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Friday, July 20, 2012

Deals Of The Week Brings It All Back Home



As a great man once said, there’s no success like failure, and failure’s no success at all. For Infinity Pharmaceuticals, the failure of one drug means it will have to seek success with another lead candidate – and it’s planning to do that alone, rather than with a longtime partner.

Infinity announced July 18 that it had taken back global rights to a key cancer drug by restructuring an existing alliance with Purdue Pharma LP and its European affiliate Mundipharma International Ltd., which had previously obtained rights to all of Infinity’s early-stage oncology programs in a 2008 arrangement. The renewed focus on that drug comes a month after Infinity said it would suspend a Phase II trial on saridegib, a cancer drug that was apparently performing no better than placebo, according to interim data. Saridegib was also covered under the same partnership.

Infinity now takes full control of a phosphoinositide-3-kinase (PI3K) inhibitor known as IPI-145, which has been through a Phase I study and is slated to enter an expansion cohort, as well as mid-stage trials for asthma and rheumatoid arthritis. Also transferred were rights to a fatty acid amide hydrolase program and other early discovery projects. Initially, Purdue and Mundipharma had sought greater control over the oncology compounds, according to Infinity CEO Adelene Perkins. But Infinity was unwilling to part with additional rights, and instead took back worldwide rights to the programs.

Perkins said the company will attempt to build value on its own, using cash from the restructured deal, before it considers partnering the programs again. But now that it’s less encumbered by alliances, Infinity could become a takeout target too. (As we’ve noted before, a clean target can be especially ripe for picking. Speculation arose last fall that Amylin would soon be bought, shortly after it recovered full rights to exenatide from Lilly. Within months, Bristol-Myers Squibb and AstraZeneca paid $7 billion to acquire Amylin, valuing it far higher than its trading price before the partnership dissolved.)

Under the newly rearranged agreement, Purdue and Mundipharma will take a larger equity stake in Infinity. Purdue will buy 1.8 million shares of its common stock for $14.50 a share, or $27.5 million. Infinity also will issue another 3.5 million shares at the same per share price to Purdue to pay off the remainder of a $50 million line of credit that Purdue issued in 2009. The investment will give Purdue a 28% stake in the company, up from its previous 22.5% share. The original contract stipulates that Purdue cannot own more than 33.3% of the company. Infinity also will pay Mundipharma a royalty on sales of any future products that were once part of the agreement ranging from 1% to 4%.

Who's in the basement, mixing up the medicine? Why, it's...



Express Scripts/ Walgreens: Walgreens will rejoin Express Script's pharmacy networks beginning Sept. 15 under the terms of a “multi-year” contract announced July 19. Although the companies did not disclose contract specifics, the announcement states that Walgreens’ 7,900 stores will participate in the “broadest” Express Scripts retail pharmacy network available to new and existing clients. With Walgreens, that network includes more than 64,000 pharmacies nationwide. The resolution must be reassuring to drug companies concerned about broad access to their drugs, even though it is unlikely that they lost much in sales because of the dispute, since competitors were ready to fill Walgreen’s shoes.

Walgreens withdrew from Express Scripts’ retail pharmacy network in January. In financial presentations preceding Walgreens’ exit, Express Scripts and rival PBM CVS Caremark both predicted the development would lead to a greater acceptance of narrower pharmacy networks among payers. Payers have typically opted for broad pharmacy networks as a convenience to members even though they are more expensive. It remains to be seen whether payers will actively choose a more restrictive network in the interest of controlling costs once Walgreens has rejoined the Express Scripts mix. Addressing the question in an email, an Express Scripts spokesman said, “we wouldn’t speculate on any future transitions, but we have had strong interest from clients” in narrower networks.

For Walgreens, the financial impact of its dispute with Express Scripts has been significant. Express Scripts processed approximately 88 million prescriptions filled by Walgreens in fiscal 2011, representing approximately $5.3 billion of the drug chain’s net sales. In a financial report filed July 12, Walgreens estimated that since it left the Express Scripts network, it has retained, on an annualized basis, only 15% of the 2011 prescriptions processed by the PBM.Adding even more pressure on Walgreens to reach an agreement was the prospect of losing its network relationship with Medco Health Solutions, which Express Scripts acquired in April. A Walgreens spokesman said in an email “there are no changes in pharmacy access for Medco clients and members” under the new agreement with Express Scripts, and that “Medco retail networks that included Walgreens will continue to do so.” Walgreens pharmacies filled approximately 125 million Medco prescriptions in 2011, representing approximately $7.1 billion of the drug chain’s net sales.--Cathy Kelly

Par Pharmaceuticals/ TPG Capital: Generic drug maker Par Pharmaceuticals agreed to be acquired by private equity firm TPG Capital in a deal that is worth as much as $1.9 billion. Par, which had sales of roughly $900 million, announced July 16 that TPG will pay $50 per share to acquire the company. Based on the July 13 closing price of $36.58, the last trading day before the deal was announced, the offer represents a 37% premium. The generic pharmaceutical company’s stock jumped more than 36% to trade at $50 the day the deal was announced. Par has until Aug. 24 to seek a better offer, the company said, noting it will “actively solicit acquisition proposals.” Should no other offers materialize, the deal is expected to close this year. Consolidation activity in the generics market has been high over the last few years, but much of it involves U.S. companies looking for ex-U.S. properties and/ or differentiated subsectors such as injectables, and hard-to-manufacture formulations, so few suitors may be interested in Par’s largely U.S.-focused business. The deal with TPG comes shortly after Relational Investors LLC, which owns 9.9% of Par, urged the company to put itself up for sale citing the continued low valuation for the stock despite Par’s effort to make operational improvements. Par added Indian generics manufacturer Edict Pharmaceuticals for $20.5 million in cash, as well as repayment of $4.4 million in debt and up to $12 million in cash earn-outs. It also bought Anchen Pharmaceuticals, for $410 million in May 2011 and a portfolio of ANDA filings, from Teva, in the wake of the Israeli company’s acquisition of Cephalon. The purchase price is below what other generic pharmaceutical companies have been bought out for recently. -- Lisa LaMotta

Amicus Therapeutics/GlaxoSmithKline: GSK increased its equity stake in Amicus Therapeutics Inc. when the two companies expanded their collaboration regarding jointly developed migalastat HCl for Fabry disease. The July 19 collaboration gives Amicus all U.S. rights to Fabry programs developed under the agreement and GSK the commercialization rights to the rest of the world. The British pharma is increasing its stake in the Cranbury, N.J.-based company to 19.9%, with a $18.6 million investment of stock priced at $6.30 per share. Migalastat HCl is being developed as a monotherapy and currently is in Phase III; data are expected in the third quarter of 2012. The drug also is in Phase II as a combination with enzyme replacement therapy. Amicus and GSK, in collaboration with Japan-based JCR Pharmaceuticals Co. Ltd., are developing migalastat HCl as a co-formulation with a proprietary recombinant human alpha-Gal A enzyme (JR-051). The formulation is expected to enter the clinic in 2013. Amicus and GSK will continue to share research and development costs for all formulations of migalastat HCl, with Amicus funding 25% and GSK funding 75% of these costs for monotherapy and co-administration during the remainder of 2012. The companies have agreed to split costs 40%/60%, respectively, for the co-formulation and for all formulations in 2013 and beyond. -- L.L.

Accera/ Nestle Health Sciences: Accera has struck a deal with Nestle Health Science SA to gain clinical development and commercialization for its medical food Axona, which is meant to help manage metabolic processes associated with moderate Alzheimer’s disease. Terms of the July 18 deal were not disclosed. People with Alzheimer's and other neurodegenerative conditions typically suffer from a condition called neuronal hypometabolism, meaning neurons are unable to process glucose. Axona, formerly called Ketasyn (AC-1202), is an orally available form of caprilyc triglyceride that is metabolized by the liver into betahydroxybuterate, a ketone body, which then crosses the blood-brain barrier for use by neurons as fuel. Accera has completed clinical trials elderly volunteers and in patients with memory impairment or mild-to-moderate AD. Results showed that Axona helped improve cognition when compared with placebo.

Established in January 2011, Nestle Health Sciences was formed to gain a stronger foothold in diagnosis and treatment of gastrointestinal diseases, an area Nestlé knows well from its medical nutrition business. The new subsidiary has bigger ambitions, however, and is hoping to create a continuum of offerings for metabolic ailments and neurodegenerative diseases like Alzheimer’s; Axona would be a strong addition to that. The medical nutrition industry is small, dominated by three companies – Abbott Laboratories, Mead Johnson Nutrition, and Nestlé. Nestlé launched the Health Science subsidiary in January, building it out of the technology from Nestlé’s existing health care nutrition business, which posted sales of $1.9 billion in 2010. The subsidiary since has purchased three companies – Vitaflo Scandinavia, CM&D Pharma, and Prometheus Laboratories– in an effort to make it more substantive than its previous medical nutrition business. - L.L.

Novavax/PATH: Novavax, a Rockville, MD-based vaccine specialist announced a collaboration on July 18th with the international non-profit health organization PATH to develop its recombinant RSV fusion protein vaccine to protect infants in developing countries through maternal immunization. There is currently no approved RSV prophylactic vaccine available for the disease. RSV is the most common childhood respiratory infection, and has a global prevalence of 64 million cases, with 160,000 deaths annually. PATH will provide approximately $2 million toward Novavax’s Phase II dose-ranging trial planned for later this year. The partners may then progress the further development of Novavax’s vaccine with the goal of immunizing pregnant women such that high levels of maternal RSV antibodies will be transmitted to their offspring before birth. Thereafter, they can elect to continue the collaboration, with PATH potentially funding 50% of Novavax’s external clinical costs. Novavax would retain global rights to the product in the event it is approved, and has made a commitment to make the product affordable and available in low-resource countries. The RSV virus is also increasingly recognized as a significant pathogen in elderly populations. Novavax has stated that their goal is to collaborate with both private and public-sector partners “in all markets throughout the world,” says CEO Stanley Erck. Novavax puts the global commercial opportunity for a prophylactic RSV vaccine in excess of $5 billion. The biotech has partnerships with Cadila Pharmaceuticals (India), GE Healthcare, and LG Life Sciences (Korea), and was the recipient of a Department of Human Health BARDA grant  in March 2011. -- Michael Goodman

Life Technologies/ Navigenics: In what appears to be a straightforward buy-over-build decision, life sciences tools conglomerate Life Technologies is acquiring personal genomics firm Navigenics.  LifeTech calls the deal its “first step in executing a strategy to build out its molecular diagnostics business.”  It will employ Navigenics’ CLIA-certified lab to design and validate new assays, including both laboratory-developed tests and FDA approved diagnostics.  Navigenics’ CLIA lab will also support LifeTech’s partnering efforts with pharma for companion diagnostics.

Two years ago, LifeTech’s genomics’ efforts – it manufactures gene sequencers through its Applied Biosystems and Ion Torrent Systems divisions – were focused on the research and translational medicine markets, initiating programs like its collaboration with the Translational Genomics Research Institute, to find gene signatures that could better guide treatments and outcomes for triple negative breast cancer.  Since then, cancer genomics research has led to an increasing number of targeted gene tests – many that can be performed on next-generation sequencing platforms.  With diagnostics a much greater potential market opportunity for genomics than life sciences research, LifeTech, along with its major sequencing rival Illumina, has started to move downstream.  And its translational work appears to have sold the firm on the need for its own CLIA lab and on the opportunities that open up in cancer genomics by owning the clinical workflow, including data analysis and bioinformatics (which we wrote about recently here). The companies did not disclose the price of the acquisition, but it’s fair to assume that it was not much more than the bricks-and-mortar value of the lab, plus a dime or two for bioinformatics and the opportunity to hold onto some good people.

Navigenics’ founding model was challenged, as were those of other personal genomics start-ups, after the cautionary letters it and others received in June 2010 on the need for a premarket review of their products.  Nor did it appear to rejigger its model to create much know-how or IP since. That said, in announcing the deal, LifeTech also noted that it will be able to leverage Navigenics’ clinician and patient education and support capabilities as it builds a diagnostics business – particularly with community-based physicians.  One benefit of the personal genomics adventure has been recognition that when to comes to complex tests there’s a greater need for direct involvement with physicians, as opposed to a focus on marketing tests to labs.--Mark Ratner

Human Genome Sciences/GlaxoSmithKline: In a deal that was years in the making, GSK finally acquired its partner Human Genome Sciences for $3.6 billion, in a deal made up of cash and debt announced July 16. Now, GSK gets full ownership of darapladib, an inhibitor of lipoprotein-associated phospholipase A2 (Lp-PLA2) being investigated in acute coronary syndrome, and albiglutide, a once-weekly, injectable GLP-1 agonist for type 2 diabetes, as well as the already-marketed lupus drug Benlysta (belimumab) that the companies have been partnered on for more than a decade. The $14.25 per-share price represents a 99% premium over HGS’ closing price on April 18, the last trading day before GSK’s initial offer was disclosed publicly. That original bid was valued at about $2.6 billion, so HGS’ three months of delaying what many observers viewed as the inevitable brought its investors roughly another $400 million. Both companies’ boards have approved the transaction, in the form of a tender that will expire July 27. -- L.L.

Sanofi/Brigham & Women’s: For the next step on its continuing quest to establish itself as an end-to-end diabetes treatment provider, Sanofi has partnered with Brigham & Women’s Hospital to search for an immunological therapy for type 1 diabetes. Researchers from both organizations will unite to conduct “proof-of-concept, safety and functional studies” with a goal of finding an immunomodulatory drug target for the disorder, according to a July 18 statement. The parties did not release financial details of the arrangement, but said that Sanofi will receive an option to acquire an exclusive license to intellectual property generated by the partnership. Sanofi has marketed Lantus (insulin glargine) for more than a decade, and sells a variety of oral and injectable medications for both type 1 and type 2 diabetes; the company is currently waiting on regulatory approval for Lyxumia (lixisenatide), a glucagon-like peptide-1 antagonist. BWH researcher and Harvard professor Dr. Vijay Kuchroo specializes in immunology, and has studied the genetic basis of type 1 diabetes. – P.B.

Lisa LaMotta reported on the Infinity/Purdue deal. And thanks to flickr user mtarvainen for sharing under Creative Commons.

3 comments:

Anonymous said...

Novavax bulleyed takeover in next months, VLP tech is the future for Big Pharma, and RSV vax a hot candidate for success!

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