Bayer buys BlueRock in $600 million bet on stem cell therapies

FRANKFURT (Reuters) - German drugmaker Bayer BAYGn.DE is paying up to $600 million for full control of cell therapy developer BlueRock Therapeutics, stepping up investment in a promising new medical area to revive its drug development pipeline.

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Having established BlueRock as part of a 2016 joint venture with Versant Ventures, Bayer will acquire the remaining 59.2% stake for about $240 million upfront and an additional $360 million depending on certain development achievements, it said on Thursday.

BlueRock, valued at about $1 billion by the deal, is working on induced pluripotent stem cells (iPSC), made by reprogramming mature body cells to behave like embryonic stem cells that are injected to restore diseased tissue in patients.

While the biotech firm is looking to treat neurology, cardiology and immunology conditions, its most advanced program will begin testing on Parkinson’s disease patients by the end of this year in a U.S. regulated trial.

“We get access and full ownership in one of the most exciting areas of biology that exist currently,” Bayer’s head of pharmaceuticals, Stefan Oelrich, said in an interview.

Parkinson’s, a debilitating neurological disease that cannot be reversed, affects more than 7 million people globally.

Bayer has already tested the waters in iPSC research. In April it struck a deal with unlisted Khloris Biosciences to jointly develop anti-cancer vaccines based on iPSCs.

In July, it followed up with a $215 million investment in a minority stake in Century Therapeutics, another U.S. biotech group with a focus on iPSCs.

But Oelrich said the outright takeover of BlueRock marks Bayer’s “foundational piece” because previous iPSC engagement had been via minority stakes and in much earlier phases of drug development.

Scientists at Kyoto University in Japan have been pioneering the technology, saying in July they would be the first to run a trial with iPSC in Parkinson’s patients, having previously run tests on monkeys.

Bayer said last year it would lean more strongly on external firms and institutions to jumpstart is development pipeline, which analysts regard as too thin to make up for an expected decline in revenues from its two pharma bestsellers from about 2024.

But iPSC will likely be a crowded field with large companies such as Roche ROG.S and Fujifilm Holdings - which in 2015 bought Cellular Dynamics International Inc - in the race, as well as biotech firms including Fate Therapeutics FATE.O and Evotec EVTG.DE.

Addition reporting by Patricia Weiss