DSM has agreed to buy Danish biotech Glycom for €765 million. The Horsholm-headquartered company regards itself as the world’s leading supplier of human milk oligosaccharides (HMOs). The transaction is expected to close in the second quarter of 2020.

Glycom operates a manufacturing plant in Esbjerg, which it said is the world’s largest HMO facility. The company also operates a small plant at an undisclosed location in the US. HMOs are a collection of carbohydrate structures found in human breast milk that act as prebiotics in infants, serving as feed for good bacteria in the intestine.

With a staff of more than 150 employees, Glycom posted sales of €74 million in 2019, predominantly generated with food and beverage giant Nestlé. The Swiss group is a “strategic” stakeholder in Glycom along with its founders, Danica Pension and various other, mostly Danish, individual investors.

DSM said Nestlé will continue to be an important customer in the future with a “mutually beneficial” long-term contract in place and firmly committed volumes covering the mid-term horizon.

“Our companies have a great fit together, with a shared passion for purpose-led and science-based solutions in Nutrition & Health. This acquisition is an attractive and logical next step for DSM enabling us to provide our customers with innovative early life nutrition solutions in our Human Nutrition business,” said DSM co-CEOs Geraldine Matchett and Dimitri de Vreeze.

The Dutch group sees the deal as highly synergistic for both companies. DSM said it can accelerate the growth of Glycom by offering HMO products to its broad global customer base as well as boosting product development by levering its strong R&D platform and clinical competencies. It also can introduce HMOs in other segments outside the early life nutrition market, such as for toddlers, children and adults, as well as for medical nutrition and pet food.

Glycom secured approvals in 2015 from the European Food Safety Authority (EFSA) and the US Food and Drug Administration (FDA) for its HMOs. The company has two GlyCare HMO products commercially available and expects to launch four more during 2020.

DSM noted that there is emerging evidence for HMO benefits in adults. These include functional gastrointestinal diseases including irritable bowel syndrome, a chronic digestive disorder that affects 10-15% of adults; metabolic diseases such as obesity and co-morbidities; reducing the consequences of antibiotic treatment; and helping allergies and intolerances.

In November 2019, Jennewein Biotechnologie sued Glycom for infringing its intellectual property relating to the fermentation of HMOs. The German biotech said that having tried unsuccessfully to chemically synthesize HMOs, Glycom is now imitating its proprietary process. Jennewein claims to be the first commercial vendor of HMOs since bringing its HMO 2’-fucosyllactose to the market in 2015.

Jennewein said it had already obtained a seizure order against Glycom along with additional evidence that will further substantiate infringement of its European patent. “Besides the infringement of said patent, we see a number of additional infringements of our intellectual property rights by Glycom,” said Andreas Hübel, Jennewein’s director IP.

More recently, on Jan, 9, Jennewein also filed a patent infringement suit with the regional court in Mannheim, Germany, against Nestlé Nutrition and its holding company Nestlé Deutschland. Nestlé offers for sale in Germany its infant formula Beba Supreme that contains two HMOs. Jennewein asserts these HMOs are produced by its proprietary process.

Neither Glycom nor Nestlé has commented on the cases.