Genzyme Corp. has agreed to acquire the San Diego manufacturing operation of South San Francisco-based Cell Genesys, Inc. The 47,000 square foot manufacturing facility was sold for $3.2 million.

The sale for Cell Genesys is part of a restructuring plan by Cell Genesys to focus its resources on the development of its most advanced and most promising products, which resulted in a decision to reduce the company’s manufacturing capabilities in the viral product area. The San Diego team has been conducting work in advancing the production of oncolytic virus therapy and gene therapy products. The majority of those employees will now become part of the Genzyme workforce.

Genzyme’s interst in the manufacturing facility, on the other hand, is to utilize the new assets and facilities to support the growth of its gene therapy program and strengthen its ability to manufacture quantities of both Adenovirus vectors and Adeno-Associated virus vectors, which are used to deliver genes to the appropriate cells in patients. Genzyme is currently in Phase 2 clinical trials for Ad2-HIF-1 alpha in patients with peripheral arterial disease. Genzyme’s therapy is designed to promote the growth of new blood vessels and improve circulation in patients’ limbs.

The agreement between Cell Genesys and Genzyme provides for Cell Genesys to have the opportunity of having its lead oncolytic virus therapy product, CG0070, manufactured under contract with Genzyme. CG0070 is currently in a phase 1 trial for recurrent bladder cancer.

The purchase comes six years after Genzyme terminated a $350 takeover offer for Cell Genesys following the withdrawal of support for the offer by the Cell Genesys board on the grounds that the offer failed to reflect the increased value of its nineteen percent stake in Abgenix, Inc., which had increased by $240 million since the announcement of the merger. Cell Genesys paid a $15 million break-up fee to Genzyme, when it backed out of the deal.