Mercia Ventures’ Northern Venture Capital Trusts have made a notable exit from Gentronix, a specialist in predictive toxicology based in Cheshire. The stake was sold for £14.8 million, resulting in a 4.5x return on investment.
This remarkable financial achievement coincides with the acquisition of Gentronix by Denmark’s Scantox Group. The deal, although undisclosed in its entirety, marks a significant milestone for both parties involved.
Overview of Gentronix
Gentronix is a Cheshire-based expert in predictive toxicology services. Established in 1999 by Prof Richard Walmsley, the company provides essential toxicology services to the global pharmaceutical and chemical industries. This facilitates the early identification of genotoxic compounds, proving crucial for clients developing new drugs or products.
Over the years, Gentronix has expanded its expertise to include ocular and skin sensitisation assays. The firm now employs nearly 70 staff members, doubling its workforce since 2021. Following its growth trajectory, it received the prestigious King’s Award for Enterprise in May this year, after an impressive increase in overseas earnings by 239% over three years. This expansion has driven its annual revenue to over £10 million, with 81% attributed to export sales.
Mercia Ventures’ Involvement
Mercia’s Northern VCTs first invested in Gentronix in 2007, continually supporting its growth with subsequent rounds of funding. Their long-term commitment has been instrumental in transforming Gentronix into a leading Contract Research Organisation (CRO).
Alex Gwyther from Mercia Ventures highlighted, “This deal demonstrates the benefit of patient capital in building a world-class life sciences business.” He emphasised that under the leadership of Matt Tate, Gentronix has gained significant momentum, further solidifying its market position.
The Acquisition by Scantox Group
The acquisition by Scantox Group is expected to be beneficial for both entities. Gentronix will retain its name and continue operating from its current premises. The deal is anticipated to open up new global opportunities and enhance Scantox’s service portfolio in toxicology and pharmaceutical development.
Matt Tate, CEO of Gentronix, expressed enthusiasm about the acquisition. He remarked, “Becoming part of the Scantox Group is a fantastic next step for Gentronix, opening up unique possibilities for us to offer an even greater service portfolio to our clients. The scale-up journey at Gentronix has been strongly supported by Mercia and the Northern VCTs.”
Strategic Benefits and Future Prospects
Scantox Group, owned by Nordic healthcare investment company Impilo, will employ nearly 400 people across seven European sites. This extensive network will cover lead optimisation, regulatory toxicology, CMC (chemistry, manufacturing and controls), formulation, and analytical services.
Jeanet Løgsted, CEO of Scantox Group, stated, “Genetic toxicology is a missing link in our portfolio and frequently requested by our clients to become a one-stop-shop premier CRO partner.” Løgsted added that Gentronix’s high-quality standards and people culture align perfectly with Scantox’s corporate DNA, making this partnership highly strategic.
Client and Market Impact
This acquisition is expected to provide a comprehensive solution to clients by combining the strengths of both companies. Gentronix’s integration will enhance Scantox’s ability to support drug development up to human trials, making them a formidable force in the market.
The deal will enable Scantox to meet client demands more effectively, as they can now offer an expanded service portfolio. This collaboration reflects a strategic move to remain competitive and responsive to industry needs.
The acquisition also signifies a robust market consolidation, positioning Scantox as a leading entity in toxicology and pharmaceutical services. This will likely attract more clientele looking for comprehensive and reliable research and development support.
Mercia Ventures’ Exit Strategy
The exit for Mercia Ventures’ Northern VCTs at £14.8 million, representing a 4.5x return on investment, underscores the financial success of their patient capital strategy.
This exit exemplifies how sustained investment and strategic support can lead to significant financial gains, reinforcing the importance of venture capital in nurturing high-potential businesses.
The acquisition of Gentronix by Scantox Group marks a new chapter of growth and expanded capabilities for both companies. The synergy created through this partnership is set to enhance service offerings and drive further innovation in the fields of toxicology and pharmaceutical development.
Mercia Ventures’ successful exit demonstrates the effectiveness of strategic investment, contributing to the development of a world-class life sciences business. This deal stands as a testament to the potential of patient capital in fostering significant industry advancements.