Expanding its overseas presence and reaching a new market, Codexis Inc. acquired Germany-based Julich Fine Chemicals GmbH for an undisclosed amount.

Julich, which is based in a town of the same name, supplies specialty enzymes, or biocatalysts, for organic synthesis and chiral building blocks to worldwide pharmaceutical and chemical companies. It was founded in 1999 as a spin-off from the Research Centre Julich in Germany.

Redwood City, Calif.-based Codexis expects the acquisition to make a positive cash contribution to the company in its first full year of operations. By combining with Julich, Codexis will benefit from an accelerated revenue growth and a greater market presence in Europe.

"We get some geographic coverage, we get coverage in complementary segments of the market, and the business model synergies are definitely there," said Tassos Gianakakos, Codexis' senior vice president of business development.

The plan is to have Julich, which already is profitable, operate as an independent, wholly owned subsidiary of Codexis. Its 13 employees will continue their work in Julich, where Thomas Daussmann will continue to serve as managing director.

About 80 percent of Julich's revenues come from Europe and Japan, areas in which Codexis hopes to grow its operations. Codexis was a spinout of Maxygen Inc., also of Redwood City, Calif., in February 2002. It employs about 80 people, and with its MolecularBreeding platform - a directed molecular evolution technology that uses biocatalysis and fermentation to investigate ways to synthesize chemical compounds - it expects to become profitable within a few years.

Julich, on the other hand, offers a range of off-the-shelf specialty enzymes and chiral intermediates used in pharmaceutical development. The acquired company will be an outlet for several of Codexis' enzymes.

"They address a market segment within the pharmaceutical chemical space that we do not," Gianakakos told BioWorld Today - basically a segment that "cannot afford a customized high-tech solution," such as Codexis offers.

Codexis has had a strategy for some time of expanding its operations into international markets, particularly Europe. The acquisition of Julich should accelerate the adoption of Codexis' biocatalytic approach to pharmaceutical process research and manufacturing. The area has been historically dominated by synthetic organic chemistry.

MolecularBreeding is the subject of at least 10 strategic alliances, including one signed last year with New York-based Pfizer Inc. worth up to $40 million in technology access fees and milestone payments for Codexis. (See BioWorld Today, July 27, 2004.)

That deal also included a $10 million equity investment in Codexis. All told, the company has raised $35 million since inception, including $25 million from its first round conducted in October 2002.

In the agreement, Pfizer signed on for expanded use of Codexis' technology after MolecularBreeding completely eliminated the impurity in doramectin, which Pfizer sells as Dectomax to treat internal parasites in cattle.

"We are seeing a massive opportunity in the marketplace for this type of approach," Gianakakos said. "We've commercialized seven processes in five years, which is unprecedented. The technology works. We're hoping to lead a wave of adoption of these types of approaches now, of bio-based approaches to making drugs."

He said the company works on products that already are launched, eliminating a lot of the clinical risk experienced with products still in development.

Codexis' technology creates tailor-made enzymes that suit the plant and the process, as opposed to changing the process to match the catalyst. Not only does it keep generics away a little longer by providing a higher purity signature, but it can save a pharmaceutical company 40 percent to 60 percent of its manufacturing costs, Gianakakos said.

"When we do use our technology, we generally are able to save on any particular drug, hundreds of millions of dollars a year," he said.