Friday, September 12, 2008

Ariad buys back spinout Ariad Gene Therapeutics

By Mass High Tech Staff

The oncology-focused drug developer Ariad Pharmaceuticals Inc. acquired the remaining 20 percent of its subsidiary, Ariad Gene Therapeutics Inc. (AGTI). The subsidiary will now be folded into Ariad and will cease to exist.

Stockholders of AGTI will receive two shares of Ariad common stock for every share of AGTI they own. A total of 2,252,128 shares of Ariad common stock will be issued.

Cambridge-based Ariad’s chairman and CEO Harvey Berger and board member Jay LaMarche abstained from the board vote that approved the re-acquisition. Both are shareholders of Ariad Gene Therapeutics (Nasdaq: AGTI).

Ariad’s move will allow the company to reap the full  “economic benefit” from sales of AGTI’s immuno-supressant cancer drug deforolimus (AP23573) and other assets, stated Berger. AGTI was collaborating with Merck & Co. Inc. on the development of the drug.

Ariad and Merck entered into the agreement, worth up to $1.1 billion, in July 2007. The collaboration calls for the two companies to jointly develop and commercialize, Ariad’s inhibitor of what is called a “master switch” protein in cancer cells, officials said.

New Jersey-based Merck provided an initial payment of $75 million to Ariad, and could provide up to $1 billion more in milestone payments and sales target payments. Ariad and Merck will each fund 50 percent of the cost of global development outside the United States.