In the largest local biotech deal of the year, French pharmaceutical giant Sanofi is acquiring La Jolla’s cancer drug startup Synthorx for $2.5 billion.
The 5-year-old startup has been working in the field of synthetic biology, expanding the genetic code to give its researchers more building blocks to create novel drugs. Synthorx just went public in late 2018, raising $131 million in its initial public offering.
Sanofi said the local startup appears to be at the forefront of cancer drug innovation, making it worth the high price tag. The acquisition is one of the biggest in recent years for local biotech. The last sizable acquisition deal was Impact Biosciences, which sold for $7 billion in 2018.
The acquisition produced a considerable return for Synthorx’s early backers, including San Diego-based Avalon Ventures, RA Capital and OrbiMed. The purchase price of the startup at $68 per share represents a 172 percent premium on Synthorx’s closing price of $25.03 on Friday.
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The drug at the center of this new deal is Synthorx’s investigational medicine code-named THOR-707. Meant to treat solid tumors, the drug is designed to boost the number of cancer-fighting cells in the body, potentially overwhelming the disease with effector T-cells and natural killer cells.
The drug type (interleukin-2) isn’t a novel idea, but Synthorx designed the protein in a way that might boost its effectiveness and reduce dangerous side effects. The companies said Synthorx’s drug could one day be used as a standalone therapeutic, or in combination with Sanofi’s portfolio of drugs.
The acquisition of Synthorx is the first major move made by the pharma giant’s new CEO, Paul Hudson, who took over the helm in September. The company has a long history in cancer drug research but has fallen behind in the hot field of immunotherapies, or drugs that harness the immune system to fight cancer. Hudson has made it known that he intends to reinvigorate Sanofi.
“This acquisition fits perfectly with our strategy to build a portfolio of high-quality assets and to lead with innovation,” Hudson said in a statement. “Additionally, it is aligned with our goal to build our oncology franchise with potentially practice-changing medicines and novel combinations.”
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The foundational science for Synthorx was first developed in the labs of The Scripps Research Institute by former researcher Floyd Romesberg.
In regular biology, the naturally-occurring DNA base pairs, A-T and G-C, can be used to build proteins with 20 amino acids. These are the building blocks often used to design drugs. Romesburg developed a third, synthetic base pair coined X-Y. With this addition to the genetic alphabet, novel therapeutic proteins can be built with up to 172 amino acids, thus expanding the potential solutions to illness.
It’s with this expanded genetic code that Synthorx has designed its drugs.
As part of the acquisition deal, Sanofi also acquired Synthorx’s research programs for drugs targeting autoimmune disorders.
Both Synthorx and Sanofi declined to comment on the acquisition until after the deal closes in early 2020, leaving questions about the startup’s future in San Diego unanswered.
Shares of Synthorx closed Monday at $67.71, up about 170 percent.
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