Replies to post #28417 on Biotech Values

[Biowatch]

MRK/GlycoFi Wonder if MNTA mentions it on CC?

[DewDiligence]

Boston Globe chimes in on GlycoFi deal:

http://www.boston.com/globe/business

>>
Merck to buy N.H. biotech in record bid

Privately held GlycoFi to net $400m in cash

By Stephen Heuser
May 10, 2006

A small New Hampshire firm with a new idea for making biotechnology drugs said yesterday it would be acquired by global pharmaceutical giant Merck & Co. for $400 million in cash, the largest such deal ever reported for a private biotechnology company.

Six-year-old GlycoFi Inc. of Lebanon, N.H., cofounded by Dartmouth engineering professors, has only 55 employees and specializes in genetically altering yeast cells so they can produce useful human proteins.

According to the National Venture Capital Association, the deal was the third-highest price paid for a private biotechnology firm, and the largest on record to be done in cash.

As injectable proteins -- so-called 'biotech drugs" -- become a larger and more profitable part of the US pharmaceutical industry, major drug makers like Merck have been racing to expand beyond traditional pills into the complex realms of biotechnology, which involve growing human proteins in large vats of living cells.

'We felt that GlycoFi gave us enormous capabilities in the area of biologics, which is an area where we want to have a far larger footprint," said Merv Turner, a Merck licensing executive.

GlycoFi's scientists say they have solved a longtime frustration of biotechnology drug makers: While yeast cells can crank out therapeutic proteins far faster than the cells now used in most biotech factories, the resulting molecules are contaminated with various sugar 'side chains" that make them unusable as drugs. GlycoFi was founded with the idea that yeasts could be coaxed to make much cleaner versions of the proteins.

'It was a team that took on a really challenging problem and they solved it," said Terry McGuire of Polaris Venture Partners in Waltham, which provided the lead financing for GlycoFi.

As the company's technology began to look more promising, it signed research deals with Merck and Eli Lilly & Co., among others. A recent paper in the journal Nature Biotechnology showed that its genetically engineered yeasts could take a well-known antibody -- a cancer treatment sold by Genentech Inc. as Rituxan -- and reliably produce slightly different versions of the drug in yeast [#msg-9379256].

Some of the versions appeared to be more effective than the original. 'If you put the right sugar on it, you get Rituxan that's 100 times better, 100 times more potent in killing cancer cells," said Tillman Gerngross, GlycoFi's chief scientist, who cofounded the company with Dartmouth professor Charles Hutchinson.

The deal will result in a major payday for the New Hampshire firm's venture backers, including Polaris, which sank $10 million into GlycoFi and will cash out for more than $100 million when the deal goes through.

'You definitely play the game for days like today," said McGuire of Polaris.
<<

[Praveen]

Biology Rising
Kerry A. Dolan, 05.12.06, 10:00 AM ET

Burlingame, Calif. - It's clear that big drug companies are hungry to fill their pipelines. So hungry that they will pay top dollar to fill them. On May 9, pharmaceutical giant Merck announced it would spend $480 million to acquire two biotechnology companies, GlycoFi and Abmaxis. A month earlier, Pfizer paid an estimated several hundred million dollars for biotech firm Rinat Neuroscience. Also in April, powerhouse biotech firm Amgen closed a $2.2 billion deal to buy a smaller outfit, Abgenix.

Acquisitions by large drug companies are nothing new, but this recent wave is a bit different. The acquisition targets share two traits: steep selling prices and a focus on protein-based drugs, called biologics. For the past century, the biggest drug firms have relied on chemistry to develop pills as medicines. But since the birth of biotechnology 30 years ago, biologics has come into its own. Biologics now account for half the products currently in Phase II and Phase III clinical trials.

"You've got the two biggest pill companies [Pfizer and Merck] getting big time into biologics," says Michael Ross, partner at venture capital firm SV Life Sciences, who funded both Rinat and GlycoFi. "Nobody can afford to say 'Oh, we're a pill company'."

Terry McGuire, managing partner at Polaris Venture Partners and GlycoFi's founding investor, believes there will be a whole host of biologic drugs unveiled in the future, partly as a result of the advances in genomics used to develop these drugs. Biologics like Amgen's (nasdaq: AMGN - news - people ) Enbrel--a protein drug for immune diseases including rheumatoid arthritis and psoriasis--have become blockbusters. Enbrel revenues were nearly $2.6 billion last year.

Which may explain why Merck (nyse: MRK - news - people ) is shelling out $400 million for GlycoFi of Lebanon, N.H. Rather than develop its own drugs, GlycoFi has come up with a process that can make better drugs more efficiently by controlling the sugar structure around proteins in drugs. Last December, Merck announced an equity investment in GlycoFi as well as a broad research collaboration (See " Pharma's Little Helper"). The $400 million acquisition price for the six-year-old company is among the largest announced deals for a privately held biotech firm.

Pfizer's (nyse: PFE - news - people ) acquisition of Rinat Neuroscience of South San Francisco, announced last month, takes the world's largest pharma company a step further into the world of biologics as well.

Rinat, a spinoff of Genentech (nyse: DNA - news - people ), had been in a bidding war to partner with one of nine interested pharmaceutical firms for a promising but very early stage drug candidate to treat Alzheimer's. Pfizer made them an offer they couldn't refuse.

In the past, big pharma have been somewhat tentative about paying cash outright to acquire a company with drugs that hadn't even entered humans for testing. But now, most of the drugs from smaller biotechs that are in Phase II clinical trials have already been licensed or partnered with bigger drug developers. "The shelves are picked over," says SV Life Sciences' Ross.

"As long as supply does not exceed demand--and I don't think it will for a while--you're going to see earlier deals done."

[DewDiligence]

“Merck is leveraging its GlycoFi assets to
become a leading player in follow-on biologics.”

—Dick Clark, Merck CEO (on today’s CC)