Astex Cashes in with metaGen

01 Dec 2003

• By Chris Morrison

Astex Technology's takeover of Schering AG spin-out metaGen Pharmaceuticals provides the Cambridge-based firm with more cash, a stronger relationship with a pharmaceutical partner, complementary technology assets, and, potentially, an improved preclinical pipeline. MetaGen investors inch closer to an exit by trading stakes in an early-stage, unfloatable company for a piece of a more mature, well-funded firm several steps closer to an IPO.

When Schering AG spun out metaGen Pharmaceuticals AG, which specializes in identifying novel cancer drug targets, in 2001, the German pharmaceutical firm hoped to accomplish two goals [See Deal]. First, by divesting an expensive area of early-stage and non-core biotechnology research, Schering would be able to trim R&D costs while at the same time taking advantage of VC funds—in this case, €42 million ($49 million) from Apax Partners—to grow the firm into an integrated drug discovery company, underscoring the popularity of pharmaceutical spin-offs among biotechnology financiers.

Secondly, granting metaGen its independence would facilitate the biotech's plans to strike alliances with other pharmaceutical firms and otherwise leverage...