7th March 2013
EKF Diagnostics sets up molecular subsidiary and acquires another business
Acquisitive point-of-care diagnostics firm EKF Diagnostics has moved into the molecular field with the establishment of a new subsidiary – which has been bolstered via acquisition.
The Penarth headquartered and Aim listed business has launched EKF Molecular Diagnostics to focus on molecular and companion diagnostics.
It has also announced that its new subsidiary has acquired 360 Genomics – a pre-revenue but close to commercialisation business that develops diagnostic technologies for cancer gene detection.
The deal is for an initial consideration of £1.6m to be satisfied through the issue of 5.64 million ordinary shares in EKF at 28.32p a share.
Additional consideration payments up to a maximum of £8m in cash will be payable if Genomics products exceed sales of more than £8m per annum over the next six years.
In addition Andrew Webb has joined EKF as chief executive of the business. which will be based in Penarth.
He joins from QIAGEN where he established and led global market development for the high growth personalised healthcare business.
He is previously an executive director at DxS, the pioneering personalised healthcare company, where he had commercial lead from the company’s inception until its sale to QIAGEN in 2009 for a consideration of up to $130m.
Mr Webb has subscribed for £200,000 of convertible loan notes in EKF Molecular. If these loan notes are converted (by the deadline of 2017) he would have a 20% stake in the firm.
360 Genomics has a pipeline of analytical tests for the detection of mutations in key cancer genes that are far more sensitive than existing chemistry platforms, and at a cost that is favourable with current point of care systems.
It has developed its flagship technology, PointMan, which provides a reliable and highly sensitive determination of the presence or absence of a point mutation, which is a random mutation that occurs at one point in the DNA sequence. Such mutations may cause cancer, but are also valuable in guiding drug treatments for cancer.
Executive chairman of EKF David Evans said: “I indicated last year our intention to adopt a more entrepreneurial approach to innovation within EKF and I am pleased to see this bear fruit with the establishment of EKF Molecular.
“It is a considerable coup to not only attract Andrew Webb away from QIAGEN to establish this new division, but also to be able to create an entrepreneurial environment whereby he can thrive and is directly incentivised to grow this new business.
“We are continuing to seek similar opportunities whereby we can attract exceptional leaders into EKF and enable both them and EKF shareholders to benefit under the EKF umbrella.”
Julian Baines chief executive of EKF said: “This acquisition, and the establishment of EKF Molecular, demonstrates our intent to rapidly address the molecular and companion diagnostics market, which we believe is an area of future potential growth. “Also the structure of the deal ensures that Andrew is incentivised to drive the business forward and provides EKF with a novel means to bring top quality people into the business.
In a brokers note Canaccord Genuity said: “We expect the impact of the 360 Genomics acquisition to be relatively limited in 2013, though the longer term potential is significant. We will adjust our forecasts as further details on the commercial strategy become available.
“We maintain our price target [share price] at 42p. We believe the current price only values the core business and does not include the opportunity from recent product launches, including QuoLab.”