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ARCHIMED concludes successfully its £203 million take-private bid for drug development software leader Instem

 May

 15, 

2024

A global leader in workflow and simulation software for drug development, Instem will be able to invest more aggressively in long-term technology innovation as an unlisted, private group.

Global private equity healthcare specialist ARCHIMED announces the successful conclusion today of its £203 million ($253mn, €233mn) take-private acquisition of Instem (INS:LSE), in accordance with the rules & regulations of the London Stock Exchange’s Alternative Investment Market and the UK’s Takeover Code. Instem shareholders will receive 833 pence in cash for each Instem share, representing a 41 percent premium over the share price immediately prior to the public announcement of the management-recommended bid on August 30, 2023.

Founded in 1969 and headquartered in Staffordshire, England, Instem has grown organically and via acquisition into one of the world’s leading developer of software and technology-enabled services for the acceleration and streamlining of drug discovery & development. Instem reported revenues of £58.9 million and pretax profit of £5.5 million in 2022.

ARCHIMED managing partner, Vincent Guillaumot says “We intend to expand and improve on that position through long-term investment in products that simulate the impact of drugs in the human body [known as in silico simulation], and through acquisitions to consolidate what remains a fragmented industry”. One of the most promising areas for in silico simulation already identified by Instem is measuring the degree to which drugs may have carcinogenic side-effects on humans.

Pre-clinical development, the research stage prior to testing in humans, is a specific strength of Instem and will become a growing focus for the company in partnership with ARCHIMED. In March 2023, Instem launched a new modeling suite, Centrus, that will use its expanding database of thousands of studies, and its increasingly refined predictive tools, to enhance drug safety and bring down development costs by minimizing the need for experimental studies. This will give the public faster, cheaper access to innovative drugs and reduce testing in humans and animals.

“Given technological advances and shifting development priorities, we knew that ARCHIMED’s take-private offer was the best way to realize Instem’s potential for all of our stakeholders, actual and potential,” says Instem CEO Phil Reason. “That includes public shareholders, employees, customers, even ARCHIMED and their investors. As a private company we’re freed from the reporting pressure of the public markets, which reduced our ability to invest in long-term innovations. We’ve known the ARCHIMED team for years – they’ve got the expertise, experience, patience and financial strength to fully back our ambitions.”

“Instem is a de-facto market leader in the pre-clinical software and technology services space.”

Vincent Guillaumot, ARCHIMED Managing Partner

ARCHIMED’s wide portfolio of companies in the biopharma industries in the US, Asia and Europe and its MedTalents® network of ARCHIMED-associated senior healthcare executives who identify, facilitate and advise on deals and offer broad counsel, will also act as catalysts for Instem’s growth.

The Instem acquisition follows a series of investments by ARCHIMED in Healthcare IT software such as Title21 in 2022, a leader in workflow software for cell therapies, and previously in Actigraph, a leader in digital biomarkers for clinical trials. ARCHIMED’s sector expertise in clinical trials was also exemplified in the past two years by investments in bioanalysis (Aliri) and clinical trials lots manufacturing (Corealis).

ARCHIMED purchased Instem through its MED Platform II fund, which closed on €3.5 billion in June, a record for a buyout fund exclusively investing in healthcare industries, according to data from Preqin. The MED Platform funds partner with category leaders in the European and North American mid-cap healthcare industries, buying majority stakes, usually alongside family owners, founders and managers. The funds provide platform companies with the strategic, tactical and financial resources they need to accelerate innovation, grow capacity, broaden product lines and expand into new regions, organically and through acquisitions.

MED Platform II has already deployed approximately 25 percent of its €3.5 billion capital purchasing three platform companies. In addition to Instem, MED Platform II has invested in formerly Nasdaq-listed Natus (through a $1.2 billion take-private deal), a global leader in neuro-diagnostics; and in Plasmid Factory, a German developer of exceptionally high-grade plasmids (an efficient means to modify genes and cells to combat maladies).