Recruiting in China

Chesterfield-based Commonwealth Biotechnologies (CBI) is planning to expand its presence in China by acquiring all outstanding shares of GL Biochem in Shanghai.

The companies have reached a purchase agreement for an undetermined price.
CBI itself does not develop drugs, but it out-sources research and laboratory support for companies that do.

According to CBI’s due diligence report, the Chinese biotech company had revenue of $13 million and an after-tax profit of $2 million in 2008.
The deal is pending regulatory and shareholder approval. CBI is publicly traded on NASDAQ and closed today at $0.56 a share, up 44 percent on the day.

“When you are merging a non-U.S. company into a U.S. NASDAQ-listed company, there are some challenges to reconcile,” said Richard Freer, co-founder and chief operating officer of CBI.

Freer said the company hopes to close on the deal within 90 days.

GL Biochem is a market leader for an area of biopharmaceuticals known as custom peptide synthesis, Freer said.

“We then become, by extension, a major player in the peptide pharmaceutical discovery business,” he said.

The product is primarily used in the development of vaccines.

This is not CBI’s first foray into China. Last year, the company entered a $1 million deal with Beijing-based Venturepharm Laboratories. Under that agreement, CBI sold 463,426 shares at $2.15 a piece in exchange for $500,000 cash and $500,000 worth of Venturepharm stock.

Freer said China is not only a good location for low-cost research centers, but also – with a population of 1.3 billion – a future growth market for vaccines.