DOTW: Fireworks

The long holiday weekend is upon us--a time for picnics, parades, and pyrotechnics. But before the industry's diehards decamped to beaches and backyards for obligatory BBQs and beer, a few companies made some fireworks of their own.

Abbott Labs, for instance, announced another $20 million investment in Ibis Biosciences, upping its stake in the company to 18.6%, Ibis parent firm Isis Pharmaceuticals said earlier in the week. Readers may recall that Abbott first inked a deal with Ibis back in January, presumably to beef up its diagnostics unit's ability to sell highly automated systems. Presumably Abbott isn't completely sold on the biotech's complicated technology--it has not, after all, yet purchased the company outright. (For more on Ibis and other players in the hospital infectious disease space, check out this June START-UP feature.)

Newsflash! It's a new day at Celera Diagnostics (seriously!). On July 1, the molecular diagnostics player officially cut ties with Applera Corp. and "emerged as an independent company with highly energized employees and its own Board of Directors, all focused on building a strong future." Not too surprising given Invitrogen's recent take-out of Applied Biosystems, Celera's sister company under the Applera moniker.

Not to be outdone, the FDA's Endocrine & Metabolic Drugs Advisory Committee also launched some rockets, but they aren't captivating the industry. On July 2, regulatory advisors voted 14-2 that all new diabetes drugs should undergo longer studies to ensure they don't increase risks of heart problems. benefit. According to panel member and physician Jessica W. Henderson "Showing cardiovascular benefit would be nice to know. But ruling out cardiovascular risk is a need-to-know." The news has already proved troublesome for both Amylin and Novo Nordisk. The share prices of both companies unsurprisingly dropped on the news.

And now a few sparklers to get your weekend started off right...

Shire/Jerini: This week’s late entry into DOTW is an IN VIVO Blog nominee for the "How to Bury Interesting Deal News Immediately Prior to a Holiday Weekend Award". On Thursday morning Shire announced its €328 million acquisition of the German biotech Jerini AG. The deal is certainly creating some fireworks: Price-wise, it’s a doozy. (As loyal subjects of King George, er...sorry, Queen Elizabeth, perhaps Shire didn't recognize the unfortuitous timing of the announcement. Our country's own birthday party--and the hope of alcohol--allows us to overlook such a blatant example of nationalism in the spirit of transatlantic unity. Analysis forthwith.)

Jerini had been for sale for some time—Reuters reported a month ago that the biotech had retained Credit Suisse to explore strategic alternatives, which predictably boosted its share price. But the eventual takeout price, €6.25 per share, is still a significant jump over Jerini’s close yesterday of €3.65, and a 199% premium over the stock’s average price in the past three months. The deal gets Shire worldwide rights to Jerini’s orphan hereditary angioedema product Firazyr (icatibant), a peptidomimetic bradykinin B2 receptor antagonist, which should be launched in Europe later this year. Approvals elsewhere around the globe, including in the US where the drug has hit a regulatory hurdle, are further behind. Shire CEO Angus Russell said on a conference call this morning that non-core assets, such as Jerini’s ophthalmology business, could be spun out or sold.

Icatibant is an unlikely deal driver at least in the sense that Jerini had already sold off rights to the product in the US, in a November 2005 pact with Kos Pharmaceuticals. And when Abbott bought Kos in late 2006, a subsequent portfolio review determined icatibant wasn’t a good fit; the candidate was returned to Jerini in September 2007. Adding injury to insult, earlier this year FDA slapped the drug candidate with a Not Approvable Letter, prompting the company’s sale exploration. Meanwhile the well-documented Genzymification of Shire continues, and clearly the specialty pharma feels it can help reverse the fortunes of icatibant in the US.

AstraZeneca/Cubist: Cubist, with extra room in its anti-infectives product bag, has taken on AstraZeneca’s broad spectrum Merrem IV (meropenem for injection) antibiotic in the US, the companies said Wednesday. AZ’s 2007 sales of the drug were nearly $150 million. The Big Pharma will continue to provide marketing support for the drug while enlisting Cubist to boost sales. Cubist already markets Cubicin, an IV antibiotic for gram-positive infections, with its specialist acute care sales force. Financial terms of the deal were mostly undisclosed, other than Cubist will see a “baseline” of $20 million in annual revenue adjustable upward depending on Merrem sales.

Bayer/Maxygen: Also Wednesday, Maxygen announced some welcome news. The Redwood City, CA biotech is selling its hemophilia treatment program to Bayer for $90 million, plus up to $30 million in future milestone payments. The upfront payment is much needed money in Maxygen's bank account and totals more than the company's revenue for the last several years combined. Michael Kind, an analyst with Rodman and Renshaw called the deal "substantial" in a note to investors, considering the bioech's market cap was just over $130 million. For its largesse, Bayer gains access to the biotech's lead drug candidate, MAXY-VII, a next generation Factor VIIa protein for hemophilia widely expected to move to early stage clinical trials in the third quarter of 2008. Bayer, of course, is no stranger to the hemophilia space. It already markets the Factor VIII product, Kogenate. Still the move comes as competition increases in the hemophilia treatment space, likely driven by pharma's desires to deepen its exposure to so-called specialty areas. In February, Wyeth won FDA approval for Xyntha, its own recombinant Factor VIII product; in May, Novo Nordisk also got a thumb's up from regulators for its NovoSeven RT, a new formulation of Factor VIIa protein that can be stored at room temperature for up to two years.

Pfizer/RaQualia and Pfizer/NovaMed Pharmaceuticals: Pfizer made big news in Asia this week, announcing two different deals that suggest change is afoot at the beleaguered giant. As we wrote in detail here, the pharma announced it will spin off some of its Nagoya, Japan research site into a venture-backed start-up, called RaQualia, seeding the 70-person company with with six drug discovery programs, six development programs and three products approved in the US -- Geodon, Zeven and Eraxis. In addition, the company also announced a tie-up with NovaMed Pharmaceuticals, a start-up with operations in both the US and China that has become expert in China's byzantine pharmaceutical sales and distribution network. Under the agreement, which has already come into force, NovaMed will serve as the drug giant's sole distribution and promotion partner throughout mainland China for six of its oncology products--Adriamycin, Daunoblastina, Leucovorin, Methotrexate, Estracyt and Farlutal. The deal is the first of its kind for Pfizer China's oncology portfolio. (Back in September 2007, NovaMed inked a similar deal with Baxter China for three of its oncology products--Holoxan, Mesna and Endoxan.) For more on NovaMed and its strategy, check out this START-UP feature from February.

ThermoFisher/Open Biosystems: Along with induced pluripotent stem cells and genome-wide association studies, RNA interference got top billing in a gee-whiz article about transformative biotechnologies in the Financial Times on Wednesday. The behemoth in research grade instrumentation and analytics, ThermoFisher Scientific, certainly believes so. On Tuesday July 1, the company announced it was acquiring Open Biosystems, which makes a variety of molecular tools for the research market, including analytics for RNAi. ThermoFisher didn’t disclose how much it paid to acquire Open Biosystems, but tools based companies have been commanding a healthy premium as bigger companies race to lock up assets, especially in areas related to the lucrative molecular diagnostics arena. (Recall that Invitrogen spent nearly $7 billion for Applied Biosystems; Hologic ponied up more than half a billion for Third Wave; and Gen-Probe launched a hostile bid for Danish player Innogenetics. And that was just June.) The biobucks were probably quite a bit less for privately held, Huntsville, Alabama-based Open Biosystems, which had just $14 million in revenue last year. Open Biosystems developed its genomic tool kit through a collaboration with researchers at Cold Spring Harbor Labs and Harvard University, and prides itself on a business model built "on a collaborative spirit...inspired by the success of the open source movement in software." It's likely that openness will disappear given that the company will immediately be folded into Thermo Fisher’s Analytical Technologies business unit.

P&G/ARYx: Burying bad news just before the holiday weekend, ARYx revealed late Wednesday afternoon that its pact with P&G had come to an abrupt end. P&G utilized a one-time thirty day cancellation option to end the collaboration, which covered the late stage development and commercialization of that biotech's ATI-7505, currently in Phase II trials for chronic constipation and functional dyspepsia. Under the terms of the intial 2006 tie-up, ARYx received an up-front of $25 millon and development, regulatory, and commercialization milestones of up to $391 million. But one of the stipulations of the deal was that the ARYx had to complete a Thorough QT (TQT) study showing that ATI-7505 didn't cause the same heart rhythm irregularities that forced Janssen Pharmaceutica to pull its blockbuster 5HT4 agonist, Propulsid, back in 2000. ARYx's publication of it TQT results, which also came yesterday, would have triggered a Tier 1, or highest, milestone payment from P&G based on the original deal terms. Despite the fact that ARYx's TQT study met its primary endpoints, P&G decided to exercise its get-out clause and returned all rights to the drug to the biotech. Dr. Paul Goddard, ARYx's CEO, remained stoic in face of adversity, promising investors that the drug will move forward into late-stage development once it's in the hands of a new partner. "This decision by P&G does not in any way diminish our confidence in ATI-7505," he said in a press release.

(DOTW is a team effort. This week's write-up includes contributions from Chris Morrison and Roger Longman.)

(Picture courtesy of Flickr user Barry Yanowitz through a creative commons license.)