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Serologicals $7M Buy of Cytomyx Subsidiary Should Bolster Cell-Based Assay, Screening Services Play


Serologicals continued its aggressive push into the cell-based assay drug-discovery market this week by announcing it would acquire Cytomyx Ltd., a subsidiary of Cytomyx Holdings that offers ion channel cell lines and related screening services.

For Serologicals, the $7-million cash acquisition serves two purposes. First, it provides the company entry into the rapidly growing ion channel drug-discovery market — which is behind only GPCRs and kinases/phosphatases in terms of sought-after drug targets — and continues to shore up Serologicals' overall burgeoning cell-based assay play.

In addition, the deal expands Serologicals' drug screening service capabilities, which the company currently provides through its Upstate subsidiary facility in Dundee, Scotland, to cover the three most popular classes of drug targets.

Cytomyx Holdings, which also offers human tissue-based biomarker discovery, target validation, and drug discovery services out of Boston subsidiary Cytomyx LLC, will now focus entirely on that business with the sale of Cytomyx Ltd., Cytomyx Holdings co-founder and CEO Mike Kerins told CBA News. According to Kerins, the Cytomyx Ltd. subsidiary that Serologicals is acquiring has a dozen employees, all located in Cambridge, UK.

"At this time, I think we can disclose that we expect high revenue growth as it relates to this business," Diem Nguyen, senior director of corporate development for Serologicals, told CBA News. "We believe that its gross margins are very attractive, and it will be slightly accretive in 2006."

"At this time, I think we can disclose that we expect high revenue growth as it relates to this business."

Cytomyx has not yet disclosed its full 2005 revenues, and does not break out revenues for each of its subsidiaries; however, for the six-month period ended March 31, 2005, Cytomyx Holdings reported total revenues of approximately £2.2 million ($3.9 million), compared with about £2.9 million in the corresponding six-month period in 2004.

It was not immediately clear whether Serologicals would keep the Cambridge facility open or retain the Cytomyx employees, although Nguyen said that "essentially the services will be provided globally, but as it relates to operations, we continue to be committed to having operations in Cambridge, as well as Dundee, for drug-discovery services."

Serologicals also inherits Cytomyx's core asset: a panel of 23 distinct ion channel cell lines, which it claims is the largest portfolio of such cell lines on the market, and which it outlicenses to researchers.

"We developed those over the course of two to three years, and came at it from a core expertise in cloning and cDNAs for ion channel members," Kerins said. "They're particularly challenging targets to work on, and we then took the next step of taking those cDNAs and developing functional, validated cell lines." Kerins added that Cytomyx has done this independently and in collaboration with a "number of undisclosed partners within big pharma."

Furthermore, Cytomyx recently began using those cell lines as part of an ion channel screening service, which Serologicals will also assume control of.

"We'll be doing two types of products and/or services," Serologicals' Nguyen told CBA News. "We will be providing these cell lines, available as a license, to biopharma, academic institutions — whoever is interested in it for research purposes.

"The second component, which is a very important component, is just the screening services," she added. "We would be using these ion channels for two types of areas in particular — some ion channel selectivity screening, as well as cardiac liabilities and testing, so we're talking about the hERG channel here."

The ion channel screening capabilities will complement Serologicals' current screening services, offered primarily through its Upstate facility in Dundee. These include its KinaseProfiler panel of assays for kinase screening and ChemiScreen calcium-optimized cell lines for GPCR screens. Together kinases, GPCRs, and ion channels make up the bulk of the most frequently investigated drug targets in pharma today.

Ion channel cell line supply and screening services are both rapidly growing, but still relatively nascent markets. Nguyen cited Cerep and MDS Pharma Services as two major competing providers of ion channel cell lines to pharma, along with "a handful of boutique suppliers."

Few companies compete in the ion channel screening services market, as well, according to Kerins, who said that UK-based BioFocus and US-based ChanTest were probably the best-established ion channel screening providers.

Kerins said that Cytomyx uses both traditional low-throughput patch clamping and the higher-throughput IonWorks platform from Molecular Devices to conduct screening using its ion channel cell lines.

According to Serologicals' Nguyen, Serologicals "already has a variety of instrumentation that we use for our GPCR [screening] as well as what we're going to be proposing for the ion channel [screening]. We will always continuously look at new platforms and technologies that basically answer different questions," she added.

Rapid Expansion

Serologicals has been one of the busiest biotechs on the M&A and collaboration front in the last six months, particularly in the area of cell-based assays for drug discovery.

In February, Serologicals and Pittsburgh-based biotech Cellumen said that they would co-develop and sell a cytotoxicity profiling panel and services for use in pharmaceutical drug discovery (see CBA News, 2/10/2006).

Later that month, CBA News reported that Serolgicals was planning to buy the CellCard high-content assay technology from defunct Vitra Biosciences, although that deal has not yet been consummated (see CBA News, 2/24/2006).

At the time, Dennis Harris, Serologicals' CSO and vice president of R&D and business development, told CBA News that the deals fit into the same strategy of increasing the company's cell-based assay play, and that Serologicals would likely announce more initiatives in this area in the near future.

— Ben Butkus ([email protected])

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