Deals of the Week Sells During Slow Season

Capitalism knows no holiday, but people need a break sometimes. The dog days of summer often slow the pace of pharma deals, and 2013 is no exception. If you traded boardroom time for surfboard time last week, or just hung out at home with a glass of lemonade and the sprinkler, Deals of the Week is here to help you catch up with what you’ve missed.

Speaking of front lawn scenes, word is that TPG Capital put a “For Sale” sign in Aptalis Pharma’s yard earlier this year, according to published accounts. Reuters reports that the private equity firm wants $3 billion but hasn’t yet found a suitor for Aptalis, a global specialty pharma whose diversified holdings include several products for gastrointestinal and digestive disorders. The firm engaged JP Morgan Chase and Evercore Partners to pursue the sale.

TPG acquired predecessor company Axcan Pharma US for $1.2 billion in late 2007, taking it private. Then in December 2010, the firm funded Axcan’s buyout of public Dutch company and former partner Eurand NV for $590 million. The merged entity was renamed Aptalis two years ago.

Aptalis’s top sellers include Carafate (sucralfate) for duodenal ulcer disease and Canasa (mesalamine) for ulcerative proctitis, and it owns three of the five approved drugs for pancreatic enzyme insufficiency: Zenpep, Ultrase, and Viokase (pancrelipase, in three formulations). The company also expanded its cystic fibrosis holdings with the acquisition of another former partner, Mpex Pharmaceuticals in 2011 for $62.5 million in up-front and subsequent non-contingent payments, giving it Phase III candidate Aeroquin (aerosol levofloxacin). A late-stage trial revealed some encouraging data about the drug in January, but Aptalis hasn’t made its next step clear.

Parties interested in buying Aptalis have included Elan Corp. prior to its own acquisition by Perrigo Co.; Forest Laboratories, which is currently dealing with a CEO transition; Sun Pharmaceutical Industries; and Salix Pharmaceuticals, but all have reportedly walked away. Buyers would get a company that posted a loss of $66.4 million on $470 million in revenues during fiscal 2011, the last time it reported full-year earnings.

If no buyer materializes, TPG could pursue an initial public offering for Aptalis. The private equity firm was a top stakeholder in contract research organization Quintiles Transnational’s May offering, which raised $1.1 billion at a valuation of $6 billion. TPG holds stakes in numerous biotech and pharma companies, and bought Par Pharmaceutical for $1.9 billion last year.

It’s also possible that Aptalis could be broken apart, either before or after a sale. It’s a diversified company, but one addressing several disparate niches. The value of its cystic fibrosis program is unclear, and might not fit squarely with a buyer’s goals as well, so TPG might not find anyone willing to pay full value for all of Aptalis’s parts. - Paul Bonanos

September's coming soon, and I'm pining for the moon. But for now, summer's here and the time is right for...

Quintiles/Novella Clinical: Quintiles put some of its IPO war chest to work this week, when it revealed an Aug. 14 deal to acquire Morrisville, N.C.-based CRO Novella Clinical, a specialist in oncology, medical devices and biopharmaceuticals. Fifteen-year-old Novella has about 800 employees in North America and Europe, including locations in Ohio, Colorado, Ontario and the UK. Financial terms of the deal weren’t released, although Quintiles said the deal won’t have a material impact on its 2013 earnings. It expects to operate Novella as a standalone division named “Novella Clinical, a Quintiles company.” Analyst Eric Coldwell of Baird Equity Research estimated that Novella will produce $150 million in revenue this year. Before the IPO, Quintiles said it would use the proceeds in part to pursue acquisitions that would broaden its service lines or deepen its expertise. Since 2011, it purchased Outcome Sciences, VCG&A, Advion Bioservices, and Expression Analysis for a total of about $280 million. The CRO had $585.7 million in cash and cash equivalents on its balance sheet June 30, along with more than $867 million in accounts receivable and unbilled services. - P.B.

Pfizer/Sanford-Burnham: The NYC-based Big Pharma has inked a collaboration with Sanford-Burnham Medical Research Institute in Orlando, where scientists will work to screen and discover new targets that could lead to treatments for diabetes and obesity. The pharma-institute tie-up, announced Aug. 13, will focus on identifying targets and compounds that interfere with the accumulation of fat in muscle cells in hopes of finding new treatments for diabetes and obesity. Research has shown that abnormalities in lipid metabolism in muscle are associated with insulin resistance. As fat accumulates in muscle tissue, it becomes insulin-resistant and glucose is not cleared effectively from the blood. Neither party would disclose the financial arrangements surrounding the deal, but Pfizer will be funding all the research efforts. Work will be conducted in both Pfizer's and Sanford-Burnham’s labs. Decision-making within the collaboration largely will be decentralized, and research decisions will be made separately in each lab with the two organizations meeting regularly for updates and to decide on next steps. All intellectual property will remain with the organization making the discovery, with any jointly-invented IP being shared. The collaboration is set to last three years, but may be extended.- Lisa LaMotta

Boehringer Ingelheim/Brigham & Women’s Hospital: Boehringer Ingelheim Pharmaceuticals Inc. and Brigham & Women’s Hospital are partnering on a long-term comparative effectiveness study to assess the use of oral anticoagulants for reduction of stroke risk in U.S. patients with non-valvular atrial fibrillation. B&W researchers will lead the study, which Boehringer is sponsoring. The objective is to better understand the real-world safety and effectiveness of warfarin and newer oral anticoagulants such as Pradaxa (dabigatran), introduced by Boehringer in the U.S. in late 2010. The analysis will be based on claims data from UnitedHealth Group, which covers more than 80 million individuals. The announcement reflects increasing industry interest in sponsoring long-term real-world evidence studies. It also reflects intense interest in the clinical role and safety of new oral anticoagulants, which, in addition to Pradaxa, include Bayer/Janssen’s Xarelto (rivaroxaban) and Pfizer/Bristol-Myers Squibb’s Eliquis (apixaban). The partners did not specify a timeframe for the study, but Sebastian Schneeweiss, vice chief, division of pharmacoepidemiology and pharmacoeconomics at B&W noted in a press release it would take place over several years.  Some 5 million people with non-valvular atrial fibrillation in the U.S. are at increased risk of stroke, Boehringer says. All of the new agents are being scrutinized by the medical community for safety, notably for increased risk of bleeding. This has been a particular concern regarding Pradaxa due to some early reports of severe bleeding by doctors, but a late 2012 FDA review of Mini-Sentinel real world data found Pradaxa did not cause increased bleeding compared to warfarin. So far, there are no head-to-head comparative prospective clinical trials of the new agents, but B&W’s work should provide some RWE insights. - Wendy Diller

Biomotiv/Torrey Pines: Cleveland-based drug developer/accelerator BioMotiv’s asset-based financing model found another backer Aug. 12, when it signed a $40 million deal with Torrey Pines Investment. Each company will contribute $20 million to a collaborative program that will fund early-stage companies over the next seven years. BioMotiv intends to in-license preclinical assets from academic and private-sector researchers, then advance them to Phase Ib or IIa for out-licensing. Assets will be housed in separate corporate structures designed to be sold individually, with returns passed back to investors. CEO Baiju Shah told START-UP in June that BioMotiv will accept smaller up-front payments than VCs typically do, allowing for earlier exits than many start-ups can expect. Further terms, including what San Diego-based Torrey Pines will receive or contribute beyond cash, weren’t released. BioMotiv raised $25 million earlier this month from investors including first-time backer Nationwide Mutual Insurance and founding investors University Hospitals of Cleveland and the Harrington family, as well as individuals. That built upon $21 million in initial funding from the founding backers. The start-up aims to raise a total of $100 million for its projects, not counting the money in the Torrey Pines deal. BioMotiv currently has seven preclinical candidates, but hopes to have 20 in development at once. - Joseph Haas

Thanks to Flickr user the-tim for the overgrown photo, reproduced via Creative Commons license.