Ligand Pharmaceuticals has entered into a definitive agreement to acquire development and licencing biotechnology firm Pfenex in a deal valued at approximately $516m.

Under the agreement, Ligand will buy all outstanding shares of Pfenex for $12 per share in cash or $438m in equity value on a fully diluted basis.

Pfenex will also receive $2 per share or $78m as a contingent value right (CVR), contingent on reaching a predefined regulatory milestone by 31 December 2021.

Pfenex leverages its Pfenex Expression Technology, designed to provide a validated, cost-effective and scalable approach to recombinant protein production.

The technology is ideal for complex, large-scale protein generation that cannot be produced using more conventional systems.

Currently, the technology is out-licensed for various commercial and development-stage programmes. Pfenex is also using the technology to develop an early-stage product pipeline and nanobody discovery and development capability.

The technology could benefit biopharmaceutical development programmes by decreasing development timelines and manufacturing costs for human therapeutics and vaccines.

Ligand expects Pfenex’s expertise in the expression of complex proteins to complement its antibody and drug enabling technologies.

The acquisition will also provide access to partnerships with pharmaceutical companies for treatments and vaccines, including Merck, Jazz Pharmaceuticals, Serum Institute of India and Alvogen.

Ligand would also benefit from process development operation in San Diego, US with scalable equipment and engineering capabilities to serve large pharmaceutical companies.

Ligand Pharmaceuticals CEO John Higgins said: “Pfenex will add an established, proven protein expression platform to Ligand that is highly complementary to our essential, proprietary drug discovery and formulation technologies.

“We are confident we will be able to quickly and efficiently grow the Pfenex business, along with our core existing technologies.”

Subject to customary conditions, the acquisition is expected to close in the fourth quarter of this year.

In March last year, Ligand Pharmaceuticals agreed to sell the intellectual property rights associated with thrombocytopenia drug Promacta (eltrombopag) to Royalty Pharma for a cash consideration of $827m.