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.

Financings of the Fortnight Can't Escape Velocity

Last we checked in with San Francisco venture firm CMEA Capital, it was April and the firm's health care team was looking to raise a new fund dedicated to buying individual drug assets, developing them with a virtual network of contractors, and selling them to Big Pharma buyers hungry for late-stage products.

The plan, dubbed Velocity, was to partner with a preferred pharma, which would contribute a sizable chunk of change; CMEA's fundraising pitch said Eli Lilly would be the partner. Lilly has been building its "Mirror" fund strategy to find VCs as drug-development proxies for pieces of its pipeline, and reserving preferential rights to the drugs if the VC teams develop them quickly and successfully.

Your faithful FOTF correspondent wrote about that plan in START-UP's April Capital Matters column, juxtaposing CMEA's approach with that of Altas Venture, which has carved out a piece of its current fund for its own "development corporation."

Well, now. CMEA's plan has changed, and it looks a lot more like Atlas's.

Velocity Development Corp. is now structured as an LLC holding company, not a fund. It will still buy assets and develop them, but not aligned with a specific pharma partner, CMEA managing director (and newly minted Velocity CEO) David Collier told us today.

Instead, Velocity will use $20 million from CMEA's current fund to launch, with a $40 million Series A upcoming and a $50 million Series B in 18 months. Those figures came from CMEA managing general partner Jim Watson in a VentureWire story earlier this month. Collier said today he wasn't allowed to discuss fund-raising, but he acknowledged and did not dispute the report.

Velocity will use the cash for operations -- $15 million maximum to develop each drug through proof of concept, for no more than three years -- not to acquire drugs if it can help it, Collier said. Instead, he and his colleagues, including three biotech veteran executives, will pay sellers with equity in the one-off companies they create around each drug. "Cash is dear, and people should be happy to take equity," he said. The blueprint is to offer a 20% stake, but Collier cautioned that was a "ballpark number to begin the negotiating process."

Is it a model that other venture firms might be forced to follow? Only if they're willing to give up venture compensation. The Velocity employees will basically be biotech employees, with an annual salary and stock options in the newco's they create around the drugs they acquire. No management fees, although it remains unanswered how the $20 million carved out of CMEA VII will be treated.

Nothing's signed, sealed or delivered yet, but the Velocity team has four or five deals in due diligence, Collier said.

A Lilly spokesman confirmed that CMEA was not part of Mirror but declined to discuss whether the Indiana pharma is looking for a replacement. Lilly said last September that one Mirror fund already had two molecules in its portfolio, one from Lilly.

VCs becoming drug developers? Veteran investor Kurt Von Emster calling his new firm VenBio an "unventure firm"? (My colleagues and I will have more on that soon.) Does anyone actually want to fund new companies anymore? Sure they do; witness the big sack of cash orphan disease firm Ultragenyx just received (description below). But the news from the innovation front -- the Series A rounds that we love to track as a rough guide to the mood of the venture industry -- remains grim. (We'll have more on that soon, too.)

Speaking of Series A recipients, one of our A-List alumni said this week it wants to go public in a big way. Others are finding it easier to crawl hermit crab-like into the shell of another hollowed-out company as a way of reaching the public markets. We told you last month how well those usually turn out.

By the way, it's a smaller world without The Big Man in it. To you, Clarence Clemons, we dedicate this edition of...

BliNK Therapeutics: The UK's top cancer research nonprofit has done it again. Cancer Research Technology, the tech transfer arm of Cancer Research UK, announced the spin out of its latest oncology-focused biotech BliNK Therapeutics on June 13, with £1 million ($1.8 million) in initial seed financing from Paris-based investor Kurma Life Science Partners. BliNK will concentrate on monoclonal antibodies for therapeutic and diagnostic uses. Kurma, which operates through the €51 million Kurma Biofund I, could put another £6 million into the start-up in the future. BliNK marks the 22nd spin-out from CRT, which has also created Antisoma and Chroma Therapeutics, both of which have secured Big Pharma partnerships, and Piramed, a PI3-K specialist that Roche acquired for $175 million in 2008. BliNK is developing new technology that prompts the immune system’s B-cells to produce cancer-fighting monoclonal antibodies against clinically relevant antigens. The company says the antibodies can be generated even when parent B-cells, which later produce millions of daughter B-cells capable of producing antibodies, are rare, or when the B-cell doesn’t easily recognize its antigen. The platform was developed by Dr. Facundo Batista, whose lymphocyte interaction laboratory is housed at Cancer Research UK’s London Research Institute, and Dr. Vincenzo Cerundolo of the University of Oxford. -- Amanda Micklus

Ultragenyx Pharmaceutical: Year-old startup Ultragenyx closed a $45 million Series A round, among the largest early-stage deals yet for an orphan disease specialist. TPG Biotech and Fidelity Bioscience led the round, investing alongside HealthCap and Pappas Ventures. The two lead investors recently enjoyed an exit in the rare disease arena, having held stakes in protein misfolding disorder startup FoldRx prior to its acquisition by Pfizer in September 2010. Led by former BioMarin executive Emil Kakkas, who relocated just a few doors down from his previous employer, Ultragenyx has already in-licensed its first candidate, UX-101, intended to treat the muscle-wasting disorder hereditary inclusion body myopathy, which afflicts about 2,000 people worldwide. Discovered in Japan, the drug previously belonged to Nobelpharma, which will retain its rights in several Asian territories. UX-101 triggers the production of sialic acid, a sugar essential for several bodily processes. Delivered in an extended-release oral formulation so as to overcome overnight clearance from the patient’s system, UX-101 is scheduled to enter Phase I trials in the US next month. Ultragenyx has subsisted for the past year on $3.4 million in seed funding from onetime BioMarin colleague John Klock and FoldRx chief commercial officer Bill Kaliski, as well as Kakkas. Ultragenyx has licensed four other preclinical drug candidates in the lysosomal storage disease area, and the firm intends to bring one into the clinic within the three- to four-year lifespan of the Series A round. -- Paul Bonanos

Tesaro: Is this the new MGI Pharma, the cancer and acute care company bought by Eisai in 2008? Tesaro has the same top executives, including CEO Lonnie Moulder, and now it has a massive infusion of cash to push its lead candidate rolapitant into Phase III for chemotherapy-induced nausea and vomiting. Tesaro said June 21 it has raised $101 million in Series B cash from a syndicate led by existing investor New Enterprise Associates. NEA kicked in $40 million, an astounding amount for one firm to contribute in a round. The syndicate included new investors Kleiner Perkins Caufield & Byers, InterWest Partners, T. Rowe Price, and Pappas Ventures, which also had a hand in Ultragenyx's A round. In December 2010, Tesaro in-licensed rolapitant, a selective neurokinin-1 receptor antagonist, from drug, diagnostic and device company Opko Health for $6 million upfront, potential milestones up to $115 million, plus double-digit royalties. Opko also took a 10% equity stake. Moulder told "The Pink Sheet" DAILY that the funds would also be earmarked for "one or two more oncology assets" to fit mid-stage between rolapitant and a preclinical anaplastic lymphoma kinase (ALK) inhibitor that Tesaro hopes to move into the clinic next year. -- Lisa LaMotta

Aveo Pharmaceuticals: For a lesson why it's worth going public if the markets allow, Aveo has netted $104.3 million from a follow-on public offering that closed June 21. The offering consisted of more than 6.3 million shares of common stock, including the overallotment, sold at $17.50 per share. The stock then gained 3% to close at $18.34 the day after the transaction. The oncology developer is on a roll. It debuted with a $83 million IPO in early 2010, then earlier this year it signed a pair of big deals with Astellas Pharma and Johnson & Johnson’s Centocor Ortho Biotech. AVEO received $125 million upfront from Astellas in February for rights to co-develop and commercialize tivozanib, which has a lead indication of renal cell carcinoma. Then, in May, Centocor paid $15 million upfront, half of it an equity investment to acquire 1.25% of AVEO, to license global rights to AVEO’s antibodies that target the RON (Recepteur d’Origine Nantais) receptor. Presumably, the funds will help the continued development of a pair of candidates in the clinic in a variety of oncology indications – tivozanib, a small molecule triple VEGF receptor inhibitor in Phase III, and ficlatuzumab, an antibody that inhibits the HGF and cMET pathways, in Phase II for non-small cell lung cancer in combination with Iressa. -- Joseph Haas

Photo courtesy of flickr user virtuallykc via a Creative Commons license.

Friday, June 17, 2011

DOTW: Save The Date

Miss the crowds? BIO’s just around the corner. This year there’s an added je ne sais quoi to the trade event as deal makers and execs converge on the regulatory swampland that is our nation’s capital. Amidst discussions of the state of the industry -- the strengthening IPO market (?), the venture financing climate, and the impact of both on deal making -- all eyes will be on FDA as it holds forth on Provenge and Avastin.

But while there’s no question BIO is a must-attend event, here at IN VIVO Blog, we’re admittedly biased in believing there’s another networking opportunity that is de rigueur for the industry’s top deal makers. That’s right: IN VIVO’s annual Pharmaceutical Strategic Alliances meeting, taking place September 22 and 23 in New York City at the Millennium Broadway Hotel.

Yes, we’re tooting our own horn, but once you’ve checked out our stellar line-up you’ll understand why. Key notes by Biogen Idec’s George Scangos and Bristol’s Lamberto Andreotti kick off the meeting. Then there’s an all-star discussion of biz dev on day 2 with help from Pfizer’s Kristen Peck, BMS’s Jeremy Levin, J&J’s Tom Heyman, Roche’s Joe McCracken, and Glaxo’s Ian Tomlinson.

You want deal making? We have it in spades. And not just at PSA. As we head into a summer time Friday, we bring you your weekly wrap up of the deal making headlines…

Boehringer Ingelheim/Zealand: Surprise! The Danish biotech Zealand pharma inked a deal this week for its Phase I-ready dual-acting GLP-1 and glucagon agonist for type 2 diabetes and obesity, ZP2929. But the partner, Boehringer Ingelheim, probably wasn’t the one folks expected given Zealand’s previous tie-up with Sanofi (the pharma formerly known as Sanofi-Aventis). This week’s deal, which includes a research collaboration, is worth €20 million in committed funding to the Danish biotech during 2011, and up to €41 million in the first two years. Zealand will conduct the first Phase I study with ZP2929, but Boehringer will pay for the research, development and commercialization of the compound, as well as any other additional GLP-1/glucagon agonists that eventually. Total biobucks for ZP2929, hailed by its inventors as a “next-generation GLP-1 agonist that improves on Byetta and Victoza, could reach €376 million. According to “The Pink Sheet” DAILY, Zealand, which raised nearly $60 million via the public markets in October 2010, had plenty of suitors for the compound. But with Zealand's most advanced compound, the GLP-1 agonist Lyxumia (lixisenatide) an increasingly important asset within partner Sanofi's diabetes pipeline, "we felt... it was better to diversify its partnership base," CEO David Solomon explained. Boehringer is a relative newcomer to diabetes, only unveiling its interest in the therapeutic area in 2008. Still it has moved rather quickly, and boasts a newly expanded late-stage pipeline thanks to the broad-ranging, risk-sharing deal it signing with Lilly in January of this year. As part of that tie-up, the two drug makers agreed to co-develop and co-commercialize up to five diabetes drugs, including Boehringer's DPP-4 compound Tradjenta (linagliptin), which FDA approved in May 2011, and a Phase III sodium-dependent glucose transporter-2 inhibitor. – EL

Vertex/Alios: Less than a month after FDA approval of its protease inhibitor for hepatitis C Incivek, Vertex Pharmaceuticals is looking to bolster its ability to offer potential combo therapies. Thus, it’s tie-up this week with Bay Area-based Alios Biopharma. The worldwide license to a pair of preclinical polymerase inhibitors, ALS-2200 and ALS-2158, is worth $60 million upfront to the privately-held Alios. In addition to the licensing agreement, the deal includes a research collaboration between the two companies: Vertex will provide undisclosed funding to Alios for discovery of additional polymerase inhibitors and retains an option on compounds unearthed via the collaboration. The bio-bucks owed Alios aren’t insignificant either: the biotech could earn up to $715 million in research and development milestones related to these two nucleotide analogs. Vertex has plans to move both molecules into Phase I trials during the fourth quarter of 2011. Longer-term, the big biotech intends to test the two molecules in varying combinations with telaprevir and VX-222, its Phase II non-nucleoside polymerase inhibitor, in an effort to find and develop an all-oral combo of drugs to treat HCV. Vertex said it expects to pay out $35 million in milestones this year, when both programs are scheduled to enter the clinic, but would not specify whether that also might cover other milestones to be met this year.—Joseph Haas

Sanofi/Audion: Sanofi has signed a two-year research agreement with Amsterdam-based Audion Therapeutics to discover and develop small molecule treatments for age-related hearing loss. Financial terms of the agreement weren’t disclosed, but Sanofi will have the option to license any compounds resulting from research done under the collaboration. Audion, a regenerative medicine play, aims to stave off deafness via developing compounds that protect and resurrect the inner ear hair cells, which are responsible for the amplification and transduction of sound waves to the auditory nervefor relay to the brain. As might be expected, Audion will work with Sanofi’s Aging unit, one of five new therapeutic strategic units established in the past year under the pharma’s revamped R&D model. Sanofi’s Early-to-Candidate Unit will also be involved. Paul August, U.S. head of the Early-to-Candidate unit, said his team aims to provide the Aging unit with a clinic-ready candidate by the end of the two-year collaboration. As this Start-Up feature noted, big pharma generally has stayed out of hearing loss, which has been dominated by med-tech firms providing hearing aids and, more recently, cochlear implants. Many venture capital firms and other investors see hearing loss as a potentially lucrative space, similar to ophthalmology, because of unmet medical need and demographic trends. The Sanofi/Audion tie-up is the first drug development partnership for hearing loss since Novartis licensed rights to a group of preclinical hearing loss and balance disorder programs from GenVec in exchange for a $5 million upfront payment and a $2 million equity investment last year.—JH

Pfizer/pSivida: Is Pfizer in or out of ophthalmology these days? This week’s amended deal between the big pharma behemoth and drug delivery play pSivida makes it clear Pfizer is willing to do what it must to protect its once daily glaucoma eye-drop Xalatan, which generated $1.75 billion in revenue in 2010 but lost key patent protection in March. Still, as Pfizer continues to redefine its innovative core (without, one hopes, experiencing a breach), it’s not so interested in ophtho that it wants to consider a broader deal with pSivida any longer. The Watertown, MA-biotech pSivida originally aligned with Pfizer in 2007 under a far-reaching deal that gave the big drug maker exclusive world-wide rights to its implant technology, as well as a 10% ownership stake. Under the revised agreement announced June 14, Pfizer will pay the biotech $2.3 million upfront for an option, which can be exercised at the end of Phase II, on an implant device that bathes the front of the eye with a sustained-release version of Xalatan. If Pfizer options the product, it will pay pSivida an additional $20 million and up to $146.5 million more in clinical and regulatory milestones. Despite Xalatan’s ability to effectively lower intra-ocular pressures without terribly onerous side-effects, compliance is a problem. (One main reason: Administering drops on a daily basis is a pain in the…er, eye.) As a result, there’s a lot of effort in the start-up community to develop implantable devices that improve adherence by obviating the need for daily administration. The 2007 deal revision provides significant potential upside for pSivida since it can now solicit partnerships with other drug makers. Among the most active deal makers in ophtho: Merck (which took out Inspire earlier this year), Novartis (via its Alcon group), Roche/Genentech, and of course specialty players like Allergan and Baush & Lomb. This wasn’t the only ophtho deal to be revised this week. On June 16 came news that Alcon was pulling out of its he collaboration with NovaBay, returning all rights to the first-in-class anti-infective Aganocide and back-up compounds. -- EL

Merck/Hanwha: Merck vaulted to the pole position in the race to bring a low-cost version of Pfizer and Amgen's rheumatoid arthritis blockbuster Enbrel to market this week, gaining rights to a late-stage biosimilar version of the biologic developed by South Korea's Hanwha Chemical. According to the June 13 partnership, Merck will develop and commercialize a biosimilar form of Enbrel, HD203, in all markets except Korea and Turkey, where Hanwha has retained marketing rights. In exchange, Hanwha receives an undisclosed upfront payment, and is eligible for milestones as well as tiered royalties on sales. Although financial terms of the deal were not disclosed in the official release, Hanwha Chemical spokesman Kwon HyukBum confirmed to PharmAsia News that the total potential cost of the collaboration to Merck is $720 million. Although Merck declined to confirm that figure, Merck BioVentures President Michael Kamarck said in an interview with “The Pink Sheet” DAILY that the deal is heavily back-end loaded. Nonetheless, the financial arrangement is "symbolic” of the huge opportunity for Enbrel biosimilars, he said. Merck has assembled a pipeline of biosimilar drugs since announcing the formation of Merck BioVentures in December 2008. Still, the company has revealed plans only for a couple of products, including a granulocyte colony-stimulating factor referencing Amgen's Neupogen and a pegylated version of Neulasta. Earlier plans to develop a biosimilar version of Amgen's Aranesp were scrapped in 2010, given emerging safety issues with the class. Merck continues to stand by its goal of having five biosimilars in Phase III by the end of 2012 and says it is mainly interested in harder-to-replicate monoclonal antibodies. – Peter Chang & Jessica Merrill

Friday, June 10, 2011

DOTW: School's (Still) In For Pharma

School's out for summer here in California, but not forever. As this week's tie-up between Pfizer and prominent hospitals and unis in Boston reminds us, big pharma seems keen on continuing education.

The goal, as we told you in this February IN VIVO feature, is to increase access to innovative R&D, via externally-sourced partnerships with leading academics, generally around risky areas, where the unmet need is high and the biological understanding is nascent (think Alzheimer's, treatment-resistant depression, obesity).

Pfizer isn't the only big pharma doing these types of deals (J&J, AstraZeneca, GSK, Bayer, and Sanofi are all touting their prowess in linking with top minds) but it has been among the most aggressive in the industry, both in terms of the pace of its deal-making and the money it's willing to spend.

On June 8, the big pharma revealed the latest in its Centers for Therapeutic Innovation program, a $100 million, 5-year collaboration with 8 Boston-area unis and hospitals that follows just months after similar tie-ups in San Francisco and New York. In announcing the deal, Pfizer made it clear Boston will become its official CTI hub (with offices on the Longwood Medical Campus, within spitting distance of academic researchers), even as the group anticipates setting up 5 additional spokes in cities in the US and elsewhere around the globe.

According to "The Pink Sheet" Daily, with an estimated 40 staffers on the Longwood Campus, the new CTI will employ twice as many Pfizer professionals as the exploratory UCSF arrangement when it got started last fall, and more than the 25 now working diligently in NYC. These industry execs are supposed to establish direct relationships with specific scientists, in the same way that VCs often reach out to academics or docs -- to identify research that could lead to viable commercial products. A joint pharma/academia steering committee will ultimately choose the projects eligible for Pfizer's $20 million annually.

The question of course, is will these CTI deals provide Pfizer with the necessary innovation to revitalize its "innovative core", even as senior industry execs continue to define what that exactly means. At around $100 million a pop, these deals are real money, even if the company is hedging by limiting the amount it doles out in one go. Certainly the amount of people power devoted to managing the alliances --85 and rising-- ain't nothing.

Pfizer, of course, loses its Lipitor juggernaut later this year, and has been increasingly looking for ways to cut costs. Two weeks ago, it revealed it was streamlining its outsourcing, looking to Parexel and Icon, to become its preferred CRO providers. This week, WSJ broke the news that the big pharma was looking to cull another $1 billion, mostly via reducing administrative costs.

Some have argued these CTI deals are a relatively low-cost way for Pfizer to get access to exciting R&D. And we certainly get the fact that individually these alliances are small money for a company with Pfizer's current cash flow. Thing is, with Lipitor going off patent that cash flow will dry up (at least a little). That means Pfizer's Jose-Carlos Gutierrez-Ramos and Anthony Coyle, who spearhead the CTI initiative, will have to justify why spending roughly $160 million of R&D money annually (assuming all 8 CTIs are up and running by year's end w/o making an attempt to incorporate management costs) is better than inking multiple development deals with biotechs --or even VCs. After all, why not take a page from Lilly's FIPNET playbook and try something like that group's mirror fund?

In other words, for the money Pfizer is ponying up, it's got to ensure it's getting more than a GED (aka generally excellent discovery) -- in the form of actual pipeline. And there's where the potential problem arises. As is true for the other CTI arrangements, the Boston deal is structured as an opt-in: there is no quid pro quo that mandates the unis participating will steer a certain number of researchers to accepting the Pfizer dollars.

As such, there is the risk that investigators with top-notch ideas may seek alternatives -- either venture capital or additional grants or heaven, forbid, competing big pharma -- to finance their early stage science. That of course would leave Pfizer with access to second-tier projects -- and really, what good does that do the big drug maker? Indeed, when reporting the IN VIVO feature, one industry source opined (off the record, of course) that in certain cases academic centers are placing an unrealistic premium on their IP, without putting enough of their own skin in the game.

Pfizer execs know the risks, telling IN VIVO "it's up to us" to create the conditions under which the CTIs can be successful; and with a majority of VCs pulling back from funding early new ideas to baby existing portfolio cos and a very limited supply of federal grant money, this may be as good a time as any to head back to school.

Whether the results ultimately create the next wave of Pfizer innovation...well that's an experiment that doesn't fit nicely into an academic calendar year. And one crucial element may be whether Pfizer execs --especially Coyle, Pfizer's CTI architect and head of R&D Mikael Dolsten have the stamina to see the program through the inevitable ups and downs.

As we wait for the next CTI deal and news of projects financed from the ongoing NY, SF, and Boston efforts, we've sharpened our pencils and cracked open our notebooks to bring you another installment of ...

Selecta/Juvenile Diabetes Research Foundation: Selecta Biosciences and the Juvenile Diabetes Research Foundation will collaborate to bring an experimental tolerogenic vaccine for type 1 diabetes through preclinical proof-of-concept. In an arrangement announced June 9, JDRF will provide undisclosed milestone-based financial support to Selecta’s efforts to produce a vaccine that specifically targets the antigen which causes type 1 diabetes. JDRF’s Industry and Development Partnership Program has provided roughly $75 million in funding for diabetes research at 32 companies since 2004. The Selecta collaboration involves staged objectives beginning with creation of a work plan for the identification of a clinical candidate, the biotech says. JDRF will also provide "insights and expertise", which could be extremely helpful given the high-risk nature of the endeavor. (Recall just last week J&J parted ways with the biotech Diamyd, which has a Phase III vaccine for Type 1 diabetes called GAD65.) Selecta's therapy aims to stop a patient’s autoimmune response to Type1 diabetes-causing antigens, thereby blocking disease progression. The vaccine actively eliminates or inactivates T cells that cause beta-cell destruction while at the same time increases the number and function of beneficial T cells. In addition to diabetes,the biotech also is working on vaccines for preventing and treating diseases in half a dozen other therapeutic areas, including infectious diseases (universal flu, pneumococcus bacterial infection, malaria), oncology (universal human papilloma virus and prostate cancer), and smoking cessation. —Joseph Haas

Lilly/Synthes: In an unusual venture, Eli Lilly and the orthopedics manufacturer Synthes have formed a long-term world-wide collaboration for the development and commercialization of bone-healing therapies. The companies will jointly develop new treatments for fractures and use in orthopedic trauma, spine, craniomaxillofacial and reconstructive procedures. The deal covers compounds ranging in stage from pre-clinical to clinical, which Lilly can license to Synthes as part of the arrangement. Lilly would not specify the compounds and financial details of the collaboration weren't disclosed. Drug-device development collaborations are common, but the extent and expected duration of this one appears to be unusual. While the companies wouldn’t specify a termination date, Lilly executives said it is designed to last at least 10 years, long enough for compounds in early-stage development to reach commercialization. More unusual is the worldwide co-promotion, in which Synthes, which is the world’s leading orthopedic trauma company, will promote to orthopedic surgeons Lilly’s Forteo, an $830 million in sales osteoporosis drug. Such drug-device commercial partnerships have a rocky history and are difficult to execute. The timing of the deal is also noteworthy, as Synthes is in the process of being acquired by Johnson & Johnson for $21.3 billion. Both Synthes and Lilly have pressing strategic reasons for pursuing the deal, though. Synthes has not been at the forefront of an orthopedic industry trend to incorporate biologics into the product mix; Lilly, for its part, has played a leadership role in its industry in exploring innovative partnerships to help fund its drug development, although it has not worked at this level before with a device company. --Wendy Diller

Merck/Roche: ASCO wasn't a huge focus for Merck this year beyond a presentation with long-time partner Ariad tied to Phase III data for the mTOR inhibitor ridaforolimus. However, as the meeting was winding down, the big pharma announced it had formed a collaboration with Roche focused on the development of companion diagnostics to accompany Merck's pipeline of investigational cancer therapies. It's the second non-traditional alliance Merck has struck with Roche in the past month: recall in May, just after winning approval for Victrelis, the big pharma signed on Roche as a marketing partner in an attempt to cut Vertex and it's Incivek out of the Hep C protease inhibitor horse race. The alliance announced this week is aimed at the other end of the spectrum: according to the June 7 press release, Roche Diagnostics will provide Merck access to validated standardized assays, as well as expanded use of the AmpliChip p53 test, to better identify patients suitable for inclusion in ongoing/planned clinical trials. Financial details of the collaboration weren't disclosed, nor did Merck give any indication of which products now under development would be candidates for companion test development. Including vaccines, Merck has a stable of roughly two dozen oncology products in its pipeline, according to Elsevier's Inteleos database. Beyond ridaforolimus, late stage assets include an insulin-like growth factor 1 inhibitor called dalotuzumab and a cyclin-dependent kinase inhibitor, dinaciclib. Earlier stage, the big pharma also has a PARP inhibitor, a MEK inhibitor, and an aurora kinase blocker, all of which are are targets of avid interest for biopharmas. (Last week, Pfizer outlicensed its PARP inhibitor, which like Merck's lags significantly behind Sanofi's Phase III iniparib.) Pharma companies are increasingly talking about the need to use companion tests in oncology --and in some cases they are walking the talk (think Pfizer's crizotinib or Plexxikon/Roche's BRAF inhibitor in melanoma). But even as they see greater need for accompanying diagnostics, with the exception of Roche, Abbott, and Novartis, biopharmas haven't seen a need to develop the testing capabilities in-house, with partnering the preferred way to access the myriad technologies now being developed. --EL

Merck/Intercell: Two long-time partners announced that they have terminated studies of a Staphylococcus aureus vaccine, as Merck elected to discontinue trials on Intercell’s late-stage prophylaxis V710. Merck’s decision followed a unanimous recommendation from an independent Data Monitoring Committee, which determined that the vaccine is unlikely to show statistically significant clinical benefits, based on interim results of a Phase II/III trial. Enrollment in the trial was suspended following the DMC’s initial recommendation in April. The DMC also flagged a safety concern, citing increased likelihood of mortality and organ failure compared to patients receiving placebo, although follow-up assessments indicated the safety risk was not statistically significant. Merck, which had committed to clinical development as well as manufacturing and marketing of V710, expects to present more detailed results of the study soon. Intercell would have been due milestone payments and royalties of unspecified size had the trial continued and the drug been approved. Merck and Intercell first announced in 2001 that they would collaborate to develop bacterial vaccines; the partnership was extended in 2004, and expanded to include a Group A Streptococcus vaccine in 2006. S. aureus is the most common hospital-acquired bacterial infection, and about 50 percent of cases are antibiotic-resistant. – Paul Bonanos

Image courtesy of flickrer MrPhilDog via a creative commons license.

Thursday, June 09, 2011

Financings of the Fortnight Goes Double-Dipping

Much of the macroeconomic chatter this past week has focused on the dreaded DD -- even the President stuck his snow cone into the conversation to tell everyone to chill out -- but here at FOTF HQ we've been deep in the depths of a different double dip. Yes, Mr. and Mrs. Financings have a new baby girl, our second, and all the wonderful things to go along: the exquisite smallness that's hard to believe even when you've been through it before; the newborn top-of-the-head smell; the softest skin and hair you've ever felt; and best of all, the tiny weight on your chest as you doze off in the rocking chair.

No, scratch that: best of all are the hallucinations brought on by sleep deprivation. Recreational drugs are so 1967; FOTF prefers to get out-of-body the natural way. We remind ourselves constantly: it's not torture, it's an enhanced interrogation technique.

Then again, if you're three years old and a newly-anointed big sister, the best part of the deal is the multiple bribes, er, treats that your once-principled parents suddenly, desperately lean on to coerce compliance. A cookie on the way home from school and ice cream after dinner? That's surely the kind of double dip the President can get behind. (Just don't tell Michelle.)

We're cutting short this week's column to push the stroller around the block -- yet again -- but having used up our vacation time for newborn duty, FOTF from here on out will be busy all summer. So much to do: check in on the A-List, glean tidbits from Start-Up magazine's first-ever venture survey (coming soon!), find new subjects to profile for our new Capital Matters column, and of course keep a close eye on how the macroeconomics are affecting the ways biotechs are raising cash. And if there's a biotech out there working on a combination ibuprofen/caffeine/martini/weight-loss pill, formulated perhaps with an estrogen antagonist to keep the pink-princess claptrap from taking over the house, Mr. FOTF will gladly double-dip into his personal fortune to fund the seed round. Until next time, folks, I scream, you scream, we all scream for...

Shield Therapeutics: Switzerland has become a hot spot for Series A financings in Europe this year. Four Swiss companies have raised Series A money totaling about $60 million since the start of the year, with the latest funding going to Shield. The Wollerau-based company has raised $12 million, to be released in two equal tranches over the next two years, to support the Phase II/III development of its oral iron deficiency product, ST10-021. This contains ferric iron tightly bound to sugar carrier molecules, with the iron being taken up from the gastrointestinal tract by a specific ferric iron carrier. Any iron that is not absorbed is excreted unchanged from the body because of the tight binding to the carrier, which is a key property of ST10-021, says Shield CEO Carl Sterritt. In contrast, in competing oral iron products that contain ferrous rather than ferric iron, any non-absorbed iron can dissociate from its carrier and cause side effects. Only one VC firm, Inventages Venture Capital, was involved in the Shield financing, but Sterritt said he preferred it that way to keep the board as simple as possible. Life-science specialist Inventages has backing from Swiss conglomerate Nestle and more than 30 companies in its portfolio. Shield had previously raised €6 million from private investors, Sterritt said. Shield plans to evaluate ST10-021 first in patients with ulcerative colitis and Crohn's disease in Europe, and it is currently drawing up plans for US development. The other three Swiss A-round recipients this year are Vaxxim, Anergis, which we wrote about here, and Delenex Therapeutics, which topped off its previously disclosed Series A with a $19 million tranche. -- John Davis

Cyterix Pharmaceuticals: Spun out of the University of Dundee in Scotland last year, oncology drug discovery firm Cyterix has set up shop in San Francisco with $9.2 million in Series A money from two U.S.-based investors. The Column Group supplied an initial installment of funding in February, and SV Life Sciences followed with a second tranche to close the round in April. Cyterix aims to develop new prodrugs activated by specific versions of cytochrome P450 enzymes that exist outside the liver and are over-expressed in tumor cells. By combining that activation mechanism with known “warheads” -- well-studied cytotoxic or molecularly-targeted compounds -- Cyterix hopes to create new drugs that solve toxicity issues by administering lower doses that affect tumors without harming healthy tissue. While the company is aiming for proof-of-concept in one or two compounds of its own, it may also partner with pharmas to develop new versions of drugs that have stalled in development due to toxicity issues. Former University of Dundee professor Steve Everett will lead the virtual company, based in San Francisco, alongside UCSF professor and CYP enzyme specialist Paul Ortiz de Montellano; a third co-founder, longtime Genentech clinical development executive and Threshold Pharmaceuticals CMO John Curd, passed away unexpectedly in April. -- Paul Bonanos

Intrexon: Blacksburg, Va.-based synthetic biology startup Intrexon said May 31 it completed a $100 million Series E round of funding intended to support its industrialized transgenetic manufacturing technology. The round includes company founder Randal Kirk, his investment firm Third Security, and an unspecified number of institutions and high-net-worth individuals; new investors accounted for more than half the round. The company has now raised $259 million since its inception in 1998, including a $67 million Series D round accumulated through several closings in 2010 and early 2011. The company is commercializing its UltraVector technology, which senior vice president Robert Beech says is a high-throughput manufacturing technique that allows mass production of complex synthetic DNA with sophisticated control capabilities. The company is engaged in multiple areas, including agricultural biology, animal science and industrial products. To date, Intrexon has announced two biopharma partnerships. The most recent was announced earlier this week, a license of Halozyme Therapeutics' recombinant human hyaluronidase for use in Intrexon's formulation of a subcutaneous alpha 1-antitrypsin for patients with genetic defects that lead to deficiencies of the protein and potentially lung and liver diseases. Kirk, a longtime major investor in the company, was the majority stakeholder in New River Pharmaceuticals, the developer of ADHD drug Vyvanse (lisdexamfetamine dimesylate), prior to its acquisition by Shire for $2.6 billion in cash in 2007 and a large shareholder of Clinical Data Inc., bought by Forest Labs this year for $1.2 billion. -- P.B.

Constellation Pharmaceuticals: GlaxoSmithKline continues to fuel competition in the epigenetics space, with Constellation adding $15 million to a Series B round that it began last year with a $22 million tranche led by GSK's SR One venture arm. All current investors, including SR One, Third Rock Ventures, and The Column Group, participated in the extension. It's quite a haul for a firm with no publicly declared compounds in the clinic, and it underscores how even in risk-averse times a handful of venture investors, often with a lot of help from pharma venture groups, are placing big bets on cutting-edge platforms. Glaxo is -- ahem -- double-dipping in epigenetics, having signed a potentially lucrative R&D partnership with EpiZyme in January that gives GSK access to small number of undisclosed histone methyltransferase targets, with EpiZyme doing the preclinical discovery work and handing off development candidates to the larger partner. As our STARTUP colleagues so ably explain here and here, the rapidly evolving field of epigenetics revolves around molecular modifications affecting the packaging of DNA into chromosomes, which allows individual cells to dial up or down the activities of different genes in a highly specific manner. Misregulation of epigenetic enzymes are thought to result in disease, particularly cancer, metabolic disorders and neurodegenerative diseases.

Photo courtesy of flickrer Funkdooby via a Creative Commons license.

EMA Leadership: Mr. Rasi Goes to London

From out of the mists of confusion created by the European Medicines Agency’s initial ineptitude in seeking a new head – its first job advert in German was wrongly directed at physicists and not physicians – an apparent savior has charged: Guido Rasi, current Director General of the Italian medicines agency, AIFA. The reaction of delegates at the OTC-focused AESGP meeting in Rome (where this blogger is currently reporting for "The Tan Sheet") to his nomination as EMA's next Executive Director is one of relief. Rasi, it appears, is whiter than white.

Unlike some of his AIFA predecessors, perhaps. Rasi's appointment to the top position of AIFA in 2008 came after its previous head, Nello Martini, was removed after being charged with “culpable disaster” (he was indeed acquitted in 2010). Martini's alleged crime, as deemed by public prosecutors at the time, was to have delayed the updating of pharmaceutical packaging and labeling where in fact a brief rewording of the documentation would have been appropriate. At the time, this resulted in delays to access and greatly angered the pharmaceutical industry.

But worse still were the crimes of Duilio Poggiolini, another former head of the Italian committee for drug registration, a forerunner of AIFA, who was accused of amassing a fortune in the region of CHF15 billion ($18 billion). The story goes that when police lifted floorboards in his house, they found underneath millions of Liras worth of gold bullion. (Lira was the pre-Euro Italian currency, for those of you with shorter memories).

And so Rasi was brought in to balance the ship and restore credibility to the medicines authority. An academic and physician by profession – until his AIFA appointment, he held a series of high-profile posts at various research institutes in Rome – he was credited with speeding up the drug registration process and thereby patient access.

His outstanding qualities in the eyes of his Italian colleagues, in addition to his acknowledged management skills, are honesty and trustworthiness. (Rare qualities indeed in anyone anywhere near the top of any multinational organization, let alone one whose shortened name has "As" and "Fs" in it..) Pharma industry commentators have already claimed that these qualities are growing in importance at EMA, following its ticking off by the European Ombudsman in June last year for a lack of transparency, and the questionable departure of its last Executive Director, Thomas Lönngren, to join the European regulatory and market access business the NDA Group. This move was seen as raising conflict of interest issues by many in industry, political circles and public interest groups.

The European Commission may have found a man to set the EMA’s house in order, but also one who will toe the line. The word in pharma circles is that he can be told to do things, but that he will then do them his own way.

Rasi's relatively short experience within the regulatory world (he's been chief of AIFA only since 2008, though on the board since 2004) may be an advantage, say some, as he comes without the baggage of a long-serving regulator. AIFA isn't a high profile agency within Europe, either (Italy is rarely used as a reference member state for decentralized approvals, for example). It does have a strong leaning towards risk-sharing deals, however-- which may prove significant.

Mr Rasi will go before a hearing of the European Parliament's committee on environment, public health and food safety on July 13, and his nomination will have to be approved by Parliament as well.

-- Faraz Kermani

Monday, June 06, 2011

Live From ASCO: Time To Cool Down?

It's day three of ASCO and the meeting is at a fever pitch, as the National Cancer Institute's Antonio Tito Fojo wryly observed during a panel on designing randomized controlled trials to achieve meaningful benefits. Not that it's an unusual state for the world's largest meeting on the largest field of drug development.

There is the typical fervor surrounding promising early data, a few major advances to report (for instance, the melanoma data from Roche and BMS covered by among others, the NYT, WSJ, Reuters, and, of course, "The Pink Sheet" Daily), and the meeting halls are packed with clinicians, investors, and journos. (Saturday's clinical science symposium on ovarian cancer had such throngs waiting for it to start that McCormick Place called in bouncers, from "Armageddon Security," nonetheless. And if you weren't in the initial crush, you probably got diverted to an overflow room. Or the second overflow room.)

Still, compared to other years, analysts aren't finding much to write home about. And, increasingly, the importance of the data being presented before packed meeting halls is being questioned. "We need to get away from things that add cost but not value," UnitedHealthcare's Lee Newcomer noted during a panel on health care reform.

Defining what value means, however, is a trickier subject.

Most clinical trials don't mean much for clinical practice, Ralph Meyer of Queen's University asserted at the plenary on randomized clinical trials. With all the controls and standardization, they represent the ideal – not real world practice. And registration studies are intended for that purpose.

In a talk called "Raising the Bar for Efficacy In Cancer Therapeutics," Alberto Sobrero, Head of the Medical Oncology Unit at Italy's Ospedale San Martino, took on whether or not those trials produce clinically meaningful data, or just go after statistical significance. Looking at the 15 pivotal Phase III trials for 9 biologics covering 8 different cancers approved over a 5-year period, he found that the hazard ratios (a statistical metric for calculating risk reduction) for progression-free survival and overall survival looked good at (respectively) 0.57 and 0.73. But when you considered the absolute gains of 2.7 and 2 months, the data were far less clear. Or as Sobrero put it, "Hmmm."

It's a complicated situation, he acknowledged. In an aggressive cancer like metastatic melanoma, a 0.8 HR would mean a 1.5 month gain – not really meaningful. But in breast cancer, that same 0.8 HR becomes worthwhile with a 6 month gain. So, both hazard ratios and absolute gain need to be considered --as well as the context of the specific tumor type-- when making a value judgement about a clinical benefit.

NCI's Fojo also questioned the significance of statistical significance. Paraphrasing an earlier researcher, he noted that if you torture data long enough, you can get it to confess to significance. Fojo found much of the clinical benefit shown in studies has marginal value. By definition, clinical benefit rate (CBR) is what you get when you add stable disease to partial and complete responses. Or, as Fojo put it, it's what you report when you have a drug that underperforms. It's "the corruption of an endpoint," he said.

Shrinking a tumor is good, he agreed, but unless it correlates with survival, stable disease does not mean anything. In prostate cancer, for instance, where some novel drugs have been reporting CBR, objective response rate (PR+CR) correlates highly with overall survival. But when you include patients that met stable disease criteria, the average benefit drops by more than half. "Because you're adding a parameter that has no value at all," Fojo said.

Of course, part of the concern is that these absolute gains aren't coming without costs. It's one thing for a drug to provide 2 months of life, quite another if it costs thousands of dollars and comes with toxicities. And given the proliferation of oncology drugs, there's more room for payers to actively manage the disease, benchmarking more expensive newer agents against cheaper, older ones, and using the ultimate metric --survival -- as the measuring stick. That's playing out at ASCO too, as Newcomer's comments indicate.

Unlike in the past, the skepticism of therapeutic value outlined in posters and abstracts isn't limited to the back corridors or the marginal sessions on clinical trial design and practice issues -- it's coming from the podium at scientific sessions. For instance, a review of recent Phase III trials in upper GI malignancies was organized around the theme of whether the findings were clinically meaningful or just statistically significant, and included a talk about the health care economics of treatment. (Hint: It wasn't pretty.)

It's all part of a larger trend toward more concentration on value, cost and payer issues as IN VIVO covered recently in the May 2011 issue.

It's great to see researchers and industry execs coming out of the convention with excitement about promising new pathways and the potential for combinations. But they should also start thinking harder about raising the bar. Otherwise climate change (of a reimbursement and/or regulatory nature) could spark a cool down in one of the hottest therapeutic areas of the industry.

Image courtesy of flickrer Joe Seggiola through a creative commons license.

Friday, June 03, 2011

Deals Of The Week: The ASCO Edition

ASCO is just moving into full swing, but already the press releases are flying fast and furious. Biotechs have long looked to this meeting as a means to showcase their smarts and increase their profile with public investors. But as big pharmas have set their sights on oncology as the therapeutic area of choice -- given its high unmet medical need and, historically, generous reimbursement, there's no doubt ASCO is now a critical meeting for even the biggest players in the industry.

Like last year, the particular tumor type driving a lot of investor interest at this year's Chicago confab is melanoma. Since presenting robust Phase III data at ASCO 2010 showing a survival benefit for Yervoy, Bristol-Myers Squibb has gone on to win rapid approval for its CTLA-4 inhibitor. This year, investors and clinicians will be watching for new data measuring Yervoy efficacy in pretreated melanoma patients; they'll also be monitoring the data associated with Plexxikon/Roche's vemurafenib, which is pending FDA approval for use in patients with the BRAF V600 mutation, a specific genetic abnormality observed in about 50% of melanoma patients.

As "The Pink Sheet" Daily notes, it's not entirely clear how the melanoma market will shake out when both products are finally on the market. They may be competitors, but given their different modes of action -- Yervoy stimulates the immune system, while the Plexx/Roche drug targets only tumor cells that carry the V600 abnormality -- it's equally likely they could act synergistically. Certainly neither drug on its own works in all patients or offers a long-term cure, even if both extend median patient survival in clinical trials.

Thus, the news June 2 that Roche/Plexxikon would find a way to work with BMS to study the two drugs in combination seemed almost a fait accompli. The press releases issued (from three different companies no less) were long on breathless prose and short on detail: the parties will conduct a Phase I/II study evaluating safety and efficacy of the two drugs in combo, but did not provide more clarity on the trial's design, its timing, or its enrollment. "If appropriate, the companies may conduct further development of the combination," Bristol said in its press release.

You will notice there's also no information on the economic sharing that might come from such a clinical collaboration either. That's hardly surprising. We've yet to see much in the way of financial deets for earlier tie-ups in oncology: AstraZeneca's 2009 alliance with Merck to combine development of their respective clinical-stage MEK inhibitor and AKT inhibitor; or Sanofi's December 2010 deal with Merck Serono to marry their Phase I PI3 Kinase- and MEK-targeting molecules.

Despite the increasing complexity of the oncology market, one in which payers are taking a more active role in controlling costs, such cross-collaboration remains the exception rather than the rule. There are plenty of reasons why: issues around control, valuation, and overlap with other non-partnered products mean it can be tough for two large companies to come to agreement on how to share knowledge and find ways to work together.

That BMS and Roche have found a way to do so can only be a smart thing. The reality is organizations like US Oncology, Cardinal's P4 Healthcare, and Via Oncology are going beyond traditional treatment guidelines recommended by the likes of ASCO and the National Comprehensive Cancer Network, working with payers to provide "clinical pathways" that aim to standardize treatment for a specific disease or tumor type. Aimed for now at treating the most costly cancers, these programs, which are still in pilot mode at major players like Aetna, Blue Cross Blue Shield and Highmark, reduce the wide latitude US doctors have historically enjoyed when prescribing oncologics.

The ultimate impact of these pathways on the biopharma industry isn't yet known, but as we write in this IN VIVO feature, their advent has real consequences for how companies should approach drug development. And while it's very early days to be talking about a melanoma pathway, doing clinical trials to show the merit of your drug in conjunction with a competitor, when it's highly likely to see real-world use in such a combination, just makes sense. (We also wonder how this impacts GSK's Phase III melanoma drugs, its MEK1/2 inhibitor and its BRAF protein kinase inhibitor. Can these earlier stages medicines get traction in the current competitive marketplace? GSK certainly hopes so, and has its own combo trials ongoing.)

Will we see more cross-company clinical stage oncology pair-ups in the future? We hope so. Could such alliances be broader and extend beyond on-offs to a ViiV type arrangement? We're doubtful given the deal making complexities and nearly every pharma's desire to be tops in oncology. But as crazy as that idea sounds, it'd be a clear choice for 2011's DOTY.

In the interim, we always have ASCO (if not Paris) and...

Clovis/Pfizer: Attention biopharma trend watchers! We bring you this news flash of another sighting of that rare bird in the wild: the out-licensing. On June 2, Clovis announced it was licensing Pfizer's Phase I/II Poly (ADP-ribose) polymerase (PARP) inhibitor, PF-01367338, for an undisclosed upfront sum. Under the terms of the agreement, Clovis Oncology will take over responsibility for global product development and commercialization, and in addition to paying the u/f, will owe Pfizer additional downstream fees milestones totaling up to $255 million (pending success in the clinic and commercially, of course). Interestingly, as part of the out-licensing, Pfizer Venture Investments is taking an equity stake in the biotech. (So it's a licensing AND a financing in one blow.) Not that Clovis is hurting in the cash department. Recall Clovis, a START-UP A-lister, pulled in one of the biggest Series As EVUH in 2009. PARP inhibition is, of course, a hot topic at ASCO, and a quick search of the pipeline database Inteleos, shows there are more than a dozen drugs in development against this target, including some that are much further along, including Sanofi's iniparib (Phase III, originally developed by BiPar), AstraZeneca's olaparib, and Cephalon's CEP-9722. The press release announcing the news emphasizes '338 is a "potent" PARP inhibitor, so it's a bit curious that Pfizer would give it up unless its trying to walk the talk of jettisoning anything not first-in-class or best-in-class. (But that raises other questions, including what does Clovis see in the compound?). Separately, Clovis also announced this week plans to develop in concert with Roche an in vitro PCR-based companion diagnostic linked to EGFR mutations.--EL

Johnson & Johnson/AVEO: Months after partnering its lead asset tivozanib in a lucrative deal with Astellas, Aveo has extended its network of partners with an early stage deal with Johnson & Johnson's Centocor Ortho Biotech division. The Cambridge, Mass.-based biotech announced the licensing deal for compounds targeting the RON (Recepteur d'Origine Nantais) receptor - believed to play a role in cancer development - for $15 million upfront May 31. Under the deal, Aveo will receive half of the $15 million in an upfront payment and the rest through a separate equity investment that gives J&J a 1.25% stake in the biotech. Given the early-stage nature of the deal, it's not surprising the arrangement is back-end loaded, with Aveo eligible to receive up to $540 million in development, regulatory and commercial milestones. Aveo will also receive tiered, double-digit royalties on sales of any products stemming from the collaboration. Centocor will be responsible for clinical development, manufacturing, commercialization and costs. J&J will also fund some research to be conducted by Aveo to identify biomarkers for patients most likely to respond to treatment with RON-targeted antibodies. "It is about building out a portfolio," said Aveo Chief Business Officer Elan Ezickson of the collaboration in an interview with "The Pink Sheet" DAILY. For J&J, the deal provides access to what could be an important product in oncology, an area of critical importance to the big pharma's overall business success. -- Jessica Merrill

AstraZeneca/Heptares: (
Spoiler alert. No oncology refs in this deal.) UK biotech Heptares Therapeutics signed its third Big Pharma agreement in two months this week, this time with AstraZeneca. The two companies have entered into a four-year research collaboration to discover and develop new medicines that target G-protein coupled receptors (GPCRs). AstraZeneca will have worldwide commercial rights to product candidates emerging from the collaboration, with Heptares receiving $6.25 million in unconditional upfront payments plus committed research funding and future milestones. Heptares will also receive royalties on product sales. Research teams drawn from both companies will focus on a number of GPCR targets known to be linked to CNS/pain, cardiovascular/metabolic and inflammatory disorders. The deal brings to more than $13 million the total upfront money that Heptares has received from its pharmaceutical partners this year, which together add an extra 18-20 months to the biotech's cash runway, according to CEO Malcolm Weir. It also represents further validation for the four-year-old company's technology, which helps stabilize GPCR molecules. That AstraZeneca is modality-agnostic in this deal - purporting to seek both small- and large-molecule candidates - reflects the growing importance of the Big Pharma's MedImmune biologics subsidiary within its overall R&D operations.--John Davis
Johnson & Johnson/Diamyd: J&J's Ortho-McNeil-Janssen (OMJP) signed one early stage deal this week -- and called it quits on another. It was barely a year ago when Elisabeth Lindner, then President and CEO of the Swedish diabetes outfit Diamyd, pronounced on a quarterly earnings call that "a new chapter has begun" as a result of the firm's $45 million upfront licensing agreement with OMJP. That chapter closed on June 1, when OMJP returned all rights to the Phase III GAD65, an antigen-based therapeutic vaccine designed to preserve beta cells in type 1 diabetics. A big disappointment to Diamyd and its shareholders, the news can hardly be called surprising. (We're even tempted to say the writing was on the wall.) On May 9, the two companies reported clinical trial data from a European pivotal study, showing GAD65 failed to meet the primary efficacy endpoint of preserving beta cell function in new diagnosed Type 1 diabetics after 15 months of therapy. Although the company noted "a small positive effect was seen", the data weren't good enough to keep OMJP engaged -- and, importantly, willing to shoulder any additional development costs. Recall the 2010 deal stipulated the two partners would share R&D costs until results of the first Phase III study were available, at which time OMJP had the option to assume full development of the drug candidate. It can't be an easy message to give shareholders, but Diamyd's acting president and CEO, Peter Zerhouni (who replaced Lindner after her abrupt departure in late April) did his best to spin the news positively. "With all the rights to returned to us we are free to decide on how to extract the most value from GAD65 going forward," he said. Whether Diamyd can sign a new partner near term is unclear -- a therapeutic vaccine for diabetes is scientifically risky and it's hard to see a lot of interest after the disappointing Phase III study results. (Even Diamyd doesn't seem that interested. In the wake of OMJP's decision it announced it would shelve a planned longer term follow-up of patients in the European trial.) Investors may have more clarity on GAD65's potential partnerability by end of June -- at the upcoming ADA meeting Diamyd will present data on the European trial, presumably providing greater detail about the small positive effect. There's also a Phase III ongoing in the US due to read out in 2012 and two other externally funded studies that may yet result in the vaccine's resurrection.--EL