Friday, April 04, 2008

Deals of the Week: Play Ball

Fans of peanuts, popcorn, and Joe Torre bobbleheads unite. America's national pastime is again underway. (Contrary to popular opinion, it's NOT bashing pharma.) On March 30 President Bush threw out the ceremonial pitch at the Washington Nationals' home opener; the pitch wasn't bad but the crowd booed loudly anyway.

Schering Plough's Fred Hassan and Merck's Dick Clark can probably emphasize with POTUS. The stocks of both companies took a beating this week after results of the long-delayed ENHANCE study were finally presented at the ACC meeting in Chicago. Following the presentation of data showing that Vytorin does not lower the risk of heart attack more than generic statins, a panel of four independent cardiologists opined that the results meant the drug should be used less often. And then the gloves came off, as the soap opera escalated into a "he said, he said" affair played out in the blogosphere. (Seems like at least one phama exec could use a review of basic kindergarten etiquette.)

In other news, Pfizer also struck-out, announcing that it's antibody-based drug, tremelimumab did no better than conventional chemotherapy in treating patients with advanced melanoma judged to be surgically incurable. Medarex and its partner Bristol-Myers Squibb also got caught up in the fall-out: some industry experts doubt their ipilimumab, also in Phase III trials, will prove effective given that it has a similar mechanism of action to the Pfizer molecule.

And with that, it's clearly time for the seventh inning stretch...or maybe simply a break from the baseball metaphors.

Takeda/Cell Genesys: Cell Genesys tied up its Phase III GVAX Prostate immunotherapy with Takeda in a deal worth $50 million upfront and an additional $270 million in milestones. In addition, Takeda will pay Cell Genesys tiered, double-digit royalties based on net sales of the GVAX immunotherapy in the US; in all other regions, Cell Genesys will receive flat double-digit royalties. Just as important, going forward Takeda will pay for all external development costs associated with the the immunotherapy's clinical development and will also pick up the tab for all additional development and commercialization costs. For more on why the deal makes financial sense for Cell Genesys check out this post from earlier in the week and our coverage in the April issue of IN VIVO.

Teva/Bentley Pharmaceuticals: The Israeli generics monolith is at it again. This time the acquisitive Teva acquired Bentley Pharmaceuticals, a generic maker with a strong presence in Spain, in a deal worth about $360 million. For Teva, the driving factor behind the deal was its desire to boost its presence in sunny Spain, where generics are one of the fastest growing sectors of that country's pharmaceutical market. Wachovia Capital Markets analyst Michael Tong told Reuters that the deal further reinforces Teva's position to be "best in class" in generics. "The potential growth of generic utilization in international markets represents a key growth driver for generic drug companis in the near to intermediate term," he said. Curious to know more about Bentley? Check out this article from 2003, when we chronicled the New Hampshire-based company's hard-driving strategy to exploit Spain's intellectual property loop-holes.

Paul Capital Healthcare/Plethora Solutions Holdings: Plethora Solutions, which develops drugs to treat various urological conditions, is celebrating a plethora of riches thanks to a financing agreement reached with Paul Capital. As part of a revenue interest financing agreement, Plethora could receive up to $28 million from the international healthcare fund, which has invested more than $900 million in the biopharma and medtech sectors. Upon signing the deal, Plethora will receive $15 million upfront, which the company says it will use to fund late stage trials of two drugs, PSD502 to treat premature ejaculation, an PSD510 to treat erectile dysfunction. In return for Paul Capital's generosity, Plethora has agreed to pay the firm revenue interest generated based on the sales of PSD502, PSD510, and ErecAid. Financings of this kind have become more common in recent months as private equity plays flush with cash look to deploy their riches to needy companies who aren't feeling the love from the public markets.

LATE UPDATE: Plethora isn't the only firm in some cash-for-royalties action this week. Just this morning we noted VIVUS Inc.'s deal with Deerfield Management, coincidentally also in the ED space. Deerfield is providing $30 million for Phase III studies of VIVUS's PDE5 inhibitor avanafil in exchange for $10 million worth of the biotech's stock plus a royalty on sales of the biotech's already marketed ED treatment alprostadil (MUSE) and potential royalties on avanafil. Interestingly, VIVUS has retained the rights to buy back the royalty stream from Deerfield at a set price of $25 million during the first three years of the deal, and $28 million during the fourth year (that option cost Vivus $2 million).

(Image via Wikimedia Commons)

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