In March this year global pharmaceutical giant, GlaxoSmithKline (GSK),
decided to hive off its California-based drug discovery outfit, Affymax, as part of its
restructuring efforts to following the merger between Glaxo Wellcome and Smith Kline
Beecham. (see ) Glaxo Holdings had earlier, in 1995, bought this boutique
drug company, which employs over 200 persons in two laboratories in Palo Alto and Santa
Clara, for an estimated $533 million.
Analysts had, in March, estimated that the
sell-off would fetch GSK about $400 million. Four months down the road, GSK has decided to
give away a majority stake in Affymax to a group of US venture capitalists, led by
Patricof & Co., for free. The group, which is said to include Sprout Group, MPM
Asset Management and Apax Partners, is understood to be planning to replace Affymax''s
management and make some staff redundant. The decision to give away the majority stake is
understood to be the inability of GSK to find a suitable buyer for Affymax, even after
several months of efforts in trying to locate one.
While GSK would retain 22 per cent of the
non-voting shares in Affymax the move would help it save about $30 million in costs. In
the recent past, GSK is said to have raised approximately $515 million through the sale of
shares in Affymetrix and Maxygen, two subsidiaries of Affymax. These subsidiaries, like
Affymax, were boutique drug discovery firms.
The decision of GSK to give away the stake in
Affymax is likely to result in an exceptional charge of about $435 million, which includes
about $425 million to be written off to reserves on account of goodwill in the books.
GSK has, however, said that it will continue
to use Affymax''s technology, which produces libraries of millions of potential drugs to
test in screens, in its laboratories.
also see : GlaxoSmithKline
to sell off Affymax