In the latest example of big pharma turning to biotech to beef up its research and development pipelines, GlaxoSmithKline plc agreed to acquire Domantis Ltd. for £230 million (US$454 million) in cash.
That deal is impressive, especially given that Domantis, a privately held firm developing domain antibodies (dAbs), still is months away from entering the clinic with its first product, and hadn't been looking for a buyout when big pharma came knocking.
The Cambridge, UK-based firm was wrapping up a number of late-stage negotiations a few months ago when it was approached by an undisclosed company interested in an acquisition, said Bob Connelly, Domantis' CEO, and that interest was "significant enough for us to consider our options."
Domantis retained New York-based Lehman Brothers to explore alternatives, and that led to the deal with GSK.
That acquisition agreement highlights pharma's increasing willingness to acquire early stage companies, despite the risk, to ensure future drug development opportunities. It also underscores the industry's growing interest in the antibody market.
"Everybody has to be able to play in the antibody sector now," Connelly told BioWorld Today, and some of the large firms have "learned that just having a strategic alliance with somebody may not be enough to guarantee you access to their technology."
That has created a "scarcity factor," he added, and companies like Domantis have had interest from other firms at a level "much more intense than it was even 18 months ago."
Antibody firms have been acquisition targets in some of the year's largest deals, such as Thousand Oaks, Calif.-based Amgen Inc.'s buyout of Fremont, Calif.-based Abgenix Inc. for $2.2 billion and London-based AstraZeneca plc's $1.3 billion purchase of Cambridge UK-based Cambridge Antibody Technology. (See BioWorld Today, Dec. 15, 2005, and May 16, 2006.)
Domantis' deal with GSK allows "us to gain access to the kind of muscle we need" to advance its preclinical pipeline, Connelly said, and to provide "a very significant return to our shareholders."
The company's largest shareholder, Australian biotech firm Peptech Ltd., which owns about 31 percent of the fully diluted interest in Domantis, stands to realize gross proceeds of £71.3 million from the acquisition. Peptech's investment stems from a 2001 collaboration to develop an anti-TNF-alpha dAb. Peptech expects to begin clinical testing of that product next year.
Domantis' other shareholders include London-based MVM Ltd., which provided seed funding and led the company's Series A round, and 3i, also of London, which led the Series B financing.
Domantis was founded in 2000 by Ian Tomlinson and Gregory Winter to develop domain antibodies, the smallest functional binding units of human antibodies, which are believed to reach a wider range of targets and carry many of the same benefits as small-molecule drugs.
"The real breakthrough," Connelly said, is the development of technology capable of "giving these little fragments of antibodies the same kind of specificity and affinity you get with a full antibody, even though they're less than a tenth of the size."
Because dAbs are so much smaller, they present greater stability, are less costly to manufacture and are much easier to administer. DAbs also have the potential to bind to two targets in vivo, "so you can create a combination therapy in one product," Connelly said.
Domantis' preclinical pipeline leads off with an anti-inflammatory dAb targeting the IL-1 pathway for treating rheumatoid arthritis, chronic obstructive pulmonary disease (COPD) and osteoarthritis, which is followed by an anti-inflammatory product for COPD that can be administered directly to the lungs, as well as a dual-targeting drug aimed at both IL-4 and IL-13 for asthma.
Beyond those products are programs in oncology and immunology, though the dAb technology "opens up all types of product possibilities," Connelly said. "It's an engine that can be applied to any area that GSK would want to go into."
Once the deal closes - anticipated to occur in January - Domantis' research operations in the UK will be integrated with GSK, and its 68 UK employees will join GSK's biologics division.
"That was a key part of the deal," Connelly said. "That [R&D team] is going to be a major asset for them."
Founder Tomlinson will continue to manage Domantis' Cambridge laboratories and will serve as a GSK executive.
Protherics Buys MacroMed, Signs Deals
Protherics plc said it acquired privately held MacroMed Inc. and signed two in-licensing deals to expand its development pipeline in critical care and cancer.
The London-based firm agreed to buy MacroMed Inc., of Sandy, Utah, in an all-share transaction valued at $25 million, gaining access to its lead product, OncoGel, a sustained-release formulation of paclitaxel in Phase II development for local administration in esophageal and brain cancers.
Protherics also added to its pipeline a potential treatment for B-cell chronic lymphocytic leukemia. It licensed co-development rights to Acadesine from Advanced In Vitro Cell Technologies SL, of Barcelona, Spain. Acadesine is in a proof-of-concept Phase I/II study.
At the same time, Protherics signed an agreement to license intellectual property from Glenveigh Pharmaceuticals LLC, of Research Triangle Park, N.C., relating to the use of ovine polyclonal antibody fragments (including DigiFab and GlaxoSmithKline's Digibind) for pre-eclampsia and eclampsia. Terms of that deal were not disclosed.
All three deals are expected to be funded by a £38.2 million (US$74.6 million) financing, in which Protherics agreed to issue 58.7 million shares priced at 65 pence each.
Nomura Code Securities Ltd. and Piper Jaffray Ltd. served as joint underwriters for the offering.