01 Jul Genzyme acquistion of Bone Care approved, significant impact forecast
Madison, Wis. – One of Wisconsin’s most prominent pharmaceutical companies has been purchased, its stock delisted and its name changed. This move will result in a continued limited presence in Wisconsin, but could also create potential opportunites for the state’s life science industry, increase distribution of their drug and has returned significant cash for the firm’s investors.
Genzyme Corp., a Massachusetts-based pharmaceutical firm, announced on Thursday it has finalized a deal to purchase Bone Care International, a Middleton company focused on the development and marketing of vitamin D-based therapies. A panel of Bone Care shareholders approved the transaction, in which Genzyme acquired all shares of Bone Care for $33 per fully diluted share, or aproximately $600 million, net of Bone Care’s cash of $119 million. Genzyme has access to a total of approximately $1.5 billion in cash, cash equivalents, and a line of credit.
Genzyme is a diversified biotech company with annual revenues exceeding $2 billion and more than 7,000 employees worldwide The company has many established products and serves patients in more than 80 countries.
Learn about Genzyme’s initial purchase of Bone Care in May
Dan Quinn, director of corporate communications for Genzyme, said the company will phase out the name of Bone Care, fully incorporating the firm and their products into their corporation. Bone Care shares have removed from Nasdaq and werelonger traded at the close of the business on June 30.
Presence and employees to remain in Wisconsin
While Bone Care will no longer exist as an independent company, Genzyme will maintain the company’s office in Middleton and keep many of the company’s employees, especially in sales, for the foreseeable future. According to the company, those Bone Care employees not retained by Genzyme will be offered severance and outplacement assistance to help them transition to new employment.
Quinn said that while the company hopes to keep more than half of the existing staff – mostly in the sales and quality control divisions – executive positions will likely be offered severance packages.
“Since a lot of those positions were related to Bone Care being a standalone company, those are the positions that overlap with Genzyme,” Quinn said. “The functions that support the product are the ones we hope will remain.”
Chris Raymond, an analyst with Robert W. Baird & Co, said it was likely that while administration will take some cuts, he was optimistic for the rest of the employees. “Genzyme tends to keep more personnel from other companies they acquire than others, so I don’t think it’ll be a draconian merger,” Raymond said.
Jim Leonhart, executive vice president of the Wisconsin Biotechnology and Medical Device Association, said the elimination of these jobs would likely not be too much of a problem due to the multiple biotech and pharmaceutical companies in the state. He cited the closing of PowerJect Vaccines in 2004, where most of the employees found work at other firms.
“They’re leaving behind at some senior people, who profited from the sale and we would encourage them to reinvest the time and experience in the areas emerging biotech companies,” Leonhart said.
National pharma interest
Although Bone Care was one of the most successful pharmaceutical firms in the state and one of the few publicly traded, Leonhart said it was “neither a death knell nor a sign the industry is crippled”, and may in fact be beneficial to Wisconsin’s life sciences industry.
Raymond said that smaller, specialty pharmaceutical firms are bought all the time by big firms, and the deals are usually successful for both parties. If a company as successful as Bone Care is purchased in Wisconsin it may help to draw more interest to the state, and having a large company like Genzyme holding office in the state could also help the industry get more momentum.
“The bottom line is we’re hopeful the employee base remains in Dane County, but we’re not in despair because we’re being recognized and that’s a sign that we’re having success,” Leonhart said.
Expanding Hectorol’s distribtion
Bone Care, a spin-off company from the University of Wisconsin-Madison, was founded in 1987. Its flagship product, the vitamin D hormone Hectorol, was based around the research of Hector DeLuca – currently president and CEO of Deltanoid Pharmaceuticals – and is used to treat secondary hyperparathyroidism in patients on dialysis and early stages of chronic kidney disease.
Hectorol will be added to Genzyme’s renal line of products for treating chronic kidney diseases, joining the phosphorous-controlling drug Renagel. A combined sales force of Genzyme and Bone Care employees will be involved in marketing the two drugs to nephrologists around the United States.
According to Quinn, Genzyme plans to begin marketing Hectorol to an international market, speaking to authorities in Europe and Japan to see what tests are necessary to begin selling the product. Quinn said Genzyme tries to follow a pattern of global marketing with all its products and hopes to implement Hectorol as soon as possible.
Raymond said said the acquisition is a smart one for Genzyme because part of Hectorol’s customer base is patients on pre-dialysis – a market Genzyme has tried to enter for some time. Hectorol also fits into their current product offerings because it is a complementary product for Renagel, a partnership that will benefit both drugs in the long run.
“I think this will set them up well for when they finally get a label for Renagel in the pre-dialysis market,” Raymond said.