Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) is acquiring private biopharmaceutical company CoGenesys Inc. for $400 million cash, funded from its internal resources.
Maryland-based CoGenesys has a broad based biotechnology platform and is focused on the development of peptide and protein-based medicines for cardiovascular disease, cancer and autoimmune disorders. The company was founded in 2005 as a division within Human Genome Sciences Inc. (Nasdaq: HGSI) to focus on early drug development and was spun off in June 2006. HGSI still controls the company.
Teva noted that its existing biotechnology infrastructure includes product development and manufacturing in several countries. Teva markets a portfolio of biopharmaceutical drugs outside the US, including interferon alpha 2b, granulocyte colony-stimulating factor and human growth hormone; it markets human growth hormone the US as well.
Teva president and CEO Shlomo Yanai said, "Biopharmaceuticals will be a long-term growth driver for Teva, and this transaction represents an important springboard in our efforts to establish ourselves among the leaders in this market. CoGenesys’ technologies and its team and pipeline complement Teva's operations, resources and expertise in bringing drugs to market. This combination will enable us to realize our vision of delivering high quality, affordable biopharmaceuticals worldwide. CoGenesys' acquisition reflects our commitment to capture the significant long-term prospects we believe the biogenerics market will offer.”
"The Wall Street Journal" noted that the types of drugs being developed by CoGenesys have become a source of deep tension between biotech companies and generic-drug makers such as Teva. The companies that develop the drugs argue that biologics are far harder to manufacture, and that it is very difficult to show whether copycat versions are as effective. But that hasn't stopped generic-drug companies from devoting significant resources to the development of generic biologics, which industry experts expect to enter the US market in about five years.
"The Wall Street Journal" added that "To get there, the generic-drug makers will have to convince regulators and Congress that they are capable of manufacturing the treatments with the same standards of quality and reliability as mainstream biotech companies. Currently, there is no legislative pathway for generic biologics to gain approval, though efforts are under way. Last year, Senate legislation aimed at creating such a system faltered.
"The market for such therapies is extremely lucrative. In 2006, global spending on biotech drugs totaled more than $60 billion, according to an estimate from IMS Health, double the 2002 figure. Three top-selling biologic drugs - Amgen Inc.'s Aranesp and Epogen, along with Johnson & Johnson's Procrit - brought in $7.3 billion of revenue last year. Teva had been exploring for biotech companies that could bolster its generic biologics capabilities for about a year, according to a person familiar with the matter.
Teva fell 1.1% on morning trading on the TASE today. It closed at $48.12 on Nasdaq on Friday.
Published by Globes [online], Israel business news - www.globes-online.com - on January 22, 2008
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