Bayer and Novartis in MS drug deal

Recently-formed Bayer Schering Pharma, the new Berlin-based health care unit of Germany's Bayer AG, has acquired from Swiss drug major Novartis a biologics manufacturing facility in Emeryville, California, USA, which is now used to produce what was one of Schering AG's lead products, the multiple sclerosis drug Betaseron (interferon beta-1b).

Novartis will transfer manufacturing responsibility for Betaseron, including the Biologics License Application, by selling related equipment and property, as well as leasing certain buildings at the Emeryville site to the German group for a one-off payment of approximately $110.0 million. The latter will also purchase related interferon beta-1a product inventory for an estimated $90.0 million in cash, subject to adjustment at closing.

In addition, Novartis will grant Bayer Schering royalty-free licenses under all patents and know-how used by the Swiss firm in relation to Betaseron. The German drugmaker will continue to pay Novartis royalties equivalent to those currently on operation on net sales of Betaseron manufactured by Bayer at Emeryville until the expiration of the original filing, development and supply agreement in October 2008, after which point no more royalties will be due.