In an effort to augment its oncology pipeline, Biogen Idec Inc. signed a definitive merger agreement to acquire Conforma Therapeutics Corp. for $150 million at closing, plus up to $100 million in development milestone payments.
San Diego-based Conforma has discovered and developed drugs that inhibit heat-shock protein 90 (HSP90) molecules, known to protect and support cancer cell growth across several tumor types. Its most advanced compounds - CNF1010, a form of the geldanamycin derivative 17-AAG; and CNF2024, a synthetic, orally bioavailable HSP90 inhibitor - are in Phase I trials.
"Global leadership in oncology is a major strategic objective" for Biogen Idec, said the company's director of public affairs, Jose Juves, explaining the company's interest in acquiring Conforma. "We believe HSP90 antagonists are a promising area of cancer therapy and that Conforma is a leader in this field."
Upon approval by Conforma stockholders, the transaction is expected to close in the second quarter. Cambridge, Mass.-based Biogen Idec is acquiring all of Conforma's issued and outstanding shares for $150 million and will pay an additional $100 million upon the achievement of certain development milestones related to HSP90 antagonists. Boards of both companies have approved the merger. Montgomery & Co. LLC, of San Francisco, acted as exclusive financial adviser to Conforma.
"The fit is really ideal," said Lawrence Fritz, president, CEO and founder of Conforma. "They have a major franchise in oncology; they have the world's largest anticancer product with Rituxan, but they have never moved beyond their roots in lymphoma and leukemia and antibody products."
Conforma's HSP90 antagonists may be able to address those same indications, "but in terms of the diseases we're most interested in," Fritz said, "we're really focused on small molecules for solid tumors."
The agreement does not include Conforma's rights to Amrubicin HCL, which the company licensed in July 2005 from Osaka, Japan-based Dainippon Sumitomo Pharmaceuticals Co. Ltd. Sumitomo sold the drug as Calsed in Japan since gaining approval in late 2002 for both small-cell lung cancer and non-small-cell lung cancer. The deal gave Conforma exclusive rights to develop and market the product in North America and Europe. (See BioWorld Today, July 11, 2005.)
It was an opportunity, the company said at the time, to expand its oncology portfolio beyond its HSP90 platform.
But now, the HSP90 platform falls into the hands of Biogen Idec, while the Amrubicin license will become the main focus of a new start-up specialty pharmaceuticals company to be called Cabrellis Pharmaceuticals Corp.
Conforma's current investors will help get Cabrellis started with a new management team, said Christopher LeMasters, Conforma's vice president of corporate development, who added that all 40 of the company's employees will transfer to Biogen Idec. Most will continue working on the HSP90 program, and "some subset of the group will have an opportunity to look for open positions at Biogen Idec for a period of time," he said.
Once on board, the Conforma employees will help Biogen Idec decide upon a development pathway for CNF1010 and CNF2024. The first product moved into a Phase I study at the end of 2004 and could be ready this year to enter Phase II development. CNF2024 just began its Phase I trial earlier this year and should be ready for Phase II sometime in 2007, Fritz said.
The Conforma employees will be integrated into Biogen Idec's San Diego campus, its oncology center of excellence. The "geography fit" is excellent, Fritz said, "since we're both here in San Diego about a half mile from each other."
Conforma's technology platform is based on the knowledge that many key signaling proteins, such as kinases and nuclear receptors, require the action of the HSP90 chaperone family in order to be properly folded and maintain their activity. Drugs that bind to the chaperones may induce the proteins to degrade, which leads to tumor cell death. Conforma's candidates bind to activated forms of HSP90, attacking only tumor cells and sparing normal tissues.
Beyond CNF1010 and CNF2024, the company has a diverse library of compounds that affect the HSP90 family and could lead to development of other treatments.
Founded in 1999, Conforma started operations in 2001 and has raised $58 million through three financing rounds. It initially took a license to pioneering HSP90 technology from Memorial Sloan-Kettering Cancer Center in New York, but it has invented its products in-house, Fritz said.
Conforma had not been looking to complete a merger.
"We were in the process of filling out our Series D financing, so it certainly wasn't our intention to use M&A as a means to finance the company," LeMasters said. "All of this came from our efforts to find a strategic partner" for the HSP90 program.
"Ultimately, those discussions led to this opportunity," he said.
Biogen Idec has several products in clinical development for oncology, including Rituxan, Volociximab, as well as anti-CD80 and anti-CD23 monoclonal antibodies, among others.
Its approved cancer products include Rituxan and Zevalin, both for non-Hodgkin's lymphoma. The company also is studying several drug candidates in the fields of immunology and neurology.
Biogen Idec's stock (NASDAQ:BIIB) rose 19 cents Wednesday to close at $46.09.