Pfizer Inc., the world's largest drug company, agreed to buy local biotech Idun Pharmaceuticals on Thursday, in a move signaling the pharmaceutical giant's continued expansion in San Diego.
The terms of the deal have not been finalized. Pfizer (NYSE: PFE) and Idun, a closely held firm, planned to wrap up their talks in the second quarter.
Pfizer recently completed renovating a 1.3 million-square-foot research campus in La Jolla, one of the company's largest R&D facilities, and last month acquired another local, private biotech for more than $500 million.
For Idun, the acquisition came as the company was poised to close a second round of private financing and its leading compound -- a pan caspase inhibitor that targets liver damage -- was in Phase II trials.
The company closed $27 million in financing in June and expected to close another $39 million this spring. The company landed $26 million in financing between 2002 and 2003.
The funding prompted Idun executives to probe three options -- going public, partnering with another company or getting acquired, said Steve Mento, president and chief executive officer for Idun. After talking with Pfizer the past 10 months, the company decided merging with the heavyweight company could help push their drug candidates through development.
"The financing gave us the flexibility to explore all our options," he said.
Idun specializes in compounds that control cell death in various diseases. Robert Horvitz, an MIT professor and Nobel Prize winner, and John Reed, chief executive of the Burnham Institute, founded Idun in 1993.
The company has two forms of its caspase inhibitor going through clinical trials, including an intravenous form for preventing liver damage during transplants and a pill form for preventing liver damage in patients with hepatitis C.
Idun also has an experimental drug for cancer and one for inflammation that should begin clinical trials in a year, Mento said.
Mento said details of the Pfizer deal -- such as potential layoffs or relocation -- are still being discussed. Idun has 54 employees, mostly scientists.
The acquisition was praised by at least one Idun investor, Elliot Parks, whose firm Ventana Capital Management has offices in San Diego and led the financing of Idun in 2002.
"It's always nice to see validation of our judgment that Idun is a good company with very good product possibilities," said Parks, the firm's managing director.
For Pfizer, the acquisition of Idun comes on the heels of the company's recent purchase of another San Diego company -- Angiosyn Inc. -- in late January.
Angiosyn, a small, private company, is developing an agent for treating ophalmic diseases, such as macular degeneration, where uncontrolled blood vessel growth can lead to blindness. Pfizer agreed to pay $527 million for the company, plus royalties on future products.
Pfizer was attracted to Idun because of its work with viral and inflammatory diseases, two areas Pfizer scientists have been working on, said Stephen Lederer, spokesman for Pfizer Global Research and Development.
Pfizer is expanding its research and development efforts during a time when patents on some of its key drugs, such as the anti-depressant Zoloft and high blood pressure drug Norvasc, are expiring.
Lederer said the acquisition of Idun was important, but not indicative of any major change in Pfizer's ongoing research and development efforts.
"Idun is a substantial acquisition but it's 50 people and two compounds," he said. "We're a company with 700 compounds and 15,000 employees."
Pfizer also recently completed a $150 million renovation of its research campus in La Jolla, which it purchased for $372 million in November 2004. The site includes nine buildings and 1.3 million square feet of research space devoted to developing treatments for viral diseases such as HIV, AIDS and SARS, and metabolic diseases such as cancer and diabetes.
With 1,500 employees devoted to research and development, La Jolla serves as Pfizer's third largest research hub in the United States. The company has 6,000 employees working in labs in Groton-New London, Conn., and 3,500 employees at research labs in Ann Arbor and Kalamazoo, Mich.
The company also has smaller research labs in St. Louis and Cambridge, Mass.