Tuesday, May 29, 2007

Genzyme Buys to Build in Oncology, Again

In a move reminiscent of its 2004 acquisitions of ImPath and Ilex Oncology, Genzyme is taking out Bioenvision, its biotech partner on the drug clofarabine, for $345 million in cash. The buyout is the Big Biotech's first move to create a global oncology business--Bioenvision launched the drug in Europe last year, where it is sold as Evoltra--and its first acquisition since its hostile takeover of Anormed last year for $580 million. Evoltra sales over the past nine months in Europe were just over $9 million.

The price represents a 50% premium over the 20-day average price of Bioenvision's shares, and is the latest in a long string of acquisitions of biotech development/marketing partners: see Genentech/Tanox, Lilly/Icos, Shire/New River, Amgen/Abgenix, etc. We expect more of these ally-to-buy scenarios: sometimes having a partner is just too expensive.

Genzyme's share of clofarabine comes via Ilex, which it bought for $1 billion in stock in February 2004 as an early step in building its oncology presence. The drug is marketed as Clolar for pediatric acute lympoblastic leukemia (ALL) since its FDA approval in December that year. The companies are aiming to expand the drug's remit into adult indications such as acute myeloid leukemia (AML).

Genzyme chairman and CEO Henri Termeer noted on a call a few moments ago to discuss the deal with analysts that the companies expect roughly $600 million in peak sales from clofarabine, and stressed the efficiencies of combining Genzyme's and Bioenvision's efforts under one global clofarabine program.

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