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Lilly acquires oncology biotech SGX Therapeutics for $64 million

Amy Swinderman
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INDIANAPOLIS—What began as a research development partnership between Eli Lilly & Co. and San Diego-based oncology biotech company SGX Pharmaceuticals Inc. has ended in a buyout. On July 8, Lilly announced the companies signed a definitive merger agreement providing for the acquisition of SGX in an all-cash, $3 per-share cash transaction totaling approximately $64 million.

The acquisition expands Lilly's footprint in the San Diego area and gives it access to Fragments of Active Structures (FAST), SGX's fragment-based, protein structure guided drug discovery technology, and a portfolio of preclinical oncology compounds focused on a number of high-value kinase targets. The transaction is expected to close in the second half of 2008.

Lilly declined to comment on the acquisition. Dr. Steven M. Paul, executive vice president of Lilly Science and Technology, said in a statement that the acquisition builds on a collaboration that began in 2003 in which Lilly used SGX's proprietary x-ray crystallography technology to determine three-dimensional structures of key Lilly drug targets.

In December 2003, the companies expanded their agreement to provide Lilly with long-term access to SGX's beamline facility at the Advanced Photon Source in Argonne, Illinois, to support Lilly drug discovery programs. Under the terms of the agreement, SGX generates crystal structure data on Lilly drug targets and compounds.

"After a successful collaboration over the past several years, we are excited to bring the scientific and technological expertise of SGX into Lilly's research organization, while at the same time expanding our presence in the San Diego area," Paul said in a statement announcing the acquisition. "We will leverage the combined resources of both companies to strengthen our structural biology capabilities and seek out innovative therapies for patients."

Dr. Stephen Burley, CSO and senior VP of SGX, says the acquisition will accelerate the potential of SGX's platform and pipeline to be realized, while simultaneously providing shareholders with attractive financial terms.

FAST is based on SGX's proprietary fragment library of approximately 1,000 structurally diverse, low molecular weight compounds. SGX's drug development programs target the MET receptor tyrosine kinase, an enzyme implicated in a broad array of cancers, and the BCR-ABL tyrosine kinase enzyme for the treatment of Chronic Myelogenous Leukemia (CML). Its drug discovery activities are focused on a portfolio of other protein and enzyme targets including JAK2, RON, ALK, RAS and IKKe that have been implicated in human cancers.

"This deal presents the opportunity to apply the SGX platform to additional Llly targets," Burley says. "We share a dedication to scientific excellence, core values and a strong belief in the power of structure. We have developed a very synergistic partnership between drug discovery and structural biology which we hope will eventually permeate all of Lilly drug discovery." DDN

Amy Swinderman

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