Fresenius Medical Care of Germany has signed an agreement with Nabi Biopharmaceuticals of the USA to buy its phosphate binder business – PhosLo - for up to $85 million, including milestone and royalty payments.

PhosLo is a calcium acetate phosphate binder for end-stage renal disease patients, and competes with Shire’s Fosrenol (lanthanum carbonate) and Genzyme’s Renagel (sevelamer HCl).

The agreement includes an initial payment of $65 million, along with milestone payments of $10 million expected to be paid in 2007, and a further $10 million over the next two to three years, providing that certain undisclosed performance targets are achieved, said Fresenius.

The German company said that PhosLo revenues are currently running at around $40 million a year. Fosrenol achieved sales of %53.5 million in 2005, while Renagel posted sales of $111 million. Also in the frame as a future competitor is Spectrum Pharmaceuticals’ RenaZorb (lanthanum dioxy carbonate), although this is still in the early stages of development.

Fresenius is also acquiring rights to a new product formulation currently under development, which Nabi expects will be submitted for licensure in the US during 2007. If all goes to plan with the development of this new version, payments to Nabi could reach $150 million, plus royalties, said the US firm in a statement.

Nabi said that PhosLo was no longer strategically matched to its other projects, which include products to treat nicotine addiction, organ transplant patients and Gram-positive infections. The company will also welcome the cash injection, as the failure of two vaccines for staphylococcal infections in late 2005 bashed a hole in its revenue projections for 2007.

It is estimated that 340,000 people in the USA have ESRD and are on kidney dialysis. Worldwide sales of phosphate binders are estimated at $600 million to $750 million per year.

In addition, there are an estimated 8.4 million chronic kidney disease (CKD) patients - representing a potential multi-billion dollar market opportunity - who are candidates for phosphate binder therapy according to the National Kidney Foundation.