Extending its information analysis reach on both sides of the Atlantic, the German company LION bioscience AG is acquiring American informatics company NetGenics Inc. in a stock deal totaling approximately $17.6 million.
“This new entity will offer a multidisciplinary, so-called middle-tier’ platform for the whole industry,” LION Chairman and CEO Friedrick von Bohlen said in a conference call. “That is again particularly important because [there has not been] such middle-tier software that, off the shelf, could combine two or more disciplines.
“From now on, we are able to offer these kinds of cross-disciplined integrations, not only in the form of services, but more importantly in the form of an off-the-shelf product which will allow not only larger pharma companies, but also lower pharma companies, larger and mid-tier biotech companies, to move into an area that seemed to be locked for a long time namely the simultaneous management and analysis of data information from different disciplines.”
Heidelberg-based LION is buying NetGenics, a privately held company, for approximately 1.12 million LION shares that were valued at $17.6 million based on Monday’s closing price. LION’s stock (NASDAQ:LEON) fell 1 cent Tuesday to close at $15.69. The shares will be subject to a lockup for a 180-day period after closing.
When the deal closes, expected during the first quarter of this calendar year, Cleveland-based NetGenics will become a wholly owned subsidiary of LION.
“The transaction will further support our anticipated break-even about two years from now to become positive cash flow and profitable,” von Bohlen said.
The deal merges SRS, LION’s integration technology, with NetGenics’ integration environment, DiscoveryCenter, creating a life science platform that includes biological and chemical information and makes it available to a large number of end users. Combining the companies’ experience in informatics and sciences adds to an expanded offering of information systems to the life science industry.
“We have been working, even at the time of the IPO, at basically a three-tier architecture where we deploy our applications, an integration layer and the scientific database layer,” Rudolph Potenzone, the president and CEO of LION’s U.S. division, said during the conference call. “DiscoveryCenter is a technology, an application delivery framework. It allows us and customers to build applications, either web-based applications or desktop applications. And provide capabilities to link together information together from both public or proprietary sources, provide various views of all the available data, and provide collaboration tools with a rich set of capabilities to allow scientists across the corporation to know who’s working on which projects and which activity is going on.”
LION also inherits NetGenics’ partnerships.
“We are happy to add Schering as a second integrated knowledge management customer,” von Bohlen said, adding that its most important partners are Schering AG, of Berlin; IBM Corp., of Armonk, N.Y.; Paradigm Genetics Inc., of Raleigh, N.C.; and Avalon Pharmaceuticals Inc., of Gaithersburg, Md.
LION said it now can deliver biology solutions both as a custom-made service and as a modular off-the-shelf package for a broader audience in the pharma and life science communities.
“Our customers are not themselves software companies, but they really must rely on partners such as LION to help them untangle such information so that we can help them build and get on with their work, which is really at the end discovering new pharmaceuticals,” Potenzone said.
LION provides information and knowledge management solutions, and also maintains an internal drug discovery program in the field of nuclear receptors.