Deals Of The Week Breaks For March Madness

It really is a mad, mad, mad, mad world. Libya. Yemen. Japan.

The relentless worrisome news is enough to drive this blogger to the madness that is the NCAA. (I suppose I could tune into the unceasing Kate/Wills show on BBC and TLC instead, but there's at least another 6 weeks to indulge that craving.)

For now, however, I'll have to make do with Deals of the Week. (EBI's corporate parent frowns a wee bit on live streaming during work hours, even if it allows one to make artful pop culture references.) And thankfully, there are plenty of suprises, setbacks, and leadership changes to make biopharma worthy of its own bracketology.

We'll return to weightier matters on Monday. For now it's time for...

Human Genome Sciences/FivePrime Therapeutics: On March 16, one week after winning FDA approval for Benlysta (belimumab), the first new lupus drug in 50 years, Human Genome Sciences inked a $50 million deal for rights to FivePrime's lead pipeline candidate, FP-1039. FP-1039, an inhibitor of the fibroblast growth factor (FGF) pathway that may be key to survival and proliferation of solid tumors, has been well tolerated in safety studies and is now being tested in endometrial cancer patients. No word yet if HGS will continue down that clinical path or prioritize other cancers. There are several members in the FGF family; FivePrime said its molecule inhibits most of them, with preclinical work showing strong inhibition of angiogenesis related to FGF and VEGF. The license agreement, extremely lucrative for an asset that hasn't yet dosed in Phase II, gives HGS development and marketing rights in the US, Canada and European Union. In addition to the $50 million upfront payment, HGS will pay FivePrime $445 million in potential milestones, plus double-digit tiered royalties on net sales. The biologic will slot into HGS's clinical pipeline, which beyond Benlysta includes monoclonal antibodies for anthrax, cancer and ulcerative colitis. -- Alex Lash

Seattle Genetics/Millennium: With their antibody-drug conjugate brentuximab vedotin heading toward an FDA approval decision this year, Seattle Genetics and Takeda Pharmaceutical's Millennium have extended their partnership to include an undisclosed second antigen target. The firms did not reveal financial terms, but Millennium will be responsible for all R&D and commercialization of the compound, with Seattle due milestones and single-digit product royalties on worldwide sales. That's different from the b. vedotin collaboration, in which Seattle Genetics has retained US and Canadian commercial rights, with Takeda/Millennium responsible in the rest of the world. Buoyed by positive data in its pivotal trials, b. vedotin inhibits CD-30 and was submitted in February for approval for relapsed/refractory Hodgkin lymphoma and relapsed/refractory systemic anaplastic large cell lymphoma. If approved, the medicine would be the only antibody-drug conjugate on the market, as Pfizer's Mylotarg was removed last year after post-market studies showed serious safety concerns. Other companies, including ImmunoGen and Roche's Genentech group, are pushing ADC technology through the clinic with the hope that the antibody conjugates, which consist of a cell-killing payload tethered to a tumor-homing antibody, provide strong cancer-fighting properties without the drastic side effects of chemotherapy. -- AL

Sanofi Aventis/Genfit: If it were ever in doubt, the high-profile failure of fat-buster Zimulti back in 2007 hasn't put Sanofi-Aventis off metabolic diseases – even outside diabetes. Zimulti's failure forced the French pharma to lean heavily on insulin treatment Lantus, and its moves to build a stronger diabetes franchise are well-documented. (Recall the French pharma’s deals with WellStat, CureDM, Metabolex, and its 2010 update of its 2003 Zealand Pharma alliance.) Most recently, on March 17, Sanofi Aventis signed a research contract with French biotech Genfit, hoping to identify molecules targeting the mitochondrial dysfunctions believed to be behind some metabolic disorders. Genfit has collaborated with both Sanofi-Aventis' predecessor companies since 1999. Back then, when Genfit trendily called itself a 'functional genomics' outfit, the biotech signed up Aventis to work on PPARa agonists in exchange for €5 million up front and some research costs; the same terms applied to a tie-up with Sanofi-Synthelabo in atherosclerosis. The latest pact sees Genfit, now described as experts in gene regulation and nuclear receptors, receiving annual payments to fund research, plus development, regulatory and commercialization-linked milestones that could, in a best-case, reach $54.5 million. Genfit's most advanced in-house compound, GFT505, is in Phase II trials for diabetes/pre-diabetes. –Melanie Senior

Merck/Ariad: Just last year , DOTW covered Merck and Ariad’s decision to revise their 2007 deal for mTOR inhibitor ridaforolimus, with Merck taking development control for the program and Ariad retaining an option to co-promote the medicine in the US and fielding 20% of the US sales effort. This week comes news that Ariad has opted in; and the announcement is worth noting for several reasons. When Ariad downsized its obligations in 2010, the move was about sacrificing long-term return in exchanging for securing its near-term cash runway. But if the company was seeking stability, reserving the right to co-promote provided a healthy compromise, allowing it to preserve some ownership of what could be an important revenue driver, rather than be reduced to sales milestone and royalty payments. Why is that important? For starters, even a 20% stake in ridaforolimus, an oral mammalian target of rapamycin that has the potential to be the first targeted agent for the treatment of sarcoma, is likely to be attractive to future acquirers--and that's above and beyond ridaforlimus licensor Merck. Indeed, with a pipeline of products in development including Phase II ponatinib, Ariad could catch the eye of bigger players looking to build their oncology pipelines. But with even big companies counting pennies, noone wants to leave money from marketed products on the table (or in the pockets of a competitor). Thus, while a co-promote may give existing partner Merck the lion’s share of the value, it still leaves enough to satisfy would-be buyers giving Ariad greater strategic flexibility. Want proof? Just ask Plexxikon, which managed to sell itself for a hefty price to Daiichi for its targeted melanoma drug PLX4032. –Ellen Foster Licking

Elanco/Janssen Animal Health: Elanco, the animal health division of Eli Lilly and Co. announced an irrevocable, unconditional offer March 14 to acquire Janssen Animal Health, part of Johnson & Johnson subsidiary Ortho McNeill Janssen. Financial terms were not disclosed. Belgium-based Janssen is focused primarily on Europe and would add a portfolio of about 50 products to Elanco’s line. Its products treat both companion animals and livestock, with an emphasis on poultry and swine. The deal would include no manufacturing facilities, but Janssen’s animal health employees would transfer to Elanco, which already employs more than 2,300 people and markets products in 75 countries. Elanco President Jeff Simmons said the transaction would provide synergies with current operations, as well. “Through this transaction, we intend to further expand our European presence, bolster our growing portfolio of companion animal medicines and diversify our food animal portfolio with new swine and poultry products,” he added. Elanco generated sales of $1.39 billion in 2010, 15% growth over 2009, and contributed roughly 6.0% to Lilly’s overall $23.1 billion in sales for the year. J&J does not break out sales data for Janssen Animal Health in its financial reporting. The sale would mean J&J’s exit from animal health, a space in which seven of 12 publicly traded big pharma companies currently play, led by Sanofi-Aventis, which generated €2.64 billion in sales last year, comprising 8.7% of its earnings.—Joseph Haas

Quest/Celera: Players of various stripes continue to snap up specialty labs, starting with GE buying Clarient last fall and Novartis bringing Genoptix into its molecular diagnostics fold in early 2011. Now, Quest is buying Celera for $671 million, or $344 million net of Celera’s $327 million in cash and short-term investments. For the money, Quest gets Celera’s Berkeley HeartLab (BHL) and its proprietary tests, as well as the smaller testing company's biomarker pipeline and R&D capabilities. The move is in line with Quest’s expansion of esoteric and gene-based test operations in cancer, CV, infectious diseases and neurology: less than a month ago, Quest snapped up Athena Diagnostics for $740 million, deepening its neuro testing channel. Celera has been limited by high infrastructure costs and commercial constraints and the BHL business should benefit from Quest’s distribution capabilities, including its patient service centers. Indeed, access to Quest’s patient service centers to perform phlebotomies and get the message out about new tests should accelerate growth. Celera will continue to operate independently and Ordonez and senior management will stay on. Quest no doubt values Celera’s pipeline as much as the tests Celera sells: Quest does not expect the deal to add to EPS for two years.—Mark Ratner