Date: Aug 16, 1995 Author: LAWRENCE M. FISHER Source: New York Times (
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Both Bristol-Myers Squibb Inc. and Biogen Inc. announced planned investments yesterday in gene-therapy companies.
Bristol-Myers said it would invest up to $20 million in Somatix Therapy Inc., a gene-therapy company in Alameda, Calif., and Biogen planned to invest as much as $35 million over the next five years in Genovo Inc., a newly formed company based in Philadelphia. Somatix shares rose $1 to close at $7.375 in Nasdaq trading; Genovo is privately held.
The deals underscore the importance of gene therapy to pharmaceutical and biotech companies alike, following closely on Sandoz Ltd.'s $295 million acquisition of Genetic Therapy Inc. in July, and the Chiron Corporation's $95 million acquisition of Viagene in April. Other big drug companies with major investments in gene therapy include Bayer, Rhone-Poulenc Rorer, Baxter International and Merck.
By treating disease with the body's own genetic material, gene therapy holds the potential to correct genetic defects and, in theory at least, treat almost every known disease. The therapy, barely five years old, involves the injection of DNA into human cells, with the goal of replacing damaged genes or producing proteins that stimulate the immune system.
The larger companies' push into gene therapy "is all about targets for drug development," said Cynthia Robbins-Roth, editor of Bioventure View, an industry newsletter. "It's a great way to leverage your drug discovery effort: you get to use the gene itself as a drug, for gene therapy; the protein that's expressed by that gene as therapy, and, eventually, if you're lucky, you can develop small molecules that act on that protein as drugs," she said. "You get three for the price of one."
In return for providing the seed money for Genovo, a company founded by James Wilson and Mariann Grossman, two leading gene- therapy specialists at the University of Pennsylvania, Biogen will receive a significant minority equity position, as well as certain licensing rights. The initial research targets will be diseases of the liver and lungs, cystic fibrosis and familial hypercholesterol.
"We believe very strongly that this is going to be one of the most exciting new frontiers in drug development," James Vincent, Biogen's chairman and chief executive, said in a telephone interview. "The impact of gene therapy on the pharmaceutical industry has the potential to equal, and quite possibly to surpass, the advances in diagnosis and treatment that the biotechnology revolution has brought about in its first 25 years," he said.
In return for certain rights to gene-therapy treatments for cancer, Bristol-Myers has bought $10 million of Somatix stock at a premium to its market value. After Jan. 1, and subject to approval for Somatix to begin the second of three human trials of its cancer vaccine, Bristol-Myers will purchase an additional $10 million in Somatix stock at a premium.
"This is a very good deal for Somatix," said Paul Boni, an analyst with Mehta & Isaly. "What they're getting from Bristol-Myers is commitment, but they're not giving up much at this point," because Somatix is only granting Bristol the right of first refusal in future negotiations. "It shows the value of getting a foothold in gene therapy," he said.
