Expedeon AG to rebrand as 4basebio and focus on DNA manufacture after Abcam concludes 120m euro deal
Expedeon AG is to rebrand as 4basebio as it refocuses on genomics and DNA manufacturing to serve the fast-growing gene therapy market.
The move follows a €120million deal struck with Abcam, which has acquired the Over-based company’s immunology and proteomics business.
The deal, struck in November, was concluded on January 2, triggering an immediate 115.6million euro payment, with a 14.4million euro payment held in escrow for two years.
Dr Heikki Lanckriet, CEO of Expedeon AG, tells the Cambridge Independent: “We were not looking to sell that part of the business. Revenue was growing strongly and there were a lot of good growth opportunities within the business.
“But of course Abcam has been one of our top five customers for a very long time. A lot of our products have been resold by Abcam and a lot of our technologies are embedded in some of their product development and assay manufacturing. So they knew the product very well and could see there was a good strategic fit. They explained what they could do with the business and where they could take it, which was exciting.
“We got an agreement on valuation and a deal was in the making.”
Of the 100 people employed by Expedeon about 70 – including 10 in Adelaide, Australia – are transferring to Abcam, which will initially lease the buildings in Over during a transition phase. It is not yet known if Abcam will integrate the Expedeon staff into its new headquarters on Cambridge Biomedical Campus in the longer-term, but Dr Lanckriet noted: “The staff are critical to the business and Abcam is very committed to keeping them as part of the transaction.”
The purchase price was equivalent to twice Expedeon’s market capitalisation and more than nine times its 2018 annual group revenue.
Dr Lanckriet adds: “For Expedeon there was an added benefit. We had two businesses within a business. We had our genomics business, which was the legacy asset we had been developing and we could see some really strong growth opportunities, but it required some investment.
“It has a fundamentally different customer base than our immunology and proteomics business, which was growing well and becoming very cash generative.
“So we had two businesses with different focuses and financial profiles and we were struggling to see how we were going to develop both of those projects.
“If we hadn’t done a transaction with Abcam, we probably would have split off the genomics business. We had some investors lined up who were willing to join in that equity story.
“Now with the Abcam transaction, it’s a great opportunity with the money we received to take that opportunity forward and put our focus on that.
“It’s helped us, crystallising in our minds where we can get some really good growth for our shareholders but also get a very clear equity story out to our investor base.”
The deal, and rebranding, were approved by shareholders at an extraordinary meeting of Expedeon AG in Heidelberg on December 19.
“We have the best company possible acquiring the assets. It is a company that we think can really do a lot more than we could have done. Abcam realises the potential,” says Dr Lanckriet.
“The core of the business will shift, temporarily at least, from the UK to Spain, where we have our genomics R&D facility, and where we are looking to expand our manufacturing capabilities as well. Our initial focus will be there but we are looking to invest in the UK as well and build up capabilities and manufacturing here.”
Dr Lanckriet will be based at Over to assist in the transition phase of nine to 12 months but explains: “My long-term future is with Expedeon AG, which is going to be rebranded to 4basebio, so our focus on genomics is becoming clear.”
The reference to DNA’s four bases indicates how the business will focus on DNA manufacturing for gene therapies and gene vaccines.
“We have already set up a UK facility and will have a small office not far from the Over site. Then we will see how we expand our footprint in the UK,” says Dr Lanckriet.
“Gene therapies and gene vaccines are really starting to boom. A lot of therapies are going through clinical trials and some are coming out.
“They are looking extremely promising, part of the world of personalised medicine, where people get treatments that become really effective and very transformative in terms of how a cure is administered. It is a real solution rather than a patch on a problem.”
Dr Lanckriet believes the business is well placed to tackle a “massive bottleneck” in the market, thanks to its proprietary TruePrimeTM technology, developed by Expedeon Biotech SLU in Madrid, Spain.
“When you look at gene therapy, DNA becomes a therapeutic agent. You need quite large quantities of DNA to treat a patient.
“DNA is currently manufactured through microbial fermentation processes.
“There are some serious safety constraints in terms of contaminants being produced, particularly toxins, which have to be removed.
“There are also some serious global capacity constraints on the ability to make adequate quantities and the quality of DNA required for these therapies.”
Expedeon’s genomics arm has developed technology to solve these issues.
“Over the years, we have developed a synthetic process in vitro to make huge amounts of DNA where no bacteria enters the process. It gives us a much better safety profile on the end product but also in terms of costs.
“Because it is in vitro process, we can make much higher density. What would typically be done in a 10,000 litre fermenter, is now done in a vessel – call it a bucket. You can see in terms of capital and scaling, this process is far better suited in terms of cost.
“Ultimately, that should help bring the cost of these therapies down. They can cost £2million per patient. That is going to be prohibitive when trying to make these much more widely applicable. The DNA cost is the main driver in this.
“With our process, we can enhance the safety profile and reduce the cost of manufacturing substantially.
“At the moment, the market is booming. There is such a shortage, so we can feed into this market gap. We are very excited to bring our novel technology into this space.”
Dr Lanckriet suggested that €10-15 million will need to be invested from the Abcam deal proceeds to turn the R&D scale operation into a GMP suite.
“We have a core platform in DNA manufacturing but we want to expand that platform and expand along the value chain to build a larger entity.
“We will look to make acquisitions upstream in terms of finding companies who make raw materials that will feed into our manufacturing plant, but also downstream looking at opportunities and technologies that will help us with delivery systems for DNA,” reveals Dr Lanckriet.
“We think the future will lie in non-viral based delivery systems. They have a far better safety process and there is a lack of immunogenic response compared to some of the viral delivery systems.”
“So we are going to be making acquisitions to build a very strong entity, similar to what we did in the immunology proteomics space.”
The decision has yet to be made whether the manufacturing expansion will be focused on the existing Spanish facilities – and the new UK government may have a role to play here.
“Madrid would be the easiest and perfectly feasible because we have a site there already, but we are keen to look at opportunities in the UK.
“It will depend a lot on where we can get some government support on where we choose our ultimate location for manufacturing,” says Dr Lanckriet.
He is confident that the technology developed gives the company “very strong advantages”.
“Quality is critical. You need extremely tight processes,” he notes. “When you copy DNA, you have an enzyme that reads the strand of DNA and puts the complementary nucleotide in the right place.
“We have developed enzymes with extremely high fidelity and high processivity – this is essentially how fast it can read. Those are the two drivers so you can produce a large amount of DNA in a short time.
“That is where the protein engineering team in Spain has really excelled by producing some enzymes with unique properties that give us a unique edge.”
Under its new plans, the company expects to expand from 30 to 50 or 60 people in 2020.
Growing the business is clearly in Dr Lanckriet’s DNA.
The Abcam deal
The deal with Abcam covers the sale of Expedeon Holdings Limited, based at Over and organised in three divisions: the proteomics-focused Expedeon Ltd and the two subdivisions within Expedeon’s immunology portfolio, Innova Biosciences Ltd in Over and TGR BioSciences Pty Ltd in Thebarton, Australia.
Expedeon Inc, based in San Diego, USA, is being transferred from Expedeon Holdings to become part of the parent company, Expedeon AG, registered in Heidelberg, Germany, with the non-electrophoretic instrument assets passing to Abcam.