Issue Date: June 4, 2007
Chris Lawson And Andrew Hacking
IT'S PROBABLY AKIN to watching a child go off to college or walking a daughter down the bridal aisle???selling a company you founded and spent the past 18 years nurturing.
But that is what Chris Lawson and Andrew Hacking did this spring when they sold their company, the Reading, England-based carbohydrate chemistry specialist Dextra Laboratories, to fellow British biotech firm Vastox.
Dextra's four partners???owners Lawson and Hacking; John Fromson, brought in as executive chairman in 2005; and Alex Weymouth-Wilson, director of R&D???had contemplated selling Dextra for several years. And early this year, following an exchange of site visits between Fromson and Steven Lee, chief executive officer of Vastox, the agreement between the two companies was reached.
The sale ended a successful but stressful run at business ownership for Lawson and Hacking. The two spun off Dextra in 1989 from sugar producer Tate & Lyle, which was no longer interested in sucrochemistry. In fact, it rankles for Hacking to this day: "What still sticks in my craw is the contempt we were held in at Tate & Lyle. They thought we were the money-wasting research group, off in a corner."
C&EN first met the two in 1990 and kept in touch over the years. Today, despite being more silver-haired than in 1990, they look more relaxed than they have in years.
Scientists at heart, they built up Dextra into a 16-employee company with sales of about $1.5 million per year, yet were having trouble taking the business to the next level. As Hacking notes, "We could make enough money to keep the company going but not to expand."
The picture began to brighten when they brought in Fromson, who joined Dextra after selling his former company, Ultrafine, to Sigma-Aldrich in 2004. He suggested that Dextra add facilities that complied with current Good Manufacturing Practices (cGMP) standards in order to capture the high end of the chemistry services market.
Meanwhile, Fromson started exploring Dextra's strategic options. "I couldn't see us going through an IPO," that is, an initial public offering, on the stock exchange, he says. "A trade sale seemed an obvious exit route. The question was: to whom, if we are trying to build a $20 million company? We concentrated on getting the cGMP project off the ground, relaunching our product catalog, and raising the awareness of the company."
By early 2007, the company had offers from financial investors, but they wanted large, dilutive shareholdings in exchange for their cash. "We were prepared to take a couple of years for this process," Fromson relates. "And then the Vastox thing came up, and events started happening quickly."
In December 2006, Vastox had acquired MNL Pharma, a British drug discovery company with a 12-person carbohydrate chemistry laboratory in Aberystwyth, Wales. Lee saw Dextra as a means of further expanding Vastox' knowledge in the field and becoming what the company calls "the global leader in this commercially underexploited area of the drug discovery industry."
The four partners agreed to Lee's offer, which was worth about $3 million. Due diligence was conducted in four weeks, and the deal was wrapped up on March 21. "There were no rabbits pulled out of the hat at the 11th hour; it was all done in a very gentlemanly fashion," Fromson says.
And perhaps gratifying to the partners, Vastox is retaining the Dextra name. Moreover, some of Vastox' carbohydrate-based chemicals will be folded into Dextra's catalog of rare oligosaccharides. And Vastox is funding the new cGMP facilities.
In April, construction started on a cGMP lab that can produce up to about 2 kg of finished product. Set for completion this month, the lab will be located in one wing of the building housing Dextra. There will also be a new analytical lab and an area for isolating raw materials. In Dextra's plans, the next phase of expansion will provide labs for a doubled workforce, Fromson says.
The acquisition already seems to be paying off for Vastox. Last month, it signed a carbohydrate-drug development deal with a small U.S. company. The long-term collaboration, worth an initial $450,000 development payment and 5% royalty on annual sales, calls for Dextra to improve the cost-efficiency of the manufacturing route for a product expected to launch in 2010.
Over the past two decades, Lawson and Hacking saw several companies trying to make their mark in carbohydrate chemistry appear and disappear. "There were a lot of failures, for a lot of reasons," Lawson recalls. "We kept on looking at them and saying, 'How can we avoid doing that?'"
But now, he adds, Dextra's staff "has a brighter future, with career progression, and a benefits package we couldn't have done for a couple of years. For the staff, there are a lot of benefits."
Looking to life after business ownership, Lawson says carbohydrate chemistry remains his future. He plans to set up a consulting firm focused on biopolymers, having secured European Union funding for an initial laboratory assignment on resolving problems in sugar production. For Hacking, "it is a huge, huge relief" that he no longer has to deal with the company's finances. "I hope to go back to being a scientist," he says.
And Fromson has been asked to stay on for another 12 months to put Dextra's plan into effect. "There is a realization that we are a revenue-making operation that is starting to turn over a fairly good return," he says. "Why would Vastox want to change that? We will enhance the profitability of Vastox."
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