Biogen Idec Inc. took a second small step toward broadening its pipeline beyond oncology, neurology and immunology with the acquisition of privately held Syntonix Pharmaceuticals Inc. In exchange for $40 million at closing and up to $80 million in development milestones payable to Syntonix's existing investors, Biogen Idec will gain several early stage programs, including two preclinical programs in hemophilia.
The acquisition has been approved by the boards of both companies and is expected to close in the first quarter, subject to customary closing conditions. Cambridge, Mass.-based Biogen Idec will acquire all issued and outstanding shares of the capital stock of Syntonix, which will continue development of its existing programs at its Waltham-Mass.-based facility.
Biogen Idec's stock (NASDAQ:BIIB) inched up 42 cents on the news to close at $49.75.
"There's not a lot of chatter on Wall Street about this deal," said Eric Schmidt, analyst with New York-based Cowen and Co. He noted that hemophilia is a niche market, and although it has "pricing power," the programs are still very early.
A $40 million deal may be a drop in the bucket to a company with a market cap of nearly $17 billion, but Biogen Idec Director of Public Affairs Jose Juves said the Syntonix acquisition allows the big biotech to continue its expansion into new therapeutic areas.
The first such move came last September through a deal with Basel, Switzerland-based mondoBiotech AG. In exchange for $7.5 million up front and up to $30 million in milestones, Biogen Idec licensed U.S. and European rights to Aviptadil, a synthetically produced human peptide for the treatment of pulmonary arterial hypertension (PAH). PAH affects an estimated 200,000 people worldwide and is treated by a relatively small group of physicians. (See BioWorld Today, Sept. 15, 2006.)
Similarly, hemophilia affects a small number of patients (14,500 Americans for hemophilia A and 3,600 for hemophilia B) and often is treated by specialists. Syntonix is conducting preclinical work with a long-acting factor IX product for hemophilia B, dubbed FIX:Fc, as well as a long-acting factor VIII program for hemophilia A. Both products are based on the company's SynFusion technology, which combines the Fc region of an antibody with a single copy of a peptide or protein, extending circulating half-life to create a long-acting product.
John Ripple, CEO of Syntonix, likened the approach to the Fc-fusion technologies used in drugs such as Enbrel (etanercept; Amgen Inc. and Wyeth Pharmaceuticals Inc.). Yet while Enbrel fuses two copies of the drug to an Fc region, Syntonix uses only one with its novel Fc-fusion construct, the company said.
Syntonix expects to file an investigational new drug application for FIX:Fc this year and currently is splitting development costs with Stockholm, Sweden-based Biovitrum AB, which eventually will market the drug in Europe, Russia and the Middle East, splitting profits with Biogen Idec. (See BioWorld Today, Jan. 24, 2006.)
Beyond PAH and hemophilia, Juves declined to specify what other new areas Biogen Idec plans to make a move in, but he said they will be "specialty markets with high unmet needs served by a concentrated number of physicians." In addition, the company plans to use acquisitions to expand its core therapeutic indications. "Business development in general is going to play a big role in our strategic vision, not just in 2007 but beyond," Juves said.
That position stems from Biogen Idec's September 2005 restructuring, a principal component of which was to boost spending on external product acquisitions. In 2006, Biogen Idec acquired two companies outright: Conforma Therapeutics Corp. in May for its Phase I cancer drugs, followed by Fumapharm AG in June for its autoimmune programs. Later in the year, it also licensed products from mondoBiotech AG and UCB and entered a research deal with Alnylam Pharmaceuticals Inc.
Schmidt said after the "slew of deals" in 2006, he expects similar heightened activity in 2007. Yet he sees Biogen Idec's story hinging on its established Rituxan (rituximab) and Avonex (interferon beta-1a) franchises and new sales from Tysabri (natalizumab).
In the third quarter of 2006, Rituxan revenues increased 12% to $204 million and global Avonex revenues jumped 19% to $445 million. Tysabri generated $5 million in sales after returning to the market. The better-than-expected earnings prompted a 15% appreciation in the stock.