Biologics buyouts: Merck buys GlycoFi, Abmaxis
Merck spends $480 million to acquire GlycoFi and Abmaxis to further strengthen its antibody and yeast expression technologies
WHITEHOUSE STATION, N.J.—Merck & Co. got out its checkbook recently as it continues to strengthen its commitment to vaccine and biologics research and development with two separate acquisitions of biotechs plying the yeast expression and antibody research and optimization waters. In separate all-cash deals, Merck first closed on its $400 million acquisition of Lebanon, N.H.-based glycoengineering specialist GlycoFi, then two weeks later bought monoclonal antibody company Abmaxis of Santa Clara, Calif., for $80 million.
"Our acquisition of Abmaxis…coupled with Merck's own industry-leading capabilities in yeast expression technology and our acquisition of GlycoFi and its complementary technologies, positions us to become a significant player in the important and growing field of biologic drugs," says Peter S. Kim, Ph.D., president, Merck Laboratories.
Both acquisitions were essentially born out of prior agreements Merck has signed with each company to apply their technology to particular areas of interest to the pharmaceutical giant.
In the case of GlycoFi, late last year Merck signed a long-term research agreement focused primarily on vaccine optimization. Merck also made a small equity investment in GlycoFi at that time. Likewise, Abmaxis has been a collaborator with Merck since late 2004, applying its expertise to help re-engineer a human monoclonal antibody that improved antibody affinity more than 70-fold while still retaining its specificity.
"We have nine priority areas of research at Merck and novel vaccines is one of them," says Janet Skidmore, director of public affairs for Merck. "Our CEO, Dick Clark, said last year that we would be focusing on a strategic objective of acquiring select biotechnology companies that complement our pipeline and internal research capabilities and this is definitive first step
For the management at GlycoFi, it was almost the perfect time to sell the company. "We were founded as a platform company six years ago," says Tillman Gerngross, Ph.D., GlycoFi founder and CSO. "In order to position a platform company as a product company, you need to come up with your own drug. While our technology is very powerful, we knew there would be significant obstacles in terms of attracting the regulatory and clinical expertise and in finding funding to build a fully integrated biotech in Lebanon and Hanover, N.H."
Also at play were issues of capacity and workflow. While GlycoFi recently wrapped up a number of smaller research agreements with other companies, some big players were looking step up the number of research collaborations. In addition to Merck, GlycoFi also has an existing research deal with Eli Lilly it signed in mid-2005.
"Lilly had signed their third agreement with us, when Merck came in with a very large agreement," Gerngross says. "Then, Lilly wanted to do a fourth agreement and we were basically booked out. What ended up happening is that the access both parties wanted was not available because they were splitting us and I think if they really wanted to fully integrate this technology into their discovery and manufacturing platform they needed to own it."
While Abmaxis and GlycoFi have complementary technologies, Skidmore is quick to point out that the GlycoFi acquisition is not strictly a vaccine play. "We think that their ground-breaking technology will enhance our ability to produce novel drugs in lots of therapeutic areas, notably oncology which is also one of our priority areas. In addition, their technology will not only help speed discovery and development of therapeutics but can potentially lead to a more effective platform for the manufacture of therapeutic proteins and vaccines."
Plans call for GlycoFi's 55 employees to remain in their New Hampshire location for at least the next two years while Merck evaluates those operations. In addition, Gerngross will stay on through the initial transition to Merck this year, and then serve as a consultant through 2007, as he resumes duties as a professor at Dartmouth College.
Skidmore anticipates that the smaller Abmaxis operation, with only 11 employees, will be folded into one of its many research facilities in North America.