DotW: (Dis)contented

Now is the winter of our discontent. Apologies to both Shakespeare and Steinbeck, but it does seem as though we've all morphed into either Richard the Third or Ethan Allen Hawley. Moreoever, if the market reaction to Obama's housing plan is any guide, he's unlikely to prove the son of York destined to bring us a glorious summer.

As the Dow slid more than 100 points again Friday--down 6% for the week--to 7365.67, the tweets, twitters, and chirps tracking our economic outlook grow more downbeat. According to BNET, pharma cos have only begun to experiment with the new medium--hey, we can't really crow; we just started cheeping--or is that cawing?--yesterday.

News this week suggests at-risk companies in our sector now include Curagen, Vanda, and--here's a surprise--La Jolla Pharmaceuticals, all of which are looking at strategic options.

Even as Genentech continues to fight off Roche's hostile offer, the biotech was forced to acknowledge additional cases of PML associated with Raptiva. The news is unlikely to dampen Roche's desire for Genentech, and Raptiva has never been the central focus for institutional investors. Avastin anyone? But the news does bolster Roche's argument that $112-a-share for the storied South San Francisco outfit might be a wee bit generous. (Meanwhile the Swiss Pharma announced the sale of $16 billion in bonds, indicating it is lining up its financing to proceed with the deal.)

And Astellas can't be feeling too good. Remember how CV Therapeutics told the company to "hit the road jack", then thought better of it, and decided to look at the Japanese pharma's nearly $1 billion acquisition offer? On Feb 20, the Palo Alto, CA-based CVT came back with an official "don't you come back no more". As Astellas mulls its next move, here's one option not on the table: appeaing to CVT's shareholders directly. A standstill agreement included in the licensing agreement Astellas's predecessor Fujisawa inked with CVT means the pharma' can't take such aggressive action.

Traditional venture capital groups continue to wring their hands over "the denominator problem", capital calls, and the need for a plan B. Meantime corporate venture continues to shine, getting in on such deals as this week's Opsana Therapeutics and Genocea Biosciences financings.

If your feeling disgruntled or simply want an excuse to bone up on random literary and pop culture allusions, IVB is here with another edition of...

Medtronic/Ventor: With economic pressures creeping into the medical device market, stalwart competitors with suitable cash reserves are looking to turn economic woes into opportunity, seeking out potential acquisitions in areas that offer the best bang for the buck. Among the handful of segments that fall into this category, transcatheter heart valve replacement and repair, although at a relatively early stage in its evolution, is one that has garnered a great deal of interest. All of the big names in cardiovascular devices—including Edwards Lifesciences, Medtronic , Boston Scientific, Cordis/Johnson & Johnson, and St. Jude Medical--are either participating in this market or have expressed an interest in doing so, either via internal development work or partnering/acquisition. For the two dozen or so privately held emerging competitors working in this arena, the hope is that this interest will eventually translate into an M&A offer with a hefty price tag. For the Israeli company, Ventor Technologies, those hopes may soon become reality. According to recent media reports, Medtronic is close to completing a deal to acquire that privately held start-up for $325 million. Ventor, which is developing a transcatheter aortic valve replacement technology, launched a first-in-human (FIH) trial of its first-generation Embracer device in 2008 and expects to begin a pivotal, multicenter study later this year. Results of the initial FIH study were presented at the 2008 Transcatheter Cardiovascular Therapeutics (TCT) meeting, held last October in Washington DC. Medtronic and Ventor are well known to one another. As one of the firm’s investors, Medtronic reportedly contributed $7.5 million to Ventor’s latest funding round, a private placement completed last May. Since its founding in 2004, Ventor has raised a total of about $20 million, so a $300+ million exit would be an extremely successful outcome by any measure. For Medtronic, the acquisition will serve to help beef up the company’s cardiovascular pipeline and focus the firm more solidly on future high-growth market opportunities. Medtronic’s cardiovascular business has lately been facing competitive pressures in several of its key product lines. The company’s Endeavor cardiac drug-eluting stent (DES) is facing an uphill battle now that it must compete with Abbott Laboratories’ well-regarded Xience V DES (also sold under a private label as Promus by Boston Scientific), which quickly catapulted to a market leading position in the US after its launch last July. Moreover, Medtronic’s implantable cardioverter defibrillator (ICD) business has lost market share in recent quarters (although the firm now says the situation has stabilized), due in large part to lingering effects from the company’s Sprint Fidelis lead recall last year, which gave a boost to ICD competitors Boston Scientific and St. Jude Medical.--Mary Thompson

GPC Biotech/Agennix: This week GPC Biotech—on its knees since prostate cancer candidate satraplatin got knocked down at FDA in late 2007--announced plans to merge with a cash-strapped US counterpart, Agennix. GPC brings money, some people, clinical development experience and a public listing; Agennix brings a Phase III cancer compound, talactoferrin. Dievini Hopp BioTech holding, the investment company of German billionnaire Dietmar Hopp (co-founder of the multinational business software company SAP AG), provides the newco with a crucial cash infusion of €15 million. Thanks to the satraplatin debacle, it's long been expected that GPC would ink some kind of deal. But as we wrote in this blog post, IVB doubts this tie-up is the kind of sale GPC Biotech's CEO Seizinger had in mind. It’s essentially a reverse merger: GPC Biotech will be tipped into a new—as yet unnamed—company, which will also hold all of Agennix’s shares, plus the €15 million cash contribution. GPC’s shareholders will own 39.3% of the new group, Agennix’s 48%, with the Hopp cash representing 12.7%. As one of GPC's largest shareholders--the protagonist of GPC’s February 2006 fundraising, among others--Hopp is calling the shots. That's one reason the newco will be listed on the Frankfurt Stock Exchange not the Nasdaq; GPC is de-listing from that exchange as part of the merger. Top priority for the newco? Development of Agennix's talactoferrin, a recombinant version of human lactoferrin that is delivered orally. Phase II studies of the drug showed compelling results in NSCLC, according to Agennix. By bolting talactoferrin onto GPC's own products, which include a Phase I kinase inhibitor and satraplatin (which still hasn't quite drawn its last breath), the aim is to create a viable pipeline that can be advanced by GPC's biz dev team. Thankfully, the newco has enough cash, courtesy of the Hopps, to last until mid-2010.

Romark/Chugai: Details were decidely lacking when it came to this week's tie-up between privately held Romark Laboratories and Chugai for the Japan-centered development and commercialization of Romark's Phase II hepatitis C compound, nitazoxanide. As part of the deal, Romarks gets an undisclosed upfront payment from Chugai, and stands to receive additional (undisclosed) monies based on certain clinical and regulatory milestones. According to a press release anouncing the news, Romark will also receive (you guessed it, undisclosed) profits from product sales in Japan through a supply agreement, as well as royalties. "Chugai is an excellent partner for us in Japan. They bring substantial expertise in the development and marketing of treatments for chronic hepatitis C exemplified by their experience with Pegasys and Copegus," said Jean-Francois Rossignol, Chairman and CSO of Romark (Whew. I'm glad he disclosed that.) Japan, is of course, a notoriously difficult market to break into. Current wisdom is that effective commercialization of drugs in that country is often best left to Japanese pharmas who better understand the unique regulatory and sales hurdles of the home market. (It's one of the reasons for Affymax's 2006 deal with Takeda for Hematide or Amgen's 2008 monster deal--also with Takeda--involving 13 products.) Moreover, such deals provide US or European based companies with important non-dilutive funding, while doing little to dimish the partnering potential deal for a product in the rest of the world. Back in 2004, Vertex licensed Mitsubishi Japan-only rights to telapravir, receiving $33 million for that particular Phase I product. Could Chugai, part of Roche's hub and spoke model, be paying as dearly for nitazoxanide? It's hard to say (I know, that's never stopped us before.) On the one hand, the drug, which belongs to a new class of broad spectrum antiviral drugs known as thiazolides, has largely been derisked in terms of its side-effects, a sticking point that's buried many a promising hepatitis C drug in the past. Romark already markets the compound as an anti-diarrheal called Alinia. But it's also true that nitazoxanide has a storied past. Romark first licensed the compound to UniMed Pharma back in 1995 in a deal worth about $1 million. Three years later, it repurchased rights to the product after UniMed abandoned development citing changed strategic interests. In addition to hepatitis C, the drug is also being studied as a possible therapy to treat rotavirus and Crohn's disease.

Lilly/NeuroSearch: We aren't sure if NeuroSearch qualifies as the little engine that could or the little engine that can't--recall that earlier this month the Danish firm stopped work on its experimental medicine ABT-894 after a Phase II trial blow-up. Either way, the Danish company keeps doing deals. Who knows? One of these days they'll score. It not clear whether the most recent deal--a collaboration with Eli Lilly on new CNS therapeutics announced Feb. 17--will be the one that scores the big payola. The company's expanded collaboration with GSK announced late January is also in the running for that honor. And like the GSK deal, the tie-up with Lilly is one where NeuroSearch's rewards are primarily all on the come. The three-year drug discovery and development deal calls for NeuroSearch to investigate a defined number of ion channel modulators as potential CNS treatments--specific details concerning the targets were, of course, undisclosed. But IVB does know that NeuroSearch is gaining $5 million up-front for its efforts, plus up to $8 million more in funding and research fees. Lilly has also agreed to take a $17 million equity stake in the company. The deal is structured so that NeuroSearch bears the brunt of the responsibility and cost for the early work, with Lilly having "various options to exercise license rights to individual compounds". Should it exercise the option to a compound, Lilly is responsible for the remaining development and commercialization costs associated with the molecule and will pay NeuroSearch milestone payments per product of up to $320 million plus royalties. covered by the agreement and related intellectual property. For Lilly, the deal is yet another example of how the company hopes to access innovation via external collaborations through its FIPNet strategy, which the company's been discussing now for a few years as a possible means to solving its pipeline gap.

Shire/UCB: Shire is to acquire worldwide rights (ex-US, Canada, and Barbados -- hey, it's a critical market; think how manic your vacation might be otherwise) from UCB to Equasym IR and Equasym XL for treating Attention Deficit Hyperactivity Disorder. The deal hasn’t exactly made a dent in the $1.2 billion cash that Shire generated last year—it will pay just €55 million in cash, which is just over three times the products’ 2008 net sales, plus undisclosed milestones if it meets certain pre-defined sales targets. So it’s a tiny deal, but also a tidy one: UCB divests drugs (and 20 sales personnel) in markets that aren’t core, furthering its focus on "bringing new innovative medicines to people living with severe neurological conditions,” according to Troy Cox, President CNS operations for UCB. (And indeed, the Equasym drugs –which are immediate release and extended release methylphenidate hydrochloride—aren’t innovative, and ADHD doesn’t really classify as a severe neurological condition. That said, UCB’s hanging on to the US market, where the drug is sold as Metadate CD and competes with Ritalin.) But for Shire, the products fit right in. The group is already a leader in the US ADHD market, with sales of almost $1.5 billion last year. Equasym not only fills out the armamentarium, but provides a bridge into Europe, where Shire doesn’t currently sell any ADHD drugs, helping prepare for the European launch, planned for 2011, of long-acting Vyvanse. (Vyvanse, recently approved in the US, is where Shire hopes to transfer most of its Adderall XR patients ahead of generics in April.) And although most of Equasym sales are currently in Europe, buying worldwide ex-US rights provides Shire with a cheap, established treatment that may be more suited to some developing markets. That helps, albeit in a small way, further another of Shire’s goals: to quadruple the share of sales it generates from RoW to 25% by 2015--Melanie Senior.

Image courtesy of flickr user HOBO through a creative commons license.