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Amgen lunges for lead role in genetics research, bags deCODE for $415M

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Two years after a pair of top biotech venture players brought struggling deCODE Genetics out of bankruptcy and reenergized its efforts to better understand the genetic triggers of disease, Amgen ($AMGN) has swooped in to buy the Icelandic company for $415 million, spurring some head scratching over the match.

Amgen's new CEO, Robert Bradway, said that bringing in deCODE will give the big biotech a state-of-the-art beachhead in the forefront of genetic research. Once a high flyer at a time when the genomic revolution promised to quickly revolutionize therapeutic development and produce a new generation of diagnostic products, deCODE enlisted the cooperation of more than 140,000 residents of Iceland, nearly half of the population, who shared a closely matched genetic profile that helped researchers pinpoint the causes of some mystifying diseases. Most recently it announced that its researchers--in collaboration with Genentech--had uncovered a prime genetic culprit behind Alzheimer's. And its research team has endeavored to do the same for dozens of other diseases.

But deCODE was forced into bankruptcy in 2009 due to a combination of factors. Investors were growing increasingly concerned that much of the hype about genetics had obscured the long road that would have to be traveled before any money-earning products could be produced. And the financial crisis froze some key players who could have helped the company, most notably Lehman's. The leaders at Polaris and Arch, though, believed in the future of the business model and took the company private, reportedly buying the assets for only $14 million.

"DeCODE Genetics has built a world-class capability in the study of the genetics of human disease," Bradway said in a press release. "This capability will enhance our efforts to identify and validate human disease targets. This fits perfectly with our objective to pursue rapid development of relevant molecules that reach the right disease targets while avoiding investments in programs based on less well-validated targets."

Fair enough, but the buyout also raises questions about just how good a match this can be. DeCODE's work in genetics extends to a variety of disease arenas that go far beyond the pipeline boundaries of even a big biotech company like Amgen. What happens to that work, and how can Amgen capitalize on it? Why not just contract out the work rather than buy the company?

In a blog posting, Polaris managing general partner Terry McGuire said the reason for the buyout is simple: "There is a great need by large biotechs and pharma companies to show true and more predictable innovation," he wrote. "And Amgen's leaders know that the future of healthcare is laid on the foundation of producing truly innovative medicines and technologies."

McGuire tells FierceBiotech this morning that the deal marks a "very exciting outcome, and not just financially." The pioneering genetics work that deCODE was involved in made a major contribution to all phases of medicine, he added. The company, now with about 130 staffers, was able to come up with new assets on target validation, diagnostics, and more. "I'm not surprised at all that someone as great as Amgen came along and said you could do lots of things with this."

- here's the press release
- read McGuire's blog post

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