Genzyme Acquires Three Cancer Drugs From Bayer, Enters Seattle Biotech Hub

3/31/09Follow @xconomy

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causing patients to gradually lose balance, coordination, and walking ability. The drug—still in the final stage of clinical development—has shown an ability in early trials to reduce the flares in a way comparable to that of the most effective MS drug on the market, natalizumab (Tysabri), from Biogen Idec and Elan.

Once approved for MS, Genzyme will make annual payments from revenue to Bayer for 10 years, or until it shells out a grand total of $1.25 billion, Genzyme said. Bayer may also get a percentage of worldwide sales starting in 2021 if Genzyme doesn’t exercise a buyout option for as much as $900 million in 2020.

—For the cancer drugs Fludara and Leukine, as well as the cancer usage of alemtuzumab, the acquisition terms are much smaller. Genzyme will make payments based on annual revenue that could total as much as $500 million to Bayer, over a maximum of eight years.

Bayer will continue to supply Fludara and Leukine, although Genzyme expects to take over production of Leukine once the FDA approves a new factory, which is expected in 2010.

Leukine has become a bit of a forgotten product around the Seattle biotech community. A genetically engineered protein called GM-CSF, it is designed to boost production of infection-fighting white blood cells to help patients recover from cancer chemotherapy. Leukine was the first FDA-approved product from Seattle-based Immunex in 1991, although it never lived up to its billing, and was crushed by competition from Amgen’s filgrastim (Neupogen), which that company marketed as having fewer side effects. It took a decade for Leukine to exceed $100 million in sales.

Bayer acquired the rights to Leukine in 2002 as part of a divestiture when Amgen acquired the rest of Immunex. The compound is now a key component of many cancer vaccines in development, and is studied by many investigators as a supportive treatment that boosts the immune system to fight tumors, not just restore defenses against infections. The Bayer unit that manages Leukine had about 150 employees in Seattle and Bothell, WA, at the time of that acquisition.

[[Updated material, 4:50 pm Eastern time]]. The transaction between Bayer and Genzyme still needs to be cleared by regulators, and is expected to close within 90 days, says Bayer spokeswoman Cathy Keck Anderson. Once that happens, Bayer’s 140 employees in Seattle and Bothell will continue to operate the Leukine manufacturing facilities under a contract to Genzyme, which will market the product. Once Bayer’s newer facility in Snohomish County wins an FDA license as it expects to in 2010, the company will consolidate manufacturing there, and Genzyme is expected to take ownership of the factory, Keck Anderson says.

Leukine generated $67.5 million in sales in 2008, and the sales trends have been “stable,” in recent years, Keck Anderson says. Plans for the 16-acre site in Snohomish County were first disclosed in this story I wrote for The Seattle Times in 2004. At that time, Germany-based Schering AG was the owner of Leukine, and it was anticipating higher future demand for Leukine based on clinical trials that suggested it might help patients with Crohn’s disease, a chronic inflammatory condition of the intestines. Schering was later acquired by Bayer. The clinical trial of Leukine for Crohn’s patients failed, Keck Anderson says.

Bayer currently manufactures Leukine at a leased facility at 51 University Street in downtown Seattle, where it was first made by Immunex. The company hasn’t disclosed how much the Snohomish County factory could boost its capacity. Leukine has a chance to see growing use in the future as an anti-cancer agent, rather than a supportive therapy, Keck Anderson says. The drug is currently being tested in a final-stage clinical trial of patients with melanoma, a deadly skin cancer, conducted by the Eastern Cooperative Oncology Group, an independent group of leading physicians that receives support from the National Cancer Institute.

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