ROCKVILLE, Md., May 2 /PRNewswire-FirstCall/ -- Human Genome Sciences, Inc. (Nasdaq: HGSI - News) today announced that it has signed a $425 million definitive agreement with BioMed Realty Trust, Inc. (NYSE: BMR - News) for the sale/leaseback of Human Genome Sciences’ large-scale manufacturing facility and for a new lease for its headquarters office and laboratories facility. The transactions are expected to add approximately $380 million in net additional cash available for HGS operations, including $220 million in new cash and $160 million in cash that will be freed up by elimination of the cash restriction associated with the previous lease for the headquarters facility.
“This is the latest in a series of steps to strengthen our balance sheet and provide increased flexibility in the management of our cash resources. We are pleased to enter into this definitive agreement with BioMed Realty Trust,” said H. Thomas Watkins, President and Chief Executive Officer of Human Genome Sciences. “We expect that both of our lead products -- Albuferon(TM) for chronic hepatitis C and LymphoStat-B(TM) for lupus -- will enter Phase 3 clinical development by the end of this year, and this additional cash will support their rapid development.”
Alan D. Gold, President and Chief Executive Officer of BioMed Realty Trust, said, “This transaction with Human Genome Sciences provides us with another tremendous opportunity, as we increase our presence in one of our core target markets. These premiere buildings will be fully leased to a well- respected company that we believe has considerable growth potential and a promising product pipeline, adding to our solid tenant base. The land component affords us additional development capabilities in this highly desirable and rapidly growing location.”
About the Agreement
Under the terms of the agreement, BioMed will purchase the HGS large-scale manufacturing facility, the HGS headquarters facility, and land located at the HGS headquarters site for a total purchase price of $425 million. The $380 million in additional available cash generated by the agreement is net of approximately $46 million that will appear on the HGS balance sheet as restricted investments upon closing, in connection with the transactions. HGS will enter into 20-year leases for the two facilities, with options to renew, and with the right to repurchase each facility under certain circumstances. The transactions are expected to be completed in the second quarter of 2006, and are subject to customary closing conditions.
The initial annual increase in rent for the two facilities, offset by increased interest income, will be approximately $20 million. HGS is exploring opportunities to offset this increased operating expense, and intends to provide updated financial guidance for the full year ending December 31, 2006 when it reports its results for the second quarter ending June 30, 2006.
About the Facilities
Construction of the 290,000 square-foot large-scale manufacturing facility, which is located at 9911 Belward Campus Drive, Rockville, was completed in 2005. HGS expects to complete the commissioning and validation of the manufacturing facility in the second half of 2006. It will be used to produce the company’s protein and antibody drugs for both clinical and commercial use. The 635,000 square-foot headquarters facility is located at 14200 Shady Grove Road, Rockville, and includes HGS offices and laboratories. HGS will retain operating control over both facilities.
About Human Genome Sciences
The mission of Human Genome Sciences is to discover, develop, manufacture and market innovative drugs that serve patients with unmet medical needs, with a primary focus on protein and antibody drugs. For more information about Human Genome Sciences, please visit the company’s web site at http://www.hgsi.com.
About BioMed Realty Trust
BioMed Realty Trust, Inc. is a real estate investment trust (REIT) focused on providing real estate to the life science industry. Additional information is available at http://www.biomedrealty.com.
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements are based on Human Genome Sciences’ current intent, belief and expectations. These statements are not guarantees of future performance and are subject to certain risks and uncertainties that are difficult to predict. Actual results may differ materially from these forward-looking statements because of the Company’s unproven business model, its dependence on new technologies, the uncertainty and timing of clinical trials, the Company’s ability to develop and commercialize products, its dependence on collaborators for services and revenue, its substantial indebtedness and lease obligations, its changing requirements and costs associated with planned facilities, intense competition, the uncertainty of patent and intellectual property protection, the Company’s dependence on key management and key suppliers, the uncertainty of regulation of products, the impact of future alliances or transactions and other risks described in the Company’s filings with the Securities and Exchange Commission. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today’s date. Human Genome Sciences undertakes no obligation to update or revise the information contained in this announcement whether as a result of new information, future events or circumstances or otherwise.
Source: Human Genome Sciences, Inc.
