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[igor1]

Friday January 19, 3:41 pm Eastern Time
Forbes.com
Around-The-Globe: Bayer`s Biotech Strategy
By Matthew Herper

It seems like every time you turn around, German chemical drug giant Bayer has signed a big deal with another biotech company.

Three days ago, Bayer announced a two-part deal with New Haven, Conn.`s Curagen (Nasdaq: CRGN - news). Less than a week ago, a deal with another biotech, Cambridge, Mass.-based Millennium Pharmaceuticals (NYSE: MLNM - news) bore fruit: an anticancer drug candidate. In the past few months, Bayer, which had 1999 revenue of $23 billion, has also made deals with Avigen (NYSE: AVGN - news), a San Francisco-based gene therapy company, and Germany`s Lion Bioscience (Nasdaq: LEON - news).

``Bayer`s appetite for large deals with biotechs is quite remarkable,`` says Joseph Dougherty, an analyst at Lehman Brothers. ``I think they`re clearly trying to leapfrog their existing research capabilities by buying state-of-the-art genomic and functional genomic platforms from the leading companies in the space, like Millennium and Curagen.``

Why is Bayer so hungry? Like Novartis, Bayer let its drug pipeline go fallow. Now it is trying to feed its own pipeline by buying technology from other companies. The Curagen deal, to which Bayer has committed as much as $874 million, is particularly interesting because Curagen will not only eventually provide Bayer with as many as 80 drug targets but will also assist in drug development, getting 44% of any of the revenue the drugs bring in.

Except for its decision to fund Avigen, which is simply ahead of its other gene therapy competitors, Bayer`s buys in the biotech space share a common thread: Millennium, Curagen and particularly Lion boast genomic systems that play well with others. In other words, Bayer is not just buying biotechs at random, it`s buying biotech databases that will mesh well with one another.

Lion, in particular, is looking to be a computer software company for the biotech industry. Its very reason for being is to take disparate research platforms and make them talk to one another. And that`s exactly what Bayer needs.

``We are partnering with the best biotechnology companies in the world, thus building one of the most productive research platforms in the global pharmaceutical industry,`` said Dr. David Ebsworth, global head of Bayer`s worldwide pharmaceutical business, in a prepared statement

In other words, Bayer tripped when it was trying to develop a drug pipeline. So it had to go out and buy one

[svwm]

Good news Igor!
Ich hoffe das gibt dem Kurs wieder ein wenig Auftrieb. Wäre dringend darauf angewiesen, da ich mit einem Call ziemlich tief unten bin. Weisst Du zufäälig, wann Bayer seine neue Strategie vorstellt, die zusammen mit diversen Banken entwickelt wurde? Habe etwas von Februar gehört, bin aber nicht ganz sicher.
Gruß svwm
Auf geht`s Bayer!

[igor1]

Fool Plate Special: CuraGen, Bayer in Historic Biotech Drug Deal
By Tom Jacobs


German big drug maker Bayer AG blew away the biotech world this week when it announced a $1.5 billion package with drug discovery and development company CuraGen (Nasdaq: CRGN - news). The pathbreaking deal has two key components: discovery and development of obesity and diabetes drugs, and gene expression and toxicity database development.

In one fell swoop, CuraGen joins the genomics big leagues currently inhabited by several other companies, including Rule Breaker portfolio holding Human Genome Sciences (Nasdaq: HGSI - news) and Millennium Pharmaceuticals (Nasdaq: MLNM - news), which hope to succeed as fully-integrated biotech drug makers. CuraGen stock, though well off its $128.28 52-week high, jumped 60% from last week`s low of $20.13 to yesterday`s $33.16 close.

Obesity and diabetes targets and drug candidates
Focusing on the two fastest-growing drug markets, CuraGen will identify 80 gene and protein targets for obesity and adult onset diabetes drugs. Bayer will then apply its massive drug discovery efforts to finding small molecule compounds that work on those targets. The partners commit to clinical development of 12 drug candidates: They will split up to $1.34 billion in development costs over 15 years, with Bayer bearing 56% and CuraGen 44%. With $20 million in trailing-twelve-month revenues, CuraGen and its investors are popping champagne corks. But there`s more.

Why the pact is special
The usual big pharma-biotech alliance has been similar to Bayer`s 1998 $465 million record-setter with Millennium, through which Bayer earned the right of first refusal to develop candidates for Millennium-supplied drug targets, while Millennium gained royalties on any future drugs to treat the chosen targets. Bayer and CuraGen, however, will share any profits at the same 56%:44% ratio by which they contribute to development costs. CuraGen pays more of the clinical testing development costs than has been typical, but gains Bayer`s drug candidate discovery expertise, marketing and sales staff, and a larger-than-usual share of future rewards.

Pharmacogenomic and toxicogenomic database
Less flashy but still interesting to biotech stock watchers is the five-year, enlargeable deal in which Bayer buys $85 million in CuraGen equity and commits to $39 million in funding. Says the press release:

"The companies intend to compile a database of gene-based markers and information that will enable scientists to predict potential drug toxicities, understand how a particular drug works, and identify the new disease indications. CuraGen and Bayer both have exclusive rights to use the established database, and CuraGen has the right to market this database and pay Bayer royalties on the resulting revenues."

Toxicogenomic and pharmacogenomic data show how new and existing compounds affect different kinds of healthy and diseased tissue. They can help companies save money by showing toxicity and effectiveness of different drug candidates before expensive and lengthy animal and human testing -- reducing drug development costs and time to market. (More information on this subject is available on our biotechnology a nd pharmaceuticals InDepth pages, and in both The Motley Fool`s Industry Focus 2001 and our Guide to Biotech Investing.)

But right now, Bayer could subscribe to a toxicity database from Gene Logic (Nasdaq: GLGC - news), whose ToxExpress product has been available for over a year and already has eight biotech and big pharma subscribers (paying between $1.5 and $5 million per year for 3-year subscriptions, according to CEO Mark Gessler, whom we in terviewed in November.) And Gene Logic`s pharmacogenomic database should be available commercially sometime in 2001.

Instead, Bayer -- one of many other drug makers in discussions with Gene Logic about subscriptions -- will pay CuraGen to build its own toxicogenomic and pharmacogenomic business. Bayer gains exclusive and presumably royalty-free use, as well as royalty payments from CuraGen`s future sales. Investors may wonder whether Bayer just bought its own development-stage version of Gene Logic, with reduced exposure should it fail, and substantial gain should it hit big.

CuraGen hits the big time
Other deals may provide more actual cash from a big drug maker to a biotech, such as last year`s $800 million deal between Novartis (NYSE: NVS - news)and Vertex Pharmaceuticals (Nasdaq: VRTX - news). But CuraGen, with less than a third of Vertex`s sales and market cap, benefits on a huger scale. It`s virtually assured of all the money it needs -- even beyond its last quarter $244 million war chest -- to survive while it makes the transition to a genomics-based drug company like Human Genome Sciences or Millennium.

Those companies may have retained more independence in the form of greater rights to develop their discoveries and independence: more potential profit, but more risk. But CuraGen doesn`t have their product pipeline or cash, and the Bayer deal may be its only way to join the big leagues. CuraGen investors should be patient: It will likely take a minimum of 10 years -- even if genomics speeds drug development -- to determine the true long-term value of today`s deal.

[igor1]

Friday January 19 2:34 PM ET
European Drug Firms Seek Growth

By Ransdell Pierson and Ben Hirschler

NEW YORK/LONDON (Reuters) - Recent moves by European drugmakers to plant deeper roots in the United States underscore their intent to grow by tapping into the world`s hungriest market for pharmaceuticals and its cutting-edge technology.

``The U.S. is the largest, fastest-growing and most profitable market in the world. It is major magnet for the drugs industry and everyone in Europe wants to get bigger there,`` said Peter Laing, industry analyst at SG Securities in London.

On Tuesday, Germany`s Bayer AG (BAYG.DE) announced two major drug-development agreements with Connecticut genomics firm CuraGen Corp (NasdaqNM:CRGN - news), one of which commits the firms to jointly spend up to $1.34 billion over the next 15 years to develop and sell obesity and diabetes drugs.

CuraGen is to provide Bayer with 80 drug targets, such as proteins and genes linked to the diseases. The German chemical and pharmaceuticals giant will then attempt to develop drugs that work by either activating or inhibiting the targets.

The agreements eclipse the $450 million drug-development deal announced last summer between France`s Aventis S.A. (AVEP.PA) and Massachusetts gene-hunting firm Millennium Pharmaceuticals (NasdaqNM:MLNM - news), which set the previous record for a collaboration between a large drug firm and a biotech.

Earlier on Friday, German drugs group Merck KGaA (MRCG.F) said it was interested in buying a U.S. drug firm, perhaps with money it might obtain by floating its VWR lab distribution business in the next two years.

The German firm has European marketing rights to IMC-225, a cancer drug being developed by New York biotech firm ImClone Systems Inc. (NasdaqNM:IMCL - news) that Wall Street is expecting to become a blockbuster.

But with a market capitalization of only $1.7 billion, analysts said Merck KGaA was probably not positioned to buy ImClone or any such mid-sized biotech firm.

``ImClone has a market capitalization of $2.5 billion and anyone hoping to buy it would probably have to pay a premium to that. So I doubt Merck KGaA could do it,`` said Sushant Kumar, a drug analyst with New York research firm Mehta Partners.

``It would make much more sense for a bigger company involved in oncology, such as Bristol-Myers (NYSE:BMY - news), to try to buy ImClone,`` Kumar said.

U.S. drug sales grew by a thumping 14 percent in the 12 months to November last year, against just eight percent in five leading European markets, according to figures released by healthcare information firm IMS Health earlier on Friday.

Indeed, the United States is the only major country in the world with no price controls on drugs and which gives drugmakers wide latitude to advertise their products on television -- both boons to sales and profits.

Switzerland`s Novartis AG (NOVZn.S) in the past year has repeatedly been mentioned by Wall Street analysts as an eventual bidder for a weaker U.S. player, such as American Home Products Corp. (NYSE:AHP - news).

Meanwhile, Novartis is racing to boost its U.S. exposure with new products aimed primarily at the American market. Last month, its diabetes treatment Starlix won U.S marketing approval and the company is awaiting approval for Zelmac, a treatment for irritable bowel syndrome.