Evotec to fill pre-IND service gap with $300M Aptuit buy

Aptuit
Evotec will buy up Aptuit, adding Aptuit's IND submission enabler INDiGO and its manufacture capabilities

Germany-based CRO Evotec is buying U.S. counterpart Aptuit in a $300 million deal, broadening expertise in the respiratory and fibrosis therapeutic areas, while filling the service gap between preclinical and in-human studies.

Both companies are focused on the drug discovery and development phase before a candidate heads into the clinic. But Aptuit’s INDiGO, an integrated solution to help accelerate transition of a preclinical drug candidate to an IND submission, plus integrated chemistry, manufacturing and control (CMC) capabilities, are specifically valuable to Evotec.

“The ability to take a PDC through to first-in-man and into support the API manufacture and the drug product manufacture beyond is completely new to us and it is important to us. Increasingly, our programs and our partnerships require us to go through IND,” said Evotec COO Mario Polywka during a conference call about the transaction on Monday.

Evotec will also inherit 750 Aptuit employees working at three facilities: one R&D center in Verona, Italy, which Aptuit acquired from GlaxoSmithKline in 2010, one in Basel, Switzerland, and one in Oxford, the U.K., close to Evotec’s own Oxford location.

The Aptuit transaction marks the most recent move by the acquisitive Evotec, which has been making at least one purchase every year since 2010, with the closest one being that of U.K.-based in vitro pharmacokinetics services provider Cyprotex in 2016. It is also one of a series of high-profile M&A actions in the CRO world, including the $5 billion buyout deal of Parexel in June, such megamergers between IMS Health and Quintiles, and inVentiv Health and INC Research, plus LabCorp’s acquisition of Covance and of Chiltern, which was announced right after the Evotec-Aptuit deal.

The management team at Evotec considers Aptuit a very stable and risk-resistant business that could offer Evotec complementary client bases with small overlaps, Polywka said during the call. The majority of Aptuit’s clients (62%) are small biopharma companies, and no single project takes up more than 3% of revenues. All the 1,000 projects Aptuit completed in 2016 were spread across over 400 customers, according to Evotec’s tally.

In terms of financials, Aptuit is expected to report 2017 revenues of about €100 million to €110 million, rising from the €88 million in 2016, compared to Evotec’s €164.5 million that year.

Evotec will pay Aptuit’s current owner Welsh, Carson, Adnerson & Stowe, a tech and healthcare-focused private equity firm, the $300 million in cash, funded partially through debt financing, Evotec CFO Enno Spillner said during the call. The company expects to close the acquisition soon in the third quarter.