West Coast Editor

With cash in its coffers from last year's sale of Domantis Ltd. to GlaxoSmithKline plc, Peptech Ltd. is buying out EvoGenix Ltd. for A$156 million (US$128.6 million), a 33 percent premium to the last trading price, in a bid to create yet another formidable antibody player.

Sydney, Australia-based Peptech plans to take all of the issued shares in EvoGenix, also of Sydney, for cash and shares totaling A$1.12 per share, based on the closing price of Peptech on Friday. The offer consists of A15 cents plus about half a share of Peptech stock for each share of EvoGenix.

EvoGenix's shares (ASX:EGX) rose more than 19 percent, ending Monday at A$1.01, and Peptech's stock (ASX:PTD) dropped A11 cents to $1.81.

"Right now, everybody's rushing after the antibodies, but this will settle down," said Tuan Ha-Ngoc, president and CEO of Cambridge, Mass.-based AVEO Pharmaceuticals Inc., whose firm last week raised $53 million in a Series D financing. (See BioWorld Today, May 4, 2007.)

"At the end of the day, biology doesn't care whether it's antibody or small molecule," Ha-Ngoc said, which is why his company works on both. He predicted the "pendulum will swing back. Neither [approach] will totally wipe out the other."

As an example that neither is necessarily better, he pointed to the EGFR cancer drugs Erbitux (cetuximab, ImClone Systems Inc.) and Tarceva (erlotinib, Genentech Inc. and OSI Pharmaceuticals Inc.). "Erbitux is a monoclonal antibody, Tarceva is a small molecule, and they're both selling about $600 million," he said.

Under the terms of the Peptech deal for EvoGenix, the former's CEO, John Chiplin, will fill the same role with the merged company, which will be renamed, and Merilyn Sleigh, CEO of EvoGenix, will stay on as an adviser. The board will be made up of directors from both companies. EvoGenix shareholders will hear more about the deal in June, with a meeting for approval slated for August.

Peptech's hookup with EvoGenix comes after rumblings of a potential Peptech takeover, which started in March after Peptech hired Citigroup to explore options. A proposed 2004 merger with Brisbane, Australia-based Agenix Ltd. fizzled because of Peptech's patent dispute with the Johnson & Johnson subsidiary Centocor Inc., of Malvern, Pa.

Peptech gets royalties for Remicade (infliximab), for rheumatoid arthritis and Crohn's disease. More royalty cash is paid by Abbott Park, Ill.-based Abbott Laboratories on Humira (adalimumab), also an anti-TNF blocker for RA.

Peptech's next generation anti-TNF compound, PN0621, is expected to enter the clinic this month. The domain antibody was in-licensed from Domantis, which London-based GSK late last year agreed to buy for £230 million (then US$454 million) in cash. Peptech took ownership of about 31 percent of the fully diluted interest in Domantis as part of the domain-antibody agreement. (See BioWorld Today, Dec. 11, 2006.)

Major antibody deals have been making headlines for two years. Thousand Oaks, Calif.-based Amgen Inc. bought Abgenix Inc., of Fremont, Calif., for $2.2 billion and London-based AstraZeneca plc took over Cambridge Antibody Technology, of Cambridge, UK, for $1.3 billion. In March, Tokyo-based Eisai Co. Ltd drove off partners for the antibody firm Morphotek Inc., of Exton, Pa., by putting an offer of $325 million on the table.

Yet to be snatched up are antibody experts such as Dyax Corp., Medarex Inc., MorphoSys AG and XOMA Ltd., but Ha-Ngoc believes they still have plenty of targets to hit with their platforms. "It's not the target - it's how do you use the product against the target, exactly what kind of clinical setting," he said.

No Comments