Europe’s largest biotech group, Serono, has announced a key strategic partnership with United States biopharmaceutical company Zymogenetics.
The deal will give Serono access to the firm’s major gene and protein portfolio.
News of the tie-up comes amid market concerns that Geneva-based Serono does not have enough new products in the pipeline.
Chief Executive Officer Ernesto Bertarelli hailed the deal as an opportunity for Serono to “bring to market further innovative treatments for medical conditions with significant unmet needs”.
Karl-Heinz Koch, an analyst at Swiss private bank Lombard, Odier, Darier & Hentsch, told swissinfo that the deal “had a lot of potential”.
“Serono has made it clear that such alliances are one of its key strategic aims, but it has been relatively quiet on this front since 2002,” said Koch.
He added that a number of similar deals might now be announced over the next couple of years and pointed out that Serono currently has cash reserves of $2.5 billion (SFr3.19 billion) for such purposes.
Under the deal, Serono will gain access to a wide range of Zymogenetics’ genes and proteins for evaluation and screening and the rights to license such proteins over the next five years.
It will also acquire the rights to license up to 12 products arising from the firm’s internal core research products.
In addition, it will gain exclusive worldwide rights to develop and commercialise products which may help heal damaged cartilage as well as those which are currently being tested as a means of treating psoriasis.
In return, Serono will make payments including a one-off $20 million protein licensing fee and the purchase of $50 million of Zymogenetics shares.
Serono posted record net profits of $390 million for 2003, but much of the company’s growth was due to flagship multiple sclerosis drug Rebif, which accounted for nearly 45 per cent of sales.
The company’s shares have come under pressure this year, amid worries about longer-term prospects at a time of increasing competition, particularly in the market for multiple sclerosis drugs.
swissinfo, Chris Lewis
Switzerland has the highest density of biotech firms in Europe.
Serono is Europe’s largest biotech company and number three worldwide.
Its four main areas are: reproductive health, neurology, growth/metabolism and dermatology.
Zymogenetics develops therapeutic proteins for problems including bleeding, autoimmune diseases and cancer.
The strategic partnership deal could help Serono fill its product pipeline, while offering Zymogenetics a route to market worldwide.
The deal will give Serono access to a large gene/protein database and product licensing rights.
The deal could help the Swiss company allay investor fears about future pipeline gaps.