Abzena buys US-based contract chemistry specialist TCRS for $15M

Abzena plc will buy Philadelphia-based The Chemistry Research Solution LLC (TCRS), a specialist contract chemistry and bioconjugation company, specialized in producing and analyzing antibody drug conjugates (DACs), for $15 million (£10 million).

Abzena plc, Antitope Limited & PolyTherics Limited, Cambridge

Abzena, a life sciences group providing services and technologies enabling the development and manufacture of biopharmaceutical products, said on Tuesday that the acquisition is subject to certain closing conditions including completion of the placing of 35,004,972 new Ordinary Shares at 60 pence each with certain existing and new shareholders, as the company has conditionally raised £20 million (net of expenses).

Abzena noted that the Placing Price represents a 7.7 per cent discount to the closing mid-market price of an existing ordinary share on November 23, 2015, being the last business day prior to this announcement.

Abzena will acquire the entire ownership interests in TCRS. The consideration will be paid as $8.8 million in cash (subject to adjustment for net current assets and retained indebtedness of TCRS at completion of the Acquisition), the issue of 3,609,978 Ordinary Shares and $0.9 million in restricted stock units over 901,697 Ordinary Shares and assumed long term debt of $1.5 million, Abzena disclosed.

Reason to buy TCRS

Giving rationale for the acquisition of TCRS, Abzena said it would broaden its service capability and, with further investment, provide GMP manufacturing capability for ADCs. It would further enable ‘Abzena inside’ ADC partner projects to be progressed further through the R&D process by the Group and create  new cross-selling opportunities for Abzena’s antibody engineering and biopharmaceutical manufacturing services.

Abzena points out that TCRS is well established and profitable company which is expected to make immediate positive contribution to the Group’s EBITDA.

By this buy, Abzena will establish another operating presence in the USA, in a key East coast life sciences hub, complementing the West coast location of Abzena company Pacific GMP.

Dr John Burt, CEO of Abzena

Dr John Burt, CEO of Abzena said that the acquisition of TCRS is an important strategic step in the company’s ambition to build itself into a self-sustaining business and ‘partner of choice’ for R&D organizations developing biopharmaceutical drugs.

Dr Naresh Jain, Managing Director of TCRS added that joining forces with Abzena has been an easy decision to make. Jain said that the two companies are very complementary in customer base and the services they offer.

After the acquisition deal is completed, Dr Naresh Jain will become Senior Vice President (ADC Biomanufacturing) & Global Head of Chemistry for Abzena, reporting to John Burt, Abzena’s CEO.

Placing proceeds

As for placing proceeds, Abzena explained that they are to be used for the acquisition of TCRS and  biomanufacturing capital expenditure, as well as further research and development in existing Abzena technologies & investment in ‘Abzena inside’ product development. The placing will also be used for additional working capital, Abzena concluded.

Abzena on Tuesday also today reported its half year results for the six months to September 30, 2015 reporting revenue rise 43% to £3.5 million, compared to the same period of 2015, of £2.4 million.

Gross profit was up 31% to £1.6 million from the same period 2015, which was £1.2 million. The group reported loss of £3.5 million (H1 2015: £2.7 million) which is reflecting increased investment in the business.

Dr John Burt, CEO of Abzena said that the business has grown significantly in the period, both organically and via acquisition.

“We anticipate further growth with the recent acquisition of PacificGMP which adds manufacturing to our offering, enabling us to support our customers from lead identification through to clinical trials,” Burt added.