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Expanding Galapagos Lands Inpharmatica

By Catherine Varmazis and Kevin Davies

Feb. 12, 2007 | The recent acquisition by Galapagos of U.K.-based informatics company Inpharmatica puts the Belgian drug discovery company in a healthy position to compete in the competitive service provider segment for the biopharma industry. Inpharmatica will be integrated into Galapagos’ services subsidiary BioFocus DPI in an all-share deal worth EU12.5 million ($16.6 million).

According to Galapagos’ CEO Onno van de Stolpe, the acquisition adds Inpharmatica’s predictive drug discovery technologies to BioFocus DPI’s suite of offerings, bolsters the company’s revenue base, and expands Galapagos’ own drug discovery pipeline, which focuses on joint and bone diseases. However, the company recently signed a 2-year, $3-million deal with the ALS Association to apply its adenoviral platform to identify neurological ALS drug targets.

The Galapagos IPO in mid-2005 provided the resources to acquire BioFocus. Then last year, Galapagos acquired the assets of Discovery Partners International. Van de Stolpe says that BioFocus DPI is competing in a very large but fragmented service provider market against companies such as Albany Molecular, Array, Evotec, Lexicon, and Pharmacopeia.

“The unique selling point of BioFocus DPI is target discovery, where we have premier technology to identify drug targets. We believe that with Inpharmatica, we’ll be in a better position to compete in this market and gain market share going forward.”

Halo Effect
Galapagos CFO David Smith offered a recent example of how that might happen. According to Smith, one big pharma potential customer said, “we had a good offering, but we were somewhat weak in our ADMENSA business — we currently have only four employees that work in ADME. The big pharma said, ‘that’s a bit of a shame, we’d like to give you a collaborative deal, where we’d use not just the ADME part of the business but the chemistry.’”

“That was one of the reasons we were interested in acquiring Inpharmatica,” Smith continued. “It immediately shores up this potential weakness that we had in the eyes of this particular customer... The ADME portion of that deal would have only been about 20 percent. So there’s a halo effect that we’re able to generate by having Inpharmatica in our portfolio.”

The key Inpharmatica tools that should expand BioFocus DPI’s predictive drug discovery capabilities are Admensa and Chematica. Admensa consists of the Admensa Interactive database, used to predict a compound’s ADME properties before it enters the clinic, and Admensa Laboratory, which evaluates compound characteristics in vitro and helps select the right ones to move to the clinic. Chematica is a suite of “pure informatics-based products” that help select drug targets and support hit and lead optimization.

Van de Stolpe said the acquisition would benefit Galapagos two ways: “[BioFocus DPI] technology is not only offered as a service to pharmaceutical and biotech companies, it also benefits our own pipeline, our own development. We make use of BioFocus DPI — we are [its] customers just like all the other pharmaceutical companies. So we benefit from both sides.”

What’s in a Name?
Along with Inpharmatica’s CEO and CFO, director of business development Imad Yassin will not be staying on with Galapagos. Although he’s sad to see the end of the “Inpharmatica” name, Yassin told Bio•IT World: “It’s a fantastic home. It makes us a viable option for outsourcing for pharma drug discovery. The Galapagos addition brings to the table the biology and the chemistry to the prediction arm of Inpharmatica.”

Yassin says that Galapagos — one of his former clients — recognized the power of prediction programs, especially to Galapagos’ internal drug development programs.

“All the surviving [service provider] companies are playing on this mixed approach and strategy, having a long-term strategy, with profitability and revenue-generating arms that feed the discovery arm,” Yassin said.

In fact, the acquisition will likely benefit Galapagos’ internal pipeline as much as other customers. As noted, the parent company will likely prove to be the biggest customer for Inpharmatica’s prediction arm — “everything starting from target prioritization, target validation, drug profiling down to lead optimization, in silico prediction, and the services component,” said Yassin.

Inpharmatica, which closed its internal drug discovery programs last year, had been looking for a merger partner for some time. Yassin says clients have responded positively to the news that Inpharmatica’s offerings will now be part of a bigger organization.

Email Kevin Davies.

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