Trader Talk

Glaxo Buying Sirtris -- A Euro/Dollar Story

GlaxoSmithKline is paying big in an effort to find cures for diseases of aging. They are buying Sirtris Pharmaceuticals for $720 million in cash, or $22.50/share. This price represents an 84% premium over SIRT's closing price yesterday.

Two things are going on here:

1) this is important, cutting-edge science; Sirtris is the leading research firm seeking to cure diseases of aging by targeting the enzymes that control the aging process, and

2) big pharmaceutical companies are desperate for new drugs and novel technologies; expect more European pharma companies to sniff around and buy U.S. biotechs with their inflated euros.

But it is the potentially revolutionary science that's important here. How can we live longer and healthier? Obviously we can try to cure selective diseases, and maybe find ways of replacing worn-out body parts.

But it has been noted for a while that one of the only treatments that has been demonstrated to extend life appears to be caloric restriction. Read: starvation diet. We're talking 30 percent less than a normal human consumes. This apparently works in rats and yeast, but definitive proof that it radically extends human life is still lacking.

Might there be a way to get the effects of longer, healthier life without the pain of starving yourself? Possibly, and that is where Sirtris comes in.

Sirtris is the leading company develop a drug pipeline based on chemical compounds known as sirtuins. These sirtuins are evidently turned on by a caloric-restricted diet. Small molecules called resveratrol (a chemical substance found in wine) apparently activate these sirtuins and have extended the lifespan of yeast, worms and fruit flies, as well as mice eating a high-calorie diet. In other words, resveratrol increases the activity of the gene associated with sirtuins in the same way that caloric restriction does.

Does this work in humans? We don't know, yet.

Seven sirtuins have been identified that may impact metabolic disorders, cardiovascular diseases and cancer. Sirtris has filed more than 100 patent applications around these sirtuins.

The company's lead drug is called SRT501; it is an enhanced formulation of resveratrol and is currently being tested as a treatment for type II diabetes and MELAS, a rare form of dementia. There are indications that they reduce weight gain, improve glucose levels, and insulin sensitivity.

Sirtris is also developing new chemical entities (NCEs) that are much more potent than SRT501 and should enter clinical testing soon.

I will be interviewing Sirtris' CEO, Christoph Westphal, at 3:20pm ET on Closing Bell.

Questions?  Comments?