Lilly FASTens On SGX Following Shareholder Vote To Complete Acquisition
This article was originally published in The Pink Sheet Daily
Executive Summary
Lilly acquires SGX, with its “FAST” fragment-based drug discovery platform and preclinical oncology portfolio; new subsidiary can move beyond financial woes.
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Lilly has wrapped up its acquisition of SGX Pharmaceuticals, with a majority of voting shareholders of the latter company agreeing Aug. 20 to become a Lilly subsidiary. Lilly stayed firm on its offer to buy all outstanding shares of San Diego-based SGX at $3 per share, tallying up to about $64 million and representing a 119 percent premium over SGX's price at the close of the day before the offer (1 (Also see "Let’s Make A Deal: Lilly Won’t Up SGX Bid Of $64 Million" - Pink Sheet, 4 Aug, 2008.)). It will acquire a portfolio of several preclinical oncology candidates that target tyrosine kinases, as well as SGX's fragment-based drug discovery platform, FAST, which can generate novel, selective small molecule compounds for a variety of targets. FAST is based on SGX's proprietary fragment library of about 1,000 compounds. The technology integrates several methodologies, including x-ray crystallography, on which Lilly and SGX have been partnered since 2003 to screen drug targets. Sealing the deal is likely to elicit a sigh of relief from SGX shareholders. The company's board had urged shareholders to approve the acquisition, citing the firm's need of a substantial financial infusion by the second half of 2009 to stay in business, setbacks due to the failure of its lead product candidate and the merger agreement with Lilly after a competitive process that included other potential suitors. SGX's rough year included discontinuing its lead program, the MET inhibitor SGX523, after dose-limiting toxicity was discovered in a pair of Phase I trials (2 (Also see "SGX Pharmaceuticals Reports Toxicity With Lead Oncology Candidate In Phase I" - Pink Sheet, 27 Mar, 2008.)). The firm's stock price fluctuated between $1.18 and $6.75 over the past 12 months, but crashed from about $4.45 to $1.20 per share after the SGX523 failure. In its earnings report on Aug. 7, SGX reported a net loss of $7.2 million, worsening from a $3.5 million loss for the same quarter the year before. The biotech had $23.7 million in cash and investments on hand at the end of the quarter, down from $39 million at the end of 2007. The deal will enable Lilly/SGX to move ahead on its pipeline, which includes other MET inhibitors, notably SGX126, a solid tumor compound, and SGX393, a wild-type tyrosine kinase BCR-ABL inhibitor, for relapsed/refractory chronic myelogenous leukemia. The biotech filed an IND for SGX393 in June. SGX393 also inhibits mutant forms of BCR-ABL, including the T3151 mutation. No currently marketed CML drug inhibits the T3151 mutation, SGX says. -Joseph Haas ([email protected]) |