Business Weekly - Cambridge, UK

Troubled Cambridge biotech, Sareum looks to have evaded the clutches of the liquidator in a deal that has a potential payback for the local Life Sciences cluster.

BioFocus, based at Chesterford Research Park, has bought Sareum’s structure-based drug discovery service business for  £553,000 cash.
The agreement sees BioFocus’ Belgian parent, Galapagos NV acquire equipment assets and Sareum’s ongoing service contracts. A team of five Sareum employees will also be joining BioFocus.

It is the second time in recent months that BioFocus has stepped in to buy contracts from an ailing Cambridge company following a similar deal with UCB at the beginning of the month.

That deal, worth £3.1m, also save an unspecified number of jobs that would otherwise have been lost following UCB’s decision to close its Cambridge operation. Sareum was itself formed following the closure of US company, Millennium Pharmaceuticals.

Galapagos has acquired all of Sareum’s ongoing service contracts relating to structure-based drug discovery, the Crystal Bank (a collection of protein targets, available for rapid drug/protein structural analysis), a fragment screening library and the specialised equipment needed to perform structure-based drug discovery.

A key step in drug discovery research is the identification of small molecules that bind to a drug target.  In structure-based drug design, the three-dimensional structure of a drug target is used to guide the discovery of such small molecules. 

Sareum’s X-ray crystallography platform enables the interactions between the small molecules and the target to be studied at the atomic level and so aid the rapid optimisation of the molecules into drugs.

Sareum’s structure-based approach to lead discovery makes use of x-ray crystallography to identify chemical fragments that bind to the target and which are then optimised into lead compounds. The approach is aimed at accelerating drug discovery.

Dr Chris Newton, senior VP at BioFocus said: “The assets and expertise acquired from Sareum strengthen our drug discovery, adding a novel technology that our customers are expressing interest in.”

It is estimated that the structure-based technology will contribute marginally to BioFocus’ revenue target for 2008 and Galapagos reiterates its full year guidance of revenues between €75-80 million and year-end cash of around €25 million.

A statement from Sareum said: “The directors believe that if this disposal had not been completed, Sareum Limited would have been unable to meet its financial commitments as they fell due and consequently would have been unable to continue trading resulting in the appointment of liquidators or administrators.”

Crucially, Sareum has retained the intellectual property of its cancer drug discovery programmes which it says it plans to develop using the proceeds of the disposal.

The AIM-listed company’s shares will remain suspended while it completes its re-organisation and finalises its financial and business strategy. Further announcements are expected to follow shortly.