Los Angeles County's biggest privately held biotech firm has agreed to sell itself to Japan's second-largest pharmaceutical company in a deal that could be worth more than half a billion dollars to investors.
Santa Monica-based Agensys Inc. has signed a definitive agreement to be acquired by the U.S. subsidiary of Astellas Pharma Inc. for $387 million up front. Agensys' shareholders could receive up to $150 million more if the company meets certain milestones while developing its cancer drugs.
The deal is considered the largest in this decade for an L.A.-based private biotech. The transaction is expected to close by the end of the month, pending approvals by regulators and Agensys shareholders.
"This is a deal that is good for investors, good for our people, and hopefully this will become the basis for building another significant (area of) biotech activity in the Los Angeles area," said Chief Executive Donald Rice, who was recruited to run the fledgling biotech after a career as secretary of the Air Force and president of think tank Rand Corp.
A UCLA spinoff, Agensys has one drug candidate being developed with Merck & Co. Inc. that is in early-stage clinical trials to treat prostate cancer and other solid tumors. It also has at least 30 potential treatments for kidney, colon, and other cancers in its pipeline. Some are being developed with biotech industry giant Genentech Inc. and other partners.
The deal itself is a milestone in several respects. Unlike many outside companies that have acquired an innovative L.A. life sciences company only to move its assets elsewhere, Tokyo-based Astellas is promising to keep Agensys in Los Angeles County and grant management and scientists significant autonomy at least for now.
Key members of the management team, including Rice and Chief Scientific Officer Dr. Aya Jakobovits, have agreed to stay on. Astellas also is promising to pour additional resources into the company to help it grow far beyond its current 100 employees.
"Agensys will be the cornerstone of our biologics efforts and an integral component of building our oncology efforts within our franchise," said Chief Executive Masafumi Nogimori when the deal was announced.
Astellas was formed from the 2005 merger of Japan's fourth and fifth largest pharmaceutical companies. The company makes a wide variety of drugs, including those used in cholesterol management, organ transplant and treating respiratory diseases.
Agensys is valuable because it has one of the more innovative drug development platforms in the business. It is based on antibodies, proteins that the body's immune system employs to attack foreign bodies or malignant cancer cells. Since antibodies are naturally occurring, its drugs can theoretically cause fewer side effects than conventional radiation or chemotherapy.