Continuing to grow its drug discovery services unit, Galapagos NV agreed to acquire Inpharmatica Ltd., a London-based firm that offers genome-scale predictive products and services, in an all-share deal valued at €12.5 million (US$16.6 million).

That agreement comes five months after Mechelen, Belgium-based Galapagos closed its acquisition of the drug discovery operations of San Diego-based Discovery Partners International Inc. for €4.25 million in cash to add technologies to its services division, BioFocus DPI.

Those additions will "accelerate our internal drug development," Galapagos CEO Onno van de Stolpe said in a conference call, while putting its BioFocus unit "in a better position to compete" in the estimated €3.4 billion discovery services market that includes U.S. firms Albany Molecular Research Inc., Array BioPharma Inc. and Lexicon Genetics Inc., and German company Evotec AG.

Under the terms, Galapagos will issue a maximum of 2.2 million shares - based upon a share price of €8.82, the average price over the 30-day period prior to Dec. 5 - in three tranches. The first and second tranches, totaling €12.5 million, will cover the €6.5 million core value of Inpharmatica and €6 million in estimated cash.

The third tranche represents an additional €6.6 million Inpharmatica shareholders could receive pending a commercial milestone expected in the first part of 2007.

Galapagos' shares (Euronext: GLPG) closed at €8.85 Wednesday, up €0.06.

Inpharmatica, a privately held UK company with estimated 2006 revenue of €4.7 million, was founded in 1998 and has built up two discovery technology platforms: Chematica, which can go from target identification to lead optimization, and Admensa, which is designed to select the most promising compounds for further development.

In addition to the technologies, Galapagos is bringing on board the majority of Inpharmatica's 30 employees, for a total headcount of more than 380 in the BioFocus unit.

The growth of the BioFocus division is one of Galapagos' three strategic aims, van de Stolpe said.

Using revenue generated by BioFocus, the company also is working on a development pipeline, and hopes to bring "our own products in the clinic, especially in the rheumatoid arthritis field," van de Stolpe said, adding that the company is on track to reach the clinic in 2008. Galapagos also is working to "establish long-term alliances with big pharma, like the one we have with GSK," he said. "We expect two more [alliances] within the next three years."

The potential $175.3 million seven-year agreement with London-based GlaxoSmithKline was signed in June to discover and develop compounds for osteoarthritis. In that deal, Galapagos will expand its osteoarthritis targets, screen potential compounds and pursue hit-to-lead programs and develop candidate selection compounds through Phase IIa. Then GSK has the option to take those compounds through late-stage development and commercialization. (See BioWorld Today, June 8, 2006.)