German pharma giant Bayer hasn’t had a major presence in San Diego. But its multi-billion dollar acquisition of Sorrento Valley biotech Vividion Therapeutics just changed all that.
Vividion had been planning to go public when Bayer offered it up to $2 billion in up-front and milestone payments with virtually no change to the biotech’s operations.
Both sides say the deal, first announced in August, gives Vividion the freedom to continue its search for new drugs against disease-causing proteins. And Bayer and Vividion think the deal could become a model for future big pharma acquisitions of local life science companies.
“It gives us the chance to maintain this culture,” said Jeff Hatfield, Vividion’s CEO, “this entrepreneurial, innovative culture, the high-growth nature of a biotech. But it’s combining with the financial strength, the capabilities of a highly respected multinational company.”
Vividion was founded in 2014 by Scripps Research scientists Benjamin Cravatt, Phil Baran and Jin-Quan Yu. The three united in an effort to solve a long-running problem in drug development — there are no treatments against 90 percent of disease-causing proteins, according to Hatfield, who became CEO in 2020.
The company has developed chemical tools to scan proteins for little nooks and crannies where small molecule drugs can bind and, if they latch on tightly enough at the right spot, block a disease-causing protein.
It’s an approach with the potential to identify new therapies against cancers, inflammatory and neurodegenerative diseases. Investors have taken notice. In 2017, the firm emerged from stealth mode after pulling in $50 million in venture capital. And in 2018, Vividion got an up-front payment of around $100 million from Celgene as part of a drug development partnership.
In June, the biotech notified the U.S. Securities and Exchange Commission that it planned to go public for $100 million. But Bayer, a $55 billion company that owns the rights to such popular drugs as Claritin, Alka-Seltzer and Aleve, had Vividion at the top of its list of potential acquisitions.
Bayer offered Vividion $1.5 billion up front, with another $500 million in milestone incentives. But the biotech would have walked away from the deal if money had been the only upside, according to Hatfield.
“We knew that we were not going to pursue this if it was just a takeout acquisition that gets consumed within the larger entity,” he said. “We wouldn’t even have engaged because we had a bright future as a public company.”
If Vividion had gone public, it would have joined at least 13 other San Diego companies to do so this year, a new record with three months left to go in 2021. Cue Health and Tyra Biosciences were among the latest to join that list, each with initial public offerings of about $200 million.
Instead, Hatfield is hopeful the Bayer-Vividion deal could eventually echo the success of one of the larger deals in life science history — Roche’s $47 billion purchase of San Francisco biotech Genentech in 2009. The Swiss drugmaker kept Genentech’s research operations intact and independent.
Vividion is currently developing drugs against everything from inflammatory bowel disease to colon cancer to lung, head and neck cancer. None of these products have entered clinical trials yet. The biotech currently has 125 employees in Sorrento Valley but will soon grow to 150.