By Matthew Willett
Comparative genomics player Exelixis Inc. will expand its model system approach for novel therapeutic discovery to the arena of plant biology through the acquisition of Agritope Inc. in a $68 million stock transaction.
The 1.5-million-share deal, which will give Agritope shareholders a 6 percent stake in South San Francisco-based Exelixis, gives Exelixis an agricultural-based functional genomics and biotechnology platform that includes plant improvement and plant functional genomics research and development.
Agritope shares (NASDAQ:AGTO) finished the day up 68 percent at $11, a 52-week high for the Portland, Ore., company. Exelixis' stock (NASDAQ:EXEL) fell $1.81 to $44. The $68 million value of the deal was based on Friday's opening price of Exelixis.
"Agritope offers a number of strategic additions for us to the plant program," said Angela Bitting, Exelixis' associate director of corporate communications. "They have a tremendous intellectual property portfolio in plant transformation and gene expression, and in expression in plant models. We're pretty exclusively chlamydomonas and ustilago, and Agritope has an extensive knockout program in Arabidopsis as well as in micro-tomatoes."
She added that some of Agritope's proprietary technology could have significant discovery potential.
"They have some very exciting technology to turn genes on and off in plants, and that's different," Bitting said. "Knockouts are traditional, but a knock-in is different, and that's important because plants have many silent genes."
As of June 30, Exelixis had cash and cash equivalents of about $126 million. It completed its initial public offering in April, netting $126 million, including the overallotment option. (See BioWorld Today, April 12, 2000, p. 1.)
The company currently has about 45 million shares outstanding, including the 1.5 million shares to be issued to Agritope stockholders, assuming they approve the deal, which is scheduled to be voted upon by the end of the year.
Exelixis focuses on moving from DNA sequence data to protein and genetic function knowledge through its model systems, applying that comparative genomics expertise to pharmaceutical discovery, diagnostic tool development and the agriculture industry. Its model system genetics process takes advantage of the short life cycles, biology and ease of genetic manipulation in species such as the fruit fly and the nematode worm. The company scans the entire genome of the organisms for genes capable of leading to a desired outcome.
Agritope has a 50 percent position in a joint venture with Aventis CropScience, called Agrinomics LLC, in the area of plant functional genomics.
Through further partnering and development, Bitting said the company stands to significantly expand its operations through the acquisition.
"It's really very compatible to what we're doing here and we're very confident that together the company can significantly leverage the technology to create additional relationships with many different kinds of agribusiness companies," she said.
The company is already considering partnership options relating to the recently acquired technology, Bitting said, in a variety of areas. Exelixis currently partners with Pharmacia Corp., of Peapack, N.J.; Bayer AG, of Leverkusen, Germany; and Bristol-Meyers Squibb Co., of New York.
"We're very excited about all the things that are going on," Bitting said. "There are a number of things that are ongoing, like our oncology program, and in much of our intellectual property we're moving very rapidly so that we can continue to deliver targets to our partners."