Tuesday, December 02, 2008

Deals of the Year Nominee: GSK/Sirtris

Ah, awards season. Why should film critics have all the fun? And voting! It's not just for presidential elections. This year your IN VIVO Blog team is nominating a handful of alliances, acquisitions, financings, regulatory negotiations and legislative compromises in our First Annual DOTY competition. And then you, dear readers, will vote (early and often, we hope) for the winner. Imaginary federal and international biopharmaceutical statutes prohibit us from awarding a monetary prize. But our winners, when they die, on their deathbeds, they will receive total consciousness. So they've got that going for them, which is nice.

Our first nominee for Deal of the Year is GlaxoSmithKline's $720 million cash acquisition of Sirtris Pharmaceuticals.

When we profiled Sirtris CEO Christoph Westphal back in 2006 he laid out the criteria for success:

"There are five things that you try to pull together in a technology-based company," Westphal told START-UP. "A novel, breakthrough scientific idea, and the ability to address a broad, unmet disease area," are the first two. But you'd still be nowhere without three and four: "The ability to be a beachhead in the important new development of products by pulling together the leading scientists in the field, and the ability to finance the business." Fifth? "Understand early on and be comfortable with the fact that you can dominate the IP space."

For $720 million GSK must have been sold on all five, especially since Sirtris' lead candidate, the Phase II SRT501, a proprietary formulation of resveratrol being tested in diabetes and other diseases, is probably small beer compared to the company's next-generation--but decidedly earlier-stage--sirtuin activators. Sirtris' value lies in the targets it is chasing, and we've never seen such an expensive target-focused deal.

Sirtuins are a seven-member family of proteins long implicated in the aging process. Sirtris has focused in particular on Sirt1, mostly in type 2 diabetes and oncology, but other sirtuins may play roles in other diseases of aging, including neurodegeneration and muscle wasting. Sirt2, for example, has in recent years become a notable potential target for Parkinson’s disease. As we reported back in April, the field had captured the imaginations of pharma execs, and GSK had been in off and on partnering discussions with Sirtris for some time.

As happens in this industry, partnering turned to M&A discussions after Sirtris published a November 2007 paper in Nature showing the chemical structure of one of its next-generation compounds (you can find our blog post around that publication here). The rest is history--and you can read all about it in Mark Ratner's IN VIVO feature on the GSK/Sirtris deal, published in May.

Sirtris' acquisition demonstrates the sometimes astounding value ascribed to target-specific platforms and underscores Big Pharma's interest in accessing en masse technologies and human resources that may allow them to leap forward rapidly.

"It wasn't really our objective to acquire [Sirtris]," Chris Viehbacher, then GSK president, US pharmaceuticals commented at the Morgan Stanley 2008 Global Healthcare Unplugged Conference. "We would have loved to have collaborated but at the end that was the only way we could do it." With a seeming nod to GSK's need to bulk up its R&D pipeline, he later said: "you do have to make sure that in 10, 15 years that you're not in the same boat that we were in when we merged."

photo by invivoblog, yours to use under creative commons

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