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NextGen Announces Acquisition of Proteomic Research Services


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NextGen Group PLC has announced that it has acquired all of the share capital of Proteomic Research Services Inc. ("PRS").

The consideration is made up of an initial payment on completion of $498,500 and up to a further $1,201,500 payable on an earn out basis subject to the meeting of specific revenue targets over the next 3 years.

The acquisition is being funded by a combination of cash and equity, with just over 80% of the PRS shares being acquired in consideration of the allotment and issue of 7,060,466 NextGen shares on completion at a price of 3p per share.

At the exchange rate applicable at closing, the maximum number of NextGen shares which could be issued pursuant to the earn out is approximately 21.3 million as the actual number will be calculated based on the higher of 3p or the then market share price.

All of these shares will be locked in for 3 years from completion. NextGen has also entered into arrangements regarding the satisfaction of loans to PRS by one of its shareholders.

PRS had annual turnover of $1.2 million in the year ended Dec 2005 and made a net loss of $272,518 from its business of supplying expert proteomic services to the research community, primarily in N America.

The Directors believe that the acquisition of PRS will consolidate the sales, support and service base that NextGen had already established via the Commercial Alliance Agreement entered into with PRS in January 2006, giving NextGen a wholly owned facility from which it can conduct and expand its commercial activities in North America.

To date, the Company has already entered into several contracts involving its contractexpress™ offering, and is negotiating several others, where access to PRS’s services and products, as well as technology acquired from Gene Oracle, has been key. The biggest order has been in excess of several hundred thousand pounds.

Placing

NextGen is also announced that it has placed 90,000,000 ordinary shares through its Broker, Ellis Stockbrokers Limited at 0.7p per share to raise £630,000 in order to fund the cash element of the acquisition cost and associated costs of the acquisition as well as to provide working capital and development funding and general working capital purposes of the enlarged group.

Application has been made for admission of the new Ordinary Shares issued pursuant to the Acquisition and the Placing to be admitted to trading on the AIM market of the London Stock Exchange.

The new Ordinary Shares will rank pari passu with the existing ordinary shares of the Company.

Dealings in the new Ordinary Shares are expected to commence on the 9th November 2006

Commenting on the acquisition and the Placing Dr James G Heffernan, CEO of NextGen stated, "Establishing a base in North America to address these opportunities has been pivotal to our strategy from the outset and now with this acquisition, in addition to the increased revenue, we anticipate that the Group will benefit significantly from this strategic initiative."

"We are particularly delighted that PRS President, Dr Mike Pisano and his staff at PRS will remain with the company following the acquisition and that Mike’s duties will increase to include scientific leadership of the new Group."

"Mike’s history of holding senior research positions in several large pharmaceutical and biotech companies such as Wyeth, Rhone Poulenc Rorer, Aventis and Genomic Solutions, together with his participation on the scientific advisory boards of biotech and instrumentation companies make him the ideal candidate for this new role."

"This acquisition has given us wholly owned facilities and additional staff in the US from which we can commercialise our increasing range of products and services into the market that represents over 50% of the global market for drug development."

"We are now in a position to create a Centre of Excellence to better serve this important market with our products and services."

"The access to PRS services and products allows us to characterise soluble proteins generated on NextGen’s automation platforms, which dramatically increases the value of the contract services that we are now offering."

"The value of orders achieved under this program has been continuously increasing and when the Gene Oracle and PRS modules are combined with the output from our core technology we are now receiving orders of several hundred thousand pounds with second phase modules of similar value depending on our initial success in producing active soluble proteins."

"We believe the contractexpress™ service offering has become an extremely cost effective outsource service for drug discovery."

Dr Mike Pisano, President and CEO of PRS commented, "The commercial agreement between NextGen and PRS has been extremely beneficial to both parties for expansion of sales and marketing globally while enhancing the product offerings of both companies."

"The co-development of the recently launched optigel™ range of custom pre-cast gels for 2D Electrophoresis is just one example of the synergy between the companies."

"We feel that a combination of NextGen’s advanced automation and fee for service businesses together with PRS’ expert protein research and characterisation services, the 2D gel and other consumables offerings, will allow the combined companies to establish many new initiatives while fostering rapid sales growth for the new Group."

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