WALTHAM, Mass.—Repligen Corp. has announced the execution ofa definitive agreement to acquire the business of Novozymes Biopharma Sweden ABin a cash transaction of $22.7 million and future potential milestone paymentsof $5.6 million.
According to company President and CEO Dr. Walter Herlihy,who spoke with the press via a webcast, the acquisition will elevate Repligento a position as a world-leading supplier of products for manufacturingbiologic drugs with the potential to yield sustainable growth and profitabilityin fiscal year 2013, beginning April 1, 2012. The combined company is expectedto generate total revenues of approximately $50 million in fiscal year 2013.
The Novozymes Biopharma acquisition diversifies and expandsRepligen's product offering and customer base while doubling the company'smanufacturing capacity. Novozymes Biopharma manufactures growth factors used inmammalian cell culture and Protein A affinity ligands used in the production ofmonoclonal antibodies. The company is located in Lund, Sweden, and operates a45,000 square-foot, cGMP-capable production facility that was renovated in 2008with an investment of about $25 million.
The products acquired in the Novozymes transaction areanticipated to generate $16 million to $17 million in revenue in 2011, and aresold primarily under long-term supply agreements with major life sciencescompanies including EMD Millipore, Sigma-Aldrich and GE Healthcare. Concurrentwith the acquisition, the term of Repligen's supply agreement with GE wasextended from December 2014 to December 2021.
"This acquisition positions Repligen as a leading producerof high-value, consumable products that will directly benefit from thelong-term growth of the biologics market," Herlihy says. "Earlier this year, weannounced our strategic objective to transition into a commercially focusedcompany, and the acquisition of the Novozymes business will deliver on thatgoal by significantly augmenting our product portfolio and providing a path tosustainable profitability."
Key to Herlihy's optimism is the continuing rapid growth forbiologics, which currently comprise five of the top 10 selling drugs on themarket, according to statistics from Krishan Maggon and Reuters that Herlihyshared with the press. By 2014, eight of the top 10 sellers are expected to bebiologics—six monoclonals among them.
"Repligen is currently a leader in the supply of fourdifferent forms of recombinant Protein A, a key ingredient used in theproduction of most monoclonal antibodies.
Through this transaction, Repligen will acquire Novozymes''native' Protein A product, which is used in the production of several of theearly blockbuster monoclonal antibody drugs. The combined company will bewell-positioned to fully benefit from the long-term growth of the monoclonalantibody market. There are more than 50 approved monoclonal antibody productsand 200 candidates currently in clinical development, most of which aremanufactured using Protein A. A further key benefit of the acquisition isRepligen's expansion into the cell culture ingredients market which increasesour product breadth and opens a market opportunity for us in the production offermentation ingredients and a future market opportunity as stem and cell-basedtherapies emerge," Herlihy adds.
The key products that Novozymes produces include insulinlike growth factor (LONGR3 IGF-I), native and recombinant Protein A products,and other growth factors that have potential applications in cell-basedtherapies. Native protein A is incorporated into the manufacturing processes ofseveral key first-generation monoclonals, which generate more than $20 billionin annual revenue and are the subject of more than 1,000 ongoing clinicaltrials to expand their use, Repligen states.
The combined company will operate two independentmanufacturing sites, with the potential to manufacture products at bothlocations increasing efficiency and security. In addition, the two facilitiesare expected to support anticipated growth for the next several years withoutthe need for significant additional capital expenditures.