Cambridge Biotechnology proves worth with £356.8m acquisition
|Babraham Research Campus, R&D home of CBT, then Proximagen and now Upsher-Smith|
A 93-year old US pharmaceutical company is to spend up to £356.8 million on acquiring a fully functioning drug discovery division by acquiring Proximagen, a move that provides the latest instalment in the story of what was previously Cambridge Biotechnology Ltd (CBT).
Set up in 2001 and backed by biotech entrepreneurs Dr Andy Richards and Sir Chris Evans’s Merlin Biosciences amongst others, CBT raised £10m before it was acquired by Biovitrum in 2005, which then offloaded it to Proximagen. Upsher-Smith will become its third owner in as many years.
The Minnesota firm aims to become a leader in the central nervous system (CNS) space, treating diseases such as Parkinson’s and Alzheimer’s and is not just after Proximagen’s product pipeline, but an R&D engine it can couple to its own product development and commercialisation expertise to create a vertically integrated pharmaceutical, a company that goes from early drug discovery right through to market.
Upsher-Smith’s existing product portfolio is centred on women’s health, dermatology and cardiology, which helped generate $451m (£290m) in revenues and $151m (£97m) in pretax profit in its last financial year.
However, it wants to expand its CNS drug discovery work where it already has one treatment in Phase III clinical trials. Proximagen has 15 drug candidates its pushing through the development process, nine of which originate from what was CBT including the group’s most advanced candidate, a treatment for obesity and diabetes which has completed Phase IIb clinical trials.
The acquisition will be welcomed by many in the UK biotech industry and the Cambridge cluster, not least of all Proximagen CEO, Kenneth Mulvany: This deal demonstrates that the UK biotechnology sector can, with supportive investors, bring together scientific excellence, business acumen and generate significant retunes for shareholders.
Staff are also believed to be excited about the deal, not only will many hold shares, but Uphser-Smith is regarded as a good company to work for.
With no drugs yet commercialised, Proximagen financial situation is fairly typical for a biotech – its revenues are low and its annual loss in the millions. Less typically though, Proximagen is cash rich, having only spent a fraction of the £50m it raised in 2009 when it acquired CBT and Minster Pharma.
Upsher-Smith though will initially pay £223m potentially going to £356.8m for Proximagen. The company says it intends to retain the Cambridge and London operations, integrating them to form a robust research and development platform for future growth.
That R&D platform has been entirely based at the Babraham Research Campus since last year when Proximagen consolidated its entire research operation into one space and the site accounts for over three quarters of all Proximagen staff.
Here’s how it got there. CBT was founded by a combination of researchers from a Pfizer Global R&D drug discovery team in what had previously been the Parke-Davis Neuroscience Research Centre in Cambridge as well as key academic collaborators.
Following an early stage investment, the company raised further seed funding in 2002 from the Cambridge Gateway Fund, Johnson & Johnson Development Corporation, Avlar Bioventures and Merlin Biosciences.
Soon after Avlar was replaced by Northern Venture Managers in a £6 million Series A funding round, the last equity round before its 2005 acquisition by Sweden’s Biovitrum for an undisclosed amount. CBT continued as an autonomous drug discovery firm within Biovitrum working on pain, inflammation and obesity.
In 2009 however, Biovitrum’s own difficulties led it to restructure the business including bringing an end to its small molecule work – CBT would either be divested or closed. Months later Proximagen, a King’s College London spin-out, which had just raised £50m on the stock market, came in with its undisclosed offer as it looked to widen the breadth of its CNS offering and bought CBT, subsequently bringing it in closer to the Proximagen family than it had been at Biovitrum.