From enterprise ELN to ‘paper on glass’

Acquisition of Contur Software expands Accelrys’ portfolio with cost-effective, rapid-deployment electronic lab notebook

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SAN DIEGO—Publicly traded scientific enterprise R&D software and services company Accelrys Inc. has broadened its reach to smaller, more focused electronic laboratory notebook (ELN) markets with the acquisition—through its Accelrys Software subsidiary—of privately held Contur Software AB in Stockholm, Sweden.

Accelrys paid approximately $13.1 million in cash for Contur—which had about $600,000 in cash upon closing—including roughly a half-million dollars to be paid upon reaching certain agreed-upon milestones. Accelrys does not expect the acquisition to have a material impact on its GAAP and non-GAAP revenue, expenses, operating profit or earnings per share for the year ending Dec. 31.

But there is an impact on the thinking about potential customers now that Accelrys has expanded its pipeline, as it and Contur serve very different markets.

Accelrys goes beyond basic ELN to incorporate applications for modeling and simulation, enterprise lab management, workflow definition and capture, data management and informatics, with a goal of integrating a diverse range of science, experimental processes and information requirements across the research, development, process scale-up and early manufacturing phases of product development.

The customer base for the Contur ELN product, on the other hand, is mostly outside of large pharmaceutical companies, seeing play primarily in academia, the biotechnology sector, chemicals and food and beverages. The Contur product focuses on using ELN software so scientific organizations can document their research and development processes and to capture their intellectual property (IP), providing such services in an on-site mode or via a software-as-a-service (SaaS) model in the cloud.

"When we were in the due-diligence process for the merger with Symyx last year, we came away quickly with the knowledge that there were multiple ways to look at the market but the simplest way would be to have a high-end notebook product that would become the centerpiece in an automated lab environment," recalls Todd Johnson, executive vice president of sales, marketing and services at Accelrys. "And that was the Symyx Notebook product. But at the other end of the market, with smaller organizations, where many people are still using paper notebooks to log data, there was much more of a focus on just getting the paper process automated—something we sometimes call 'paper on glass' applications."

Of course, relying on paper notebooks is inefficient, because the output of such experiments cannot be easily retrieved, searched or shared, resulting in inconsistent processes, IP risks and duplicated experiments, Accelrys notes. Contur ELN, which was launched in 2003, addresses such issues by delivering a software solution that is reportedly quick and easy to deploy and enables customers to effectively document and capture experimental data, as well as the resulting IP, in a user-friendly and secure environment.

"IP capture and the ability to share data and collaborate on experiments in simpler ways than with Symyx Notebook was something we saw the value in early on, and we felt that in the long run, it would be important to address both ends of the marketplace," Johnson says. Contur, he says, was already "on our horizon" with the Symyx merger, and "someone we had listed as a leader in the paper-on-glass space, particularly because they were making more progress in doing this as a cloud-based solution with an SaaS offering than anyone else was."

It became clear recently to Accelrys that Contur had decided that, for the right price, it might be good for them to merge into a larger entity, and that got Contur off the horizon and into the courtyard for some chats about a possible acquisition.

"Once we knew that Contur had gone from doing well on its own to being open to acquisition, we moved quickly because we felt they were a unique and potentially valuable asset," Johnson says, "and we didn't feel like there were several other Conturs out there for us to hook up with later if we let someone else get them."

In announcing the acquisition, Accelrys reported that Contur ELN was an ideal complement to Symyx Notebook by Accelrys and broadened the range of solutions that Accelrys could provide to scientific R&D organizations. The Symyx Notebook, the company notes, is a multidisciplinary, highly customizable ELN intended to be integrated with other enterprise systems and instrumentation and can also be deployed in validated environments, and is ideally suited to enabling R&D organizations to deploy a fully integrated electronic laboratory environment. Contur ELN, on the other hand, is targeted to assist R&D organizations that aren't so enterprise-level with a solution that documents their experimental processes and captures the results in a searchable central location, either on premises or as an on-demand SaaS model.

"We are excited about expanding Accelrys' portfolio with Contur's ELN and view this as an important addition to our evolving enterprise R&D platform," said Max Carnecchia, Accelrys' president and CEO, in the news release announcing the acquisition. "In addition to innovative technology, we are adding domain experts to our team and expanding our ability to meet customer needs in product and process development. With the addition of Contur's software solutions, Accelrys now offers cost-effective ELNs to meet the range of needs of various scientific research and development teams—from R&D organizations transitioning from paper to an electronic notebook to those requiring a fully integrated electronic lab environment."

Contur Software has roughly 20 employees in Sweden, and Accelrys says it has retained key management personnel with the acquisition. Johnson says he expects few real challenges working across the Atlantic Ocean, and notes that the Contur team will probably interact directly with the core Accelrys team in the United Kingdom as much as with the company's main headquarters in San Diego.

Johnson says Accelrys will be moving very quickly on the sales front to bring the broader sales channel together with Contur products, and notes that Contur is already tapping that sales force here and there on an as-needed basis. The full direct sales force and academic sales force were expected to be brought to bear in early July, Johnson told ddn in mid-June.

In the two weeks following the closing of the deal, Johnson says, the Accelrys and Contur teams had already begun working on about a half-dozen deals.

"Overnight, we'll dramatically increase Contur's coverage in key target markets, and we're excited about being able to offer the option to customers with whom we might have competed at times of buying a single 'SUV' or two 'compact cars' with the Symyx and Contur options. Another thing is that we have a much bigger footprint than they do in the U.S. and Asia, but they've had a lot of success in Europe and so we expect some great penetration on a global basis. I also think we'll learn a lot from them about cloud-delivered applications and I think there will be lasting impact on the rest of our product line with what we learn from their successes."

Accelrys' Q1 revenues soar by 67 percent

SAN DIEGO—Still benefiting from its Spring 2010 merger with Symyx Technologies Inc., Accelrys Inc. recently reported that its first-quarter revenues increased $13.8 million to $34.6 million from $20.8 million for the same quarter of the previous year, an increase of 67 percent.

Accelrys said revenue, operating loss and net loss for the quarter ended were affected by fair value adjustments to deferred revenue. Operating loss was additionally affected by business consolidation and restructuring costs and purchased intangible asset amortization. Net loss was also impacted by additional purchased intangible asset amortization and fair value adjustments to deferred royalty income.

"From a financial standpoint, I am pleased that we continued to obtain the benefits of our merger with Symyx, as our non-GAAP profitability and rock-solid balance sheet demonstrate," Max Carnecchia, Accelrys' president and CEO, said in a statement. "From an operating standpoint, we continue to focus on optimizing our product portfolio. To that end, we are commencing the restructuring and streamlining of our content product lines in order to better integrate them with our software business."

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