Pfizer Picks Up Seven-Year-Old Serenex

Dow Jones VentureWire
03.04.08

Pfizer Picks Up Seven-Year-Old Serenex

Pfizer Inc., in a continued effort to reinvigorate its drug pipeline, has agreed to acquire cancer treatment developer Serenex Inc., a seven-year-old company that raised $81 million in equity over its life.

With the agreement, Pfizer will acquire the rights to Serenex's lead compound, oral Hsp90 inhibitor SNX-5422, currently in Phase I trials for solid tumors and hematological malignancies. In addition, Pfizer will also acquire Serenex's drug discovery technology and its small molecule Hsp90 inhibitor compound library, including targets for cancer, inflammatory and neurodegenerative diseases. The terms of the deal, which is scheduled to close in the second quarter, were not disclosed.

Serenex was founded in 2001 with technology from Duke University that ultimately formed its Hsp90 inhibitor program. The company last raised a $31 million Series D round last June.

The company's investors have included Intersouth Partners, Mediphase Venture Partners, Lilly Ventures, Seaflower Ventures, Takeda Research Investment, Western Technology Investment, Ritchie Capital Management, Yorkville Advisors, MC Life Science Ventures, Pac-Link Bio Venture Investment and Pearl Street Ventures.

"The investors are happy about [the deal]," said Serenex Chairman and Intersouth General Partner Garheng Kong, declining to elaborate on potential returns from the deal. Intersouth first invested in the company in 2002, when the firm led its $15 million Series B round.

Since then, Kong said, the company has had a "nice progression," culminating in this deal that was the result of partnership talks that turned into an acquisition. "There was quite a bit of pharmaceutical interest in this program," Kong said.

For Pfizer, this deal marks the result of its growing focus on investing in new products outside of its company. Pfizer, like all major pharmaceutical companies, is facing increased pressure to discover new products to continue bringing in large profits after patents for previous products expire. Pfizer has already lost its U.S. exclusivity for Norvasc and Zoloft. In addition, the company also faces the expiration of its patent for cholesterol drug Lipitor in 2010. To combat this, Pfizer has revamped its venture capital investment model and created an incubator for start-ups on its La Jolla, Calif., corporate campus.

"We had talked to a large number of companies about partnerships of our Hsp90 program, which was already our strategy," said Serenex President and Chief Executive Richard Kent. "Pfizer's interest and their interest in M&A quickly rose to the top of those discussions."

Durham, N.C.-based Serenex has another compound, SNX-1012, that was not included in the Pfizer acquisition deal. Serenex in-licensed that treatment from Mucosal Therapeutics in 2005. SNX-1012 is currently in Phase II testing for oral mucositis. That treatment may potentially be used to form a new spin-out company, Kent said.

"Pfizer's main interest was in our Hsp 90 program...That's what drew them to Serenex," Kent said. "[SNX-1012] will be spun out to the same investors we have in Serenex now."