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Sosei acquires Heptares Therapeutics for up to $400 million
02-23-2015
by Lloyd Dunlap  |  Email the author
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TOKYO and LONDON—Sosei Group Corporation, a leading Japanese biopharmaceutical company with operations in Japan and the U.K., announces that it has acquired Heptares Therapeutics Limited, a clinical-stage private U.K.-based biotechnology company focused on creating novel medicines targeting G protein-coupled receptors (GPCRs).
 
Sosei has acquired 100 percent of Heptares’ share capital for $180 million in cash consideration and up to $220 million contingent upon the successful progression of the company’s pipeline and platform.
 
The combination will create a leading global biopharmaceutical group with sustainable, proven and highly successful drug discovery and clinical development capabilities for generating innovative medicines; a broad and balanced pipeline with strong growth prospects, including products with blockbuster potential; access to global pharmaceutical markets; regulatory expertise across the EU, U.S. and Japan; and a significant cash balance.
 
These strengths will enable the Group to sustain its pipeline and revenue stream on a long-term basis, the company said in a statement. Heptares will become a wholly owned subsidiary of the Sosei Group, with its existing R&D operations continuing in the U.K.
 
Shinichi Tamura, chairman and CEO of Sosei, said: “Today is an historic day for Sosei. Heptares is based on truly world-class science and its drug discovery and development capabilities will contribute to a sustainable stream of new products for the Group. While core to our future, an independent subsidiary structure will ensure Heptares is able to maintain the culture and business model that has been the foundation of its success so far.”
 
Dr Malcolm Weir, CEO of Heptares, added: “This is an excellent next step for Heptares which maintains our integrity and purpose within a Group that has a clear and coherent vision. It is a great example of the translation of ground-breaking U.K. academic science into economic and potential therapeutic value and secures significant investment into our technology platform and clinical pipeline well into the future. We look forward to working within the Group to advance our programmes, both partnered and in-house, and, over time, to providing much needed new treatment options for patients.”
 
The Group has been exploring strategic opportunities that can both build on and go beyond the secured revenue stream in milestones and royalties derived from the two COPD products (Ultibro® Breezhaler® and Seebri® Breezhaler®) marketed by its partner Novartis.
 
The acquisition of Heptares, with its exciting clinical and preclinical pipeline of potentially transformative new medicines targeting serious diseases with major unmet need (e.g. Alzheimer’s disease, ADHD, metabolic disease, schizophrenia, migraine, and others), and its unique, differentiated and high potential StaR® drug discovery platform, significantly fulfils this goal and further represents a major step towards the Group’s strategic vision of becoming a significant global biopharmaceutical company from Japan.
 
In addition to its pipeline and platform, Heptares has established collaborative partnerships with a number of the world’s leading pharmaceutical companies that provide the company with a prospective stream of revenue through milestones and royalties. Consolidation of these revenues will make a significant contribution to the Group’s financial position. The combined entity expects continued strong growth driven by revenues from new clinical-stage alliances and platform partnerships.
 
Heptares was founded in 2007 based on the pioneering work of its founding scientists Richard Henderson and Christopher Tate at the MRC Laboratory of Molecular Biology (Cambridge, U.K.), with investment from MVM Life Science Partners and led by co-founders Malcolm Weir and Fiona Marshall. From these origins, and with additional venture funding from MVM, Clarus Ventures, Novartis Venture Fund, Takeda Ventures and the Stanley Family Foundation, Heptares has moved on to develop its unique StaR® technology platform that enables it to design drugs precisely based on a detailed understanding of the structure of the drug target—an approach known as structure-based drug design (SBDD). By this method, Heptares aims to design and develop superior medicines that are more effective, with better selectivity and fewer side effects.
 
Heptares applies this approach primarily to GPCRs—a superfamily of membrane proteins found in every cell in the body that are crucial to communication between cells. Their central role in many biological processes means that they are important targets for drugs: GPCRs are the site of action of about 40 percent of currently marketed drugs. The potential of the Heptares platform for both discovery of novel, differentiated small molecules and biologics, is therefore very high.
 
Heptares’ StaR platform has been used to generate a wholly owned pipeline of new medicines with potential to transform the treatment of a wide range of human diseases. The pipeline is focused on highly validated targets and is diversified across the neuroscience, metabolic and orphan disease areas, creating multiple future opportunities for both internal development and partnering, and thereby poised to generate revenue in the near future and over a long-term period.
 
In addition to in-house development, Heptares has leveraged the capabilities of its proprietary StaR technology to sign partnership agreements with a number of the world’s leading pharmaceutical and biologics companies, including AstraZeneca, Cubist (Merck), Takeda Pharmaceutical, MorphoSys, MedImmune and Novartis. These existing partnerships have provided more than $30 million in upfront and milestone payments to date and are expected to continue generating revenues through milestone payments and royalties over the coming years and beyond the expiration of the Group’s COPD products patents in 2026. New pipeline products and alliance deals will likewise generate income for many years to come.
 
The Heptares platform will complement the existing technologies of the Group subsidiaries: Activus’ nanoparticle technology (APNT), and Jitsubo’s novel peptide manufacturing technology (Molecular Hiving™) and peptide modification technology (Peptune™). Together, these technologies are expected to generate synergies in the effort to identify new compounds and to further strengthen the pipeline and enhance corporate value.
 
The Group will continue to be led by Shinichi Tamura as chairman and CEO. Dr Malcolm Weir, Heptares co-founder and CEO, will remain as CEO of Heptares, which will be managed as an autonomous subsidiary of the Group. Dr Weir will also join the enlarged Group as chief R&D officer and will be responsible for worldwide research and development outside Japan. Dr Declan Doogan and Peter Bains, currently serving as non-executive directors on the Group’s main board, will join the Heptares board representing the Group’s interest. Dr Fiona Marshall, co-founder of Heptares and CSO, will also join the Heptares board.
 
Sosei was advised by Moelis & Company and Clifford Chance LLP. Heptares was advised by Goldman Sachs International and Covington & Burling LLP.
 
Code: E02231501

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