NEWS OF THE WEEK
BIOTECH WHEELING AND DEALING PHARMACEUTICALS: Partnerships
were the focus of BIO’s annual meeting in Philadelphia
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SK EXECUTIVES where they spent their time
during the Biotechnology Industry Organization’s annual meeting, held last week in Philadelphia, and you’re likely to hear the same answer: the partnering rooms. Inside rows of windowless cubicles, big and small companies alike were forging new relationships and cultivating the ones they already have. That much of the activity in the sprawling Pennsylvania Convention Center took place behind closed doors reflects the feverish state of the industry. In a report released at the meeting, Ernst & Young found the life sciences industry at its healthiest in a decade: Mergers and acquisitions activity has surged, a recordbreaking number of biotech companies are going public, and venture capital funds are abundant. Biotech firms raising the earliest rounds of funding brought in $1.8 billion last year, a 10-year peak. That environment has given biotech companies bargaining power at a time when big drug firms are more reliant than ever on deals to fill their pipelines. “All of that comes together and makes it really competitive,” said Kevin Sin, director of oncology business development at Genentech. Deals are happening faster, at higher prices, and for riskier programs, Sin noted. Drug firms are also trying to tap innovation earlier. During the meeting, GlaxoSmithKline unveiled two sizable investments founded in early-stage science. The big pharma firm committed $95 million to support
launch of the Altius Institute for Biomedical Sciences, a Seattle-based nonprofit that will focus on gene control. Altius will be led by the University of Washington’s John A. Stamatoyannopoulos, better known as Stam, who in 2012 showed that the human genome doesn’t just contain the recipes for making proteins; it also dictates how genes are controlled in different kinds of cells. The potential to harness gene control moves genetics beyond simply identifying the important targets or mutaSURGE Investors are pouring cash tions in disease to being able to into early-stage biotech firms. probe “under what conditions and in which tissues” they are Number of companies worth $1 billion active, said Lon Cardon, GSK’s without an approved drug head of alternative discovery 30 and development. 25 When up and running, the 20 nonprofit is expected to house 40 to 80 scientists, about 10 of 15 whom will come from GSK. The British firm hopes that Stam’s 10 technology will provide insight 5 into how its molecules work 0 and, by extension, point to rel2007 08 09 10 11 12 13 14 evant measurements to make in clinical trials. NOTE: Based on market capitalization at the end of 2014. SOURCES: Ernst & Young, S&P Capital IQ Separately, GSK and Avalon Ventures backed three new companies—Adrenergics, CadheRx Therapeutics, and Calporta Therapeutics—as part of their 2013 pact to jointly launch up to 10 new firms. Each biotech firm will receive up to $10 million in its first round of funding. Meanwhile, Johnson & Johnson announced 17 partnerships with academic institutions and biotech companies. The deals, which bring J&J new drug discovery tools, span small molecules, antibodies, and RNAbased therapies.—LISA JARVIS
LAB CHEMICALS To buy Sigma-Aldrich, Merck KGaA must divest major laboratory lines The European Commission has approved Merck KGaA’s $17 billion acquisition of Sigma-Aldrich on the condition that the company divest parts of Sigma-Aldrich’s laboratory solvents and inorganic chemicals businesses. The requirement is designed to protect purchasers of lab chemicals from being monopolized, but reactions by purchasers are mixed. Merck will have to sell a facility in Seelze, Germany, where most of Sigma-Aldrich’s solvents and inorganic chemicals for Europe are produced. The firm will also have to give up the worldwide rights to the Riedel-de Haën, Hydranal, and Fluka brands. Together these brands feature
thousands of reagents for applications including chromatography, microbiology, spectroscopy, and titrations. Additionally, Merck is required to grant a temporary license for the SigmaAldrich brand of solvents and inorganic chemicals in Europe. “We are relieved that we will still continue to have choice,” says Oliver Tames, founder of England-based process technology start-up IntensiChem, a regular purchaser of lab chemicals. “A significant amount of our chemical inventory has been sourced from Sigma-Aldrich.” Caroline Briggs, director of Amici Procurement Solutions, a Scottish purchas-
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ing agency, says she is more concerned about which company will take over the businesses slated for divestment. “I felt the high degree of quality infrastructure at Merck coupled with the second-tonone delivery performance of Sigma would be a great thing for the market,” Briggs says. The commission isn’t requiring divestments in the two firms’ bioscience products and drug raw material businesses because it sees a sufficient level of competition. Merck has already gained approval for the acquisition, announced last September, in key markets including the U.S., Taiwan, and Russia.—ALEX SCOTT
