Summit sells Dextra services division

01-Sep-2009 - Last updated on 02-Sep-2009 at 09:31 GMT

Summit has sold Dextra, its analytical and manufacturing services division, to NZP but believes operating the contract business has been beneficial to its industry standing and R&D capabilities.

Numerous innovator companies are diversifying into contract services but Summit has decided to exit the sector, selling its zebrafish services division and Dextra in the past four months.

Steven Lee, CEO of Summit, explained to Outsourcing-Pharma that the company had always intended to divest its services divisions but that it has gained a lot from operating in the sector over the past five years.

As a start-up spun out of Oxford University, UK Lee believes that the business was very science based. By operating its services division the company gained discipline and its scientists developed commercial mindsets, while retaining the innovation that is the business’ strength.

The company’s R&D and intellectual property (IP) has also benefited. Lee explained that since Summit bought Dextra over two years ago it has stripped it of its R&D capabilities and IP and this can now be applied to its development programmes.

Furthermore, operating the services divisions allowed Summit to build relationships with pharma companies and enhance its reputation. These relationships have proved fruitful, with Summit signing seven early development deals in the past 12 months.

Lee added that one of these, a deal for a compound in preclinical, earned Summit $7m (€4.9m) and that other promising compounds are in development. Summit is looking at making two more deals in the next 12 months.

Now that that the company’s services divisions have been divested Summit will focus on developing drug candidates that are attractive the pharma. Lee explained that its second generation iminosugar platform represents a new chemical space and that this is in demand as pharma as pursues new targets.

Summit had always intended to focus on this business model but the divestiture of Dextra was hastened by the economic climate and a failure to secure fund raising.

NZP’s end-to-end offering

Companies are increasingly trying to offer end-to-end services to provide additional stages they can win clients and keep them by providing all the services that are needed.

New Zealand Pharmaceuticals (NZP) has now taken a step towards this goal, with the analytical services and small-scale manufacture capacity at Dextra complementing its facilities that provide Phase II to commercial production services.

Dextra made an operating loss of £1.1m ($1.8m) in the 2008 fiscal year as a result of the business expanding and increasing its headcount in the same year the market became “exceptionally difficult”. All employees at Dextra will be immediately transferred to NZP.