CONTRACT : Synbiotics Pact to Double Size of Firm
Synbiotics signed an $8.5-million limited research and development contract Monday that could generate 11 new products during the next three years, as well as double the size of its plant and professional staff.
The contract was funded by PruTech Research and Development Partnership II, a California limited R&D; partnership, and PruTech Project Development Partners, an institutional and corporate partnership. San Jose-based R&D; Funding Corp., an affiliate of Prudential-Bache Securities, is the general partner in both partnerships.
Synbiotics will use the $8.5 million to develop 11 specific products and will retain the right to manufacture and sell those products, according to Edward T. Maggio, president and chief executive of the San Diego-based veterinary and human health care products company. Synbiotics, whose products are based on monoclonal antibody technology, “will be able to acquire (the products) outright after a period of time,” he added.
The contract may require doubling the size of Synbiotics 4,000-square-foot manufacturing facility in Rancho Bernardo and eventually boost the company’s 20-person professional staff to between 45 and 50 people, Maggio said Monday.
“We expect to see the first of (the new products) on the market in the next six to eight months,” Maggio said. “This is a great opportunity to foster additional growth with minimal (stock) dilution. One of our objectives this year has been to strengthen our capitalization base, and do it in a non-dilutive manner.”
Synbiotics will benefit from the injection of contract revenues and will enjoy a new source of product revenues, said Maggio, who explained that “the partnerships will earn their return from royalties on products we sell.”
Although Maggio said Synbiotics decided not to undertake a public offering, it expects to benefit from “corporate marketing partnership relationships” it is developing with several major veterinary and human health-care companies.
The company reported a net loss of $418,259 for the second quarter ended Sept. 30, compared to a $218,886 loss during the same quarter a year earlier. Revenues for the period dropped 43%, to $147,426.
