This story originally ran on Oct. 28.
By Tony Fong
Belgian biotechnology firm Eurogentec announced an agreement to purchase antibody company AnaSpec last week, in a move to expand Eurogentec's proteomics and geographic footprint.
Both Eurogentec and AnaSpec are privately held and declined to disclose the financial terms of the deal.
Based in Liege, Eurogentec is primarily a consumables and reagents firm offering expertise and products in the proteomics, DNA, RNA, PCR, and qPCR fields. It also offers services for the biopharmaceutical sector.
Among its offerings are antibodies, proteins, and peptides, but to date, its profile in proteomics has been minor. The AnaSpec deal was made expressly to change that, Eurogentec's CEO told ProteoMonitor this week.
"We are doing mostly genomics [but] very little proteomics," Jean-Pierre Delwart said. But with drug firms increasingly turning their attention to biologics, the message Delwart was hearing was that that the future of new drug development will be in proteins, and new proteomics tools and methods will be needed for that.
"People need to analyze proteins, and proteomics tools have a bright future," he said. "That's why we intend to develop Eurogentec more in the proteomics field."
Like any firm, Eurogentec is continually on the lookout for new unmet needs and potential opportunities, and "we think in proteomics there is a very big potential for development," Delwart added. "So this is clearly a signal that we are willing to move in that direction."
In addition, the deal gives Eurogentec increased access to the US market where about half of total life-science sales worldwide are generated, Delwart said.
His company's exposure to the US market was "too small," he said, and "we were looking for opportunities to extend our business. AnaSpec's business "fits perfectly," with Eurogentec's, both in terms of geography and product lines.
As a small firm, AnaSpec offers products for what he called a niche market, such as drug firms working in central nervous system diseases, and "that's exactly what Eurogentech was looking for — to be strong in a very niche market."
In particular, he cited AnaSpec's zebrafish-derived antibodies, which he said are applicable for diagnostic screening purposes, as a product that interested Eurogentec.
He also said that because AnaSpec's products are designed for the pharmaceutical and diagnostic markets, they complement Eurogentec's line of products as well as its services business.
Meanwhile, for AnaSpec — which sells catalog antibodies and peptides, as well as fluorescent dyes and detection reagents targeted to the proteomics community — the acquisition by Eurogentec is an opportunity to keep growing its technology and increase its visibility in Europe, said Albert Hong, head of business development at the firm. Based in Fremont, Calif., the company's revenues have been largely dependent on its US business.
In late March or early April, he said, AnaSpec hired investment bank Achelous Partners to reach out to companies that might be interested in purchasing it.
According to Hong, though, the purpose was not to actively seek out a buyer but to help pin a value on AnaSpec.
"It's always something you have in mind — trying to value the company. And this was an exercise to get an understanding of the value of the company," he said. But "as we explored it, it made sense to engage Eurogentec and accept their offer."
Other firms also expressed interest in acquiring AnaSpec, but Hong declined to identify them.
While some firms that have been bought during the past few months have entered into deals because they felt they were too small to compete effectively in the market and could not access the capital markets to expand their operations, Hong said that was not the case with AnaSpec.
"The opportunity arose and we decided to jump at it at a peak in our business," he said. He declined to release any financial information for AnaSpec, but said it has just moved into a new building.
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Upon completion of the deal, expected by the end of the year, "We will intensify the research and development at the level of AnaSpec," Delwart said. Two years ago, Eurogentec began taking steps to build up its R&D operations "and the link we have today with AnaSpec will intensify that to supply the pharmaceutical and diagnostic business with new technology and new technology platforms to increase their research," he added.
In addition to adding substance to its proteomics business, Delwart said that it will leverage AnaSpec's technology, especially its proprietary dyes and quenchers for its DNA business.
Hong said also that AnaSpec will be tapping into Eurogentec's expertise in genomics technology to develop its own products for that market.
"We'll definitely be using our fluorescent dye technology …for in vitro diagnostics and oligonucleotides," he said. "We think there's a significant market for that."
In addition, Eurogentec has some proteomics capabilities that AnaSpec doesn't, including protein expression.
"We've done some recombinant protein [work on] our side, but that will allow us to do significantly more [work in that area] and strengthen that branch of our proteomics," he said. Eurogentec's strength in that area will allow AnaSpec "to develop more products in that arena."
Delwart added Eurogentec will provide AnaSpec expertise in quality assurance practices such as good manufacturing practices and ISO certification. Its manufacturing of oligonucleotides for in vitro diagnostics is ISO 13485 certified.
The combined companies are anticipated to generate revenues of $70 million in its first year, Delwart said, with AnaSpec contributing about $14 million to that figure.
AnaSpec will keep its name and operate as a wholly owned subsidiary of Eurogentec. AnaSpec's founders, Anita and Frank Hong, currently the company's president and CEO, respectively, will continue running the company for at least the next two years, Delwart said.
No layoffs are planned and, when combined, the new company will have about 400 employees. AnaSpec will remain in its Fremont headquarters. Eurogentec will maintain its US office in San Diego for the production of oligonucleoties for in vitro diagnostics, however, Delwart said.
AnaSpec product sales in Europe will be handled through Eurogentec.
The deal is the latest in what has been one of the most active selling and buying periods in proteomics, and more broadly in life sciences, in recent memory.
Also pending are Danaher's $1.1 billion purchase of the Applied Biosystems/MDS mass-spectrometry joint venture and MDS' Analytical Technologies division [See PM 09/10/09], and Agilent Technologies' $1.5 billion acquisition of Varian, an instrument and vacuum firm that also manufactures some LC-MS systems and Fourier transform mass specs [See PM 07/30/09], two deals that rearrange the life-science landscape in general, and could have seismic consequences on the proteomics market.
Those deals, as well as a number of smaller transactions, have had some experts saying that life sciences may be in a new period of openness for M&A activity [See PM 09/24/09].
While Eurogentec is looking to move up the proteomics food chain, Delwart said that in the near term, the company will be concentrating on integrating the AnaSpec purchase before it moves to fill any gaps in its proteomics technology portfolio.