Genentech said Lonza Group Ltd. will purchase Genentech's manufacturing facility in Porriño, Spain, for $150 million.
Genentech will also enter into a supply agreement to manufacture certain Genentech products at Lonza's facility currently under construction in Singapore. Genentech will receive the right to exercise an exclusive option to purchase the Lonza Singapore facility.
Under the terms of the agreement, Lonza will acquire from Genentech the FDA-licensed Spain facility, which has 40,000 liters of biologic manufacturing capacity and is currently dedicated to the production of Genentech's Avastin.
Lonza plans to retain the facility's 310 employees and will continue to produce Avastin for Genentech under the terms of a supply agreement.
Under the terms of a concurrent agreement, Genentech plans to purchase Avastin and other oncology products from Lonza's planned 80,000-liter Singapore facility, and Genentech may opt to purchase the facility in the future.
FDA licensure for producing Avastin at the Lonza plant in Singapore is expected in 2010. The terms of the option to purchase the facility allow Genentech to acquire the facility during the period from 2007 to 2012 for a purchase price of $290 million, plus an additional $70 million in milestone payments if certain performance milestones are met.
The companies anticipate closing the transaction before the end of 2006. As a result of the Spain plant divestiture, Genentech expects to record a loss in the range of $10 to $20 million.