Ironwood Pharmaceuticals Sells Struggling Microbia Subsidiary to Royal DSM

9/22/10

The chemical giant Royal DSM has agreed to purchase the Lexington, MA-based bio-manufacturing firm Microbia from Ironwood Pharmaceuticals, according to a press release. DSM, based in Heerlen, The Netherlands, has not disclosed terms of the deal.

Xconomy was unable to immediately reach representatives from Microbia and DSM about the transaction.

Microbia (formerly Microbia Precision Engineering) designs microbes used to make chemicals from renewable sources as opposed to traditional petroleum-based methods. Despite its innovative bio-manufacturing technology and its collaborations with major companies such as DuPont (NYSE:DD) and Teva Pharmaceutical Industries (NASDAQ:TEVA), Microbia hasn’t managed to become profitable.

Microbia spun out from Cambridge, MA-based Ironwood (NASDAQ:IRWD) in 2006 as an independent subsidiary of Ironwood. Ironwood has since been a majority owner of Microbia, though it sold a minority stake in the business in September 2006 to the British food and beverage ingredients maker Tate & Lyle.

“We are thrilled to join DSM. Being part of a large global organization, and a world leader in industrial biotechnology, vitamins and carotenoid development, manufacturing and sales will expedite our ability to leverage our proprietary bio-based technology platform,” Kevin Madden, the chief scientist at Microbia, said in a statement.

Ironwood’s sale of the Microbia subsidiary to DSM might be healthy for its own bottom line. Microbia’s unprofitable business was blamed for $1 million in losses on Ironwood’s balance sheet in 2009, according to its annual financial statement.

DSM said the purchase of Microbia advances its efforts to develop natural carotenoids, which are valuable compounds used as ingredients for foods and nutritional products.

Ironwood, which went public in January 2010, is dedicated to developing drugs such as its lead compound linaclotide for irritable bowel syndrome, while its Microbia subsidiary has been focused on providing microbes and bioprocessing technology to chemical and drug companies and developing natural carotenoids internally.

We’ll update this story when we learn of DSM’s plans for Microbia.

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