South San Francisco-based biotech heavyweight Genentech Inc. is buying Biogen Idec Inc.’s 500,000-square-foot manufacturing plant in Oceanside for $408 million in cash.
Of the 430 employees currently working at the plant, 330 are expected to be offered employment with Genentech with the rest expected to remain with Biogen Idec, which is headquartered in Cambridge, Mass.
Adam Noah, a health care analyst with the Granite Financial Group in San Diego, believes Biogen Idec’s decision to sell the plant indicates the firm has much lower expectations for demand of its troubled multiple-sclerosis drug Tysabri.
Tysabri was slated to go into full production at the Oceanside plant in 2006.
However, Biogen Idec and and its Irish pharmaceutical partner, Elan Corp., decided to pull the drug off the market in February after one patient died and another developed a rare but serious nervous system disorder called progressive multifocal leukoencephalopathy after taking Tysabri.
As of June 13, Tysabri’s troubles had worsened.
Reports surfaced that day that a possible fifth case that linked the deadly brain infection with Tysabri was reported last month through the
Food and Drug Administration’s Adverse Events Reporting System, which collects reports of possible drug reactions from physicians and drug companies.
That came after a fourth case was reported to the FDA earlier this month.
The companies reported three confirmed cases of the infection in patients taking Tysabri.
Two patients had died with a third patient showing signs of improvement.
Some analysts had said the new cases make a return for Tysabri to the marketplace unlikely.
According to reports, Biogen Idec makes Tysabri at a plant in Research Triangle Park, N.C., and said it expects to meet the “foreseeable manufacturing needs” for Tysabri using that plant.
“Clearly the expected market size is much smaller,” Noah said. “Before they had a lofty goal.”
He sees the plant sale as good and bad news for San Diego.
The presence of Genentech adds to San Diego’s prestige as a major biotechnology hub and brings new jobs, he said.
Genentech said it expects manufacturing of Avastin at the plant to begin in 2006 with FDA licensing anticipated in the first half of 2007.
“It’s a manufacturing site and it’s in Oceanside (not part of San Diego’s biotech hub), but it’s the beginning of a presence,” Noah said. “It brings jobs and more of a presence.”
The bad news is Biogen Idec will no longer have a dominant presence in San Diego.
Biogen Idec expects to record charges of $50 million to $57 million in connection with the sale.
The transaction is subject to various conditions and could close as early as June 23.
The announcement was made after the stock market closed.