Global Insight Perspective | |
Significance | Under the acquisition agreement, which is expected to close in January 2007, Domantis will be embedded in GSK's Biopharmaceuticals Centre of Excellence for Drug Discovery (CEDD), while continuing to operate from its existing laboratories in Cambridge. |
Implications | Domantis' speciality is so-called 'domain antibodies', which are smaller than the currently available monoclonal antibodies and have the potential to be administered in more convenient inhaled, topical and even oral formulations. |
Outlook | The deal highlights a trend, whereby having divested much of its interest in early-phase antibiotic research in response to a tough regulatory and commercial environment, Big Pharma is now buying back into the field at a high price through smaller biotechs as new opportunities arise and existing portfolios mature. |
GlaxoSmithKline will pay out £230 million (US452.3 million) in cash for the Cambridge-based antibody specialist Domantis, which is privately owned by investors including Australian biotech Peptech with a 36% stake, Danish pharmaceutical company Novo Nordisk and private equity firm 3i.
Domantis was founded in 2000 by Dr Ian Tomlinson, currently chief scientific officer, and Sir Gregory Winter, board member and chairman of Domantis' Scientific Advisory Board. Both co-founders come from the U.K. Medical Research Council's Laboratory of Molecular Biology (MRC-LMB) and Sir Gregory remains a deputy director of both the MRC-LMB and the MRC Centre of Protein Engineering. The MRC-LMB also gave birth to Cambridge Antibody Technology (CAT), another antibody pioneer snapped up by GSK's U.K. rival, AstraZeneca, for nearly three times the price of Domantis earlier this year (see United Kingdom: 15 May 2006: AstraZeneca Agrees to Snap Up CAT in US$1,328 mil. Deal).
Under the acquisition agreement, which is subject to clearance under the U.S. Hart-Scott-Rodino Antitrust Improvements Act and is expected to close next January, Domantis will be incorporated into GSK's Biopharmaceuticals Centre of Excellence for Drug Discovery (CEDD), while continuing to operate from its existing laboratories in Cambridge. Chief Executive Officer Robert Connelly said the arrangement allowed Domantis to "embed our R&D organisation intact within a company committed to fully exploiting the potential therapeutic applications of our technology." Dr Tomlinson will continue to manage Domantis' Cambridge laboratories while serving as a GSK executive in the Biopharmaceuticals CEDD reporting to Dr Mike Owen, senior Vice-President, Biopharmaceuticals CEDD.
Domantis' trick has been to develop a new generation of antibody therapies that should overcome the size constraints of the current wave of monoclonal antibodies, which have the advantage of precision binding to targets, but whose unwieldy molecular size means they have to be administered by injection or infusion. Domantis' so-called domain antibodies (dAbs) are based on the smallest functional binding units of human antibodies. Not only may they be administered in more conveniently inhaled, topical and, potentially, oral formulations (as well as by injection and infusion) but the dAbs can serve as building blocks for therapeutics simultaneously directed at more than one disease target. Current research programmes at Domantis address conditions including rheumatoid arthritis, asthma, chronic obstructive pulmonary disease and multiple myeloma.
"Combining the core protein-engineering capabilities, technology, and intellectual property of Domantis with the basic science and clinical and commercial strength of GSK creates an opportunity to advance biopharmaceuticals on a global scale," commented Dr Tomlinson.
Outlook and Implications
GSK's acquisition of Domantis highlights a trend, whereby having divested much of its interest in early-phase antibiotic research in response to a tough regulatory and commercial environment, Big Pharma is now buying back into the field at a high price through smaller biotechs as new opportunities arise and existing portfolios mature. AstraZeneca's acquisition of CAT was a case in point. U.S. pharma supreme Pfizer took a similar route in June 2005, when it shelled out US$1.9 million for Vicuron—although in that case the target company actually had a late-stage anti-infectives pipeline (see United States: 16 June 2005: Pfizer Buys Vicuron in US$2 bil. Deal as Fight Against Patent Expirations Continues).
Mainstream pharmaceutical companies were put off antibiotics by price erosion in a fiercely competitive marketplace, complications in development and stringent, safety-driven regulatory standards. Smaller companies, such as Domantis and CAT, stepped in to take up the slack. At the same time, however, the widespread emergence of antibiotic resistance was creating a desperate need for effective new therapies, while patents on leading antibiotics such as Pfizer's Zithromax (azithromycin), Roche's Rocephin (ceftriaxone) and GSK's own Augmentin (amoxicillin) were starting to run out (see World: 15 November 2005: Antibiotics - The Battle Against Bacteria).
From this perspective, GSK's move on Domantis makes a lot of sense, particularly with the added attraction of more user-friendly dosing formats. Like many niche biotechs in the current market, however—where prices have been inflated by the mainstream pharmaceutical industry’s pipeline drought—Domantis has not come cheap. It is also something of a long shot: as GSK told Reuters, the first Domantis drug is not expected to enter the clinic until the fourth quarter of next year.