Seahorse Bioscience this week announced that it has acquired BioProcessors for an undisclosed sum, and will use the company's tools to help expand its footprint in the biologic drug-manufacturing arena, while maintaining its footprint in the cell-based assay market.
Concurrent with the acquisition, which closed last week, was a $6 million Series D round of venture-capital financing. Participating in the round were Commonwealth Capital, Oxford Bioscience, Flagship Ventures, Life Sciences Partners, FLIR Systems, Healthcare Ventures, New Science Ventures, and HLM Ventures.
A Seahorse official told CBA News that the firm has already integrated BioProcessors, which has taken on the Seahorse name, and plans to increase its sales and marketing efforts.
BioProcessors' principal technology is the high-throughput SimCell cell-culture platform. The system comprises a microbioreactor array, automated cell culture robotics, and data solutions to manage high-throughput cell-culture workflows.
Meantime, Seahorse's flagship product, the XF analyzer, determines if cells are consuming more oxygen than normal, which would indicate that they are able to produce more protein. And "more protein means more drug — and more drug means more money," said Steve Chomicz, vice president for sales and marketing at North Billerica, Mass.-based Seahorse.
The technology is used fro drug discovery by academics and by pharmaceutical and biotech companies, and for bioprocessing by biotechs, most of which perform their own bioprocessing because of the need to ensure the quality of components and the resulting biologics.
Chomicz said this week that one reason the company bought Woburn, Mass.-based BioProcessors is because of an overlap between the firms' customer bases. He declined to disclose what percentage of Seahorse customers are in the bioprocessing area.
He said Seahorse's sales force can cover both product lines because a percentage of Seahorse's existing customer base buys the XF analyzer for bioprocessing applications, and the BioProcessor instrument is sold specifically for bioprocessing.
"So … it is a good extension for us," Chomicz said. "We were looking for M&As as part of our general growth strategy."
Fouad Azzam, a general partner with VC investor Life Sciences Partners, told CBA News this week that each company addressed "a different part of the value chain," with Seahorse's XF platform focusing on "looking at cell health, et cetera," and then "once you have your cell lines, and you know what you are doing, production of the cell lines can be scaled up" using BioProcessors' technology.
If researchers are able to interrogate the right cell lines that they identified using the Seahorse platform "so that you know ahead of time which cells will behave the way that you want them to behave," scaling up production of those lines using the SimCell platform will result in significant time-to-market savings, said Azzam.
"It streamlines the value chain for you in biologic production," he added. "If you can cut down your time to market for a biopharmaceutical, that creates hundreds of millions [of dollars] of saved costs for pharmaceutical companies."
Old is New
This is Seahorse's second acquisition. Its first, made in 2005, was Innovative Microplate, which gave the company the "capability of developing smart plastic consumables," which it uses in its XF product line and XF assay cartridges, Chomicz said.
[ pagebreak ]
Chomicz also said that Seahorse officials saw the same kind of fit in BioProcessors because that company, much like Seahorse, has a technology that modernizes an out-of-date technology — shake flasks.
"The reason that we liked BioProcessors is that what they did was take an old technology … and they developed a way of automating it," said Chomicz.
Similarly, Seahorse Bioscience takes an old method of using a Clark electrode to measure cellular metabolism in a flask of cells, and developed an instrument to perform that function in a microplate.
"That is our focus: taking old technology and modernizing it," he said.
Seahorse's XF instruments measure energy use in living cells. Their applications include assessing substrate use, mitochondrial function, and cell quality, and measuring energy expenditure.
It competes with Bionas' 2500 system, which, like the XF, kinetically measures acidification and oxygen consumption in live cells. Other rivals include MDS Analytical Technologies' CellKey product, Applied Biophysics' ECIS platform, and the xCELLigence system co-developed by Roche and Acea.
"In that sense, the merger helps you fill the entire value chain; it's the same customer base, but different parts of the organization within the same customer base," Azzam said.
Chomicz declined to comment on the size of the bioprocessing market in which Seahorse will increase its play, except to say that the reason Seahorse was attracted to the bioprocessing market is that it is rapidly growing.
"We … see that pharma is investing heavily in bioprocessing [and] biotechs are investing heavily in bioprocessing … as drug discovery moves away from small molecules, and pharmas and biotechs invest heavily in biologic drugs," Chomicz said. "It is a growing area, and it will continue to grow."
Marketing for Sales
Jeff Hurst, a general partner and co-founder of Commonwealth Capital, told CBA News this week in an e-mail that Seahorse's headcount has increased from about 65 to about 80 as a result of the acquisition.
According to Chomicz, the new company will be stepping up its sales and marketing efforts. "I think our first strategy is to start with more exposure in the bioprocessing market," he said. To that end Seahorse will start going to more trade shows in the bioprocessing field.
"We are currently identifying shows at which we want to exhibit, and we are going to start advertising and promoting those products, because the customers that we have spoken to really like it a lot," Chomicz said. He did not elaborate.