Sygnis Pharma: QuickView

Sygnis has just completed the merger with X-Pol Biotech, which has resulted in its strategy and risk profile changing totally. It was essentially a single product drug development company in a very high-risk indication (stroke). It now develops tools for analysing DNA and already has a licence agreement for its polymerase Qualiphi with Qiagen, which should result in near-term revenues. Sygnis is now 77.5% owned by the former shareholders of X-Pol and it has taken the opportunity to reduce the number of shares outstanding with an eight-for-one consolidation.

Sygnis Merged With X-Pol Biotech
Sygnis has merged with Spanish biotech company X-Pol Biotech, in an all- share transaction, which results in the original Sygnis shareholders being diluted down to 22.5%. Pilar de la Huerta, former CEO of GENETRIX (largest shareholder in X-Pol), is now CEO of Sygnis and Peter Willinger has continued as CFO.

New Strategic Direction As A Developer Of DNA Tools
Sygnis is no longer a drug discovery company; it is now focused on developing tools and technologies for analysing DNA. The main focus is on isothermal polymerases and DNA sequencing. Its lead product is a novel DNA polymerase, Qualiphi, for the high-fidelity amplification of long DNA sequences. The current market for this product is worth c €70m with double-digit growth; the main polymerase used is Phi 29, but Qualiphi is four times faster and more accurate. Qualiphi was licensed in July 2012 to Qiagen, the market leader in the field, in an exclusive, global contract.

Eight-For-One Consolidation Of Shares Carried Out
Prior to the merger, Sygnis carried out an eight-for-one share consolidation to reduce the number of shares from 16.83m to 2.10m. On completion of the merger, the number of shares increased to 9.35m.

Valuation: EV Of c €32m
Sygnis’s EV is currently c €32m. Initial revenues are due in FY13, but the company still needs to raise capital, probably in two equity placements of €1m and €3m during H113. Sygnis could also draw down capital from its €10m equity line with YA Global. The company forecasts that this should enable it to become cash generative. The investment case is based on the potential of the Qualiphi polymerase to gain market share and further product launches.

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