Baxter International Puts Down $900 Million to Beef Up Cancer Products for Spinoff

Baxter International (BAX) Puts Down $900 Million to Beef Up Cancer Products for Spinoff
May 12, 2015
By Riley McDermid, Breaking News Sr. Editor

Deerfield, Ill.-based Baxter International said Tuesday it would buy a promising leukemia treatment, Oncaspar, from Italian company Sigma-Tau Finanziaria S.p.A. for $900 million, as it bolsters its oncology pipeline in an increasingly lucrative and competitive field.

Baxter estimated oncology alone could bring in $10 billion once its pipeline is established, with Oncaspar already raking in $100 million in annual sales.

The company said the new buy will become part of its spinout Baxter BioScience, which is slated to be publicly traded and fully separate by the third quarter of 2015. It will pay for the buy through foreign cash and debt and said it expects the deal to close by the end of next quarter.

''Oncaspar is a strong strategic fit for our rapidly expanding oncology business, as it complements our R&D programs in hematologic cancers,'' said David Meek, head of oncology for Baxter BioScience. ''The acquisition provides an immediate commercial footprint in the United States and Europe with a heritage of expertise in treating this challenging disease.''

The oncology sector has an estimated $10 billion total market potential for Baxter’s pipeline assets, the company said.

Oncaspar is a first-line biologic used as part of a multi-agent chemotherapy regimen to treat acute lymphoblastic leukemia (ALL). It is marketed both in the United States and internationally in countries including Germany and Poland. ALL is a rapidly progressing cancer of the white blood cells responsible for more than 80 percent of childhood leukemia cases.

'The Baxter BioScience legacy of delivering solutions for orphan diseases and small patient populations and our global presence positions us well to accelerate the growth of the Oncaspar portfolio globally,'' said Ludwig Hantson, president of Baxter BioScience. ''With Oncaspar, Baxalta will bring an established standard of care therapy to more patients worldwide through the pursuit of additional indications and regulatory approvals across the globe.''

This isn’t the first strategic buy Baxter’s made this year. In early March, Baxter said it would acquire privately held German biopharma SuppreMol for $225 million as a way to gain access to the company’s early-stage development portfolio of novel biologic immunoregulatory therapeutics for the treatment of autoimmune diseases.

Based in Martinsried, Germany, SuppreMol has focused on developing treatments for autoimmune and allergic diseases, an area Baxter said will jibe nicely with its own portfolio.

SuppreMol’s portfolio of novel investigational treatments complements and builds upon our leading and differentiated immunology portfolio, offering the opportunity to expand into new areas with significant market potential and unmet medical needs in autoimmune diseases,'' said Ludwig Hantson, president of Baxter BioScience, in a statement.

The buyout comes with SuppreMol’s lead candidate SM101, an investigational immunoregulatory treatment that has completed Phase IIa studies in idiopathic thrombocytopenic purpura and systemic lupus erythematosus. Its initial Phase IIa data has shown a promising dose response in multiple endpoints among patients with SLE treated with either one of two different doses of SM101 for six months.

“Matching therapeutic innovation with market needs is challenging for biotech companies. Working with Baxter, a global immunology leader, is the ideal setting for SuppreMol's promising therapeutic projects to deliver on our most ambitious goal to treat important autoimmune diseases and severe allergies,'' said Klaus Schollmeier, CEO of SuppreMol, in a statement.

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