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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