2 Biotech Firms Team Up With Big Drug Companies
Two biotechnology companies on the West Coast have joined a growing list of fledgling firms that are teaming up with established pharmaceutical giants in an effort to raise money and gain marketing might in the development of new drugs.
Genetic Systems Corp., a 6-year-old biotech company in Seattle, said Monday that it will receive $60 million from Syntex Corp. of Palo Alto in exchange for 18% of its stock and an agreement to jointly develop and market several genetically engineered products that have the potential to detect acquired immune deficiency syndrome, or AIDS, and other sexually transmitted diseases.
Also on Monday, Amgen, a 6-year-old biotech company in Thousand Oaks, and Johnson & Johnson said they have reached a joint agreement worth $6 million to develop and market three drugs to treat diseases such as hepatitis and certain types of cancer. Amgen says the arrangement may allow it to break even in fiscal 1986; it would be the company’s first year without a loss.
Assuming that it wins the approval of shareholders, Genetic Systems said it will sell 4.7 million of its shares to Syntex for $40 million, or $8.50 a share. Under the agreement, Syntex also will provide Genetic Systems with $20 million during the next five years for a joint research program.
Under the tentative agreement reached by Amgen and New Brunswick, N.J.-based Johnson & Johnson, Amgen will do most of the research to develop the three drugs, and Johnson & Johnson subsidiaries such as Ortho Pharmaceutical Corp. will do most of the marketing. Johnson & Johnson’s $6-million contribution for research and development could end a string of losses for Amgen, which lost $7.8 million on revenue of $10.1 million in the 1985 fiscal year ended March 31.
Genetic engineering is a series of techniques developed in the 1970s that allow researchers to rearrange DNA, the molecular building block of life that tells cells what functions to perform. Rearranging the substance can make cells produce certain proteins that scientists believe can enhance the body’s ability to fight infectious disease or that can help doctors detect abnormalities.
