GSK to acquire Sirtris for $720 million

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LONDON—Lookingto strengthen its pipeline of metabolism and anti-aging compounds,GlaxoSmithKline (GSK) announced on Tuesday it reached a definitive agreement toacquire Cambridge, Mass.-based Sirtris Pharmaceuticals through a cash tenderoffer of $22.50 per share, or approximately $720 million.
"Modulation of this family of enzymes is a potentiallytransformative science that could address diseases associated with metabolismand ageing such as diabetes, muscle wasting, and neurodegeneration," commentsMoncef Slaoui, chairman of GSK R&D in a press release announcing the deal."This acquisition continues GSK's strategy of pursuing the best new science,externally or internally, to bring new medicines to patients and value to theGSK pipeline. Our intent is to retain all Sirtris employees and continue theentrepreneurial and innovative culture they created." 
To that end, GSK announced the Sirtris operation will remainat its Massachusetts headquarters and will operate as an autonomous unit withinGSK's drug discovery organization.
Current CEO and Vice Chair of Sirtris,Christoph Westphal and the rest of the management team will continue to leadthe operation. 
"We have built a dynamic and scientifically-drivenorganization. We expect this transaction will accelerate our vision to targetsirtuins to treat diseases of metabolism and ageing and deliver tremendousvalue to patients, our shareholders and our employees," says Westphal in theacquisition announcement. "We look forward to working with GlaxoSmithKline andtheir world-class research, development and commercialization organization."
Sirtris is one of a small number of companies involved inR&D programs focused on a class of enzymes called sirtuins. Sirtuins havebeen implicated in both the aging process and metabolism and have the potentialto treat a wide range of diseases including Type 2 diabetes. The company'sfocus, thus far has been on the enzyme SIRT1, which has been shown to play akey role in the health benefits related to calorie restriction. A number ofpublications over the past couple of years have suggested that the beneficialaffects of calorie restriction are triggered by the activation of SIRT1.
Currently, Sirtris has its lead compound SRT501 in Phase 1bclinical trials as a treatment for Type 2 diabetes. SRT 501 is the company'sproprietary formulation of the substance resveratrol, a natural substance thatis found most notably in red wine. Last week, the company also announced positivein vivo data that indicate overexpression of SIRT1 can aid in tumorsuppression. As a result, the company now expects to launch human trials of acancer therapeutic later this year.
Shares of Sirtris, which closed at $12.23 the day before theacquisition announcement, soared roughly 83 percent to an intraday high of$22.34 based on the $22.50 per share offer, while the market also seemed toapprove of the deal by boosting GSK shares 81 cents to an intraday high of$44.54.
At least one analyst who had an "outperform" rating onSirtris was surprised by the deal. In a story published by the AssociatedPress, Oppenheimer & Co. analyst Bret Holley said in a note to investorsthat "We had believed there was strong interest among major pharmas in Sirtris'platform technologies and compounds, but are somewhat surprised by an outrightacquisition versus a partnership in 2008."
Some of the surprise to the deal may be that it runs a bitcounter to other recent acquisitions by large pharmas which have tended totarget companies that have products already on the market or in later stagetrials, such as the acquisition of Millennium Pharamaceuticals by Japanesepharma Takeda announced earlier this month.

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