May 12, 2015 / 1:30 PM / 5 years ago

Baxter buys cancer drugs from Italian drugmaker for $900 million

(Reuters) - Baxter International Inc (BAX.N) said it agreed to buy two drugs to treat a rare form of blood cancer from Italian drugmaker Sigma-Tau Finanziaria SpA for $900 million, before expenses.

Both the drugs are biologics to treat acute lymphoblastic leukemia (ALL) and will form part of Baxter’s biopharmaceutical business Baxalta, which is expected to be spun off this year.

Of the two drugs, Oncaspar is approved for sale in the United States, Germany and Poland and has about $100 million in annual sales, Baxter said on Tuesday. The other drug is currently undergoing trials.

The U.S. Food and Drug Administration has classified ALL as a rare disease and the American Cancer Society estimates that about 6,250 new cases of ALL will be diagnosed in 2015.

Treatments for rare diseases have attracted interest from drugmakers and high premiums for their developers as the therapies can command exceptionally high prices with little pushback from the limited number of patients.

Biologics, made from living cells, also carry hefty price tags as they have safer profiles and stronger efficacy than typical treatments for cancers and immunological diseases.

Baxter’s deal is expected to close in the third quarter and add to its adjusted profit on a cash basis in the first full year after that.

Other drugmakers that are currently developing treatments for ALL include Novartis AG NOVN.VX, Bristol-Myers Squibb Co (BMY.N), GlaxoSmithKline Plc (GSK.L), Genmab A/S GEN.CO and Roche AG ROG.VX.

Baxter shares were little changed at $69.16 in early trading on Tuesday on the New York Stock Exchange.

Reporting by Vidya L Nathan and Rosmi Shaji in Bengaluru; Editing by Savio D'Souza

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