Press Release: Galapagos to acquire Inpharmatica
Galapagos to acquire Inpharmatica
Acquisition broadens drug discovery capabilities and services
Webcast Conference Call Scheduled for 10.00 AM CET on 6 December, 2006
* Acquisition price of EUR 12.5 million in all-share transaction
* Acquired assets include an estimated EUR 6 million in cash (of which half is due by December 31, 2006)
* Potential all-share earn out payments of maximum EUR 6.6 million based on pre-agreed commercial milestones
* Technology will accelerate Galapagos' drug development
* Services will add breadth and depth to BioFocus DPI offering
* Estimated 2006 Inpharmatica revenues of EUR 4.7 million
Mechelen, Belgium, and London, UK, 6 December, 2006; Galapagos NV (Euronext & London AIM: GLPG), an integrated drug discovery company, and UK-based Inpharmatica Ltd. today announced that they have entered into a definitive agreement under which Galapagos will acquire Inpharmatica in an all-share transaction. The acquisition price of Inpharmatica is in three components: the ongoing business is valued at EUR 6.5 million, the estimated cash at an additional EUR 6 million (of which half is due by 31 December 2006), and the potential maximum earn-out related to commercial milestones at EUR 6.6 million.
Galapagos will issue, on the basis of EUR 8.82 per share (the average GLPG share price over the last thirty days prior to 5 December 2006), a maximum of 2,165,532 new shares assuming that all three components are fully delivered. The new shares will be issued to the Inpharmatica shareholders in three tranches. The first tranche of 623,582 new Galapagos shares shall be issued in December 2006. Two subsequent tranches are due to be issued in April and May 2007. The exact number of shares to be issued in these two tranches at that time will be dependent upon certain pre-agreed contractual conditions.
All issued shares will be subject to a lock up agreement ending 10 May 2007. Galapagos shall apply for a listing of the newly issued Galapagos shares on Euronext Brussels and Euronext Amsterdam, subject to the approval by the Belgian Banking Finance and Insurance Commission (BFIC-CBFA) of a prospectus as required under applicable Belgian law, as well as on London AIM.
Inpharmatica is a world-leader in the development and application of powerful, genome-scale predictive products and services for drug discovery research. The company's technologies for drug discovery will bolster Galapagos' leading position in this field by improving the Group's ability to select targets and compounds based on predictive models and expertise. These technologies include ADME services (Admensaâ„¢), a novel approach to prioritize chemical compounds in drug screening, as well as chemo-informatics services (Chematicaâ„¢) to select the best targets for drugability. Both technologies have already been widely adopted by the pharmaceutical industry and enjoy a track record of success. Major new customers brought by Inpharmatica to the Galapagos group include Pfizer and Schering.
Inpharmatica will become part of BioFocus DPI, Galapagos' drug discovery services business. BioFocus DPI will assume the commercial and scientific management of Inpharmatica, including the execution of all current contracts of Inpharmatica. As a consequence of the acquisition, the companies anticipate downsizing of Inpharmatica's management, sales and administrative staff positions. The current CEO and CFO will assist in handover until 31 December 2006 and 31 March 2007 respectively. Immediate annualized operational synergies are expected to amount to about EUR 1.5 million. As part of the acquisition, Galapagos will obtain certain downstream financial rights to Inpharmatica's internal PPAR-delta program, addressing obesity and diabetes, which has reached the stage of candidate selection.
"We are excited to add the distinguished drug discovery capabilities of Inpharmatica to our BioFocus DPI business. Adding proprietary target and compound selection tools to our platform provides an even broader array of drug discovery solutions for both our internal R&D and for our services business," commented Onno van de Stolpe, CEO of Galapagos. "It will position our company further for additional turn-key deals ranging from target discovery all the way to clinical Proof of Concept."
"We believe that the merger of our drug discovery service operations into BioFocus DPI creates the best value for our shareholders", said John Lisle, Inpharmatica's CEO. "Integrating Admensa and Chematica within the BioFocus DPI offering will greatly increase their commercial potential and opportunity."
Rationale and strategy of acquisition by Galapagos
Galapagos acquires Inpharmatica as part of its strategy to build a worldwide leader in drug discovery services, ranging from target discovery all the way through to the delivery of compounds with clinical Proof of Concept.
Galapagos will integrate Inpharmatica into its service division BioFocus DPI. Inpharmatica currently employs around 30 people in Cambridge and London, UK; the majority of this staff will join BioFocus DPI and will bring the total Galapagos headcount to over 380 staff in seven countries.
Galapagos will also employ this acquired capability in its own drug discovery programs in bone and joint diseases, where it aims to bring its own candidate drugs into the clinic.
The acquisition of Inpharmatica fits within Galapagos' strategy to partner with pharmaceutical and biotechnology companies in turn-key drug discovery collaborations, as it strengthens the company's breadth of technologies and services. Galapagos entered such a turn-key alliance with GlaxoSmithKline in osteoarthritis in June 2006 and intends to complete two more such turn-key deals in the coming three years.
The predictive drug discovery capabilities acquired are expected to accelerate Galapagos' own R&D pipeline by enabling prioritization of its validated targets and the chemical lead compounds in the process of drug development.
Webcast Conference Call details
Galapagos will host a conference call discussing the transaction on 6 December, 2006 at 10.00 AM CET/ 9.00 AM GMT. To participate in the call, dial +32 2290 1608 ten minutes in advance of the call. A live webcast of the conference call can be accessed on the Galapagos and Inpharmatica websites at www.glpg.com and www.inpharmatica.co.uk, respectively. An archived version of the webcast will be available later today and archived on both company's websites for 30 days.
Galapagos is a publicly traded, genomics-based drug discovery company (Euronext Brussels, GLPG; Euronext Amsterdam, GLPGA, London AiM: GLPG) that has drug discovery programs based on proprietary, novel targets in bone and joint diseases - osteoarthritis, osteoporosis and rheumatoid arthritis. Galapagos offers a full suite of target-to-drug discovery products and services to pharmaceutical and biotech companies through its division BioFocus DPI, encompassing target discovery and validation, and drug discovery services through to clinical Proof of Concept. In addition, BioFocus DPI provides adenoviral reagents for rapid identification and validation of novel drug targets and compound libraries for screening. Prior to this transaction, Galapagos employed more than 360 staff, and occupies facilities in the US, the UK, Belgium, Switzerland, Germany and the Netherlands. Galapagos maintains its revenue guidance for 2006 of EUR 33-38 million. More information about Galapagos and BioFocus DPI can be found at www.glpg.com.
Inpharmatica is a privately held drug discovery company. Founded in 1998, the company employs around 30 people at its UK locations in London and Cambridge. Major investors include 3i, GIMV, Advent Venture Partners, Abingworth, Gilde and Reed Elsevier Ventures. The principal capability of Inpharmatica is to effectively manage and leverage the overwhelming gene, protein and drug compound related data generated in drug discovery.
The company offers a full set of predictive capabilities, database products and consultancy services to accelerate the drug discovery process and enable creation of high quality Candidate molecules. Inpharmatica reported an audited operating loss of EUR 11.9 million for the year ended 31 December 2005, mainly attributable to the discovery unit, and net assets of EUR 10.9 million (before preference share debt of EUR 18.5 million, which will be eliminated upon consolidation by Galapagos). The discovery unit was closed during 2006, consolidating operations towards services, and Inpharmatica is in advanced stages of agreeing a partner for its PPAR delta discovery program.
Galapagos acquired the continuing service operations as well as the downstream PPAR-delta rights. It has two remaining service business units:
Chematicaâ„¢, which enables effective selection of the best biological targets and the most appropriate drug-like chemistry starting points for advancement; and
Admensaâ„¢, which enables the highly efficient selection of chemical compounds with the optimal balance of ADME properties.
Inpharmatica is a very well-known and highly-regarded partner to the pharma and biotech industries with excellent connections in most leading companies worldwide. More information about Inpharmatica can be found at www.inpharmatica.co.uk.
Forward Looking Statements
This release contains certain forward-looking statements that involve risks and uncertainties that could cause actual results to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. You are urged to consider statements that include the words "may," "will," "would," "could," "should," "believes," "estimates," "projects," "potential," "expects," "plans," "anticipates," "intends," "continues," "forecast," "designed," "goal," or the negative of those words or other comparable words to be uncertain and forward-looking. Any forward-looking statements made by Inpharmatica or Galapagos speak only as of the date made. Inpharmatica and Galapagos undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.