An interview with the GSK head of drug discovery on the Sitrtris purchase. Courtesy of the Forbes website:
Why Glaxo Bought Sirtris
Matthew Herper, 04.24.08, 6:00 AM ET
Tuesday night, drug giant GlaxoSmithKline announced it was buying Sirtris Pharmaceuticals of Cambridge, Mass., for $720 million in cash. Sirtris has generated a lot of hype because it is developing anti-aging drugs, some of which are based on resveratrol, a chemical in red wine.
The company's business plan was based on developing drugs based on enzymes called sirtuins, which are involved in aging. These medicines, it is hoped, could mimic the life-prolonging effects of a calorie-restricted diet. Sirtris Pharmaceuticals ' first drug is a treatment for diabetes.
The stock market hasn't been kind to Sirtris, which was trading at $12, down 45% from its 52-week high. But GlaxoSmithKline decided the market had it completely wrong, paying $22.50 a share in the buyout deal.
It's one of the bigger biotech deals this year, and, like Takeda's $9 billion acquisition of Millennium Pharmaceuticals, also of Cambridge, Mass., it's a purchase of a U.S. biotech by a foreign acquirer. Sixty percent of the $80 billion spent purchasing U.S. health care firms this year was spent by foreign buyers.
Forbes chatted with Patrick Vallance, head of drug discovery at GlaxoSmithKline, to find out why the drug maker decided to make such an expensive purchase of an essentially unproven medicine. Excerpts of the conversation are below.
Forbes.com: Why buy Sirtris?
Vallance: Great pathway, real opportunity for transformational medicines, the leading group in terms of their insight into those pathways, real progress in terms of the chemistry and small molecule of those enzymes. We're very keen to have deep expertise in areas we see as transformational. For us, Sirtris looked like a great place to invest, a great group of scientists who we think are going to deliver.
You've said you want to keep Sirtris basically intact. How do you keep researchers from jumping to other biotechs?
We'd like to retain the entire team. We're going to enable these people to make the medicine they really want to make. What we're going to do is enable them to turn that from where they are now to creating a medicine to treat disease. That is even more important than the various financial measures we've put in place to try and retain people.
How did the weak dollar play into this deal?
Not at all. It's nice it's a weak dollar, but that wasn't a starting position, we weren't weighing this up against something elsewhere in the world. We wanted to make sure we paid a fair price for it. Clearly the price is what it is, and [with] the exchange rate what it is, we think we paid the right price for what we bought.
Why didn't the stock market see the same value in Sirtris that you do?
It's high-risk. It's an area of science that's fascinating. Like a lot of areas of science, it's got its controversies, and like many biotechs in this stage, with a good pathway, this hasn't been proven yet. It has to be proven with a medicine. We're forever investing in high-risk things. That's what we do in the pharmaceutical industry. We're pretty clear that we see a big opportunity here.
Are you interested in the drugs Sirtris has already created, or in creating new medicines based on the company's knowledge of sirtuin biology?
I think the theme is Sirtris has done a great job in both biology and chemistry. They have a great team. Can we bring new things to the table? Of course. One area is expertise in pre-clinical research and in formulation. Another is a long experience in small-molecule drug discovery.
The whole idea is that we not swamp Sirtris. Now they can do things with a scale and know-how that's much more difficult if you're in a group of 60 people than if you're in a large organization that has done this for years.
edited for typos...
Edited by malbecman, 08 May 2008 - 10:36 PM.
LongeCity
