Aquapharm secures second round investment of £1.8M

July 24 2007

Aquapharm Biodiscovery Ltd (Aquapharm), a UK based marine biotechnology company, is pleased to announce the completion of its latest round of investment financing of £1.8 million. E-Synergy were the initial lead seed investor alongside Scottish Enterprise, NESTA Investments and HIE Argyll and the Islands (HIE AIE). Fronting this new investment round are the Amsterdam based VC fund, Aescap Venture which has over €100M under management. Co-investing along side Aescap are Tate & Lyle Ventures together with the original seed investors. John White from E-Synergy remains on the Aquapharm board with new members Patrick Krol, Partner of Aescap Venture and Simon Barnes, Managing Partner of Tate & Lyle Ventures .

Aquapharm, led by CEO Dr Andrew Mearns Spragg, was incorporated in 2000 and is located, near Oban, Scotland, within the facilities of the European Centre for Marine Biotechnology (ECMB). The Company currently employs a team of 15 full-time staff and has commercial interests ranging from anti-infective drug discovery to the development of novel anti-oxidants for the nutraceutical and cosmeceutical markets.

Dr Andrew Mearns Spragg, the CEO of Aquapharm said "Completing this new investment is recognition by venture capital of the exciting advances made by the company over the past 3 years in the areas of anti-infective development and novel ingredients for functional foods and cosmeceuticals. It is another confirmation of the potential economic benefits that marine biotechnology holds for the development of new innovative natural products for the wellness of all of us."

Aquapharm builds value from developing new bioactive compounds derived from marine micro-organisms, with the aim to develop these as the next generation of bio-actives, with applications in a diverse range of sectors. With good access to diverse marine environments, Aquapharm has sampled ecological habitats ranging from shallow brackish waters to the cold oceanic depths. By applying its proprietary technology the company has been able to culture previously unculturable microbes from collected samples and has built a substantial and specialised library of over 6,500 marine bacteria and fungi. By applying patented fermentation technology to its microbial library, based on key stress mechanisms within the micro-organisms, Aquapharm can achieve sustained production of important secondary metabolites within the culture system. This resulted in the discovery of a plethora of new chemical entities with interesting properties and immediate market application, including:

• Pharmaceutical compounds such as new antibiotics to tackle MRSA and C. difficile
• Novel bio-catalytic enzymes
• Cosmeceutical compounds (e.g. anti-oxidants and anti-ageing compounds)
• Carotenoids, Polymers, oligosaccharides and essential fatty acids (omega-3, DHA, EPA).

Dr John White, Founder Director of E-synergy stated "E-Synergy is very pleased to complete a further planned round of investment in Aquapharm and bring in leading new investment partners Aescap and Tale & Lyle to continue the growth and successful commercial development of this leading marine bio-discovery company in Europe.

Mr Patrick Krol, partner of Aescap said "The bio-diversity of the (deep) sea is an un-tapped treasure. Aquapharm is ideally suited to exploit this value with its top-tier team of scientists and commercially savvy management team".

Dr Simon Barnes, Managing Partner of Tate & Lyle Ventures added: "Aquapharm has an excellent ability to develop natural marine-derived ingredients for a wide range of functional food applications and nutraceuticals. Aquapharm's focus on the sustainable production of ground-breaking bio-ingredients and the advancement of fermentation technology enjoys an excellent fit with our fund strategy."

Gerard Kelly Senior Director, Scottish Enterprise Investments said "We are pleased to be able to continue to support Aquapharm, investing alongside Tate & Lyle Ventures and Aescap who are both partners of the new Scottish Venture Fund, and E-synergy an existing Scottish Co-investment Fund partner. Aquapharm is a great example of a young and innovative growing Scottish technology company with significant potential which, with the support of the public sector, has been able to raise a substantial amount of local and international risk capital to help develop its products and market."

Area director for HIE A&I, Ken Abernethy said: "Aquapharm is a resounding success story for Argyll and the Islands. Andrew Mearns Spragg's dedicated research team are well placed to push the boundaries of science. Marine biotechnology is an emerging science, and HIE A&I's investment is geared to keep this innovative company right at the forefront of research into the health-enhancing benefits of marine organisms.

"Aquapharm has profited from just a fraction of the ocean's reserves and we are extremely proud that the ECMB is the catalyst for this new phase of growth for the company. We are delighted to be making this investment in a sector which is bringing such high quality jobs into the Highlands."

Notes for Editors

About Aquapharm

• Aquapharm develops natural products from the, as yet, untapped microbial resource of the sea.
• By applying its proprietary technology the company has been able to culture previously unculturable microbes from collected samples and has built a substantial and specialised library of over 6,500 marine bacteria and fungi.
• Aquapharm has developed culturing techniques within its laboratories that favour biological diversity, a strategy which has been rewarded by the discovery of many new species and subspecies, some of which do not fall into any known biological grouping.
• The microbial library sits at the core of the company and serves as a valuable resource for Aquapharm’s own commercial activities
• By applying unique fermentation technology (patent pending) it is possible to induce stress mechanisms within the organisms and thus achieve sustained production of important secondary metabolites within the culture system.
• Collects samples of bacteria and fungi from the marine environment to build a microbial library and a natural products library. This is valuable because the library could contain previously unknown compounds that may provide cures for diseases or answers to manufacturing problems. Using this library, Aquapharm actively looks for
  • new antibiotics active against multi drug resistant organisms, such as MRSA, VRSA & c. difficile
  • natural organic pigments for use in the human and animal feed industry.
  • functional food active ingredients (foods with health giving benefits, i.e. anti-oxidants) An example of a marketed functional food is a fatty acid included in a yogurt & margarine which reduces cholesterol.
  • Novel enzymes with applications in the pharmaceutical and food industry
• The Company has a means to find new classes of pharmaceuticals (new drugs to fight disease) and to find industrial products (pigments, antioxidants etc) that can be produced organically (bio-fermentation) i.e. without the need to use petrochemicals.
• It undertakes discovery in an environmentally sustainable manner. Most marine discovery companies look at larger species such as corals and sponges and collect these. Aquapharm, however, collects samples of microscopic bacteria and fungi, which has no adverse environmental impact.

Aescap Venture
Aescap is a new European biomedical venture capital fund with €102m under management. So far Aescap has invested in four biomedical companies: Affectis AG, ActoGeniX NV, ProtAffin AG and to-BBB NV.

Aescap was founded by Michiel de Haan, founder and former CEO of Atlas Venture and Dr Dinko Valerio, founder and former CEO of Crucell, a Euronext/NASDAQ-listed biotechnology company. Other partners are Patrick Krol, an entrepreneur and expert in life science marketing and business development, and Kreske Nickelsen, a previous director of life sciences at 3i.

Tate & Lyle Ventures
A £25M venture capital fund focused on investing in high growth companies in the fields of renewable ingredients, food technologies, renewable resources such as biomaterials and biofuels and industrial processing technologies.

Tate & Lyle PLC the fund’s leading investor is one of the world's leading renewable ingredients companies focused on innovation and product development in these sectors.

Tate & Lyle Ventures is structured and managed as an independent venture capital fund. The name of the management company that manages Tate & Lyle Ventures is Circadia Ventures LLP.

Scottish Enterprise
Scottish Enterprise is the main economic development agency for Scotland covering 93% of the population from Grampian to the Borders. The Scottish Enterprise Network consists of Scottish Enterprise and 12 Local Enterprise Companies. Working in partnership with the private and public sectors the Network aims to build more and better businesses, to develop the skills and knowledge of Scottish people, and to encourage innovation to make Scottish business internationally competitive. Further information on Scottish Enterprise is available at www.scottish-enterprise.com

Scottish Enterprise has a portfolio of three investment products for growing businesses. For early stage businesses, the Scottish Seed Fund provides investments from £20,000 to £100,000. For small and ambitious companies, the Scottish Co-investment Fund provides between £50,000 and £500,000 in company finance deals of up to £2m. For larger companies trying to raise funds for the next crucial stage of development, the Scottish Venture Fund provides investments in the range, typically, between £2m and £10m. Both the Scottish Co-investment Fund and the Scottish Venture Fund invest in partnership with the private sector on at least a matched funding basis. Further information on Scottish Enterprise investments is available at www.scottish-enterprise.com/equity

Highlands and Islands Enterprise
The Highlands and Islands Enterprise network (HIE) is responsible for economic and community development in an area which covers more than half of Scotland, from Shetland to Argyll. HIE's headquarters are in Inverness and most of its services are delivered through local enterprise companies. The Network employs around 550 people and last year invested more than £100 million to help people living in the Highlands and Islands realise their full potential.

NESTA
NESTA is the National Endowment for Science, Technology & the Arts. With endowed funds of over £300 million, our mission is to transform the UK’s capacity for innovation. We do this in three main ways: by working to build a more pervasive culture of innovation in this country; by providing innovators with access to early stage capital; and by driving forward research into innovation, with a view to influencing policy.

Contact
Dr Andrew Mearns Spragg
Aquapharm Bio - Discovery Ltd
European Centre for Marine Biotechnology
Oban
Argyll
PA37 1QA
01631 559 390

andrew@aquapharm.co.uk
www.aquapharm.co.uk

ENDS