Biogen Idec to acquire Stromedix in deal worth potentially more than $560 million

Stromedix’s lead candidate, STX-100, is a novel humanized monoclonal antibody that selectively disrupts the TGF-beta pathway, which plays a central role in fibrotic disease

Jeffrey Bouley
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WESTON & CAMBRIDGE, Mass.—BiogenIdec has entered into a definitive agreement to acquire StromedixInc., a privately held biotechnology company focused on innovativetherapies for fibrosis and organ failure, with Stromedix bringing toBiogen Idec a "highly differentiated candidate for treatment offibrosis" and "complementing Biogen Idec's Scientific expertiseand core capabilities in immunology,"

Under the terms of the agreement,Biogen Idec will make an upfront cash payment of $75 million andadditional contingent value payments of as much as $487.5 millionbased on the achievement of certain development and approvalmilestones across multiple indications.

Stromedix's lead candidate, STX-100,is a novel humanized monoclonal antibody that selectively disruptsthe TGF-beta pathway, which reportedly plays a central role infibrotic disease. According to Biogen Idec,STX-100 exhibitedsignificant anti-fibrotic activity in preclinical animal models offibrotic disease and demonstrated an attractive safety andtolerability profile in a Phase I trial.

Stromedix has also identified a seriesof clinical biomarkers that reflects the biological activity ofSTX-100.

STX-100 is entering a Phase II trial inpatients with idiopathic pulmonary fibrosis (IPF), a debilitating andtypically fatal disease in which patients experience progressivedifficulty breathing due to scarring of the lungs. More than 200,000patients in the United States and Europe have IPF, and there is noFDA-approved treatment for the disease at this time. STX-100 haspotential in several additional fibrotic indications given itsselective mechanism of action. In addition to STX-100, Stromedix hasa preclinical compound that may have utility for the treatment ofinjury due to inflammation.

"Fibrotic organ failure, and inparticular IPF, is a terrible disease with a high mortality rate, andthere are no effective treatments at this time," said Douglas E.Williams, executive vice president of R&D at Biogen Idec. "Webelieve STX-100 has the potential to be a best-in-class therapy andit is an excellent strategic fit with our focus on highlydifferentiated programs with the potential to make a real differencefor patients. The Phase II program complements our scientificexpertise and advances our research and development efforts inimmunology. We are pleased to welcome Mike and his team back toBiogen Idec to drive STX-100's continued development."

If the "welcome back" messagedoesn't ring any bells, Stromedix CEO Dr. Michael Gilman, who is nowreturning to Biogen Idec, had in 2005 resigned as head of researchfollowing a large layoff at Biogen Idec. Moreover, STX-100, whichmore or less represents the full value of Stromedix, was in-licensedfrom Biogen Idec back in 2007. So a key person and a key asset returnto Biogen Idec after having been largely "de-risked" by anothercompany that now becomes part of Biogen Idec. As Steve Dickman wroteat, Biogen Idec let Stromedix "do the hard part."after letting STX-100 go because it looked too challenging and toorisky, and now venture capital investors are looking at a two-timesreturn on investment, with an eventual five-times return not beingoutside the realm of likelihood if the most likely milestones arereached—and around a 19-times return on investment in the highlyunlikely event all milestones are reached.

"With a well-establishedunderstanding of the fundamental biology and tremendous unmet medicalneed, fibrosis is one of the most exciting and dynamic areas of drugdevelopment today," said Gilman in the news release about theacquisition. "We appreciate Biogen Idec's focus in immunology andtheir tremendous international R&D and commercial capabilities.By joining forces, we expect to accelerate the development of STX-100and other promising early-stage drug candidates. This begins a newchapter for all of us at Stromedix, and we look forward to a brightfuture as part of Biogen Idec."
The transaction is subject to customaryclosing conditions.

STX-100 is a novel, humanizedmonoclonal antibody that selectively targets integrin αvβ6. STX-100binds to αvβ6, preventing αvβ6 from binding to latent (orinactive) TGFβ complex and converting it to active TGFβ, thecentral driver of fibrosis. STX-100 has exhibited significantanti-fibrotic activity in preclinical animal models. In August 2010,the FDA granted orphan drug designation to STX-100 for the treatmentof IPF. Stromedix believes that STX-100 has potential therapeuticapplication across a broad number of fibrotic diseases.

Jeffrey Bouley

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