By Brady Huggett
Call it buying up the competition or helping out a colleague, but either way, Genzyme Corp. is in a definitive merger agreement to acquire Novazyme Pharmaceuticals Inc. for up to $225 million.
Novazyme, of Oklahoma City, will function as a wholly owned subsidiary of Genzyme and operate as part of Genzyme General. Novazyme focuses on enzyme replacement therapies for such afflictions as Pompe disease, Gaucher¿s disease and Fabry disease, distinctly matching Genzyme¿s arsenal of products for lysosomal storage disorders.
Genzyme will pay $137.5 million in stock for Novazyme, with Novazyme stockholders being eligible to receive two additional stock payments totaling $87.5 million, contingent upon U.S. marketing approval for the first two products that employ certain Novazyme technologies.
Genzyme¿s stock (NASDAQ:GENZ) rose 26 cents to close at $56.90 Tuesday. At Tuesday¿s opening price of $56.64, that would result in the issuance of about 2.43 million Genzyme shares. Genzyme calculated its earnings per share for the second quarter using approximately 203 million shares.
While Novazyme loses its independence, it gains clinical speed.
¿What this allows us to do is advance our lead program for Pompe into the clinic quicker and get to a later-stage Phase III,¿ said John Crowley, CEO and president of Novazyme.
Novazyme¿s lead product, NZ-1001 for Pompe disease, is in preclinical studies now but is expected to begin clinical trials by the end of 2001. Crowley said the idea would be to get the product into a Phase I/II trial, then ¿move very quickly¿ from there.
Genzyme¿s own enzyme replacement therapy for Pompe is in a Phase II trial. The intersection of these two drugs will likely leave only one standing in a Phase III trial.
¿Both [products] are pretty well defined, in terms of what they are and their timelines,¿ said Jan van Heek, executive vice president, therapeutics and genetics, at Genzyme. ¿We will see data from both trials and then make a conclusion about how we drive it forward. The overall goal for the merger is to bring the best product forward to patients.¿
But Novazyme¿s lead product didn¿t broker the deal alone. Its phosphorylation technology for enzyme replacement therapies can be applied across several lysosomal diseases, including Fabry disease, Gaucher¿s disease and mucopolysaccaride I disorders (MPS-I) ¿ areas Genzyme has its hands in with its products Fabrazyme, Cerezyme and Aldurazyme, respectively. Cerezyme is approved and is expected to bring in about $565 million to $575 million in 2001. Fabrazyme is approved in the EU and under review by the FDA in the U.S., and Aldurazyme is in Phase III trials. (See BioWorld Today, Nov. 27, 2000, and Aug. 6, 2001.)
¿With Fabrazyme, you can imagine that we will go forward with a product that is in the last phase of regulatory approval,¿ van Heek said. ¿And I think there is ample opportunity to look at Fabry progress made on the Novazyme side and look at a second-generation product.¿
For Aldurazyme, van Heek said Genzyme is expecting a regulatory filing late this year or early next year. Novazyme¿s research in the area could help formulate a second-generation drug there as well, he said.
¿I think there are lots of opportunities to combine these and get the best drugs to patients,¿ van Heek said.
Novazyme¿s Oklahoma City headquarters and its Princeton, N.J., business and executive offices will remain functional and where they are. Crowley will serve as senior vice president of Genzyme Therapeutics and will assume overall responsibility for its Pompe disease programs, while maintaining his duties as president of Novazyme. William Canfield, Novazyme¿s founder, chairman and chief scientific officer, accepted the position of senior vice president for glycobiology and will continue to head the roughly 70 scientists in Oklahoma City.
Less than a year ago, Genzyme acquired GelTex Pharmaceuticals Inc., of Waltham, Mass., for about $1 billion. Genzyme acquired the product Renagel through the acquisition, a product Genzyme predicts will bring in about $150 million to $160 million this year. (See BioWorld Today, Sept. 12, 2000.)
The acquisitions worked toward different ends, van Heek said.
¿I think they both have very important merits,¿ he said. ¿When we first did something with GelTex it was a joint venture around a product. Ultimately, we decided the product was worth making the acquisition. Here we feel this is very much in the core of Genzyme, but both [acquisitions] are extremely important to the future of Genzyme General.¿
The acquisition also will affect Neose Technologies Inc., of Horsham, Pa., which will receive about $6 million in Genzyme stock at the closing of the merger. It also will receive stock payments in the future with a potential value of $4 million and will receive royalties on net sales of all Genzyme products for the treatment of lysosomal storage diseases using Novazyme¿s technology. Genzyme will repay a $1.5 million note in late 2002, as well. Neose partly funded Canfield¿s scientific research and thus became an early investor in Novazyme.