Friday, March 07, 2008

Deals of the Week: Shiny Happy People

It's been a tough week in pharma land--not that you'd necessarily know it from the press releases. Canadian-based CV play Medicure Inc. announced lay-offs of 50 employees and full-time consultants as part of a "corporate restructuring". This drastic measure--and more cuts seem in the offing based on the press release--came after the company's phase III compound, MC-1 failed to meet its primary endpoint in patients receiving coronary artery bypass graft surgery. Meanwhile, PDL, which put itself up for sale last fall after investors dissed the company's financial performance, announced it was taking itself off the market. It's another high-profile failure for activist shareholders, but at best, a pyrrhic victory for PDL. Despite the recent sale of half a billion dollars worth of assets, the company will axe another 260 employees--that's on top of the 320 lay-offs announced previously. To woo back investors, the company is considering giving shareholders at least 50% of future royalties coming from currently marketed products. That's a nice bone to throw to investors, but the company might be better off reinvesting that money into its pipeline, which includes a Phase II antibody to treat multiple sclerosis that is partnered with BiogenIdec.

And then there's Pfizer. It's never a good sign when a company's stock price comes close to its 52-week-low the same day that corporate bigwigs give their spiel to industry analysts. But the shiny, happy people of Pfizer stayed up-beat in a command performance that included these memorable phrases: "invest to win"; "pain is the hidden gem in our portfolio"; and "our DNA has changed." And who could forget"LOE"? (That's code for loss of exclusivity NOT loss of Exubera.) In addition to providing analysts with a crystal-clear picture of what their $8 billion R&D budget has bought them, company execs promised 15-20 Phase III starts by the end of 2009 and the same number of regulatory approvals between 2010 and 2012. Too bad, as one industry watcher noted to this IN VIVO blogger, that the company will need 11 new products each averaging sales of $750 million to replace Lipitor when it goes off patent. Respectfully, we'd like to suggest a more approrpiate acronym to the good folks at Pfizer: LOL. For loss of Lipitor, of course. (What? You thought I meant something else?)

And now it's time for the acronym we all know you've been waiting for: DOTW. As in...

Pfizer/ Serenex: Financials for Pfizer's acquisition of Serenex haven't been disclosed, and the deal wasn't mentioned except in passing during the Big Pharma's Big Show this week. But the deal underscores the increasing attention being paid to inhibitors of Hsp90, a chaperone protein that helps a variety of client proteins--many of which are implicated in various cancer signalling pathways--to fold properly. Beyond Serenex's lead SNX-5422 Phase I (oral) and preclinical (IV) programs, Pfizer also gains access to Serenex's Hsp90 inhibitor compound library and screening platform. Since you're asking, we'd ballpark the deal in the same range as Biogen Idec's 2006 acquisition of another Hsp90 player, Conforma Therapeutics, which cost the big biotech $150 million upfront and $100 million in potential earnouts (the Serenex deal, we're told, is also structured with an upfront-plus-earnouts). What Pfizer isn't buying is Serenex's in-licensed lead compound, SNX-1012, a Phase II candidate for oral mucositis. Serenex investors, which have poured $81 million into the comany since its 2003 inception, will hang onto that asset and continue to fund its development. Look for more on this deal and the Hsp90 inhibitor landscape in the next IN VIVO.

Endo/Novartis: Endo Pharmaceuticals announced Tuesday that it has licensed US marketing rights to Novartis's topical pain gel Voltaren. The spec pharma, which will pay Novartis $85 million plus an additional $25 million in milestones as part of the 5-year agreement, plans to commercialize the topical NSAID without delay according to the press release. Such news is almost certainly music to the ears of DE Shaw Valence Partners, which currently holds nearly 10% of Endo's outstanding shares. As we wrote here last week, DE Shaw complained in a letter to Endo's board that the group is "overly focused on the need to complete a large acquisition or in-licensing deal," rather than focusing on strengthening its existing pain businesses. Certainly this latest deal suggests that the newly restructured management team at Endo is focused on its core-strength. But Endo will need to take immediate steps to capitalize on this latest transaction. Peak sales for Voltaren are at most $250 to $300 million and competition in the topical NSAID space is heating up. Alpharma Inc., another specialty pharma, announced US approval of its diclofenac patch in late January. And last October, the same company licensed the US rights to a topical NSAID gel in Phase III development from IDEA AG. Still despite the positive news this week, it's hard to forget that the company is lacking a CEO--Peter Lankau's departure was official as of last Saturday--nor that the spec pharma remains at a strategic crossroads that could eventually invovle the sale of the company. (Hey, we know a big pharma that's hip to pain...)

Morphotek/ HMI: Morphotek, a subsidiary of Eisai, gets our award for non-event press release of the week. On Thursday the company announced it was adding to its therapeutic mab pipeline through an exclusive arrangement with Human Monoclonals International. The deal gives Morphotek rights to an IgM antibody specific to a cancer cell surface antigen. Deal terms were not disclosed, but Morphotek did note in its release that it will use its "antibody optimization and development expertise [to] enable the further development of this promising antobody and clinical proof-of-concept studies in more types of cancer." Phew. For a minute we were worried that it might be limited just to metastatic melanoma, where exploratory Phase I studies have been reported. No doubt, dear reader, you'll find it reassurring (as we did) that the in-licensed antibody was discovered through years of basic research focused on tumor cell biology and human cancer. many graduate students and post docs slaved over this project?

Amgen/ Kyowa Hakko: Amgen promised Thursday to pay Kyowa Hakko, the Tokyo-based drug unit of Kirin Holdings Co., as much as $520 million for rights to an experimental inflammation and cancer drug . The deal included a monster up-front--$100 million--for rights to the humanized monoclonal antibody known as KW-0761, which is currently in Phase I trials for lymphoma. Despite the big price tag, the current deal gives Amgen rights only for non-oncology indications. Kyowa will continue to develop KW-0761 as a cancer therapeutic until the compound completes Phase IIa trials. At that time, Amgen may elect to expand its current license to include oncology. Still, it will have to pay for the privilege, reimbursing Kyowa for the related development costs as well as assuming additional development and commercialization costs. The deal comes as much needed good news for Kyowa: just last week, the FDA issued a non-approvable letter for the company's Parkinson's disease treatment, istradefylline (KW-6002. It's also validation for Kyowa's US-based subsidiary, BioWa, which engineered the anti-CCR4 antibody using its Potelligent technology. For Amgen, meanwhile, it's a big money attempt to shore up a pipeline that's been hit hard in the wake of the Epogen and Aranesp scandals. Moreover, it shows the California biotech's commitment to Japan--at least as a source of potential new medicines if not as a market for those drugs. Recall that Amgen recently signed a monster deal with Takeda, in which the Japanese drug maker paid the company $200 million for the Japanese rights to 12 pipeline products, plus agreed to buy Amgen's Japanese subsidiary for an undisclosed sum. At the time we commented that perhaps Amgen was cashing out of Japan. For those keeping track, Amgen won't be marketing KW-0761 in Japan either--Amgen has worldwide rights to the compound except in Japan, South Korea, China, and Taiwan.

And just in case you need a 90s flashback, check out this video from R.E.M. in their ironic glory.

Photo courtesy of flickr user Donna Cymek through a creative commons license.

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