Wednesday, April 23, 2008

Wow: Glaxo Pays an 84 Percent Premium for Sirtris Pharma

This one will be an HBS case study before long: how do you take some very early academic research from Harvard and generate $720 million of value in just four years?

GlaxoSmithKline is paying that amount, in cash, for Cambridge's Sirtris Pharmaceuticals, which develops drugs based on the chemical resveratrol. Resveratrol is an ingredient found in red wine, and it may help fight diseases related to aging. Even more fantastically, it seems to extend lifespan in mice.

Sirtris has no drugs on the market and no revenues. It was founded in 2004, and went public last year. Its most advanced drug candidate, SRT501, aims to treat diabetes, but it just completed Phase 1b trials, the results of which were announced in January.

The biggest question about this deal -- not addressed in any of the stories -- is, how long are Westphal and his key team members required to stick around after this acquisition? I wonder whether they'll have the desire, or the incentives, to stick around long enough to transform the company's early promise, which was clearly attractive to Glaxo, into actual drugs.

Here's the NY Times coverage ... and the story from today's Boston Globe. Forbes notes that the deal is part of a trend of foreign pharma companies buying US firms because of the weakness of the dollar. Bloomberg ran an earlier piece on the company, last November, 'Sirtris may fight diseases of age.' Xconomy has a Q&A with Sirtris exec Michelle Dipp, who handles corporate development and PR for the company.

I wrote about Sirtris and one of its predecessors, Elixir Pharmaceuticals, last November in the Globe.

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