After establishing two collaborations in recent years with Transform Pharmaceuticals Inc., Johnson & Johnson has made a $230 million cash offer to acquire the formulations company.

Founded in 1999, Transform specializes in discovering superior formulations and crystalline forms of drug molecules. The company has 80 employees at its Lexington, Mass.-based operations.

Nick Galakatos, Transform's chairman and co-founder, said the acquisition is a direct result of each company's success in working with the other.

"It's a truly remarkable match between technology capabilities and commercial presence across the health care industry," he told BioWorld Today.

Transform entered its first agreement with J&J through its ALZA Corp. unit in 2002. ALZA and Transform established a three-year deal to optimize the formulation of products in ALZA's pipeline to be used with its D-Trans transdermal delivery technology. (See BioWorld Today, June 6, 2002.)

A second agreement was formed in December 2003 with J&J Pharmaceutical Research & Development LLC, of La Jolla, Calif., covering topiramate, an anti-epileptic drug marketed by Ortho-McNeil Pharmaceutical Inc. Transform held a patent on a salt form of topiramate that improved the compound's solubility. It assigned all rights to the patent to J&J in exchange for up-front payments, milestones and royalties.

In its own pipeline, Transform has a Phase II central nervous system lead product called TPI-926. It is a reformulation of an existing marketed product that could benefit 1 million CNS patients and reach the market in 2007.

"In addition to the technology and the emerging pipeline of the company," Galakatos said, "the third major consideration for J&J to be interested in the company is the people. We have put together a group that is probably the best group in the world" in the formulation area.

Galakatos said J&J intends to grow the Transform site at the strategic Boston-area location. The pharmaceutical company recognized the attributes of Transform's staff, which led to the definitive acquisition agreement.

"That became one of the main driving factors for them to pursue the acquisition rather than just another collaboration," Galakatos said.

Since inception, Transform has raised about $60 million through lead investors such as Boston-based MPM Capital and Polaris Venture Partners, of Waltham, Mass.

Galakatos works as a senior partner at MPM, but teamed up with Robert Langer of the Massachusetts Institute of Technology in 1999 to start Transform.

"We came up with this idea that pharmaceutical formulations are essentially the backwater of pharmaceutical R&D," he said. "While technology and innovation has been generated for all other aspects of the pharmaceutical R&D continuum, such as gene discovery or target discovery, very little was done in the formulation area."

Aside from J&J, Transform has worked with Indianapolis-based Eli Lilly and Co.; Abbott Park, Ill.-based Abbott Laboratories; Basel, Switzerland-based F. Hoffmann-La Roche Ltd.; and London-based AstraZeneca plc. While financial terms were never disclosed, its deals are structured to provide near- and long-term revenues.

The company sees great value in applying its high-throughput experimentation technologies to vary crystalline form and improve drug formulation.

"It's a required step of developing a product," Galakatos said, "and it's a step that everyone knows can have a fundamental impact on the performance of the drug."

While the pharmaceutical industry typically attempts to find the right match between drug and formulation from up to 50 different in-house recipes, Transform increases the number of choices to at least 1,000, offering better odds of finding the right match. The company also is leveraging its technology for the medical device industry.

"We had not been looking to be acquired," Galakatos said. "The company had a long-standing relationship with J&J through the two deals. This is something that evolved over time as the two companies got to know each other."