The acquisition has been hailed as the next stage within the Galapagos and BioFocus strategy to partner with pharmaceutical and biotechnology companies in turnkey target to candidate drug collaborations, having already announced an alliance between GlaxoSmithKline last week. In addition, the deal also allows Galapagos to further strengthen its presence in the US with as the acquisition includes the assets of all four of DPI's drug discovery services sites, two of which are in San Diego and San Francisco, USA. The other two are located in Allschwill (Basel), Switzerland and Heidelberg, Germany as well as DPI's Japanese sales office in Tokyo. Further terms of the agreement will see all four of the current DPI sites will remain fully operational and will be merged into BioFocus, the drug discovery services division of Galapagos. DPI will also sell to Galapagos all capital stock or equity interests of its subsidiaries, Discovery Partners International, ChemRx Advanced Technologies, Xenometrix and Discovery Partners International, L.L.C.
BioFocus will assume the scientific management of these sites, including execution of all current service contracts, while other operational functions will be managed directly by Galapagos. As a result of the integration of the DPI activities within BioFocus, the firm is to change its name to BioFocus DPI. However, the companies have said that they anticipate some downsizing of general and administrative functions in the San Diego facility. "We believe that, combined with the previously announced merger of Discovery Partners International, with Infinity Pharmaceuticals, the sale of the drug discovery service operations of DPI to Galapagos obtains an excellent result for our stockholders," said Michael Venuti, acting Chief Executive Officer, DPI.
"Concomitantly, we will have added to our cash position to help achieve a Net Cash balance at the time of the closing of the merger with Infinity that is well within our targeted $70-75 million range to set the exchange ratio to be used in the Infinity merger," he added. In April of this year DPI and Infinity Pharmaceuticals entered into a definitive merger agreement in which the deal was anticipated to be in excess of $100 million. With the San Diego and San Francisco operations, Galapagos gains a firm foothold in the US in addition to its existing BioFocus sales office in Boston opened in November 2005. Galapagos anticipates that DPI operations will contribute more than $10.2 million in external revenues to BioFocus DPI for the six months remaining in 2006.
"We will now have a global reach with operations in seven countries. The combined group will be able to provide services ranging from target identification to delivery of drug candidates," said Onno van de Stolpe, CEO of Galapagos.
"We believe this positions the Company well for additional turnkey deals like the alliance announced last week between Galapagos and GlaxoSmithKline."