Mayne joins region’s biotech culture

BOULDER — An Australian pharmaceutical company will continue to manufacture a cancer-fighting drug in Boulder following its acquisition of NaPro BioTherapeutics Inc.’s paclitaxel business.

Operations will continue at the 28,000-square-foot site at 4876 Sterling Drive, the same location where Boulder-based NaPro made the active ingredient of paclitaxel, a generic drug used for treating ovarian, lung and breast cancers.

The 53 workers in that division have become employees of New Jersey-based Mayne Pharma USA Inc., a business division of Mayne Group Limited, a pharmaceutical and heath-care company headquartered Melbourne, Australia. The Mayne Group is traded on the Australian Stock Exchange (ASX: MAY) and has businesses in pharmaceuticals, health services and health-related consumer products.

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Mayne paid NaPro $71.7 million in cash minus an inventory adjustment of $4.6 million. The deal closed Dec. 12.

For its money, Mayne received NaPro’s worldwide manufacturing and intellectual property assets on the injectable cancer drug, which is made from the needles of the Pacific yew tree. Mayne also acquired NaPro’s 5 million yew trees at plantations in British Columbia, Canada, Michigan and Ohio, more than 100 issued and pending U.S. and international paclitaxel patents, a global registration dossier, development and supply agreements, inventories and related liabilities.

Brian McCudden, formerly NaPro’s vice president of operations, has become Mayne Pharma’s vice president of operations in Boulder.

Stuart Hinchen, president of Mayne Pharma, was in Boulder for a sign and logo unveiling Dec. 15. He said the former NaPro operations in Boulder would become a critical component of the company’s global business.

“Manufacturing API (active pharmaceutical ingredient) is a specialized process that is critical to the success of a product on the market, so our aim is to continue expanding our API capabilities, and Boulder will be at the heart of that activity,” Hinchen said. “The people here (Boulder) with their knowledge and skill sets are essential to our success.” Other ingredients could be produced in Boulder in the future, he said.

Mayne Pharma, formerly Faulding Pharmaceutical Co., has manufacturing and product development offices in Australia and Puerto Rico and markets products in more than 50 countries.

Mayne Group recorded $5.2 billion in sales in 2003 and a loss of about $450,000. The loss was attributed to some nonperforming hospitals that Mayne sold during the year and an accounting change of how the company calculates business evaluations. Historically, the company has annual profits.

Five days after Mayne acquired the operation in Boulder, the company said it would upgrade production services at its two injectable pharmaceutical manufacturing plants in Australia and Puerto Rico, costing $60 million over the next year.

It said the majority of the investment would be used to increase the manufacturing capacity of anti-cancer pharmaceuticals at the company’s Mulgrave facility in Melbourne, Victoria.

“Our major sales are generated from oncology related products and our future growth will also rely on expanding this specialty range,´ said Stuart James, Mayne Group’s managing director and chief executive officer.

In Puerto Rico, Mayne will upgrade its Aguadilla facility, which produces a range of injectable pharmaceuticals, excluding anti-cancer products.

NaPro had been supplying ingredients to Faulding for about 10 years. Mayne acquired Faulding in October 2001. Recently, the Mayne Group acquired two injectable oncology products from Xanodyne Pharmacal — methotrexate and leucovorin. Methotrexate is used in treating a range of cancers, while leucovorin is used to counteract the toxic side effects of certain chemotherapy treatments, including methotrexate.

NaPro (Nasdaq: NPRO) has narrowed its focus to working on cures for cancer and hereditary diseases.

“The net proceeds from this sale & will provide us with additional capital to advance the development of our proprietary oncology and hereditary disease therapeutic programs,´ said Leonard P. Shaykin, chairman and chief executive of NaPro, in a statement. “We anticipate bringing at least two of our proprietary drug candidates into the clinic in the coming year.”

NaPro retired $21.9 million in debt, including accrued interest, and payables arising from its development relationship with Abbott Laboratories, and received $3.2 million in connection with the termination of its marketing agreements with Mayne Pharma and Abbott. NaPro expects that its cash balance at year-end will be approximately $50 million.

Napro has about 100 employees following the sale. Its stock price dropped from $2.15 per share Dec. 12 to under $1.90 a week following the sale. Napro’s five-year high of nearly $13 a share occurred in December 2001.

For the nine months ending Oct. 1, Napro’s revenues fell 11 percent to $21.8 million. Net loss increased 45 percent to $10.9 million.