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LONDON, Feb 23 (Reuters) - Japan's Sosei Group is to buy privately owned British biotechnology business Heptares for up to $400 million, the companies said on Monday, continuing the feverish pace of dealmaking in the sector.
Drug companies around the world are scouting the biotech landscape for new products to drive sales growth, with Canada's Valeant Pharmaceuticals International announcing at the weekend that it has agreed to buy gastrointestinal drugmaker Salix Pharmaceuticals for more than $10 billion.
Heptares specialises in work on an important class of proteins known as G-protein-coupled receptors, or GPCRs, which serve as a main conduit for chemicals to get past a cell's membrane and be taken up by a cell.
It has early-stage drug candidates in clinical and pre-clinical development in areas including Alzheimer's disease, schizophrenia, migraine and diabetes.
The importance of GPCRs was recognised in 2012 when the Nobel Prize for chemistry was awarded to two American scientists who pioneered research in the field.
Sosei said it would pay $180 million upfront for Heptares and up to $220 million if certain development targets are met.
The Japanese company said the deal is expected to enhance revenue and profit growth significantly from 2017 and would give it potential new products to market after patents expire on two chronic lung medicines in 2026.
Sosei derives significant revenue from the lung drugs Ultibro Breezhaler and Seebri Breezhaler, which are marketed by its partner Novartis.
Shares in Sosei rose as much as 10.5 percent after news of the deal before giving up most of the gains to end 1 percent higher.
Heptares, which was founded in 2007 based on the work of scientists at the MRC Laboratory of Molecular Biology in Cambridge, already has research alliances with a number of leading pharmaceutical companies including AstraZeneca, Novartis and Takeda.
The British business will continue to be run as an autonomous subsidiary of Sosei.
GPCRs are linked to a wide range of diseases, since they play a central role in many biological functions in the body, but developing new drugs to target them accurately has been difficult.
Heptares uses a drug design technology known as StaR to target GPCRs precisely, which it believes will produce medicines that work more effectively with fewer side-effects.
Sosei was advised by Moelis, while Goldman Sachs advised Heptares. (Reporting by Ben Hirschler; Editing by David Goodman)