Astellas' $537M Buy of UCLA Spinout Agensys
Benefits School; May Buoy LA Biotech Sector
[December 3, 2007]
By Ben Butkus
Japanese pharmaceutical company Astellas Pharma last week said that its US subsidiary has acquired Agensys, a University of California-Los Angeles spinout, for $387 million up front plus a maximum of $150 million in potential future milestone payments.
UCLA and the University of California system, which hold an undisclosed equity stake in Agensys, will as a result receive a portion of the upfront payment and any future milestones, making it one of the most lucrative tech-transfer deals in the school's history.
Officials said the acquisition may also represent a big win for the LA-area biotech industry – oft overlooked in favor of the San Diego and Bay Area biotech corridors – as Astellas plans to retain Agensys as an operating subsidiary in LA suburb Santa Monica.
Agensys, originally known as UroGenesys, was founded by a group of UCLA scientists in 1996 with approximately $8 million in seed funding from private donors and angel investors. UCLA took an undisclosed equity stake in the company in exchange for a license to university-developed technologies.
Agensys' specialty is its pipeline of therapeutic fully human monoclonal antibodies to treat solid tumor cancers based on its own proprietary targets, some of which were discovered in the laboratories of UCLA scientists, and some of which were discovered by the company.
Over the past 10 years, UCLA has reaped an undisclosed but "significant" financial return from the company in the form of licensing and milestone payments related to various development milestones and deals between Agensys and other companies, and could continue to garner such payments in the future, Arie Belldegrun, professor and chief of urologic oncology at UCLA and one of Agensys' co-founders, told BTW last week.
According to Belldegrun, Agensys' lead product is the prostate stem cell antigen, or PSCA, tumor target, which Agensys licensed from UCLA early on, advanced farther down the pipeline, and then used as the basis for an approximately $17 million deal with Merck to co-develop a humanized antibody that it signed in 2005. Belldegrun said that if a drug based on that target hits the market, UCLA will receive royalties for an undisclosed number of years.
"The different thing we have done from other companies is to not build a one-drug or two-drug company," Belldegrun said. "We wanted to start with a broad base and do something like Genentech.
"We started [by] discovering multiple genes and have generated over 300 patents; validated those; and then decided that everything [with] a surface molecule that we can generate antibodies against, we will develop in house," Belldegrun added.
Agensys has outlicensed all IP related to genes in which it had no interest or expertise. In addition, the company has over the years developed a modest pipeline of vaccine technologies that didn't really fall in its wheelhouse. Beldegrun said that the company has licensed these types of technologies to companies such as Genentech, Seattle Genetics, and Sanofi-Aventis.
Meantime, Agensys continued to develop technology and expertise in humanized antibodies, and currently has potential targets for 10 to 14 cancer types in its portfolio – including the PSCA technology – which is what attracted Astellas to the firm, according to Belldegrun.
"Astellas was looking for more than just one or two molecules," Belldegrun said. "They were looking for an infrastructure to continue to develop a biotechnology platform at Astellas, and they are getting a full workforce with experts in antibody and gene discovery; and expertise in large-scale production in GMP facilities that we built in order to produce these antibodies."
Masafumi Nogimori, Astellas' president and CEO, said in a statement that "Agensys will be the cornerstone of our biologics efforts and an integral component of building our oncology efforts within our franchise." Astellas also said that its medium-term plan is to "aggressively" build up its antibody R&D capabilities, and that the addition of Agensys will provide access to expertise and assets in fully human monoclonal antibodies, proprietary cancer targets, and clinical antibody candidates.
'Enormous' Deal for UCLA
It is unclear what the exact financial return to UCLA will be from the acquisition of Agensys, but according to Kathryn Atchison, vice provost for intellectual property and industry relations at UCLA, the deal is "enormous" for the school and certainly one of the biggest financial success stories in its history.
"From the standpoint of taking equity, our goal was to really show the faculty and the investors that we are a partnership, and that it's not that this is only about the money. If we really just wanted to go for the money, we would [have] licensed these [technologies] to a large company and taken large payments." |
Belldegrun added that the up-front acquisition payment easily eclipsed the value of any previous licensing deal that Agensys had consummated involving technology that had originally been developed by UCLA researchers.
Atchison also said that the deal is particularly rewarding because Agensys was the first company in which UCLA took an equity stake after the UC Office of the President began allowing schools to do so in the mid 1990s.
"From the standpoint of taking equity, our goal was to really show the faculty and the investors that we are a partnership, and that it's not that this is only about the money," Atchison said. "If we really just wanted to go for the money, we would [have] licensed these [technologies] to a large company and taken large payments."
Instead, she noted, UCLA granted the license to Agensys in 1996 in exchange for equity.
"We've been working on this partnership for 11 years, so it's not like we ever count on money," Atchison said. "The success rate of start-up companies [is low]. We're all celebrating that one of our startup companies has made it. They're already approaching Phase II clinical trials for some therapeutics, so we're hoping there will soon be some excellent products coming out in the prostate cancer market."
Some of those potential products will likely be produced at Agensys' facilities in Santa Monica, as Astellas said that it plans to fold the approximately 140-person operation into its US subsidiary, currently based in Deerfield, Ill.
In an e-mail to BTW, Astellas corporate communications representative Saori Furukawa wrote that "Astellas will utilize the current R&D infrastructure of Agensys intact. Agensys will become a part of Astellas' research organization. The combined team will continue to pursue efforts to optimize research productivity."
Therefore, the impact of the deal may be even more significant for the biotech industry in Los Angeles, which has long lived in the shadow of biotech success in San Diego and San Francisco, according to UCLA officials.
"[Astellas] spun out a [US] subsidiary, and then merged that into Agensys," Earl Weinstein, assistant director of business development and licensing at UCLA, told BTW. "They will have a fully operating subsidiary right in Los Angeles; actually, right in Santa Monica, which is unprecedented. For the LA region, this is really the first time there has been a big pharma acquisition like this. It's a huge step for this region."
Atchison said that UCLA, in collaboration with area universities such as the California Institute of Technology and the University of Southern California, have been making a concerted effort to grow their tech-transfer activities, particularly in the biosciences, over the past several years.
"This is something the mayor's office is working on and these three universities have bonded together on," Atchison said. "We're all trying to better publicize the biotech industry that is in LA and never gets recognized for being as prominent as it is."
Added Belldegrun, "I think that the chancellor's office and UCLA are waking up to the fact that they need to do much more than they've been doing. They've done quite well in past years, but I think that right now things are moving very rapidly to streamline the whole idea of patenting and IP."
