West Coast Editor

To boost its chemical and manufacturing capability, Gilead Sciences Inc. is buying out longtime partner Degussa AG's subsidiary in Canada, Raylo Chemicals Inc., for €115.2 million (US$147.7 million).

Erin Edgley, spokeswoman for Foster City, Calif.-based Gilead, said the main rationale for the buyout is to scale up production of investigational products.

"The Raylo site has two locations in Edmonton, and we're taking over one of them," she said.

Gilead's stock (NASDAQ:GILD) closed Tuesday at $56.59, up 10 cents.

Gilead has worked with Edmonton, Alberta-based Raylo for 14 years, getting development expertise and commercial products on a large scale from the firm, and expects to use the new site mainly to make investigational products, supply active pharmaceutical ingredients (APIs) for clinical research programs and contribute to new product launch supplies.

As part of the deal, which is expected to close in the fourth quarter, Gilead has entered long-term agreements with Degussa for the supply of raw materials and the manufacture of certain APIs for Gilead's products. Degussa, of Dusseldorf, Germany, will keep the Raylo name as an asset.

Edgley said Gilead is working with Raylo on an integration plan. About 200 employees work at the two sites, and whether overlap will cause any layoffs will not be known until the deal closes, she told BioWorld Today.

Raylo's agreements with other firms include one entered last March with Antisoma plc, of London, under which Raylo makes AS1411 (formerly AGRO100), Antisoma's aptamer drug in trials for cancer.

Antisoma said it chose Raylo because of its success in the making of aptamers and other oligonucleotides, including Macugen (pegaptanib), the compound for age-related macular degeneration developed by New York-based companies Pfizer Inc. and Eyetech Pharmaceuticals Inc.

The primary license for Macugen came from Gilead, which got the aptamer as part of a $550 million stock acquisition of NeXstar Pharmaceuticals Inc., of Boulder, Colo., in the spring of 1999. Antisoma's AS1411 is made by extracting the nucleotides from salmon sperm and then linking them chemically. (See BioWorld Today, March 2, 1999.)

In February, the compound was granted orphan drug status in the European Union for the treatment of renal and pancreatic cancers, and already had been given orphan status in the U.S. for both.

Gilead recently made news with its out-licensing of the marketed cancer product DaunoXome to Diatos SA, of Paris. A liposomal formulation of daunorubicin, DaunoXome has been sold by Gilead in more than 20 countries for AIDS/HIV-related Kaposi's sarcoma, and the company could get $4.7 million in up-front and milestone payments, which are based on regulatory approvals of new indications, such as acute myeloid leukemia. Royalties are included, too. (See BioWorld Today, May 12, 2006.)

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