Motley Fool Income Investor
recommendation Merck
Merck's bigger, and arguably more compelling, deal of the day was for GlycoFi, for which it will pay $400 million. GlycoFi is purely a technology company, with no drugs in development. However, the privately held firm has attracted some big-time attention. In addition to its Merck collaboration, GlycoFi has alliances with Eli Lilly
GlycoFi offers special types of yeast that produce therapeutic proteins with highly uniform glycoforms, or sugar structures. According to the company, about 70% of therapeutic proteins are glycoproteins -- peptides with sugar structures attached. These structures can affect protein activity; however, the industry standard for biomanufacturing -- mammalian cell culture -- typically yields protein batches with the same peptide backbone but a mixture of glycoforms.
GlycoFi's technology allows for isolating different glycoforms and identifying those with the highest potency. Once these glycoforms are found, the company's yeast technology can produce the proteins in large batches.
For Merck's second purchase, it will pay $80 million for Abmaxis, a specialist in "in-silico," or computational design, of monoclonal antibodies. The firm has a specialized process of discovery, selection, and small-scale production of antibodies that it believes produces antibodies faster and with greater potency, specificity, and stability. However, the company has not started testing its candidates in preclinical trials.
These deals don't offer Merck a big payoff right now, but they could improve Merck's development efforts. In addition, and perhaps as importantly, if either of these technologies bears fruit, Merck's ownership of them could allow it to pull in more biotech partners, which have been the major innovators in creating new medicines in recent years. These signal that Merck is taking a long view, so investors will have to be patient.
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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article