Gerngross Mulls Buying Back GlycoFi After Merck Closes HQ

Xconomy Boston — 

[Updated, 1:05 pm ET] What does the future hold for GlycoFi, the Lebanon, NH-based company that Merck bought for $400 million in 2006? The Valley News first reported on Sunday that GlycoFi has moved out of its headquarters at the Dartmouth Regional Technology Center, and that a “select number” of employees have transferred to other Merck labs on the East Coast.

[Updated with response from Merck] Merck confirmed to Xconomy on Tuesday that the company has indeed closed the GlycoFi facility in Lebanon. In a statement, Merck said: “This action is consistent with the global initiative Merck announced in 2013 to sharpen our commercial and R&D focus to enable the company to better target its resources behind those opportunities that have the potential to deliver the greatest return on investment, including bolstering its pipeline and implementing a more agile operating model, with a significantly reduced, more flexible cost structure.”

According to GlycoFi co-founder Tillman Gerngross, meanwhile, the pharma company has moved what remains of the company to Boston. Gerngross says that, as far as he knows Merck is still using the GlycoFi technology—a method of making proteins from yeast.

Gerngross (pictured above), a Dartmouth College professor who also founded Adimab, says about a third of the roughly 20 employees who worked at GlycoFi’s New Hampshire site are staying in the area, and some of them have been hired by Adimab. Others have found different local jobs, with “a dozen or so” moving to Boston to continue working with Merck.

Gerngross and Charles Hutchinson, the emeritus dean of Dartmouth’s Thayer School of Engineering, formed GlycoFi in 2000 based on a method Gerngross developed to make genetically engineered yeast cells that produce human-like proteins. The venture was a huge financial success; GlycoFi raised a total of $32 million—about $20 million of which came from venture capitalists including Boston VC firm Polaris Partners—and was sold to Merck for $400 million. Gerngross subsequently leveraged that success to create his next company, the antibody discovery shop Adimab, which today remains a profitable privately held venture with partnerships with dozens of life sciences companies, among them Merck.

Yet, as Gerngross told Xconomy in 2014, he had his regrets about the GlycoFi deal. He didn’t agree with Merck’s plan to use GlycoFi to create so-called “bio betters,” or slightly cheaper/structurally similar versions of existing biotech drugs, likening it to buying a calculator and using it to nail in nails. In 2014, Gerngross said Merck had gained a better appreciation over the years of what to do with GlycoFi’s technology, such as harnessing its ability to make new molecules—“that’s where the value proposition is,” he said—though he didn’t provide details. It’s unclear what came of those efforts.

Gerngross said then that the GlycoFi experience “really ended up shaping the way we thought about Adimab, and why it’s a very different company than GlycoFi.” Indeed, rather than sell Adimab, Gerngross has amassed a slew of deals for fees and recurring payments, and turned the company from a C-corp to an LLC so he could distribute cash to shareholders via dividends. Adimab became profitable a few years ago, and likely isn’t at risk of being swallowed up by Big Pharma.

Gerngross says today that Adimab had some discussions with Merck three or four years ago about possibly buying GlycoFi, but couldn’t come to terms. That’s something he’s still considering.

“We would still be interested in principle to acquire it if it were available,” he says. “But I also know that other folks have been interested in [GlycoFi], and I’ve been in conversations with some of them.”