Sometimes, a pharma partnership is a prelude to a buyout deal. Other times, as some lovelorn users of one newsworthy social network like to say, it’s complicated. For GlaxoSmithKline, its relationships with three different companies show how one kind of deal can lead to another – or not.
This week, GSK acquired one longtime partner, wrestled with another after it rejected a hostile bid, and raised its stake in a third. First, it paid GBP 61 million ($99 million) to acquire the portion of proteomics drug discovery company and longtime partner Cellzome that it does not already own. GSK will pay cash for just over 80% of Cellzome shares; it previously owned a shade less than 20% of the company, thanks to a 2001 deal in which GSK sold its Cell Map division to the privately-held German start-up, then just a year old. The deal, expected to close Monday, gives GSK access to additional tools to assess interactions between drugs and proteins, potentially leading to better visibility into drug successes and failures during the discovery process. The two are already familiar with one another: They’ve been collaborators in an inflammatory disease partnership since 2008.
The first-comes-love-then-comes-marriage arrangement doesn’t seem to be happening for GSK and Human Genome Sciences, though. As we noted last week, that deal turned hostile as HGS rejected a $13-per-share bid that valued it at $2.6 billion. Now, HGS is trying to remain independent by adopting a poison-pill strategy, a shareholder rights plan that would kick in if a third party acquires 15% of HGS stock. While HGS is still retaining banks to explore strategic options, the new provision would allow its stakeholders to thwart a takeover attempt; it reiterated that it believes GSK’s offer is inadequate this week as well. GSK and HGS are already partners on the lupus drug Benlysta (belimumab), as well as a pair of pipeline drugs including Phase III cardiovascular drug darapladib.
Is there a middle ground between outright acquisition of a partner and a hostile takeover of one that doesn’t want to be bought? How about what GSK did with its collaborator Theravance this week? The British pharma took that relationship to the next level when it acquired 10 million additional shares of publicly traded Theravance for $213 million, based on terms announced in April. That boosts its ownership stake from 18.3% to 26.8%. The two have been allies since 2002, and have expanded their partnerships around bifunctional muscarinic antagonistic beta-2 agonist (MABA) and long-acting beta-2 agonist (LABA) programs under development for chronic obstructive pulmonary disease, including Relovair (fluticasone furoate/vilanterol).
Sound complicated? Some deals are easier to complete than others, but we've got more news than that to report this week. Now stop hitting 'refresh' and read...
Agilent/Dako: The words “biggest tech IPO in history,” were frequently spoken of Facebook’s offering this week, but it’s worth remembering that the spinout of Agilent Technologies from Hewlett-Packard in a 1999 offering was once ranked among the biggest ever. Agilent made a move in the life sciences May 18, when it acquired Danish cancer diagnostics company Dako for $2.2 billion in cash. Agilent, a Santa Clara, Calif.-based maker of electronics measurement equipment, already markets a variety of life sciences and chemical analysis products. Its microscopes, imaging equipment, software and other laboratory gear allow study of biological samples at the molecular level; they are sold into the commercial pharma, biotech and research market as well as the academic and government markets. Dako sells antibodies, software and instruments for cancer diagnostics, including diagnostic kits, probes, and reagents used in flow cytometry. It posted revenues of about $340 million in 2010. Swedish private equitiy firm EQT Partners AB acquired Dako from its founding family for about $1.3 billion in February 2007; Novo Nordisk held a minority stake at the time. – Paul Bonanos
Piramal/DRG: Flush with cash from the May 2010 sale of its branded generics business to Abbott Laboratories Inc., Piramal Healthcare Ltd. announced on May 16th that it will acquire life science analytics and consulting firm Decision Resources Group for $635 million. The acquisition is Piramal’s second this quarter; in April it moved to acquire Bayer AG’s molecular imaging business, including florbetaben, a Phase III molecular imaging agent for diagnosing Alzheimer’s disease. Last August, the company made a significant investment in Vodafone’s Indian operations. The DRG acquisition price represents a 4x multiple of DRG’s projected 2012 top line sales of $160 million. The beneficiary of the sale is Provident Equity Partners, which focuses on the media, communications, education and information sectors, and has over $23 billion under management. Provident took a majority stake in DRG for $193 million in May 2010, investing out of its $4.25 billion Fund V. The sale to Piramal, expected to close in the second quarter, will bring Provident a 2.1x return on investment. Piramal chairman Ajay Piramal cited rising demand in the pharma sector for “specialist information” during a time of rising research costs and increasing complexity in accessing global markets. In particular, he emphasized Piramal Healthcare’s reputation and relationships with global life science companies and its knowledge of emerging markets. DRG CEO Peter Hoenigsberg echoed the demand for information about emerging markets, which he called “the primary avenues for growth in the pharma industry” – and mentioned Piramal’s experience in emerging markets as a factor in the deal. - Michael Goodman
Bristol-Myers Squibb/Tsinghua University: Bristol-Myers Squibb has teamed up with China’s Tsinghua University to develop novel targets for oncology and immunoscience on May 14. The partnership will focus on 3D protein structure mapping of biological targets, as well as structural biology research. "This is Bristol-Myers Squibb's first discovery collaboration in China and is an example of the company's deepening commitment to the country," said Francis Cuss, senior vice president of research at BMS. "We are delighted to be working with Tsinghua University, a world-renowned and highly esteemed research-based academic institution with expertise in target identification and structural biology that will support the discovery of new medicines to fight serious diseases in China and around the world," he said. The multi-year partnership is one of many that have popped up in recent years between innovation-hungry Big Pharma and the academic community. - Lisa LaMotta
Newron/Zambon: Two Italian companies struck a licensing deal around safinamide, a novel Parkinson's treatment that showed safety and efficacy in a recent Phase III trial. Chemical and pharmaceutical company Zambon paid a total of €20 million ($25.4 million) to Newron Pharmaceuticals of Milan to option and license the drug worldwide, not including Japan and other Asian territories already covered by a deal with Meiji Seika Pharma. (One-time rights holder to safinamide, Merck-Serono, returned the drug to Newron in October 2011, throwing a wrench in Newron's previous corporate development plans.) Newron will also receive milestone payments of unspecified size, as well as double-digit royalties if the drug is commercialized. Zambon will shoulder further development costs of the drug. Newron had been lining up safinamide for approval in 2013. The compound is expected to be marketed as an add-on treatment administered alongside dopamine agonists in patients with various stages of Parkinson's disease; Newron says it has both dopaminergic and non-dopaminergic properties. Separately, Newron said new chief executive Stefan Weber will replace founding CEO Luca Benatti, who stepped down from the position after 13 years. - P.B.
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