BioWorld International Correspondent
Pharming Group NV is acquiring fellow Dutch firm DNAge BV in a move that brings its former chief business officer, DNAge co-founder and CEO Rein Strijker, back into the fold.
Leiden-based Pharming is paying DNAge shareholders 4 million shares initially, spread over several installments. Based on the progress of DNAge’s development programs, it also would hand over milestone payments and royalties on eventual product sales. In addition, DNAge shareholders have acquired warrants to purchase 600,000 Pharming shares.
Based on Pharming’s closing share price of €3.83 Thursday, immediately before the deal was disclosed, the stock-based component of the deal is valued at €15.3 million (US$18.4 million). The transaction is due to be completed before the end of May.
Rotterdam-based DNAge was spun out from the Erasmus Medical Center (EMC) at Erasmus University in Rotterdam in 2004 to develop therapies for diseases of aging. Its principal scientific founder, Jan Hoeijmakers, was first to establish a link between malfunctioning DNA repair systems and disease. The company, which raised €1.2 million in seed funding last year, is initially focusing on the inherited condition Cockayne syndrome. (See BioWorld International, April 20, 2005.)
Rein Strijker told BioWorld International that DNAge was back on the market, seeking €12 million to €15 million in new investments, when Pharming took an interest. "So here we have a situation where I can execute the business plan and reduce the risk," he said. "It’s a better deal than a round of equity financing."
Part of the funding would have needed to enable DNAge build its own infrastructure. It now will leverage Pharming’s organization, instead. "They have all the infrastructure we need," he said. DNAge’s cash requirement was small, Strijker said, and will be further reduced by the deal.
"We expect that the costs that are associated with DNAge are 5 percent or less than Pharming is spending on its own programs."
In addition to managing the DNAge programs, Strijker will play a wide role at Pharming, a company where he previously spent about 15 years.
"I think it’s positive that Rein Strijker is back on board," Marcel Wijma, analyst at Van Leeuwenhoeck Research BV in Voorhout, told BioWorld International. "They need to expand their management team." Nevertheless, the deal was "a surprise," he said, because DNAge still is so early stage. "Pharming needs to broaden its pipeline desperately. In a way, you can see them as a one-product company," he said. "They need to buy a company which gives them access to the U.S. market."
Pharming’s lead drug candidate, a recombinant version of human C1 inhibitor (rhC1INH) is undergoing a pivotal Phase III trial in hereditary angioedema. The company recently filed investigational new drug applications to start trials of the product in acute graft-vs.-host disease and reperfusion injury. It also has submitted a GRAS filing for recombinant lactoferrin, for use as a nutritional supplement. In February, the company reported cash holdings of about €50 million, following two recent deals, an institutional placing and a cash-for-royalties deal with Paul Royalty Fund, of New York. (See BioWorld International, Feb. 8, 2006.)
Pharming investors responded positively to news of the DNAge acquisition. Its share price moved to €4.02 by the close of trading Monday, a 5 percent gain on its closing share price immediately before the deal was disclosed.