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2021-08-05| IPOM&A

Bayer Spends $2 Billion to Acquire a Startup on the Brink of an IPO

by Rajaneesh K. Gopinath
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Bayer, one of the top global pharma giants, has been making vital acquisitions in the past couple of years, starting with a $425 million deal to buy KaNDy Therapeutics Ltd. and forking out another $4 billion for Asklepios BioPharmaceuticals in 2020. Just last month, it announced snagging Noria Therapeutics Inc. and PSMA Therapeutics Inc. to expand its portfolio in prostate cancer. Now, the German drugmaker has acquired a startup company that was on the brink of an IPO.

On August 5th, Bayer announced acquiring Vividion Therapeutics in a deal worth $2 billion. The San Diego-based firm was preparing for an initial public offering when the deal kicked in. As per the agreement, Bayer will make an upfront payment of $1.5 billion and settle the remaining $500 million in potential success-based milestone payments. The deal is expected to take place in the third quarter. Upon acquisition, Vividion will operate as an independent organization.

“This acquisition is a cornerstone of our strategy to fuel our pipeline with breakthrough innovation,” said Stefan Oelrich, Member of the Board of Management, Bayer AG, and President of the Bayer’s Pharmaceuticals Division.

 

Quest for Undruggable Targets

Vividion intends to go after challenging targets that have been deemed undruggable, using its proprietary technology. It especially focuses on the oncology and immunology indications, where there is a significant unmet need. Among other pre-clinical programs, it is currently working on a transcription factor NRF2 antagonist for the potential treatment of NRF2 mutant cancers, as well as NRF2 activators for various inflammatory diseases such as irritable bowel disease.

With the acquisition, Bayer will lay hands on Vividion’s novel discovery platform that can produce various small molecule therapies. The discovery platform comprises three integrated, synergistic components: a novel chemoproteomic screening technology, an integrated data portal, and a proprietary chemistry library. 

“Vividion’s technology is the most advanced in the industry, and it has demonstrated its ability to identify drug candidates that can target challenging proteins. Together with Bayer’s existing know-how, we will be able to develop first-in-class drug candidates, increasing the value of our pipeline. We want to provide innovative therapies for patients whose medical needs are not yet met by today’s treatment options,” Oelrich said in a statement.

 

A Unique Approach

Vividion spun out of Scripps Research Institute in La Jolla, California, in 2013 and has raised a total of $371.5M in funding over 5 rounds. It secured $135 million in its latest Series C funding round in February this year. Its unique approach identifies previously unknown binding pockets in undruggable targets to generate first-in-class novel compounds.

Thanks to its technology, Vividion has signed high-profile collaborations with big pharma previously. In 2018, Celgene gave $101 million in upfront payment to form a strategic alliance with Vividion for discovering small molecule drugs that target the ubiquitin proteasome system. Last year, it received $135 million from Roche to target novel E3 ligases as well as various cancer and immunology therapeutic targets.

“Despite advances in genomics, structural biology, and high-throughput screening, about 90% of disease-causing proteins cannot be targeted by current therapies due to the lack of a known addressable binding site. Our proprietary chemoproteomic platform technology addresses the key limitations of conventional screening techniques and allows us to discover previously unknown, or cryptic, functional pockets on the surface of proteins and identify small molecules that selectively bind to those targets,” said Jeff Hatfield, CEO at Vividion.

“When combined with Bayer’s expertise in the development of small molecules to market and patient, an unparalleled position comes into existence to unlock undruggable targets and generate first-in-class novel compounds for the benefit of patients.”

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