Friday, June 19, 2009

Deals of the Week 3G S

Welcome to the 3G S version of Deals of the Week! It's just like previous versions of DOTW except much, much faster, and much, much more powerful. Unlike 3G S versions of other technological marvels that coincidentally became available today, DOTW 3G S doesn't cost extra (still free!) and under most circumstances you won't have to queue to read it. Oh, and subscription not necessary, but oh so convenient.

Just for you, dear readers, we've put together an all-star playlist, where your favorite companies cover your favorite hits! Are we reaching just a little? Yes. Is your normal DOTW blogger busy writing something some of you will actually pay for? Absolutely. Are we in a hurry to get down to the pub Apple Store? mmmmaybe.

1. Zicam marketer Matrixx Initiatives covers Nirvana's "Smells Like Teen Spirit"
2. Sanofi-Aventis covers the Red Hot Chili Peppers' "Give It Away Now"
3. Genzyme covers Neil Young's "The Needle and the Damage Done"
4. Arena Pharma covers Bare Naked Ladies' "If I Had Million Dollars" (100 times)
5. Biogen Idec covers Oasis' "Don't Look Back in Anger" (dedicated to Genentech)

Enough already, lets get to the best app store on these here Internets, it's ...

Johnson & Johnson's Tibotec/TB Alliance: The diversified JNJ may be busy crossing the t's and dotting the i's of its pending acquisition of Cougar Biotechnology, but its not too busy to burnish its image and do some good in the developing world. This week came news that JNJ subsidiary Tibotec was teaming up with the not-for-profit TB alliance to speed the development of TMC207, a novel molecule in Phase II clinical trials that targets a specific energy-storing enzyme that looks to be especially promising in taming multi-drug resistant tuberculosis. (Interim mid-stage data for TMC207 recently published in the New England Journal of Medicine have been generating quite a stir in the ID community: in the placebo-controlled study, the addition of TMC207 to a regimen of five other TB meds cleared traces of the nasty bug in the sputum of 48% of the participants, compared to 9% in patients taking the standard-of-care regimen.) Under the terms of the agreement, Tibotec continues to develop TMC207 for the treatment of multi-drug resistant TB, but the TB Alliance will pitch in when it comes to the drug's development costs. Once the drug is approved, Tibotec promises to establish an access program to ensure the compound reaches the people most in need of the the medicine--those in developing countries. The TB Alliance also has a royalty-free license for world-wide development of TMC207 and will collaborate with Tibotec to develop additional follow-on compounds. The deal recalls last fall's collaboration between Summit and Lilly's TB Drug Discovery Initiative and shows the increasing ground swell of support by Big Pharma for what has long been a neglected disease area. No word on whether Tibotec plans to apply for the FDA's Priority Review Voucher program, a new incentive scheme for drug development in neglected diseases, on the basis of the TMC207 research--Ellen Licking.

Watson/Arrow: On June 17, Watson Pharmaceuticals announced a $1.75 billion cash and stock deal to snap up the privately held generic company Arrow Group, which markets in more than 20 countries. Beyond Arrow's 100+ drugs, Watson gets the company's international sales, legal and regulatory infrastructure. Arrow, founded in 2000, operates as Cobalt Pharmaceuticals in the US and generated $647 million in total revenues last year. Watson execs also believe they’ve gained a long-term investment in generic biologics through Arrow's 36% stake in Eden Biodesign, a biologics CMO. The price of the deal--at about 2.7x 2008 revenue--falls in line with other recent generics deals like Mylan/Merck KGaA and Barr/Pliva; since Watson hasn't had to raise debt to pull it off ($1.05bb in cash and 16.9mm shres of common stock plus $200mm in zero coupon preferred stock redeemable in three years), it can continue to shop for more deals. Our full write up is in "The Pink Sheet" DAILY.--Carlene Olsen

GSK/Dr. Reddy’s: On June 15, GlaxoSmithKline and Indian generics giant Dr. Reddy’s allied to develop and market drugs in emerging markets, including India. GSK gains access to more than 100 branded generics in Dr. Reddy’s portfolio and pipeline for cardiovascular, diabetes, oncology, GI and pain indications. GSK and Dr. Reddy’s will co-promote the drugs in some markets and under only one of the company’s brand names in others. As “The Pink Sheet” DAILY writes, GSK says it is still sorting out “which products will be sold under what brand, in which countries." Generally, though, Dr. Reddy's will manufacture generic drugs, which GSK will then market in certain African, Middle Eastern, Asia Pacific and Latin American countries, focusing on key markets such as Brazil, Mexico, India, China and Turkey and aided by its emerging markets sales force, 11,000 reps strong. The announcement comes on the heels of GSK's deals with Shenzhen and Aspen; since the beginning of the year the pharma has entered into at least four deals that expand its presence in emerging markets. You might even say it has an emerging markets strategy.--Carlene Olsen

Vitae Pharmaceuticals/Boehringer Ingelheim: Vitae says it has extended its cash runway beyond 2010 by agreeing to co-develop BACE inhibitors for Alzheimer’s disease with BI. In what we learned was a highly competitive deal, the biotech gets $42 million upfront in its second alliance with the German pharma; as we noted earlier this week, the pair have been partnered since 2007 to develop 11beta-HSD1 inhibitors for diabetes and other metabolic disorders. The cash will come in handy: Vitae CEO Jeff Hatfield told "The Pink Sheet" DAILY this week that Vitae’s lead renin inhibitor compound VTP-27999--which it recently reacquired from ex-partner GSK--should enter clinical development before the end of 2009, and a $13 million loan secured last October was only going to get the biotech so far. BACE inhibition is a very difficult but very promising avenue of disease-modifying Alzheimer's research; hence such a large upfront payment for a program still in lead optimization--Joe Haas

Adimab/Merck and Adimab/Roche: Yeast-based antibody discovery platform play Adimab announced its first two deals this week, with Merck & Co. and Roche. The companies have been light on specifics, but the deals include upfront payments, preclinical and clinical milestone payments, and commercial milestones and royalties. Adimab thinks its on to a winner with a discovery platform it claims is both faster and better than conventional phage display technologies, and unencumbered by IP cross-licensing. (Of course there are plenty of companies who still dig the phage, for whom phage is the rage: this week Morphosys said that Schering-Plough (still betrothed to Merck) extended its access to Morphosys Hucal Gold library for another year.) Adimab will make antibodies to multiple undisclosed targets for Merck, and one undisclosed oncology target for Roche. What's perhaps more interesting is the biotech's overall deal strategy, which we've discussed here and will dive into deeper in the next issue of START-UP.--Chris Morrison

Covidien/Neuromed and Covidien/Nuvo: This is your medical device company on drugs. OK, to be fair Covidien, the diversified ex-Tyco Healthcare conglomerate, is apparently the largest supplier of controlled pain meds in the US, but it's much better known as a medical device company--devices account for greater than two thirds of its sales and its recent business development activity has been dominated by device acquisitions: VNUS, which closed this week, was the latest and you can read all about it here. So now that you've forgiven us for overlooking Covidien's pain drug franchise, part of its Mallinckrodt unit, on to the news! This week Covidien licensed Nuvo Research Inc.'s two topical formulations of the NSAID diclofenac (the more advanced drug is already under review at FDA, with a PDUFA date in early August; the second is in development). The next day, Covidien bought rights to Neuromed's Exalgo extended-release hydromorphone, a compound Neuromed licensed from JNJ's Alza Corp. in 2007. The drug recently hit its primary endpoint in a Phase III trial and has a PDUFA date in November 2009, though Covidien notes in the release announcing the deal that the class-REMS may slow things up a teensy bit. Both deals include undisclosed up-front payments, milestones and royalties.--Chris Morrison

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