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Asterand confident in strong growth prospects as BioSeek acquisition progresses well

Specialist medical research supplier Asterand (AIM: ATD) said it continues to make good progress on its acquisition of privately-held drug discovery services company BioSeek Inc. The company expects shareholder documentation to be approved by the UK Listing Authority in the coming weeks.

The San Francisco based BioSeek has developed a proprietary human primary cell based, high throughput assay systems (BioMAP) designed to replicate the intricate cell and pathway interactions present in inflammatory, autoimmune and cardiovascular diseases. The BioMAP platform provides pharmaceutical companies with actionable data to guide their lead selection and optimization programmes.

Asterand announced the combined cash and equity based acquisition, which is valued up to US$14 million, in November 2009. Asterand signed an agreement to buy BioSeek for an initial US$1.0 million in shares and a further up to US$13 million in 2011 depending on the level of sales growth achieved by BioSeek in the twelve months ended December 31 2010.  The first such payment of US$3.0 million will be made in Asterand shares, and any additional payment will be in cash or shares, at Asterand's discretion.

The deal is Asterand's first step in its "buy and build" strategy to consolidate leadership in the global human tissue and human tissue based services market. It believes BioSeek is highly complementary to Asterand's business in terms of both products and services offered.

In this morning’s update Asterand also repeated its previous guidance on the industry’s evolving customer behaviour. Among some of its customers Asterand has noted that larger purchases are being split into smaller units to be bought over time. Subsequently approximately £0.7 million worth of orders expected for delivery in 2009 have been carried over into the current year, impacting 2009’s income and cash flow figures. Asterand reiterated that overall demand for human tissue continues to increase.

Furthermore the company said that while it remains cautious of market conditions in the coming months, it has a strong pipeline of business and it is confident in the strong growth prospects for both the sector and for Asterand. The final results for 2009 are expected to be published at the end of March 2010.

Disclosure: The author holds no positions in the company