Deals Of The Week: The Letter's In The Mail

Pens were flying this week, tied up mainly writing letters, rather than signing dotted lines. Activist investor Carl Icahn put pen to paper (or fingers to keyboard) to scold Amylin Pharmaceuticals' board of directors April 4 for rejecting a reported $22 per share takeover offer from Bristol-Myers Squibb.

There hasn’t been any confirmation of Bristol’s offer or Amylin’s rejection, but Icahn was equally as irked by the lack of transparency. “I find it reprehensible that the board of directors has still not acknowledged or denied the media reports regarding its rejection of a $22 per share takeover offer,” he said in the letter. He made lots of other demands too, which you can read about in "The Pink Sheet" DAILY.

Then, Roche CEO Severin Schwan wrote to the shareholders of Illumina Inc., the next-generation sequencing company, urging them to accept a takeover offer rejected by the company’s board of directors. The offer of $51 per share represents an increase over the $44.50 per-share offer proposed in January. “Your decision will ultimately determine your ability to obtain certain value for your investment amid increasing headwinds for Illumina and the broader sequencing sector,” Schwan said.

Deals of the Week doesn’t know how much correspondence has been going back and forth between Watson Pharmaceuticals and its Swiss generic rival Actavis, but assumes it’s a lot. Media reports say the two are nearing a merger, with Watson offering roughly $7 billion and an announcement could come as early as next week.

We’ll have to wait and see how many jelly beans we eat before these or other takeover rumblings become a reality. In the meantime, here’s a look at some of the deals that did get done....

Spectrum Pharmaceuticals/Allos Therapeutics: Spectrum will buy specialty cancer drug developer Allos Therapeutics, Spectrum announced April 5. Spectrum will pay $1.82 per share, or $206 million, upfront to Allos shareholders, along with a contingent value right (CVR) that gives Allos shareholders another 11 cents per share if the biotech’s lead cancer drug, Folotyn (pralatrexate), is approved in Europe before the end of 2012 and gains reimbursement in three major markets before the close of 2013. Spectrum hopes to create synergies between its current cancer drugs and Folotyn. The news coincided with Spectrum’s announcement that its bladder cancer drug apaziquone failed two Phase III clinical trials. It also comes on the heels of a failed attempt by AMAG Pharmaceuticals last year to acquire Allos. AMAG paid a $2 million termination fee last fall after its shareholders killed the company's three-month long attempt to conduct an all-stock merger. The acquisition by Spectrum comes as no surprise. In a Sept. 15 regulatory filing, Allos revealed that management had turned down a buyout offer from an undisclosed company.--Lisa Lamotta

Amgen/AstraZeneca: AstraZeneca’s MedImmune biologics unit bolstered its pipeline, particularly in the inflammation and respiratory areas, while Amgen  obtained some needed financial flexibility in a partnership the companies announced April 2. Under the deal, MedImmune and Amgen will co-develop and commercialize five monoclonal antibodies originally discovered and advanced into clinical development by Amgen. The lead compound included in the collaboration is brodalumab (AMG 827), an interleukin-17 receptor blocker that has produced impressive Phase II data in moderate to severe plaque psoriasis and also is being investigated in Phase II studies in psoriatic arthritis and asthma. The other four candidates all are in various stages of Phase I development for indications such as Crohn’s disease, ulcerative colitis, systemic lupus erythematosus (SLE) and asthma. Under the deal, MedImmune will pay Amgen $50 million upfront for development and commercial rights to the five antibodies, while the two firms will share development costs. MedImmune has pledged to cover 65% of such costs each year from 2012 to 2014, and costs will be split equally by the two firms starting in 2015. The rationale behind the deal seems fairly clear-cut on both ends. Amgen, which needs to reduce R&D spending that exceeded 20% of sales last year, gets financial flexibility, while MedImmune and its parent, hit hard by recent drug development failures and facing a deep patent cliff, need to boost their pipeline.--Joseph Haas

Forest Laboratories/Janssen: Forest Laboratories has paid $357 million in cash for all U.S. patents and other U.S. and Canadian intellectual property protecting Bystolic (nebivolol), its anti-hypertensive drug, from Janssen Pharmaceutica, a subsidiary of Johnson & Johnson, the companies said on April 2. The deal includes the nebivolol composition-of-matter patent and eliminates the need for Forest to pay royalties on sales of the drug. In addition, Forest and Janssen ended licenses in Canada for both Bystolic and Savella (milnacipran), Forest’s fibromyalgia drug. Forest’s Canadian subsidiary will assume responsibility for registering and commercializing the drugs. Bystolic, while not a blockbuster, has done surprisingly well as a late entrant into a heavily genericized market. As the only branded beta-blocker on the market, it has benefited from Forest’s promotional efforts and from a mild side effect profile, which gradually has won over doctors and patients. And the company points out it has good market access, with 85% of total beta blocker lives covered by managed care in the U.S. with no prior authorization or step edit restrictions. Overall, Bystolic has 4% share of the beta blocker class and continues to grow. Forest’s fiscal year 2012 ended March 31, so it hasn’t reported full-year sales of the drug yet, but says sales are annualizing at more than $400 million. That’s considerable, given the low expectations when Forest launched Bystolic roughly five years ago and the fierce generic competition.--Wendy Diller

Eisai/Valeant Pharmaceuticals: Eisai balanced the disappointment of seeing its new breast cancer therapy, Halaven (eribulin), turned down by the U.K.'s cost watchdog, NICE, April 2, by announcing the same day a tie-up with Valeant to market the product in eight countries in Central and Eastern Europe. Valeant's European division, PharmaSwiss SA, will promote and distribute Halaven in Bulgaria, Estonia, Latvia, Lithuania, Poland, Romania, Hungary and Slovenia, for patients with locally advanced or metastatic breast cancer whose disease has progressed after at least two chemotherapeutic regimens for advanced disease. Financial terms of the agreement were not revealed. PharmaSwiss, acquired by Valeant in 2011 for $480 million, is one of the largest medicines distributors in Central and Eastern Europe, with operations in more than 12 countries. Despite losing an appeal on the negative NICE final draft guidance, eribulin is still being reimbursed in the U.K. through the government's Cancer Drugs Fund (CDF); it also is available and reimbursed in a number of other European countries, Eisai said. Clinical data indicate that eribulin is associated with a statistically significant overall survival benefit in heavily pretreated patients, and Eisai reported it is in the top-12 most prescribed drugs in the CDF.--Jessica Merrill

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