CARLSBAD, Calif.—Roughly seven months after making a second $20 million investment in Isis Pharmaceuticals subsidiary Ibis Biosciences, Abbott announced last week that it would exercise its option to buy the remaining 81.4 percent of the company it does not own for an additional $175 million, bringing the total enterprise price to $215 million. With the acquisition, Abbot gains rights to the Ibis T5000 Biosensor System, a molecular diagnostic platform used for the identification and characterization of infectious agents.
Once the sale is closed, Isis will sport more than $600 in the company coffers, but don't expect it to go on a buying spree of under-funded pharma and biotech companies, at least according to Dr. Stanley Crooke, company chairman and CEO.
"We have been very clear that we have a well-defined strategy and we are committed to the business strategy develop and discover drugs and license them at Phase II," Crooke said during a conference call detailing the sale. "With our added muscle we can exercise our strategy without compromise."
In practice, Crooke said, that would mean "moving more drugs into development for our partners each year to about three or four." It would also allow the company to do more robust Phase II trials work than it has in the past, as well as provide added funding for the company to continue development of the antisense discovery platform that is the core of the company.
Investors reacted favorably to the news of the sale, sending shares of Isis up more than 7 percent the day of the announcement from $12.93, up from the previous day's close of $12.05, a trend that continued for the rest of the week, with Isis hovering near the $14 per-share market in late Friday trading.
For Abbott, the purchase seemed to be practically a foregone conclusion, since it invested $40 million in two separate tranches earlier this year, at which time the company also received the exclusive option to buy Ibis before June 2009. The diagnostics tools will be managed under Abbott's existing molecular diagnostics business.
While Abbott did not comment by press time, Stafford O'Kelly, vice president of Molecular Diagnostics at Abbott, had this to say about the acquisition in a press release announcing the deal: "The broad applicability of Ibis' technology has been demonstrated in biodefense applications, microbial forensics and infectious disease detection and surveillance, and we believe that it has the potential to be a powerful tool in the detection and surveillance of infectious diseases in the hospital and clinical settings."
Currently, the Ibis tests are only available for research use, though it is clear the intention, once they are fully developed, is to bring them to the clinical diagnostic and hospital setting for a broad range of applications.
According to company information from Ibis, the Ibis T5000 "is capable of identifying virtually all bacteria, viruses and fungi, and can provide information about drug resistance, virulence and strain type of these pathogens." Potential applications include the detection identification of emerging or even unknown pathogens, monitoring of pandemic diseases, forensic characterization of human samples, identification of sources of hospital-associated infections, as well as other potential future uses.
Under the terms of the deal, expected to close in early January, Isis will receive royalties on Ibis sales of 5 percent once sales reach $140 million through to $2.1 billion and further royalties of 3 percent on total sales amounts above that amount, Or, as Isis officials put it, the sales was like licensing the Ibis technology for an upfront fee of $215 million with ongoing royalty streams. DDN
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