BioWorld International Correspondent

The Swedish biotechnology firm Biovitrum AB is disposing of its plasma products division, a business with an annual turnover of SEK800 million (US$87 million), to Swiss company Octapharma AG in a deal scheduled to close July 15.

"We are not disclosing any price, but the consequences are very positive. We are reinforcing our cash position," Mats Pettersson, CEO of Stockholm-based Biovitrum, told BioWorld International.

The company was formed last year as a spin-off of the metabolic diseases unit of Pharmacia Corp., of Peapack, N.J. The plasma products division, which was included in that transaction, has been something of a cash cow for the company, subsidizing a considerable portion of its drug discovery and development activities. (See BioWorld International, Aug. 8, 2001.)

That situation will continue. Although the 450 employees who work in the plasma products business are transferring across to Lachen-based Octapharma, Biovitrum has retained rights to an agreement with Wyeth, of Madison, N.J., to continue manufacturing ReFacto, a recombinant form of the blood-clotting agent Factor VIII.

Some of the actual work associated with that arrangement will be subcontracted to Octapharma. But Biovitrum and Pharmacia will both continue to derive royalty-related income from the product.

"We will have royalties up to the expiration of the patent - that is 2016," Pettersson said. This cash stream is worth approximately US$50 million to Biovitrum and funds most of its annual US$70 million R&D budget. Contract research services it supplies to Pharmacia and to Wyeth yield around US$10 million more, so the company's annual cash burn is less than US$10 million.

The Octapharma transaction aside, Biovitrum is sitting on a cash pile of approximately US$100 million, following its initial financing round last year. When that deal is completed, it will have slightly more than 500 employees, more than 400 of whom are research staff. Although it has the financial muscle to engage in acquisitions, that is not an immediate priority.

"Given that we are less than a year old we don't have that at the top of the management agenda," Pettersson said.