DotW: Singing in the Rain

It's raining cash! Hallelujah, it's raining cash!

Forgive us our exclamatory punctuation, but we had a Gene Kelly moment given the number of financings announced this week. From planned follow-on public offerings by Arena and Xenoport to Jazz's private placement to additional fundraises by start-ups Viamet, Taiwan Liposome, Intellikine, and Zosano, it did seem as if the financial heavens opened, raining manna upon the starving in our industry.

Vertex managed to get in on the action, too announcing this morning its intention to sell the future milestone payments associated with the filing, approval and launch of its first-in-class protease inhibitor telaprevir in Europe? (We're still a bit bemused by the pre-deal press release, but admit to being easily confused.)

In any event, this is the kind of rainy weather designed to put smiles on the faces of biotech CEOs. (A far cry from the kind that had some in the Northeast signing up for DIY ark building classes at the local Home Depot.)

It's also raining positive data--at least for Amgen and Rigel. Amgen's stock tipped up on news that the key to its future, denosumab, appears to be superior to Novartis’ Zometa in a Phase III head-to-head study in breast cancer-linked bone complications. And Rigel is positioning itself for a future edition of DOTW after reports that its oral rheumatoid arthritis drug showed positive results in mid-stage trials. (Amylin also annouced positive trial results for its mid-stage obesity drug, but investors didn't swoon on the news primarily because of the delivery challenges associated with a twice-daily injectable.)

This just in: it's raining approvals too. Regulators approved Lilly/Daiichi's anti-clotting drug prasugrel, which will be marketed (effectively we assume) under the name Effient.

Meantime Big Pharma and Big Biotech must be pleased with the innovator friendly proposal by Ted Kennedy this week for a follow-on biologics pathway that includes 13.5 years of exclusivity (What happened to Piven and 10 years?), while believers in personalized medicine see the positives of Francis Collins as the leader of the National Institutes of Health.

What else happened this week? Just a little write-up we like to call


Merck/Portola: Portola is another company soaking up the cash this week, thanks to its deal with Merck for the Phase II Factor Xa inhibitor betrixaban. According to the terms of the deal, announced July 9, Merck will pay $50 million upfront for betrixaban, plus another $420 million in milestone payments and double-digit royalties. It’s the second major collaboration this year for the privately-held Portola. In February, Novartis paid $75 million upfront for rights to the biotech’s anti-thrombotic elinogrel. As news of the Merck deal and it biobucks surfaced, one of the central questions was whether Merck had gotten a relative steal. Recall that Pfizer paid BMS $250 million upfront for a 50% share of the competing molecule apixaban back in 2007. In fairness to Portola, its molecule is at a much earlier stage of development compared to apixiban. Also Merck is picking up 100% of the development costs of the program (Pfizer is paying 60% of apixaban’s R&D costs, while the two pharmas jointly split profits/losses and worldwide commercialization costs.) That’s a real boon for the biotech, given that Phase III trial costs could easily run to $350 million or more. Portola has an estimated $175 million on its balance sheet after the Merck deal and won’t need to hunt for additional capital anytime soon. But if financing risks are off the table, the company’s venture backers, which include Frazier Healthcare Ventures, Alta Partners, and MPM Capital (among others), are still in the hole and waiting for their exit. (The company has raised an estimated $200 million in venture money and another $20 million in debt since its 2003 founding.) And with the company’s two major programs partnered, the pool of potential acquirers has effectively shrunk to Novartis and Merck, who are now waiting to see how elinogrel and betrixaban pan out in later stage trials. With "two, multi-billion dollar products," Portola could be well-received, but for the foreseeable future, the market is "amazingly challenging," Frazier Healthcare Ventures’s Alan Frazier said in an interview with “The Pink Sheet” DAILY.--Ellen Foster Licking and Emily Hayes

MedImmune/Catalyst: Privately held Catalyst Biosciences remains in the news , announcing its second discovery and preclinical development deal in as many weeks. Hot on the heels of Catalyst’s June 30 tie-up with Wyeth to develop Factor VIIa therapeutics for hemophilia, Catalyst and AstraZeneca's MedImmune are working together on an undisclosed target in the autoimmune and inflammatory disease space, with MedImmune holding an option to expand the work to a second target any time during the deal’s three-year term. Financial terms were not broken out, but Catalyst says it could realize $195 million in upfront licensing fees and milestones during the life of the deal. In addition, MedImmune will fund an undisclosed number of full-time research personnel at Catalyst and will pay royalties to the biotech for any product arising from collaboration that reaches the market. As is typical in these kinds of arrangements, Catalyst will be responsible for discovery and early-stage research, and then turn the molecules over to MedImmune for further development. The deal illustrates AstraZeneca/MedImmune’s desire to expand biologics efforts beyond antibodies. Catalyst, after all, has developed a next generation protein engineering platform to create souped-up proteases called Alterases that are designed to degrade or modulate proteins involved in hemophilia and inflammatory disease. With these two recent tie-ups, Catalyst is likely to remain off the Deals of the Week page for some months to come, unless a significant opportunity arises. "We won't do any small deals at this time because we're full-up, plus we have our own internal programs," Usman said in an interview with "The Pink Sheet" DAILY.--Joseph Haas

iZumi/Pierian: It's also raining stem cell news due to this week’s International Society for Stem Cell Research meeting in Barcelona. An early announcement came from iZumi Bio, which has merged with a still-mostly-conceptual outfit out of Harvard called Pierian to create iPierian. As part of the merger—terms were mostly undisclosed—Pierian backers MPM Capital and FinTech Capital Partners are investing $11.5 million in the new company, Pierian’s founders (Harvard faculty members George Daley, Doug Melton, and Lee Rubin) are joining the company’s SAB along with three other Harvard stem cell scientists, and Corey Goodman (Pfizer’s former BBC chief) will become the combined groups’ chairman. MPM’s Ashley Dombkowski will join the company’s board. The company aims to apply its cellular reprogramming technology to create in vitro models of disease that can be used, as a first step, to discover small molecule treatments for neurodegenerative diseases like spinal muscular atrophy and amyotrophic lateral sclerosis. We’ll have more to say about iPierian’s induced pluripotent stem (iPS) cell technology in the next issue of Start-Up. For now, suffice it to say that between these guys and Fate Therapeutics we might have a new Alnylam/Sirna thing going on in the iPS cell space. --Chris Morrison


Shionogi-Sciele/Victory Pharma: Ugly. In mid-May Shionogi’s Sciele announced it was purchasing the privately-held pain specialist Victory Pharma for $150 million. But on July 10, in a tersely worded press release that was short on details but long on mystery, the two companies announced they were terminating the proposed tie-up. The news is a blow to Victory’s backers—Ampersand and Essex Woodlands—who had committed $45 million to the company back in March. (Essex's cash-on-cash return likely wasn't what it wanted, but as we noted in a previous edition of DOTW, the internal rate of return (3x in just a few months) would have been most impressive. What scuppered the deal isn't clear -- “an unforeseen development that occurred after the agreement was signed,” says the press release. So we'll speculate a bit and hypothesize that changing views at the FDA about the potential dangers of acetaminophen and NSAIDs had something to with the deal's collapse. Victory markets Naprelan, the only branded, once-daily sustained release formulation of the NSAID naproxen. And it's in the final stages of securing approval for a new tablet strength version of Naprelan, with an anti-nausea medicine in pivotal trials. In addition to Naprelan, Victory also markets Fexmid and two acetaminophen containing products, Dolgic for tension headaches and Xodol, a combination hydrocodone/acetaminophen product for pain. On June 30, an FDA advisory committee narrowly ruled to recommend the removal of acetaminophen from combination prescription and OTC products. Both Dolgic and Xodol would appear to be affected by the new recommendations, but the fall-out in terms of market potential is likely worse for Xodol since the potential for abuse of the hydrocodone-only containing drug means it will be subject to stricter prescribing limits and potentially a REMS under the new guidelines. And the rug might be pulled out from under Naprelan as well. FDA continues to refer to the "hazards of NSAID products" and recently started requiring REMS for new brands of diclofenac products.--EFL

AstraZeneca/MAP Pharmaceuticals: Poor Map Pharmaceuticals. Shares of the biotech fell 16% and then rebounded Thursday July 9, after partner AstraZeneca announced it was pulling out of their collaboration on the planned development of the pediatric asthma drug budesonide. Recall that AZ and MAP are still newlyweds. Thinking the MAP drug could extend its own budesonide franchise, Pulmicort Respules, the Big Pharma ponied up $40 million upfront and promised biobucks in the $750 million range in late December 2008. The end of the deal isn’t all that surprising: in February, MAP revealed the drug had failed to meet the main goals of a late-stage trial in children with mild asthma. But the obits for the drug—if not for MAP—were swift. “The drug is essentially dead,” Wedbush Morgan Securities analyst Liana Moussatos told Reuters. Analysts like Moussatos expect the news won’t permanently cripple Map, mostly because of promising results associated with the biotech’s orally inhaled migraine drug Levadex, which is in late stage clinical trials. That medicine is still unpartnered and the company has been careful not to speak publicly about any potential future deal other than to say there has been “strong interest from people in the migraine area.” But with an estimated $67 million in cash and a quarterly burn rate of around $16 million, there is pressure on Map to ink a deal for the migraine product sooner rather than later.--EFL