In a move that adds to its health-care and biotechnology portfolio, New York-based Patricof & Co. Ventures Inc. has agreed to purchase a majority stake in drug-discovery company Affymax Research Institute from GlaxoSmithKline (GSK) for $51 million. The company will be called Affymax Inc.
Patricof was the lead investor in the deal and committed $24.5 million to the company, said Lori Rafield, a general partner at Patricof & Co. Other investors included The Sprout Group, MPM Asset Management, and Patricof’s sister company based out of London, Apax Partners. Under the terms of the purchase, GSK will receive non-voting preferred stock in exchange for its interest in Affymax. The transaction is expected to close within the next month.
“Affymax has the good things of a start-up combined with the great things of a later-stage company,” said Rafield. “It has a deep and broad patent estate (with 300 patents). Its intellectual property portfolio is well-developed, and its patents are well-protected. And the firm has breadth of expertise.”
Rafield said drug discovery companies are valued on the power of their research platforms and the promise to deliver multiple drug candidates to clinics.
“Today, with the enormous number of drug targets that have resulted from the sequencing of the human genome, Affymax is uniquely positioned to leverage its high-through-put-chemistry and screening platform to rapidly identify new drug candidates,” she said.
Founded in 1988, the Affymax Group has earned industry-wide recognition for its technological innovations. GSK helped to transform Affymax from a technology-development center, focused on combinatorial chemistry and high-throughput molecular screening, to a drug-discovery company.
The board of Affymax will include Rafield, Kathy LaPorte of The Sprout Group and Nick Galakatos of MPM Asset Management. GSK will not participate in the management of Affymax, nor have any representation on the board.
The relationship with GSK has given Affymax a compelling advantage over its competitors, Rafield said, in that it has developed its discovery technologies with the assistance of GSK’s chemists and biologists.
“No other drug discovery company has had this level of insight into the discovery process of a leading pharmaceutical company,” she said, in a release. “This experience sets the stage for Affymax to be productive as a drug discovery company and to evolve into a successful drug development organization.
She went on to say that Affymax is the second biotechnology investment Patricof & Co. has made. It invested in Seattle-based ZymoGenetics last fall for a total consideration of $44 million. ZymoGenetics is a bioinformatics-driven company dedicated to the discovery and development of novel therapeutic agents used in the treatment and prevention of human illness.
Rafield said her firm plans to take Affymax public in the next two or three years.