BioWorld International Correspondent

LONDON - VASTox plc simultaneously acquired fellow zebrafish specialist DanioLabs Ltd. and Dextra Laboratories Ltd., a carbohydrate chemistry services company, in deals with a total value of £16.5 million (US$32.5 million).

Those purchases come on top of buying MNL Pharma Ltd. at the end of 2006, and having acquired three companies in as many months, VASTox now intends to find a new corporate identity.

The purchase of DanioLabs values the Cambridge UK-based company at £15 million and takes the form of 11.7 million new VASTox shares and cash of £159,000. At the end of July 2006, DanioLabs had cash of £2.74 million and recorded an annual pre-tax loss of £2.76 million.

VASTox intends to retain DanioLabs' facility in Cambridge and will take on 37 staff. The CEO Tony Sedgwick and CFO Keith Churchman are leaving the company.

Steve Lee, CEO, told BioWorld International the acquisition of DanioLabs will make VASTox world leader in zebrafish technology. "When you look at their big pharma clients and ours, we now have the skills and technology to provide screening services across the board."

Since it was spun out of the University of Cambridge in 2002, DanioLabs has concentrated on building disease models based on zebrafish, automating them and using the resulting screens to reprofile existing drugs.

"We, on the other hand, have concentrated on screening for new chemical entities and bioanalysis. Although we have been working on the same model organism, [DanioLabs] spent their money on different things, with the results that the two companies are complementary," Lee said.

DanioLabs has two reprofiled drugs in Phase I for treating drooling and excessive sweating in Parkinson's disease, two preclinical compounds for age-related macular degeneration and glaucoma. In addition, the company has a collaboration with Oxagen Ltd. of Abingdon, UK, to screen Oxagen's G-protein coupled receptors in a zebrafish model of inflammatory bowel disease, and with Senexis Ltd. of Cambridge, in Alzheimer's disease.

In total DanioLabs had raised about £9 million, including more than £1 million in grants.

Lee is confident he can build the screening services business further. "We've checked out zebrafish companies around the world. Most are what I would call lifestyle companies, with 12 to 15 people. There are none where big pharma would spend much money."

Dextra, based in Reading, UK, comes with a smaller price tag of £1.5 million, payable through the issue of 1.9 million shares. Its last full year results to the end of September 2006 the company had £170,000 cash and made a pretax profit of £70,000.

VASTox will retain Dextra's facility in Reading along with all 17 employees. Apart from the profitable services business, the acquisition will add value to the purchase of MNL Pharma, a specialist in imino sugars, naturally occurring, orally available carbohydrates that stimulate the immune system, inhibit enzymes and prevent viral protein synthesis.

Lee said the skills at Dextra would make it possible to synthesize synthetic versions of those sugars, and the company's facilities include GMP manufacturing capabilities.

All the new shareholders have agreed to a 12 month lock-in.

VASTox now needs to work at integrating the acquisitions and to do some spade work to advance the company's programs over the next 12 months, Lee said. "But M&A in itself is always partially opportunistic, so while it will be business as usual, we won't stop looking."

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