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Genzyme to Buy Ilex for $1B in Stock

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By David Koenig
The Associated Press
Thursday, February 26, 2004; 7:48 PM

DALLAS -- Biotechnology company Genzyme Corp. announced Thursday it is buying Ilex Oncology Inc. for $1 billion in stock to bolster its business of providing drugs to treat cancer.

Genzyme, based in Cambridge, Mass., said it would pay $26 per share to stockholders of San Antonio-based Ilex.

Ilex produces Campath, used to treat leukemia, and two drugs in the late stages of seeking regulatory approval.

The deal, announced after the close of trading, would represent a 22 percent premium over Ilex's closing price. The shares had gained 57 cents, nearly 3 percent, to close at $21.37 on the Nasdaq Stock Market. In extended trading, they jumped $3.88, more than 18 percent.

Before the agreement was announced, shares of Genzyme rose 5 cents to close at $53.28 on the Nasdaq. They fell $1.94, or more than 3 percent, in the extended session.

Genzyme said the acquisition would reduce its earnings in the short term but add to profits in 2006.

Henri A. Termeer, Genzyme's chairman and chief executive, said the deal "provides us with a solid franchise in the important field of oncology." He said Genzyme would gain a company that has already brought a cancer drug from development to market.

Termeer predicted that Ilex's drug for treating leukemia, called Campath, would eventually generate more than $500 million in sales.

The drug, which was approved less than three years ago, had $71.7 million in sales last year, an increase of more than 65 percent from 2002, according to Ilex, which shares the revenue with marketing partner Schering AG.

It is not cheap. Ilex chief executive Jeffrey Buchalter said treatment costs $30,000 per patient.

Ilex and Schering are conducting trials to expand the uses of Campath to treat other types of cancer. Ilex is also developing a drug called Clofarex to treat blood cancers and solid tumors.

Last month, Ilex announced that it planned to stop work on an experimental drug, DFMO, after studies showed it didn't prevent the recurrence of bladder cancer.

The price that Genzyme is willing to pay exceeded its $600 million acquisition last year of SangStat Medical Corp., a California company that makes a drug to reduce the chance of organ rejection in transplant patients. SangStat's revenue was more than three times that of Ilex.

Genzyme had 2003 sales of $1.58 billion and earned $103.7 million. It produces drugs to treat rare genetic disorders, such as Gaucher's disease - the lack of an enzyme that removes certain fat from cells - along with kidney disease and other conditions. It also sells genetic-testing services.

Last week, Genzyme executives predicted that 2004 revenue will jump to $2 billion this year, fueled by sales of its top drug, Cerezyme, used to treat Gaucher's disease.

Ilex lost $62.1 million last year after losing $46.2 million in 2002. Revenue rose 12.6 percent, to $34.8 million, in 2003, mostly from its share of Campath sales.

Genzyme said it would keep Ilex's operations in San Antonio.


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