- Forma Therapeutics has revealed that it has done a deal with Novartis, agreeing to use its chemistry platform to develop inhibitors for an undisclosed protein-protein interaction target in oncology.
- The license and option pact is worth up to $200 million in upfront fees and milestones.
- Forma only recently dropped its stealth approach to announce that it had raised $25 million to pursue new compounds that could target pathways disclosed by the Cancer Genome Atlas Project.
- Its three founding scientists have played a key role in the field at the Broad Institute.
- Reinhard Ambros, head of the Novartis Venture Funds (NVF) says: “Protein-protein interactions represent important target opportunities in the field of oncology drug discovery, but have been highly elusive to date. Novartis is very excited to be collaborating with Forma to access their biology and chemistry expertise and powerful discovery tools to unlock this challenging target class.”
This press release has more details.
Deal Analysis:
- The very high P/E of most biotech deals makes it difficult for a non-pharma investor to even give it a serious consideration. So in that sense, the investor pool is limited.
- Forma Therapeutics has done a great job in securing the deal and the associated funding. As rhe capital markets dry-up, there won’t be many takers for biotech investments. And in that sense, this $25-$200 million is probably worth 5x the amount in bullish times.
- Lets hope Forma Therapeutics uses the funding wisely and R&D that can be resold for rapid revenue generation. Investors will not wait for 4-5 years to see results. Getting the funding is the first step… delivering on it is a bigger step. Tangible results are needed in 12-18 months. Lets see how it goes.
Situation Analysis: Shares of the UK’s Protherics surged more than 30 percent after the biotech announced that “a number of parties” have expressed an interest in buying the company. Rumors about a possible buyout had already triggered a rise in share value, which prompted the statement.
Protherics recently launched a Phase IIa trial for its Angiotensin vaccine therapy for hypertension. CEO Andrew Heath has already remarked that Angiotensin offers a major out-licensing opportunity. Data from that trial is expected in about a year. CytoFab is in mid-stage development for serious infections, but data from that trial won’t be available until 2010. That leads at least one analyst to doubt that any of the bidding is coming from a blue chip pharma company.
Company Official Announcement
Protherics PLC
Re: share price rise
London, UK; Brentwood, TN, US; 13 August 2008 – Protherics PLC (“Protherics” or the “Company”), the international biopharmaceutical company focused on critical care and cancer, notes today’s rise in the Company’s share price and confirms it has received approaches from a number of parties interested in acquiring Protherics, which the board is considering. However, there can be no certainty that any formal offer will be made, nor as to the terms on which any offer might be made. A further announcement will be made in due course.
In accordance with Rule 2.10 of the City Code on Takeovers and Mergers (the “Code”), Protherics confirms that at the close of business on 12 August 2008, it has 342,159,034 ordinary shares of 2 pence each in issue and admitted to trading on the London Stock Exchange under the UK ISIN code GB00070290.
About Protherics
Protherics (LSE: PTI, NASDAQ: PTIL) is a leading international biopharmaceutical company focused on specialist products for critical care and cancer. Protherics has produced two FDA approved biologics for critical care use which are currently sold in the US: CroFab™, a North American pit viper antivenom and DigiFab™, a digoxin antidote.
Protherics reported revenues of £26.1 million for its year ended 31 March 2008 and a strong cash balance of £37.7 million. The Company’s strategy is to use the revenues generated from its marketed and out-licensed products to help fund the advancement of its broad, late stage pipeline.
Protherics has two major development opportunities in its portfolio. CytoFab™ is being developed by AstraZeneca, for the treatment of severe sepsis, following a major licensing deal announced in December 2005. AstraZeneca is conducting an additional phase 2 programme following changes to the commercial manufacturing process. A new formulation of Angiotensin Therapeutic Vaccine, for the treatment of hypertension, has today commenced a phase 2a study. Protherics also has Page 3 four novel products being developed in a range of cancer indications where it intends to undertake the sales and marketing in the US and/or the EU.
With headquarters in London, the Company has approximately 300 employees across its operations in the UK, US and Australia.
