Veröffentlicht am Anlässlich der angekündigten Übernahme der britischen Expedeon Ltd. durch die SYGNIS AG hat der GBC-Analyst Cosmin Filker mit dem CEO der SYGNIS AG, Pilar de la Huerta, über die Hintergründe der Transaktion sowie über die daraus erwarteten Effekte gesprochen.
GBC AG: Mrs. de la Huerta, Expedeon Ltd. is a spin-out of Cambridge University. Could you elaborate on the background about the company?
Pilar de la Huerta: Expedeon is a UK company that develops and commercializes tools and reagents for the proteomic market (scientist that research in proteins). It started as a Cambridge University spin-out, founded in 2003 by Heikki Lanckriet, the current CEO, and Daniel Jones, currently Expedeon COO. The Company started with their commercialization strategy in 2007, and since then, they have grown the company, maintaining an excellent EBITDA-margin of 13%, and creating their own sales force in the main markets. Expedeon then acquired PageGel Inc in 2009, which established a base in San Diego, California and enables better penetration in the vast US market. In 2011 the company acquired the protein fractionation technology from Protein Discovery, a Tennessee based company. In 2013 the company expanded eastwards with the opening of a sales office in Singapore, to better serve the emerging markets. In addition to direct sales through its sales forces and the distribution network the company also has several OEM agreements in place with key suppliers in the market. Most notably they have strong partnership with a tier 1 global supplier of life science reagents for supply of precast gels and more recently, in December 2015, another OEM agreement was signed with the Chinese market leader in gel documentation systems, (systems used to photograph and analyze the gels Expedeon manufactures).
GBC AG: With the acquisition of Expedeon Ltd. the product range of SYGNIS AG will be expanded by the field of proteomics, which is a new business sector for SYGNIS AG. How are the two business sectors related?
Pilar de la Huerta: Well, Sygnis products are targeting the “genetic” market and Expedeon products are targeting the “proteomic” market. Both markets are the two main markets of the molecular biology, and, covering both, we will cover all users in the molecular biology environment. Our product ranges are completely complementary; they don’t have any overlap. We have a perfect vertical integration, for many applications. From a workflow point of view, Expedeon products sit just downstream from the Sygnis products. For this reason, the synergies between the two companies, from a product point of view, are perfect.
GBC AG: What are the key fields of application for the products of Expedeon Ltd. and who are the primary customers of the company?
Pilar de la Huerta: Expedeon’s products are mainly targeted towards separation, purification and analysis of proteins, the end product of DNA. Electrophoresis, which means separating proteins in an electric field, is a key application area where Expedeon has world leading knowledge, technology, expertise and products. This is a technique used routinely in every life science laboratory with huge market potential, currently in excess of $ 1.4bn per annum but also has clinical applications and is for instance used for the evaluation of the kidney function and monitor for protein content in urine. Expedeon sells its products to a variety of customers. Life Sciences researchers in academic institutes, pharma companies, CRO and biotech companies are the main customers for the company. They have a very loyal customer base that will be targeted by Sygnis products.
GBC AG: Expedeon Ltd. has numerous sales channels and an excellent standing in the USA. What does the new access to the USA, UK, and Asia mean for SYGNIS AG?
Pilar de la Huerta: This is a fantastic opportunity for us to enter our products more directly in these main markets. Up to now, we don’t have any direct salesforce. All our sales are done through distributors and online shop. But our products are based on a new technology and, whenever you introduce a new technology in the reagent environment, the direct relation and support between the customers and the company is a key factor. We don’t have the possibility of having this direct contact and support and this is the main weakness of our company at this moment. To invest money in creating our own sales force to cover the main markets (EU, USA and Asia) is too expensive and not so efficient, unless you have a huge portfolio, which is not our case. Expedeon sales force is the way to acquire a profitable sales force, very well positioned, with a high level of performance, to enter our products very strongly in the key markets for our company. They have the experience to promote and allocate our portfolio in the main markets and with the key customer, so we expect to increase our revenues level fast to reach profitability in a very near future.
GBC AG: What synergetic effects do you expect on the level of technology and, more important, on the business level?
Pilar de la Huerta: As I have mentioned, we have several fields with synergies. On one hand, our product portfolio is completely synergistic, as we are covering the two main markets of the molecular biology. Their sales force is perfect to commercialize and market our products, as they have a very technical sales force, very well prepared to understand and provide support to our customers. We also have synergies from a customer point of view, as most of the Sygnis customers will use Expedeon products, and some of Expedeon customers, will use Sygnis products. Sygnis products can be a “sexy” hook to catch the attention of potential customers that at the end could acquire Expedeon products. Anyhow, we see a lot of synergies in this field. On top of this, as in all acquisitions, we will make some optimizations in the expenses side. They have two manufacturing facilities, one in UK and another one in USA, very well prepared and with a high level of automatization, so we can move Sygnis manufacturing process there to reduce the cost of production and therefore increase margins. At the end, all will “push” the business up to grow and reach profitability in a very near future.
GBC AG: What measures will be taken to successfully integrate the new company?
Pilar de la Huerta: Well, the first issue will be to train Expedeon sales force into the Sygnis portfolio. Our priority this year is to push, through Expedeon sales people, our products into UK, USA and the rest of Europe, aiming to speed up the ramp up period. We will move the manufacturing facilities to USA and UK in order to increase margins as soon as possible. In parallel Expedeon and Sygnis R&D people will have to understand each other’s side to build a potent R&D global team to create the new portfolio that the combo company will launch in 2017 and future years.
GBC AG: Expedeon Ltd. is already profitable. What does the acquisition mean for the operative development of SYGNIS AG?
Pilar de la Huerta: As some structural expenses of the combo will be optimized, gross margin on Sygnis products will be increased, revenues will speed up, we expect to get profitability in a near future. This will move the combo to a different scenario, where the company could cover their cash needs for their current business framework. In this situation, we expect to grow our business faster and became an important player in the reagent arena.
GBC AG: What is the planned timetable for the forthcoming months regarding the transaction?
Pilar de la Huerta: Well, after the announcement we need to wait for our AGM for the formal approval. We will hold our AGM on June 20th, after that, and after the approval of the prospectus by BaFin, we will open a two weeks subscription period to allow all current shareholders to subscribe their rights. In this period of time, Expedeon shareholders will subscribe, with a contribution in kind, the shares not subscribed by current shareholders (at least all key shareholders will resign their rights to allow Expedeon shareholders to subscribe new shares). After that two weeks, we will still have some additional days to do private placements in case we need it. At the end, we expect to have the transaction closed by mid-July. The registration process could take some time, so probably the new shares will not be registered until mid-August.
GBC AG: Regarding the acquisition, you also announced a capital increase of 20.0m new shares. Can you elaborate on the details about the transaction?
Pilar de la Huerta: The transaction with Expedeon is going to be done through a capital increase process. Sygnis will issue up to 20m shares to be able to obtain 96% of Expedeon through a contribution in kind, and some additional money to pay 4% of the transaction to Expedeon plus some cash to finance the integration process and the expenses (legal, banks, auditors etc) produced with the transaction. At the end the main part of this capital increase is the acquisition of Expedeon.
GBC AG: Mrs. de la Huerta, can you summarize where SYGNIS AG will stand after the successful transaction?
Pilar de la Huerta: We will be a lead reagent company targeting the molecular biology market (globally) with a broad of innovative, high margins and patented portfolio, our own sales force in the main markets, and a well optimized cost structure. Let’s say it with other words, “we will be ready to become one of the leaders in reagent arena”.
GBC AG: Mrs. de la Huerta, thank you for the interview.
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