Novartis to Assist Bayer in U.S. Validation of Betaseron Facility

As part of a legal settlement, Novartis will assist Bayer Schering Pharma in obtaining U.S. FDA validation of Bayer's outsourced European Betaseron manufacturing facility, Bayer said this week. The facility is operated by Boehringer Ingelheim.

Boehringer manufactures Bayer's Betaseron (interferon beta-1b), a multiple sclerosis (MS) treatment, for European distribution, while the U.S. and Canadian supply is produced in California.

The agreement is part of a legal settlement the firms struck when Schering, purchased by Bayer last year, exercised a change in control provision for a Betaseron production contract held by Chiron, Bayer said. The provision was triggered when Novartis purchased Chiron.

Novartis will non-monetarily support Bayer in submitting a biologic license application (BLA) for Boehringer's Betaseron production operations, Bayer said. The firm did not provide a timeline for submission.

Under the terms of the settlement, Novartis' Betaseron BLA will be transferred to Bayer, and the former Chiron production facility, located in Emeryville, Calif., will be leased to Bayer for six years. In addition, Bayer will own all manufacturing equipment and be granted a royalty-free license to use all Betaseron patents and production "know-how."

In return, Novartis will receive a one-time payment of $110 million, and Bayer will purchase all existing Betaseron inventories for $90 million. Furthermore, Bayer will continue to pay Novartis royalties, per the original Chiron-Schering agreement, until it expires in October 2008.

Also as part of the settlement, Bayer will supply interferon beta-1b for Novartis' own branded MS treatment beginning in 2009 under a double-digit royalty agreement, with Novartis retaining the rights to develop new formulations and presentations of the biologic.