Boston Biomedical Inc. to be acquired by DSP

OSAKA, Japan—Dainippon Sumitomo Pharma Co., Ltd. (DSP) has announced the finalizing of an agreement with Boston Biomedical Inc. (BBI), under which DSP will acquire the Norwood, Mass.-based company.

Per the terms of the agreement, DSP will pay $200 million upfront to BBI and its shareholders on closing of the acquisition of the shares, with the potential for development milestone payments of up to $450 million related to BBI608 and BBI503, BBI's compounds currently in development. After the launch, DSP will make milestone payments of up to $1.89 billion based on the achievement of net sales targets. The company plans to have the two compounds commercialized in 2015 or later.

"Acquisition of BBI is not only an acquisition of an innovative pipeline in the oncology area, it also represents obtaining an excellent drug discovery/development platform with the capabilities of BBI, enabling us to continuously create candidate compounds likely to advance into later development stages," Masayo Tada, Representative Director, President and CEO of DSP, said in a press release. "Subsequently we intend to establish our R&D base in the U.S. to expand our presence in cancer treatment globally. We are aiming to make the oncology area one of our future focus therapeutic areas next to the CNS area."

The boards of directors of both companies approved the transaction, which is subject to customary closing conditions. The acquisition is expected to close in April, after which BBI will become a fully owned subsidiary of DSP and will continue operations in the Boston area. Citigroup Global Markets Japan Inc. served as DSP's financial advisor for the transaction.

The companies already have a history, having signed a product option license agreement with each other in March 2011 on the development and commercialization rights for BBI608, small-molecule oral drugs from BBI aimed at instigating an antitumor effect in cancer stem cells. Under the agreement, DSP paid BBI $15 million in an upfront payment and clinical trial support. The agreement gave DSP the option to acquire exclusive rights to develop and commercialize the compound in Japan, as well as an exclusive negotiation right for the United States and Canada for a set period of time. DSP was also responsible for paying $55 million during the option agreement period for development costs and continuation for the option.

BBI's focus is in oncology, and its foremost pipeline products are BBI608 and BBI503, both small-molecule oral drugs that target cancer stem cells. Anticancer drugs that target these stem cells are increasing in popularity given their potential efficacy against refractory, recurrent and metastatic cancer cases. The difficulty inherent to singling out a molecule specific to cancer stem cells, however, means that no such drugs have been successful thus far. BBI's drug candidates are currently in clinical trials to target cancer stem cells. A Phase III trial of BBI608 in colorectal cancer is preparing to get underway, as are Phase Ib and II clinical trials for various solid tumors. Thus far in clinical trials, the compound has shown excellent safety, favorable pharmacokinetics and some encouraging signs of anticancer activity. BBI503 is in a Phase I clinical trial for patients with various advanced solid tumors.

"Cancer stemness represents an exciting new frontier for developing novel drugs against cancer with the potential to achieve differentiating clinical efficacy compared to conventional chemotherapy and current targeted agents," Chiang J. Li, Founder, Chairman and CEO of BBI, said in a press release. "With DSP's outstanding track record in bringing innovative medicine to patients, we believe this strategic transaction represents the best path toward bringing our first-in-class cancer stemness inhibitors to cancer patients."