Acquisition of Logos Technologies
13 May 2013
("Instem", the "Company" or the "Group")
Acquisition of Logos Technologies
Strategic expansion into the early phase clinical market extends addressable market & increases cross selling opportunities
Instem plc (AIM: INS.L), a leading provider of IT applications to the global early development healthcare market, today announces the acquisition of the entire issued share capital of Logos Holdings Limited along with its subsidiaries Logos EDC Solutions Limited and Logos Technologies Inc (“Logos”), for an initial cash consideration of £0.55 million (the “Acquisition”). A further consideration of up to £4.45 million will be payable subject to performance, in a mixture of cash and shares at the Company's discretion.
The Acquisition represents a strategic move by Instem into the early phase clinical market and is expected to be earnings enhancing in the first full financial year of ownership.
Logos’ ALPHADAS® software suite is the market leading, e-source data capture system and site automation software suite for early phase clinical studies. Headquartered in London, UK, and with employees in the US and Europe, Logos’ ALPHADAS is believed to have been selected for the majority of new business placed in the early phase market in the last three years. Clients include SNBL CPC Inc, PharmaMedica Research and Spaulding Clinical. Logos’ revenue for the year ended 30 September 2012 was £0.75 million, an increase of 114% on the prior year, delivering EBITDA of £65k with gross assets of £166k as at 10 May 2013. Logos sells its software through a variety of licence and usage models and currently has an annual recurring revenue base of approximately £367k. All of Logos’ management team and employees will be joining the Instem Group.
The early phase clinical market is much less automated in terms of data capture and analysis than Instem’s core pre-clinical market, with larger clinics typically not yet fully automated and the majority of smaller clinics still using paper records. This represents a significant emerging market opportunity for both the Logos and Instem software suites.
The broader coverage of the early development domain will enable Instem to bid for larger opportunities spanning early clinical as well as pre-clinical client workflows and is expected to increase the strategic importance of Instem to its clients, enhancing client retention and improving the probability of Instem being considered for future business.
There is currently little overlap between the two customer bases, providing the opportunity for cross-sale of certain modules from Instem’s Provantis and Centrus suites into the Logos customer base and of certain elements of the ALPHADAS suite into Instem’s pharmaceutical customers. Logos will also benefit from Instem’s global sales and marketing capability.
Entry into the early clinical market not only expands Instem’s addressable market, but also provides greater access to early phase clinical data in both healthy and patient populations, enhancing the potential of Instem’s translational informatics solutions.
The initial cash consideration of £0.55 million will be funded from Instem’s existing cash balances. The maximum performance based consideration payable in connection with the Acquisition is £4.45 million, the earn-out being contingent upon the performance of the acquired business against challenging profit targets over the next four years.
The maximum proportion of the total consideration payable in shares is approximately 50% and, save for the initial earn-out payment that covers the period to 31 December 2013, the issue of share based payments is entirely at Instem’s discretion. Any shares issued to the sellers will be subject to customary lock-in and orderly market arrangements. Subsequent earn-out payments will be assessed over successive twelve month periods following the date of acquisition, with each payment subject to minimum performance criteria and a cap. Instem will make appropriate provision for current and long term contingent consideration amounts which it reasonably expects to pay, with such amounts subject to periodic review and update depending on the actual and expected performance of the acquired business.
Giles Wilson, CEO & Founder of Logos Technologies, stated:
“Instem has a fantastic reputation in the pharmaceutical industry for quality software solutions and outstanding customer support. We are delighted to be joining the Instem group and welcome the global reach and blue chip customer base they will provide us, helping us to achieve our next stage of growth as we seek to capitalise on our strong market position.”
Phil Reason, CEO of Instem plc, further commented:
“This earnings-enhancing acquisition is an important part of our growth strategy. Logos’ ALPHADAS suite is an acknowledged leader in the early phase e-source data capture industry and the integration of the business expands our product portfolio, increases our market opportunity and provides avenues for additional cross-sales of our Provantis and Centrus suites. We are delighted that the talented team at Logos will be joining the Instem group and we look forward to working together to provide valuable automation tools to enable our clients to bring new products to market quickly and cost effectively.”
For further information, please contact:
|Phil Reason, CEO||+44 (0) 1785 825600|
|Nigel Goldsmith, CFO|
|N+1 Singer (Nominated Adviser & Broker)||+44 (0) 20 7496 3000|
|Wallbrook Financial PR||Tel: +44 (0) 20 7933 8000|
|Paul Cornelius||or email@example.com|
Instem is a leading supplier of IT applications to the early development healthcare market delivering compelling solutions for data collection, management and analysis across the R&D continuum. Instem applications are in use by customers worldwide, meeting the rapidlyexpanding needs of life science and healthcare organisations for data-driven decision making leading to safer, more effective products.
Instem’s portfolio of software solutions increases client productivity by automating study-related processes while offering the unique ability to generate new knowledge through the extraction and harmonization of actionable scientific information.
Instem supports over 450 clients through full service offices in the United States, United Kingdom and China with additional locations in Japan and India.
To learn more about Instem solutions and its mission, please visit instem.com.