Bayer to Buy Gene-Therapy Firm AskBio for Up to $4 Billion
26 October 2020 - 6:59PM
Dow Jones News
By Ruth Bender
BERLIN -- Bayer AG said Monday it would pay as much as $4
billion for U.S. biotech firm Asklepios BioPharmaceutical Inc. to
strengthen the German company's drugmaking arm, as Bayer continues
to reel from its acquisition of crops giant Monsanto.
The latest deal -- for which Bayer will pay $2 billion now and
as much as a further $2 billion based on future success milestones
-- is a bet on cutting-edge gene therapy, in which a functional
gene is inserted to counter the effects of a disease caused by a
missing or faulty gene.
The German company's biggest pharmaceutical acquisition since
its purchase of domestic rival Schering AG in 2006 is also an
attempt to tackle one of a series of challenges that has been
plaguing the inventor of aspirin, especially since its 2018
acquisition of U.S.-based Monsanto.
The $63 billion Monsanto deal was meant to give the company
another big, fast-growing revenue stream besides pharmaceuticals.
Instead, it has saddled Bayer with a protracted legal battle over
whether Monsanto's Roundup weedkillers cause cancer -- a dispute
that has pummeled Bayer's share price. Bayer says Roundup is
safe.
Then, last month, Bayer shocked investors with a warning that
the coronavirus pandemic would hit its agriculture business harder
than expected. Bayer has also faced setbacks in settling the
Roundup lawsuits for $10.9 billion.
The profit warning cast more doubt on the rationale for the
Monsanto deal and its ability to boost Bayer's profit.
At the same time, Bayer's drug pipeline has been worrying
investors. Two of the company's bestselling drugs -- blood thinner
Xarelto and eye treatment Eylea -- will start to lose patent
protection from around 2024.
Analysts have been concerned that Bayer doesn't have enough
promising new products in its research-and-development pipeline to
make up for the expected drop in sales from the blockbusters'
patent losses.
To boost its pipeline, Bayer has been looking for
drug-development partnerships or deals to license drugs that are in
promising stages of clinical development.
Stefan Oelrich, chief executive of Bayer's pharmaceutical
branch, said the purchase of AskBio was slightly larger than the
acquisitions Bayer had been seeking in the pharmaceutical space,
but added that he was convinced after the first phone call with the
U.S. company's co-founders that it would be the "perfect fit."
"What we now have is a comprehensive pipeline," Mr. Oelrich said
in an interview. "I feel like things are really coming together on
the pharma side."
Mr. Oelrich said it was too early to predict how much in sales
the AskBio treatments are likely to generate, but added that he
expects the deal to help Bayer build a leading position in gene
therapy. That treatment area has been gaining momentum after
setbacks occurred during the first testing in humans in the 1990s,
when several patients died.
Dozens of gene therapies are now undergoing clinical trials and
big drug companies have been acquiring gene-therapy firms, betting
on the success of those treatments in the future.
AskBio was co-founded by Richard Jude Samulski, who pioneered
the use of what are known as adeno-associated viruses as vehicles
to replace a defective gene with a healthy gene. Pfizer Inc. bought
Bamboo Therapeutics Inc. from AskBio in 2016, as Pfizer sought to
boost its presence in the treatment of rare diseases.
AskBio currently has therapeutics in early phases of clinical
development to treat conditions such as Pompe disease, Parkinson's
disease and congestive heart failure.
Write to Ruth Bender at Ruth.Bender@wsj.com
(END) Dow Jones Newswires
October 26, 2020 03:44 ET (07:44 GMT)
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