Evotec today said it acquired Cell Culture Service (CCS) for €1.15 million ($1.5 million) upfront, plus up to €1.05 million (about $1.4 million) in milestone payments tied to achieving undisclosed revenue targets, and payable one year after the acquisition.

Evotec said the acquisition would enhance its ability to provide integrated drug discovery and early development services for pharma and biotech companies. CCS supplies custom cells and cell-based reagents such as recombinant assay cell lines, assay-ready frozen instant cells, qualified membranes, and proteins for high-throughput screening.

“CCS’ experience and technologies for large-scale cell production are a perfect fit with Evotec’s screening and in vitro pharmacology activities,” Mario Polywka, Ph.D., Evotec’s COO, said in a statement.

Dr. Polykwa is Evotec’s temporary day-to-day leader, after CEO Werner Lanthaler took a leave of absence that according to the company was health-related.

Evotec said it would fully integrate CCS’ entire team of specialized cell culture scientists and technicians to achieve cost synergies and efficiency improvements. Both companies are headquartered in Hamburg, Germany.

Privately-held CCS is expected to generate €1 million ($1.3 million) in annual revenue for publicly-traded Evotec, which has told investors it expects annual 2012 revenues of €88 million ($115.4 million) to €90 million (about $118 million). During the first three quarters of 2012, Evotec generated €64.2 million ($84.2 million), up 8% from €59.7 million (about $78.3 million) for Q1–Q3 2011. However, net income fell nearly 18% during the nine-month period from the previous year, to €7.5 million (about $9.9 million) from €9.2 million ($12 million).

A Nov. 8 statement did not explain the net income decrease, but did attribute its higher revenues to drug discovery alliances that include those announced in recent months with Bayer (endometriosis) and CHDI Foundation (Huntington’s disease); “significant” milestone revenue from Andromeda/Teva, Boehringer Ingelheim, and Novartis; cash from two companies acquired in 2011 companies, Kinaxo (now Evotec Munich) and Compound Focus (now Evotec San Francisco); and revenues from upfront payments from its CureBeta partnership.

Under CureBeta, Evotec agreed to license to Johnson & Johnson’s Janssen Pharmaceuticals a portfolio of small molecules and biologics designed to trigger the regeneration of insulin-producing beta cells. The portfolio was identified by scientists in the Harvard University laboratory of Douglas Melton under a collaboration with Evotec.

Evotec said today it was retaining its cash liquidity guidance to investors for full-year 2012 of more than €60 million ($78.6 million), despite cash requirements for the transaction and integration that it pegged at about €1.2 million (about $1.6 million) for 2012. 

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