GSK snaps up Domantis to move into biotech field

GlaxoSmithKline snapped up the privately owned British biotech company Domantis yesterday in a £230m deal that catapults the pharmaceutical firm into the arena of next generation antibody drugs.

The founders of Domantis, Sir Gregory Winter, one of the co-founders of Cambridge Antibody Technology, and Dr Ian Tomlinson, formerly of the UK Medical Research Council, stand to net £50m from the sale.

This is just the latest in a string of deals made by major drug companies keen to get a foothold in biotech medicine and more than doubles Glaxo's projects in this area.

In October, Merck & Co agreed to buy Sirna Therapeutics, a specialist in gene splicing, for £561m and the pace of M&A is accelerating.

Monoclonal antibodies, such as the breast cancer drug Herceptin, are laboratory-engineered versions of the antibodies found in the natural immune system and bind with targets in the body. However, their therapeutic applications have been constrained by their large molecular size. Existing medicines are administered by injection.

Domantis has been at the forefront of researching the next generation of antibody therapy - based on just a portion of the molecule.

Due to their size, these domain antibodies (dAbs) can be administered orally as well as through injection.

Mike Owen, the senior vice president at GSK's biopharmaceuticals unit, said: "Domantis has pioneered the extension of antibody therapies to potentially wider applications than has been possible with conventional monoclonal antibodies."

Dr Tomlinson said the acquisition highlights the tremendous potential and value of dAbs.

Analysts said the deal was a good strategic move for GSK, although there were suggestions it paid a high price for a business which has raised just £42.4m from venture capitalists since its launch.

Navid Malik, a pharmaceutical analyst at Collins Stewart, said: "It's really platform technology that they are buying. It gives them a stronger foothold in the area of antibodies and proteins."

Rather than expanding Glaxo's immediate pipeline, it is about putting the firm in the novel area of antibody drugs, he added.

Ben Yeoh, an analyst at Dresdner Kleinwort, said: "GSK are looking for interesting technology and that is what they are acquiring with Domantis. However, in terms of providing anything commercially, that is five to 10 years down the line."

Domantis is currently researching treatments for rheumatoid arthritis, asthma and chronic obstructive pulmonary disease.

Dr Tomlinson will continue to manage Domantis' Cambridge-based laboratories as part of GSK's biopharmaceuticals unit.

The Australian biotech company Peptech, which is to list on AIM next week, said it would raise £71.3m from the sale of its 31 per cent stake in Domantis.