Staying on track with a corporate plan to focus on therapeutics, Maxygen Inc. sold its plant sciences business for $64 million in cash to partner DuPont.
Wilmington, Del.-based DuPont bought Maxygen's subsidiary Verdia Inc. outright, gaining worldwide, royalty-free exclusive rights to use MolecularBreeding directed evolution platform technology for agricultural applications.
"This has been a fantastic return on the investment for Maxygen shareholders," said Russell Howard, CEO of the Redwood City, Calif.-based company. "Maxygen has spent minimal funds on this activity over the last seven years."
All 50 of Verdia's employees will receive offers for employment with DuPont, which will retain Verdia's name, leadership team and its Bay area offices. Verdia's assets will enhance DuPont's gene research and trait discovery capabilities, allowing the company to reach research targets up to three years faster.
Howard told BioWorld Today that Maxygen would receive the cash proceeds upon government clearance of the sale, expected within 60 days. Those proceeds would be used to advance the company's preclinical-stage programs. Within the next 18 months, Maxygen plans to move into the clinic an improved interferon beta for multiple sclerosis, as well as a granulocyte-colony stimulating factor for neutropenia. The company also has an improved interferon-alpha treatment in development with F. Hoffmann-La Roche Ltd., of Basel, Switzerland, for hepatitis B and C infections.
Aside from advancing its therapeutic programs, the money will help the company build itself in the therapeutic area.
"We will look to in-license, to do joint ventures, to acquire assets in other companies," Howard said.
At the end of 2002, Maxygen spun out its wholly owned subsidiary Codexis Inc., a company focused on developing biocatalysts and improved manufacturing processes for drugs. The spinout of Codexis and the sale of Verdia are both part of a strategic plan to transform Maxygen from a company focused in four different areas (agriculture, protein pharmaceuticals, chemical manufacturing and vaccines) to one focused simply on therapeutics.
In 1999, Maxygen formed a collaboration worth $85 million between Verdia and Pioneer Hi-Bred International Inc., which now is a DuPont subsidiary, to accelerate the development of advanced crop genetics in corn, soybeans and other crops. Researchers from the companies recently unveiled an agricultural trait developed through gene shuffling in the May 21, 2004, issue of Science. Pioneer is studying that trait, called glyphosate resistance, in field tests of corn. It could be on the market within the next five to six years. (See BioWorld Today, Jan. 26, 1999.)
Later in 1999, Maxygen signed a five-year research deal worth $125 million with Zeneca Agrochemicals to develop input and output traits for several crops. Zeneca later merged with Novartis Agribusiness to form Syngenta AG, of Basel, Switzerland. (See BioWorld Today, Aug. 12, 1999.)
Howard said it was those two deals that helped build the Verdia business.
"Over a five-year period, we have been able to grow the value of the business based on DuPont financing and the research collaboration with Zeneca, then later Syngenta," he said. "We grew the value of that business with two corporate partners, each of them five-year deals that brought in good revenues."
Maxygen's MolecularBreeding technology is based on a gene-shuffling approach and should help Pioneer identify and develop a number of new traits to help plants survive costly environmental events. Droughts, for example, cause more than $8 billion in losses for farmers annually.
Pioneer also plans to use the technology to develop crops that more efficiently use key inputs such as nitrogen. U.S. farmers apply an average of 136 pounds of nitrogen per acre each year, costing them an average of $40 per acre over the past 10 years.
DuPont's nutrition and health businesses also could tap into the Verdia technology to improve plants' health benefits, nutritional value and taste for consumers, and processing attributes for food manufacturers.
As of March 31, Maxygen had $174 million in cash, which is augmented by the $64 million cash payment for Verdia, Howard said.
The company's stock (NASDAQ:MAXY) rose 15 cents on Thursday, to close at $9.81.