Staff Writer

Roche Holding AG continued its streak of biotech buyouts this week, moving to acquire antibody screening company Arius Research Inc., of Toronto, for about C$191 million (US$189.2 million).

The all-cash deal, which is subject to a vote by Arius shareholders and court approval, is expected to close in the third quarter, both companies said. It is the third such foray Roche has announced this week, following a $44 billion offer to buy what it doesn't already own of South San Francisco-based Genentech, the world's largest biotech firm, and moving to acquire gene therapy company Mirus Bio Corp., of Madison, Wis., for $125 million.

Roche intends to keep Arius' site in Toronto, as well as the full complement of the company's nearly 45 employees.

Once the acquisition is complete, the Toronto location would serve as a center for the discovery of innovative biotherapeutics, with an initial focus on oncology and inflammation, the two companies said. The center would be headed by Arius CEO David Young.

The company had raised only $40 million to this point, and spent $30 million to get the deal done, Young said, adding that, "We created a lot of value."

Arius, founded in 1999, began its search for potential partners last year with the intent of only selling certain molecules - not the entire company - in an effort to move its pipeline forward. But that plan changed, Young said, as companies began to show interest in Arius's broader pipeline.

With the acquisition of Arius, Roche would have access to its FunctionFIRST technology platform that generates and selects therapeutic antibodies based on their activity.

Arius has a collection of more than 500 antibodies that kill cancer cells but not normal cells, Young said. Roche's resources, he said, will help prioritize which antibodies are the most promising for clinical development.

Arius's pipeline includes CD-44, which targets cancer stem cells, and Trop-2, a cell surface molecule that may work in pancreatic cancers.

"Roche has a very dedicated business in antibodies," Young said, pointing out that over the past decade the Swiss drugmaker has built an antibody manufacturing and process development site in Germany and has acquired another antibody site in Zurich.

"Arius' promising platform and early pipeline of new antibody candidates represent an excellent fit with our own progressing research in the fields of cancer and immunology," Lee Babiss, head of global research at Roche, said in a statement. "The FunctionFIRST approach provides us with a large library of antibodies from which we can identify the best new drug candidates for the development of clinically differentiated medicines."

Roche will pay C$2.44 for each common share of Arius Research Inc. The price represents a 15 percent premium to the closing price on July 22 and a 44 percent premium to the 20-day volume-weighted average closing price ending May 15 (the last trading day prior to ARIUS' announcement that third parties have shown interest in the company and its technologies).

Roche also will acquire all of the issued and outstanding warrants of Arius, paying C$1.44 for each Class F Warrant and C$1.78 for each Class G Warrant.

Shares in Arius (TSX:ARI) rose C26 cents, or 12.2 percent, closing at C$2.39.