Baxter pads biopharma unit with pre-spinoff oncology buy

As Baxter ($BAX) gears up to spin off its biopharma unit into new company Baxalta, it wants to make sure the new pharma has enough revenue to rely on. And to do that, it's bulking up.

Baxter BioScience oncology head David Meek

The Illinois company has agreed to purchase leukemia treatment Oncaspar from Italy's Sigma-Tau Finanziaria for $900 million, it said Tuesday. The therapy--part of a first-line chemo regimen to treat acute lymphoblastic leukemia (ALL)--will play a key role in Baxalta's oncology division, Baxter said, with $100 million in annual sales from countries including the U.S., Germany and Poland.

"The acquisition provides an immediate commercial footprint in the United States and Europe with a heritage of expertise in treating this challenging disease," David Meek, Baxter BioScience's head of oncology, said in a statement.

And Baxter won't stop there. It plans to investigate Oncaspar for potential new indications, it said, both in ALL and other cancers--including acute myeloid leukemia.

Baxter's not the only company shelling out to get in on the booming oncology market. In March, AbbVie ($ABBV) agreed to fork over $21 billion for Pharmacyclics ($PCYC), which markets blood cancer drug Imbruvica with partner Johnson & Johnson ($JNJ). And a few days prior, Novartis ($NVS) closed its $16 billion pickup of GlaxoSmithKline's ($GSK) cancer assets.

For Baxter, whose biopharma business relies heavily on its hemophilia drugs, cancer meds will be an important sales source. The company thinks the oncology sector represents $10 billion in total market potential for its pipeline assets, it said--and with two new, long-lasting Biogen ($BIIB) challengers to its leading hemophilia products out there, that's revenue Baxalta could use.

- read Baxter's release

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