13 September 2008

A Darwinian Marriage

The Galapagos Islands inspired Charles Darwin to develop his theory of evolution, and now Belgium-based Galapagos may be able to teach us something about the evolution of fragment-based drug discovery: the company recently announced the purchase of Sareum’s structure-based drug discovery services unit. A few days later, UK-based Sareum announced that it was discontinuing internal laboratory research.

Sareum’s platform focused on the crystallographic discovery and recombination of fragments; Galapagos is planning to merge these capabilities with their BioFocus DPI contract services group.

The price? Just £ 553,000, or a little more than $ 1,000,000 at the time of the announcement.

What conclusions can be drawn from this acquisition? On the one hand, clearly Galapagos feels the technology has value. On the other, a million dollars doesn’t go far these days; it would be difficult to put together the platform Sareum has been building since 2003 for this sort of money.

Obviously a single data point can not lead to a whole theory, but it does spawn many hypotheses. What does this mean for service-based business models? For valuations of European vs US companies? For the value (fiscal and scientific) of fragment-based drug discovery in general?


Dr Denis Zeyer said...

It's not so easy to talk about the value of the company. If you're looking deeper at Sareum press release, the company apparently was almost out of cash. So the price does not reflect the value of the technology but a way to get back a part of the initial investment before company end (a kind of distress sale).
The Darwinian evolution is going on.

TINS1 said...

In agreement with Denis, this was a forced sale so Sareum was not in a position to bargain. Further, there was no IP and used scientific equipment. As much as we love our magnets and crystallization robots, they don't hold their value well. Finally, there is no mention of whether the purchase included any of the internal development compounds at Sareum, so likely not. In the end, they bought the know how of the Sareum people and some customers. Given that, the price is probably still low!!! Gregg

Anonymous said...

Apparently they mainly got the equipment, not the people or any other (IP) assets