Majority Interest in Idenix Pharmaceuticals, an MPM Capital Portfolio Company, to be Acquired by Novartis Pharma AG
BOSTON, March 26 /PRNewswire/ -- MPM Capital, L.P., the world's largest dedicated venture capital firm for the life sciences industry, announced today that Novartis Pharma AG has entered into a definitive agreement to acquire from existing shareholders a majority equity interest in Idenix Pharmaceuticals, Inc., one of MPM's portfolio companies. It is the largest acquisition to date of an MPM portfolio company. MPM played a critical role in Idenix Pharmaceutical's creation, funding, and expansion over the past five years.
Upon closing of the transaction, Novartis will acquire 51% of Idenix stock on a fully-diluted basis from existing Idenix shareholders. Novartis will pay to the selling shareholders $255 million at closing and up to an additional $357 million contingent upon achievement of certain hepatitis drug candidate milestones.
Under the terms of the agreement, Idenix will receive an up front $75 million licensing payment for Idenix's hepatitis B drug candidates. Novartis will also have an option to jointly develop Idenix's hepatitis C drug candidate, NM283, and all other subsequently developed Idenix drug candidates upon completion of clinical phase II trials. Should Novartis exercise its option for NM283, total licensing and milestone payments to Idenix through acceptance of regulatory filings may equal up to $175 million. Global clinical development costs of the initial licensed hepatitis drug candidates will be assumed by Novartis and further payments for such candidates will be made upon regulatory approvals and achievement of sales milestones.
"We view this deal as remarkable for many reasons," said Ansbert K. Gadicke, M.D., Founding General Partner of MPM Capital, L.P., which has over $2.1 billion in committed capital under active management. "First, this transaction demonstrates the kind of value that can be built by a small company with novel products designed to change the therapeutic landscape."
"Second, we believe this deal validates MPM's underlying principle that biotechnology investments can yield favorable financial results if companies and their venture capital partners work closely to provide sufficient human and financial resources," Dr. Gadicke added. "Third, we see this acquisition as the harbinger of a new model for the biotechnology industry. In this model, venture capitalists take a long-term view of their biotechnology investments by providing substantial financial resources and support to companies, thereby enabling company management to advance their drug candidates to critical clinical milestones."
"With strong clinical data, the opportunities to attract pharmaceutical partners increases greatly, enhancing the chances that a new product will reach the marketplace. In turn, investors gain an attractive rate of return and biotechnology executives are able to continue their track record of innovation," he said.
MPM applies its expertise in biotechnology by finding entrepreneurial teams that have first-rate technology, strong intellectual property and a desire to work with leading venture capital firms, such as MPM, to help them build strong companies.
"We helped Jean-Pierre Sommadossi, the Chairman and CEO of Idenix, build his team, raise funds, and craft the business strategy in order to create real value with breakthrough therapies for viral diseases," continued Dr. Gadicke. "Those were some of the key ingredients that made Idenix so successful."
Idenix Pharmaceuticals, based in Cambridge, MA with drug discovery operations in Montpellier, France and Cagliari, Italy, is focused on the treatment of infections caused by hepatitis B virus, hepatitis C virus and human immunodeficiency virus (HIV). It is one of 60 companies that MPM has funded in the past six years through its three MPM BioVentures funds. The firm expects to add 12 to 15 new companies to its investment portfolio annually.
Successful closing of the transaction is subject to antitrust regulatory approval and other closing conditions, and is expected to occur in the second quarter of 2003.
"We are seeing more technologies and more business opportunities than we saw five to seven years ago, including spinouts from very big companies," said Dr. Gadicke. "But those opportunities take more time and greater investments, unlike 10 years ago when you could raise an initial $10 million to $20 million and subsequently launch a $100 million IPO."
For MPM, each of today's biotechnology investments can require upwards of $50 million to $70 million.
MPM's long-term investment strategy was demonstrated in its first fund, MPM BioVentures I, which raised $230 million in 1997 and 1998. The fund is now fully committed, with 75 percent of the investments in biotechnology and 25 percent in medical devices and other healthcare-related companies. The 26 companies in the Fund received between $5 million and $20 million from MPM and the Fund has, to date, performed well.
MPM has since raised a $600 million fund -- BioVentures II -- and in December 2002 set a record with the creation of the largest life sciences venture capital fund in the world, BioVentures III, a $900 million fund. In this fund, MPM plans to build a portfolio of 40 to 45 companies, with investments between $20 million to $60 million. About 85 percent of these investments will be dedicated to biotechnology companies and 15 percent is slated for medical device firms.
About MPM Capital, L.P.
MPM Capital, L.P. is a global asset management firm focused solely on healthcare investing from early stage start-ups to large capitalization public companies. Headquartered in Boston, Massachusetts, MPM has offices in South San Francisco, California and Munich, Germany. The firm manages over $2.1 billion in assets through the MPM BioVentures Family of venture capital funds and the MPM BioEquities public market funds. These combined funds make MPM one of the largest asset management firms dedicated to the life sciences sector. For additional information, please visit our website at: www.mpmcapital.com. |
