sanofi-aventis continues R&D spending spree

French pharma acquires U.S. biopharmaceutical firm TargeGen for $75 million

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PARIS—Targeted toward shoring up its pipeline of oncology products, leading global drugmaker sanofi-aventis has signed an agreement for the acquisition of U.S. biopharmaceutical TargeGen Inc., known for developing small-molecule kinase inhibitors for the treatment of certain forms of leukemia, lymphoma and other hematological malignancies and blood disorders.

sanofi-aventis will make an upfront payment of $75 million for the closely held company, based in San Diego, Calif. The transaction is expected to close in the third quarter of this year. Additional payments tied to reaching development goals on TargeGen's lead product may bring the total purchase price to $560 million, sanofi-aventis says.

"The acquisition of TargeGen represents a further significant step to increase our engagement in the field of hematological malignancies," says Marc Cluzel, sanofi-aventis' executive vice president of research and development.

The TargeGen purchase is a coup for sanofi-aventis, giving the French pharma an experimental treatment for myelofibrosis, a bone marrow disorder that disrupts the body's production of blood cells, causing fatigue and an enlargement of the spleen. TargeGen completed early-stage patient studies last year of the drug, known as TG 101348—and more trials are planned for this year, sanofi-aventis says.

Jack Cox, director of public affairs and media relations at sanofi-aventis' U.S. bureau in Bridgewater, N.J., says the TargeGen acquisition is crucial to the company's long-term oncology pipeline plans.

"There are no currently approved specific therapies for myelofibrosis, polycythemia vera or essential thrombocythemia, which collectively constitute the major myloproliferative diseases," Cox says.

These disorders are estimated to affect more than 200,000 patients in the United States and more than twice that total worldwide. Preclinical data on TargeGen's highly selective Janus kinase 2 (JAK-2) inhibitior, TG 101348, provides a relative indication of a potential best-in-class profile, he says. This would need to be demonstrated in further clinical studies.

"Although listed in San Diego, TargeGen is a rather virtual organization mainly working with contractors and consultants," Cox says. "It is therefore our intention to integrate the TargeGen activities into sanofi-aventis."

sanofi-aventis CEO Christopher Viehbacher may be acquiring experimental drugs in part because the company's labs haven't been bringing new products to market fast enough to offset sales being lost to competition from generic products, according to some analysts. sanofi-aventis did two to three acquisitions a month in 2009, and will probably do the same in 2010, Viehbacher stated in February. With the TargeGen purchase, sanofi-aventis has added about 20 projects to its cancer pipeline in the past year, he says.

Peter G. Ulrich, president and CEO and co-founder of TargeGen, says, "sanofi-aventis brings many strengths to the continued development and potential commercialization of TG 101348. With its global focus on oncology and long term commitment to this patient population, we are confident they will maximize the potential of TG 101348 across multiple clinical indications."

Ulrich says he considers the $75 million sanofi-aventis pays upfront as "the first payment on an acquisition that goes to TargeGen shareholders. After closing, sanofi-aventis owns the company and pays for all further drug development."

TargeGen's owners include five investment firms: Forward Ventures, Enterprise Partners Venture Capital, Chicago Growth Partners, VantagePoint Venture Partners and BB Biotech Ventures.

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