Genzyme acquires rights to Campath
The Cambridge biotech broadens its lineup with deal for cancer drug
Genzyme Corp., the Cambridge biotechnology giant best known for targeting rare genetic disorders like Pompe disease and Fabry disease, is increasing its investment in drugs to treat broader diseases such as cancer and multiple sclerosis.
The company said it struck a multimillion dollar deal yesterday with Bayer HealthCare to acquire most of Bayer's rights to Campath, a cancer drug in advanced clinical trials to treat multiple sclerosis. Genzyme acquired Campath when it bought Ilex Oncology Inc. of San Antonio in 2004, but shares marketing and distribution rights with Bayer HealthCare, a subsidiary of Bayer AG of Germany.
In addition, Genzyme is buying two established cancer drugs from Bayer, Fludara and Leukine. As part of the deal, next year Genzyme will buy Bayer's manufacturing plant near Seattle - where Leukine is produced - for $75 million to $100 million.
Instead of buying the drugs upfront, Genzyme agreed to make gradual payments based on how well the treatments sell. If they generate enough revenue, the deal could ultimately be worth $2.9 billion, including the price of the plant, over the next 11 years. Much of the money is contingent on Campath's approval by the US Food and Drug Administration to treat multiple sclerosis, a chronic disease that interrupts the flow of information to the brain and causes symptoms that range from numbness to paralysis. The company hopes to win FDA approval in 2012.
Genzyme shares rose 44 cents yesterday, less than 1 percent, to $59.39 on a day when the broader stock market rose modestly.
J.P. Morgan analyst Geoffrey Meacham, who has a "neutral" rating on Genzyme's stock, had a mixed reaction to the Bayer news.
"Our take is that the deal makes strategic sense as Campath MS is an important pipeline asset for Genzyme," Meacham wrote in a note to investors. "However, we question why Bayer is a willing seller if it shares Genzyme's enthusiasm."
Regardless, he noted that Genzyme has already made a major investment in Campath to treat multiple sclerosis and has highlighted the drug at a meeting with investors. If approved for multiple sclerosis, it could potentially compete with some drugs made by Biogen Idec Inc., another biotech in Cambridge.
In addition, Genzyme said the deal will provide an immediate boost to its cancer treatment franchise. The company estimated it would increase oncology revenue by $185 million this year and up to $700 million over the next three years. Last year, the oncology segment accounted for $117 million in sales.
Genzyme said the deal will help it meet its goal of increasing earnings by 20 percent a year from 2006 to 2011.
Todd Wallack can be reached at twallack@globe.com. 