In what promises to be the biggest bioscience firm deal in state history, Oklahoma City-based Selexys Pharmaceuticals Corp. has struck an agreement that could lead to the company's acquisition for up to $665 million.
“This is the largest, by far, pharmaceutical deal ever for an Oklahoma-based company,” said Dr. Scott Rollins, president and CEO of Selexys. “This is a monumental deal for my company, for Oklahoma, for biotechnology in the state — any way you want to look at it.”
Selexys also has acquired $23 million in venture capital financing that will help pay for clinical study of its lead asset, a drug designed to help sickle cell anemia patients deal with circulation problems that can cause strokes, heart attacks and other major health problems.
The $23 million equity financing, led by MPM Capital, will allow Selexys to begin a broader Phase 2 clinical study in patients with sickle cell disease, Rollins said. That testing would begin in 2013 and could take up to two years.
Selexys will expand its staff, expand its space in the Presbyterian Health Foundation near downtown Oklahoma City and provide new contracts for local vendors to launch the testing program, Rollins said.
“Everything about this company is internal to Oklahoma,” Rollins said. “Rod McEver at the Oklahoma Medical Research Foundation discovered this technology. (Oklahoma City-based) Cytovance Biologics is manufacturing it. It's a great spread-the-wealth model for the bioscience sector in Oklahoma.”
Selexys has agreed to provide Novartis Pharmaceuticals, one of the world's largest pharmaceutical firms, an exclusive option to buy Selexys and its developing drug, called SelG1, after the successful completion of the Phase 2 study. The deal, which includes upfront, acquisition and milestone payments, could total up to $665 million.
“For the second-largest pharmaceutical company in the world in Novartis and one of the largest venture capital groups in the world in MPM to put this kind of money into this technology, it really validates the science and the clinical approach,” Rollins said.
Selexys' SelG1 program has offered encouraging results in Phase 1 testing, Rollins said. It likely will take another five years before the drug would reach the marketplace, he said.
About 100,000 people, mostly African-Americans, suffer from sickle cell anemia in the United States. The potential worldwide market is several times that size, Rollins said.
“It's certainly a billion-dollar-plus market worldwide annually,” he said.
The drug has obtained orphan drug status in the United States and Europe, which allows for faster development and marketing of compounds to serve rare diseases, Rollins said.
“We will be able to get to market more quickly and more cost effectively in terms of the development program,” he said. “It also helps with the pricing and reimbursement of the drug.”
Sheri Stickley, CEO of the Oklahoma Bioscience Association, said Wednesday's announcement immediately makes Selexys Oklahoma's poster child among local bioscience businesses.
“The impact on Oklahoma City and the state is that this puts us on the map,” Stickley said. “This draws attention to the great science and the great companies that we have here in Oklahoma.”
Stickley said Selexys is one of several state companies seeking to bring new drugs to market, a process that can take a decade and cost $1 billion. The ability of Selexys to attract venture capital and a potential buyer is very satisfying, she said.
“This is what we're all working toward,” Stickley said. “This is validation and reward for a lot of hard work.”
If the Novartis deal is struck, Selexys and its sickle cell drug would be acquired, and the Oklahoma City firm would spin off into a new company that also is working to develop a drug to treat Crohn's disease and cancer, Rollins said. Some of the new venture capital money invested in Selexys will go toward advancing that second program through a Phase 1 clinical study, he said.
The sickle cell drug works by targeting a molecule that causes hemoglobin cells to stick to blood vessel walls, which can trigger strokes, heart attacks and organ failure in sickle cell patients, Rollins said.
“We're providing sort of a lubricant-type strategy that will bind to these red blood cells and help them flow,” he said. “So far, the preclinical experiments have been extremely promising. We've actually put the drug into humans and it's been very safe so far and it blocks the target as we had expected that it would do.”
To reach this point, Selexys raised about $9 million from local investors, including wealthy individuals and organizations such as i2E Inc. and the Oklahoma Life Sciences Fund. It has won about $12 million in grants, Rollins said. The firm also was awarded funds from Oklahoma's Economic Development Generating Excellence (EDGE) program, which the Legislature scrapped last year to fund endowed chairs at state universities.
“We're a perfect example as to why that should not have happened,” Rollins said. “Without that EDGE money, we wouldn't be bringing $665 million and jobs to Oklahoma.”