With plans in place to expand clofarabine's label from pediatric acute lymphoblastic leukemia (ALL) to adult acute myeloid leukemia (AML), Genzyme Corp. moved to acquire partner Bioenvision Inc. in an all-cash deal worth approximately $345 million.

Cambridge, Mass.-based Genzyme will pay $5.60 per outstanding common share of New York-based Bioenvision, a 50 percent premium over Bioenvision's average share price during the past 20 trading days. Yet, in a research note, CIBC World Markets Corp. analyst Bret Holley called the price "somewhat low" given projected sales of clofarabine in both ALL and AML.

Even so, Bioenvision investors seemed to like the news, nudging the shares (NASDAQ:BIVN) up 34 cents on Tuesday to close at $5.59. Over the past two weeks, Bioenvision's stock price has risen from $3.35 to $5.25, with acquisition rumors blossoming after Genzyme's annual analyst day and reaching a fever pitch late last week, when Bioenvision traded at 11 times its normal volume.

Genzyme shares (NASDAQ:GENZ) also rose on Tuesday, closing up $1.30 at $62.56. Genzyme predicted the acquisition would be approximately 6 cents dilutive in 2007, slightly dilutive to break-even in 2008, and accretive in 2009. The company also announced Tuesday a three-year $1.5 billion share repurchase program, which Robert W. Baird & Co. Inc. analyst Christopher Raymond said in a research note "should partially offset the dilution from the BINV acquisition."

The acquisition gives Genzyme exclusive, worldwide rights to clofarabine, a purine nucleoside analogue. Bioenvision markets the drug as Evoltra for pediatric relapsed or refractory ALL in Europe and posted net sales of $3.9 million in the quarter ending March 31.

Genzyme previously obtained North American rights to clofarabine through the $1 billion acquisition of ILEX Oncology Inc., which had licensed the rights from Bioenvision. Genzyme markets the drug as Clolar for pediatric relapsed or refractory ALL in the U.S. and Canada and does not break the product's sales out from the rest of its oncology franchise, which posted first quarter sales of $22.4 million. (See BioWorld Today, March 16, 2001, and March 1, 2004.)

Yet Genzyme has big plans for clofarabine. Chairman and CEO Henri Termeer said in a conference call that peak sales are estimated to reach $600 million.

Achieving that number depends on expanding clofarabine's label into AML. ILEX previously failed to get approval in AML after an Oncologic Drugs Advisory Committee voted against it. That decision was based on two Phase II studies showing an overall response rate of 20 percent in ALL and 3 percent in AML. Bioenvision also failed to get the AML label. (See BioWorld Today, Dec. 2, 2004.)

But both companies are steaming ahead once again in AML. Bioenvision filed an application with the European Medicines Agency based on a Phase II trial in which 44 percent of elderly AML patients treated with Evoltra achieved a complete response. In the conference call, Bioenvision Chairman and Chief Executive Officer Christopher Wood said the 90-day response from the agency was "in-line with what we expected."

Bioenvision also is working with the National Cancer Research Institute to enroll a Phase II/III trial in older patients with AML or high-risk myelodysplastic syndromes (MDS). Genzyme is conducting a Phase III study in older AML patients to evaluate the combination of clofarabine and cytarabine; a pivotal Phase II study of clofarabine in first-line AML in older patients; and a Phase III trial with the Eastern Cooperative Oncology Group in first-line AML in older patients.

In his note, Holley predicted the EMEA's 90-day response "was favorable and likely did not include requests for new data." He added that he believes "there is a good probability of approval for clofarabine in elderly AML in late 2007." Genzyme did not elaborate beyond its conservative estimate of late 2008 for the global label expansion.

Beyond AML, Genzyme is exploring clofarabine in MDS and other types of cancer, as well as bone marrow transplant. Although Bioenvision had been studying the drug in psoriasis, Genzyme indicated its autoimmune programs would be preclinical, with the main focus for the drug in oncology.

In addition to clofarabine, Genzyme's acquisition of Bioenvision will include the UK-marketed drug Modrenal (trilostane) for relapsed postmenopausal breast cancer and the late-stage drug Suvus for refractory chronic hepatitis C infection. On March 31, Bioenvision had $20.6 million in cash, equivalents and short-term investments, not including a $30 million registered direct offering in April and $7.4 million in warrants exercised in May.

The acquisition is expected to close in July and has been approved by the boards of directors of both companies.

Separately, Genzyme Canada Inc. said it reacquired Canadian rights to Hectorol (doxercalciferol) from Shire BioChem Inc. Hectorol is a vitamin D2 hormone used to manage secondary hyperparathyroidism in patients on dialysis.