This story originally appeared in Biocommerce Week, a newsletter that has been discontinued.
In a bid to continue bolstering its portfolio of cell-based drug-discovery tools, PerkinElmer said a couple of weeks ago that it would acquire Euroscreen Products, a subsidiary of Belgian drug-discovery operation Euroscreen, for an undisclosed cash sum.
The proposed acquisition would provide PerkinElmer a sturdier foothold in the G-protein coupled receptor assay-screening market, and supports the company’s well-publicized strategy to better compete in the overall cell-based assay arena. The bid also comes only two weeks after PerkinElmer said it would acquire Evotec Technologies, the tools and technologies division of German drug-discovery firm Evotec, for €23 million ($30.5 million) in cash (see BioCommerce Week 12/6/2006).
Euroscreen, of Gosselies, Belgium, specializes in GPCR assays based on the aequorin calcium-sensitive luminescent photoprotein. It exclusively licensed the core technology from the University of Georgia Research Foundation, and markets its assays under the name AequoScreen. Euroscreen sells cell lines and membranes expressing GPCRs and aequorin, and provides assay protocols for these technologies.
Under the terms of the agreement, Euroscreen would transfer to PerkinElmer its portfolio of GPCR screening tools and its exclusive global license to the aequorin technology.
Partners and Competitors
Although Euroscreen focuses primarily on internal drug discovery and contract drug-discovery services, it supplements its revenues by licensing the aequorin technology to biotechnology and pharmaceutical companies for their internal use.
Euroscreen said that it has licensed the technology to more than 30 such companies to date, among them Merck, Amgen, Bristol-Myers Squibb, Bayer, Cephalon, UCB, and Solvay. PerkinElmer officials said that the firm would inherit these deals.
Euroscreen also has a number of formal and informal partnerships with other instrumentation vendors. These include BCW Index firms Molecular Devices and Applied Biosystems, as well as CyBio and Hamamatsu — all of whom market instruments on which the AequoScreen technology has been validated.
In addition, Euroscreen already has a partnership with PerkinElmer under which AequoScreen and PerkinElmer’s LumiLux are bundled together for sales.
For PerkinElmer, the deal, expected to close by the end of the first quarter of 2007, represents a deeper penetration into the GPCR screening market. GPCRs are one of the most investigated and exploited drug target families. PerkinElmer believes that GPCR targets comprise between 30 and 40 percent of drug screening programs. Some industry reports have estimated that figure may be more than 40 percent, and that GPCRs are targets for more than 50 percent of all currently marketed pharmaceuticals.
“There are two reasons for this,” Richard Eglen, vice president and general manager of discovery and research reagents for PerkinElmer’s Life and Analytical Sciences unit, told BioCommerce Week sister publication Cell-Based Assay News recently. “One is that GPCRs are a very druggable class of targets. But related to that, there are new ideas about how GPCRs function that appear to be opening up new ways to designing new therapeutics.”
Accordingly, competition is fierce in the GPCR assay market, and includes reagents from DiscoverX (distributed by GE Healthcare), Invitrogen, and Cisbio; instrumentation from PerkinElmer, Molecular Devices, CyBio, Hamamatsu, as well as many other high-content imaging vendors; and services from companies such as Millipore, Caliper’s Novascreen division, Galapagos and, of course, Euroscreen.
With such competition as a backdrop, PerkinElmer and Euroscreen tout AequoScreen as a superior reagent for GPCR screening by claiming the luminescent aequorin offers a cost and sensitivity improvement over fluorescent calcium indicators such as Fluo-3 and Fluo-4, which are commonly used in Molecular Devices’ market-leading FLIPR GPCR screening instrument platform.
PerkinElmer also offers several reagents for GPCR screening, according to Eglen, so the acquisition of Euroscreen’s products actually brings a competing tool under PerkinElmer’s umbrella.
“We think we now offer a pretty complete solution, because we can go all the way from classical ligand binding for GPCRs through to endpoint assays,” Eglen said.
Targeting Cell Analysis
PerkinElmer sells a variety of technologies into the life sciences research and molecular diagnostics market. Over the past year, the firm has sold its Aerospace and Fluid Testing divisions, its lithography product line, and its semiconductor business. Since those sales and divestitures, health sciences sales have accounted for roughly 82 percent of PerkinElmer's revenue — expected to be around $1.53 billion for full-year 2006.
While proteomics has remained a key field for PerkinElmer, its recent efforts suggest it sees perhaps even greater opportunities in cell analysis. Indeed, company officials began 2006 by saying that expanding the firm’s drug-discovery tool portfolio to include next-generation proteomics diagnostics was a priority. But shortly thereafter company officials also noted that the cell-analysis field was of great importance to the firm’s plans to grow revenue.
"We're seeing a migration of applications," said Rob Friel, president of PerkinElmer's life and analytical sciences business, during the firm’s first-quarter conference call last January (see BioCommerce Week 2/1/2006).
"In drug discovery, it's really moving from biochemical and radioactive assay to cellular and non-radioactive,” he said. “In proteomics, we're seeing a move from analytical and 2D gels, where we're looking at the structure of the protein, to biomarkers and trying to determine the pathological outcome.
"The challenge for us has been to migrate our products and our portfolio to match this migration of the applications," said Friel. "It's been a challenge to do that quicker than the deterioration in the market.”
PerkinElmer already has strong high-throughput screening and cell- and liquid-handling plays through its CellLux and LumiLux instruments for cell-population experiments. But the acquisition of Evotec Technologies will give PerkinElmer an immediate competitive position in the high-content screening and cellular analysis markets, an area in which it has been conspicuously lagging behind its rivals in the life sciences instrumentation market, such as GE Healthcare, Thermo Fisher, Molecular Devices, and BD Biosciences.
“Management realizes that being good at cell-based assays has application in both the research and clinical diagnostics setting. Cell-based tests are likely to be adopted to a greater extent in clinical diagnosis.”
“The acquisition of Evotec Technologies brings us immediate scale and brand recognition in the cellular sciences space,” Mary Duseau, global sales leader of molecular medicine at PerkinElmer Life and Analytical Sciences, told BioCommerce Week in early December. “When you look at the products that [Evotec Tech] currently has – and the Opera, in particular – they’ve got an excellent reputation, and they’ve got excellent reach, as a stand-alone company both in the drug-discovery world and in academia.”
“The way to view these two acquisitions is that they are part of a very coherent strategy to move into the cell biology space, and to develop more technologies for drug discovery and research,” said PerkinElmer’s Eglen.
John Sullivan, a research analyst with Leerink Swann who has covered PerkinElmer for several years, told CBA News that all of these initiatives could result in a more dependable revenue stream for the company.
“I do think that PerkinElmer is looking at the cell-based analysis market and seeing a much more fragmented market than genetic analysis or even protein analysis, so I think that they are viewing the cell-based analysis market as one in which they can compete well,” Sullivan said.
“The cell-based analysis world breaks into instrumentation companies … and then into enabling biology franchises. I think PerkinElmer is seeking to compete to a greater extent on the enabling biology side, and that makes a lot of sense to me because that’s a potentially high-margin business where consumable revenue streams can be developed.”
And, according to Sullivan, PerkinElmer’s increased cell-based assay capabilities may tie in nicely with the company’s expertise in clinical diagnostics.
“PerkinElmer is doing a good job of recognizing that researchers’ work is going to move past genetic analysis and even past protein analysis into cellular analysis,” Sullivan said. “[It] is realizing that there is a growth opportunity in helping researchers to do their cellular research efficiently.
“Further, management realizes that being good at cell-based assays has application in both the research and clinical diagnostics setting,” he added. “Cell-based tests are likely to be adopted to a greater extent in clinical diagnosis.”
— Edward Winnick contributed to this article.