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Evotec Agrees to Buy DeveloGen for $17.9M

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Evotec today said it has signed a definitive agreement to buy biopharmaceutical discovery and development firm DeveloGen for up to €14 million ($17.9 million).

As part of the deal, DeveloGen shareholders are also eligible for deferred payments based on milestones and royalty income.

In a statement, Evotec, headquartered in Hamburg, Germany, said the acquisition adds two complementary alliances to its portfolio of core assets, including DeveloGen's integrated discovery alliance with Boehringer Ingelheim on small molecules to treat type 2 diabetes. Evotec will receive ongoing research funding from the alliance and is eligible for potential milestone payments of up to €237 million for the lead compound and royalty payments, it said.

Evotec also has been collaborating with the Boehringer Ingelheim for the past six years and in June said it was receiving € 2.5 million in a milestone payment from the drugmaker for the selection of a candidate compound for pre-development studies in an oncology program.

DeveloGen also has a development partnership with Andromeda Biotech on DiaPep277, a synthetic peptide immunomodulator for type 1 diabetes, which is exclusively licensed by Teva Pharmaceutical Industries. The drug is currently in Phase III clinical development.

"Through the acquisition of core DeveloGen assets and its disease biology know-how in metabolic disorders, Evotec broadens is portfolio of high-value partnerships and adds substantial potential for milestone payments over the next few years," Werner Lanthaler, CEO of Evotec said.

DeveloGen is based in Goettingen, Germany.

Under the terms of the deal, the €14 million in shares will be created using Evotec's authorized capital with an attributed per-share value of €2. Four million shares totaling €8 million will be issued to the sellers upon the closing of the deal. Three million shares worth €6 million are conditional on certain undisclosed events and representations.

Evotec said that shareholders of about 99 percent of DeveloGen's capital have approved the deal, which is expected to close next month.

Evotec said that it expects to spend €2 million in cash requirements and transaction costs for the deal but reiterated earlier goals of more than 15 percent revenue growth year-over-year and liquidity of more than € 64 million for 2010. It anticipates about €10 million in R&D costs for the year.

Evotec also announced it has appointed DeveloGen's CEO Cord Dohrmann as its chief scientific officer and as a member of its management board beginning Sep. 1.

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