Friday, April 16, 2010

Deals of the Week: Show Me The Money!

It's been a week of monetary navel gazing, as laggards stateside booted up TurboTax and calculated their contributions to dear Old Uncle Sam and tea partiers condemned America's "gangster government," shouting their own version of "Show me the money." (Got health care with that?)

Apparently Michelle Bachmann and Co. forgot to read the current tax code before villifying it; according to the the Tax Policy Center of the Urban Institute and Brookings Institution, only 53% of U.S. households paid income taxes on their 2009 earnings, with federal taxes for the year dropping by about $173 billion. Who was it who said "A billion here, a billion there, and pretty soon you're talking about real money?" (No, that's not a bio-bucks reference.)

Who else was feeling taxed this week? Besides air traffic control, residents of Iceland and Wisconsin, how about OSI shareholders? Analysts expect Astellas' hostile-turned-friendly negotiations with the biotech will result in an offer closer to $60-a-share even if no white knight emerges. Certainly it doesn't look like a majority of OSI shareholders will tender their shares without a little extra kwan.

Fabry and Gaucher disease patients seem ready to yell "Show me the drug!" The New York Times reports anger among Genzyme's most faithful constituency at the continued shortfall in Cerezyme and Fabrazyme supply. Carl Icahn's blood pressure may be rising as well, given the arrangement Genzyme brokered with that other activist outfit, Relational Investors.

Let's not forget Novartis employees. David Epstein, head of global pharma for Novartis gave his "help me help you" spiel in a letter, announcing the second major reorganization of the US group in less than a year. (We doubt it was an up-at-dawn, pride-swallowing siege, however.)

It's always "show me the money" for biotechs on the prowl for deals and venture firms in fundraising mode. Early-stagers Third Rock Ventures of Boston joins the ranks of VCs on the money trail; SEC documents this week reveal the firm wants to raise $400 million for its second fund. Meanwhile, the NVCA released its first-quarter venture numbers that support what IVB told you last week: it's still a tough go for private biotechs looking for money.

We hope we had you at hello, but even if we didn't, know that IVB will not rest until we have you holding a Coke, wearing your own shoe, playing a Sega game, or until we've bored you to death with '90s movies references. Excuse us while we call our agent, it's time to negotiate another edition of...

Celgene/Agios: Agios won't be uttering the phrase "show me the money" for some time. Rather than tapping its VC backers -- ARCH Venture Parters, Third Rock, and Flagship -- for a Series B or C, the company hitched its fate to Celgene in a deal reminscent of Sanofi's amended tie-up in November 2009 with Regeneron. In exchange for $130 million, which includes what Agios execs called a "modest" equity investment, Celgene has an exclusive option at the end of Phase I to develop any drugs resulting from Agios' cancer metabolism research platform. Celgene can extend the undisclosed exclusivity period if Agios agrees, but it will have to provide additional funding for the privilege. Agios will lead discovery and early translational development for all cancer metabolism programs, while Celgene controls and funds global development and commercialization of any licensed drugs. On each program, Agios could receive up to $120 million in milestones as well as sales royalties. The deal is noteworthy for two reasons: First, it's the largest known alliance value so far this year, and all of the molecules are still preclinical. Second, it's unusual for a private company to ally itself so closely to one partner so early in its life-cycle. Agios' near-term financial future is secure, but now that it's tied to the hip of Celgene, its exit options are far narrower. In other words, if the IPO window doesn't re-open, who will show Agios' investors the money? -- Jessica Merrill and EFL

Teva/Mersana: Teva's new slogan ought to be "We're not just about generics anymore." Further proof of the Israeli giant's expansion into branded drugs comes this week with the firm's April 13 alliance with Mersana, a privately-held biotech developing a novel analog of fumagillin, XMT-1107, for a variety of oncology indications. Bio-bucks for the deal total $334 million, including development, regulatory, and commerical milestones, but the parties did not disclose the upfront for the Phase I-ready compound. Teva gains rights to '1107 in all indications worldwide except for Japan and will take over development costs. Fumagillins, which inhibit angiogenesis by a pathway distinct from VEGF, are a well-studied class of potential cancer molecules that also come with safety concerns (Takeda and Abbott abandoned their programs in the mid-'90s.) Mersana believes its flexible biopolymer conjugate technology solves the toxicity issues. A Phase I trial in all-comers with refractory solid tumors is due to begin later this year. -- Joseph Haas

Roche/Mendingo: Kaching. It's good to be a diabetes device player, especially when pharma companies are on the prowl. Just weeks after Sanofi made a run at becoming an end-to-end diabetes provider, purchasing blood glucose monitor developer Agamatrix, Roche paid $160 million upfront plus $40 million in performance-based earn-outs to take out Mendingo, maker of the Solo micro insulin patch pump. Mendingo already has 510(k) clearance for Solo, but the system is not expected to launch until 2012 because of manufacturing capacity limitations. The device will dovetail with Roche's Accu-Chek blood glucose meter and insulin pump offerings for diabetes management. As David Kliff of Diabetic Investor has noted, pharma companies see an opportunity to provide integrated solutions to the rapidly expanding diabetic population. One segment poised for growth is the patch pump market, which could jump more than 30% in the coming year, especially if the products are approved in Europe. In the US, Solo's main competition comes from Insulet, maker of the Omnipod patch pump. -- Brooke McManus

Hospira/Javelin: When Hospira showed Javelin $141 million this week, Javelin ditched its potential acquirer Myriad Pharmaceuticals in favor of what Javelin management called "a superior proposal." Javelin, which submitted its pain drug Dyloject to the U.S. Food and Drug Administration in December and has an Oct. 3 PDUFA date, has been viewed as an increasingly attractive acquisition target especially since Myriad's bid, also launched in December, was viewed by the Street as "underwhelming." The original deal called for Myriad to acquire Cambridge, MA-based Javelin with stock, and it would end with Javelin stockholders owning 41% of the combined company. Hospira, however, offered $2.20 a share in cash, and it will pay more than $12 million in fees related to the break-up. Myriad has until Friday midnight to respond with a superior offer, but analysts at Leerink viewed its noncomittal response as an indication that a sweeter deal won't be in the offing. For Hospira, the acquisition seems to make strategic sense, further building out its pipeline of specialty injectables. -- EFL

1 comment:

Sony said...

Great .. Just Show me da money .... not to uncle sam again...