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GlaxoSmithKline plc (GSK) announced an agreement for the sale of the Affymax business, a GSK drug-discovery operation in California, to Affymax Inc, a new company founded by a syndicate of venture capital firms led by Patricof & Co. Ventures Inc.
Glaxo Wellcome originally purchased the Affymax business as a technology-development centre, focused on combinatorial chemistry and high-throughput screening. However, the Affymax business has moved on to become a drug-discovery company. GSK's decision follows a review of its drug discovery operations. The Affymax business technologies of combinatorial chemistry and high throughput screening will continue to be used in the GSK R&D organisation.
Under the terms of the divestiture, which are subject to a definitive agreement, GSK will receive non-voting preferred stock in Affymax Inc. in exchange for the Affymax business. GSK will not participate in the management of Affymax Inc, nor have any representation on the Board. The transaction is expected to be completed within the next month.
The transaction to sell the Affymax business will be recorded as a sale of net assets worth approximately £3 million and will result in cost savings to GSK. As a result of the sale, an exceptional charge of approximately £305 million will be made in the current financial year. This charge includes a goodwill write-off of £299 million which arose on the original purchase of the Affymax business and was previously written-off to reserves. To comply with current accounting standards on disposals, this goodwill will be re-instated and then written-off as an exceptional charge to the P&L account.
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