BioWorld International Correspondent
LONDON - Another UK antibody company was swept up, as Novartis AG sealed a recommended all-cash offer worth £305.1 million (US$569 million) for NeuTec Pharma plc, paying more than twice the Manchester-based company's market capitalization.
It has been a hyperactive week for Basel, Switzerland-based Novartis, which a day earlier announced big-ticket deals with Genelabs Technologies Inc. and Human Genome Sciences Inc., to add to two $400 million plus deals agreed upon in March. (See BioWorld Today, June 6, 2006, and June 7, 2006.)
Buying NeuTec Pharma gives Novartis access to two advanced stage antibody products for serious hospital-acquired infections: Mycograb, for treating systemic fungal infections, and Aurograb, for treating methicillin-resistant Staphylococcus aureus infections.
Daniel Vasella, CEO of Novartis, said the products "promise to dramatically improve treatments in the area and will also enable Novartis to strengthen its biologics pipeline and anti-infective drug portfolio." Mycograb has been filed in Europe and is approved for compassionate use, while Aurograb is in Phase III.
From its formation in 1997, NeuTec Pharma raised just £7.3 million of private money before going public on London's Alternative Investment Market in January 2002, raising £10 million and giving the company a valuation of £35 million. Since then it has been back to the market once - in July 2004 for £25.8 million - and the company had cash of £24.8 million in December 2005. A key to the high valuation is that NeuTec has retained 100 percent ownership of its products.
The buyout is a big payday for the founders of NeuTec, Ruth Matthews and James Burnie, a wife and husband team, who retain a 7 percent stake. The couple spun the company out of Manchester University to commercialize research based on observations of patients who were infected by so-called "hospital superbugs" following surgery. They compared patients who recovered following intensive care for a hospital-acquired infection with those who died and discovered that survivors had produced antibodies against antibiotic-resistant microbes.
From that base, NeuTec has developed a platform technology, FabTec, for the selection and production of recombinant antibodies taken from blood samples of people recovering from a range of infections. Novartis noted that the acquisition also supports its objective of broadening its portfolio of antibody-related IP.
Burnie, NeuTec's CEO, said the deal would maximize the impact of NeuTec's products. "The reach and resources of Novartis will help to maximize the potential of Mycograb and Aurograb to treat more patients and have a greater impact in an area of significant unmet medical need."
The sale of NeuTec comes just three weeks after AstraZeneca plc agreed to buy Cambridge Antibody Technology Group plc for $1.3 billion. While that deal was at a 67 percent premium, Novartis' offer for NeuTec of £10.50 per share represents a premium of 108.9 percent on the closing price of £5.02 per share on June 5. After NeuTec announced Tuesday morning it was in talks with a possible suitor, the share price rose that day by £4.22 to close at £9.25.
Novartis wants to keep NeuTec's R&D team together and has said it will retain all staff at the current facility in Manchester for at least two years.