GlaxoSmithKline [LSE/NYSE: GSK] and Genelabs Technologies, Inc. [NASDAQ: GNLB] have entered into a definitive agreement pursuant to which GSK will acquire Genelabs for approximately $57 million (£35 million) through a tender offer of $1.30 per share in cash. This strategic acquisition will strengthen GSKâs effort to develop and deliver novel therapies against the hepatitis C virus (HCV). Under the terms of the agreement, a subsidiary of GSK will commence a tender offer to acquire all of the outstanding shares of Genelabs common stock. The board of directors of Genelabs has unanimously recommended that shareholders tender their shares in the offer.
"Genelabs has demonstrated a strong track record in HCV drug discovery and identified numerous novel classes of inhibitors that target unprecedented mechanisms in the virus's life cycle," stated Zhi Hong, SVP of the Infectious Diseases Centre for Excellence in Drug Discovery (ID CEDD) at GSK. "This arrangement, combined with our other collaborations, will give GSK a broad HCV drug discovery platform addressing novel targets and innovative therapeutic approaches."
Genelabs will become part of GSK's Drug Discovery organisation and its HCV programmes will be consolidated into the broad therapeutic approaches already underway internally and through external collaborations. This acquisition continues GSKâs strategy of pursuing the best science, internally or externally, to bring new medicines to patients and value to the GSK pipeline.
Fred Driscoll, President & CEO of Genelabs said, "This transaction provides our shareholders with certain value at a substantial premium to our stock price. Through the efforts of our experienced scientific staff and other employees, we have generated highly differentiated compounds with the potential to address unmet medical needs of people with the HCV infection. GSK's world-class research and development organisation will allow us to accelerate our strategic vision of providing novel treatments that deliver tremendous value for patients."
There is a high unmet need for new drugs to treat HCV infection. The current gold standard therapy comprises pegylated-alpha interferon (IFN) plus ribavirin (RBV). The efficacy rate of this combination is relatively low (approximately 50%) and both drugs are associated with significant side effects that often lead to treatment discontinuation. Several new antiviral drugs targeting multiple virus and host targets are currently in development. Rapidly emerging drug resistance suggest that combination therapies with multiple classes of drugs will be required to achieve sustained virological response.
The tender offer is subject to customary conditions and is expected to close in December 2008.
About GlaxoSmithKline
GlaxoSmithKline - one of the world's leading research-based pharmaceutical and healthcare companies - is committed to improving the quality of human life by enabling people to do more, feel better and live longer. For further information please visit www.gsk.com.
About the ID CEDD
The ID CEDD is a global research unit within GSK Drug Discovery dedicated to discovering therapies for infectious diseases. It is designed to integrate and better coordinate the progression of infectious diseases medicines from therapeutic hypothesis to clinical proof of concept. While drawing from the broader resources of GSK's R&D organisation, the ID CEDD bridges the conventional gap between discovery and development, brings scientists and physicians together in an entrepreneurial environment and size of small biotechnology companies. The ID CEDD currently consists of three discovery units for antivirals, antibacterials and medicines against diseases of the developing world. It focuses on building an innovative pipeline through both internal efforts and external alliances with other companies and research institutions. Its Infectious Diseases Centre of Excellence for External Drug Discovery (ID CEEDD) will focus on 'virtualising' a portion of the infectious diseases pipeline by forming multiple risk-sharing/reward-sharing alliances.
About Genelabs Technologies
Genelabs is a biopharmaceutical company focused on the discovery and development of novel compounds for infectious diseases. In addition to a late-stage drug candidate for hepatitis E partnered with GSK, the company is advancing multiple partnered and proprietary compounds designed to selectively inhibit replication of the hepatitis C virus. For more information, please visit www.genelabs.com.