Deals of the Week Looks At How Amgen’s Global Expansion Affects Partnering

why yes, these are Japanese flip-flops, why do you ask?

Amgen Inc. has made a big deal about expanding into Japan and eventually building a standalone subsidiary there. Now, the biotech’s Japanese expansion strategy is paying off for at least one of its partners: Cytokinetics Inc.

The two companies announced June 12 that they have expanded an existing collaboration for the heart failure drug omecamtiv mecarbil and other related compounds to include Japan. Cytokinetics will receive $25 million from Amgen in the form of a $15 million upfront fee and a $10 million stock purchase, sold at a 36% premium. The company is also eligible to receive up to $50 million in pre-commercialization milestone payments for the development of omecamtiv in Japan, as well as royalties on sales of the drug in the country. Amgen will also reimburse Cytokinetics for the cost of a Phase I study that will support the inclusion of Japanese patients in a potential Phase III program for the drug.

For investors, the deal represented a vote of confidence in omecamtiv, and Cytokinetics stock opened June 12 up 15% over the prior day’s closing price. The $25 million in cash is also important to Cytokinetics, which ended the first quarter of 2013 with $61.6 million.

Omecamtiv, a novel cardiac myosin activator, is one of Cytokinetics’ two lead programs. A Phase IIb trial evaluating an intravenous form of the drug in acute heart failure patients has completed enrollment, and a Phase II trial evaluating an oral formulation in outpatients with heart failure started in the first quarter. Amgen is conducting the trials.

Under the original 2006 collaboration, which excluded Japan, Amgen paid Cytokinetics $42 million upfront and paid $33 million to buy stock in exchange for an option to license omecamtiv. Amgen exercised that option in 2009 after positive Phase IIa data read out, and paid Cytokinetics another $50 million upfront and agreed to pay $600 million in milestones.

It looks as though the Cytokinetics deal expansion may be a one-off case, however. A review of Elsevier’s Strategic Transactions database revealed Amgen doesn’t have many other licenses that specifically exclude Japan. One example is KAI Pharmaceuticals Inc., which Amgen acquired in 2012 for $315 million. That acquisition excluded Japan, where Ono Pharmaceutical Co. Ltd. had previously bought the license.

But Japan remains the world’s second largest pharma market, and Amgen’s efforts to rebuild in the region could help future partners, both in terms of deal value and in that signing a single global partner can sometimes speed up the drug development process. Amgen announced plans earlier this year to aggressively expand in Japan and build a Japanese subsidiary by 2020. That reversal comes only five years after the company left the market in 2008, when it out-licensed 13 compounds to Takeda Pharmaceutical Co. Ltd. for $200 million upfront and $702 million in R&D funding and milestones. As part of that deal, Takeda acquired Amgen’s Japanese subsidiary Amgen KK for an undisclosed price.

In May, Amgen unveiled more details about how it will execute on its re-entry plan, namely through a partnership with Astellas Pharma Inc. with which it will form a joint venture to bring Amgen products to market in Japan. The Tokyo-based JV will be 51% owned by Amgen and 49% owned by Astellas and operate as Amgen Astellas BioPharma KK. The deal is structured to allow Amgen to turn the operations into a wholly-owned Japanese affiliate as early as 2020.

Amgen declined to provide any valuable insights on what might be next in terms of partnering in the region. But one thing is certain, we can expect more. CFO Jonathan Peacock specifically commented on Japan and China during the Goldman Sachs Global Healthcare conference June 11. “We’ll continue to branch out and make targeted investments in the markets that are important to our future growth,” he said. -- Jessica Merrill

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AstraZeneca/Pearl Therapeutics: British pharma AstraZeneca PLC has made a big play in respiratory disease with the $1.15 billion acquisition of Pearl Therapeutics Inc. AstraZeneca will pay $560 million upfront, as well as $450 million in development and regulatory milestones related to early-stage pipeline assets to acquire all shares of privately-held Pearl. Pearl shareholders are also eligible to receive $140 million in milestones related to sales of its lead pipeline candidate. The deal puts AstraZeneca in the midst of the fiercely competitive and changing treatment space for chronic obstructive pulmonary disease. The company gains PT003, a fixed-dose combination of glycopyrrolate, a long-acting muscarinic antagonist (LAMA), and formoterol, a long-acting beta-2-agonist (LABA), in Phase III development. It also gets an earlier-stage triple combination that includes a LAMA, LABA and inhaled corticosteroid (ICS). The drug is only in preclinical development, but AstraZeneca plans to move it into Phase II testing immediately. Triple combinations are expected to eventually play a major role in the market. Respiratory disease is one of three key therapeutic areas AstraZeneca is focusing on as part of its turnaround strategy, and the company has increased the pace of development of several projects. The acquisition of Pearl comes just a week after AstraZeneca announced it was pulling out of one of its other late-stage programs with partner Rigel Pharmaceuticals Inc. after the Phase III rheumatoid arthritis drug fostamatinib produced disappointing results. --Lisa LaMotta

Xenon/Isis: In a reversal of its usual out-licensing strategy, Xenon Pharmaceuticals Inc. has exercised an option to in-license a potential treatment for anemia developed under a 2010 alliance with RNA technology specialist Isis Pharmaceuticals Inc. The firms announced June 10 that Xenon will pay $2 million to Isis to license XEN701, a molecule in preclinical development that is designed to inhibit the production of hepcidin, a protein produced in the liver. By inhibiting hepcidin, XEN701 could offer a non-erythropoietin receptor-based mechanism for the treatment of anemia. It is the first drug to enter development from Isis’ collaboration with Xenon. Under the original deal, Xenon paid Isis an undisclosed fee in the form of a convertible promissory note in exchange for using the latter’s antisense technology to discover and develop drugs against hepcidin and hemojuvelin for anemia. Xenon also gained an option to license worldwide development and commercialization rights to candidates produced from the partnership. Isis also is eligible for milestones and royalties. Vancouver-based Xenon has been more active out-licensing its human clinical genetics platform out to larger pharma partners, including Merck & Co. Inc., Teva Pharmaceutical Industries Ltd. and Roche. --JM

Questcor/Novartis: Questcor Pharmaceuticals Inc. announced June 11 that it has acquired rights to develop Synacthen (tetracosactide) and Synacthen Depot from Novartis AG in the U.S. and plans to acquire rights in certain other countries subject to closing conditions. The deal is another example of big pharma’s increased willingness to sell-off non-priority assets, and Questcor appears intent on breathing new life into a mature brand, similar to how it has revitalized its existing Athcar Gel (repository corticotropin injection). The Synacthen products are already approved in 40 countries for certain autoimmune and inflammatory conditions, including rheumatoid arthritis and multiple sclerosis, and are also approved as a diagnostic test for adrenal insufficiency, but they have never been approved in the U.S. Questcor plans to develop the products for the U.S. market and use the drugs as an opportunity to build an international presence. Synacthen is a synthetic 24 amino acid melanocortin receptor agonist, an area of research Questcor specializes in with Athcar. Questcor has successfully built Athcar into a high-growth brand with sales of more than $500 million in 2012 by broadening its use from a niche indication in infantile spasm to larger patient populations like multiple sclerosis and nephrotic syndrome. But the company has also drawn criticism from insurers and some in the health care community for aggressively raising the price from $2,000 per vial to $28,000 per vial as part of its repositioning of the drug to fit in the rare disease business model. --JM

AstraZeneca/Cancer Research UK: Building on existing collaborations with Cancer Research UK, AstraZeneca is providing scientists funded by the world’s biggest cancer charity with compounds for use in developing potential new oncology drugs. One new project, announced June 14, will involve scientists at the University of Manchester testing compounds targeting a key protein involved in DNA damage response. AstraZeneca has first rights to any molecules discovered through the agreement and can choose to continue further development. In return, Cancer Research Technology Ltd, the UK charity’s commercial arm, will receive royalty payments when the project reaches certain milestones. CRT also has the option to develop the molecules further if AstraZeneca decides to pass. Britain’s second-biggest drug maker has also invited Cancer Research UK scientists from the Paterson Institute to test AstraZeneca’s compound collection against a potential oncology target at its UK research center in Alderley Park. It is the first time AstraZeneca has invited an external party to screen such an extensive set of compounds within its screening facility. AstraZeneca will have first rights of negotiation on any resulting projects. CRT has a growing, 90-strong in-house drug discovery effort which has expanded with the help of funding from Cancer Research UK – and has access to clinical development capabilities in conjunction with Cancer Research UK's drug development office. This includes CRUK’s Clinical Development Partnerships initiative, designed to move de-prioritized pharma assets into the clinic. This wide-ranging R&D capability and close linkage with academia has attracted in AstraZeneca to CRT, with the two first partnering in 2010 [W#201020370]. --Sten Stovall

BioLineRx/Jiangsu Chia-Tai Tianging Pharmaceutical: Israeli biotech BioLineRx Ltd. lined up a rare early-stage out-licensing partner for one of its two candidates for hepatitis C this week. Liver disease-focused Jiangsu Chia-Tai Tianqing Pharmaceutical (CTTQ) licensed development, manufacturing and commercial rights in China and Hong Kong to BL-8030, a preclinical second-generation protease inhibitor for HCV. BioLineRx receives an undisclosed upfront payment plus potential development, regulatory and commercialization milestones that could total $30 million for the compound. The Israeli company also could earn high-single-digit royalties on sales if ‘8030 reaches market. BioLineRx also will have access to CTTQ’s clinical data for the compound and can use the data for regulatory purposes outside the territories licensed by the Chinese firm. BL-8030 is one of two HCV candidates being developed by BioLineRx, along with Phase I/II BL-8020, an inhibitor of HCV-induced autophagy. Both compounds were in-licensed from France’s GenoScience Pharma in early 2012[W#201220060]. In a release, CTTQ President Jian Sun Emba noted that HCV prevalence is high in China, with about 3.2% of the population, or roughly 43 million individuals, infected with the virus. –-Joseph Haas

BMS/Simcere: In their third deal in three years, Bristol-Myers Squibb Co. and Simcere Pharmaceutical Group will collaborate in China to co-develop and commercialize a subcutaneous formulation of Bristol’s rheumatoid arthritis treatment Orencia (abatacept), the companies announced June 14. Simcere, based in Nanjing, will perform and fund all development and regulatory activities required to obtain marketing approval in China based on a pre-agreed development plan. The companies will share responsibility for commercializing Orencia SC in China, and will share profits and losses related to Orencia SC there. Financial terms were not disclosed. If approved, Orencia would become Bristol’s first biologic to enter the Chinese market. The novel T-cell co-stimulation modulator is approved already in the U.S., Europe and Japan, and booked global sales of $1.2 billion in 2012. It would theoretically launch into a very competitive RA market in China, which includes novel biologics, biosimilars, and is dominated by NSAIDs. Although Simcere would not comment on development timelines for China, the company confirmed to PharmAsia News that it would need to conduct certain clinical studies in China to obtain regulatory approval for Orencia. BMS and Simcere first tied up in 2010 to co-develop BMS-817378, a small molecule c-Met inhibitor in preclinical development. Under that deal, Simcere is funding and taking the lead for clinical trials in China through proof-of-concept in return for exclusive China marketing rights for the oncologic, while BMS retains marketing rights in the rest of world. In a second deal, announced in 2011, BMS and Simcere are co-developing a preclinical CETP (cholesteryl ester transfer protein) inhibitor, BMS-795311, in China. --Josh Berlin

photo from flickrer nb360 used under creative commons license

Once You Start Up Financings of the Fortnight, It'll Never Stop

Your faithful FOTF correspondent is in San Diego this week for the CalBIO conference, specifically to wax journalistic on a panel trying to look into the future – 2030! -- and opine sagely upon what we see. Some call this prediction; others call this pulling objects out of one’s nether regions, which thankfully doesn't require the Jagger-like calisthenics seen at the start of this week's video flashback.

What we can predict with near certainty is that the upcoming issue of Start-Up, arriving soon in print or electronic edition according to your subscription preference, will be full of timely topics. We’ll go inside Third Rock Ventures, which has raised more than $1 billion since 2007 to invest solely in early stage biotech. And not just invest; Third Rock creates many of its own companies, then puts its own partners into temporary executive roles in those companies once they launch.

Is it working? Hard to say yes, definitively, until they start truly reaping what they’ve sown. (Only two exits so far.) But Third Rock has a 28% stake in one of the companies in the IPO queue, bluebird bio, and a 24% stake in Agios Pharmaceuticals, which filed its S-1 a few days ago. More might be coming this year. LPs have enthusiastically bought into the Third Rock promise, that's for sure. But that’s not to say the group hasn’t hit snags or that there aren't adjustments to make. (You'll have to read Start-Up to find out what those are.)

Third Rock’s not the only VC growing their own. Flagship Ventures has been at it twice as long, in fact, and about five years ago – right around the time Third Rock rolled into town – it decided to put a brand on its in-house start-up brewery: VentureLabs. They’ve been busy lately, with big – dare we say “Third Rock-like”? – Series A rounds to launch two high-concept start-ups, Moderna Therapeutics and Syros Pharmaceuticals. The new Start-Up will also look at the early days of Moderna, and how the Flagship/VentureLabs folks helped push what was at first an advancement in the induced pluripotency of stem cells toward a new therapeutic modality that, despite many question marks, almost immediately attracted a major Pharma partnership and nearly a quarter of a billion dollars guaranteed.

If bluebird or Agios goes public, it will be Third Rock’s first IPO, but Flagship’s been around the block many times. In the current window, it’s already notched two IPOs since the start of 2012 – Receptos and Tetraphase Pharmaceuticals – and it owns 16% of Agios. Others have ushered even more biotechs public in the same time frame: As we note in the next Start-Up, New Enterprise Associates and funds associated with Fidelity top the charts with five IPOs apiece.

But as our colleague Stacy Lawrence reports, there’s been no rush to exit: Among all major shareholders (those with 5% stakes or higher)  that went through IPOs in 2012, less than one third have reduced their holdings. Thirty of 43 have held tight or increased their shares, often in the IPO as part of an agreement to get the deal done.

Just published in "The Pink Sheet" DAILY, Stacy also talks to several VCs about what seems to be a reinvigorated IPO appetite for early-stage biotechs – a good sign indeed for the likes of Third Rock and Flagship. And what of the growing number of early-stage biotechs with corporate investors providing the backbone of support? Once quite rare, we’re now seeing new companies out of the gate mainly backed by corporates, such as Protagonist Therapeutics, whose JJDC-led Series B we describe below. Another, ArmaGen Technologies, caught our attention when it made Start-Up’s 2012 A-List for its intriguing receptor-mediated technology that draws therapeutics through the blood brain barrier, and for its unusual Series A syndicate: Four corporate investors splitting evenly a $17 million round. Our colleague Paul Bonanos was even more curious, and in the story he’s penned for -- you guessed it -- the new Start-Up, he noted this telling quote from one of ArmaGen’s backers: “When you take away the worry about losing your money, great opportunities arise.”

In essence, at least a couple of ArmaGen’s investors consider exposure to the company’s technology just as important, if not more, than their financial return. Outlooks like that among corporate investors should make for very interesting strategy discussions when it comes time to ready a company for sale or for a public debut. Then again, not all corporate VCs embrace strategic return more than financial return. (For a rather brusque counterpoint, see this story about Novartis Venture Funds and chief Reinhard Ambros' decision to drop its strategy-oriented option fund: "Strategic means you pay money for something intangible, and you waste money.")

If we don’t get to the blurbs soon, this column will go past the point of no return. So let’s sum up: If you like the topics of conversation here at FOTF, you should love Start-Up, perhaps even enough to subscribe. That ends our shameless plug; now back to our shameless prose, often referred to as...

Avaxia Biologics: The therapeutic antibody firm topped off its Series B round with an undisclosed amount of cash from the venture arm of AbbVie, bringing the round to $11.4 million. It’s a fascinating case for several reasons. First, Avaxia’s lead product, an oral TNF inhibitor currently in a Phase Ib study in irritable bowel syndrome patients, goes after the same target as AbbVie’s superblockbuster Humira (adilimumab). That might lead one to believe AbbVie wants a closer look at what could make a potential replacement for Humira. But that outcome would be a rare occurrence, indeed. According to our Strategic Transactions data, from 2006 to 2011 only two private companies backed by corporate venture funds were eventually bought by the funds’ parents: Avid Radiopharmaceuticals (bought by Eli Lilly) and Avidia (Amgen). AbbVie does not gain any rights to Avaxia’s lead, AVX-470, or other products, but it does take a board seat. Another reason this is one to watch is Avaxia’s antibodies. They’re not monoclonal, like Humira and so many other key biotech products. They’re polyclonal, essentially a gemisch of antibodies strained from cow’s milk, and therefore quite capable of surviving a trip into the gut. Avaxia comes along just as a few companies, led by Symphogen, are dipping a toe into the possibility of antibody combinations. But those combinations are made from monoclonals, not polyclonals. Other than serum products, it’s hard to find precedent to what Avaxia is aiming for. Just as notable is how far Avaxia has gotten with its platform, funded to this point by angel investors. Its A and B rounds, totaling nearly $10 million before the AbbVie add-on, were led by angel groups. – Lisa LaMotta and Alex Lash

Clovis Oncology: Clovis took advantage of a strong clinical data release with a public offering that brought in $240 million, the third largest secondary offering of the year behind Onyx Pharmaceuticals and Ariad Pharmaceuticals. The firm is the best performer from the biotech IPO class of 2011, with a 445% gain as of June 13, thanks in large part to a mighty ASCO bump – that is, data it presented at the recent American Society of Clinical Oncology conference that took Clovis’ share price from $36.56 to $74.59 in one weekend. The company reported Phase I/II efficacy data for its non-small cell lung cancer drug CO-1686 in patients with the T790M mutation, which confers resistance to current treatments. Clovis has done well with its strategy of in-licensing candidates and companion diagnostics; it brought in CO-1686 from Avila Therapeutics in 2010, then partnered with Roche to develop a test for the T790M mutation a year later.  Clovis’ recent run-up also benefited from positive initial data at ASCO for its drug rucaparib in ovarian cancer. Rucaparib is an oral poly (ADP-ribose) polymerase (PARP) inhibitor that Clovis licensed from Pfizer in 2011, and subsequently partnered with Foundation Medicine to create a companion test to find patients most likely to respond to the compound. -- A.L.

Protagonist Therapeutics: The peptide development firm said June 4 it has raised a $14 million Series B round, led by Johnson & Johnson Development Corp. JJDC joined Series A investors Lilly Ventures and Australian firm Starfish Ventures. Protagonist spun out of the University of Queensland’s Institute of Molecular Biosciences and, while headquartered in the San Francisco suburb of Menlo Park, Calif., it maintains discovery operations in the Queensland capital of Brisbane. It’s the latest example of early-stage biotechs drawing most or all of their venture funding from corporate-affiliated funds, which are helping fill the gap left by traditional venture moving their limited resources toward the later stages. Protagonist says it has developed a platform to identify disulfide rich peptides, a more stable version of a molecule that has limited therapeutic availability. Also called constrained or stapled peptides, the area is looking to Aileron Therapeutics, which recently completed the first clinical trial of a stapled peptide and answered some questions about the compound’s ability to remain stable in vivo and avoid safety concerns. The preclinical Protagonist has signed deals with Zealand Pharma and Ironwood Pharmaceuticals; one of the firm’s pursuits is the development of orally-active therapeutics for inflammatory bowel diseases. -- A.L.

Dermira: The firm developing treatments for acne and other skin disorders said June 11 it has raised a $35 million Series B financing to move into a Phase I/II trial its lead program, lemuteprofin, a photodynamic acne therapy, and two preclinical programs. Dermira’s Series A investors Canaan Partners, New Enterprise Associates and Bay City Capital all re-upped and were joined in the round by Maruho, a 100-year-old Japanese firm that specializes in dermatology and typically keeps a low deal profile. Dermira has now raised more than $70 million in venture funding; its $42 million A round helped it purchase Valocor Therapeutics, at the time the owner of lemuteprofin after its spinout from failed Canadian biotech QLT. -- A.L.

All The Rest: To fund work on Phase II AKB6548 for anemia associated with CKD, Akebia Therapeutics raised $41M in Series C financing…ResearchGate, which is developing a platform to share and search for scientific data online, closed a $35M Series C…Edge Therapeutics collected $18M in Series C funds to support Phase II of EG1962 in preventing delayed cerebral ischemia…Prism Pharma, which has a lead compound for fibrosis, completed a $15M Series C…GSK spin-off Autifony Therapeutics topped up its Series A with an additional £5.5M from Pfizer Venture Investments and International Biotechnology Trust…in addition to adding Janssen as a new partner, Second Genome completed a second tranche on its Series A, which now totals $11.5M…concurrent with a $2.3M grant from the Norwegian Research Council's BIA-Program, Targovax raised $1.4M in equity…Arcturus Therapeutics, focusing on RNAi for rare diseases, closed a $1.3M seed round…Baxter Ventures came in as a new backer for Ocular Therapeutix…ARCA biopharma publicly sold $20M in Series A convertible preferred shares…StemCells received the right to sell Lincoln Park Capital Fund up to $30M in common shares…Oncothyreon raised $10M in an RDO to fund up-front payment in Array BioPharma co-promote…an undisclosed health care fund bought $9.8M in Celsion’s common stock…BioTime grossed $9.1M through a PIPE…epigenetics company Epizyme grossed $77M in its IPO…PeptiDream floated on the Tokyo Stock Exchange, raising $52M…Israeli firm Kamada completed a $52M IPO in the US…Kadimastem, which commercializes pluripotent stem cell-derived products, raised $5.5M in an IPO on TASE…Heat Biologics, PTC Therapeutics, bluebird bio, and Esperion all set terms for their IPOs…stem cell producer Cellular Dynamics International and Agios Pharmaceuticals, which is targeting inborn errors of metabolism, filed for their IPOs…Array BioPharma offered $115M in convertible senior notes…and Anacor Pharmaceuticals received a $45M three-tranche loan facility from Hercules Technology. -- Amanda Micklus

Deals Of The Week Tracks Obamacare

The pharmaceutical community, like much of the country remains divided about the Affordable Care Act and  its impact on healthcare and the industry, perhaps even more so than when the original law passed in 2010. The industry, of course, supported the initial legislation, and many people continue to believe it made the right decision. 

But as deadlines approach for the all-important next phase of the law, execution realities and uncertainty raise questions, many of which can’t be answered in the near term. Nonetheless, they have implications overall for the healthcare system and patients, and, more narrowly, for pharma commercial and business development strategy. This year, in particular, is important for the market access phase of the legislation, as the country prepares to get new health insurance exchanges running by the Jan. 1, 2014 deadline, and states decide whether and how to expand their Medicaid offerings to broader populations. As of Jan. 1, Americans must have individual insurance coverage or pay a penalty (modest at first); they can buy the coverage through insurance plans listed on health insurance exchanges which begin operations on that date. 

Overall, pharma industry support, officially, at least, seems high, even as executives worry whether their companies will ever make up for the tradeoffs they agreed to three years ago in the form of bigger rebates (for Medicaid and other government programs) and taxes through numbers of newly covered lives. They are concerned about less high-profile provisions of the act, such as its dramatic expansion of the 340b program to new categories of hospitals, and a provision that limits reimbursement companies can get for minor improvements to their product, as well as the federal and state governments’ ability to execute their plans on time. 

Many states are just now announcing which insurance companies are participating in the exchanges and those plans are identifying their basic options, but the industry in general does not yet have a good perception of what drug coverage will look like, how the new exchange plans or Medicaid expansion will be populated, or how the mandatory individual insurance provisions will be enforced. 

Because no one really has the answers, many in the industry expect companies to monitor the ACA’s progress closely but continue to operate status quo. They are not so much keeping their heads in the sand as monitoring cautiously,” says an executive at a firm that advises companies on market access issues. “From a tactical perspective, no one knows what will happen, so they are taking the path of least resistance. Top execs are asking me to come up with projections, and I don’t know them, so they are proceeding as though there is no effect.”

The uncertainty hasn’t stopped Wall Street from predicting winners and losers in the healthcare sector in general, or entrepreneurs form seizing opportunity in the midst of change. At the Jefferies investment bank conference on June 4, a panel of experts opined about investor beneficiaries, and all agreed that whatever else, managed care –perhaps by another name—will be the name of the game going forward. Past efforts to move populations into managed care failed, but what’s different now is the government support for such programs, as well as massive databases that able to monitor how the system is performing.

Meanwhile, the industry’s relentless search for innovation continues – if for no other reason than because without it, there’s not much of an industry – witness the struggles of specialty pharma companies such as Elan PLC, Endo Health Solutions, and Forest Laboratories, all laboring to move beyond the enormous success of an innovative drug but finding it hard to come up with a repeat act.--Wendy Diller

MorphoSys/GSK: MorphoSys has struck a development and commercialization deal with GlaxoSmithKline for its mid-stage rheumatoid arthritis antibody, MOR103, which targets the GM-CSF pathway that stimulates production of immune cells such as macrophages. The deal, announced June 3, gives MorphoSys near-term cash in the form of a €22.5 million ($29.5 million) upfront, plus development, regulatory and commercialization milestones that could add up to €425 million. GSK also will pay a double-digit royalty on all sales of the product. MOR103 has completed a Phase I study in healthy individuals, as well as a Phase Ib/IIa trial in 96 patients with mild to moderate rheumatoid arthritis. Patients in the drug arm of the study showed a significant effect compared to placebo at just four weeks. GSK will take over all development, but did not specify when it will begin Phase II studies. MOR103 has also been tested in patients with multiple sclerosis.

MorphoSys has been shifting gears for the last few months as it tries to move away from the partnership model that has made it profitable to concentrate more on its wholly-owned pipeline. MorphoSys has two drugs in its proprietary pipeline: MOR208, a Phase I asset which targets CD19 for B-cell malignancies, and MOR202, a HuCAL antibody against CD38 for multiple myeloma. – Lisa LaMotta

Pfizer/CytomX Therapeutics: After obtaining preclinical proof-of-concept last year for its approach to tumor-specific delivery of specially engineered antibodies, CytomX has struck its first alliance with a big pharma. Under an agreement announced June 6, the company will collaborate with Pfizer to discover and develop a variation on antibody-drug conjugates (ADCs) for cancer. Pfizer will pay the South San Francisco, Calif.-based biotech $25 million in combined upfront cash and milestones pegged to research and preclinical achievements. In addition, privately held CytomX could earn up to $610 million in regulatory and sales milestones, as well as tiered royalties into double digits on sales of any product reaching market. Because of the selectivity of candidates generated via its Probody Platform, CytomX says it can target broadly expressed tissues that are difficult to reach with other therapeutic approaches because of worries about off-target toxicity. CytomX uses its technology to generate ADCs that it calls Probody Drug Conjugates (PDCs), specially engineered antibodies or other approaches to drug delivery for cancer, inflammation and other unmet medical needs. PDCs will be safer and differentiated from other ADCs, CEO Sean McCarthy said, because they are engineered to combine cytotoxic payloads with Probodies that are masked to become activated only in the tumor’s micro-environment. Pfizer and CytomX are not disclosing the indications or specific targets on which they will work together, nor any timelines for the work, other than that it is an exclusive, multi-target alliance focused on oncology. – Joseph Haas

Janssen Biotech/Second Genome: Janssen Biotech and Second Genome Inc. announced a landmark research alliance on May 5th in which the latter will apply its microbiome discovery platform to characterize the role of human bacterial populations in ulcerative colitis. The goal is to translate the knowledge into therapeutic programs. The deal marks big pharma’s first commercial collaboration in microbiome R&D and may stimulate further deals and investment in the space. Interest in the therapeutic potential of the microbiome has been building over the past three years with the founding of several venture-backed companies focused on microbiome biology. Second Genome gets an upfront payment and milestones, both undisclosed. The upfront does not include equity. Janssen will fund the collaborative research through its Johnson & Johnson Innovation Center and the immunology therapeutic area within Janssen R&D LLC. Second Genome has preclinical programs in inflammatory bowel disease and type 2 diabetes, each about a year and a half from IND. It also has several discovery programs. On the same day, the start-up announced a $6.5 million third tranche to its series A financing, bringing the total raised to $11.5 million.—Michael Goodman

The Medicines Co./ ProFibrix: The hospital marketer The Medicines Co. is expanding into the hemostasis market, and has negotiated an option deal with ProFibrix BV that could improve its position there. The company announced June 4 it has agreed to pay $10 million upfront for an option to acquire ProFibrix later this year after Phase III clinical trial results read out on the company’s lead biologic, Fibrocaps. The dry powder topical formulation of fibrinogen and thrombin is being developed to stop bleeding during surgery. If the results of the single Phase III trial testing Fibrocaps are positive, The Medicines Company would pay $90 million to acquire ProFibrix outright. It also would be on the hook to pay $140 million in regulatory and sales milestones. ProFibrix’s ongoing Phase III trial, FINISH-3, has completed enrollment of 719 surgical patients with mild to moderate surgical bleeding, and the results are expected in the third quarter. The Medicines Company already markets the recombinant thrombin Recothrom, to which it recently gained rights through an earlier option arrangement with Bristol-Myers Squibb Co. The Medicines Company plans to combine the 60-person hemostasis group it gained from Bristol with the ProFibrix team. Both are based in Seattle, although ProFibrix’s leadership and headquarters are in The Netherlands. Plans call for CEO Jan Öhrström to stay on with The Medicines Company and head the company’s efforts in the hemostasis market. – Jessica Merrill

Novavax/Isconova: Eager to add adjuvant technology to its clinical and preclinical recombinant vaccine candidates, Novavax is making a $29.2 million bid to buy Swedish firm Isconova. Spun out of the Swedish University of Agricultural Science, Isconova produces saponin-based, immune-modulating adjuvants. In October 2012, Rockville, Md.-based Novavax, which has vaccines in clinical development for seasonal influenza, pandemic influenza, respiratory syncytial virus and rabies, reported successful Phase I data testing its pandemic flu vaccine boosted with a third-party saponin-based adjuvant. In a release, Novavax said based on those data plus Isconova’s own data, it believes the Swedish biotech’s technology can complement and strengthen its vaccine programs. Novavax announced a public offer June 4 under which it would issue 15.45 million new shares of common stock and swap 1.2388 shares of its stock for each Isconova share. The deal would represent a 26.7% premium over Isconova’s share price at the close of trading June 3 and would result in Novavax shareholders owning 91.1% of the new combined company. Isconova shareholders would control the remaining 8.9%. Novavax said if the deal goes through, it will offer Isconova management “positions subject to their commitment to the combined company,” and it does not plan to seek changes regarding the Swedish firm’s headcount, employment terms or business location.--JAH

Arno/Veridex: Cancer-focused Arno Therapeutics signed an agreement June 3 with Veridex, a subsidiary of Johnson & Johnson, to develop a diagnostic test for seeking optimal patients for its oncology candidates. Based in Flemington, N.J., Arno is developing cancer therapeutics that target the PI3 kinase/Akt pathway, as well as HDAC inhibitors and camptothecins. The two firms will team up to use Veridex’s proprietary CELLSEARCH platform to develop a diagnostic to detect the presence of activated progesterone receptors as a biomarker of anti-progestin activity in circulating tumor cells, those that have detached from a solid tumor and are found in the bloodstream. Arno is developing onapristone, an oral, anti-progestin type 1 progestin receptor antagonist. Now in preclinical development, onapristone is slated to begin clinical study during the second half of 2013.--JAH

AstraZeneca/ Rigel: AstraZeneca pulled out of its three-year partnership with Rigel Pharmaceuticals on June 4 after the companies announced lackluster results of the Phase III program for rheumatoid arthritis drug fostamatinib, an oral spleen tyrosine kinase (SYK) inhibitor. The drug did not show the levels of efficacy that many other drugs in the category have in clinical trials, prompting AZ to pull the plug. Rigel intends to evaluate the data from the Phase III program, which AZ conducted, and make a decision by end of the summer regarding its next steps. Rigel executives believe that fostamatinib could still find a place in the crowded RA market, even if the indication is just for a small subset of patients. Rigel potentially will seek approval of the drug on its own, but said it will not commercialize the drug without a partner. 

The failed program is just the most recent in a string of failures for the British pharma, which has ended programs in cardiovascular and oncology as well. It has also faced a slew of setbacks with its diabetes program, partnered with Bristol.--LL

Under One Roof: Roche Talks Up In-House Advantages In Cancer

Roche had a number of pithy taglines to splash around its oncology business review at ASCO: "we take cancer personally," or with a slightly more ominous tone, "doing now what patients need next." But the more powerful refrain may have come from execs' repeated mention of how much Roche has "under one roof."

With so many companies targeting oncology and talking up their strategies to move up the leader board, the onus is on the market leader to maintain its position. That may not actually be a large internal priority at Roche, as their acquisition of Genentech gave them a comfortable lead. Roche oncology sales in 2012 were almost three times as much as its nearest competitor, Novartis--$19 billion, versus $6.6 billion, respectively for the full year, according to IMS Health.

Karl Mahler, Roche's head of investor relations, cited the HER2 franchise as the model of how Roche is differentiated from other companies, changing standard of care, building lines of therapy and moving towards combinations. That's what Roche is looking to do in hematology, moving from the rituximab base to new drugs like GA101. "We have a number of scenarios that can help us both extend the franchise and potentially replace and extend the franchise," Roche Pharma COO Daniel O'Day said. 

There was an underlying theme in the firm's annual ASCO presentation: how well their model works, how they can repeat that success, and how big their position in oncology actually is. Part of the success is positioning and building off their existing business, where O'Day touted the firm's in-house capabilities - especially in the growing field of rational anti-cancer combinations.

The foundation for Roche's oncology business are the three pillars of the anti-HER2 franchise, the anti-CD20 franchise and the anti-angiogenesis franchise. "Obviously we want to continue to improve upon those," O'Day told the June 2 meeting in Chicago, "but we'll be adding that the many, many new targets that we have and new pathways, things like our MetMAb, PI3 kinase, Bcl-2, others." There's also the antibody-drug conjugate platform, which beyond the recently launched Kadcyla includes 20-25 new compounds. "Add to that the immunotherapy and I think it gives you the richness of the combination therapies being able to really come to play."

"Of course, you can do that across companies in different ways," O'Day added, "but we think there are significant strategic advantages to do that within one organization." And Roche has the "diversity and mass ... in each one of these areas" that can make that doable within one company.

There's a similar situation with companion diagnostics, he added, "because often the value on these combination therapies is obviously more obtained on the pharma side than on the diagnostic side, and that's one of the advantages of the Roche Group strategy that's allowed us to move diagnostics ahead very aggressively, as well."

O'Day returned to the pharma side in 2012 after a seven year stint heading the diagnostics division. He played up how his "good relationship" will help the company as it considers strategies to optimize the pharmaceutical pipeline in oncology.

An early test of these beliefs comes from the PD-1/PDL-1 inhibitor class, the promising immune checkpoint area that has been a hotbed at ASCO. Roche has its own version, but it remains to be seen if its or Merck's or Bristol's or anyone else's emerges as the optimal partner - though execs argued that Roche's PDL-1 is looking good. The company also has an assay that could have a pivotal place as the field takes off.

The shift to two or more agents combining in immune checkpoint "really does highlight how valuable it might be to have many of these reagents under one roof, because the collaborations across companies are always challenging," Hal Barron, Roche's head of global pharmaceutical development, said. "We would always pursue them if that's where the biology went, but we have an opportunity to define how the future looks by having these."

It also means not having to share the value. Companies can do that, "but I do think it gives us a tremendous competitive advantage to have as many products within one company as possible, because it allows us to look at a global pricing strategy where we have set out a certain range," O'Day said. (And with new combinations will come the need for an evolving pricing strategy, O'Day admitted. We'll have more to say on that in the next issue of "The Pink Sheet".)

Though Barron rebuffed a question about the company's wishlist for opportunities it doesn't have in its own pipeline - not wanting to tip its cards - the exec revealed part of its business development strategy:  "Our approach is, oftentimes, to ask ourselves is there a way of improving on those within that pathway? I won't go into great detail about that, but we are constantly looking at drugs that are active and saying, not just do we wish we had those, but could we then take those and that pathway and make it better? I think our strategy is to really have as many things as we could."

Most companies looking to build their oncology presence talk up the importance of expertise. Roche spread that around the (very crowded) room -- during the Q&A, it became clear that many company experts were seeded throughout the space, ready to impress.

Mahler laid it out from the start of the meeting. Over half of Roche's R&D budget is dedicated to cancer care. "And we are not currently only in the lead, but we also intend to stay in the lead by spending appropriate money for this," he promised.

As long as Roche is willing to put money where its mouth is, it very well may wind up in the end just as it started -- in the lead.

Deals Of The Week Watches Crowdfunders Multiply Like Rabbits

That giant sucking sound you hear is investors pulling their money out of early-stage drug and device research. As we’ve chronicled here and in our other publications, big pharma has valiantly stepped in to fill the breach, whether through corporate venture or academic tie-ups, but that won’t be enough to budge the gathering volume of biomedical discoveries stalled between lab and clinic.

Some investors, thinking the JOBS Act and its provisions governing general solicitation will usher in a sea change in how biomedical ideas get funded, have pointed to crowdfunding as a solution. We’ve written about a number of these entities, including MedStartr Inc., Poliwogg LLC, and most recently, HealthiosXchange.

On May 17, VentureHealth LLC threw its hat into the ring. VentureHealth is the creation of Mir Imran, who founded and manages its sibling companies InCube Ventures LLC and InCube Labs LLC, an incubator and collaborative research lab that spins out one or two companies each year. InCube Ventures typically invests in start-ups out of InCube Labs as well as in external companies. Mir himself holds more than 200 issued patents, is the inventor of numerous devices, and has founded more than 20 medical device companies, 15 of which have had successful exits via trade sale or IPO.

There is some debate about whether crowdfunding threatens VC by accessing a new and better idea flow and a broader base of investors. Greg Simon, CEO of Poliwogg, sees it as potentially disrupting the traditional investment supply chain, knocking out investment banks and venture, along with their bloated fees.

Simon told us that venture would probably not be interested in crowdfunding because the numbers are too small and, besides, venture’s business model is based on investing other people’s money.

Mir and his colleagues at InCube think otherwise. VentureHealth embodies the idea that the best of venture can be blended with the best of crowdfunding, to the benefit of venture investors, citizen LPs, entrepreneurs, and biomedical technology.

The potential of linking venture to crowdfunding was unwittingly demonstrated by an early pioneer. MedStartr, a crowdfunder of low-tech health and wellness products to non-accredited investors, operates on what amounts to a donation model. Investors see no return except for the warm glow that comes with contributing to a good cause. But an interesting thing about its crowdfunding model is that venture, angel, and other kinds of investors are on the sidelines watching. And every so often, when they see a good idea, they swoop in and fund it. MedStartr, sadly, is unable to participate in those exits.

But VentureHealth is.

For starters, VentureHealth takes a carried interest fee on what it earns in a sale or other liquidity event, much like a VC would. Mir’s partner, Andrew Farquharson, claims that this model aligns the interests of VentureHealth with its investors. Unlike some other crowdfunding portals, VentureHealth has no plan to become a registered broker-dealer.

VentureHealth’s plan is to only go out to accredited investors. In fact, it will be quite selective in the investors it brings in – physicians, researchers, individuals who understand the technology being offered and the market it’s targeting. As long as they meet those criteria, they can be experienced accredited investors or novice accredited investors who meet the minimum financial requirements set by the SEC but have traditionally been excluded from investing in private companies. Mir told us that VentureHealth is not interested in going out to non-accredited investors. It can raise all the money it needs from its accredited base, with additional support from InCube Ventures and, where warranted, from other venture co-investors.

It’s refreshing to find a crowdfunder who rejects the populist cant that many of its peers go in for. That’s not to say that VentureHealth isn’t opening up ground floor investment opportunities for investors who would otherwise be excluded. But it’s not exactly democratizing the process for all comers.

VentureHealth will focus on devices, drugs, diagnostics, and mobile health. In many cases, says Mir, InCube Ventures will co-invest alongside VentureHealth. The crowdfunding entity will likely have broader a remit for the deals it pursues than its venture sibling, but where they intersect, there will be co-investment. Venture health will be able to draw on the traditional venture strengths of screening deals, doing the diligence, managing companies, and providing follow-on funding.

The two exits listed on VentureHealth’s website illustrate the flexibility and potential of the venture/crowdfunding model especially when managed by industry insiders with extensive relationships and know-how.

Nfocus Neuromedical Inc. is a developer of a neurovascular device with an initial indication in brain aneurysms. The company was founded by Mir and co-inventor Martin Dieck. It was acquired in February by Covidien PLC in a structured acquisition for $51 million upfront and a $21 million earn-out payment. VentureHealth raised $1.49 million. Oxford Bioscience, DFJ e-Planet Ventures and others participated in financing rounds.

In the other exit, BodyMedia Inc., a developer and marketer of wearable body monitors that communicate with mobile devices, was acquired by Jawbone for $100 million in May 2013. VentureHealth raised $469,000. InCube Ventures, Comcast Ventures, and others participated in financing rounds.

Mir acknowledges that there’s an incestuous element to these early exits in which he wears the hats of company founder, venture co-investor, and crowdfunder. That might change over time. But he underscores another advantage of VentureHealth’s tight association with its VC sibling: “When Incube Ventures makes an investment from our fund, we keep a sizeable amount of dry powder on hand for follow-on rounds.” His point is that most angel investors – Mir says crowdfunding is organized angel investing – can’t look that far into the future and reserve capital for follow on fundings.

VentureHealth’s raises currently range between $500,000 and $1.5 million. Mir expects that number to rise as his accredited investor base gains experience. VentureHealth lists one “active investment” on its site: Channel Medsystems Inc. is developing an office-based, cryoablative technology to treat excessive menstrual bleeding. It raised $9.7 in an April B round led by Boston Scientific, toward which VentureHealth contributed $875,000.--Mike Goodman

While the crowdfunding space gets more crowded, deals and acquisitions this week continued their torrid pace.

Valeant/Bausch & Lomb: M&A-focused Valeant Pharmaceuticals International Inc. announced its biggest acquisition yet on May 27, agreeing to pay $8.7 billion to acquire privately held eye care company Bausch & Lomb Inc.  The transaction will increase Valeant’s eye care portfolio substantially: B&L offers a suite of prescription and over-the-counter drugs, contact lenses and lens-care products, as well as ophthalmologic surgical devices and instruments.

CEO Michael Pearson said the deal would create a global eye care platform within Valeant, retaining the B&L brand name,that will provide pro forma net 2013 revenue of roughly $3.5 billion. Of the $8.7 billion price tag, $4.5 billion will go to B&L’s owners at Warburg Pincus, while the remainder will retire B&L’s outstanding debt. Valeant, which had $414 million cash on hand at the end of the first quarter, said it will finance the transaction mainly through debt, while also raising between $1.5 billion and $2 billion in new equity. The Canadian specialty pharma projects $800 million in cost synergies from the transaction by the end of 2014.

The deal, unanimously agreed upon by both companies’ boards and expected to close during the third quarter, follows Valeant’s recent and apparently unsuccessful courtship of Actavis Inc. Acquiring B&L will enable Valeant to balance its revenue mix from both a geographic and therapeutic perspective. After closing, about 50% of Valeant revenue will stem from the U.S., with Eastern and Central Europe comprising 15%, Western Europe and Japan 13%, and Latin America, Canada, Australia, Southeast Asia and South Africa rounding out sales. In terms of therapeutic areas, dermatology and aesthetics will contribute about 34%, eye health about 32%, neurology and “other” about 12%, and consumer and oral health about 11%.--Joe Haas

GlaxoSmithKline/Okairos: GlaxoSmithKline PLC has done the biggest takeout of a private, clinical-stage European biotech so far this year with the acquisition of Okairos SRL for that company’s Phase I RSV vaccine and T-cell stimulating technology. for the biotech’s VCs nabbed roughly a 10x return on their €23.2 million invested capital.

Vaccines are a core therapeutic area for GSK. With Okairos, it hopes to have the basis of a first-in-class blockbuster. RSV is a common virus that presents with cold-like symptoms. In infants under one year old in the U.S., the disease is the most common cause of bronchitis and pneumonia and can require hospitalization or occasionally be fatal. Okairos’ vaccine provided “complete protection” against RSV in preclinical testing on rats and calves; the biotech started a Phase I trial in 40 healthy volunteers in February. MedImmune Inc.’s Synagis (TK) is a monoclonal antibody used as a preventative in premature and other high risk infants, but there is no RSV vaccine or post-infection therapy on the market.

In addition to RSV, Okairos has four clinical stage vaccine programs for malaria, HIV and hepatitis C (prophylactic and therapeutic). The Okairos platform and much of the management came out of Merck & Co. Inc. Okairos co-founder and CEO Riccardo Cortese was the founder and head of the Istituto di Ricerche di Biologia Molecolare (IRBM) in Rome, which later became a subsidiary of Merck. He departed Merck, taking much of his original IRBM team with him, and in-licensed the technology from the pharma in 2007.--Stacy Lawrence

AstraZeneca/Omthera: In its quest to reshape its cardiovascular pipeline, AstraZeneca PLC bypassed commercial-stage fish oil pill maker Amarin Pharmaceuticals Inc. announcing plans May 28 to acquire Amarin’s rival Omthera Pharmaceuticals Inc. instead. By acquiring Omthera, AstraZeneca accepts more risk, but gains an NDA-ready asset for dyslipidemia for considerably less than it would have cost to acquire Amarin ([A#14130528004]). AstraZeneca will pay Omthera $12.70 per share, or approximately $323 million, an 88% premium over Omthera’s closing price on May 24. The enterprise value of the deal is lower, about $260 million after incorporating Omthera’s cash balances of roughly $63 million, the company said.

In addition to the upfront cash from AstraZeneca, Omthera shareholders will receive contingent value rights of up to $4.70 per share, about $120 million, tied to milestones for Omthera’s lead product Epanova. The product, a mixture of polyunsaturated free fatty acids derived from fish oils, namely EHA and DHA, has demonstrated efficacy in Phase III studies for reducing triglyceride levels, as well as non-HDL cholesterol in combination with a statin, in patients with hypertriglyceridemia.

It is an indication for mixed dyslipidemia, a broader patient population, that both AstraZeneca and Amarin hope to pursue, and there, Amarin is ahead. Its product, Vascepa, is already on the market, and the company is awaiting action from FDA on an sNDA for mixed dyslipidemia. But, with a market capitalization of close to $1 billion, Amarin would have been a more expensive takeout.--Jess Merrill
 
ThromboGenics/Eleven Biotherapeutics: Following the recent U.S. and European launches of its first product, the macular adhesion therapy Jetrea (ocriplasmin), Belgian biotech ThromboGenics NV now wants to build on that success by developing a range of ophthalmic products. As part of that strategy, it has licensed technology from U.S. company Eleven Biotherapeutics to design a new protein therapeutic targeted at diabetic eye diseases such as diabetic macular edema.

ThromboGenics has identified a biologic target involved in diabetic eye diseases, and will use Eleven's AMP-Rx protein design technology to create a novel product, the companies announced May 28. Eleven has received an undisclosed upfront payment, and will receive development, regulatory and sales milestones plus royalties on any protein developed using the technology. Eleven argues it has already validated the technology by developing its own lead protein therapeutic, EBI-005. The product is being evaluated in a Phase Ib study for the treatment of dry eye disease.

ThromboGenics is a European biotech success story. In addition to launching Jetrea in the U.S. on its own at the beginning of 2013, it has also received a total of €90 million ($117 million) in milestone payments from ex-U.S. Jetrea licensee Alcon (a division of Novartis AG), after that company gained EU approval and subsequently launched the product in the U.K. and Germany. The biotech expects "significant" royalties from Alcon's net sales of Jetrea.--John Davis

Amgen/Astellas: Amgen Inc. took a second stab at the Japanese market with an alliance and joint venture with Astellas Pharma Inc., five years after selling off its Japanese affiliate and portfolio to Takeda Pharmaceutical Co. Ltd.

The alliance with Astellas, announced May 29, provides Amgen a co-development and co-commercialization partner for five products. The furthest in development are AMG 145, a PCSK9 monoclonal antibody  in global Phase III trials and in Phase II in Japan with a lead indication of hyperlipidemia; and romosozumab, a sclerostin mAb in global Phase III and Phase II/III in Japan for osteoporosis. Anti-HGF mAB rilotumumab is in Phase I in Japan for gastric cancer, and MET inhibitor AMG 337 for gastric cancer and blinatumomab for hematological tumors are still in preclinical.
The alliance for the five products will last through 2032 at the latest. Astellas would pay undisclosed royalties to Amgen for any products that reach market, but the companies will otherwise share development costs and profits 50-50.

Astellas and Amgen also formed a joint venture, Amgen Astellas BioPharma KK, which is structured to allow Amgen to turn the operations into a wholly owned Japanese affiliate as soon as 2020. The JV, 51% owned by Amgen, 49% by Astellas, will open Oct. 1 in Tokyo and will comprise seconded employees from Astellas, transferred employees from Amgen and new hires. However, a source close to Amgen’s previous Japan operations said Amgen may have trouble with recruitment after exiting the country.

At a May 29 press conference in Tokyo, Amgen CEO Robert Bradway said, “This is the alliance we expect to create a platform for Amgen to have its own operations in Japan.”--Dan Poppy

Pfizer CTI/UCSF: Pfizer Inc.’s Centers for Therapeutic Innovation (CTI) has broadened its scope through a deal with the University of California San Francisco that will focus on small molecule research – a first for CTI. Until now, the Pfizer initiative had focused only on biologic projects. Under the new collaboration, CTI will provide UCSF with funding and scientific expertise to support preclinical and clinical development of the compounds. The therapeutic areas and number of compounds included in the collaboration were not disclosed, but UCSF is eligible for milestone payments and royalties should any of the compounds advance through commercialization. CTI is expected to engage some of its other partners in small molecule research.

CTI was set up by Pfizer in late 2010 to allow the Big Pharma to better engage scientists on medical campuses and in research institutions. Pfizer set up hubs in San Francisco, New York, and Boston and has committed hundreds of millions to the projects. CTI is expected to expand to as many as eight cities.
The first initiative under the CTI banner was a collaboration set up between CTI and UCSF in November 2010. At the time, Pfizer committed $85 million of funding over a five-year period.--Lisa Lamotta