Friday, January 15, 2010

DotW: Climbing Halfway to the Stars

We say adieu to another frantic JPMorgan conference, punctuated by the ring-ding-ding of cable cars, the buzzing of blackberries, the exchanging of business cards, and the shouts of protestors railing about unethical drug pricing. Unlike Tony Bennett, DotW's bloggers didn't leave their hearts in San Francisco.

Nor, thankfully, did we leave our trusted digital recorders, jam-packed with interviews and presentations that will soon bear much fruit, hopefully of a quality and heft reminiscent of the vintages that were in abundance at the evening soirees this past week.

Compared to previous years, however, the week-of-conference deal flow seemed rather quiet even if the mood was decidedly more upbeat than last year. No doubt the thousands of investors, executives, and business development-types dashing from presentation to cafe to hotel suite were trying their best to pump up the volume, which we'll await in the weeks to come.

Meanwhile, take a post-JPMorgan chill pill and wash it down with a glass our own expressive--and admittedly opinionated (but never overbearing)--vintage, laden with supple notes of snark and absurdity.--Alex Lash

Sanofi-Aventis/KaloBios: Privately-held KaloBios announced a deal with Sanofi-Pasteur, the French pharma's vaccine division, worth $35 million upfront for the biotech's Phase 1 product, KB001. The monoclonal antibody is aimed at treatment or prevention of Pseudomonas aeruginosa infections in the hospital setting, especially prevention of pneumonias in mechanically ventilated patients. KaloBios stands to earn another $255 million based on development, regulatory, and commercial milestones, plus royalties. KaloBios kept back rights to the product in cystic fibrosis and bronchiectasis, but Sanofi has the ability to opt back in after Phase 2b studies in those indications are published. The deal is further validation for KaloBios, which has raised about $80 million in venture backing and has a non-exclusive partnership around its technology with Novartis. For Sanofi, one of the world's biggest vaccine makers, it's the firm's second deal in as many months for a therapeutic vaccine that addresses infections. Last month, Sanofi reached an exclusive, worldwide agreement with Syntiron to develop and commercialize its prophylactic vaccine against Staphylococcus. -- Ed Silverman

Roche/Galapagos: Belgian biotech Galapagos seems intent on signing one deal for each of the species of brown finch found on its namesake archipelago. (That’s 13, according to the Galapagos Conservation Trust.) Yes, we are kidding. But the option deal it announced with Roche on Monday is at least its sixth Big Pharma alliance in just over two years, so we’re not exaggerating too much. Roche and Galapagos are teaming up to discover and develop large and small molecules to treat COPD. The biotech gets €6 million upfront and is eligible for a slew of milestone payments spread across discovery, development, regulatory and sales hurdles, plus eventual royalties. Roche gets an option to license molecules at either clinical candidate selection or completion of Phase I, after which it funds all remaining development. The deal is relatively representative of its other pharma alliances, if a little more valuable than past deals. Roche joins recent Galapagos partners Merck (two deals), Janssen, GSK, and Eli Lilly. This morning Galapagos said it had received milestones in each of its two Merck deals, totaling €3.6 million. -- Chris Morrison

Quidel/Diagnostic Hybrids: Long known as a pure play in low-cost, rapid diagnostics for triaging patients for infectious diseases, Quidel is acquiring Diagnostic Hybrids, which sells antibody-based direct fluorescent in vitro assays to hospitals and reference labs. The deal, for approximately $130 million, opens a new market to Quidel and addresses a recurring problem for the company: sales of its main flu-test products are seasonal and can fluctuate dramatically year-to-year. The company felt this variation keenly: due to the mild winter flu season of 2008-2009, flu-test sales were off 90% compared to the prior year. Moreover, the unpredictability of disease incidence exposed flaws in Quidel's strategy to ship tests in bulk to distributors at the start of the flu season.These problems led to a restructuring in the spring of 2009 as well as the creation of an on-demand distribution system. Acquiring Diagnostic Hybrids should help steady the course. One third of the combined companies’ products will be seasonal, down from one half. Diagnostics Hybrids' products include antibody-based kits for identification of respiratory viruses, herpes, bacterial viruses, and thyroid stimulation immunoglobulin. -- Mark Ratner

Novartis/Proteus: Novartis is obviously keen to diversify not just with generics but with devices and consumer products. To wit: Alcon. Still, the Swiss behemoth's deal this week with Proteus Biomedical is an interesting twist, replete with convergent themes of devices, monitoring, and outcomes-driven healthcare delivery. The privately-held Proteus is teaming up with Novartis for an exclusive worldwide license to use the biotech's sensing technology to improve medication adherence post organ transplantation. The deal is worth $24 million in upfront cash and equity to Proteus, which has raised more than $70 million over four venture rounds since its 2004 founding. As part of the deal, Novartis also has option rights related to oncology and cardiovascular applications, and rights to use the technology in its clinical drug development. This is the second alliance between the two companies. In September, Novartis and Proteus teamed up to conduct a 20-patient study to monitor patients' compliance taking theblood pressure med, Diovan. Researchers measured adherence using Proteus's sophisticated "chip in the pill" technology, which reports when Diovan is ingested via a sensor on the patient's shoulder. According to Novartis, Proteus' whiz-bang approach worked far better than spousal nagging or a sticky note on the bathroom mirror: compliance increased from 30% to 80%. -- Ellen Licking

Amgen/Biovail/MedGenesis: Since its annus horribilis in 2007, Amgen has been more willing to share and Sharer alike. Bad puns aside, the once-voracious acquirer is now often an out-licenser, and this week it sent exclusive global rights to glial cell line-derived neurotrophic factor (GDNF) in central nervous system indications to Canadian firms MedGenesis Therapeutix and Biovail. Terms weren't disclosed other than Amgen taking what the firms described as a "small equity stake" in MedGenesis. Near-term, the three-sided deal allows Biovail and MedGenesis to team up and develop GDNF for Parkinson's disease using MedGenesis delivery technology. MedGenesis said it also has taken rights to GDNF for non-CNS indications and could collaborate with other partners. The Vancouver firm is applying its platform of convection enhanced delivery, which uses pressurized infusion to deliver drugs locally to the brain, to treat epilepsy and glioblastoma multiforme. -- Alex Lash

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