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Venn Life Sciences to offer "one-stop shop" with Kinesis Pharma deal

Published: 13:05 22 Sep 2015 BST

Miscroscope
Kinesis is involved in regulatory aspects of drug substance and product development

Venn Life Sciences (LON:VENN) plans to offer pharmaceutical firms a "one-stop shop" with its €6.5mln acquisition of Dutch drug consultancy Kinesis Pharma BV.

The AIM-listed clinical research organisation (CRO) said it was buying Kinesis to strengthen its position in the market for early-stage drug development.

The group currently offers clinical trial management, monitoring and biometric data services to customers in the later phases of developing treatments.

But Kinesis will allow it to supply more early-stage technical services, such as working out how a drug should be administered or how quickly it has worked its way through the body.

Chief executive Tony Richardson said drug firms were addressing potential efficacy and safety issues earlier in the development process to save cost and time.

"This means we can travel the whole journey with a client rather than coming in at the middle," he told Proactive Investors in an interview.

"If we can offer them a one-stop shop for all their needs, we think that will be attractive to them."

Venn, whose clients generally have valuations between €100mln-€500mln, employs 120 people at its Dublin head office and other sites in the UK and mainland Europe.

The acquisition of Kinesis, based in Breda in the southern Netherlands, will increase that by half to 180.

Venn, which has raised £3.57mln in an oversubscribed placing of shares worth 22p apiece to fund the deal , will initially pay €3.6mln for Kinesis.

About €2mln of that will be in cash and €1.6mln in “consideration shares” worth 23p each.

The purchase price could rise by a further €2.9mln, depending on the future performance of Kinesis, with the extra payments satisfied half in cash and half by issuing shares over four years.

Kinesis reported revenues of €5.9mln and underlying earnings, or EBITDA adjusted for excess management fees, of €600,000 for 2014.

Richardson said Venn also wanted to make acquisitions to expand its presence in central and eastern Europe, but it would focus on integrating Kinesis for now.

News of the acquisition came as Venn unveiled interim results showing first-half revenue growing to €4.26mln from €1.51mln the year before.

The company is moving closer to break-even, with the loss before tax narrowing to €259,000 from €987,000 in the first half of 2014.

Continued revenue growth and improved project margins due to more efficient  resource use and project management drove the performance, Venn said.

As the business continues to expand, margins should continue to improve, it predicted.

William Lynne at broker Hybridan said Venn was a good match with Kinesis.

He added that half-yearly results were well on track to meet market expectations, with €9mln in new contract wins.

"Combined with the accretive contribution from Kinesis, the future looks very promising," he said.

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