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27. Business combinations during the prior period

On 21 June 2022 we acquired, in an all-cash transaction, 100% of the shares and voting interests of CellPoint for a total agreed payment at completion of €125 million, including consideration for other liabilities associated with the transaction amounting to €10.3 million. Additional contingent consideration up to €100.0 million is due when certain milestones would be achieved.

On the same date we acquired all of the outstanding capital of AboundBio, for a total agreed price of $14 million, including consideration for other liabilities associated with the transaction.

The main reason for these acquisitions was to position ourselves in the next-generation cancer therapy market and to significantly broaden our portfolio and capabilities. The goal is to expand the current market for CAR-T therapies and have an important impact on patients in need of additional and improved treatment options.

Details of the fair value of identifiable assets and liabilities acquired in both transactions, the purchase consideration, the goodwill at the acquisition date and the net cash outflow arising on acquisition are as follows:

 

21 June 2022

 

 

CellPoint

AboundBio

Total

(thousands of €)

Book value

Adjustment

Fair value

Book value

Adjustment

Fair value

 

Intangible assets other than goodwill

-

120,517

120,517

-

4,053

4,053

 

Property, plant and equipment

1,289

 

1,289

965

 

965

 

Other non-current assets

81

 

81

4

 

4

 

Trade and other receivables

162

 

162

-

 

-

 

Cash and cash equivalents

3,179

 

3,179

4,279

 

4,279

 

Other current assets

1,254

 

1,254

536

 

536

 

Deferred tax liabilities

-

(22,368)

(22,368)

-

(907)

(907)

 

Trade and other liabilities

(32,789)

 

(32,789)

(587)

 

(587)

 

Current deferred income

-

 

-

(474)

 

(474)

 

Net assets acquired

(26,824)

98,149

71,325

4,723

3,146

7,869

 

 

 

 

 

 

 

 

 

Consideration paid in cash

 

 

107,750

 

 

14,976

 

Fair value re-measurement of previously held equity investment

 

 

 

 

 

342

 

Deferred consideration

 

 

5,808

 

 

-

 

Fair value of contingent consideration

 

 

20,211

 

 

-

 

Fair value of total consideration

 

 

133,769

 

 

15,318

 

 

 

 

 

 

 

 

 

Goodwill

 

 

62,444

 

 

7,449

 

Exchange differences on goodwill

 

 

 

 

 

(80)

 

Goodwill in the balance sheet at 31 December 2022

 

 

62,444

 

 

7,369

69,813

 

 

 

 

 

 

 

 

Net cash outflow arising on acquisition

 

 

 

 

 

 

 

Consideration paid in cash

 

 

107,750

 

 

14,976

 

Less: cash and cash equivalents balances acquired

 

 

(3,179)

 

 

(4,279)

 

Cash out from acquisition of subsidiaries, net of cash acquired (in 2022)

 

 

104,571

 

 

10,698

115,270

 

 

 

 

 

 

 

 

Cash used in operating activities for other liabilities related to the acquisition of subsidiaries (paid in 2022)

 

 

28,164

 

 

 

28,164

 

 

 

 

 

 

 

 

Cash out from acquisition of subsidiaries (payment of deferred consideration in 2023)

 

 

7,000

 

 

 

7,000

As part of the acquisitions, we identified the following acquired intangible assets:

  • IPR&D: in-process research and development related to two CD19 CAR-T product candidates in Phase 1/2a clinical studies. The fair value at acquisition date (€28.2 million) was based on the relief from royalty method.
  • Exclusive rights: through the acquisition of CellPoint we acquired on the one hand a collaboration agreement between CellPoint and Lonza providing the exclusive right to use the automated Lonza Cocoon® Platform in the development and commercialization of CAR-T cell products, and secondly, a collaboration agreement between CellPoint and Hypertrust providing exclusivity to use the jointly developed XCellit® software for workflow management and monitoring for the manufacturing of the CAR-T cells using the Lonza Cocoon® Platform. The fair values at acquisition date amounted to €89.7 million and €2.6 million respectively. A with and without method was retained to value the exclusivity with Lonza and the XCellit® software was valued based on the applicable royalty rate in the contract.
  • Technology: through the acquisition of AboundBio, we acquired a fully human antibody-based therapeutics platform which was valued at €4.1 million at the time of acquisition.

We assessed that the carrying value of all other acquired assets and assumed liabilities approximate their fair value at acquisition date.

The goodwill arising from both transactions totaling €69.8 million was attributable to buyer specific synergies, the value of the assembled workforce and the accounting for net deferred tax liabilities for a total amount of €23.3 million, consisting of deferred tax liabilities on the acquired intangible assets of €32.3 million less recognized deferred tax assets of €9.0 million.

The acquisition costs related to both transactions were considered not to be material and were recognized in our consolidated income statement on the line "general & administrative expenses”.

Antibody
A blood protein produced in response to and counteracting a specific antigen. Antibodies combine chemically with substances which the body recognizes as alien, such as bacteria, viruses, and foreign substances
CAR-T
Chimeric antigen receptor T cells (also known as CAR-T cells) are T cells that have been genetically engineered to produce an artificial T cell receptor for use in immunotherapy
CD19
CD19 is a protein found on the surface of B-cells, a type of white blood cell. Since CD19 is a hallmark of B-cells, the protein has been used to diagnose cancers that arise from this type of cell, notably B-cell lymphomas
Milestone
Major achievement in a project or program; in our alliances, this is usually associated with a payment
Phase 1
First stage of clinical testing of an investigational drug designed to assess the safety and tolerability, pharmacokinetics of a drug, usually performed in a small number of healthy human volunteers
Product candidate
Substance that has satisfied the requirements of early preclinical testing and has been selected for development, starting with formal preclinical safety evaluation followed by clinical testing for the treatment of a certain disorder in humans