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Lebanon Firm
Valley News
by Warren Johnston and Sonia Scherr
May 10, 2006
Lebanon- A biotechnology company started six years ago by two faculty members at the Thayer School of Engineering at Dartmouth College is being purchased by pharmaceutical giant Merck & Co. for $400 million.
Under the all-cash agreement, New Jersey-based Merck will acquire 100 percent of GlycoFi, which will become a wholly owned subsidiary of the larger company.
GlycoFi has about 55 employees who will continue working in the Centerra research park on Route 120 as employees of Merck, Tillman U. Gerngross, one of GlycoFi’s founders said yesterday.
“It’s joining forces where we have expertise in an area of pharmaceutical drug development that Merck, by buying the company, was able to acquire,” Gerngross said. “To enable a large pharmaceutical company to come to the area and create a research site here I think is a great (thing) for the Upper Valley.”
The deal is expected to become final in the next couple of months and is subject to regulatory approval, a news release said.
GlycoFi, which was founded in 200 by Gerngross and Charles E. Hutchinson, has developed a yeast-based, proprietary protein technology, which has the potential for use in developing and producing such things as vaccines and drugs that could fight cancer.
Proteins used in the manufacture of drugs have come from mammalian cells, usually taken from the ovaries of hamsters. By using yeast cells, GlycoFi can produce more protein and faster.
The company has raised $34.6 million in four rounds of venture-backed financing, the GlycoFi website says.
Merck’s acquisition will benefit GlycoFi’s employees and investors because the company’s privately held stock will be purchased for cash, Gerngross said.
The sale also will benefit Hanover venture capital company Borealis Ventures, which was an early investor in GlycoFi, Managing Director Philip Ferneau said yesterday.
“In the Upper Valley, this puts the technology community on the map,” Ferneau said. “GlycoFi built the company with world-class scientists. This speaks well for them, Dartmouth and to the maturing of the technology industry in the Upper Valley.”
For startup technology companies to grow and prosper, a community needs to have expertise, intellectual properties and venture capital. The Merck acquisitions of GlycoFi brings a new level of research collaboration as well as international attention to the Dartmouth area, Ferneau said.
In addition to the purchase of GlycoFi, Merck also announced the purchase of Santa Clara, Calif.-based Abmaxis Inc. for $80 million.
The purchase announcements come two weeks after Merck Chief Executive Officer Richard T. “Dick” Clark promised shareholders big changes to a company wounded in litigation over heart problems caused by its pain medication Vioxx.
Merck officials say the deals will make the company a bigger player in the growing field of biologic drugs, which are made from living organisms such as yeast.
Merck previously had deals with both firms to develop or improve drugs. Officials at GlycoFi announced in December that the company had formed a broad strategic alliance and multiyear research collaboration with Merck.
Under the alliance, GlycoFi’s scientists have been working with Merck’s scientists to develop vaccines, antibodies and other therapeutic proteins.
It was the partnership with GlycoFi that led to yesterday’s acquisition announcement, a Merck news release says.
“Based on the work we’ve done together, and the impressive scientific talent in both organizations, we are confident that the full value of GlycoFi’s technology will be realized by Merck,” Gerngross said in the release.
Shares of Merck closed yesterday on the New York Stock Exchange down 2 cents at $34.43 with a volume of 8.4 million or about 600,000 shares above its average. In after hours trading, the stock was down about 26 cents and selling for $34.17. Merck has traded in a range between $25.50 and $36.65 during the last 52 weeks.
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