Spain manufacturing plant purchased for $150M as first step.

Lonza Group will purchase Genentech’s manufacturing facility in Porrino, Spain, for $150 million. This facility has a biologic manufacturing capacity of 40,000 L and is currently dedicated to the production of Genentech’s Avastin®. Lonza plans to retain the facility’s approximately 310 employees and continue to produce Avastin for Genentech.

Concurrently, Genentech entered into a supply agreement for the manufacture of certain its products at Lonza’s facility currently under construction in Singapore. Under this agreement, Genentech also receives the right to exercise an exclusive option to purchase the facility.

Genentech plans to purchase Avastin and other oncology products from Lonza’s planned 80,000-L Singapore facility and 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 between 2007 and 2012 for a purchase price of $290 million, plus an additional $70 million in milestone payments if certain performance milestones are met.

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