Evotec snags Renovis for $151M
HAMBURG, Germany—Evotec AG announced that the U.S. Securities and Exchange Commission (SEC) has declared effective Evotec's Registration Statement on Form F-4, which is required for the completion of the merger transaction with Renovis Inc., a South San Francisco based biopharmaceutical company focused on the discovery and development of drugs for major medical needs in the areas of neurological and inflammatory diseases. This is an important milestone in connection with the proposed acquisition by Evotec of all of the shares of Renovis as it is clearing the way for Renovis to call a stockholders' meeting to vote on the acquisition. Renovis has called a special stockholders' meeting for May 1, 2008 for that purpose.
HAMBURG, Germany—Evotec AG today announced that CHDI Foundation Inc., a not-for-profit organization pursuing a biotech approach to finding therapies for Huntington Disease has extended its collaboration with Evotec to the end of 2010 to help them advance their Huntington's Disease drug discovery programs. This contract extension is worth up to $37 million in research payments for Evotec. The collaboration covers Evotec's entire drug discovery offering, including its expertise in medicinal chemistry, biology and compound sourcing.
HAMBURG, Germany—In a deal that was perhaps years in the making, Evotec AG announced in mid-September its intention to acquire development-stage, neurological and inflammatory disease specialist Renovis Inc., in an all-stock transaction valued at approximately $151.8 million. To complete the acquisition, Evotec, currently traded on Frankfurt Stock Exchange, would issue American Depository Shares (ADSs) representing 1.0542 ordinary shares in exchange for all outstanding shares of Renovis. The intention of issuing ADSs—and a condition of the agreement—is to have them approved for initial listing on the NASDAQ Global Market. The transaction is expected to close by the first quarter of 2008, subject to customary closing conditions.
Once the acquisition is completed, Evotec will have effectively completed a re-making of the company, a transition it commenced in 2005. In the past 12 months alone, Evotec has disposed of Evotec Technologies to PerkinElmer for $29 million, spun out its compound library business in a joint venture based in India and, most recently, announced an agreement to sell its chemical development business to Greenwich, Conn.-based Aptuit for just shy of $64 million.
"This leaves Evotec where we are well-funded and concentrated on discovery and development," says Jörn Aldag, president and CEO of Evotec. "The Renovis transaction really reinforces Evotec's capabilities with a strong pipeline in an area where we have a pipeline gap and, in total, gives us a company that is focused on CNS, pain, inflammation and leaves us in a very strong cash position."
While Evotec has spent the past couple of years reworking the company with an eye toward becoming a discovery and development biopharma, Renovis CEO Corey Goodman notes that he and company management had some time ago identified Evotec as a strong potential partner. "We've had their eye on them," Goodman says. "We believe tht Evotec represented a collection of clinical and preclinical drugs and drug candidates in the CNS space with some extraordinary capabilities that we thought would be a perfect combination with Renovis."
Though Evotec is officially the acquiring company, the deal doesn't appear to be the case of a stronger, more robust company snapping up a weaker sister. "Both companies are well-funded," says Aldag, "and funded well enough to take their own programs forward. This is clearly one of the attractions."
Two factors came into play to bring the companies together. First, were the complementary, non-overlapping programs in CNS, pain and inflammation that mark the work of both companies. Second, it combines Evotec—which currently has three programs in clinical trials but precious few programs in preclinical development—with Renovis—which has no current clinical programs but three very promising preclinical programs.
By the end of next year, it is plausible for the company to have five compounds in clinical trials: current Evotec compounds EVT 201 (for insomnia, currently in Phase II proof-of-concept); EVT 101 ( for Alzheimer's disease, currently in Phase Ib); EVT 302 (an MAO-B inhibitor for smoking cessation now in Phase I); joined by Renovis' preclinical candidates VR1 and P2X7 antagonists targeting a variety of indications.
The VR1 program is Renovis' most advanced and also has the potential to pump some serious dollars into company coffers via a partnering deal the company struck with Pfizer in 2005. Through this deal, the company could receive as much as $170 million in milestone payments and double-digit royalties on net sales of any products resulting from the VR1 collaboration.
For its part, Evotec counts Roche and Boehringer Ingelheim as big pharma research partners.
The Renovis location in South San Francisco, Calif., will be retained by the company and will become a center of excellence for Evotec focused on discovery projects for inflammatory diseases, pain and other related diseases based on the VR1 and P2X2/3 and P2X7 target families.
Total head count of the company, which totals 630 pre-merger, will shrink to roughly 400, Aldag said, though there were no specific details on exactly where those cuts would occur.