BioWorld International Correspondent
Denmark's flagship biotechnology company, NeuroSearch A/S, purchased genomics firm Display Systems Biotech A/S of Copenhagen and assigned all of its employees and selected assets, activities and rights to a new entity, Azign Bioscience A/S.
NeuroSearch, of Ballerup, issued 66,362 new shares, priced at DKK437 per share, to fund the purchase. Although this values the deal at DKK29 million (US$3.5 million), NeuroSearch is currently trading at a substantial discount to the issue price, which was based on its weighted average trading price from July 1 to Dec. 31, 2000. Its stock slipped 4 percent last Wednesday, when the deal was announced, to close at DKK215.
The deal also represents a significant drop in valuation for Display Systems Biotech. Its last financing round valued the company at DKK40 million, according to Henrik Molte, head of investor relations at NeuroSearch.
NeuroSearch said the purchase will have no impact on its current financial outlook. Azign Bioscience has enough cash to fund its activities for one to two years. Its funding requirements will be reviewed after a year, when NeuroSearch may seek external investors for the company.
The purchase - NeuroSearch's first - was an opportunistic rather than a strategic move.
"We knew the company quite well because we had a collaboration with them in the ion channel array area," NeuroSearch President and CEO Jorgen Buus Lassen told BioWorld International. The company has excellent scientific staff, he said, but lacked commercial business development experience.
Display Systems Biotech has developed and patented a technique for analyzing gene expression called "restriction site differential display," which exploits the specificity of the Taq1 restriction enzyme for cutting within open reading frames on cDNA strands. Specific adapter sequences are ligated to the cut ends, allowing subsequent PCR amplification of coding regions that have undergone transcription.
This technology will give NeuroSearch the capability to discover new ion channel targets, Lassen said. The company is engaged in the discovery and development of ion channel modulators for treatment of CNS disease and has five compounds in clinical trials. Up to now, though, it has worked only on published ion channels or on targets identified by academic collaborators.
Azign will further develop the platform technology and license it to drug discovery companies as well as continuing ongoing work in cardiovascular disease, CNS disease and diabetes. Bo Skaaning Jensen, head of ion channel molecular biology at NeuroSearch and a member of the new company's board, said it will develop a design array that is a tailored DNA chip containing only those genes that are regulated by a particular disease. "I think what we are facing now is a race to find those genes that are relevant for pharmacological intervention," he said.