Genzyme Acquires Three Cancer Drugs From Bayer, Enters Seattle Biotech Hub
[[Updated: 4:50 pm Eastern time]] Genzyme, the world’s largest maker of drugs for rare genetic diseases, is making a big move into broader diseases like cancer and multiple sclerosis to continue fuelling its growth. The Cambridge, MA-based biotech company said today it is acquiring three drugs from Germany-based Bayer AG, including one that gives Genzyme its first foothold in the Seattle market.
The deal provides Genzyme the worldwide rights to alemtuzumab (Campath), a leukemia drug thought to have greater potential as a treatment for MS; as well as two other cancer drugs, fludarabine (Fludara) and sargramostim (Leukine). The acquisition is structured in an unusual way—Genzyme isn’t paying upfront fees, although it will make annual payments from revenue to Bayer. Genzyme is also paying $75 million to $100 million for a Seattle-area factory to produce Leukine, a white blood cell booster used for patients who have had those infection-fighting cells wiped out by cancer chemotherapy.
Genzyme makes most of its $4.6 billion in annual revenue from enzyme replacement therapies for rare genetic disorders, and last year got just a small fraction of revenue, $117 million, from cancer drugs. The company is on a mission to show Wall Street that even though it is now a large company, it can maintain fast growth, with a stated goal of 20 percent compound annual earnings growth from 2006 through 2011. This acquisition of cancer drugs is supposed to provide an additional $185 million in revenue in 2009, and as much as $700 million in revenue over three years, which will help support the company’s earnings target.
“Alemtuzumab is a potentially transformative therapy for the treatment of multiple sclerosis, and an important part of our future. This strategic transaction clarifies the responsibilities of each company and gives Genzyme control over the execution of this program,” said Henri Termeer, Genzyme’s chairman and CEO in a statement. “We will continue to collaborate with Bayer in a more streamlined and focused way.”
There a lot of moving parts in the deal terms, so we’re breaking them out in digestable chunks: