Friday, June 24, 2011

Deals of the Week's Summer Song

Why do so many summer songs include a twinge of regret? Take “Summer Wind,” made famous by Ol’ Blue Eyes, whose lazy August tempo belies its remembrance of a lost warm-weather love at least two seasons later. Or Chad & Jeremy’s lovely “A Summer Song,” which predicts autumn's sadness even as the lightning bugs still blink. Buffalo Tom’s poetic “Summer” is vague, but it's a past-tense tale of a wasted season of lost heroes and things left behind. And while Percy Faith’s “A Summer Place” is an instrumental that’s about as easy as listening gets, it’s also the theme from an entire movie about The One That Got Away.

(Perhaps it’s only natural that a songwriter would wrap up a story a few months onward. After all, if you start in summer and stay there, you get Seals & Crofts’ “Summer Breeze,” which has confounded us for decades. Did I have jasmine in my mind all along, and I just didn’t know it?)

At any rate, perhaps there’s something we can learn from these seasonal snapshots, particularly those that depict someone special slipping away like a handful of sand through your fingers. As VCs, execs and bankers steal away to places like Aspen and the south of France (after BIO of course), it’s easy to imagine them sleeping on a deal that could’ve been.

But with one healthy licensing arrangement, a reverse-merger that took another company public, a funding in the hotly contested epigenetics arena, and more action around the industry this week, it’s clear some are keeping their oars in the water, even as many of us dream of sticking our toes in the sand.

They say that all good things must end someday, but until then, stay cool and beat the heat with…
Abbott/Biotest: Already the owner of a strong rheumatoid arthritis franchise, Abbott Laboratories now hopes it’s found a new drug that will pick up where Humira (adalimumab) leaves off when it loses patent protection in 2016. Abbott paid $85 million up-front to license German biotech Biotest’s BT-061, a Phase II anti-CD4 antibody designed to act on a T-cell regulation pathway and combat inflammatory diseases such as RA and psoriasis. Milestone payments could add another $395 million to the deal, which also includes royalties if the drug is approved and marketed. For its cash, Abbott gets worldwide rights to the drug outside of five major European markets: U.K., Germany, France, Italy and Spain. In those countries, Abbott and Biotest will co-develop and co-promote BT-061. It’s the latest of Abbott’s moves to shore up its post-Humira pipeline. Last fall, the company paid $450 million upfront to license ex-US rights to Reata Pharmaceuticals’ bardoxolone, which announced positive data today; Abbott also bought Facet Biotech for $722 million in March 2010, giving it the multiple myeloma treatment elotuzumab, scheduled to enter Phase III later this year. Both products could be marketed before Humira’s expiry if all goes well. - P.B.

: The latest company to execute a reverse-merger transaction and emerge as a public company is Allozyne, a conjugated protein therapeutics specialist with a focus on autoimmune disorders. Allozyne revealed plans to merge with publicly traded Poniard Pharmaceuticals, whose stock has been trading at less than 25 cents since the beginning of June and hasn’t cracked the $1 mark for more than a year. Allozyne shareholders will receive 65% ownership of the surviving company, which will keep the Allozyne name, Seattle headquarters, and CEO, while Poniard’s stakeholders will get 35%. The combined company will seek a partner for Poniard’s primary asset, the Phase III oncology drug picoplatin, while focusing its attention on Allozyne’s portfolio. That includes AZ01, a multiple sclerosis drug set to enter Phase II, and AZ17, a preclinical antibody Allozyne says has broad potential in autoimmune and inflammatory diseases. The deal sets up a path to liquidity for Allozyne’s venture investors, who have poured at least $39 million into the company since 2005; they include MPM Capital, OVP Venture Partners, Arch Venture Partners and Amgen Ventures. Poniard shareholder Bay City Capital will loan the company $2.4 million as part of the transaction. Last month, Radius Health raised funding and concurrently reverse-merged with an as-yet-unlisted shell company, intending to go public by early next year. - P.B.

AstraZeneca/Dentsply: AstraZeneca’s pending sale of its dental supplies and medical devices business, AstraTech, to Dentsply International, the world’s largest maker of dental supplies, comes with a handsome valuation and a strategic challenge: now that it is entirely a pure-play pharma, AZ will have to deliver on growth through innovative medicines. The sale of AstraTech, announced June 22, removes AZ from a business it has been in since the 1950s. Still, with sales of roughly $535 million, that hasn't been enough buck for the required operational bang. But Dentslply's offer -- at a multiple of roughly three times sales and nearly 20 times EBITDA--gives AZ plenty of dry powder, adding substantial cash to a net cash position of just $1.5 billion based on the multi-national's first quarter filing. AZ will need that money to support strategies that bolster its top line as it enters into what analysts peg as one of the steepest patent cliffs in the industry, beginning in 2012 and lasting through 2016, with the expiration of the U.S. patent of Crestor. AZ ‘s emphasis on focus has met skepticism on Wall Street, but the recent success of pure-play Bristol Myers Squibb andequally lackluster results at diversified companies like Pfizer may change some analysts' minds. - Wendy Diller

Epizyme/LLS: Well-funded epigenetics startup Epizyme already has $54 million in VC money to play with, but that hasn’t stopped it from pursuing alternate sources of capital. The Cambridge, Mass.-based startup announced that it will receive $7.5 million in new money from the Leukemia & Lymphoma Society, intended to support preclinical and early-stage clinical development of a drug targeting Mixed Lineage Leukemia. The capital, which will be delivered in installments as certain milestones are reached, will support development through Phase I of a histone methyltransferase inhibitor targeting the gene DOT1L. In January, Epizyme struck a partnership with GSK covering a defined set of HMT inhibitors that brought in $20 million upfront, with milestone payments potentially yielding $630 million. Two months later, the biotech forged a pact with Eisai around the EZH2 enzyme worth $6 million up-front and $200 million in milestones. Enthusiasm for epigenetics has run high lately, as rival Constellation Pharmaceuticals added $15 million to a previously announced $22 million round earlier this month. - P.B.

Sanofi/Medco/UBC: Sanofi-Aventis became the second Big Pharma this year to form an alliance with a clinical outcomes research organization, tapping MedCo and its United BioSource Corp. unit to deliver payer perspective on drugs still under development. Sanofi will pay Medco and UBC an undisclosed amount for their expertise, particularly in identifying patient populations for drugs before they come to market. MedCo has pharmacy claims data for 65 million Americans, which Sanofi may find useful as it develops plans for late-stage compounds such as its Phase III dyslipidemia drug mipomerson and multiple sclerosis candidate Lemtrada (alemtuzumab). The deal follows AstraZeneca’s February agreement with health benefits provider WellPoint and its clinical outcomes unit HealthPoint, intended to provide it with “real-world” data concerning cost, clinical and comparative effectiveness as it negotiates with payers. - P.B.

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