Deals of the Week and the Other Innovation Problem

Health care innovation, the R&D spark that ignites the alliances and M&A often featured here in Deals of the Week!, is part of the problem. At least when it comes to affordability.

Almost uniquely across business sectors, health care innovation invariably drives costs higher, while elsewhere innovation usually leads to cost reductions.

This observation, put forward by Mark Pearson, head of the health division at the Paris-based Organisation for Economic Co-operation and Development (OECD) at The Economist's 2012 Global Healthcare Summit in London Nov. 29, is a worry for pharma companies expecting ever higher prices for their shiny new targeted therapies.

A second driver of increasing health care spending is the lack of productivity gains achieved by making changes to the health care labor force, pointed out Pearson. Health care apparently has far and away the worst record among workforces when it comes to increasing productivity, particularly in Europe. The medical profession is full of restrictive practices, like the way training is pursued, and restrictions on who is allowed to prescribe, or allowed to perform minor procedures.

These are both bigger drivers than the growth of the elderly population, which is often cited as the reason why health care spending is increasing, Pearson argued. The increasing number of elderly patients is only a weak driver of health care spending, accounting for around 10% of the rise in health care costs in European countries, he noted.

Bringing more private funding into health care is one solution, and maybe the only solution, to fill the gap between health care expectations and cost, Pearson continued.

But it must be the right sort of private financing. Private health insurance which just duplicates publicly funded health care is particularly bad at improving the efficiency of health care systems, Pearson said. It just explodes costs. What's needed is supplementary insurance, which builds on a core group of services.
Finding new sources of funding is one area where the experience of developing countries can shed some light. In Singapore for example, those patients who want to have better hospital experience can pay extra for larger, more luxurious rooms.

Developing economies, such as Chile and Mexico, also have experience in defining a set number of diseases and conditions that the public health care system will treat, with other health care paid for by patients out-of-pocket.

Pearson liked the idea of "sin taxes," for instance taxes on fatty foodstuffs in France and Denmark, but admitted that they don't raise much money. They might make sense for public health reasons, but they are not the future for financing health care. Instead a rational discussion about what services a public health care system is prepared to fund is needed, so that a larger private market can develop, he concluded.

--John Davis

With that suggestion, we turn to see which innovations might have attracted the attention of Europe's economists in this week's ...

Sanofi/Selecta: Selecta Biosciences has signed its first Big Pharma partner, Sanofi, in a deal to discover up to three targeted, antigen-specific immunotherapies for life-threatening allergies. The deal announced Nov. 28 gives the French pharma license to one program and options for two more. The financials were fuzzy, with no up-front payment disclosed and an imposing but unstratified $900 million in development, approval and commercial milestones should all three succeed, and tiered double-digit royalties on potential product sales.
The companies will apply Selecta’s targeted tolerogenic Synthetic Vaccine Particles (SVP) platform to discover and advance potential immunotherapies designed to abate immune responses against an undisclosed, life-threatening food allergen. Based in Watertown, Mass., Selecta researchers will conduct the early-stage work in tandem with Sanofi’s Boston-based scientists; when a candidate is chosen for clinical development, Sanofi will take over development. The companies currently are pondering two additional indications for immunotherapies to food- or air-based allergens, Selecta CEO Werner Cautreels said in an interview. In 2011, Selecta partnered with the Juvenile Diabetes Research Foundation to seek a tolerogenic vaccine for type 1 diabetes using Selecta’s SVP platform. Months later, it partnered with the Science Applications International Corp. (SAIC) to work toward a synthetic malaria vaccine. That work is being financed by NIH’s Malaria Vaccine Product and Support Services contract.--Joseph Haas

AstraZeneca/Pfizer/Quebec Provincial Government: Quebec’s new Neomed Institute, a drug discovery effort unveiled Nov. 23, will be seeded with a $77 million cash investment over five years, plus about $30 million in in-kind donations from AstraZeneca PLC, the initiative’s primary backer. Also contributing funding are Pfizer Inc. and the government of Quebec. Heading up the effort will be former biotech executive Max Fehlmann, previously the president and CEO of the Quebec Consortium for Drug Discovery (CQDM).
CQDM, which is backed by seven pharma companies including AstraZeneca and Pfizer, focuses on creating new tools for drug-discovery an “open innovation” environment, said Fehlman, while Neomed has more of a classic biotechnology business model. To start up the project, Pfizer is contributing $3.5 million while the provincial government is kicking in another $28 million. AstraZeneca is the largest initial contributor, however, providing $5 million in cash plus facilities, lab equipment and three pain molecules. Fehlmann said Neomed has $38 million in cash at present – including future donations from other firms and the in-kind contributions, the total investment is expected to exceed $100 million.The research center was closed under a workforce reduction announced by AstraZeneca in February that also resulted in the shuttering of a facility in Sodertalje, Sweden. Fehlmann said the incentives that brought pharma R&D efforts to Quebec in the first place, such as tax incentives and a strong academic community, remain in place. “It is now my challenge to go and get additional pharmaceutical companies into our consortium,” Fehlmann said, adding that he already has begun talks with the other companies involved in CQDM’s efforts. One of those is Merck & Co. Inc., which announced a $12.5 million investment in research by three university-affiliated and hospital-based research centers in Quebec on Nov. 26. That investment, part of a larger five-year $100 million commitment by Merck to R&D funding in Quebec, does not rule the New Jersey-based pharma out of participation in Neomed, Fehlmann added.--JH

Evotec/Probiodrug: German CNS specialist Evotec AG’s latest collaboration is with Germany’s privately-owned Probiodrug AG to develop new therapies for treating major age related diseases.
Under the terms of the agreement, announced Nov. 28, Evotec will set up and validate assays to support the pre-clinical and clinical development of glutaminyl cyclase (QC) inhibitors for the treatment of Alzheimer's disease. Glutaminyl cyclase is a proprietary enzyme target discovered and validated by Probiodrug which plays a crucial role in the pathogenesis of Alzheimer's disease as well as potentially other diseases.
Evotec remains on a collaborative “roll,” partnering with drug companies to discover new compounds and bring them into clinical trials. Last month it linked up with fellow German firm Bayer AG in a five-year collaboration to develop drugs for endometriosis, a frequent and painful condition in which endometrial cells grow outside of the uterine cavity. The German drug discovery company also has broad collaborations with Roche and Boehringer Ingelheim GMBH to find therapies for diseases of the central nervous system. Evotec also has a pipeline of preclinical and clinical CNS drugs of its own and it intends to find partners to take on development of the drugs in late-stage clinical trials.--Sten Stovall

Nestle/Chi-Med: Food and nutrition giant Nestle SA announced a joint venture with Chinese health care company Hutchison China MediTech Ltd. to explore nutritional and medicinal products based on Chi-Med’s Chinese medicine library and fund Phase III trials on an existing clinical candidate. The Nestle Health Science division, established two years ago, joined with Chi-Med in a 50-50 JV that created Nutrition Science Partners Ltd., which will specialize in gastrointestinal products derived from botanical plants. The JV will also oversee late-stage development of Chi-Med’s Phase III-ready inflammatory bowel disease drug HMPL-004. Nestle has made an initial cash investment to establish the JV, and will fund a 2700-patient Phase III trial beginning early next year. The move is part of Nestle’s overall strategy in personalized health care, which includes nutrition, drugs and diagnostics; the company acquired GI diagnostics company Prometheus early last year as well. Nutrition Science Partners expects to build a pipeline in GI, and may also extend its reach into metabolic disorders and brain health in the future. Nestle Health Science president and CEO Luis Cantarall will be the JV’s chairman, while Chi-Med CEO Christian Hogg will be a director and its general manager.--Paul Bonanos

Roche/Broad Institute: Roche is hoping to get a little more bang for its buck by repurposing some of the drugs that have been languishing on its shelves for as far back as 20 years. The Swiss pharma giant has tapped the Massachusetts Institute of Technology’s and Harvard University’s Broad Institute to screen more than 300 compounds that it had previously tested in a variety of indications. The compounds were sidelined during preclinical or early clinical development because they either did not prove efficacious in the tested patient populations or addressed a disease area that wasn’t pertinent to the Roche pipeline; none fell due to safety concerns. Roche believes that the amount of time and money already spent on the compounds make them a very valuable resource and potential fast-track development opportunities. The initial agreement between Roche and Broad is expected to span two years. Beyond that, the partners will evaluate any progress and determine if any of the compounds are worth investigating further. Roche’s head of medicinal chemistry, Karen Lackey, told “The Pink Sheet” DAILY that the company hopes to find at least 10 to 15 projects that could merit further clinical trials.--Lisa LaMotta

Curis/Genentech: In conjunction with a debt financing deal that net the biotech $30 million in fresh, non-dilutive capital, Curis Inc. said on Nov. 28 that it had in-licensed from Roche’s Genentech unit exclusive, worldwide rights to develop and commercialize a Phase I anti-cancer agent. Curis has brought in GDC-0917, a small molecule that antagonizes IAP (inhibitor of apoptosis) proteins, which Genentech has studied in 42 patients with refractory solid tumors or lymphoma. Genentech gets $9.5 million up-front, potential “first commercial sale” milestone payments should the molecule, now named CUDC-427, makes it to market in certain territories ,and and single digit royalties on net sales. Curis receives a royalty from Genentech on sales of Erivedge (vismodegib), which was approved by FDA to treat advanced basal cell carcinoma in January 2012 and is in Phase II for a less severe form of the disease. Curis has used this royalty to secure its debt financing – essentially trading future revenue for a bolus of cash that will fund ‘427’s development, and development of other drugs in its pipeline, now. Analysts predict the deal gives the biotech an extra year of cash runway at current burn rates.--CM

BioCryst/Presidio: This week’s “No-Deal” is of a predictable nature, as the planned merger between BioCryst Pharmaceuticals Inc. and Presidio Pharmaceuticals Inc. has fallen apart in the weeks since dual setbacks hit BioCryst’s pipeline. In early November, BioCryst said it would withdraw an IND for an experimental hepatitis C therapy over toxicity concerns; a few days later a Phase III study of the company’s peramivir antiviral was halted due to lack of efficacy. Though the writing seemed to be on the wall at the time, on Nov. 8 BioCryst said then that it would move forward with its planned merger with privately held Presidio, though it would work to conserve cash. On Nov. 30, the companies mutually terminated the deal.--CM

There's A Financings of the Fortnight In Every Crowd

"Psst, wanna buy some biotech?"

It’s already helped rock singers and indie film makers and arapaima trackers. But can crowdfunding help fill the life sciences venture gap?

The JOBS Act of 2012, signed into law by President Obama in April, aims to let small private companies raise money and go public more easily. Part of the law deals with the brave new world of equity crowdfunding, or selling private shares to the grass roots. Many of the details have yet to emerge from the Securities and Exchange Commission, which is charged with writing the new rules, including those that regulate crowdfunding. That means US entrepreneurs eager to use the model for the time being have to give something other than equity as remuneration for their backers’ cash. On the science-focused site PetriDish.org, you can search for projects based on the awards they’re using as compensation. (Get back to us when someone offers hats.)

Another example a bit closer to our hearts – or more accurately, our guts – are two citizen-science projects on the crowdfunding site IndieGoGo that ask the unwashed masses to submit body swab  samples and help build massive microbiome databases. (The more unwashed the masses, the better!) Both of the projects, American Gut and uBiome, have a sliding donation scale, but for less than $100, contributors will receive a kit to swab their various regions and, er, effluences, and submit them for analysis. Once processed the personal microbial profiles are made available back to the contributors. (Hey, a hat would be nice, too.) We’ve reported on the caution VCs have shown so far toward the wealth of microbiome data emerging from this new field, so we’re eager to see if projects like these, if and once they meet their crowdfunding goals, draw interest from more traditional investors. 

Despite the temporary regulatory limbo, plans are afoot in the US to create crowdfunding platforms that let start-ups sell equity. (We’ll dig into one of those plans in the next Capital Matters column of START-UP.) Elsewhere, the model is already underway. As we noted in this column in October, the French crowdfunding site Wiseed.com shepherded grassroots investors to what it says is the first-ever equity crowdfunding exit – through a biotech firm, no less. French antibiotic developer Antabio raised €300,000 from 207 crowdfunders in late 2010. The firm pulled in a Series B round from an angel investor a year later, and in mid-2012, the same angel offered to buy out the crowdfunders’ shares. It’s not clear what kind of return they received. An Antabio spokeswoman told the IN VIVO Blog in October it was a 2x return, but Wiseed’s own material calls it a 44% return. And the co-editor of this site says he invested €1400 and received €2434, a 73% return. (When we get clarification, we'll pass it along.)

Back in Washington, the SEC recently held a small-business meeting and took public comment on what its JOBS-related rules should look like. Some of the key crowdfunding questions remain up in the air, such as: Should equity crowdfunding services be regulated lightly, like the arts-donation site Kickstarter, or treated like broker-dealers? With serious questions like that still unresolved, we probably won't know anytime soon whether crowdfunding can become a real piece of the life science funding puzzle. But you can still find all the other puzzle pieces every two weeks by opening the rectangular cardboard box marked…

BioTime: The San Francisco Bay Area stem cell company said November 15 it has secured $10 million from an unnamed private investor to help pay for its proposed acquisition of assets from stem-cell pioneer Geron. Those assets have been in limbo for a year after Geron said abruptly in November 2011 it would end its stem-cell R&D to focus on small molecule cancer treatments. Geron’s spinal-cord injury treatment, derived from embryonic stem cells, was the first of its kind to enter the clinic, the most advanced example of cutting-edge stem-cell technology that has, to date, been slow to attract backers beyond California’s publicly funded regenerative medicine agency. Led by a Geron cofounder and its former CEO, BioTime in October made a public offer for Geron’s stem-cell assets. On November 15, concurrent with the financing announcement, BioTime published a non-binding letter of intent with Geron. If consummated under the terms outlined in the letter, the deal would create a new company to house the Geron assets, with Geron shareholders receiving more than 21% of the common stock and warrants to buy 8 million common shares of BioTime itself. The unnamed financier would put $5 million into the new company in exchange for 7% of the common stock and three-year warrants for roughly 350,000 shares at an exercise price of $5 per share. In addition, BioTime would contribute to the new company $5 million in cash, $30 million in BioTime common shares, warrants, and other rights. The anonymous investor’s other $5 million would go to the parent BioTime to buy 1.35 million common shares at about $3.70 per share, plus three-year warrants to purchase 650,000 shares with an exercise price of $5 per share. – Alex Lash

Lanthio Pharma: New European biotech start-ups have been few and far between this year. Tapping an unusual syndicate, however, the new Dutch firm Lanthio said November 27 it has raised a €4.8 million Series A round to push a lead compound from its peptide discovery platform into clinical trials, likely to treat lung fibrosis. The round was led by seed investor BioGeneration Ventures, which specializes in Dutch start-ups. But the surprising part of the funding news is that 20-year-old German antibody firm (and first-time investor) MorphoSys also took part. It will take a minority stake in Lanthio, and it will also become an R&D partner, receiving what the companies called “preferred rights to exclusively license” Lanthio’s technology for drug discovery. No financial details were disclosed. Spun out of the University of Groningen in 2011, Lanthio’s platform produces peptides that are stable in circulation and act as receptor agonists – relatively rare, as most peptide technologies find it easier to produce receptor antagonists. Other investors included INKEF Capital and Hanzepoort. INKEF Capital is an investment vehicle for the largest pension fund in the Netherlands, Stichting Pensioenfonds ABP. The round remains open for one more investor, Lanthio CEO Bart Wuurman told our colleagues at “The Pink Sheet” DAILY this week. "The number of European life science VCs with money to invest in new companies can be counted on one, maybe two, hands, as they appear to be keeping back financing for their existing investments," Wuurman said. – John Davis

Applied Genetics Technology: As we noted in September’s issue of START-UP, some VCs have taken a shine to gene therapy companies lately. Once considered far too risky for investors, the field has seen an unlikely renaissance recently, thanks to improved clinical data sets, improvements in manufacturing, and even a drug approval that could be a bellwether. On Nov. 19, the latest investment in the sector went to Gainesville, Fla.-based Applied Genetics Technology Corp., which reaped $37.5 million in a new Series B round. Leader Alta Partners was joined by first-time backer and GSK affiliate SR One as well as academic spinout specialist Osage University Partners. Returning investors from AGTC’s $11.8 million Series A round in 2009 included InterWest, Intersouth Partners and MedImmune Ventures. AGTC will use the funds for a Phase II trial on a therapy for alpha-1 antitrypsin deficiency, a protein disorder that leads to loss of lung function and liver damage, as well as early-stage treatments for the rare eye disorders achromatopsia and X-linked rentinoschisis. AGTC uses adeno-associated virus vectors to insert DNA into cells in order to correct genetic disorders. In early November, Belgian gene therapy company uniQure received European approval for Glybera (alipogene tiparvovec) to treat a rare protein deficiency, making it the world’s first gene therapy to gain regulatory approval. – Paul Bonanos

TauRx Pharmaceuticals: Just when you thought late-stage Alzheimer’s trials were done for a while, the Singapore-Scotland hybrid TauRx said November 20 it has received the first tranche of a $112 million equity investment to help push its lead candidate into Phase III. The money comes from a sole investor, Genting Management, a subsidiary of the Malaysian conglomerate Genting Berhad. The full investment is due by year’s end, according to TauRx, and gives Genting a 20% stake in TauRx. It brings the company’s total equity raised to nearly $300 million since its 2002 inception. The company says those Phase III trials have already begun enrolling. They will total more than 1500 patients around the world to confirm disease-modifying effects that a Phase II trial of an earlier version of the drug showed in mild to moderate Alzheimer’s patients, says the company. The firm’s treatment, dubbed LMTX, is aimed at dissolving the tangles of tau protein implicated in the decline of cognitive function of Alzheimer’s. The leading theory of the past decade or so -- that clearing accumulation of beta amyloid, another protein in the brain, would ameliorate the disease -- has encountered major setbacks in recent years, most notably the Phase III trial data released this year for the drugs bapineuzumab and solanezumab. Those disappointments have helped boost a cautious resurgence of work on other pathways such as tau that might lead to an Alzheimer’s treatment. They have also pushed researchers to theorize that beta-amyloid accumulation is a symptom of Alzheimer’s, and once present too late to respond to treatment. – A.L.

The Best of the Rest: To support lead candidate delafloxacin in Phase III for acute bacterial skin and skin structure infections, Rib-X Pharmaceuticals completed the first tranche of a $67.5 million Series 2 preferred share financing… led by Lilly Asia Fund, Chinese mAb developer Innovent Biologics  brought in $25 million in Series B funding… in a Series F to advance EPI743 in Phase IIb for two orphan indications, Edison Pharmaceuticals raised $20 million… French immunotherapeutics company TxCell cleared $15 million in a Series C round… Life Sciences Partners led a $12.8 million late-stage round for blood cancer drug maker Kiadis Pharma… NanoBio’s $11 million Series C will support development of infectious disease candidates and nanoemulsion-based vaccines… With $8 million from Pfizer Venture, Rhythm Pharmaceuticals expanded its June 2012 Series B to $33 million… MabVax Therapeutics raised $5.25 million in a Series B…an at-market RDO of Series A convertible preferred stock brought in $40 million for spec pharma BioDelivery Sciences to support completion of Phase III for chronic pain candidate buprenorphine… In an amended S-1 filing, Audeo Oncology set a range of $14-16 for 3.25 million shares in its planned IPO… A private placement of convertible debentures brought in $12.7 million for OTC-traded cancer therapeutics developer Arno Therapeutics… Concurrent with in-licensing of Genentech’s Phase I IAP inhibitor GDC0917, Curis secured $30 million in debt financing from Pharmakon in exchange for certain future Erivedge royalties. -- Maureen Riordan

Photo courtesy of flickr user James Cridland, whose photo stream is crowded with cool pictures.

Coming Soon ... DOTY 2012

2012's IN VIVO Blog Deals of the Year competition is right around the corner ... nomination posts will begin next week and as always our readers will vote for the winners in three categories: M&A, alliance, and financing. Who's got what it takes to win this year?

Deals of the Week Lovingly Massacrees the Classics

This post is called Deals of the Week, and it's about deals, and the week, but Deals of the Week is not the name of the blog, that's just the name of the post. And that's why I called the post Deals of the Week.

Now it all started four Thanksgivings ago; it was four years ago on Thanksgiving, when Chris Morrison and I started writin' a blog about deals, but not every day, just once a week. And writin' about deals once a week, you know it's a lot of work. (Hint. Hint.)

And there's a lot of garbage you gotta sift through, but we decided it would be a friendly gesture on behalf of readers. So we trolled around the Internet with our shovels and rakes and other implements of destruction (a.k.a. EBI's Strategic Transactions database) looking for deals to analyze. But then a big bad editor (also known as Officer Roger) said why are you doin' that? We are closed on Thanksgiving.

And we had never heard of a blog closed on Thanksgiving before (we don't get out much) so with tears in our eyes we drove off into the sunset looking for another place to dump our garbage -- I mean our deals.

We didn't find one. So we wrote our post anyway, went back and had a Thanksgiving Day that couldn't be beat, went to sleep, and didn't get up until the next morning when we got a call from Officer Roger... And it's been a recurring feature here at IVB ever since.

But fortunately, not another case of American blind justice since we always arrive at the truth of the matter and it doesn't even require 27 eight-by-ten color glossy pictures with circles and arrows and a paragraph on the back of each one.

In honor of the day, we hope you consider joining the IN VIVO Blog Movement. All you've got to do is walk into the office wherever you are, just walk in and say ,"You can get anything you want at IN VIVO Blog." And walk out.

You know if one person, just one person does it, they might think he's really sick and they won't take him... And can you, can you imagine fifty people a day, I said fifty people a day (okay, we'd really like 1000) walking in, quoting a line from IN VIVO Blog and walking out?

And friends, they might think its a movement. And that's what it is, the IN VIVO Blog Movement.

Remember Deals of the Week? (This is a post about Deals of the Week.)

Without further ado, we bring you this week's installment. Feel free to sing along in four-part harmony. With feeling. Cuz'...

You can get anything you want at IN VIVO Blog.
You can get anything you want at IN VIVO Blog.
Log right in, it's a click away.
Just a finger tap. You don't have to pay.
You can get anything you want at IN VIVO Blog. (Excepting Roger.)

Alice parody by Ellen Licking, Arlo Guthrie's original here (or catch it on Thursday -- we'll be listening to WMMR at 2p). Happy Thanksgiving from EBI's IN VIVO Blog.




Algeta/Ablynx: Ablynx and Algeta hope that by linking their cutting-edge technologies in a joint feasibility study they can make a quantum leap in cancer therapy innovation. Their 12-month “targeted radiotherapy” project entails Ablynx generating a nanobody that will deliver Algeta’s alpha-particle emitting radio therapeutic thorium-227 against an undisclosed cancer target. Algeta will also provide the linker technology for the conjugate. Financial terms were not disclosed. Ablynx’s nanobody will deliver the thorium radiotherapeutic payload to a cancer cell, where the high energy of the alpha particle emitted by the attached thorium would kill the tumor tissue at a distance of a few cell diameters while sparing the remaining body. The therapeutic principle is akin to that of antibody-drug conjugates, such as Roche’s T-DM1, where a chemotherapeutic is selectively targeted to cancer cells to kill the malignant cell while sparing healthy tissues.--Sten Stovall

Pfizer/Cystic Fibrosis Foundation: Following up on the January approval of Vertex Pharmaceuticals Inc.’s Kalydeco (ivacaftor), the first drug to address the underlying cause of cystic fibrosis, Pfizer Inc. and the Cystic Fibrosis Foundation are teaming up in a $58 million, six-year extension of an existing R&D alliance to bring additional root-cause-focused drugs into clinical development for cystic fibrosis. Maryland-based CFF is partnered with multiple companies, including Vertex and Genzyme Corp., to help fund CF drug development. CFF President and CEO Ronald Beall says the foundation will invest about $114 million in medical science efforts in 2013, with about $80 million of that going to support drug-discovery and development. Pfizer’s work in CF stems from its 2010 acquisition of FoldRx Pharmaceuticals Inc., a biotech that focused on developing oral therapeutics for protein-misfolding-related conditions. That buyout was part of the world’s largest pharma’s move into drugs for orphan and rare diseases. The goal of the Pfizer/CFF agreement, announced Nov. 19, is to bring one or more drug candidates addressing mutations of the Delta F508 protein, a misfolding defect implicated in roughly 90% of CF cases, into the clinic.--Joseph Haas

Paladin Labs/Ativa Pharma: Montreal-based Paladin Labs is expanding its Mexican operations with the acquisition of Guadalajara-based Ativa Pharma. The deal, announced Nov. 19, will give the specialty pharmaceutical company an established distribution network in the country and an existing team that is familiar with the Mexican regulatory authorities. Paladin estimates that the Mexican pharmaceutical market could be worth $8.1 billion. The company will be introducing several of its own products to the market, including Travelan, a traveller’s diarrhea prevention; Abstral for breakthrough cancer pain; and Tostran for hypogonadism. The company will also seek approval for several compounds already in Ativa’s pipeline. Paladin expects that the first regulatory approvals and commercial launches will begin in the second half of 2013. The company would not reveal any financial details pertaining to the acquisition.--Lisa LaMotta

Shire/Boston Children’s Hospital: Shire PLC is expanding its presence in rare diseases, an area that already makes up about one-third of the company’s business, through a collaboration with the Boston Children’s Hospital. Announced Nov. 20, the three-year agreement will focus on developing treatments for pediatric diseases with high unmet medical needs. The partnership will leverage Shire’s commercial expertise in the area, as well as Boston Children’s Hospital’s understanding of pediatric disease and its clinical network. In exchange for an option to license any products that emerge from the collaboration, Shire will make an undisclosed upfront payment to fund specific programs. The Hospital will receive milestone payments and royalties upon commercialization of any products.--Lisa LaMotta

NeuroVive/Sihuan: The importance of China as a growing market for pharmaceuticals was underscored Nov. 20 when NeuroVive, a tiny Swedish biotech, forged its first product development agreement, with Sihuan Pharmaceutical Holdings, one of the largest domestic pharmaceutical companies in China. The deal also is the first Sihuan has entered into with a non-Chinese pharmaceutical company. Sihuan will conduct clinical trials in China on NeuroVive's two investigational tissue repair products, CicloMulsion and NeuroSTAT, which have potential in the treatment of acute cardiovascular and neurological conditions, respectively. CicloMulsion, a formulation of cyclosporine A found in initial studies to protect mitochondria from destruction during trauma, is in a Phase II/III study in Europe, and NeuroSTAT, another cyclosporine A formulation, is about to start a Phase IIa study. Sihuan is paying just $7.5 million in upfront and milestone payments initially, reflecting Sihuan's funding of the Chinese development work and its pioneering nature, but will pay a 10% royalty on any sales. At the same time, the alliance will go some way to validate NeuroVive's research focus on mitochondrial medicine. The Chinese market for acute cardiovascular and neurological conditions is currently worth around RMB 2 billion ($321 million) annually.--John Davis

Wright Medical/BioMimetic: Wright Medical Group gains a near-term commercial opportunity in regenerative medicines with the acquisition of BioMimetic Therapeutics Inc. for what could amount to $380 million. Under the deal announced Nov. 19, Wright Medical will pay $190 million down in cash and stock, plus up to $190 million more in milestone payments. BioMimetic’s key product is the Augment bone graft, which is under review by FDA as a replacement for autologous bone graft in foot and ankle fusion procedures. The product could receive PMA approval “between late April next year and … the end of the year,” Wright Medical CEO Robert Palmisano said during a Nov. 19 analyst call announcing the deal. Wright is obviously confident in the approvability of Augment, despite FDA’s initial “not approvable” determination in January. BioMimetic submitted a PMA amendment in June responding to questions raised by the agency. FDA’s Orthopaedic and Rehabilitation Devices advisory panel had narrowly supported approval at a May 2011 meeting. Augment is a synthetic alternative to autologous bone graft, made of recombinant human platelet-derived growth factor (rhPDGF-BB) and beta-tricalcium phosphate (β-TCP) granules, which form a scaffold to support cell attachment. The two components are mixed during surgery and applied directly to the surgical site during open orthopedic procedures. Besides Augment, BioMimetic also markets its Augmatrix biocomposite bone graft substitute line of products for orthopedic indications. -- Sue Darcy 

BASF/Pronova BioPharma: German chemical firm BASF casts a voluntary cash offer of NOK4.845 million ($846 million) to hook omega-3 fatty acid maker Pronova BioPharma ASA on Nov. 21. While some Pronova investors were disappointed with the 24% premium offer of NOK12.5 per share, according to media reports, BASF said it already has irrevocable pre-acceptance commitments from shareholders representing approximately 60% of Pronova’s share capital. It needs at least 90% of the total shares for the deal to move forward, the firm says in a release. BASF says closure of the deal, which is expected in the first quarter of 2013, “immediately” would give BASF “a leading position in the global market for omega-3 fatty acids,” when combined with its prior acquisition of omega-3 fatty acid maker Equateq Ltd. The deal would give Pronova, which makes the omega-3 heart prescription drug Lovaza for GlaxoSmithKline PLC, enhanced manufacturing capabilities through BASF’s global platform and resources, the Norwegian firm says in a Nov. 21 release. The deal reflects industry’s growing interest in omega-3s, which also led to the recent acquisition by Royal DSM NV of Ocean Nutrition Canada Ltd. in May.--Elizabeth Crawford

Deals Of The Week: A Better Way To Investigate Clinical Trial Investigators?

In tandem with a 10-company effort launched in September to resolve clinical development hurdles, three pharmas are coming together to establish a databank that participants will be able to use to evaluate potential clinical trial sites and investigators. The Investigator Databank initially will be a joint effort of Johnson & Johnson, Merck & Co. and Eli Lilly, but other participants from the non-profit TransCelerate BioPharma initiative are expected to join in eventually.

Andreas Koester, head of clinical trial innovation/external alliances for J&J’s Janssen R&D, said the initiative’s primary goal will be to “avoid redundancy” in paperwork for selecting and approving trial sites and in training clinical trial investigators.

Koester, who will lead the effort, told Deals of the Week that the Investigator Databank should be ready to go by the end of this year. The initial three participating firms already have uploaded their information into the databank but it is behind firewalls for now so none of the companies can access another’s data until the initiative begins. Other companies participating in TransCelerate are expected to begin contributing information by the middle of 2013.

“The R&D team at Janssen came together last year to look at our clinical-trial process and see what could be improved upon and what could be streamlined,” Koester said. “There were some things that needed a common solution and would only work if we teamed up with our peers.”

The databank, which will not include any patient data, is intended to serve as a one-stop repository where key information about trial sites, such as what equipment a site does or doesn’t have and the Good Clinical Practice (GCP) training records of its personnel, can be accessed by any participating company. The expectation is that the jointly provided data will minimize redundacy in much of the site- and investigator-selection process, such as prequalification and CGP training. To aid the effort, each participating company will agree to acknowledge one another’s GCP protocols and work toward an industry standard, Koester noted.

J&J and Lilly were among the 10 pharma companies (Merck was not, however) that announced Sept. 18 the creation of TransCelerate and its five goals, one of which was the centralization of trial site prequalification and training. TransCelerate CEO Garry Neil said the databank’s work will be aligned with the non-profit’s focus on clinical study execution.

“Industry collaboration, including pre-competitive data-sharing, is critical to ensuring continued progress to improve industry-wide clinical trial practices,” Neil said.

Beyond the benefits of time conservation, the databank also is expected to benefit clinical trial quality by making it more feasible for investigators to participate in multiple trials. Koester said that many investigators don’t participate in more than one or two clinical trials because the paperwork tends to be too time-consuming and takes away from time spent with patients. Companies therefore churn through investigators and often have trouble finding more.

“Sharing our investigator databases will help optimize administrative activities by mutually recognizing training and other essential information that is required of our investigators, as well as allow us the ability to include key investigators around the world with whom we have not worked in the past,” said David Detoro, head of global trial management for Merck Research Laboratories. “All of this will help lead to more efficient clinical trial execution – a critical component of getting novel products to patients in a timely fashion.”

While biopharmaceutical companies are finding ways to work together to make clinical trials more efficient, they nonetheless continue competing in the business development world. For the latest examples, check out our latest summary of  …

Forest/Adamas: Adamas Pharmaceuticals and Forest Laboratories are counting on simplification and reduced frequency of dosing to carry Arimenda, a fixed-dose combination of two long-marketed drugs to treat dementia associated with Alzheimer’s disease. Privately held Adamas out-licensed the drug to Forest Nov. 14 in a deal that includes a $65 million upfront payment as well as potential milestone payments and sales royalties. The deal, under which Forest will assume all developmental and commercialization costs for the drug in the U.S. market, brings Adamas a $65 million upfront payment. In addition, Adamas could earn up to $95 million in development and regulatory milestones, as well as royalties on net sales beginning five years after U.S. launch of the memantine/donepezil combo product. Arimenda is a fixed-dose combination of extended-release memantine (Forest’s Namenda XR) and immediate-release donepezil (Eisai/Pfizer’s Aricept), which Adamas was developing using its own extended-release technology. However, Forest, which has been working to ameliorate a looming patent cliff as Namenda and antidepressant Lexapro (escitalopram) lose exclusivity, bought out U.S. rights to Arimenda with a plan to use its own proprietary extended-release memantine formulation in the product. That formulation, combined with several Adamas patents, will give the new product patent protection into 2029 and could help Forest extend the life of its franchise. It’s unclear if Forest intends to use the Arimenda brand name. – Joseph Haas

Colby/MannKind: Small, privately held Colby Pharmaceutical has built a portfolio of clinical-stage assets, focused mainly in cancer, in the last year through in-licensing and acquisitions. The most recent of three transactions is a licensing deal with MannKind, announced Nov. 13. Colby acquired worldwide rights to develop and commercialize disease-specific antigen compounds and intra-lymph node delivery technologies from MannKind’s novel MKC1106 immunotherapy programs, currently being studied for the treatment of melanoma, prostate cancer and hematological disorders. In exchange, Colby agreed to pay $140 million in upfront and potential milestone payments to MannKind. The San Jose, Calif.-based company plans to further develop the MKC1106-MT regimen in a Phase II melanoma trial. It is the most advanced intra-lymph node injection regimen from the program, and also plans to study the technology with its lead compound, the cancer adjuvant JVRS-100, a cationic lipid-based immune activator, and eventually with other adjuvants that might be in development outside the company. The partnership with MannKind is one of three deals Colby has completed since September 2011. At that time, Colby acquired worldwide rights to the lipid-based immune activator JVRS-100 from Juvaris BioTherapeutics, along with the company’s broader technology platform, called cationic lipid-DNA complex. Colby also acquired Othera Pharmaceuticals in September, obtaining a portfolio of small-molecule compounds for Nrf-2 regulated diseases characterized by oxidative stress injury. – Jessica Merrill

Pernix/Cypress/Hawthorn: Houston-based specialty drug manufacturer Pernix Therapeutics Holdings announced a deal to acquire generic drug maker Cypress Pharmaceuticals and its subsidiary Hawthorn Pharmaceuticals, a branded business, on Nov. 14. Under the terms of the agreement, Pernix will pay $68.5 million upfront in cash along with $12.5 million in equity. A delayed payment of $10 million will be paid out in December 2013 and the final $10 million will be paid in milestone payments, the triggers of those milestones were not disclosed. Cypress and Hawthorn are privately held companies founded in 1993 and based in Madison, Miss. They are expected to report out revenues of about $50 million in 2012. More than half of the company’s sales come from generic products including cough and cold medications, nutritional supplements, analgesics, urinary tract remedies and women’s health treatments. The remaining 46% of revenues were brought in by the branded side of the business under the Hawthorn name, which includes pharmaceutical products for allergy, respiratory, iron deficiency, nephrology and pain management. The acquisition is expected bring Pernix’s 2013 revenues to a range of $135 million to $145 million. The deal also will have synergies with the last acquisition Pernix made – its $4.9 million acquisition of Houston-based contract manufacturer Great Southern Laboratories in July. – Lisa LaMotta

Foundation Medicine/AstraZeneca/Ariad: Cancer genomic analysis play Foundation Medicine announced a pair of partnerships Nov. 12-13, bringing its number of disclosed partnerships to seven this year. Financial details weren’t disclosed for either deal. The AstraZeneca collaboration is a multi-year tie-up in which the partners will work to identify alterations in cancer-related genes to help predict patient response or resistance to targeted therapies. AstraZeneca hopes to use the information to aid drug development. Foundation Medicine also was granted right-of-first-negotiation for developing diagnostics as part of the deal. The Ariad Pharmaceuticals partnership is focused on genomic profiling for a specific candidate, AP26113. The companies will develop genomic profiles of patients in an ongoing Phase I/II trial to treat non-small cell lung cancer and match them to clinical observations on the activity and selectivity of AP26113. The idea is to identify the best patient population for the dual-inhibitor of ALK and EGFR, which could speed development time. Foundation Medicine launched its first product in June, FoundationOne, which enables physicians to identify the molecular alterations involved in a particular patient’s cancer and match them with relevant approved therapies and clinical trials. The firm raised $42.5 million from 10 investors in a Series B financing that closed in September. – Stacy Lawrence

Alnylam/Tekmira: In our “Revised Deal of the Week,” Alnylam Pharmaceuticals has settled a trade-secrets suit brought by partner Tekmira Pharmaceuticals and inked a new licensing agreement that restructures their relationship. The twin actions free Alnylam from a thorny legal problem and enable it to manufacture its own drug candidates. Under the new agreement, Alnylam will make a one-time payment of $30 million to Tekmira to buy out manufacturing obligations so that Alnylam can independently manufacture lipid nanoparticle (LNP) technology for RNA interference (RNAi) therapeutics. In addition, Alnylam said it will make a one-time payment of $35 million related to the termination of prior license agreements and a “significant reduction in milestone and royalty payments” for its lead RNAi programs, ALN-VSP, ALN-PCS and ALN-TTR02. In a Nov. 13 conference call, Alnylam CEO John Maraganore said that over the past year the company has developed internal capabilities and proprietary processes for manufacturing LNP-based products. He noted that Alnylam would be able to manufacture its lead compound ALN-TTRO2, being developed for treatment of transthyretin-mediated amyloidosis, for the start of Phase III trials and expects to supply the drug at least through the early stages of commercialization. Phase II trial data on ALN-TTRO2 are expected in mid-2013 and the pivotal study is to begin by the end of 2013. Tekmira also is eligible to receive an additional $10 million in near-term milestones – a $5 million payment when ALN-TTR02 enters a pivotal trial and a $5 million payment when clinical trials for ALN-VSP begin in China. Tekmira also will receive five additional non-exclusive licenses to develop and commercialize RNAi therapeutics based on Alnylam’s siRNA payload technologies and will pay Alnylam milestones and royalties for these products. – Brenda Sandburg

TG Therapeutics/Ildong Pharmaceutical: Korea’s Ildong Pharmaceutical signed a licensing agreement with TG Therapeutics on Nov. 15 to co-develop and commercialize the latter’s anti-CD20 antibody ublituximab (TGTX-1101) in South Korea and Southeast Asia. MedCI LLC served as licensing advisor and provided assistance to TG Therapeutics, a clinical-stage biopharmaceutical company focused on the acquisition, development and commercialization of treatments for cancer and other underserved therapeutic needs. Under the terms of the agreement, TG Therapeutics is receiving an upfront payment of $2 million in addition to sales-based milestone and royalty payments in exchange for exclusive rights to develop and commercialize Ublituximab for all therapeutic indications in the territory, which also includes Taiwan, Singapore, Indonesia, Thailand, Philippines, Myanmar and Vietnam. TG Therapeutics is developing ublituximab for hematologic malignancies and other B-cell lymphoproliferative disorders. Currently, it is being evaluated in a North American Phase I/II clinical trial in patients with relapsed or refractory non-Hodgkin's lymphoma. – Peter Chang

But those weren't the only deals made during the past business week. Here is a roundup of other business development transactions occurring in the biopharmaceutical arena in the past seven days:

• MedImmune and biOasis Technologies entered an R&D agreement Nov. 14 to investigate the latter's Transcend technology for delivery of compounds to the brain;
• Reckitt Benckiser made a $1.4 billion offer Nov. 15 to buy out Schiff Nutritional, topping an earlier offer from Bayer AG;
• GlaxoSmithKline and Aptuit announced a multi-year expansion of their drug-development partnership in Verona, Italy, on Nov. 13;
• Boehringer Ingelheim and BaroFold signed a non-exclusive license on Nov. 13 to use BaroFold's PreEMT (Pressure Enabled Manufacturing Technology) platform for protein refolding work in BI's drug production; and
• Synthetic Biologics acquired clinical-stage beta-lactamase assets for prevention of Clostridium difficile infections Nov. 12 from Prev AbR LLC.

Photo credit: Wikimedia Commons

Red Rover, Red Rover, Let Financings of the Fortnight Cross Over

The Pacific Ocean has the Marianas Trench, the deepest place on Earth, more than six miles down. But Financings of the Fortnight has Crossover Canyon. And this fortnight, it went from zero to 210 million.

The zero was the number of dollars Radius Health raised trying to go public, and 210 million was the blockbuster financing for Intarcia Therapeutics. How fortuitous. As we noted in our previous column, our colleague Stacy Lawrence is working on a Start-Up feature about the return of crossover investors to biotech, and as if to punctuate her weeks of reporting that you’ll be able to enjoy just after Thanksgiving, Intarcia announced Nov. 15 a $210 million Series C, one of the industry's biggest rounds of private financing in memory, and it did so mainly by tapping crossover investors: the hedge fund Baupost Group, the diversified fund Farallon Capital Management, the multinational giant Fidelity Investments, and two other unnamed institutional investors. Existing venture backers New Enterprise Associates, New Leaf Venture Partners and Venrock also joined. The funding consists of $160 million in equity and $50 million in debt, and it’s all in one shot, Intarcia CEO Kurt Graves told our "Pink Sheet" DAILY colleagues. In other words, they don’t need no stinkin’ tranches.

The money will help push Intarcia’s lead product ITCA-650 in a set of Phase III trials. Intarcia has developed a formulation of the diabetes drug exenatide that can be implanted under the skin up to a year in a matchstick-sized delivery device. Exenatide, an analog of glucagon-like peptide-1, is marketed by Bristol-Myers Squibb and partner AstraZeneca as both Byetta and Bydureon, in twice-daily and once-weekly formulations respectively. The partners paid $7 billion to acquire Amylin, which previously owned the drugs, in June.

Meanwhile, Intarcia was once a whisker away from partnering ITCA-650 but backed off to keep full control. That helps explain the enthusiasm of the crossover investors, who have piled into to some of the year’s largest venture rounds, though none of course as large as the Intarcia deal. Crossovers want to take companies public; M&A is not their preferred exit. In fact, one factor in their resurgence is frustration as they’ve watched strategic buyers pick off the best biotechs before they, the public investors, can get a piece of the action. It’s worth mentioning that these days, those buyouts often happen in wildly favorable circumstances for the buyers – in structured deals with earnouts that only pay shareholders if the acquired company’s products hit milestones, as we explained in the March issue of Start-Up.

So when you see hedge and mutual funds featured in a biotech venture round, it’s a good bet that company will do its damndest to go public. With all that cash riding into Phase III, and a product that could address one of the world’s most burdensome diseases, don’t expect Intarcia and its new shareholders to jump quickly into a buyer’s arms.

The crossover road can be rough, too. Radius Health, with crossovers BB Biotech AG and Brookside Capital in the mix, raised $91 million in 2011 – also with a debt component – merged with a public shell, and pointed itself toward the public markets through a process known as Form 10, which lets a company list over the counter without the hullaballoo of a big IPO. It then opted to try for a big IPO, after all, and filed an S-1 in February. Those dreams were put on hold this week; the company said it would withdraw its S-1 because of general market conditions, and the stock is still not trading anywhere, even on the low-profile, low-volume exchanges.

Somewhere in between Intarcia’s $210 million and Radius’s zero is Ziarco, a new company that said Nov. 5 it received the first $6 million tranche of a potential $27 million Series A round. Consider it a small bite of Pfizer’s old Sandwich. Ziarco licensed four drug candidates that were developed at Pfizer’s now-shuttered Sandwich, UK labs, and part of the venture cash comes from Pfizer’s venture arm. But the lead financier is a very unlikely source: the hedge fund Biotechnology Value Fund, which typically invests in small- and micro-cap biotechs like this one. The crossover move is its first in five years, and it doesn’t seem inclined to make a habit of it. BVF partner Mark Lampert called the Ziarco deal opportunistic. Ziarco has four anti-inflammatory and anti-allergy drugs, on which Pfizer spent more than $100 million on R&D, said BVF’s Lampert. The most advanced is a histamine H4 receptor antagonist that has completed Phase I. CEO Mike Yeadon, who was VP and CSO of the allergy and respiration research team in Sandwich, told our “Pink Sheet” DAILY colleagues it could be a once daily low dose oral treatment for asthma, allergic rhinitis, pain, and inflammatory skin conditions. Pfizer Ventures’ stake is undisclosed, and it will receive milestone payments and royalties as the drugs progress.

Speaking of progress, we're almost to the blurbs. A quick programming note: This week we've added a new twist to FOTF. After the four blurbs, you'll find a lightning-round paragraph that takes you through the rest of the fortnight's financings. We hope you find it useful. Now on the count of three, let's all get a running start and jump headlong into...

Visterra: If the Cambridge, Mass. biotech has its way, Tamiflu will have competition. Visterra said Nov. 9 it closed a $26 million Series A round with $13 million from the Bill & Melinda Gates Foundation, Omega Funds, and its existing investors. The cash will help Visterra push its monoclonal antibody VIS410 into the clinic for seasonal and pandemic influenza. It’s a therapeutic, much like Tamiflu (oseltamivir), which is famously stockpiled whenever a new flu strain emerges amid whispers of “pandemic.” Visterra also sees it used as a prophylactic for first responders and others at near-term risk of flu infection. The infusion of cash from the Gates Foundation was undisclosed, but it’s significant nonetheless. Visterra is the third biotech in roughly a month, and fourth since March 2011, to sell equity to the Gates Foundation. In our previous edition we discussed the Gates investment in vaccine firm Genocea Biosciences. New head of global health Trevor Mundel said this summer the foundation would be more aggressive with its new investment strategy, and so far he’s right. (The upcoming issue of Start-Up takes a deeper look at the Gates biotech investment initiative.) So far, the foundation is targeting platforms, such as Visterra’s antibody discovery technology, so it can help point applications of the technology in directions beneficial to global human health. For example, roughly half of Gates’s Visterra investment is earmarked for a program in infectious disease (but not the flu). The other lead investor in the $13 million tranche, Omega Funds, usually buys shares of venture firms no longer able to hold positions in portfolio companies. But the Visterra investment is primary, not secondary, said Visterra CEO Steve Brugger. – Alex Lash

Abbvie: With a split from its parent company Abbott Laboratories imminent, the pharmaceutical unit AbbVie issued $14.7 billion in debt securities that will help it pay back cash to Abbott, as well as fund dividend payments to future shareholders. The debt issuance -- which included three-year fixed-rate, three-year floating-rate, five-year, six-year, 10-year and 30-year notes – was the largest dollar-denominated offering by a company in more than three years, and a sign that throughout market turmoil, health care reform, and other disturbances, Big Pharma has no problem convincing bond buyers of its seaworthiness. However, AbbVie did receive a slightly lower rating, Baa1, from Moody’s because of its untested independence and its overreliance on sales of rheumatoid arthritis drug Humira (adalimumab). Before AbbVie, the largest dollar-denominated debt offering was from Roche in February 2009 to help pay for its acquisition of Genentech. The company issued $13.5 billion in long-term debt, as well as $3 billion in commercial paper, a form of short-term debt. That same year Pfizer issued $13.5 billion in debt in conjunction with its acquisition of Wyeth. Amgen has also issued more than $10 billion in debt over several years to fund share repurchases. AbbVie issued $3.5 billion of 1.20% senior notes due 2015, $4 billion of 1.75% senior notes due 2017, $1 billion of 2.00% senior notes due 2018, $3.1 billion of 2.90% senior notes due 2022, $2.6 billion of 4.40% senior notes due 2042, and $500 million of floating rate senior notes due 2015. – Lisa LaMotta

Pearl Therapeutics: The Redwood City, Calif. company said Nov. 13 it has closed a $65 million Series D round to help move its combination chronic obstructive pulmonary disease drug, PT003, into Phase III testing by mid-2013. With four years of Phase II testing under its belt, Pearl Therapeutics wants to move into two pivotal trials and, it hopes, attract a partner for PT003. The Series D included the company’s four existing investors: 5AM Ventures, Clarus Ventures, New Leaf Venture Partners, and round leader Vatera Healthcare Partners. The company has raised a total of $167.5 million since 2007, including its $69 million Series C in 2010, which included the same four investors. Pearl expects to file for approval of its combo product, as well as each of the components in three separate New Drug Applications, by the first half of 2015. PT003 is a fixed-dose combination of glycopyrrolate, a long-acting muscarinic antagonist (LAMA), and formoterol, a long-acting beta-2-agonist (LABA). It uses a meter-dose inhaler (MDI) as a delivery device, and since MDI technology is already used with other medications, the company will not have to seek regulatory approval for the device, nor will it have to spend resources educating doctors and patients about the use of the device. – L.L.
 
Auspex Pharmaceuticals: Amid all our talk about public investors crossing over into the mezzanine rounds of private companies, we noticed that Auspex is having a different conversation. The San Diego-area company that makes deuterium-modified compounds has raised a $25 million Series D round that it hopes will fund its lead drug, an analogue of tetrabenazine, a treatment for chorea (involuntary spastic movements) associated with Huntington’s disease (HD). The original version, Xenazine, is marketed by Valeant Pharmaceuticals International through Lundbeck in the U.S. for the same indication. New investor Panorama Capital led the Series D round, with participation from existing investors Thomas, McNerney & Partners, CMEA Capital, and Sloan Biotech Fund. Gaurav Aggarwal of Panorama joins the board with the financing. Auspex has raised a total of $60 million since its 2007 inception. “We like the near-term nature of the product and the uniqueness of it,” Aggarwal told our friends at "The Pink Sheet". He was confident that Auspex could go public even if the syndicate can’t sell the company. Another deuterium modification company, Concert Pharmaceuticals, has advanced its lead candidate for diabetic neuropathy nephropathy into Phase II. Deuterium is an isotope of hydrogen, and substituting it for hydrogen bonds makes a molecule more able to withstand enzymatic breakdown and thus stay in the body longer. It also creates new chemical entities, their developers say. The patent office agrees: on Nov. 15 it granted a composition-of-matter patent to Auspex for its deuterium-substitute version of Pfizer’s JAK kinase inhibitor tofacitinib, which the FDA approved on Nov. 6. – A.L. 

The Best of the Rest: Shanghai Jingfeng Pharma’s venture round brought in $30 million led by Vivo Ventures…an OrbiMed-led Series B for Cardioxyl Pharma totaled $28 million…Roche Ventures and MedImmune Ventures participated in Ambit Biosciences’ $25 million Series E supporting quizartinib clinical trials… fellow diagnostics companies Metamark Genetics, Epic Biosciences, and Advanced Cell Diagnostics each raised Series B financings…STAR antibody platform play Alethia Biotherapeutics closed a $4.7 million Series B…Avexxin raised an undisclosed amount in Series B financing for chronic inflammatory disease development…Vivo Ventures and New Leaf Partners joined as new shareholders through MEI Pharma’s $27.5 million PIPE…Tavistock Life Sciences led a $Cdn26.1mm private placement for MethylGene…vaccine adjuvants developer Isconova raised SEK50mm through a rights issue…Idera Pharma completed a $7mm converted preferred stock and warrants sale…small-molecule cancer drug developer Array BioPharma’s FOPO grossed $65.7 million…in the only completed IPO of the fortnight, breast cancer testing company Atossa Genetics raised $6.5mm without taking a haircut…Enanta filed to go public, hoping to advance its anti-infectives…Cardiovascular diagnostics company Singulex postponed its IPO … AstraZeneca completed a $2 billion two-tranche bond issue… insurance provider Aetna raised $2 billion from the sale of senior notes to fund its acquisition of Coventry Health Care.

Photo courtesy of flickr user bumeister1 via a Creative Commons license.

Viagra, The Strange Duck

Sildenafil, the active ingredient of Pfizer’s blockbuster erectile dysfunction drug Viagra, lost exclusivity in the U.S. on Nov. 6 – but don’t expect to see generic Viagra here anytime soon. 

The LOE affects only the drug’s use in pulmonary arterial hypertension (PAH), for which Pfizer sells it under the brand name Revatio.Viagra, on the other hand, continues to be protected by a use patent through April 2020, as "The Pink Sheet"’s Brenda Sandburg noted in an article on Nov. 12. It is available in 25 mg, 50 mg and 100 mg tablets; Revatio on the other hand only comes in a 20 mg strength, which is recommended to be taken three times daily. The recommended dosing for Viagra is 50 mg as needed, but not more than once daily, although depending on effectiveness and tolerance, a higher or lower dose can be taken. 

The AWP for both brands, likewise, is somewhat similar. A 90-tablet bottle (one month supply if used according to the label) of Revatio lists for  $2,107.04, with a 25% mark up on the wholesale acquisition cost, or direct price. Viagra’s AWP is calculated at 100 50 mg tablets for $2,783.49, with a 25% mark up, according to Elsevier’s The Gold Standard (roughly a three months or longer supply).

Four generic competitors have FDA-approved ANDAs for sildenafil, including Pfizer’s Greenstone subsidiary, which is selling the authorized generic. Despite the competition, the list price (AWP) for the generic appears to be only slightly discounted—but of course, the launch is only in its earliest days and AWPs don’t capture the true value of a drug, especially a generic, after rebating. 

So what’s to stop cost-conscious consumers from asking docs for generic Revatio and taking multiple tablets instead of one Viagra?

Plenty, say experts. Companies aren’t likely to promote the generic’s off label use in ED because of the threat of huge government fines for off-label promotion. Moreover, the drugs are prescribed by different kinds of doctors, who aren’t likely to try to game the system when they have nothing at stake. Pulmonary or cardiology specialists prescribe Revatio, while general practitioners primarily write scripts for Viagra, so a massive educational effort would seem to be in order, but generic companies generally do not engage in such activities on a grand scale.

Payers would be another obstacle:  private insurers aren’t likely to cover off label use of a generic when an on-label brand is available; furthermore, many require prior authorization before covering Revatio. Medicare doesn’t cover Viagra anyway, so many patients will just keep doing what they’re already doing: paying out of pocket.

That said, there’s little precedent for a drug going off patent in one indication while remaining exclusive in another; most dual brands lose exclusivity at the same time. The few examples that come to mind are old and harken back to days when the competitive landscape was quite different (Prozac and Sarafem, suggested one consultant).   

Sildenafil is an outlier because Pfizer has a use patent protecting exclusivity for ED, at least in the U.S. -- a protection that a U.S. district court reinforced last year in a ruling against Teva (Teva is appealing). However, Pfizer lost a court case over the patent in Canada on Nov. 8, so Viagra will face generic competition there shortly. 

Given the similarities, and the availability of a generic active ingredient, the question comes to mind as to whether this means much of anything for the Viagra blockbuster franchise. The question’s important to Pfizer in particular because Viagra is by far the bigger seller; its sales for the nine months ended Sept 30 were $1.5B, while Revatio sales were $414M.  

The bet is that Viagra won’t get hit too hard. In any event, Pfizer will surely be watching closely for competitors’ missteps, particularly regarding off label promotion. In the words of one consultant: “This really is a strange duck.”

Source for image: www.visualphotos.com