In Need Of Revenues, Aastrom Buys Sanofi’s Cell Therapy Products
More than a year after the failure of its lead program forced a major overhaul, Aastrom Biosciences (NASDAQ:ASTM) announced Monday it had acquired pharmaceutical giant Sanofi’s cell therapy and regenerative medicine business for $6.5 million.
“We’ve taken steps to strengthen Aastrom and broaden the business, and I think this transaction is a clear reflection of that,” says Nick Colangelo, Aastrom’s CEO.
As part of the deal, Aastrom of Ann Arbor, MI, obtained what was a legacy business left over from Sanofi’s $20 billion buyout of Genzyme. Aastrom receives the commercial rights to three products: Carticel, Epicele, and MACI. Carticel is an autologous chondrocyte implant marketed as a treatment for cartilage defects. Epicele is a permanent skin replacement product, and MACI is a cartilage repair product marketed in Europe. Colangelo says Aastrom also acquired manufacturing and development centers in Denmark and the United States.
“We’ve acquired some of the earliest FDA-approved autologous therapies,” Colangelo says, referring to products derived from a patient’s own tissues. “It’s a strong synergy. We’ve been working on autologous cell therapy for the life of the company.”
Colangelo says that the three products Aastrom purchased from Sanofi generated $44 million in revenue in 2013. That’s a drop in the ocean for Sanofi and its $140 billion market cap, but for Aastrom it’s a life preserver. The biotech plans to use the cash to pay for the ongoing development of therapies such as its Phase 2b study of ixmyelocel-T to treat a cardiovascular condition known as dilated cardiomyopathy.
Only $4 million of the purchase is payable in cash, with $2.5 million in the form of a promissory note, reflecting the small revenue stream the products are expected to deliver, as well as Aastrom’s own cash position. It had $8 million in the bank at the start of the year.
Aastrom will also inherit all of Sanofi’s employees who worked for its regenerative medicine and cell therapy division. As we reported on April 11, Aastrom recently appointed Ross Tubo as chief scientific officer. Tubo was formerly vice president of stem cell research and chemokine biology at Genzyme, where he oversaw R&D for two of the first FDA-approved autologous cellular therapies before the Sanofi takeover.
“It’s an interesting circle of life,” Colangelo says. “Ross left Harvard Medical School and helped develop these products with Genzyme. Now they end up right back in his lap.”
Colangelo says the acquisition has already sparked interest from investors, but Aastrom isn’t planning on raising another big round in the immediate future. “The commercial products will fund development, so it will reduce our need for capital in the long-term,” he adds. “I’m excited to do this kind of transformational transaction. It positions us to grow in ways we wouldn’t have been able to otherwise.”