Biogeneric boost for Teva

Company set to acquire CoGenesys for $400 million.

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JERUSALEM—Teva Pharmaceutical Industries Ltd. in late January announced it entered into a definitive agreement to acquire CoGenesys Inc., a privately-held biopharmaceutical company with a broad-based biotechnology platform focused on the development of peptide- and protein-based medicines across many therapeutic categories.

In its recently completed strategic review, Teva identified biopharmaceuticals, particularly biogenerics, as one of its major long-term growth opportunities. With this acquisition, Teva has indicated that it will be able to take a significant step toward becoming a leading player in the biogenerics market as that market evolves.

"CoGenesys' breadth of technologies and the depth of their team and pipeline complement Teva's large-scale operations, extensive resources and its proven expertise in bringing drugs to market," says Shlomo Yanai, Teva's president and CEO. "This combination will enable us to realize our vision of delivering high quality, affordable biopharmaceuticals worldwide. CoGenesys' acquisition reflects our commitment to capture the significant long-term prospects we believe the biogenerics market will offer."
With more than 15 years of peptide- and protein-based drug development research, CoGenesys brings to Teva advanced technological platforms—including Albumin Fusion, a novel approach to long-acting biopharmaceuticals—which are reportedly key to establishing Teva's leadership position in biogenerics.
What will be interesting to see it how quickly or how smoothly Teva can capitalize on biogenerics, particularly in the United States, where there is currently no mechanism for biological drugs to be approved in generic form—in fact, an attempt in the U.S. Congress to implement a pathway for generic biologics to gain approval tanked last year. However, many industry experts have predicted that generic biologics will enter the U.S. market in about five years.

"In the U.S., there is currently no regulatory pathway for biogenerics; therefore it is difficult to say how this technology can help us in this area. We are confident however that a pathway will be established in the coming years," says Teva spokesperson Denise Bradley. "We have been looking at biopharmaceutical companies for several years, and we believe that CoGenesys is the right company at the right time for Teva."

One of the key components of this acquisition is the team of approximately 75 employees that comes with CoGenesys, notes Bradley, many of them Ph.D.-level scientists working in a 48,000-square-foot facility located in Rockville, Md., and led by Dr. Craig Rosen and Steve Mayer. Key leadership, and presumably most or all of the staff, will remain at Teva, she notes. The division will remain based in Rockville and, after the acquisition closes, it will be called Teva Biopharmaceuticals USA.
"I am pleased that Steve, Craig and the rest of the CoGenesys team are committed to remaining with Teva to continue to enhance their innovative technologies and bring their pipeline to the market," says Bill Marth, president and CEO of Teva North America.

"Teva has already demonstrated a commitment to our organization and shares our vision of developing high-value peptide- and protein-based products," notes Rosen, CoGenesys' co-founder, chief scientific officer and executive chairman. "Teva's resources, its extensive clinical experience and regulatory expertise create the optimal environment for the CoGenesys team to continue to successfully commercialize our scientific work."

Teva already has some experience with making biologics, noted Brian Orelli in a recent Motley Fool article, though most of that experience is abroad, with the exception of human growth factor for the U.S. market. But he thinks the acquisition of CoGenesys will allow Teva to get a better foothold in follow-on biologics between now and when the U.S. FDA is granted the power to approve them. Also, there are opportunities in places like India, which already allows follow-on biologics, and in Europe, which seems to be warming the concept faster than the United States.

CoGenesys was established in 2005 as a division within Human Genome Sciences Inc. (HGSI) to focus on early drug development and was spun off as an independent company in June 2006. Under terms of the agreement, Teva will pay the purchase price of $400 million in cash, funded from its internal resources. The transaction has been approved by the boards of directors of each company and by the shareholders of CoGenesys and, subject to customary closing conditions, is expected to close during the first half of 2008.

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