Friday, December 04, 2009

DotW: Party Crashers

The IN VIVO Blog was in Washington, D.C. this week and stood, as giddy as school kids, at the fence to watch the White House glow in the mid-Atlantic night just across the North Lawn. As we ogled the staff coming and going through the checkpoints (Ron--I mean Rahm--is that you?), we pondered the question of access. Who's got it? How do we get it? What do we do with it once we have it? In this town, a lot of people spend a lot of time wondering. You know: Who's in, who's out, who, ahem, left their invitations in the car.

If you're going to party-crash, you might as well go for the most exclusive club imaginable. It's a hell of a lot better than crashing with one of the most exclusive clubs imaginable. In your car. Sticking out the window. If you know what we mean. Go ahead, be a Tiger.

We poke fun, perhaps too easily, but you can be sure every pharma corp-comm exec double-checked last weekend that Tiger Woods wasn't a spokesman. (He isn't, as far as we can tell.) Domestic troubles, car wrecks, and....erectile dysfunction! Have fun with that one, folks.

Pfizer knows what we're talking about. After all, it's had baseball player and steroid user Rafael Palmeiro touting Viagra, and Robert Jarvik, non-practicing doctor who didn't even row his own boat, pimping Lipitor. So it's no surprise that on the heels of Pfizer's latest mega-blunder, its $2.3 billion fine for illegal marketing practices, CEO Jeff Kindler stuffed a couple meas in his culpa for his "Kindler, Gentler" tour this week. He praised health care reform -- at least the Senate version -- and promised Pfizer would stop helping doctors improve their golf games. (He said nothing, however, about helping golfers improve their driving records.)

As our colleagues reminded us at the FDA/CMS Summit this week, so much of health care reform revolves around getting in so you don't get left out. That's why Pfizer and the pharma industry pledged this summer to kick in $80 billion toward the reform bill. When centers of power shift, all kinds of people start to scramble. Which, wouldn't you know, brings us to...

Pfizer/Protalix: There was no greater example this week of shifting power centers than Pfizer's Dec. 1 deal with Protalix. By buying global rights to the enzyme replacement therapy taliglucerase for the treatment of Gaucher disease, Pfizer becomes the latest big pharma to crash the orphan-drug club. Because Israeli firm Protalix uses a plant-cell expressed form of the missing enzyme glucocerebrosidase, analysts speculate Pfizer could sell it at a 20 to 25% discount to Genzyme's mammalian-cell expressed Cerezyme, currently the only drug approved to treat Gaucher's. (How's that for exclusive?) The deal pays Protalix $60 million upfront for worldwide rights except in Israel, with milestones up to $55 million. Pfizer and Protalix will split revenues and expenses 60/40. The deal also plays into two of the company’s strategies, first to expand into niche areas that address serious unmet medical needs and secondly, to move into biosimilars. Pfizer will fold the drug into its Established Products Business Unit, the operation charged with maximizing sales of Pfizer’s mature brands. That’s one hint Pfizer views taliglucerase as something of a biosimilar opportunity, despite the fact that it is a new drug. Protalix is currently finalizing a rolling NDA submission for taliglucerase to FDA. Having an experienced marketer like Pfizer move into Gaucher disease is bad news for Genzyme, which is facing manufacturing problems that have led to a supply shortage of Cerezyme. -- Jessica Merrill

AstraZeneca/Targacept: With one successful partnership under their belts, AZ and Targacept are trying again, with the Big Pharma paying $200 million upfront for global co-development and commercialization rights to TC-5214, an antidepressant that recently completed Phase IIb. Yes, that's $200 million upfront. In the past two years, only the Pfizer/Medivation alliance for Alzheimer’s disease candidate Dimebon has brought a bigger upfront payment for a neuropsychiatric drug -- $225 million. Beyond the upfront, the deal also could provide up to $1.04 billion for development, regulatory and sales milestones. In addition, Winston-Salem, N.C.-based Targacept would receive stepped up double-digit royalties on worldwide sales should ‘5214 reach the market. Despite elbowing its way into the $200-million-upfront party, Targacept saw its stock price fall more than 6 percent the day of the deal. In 2005, the two companies partnered on a compound for Alzheimer’s disease (AZD3480), and since then AstraZeneca has licensed the rights to two additional compounds under the deal, while switching ‘3480’s development path from Alzheimer’s to attention deficit/hyperactivity disorder. –- Joseph Haas

MedImmune/Trellis Biosciences: But wait, there's more! Through its biologics group MedImmune, AstraZeneca also made a play in the antibody space, licensing a pool of antibodies from Trellis Biosciences with the potential to fight respiratory syncytial virus, or RSV, which occurs most commonly in the elderly, the immunocompromised, and small children. Trellis could realize up to $338 million plus royalties under the deal, but didn't disclose specifics. MedImmune currently markets the only preventive therapy for RSV, Synagis (palivizumab). There is no approved therapy for treatment, but Trellis says its antibodies have shown ability to both prevent and fight the virus in animal models. Based in South San Francisco, Calif., Trellis uses its proprietary CellSpot high-throughput screening technology to identify and extract promising antibodies from human blood samples. For its RSV program, the company screened 20 million B cells from 30 donors who had recovered from RSV. CFO James Posada told "The Pink Sheet" DAILY that Trellis hopes to bring more antibodies through preclinical and license them to partners who would take over at the IND-enabling stage. -- JH

Chiesi/Phenomix: Speaking of exclusive clubs, Europe is rather posh, innit? What young American biotech doesn't want to leave its footprint on the Continent? Phenomix went abroad this week, sealing a deal with Chiesi Farmaceutici to commercialize the DPP-4 inhibitor dutogliptin for type-2 diabetes in Europe. Phenomix gets up to $28 million in near-term cash and the total value, which includes milestone payments, could reach $163 million. It comes more than a year after Phenomix partnered with Forest Laboratories to develop dutogliptin in North America. Dutogliptin is now part of a Phase 3 clinical development program that includes five studies of 3,000 patients. The first results are due for release in the second quarter of 2010, according to Forest. Chiesi, of Parma, Italy, will be responsible for product development, regulatory approval and commercialization in the territories covered by the deal. Phenomix, based in San Diego, Calif., will also receive an undisclosed cut of sales. Following the Chiesi deal, Phenomix is now in an “excellent cash position,” said CEO Laura Shawver. Previously, the company gained $75 million upfront from Forest and it has raised $141 million since its 2002 founding. -- Emily Hayes

Centocor/Xencor: Building on a strategy that brought to market therapeutic antibodies like Stelara for severe plaque psoriasis and Simponi for rheumatoid arthritis, Johnson & Johnson’s Centocor unit announced Nov. 30 a deal with antibody developer Xencor for the rights to Xencor’s XmAb and Xtend platforms. Centocor will use them to create antibodies that are more potent and last longer. Centocor has the right to develop and commercialize several optimized candidates, and in exchange, Xencor gets an undisclosed upfront fee, an annual maintenance fee and potential milestones and royalties on products commercialized under the collaboration. Looking back for comparables, we found what appears to be a less comprehensive deal Xencor signed with Merck in March. Merck paid Xencor $3 billion upfront to license Xtend for the development of antibodies towards an undisclosed drug target, as well as agreeing to clinical development milestones and royalties. Privately-held Xencor is still swinging solo, despite the fact that M&A activity has been hot in the space as drug makers look to enhance their pipelines with therapeutic antibodies that are more effective and longer-lasting than those already on the market, especially given the increasing threat of biosimilar drugs. -- JM

And finally, a tale of an outsider in the medical device space getting invited to the dance by one of the cool kids...

Stryker/Ascent Healthcare Solutions: For years, surgical product makers have called medical device reprocessing a threat and pointed to the potential safety hazards. Now one of their own is primed to take over the market. Orthopedic firm Stryker said this week it is paying $525 million in cash to acquire Ascent Healthcare Solutions, and in doing so will control about 65% of the fast-growing $175 million device reprocessing sector. Ascent develops processes to clean, sterilize and generally refurbish used disposable devices. It submits, in most cases, the processes for FDA clearance then resells the devices for about half price. Many of the targeted products, such as cardiac ablation catheters and surgical trocars, are labeled by the original equipment manufacturer for single-use only, so reprocessing can really cut into sales volumes for OEMs, who have also complained that they are vulnerable to lawsuits when reprocessed versions of their products cause adverse events. But the move by Stryker underscores that device reprocessing has become an accepted reality and a successful business model, particularly as hospitals look to cut costs in the current economic and reimbursement environment. And despite periodic graphic reports in the media of reprocessed devices gone wrong, increased government oversight has put the recycled products in the regulatory mainstream. Stryker says it envisions a $1.8 billion opportunity in reprocessed devices and plans to make a strong pitch to hospitals about the potential to slash supply chain costs.-- David Filmore

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