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Human Genome to raise $380 million in cash from real estate transactions
New York, May 2 - Human Genome Sciences, Inc. said it expects to generate $380 million of cash from a sale and leaseback of its large-scale manufacturing facility and for a new lease for its headquarters office and laboratories facility.
The agreement is worth $425 million and is with BioMed Realty Trust, Inc.
Cash made available includes $220 million of new money and $160 million released by eliminating 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," said Thomas Watkins, president and chief executive officer of Human Genome Sciences, in a news release.
"We expect that both of our lead products - Albuferon for chronic hepatitis C and LymphoStat-B for lupus - will enter phase 3 clinical development by the end of this year, and this additional cash will support their rapid development."
Under the agreement, BioMed will purchase Human Genome's large-scale manufacturing facility, headquarters and land located at the headquarters for a total of $425 million.
The $380 million in additional available cash is net of about $46 million that will appear on the balance sheet as restricted investments upon closing.
Human Genome 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.
The initial annual increase in rent for the two facilities, offset by increased interest income, will be approximately $20 million.
Human Genome said it is exploring opportunities to offset this increased operating expense.
Human Genome is a Rockville, Md., biotechnology company.
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