Bayer Will Acquire AskBio for Up to $4 Billion

Investing in Gene Therapy

Bayer AG (BAYRY), the German pharmaceutical and life sciences company, is planning to acquire US biotech firm Asklepios BioPharmaceutical for as much as $4 billion. Bayer will pay an initial $2 billion for the company followed by up to $2 billion more if AskBio hits certain success milestones.

AskBio, a closely held North Carolina-based company, specializes in developing gene therapies for conditions like Parkinson’s disease and congestive heart failure. AskBio also manufactures components used by other cell- and gene-therapy businesses. This arm of the company helps fund its research of experimental treatments.

A Booming Industry

Gene therapy is a booming industry. As researchers find ways to insert functional genes in the body’s instruction manual, there is a potential to cure a wide variety of diseases resulting from a faulty or missing gene.

Bayer is not alone in its quest to invest in gene therapies. Drugmakers like Novartis AG (NVS), Roche Holding AG (ROG:SW), and Bristol-Myers Squibb Co. (BMY) have recently acquired gene therapy companies as well.

Challenges for Bayer

Bayer has faced several hardships recently, and sees the acquisition of AskBio as a way to move forward with the drug making arm of its business. In 2018, Bayer acquired Monsanto for $63 billion. The goal of this deal was to give Bayer a fast-growing stream of revenue that would be separate from pharmaceuticals. However, Bayer has been plagued with legal disputes about Monsanto’s Roundup weed killers. These lawsuits have cost the company $10.9 billion. Additionally, the COVID-19 pandemic has hampered Bayer’s agriculture business.

Some investors are also concerned that two of Bayer’s most profitable drugs, Xarelto and Eyla, will lose patent protection in the coming years, so it needs to develop new products. The company hopes that its acquisition of AskBio will help achieve this goal, and will help Bayer recover from some recent difficulties.

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