Friday, September 18, 2009

Deals of the Week: Hey Everybody, Let's Get Small!

Steve Martin's not the only one getting small, though we hope the rest of this week's newsmakers aren't getting small while driving. That would be bad, and probably against the law.

So who's shrinking--but not from the DotW spotlight--this week? Elan and Johnson & Johnson got a little smaller to satisfy Elan's Tysabri partner Biogen Idec. Of course this downsizing--$115 million knocked off the price of the companies' once-$1.5 billion deal--is accompanied by J&J forfeiting its right to finance Elan's acquisition of Biogen's half of Tysabri, should Biogen get acquired itself. Small questions? The answers are here.

Meanwhile Arena Pharmaceuticals saw its shares rise on the promise of shrinking waistlines, joining fellow obesity drug hopefuls Vivus and Orexigen with positive Phase III data. We interjected our own little "excuuuuuuuuuuse me" earlier this week but we won't let our small concern spoil the diet-drug party. We still expect deals for these compounds, just, you know, smaller ones.

Of course nobody has out-smalled Eli Lilly this week. The drugmaker said on Monday it was restructuring to the tune of 5,500 fewer jobs to save $1 billion by 2011. The new blueprint lacked much in the way of small print, but we'll have some more details for you in Monday's "The Pink Sheet'"

But not every ambition was small. Omeros and Anthera each announced plans for an IPO--no small feat in today's market--which we suppose makes them the week's Two Wild and Crazy Guys.

Finally--and we're going to blow your mind here if the various late-70s era Steve Martin references haven't already--can you be Big and Small at once? Find out next week as we explore that main theme at our Pharmaceutical Strategic Alliances meeting in New York City. Can't make it to the meeting? Check out the blog and our twitter feeds for regular updates.

Until then, settle in for a set of deals that are definitely not small potatoes. It's ...

ESBATech/Alcon: In what looks like a winner for the Swiss biotech's VC owners, ophthalmology specialist Alcon is buying antibody fragment technology play ESBATech for $150 million--just over twice the value of the cash those VCs ploughed into recapping the company via two Series B raises in 2006/2008. ESBATech's shareholders will also be eligible for a package of CVRs that could total $439 million in R&D milestones, and oh-by-the-way, they also get to keep hold of the ESBATech IP outside the ophthalmic space. Those investors--B round leaders SV Life Sciences, Clarus Ventures, HBM BioVentures and HBM BioCapital, and earlier backers Novartis Bioventures, Bio Medinvest and VI Partners--have spun out Delenex, which will focus on ESBATech's legacy areas of rheumatology and respiratory disease. The sell-and-spin-out strategy has paid off in the past (think NovaCardia/Sequel, Peninsula/Cerexa, etc.), though this may be the first time it has been tried with this kind of platform technology company (or the first time it doesn't involve Domain Associates?). More typically shaving off therapeutic rights to platform technologies is done via the types of strategic alliances we've seen from the likes of Sirna (now part of Merck, of course) in RNAi.

Pieris/Allergan: Which brings us to our next deal, a strategic alliance between Pieris Proteolab and Allergan for ophthalmic uses of the biotech's Anticalin technology. (Anticalins are a new class of biologic drugs based on naturally occuring lipocalin proteins.) Pieris gets $10 million up-front, and although the two companies will work together on optimizing existing molecules and designing new ones, Allergan will pick up the discovery and development tab. Allergan will then have the option--at some unspecified point in the development continuum--to license exclusive worldwide rights to the molecules that come out of the collaboration (did you think we'd make it a week without an option-alliance to write up?). The companies were mum on the rest of the financials, but the Allergan's-paying-for-everything arrangement makes it quite different from the typical risk-sharing nature of most option-alliance deals, suggesting perhaps the terms aren't as sweet on the back-end for Pieris. The deal is the first major collaboration for Pieris in several years, and follows on a 2008 $38mm Series B led by Orbimed Advisors.

BMS/Taisho: Taisho Pharmaceutical, the big dog of the Japanese OTC market, has acquired from Bristol-Myers Squibb Co. the pharma's Asian (but ex-China and ex-Japan) OTC assets. Taisho is also buying BMS's Indonesian infrastructure through the acquisition of BMS's 98% stake in PT Bristol-Myers Squibb Indonesia Tbk. All told the price comes to $310 million, a figure some Japanese analysts considrered too high, report our friends at PharmAsia News. For Taisho the move is part of a long-term policy to expand its OTC presence in Asia, and expand it has: through the deal Taisho is getting trademarks and registrations and IP for a diverse set of self-medication brands in eight Asian markets (Indonesia, the Philippines, Thailand, Malaysia, Singapore, Hong Kong, Taiwan and Macau) and trademarks and patent rights for those products in 12 further countries from Afghanistan to Papua New Guinea. Meanwhile BMS continues down the road of focusing on prescription biopharma, offloading non-core assets as it adds to its string of pearls.

Ambrx/Wyeth: Protein optimization play Ambrx is branching out from its secreted protein focus into antibodies and antibody-toxin conjugates, and has inked a deal with about-to-be-pfizery pharma Wyeth. The worldwide alliance covers three targets; Ambrx gets an undisclosed upfront payment and research funding, payments on preclinical, clinical, regulatory and commercial milestones, and tiered royalties on any sales. Wyeth joins existing Ambrx partners Merck-Serono, Lilly and Merck & Co. in accessing Ambrx's sought-after technologies, ReCode and EuCode. These platforms essentially allow for site-specific integration of Ambrx-made amino acids into various proteins. These amino acids are then conjugated--to PEG, to a toxin, etc.--creating molecules with improved properties or killer payloads. Make sure to check out 'The Pink Sheet' DAILY for the skinny on the new deal.

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