Friday, April 17, 2009

DotW: The Yogi Berra Edition

Lest their be any doubts, this blogger is officially ABY* whenever the Yankees take the field. Still it's impossible not to like the endearing Yogi Berra, who blessed the Yankees' new stadium by throwing out the ceremonial first pitch in the April 16 home opener. Who else can state the obvious with such wit?

Take, for instance, the old saw "the future ain't what it used to be." It's a phrase that could be be used to describe a number of happenings in our industry this week, including the scene at Infinity Pharmaceuticals, which suffered a clinical setback with its HSP90 program. Remember that's the compound it took back from AstraZeneca in December because the pharma (theoretically) wasn't interested in such a small market--GIST (gastro-intestinal stromal tumors)--and the evolutionary incompatibility of the AZ/Infinity relationship.

Or perhaps the saying is better applied to the "Rochification" of Genentech. It certainly didn't take long for the long arms of the Swiss pharma to reach California. Hours after David Mott, former MedImmune CEO and general partner at NEA, discussed the challenges of running stand-alone biotechs within pharma at our annual PSO meeting, we saw a changing of the guard at the iconic biotech, with Art Levinson stepping aside as CEO of the company to be replaced by Pascal Soriot, Roche's commercial pharma head.

Another Genentech star, Sue Desmond-Hellman, is also apparently headed for the exit. Like Levinson, who will be serving in an advisory capacity, Desmond-Hellman is distancing herself from day-to-day operations. The changes aren't terribly surprising, but they did come sooner than many expected. leaving the door open to a future sale or other moves.

In the case of Genentech, maybe another Yogi-ism also applies: "it isn't over until it's over". After all, notable scientists such as Marc Tessier-Lavigne and Richard Scheller are sticking around--for now--according to this story in "The Pink Sheet" DAILY.

Undoubtedly execs at Dendreon have embraced the optimism of "it isn't over until it's over" as well. The biotech's share price surged from $7.30 to well over $20 on April 14, when news broke that the Seattle biotech's therapeutic prostate cancer vaccine Provenge "met" its primary endpoint of overall survival. Dendreon investors certainly have strong stomachs--this is not the first time the biotech's share price has swung wildly (at least time movement was in positive territory). Will it plummet in the future? Much depends on the actual data, which won't be released until April 28, and whether or not regulators actually approve the drug. Indeed, it isn't over until it's over.

Alternatively, take the news "with a grin of salt." That's good advice generally and certainly when it comes to speculation about potential M&A activity. Take Actavis, the Iceland generic maker, which has been on the block since January. On Thursday, Reuters reported that a potential sale of the company had been officially halted because of disagreements over price and a dearth of suitors, according to several unnamed sources. An Actavis spokeswoman declined to comment on the auction but said: "All strategic options continue to be reviewed and evaluated". In other words, make sure to have some salt grains handy.

When you see a fork in the road, do you take it? It's certain that "if you don't know where you are going, you will wind up somewhere else". Fortunately IVB brings you a weekly road-map to the industry's deal-making activity...

GlaxoSmithKline/Pfizer: The big deal-making news this week was, of course, the announcement by GSK and Pfizer that they were joining forces to create a new HIV company with 11 marketed assets and another six in the pipeline. “This is an innovative deal and will reenergize Glaxo’s presence in HIV treatments,” said GSK CEO Andrew Witty, who noted the new company will hold a 19% share of the global HIV market. Witty might have put it another way: "We have deep depth." Control of the as yet unnamed newco is in the hands of GSK, which has an 85% stake in the outfit, as well as seven of nine board seats. This pooling of resources is a creative solution to the problem of a weak pipeline, and it offers both big pharmas plenty of potential upside. In Pfizer's case, the drug maker is contributing very little cash while getting a better opportunity to commercialize its CCR5 inhibitor, Selzentry, which has so far has failed to live up to its potential according to analysts. For GSK, the advantages include gaining a much deeper pipeline of drugs while simultaneously avoiding the cost of having to license them from another company. Moreover, by joining forces, Glaxo and Pfizer may eventually find it easier to unlock the value of their existing HIV drugs as well as those that make it out of the lab--provided they can spin off the new company in the process. Indeed that's likely to be the real value of the deal. Analysts note that even when combined, the assets of GSK and Pfizer aren't likely to unseat Gilead as the number 1 player in HIV. And given the absence of Phase III compounds and the odd 85/15 ownership structure--it's been a long time since this blogger's taken math, but isn't a JV usually 50/50?-- what does GSK really stand to gain unless it can bundle the assets up and sell them to some one else? Especially since, as Dow Jones points out, "the combination of the two companies' assets, along with any savings realized, would fetch a price greater than the two franchises sold individually." Of course, when asked about the prospect of a future spin-off, both Pfizer and GSK execs played it cool. “I wouldn’t rule that out. Right now, we’re looking at what is the best way that we can handle the large portfolio we have,” Martin Mackay, who heads Pfizer’s global research and development and is also a board member of the new company, told "The Pink Sheet" DAILY. Witty, meantime, declined to discuss speculation of a spin-off, noting efforts were focused on creating "sustained value". How boring. We think Witty should practice the following Yogi-ism, since interest in the J/V is unlikely to taper anytime soon: "I wish I had an answer to that because I'm tired of answering that question."

Sanofi-Aventis/BiPar: Another week, another Sanofi deal. Only this time we aren't talking about a tie-up between the French pharma and a generics maker in an emerging market. Nope, this week's deal is about accessing hot targets in an equally hot space: poly ADP-ribose polymerase (PARP) inhibitors in oncology. The acquisition, which is expected to close in the second quarter, could be worth up to $500 million in upfront and milestone payments, but the companies are not disclosing specifics. In other words, "a nickel ain't worth a dime anymore." Based in Brisbane, Calif., BiPar's lead candidate is BSI-201, now in Phase II testing for the so-called triple-negative breast cancer,tough-to-treat tumors that are negative for three common biomarkers, including HER2. Interest in BiPar's PARP inhibitor program has been growing steadily. Last fall, the molecule earned a place in the top 10 most partnerable oncology assets at Windhover Information's Therapeutic Area Partnerships conference in Philadelphia. One month later the company reported positive safety and efficacy data for the drug at the San Antonio Breast Cancer Symposium. The safety findings, along with potential application in multiple cancers, helped pave the way for the deal with Sanofi, BiPar board member Wende Hutton, a general partner at Canaan Partners, told "The Pink Sheet" DAILY. It's hard to know based on the biobucks, however, just how good the exit was for Canaan Partners and the other investors in the privately-held BiPar. According to FDC/Windhover's Strategic Transactions database, BiPar has raised over $70 million--including $20 million this past January--since its founding in 2004. As we've reported in the past, structured acquisitions, where the bulk of the return comes only after pre-determined milestones are met, are becoming increasingly common in a buyer's market given the emphasis on a desire to share both financial and development risk. An eventual exit of $500 million for BiPar's investors, which beside Canaan Partners include Domain Associates and Vulcan Capital, fits the on-going trend and means the backers won't have to finance the Phase III trials of BSI-201. And BiPar isn't the kind of biotech Sanofi plans to keep at arms' length. The group will be integrated into Sanofi, with a core development team from the company working from the California base.

Image from flickrer Bari D. used under a creative commons license.

*ABY = Anybody But the Yankees

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