Daiichi Sankyo nabs tiny Plexxikon in $935M deal

In another sign that cutting-edge biotechs with a hot prospect or two in the pipeline are able to forge rich buyout deals, Daiichi Sankyo says  it will pay $805 million upfront and up to $130 million in near-term milestones for Plexxikon, a tiny oncology developer that has grabbed headlines with some stellar results for its lead melanoma drug.

For Daiichi the deal offers a potential shortcut into the oncology market. The biotech's targeted PLX4032 could be approved as early as next year. And Berkeley, CA-based Plexxikon, a 2010 Fierce 15 company, was savvy enough to retain co-promotion rights in the U.S. when it arranged its licensing deal with Roche.

A small biotech with only 45 employees, Plexxikon will now operate as a separate unit of Daiichi's, with its staffers concentrating on filing for regulatory approval on PLX4032 later this year. The developer also has early-stage programs underway for breast cancer and rheumatoid arthritis.

Plexxikon reached this deal after running one of the most cost-effective pipeline efforts in the industry, needing only $67 million in venture funds over nine years and relying heavily on major partnerships to fuel its work. In an interview with FierceBiotech, CEO Peter Hirth says that the new game plan will be to continue on much as before, with a goal of producing one new IND a year, all while pushing ahead with the eight programs it has in place.

"Daiichi Sankyo really liked the way we go about doing business," says Hirth. "They are supplying a budget to us, similar to the one we had for the last two years. We will be making our own decisions, stay independent as we have been, making decisions on our own." And Daiichi Sankyo can step in after Phase II and continue late-stage development work themselves, leaving Plexxikon to do what it does best.

Last August researchers announced that nearly all melanoma patients enrolled in a clinical trial of PLX4032 demonstrated some response; 81 percent of patients had tumor shrinkage of at least 30 percent. That led the University of Pennsylvania's Lynn Schuchter to tell USA Today that "this is the most important breakthrough in melanoma, ever."

With the IPO window closed to most new biotech offerings, best-in-class players are now finding that M&A may offer backers the best exit strategy. That's something that Calistoga--another Fierce 15 company--helped illustrate when Gilead agreed to a $600 million deal to buy the company just a week ago. And industry insiders say that you can expect to see more such deals in the months ahead. For at least the first half of the year biotech buyouts will be hot.

- check out the Plexxikon release
- read the Bloomberg report