Status Report: Sirtris Pharmaceuticals - GlaxoSmithKline

The proposed acquisition of Sirtris Pharmaceuticals (SIRT) is essentially an effort to bolster GlaxoSmithKline's (GSK)s pipeline in the "Type 2" diabetes treatment area. This is a direct result of GSK's recent "Avandia" problems, described briefly in this article. As discussed in numerous previous pharmaceutical and/or biotech deals, the diabetes treatment segment -- whether it be on-market products or research/development products -- is one of the more competitive drug markets. As far as SIRT is concerned, the company currently has no drugs on the markets and does not expect to until 2112-2213.

Although there have been a few deals where the pipeline aspect drew some mild regulatory interest (Sicor - Teva Pharmaceuticals (TEVA) for example) these situation are for the most part immune to antitrust scrutiny. It should also be noted that SIRT lists GSK as a competitor, but also notes several top-tier and second tier players:

Abbott, AstraZeneca, Bayer, Bristol-Myers Squibb, GlaxoSmithKline, Johnson Johnson, Lilly, Merck, Novartis, Novo Nordisk, Pfizer, Roche, Sanofi-Aventis, Takeda and Wyeth, as well as large and small biotechnology companies such as Amgen, Amylin, Genentech and MannKind are pursuing the development or marketing of pharmaceuticals that target diabetes or other diseases that we are targeting.

This in now way changes the fact that the relevant market, again Type 2 diabetes drugs, is among the most competitive in the pharm/biotech industry, and as such there is virtually no chance of an HSR delay for this transaction. There is a chance of EU approval for this deal, as SIRT is currently in the process of obtaining Orphan Drug status for its "SRT501" diabetes product, but this does not necessarily mean a formal European Commission review for the transaction will be required. Naturally, if this is this case, there is a chance of a brief delay in the initial tender offer expiration.

In sum, this should be a very easy transaction for GSK to complete in less than 60 days, and more likely in the standard 45-day time frame.

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