DotW: Pink Is The New Black

It's official. Pink is the new black. Any doubt, look at the week's most depressing news item: the U.S. government's announcement that 651,000 jobs disappeared in February.

These days everyone knows someone touched by the rapidly deteriorating economy. We are all frugalistas (frugalistos?) now.

The blogosphere has errupted with sites outlining helpful hints for the newly unemployed, designed to help curb spending and add meaning when someone's work identity is in flux. One of our favorites: 100 Creative, Painless (and Even Therapeutic) Ways to Downsize Your Life After a Layoff.

Pharma types could learn a lot from the site, which includes the following suggestions: hold a garage sale; consider a smaller house; use less or reuse. In our lexicon that could be reworded to mean monetize unwanted assets (aka outlicense), accept that your company may need to downsize instead of growing larger (the anti-Pfizer strategy made manifest by BMS), jettison R&D (Sanofi and Valeant are the first to admit they might need less internal research), and utilize a stable of technologies to find new uses for old drugs (an homage to the reprofilers!).

Our own personal favorites from the top 100 suggestions:

58. Discover community theater. Pfi-eth, Roche/Genentech, preemption, the hunt for an FDA commish, and the fall-out from Obama's healthcare budget all seem to apply if you are looking for a biopharma-centric spin to performance art.

45. Collect coins, as in make a game of finding coins on dressers, the floor, or the street, collect them, and deposit them in the bank (Roche are you listening? It's one way to find the extra $4 billion you need for your $93-a-share bid for Genentech).

43. Surfing the internet. As long as it includes a visit to IVB and Deals of the Week, of course.


Pfizer/Aurobindo: A year after signing a smaller arrangement with the Indian generics firm, Pfizer signed up again with Aurobindo to sell up to 60 generics, primarily in the U.S. but also in Europe. (We’re not exactly sure what this means for Aurobindo, incidentally — since it also has a growing U.S. presence.) The whole thing is an expansion of Pfizer’s “mature products” strategy — an idea initially articulated as a way of squeezing more profits out of existing drugs largely by selling brands into emerging markets. Such a strategy wouldn’t change the pharma business model fundamentally: Pfizer would still use detail reps to sell brands and the brands, although lots cheaper than they’d be as patented U.S. drugs, would still net some premium. The idea isn’t unique to Pfizer: Sanofi-Aventis acquired Zentiva to sell generics in Eastern Europe, while GlaxoSmithKline teamed up with South African generics company Aspen to sell generics in emerging markets. But Pfizer now is moving wholesale into the U.S. generics business. With the Aurobindo deal, it’ll have approximately 120 generic drugs to sell (injectable and oral) in the U.S. – better than one-third of Teva’s list. Why the relative shift in geographic emphasis? Pfizer’s seen the power of generics to interrupt its own U.S. business (Lipitor U.S. sales fell 12% last year, largely because generic simvastatin has been eating its lunch; even its apparently fast-growing Lyrica has been hobbled by the managed-care driven popularity of its generic predecessor, gabapentin, despite its worse label for pain). And the apparent re-emphasis also may reflect rising pessimism about the health of emerging markets, where the economies have been hurt a lot more than in the U.S by the global crisis. Meanwhile, there’s no question about the health of the U.S. generics market. The problem is that Pfizer now is going directly into competition with companies like Teva, Watson and Mylan, and without an obvious strategic or tactical advantage compared to companies that have been built for the high speeds and narrow margins of the generics world. The generics strategy hasn’t worked wonderfully elsewhere, investors point out — Novartis never has made Sandoz into a top generics performer, despite its size. We see it as further evidence that Pfizer is trying to recreate itself as a truly industrial company, a value stock, with modest if predictable top line growth boosted into less modest bottom line growth by strict limits on the expense line. (You can read more about our thesis in the February issue of IN VIVO.)--Roger Longman.

Pfizer/Bausch & Lomb: But Pfizer's diversification strategy isn't limited to generics. On the same day it announced its deal with Aurobindo, it also announced a U.S. co-promotion tie-up in ophthalmology drugs with privately-held Bausch & Lomb. In an environment in which pharma companies are looking to cut costs and retool selling strategies, the co-promotion offers the opportunity for the two organizations to consolidate their commercial structure without sacrificing breadth and reach. The partnership will market Pfizer’s Xalatan, which tallied total sales of $1.75 billion last year, including $536 million in the U.S., with B&L’s Alrex, Lotemax and Zylet. Pfizer also gets a piece of B&L’s bacterial conjunctivitis candidate Optura, which sailed through an FDA Dermatologic and Ophthalmic Drugs Advisory Committee meeting in December. FDA action on the NDA is expected this quarter--Jessica Merrill.

Vertex/ViroChem: As Vertex anticipates bringing its protease inhibitor for hepatitis C, telaprevir, to market, it expanded its HCV pipeline March 3 with the purchase of privately-held Canadian biotech ViroChem. In the process, the Cambridge, Mass., biotech gained a pair of Phase I polymerase inhibitors. But they didn't come cheap: Vertex reportedly had to beat several competitors for the acquisition, eventually paying $100 up-front and issuing 9.9 million new common shares of its stock, pushing thetotal deal value to nearly $340 million. “It was a really competitive process and there were many large pharma companies that were looking at this with us,” Vertex Chief Commercial Office Kurt Graves told "The Pink Sheet" DAILY. The relationship the two companies built, combined with telaprevir’s lead in the HCV protease inhibitor race, gave Vertex a big advantage, he added. Graves cited several strategic underpinnings for the deal, including the ability of the ViroChem drugs' to enhance the lifecycle of telaprevir-based regimens, establishing the foundation for a franchise of specifically targeted antiviral therapy combinations in HCV that can displace the current standard of care ribavirin and peg-interferon. Of the two ViroChem compounds, Vertex seems most interested in VCH-222, which in a five-patient, three-day trial showed the most substantial viral-load reduction seen so far with an investigational polymerase inhibitor for HCV. Telaprevir and ‘222 are complementary in safety, Vertex says, because they are metabolized differently, and the biotech hopes to begin combination therapy study of the two compounds later this year--Joseph Haas.

Sanofi-Aventis/AEterna-Zentaris: Sanofi-Aventis is hoping to add to its bag of tricks in the U.S. market with a co-development and commercialization deal announced today with AEterna Zentaris. Sanofi gains rights to AEZ’s injectable cetrorelix pamoate, a leutenizing releasing hormone antagonist in Phase III development for benign prostatic hyperplasia. AEZ will receive $30 million up-front and stands to gain up to $135 million in regulatory and commercial milestone payments, plus an escalating double-digit royalty on net U.S. sales; it also will complete the current Phase III program — three Phase III trials involving more than 1,600 patients with symptomatic BPH in Canada, the U.S. and Europe — and handle the NDA submission. Sanofi is responsible for post-marketing studies and AEZ will have access to any data from Phase IIIb and IV clinical trials for use elsewhere, while hanging onto “certain” U.S. co-promotion rights as well. For AEZ, the move provides some additional cash to get cetrorelix across the finish line in BPH. (Cetrorelix acetate is already marketed as Cetrotide by Merck Serono ex-Japan [Shionogi in Japan] to prevent premature ovulation in women undergoing in-vitro fertilization.) The Canadian biotech had sold off non-core assets in 2008 to raise cash to fund the compound’s pivotal BPH program and an earlier-stage oncology candidate, and nearly was down to its last few Loonies when it inked a deal last fall with Cowen Healthcare Royalty Partners bringing in $52.5 million in exchange for AEZ’s royalty income from fertility sales. AEZ shares spiked more than 50 percent on the deal news, but the firm’s market cap remains anemic at about $57 million--Chris Morrison.

Pharmexa/Affitech: Eager not to miss out on the high-value antibody shopping that big pharma have indulged in over the last few years, Norwegian private group Affitech is reverse-merging into Denmark’s listed Pharmexa. The idea is to create a fully-integrated antibody group quickly, combining Affitech’s phage-display-based antibody discovery technology and expertise (similar to that used by CAT, acquired for about $1 billion in 2006 by AstraZeneca) with Pharmexa’s immunology and product-development skills, hitherto focused on vaccines . The new company, to be called Affitech and headquartered at Pharmexa, will be listed on the Nasdaq OMX Copenhagen exchange and owned 70 percent by Affitech shareholders, 30 percent by Pharmexa. Standalone Affitech didn’t have the development capability likely to attract Big Pharma partnerships or acquisitions—they want technology and product candidates. That helps explain why certain antibody companies, including Dyax and Sweden’s BioInvent, haven’t been snapped up: they started product development relatively late. So Affitech needed a quick way to fix the situation—since its shareholders, some of which have been around since 1999, were starting to get itchy for an exit. “Organic growth would have taken too long,” says Affitech’s CEO Martin Welschof, who will become Chief Technology Officer of the new group. He claims the company already is discussing potential partnerships, but not a trade sale — at least, not quite yet--Melanie Senior.

Novartis/Proteon: Anyone following IVB's twitter feed know that corporate venture financings have been prominent news lately. This week came news that the MPM BIO IV NVS Strategic fund, Novartis' corporate venture gambit with MPM Capital, invested in the $38 million Series B financing of Proteon. Similar to other recent MPM/Novartis deals, the financing gives Novartis the option either to buy the Waltham, Mass.-based biotech or acquire a global license to said start-up's lead compound, PRT-201, at the conclusion of the recombinant human elastase's Phase II program. The drug currently is in Phase I/II studies in end-stage renal disease patients undergoing surgery for arteriovenous fistula creation. While specific details of Novartis' option were not disclosed, Proteon said acquisition and regulatory milestones could exceed $550 million. These kinds of option arrangements were tricky to negotiate just a few years ago. When VCs were flush with cash, many thought twice about signing off on a deal that capped the ultimate upside of a portfolio company. With Novartis taking an option on a significant program, what other pharmas would think seriously about acquiring said biotech at a premium? And what if they pharma didn't actually exercise the option? These kinds of agreements didn't protect the start-up in the event of such negative news. But in an environment where cash is king--and cash now is even more important--corporate venture groups looking to broker option-style deals ala Novartis might be gaining more leverage. Certainly this is the second deal in recent months for the MPM/Novartis group. In January, they invested in Peptimmune, with Novartis optioning worldwide development and commercialization rights to PI2301, a Phase Ib multiple sclerosis candidate.

(Image by flickr user my hobo soul used with permission through a creative commons license.)