Washington Editor

Pharmaceutical giant Bristol-Myers Squibb Co. is acquiring Waltham-Mass.-based Adnexus Therapeutics Inc. for $430 million in an all-cash deal, the firms said Monday.

Adnexus, founded in 2002, is the developer of adnectins, a proprietary protein therapeutic class based on human fibronectin, an extracellular protein that is naturally abundant in human serum.

The firm's most advanced adnectin product is Angiocept (CT-322), which inhibits activation of vascular endothelial growth factor receptor-2.

Adnexus will retain its name and its 55 employees and will operate as a subsidiary of Princeton, N.J.-based BMS, Adnexus's CEO John Mendlein told BioWorld Today.

Under the terms of the agreement BMS will acquire all of Adnexus' issued and outstanding shares of capital stock and stock equivalents in an all-cash transaction for a gross purchase price of $430 million, with the net purchase price coming to $415 million after deducting Adnexus' net cash balance at closing.

BMS will pay an additional $75 million, in three increments of $25 million each, when certain development and regulatory milestones are met.

Just last month, Adnexus had filed for an initial public offering worth at least $86 million. (See BioWorld Today, Aug. 23, 2007.) The firm's aspirations, Mendlein said, were to build a pipeline of adnectins using its PROfusion protein design engine and "parlay that into multiple products across different therapeutic areas," he said.

But, he added, the firm realized that through its ongoing partnership with BMS - a development deal the two companies struck in February for up to six oncology targets using the PROfusion engine - it could advance its adnectin class in a single "established infrastructure" rather than through multiple partnerships.

"One of the advantages of this is that we can go after established therapeutic areas where antibodies have demonstrated clinical impact and then follow up with an adnectin-based medicine that designs around the patents of the antibodies themselves," Mendlein said.

The deal gives BMS control of a new class of therapeutics, which, he noted, "doesn't happen very often in the industry. "So we think that we are taking the best of biotech and merging and combining it with the best of pharma right now," Mendlein said. "So the idea is to transform not only ourselves but perhaps our partner that we are very proud to have as our partner."

Adnexus' performance in the earlier development deal with BMS, which was "beyond our expectations in terms of quality and speed," made consideration of the small biotechnology firm "a very natural thing," said Francis Cuss, BMS' senior vice president of discovery and exploratory clinical research. He said the Adnexus acquisition fits well with his firm's strategy to further expand into the biotechnology industry.

"This is part of executing a strategy around biologics, which will be a critical element of our growth strategy," Cuss said. "We've had this strategy for some years now, and we believe that will be the cornerstone of our future growth." He noted that BMS has two biological products on the market: Orencia (abatacept), a product to treat rheumatoid arthritis, and Erbitux (cetuximab), a drug for colon cancer developed by BMS' partner ImClone.

The firm also has three other biologic drugs in clinical studies, he noted. Ipilimumab, developed by BMS' partner Mederex, is being tested in a Phase III study for the treatment of melanoma. Belatacept is being tested in a Phase III study as an agent for use in patients receiving solid-organ transplantations. The company also is testing an agonistic anti-CD137 monoclonal antibody in a Phase I study.

"We are thrilled to be working with Adnexus, because it unites two organizations of exceptional scientific talent who have a shared commitment both to innovation and the passion for improving the lives of patients with serious unmet medical needs," Cuss said.

Lehman Brothers served as the financial advisor for Adnexus, and Wilmer Hale provided legal counsel to the firm. Cooley Godward Kronish LLP advised Adnexus investors Atlas Venture, Flagship Ventures, HBM BioVentures, Polaris Venture Partners and Venrock.

Morgan Stanley acted as financial advisor for BMS, with Cravath, Swain & Moore LLP serving as legal advisor.