Deals of the Week Meets "The Outlier"

This statement may amuse you, coming on the heels of Abbott's mind-boggling $450 million up-front payment to license ex-US rights to Reata's bardoxolone in chronic kidney disease: in 2010, alliance upfronts are declining.

Reata's upfront haul is surely a giant among men (more on the deal below). But a look at all alliances signed by the industry's larger companies (big pharma, big biotech, large Japanese and European co's, and spec pharmas) over the past four years show that not only are alliance upfronts decreasing, but fewer deals are being signed overall (approximately 20% fewer).

We presented the chart below at this week's Pharmaceutical Strategic Alliances meeting in NYC, as part of a dealmaking overview. The data (which are through August 2010) suggest that at least in terms of deals where financials were disclosed, pharma is becoming more cost-conscious. This isn't really a surprise -- we're seeing more option-alliances and earn-out heavy acquisitions than ever before, and payments on the front end are bound to suffer.

But Reata's impressive terms around bardoxolone again show that there will always be assets that cause a stir, and a bidding war, and a blogger to exclaim 'holy crap that's a lot of money!' Reata retains sole possession of bardoxolone's US rights and will fund its Phase III development itself. Even so, this cash should allow it plenty of breathing room to get through NDA filing and -- if all goes well -- toward a US launch.



Abbott/Reata: Upfront payments on licensing deals have trended downward lately, but Abbott Laboratories is headed full-steam in the opposite direction. Abbott made an enormous $450 million upfront commitment to Reata Pharmaceuticals’ Phase II renal disease candidate bardoxolone methyl. It's the largest upfront ever for a Phase II product, especially given the deal is only for ex-US rights. (It also doesn't include rights in certain Asian countries that Reata has already partnered away.) Milestone payments could add $350 million to the deal, plus Reata gets royalties on sales in Abbott’s territories. Bardoxolone, an antioxidant inflammation inhibitor, has shown promise as a potential disease-modifying drug that can reverse the effects of chronic kidney disease; Reata is preparing to present Phase IIb data at the American Society of Nephrology conference in November. A Phase III trial in the coming months will further study bardoxolone's effect on glomerular filtration rate, the amount of filtered fluid passing through the kidney per unit of time. Abbott also took a minority equity stake in Reata, whose backers include Cardinal Investment's CPMG, Novo A/S, and Texas firms Ojai Goliad and StarTech Ventures. Abbott already markets Zemplar, a hyperparathyroidism treatment for renal patients, in 24 countries. As Abbott tries to move itself away from its dependence on the TNF-alpha drug Humira, it's been opening its checkbook, especially for early and mid-stage assets. Recall late in 2009, it spent $170 million to acquire PanGenetics' Phase I NGF inhibitor; in March the big pharma paid a 61% premium to purchase Facet Biotech, a PDL Biotech spin-off, developing the Phase II multiple sclerosis drug daclizumab; this past June the company spent $75 million to in-license Neurocrine Biosciences' Phase IIb gonadotropin-releasing hormone (GnRH) antagonists for women's and men's health. And don't forget the purchase of Piramal's health care solutions biz for $2.12 billion upfront and another $1.6 billion over the course of four years to establish a significant beachhead in India.--Paul Bonanos

GlaxoSmithKline/Dendreon:It may be a happy problem for a young company launching its first product to have: Demand for the new prostate cancer therapeutic vaccine Provenge is likely to exceed supply, and the company that makes the drug, Dendreon, has limited production capacity. Dendreon is a small biotech, after all, and its ability to ramp up and manage the supply of Provenge has been a serious concern for patients and investors since the vaccine launched in May. In response, the Seattle-based biotech has turned to a big pharma, GlaxoSmithKline. According to a Securities & Exchange Commission report filed on Sept. 21, the companies signed a development and supply agreement September 15, in which GSK will supply the antigen used to make Provenge to Dendreon. (Okay, so technically this is a deal of last week.)The first supplies are slated for delivery in August 2011. Sales of Provenge, which Dendreon launched last spring, were $5.2 million in July and $2.45 million in June.--Wendy Diller

Warner Chilcott/Novartis: Warner Chilcott took full control of the U.S. sales and marketing of Novartis’ overactive bladder drug Enablex (darifenacin) in a $400 million deal announced Friday September 24. The Irish specialty pharma already had a co-promotion agreement with Novartis for the drug, but scrapped that alliance and replaced it with the new one. Warner Chilcott had obtained some rights to Enablex through its $3.1 billion acquisition of Procter & Gamble’s prescription drug business in August 2009; P&G had shared promotion of Enablex with Novartis since 2005. Recall Novartis acquired the drug from Pfizer in 2003. In 2009, Enablex sales in the U.S. were $190 million, of which Warner Chilcott was entitled to a share; it also incurred advertising, promotion and selling costs for the drug. Under the new agreement, Warner Chilcott will take full responsibility for sales and marketing of Enablex in the U.S., and will assume control of its manufacturing within three years. A milestone payment could add $20 million more to the new deal as well.--PB

Novartis/Alnylam: In our “no deal” of the week, Alnylam announced Sept. 23 that Novartis has selected a “full and final list” of 31 targets for which it will seek to develop RNAi drugs based on Alnylam intellectual property. That decision brings an end to a five-year partnership in which the two companies worked together to identify and advance RNAi therapeutics for a range of undisclosed indications. Concurrently, Novartis also declined to exercise an adoption license for Alnylam’s RNAi technology platform, which would have brought the biotech an additional $100 million. According to Alnylam CEO John Maraganore during a Sept. 24 investor call, Novartis determined that the 31 programs it will undertake at the Novartis Institutes for Biomedical Research will keep it plenty busy for next several years. To date, the five-year collaboration has brought Alnylam about $125 million in proceeds, both in the form of research funding and equity investments – Novartis currently holds a 13.4% ownership stake in the biotech. The partnership also funded about 25 full-time equivalents annually, Maraganore said. With the partnership’s expiration Oct. 12, Alnylam plans to reduce its workforce by 25% to 30%, he said, enabling the company to position itself for “continued growth, success and focus on the highest value activities.”—Joseph Haas

Financings of the Fortnight Checks Out Big Rounds in the Big Apple

Even in good times it's not easy for a private biotech to take its lead compound to market all by itself. These dreary days, it's rarer than an empty cab in the Midtown rain. That's a New York reference, pal. It's PSA week, whaddya expect?

Despite all the distractions, like the perfect weather and giant slices of pizza everywhere, we couldn't help but notice when this fortnight brought us not one but two venture-backed firms whose investors are doubling down to get their protégés through Phase III.

Bully for them, we say, if they can get through registrational trials without a Big Pharma partner. At that point, Big Pharma partners hungry for near-market pipeline assets won't have a choice but to lavish riches upon them, right? Well....that's what we used to say about getting to a Phase II/proof of concept milestone. Now we're hearing things like this: "How do VCs fund all of these companies to Phase III, which seems to be the stage that Big Pharma is comfortable with?" That's what Quaker BioVentures founding partner Brenda Gavin told START-UP recently.

Let's not make too much fuss about two biotech fundings -- and we'll get to them in a moment -- but it's hard to ignore the larger context: Of the many biotech-focused venture funds running out of gas, not all are likely to re-up. So our first instinct was to wonder who's behind these whopping late-stage rounds that are designed to push a biotech's lead asset through Phase III. Are they the product of VCs rolling the dice one last time on portfolio companies that represent their best chance to get out with a bang?

So far, no. As you'll see below, one recipient of generous funds, Relypsa, tapped returning investors to help push its potassium-binding agent through Phase III. But the round was led by new investor OrbiMed Advisors, a firm flush with newly-raised cash. The second recipient profiled below, the German firm immatics biotechnologies (which we assume can now afford to buy some upper-case letters) turned to existing European investors for about half its new round. But one returning investor -- indeed, the one that remains its largest shareholder -- is dievini Hopp BioTech holding (again with the lower case!), which invests the cash of billionaire Dietmar Hopp, founder of software giant SAP and probably not among the biotech funds running out of gas.

An interesting side note: immatics CEO Paul Higham told our Pink Sheet colleagues that his efforts to raise cash from US investors earlier this year ran into reluctance to commit large sums, especially for a cancer immunotherapy based in Europe focused on renal cell carcinoma. (Those conversations took place before Dendreon's Provenge approval, Higham said.) Another interesting side note: Strategic Transactions tells us the three largest drug-related venture rounds so far this year are all European companies: Archimedes ($100 M), AiCuris ($75 M), and now immatics ($71 M).

Is there anything to the Eurocentric bent of these rounds? It's not as if optimism is brimming across the pond. A survey of VC attitudes released in June revealed just as much gloom in Europe as in the US, with hope for venture expansion pointed more toward emerging markets.
If you're keeping tabs, by the way, another recipient of funds earmarked for a late-stage push is Calistoga Pharmaceuticals, the Seattle firm working on isoform-selective PI3 kinase inhibitors. Its $40 million Series C round in June will fund a registrational program for its unpartnered lead CAL-101 and other clinical work, and the startup recently brought on board Pharmacia and PTC Therapeutics veteran Langdon Miller as executive VP of R&D to oversee the work, but CEO Carol Gallagher told us this week the money won't get them to NDA.

We all need a push every so often to get to our destinations. Which reminds us, the traffic outside our 44th St. hotel is a nightmare, so it's time to shut our laptops, duck into the subway, and get on board another installment of....

Relypsa: Doing its part to get a US biotech on the list of top fundraisers, Relypsa said September 13 investors had committed to a $70 million Series B round to help the firm push its potassium binder RLY-5016 into Phase III. Relypsa president Gerrit Klaerner said the firm can run the trial itself, with plans to reduce recruitment needs by incorporating Phase II data into the trial design. '5016 is a binding polymer that stays in the gastrointestinal tract and absorbs excess potassium, a potentially deadly condition. One application Klaerner would like to address is patients who would otherwise might have to avoid angiotensin-converting enzyme (ACE) inhibitors and angiotensin receptor blockers (ARBs) to lower blood pressure, as these drugs can have the side of effect of releasing potassium into the blood stream. An acute buildup of potassium is called hyperkalemia and can lead to arrythmia or cardiac arrest. OrbiMed Advisors led the round, but it also included investors who backed Relypsa's predecessor, Ilypsa, which Amgen bought in 2007 for $420 million for its lead compound, a phosphate binder for chronic kidney disease patients. To create Relypsa, Amgen spun out the rest of Ilypsa's assets to the same management team. -- A.L.

immatics biotechnologies: Developers of cancer immunotherapies have attracted renewed interest from investors and big pharma since the US approval of Dendreon’s Provenge in April. But German biotech immatics biotechnologies says it had plenty of investor interest from its own countrymen before Dendreon's success, leading to a Series C funding round of $71 million (€54 million). Immatics’ technology is markedly different from Dendreon’s, however, as it's based on administering the same combination of chemically synthesized, tumor-associated peptides to each patient with a particular cancer. The skill is in identifying antigenic peptides that actually induce a strong immune response, said immatics executives. The financing will fund a Phase III clinical trial of immatics’ lead therapeutic vaccine in renal cell carcinoma. Approximately half of immatics new funds came from existing investors including dievini Hopp Biotech holdings and Wellington Partners. New investors were venture capital funds advised by MIG Verwaltungs AG and AT Impf GmbH. The latter is owned by the Strüngmann brothers, who co-founded the German generics company Hexal, before selling it some years ago to the Swiss generics-and-original-research combo, Novartis. -- John Davis

Addex Pharmaceuticals: Addex raised CHF 20 million ($20 million) in a combined registered direct offering and debt transaction with Biotechnology Value Fund. Announced Sept. 15, the deal was structured as 593,567 new registered shares in Addex for CHF 6 million and the issuance of six-month mandatory convertible notes for CHF 14 million. The transaction was priced at $10.18 a share, a 12 percent premium over Addex’s volume weighted average share price during the five trading days prior to Sept. 14. Upon closing, BVF will own 9% of Addex’s outstanding shares, while the convertible notes will become 1,371,069 new shares on March 14, 2011, representing 17% of the firm’s outstanding shares. It comes a week after Addex landed a $900,000 grant from the Michael J. Fox Foundation to help finance a Phase II study of lead compound ADX48621 in Parkinson’s dyskinesia. Addex says the BVF cash infusion will give it runway into 2012 and help it advance several programs, including '621, while leaving it less vulnerable to another stock price decline should one of its programs disappoint. BVF was able to buy into the Swiss company at a bargain price because of last December’s failure of gastroesophageal reflux disorder and migraine candidate ADX11059, which resulted in Addex’s share price tumbling by about 75%. -- Joseph Haas

Anacor Pharmaceuticals: Just as it's pulled in a $15 million milestone from GlaxoSmithKline in connection with a 2007 option deal to develop an antibiotic based on its boron chemistry platform, Anacor has decided to try again for an initial public offering. On Sept. 10, the Palo Alto, Calif. biotech filed its S-1 with $86 million as its placeholder until it determines price range and share volume. In August 2007, Anacor filed to go public with a goal of raising up to $57.7 million then withdrew in December 2008 due to unfavorable market conditions, though it's worth noting it had plenty of time to make its issue before the financial tsunami struck. As part of the 2007 collaboration with GSK, the pharma committed to invest $10 million in a future private placement, which it did in January 2009. Schering-Plough also invested in that private placement as part of a 2007 licensing deal for a topical antifungal, but S-P isn't listed in the S-1 as one of Anacor’s principal stockholders. Anacor says it has raised $88 million in equity capital since its inception in 2002. In addition to advancing its pipeline of five clinical candidates, Anacor presumably will use the proceeds to cash out its equity investors, which include Rho Ventures (25.5%), Venrock Associates (16.1%), Care Capital (12.4%) and Aberdare Ventures (11.5%), along with GSK (14%). Anacor plans to begin a Phase III program for lead program AN2690 in onychomycosis in the fourth quarter of this year. -- J.H.

Photo courtesy flickr user Adrian8_8.

Avandia Decision Today; Steve Nissen Thinks It Will Stay on the Market

Word is that US and European regulators will make separate announcements shortly about the future of Avandia. The status of GlaxoSmithKline's former blockbuster diabetes drug is once again under review, thanks to concerns about a potential increased risk of heart attacks compared to other treatment options.

What will the decision be?

Cleveland Clinic cardiologist Steve Nissen, MD, thinks he knows the answer: FDA will leave rosiglitazone on the market.

That, to put it mildly, isn’t what Nissen thinks FDA should do. But, he tells us, that is what he now believes FDA will do.

One clear sign that FDA is likely to save Avandia, Nissen says, is the agency’s recent red flag for its thiazolidinedione competitor, Eli Lilly & Co.’s pioglitazone (Actos).

FDA announced on September 17 that it had commenced a safety review of Actos after receiving preliminary results from a long-term observational study designed to evaluate the risk of bladder cancer. The agency did note that the review is ongoing and it has not concluded that Actos increases the risk of bladder cancer.

Nissen calls FDA’s analysis “barely statistically significant” for what is essentially a small subgroup of individuals. The Actos review, Nissen says, is a “smokescreen designed and timed to keep rosiglitzone on the market.” (For coverage of the warning, click here).

Indeed, the timing of the Actos safety update is fortuitous for GSK. A key piece of the argument for pulling Avandia is the availability of a “safer” alternative, Actos. However, it would certainly be an odd decision for the agency to pull one product due to a potential increase in cardiovascular risk and recommend use of alternative that may or may not have an increased risk of bladder cancer.

Nissen, of course, has led the calls for Avandia’s withdrawal, and he is convinced that the agency’s actions with the product reflect ongoing challenges with handling post-marketing safety issues. In his view, it basically comes down to how FDA reacts to challenges from outside—and, by implication, the need for change in the drug center management.

[Editor’s Note: Nissen will expand on his views about the decision-making at FDA during The RPM Report’s FDA/CMS Summit for Biopharma Executives in Washington DC Dec. 9-10. For more information or to register, click here.]

Kate Rawson

Notes From PSA: More on Lilly's Next Project Financing Project

If at first your project financing doesn't succeed, try try again. That was the message during a panel discussion at our (20th Anniversary) Pharmaceutical Strategic Alliances conference in NYC on Wednesday. The topic of conversation was deal structures for high-risk, high-reward projects, which screamed for analysis of the 2008 three-party deal to finance two of Eli Lilly's late-stage Alzheimer drugs.

Private equity firm TPG-Axon Capital and CRO Quintiles Transnational put up much of the cash, with Quintiles running the Phase III trials. The structure is still in place for one of the compounds, solanezumab, but the other, the gamma-secretase inhibitor semagacestat, is no longer in development.

We should amend our opening statement: The deal has succeeded for Lilly in the sense that someone else helped pay for development of a drug that failed (or, at least, is currently on the shelf). Lilly senior vice president Gino Santini and Quintiles senior vice president Tom Perkins, both on the panel, said everyone knew from the start that the risk-reward calculation for Alzheimer's was high on both counts. "We went in with our eyes wide open," said Perkins.

The deal turned out to be a true product of its time, announced just two months before Lehman Brothers imploded, and cheap, leverageable private equity suddenly became a distant dream. "I don't know that we could attract capital of that size for a project of that risk profile if we went out looking today," said Perkins.

Then again, the lure of reaching the brass ring in Alzheimer's has proved over and again to be awfully tempting. Just ask Lundbeck (Flurizan, ouch), Pfizer (Dimebon -- not a happy result), and J&J (bapineuzumab -- jury's still out).

Meanwhile, Lilly keeps plugging away at project finance models. Its latest, reported in part a couple weeks ago, centers around three venture funds that Lilly is backing, putting up just shy of 20% of each fund's capital, up to $50 million in each. Lilly will be the only biopharma LP in each fund.

One will be reportedly run by CMEA Ventures in San Francisco, which Lilly officials haven't disputed; one we hear by a well-established firm in Cambridge, Mass.; and the third remains a mystery. The final two funds haven't closed yet. Lilly is also offering a portfolio of its pipeline compounds to each fund manager. They can choose from Lilly's basket or from outside opportunities. Santini said today the mix of compounds in each fund should be 50/50. Lilly gets call options on all its own molecules and on one of five sourced externally. For the calls it exercises, Lilly must pay "fair market value," though it's unclear how independently that value will be determined. The funds can also use Lilly's Chorus development team -- or teams, as the company has two in Indianapolis, one in India and could add a fourth in Europe -- to run the development.

Santini said the one general partner up and running has already chosen one Lilly molecule and one third-party molecule.

Various attempts at project financing haven't turned out very well so far, but the promise of newly freed assets, released by Big Pharma mergers and downsizing, has kept the dream alive. And we emphasize dream -- the next wave of funds mostly remain behind the scenes, as their founders scramble to convince investors to join. (We examined the dream of asset financing, and the difficulties it faces, in this feature.)

Comparative Effectiveness Research: PCORI Looks to UCLA's Washington

The Patient-Centered Outcomes Research Institute (PCORI) is beginning to take shape.

The PCORI board is expected to be announced by the Government Accountability Office on September 23.

Our understanding is that UCLA's Eugene Washington will be named the Chairman of the PCORI board. Washington is Vice Chancellor of UCLA Health Sciences and Dean of the David Geffen School of Medicine. Prior to joining UCLA this year, Washington was at the University of California San Francisco, where he was Executive Vice Chancellor and Provost. To read more about Washington, click here.

To view PhRMA's list of PCORI board nominees, click here.

DotW Contemplates the Beginning of the End for Genzyme

The biggest deal of the week wasn't a chart-topper just because of its size. It was also likely the tip of a much larger iceberg.

We're talking about Genzyme's sale of its genetic testing unit to Lab Corp. for $925 million. Combined with 1,000 layoffs at the big bio, the spinout of the unit -- at a price 30% to 40% higher than at least one analyst expected -- could be a big step toward getting Genzyme ready for a sale. It comes a year and a half after serious manufacturing problems at a Boston-area plant were first disclosed in early 2009, an event that opened top executives to criticism from tub-thumping shareholders.

Now, our chilly choice of metaphor a few sentences ago might lead you to think that anyone steaming toward a rendez-vous with Genzymic destiny could be making a mistake of Titanic proportions. You, dear reader, must let your powers of speculation be your guide. We're certainly not ones to scream at Chris Viehbacher to pull hard alee, or astern, or throttle the jibbers, or whatever you're supposed to say to a ship's captain who needs a course correction, fast. Sanofi has offered $69-a-share, but it could take an offer of $75-a-share to bring Genzyme to the negotiating table, analysts told our Pink Sheet colleagues this week.

Viebacher doesn't seem ready to rush headlong into anything, let alone a $18.5 billion disaster. After all, Genzyme is less an iceberg -- although you have to wonder if other manufacturing nightmares still lurk beneath the surface -- than a collection of islands, which like the Galapagos, have inhabitants that have evolved quite separately, and in some cases, more successfully than others. (We leave it to you to sort out the finches from the tortoises and figure out what the hell to do with the feral goats.)

The sale of the genetics business, combined with the planned sale of the diagnostics and pharmaceutical intermediaries units, don't automatically point Genzyme toward M&A. Nor do the layoffs. The Cambridge, Mass. biotech has plenty of reasons to shift resources around, whether it's hiring more in manufacturing to shore up quality control or amassing cash for a share buyback. The firm raised debt this summer to fund the first tranche of the buyback, and the Genetics unit sale will pay for the second tranche, Genzyme said. But CEO Henri Termeer has publicly said there's a "high probability" of a deal with Sanofi, so every move Genzyme makes from now on must be viewed in that context.

For Sanofi, the sell-off of Genetics and the other two businesses would make for a cleaner eventual acquisition of Genzyme, but otherwise shouldn't make much difference, as they're tangential to the French pharma's interests. Sanofi is willing to wait. Viehbacher said as much at a conference this week: "I don't think they are in a hurry and neither are we in hurry. I don't see anybody else coming into the deal, so that's not pushing anybody in terms of speed."

The wild cards, of course, are the shareholders. Viehbacher spent last week meeting with Genzyme's. Termeer has said his board, which includes dissident investors who agitated their way into the boardroom, is adamantly opposed to the current offer at $69 a share. And don't forget Sanofi's shareholders, which include French corporate titans L'Oreal, the cosmetics company, and the oil firm Total. They haven't revolted, but it seems they're casting a wary eye on the proceedings.

Viehbacher has already served notice early in his term that he'll only appease shareholders so much -- dividends yes, buybacks no -- so how he handles the Genzyme situation, given his previous pledges of no purchases over $20 billion, could be the defining moment of his tenure.

Same goes for Termeer, who was on the buying end of many acquisitions as he built Genzyme over twenty five years into the powerful but hodgy-podgy (or, if you prefer, "diversified") business it is today. He may well come to the end of his term as the big biotech's mastermind, even if Sanofi bows out. Should a deal not transpire (we'll keep the "NO DEAL!" JPEG warm), Genzyme's share price will likely sink back to the pre bear-hug level of the low $50s. With the activist shareholder presence on Genzyme's board, does anyone really believe Termeer can keep his post if the deal doesn't get done?

AstraZeneca/University College London and Cancer Research Technology: AstraZeneca this week revealed a pair of new arrangements to advance its stem-cell research targeting blindness related to diabetes and, separately, its oncology program. The Big Pharma said it will collaborate with researchers at University College London, led by Dr. Marcus Fruttiger, in a three-year partnership to explore uses of regenerative medicine to address diabetic retinopathy, a leading cause of blindness which afflicts about a quarter of Type I and more than half of Type II diabetes patients. The collaboration echoes Pfizer’s ophthalmological research deal with UCL, in which the two are searching for new therapies for age-related macular degeneration. AstraZeneca also said UK-based charity Cancer Research UK and its partner Cancer Research Technology would perform a Phase I/IIb clinical trial on oncology candidate AZD-3965, an inhibitor of the monocarboxylate transporter 1 (MCT1) that is crucial for cell metabolism. Once the trial is completed, AstraZeneca will retain a right to further develop the drug, or offer it to CRT to seek a different partner; the charity will receive a royalty on the drug’s revenues if it’s ever approved, regardless of which company develops it further. -- Paul Bonanos

Merck/Beijing Genomics Institute: With the president of Merck Research Laboratories Peter Kim in attendance, the Beijing Genomics Institute this week announced the signing of a statement of intent to form a working relationship with Merck. The organizations aim to utilize BGI’s high-throughput DNA sequencing and analysis capabilities in a research collaboration, primarily to analyze genomic and epigenetic data generated using Merck samples. “The key is epigenetics,” said one person familiar with the discussions. The deal comes at a time when several US-based next-generation sequencing companies are trying to establish a foothold in drug discovery, including current IPO hopefuls Complete Genomics and Pacific Biosciences, while also aiming at the more lucrative clinical diagnostics market down the road. At the same time, academic genome sequencing centers are operating more frequently as businesses, competing with commercial entities in terms of cost, throughput, and accuracy. For its part, BGI currently boasts a combined sequencing and bioinformatics staff of just under 4000, including 1500 bioinformaticians, and it expects to boost the overall number to 5000 by year-end. Given the scale and complexity of genetic information and the speed at which it is being obtained, a relationship with BGI could offer significant advantages, including on the regulatory front. “From the patient standpoint, we risk getting scooped by others outside this country, whether we are then sending the results to BGI in China to be interpreted or some other offshore thing,” cautions one CSO. -- Mark Ratner

GenMab/Seattle Genetics: The Danish firm GenMab has licensed Seattle Genetic's antibody-drug conjugate (ADC) platform to use with its own HuMax-TF antibody technology to develop drugs that target the Tissue Factor antigen. GenMab is responsible for all research, manufacturing, preclinical development and Phase I trials of ADCs that combine the two technologies. At the end of Phase I, Seattle Genetics has the right to opt into co-development and share all costs and profits fifty-fifty. If Seattle Genetics does not opt into a compound, GenMab would pay fees, milestones, and single-digit royalties on worldwide net sales. GenMab is paying Seattle Genetics an undisclosed upfront fee. The Seattle, WA-based biotech's ADC technology links cell-killing agents to antibodies to deliver precise payloads to tumor cells while leaving, in theory, healthy cells undisturbed. Its molecules have yet to reach FDA approval, but its lead, brentuximab vedotin, is in Phase III for Hodgkin lymphoma. The collaboration comes as GenMab shifts development focus on its flagship anti-CD20 product Arzerra (ofatumumab) to subcutaneous autoimmune indications. More accurately, GenMab's partner GlaxoSmithKline will make the shift, as it holds development rights to the compound. The partners amended in July their long-running collaboration to give GSK the autoimmune rights, a move that paid GenMab £90 M at the forfeit of development milestones. GenMab still helps pay for oncology development, but its contribution is capped at £145 M total. -- Alex Lash

Santarus/Pharming Group: Faced with a cash squeeze, Dutch protein therapeutics developer Pharming Group inked a deal with San Diego-based Santarus to license Pharming’s late-stage orphan drug Rhucin (conestat alfa) in North America. Santarus will obtain rights to Rhucin, a recombinant human C1 inhibitor which alleviates swelling related to hereditary angioedema, for $15 million up front, plus $5 million if and when the FDA grants approval of the drug’s biologic license application. Further milestones, including ones based on sales goals, are also built into the agreement. Pharming will still be in charge of obtaining approval of the BLA in the U.S., while Santarus will address regulatory hurdles in Canada and Mexico. In April, Pharming dealt away Rhucin’s distribution rights in 24 European countries to Swedish Orphan Biovitrum for an undisclosed amount. The upfront payment will help Pharming deal with a cash flow crunch due to a bond debt payment owed in the fall. Separately, Santarus said it had obtained Covella Pharmaceuticals and its anti-VLA-1 antibody program for $1.8 million plus royalties, future considerations and other expenses; that deal also includes an amended agreement with Biogen Idec, from which Covella licensed the program in January 2009. -- Paul Bonanos

Johnson & Johnson/Crucell: The far-flung Johnson & Johnson health care empire may be adding a vaccines unit as J&J bid €1.75 billion (about $2.3 billion) to buy Crucell NV on Sept. 17. The pharma giant said that if the deal goes through, Crucell would continue to operate as a subsidiary, retaining its facilities, ongoing programs, senior management and its “entrepreneurial culture that has fostered innovation and growth.” J&J’s bid works out to roughly €24.75 per outstanding share of the Netherlands-based vaccine maker, nearly a 58% premium over the closing price of €15.70-a-share on Sept. 17. Recall that in September 2009, J&J acquired a 17.9% stake in Crucell for €301.8 million, a 28% premium, in a transaction that also partners the two companies on an effort to develop a universal monoclonal antibody against all types of influenza A. That deal included a standstill agreement specifying that J&J would not attempt to increase its holding in Crucell for at least three years, but the acquisition bid is going forward as a mutual effort between the two companies. In a joint release, the companies indicated J&J’s board of directors and Crucell’s supervisory board have authorized the negotiations to proceed. This is not the first time a big pharma company has tried to acquire Crucell--Wyeth made a bid estimated at €1.35 billion in early 2009 but dropped the effort when it was bought out by Pfizer.--Joseph Haas

Photo courtesy of Flickr user Rob Lee.

Amid A Lot of Snarky Back-Room Talk, Some Deals Got Done

This week’s two biggest biopharma events—the emergence yet again of activist Elan shareholders and the betting on Sanofi-Aventis’ ultimate bid price for Genzyme—are more suitable for discussion around the water cooler than a “Deals of the Week” column.

In both cases, it’s likely a situation of “no deal yet." Elan’s CEO Kelly Martin will have to find a way to work with two different but very unhappy and vocal factions: activist shareholder and CEO of Zoar Invest, Ib Sonderby, who launched the SaveElan.com website to promote his proxy fight and nomination of four candidates for the biotech’s board of directors; and two dissident board members, who have threatened to sue Elan for blocking their investigation into a corporate governance issue unspecified in nature.

To soothe both groups, Martin will almost certainly have to do more than issue a 17-page letter defending his leadership and responding to critics’ charges. Elan's decision to report one of the board dissidents, Jack Schuler, to the U.S. SEC for possible insider trading violations won't be the solution. The complaint, made several months ago, came to light only this week as part of a document filed in a court in Ireland.

Meantime, the odds in Vegas—or at least Cambridge, MA—suggest Sanofi will raise its offer in order to put to rest the biopharma deal most resembling a Clash song. In an effort to push Genzyme management to the table, Sanofi CEO Chris Viehbacher met with major shareholders in New York this week, presumably to gain a better sense of the minimum price stakeholders will want to tender their shares.

Sanofi put a hard stop to rumors that it is willing to raise its offer from its original $69-a-share bid, stating loud and clear that only one offer is on the table. Nevertheless, the smart money suggests an offer of around $75-a-share would be tough for Genzyme shareholders—and its CEO Henri Termeer to ignore; true, that’s off from the biotech’s pre-manufacturing crisis high of $84 but a nice premium to the pre-rumorville share price of $50.77 (June 30, 2010 closing price). And, it caps the deal price at $20 billion, the ceiling Viehbacher and his team have set to avoid being mired in a mega-merger.

As the “he said, he said” dramas play out, the deal making table proved to be busy, with opportunities in rare diseases once again commanding interest—and significant upfront dollars. Meantime Johnson & Johnson’s discovery deal with Anchor Therapeutics is yet another reminder of how hungry Big Pharma remains for pipeline-filling products, while Bristol-Myers Squibb’s take-out of ZymoGenetics shows how the “try before you buy” mentality can pay out for smaller biotech partners.


Shire/Acceleron: Shire’s agreement with privately held Acceleron represents a renewed commitment to orphan diseases, which have been a crucial driver of the company's growth over the past year. The Irish pharma said it would license Acceleron’s activin receptor type IIB class of molecules, including a Phase II program addressing Duchenne muscular dystrophy, in markets outside the U.S. and Canada. The deal nets Acceleron a $45 million upfront payment, milestone payments on the DMD drug that could add $165 million to the deal value, and sales royalties. In addition, further milestones for other indications or related compounds could bring Acceleron an additional $288 million. Shire has relied on its Human Genetic Therapies division, which addresses rare diseases, to make up for lost revenues following the company’s loss of blockbuster attention deficit/hyperactivity disorder treatment Adderall XR to generic competition in 2009.

Anchor Therapeutics/J&J: Peptide drug platform developer Anchor Therapeutics announced a collaborative agreement with Johnson & Johnson’s Ortho-McNeil-Janssen subsidiary, under which J&J will license a handful of Anchor’s preclinical programs targeting oncology and metabolic diseases for up to $480 million, based on regulatory and development milestones. The J&J unit will deliver an upfront payment of undisclosed size for rights to fewer than 10 peptide drugs that act on G-protein coupled receptors, whose misregulation is linked to a broad spectrum of diseases. The J&J agreement will first target the previously little-explored GPR39 receptor, although some additional targets have yet to be chosen. Anchor recently announced the $10 million first close of a Series B round from insiders Healthcare Ventures, TVM Capital, and the Novartis Option Fund; the proposed $15 million round has been left open for a new investor.

Roche/ReMYND: Roche is the latest Big Pharma to announce a strategic alliance in the folded proteins arena. It's teaming up with Leuven, Belgium-based reMynd to develop novel treatments of Alzheimer’s and Parkinson’s diseases based on reMynd's technologies. reMYND could receive over €500 million in milestone payments and royalties on net sales. The collaboration will focus on two of reMYND’s pre-clinical small molecule programs targeting α-synuclein and tau related pathologies in appropriate model systems as well as potential back-up classes. Roche and reMYND will form joint teams to progress the programs towards clinical. The products developed by reMynd are designed to clear the toxic, misfolded proteins, which in the brain have formed tangles and plaque deposits. The compound eradicates them at the first stage of toxicity in both Alzheimer’s and Parkinson’s diseases. “I think they will be first in class not only with regard to the target, but also first in class in terms of disease mechanism,” said Koen De Witte, Managing Director of reMYND. reMYND says it has good reason to classify its compounds as “unique and “disease-modifying." Current drugs tend to act as “replacement therapies”, which seek to treat the symptoms of Parkinson’s and Alzheimer’s diseases. reMynd's compounds slow the loss of dopamine, for example, which is a key cause of motor symptoms in Parkinson's. But the compound won't be able to stop disease progression – rather it will improve quality of life.

Ono Pharmaceutical/Onyx: Ono is saying “oh yes” to inlicensing oncology products. The pharma made headlines on September 8, announcing it had acquired Japanese development and commercialization rights for two compounds from Onyx's proteasome inhibitor program, carfilzomib and ONX 0912. It was the Japanese firm’s second deal of the month, coming one week after the firm in-licensed pancreatic cancer therapy salirasib from Concordia. In order to get rights to carfilzomib, which is on track to be filed with U.S. regulators by the end of 2010 as a treatment for multiple myeloma, Ono will pay Onyx $59.76 million upfront, up to $286.69 million in development and sales milestones, and double-digit royalties on net sales for home country rights in all oncology indications for the two compounds. (Onyx maintains commercialization rights for the products elsewhere in Asia Pacific.) Ono has been actively building its oncology and oncology-related pipeline in recent years. With little previous expertise in the area, the company began in earnest in 2004 to in-license products to establish an oncology presence and has since in-licensed nine cancer-related compounds, including Merck’s antiemetic Emend.

Transgene/Jennerex: At first blush, the French immunotherapy specialist Transgene isn’t the most likely of in-licensors. But the company has plenty of cash and a strategic interest in privately-held Jennerex’s mid-stage cancer immunotherapy JX-594 in development to treat solid tumors. The tie-up between the two players has Transgene taking an undisclosed equity stake in the company; in addition Jennerex stands to gain up to $116 million in development and registration milestones plus tiered double-digit royalties and the potential to co-promote and profit-share in certain countries. Not bad for a regional deal that is limited to Europe, the Commonwealth of Independent States (CIS), and the Middle East. The two companies plan to develop JX-594 first as a treatment for hepatocellular carcinoma, with a large randomized controlled Phase 2b/3 study in the works. It’s fair to say JX-594, an engineered oncolytic virus, isn’t exactly every biopharma’s ideal drug candidate. While Dendreon’s approval earlier this spring of cancer immunotherapy Provenge has given the field some validity, Pfizer’s decision in early September to end a cancer immunotherapy collaboration with Celldex suggests there is still skepticism about the market potential for these kinds of therapies.

– Ellen Foster Licking (e.licking@elsevier.com), Alex Lash (a.lash@elsevier.com), Paul Bonanos (p.bonanos@elsevier.com), Daniel Poppy (d.poppy@elsevier.com), and Faraz Kermani (f.kermani@elsevier.com).
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Should Have Stayed at a Holiday Inn: Orexigen's "Tremendous" Advantage Going Third

The three obesity drugs—Vivus’ Qnexa, Arena’s Lorqess, and Orexigen’s Contrave—pending at FDA haven’t suffered from a lack of buzz in the investment community.

The trio of therapeutic candidates have the high-risk/high-reward profile that Wall Street typically flocks to.

In fact, the drugs are being so closely monitored by investors that two peripheral y relevant events—one that has happened and one that will happen—are garnering almost equal attention because of their impact on the three obesity drugs: the FDA advisory committee safety reviews of GlaxoSmithKline’s diabetes drug Avandia and Abbott Laboratories’ diet pill Meridia.

Qnexa was recently voted down by FDA’s Endocrinologic & Metabolic Drugs Advisory Committee due to concerns over the drug being used by large populations and a lack of long-term cardiovascular safety data (See “Weighing the Regulatory Climate,” The RPM Report, September 2010). In that instance, there was clearly an echo-effect from the prior two days of deliberations over the cardiovascular risks associated with Avandia.

Now investors are wondering if the case will be the same for Arena: Lorqess will be vetted by the Endocrinologic & Metabolic Drugs panel on September 16, the day after a joint committee review with the drug safety panel of Meridia to determine whether that drug should be taken off the market due to an increased risk of nonfatal myocardial infarction and stroke.

Orexigen’s Contrave is tentatively scheduled to go before an FDA panel on December 7.

Orexigen CEO Michael Narachi believes going third is an advantage, he explained during an interview with “The Pink Sheet” after announcing a partnership deal with Takeda.

“Being last up for review will provide tremendous learnings for our own regulatory review process. This will enable us to better understand the FDA's approach to evaluating the risk/benefit of obesity therapies, their perspective on potential post-marketing requirements and which of those may be broadly applicable versus drug specific.” (read coverage of Orexigen’s partnership deal with Takeda in “The Pink Sheet” by clicking here).

In other words, Orexigen is sitting back and watching—up close.

One detail that demonstrates just how important the regulatory lessons from Avandia, Qnexa et al. are to Orexigen was the company’s physical presence for the three-day advisory committee reviews of Avandia and Qnexa in July.

The July advisory committee meetings were held at the Hilton Hotel in Gaithersburg, Maryland, where FDA hosts more high-profile panel meetings due to more space.

We’re not sure Orexigen officials were there in person at the Hilton but the company showed up in force at the Holiday Inn just down the street.

We doubt Orexigen got lost. The firm had a pseudo-command center set up apparently to monitor the developments of the Avandia and Qnexa reviews as preparation for what may lie ahead in December.

That’s a smart strategy considering many of the themes from prior reviews, such as the need for long-term cardiovascular outcomes data beyond one year and an appropriate risk evaluation and mitigation strategies (REMS) program, will repeat themselves at the Contrave meeting.

Maybe Vivus should have stayed at a Holiday Inn too.

Financings of the Fortnight Goes Trend-Spotting. Ooh, There's One Now!

Back to school. Back to work. Strip off those summer whites, unless your name is Tom Wolfe. (But seriously, does anyone who didn't grow up on a yacht or "summering" on the Vineyard really care what colors you wear according to the calendar?) The best part of summer vacation, if you're lucky enough these days to have a job to take a vacation from, is checking out from the real world, diving into a book, be it throwaway fiction or essential history, and letting your kids bury you in sand.

But now we're back, and a few interesting things happened while our attention was diverted by Stieg Larsson, hot dogs and hurricane swells. Out in the wider world, the IPO pipeline became a crowded place, and we're now seeing the largest pent-up demand on record. Surely that must mean, at long last, biotech investors have another type of exit -- something other than a trade sale chock-a-block with milestones and earnouts.

Yes? No. In our little corner of the world, it's plus ça change, mes amis. While established names like General Motors and Toys 'R' Us were making plans, only four drug and two diagnostics firms joined the queue this summer, and only two left it via IPO: Trius Therapeutics and NuPathe. The most recent biopharma filer is Zogenix, which we detail below. If there's a candidate for "one to watch" -- other than the next potential killer forming in the Atlantic -- it's Ikaria, a commercial-stage firm that sells a nitric-oxide delivery system for critically ill patients. It registered in May and set down a $200 million placeholder; no word yet on more specific terms. (Here's our take from May on Ikaria's unusual origins and its unusual shareholder dividend. Here's Ikaria's recently updated S-1.)

Another macro-trend we've noted upon our return: corporations borrowing cash cheaply but not spending it. Alas, the trend doesn't extend to biotech venture investors, for whom it's hard to find cash right now, let alone spend (or invest) it, and they face a shakeout that will force survivors to find new partners and new investment models. As we describe in the September issue of START-UP, VCs must turn more frequently to Big Pharma either as syndicate partners or for cash. The latest example is Eli Lilly, which is putting as much as $150 million into three venture funds, one of which is managed by CMEA Capital of San Francisco. Lilly's head of new ventures Darren Carroll told Bloomberg News that Lilly's cash will only represent about 20% of each fund's reserves, but the Big Pharma will still have first crack at buying some of the portfolio companies. VentureWire reported that deals with the other two firms aren't finalized, but the general idea is to spin out compounds Lilly can't or won't develop on its own, let CMEA and the other funds develop them, and give Lilly the option to buy them back. Sounds to us like a new spin on project financing, a puzzle many folks are trying to figure out these days. Carroll didn't respond by press time to questions. We'll let you know as we hear more.

Across the pond, a veteran life science investor also had funding news. Forbion Capital Partners, based in the Netherlands and Germany, said it closed its second fund, FCF II, as well as a sidecar to its first fund. The two totaled more than €190 million ($240 million). Forbion has already started spreading its FCF II cash, as we noted here.

Anyone who's tried to have a little fun this summer certainly has recognized the need to do more with less. Just ask Mrs. Fortnight, for whom a trip to the luxurious day spa these days means a hot bath, two cups of epsom salts and a nail file. You could also ask practically any biotech startup. All venture rounds now seem to be tranched, a trend that won't disappear anytime soon. Who says it's a bad thing? As one startup CEO noted in the September START-UP feature, sometimes management gets too sloppy with big piles of money. Several startups were rewarded with top-ups of their current rounds, and we've highlighted two: stem-cell platform developer iPierian and next-generation antibody play Zyngenia.

Another trend you've probably noticed: we're pathologically unable to write short columns.Enough jibber-jabber. It's time for...


Zogenix: San Diego’s Zogenix hopes this season’s IPO climate will be warmer than in 2008, when it scuttled a proposed offering as the broader economy chilled new listings. The company filed a new S-1 September 3, previewing an offering that could be worth up to $90 million. Since its first attempt at going public two years ago, Zogenix has won FDA approval for Sumavel DosePro, its needle-free sumatriptan injection device, which delivers fast-acting migraine relief via a puff of nitrogen gas that delivers a liquid dose of the drug subcutaneously. The product, which hit the market in January 2010 and brought in $6.1 million in revenue by June 30, is co-promoted in the U.S. through an agreement with Astellas Pharma. The offering will bring liquidity to top shareholders Clarus Ventures and Domain Associates, along with Abingworth, Scale Venture Partners, Chicago Growth Partners and Thomas McNerney & Partners, which have collectively invested north of $140 million in the startup. Zogenix is also conducting Phase III trials on an oral, controlled-release version of hydrocodone, intended for patients experiencing chronic pain, and exploring other uses for the delivery technology in DosePro. -- Paul Bonanos

Zyngenia: Antibody player Zyngenia has tapped existing investor New Enterprise Associates for an additional $15 million in Series A financing, bringing the total raised to $25 million since the round initiated in September 2009. There was no specific milestone that triggered the Series A extension, Zyngenia president and CEO Peter Kiener told IVB, but NEA recognized the company’s success in pushing three candidates to lead optimization, as well as building out the technology platform and putting together their scientific team. The funds will sustain operations through the second half of 2011. Looking to overcome limitations of monoclonal antibodies that only interact with one target, Zyngenia is developing what it calls Zybodies, which are engineered antibody-like proteins that combine the activity of two or more biologics. The technology comes from the lab of Carlos Barbas of the Scripps Institute (and Zyngenia’s CSO). While the targets aren’t disclosed, the three lead multi-specific antibodies are being investigated for solid tumors and inflammation associated with rheumatoid arthritis, and they have achieved preclinical proof-of-concept in vitro and in vivo. The Series A money should help advance the candidates towards human testing; INDs are planned for the beginning of 2012. In addition to the venture capital, Zyngenia received $2.5 million in grants and loans from state and county organizations in Maryland earlier this year. -- Amanda Micklus

iPierian: We knew that the brouhaha over the Obama administration's embryonic stem-cell (ESC) policy didn't directly affect the nascent field of induced pluripotent stem cells. But we were curious nonetheless how non-ESC companies would fare. Here's one answer: iPierian, which is using induced pluripotency to create cells to be used for more conventional drug discovery, added cash from the venture arms of GlaxoSmithKline and Biogen Idec to push its Series B round up to nearly $29 million, a few million beyond what iPierian said it intended to raise in a SEC filing earlier this year. The lead investor on the previous tranche was Google Ventures, so not only is iPierian surfing the rising wave of corporate venture, it's hanging ten with unlikely people. Google's Krishna Yeshwant took a seat on iPierian's board, which itself is notable because pharma venture arms often prefer observer roles. So far Google's new investment arm has made just two life-science forays, iPierian and yeast-based antibody discovery firm Adimab. -- A.L.

Shanghai Pharmaceuticals: The firm that makes Tamiflu (oseltamivir) in China for Roche is going to float as much as 667 million shares in Hong Kong to raise cash for acquisitions, it said this week. It could raise up to 1.2 billion dollars -- Hong Kong dollars, that is, or about 150 million of the American kind. Still, $150 million for a biopharma firm on any public market is nothing to sneeze at, even if you're coming down with the flu. The firm said it wants to use the cash to acquire domestic competitors and sales networks both in and out of China, adding to the bounty of four regional distributors that it bought last year. Shanghai is now the country's second-largest drug distributor, trailing only Sinopharm, which has been on a partnership and buying spree of its own. Both companies are state-owned. -- A.L.

Photo courtesy of flickr user Randy Son of Robert.

The Power of DOTY: IVB Fake Award Used as a Shield for Elan/J&J

It was with amusement that we noted Elan CEO Kelly Martin hold up our little old blog as part of his defense of Elan's "18% solution" transaction with Johnson & Johnson, itself a small part of his unusual and unusually lengthy defense of his leadership of Elan. We were amused because we always assumed we were the Rodney Dangerfield of biopharma weblogs, but were encouraged to hear otherwise.

Martin wrote in his 16-page letter to shareholders on Monday:

Johnson & Johnson transaction: First, it is important to remember that this was an excellent transaction that significantly reduced our science, financial and execution risk around the immunotherapeutic approach to Alzheimer’s as well as allowing for the acceleration of the development of this technology and approach to the treatment of patients, while at the same time enabling shareholders to participate in the potential for substantial longer term value creation. I noted the positive comments from Moody’s earlier. The highly respected IN VIVO Blog also named it the 2009 M&A/Alliance deal of the year.

Ahem. Actually, dear readers, it was YOU who named Elan/J&J as the 2009 M&A/Alliance of the year last year (with only 39% of the vote, but we don't have time for run-offs). Deal of the Year (a.k.a. "The Doty" a.k.a. "The Roger") is an open vote, and as such, we were in some respects just the messenger. Sure, we nominated the deal -- along with four other deals in that category -- but it was you guys who determined the winner.

As such, Kelly Martin's defense of the J&J deal will have to remain without our official imprimateur (besides, nobody from Elan ever stepped forward with an acceptance speech!). That said, we do stand by our initial assessment, made last July, that the deal helps Elan out of a jam. And with Alzheimer's products sadly running into trouble left right and center, sharing and hedging risk particularly in this extremely difficult area of drug development continues to make sense to us.

The whole episode has us hankerin' for the 2010 DOTY competition. Depending on how the looming proxy battle with Sonderby & co plays out (see our full coverage in "The Pink Sheet" DAILY) maybe Elan will get another nod this year.

What’s In A Name? The Semantics of Comparative Effectiveness

Somewhere, Senate Finance Committee Chairman Max Baucus (D-Mt.) is smiling.

Baucus may be making inroads on his effort to relabel comparative effectiveness research as something a bit more patient – and industry – friendly.

As congressional debate on creating a public/private entity to conduct such research was heating up, Baucus decided that the term "comparative effectiveness research" was becoming too much of a lightning rod for controversy and changed the term in health care reform legislation to "patient-centered outcomes research."

CER, it seems, had become too linked to issues such as whether research data would limit physician's latitude for prescribing and whether costs might play a determining role.

HHS apparently jumped on the terminology bandwagon with its Sept. 1 announcement of grants to build up research capabilities in health facilities, with a focus on diverse populations. The announcement says the $17 million in awards will go toward "patient-centered outcomes research" or PCOR. Interestingly, the entire release eschews the loaded CER terminology, save for a link for more information on "about patient-centered and comparative effectiveness research" in the second to last sentence.

CER/PCOR stakeholders are now eagerly watching for HHS to name the first board members of the Patient-Centered Outcomes Research Institute, created as part of the health reform initiative. One key issue facing the group is how to effectively disseminate research findings. Who knows? Perhaps research branded as PCOR will be more effective than that branded as CER.

PCOR may hold one advantage over CER – it won't be easy to sub in "cost" for "centered" in the same way opponents of CER fueled resistance for the approach by calling it "cost-effectiveness research".

Not everyone has gotten with the new lingo, of course. A variety of health policy groups are sticking with CER, including the New England Healthcare Institute. And the HHS Agency for Healthcare Research and Quality "Effective Health Care Program" today announced an upcoming conference featuring topics such as "The Role of CER in Health Care Improvement" and "Examples of Incorporating CER Into Clinical Practice."

Only time will tell if Baucus will have the last laugh and get everyone to adopt his vision of patient-centered outcomes research.

- Gregory Twachtman

Image courtesy of flickrer dullhunk used with permission via a creative commons license.