By Chris Delporte
In a deal worth $17.5 million, Harvard Bioscience Inc. will acquire Union Biometrica Inc., a privately held company focused on the development of products using model organisms practical for high-throughput applications in drug discovery.
Under the terms of the agreement, Harvard Bioscience (HBIO) will issue approximately 659,282 unregistered shares of its stock, 263,202 options to purchase common stock and $7.5 million in cash for all of Union Biometrica¿s outstanding shares and options. HBIO had about 25.6 million shares outstanding on March 31.
Founded in 1989 by Peter Hansen, chairman and chief technology officer, and his wife, Petra Krauledat, president, Union Biometrica (UBI) has sought little venture capital funding and primarily is supported by revenue generated through operations. As part of the deal, Hansen and Krauledat will join HBIO.
¿[Union Biometrica] decided that they didn¿t want to go the outside route and were looking for companies that would be a good fit,¿ Jim Warren, Harvard Bioscience¿s chief financial officer, told BioWorld Today. ¿We are a clean match and, with our resources, we can help them grow.¿
As a developer and manufacturer of tools for drug discovery, the product Harvard Bioscience is most interested in is UBI¿s Copas. Invented and developed by the Somerville, Mass.-based company, Copas has two main applications: rapidly creating transgenic models of human diseases and high-throughput/high-relevance screening of drug libraries against models of human diseases. According to Harvard Bioscience, nine out of 10 drugs fail in clinical trials due to poor efficacy and ADMET (absorption, distribution, metabolism, elimination and toxicity) properties. Copas enables screening much earlier in the drug discovery process, in turn reducing late-stage failures.
Current customers of the Copas system include Glaxo-SmithKline plc, Novartis Pharmaceuticals Corp., Janssen Pharmaceutica, Exelixis Inc. and the Sanger Centre. UBI also has collaborative research and development agreements with Novartis and Janssen, a Johnson & Johnson unit, for both instrument and model organism development.
¿We anticipate that our 2001 revenues from UBI could be as much as $5 million,¿ Warren said. ¿Revenues for 2002 are expected to be in the range of $15 million to $20 million. We currently expect to expand sales, service and marketing as well as spending on new technology. Therefore, on a cash basis, [earnings per share] will experience dilution of approximately 1 cent to 3 cents per share. However, for 2002, we expect a 5 cent to 10 cent contribution to EPS.¿
HBIO had first-quarter earnings of $1.15 million, or 5 cents per share, on revenues of $8.6 million. It had $42.4 million in cash on March 31.
Copas enables the rapid analysis and sorting of popular model organisms, including C. elegans (the worm), D. melanogaster (the fruit fly) and D. rerio (the zebrafish). These model organisms have similar disease genes to humans. The analysis of them in relation to humans is called comparative genomics, which is emerging as a powerful technique in drug discovery. The Copas system can analyze about 1 million C. elegans in a normal, eight-hour day, HBIO said. Before Copas, transgenic model organism production was a slow, manual process, and library screening on organisms was impractical because it could only be done under a microscope, one organism at a time, it said. Union Biometrica said that its system allows scientists to rapidly connect genes to gene function in living organisms complete with their complex biochemical pathways and signaling systems.
If the genes are disease genes (either naturally occurring genes that are similar to the human disease genes or human genes that have been transgenically incorporated into the model organism), researchers can directly screen for therapeutics. In efficacy testing, mode of action studies and toxicity testing, model multicellular organisms and Copas provide an alternative to using laboratory mice, which is attractive to pharmaceutical companies and academic laboratories.
¿We believe the UBI products and technology are of pivotal importance to drug discovery,¿ David Green, president of Holliston, Mass.-based Harvard Bioscience, said in a prepared statement. ¿UBI customers and collaborators include the top names in pharmaceutical and university research. So far, the technology has only been applied to target validation and compound screening. Its potential for ADMET screening and real-time gene expression haven¿t been tapped, and those markets are significant.¿
Model organisms such as D. melanogaster and C. elegans are optically transparent. Copas uses fluorescent marker technology to detect and quantify the expression of mRNA and proteins. The system is able to sort through thousands of organisms per minute based on the fluorescence. Copas systems operate by having organisms in liquid suspension enter an optically clear flow channel. The problem with traditional microscopy was that most organisms were constantly moving, making it difficult to visualize weak fluorescent detail. Copas¿ fluid mechanics cause the organisms to be oriented and straightened for a millisecond, which is long enough for the system¿s laser optics to acquire a complete set of data regarding the pattern of protein expression.
Harvard Bioscience¿s stock (NASDAQ:HBIO) closed Friday at $8, down $1.04, or 11.5 percent.