Deals Of The Week: Hot Pursuit

Takeda is in hot pursuit of Swiss biopharma Nycomed – or maybe not. After the rumorville erupted Thursday May 12 about a possible $12 billion take-out of the private-equity owned Nycomed (which has been on the auction block for months if not years), Takeda tried to squelch the speculation.

In a 96-word statement posted on its website Friday May 13, Japan’s largest pharma noted, “The company would like to make clear that Takeda has not agreed to any such an agreement as suggested by certain news publications…there is nothing that needs to be announced at this point.”

It’s customary practice for companies not to comment on pending M&A rumors (that’s what the bankers are for). And who really wants to announce the biggest deal in their company history on Friday the 13th? That’s like asking for bad integration karma.

Still, Takeda’s action ain’t going to do much to stop the whispers. Various news outlets are simply using the statement to point out that the inevitable persons familiar with the matter say a deal is in its final stages “but might take time to conclude.”

Indeed, as we pointed out in this story from “The Pink Sheet” DAILY, one of the reasons the rumors have garnered so much traction – aside from the juicy valuation Takeda allegedly places on the company – is the logic of the tie-up. As the 15th biggest pharma worldwide, Takeda has been trying since its $8.8 billion take-out of Millennium Pharmaceuticals to become a significant multi-national player. That 2008 acquisition did more than expand the Japan co’s presence in oncology, a core therapeutic area. It also dramatically increased the company’s US footprint at a time when the its joint venture with Abbott was winding down, and bolstered Takeda’s senior executive team with the likes of Deborah Dunsire, Christoph Bianchi, and Nancy Simonian.

In the same vein, a Nycomed buy would significantly boost Takeda’s European footprint (one of Takeda’s long-stated goals), while also jump-starting its emerging markets strategy (another more recently stated goal). Like most Japanese pharma, Takeda has been behind its multinational counterparts when it comes to inking deals in various EMs. But with a single deal, the Japan drug maker could increase the percentage of sales revenues coming from this increasingly valuable part of the world. Almost 40% of Nycomed’s $4.5 billion revenues from 2010 came from emerging territories, and the company forecasts that share to increase to 60% by 2015.

It’s true that Nycomed’s therapeutic focus on respiratory diseases and inflammation doesn’t quite chime with Takeda’s areas of interest. But Nycomed’s expertise in GI seems like a natural fit; the company got its start in 1895 manufacturing and selling bismuth – the basic ingredient in Pepto-Bismol. The ability to leverage Nycomed’s strong existing OTC biz is also likely an allure; Nycomed demonstrated its prowess in this arena in 2009 when it scored Europe’s second centralized Rx to OTC switch for pantoprazole. (Coincidentally that’s the same year OTC versions of Takeda’s blockbuster PPI Prevacid hit the market.)

Certainly if Takeda wants to ramp up quickly in both Europe and EMs, there aren’t too many specialty cos that are affordable – and available for purchase. Let’s not forget that Nycomed’s ownership structure – PE firm Nordic Capital holds more than 40% with Credit Suisse’s DLJ Merchant Banking, Coller International Partners, and Avista also having stakes – means there’s increased pressure on the privately-held Nycomed to create some exit options. Thus, if the Takeda deal doesn’t materialize, it’s a fair bet another suitor for Nycomed will emerge.

Stay tuned to IN VIVO Blog as the chase for Nycomed evolves. Meantime there’s no need to delay the deal making gratification. Ever in pursuit of the week’s top deals, we bring you – signed, sealed, and delivered – another edition of ...


Alkermes/Elan Drug Technology: Nycomed isn’t the only European company that’s been looking for a buyer. In the week’s biggest confirmed deal, Alkermes announced it has snapped up Elan Corp’s Elan Drug Technology group in a cash and stock deal worth nearly $1 billion. The new company will be incorporated in Dublin but have a decidedly US look: Richard Pops, Alkermes’ current chairman and CEO will retain those job duties, while EDT’s CEO Shane Cook becomes president of the new entity. The acquisition could be a transformational event for Alkermes, which has spent the last few years trying to step out of the shadow of some big name partners (Eli Lilly, Amylin, Johnson & Johnson) and dodge the negative Exubera press that gave drug delivery a bad name. The transaction certainly deepens the drug delivery technology capabilities within Alkermes, but that’s not the story line executives are playing up. In an interview with “The Pink Sheet” DAILY, Pops was pretty clear that he didn’t want Alkermes tarred with that brush. Indeed, the biotech has spent the last several years trying to reinvent itself, emphasizing its CNS-focused product development expertise a la Vivitrol. In this case, the drug delivery expertise is a means to that end – and a pretty lucrative one. Technology from the newly combined EDT/Alkermes is embedded in more than two dozen commercial products, from Acorda’s Ampyra to J&J’s anti-pyschotics Invega Sustenna and Risperdal Consta to Eli Lilly/Amylin’s Bydureon. That means there are some nice royalties coming the new Alkermes’ way to support its drug development ambitions. As Pops told PSD, “it takes us immediately to a cash-flow positive company.” And it’s hard to argue with a balance sheet in the black.—Lisa LaMotta and EL

Shire/Heptares: The hope that new technologies can crack intractable targets continues to lure big pharma to the deal making table. But in the case of this week’s early stage R&D alliance, a tie-up between Shire and the GPCR-focused start-up Heptares, that allure wasn’t so strong that the pharma in question didn’t want to hedge its risk. Thus, Shire – not usually one to reach so far back in the value chain – has agreed to take an exclusive option on a novel adenosine A2A antagonist currently in preclinical development at Heptares for the treatment of the symptoms of Parkinson's disease. (It has the potential to treat other CNS diseases as well.) Of course, Shire already has significant business in the CNS area, with the ADHD therapy, Vyvanse (lisdexamfetamine), being its top-selling product. The financial terms of Heptares’option agreement with Shire weren’t disclosed, but include an upfront payment and, according to Heptares’ CEO Malcom Weir, significant downstream royalties. There’s also a separate payment owed if and when the option is exercised. This is the second big pharma alliance Heptares has inked in as many months; in April it announced a tie-up with Takeda worth £4.5million upfront (also CNS focused, though that particular target was not disclosed). Heptares also isn’t one to shy away from options. In 2009, eight months after the Swiss pharma’s Novartis Option Fund invested in the biotech’s $30 Series A, Novartis and Heptares announced an option-based alliance that requires the start-up to produce small molecules against a GPCR of the pharma’s choosing.–John Davis & EL

Allos/Mundipharma: Allos Therapeutics achieved a key strategic goal May 10, announcing a co-development and commercialization pact for Folotyn with the U.K.’s Mundipharma International Corporation Ltd. The deal is worth $50 million upfront to Allos, and the smaller firm gets to keep 100% of the US market. (Mundipharma has exclusive ex-US rights.) Folotyn, a folate analog metabolic inhibitor, was approved under accelerated review by FDA in 2009 for relapsed or refractory peripheral T-cell lymphoma and remains the only drug approved in the US for this indication. (Currently there are no approved drug therapies in Europe.) Still that hasn’t helped sales of the medicine, which are most diplomatically described as tepid. Folotyn’s US approval came with a requirement for four post-marketing trials, including studies that measure efficacy in previously undiagnosed PTCL patients and in combination with bexarotene in relapsed or refractory cutaneous T-cell lymphoma. Importantly, the deal requires Mundipharma to fund 40% of the costs of those trials. The cost-sharing would be split 50/50 if Folotyn garners a positive nod from the European Medicines Agency, an event that could happen in 2012. Allos also can earn commercial progress- and sales-based milestones totaling up to $310.5 million under the partnership, along with tiered double-digit royalties on sales occurring in Mundipharma’s licensed territories. Meanwhile, Allos’ monopoly in the U.S. may be short-lived, as Celgene Corp. has a June 17 PFUFA date for its application to add progressive or relapsed PTCL to the label of its HDAC inhibitor Istodax, which already is approved for second-line therapy in cutaneous T-cell lymphoma.—Joseph Haas

Pfizer/Zealand: We’re late to this break-up, which was apparently first tipped when Zealand pharma released its IPO prospectus back in 2010 and again in the biotech’s annual report, but it finally caught our eye yesterday. (Hey, the third time’s the charm.) As part of an announcement about its first quarter results, the Danish biotech said yesterday it had regained rights to danegaptide, a gap junction modifier with potential in atrial fibrillation, from former partner Pfizer. Pfizer got its mitts on the project as part of the Wyeth acquisition (Wyeth and Zealand originally teamed up in 2003) and has since made no bones about its desire to exit cardiovascular research. Specific terms of the give-back weren’t announced but Zealand now holds “all rights to and all clinical data generated with this compound,” the IV version of which has completed two Phase I studies. Zealand intends to take an oral version of the drug into Phase I and “together with a new large pharma partner we intend to prepare for the Phase IIa proof of principle study in 2012,” according to the company’s 2010 annual report. Pfizer’s decision to pull back on cardiovascular R&D reflects a broader industry trend away from an area that was once close to most pharmas’ hearts (sorry). Zealand’s search for a new partner will therefore see it knocking on fewer doors, though with a first-in-class compound with potential acute and chronic uses, it’s likely to get a look-see from the remaining cardiovascular stalwarts.—Chris Morrison