Biogen in Drug Deal With Protein Design Labs

Biogen Idec Inc., which pulled its Tysabri multiple sclerosis treatment from the market in February, agreed to pay Protein Design Labs Inc. as much as $800 million for an MS drug and two other experimental products.

Protein Design will receive $40 million initially, and Biogen said it would purchase $100 million of stock from the Fremont, Calif.-based company. Successful development of the three drugs would lead to payments of as much as $660 million more, Biogen spokesman Jose Juves said.

Biogen needs new medicines to boost profit after the company suspended Tysabri sales this year because the drug was linked to a fatal nerve infection. Biogen’s top-selling drug is the 9-year-old Avonex multiple sclerosis treatment, which is facing slower sales growth in the U.S. because of competition from Pfizer Inc. and Serono’s Rebif.

“They’ve got to feed their pipeline,” said John McCamant, editor of Medical Technology Stock Letter in Berkeley.

The companies announced the agreement after U.S. markets closed. Shares of Protein Design closed down 1 cent at $23.30 but rose $2.35, or 10%, to $25.65 in late trading. Shares of Cambridge, Mass.-based Biogen closed down 42 cents at $40.84.

Protein Design licenses its technology for making biotech medicines to bigger drug makers such as Genentech Inc., Eli Lilly & Co. and Wyeth. The money-losing company doesn’t have any products of its own on the market.

Each of the three drugs included in the Biogen deal have potential against multiple diseases, and Protein Design lacked sufficient resources to proceed without a partner, McCamant said.

The agreement with Biogen covers Protein Design’s experimental MS drug, daclizumab, which is in the second of three stages of tests typically required for U.S. approval.

Biogen also will gain rights to a cancer treatment called volociximab, which is being tested in patients with skin, kidney and pancreatic cancers. The third drug covered by the agreement is Huzaf, which is being studied against the bowel disorder Crohn’s disease.