BioWorld International Correspondent

Roche Holding AG is acquiring GlycArt Biotechnology AG for about CHF235 million (US$180 million) in cash.

In agreeing to the deal, which is slated to close in the third quarter, GlycArt has achieved a successful and - by the standards of the biotechnology industry - rapid exit for investors.

The Schlieren, Switzerland-based company was established in September 2000 as a spinout from the Swiss Federal Institute of Technology (ETH) in Zurich to commercialize a method for boosting antibody-dependent cellular cytotoxicity, an important mechanism for many antibody-based drugs. It had raised just CHF23 million in venture capital funding during its tenure as an independent entity. (See BioWorld International, Dec. 3, 2003.)

CEO and co-founder, Joël Jean-Mairet, told BioWorld International that several factors influenced the decision to seek an exit. For one, it had received an unsolicited offer from a mid-sized pharmaceutical firm seeking to enter the oncology arena. In parallel with a planned fund raising, the company therefore decided to launch a structured M&A process led by the investment bank ABN Amro.

Its decision to join with Basel, Switzerland-based Roche was influenced by their ongoing collaboration. GlycArt lacks clinical development expertise, Jean-Mairet said, and it has two drugs entering the clinic next year. In addition to Roche's development and marketing organization, the pharmaceutical firm also holds 40 percent of the world's antibody production capacity, he said.

"Another factor is that the private equity markets are miserable in terms of valuation," he said. GlycArt had planned to raise CHF45 million in its next financing round. While the company could have raised the cash, he said, the terms would have been unattractive.

Roche plans to maintain the GlycArt organization, which employs 30 people. It also will continue its drug development programs. In addition, it now is the owner of GlycArt's GlycoMab technology, originally developed at ETH Zurich. By altering the glycosylation patterns on the Fc portion of antibodies, GlycArt can improve the efficiency with which they recruit cytotoxic natural killer cells to cancer cells, for example, or virally infected cells.

"The technology is very well validated, it's robust and it can be applied in a broad sense," Jean-Mairet said. "It's a technology that has the potential to add enormous value to a compound down the road."

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