Plexxikon, Creator of Hot Melanoma Drug, Bought by Daiichi Sankyo for $805M Upfront

2/28/11Follow @xconomy

Plexxikon, one of the Bay Area’s breakout biotech success stories of the past year, has concluded with a happy ending.

The Berkeley, CA-based cancer drug developer said today it has agreed to be acquired by Japan-based Daiichi Sankyo for $805 million upfront, plus another $130 million in potential milestone payments that could bring the final price tag to $935 million. Since Plexxikon says it has raised about $67 million in capital since its beginning, it will go down as a company that generated more than a 10-fold return on investment.

The company, which got going with its initial venture round in 2001, is coming off a transformative year. Plexxikon’s lead drug in development, designed specifically for about half of melanoma patients with a certain gene mutation, showed some truly eye-opening results back in August. That’s when data from the first 32 patients in a clinical trial showed that 81 percent had tumor shrinkage after getting the Plexxikon drug, which is unheard of in a field where doctors are used to seeing a 10-to-15 percent response rate. Plexxikon proved it wasn’t a fluke in January, when it said a bigger study of 675 patients found the new drug held tumors in check, and helped patients live longer than a standard chemotherapy. The result was promising enough that Plexxikon, and its partner Roche, have said they plan to seek FDA approval of the medicine later this year.

This drug, PLX4032, has already been written up in the New England Journal of Medicine as an intriguing poster child for more genetically personalized medicine. But Plexxikon emphasized in today’s announcement that it has a pipeline of other personalized medicines created through the same method, which is part of what Daiichi Sankyo is buying.

“Since 2001, Plexxikon’s novel drug discovery and development approach, along with our unique business model, has led to the development of a portfolio of well-differentiated product candidates spanning multiple therapeutic indications,” said Peter Hirth, Plexxikon’s CEO, in a statement. “We are particularly proud of the advancement of PLX4032 as a truly personalized medicine combined with a companion diagnostic, and our near-term opportunity for commercialization. We are pleased that Daiichi Sankyo recognizes the value not only of the commercial opportunity of PLX4032, but also of Plexxikon’s robust pipeline and discovery engine.”

Peter Hirth and Kathy Glaub

Plexxikon has long had ties to Japanese investors, who will join their American counterparts in reaping a big return. The company’s crew of backers includes Astellas Venture Capital, Daiwa SMBC Capital, Kumho Asiana Group, Advanced Technology Ventures, Alta Partners, CW Ventures, GIMV, Pappas Ventures, and Walden International, according to the company’s website.

I’m planning to do a quick interview with Peter Hirth and Plexxikon’s president, Kathy Glaub, later today. I’ll also be sure to ask Peter more about this deal, and what it might signify for the future of biotech drug development, at our next Xconomy San Francisco event on March 16th—in which Hirth is one of the featured panelists.

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