Cadence Design Systems offers computing technologies used in industries such as communications, automotive, aerospace and defense. The company is now adding drug discovery to its reach with a $500 million deal to acquire OpenEye Scientifica private provider of simulation software used in computational drug design.
OpenEye does not develop drugs but its software is used by pharmaceutical and biotechnology companies that do. The company’s software-as-a-service offering, called Orion, provides molecular modeling and simulation capabilities. In its announcement of the acquisition on Monday, San Jose, Calif.-based Cadence said growing demand for new drugs is driving demand for computational capabilities that enable 3D analysis of the structure of molecules. The company noted that biosimulations have become essential tools that provide atomic-level information about molecular interactions.
“Cadence’s deep expertise in computational software drives innovation in algorithms that improve the reliability, efficiency and speed of molecular simulations,” said Cadence President and CEO Anirudh Devgan. , in the announcement. “We look forward to welcoming such an accomplished team and are excited to accelerate innovation and improve research and development productivity in the pharmaceutical and biotechnology industry.”
OpenEye, based in Santa Fe, New Mexico, was founded in 1997. The company says its products are used by pharmaceutical giants such as Pfizer and AstraZeneca, as well as smaller biotech companies such as Therapeutic Black Diamond. Other clients include academic institutions.
Cadence describes its business strategy as “intelligent systems design.” The company provides its calculation software to electronic systems and semiconductor customers, who use it to develop their own products. Most of the company’s revenue comes from licensing its software and intellectual property. Cadence reported nearly $3 billion in revenue for 2021, an 11% increase over the prior year. In second quarter 2022 financial results released after Monday’s market close, Cadence posted revenue of $858 million, an increase of 17.8% over the same period last year.
Speaking on a conference call to discuss second-quarter financial results, Devgan said the qualities of OpenEye that interest Cadence include the use of its software by 19 of the top 20 pharmaceutical companies and a strong marketing with its software. offer as a service. OpenEye will enable Cadence to reach new customers in the life sciences. But the move also pits the tech company against well-established competitors in computer drug design, such as Dassault Systèmes and Schrödinger.
The acquisition of OpenEye is a cash transaction. Cadence expects to complete the transaction in the third quarter of this year.
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