Germany's Evotec has announced plans to acquire the US firm Renovis in a stock deal valued at just under $152 million.
The Hamburg-based firm said that the merger would create an emerging global pharmaceutical company with three candidates in the clinic, “a strong late-stage preclinical pipeline focusing on areas of neurological and inflammatory diseases, and pro-forma cash of approximately $175 million”.
Joern Aldag, Evotec’s chief executive, said that the link-up “will provide us with discovery talent in the US biotechnology industry and will clearly sharpen” the focus of Evotec’s existing activities. The enlarged company will seek a listing on the Nasdaq stock market once the deal closes, which is expected by the first quarter of 2008, subject to shareholder and antitrust clearance. Under the financial terms of the agreement, Evotec will issue American Depository Shares representing 1.0542 ordinary shares for each Renovis share, giving the German firm’s stockholders a 68.8% stake of the combined group.
Mr Aldag added that over the past year “we executed our strategy and streamlined our business by spinning out non-core assets”. This has involved the sale of Evotec Technologies to PerkinElmer, $29 million of which has already been paid, the transfer of its library synthesis business into a joint venture with Indian RSIL and most recently the sale of UK-based chemical development business to Aptuit for around 46.4 million euros in cash. That sum is not included in the aforementioned $175 million cash figure.
He added that the new entity is now “very well funded to drive three clinical programmes to their next inflection points”, as well as three later stage preclinical projects into the clinic in 2008. Results from a second Phase II study of the firm’s lead compound EVT 201, for elderly insomniacs, are due to be reported in October.
The last time Renovis hit the headlines was last October when its shares sank 75% after partner AstraZeneca decided to stop development of experimental stroke treatment NXY-059 after it failed to show a benefit compared to placebo on a number of endpoints, including measures of stroke-related disability and neurological status. As for Evotec, initial reaction to the deal has been positive and the firm’s shares had risen 3.5% to 3.30 euros at 9.55 this morning.