US buy boosts Life Therapeutics' plasma business

Sydney-based Life Therapeutics (ASX:LFE) has acquired privately-held California-based Pyramid Biological for US$13 million, plus assumption of US$7 million debt, increasing its stake in the global plasma supply industry.

"It is one of the turn-around stories for Australian biotech," said Life Therapeutics CFO John Manusu. "We are taking on the best and winning. We now have the largest market share of hyperimmune plasma worldwide.

"We have turned the company around from a loss of AUD$17 million in 2002/03, to a loss of $10 million in 2003/04, to a loss of $7 million in 2004/05, and we plan to make a bottom line profit of over $6 million in 2005/06."

Pyramid reported revenues of about US$20 million in 2004. The acquisition increases Life Therapeutics' US operations from eight to 13 plasma collection centres in eight states with nearly 450 employees.

The terms of the acquisition of Pyramid were originally agreed to in July this year and a further US$5 million is subject to milestones. Additional long-term plasma contracts have also been finalised as part of the conditions of purchase. The largest of these long-term supply contracts is with European plasma fractionators Octapharma -- a five-year agreement with a US$22 million 2006 source plasma purchase increasing to $32 million a year for the next four years.

"We are now the primary supplier of IVIG [intravenous immunoglobulin] to one of the top five fractionators in the world. It is in the low end of the market but it is volume. Our cost structure is significantly lower due to this increased volume, and we have increased our 2006 sales forecasts to AUD$100 million," said Manusu.

As a result of the acquisition, Life Therapeutics will merge its Life Sera division with Pyramid's operations.

"This is a major acquisition for our company and directly supports our strategic plan to become a leading manufacturer of niche therapeutics. Essentially this acquisition will complete the transformation of our company from one with limited small R&D revenue to substantial revenues and profits," Manusu said in a statement.