Friday, January 18, 2008

Deals of the Week: You Can't Always Get What You Want

It's been a busy--and, for some, disheartening--week in biopharma land. Just three days after researchers disclosed that Vytorin, the highly touted cholesterol drug that combines Schering's Zetia and Merck's Zocor, is no more effective at preventing heart disease than Zocor alone, came the first class action law-suit. David Rheingold, the attorney in the case, filed the federal suit on behalf of his momma. (What a good son.)

The Vytorin kerfluffle aside, Novo Nordisk announced it was shelving its AERx inhaled insulin drug while NitroMed announced it would no longer provide sales and marketing for BiDil, the first drug approved for use in a specific racial group. As part of its retrenching, the company laid-off 70 of its 90 employees and hung out a for sale sign, hiring Cowen and Company to "explore strategic options."

NitroMed wasn't the only company to announce it was "restructuring". So did Novartis, which took a $444 million charge to pay for a program that will cut thousands of jobs. In addition, the company announced that its twice-delayed diabetes treatment, the DPP-IV inhibitor Galvus, may never make it to the US market at all. (The drug was approved by the EU back in September.)

All of which reminded this IN VIVO blogger of that classic Rolling Stones tune "You Can't Always Get What You Want." (You know what comes next.)

Pfizer/Scil Technology: Another week, another Pfizer deal. This blogger admits she was nonplussed upon reading the news release. Pfizer and ... Scil? A German tissue regeneration player? But yes, devoted readers, Pfizer has once again demonstrated its passion for biotech products, signing a $250 million deal to in-license world-wide rights to Scil's osteoarthritis therapy, CD-RAP, to regenerate tissue in aging joints. (Hey, it wasn't an acquisition.) The companies didn't break out how the $250 million in potential rewards will be split among up-front fees and milestone payments. But Ed Harrigan, Pfizer's SVP of worldwide business development, did say this in a news release:"This partnership reflects Pfizer's on-going commitment to pursue the best science anywhere on the globe and secure novel technologies and products that will complement our existing research programs." (We're grateful to Ed Harrigan and his team--their biologics focused deal-making continues to make us look smart.)

Alfacell/ Strativa Pharmaceuticals: Alfacell licensed its Phase III cancer therapy, Onconase, to Strative Pharmaceuticals for $5 million up-front and up to $225 million in cash milestones. Under the terms of the agreement, Strativa has exclusive marketing, sales and distribution rights to Onconase for the treatment of cancer in the U.S. and its territories. Alfacell, meanwhile, retains the rights for product manufacturing, clinical development and obtaining regulatory approvals. The drug, which is a natural protein isolated from the leopard frog, was developed using Alfacell's ribonuclease (RNase) technology for the treatment of inoperable malignant mesothelioma, a rare cancer affecting the lungs and usually associated with exposure to asbestos. Though the exact mechanism of action is unclear, the drug appears to selectively target diseased cells by triggering apoptosis. Onconase has been granted orphan drug status as well as fast-track development status by the FDA for the treatment of malignant mesothelioma.

Warburg Pincus/ Lifecore Biomedical: Warburg Pincus, the global private equity player, agreed to buy Lifecore Biomedical for $17 a share, in an all-cash deal worth roughly $239 million. (That's a 30% premium to Lifecore's average share price for the past 30 trading days in case you were wondering.) "As a private company, Lifecore will have greater flexibility to focus on its long-term strategic direction. Warburg Pincus and its affiliates have confidence in Lifecore’s future and will support achieving our long-term goals,” said Dennis Allingham, Lifecore's President and CEO in this release. We admit that Lifecore's profile--it's mostly a dental and OEM supplier--makes it the kind of device company to which we don't typically devote a lot of ink. It's also true that $239 million is small potatoes in the PE world. (Just a few months back TPG Biotech ponied up $1.3 billion for the Canadian Axcan Pharma and its portfolio of treatments for gastrointestinal disorders, for instance.) But Warburg Pincus's involvement has us intrigued. And, it's in keeping with the deeper entwining of biopharma and PE as the credit crunch halts mega-deals in other industries.

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