Bayer (BAYRY) is looking to boost its portfolio by inking deals/ making acquisitions. In keeping with its strategy to grow via acquisitions/collaborations, Bayer signed an agreement with Dimension Therapeutics to develop and subsequently commercialize a new gene therapy for treating patients suffering from hemophilia A.
According to the terms of the deal, Bayer will make an upfront payment of $20 million to Dimension Therapeutics. The deal also involves milestone payments from Bayer of up to $232 million.
Moreover, Dimension Therapeutics will be responsible for all pre-clinical development activities as well as the phase I/IIa trial with funding from Bayer. The German company will conduct a confirmatory phase III trial (depending on results of the mid-stage study) and also assume responsibility for submitting the hemophilia A candidate, emanating from the collaboration, to regulatory authorities for approval. Bayer will also be responsible for commercializing the drug, in the event of favorable regulatory decisions. Royalties from sales of the product will be paid to Dimension Therapeutics by Bayer.
We note that Bayer already has a presence in the hemophilia A market (Kogenate) and is developing BAY94-9027 for the same indication. The company intends to file an application with the FDA in 2015. Given its expertise in the field, the deal seems to be a smart strategic move.
Bayer was also in the news recently when its oncology drug Nexavar was approved in Japan. Approval was gained for treating patients with differentiated thyroid cancer.
The Japanese approval of Nexavar was based on positive results from the phase III DECISION trial. Results from the study revealed a significant increase in median progression-free survival for patients treated with Nexavar compared to patients under placebo.
We note that Nexavar was approved in the U.S. for the treatment of patients suffering from locally recurrent or metastatic, progressive, differentiated thyroid carcinoma refractory to radioactive iodine therapy in Nov 2013. Approval for the indication in the EU was gained in May 2014. Bayer has an agreement with Amgen (NASDAQ: AMGN) on Nexavar, which is approved for other oncology indications as well.
Bayer carries a Zacks Rank #2 (Buy). Better-ranked stocks in the healthcare space include Allergan (NYSE: AGN) and Regeneron Pharmaceuticals (NASDAQ: REGN). Both are Zacks Rank #1 (Strong Buy) stocks.
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