GlaxoSmithKline bids to purchase ID Biomedical

GlaxoSmithKline (GSK) has made a $1.7-billion bid to purchase Vancouver’s ID Biomedical (IDB), one of Canada’s largest biotechnology firms and the primary supplier of the Canadian government’s supply of influenza vaccine. The offer has been endorsed by the boards of both firms and is expected to close by late 2005 or early 2006, subject to IDB shareholder approval.

GSK’s offer for IDB is the latest in its global strategy for boosting its vaccine holdings and follows the recent doubling of influenza vaccine production at its facility in Dresden Germany, and its purchase of a Wyeth vaccine site in Mariette PA.

Under the terms of the purchase agreement, GSK would obtain all IDB shares at $35 a share, or a 13% premium as of Sept 6/05. In addition, GSK agrees to assume IDB’s US$77-million debt and will loan $120 million to repay term debt and finance cash requirements up to the anticipated closing date.

IDB is one of Canada’s fastest growing biotech firms with a staff of more than 500, including 139 R&D personnel as of December 31/04. In contrast, GSK has 1,000 scientists devoted to vaccine R&D and production, all located in Belgium.

In 2001, IDB secured a 10-year mandate from the Canadian government to provide influenza vaccines for all Canadians in the event of an influenza pandemic.

Late last year, it scored a spectacular home run with an agreement to sell its Fluviral influenza vaccine — produced and commercialized in Canada — into the US market. The deal, valued at US$2.3-$2.5 billion between 2005 and 2014, is the largest purchase agreement ever received by a home-grown biotechnology firm (R$, December 7/04). It is still seeking FDA approval.

IDB’s R&D expenditures have also been rising. In 2004, R&D outlays totalled $53.6 million. That was up 17% from $39.7 million in 2003, which in turn was a 107.5% increase from 2002 when it spent $15.2 million.

Revenue has also increased dramatically, from $6.8 million in 2003 to $53.6 million in 2004. In 2004, IDB posted a $39.7-million loss.

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