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Genentech Gets Rights, Can Buy Out Biotech Research Program

Lab technician (GSA.gov)

(GSA.gov)

The biotechnology company Forma Therapeutics in Cambridge, Massachusetts says it has an agreement with Genentech, a member of the Roche Group, granting Genentech exclusive rights to acquire one of Forma’s pre-clinical small molecule cancer research programs. The specific cancer target of the therapy under development is not disclosed.

The agreement begins as a research collaboration between the two companies. Genentech, in South San Francisco, California,  then will be responsible for all development activities and will have the option to acquire the entire program from Forma at a future phase of development.

Under the agreement, Forma will receive an upfront payment and research funding, and is eligible to receive further payments upon the achievement of certain development milestones. If Genentech then acquires the program, Forma will receive a buy-out payment and will be eligible for additional milestone payments if certain sales thresholds are met.

Luke Timmerman at the business Web site Xconomy says the deal is unusual in the industry, since Genentech has the option to acquire the entire research program, still in pre-clinical (animal testing) stage. Most collaboration deals involve only the granting of development or commercialization rights, for payments conditioned on meeting certain development or sales milestones, and sometimes in exchange for an equity stake.

According to Timmerman, the deal allows Forma to provide investors with a return on investment without going public or handing over an equity stake to Genentech. “This deal gives us the best of both worlds, Forma CEO Steven Tregay tells Timmerman. “It gives us near-term funding to continue to build our capabilities up for our pipeline, while at the same time giving us a well-defined exit for our investors down the road.”

Read More: Spirogen, Genentech Partner on Anti-Cancer Therapies

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