Deals of the Week: March Madness

It's that time of year again. The nip in the air is almost gone; the birds have returned from their southern haunts, and madness grips the nation as men, women, and children suddenly grapple with one of spring's deepest mysteries: NCAA brackets.

But before you place your bets in the office pool, take a moment to review the madness that has gripped pharma land this week. 2007 may have been a tough year for J&J, but CEO Bill Weldon isn't taking it on the chin--his executive pay package increased 10% to $31.9 million. Merck's CEO, Dick Clark, also earned a hefty 80% raise. Meantime heparin continued to dominate the news (no pictures please), while an FDA advisory committee recommended placing new restrictions on the anemia drugs Epogen, Aranesp, and Procrit. And Pharma's vultures began circling Wyeth after the company and its partner Progenics Pharmaceuticals announced that their intravenous bowel drug, methylnaltrexone, failed in Phase III to improve GI function after surgery. Moreover, Wyeth withdrew its European application for the approval of Pristiq for menopausal hot flashes, citing the need for more data. Thank goodness the FDA approved that same medicine for depression last month; frustrated Wyeth execs might need it. (Alternatively maybe they should indulge in a glass of New Jersey's finest tap water. It could be just as potent.)

Here's a look at this week's mad, mad deals:


EUSA/Cytogen: Two-year old spec pharma EUSA Pharma continued pursuit of its rapid product- and infrastructure-build-up this week with the $22.6 million cash acquisition of US oncology and pain control group Cytogen Corp. EUSA—whose ambition is to become the next Shire—spotted a good moment to buy the ailing US group, whose shares have fallen steadily since early 2007, in part due to poorly-focused management. (See this IN VIVO Blog post for more.) Unlike most other spec pharma, EUSA’s goal has been to establish from the outset a business in Europe and in the US (as its name suggests). A tall order for a start-up, perhaps, but one that allows it to access a wider pool of product opportunities, larger growth potential, and to avoid the trap that many other European spec pharma hopefuls have fallen into: lack of focus. (See this IN VIVO feature for more background.)

AZ/Silence: Whatsamatta, our haiku wasn’t enough? Perhaps we were being unfair to Silence Therapeutics and AstraZeneca, who signed a deal in RNAi delivery yesterday. The financial details remain undisclosed and they probably don’t amount to much up-front anyway, and that’s just fine—the story here is the application of Silence’s proprietary Atuplex RNAi delivery system to the molecules AZ is developing against targets in the two firms’ earlier collaboration, which will probably net Silence some additional cash down the road. In addition, AZ and Silence are combining forces to develop novel delivery technologies in the RNAi space; the resulting delivery tech can then be used independently by either firm.

Lilly/Transition Therapeutics: Late in the week, Lilly announced it was teaming up with Transition Therapeutics to develop and commercialize the biotech's gastrin based therapies, including the lead compound TT-223, which is currently in early Phase II testing. Gastrin based therapies are an emerging class of drugs to treat Type 2 diabetes; preclinical and early human trials have shown they provide sustained improvement in glycemic control. Deal terms were very small, especially considering that TT-223 has already reach proof-of-concept: Transition receives just $7 million in an upfront payment and as much as $130 million in downstream sales and development milestones. No doubt the novelty of the class played some role in the low upfront. It's also possible that new draft guidelines issued in February by the FDA that recommend ratcheting up patient enrollment in Phase III trials of drugs tested for Type 2 diabetes may also have played a role. Many analysts believe those new guidelines were a key reason Lilly scrapped its partnership with Alkermes to develop the Phase III AIR Insulin program.

Reed-Elsevier/Windhover: On Monday, M&A got personal for the IN VIVO Blog. Reed Elsevier, publishers of Cell, Neuron, Lancet, and a host of other mags, acquired Windhover. Undoubtedly there will be synergies (sorry, we had to use the word) with another of Elsevier's offerings: FDC Reports, publishers of The Pink Sheet and The Gray Sheet. (Some mergers really do add value.) Meantime, we writers are muddling through the transition and speculating about the undisclosed deal terms. (Staffers are always the last to know.) If you've got information--or gossip--feel free to drop us a line.

Wyeth/Curis: In addition to dealing with the methylnaltrexone fall-out, Wyeth also announced Monday that it was ending its four-year collaboration with Cambridge biotech Curis Inc. to develop small-molecule treatments to treat stroke and cardiovascular conditions. The original collaboration gave Wyeth exclusive rights to Curis's hedgehog protein agonists for neurological disorders, while Curis kept the rights in other indications, including wound healing, hair growth, and bone disorders. (Hedgehog proteins play an important role in cell physiology and have been an important source of new pharmaceutical targets.) Deal terms at the time were small: Wyeth paid Curis a $3 million licensing fee and agreed to provide research funding for several years. Daniel Passeri, Curis's CEO, remained upbeat, saying "We remain hopeful about the future prospects of the Hedgehog agonist as a potential therapeutic for various diseases and we will seek a new partner to continue advancing this program." Meantime the company is focused on its cancer programs, and announced that collaborator Genentech was taking a hedgehog antagonist molecule into Phase II trials.

(Photo courtesy of Flickr user diz8882002 via a commons license.)