Gilead Sciences, Inc. has signed a definitive agreement to acquire Canadian subsidiary Raylo Chemicals, Inc. and most of its assets from Germany-based specialty chemicals company Degussa AG for approximately $149 million. In addition, Gilead has entered into long-term agreements with Degussa for the supply of raw materials and the manufacture of certain active pharmaceutical ingredients (API) for Gilead products. The companies expect the transaction to close in the fourth quarter of this year.

Located in Edmonton, Canada, Raylo Chemicals is currently part of Degussa’s exclusive synthesis and catalysts business unit. Raylo’s operations encompass custom manufacturing of API and advanced intermediates for the pharmaceutical and biopharmaceutical industries. Gilead intends to utilize this site primarily for manufacturing development of investigational products, supplying API for clinical research programs and contributing to new product launch supplies. Gilead will assist Degussa in transitioning non-Gilead business to other sites. The Raylo name will remain an asset of Degussa.

“Gilead has had a long-standing and successful partnership with Degussa and Raylo, and we look forward to welcoming our colleagues at Raylo to the Gilead team,” said John C. Martin, Ph.D., president and chief executive officer, Gilead Sciences. “As our company continues to grow, so does our need for chemical and manufacturing expertise. This agreement underscores our commitment to advancing new therapies that address significant unmet medical needs by enabling us to rapidly provide adequate supply of Gilead’s investigational products for preclinical and clinical evaluation.”

Dr. Klaus Engel, chairman of Degussa’s management board, said, “The sale of Raylo is a key step in our sustainable growth strategy in fine chemicals to shift production capacity from the Western Hemisphere to Asia. The long-term supply agreements with an innovative company such as Gilead prove Degussa’s strong position in exclusive synthesis and are a landmark for the successful cooperation with a leading pharmaceutical company. For the Raylo employees this transaction opens new and attractive opportunities within Gilead.”