Acquisition of BioWisdom

Instem Life Science Systems plc
(“Instem” or the “Company”)

Acquisition of BioWisdom

Accelerates Centrus product development and growth trajectory into adjacent markets

Instem Life Science Systems plc (AIM:INS.L), a leading provider of IT applications to the global early development healthcare market, today announces the acquisition of BioWisdom Ltd (“BioWisdom”), a leading provider of software solutions for extracting intelligence from R&D related healthcare data for an initial enterprise value of £0.90 million and a maximum total enterprise value of £1.50 million, subject to certain performance criteria. The acquisition is expected to be earnings enhancing in the first full financial year of ownership.

The acquisition broadens and strengthens Instem’s recently launched Centrus™ product suite, accelerating the product development roadmap and uptake of Centrus, while also enabling greater penetration of the BioWisdom solutions through Instem’s global sales and delivery channels.

Instem launched Centrus in September 2010 to expand its solution portfolio into data/document management and reporting applications in the Early Development market.

Overview of BioWisdom:

  • Based in Cambridge, UK, BioWisdom has a team of IT and Computational Biology experts who have a deep understanding of the potential uses of data and information generated during the R&D process and beyond
  • Web based technology enables clients to access, aggregate and derive intelligence from structured and unstructured public and private data    
  • Over 50 customers with less than 20% overlap with Instem’s customer base
  • Several significant common customers such as AstraZeneca, Servier and Novo Nordisk
  • Clients in all key geographic regions but with a particular concentration in Europe and the US
  • A mix of Software-as-a-Service, subscription and perpetual license revenue with over 70% annually recurring
  • Due to the size of BioWisdom the company is not required to file audited accounts. Management accounts for the financial year ended 31 December 2010 reported revenue of £1,554,000 and EBITA of £380,000.  There were net liabilities of £1,059,000, of which £676,000 represents deferred income arising from the annually recurring fees.

The Acquisition:

  • Provides complementary software and services which will be integrated with the Centrus product suite
  • Integrates BioWisdom’s management team and employees into Instem’s structure
  • Brings extensive bio-informatics domain expertise with particular strengths in the safety assessment market 
  • Is expected to be earnings enhancing in the first full financial year of ownership. .
  • Initial consideration of £200,000 in cash and £700,000 of unsecured debt assumed with deferred, contingent consideration up to a maximum of £600,000 payable in cash and shares if BioWisdom achieves certain performance criteria in the two years ending 31 December 2011 and 31 December 2012.

Information on BioWisdom

Established in 2000 and headquartered in Cambridge, UK, BioWisdom helps clients leverage public and private sources of information to improve the quality, reduce the level of attrition and reduce time-to-market in their R&D pipeline.  Existing customers, such as AstraZeneca, Johnson & Johnson, Merck & Abbott, use BioWisdom’s solutions to gather information about their drug candidates, find patterns in research data, and put results into a broader scientific context in order to predict likely beneficial outcomes or safety implications. Its powerful suite of software tools enables access to, alignment of, mining, analysis and knowledge extraction from an extensive collection of public and private scientific and medical information sources.

Acquisition Rationale
                                                                                                                                
Increased product offering

This acquisition significantly enhances and complements Instem’s recently launched Centrus solution suite, accelerating the ability to aggregate, analyse and extract knowledge from huge volumes of disparate internal and external data, unlocking considerable additional value from billions of dollars of prior research investments.

As well as its software solutions, BioWisdom currently creates scientific content from both historic information and the latest scientific research and sells subscription-based access to it. This market area was previously unaddressed by Instem and BioWisdom’s Safety Intelligence Programme (SIP) is seen as a particularly strong growth opportunity due to the close integration with both Instem’s Centrus and Provantis solution suites.

Consolidation of a fragmented industry

Consolidation of mission-critical IT functions within the pharmaceutical R&D world is being encouraged by many large pharmaceutical and other R&D focused businesses. The Early Development Applications market is highly fragmented and clients are in need of solutions that harmonise access to information whether this is from in-house or out-sourced laboratories.

Instem’s clients will now have access to a broader set of solutions enabling true enterprise information integration within and beyond early drug development, whilst helping to reduce their number of suppliers to a strategic core and realising higher value from their technology investments.

Increased addressable market size and share

Instem will be adding over 50 new clients through this acquisition which will provide both companies’ product suites with cross-selling opportunities. In particular, Instem’s global reach in the Life Sciences industry will facilitate market penetration of the BioWisdom solutions and services.

Specialist knowledge

BioWisdom was founded by Dr. Gordon Baxter, an established pharmacologist and technology entrepreneur, and consists of a team of experts in the field of computational biology, the addition of which will significantly enhance Instem’s domain expertise.

The experienced management team and employees of BioWisdom will be actively involved in the operations of Instem going forward. Instem sees this very much as a growth opportunity for both organisations and has structured the terms of the acquisition to encourage active participation in the enlarged company. All 13 employees, 12 based in the UK and one based in the US, will be kept on at their current locations.

Dr. Gordon Baxter will be maintaining responsibility for the success of the BioWisdom business unit and its clients, and will take on the new role of Chief Scientific Officer for the Instem Group.

Dr. Gordon Baxter, CEO and Founder of BioWisdom, stated:

“The acquisition of BioWisdom by Instem creates opportunities for both companies in new but closely related markets.  The combined businesses have a fantastic depth of experience across both regulated and non-regulated data environments, which will stimulate the development of new products and services for our pharmaceutical industry customers.  The BioWisdom team has already identified a number of areas where our existing business will be improved by the acquisition and we look forward to working with Instem to create new, compelling solutions for data collection, management and analysis right across the R&D continuum.”

Phil Reason, CEO of Instem Life Science Systems plc, further commented:

“Integrating the BioWisdom products into Instem’s Centrus suite will significantly accelerate the introduction of new capabilities that focus on data integration, visual analytics and knowledge extraction.

“The BioWisdom products come with many prestigious and highly satisfied clients, which is always a key factor when building market penetration with a solution suite that is unique in the industry.  Following this acquisition, all of the world’s top 12 pharma companies and 16 of the top 20 will be Instem clients, as well as thousands of academic and not for profit researchers.

“The talented and complementary BioWisdom team has a very similar outlook to the existing Instem team, and their integration will increase our ability to help our clients bring new products to market quickly and cost effectively, while minimising any possible safety implications.”

For further information, please contact:

Instem Life Science Systems plc +44 (0) 1785 825600
Phil Reason, CEO  
Brewin Dolphin - Financial Advisor, Broker & NOMAD +44 (0) 845 213 4730
Mark Brady  
Sean Wyndham-Quin  
Threadneedle Communications +44 (0) 20 7653 9850
Caroline Evans-Jones  
Fiona Conroy  

About Instem Life Science Systems plc

Instem (AIM:INS.L) is a leading supplier of IT solutions to the early development healthcare market. Instem’s study management solutions accelerate drug and chemical development by increasing productivity, automating processes and enhancing practices that lead to safer and more effective drugs.

Instem has over 80 customers in North America, Europe, China, India and Japan, including seven of the top ten pharmaceutical and biotech companies such as GlaxoSmithKline and AstraZeneca.  The Company employs over 100 people in six offices in the U.S, UK, and China; with additional resource locations in India and a full service distributor in Japan. It is estimated that approximately half of the world’s pre-clinical drug safety data has been collected over the last 20 years via Instem software. 

To learn more about Instem please visit the Company’s website, www.instem-lss.com, or its investor centre http://investors.instem-lss.com/.
  
About Centrus

Launched in September of 2010, Centrus provides a single, secure environment to access, harmonize and use early drug development information from a variety of sources, including current data acquisition systems, legacy systems, warehouses, partner and contract research applications, to meet the rapidly-expanding needs of life science organizations for data-driven decision making.

About BioWisdom Ltd

BioWisdom delivers intelligence for the Healthcare Industry and helps clients to navigate the complex scientific and commercial issues involved in developing successful healthcare products. The company provides a powerful suite of software tools for the acquisition, integration, visualization and high value analysis of healthcare intelligence. The BioWisdom team combines extensive experience of the pharmaceutical and biotechnology industries with proven expertise in life science software development.

More information about BioWisdom solutions can be found at www.BioWisdom.co.uk