Japanese drug firm Astellas Pharma announced late Monday it has agreed to buy Ocata Therapeutics (NASDAQ: OCAT), which is developing regenerative medicines for eye diseases. It’s an all-cash deal worth $379 million, with the Astellas offer of $8.50 a share representing a 79 percent premium to Ocata’s share price at the end of November 6.
The deal could have immediate implications for another Boston-area startup. Hours before Astellas and Ocata announced their agreement, Xconomy reported Monday that Vision Medicines has raised $7.5 million to develop a treatment for a rare form of blindness called Stargardt disease that strikes children and teenagers. It is racing Ocata as well as multinational firm Sanofi, which has partnered with U.K. firm Oxford Biomedica. Now Vision could be up against not one but two deep pocketed competitors. Astellas tallied more than $10 billion in drug sales last year.
The acquisition of Ocata is no done deal, however. Astellas must convince Ocata shareholders to sell. Ocata executives, led by CEO Paul Wotton, and directors have said yes, but they represent only 1.7 percent of all outstanding shares, according to a press release that Astellas and Ocata issued jointly Monday evening. The tender offer will start no later than November 25 and last for 20 business days.
Formerly known as Advanced Cell Technology, the Marlborough, MA-based Ocata was a stem cell pioneer, developing embryonic stem cells for human therapies all through the previous decade’s ethical debates over the practice. In 2001, President George W. Bush severely curtailed the nascent industry by limiting federal funding for embryonic stem cell research. The president’s action prompted California voters to establish their own state funding and agency in 2004. The California Institute for Regenerative Medicine, now a decade old, has been undergoing a makeover, adjusting to advances in stem cell research and impatience for clinical results.
Based in Massachusetts, Ocata went a different route, backing its way onto the public markets through a reverse merger in 2005, then narrowing its focus to eye diseases and Stargardt’s in particular in 2009, on the heels of big staff cutbacks, as Xconomy reported. At that time, the company was running out of cash and its stock was worth pennies, not dollars.
Two years later, in mid-2011, the company finally administered its stem cell treatments to patients for the first time, and chief scientific officer Robert Lanza told Xconomy that it was “vindication.”
“In the early days, we were called murderers,” Lanza said. “We almost went under a few times. This was not easy.”
Ocata’s treatment for Stargardt disease is in Phase 2. It began a trial for dry age-related macular degeneration in the third quarter.
Photo “Tired Hazel Eye” by Michael Gil via Creative Commons license.