Maxygen shares jump on Bayer hemophilia deal

Shares of Maxygen Inc. jumped Wednesday after the biotechnology company said it is selling its hemophilia treatment program to Bayer's health care division for $90 million, plus up to $30 million in future milestone payments.

The stock gained 97 cents, or 27.6 percent, to reach $4.48 Wednesday on more than five times average volume. Shares have traded between $3.28 and $9.56 over the last 52 weeks.

The $90 million upfront payment from Germany-based Bayer eclipses Maxygen's revenue for the last several years combined. The Redwood City, Calif.-based company has not yet had a profitable year.

Germany's Bayer will gain the Redwood City, Calif.-based biotechnology company's lead drug candidate MAXY-VII, along with a license to use its underlying gene targeting technology. MAXY-VII is expected to move to early-stage clinical studies in the third quarter. Bayer already sells Factor VIII product Kogenate for the treatment of hemophilia A, which affects about 1 in 10,000 births.

Hemophilia is an inherited bleeding disorder caused by deficient or defective blood clotting proteins. Roughly 20 percent to 30 percent of patients with hemophilia develop antibodies to current therapies, so a mechanism called Factor VIIa is used to help these individuals form clots.

Bayer is making the deal as the hemophilia treatment market becomes intensely more competitive. In February, Madison, N.J.-based Wyeth received Food and Drug Administration approval for Xyntha and Denmark's Novo Nordisk AS received FDA approval for NovoSeven RT in May. Deerfield, Ill.-based Baxter International Inc. sells the hemophilia treatment Advate.

"This agreement allows Maxygen to capture significant value from this preclinical asset, and puts MAXY-VII in the hands of the hemophilia leader," said Russell Howard, chief executive officer of Maxygen, in a statement.

If approved, he added, more opportunities for Maxygen's technology will likely open up.

"We are very impressed by today's news and consider it a significant transaction for Maxygen, both financially and as a partnership with a multinational hematology leader," said Rodman & Renshaw analyst Michael G. King Jr., in a note to investors.

He reaffirmed a "Outperform" rating and a $9 price target for Maxygen. The deal is substantial for the company, considering its market cap as of Tuesday was just over $130 million, he added, and royalty payments will likely kick in during the 2011 fiscal year.