Friday, June 20, 2008

DotW: Easy Livin'

Today marks the official start of summer (at least for those of us in the Northern climes). With another BIO fest put to bed, pharma and biotech execs--and, according to the Boston Globe, politocos--can get down to the serious business of the season: BBQs and beer. Certainly the news flow this week--from the partying in San Diego to the resolution of several long-standing disputes--contributed to the sense of easy living.

Biogen Idec employees and shareholders have reason to crack open a cold one: Carl Icahn has officially called off his efforts to install three dissident nominees to the company’s board, the Associated Press reports. Could this really be the final chapter in what the WSJ calls Carl's colorful efforts to force a sale of Biogen? (Will Carl change his name to Icahnt as a result?)

Meantime, Pfizer execs can breathe a little easier now that they've reached a settlement with the Indian drug manufacturer Ranbaxy that will delay the introduction of generic Lipitor by about 20 months. The settlement guarantees Pfizer an additional $10 billion to $15 billion in brand-name Lipitor revenue from March 2010 through November 2011. BNet's David Hamilton notes the agreement is definitely good for Pfizer, allowing the company to quash ugly rumors about the disappearance of its dividend--at least for now.

We're happy to report that J&J and The Red Cross have also resolved their differences: the two giants reached a deal that will allow both to use the legendary emblem they've shared for over 100 years.

No easy times at Schering-Plough, but that hasn't stopped CEO Fred Hassan from adopting a zen-like attitude about his company's slumping share price--down more than 25% this year--as Marshall Goldsmith tells in this softball Business Week Q&A. You'll be happy to know that when times get tough, Hassan embraces his "emotional intelligence" in order to "empathize with others so you can earn their trust." According to Hassan, "The key is confronting the reality you face and dealing with it with courage and tenacity." (So that's the secret. I thought it was cheap stock options.)

Take a tip from Fred and celebrate the good life with another edition of...
Sanofi Aventis/Zentiva: Another week, another pharma makes a bid for a generics company. Last week, the big news was Daiichi's bold purchase of a controlling interest in Ranbaxy. This week news surfaced that Sanofi Aventis offered $2.6 billion to purchase the outstanding shares of Zentiva, a Czech generics outfit. Like last week's Daiichi/Ranbaxy tie-up (now unlikely to be scuppered by a competing bid from Pfizer), this deal appears to be about Sanofi's need to diversify beyond its traditional pharmaceutical business. It's also about tapping into a potentially valuable emerging middle class market--in this case, Eastern Europe. Sanofi, which already owned about 25% of Zentiva, may have been spurred to action by the Czech finance group PPF, which offered to buy the generics maker in early May. (Sanofi's bid represents an 11% premium to that of PPF.) But it's not hard to see why owning a bigger stake of Zentiva might be good for the French pharma, which faces patent expiries on two blockbusters, Plavix and Lovenox. If successful, Bloomberg News says Sanofi would add more than 180 generic medicines to its portfolio, including copies of Bristol-Myers Squibb’s Glucophage and Merck’s Zocor, at a time when the market for generics is growing at twice the rate of brand-name medicines. Still, it's clear there are two schools of thought when it comes to a diversified business model. Sanofi appears to be following in the footsteps of Daiichi and European rival Novartis, which has seen solid growth from its Sandoz unit. But the growth strategy is completely opposite from the approach taken by Takeda and Bristol, which have shed non-core pharma assets in order to invest in interesting R&D.

Kyowa Hakko/Alnylam: Another week, another Japanese deal. Remember Takeda's big RNAi deal with Alnylam at the end of May? One product not included in the tie-up was the biotech's lead clinical compound, ALN-RSV01, which is currently in Phase II clinical trials for the treatment of respiratory syncytial virus. On Thursday, Alnylam announced it had signed an exclusive alliance to develop and commercialize that drug in Japan and other major Asian markets with Kyowa Hakko. Kyowa will pay $15 million upfront and up to an additional $78 million in development and sales milestone payments for the privilege. It also promised to pay double-digit royalties based on the sales of ALN-RSV01 in this territory. In exchange, Kyowa will also have access to Alnylam's additional downstream RSV-specific RNAi compounds. Importantly, Alnylam retains all development and commercialization rights worldwide excluding Asia. This is Alnylam's third deal in 2008 and shows the company's willingness to aggressively monetize its platform. While this latest deal isn't all that big in bio-bucks, it fulfills the biotech's strategy to find an Asian partner for this particular program, which wasn't included in the larger agreement with Takeda because of that pharma's general lack of interest in the antiviral space. In an interview a few weeks ago, CEO John Maragonore noted the company felt it was better to exclude the RSV program from the Takeda transaction in order to fully maximize its value. "We had the feeling that ALN-RSV01's overall value would get lost in other considerations of the deal,” he said. And now we know what the program is worth--at least to Kyowa Hakko.

Boehringer Ingelheim/Actimis: We distinctly don’t know what Actimis Pharmaceuticals’ Phase I anti-asthma project, AP768, is worth to its kind-a, sort-a acquirer, Boehringer Ingelheim. BI apparently wants the compound but not the rest of Actimis so the little-known San Diego company will spin off the non-AP768 bits into a new company and let BI acquire what’s left. BI will buy Actimis in stages, as AP768 proves itself but the unhelpful PR (which touts this as a $515 million acquisition, granted the compound gets into Phase III) doesn’t give any real sense of the value to Actimis’ investors, the largest of which are Sanderling and Mitsui Venture Partners. Actimis CEO Peter McWilliams wasn’t much more helpful when he spoke with our colleagues at The Pink Sheet Daily. What it does imply, however, is that the VCs, who financed the company’s spin-off from Bayer in 2005, don’t want to put any more money into the compound’s clinical development and are instead willing to limit their upside by letting BI finance the rest of the work through share purchases. Presumably the first slug of money will return at least part of the Sanderling/Mitsui investment and, if the drug continues to perform, subsequent purchases will actually make them some money. And not a bad deal for BI, either. If the drug works, BI will have paid for the entire thing with capitalizable equity (OK, not a big thing for a private company like BI, but an interesting model for any public company looking to replicate the deal) and, presumably, won't owe any royalties on it.

Roche/ThromboGenics & BioInvent: On Wednesday Belgian based ThromboGenics and Swedish antibody maker BioInvent announced they had partnered their jointly developed anticancer monoclonal antibody, TB-403, with Roche. Deal terms for the early stage mAB (it just finished a Phase Ia trial) were generous: the two biotechs will split the $77.4 upfront payment 60/40. The companies could also receive close to $700 in downstream development and commercial milestones if the drug pans out in multiple indications. In addition, Roche has agreed to pick up all additional development costs for TB-403 beyond the clinical trial already in progress and will pay the biotechs to research the possible utility of the antibody in other non-cancer arenas. In return, Roche has worldwide marketing rights to the product, with BioInvent and ThromboGenics retaining co-marketing rights in Belgium, the Netherlands, Luxembourg and the Baltic and Nordic Regions. TB-403 works by inhibiting a specific protein, Placental Growth Factor (PIGF), cutting off blood flow to tumors via a different mechanism than other VEGF inhibitors such as Genentech's Avastin. Indeed, a study published in the November Cell showed that anti-PIGF antibodies appear to starve tumor blood vessels without impacting the vasculature in healthy tissues, a side-effect commonly associated with current tumor-fighting treatments. Thanks to its Genentech ties, Roche is well versed in angiogenesis inhibitors and clearly liked what it saw despite the dearth of human data associated with the antibody. Competition for hot oncology targets is, of course, fierce and that likely drove up the deal value for TB-403.

Medicis/Liposonix: We opine in our June START-UP (which went to press last week) about pre-commercial device companies not standing a snowball’s chance in a sauna of achieving a respectable exit. And this week, Medicis went and proved us wrong, paying $150 million for Liposonix, the developer of an ultrasonic body sculpting technology due to premiere on the US market sometime after 2011. (If the launch goes well, Liposonix investors stand to receive another $150 million in commercial milestone payments.) Liposonix's story echoes that of many medtech/ device companies: VCs are holding such outfits in their portfolios longer than ever--longer even than biopharma investments--and putting up far more dollars than they used to. After almost ten years and $40 million, Accuitive Medical Ventures, The Carlyle Group, Delphi Ventures, Essex Woodlands Health Venture, Pinnacle Ventures, Three Arch Partners, SV Life Sciences, and Versant Ventures must be breathing a sigh of relief that Liposonix finally found just the right mid-sized acquirer. Medicis has a successful wrinkle-reducer, Restylane, and is about to launch Reloxin, its Botox alternative. With almost $465 million in sales in 2007, Medicis certainly has the heft to continue Liposonix’s clinical trials and could be first to market with this long-awaited device that melts isolated pockets of fat away without surgery or actual physical exertion.

(Photo courtesy of Flickr user thovie333 via a creative commons license.)

No comments: