Abzena's (L:ABZA) acquisition of PacificGMP in September for £5.5m and recent purchase of TCRS for £10m significantly enhances its technology and services offering, particularly GMP manufacturing capacity. The deals are immediately accretive to the group on an EBITDA basis, with full impact on revenues and EBIT margins expected in FY17. To fund the TCRS acquisition, the company completed a £20m (net) share placement. The Abzena inside antibody clinical pipeline has increased to 10, with two new products in Phase I studies. Our fair value increases from £105m to £130m, although due to the increased share count (+38.6m shares for placing and TCRS deal) our per share value is lowered from 108p to 95p.
Synergies from PacificGMP and TCRS deals
The PacificGMP acquisition boosts the service offering and should help Abzena capture more business. It provides access to existing PacificGMP businesses in US/Asia and, more importantly, it will expand Abzena’s core contracts globally by offering greater integrated services. The proposed acquisition of TCRS will allow GMP manufacturing capability for candidates emerging from Abzena’s existing antibody-drug-conjugate (ADC) technology. Both strategic moves create a more encompassing and integrated protein development and manufacturing service that should lead to an increase in contract volumes and value.
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