LONDON: Instem plc, a leading provider of IT solutions, has acquired the entire issued share capital of The Edge Software Consultancy Ltd for a total consideration of up to £8.5 million, a news release said.
The consideration will be satisfied by a combination of cash and new ordinary shares in the Company.
The Edge Software has an established client base across the pharmaceutical, biotechnology, biopharmaceutical and animal health sectors. It provides technology and services aimed at improving the efficiency of drug discovery research and development, enhancing client productivity while ensuring that critical high-quality data from studies and experiments is efficiently captured, stored and shared.
As such, it effectively bridges the gap between research and IT, translating the needs of scientists into terms that technology professionals can understand and deliver.
Its suite of tightly integrated technology solutions include:
· Laboratory Information Management Systems, which enable clients to manage samples, test results and associated data to improve lab productivity
· Electronic Laboratory Notebook solutions
· Data Aggregation and Analytics
Clients use these solutions to increase productivity and reduce time to market as drug and similar candidates are identified and advanced into the latter stages of research and development (where Instem’s existing market leading solutions feature strongly).
The Edge will be integrated into the Company’s Study Management and Data Collection business unit, further broadening its reach within existing and new clients and enhancing its technology offering.
The Edge is already the go-to partner for many of Instem’s clients looking to revolutionise their R&D processes, and the combined operations will be able to provide a simplified service structure. Furthermore, the Acquisition strengthens Instem’s position within Discovery – helping it to meet growing interest for the wider sharing of data.
In the year ended 31 July 2020, The Edge had unaudited, normalised profits before tax of £1.7m on sales of £2.7m, of which £0.8m was recurring revenue.
Its 2020 sales benefitted from high levels of professional services revenue, expected to be replaced by significant future growth in recurring software revenue.
The Acquisition is expected to be earnings enhancing in 2021. As at 31 July 2020, The Edge had net assets of approximately £2.4m.
Increased Market Opportunity:
As The Edge’s and Instem’s solution portfolios are almost entirely complementary, the Acquisition further broadens Instem’s reach into the closely adjacent Discovery Study Management market.
Importantly, there is significant scope following the Acquisition to drive value by targeting existing clients with new products and growing the Group’s overall reach.
Instem will integrate The Edge quickly and will be targeting increased cross-selling, particularly into Instem’s large client base, while leveraging Instem’s global Sales, Marketing, Delivery and Client Management teams to facilitate geographic expansion of the acquired solutions.
Terms of the Acquisition:
The consideration comprises £6.0m payable on completion of the Acquisition, £0.5m of deferred consideration and up to a further £2.0m which is payable contingent upon the future financial performance of The Edge.
Phil Reason, CEO of Instem, commented: “We are delighted to have continued our acquisition strategy with such a strong addition to our portfolio. The Edge has an excellent reputation with its clients and we believe their suite of products, and scientific and technology know-how will further enhance our industry reach and standing. We are particularly pleased to extend our coverage in Bioanalytical / Drug Metabolism & Pharmacokinetics, both of which are hugely important across other phases of R&D that Instem targets.
Additionally, we continue to evaluate a number of potential acquisition opportunities and are well placed to build on this very exciting addition in due course. With our core focus on enhancing margins, growing revenue stream visibility, and strengthening opportunities within existing and new client bases, The Edge is the ideal way for us to advance our broader acquisition strategy.”
Andrew Lemon, Managing Director at The Edge added: “We are very pleased to have joined the wider Instem family. Harnessing the global resources, processes and reach of Instem will give us exactly what we need to take the next step in our journey to bring our innovative solutions to more scientists around the world. Combining our story with a well-established and proven life sciences leader like Instem further validates our entire approach in the market and offers new and exciting opportunities for our clients and staff.”
Instem is a leading provider of IT solutions & services to the life sciences market delivering compelling solutions for Study Management and Data Collection; Regulatory Solutions for Submissions and Compliance; and Informatics-based Insight Generation.
Instem solutions are in use by over 500 customers worldwide, including all the largest 25 pharmaceutical companies, enabling clients to bring life enhancing products to market faster. Instem’s portfolio of software solutions increases client productivity by automating study-related processes while offering the unique ability to generate new knowledge through the extraction and harmonisation of actionable scientific information.