Friday, January 25, 2013
Pharma dealmaking is usually fraught with all kinds of risks, whether technical, clinical, regulatory, financial, or otherwise. But Allergan’s buyout of migraine drug developer MAP Pharmaceuticals this week represented a unique roll of the dice: the $958 million deal’s ultimate value to the buyer hinges largely on the approval of a late-stage drug currently under re-examination due to a “Complete Response” letter from FDA, casting its approval this spring into doubt.
It’s not unprecedented for a buyout to occur while a drug nearing approval hangs in the balance – more on that in a moment – but the Allergan/MAP deal is perhaps even more unique in that it shifts the risk around Levadex (dihydroergotamine), once shared by the two companies, entirely to the buyer, just a few months before an approval decision is due from FDA. Allergan had already paid MAP $60 million up-front for rights in U.S. and Canada to the inhalable Levadex in January 2011, when two Phase III trials of the drug had already been completed. But FDA demanded additional work in a March 2012 CRL, and MAP filed an amended NDA seven months later. The drug has a PDUFA date of April 15.
Even with precedent, it’s a rare case that a deal’s valuation is driven entirely by a single drug this close to approval, but under the shadow of a CRL. We at Deals of the Week! looked for other examples of acquisitions of companies with an outstanding CRL since 2010, and discovered a range of outcomes.
Cephalon’s 2011 buyout of Chemgenex, for example, featured uncertainty in the pipeline as Chemgenex prepared chronic myeloid leukemia drug Omapro (omacetaxine) for resubmission; the drug was eventually approved in a narrower third-line indication than originally requested, and is marketed as Synribo today. And Kyowa Hakko Kirin’s $475 million acquisition of Prostrakan in April 2011 occurred between the April 2010 CRL for Rectiv (nitroglycerin ointment) for anal fissures and its eventual June 2011 approval. But both those companies had other key assets ahead of those covered by their CRLs.
Sometimes the outcome isn’t as encouraging. When Pfizer bought Encysive in 2008 for $195 million, it hoped that Thelin (sitaxentan) would complement its existing drug Revatio (sildenafil) for pulmonary arterial hypertension, even though the compound had already received three CRLs. But two years later, Pfizer gave up the ghost, withdrawing Thelin from Europe and all the territories in which it had already been approved, and ceasing U.S. clinical trials. (In late 2010, Pfizer also acquired King Pharmaceuticals, whose pain drug Remoxy (long-acting oxycodone) remains under CRL status.)
In any case, MAP has long expressed confidence that Levadex’s approval is likely, and that FDA’s concerns about chemistry, manufacturing and controls won’t affect either the drug’s safety or efficacy. That was enough to convince Allergan (which, as the Levadex partner is in a position to know what's what) to acquire full rights to the drug instead of just share them.
Roll the dice with us, and see which pharmas and biotechs are trying to conquer new terrain. You don’t even have to attack Irkutsk when you’ve got…
Watson (Actavis)/Uteron – Watson, which will soon go by the name Actavis Group, has been adding to its portfolio of women’s health products in hopes of building its branded business – with a goal of $1 billion in revenues for the division. The latest acquisition for the group was Belgium’s Uteron Pharma, which Watson purchased on Jan. 23 for $150 million upfront and the promise of another $155 million in milestone payments. Uteron brings a branded oral contraceptive, a test used in the infertility process and an intrauterine device (IUD) to the table. Uteron’s Levosert is an IUD that delivers 20 mcg of levonorgestrel per day. It is currently pending approval in the EU and in Phase III in the U.S. with the potential to reach the U.S. market by 2014. The product will go head-to-head with Bayer’s Mirena and its latest offering Skyla. The other late-stage opportunity in Uteron’s pipeline is Diafert, a non-invasive immunoassay kit for the assessment of egg quality during in-vitro fertilization (IVF), allowing physicians to select the best eggs for the process and increase success rates. The test is expected to gain approval in the EU this year and in the U.S. in 2014. Uteron also has a Phase II oral contraceptive that could stand out in a heavily genericized market. Estelle, expected to reach the U.S. market in 2018, uses a natural form of estrogen, while most oral contraceptives on the market use synthetic estrogen. Watson expects to combine the product with various types of progestins to create a family of products. –Lisa LaMotta
Baxter/Inspiration/Ipsen -- Ipsen of France hopes it can soon free itself of U.S. partner Inspiration Biopharmaceuticals Inc. now that Baxter International Inc. has agreed to buy the troubled biotech’s flagship hemophilia drug OBI-1 and related Boston, MA manufacturing facility. Inspiration entered Chapter 11 protection at the end of October 2012 to restructure and find a buyer for its two main hemophilia products. These are OBI-1, a recombinant porcine factor VIII (rpFVIII) for treating hemophilia A with inhibitors, and IB1001, a recombinant factor IX (rFIX) for the treatment of hemophilia B. Ipsen, Inspiration’s sole senior secured creditor, has been bleeding funds developing these two experimental drugs since 2010 and has been trying to distance itself from Inspiration since then. Ipsen has also been providing Inspiration with Debtor-in-Possession financing (DIP) for an amount of up to $18.3 million to permit the sale process to proceed and support business continuity. The duo on Jan. 24 said U.S.-based Baxter had now agreed to buy worldwide rights to OBI-1 along with Ipsen’s industrial facility in Milford, outside Boston, which makes bulk OBI-1, a biologic product, thus making the plant of strategic interest to Baxter. Subject to court and regulatory approval, Baxter will pay $50 million upfront, up to $135 million in potential additional development and commercial milestones as well as tiered net sales payments ranging from 12.5% to 17.5% of OBI-1 annual net sales. The share of upfront payment to be received by Ipsen should mainly cover the total amount of DIP financing it has provided to Inspiration. The remaining portion of proceeds is contingent on OBI-1’s regulatory approval. As a consequence, Ipsen may incur an impairment charge to its hemophilia related assets, composed mainly of the convertible bonds and the Milford manufacturing site, totaling some €100 million after tax. The sale process for IB1001 has meanwhile entered the final bidding stage. Evercore Partners, which acted as sole financial advisor to Inspiration and Ipsen on the OBI-1 transaction, are leading the IB1001 sale negotiations too. This sale will be the more difficult, though, given IB1001’s cloudy regulatory prospects after safety issues led FDA in July 2012 to slap a clinical hold on the candidate, impacting two ongoing phase III trials. Ipsen declined to say how many groups have voiced interest in acquiring IB1001. - Sten Stovall
Dezima/Mitsubishi Tanabe -- Intriguing European start-up Dezima acquired a Phase I compound to treat dyslipidemia from Mitsubishi Tanabe Jan. 22, giving the young company a new lead program, and observers of recent clinical disappointment in the space something to scratch their heads about. Dezima paid an undisclosed amount for rights to TA-8995, an inhibitor of cholesteryl ester transfer protein (CETP), which it will rename DEZ-001. The company says it plans to fund studies on the drug, which has already been through single and multiple-ascending dose studies that revealed effects on both high-density and low-density lipoprotein, all the way into Phase III. Dezima was co-founded in 2012 by University of Amsterdam professor John Kastelein, along with investors Forbion Capital Partners and BioGeneration Ventures. Kastelein and Forbion’s Sander van Deventer, the latter of whom serves as Dezima’s CEO, also helped establish uniQure, whose gene therapy Glybera (alipogene tiparvovec) became the first treatment of its kind approved anywhere in the world last fall. The company also said it had added two dyslipidemia experts to its scientific advisory board: University of New South Wales professor and International Atherosclerosis Society president Philip Barter, and Washington Cardiovascular Associates director and Medstar Research Institution consultant Bryan Brewer. – P.B.
PatientsLikeMe/UCB/VA Epilepsy Centers of Excellence -- On Jan. 22, the U.S. Department of Veterans Affairs’ Epilepsy Centers of Excellence (ECoE), UCB SA and PatientsLikeMe (PLM) announced a study to better understand what factors improve health outcomes for veterans with epilepsy. No financial terms or timelines were disclosed. The ECoE is interested in compiling the kind of real-world, patient-reported data that PLM specializes in to improve the overall quality of life of epilepsy patients. It would build on a recently completed ECoE study of various metrics including seizure frequency and severity, treatment adherence, and patient-physician dialogue. Both ECoE and PLM had separately been working with the Brussels-based biopharm UCB which markets several products including Keppra XR (levetiracetam) for epilepsy. Both valued UCB’s expertise in epilepsy, and its KOL networks and advisory boards. Moreover, PLM and UCB have partnered since 2010 on epilepsy projects. ECoE staff physician John Hixson and UCB approached PLM with a request to help them develop a way of integrating the patient-reported experiences which PLM harvests through surveys of epilepsy communities with clinicians’ experience to improve disease management at the point of clinical encounter. According to Hixson, 66,000 veterans with epilepsy visit the VA Medical Centers each year. The parties said the collaboration will harness PLM insights, for instance into how patients can best describe their seizures to clinicians, and what was the optimal physician type to care for epilepsy patients. Jamie Heywood, co-founder and chairman of PLM, said “This is a great opportunity to validate our earlier findings which revealed that patients using our website reduced side effects, increased compliance, and reduced ER visits.” In August 2012, PLM and Merck & Co. Inc. partnered to analyze and interpret psoriasis patient-reported data. - Michael Goodman
AstraZeneca/Orexo -- Once again, one company's trash is another company's treasure. Or, at least, its very low-risk preclinical and preliminary respiratory bet. This morning Swedish biotech Orexo said that it had granted AZ rights to evaluate compounds in its OX-CLI preclinical respiratory R&D program. Terms of the deal were not disclosed, though Orexo said that if the Big Pharma decided to option any compounds that it would receive potential development milestones and royalties. The CLI program had been idle since Orexo and J&J's Janssen unit killed a deal around those assets and other Orexo programs back in January 2012.-- Chris Morrison
Celsion/Zhejiang Hisun Pharmaceutical Company -- We've covered a ton of option deals here at DOTW, but this might be our first "option for an option" deal. NJ-based biotech Celsion said on Jan. 22 that it received a $5 million fee when it entered a technology development agreement with Zhejiang Hisun Pharma Co., and laid out a roadmap for a future option-deal with the Chinese pharmaceutical company for China rights to Thermodox (a heat-activated liposomal encapsulation of the chemotherapeutic doxorubicin). Phase III data on Thermodox in hepatocellular carcinoma (the HEAT study) are expected this month, according to the company, and the product is being developed for a variety of other oncology indications. If Hisun wants those rights, it must pay Celsion another $5 million within 60 days of this first deal, which would trigger an option on a deal that includes an additional $15 million up-front fee, milestones, and royalties on sales in the Greater China market, which Celsion notes is home to the largest HCC patient population in the world. Per a 2008 deal, Yakult holds rights in Japan, the only other territory where Celsion has licensed the asset. -- CM
Risk image via flickr user avyfain under creative commons
But easier said than done; the US JOBS Act, meant to ease regulation, spur IPOs, and let a million crowdfunders bloom, has so far done little of anything. Our colleagues at START-UP described here the snail's pace of the crowdfunding portion of the JOBS agenda. And the JOBS Act's so-called "IPO on-ramp" seemed after the bill became law in April to be more of an LA freeway at rush-hour, with all of eight biotechs going public in the US. Will the bottleneck clear soon? If all the institutional investors and hedge funds crossing over into biotech recently are any indication, a bunch of extremely well-funded private companies will try their hands soon.
Reeling in more private money instead of going public is still an option for some companies, but generally the numbers don't recommend doing so. Biotechs in 2012 attracted $4.1 billion, down from $4.8 billion in 2011, according to the National Venture Capital Association's Money Tree report. Medical device investments dropped to $2.4 billion in 2012, from $2.8 billion in 2011. There have been worse years in the past decade, but the decline stands out in a year that featured legislation meant to spur investment. A recent survey of investment bankers shows a lot of skepticism about the JOBS Act (h/t to Dan Primack's "Term Sheet" email), a big dip from their positive attitudes last summer. Life-science VCs never sported the rose-colored lenses, as noted in the second annual life-science venture survey that START-UP published last September.
Then again, a flurry of IPO activity this quarter or next could make that slim "Too soon to tell" majority look all the wiser. Other VCs voted for optimism with their checkbooks in 2012: the early-stage investors. There weren't a ton of them, as you might extrapolate from the overall VC numbers noted above. One way to take the temperature is to tally the disclosed Series A rounds, which is why START-UP publishes its A-List every year. Lucky you: It just went live Thursday night, and for the non-subscribers we'll share this tidbit that shows biopharma Series A activity was, in dollar terms, practically flat, but deal volume was up, making for a small
Click through, and you'll find lots more discussion. We've got device and diagnostics numbers, too, as well as The A-List itself: the 12 companies we feel best exemplify the year's scientific, financial and strategic trends in early stage life science venture: ArmaGen Technologies, Avelas Biosciences, Cibiem, Cotera, Enterome, Galera Therapeutics, Global Blood Therapeutics, Intact Vascular, Novira Therapeutics, Oculeve, Solstice Biologics, and Warp Drive Bio.
If that's not enough to make you tear down the paywall, the A-List feature also includes profiles of two very active Series A investors and a round-up of the year's activity for our A-List alumni, who stretch back to 2004. It's all so A-riffic, you'd half expect the official celebrity spokesperson to be A-Rod. A-hem. Before we get too carried A-way, let's A-vail ourselves of the latest A-dition of...
Onyx Pharmaceuticals: Intent on proving this year it isn’t a one-trick pony with the success of kidney and liver cancer treatment Nexavar (sorafenib), Onyx took advantage of a share price upswing to raise $359 million in a follow-on, selling 4.4 million shares at $81.50 each. According to Elsevier’s Strategic Transactions database, it’s the largest life sciences follow-on since orphan disease play Alexion Pharmaceuticals raised $465.1 million in May 2012. It’s also the largest financing Onyx has done to date. As of Sept. 29, 2012, Onyx had $573 million in cash. (It also tallied an operating loss of $228.9 million in the first nine months of 2012.) The firm expects to use the cash in part for trials intended to push Kyprolis (carfilzomib) all the way up to frontline therapy. In addition, it’s waiting for data due the second half of 2013 that would be the basis of a European regulatory application; Onyx is planning to market the drug on its own there. Kyprolis was first approved in July to treat relapsed/refractory multiple myeloma. Onyx said in January it had more than $62 million in Kyprolis sales after five months on the U.S. market. Shares were up by as much as 14%, but they've since retreated to a 2% gain in the new year. Still, Onyx almost doubled its share price in 2012, so investors seem content for now to eschew profitability. But that likely won’t remain the case for too long. — Stacy Lawrence
InterMune: More from the fortnight’s follow-on fiesta! InterMune raised $229 million in concurrent public offerings of convertible senior notes and new stock, even as it continues to work to get its potential blockbuster in idiopathic pulmonary fibrosis approved in the U.S. Priced Jan. 16, the offering netted $102 million in sales of 2.5% convertible senior notes due in 2017, along with $127 million from the sale of 13.5 million common shares at $9.90 apiece. The senior notes convert to common stock at a price of $12.87, 26% higher than InterMune’s average stock price of $10.19 before the offerings. The Brisbane, Calif. company is conducting a Phase III ASCEND trial to obtain evidence that pirfenidone, a dual inhibitor of TGF-beta and THF-alpha synthesis, can produce significant improvement in forced vital capacity in IPF patients. Already marketed in Europe as Esbriet and Japan as Pirespa, pirfenidone would be the first drug approved in the U.S. for IPF. The current standard of care is lung transplant. InterMune said it would use the proceeds to fund ASCEND and commercialization efforts for the drug, as well as to retire 5% convertible senior debts that come due in 2015. — Joseph Haas
Versartis: Like several venture-backed companies of late, Versartis is the latest to take another round of venture funding and aim for late-stage trials on its lead program rather than strike a partnership or execute a trade sale. The Redwood City, Calif. developer of VRS-317, a long-acting version of human growth hormone intended to treat pediatric growth hormone deficiency, announced January 15 it has closed a $25 million Series C round, building on at least $32 million in previous funding. Aisling Capital led the new round, while prior investors Index Ventures, New Leaf Venture Partners, and Advent Venture Partners’ Life Science Fund provided follow-on funding. Like its successor Diartis, Versartis was spun out of extended half-life technology developer Amunix in 2010 to establish a separate, single-asset entity that would house VRS-317. Shortly after Versartis’ $11 million Series A, Amunix founder Willem "Pim" Stemmer told START-UP in 2010 that Versartis could be on the block as soon as late 2011, with one or two rounds of funding in between. Now, Versartis says it’s preparing to go long, with a 2014 Phase III trial slated to succeed the Phase Ib/IIa trial currently underway. Versartis declined to discuss its new deal. Other companies, such as Intarcia Therapeutics and Flexion Therapeutics, have also recently taken big rounds instead of crafting an exit or partnership. – Paul Bonanos
Aileron Therapeutics: The biotech with the most advanced "stapled" peptide program said January 14 it has hit a milestone and triggered the second tranche of its Series D round, bringing the total to $42 million. The cash will help push its lead drug ALRN-5281 into the clinic to treat patients with orphan endocrine disorders. The compound's clinical progress will be closely watched, as stapled peptides are one version of constrained peptides, altered to hold their shape, penetrate cells and perhaps hit previously undruggable targets. They have also sparked a recent and vigorous debate, as well, as the brand-new edition of START-UP explains. Aileron holds exclusive rights to the stapled version, which was invented at Harvard Medical School in the previous decade. Its Series D, first unveiled in 2009, was notable for a syndicate that included four corporate venture groups: SR One (of GlaxoSmithKline), Roche Venture Fund, Lilly Ventures, and Novartis Venture Fund. All four are participating in the new tranche, along with existing investors Apple Tree Partners. — Alex Lash
The Best of the Rest: BioCrossroads Indiana Seed Fund made $500k and $250k investments in, respectively, Esanex – to advance Phase I trials for an Hsp90 inhibitor for solid tumors that Pfizer acquired in its 2008 buy-out of Serenex – and Algaeon, which is developing algae cultivation technology for nutraceuticals and to date has only raised money from its founders and angel investors… From its new life sciences fund, TVM Capital has made the first investment in Kaneq Bioscience, a spin-off of Kaneq Pharma that's developing early-stage compounds for metabolic diseases and cancer... To fund Phase II trials for Aganirsen in back-of-eye diseases, including the orphan indication neovascular-associated corneal graft rejection, Gene Signal has received undisclosed funding from a group of private investors who have backed the Swiss company since its 2000 formation... Ariad Pharmaceuticals priced a $300mm FOPO of 15.3mm shares at $19.60. RNAi-based therapeutics developer Alnylam Pharmaceuticals brought in $174mm through the public sale of 9.2mm shares at $20.13… Aegerion Pharmaceuticals closed a $67.9mm public offering… A FOPO of 6.7mm shares at $7.50 brought in $47mm for Aveo Pharmaceuticals… Antibiotics-focused Trius Therapeutics raised $34.1mm in a 7.2mm share FOPO priced at $4.75… Antibody player KaloBios has set terms for its IPO of 3.85mm shares at a proposed $12-14 range… Israeli biotech Alcobra has hopes for an $18.75mm IPO on Nasdaq to advance its work on cognitive dysfunction disorders… A price range between $22-$25/share was set for the planned IPO of Pfizer’s animal-health unit Zoetis, which it’s spinning off as an independent company... Through the sale of ten-year, 2.125% convertible subordinated notes, Theravance brought in $282mm… Raising $105.7mm by selling 3.25% six-year senior notes, Pacira Pharmaceuticals will use $30mm to repay debt, the rest to fund continued commercialization and development of additional indications of Exparel, its injectable post-surgical anesthetic… Through the offering of five-year convertible senior notes, Auxilium Pharmaceuticals collected $200mm… Pharming Group secured €16.35mm ($21.71mm) in convertible bond financing through a syndicate of existing institutional investors led by Kingsbrook Opportunities Master Fund… Oculus Innovative Science is spinning off Ruthigen as an independent public company to develop RUT5860 for preventing infection in trauma and surgical procedures… Concurrent with venture funding from a group of investors led by Colorado-based High Country Venture, ViroCyt – an InDevR spin-off developing technologies that enable rapid quantification of viruses – began operations. — Maureen Riordan
A-Train photo courtesy of flickr user The Eyes of New York.
Friday, January 18, 2013
Wall Street is hoping AstraZeneca will buy its way out of its current conundrum. The pharma jumped off the proverbial patent cliff last year and is expected to slide for the foreseeable future. Analysts' model for a turnaround of the beleaguered British pharma is Sanofi, with its aggressive acquisition strategy executed by CEO Chris Viehbacher starting in 2009.
Medicago: The vaccine company got a $15 million loan from an undisclosed major pharmaceutical company with which it is negotiating a partnership. The deal would include co-promotion rights to Medicago vaccines in certain markets. If the deal goes through, the loan will be applied as part of an upfront payment. In that case, Medicago will not pay any interest on the loan. The biotech plans to start a Phase IIa trial of its quadrivalent seasonal flu vaccine with interim data expected in mid-2013. Medicago has an existing alliance with Mitsubishi Tanabe Pharma to develop a rotavirus vaccine and at least two additional vaccine candidates. - Stacy Lawrence
OcellO/Merus: The deal between the Dutch companies gives Merus access to OcellO’s 3D cell culture-based screening platform to profile Merus’ bispecific antibodies to treat cancer. Details of the deal remained undisclosed. Merus is a preclinical company; its lead candidate is partnered with Novartis. It’s been around since 2004 and has brought in more than $30 million in venture financing and corporate deals. OcellO was founded in 2011 and is based on 3D screening technology developed at Leiden University. - S.L.
Monday, January 14, 2013
Among recent elections with profound and far-reaching consequences for national and global affairs, the DOTY is surely...
…well, seriously, Epizyme is truly honored to be recognized by the In Vivo community, particularly among such notable competition. Thank you!
There has never been a better time to be in biotech. The ability to identify true oncogenes and create personalized therapeutics to treat the genetically defined cancers that they drive is a transformational force for patients and all of us. Epizyme is proud to be a leader in this effort.
But it ain’t easy, and it can’t be done alone. Thank you to everyone at our partner Celgene for…
…recognizing the potential of Epizyme’s personalized therapeutics strategy and product platform
… sharing our vision of a partnership that enables us to build a major biopharma company
…and your tremendous commitment to the broader community.
We are thrilled to be working with Celgene and our other partners (not too mention really psyched that we don’t have to worry about our own “fiscal cliff” any time soon!).
Biotech, like that other noble endeavor soccer, is a team sport. Epizyme’s success so far has been made possible by an exceptional group of people in research, development, and business working together. This award is a reflection of their excellence, passion, and willingness to ask (that is, relentlessly hound) friends, family, and strangers met at bars on New Year’s eve to vote, vote, vote!
Along those lines, we’d like to give a special thanks to the Hamilton Wenham Regional High School class of 2015, the bar flies at The Anchor in New Haven, CT and everyone who exercised their franchise. Pericles would be proud.
Congratulations, too, to the winners in the other categories and to all of the nominees, and thanks again to In Vivo and the entire biopharma community. Looking forward to a great 2013!
Friday, January 11, 2013
|SR One's Jens Eckstein, via|
GSK has set broad parameters for SR One, with few restrictions; the firm invests with an eye on "the future of pharma in general," not GSK, Eckstein says. GSK has never bought an SR One investment, and the firm steps aside if it sells one of its portfolio companies. He adds that the fund's priority is early-stage innovation, with innovation defined broadly as “anything that changes the way medicine is done today.” That said, as SR One’s interests move "earlier and earlier” up the value chain, the evergreen funding provided by the corporate parent eliminates funding cycles and gives the venture firm a huge advantage over independent competitors.
To illustrate the range of SR One’s interests, Eckstein pointed out that moneys dispersed last year ranged from $20,000 to $10 million. Some of the smaller investments were made to support due diligence because “one theme in the VC world now is to kill early,” he added, even before officially forming companies. "We put the money to work even before we start companies, which is very different than in the past," he says. So, the firm is working with a contract research organization that determines the reproducibility of scientific data supporting potential technological investments.
It also is experimenting with ways to incentivize management to kill struggling projects quickly, something that is not easy to do in a world in which stopping work on a project can put management out of work, a theme that other investors echoed. “If you have a good relationship with a management team and talk with them,” you can do it, he said. And if management is straight about bad news, he will look to them for the next project.
SR One is moving into healthcare information technology, and Eckstein expects it to do its first IT deal this year. Figuring out the financial and business models for healthcare IT has been a struggle for traditional life sciences venture investors, but Eckstein says SR One has built capabilities to do that. That said, the IT mindset differs from straightforward life sciences because the key hurdles in IT are not technological, but are business model related. With IT, Eckstein explains, you can prototype projects quickly and your projects can have an impact quickly. And no one's talking about consumer apps here, but about using IT to "understand the patient as a whole and the way we triage patients through the hospital system." He adds, "I have fairly specific ideas of what I am looking for and we are getting there."
Eckstein wouldn't divulge specifics on the fund's performance, but he pointed out that historical analysis shows it is in the top 25% of venture capitalists and is "not a cost center to GSK."
Time will tell how SR One will do under Eckstein's watch, but for starters, here's a way to start the scorecard: The firm has done eight financings since he joined (of which six are publically announced), including the following: River Vision, which joins the ranks of orphan drug start ups with a $17 million Series A round announced in December; RaNa Therapeutics; Auxogyn Inc., a video technology that helps to assess the viability of early embryos; IlluminOss Medical Inc., a developer of minimally invasive technology for treating bone fractures (SR One was a first time investor in a $28 million C round that closed in September); and PsiOxus Therapeutics, which SR One joined as part of a Series B syndicate that raised $22 million. Canadian firm Thrasos Therapeutics also joined the portfolio, as GSK invested in a Series C round supporting an acute kidney injury therapy entering Phase II clinical trials.
While Eckstein and others were creating buzz at JPM, of course, real world deals were taking place, and for more on that, let's turn to...
Shire/arGEN-X/Ethris: This was a busy week for Shire, in which the Ireland-headquartered group announced it is buying Boston-based Lotus Tissue Repair, as well as expanding its early-stage rare disease collaborations with arGEN-X BV of the Netherlands and young German biotech Ethris. On Jan. 7, arGEN-X and Shire said their initial alliance, formed in March 2012 to create novel human antibody therapeutics to fight rare and unmet diseases, was so successful that they’re expanding it to explore “a new and exciting therapeutic opportunity.” The duo did not identify that disease area or give financial details. Under their arrangement arGEN-X will remain responsible for all antibody discovery and certain preclinical activities, while Shire will conduct all relevant preclinical work, as well as clinical and commercial development of therapeutic antibody products. arGEN-X receives research funding and success-based payments, as well as milestones and royalties on products developed under the collaboration.
The same day saw privately-held Ethris GmbH of Germany and Shire announce an R&D alliance to develop and market RNA-based therapeutics based on protein replacement. Ribonucleic acids that encode for such proteins are attracting much R&D attention, but so far RNA’s inherent instability and immunogenicity have been significant hurdles. Shire and Ethris hope to clear that obstacle by using the latter’s technology which creates so-called stable and non-immunogenic messenger RNA molecules for use in protein replacement therapies to treat monogenic genetic diseases.. Privately-held Ethris is financed by QureInvest II, a life sciences investment fund managed by HS LifeSciences, Düsseldorf Germany.--Sten Stovall
Evotec/Yale: Evotec AG, the German R&D services and product company, and Yale University announced on January 9th a strategic partnership, which will integrate basic science undertaken at Yale with Evotec’s drug discovery platform. Yale and Evotec will jointly assess novel research technologies, including assays, screens, and models, as well as exploratory drug targets and compounds. No financial terms were disclosed. The intention is to advance candidates in as efficient and accelerated a manner as possible to a stage where they can be commercialized. Cord Dohrmann, CSO of Evotec, said in the release that the partners will focus “all efforts on bringing individual projects to highest industrial standards in preparation for development and commercialization partnerships with pharma companies.”
The German mid-cap has ventured before into academic waters, collaborating with Harvard University in March 2011 to develop new diabetes therapies targeting beta cell regeneration. In July 2012, Janssen Pharmaceuticals Inc. licensed exclusive rights to the small molecules and biologicals that resulted from that collaboration. Evotec also expanded the Harvard alliance in January 2012 to include Brigham and Women's Hospital and to refocus it on discovering and developing new biomarkers and treatments in the field of kidney disease. The Yale deal is more wide-ranging over several therapeutic areas, including central nervous system diseases (CNS), metabolic disease, immunological disease, and cancer. It also harnesses Evotec’s arsenal of discovery and preclinical capabilities, including assay development and screening, structural biology, medicinal chemistry, and in silico and zebra fish modeling. --Michael Goodman
Amgen/Bind Biosciences: The first major partner for nanomedicines company Bind Biosciences is Amgen, with the two companies announcing a licensing deal Jan. 8. The partnership will be the first to study a nanomedicine technology combined with a targeted drug, rather than with a cytotoxic agent, according to the companies. Amgen gains the exclusive right to develop and commercialize a kinase inhibitor nanomedicine for a range of solid tumors, using a novel Accurin from Bind’s nanotechnology platform and its own undisclosed proprietary kinase inhibitor. Both companies will work on the preclinical development of the compound, and Amgen will have responsibility for all future development and commercialization. Bind could receive upfront and development milestone payments totaling $46.5 million, and could receive an additional $134 million in regulatory and sales milestones for the first therapeutic indication. The deal also includes tiered royalties on potential sales of the drug. Bind is eligible to receive additional milestones if Amgen pursues other indications beyond the initial one. “This takes the technology to the next level,” said Bind CEO Scott Minick. The company is continuing to develop its own clinical-stage nanomedicine, BIND-014, combining one of its propriety Accurins with the cytotoxic agent docetaxel, independently. Phase II studies are expected to start in early 2013, following positive Phase I data.--Jessica Merrill
BioMarin/Zacharon: Orphan drug developer BioMarin expanded its portfolio of drugs for rare diseases with the acquisition of glycobiology company Zacharon Pharmaceuticals, the firm announced Jan. 7. San Diego-based Zacharon is focused on developing small molecules targeting pathways of glycan and glycolipid metabolism and has two drug discovery projects focused on inhibition of heparin sulfate synthesis for the rare lysosomal storage diseases Mucopolysaccharidosis Type III and other MPS disorders. BioMarin knows the field well; it already has two drugs, Naglazyme and Aldurazyme, on the market for MPS VI and MPS I, respectively, and is planning to file a new drug, known as GALNS, with FDA this year for MPS IVA. The addition of Zacharon could help BioMarin bring an oral MPS treatment to market. BioMarin paid $10 million upfront for 100% of Zacharon’s share capital and may make additional milestone payments. Zacharon raised $3.5 million in a Series A financing in 2008; the company partnered with Pfizer on rare disease drug development in 2011 in a deal valued up to $210 million.--J.M.
Daiichi Sankyo/Amplimmune: Amplimmune signed its second business development agreement on Jan. 8, agreeing to an option deal including R&D funding and other possible earn-outs with Japan’s Daiichi Sankyo for Phase I-ready AMP-110. Amplimmune, which out-licensed AMP-224, a fusion protein blocking interaction between the PD-1 and B7-H1 proteins to GlaxoSmithKline in 2010, to intends to start clinical development of ‘110 in an undisclosed autoimmune indication within the next six months. A large-molecule fusion of the extracellular domain of B7-H4 protein, ‘110 is designed to mimic the activity of naturally occurring B7-H4 protein in inhibiting T-cell pathways that can contribute to autoimmune disease. While the partners will not announce the first indication before launching the initial Phase I study, a description on Amplimmune’s website notes that ‘110 suppressed the progression of collagen-induced rheumatoid arthritis in mice. Amplimmune will develop ‘110 through Phase IIa, with Daiichi having the option to acquire the program at any point during that period. The Japanese firm will pay Amplimmune more than $50 million to cover past and upcoming R&D costs for ‘110, as well as an undisclosed upfront fee. Amplimmune also can earn undisclosed performance-based milestones. If Daiichi licenses ‘110, however, there will be no further earn-outs for Amplimmune, such as royalties on product sales.—Joseph Haas
Gilead/MacroGenics: Privately-held MacroGenics announced a licensing agreement Jan. 7 under which it will co-develop and commercialize Dual-Affinity Re-Targeting (DART) therapeutics for four unspecific targets with Gilead Sciences. Gilead gets exclusive worldwide rights for the three of the programs, with MacroGenics to receive up to $30 million in license fees and up to $85 million in preclinical milestones. For the fourth, undisclosed program, MacroGenics will retain commercial rights outside of the U.S., Europe, Australia and New Zealand. MacroGenics’ proprietary DART technology platform discovers bi-specific antibodies in which a single recombinant molecule is able to target two different antigens. Gilead will fully fund all R&D activities surrounding the projects. MacroGenics also can earn up to $1 billion in clinical, regulatory and commercialization milestones if all four programs succeed, plus tiered royalties, up to low double-digits. The deal is MacroGenics’ fourth around its DART platform in the past two years, following agreements with Pfizer, Boehringer Ingelheim and Servier.—JAH
Ultragenyx Pharmaceutical/Baylor Research Institute: The Novato, Calif.-based biotech Ultragenyx Pharmaceutical announced Jan. 10 that it has in-licensed a third compound from the Baylor Research Institute in Dallas. The deal gives Ultragenyx the North American rights to triheptanoin (UX007), a synthetic triglyceride of C7 fatty acids that is meant to treat defects in mitochondrial metabolism of long-chain fatty acids; the biotech also has an exclusive option to rest-of-world rights. UX007 is expected to treat the family of fatty-acid oxidation disorders (FAOD) that affect schildren and can result in muscle weakness, fatigue, low blood sugar, cardiomyopathy and a greatly shortened life-span. Terms of the deal were not disclosed. UX007 will fit squarely within the company’s pipeline, which includes UX001, a replacement therapy meant to treat hereditary inclusion body myopathy (HIBM), which is a rare muscle-wasting disease. Ultragenyx conducted a Phase I trial of 26 patients and currently is conducting a Phase II trial that has 45 patients. Data are expected in 2013. Its other program is UX003, an enzyme replacement therapy to treat mucopolysaccharidosis type 7 (MPS7), the rarest of the MPS disorders. The company expects to begin a Phase I/II trial in mid-2013 and to generate interim data from that trial before the end of the year.--LL
Illumina/Verinata: Genetic analysis specialist Illumina said Jan. 7 that it has acquired privately-held prenatal testing test maker Verinata of San Carlos, Calif. Illumina paid $350 million up-front in the deal, which also includes $100 million in milestone payments that could be fulfilled by 2015. The acquisition brings Verinata’s non-invasive prenatal test, Verifi, which identifies conditions including Down’s syndrome, Edwards syndrome, Patau syndrome, and sex chromosome abnormalities, by analyzing cell-free fetal DNA circulating in the mother’s blood. Verinata launched Verifi in May 2012. Several months prior to the launch, Illumina had established a three-year supplier agreement with Verinata for sequencing instruments and consumables, which also included an unspecified collaboration between the companies toward gaining regulatory approval for the test. The acquisition spells an exit for Verinata’s venture investors, which include Mohr Davidow Ventures, Sutter Hill Ventures, and Alloy Ventures; they most recently supplied $48.5 million in Series C funding in August 2011. Originally named Artemis Health, Verinata licensed key technology for its product from Stanford University in January 2009. Illumina had $1.2 billion in cash, cash equivalents and short-term investments as of Sept. 30, 2012.– Paul Bonanos
Yeah yeah. We know. The life science venture shakeout isn’t over yet. It’ll get smaller before it gets bigger. Happy new year, everybody. That was the drumbeat we heard as we made the rounds at J.P. Morgan this week. But the California sun was shining, the street musicians were banging on their plastic buckets, and the doors of the St. Francis (don’t call it the Westin!) just kept on revolving.
Let us throw a few names at you. Sanderling Ventures. Alex Denner. Ascension Health. Hatteras Venture Partners. Shakeout notwithstanding, all have raised or are raising new health care funds, some by notable means. Hatteras is boosting its fund size 50% to $125 million by adding Small Business Administration loans under a new venture-friendly government program.
Sanderling Ventures, whose last fund was of 2004 vintage – so long ago uncorked it doesn’t even register on START-UP’s latest annual gas-tank chart -- has laid down a marker that it’s looking to raise a seventh fund of $250 million, and GlaxoSmithKline says it will be a limited partner with a $50 million stake.
The venture arm of Ascension Health, one of the largest hospital groups in the US, has raised a third fund of $225 million. And Carl Icahn’s former biotech consigliere Alex Denner is also launching his new hedge fund, friends of FOTF tell us.
But the fund news we found most intriguing was that apparently CMEA Capital of San Francisco is giving an eighth fund a go, and it might be life-sciences only. We’re not sure of the details – and CMEA isn’t talking – but we do know this: two new partners with biotech experience have been dubbed "founding partners" of CMEA 8. It says so on the firm’s Web site. One is Kent Hawryluk, who has been an Indianapolis-based VC with Twilight Venture Partners for years. He helped found Marcadia Biotech in 2006 and sell it to Roche in late 2010 for nearly $300 million upfront. The other is Troy Wilson, who was president, CEO and co-founder of Intellikine until Takeda bought it about a year ago for up to $310 million.
With CMEA maintaining radio silence despite our entreaties, we’re left to speculate about the verbiage on Hawryluk and Wilson’s CMEA pages:
“Our success at Marcadia is a reproducible formula for the portfolio companies of CMEA 8. We focused on transforming breakthrough science into a product needed by patients and Pharma. It was through capital efficiency, proper incentives, and hard work we were able to create value in such a short amount of time.”And…
Wilson’s most recent success illustrates the strength of the CMEA 8 model. He was President and CEO of Intellikine, a company he co-founded. In just over four years, Intellikine discovered three drugs to treat cancer and advanced them into clinical testing… Along with several of his Intellikine colleagues, he recently co-founded Wellspring Biosciences. “It’s exactly the sort of company we want in CMEA 8,” he says.Wellspring, by the way, is developing small molecules for cancer treatment, according to its bare-bones Web site.
Last we heard news from CMEA, it was launching the Velocity Development Corp. in 2011, a virtual development team for asset financing, as a carve-out of its seventh fund. In an earlier permutation, Velocity was supposed to be backed by Eli Lilly & Co. as part of Lilly’s “mirror fund” scheme, but instead it launched in mid-2011 as part of CMEA’s portfolio. Around the same time, Atlas Venture created its own asset-financing group, the Atlas Venture Development Corp. AVDC since has announced two projects, Arteaus Therapeutics and Annovation Biopharma, and in the following months, other asset-based venture schemes have debuted.
All the while, Velocity has been quiet. In discussing Velocity at the time of its launch, CMEA managing general partner Jim Watson, one of the San Francisco firm’s high-tech investors, said there would be no CMEA 8. Plans apparently have changed.
A lot has certainly changed for Kleiner Perkins Caufield & Byers partner Risa Stack. On January 7, Stack said she was taking a position as a general manager and a primary deal maker for General Electric's healthyimagination, a $6 billion initiative to make health care affordable and accessible. Stack will develop strategy and drive execution of new initiatives with an initial focus on personalized medicine and health care data, her areas of expertise at KPCB.
Stack already was on the healthyimagination advisory board, and the initiative’s CEO Sue Siegel is a long-time friend and colleague, having worked at Mohr Davidow, a frequent co-investor with Kleiner Perkins in diagnostics. Stack worked closely with co-founder Brook Byers, who also was heavily involved in many of her portfolio companies. (Byers is Kleiner’s board representative at Foundation Medicine, which just extended its Series B round – see item below.) Several of Kleiner Perkins’ diagnostics portfolio companies, including Foundation, CardioDx and Veracyte, are in the early phases of product launch. And with technologies abundant – even fungible, some say – it makes sense to look to integrators like GE to drive adoption.
Raise a fund? Ha. We at FOTF HQ can barely raise our fingers to the keyboard to write this column after four days of pounding the San Francisco pavement. Fortunately, there's nothing better to elevate one's chi and center one's chakras (we are in California, after all) than the year's first edition of...
Foundation Medicine: Coincidence? In Vivo Blog readers name Foundation Medicine’s Series B round their top financing deal of the year. Four days later, the company reveals it’s grabbed the attention, and cash, of three renowned investors who have added $13.5 million in new capital to push the Series B total to $56 million. Microsoft chairman Bill Gates, jVen Capital founder and former Digene chief Evan Jones, and Russian billionaire Yuri Milner topped off the round, following a September 2012 first closing that featured crossover investors Deerfield Management, Redmile Group and Casdin Capital; strategic backers Roche Venture Fund and WuXi Corporate Venture Fund; and VCs Third Rock Ventures, Google Ventures and Kleiner Perkins Caufield & Byers. The latest cash infusion arrives as Foundation continues to commercialize its first product, FoundationOne, a genomics test that oncologists use to choose appropriate treatments or clinical trials for cancer patients based on assays of their tumors. Foundation struck at least seven pharma partnerships during 2012, and it is planning to launch a hematologic malignancies test in 2013. Gates invested on his own rather than through his foundation, as he did in a 2011 round for Nimbus Discovery. Milner, known for his late-stage investments in Facebook, Twitter and Zynga, recently took a stake in 23andMe. And Jones, who has backed Veracyte, Fluidigm and CAS Medical Systems, took a board seat at Foundation. – Paul Bonanos
Ultragenyx Pharmaceutical: Last summer, START-UP posed the question “Was Enobia’s Sale A High-Water Mark For Rare Disease Deals?” Rare disease company Ultragenyx is trying to make that question look silly. The Northern California firm with close ties to rare-disease leader BioMarin Pharmaceutical said on December 20 it has raised a $75 million Series B round. It was led by Adage Capital Partners and featured a varied roster of heavyweight crossover public investors, corporate venture groups and its existing venture backers. The cash will go mainly toward the biotech’s lead clinical programs, UX-001, a Phase II replacement therapy for hereditary inclusion body myopathy, and UX-003, an enzyme replacement therapy to treat mucopolysaccharidosis type 7, due to enter a Phase I/II trial this year. The cash also likely means that Ultragenyx will look to go public in the not-too-distant future, often a requisite to entice public investors to make private biotech investments, as our colleague Stacy Lawrence explained in a November START-UP feature. (For more crossover coverage, check out the new In Vivo magazine, in which Stacy has drawn back the curtain on Deerfield Management, which wants to become unequivocally the top health care hedge fund.) Despite the influx from global funds like T. Rowe Price, Blackrock and Jennison Associates, and the inclusion of rare-disease heavyweights Shire and Sanofi-Genzyme Bioventures, one of Ultragenyx’s original backers has the board chair: Eran Nadav of TPG Biotech. TPG and Fidelity Biosciences led the company’s $45 million Series A round – which landed it on START-UP’s 2011 A-List, by the way. – Alex Lash
Labrys Biologics/Solstice Biologics: By lumping two companies together, we don’t mean to imply they are two versions of one concept or two products spun out of one platform. On the contrary, they’re quite different. But they have the same lead Series A investor, venBio, and therein lies the rub. Labrys – $31 million committed, syndicate also includes InterWest Partners, Canaan Partners and Sofinnova Ventures – is a single-asset bet, an antibody to treat chronic migraine pulled from Pfizer’s shelf that should start Phase II this year; that’s the kind of idea venBio mainly was formed to go after. But Solstice – $18 million, and Aeris Capital joins venBio – is a bold technological idea, a reworking of RNA strands to help deliver their therapeutic promise into all kinds of cells. To date, constraints on delivering nucleic acids as drugs have limited the field to a few clinical applications. If Solstice’s RNA engineering works – a big if, as venBio cofounder Corey Goodman told "The Pink Sheet" Daily – it could crack the field wide open and justify the leeway venBio LPs gave Goodman’s team to seek out one or two early stage deals. Meanwhile, Labrys is to some extent a bet on Goodman’s drug connoisseurship. He ran Pfizer’s San Francisco biotech group for a couple years before the Wyeth merger shut down the group, and he was well acquainted with the migraine antibody. When Pfizer decided to outlicense it in early 2012, Goodman joined the competition quickly. – A.L.
Sarepta Therapeutics: On the heels of 48-week extension data from a Phase IIb trial in Duchenne muscular dystrophy (DMD) patients, Sarepta priced an underwritten public offering Dec. 13 netting the company $118.2 million. The Cambridge, Mass., firm announced it would offer more than 4.95 million new shares of common stock at $25.25 per share, a slight discount from its same-day closing price of $25.44. The raise capped off a turbulent 2012 for Sarepta. The company had an unclear future after 24-week data from eteplirsen’s Phase IIb trial in DMD produced mixed results. The share price sank as low as $3.24 in December 2011, adjusted for a subsequent reverse stock split, and the firm risked being de-listed by NASDAQ. Gains in early 2012 eroded gradually, and shares neared a new low as recently as July. However, a turnaround began that month as Sarepta engineered a six-for-one reverse stock split to bolster its share price. Then, in short order, it released impressive 36-week and 48-week data for eteplirsen. In the aftermath, Sarepta’s share price soared, peaking at $45 in early October. The improved trial results also brought about major interest in the company from institutional investors, Sarepta CEO Chris Garabedian said. They make up a large majority of the offering’s investors, he said, which comes after an at-the-market facility brought in $37.8 million after the 36-week data were released. -- Joseph Haas
The Best of the Rest: HealthCare Royalty Partners provided Nuron Biotech with $80 million in equity and royalty financing… Russian VC RusnanoMedInvest participated in venture rounds for Regado Biosciences ($51 million), Marinus Pharma ($21 million), and Lithera ($20.6 million)… Naurex completed a $38 million Series B round led by Baxter Ventures...Allakos raised $32 million in Series A funds to support work on immuno-inflammatory antibodies... for its FANG cancer vaccine platform, Gradalis pulled in a $24 million Series B… health IT company Within3 raised $20 million… NeRRe Therapeutics closed an $18.4 million Series A and got rights to GSK’s neurokinin antagonists… To further its anti-diabetic agent imeglimin, Poxel raised $17mm in Series B financing… NanoDimension led a $16 million Series B for Blend Therapeutics… GoBalto raised $12 million in a Series B round to support cloud-based software that simplifies clinical trials… TPG Biotech provided Trevi Therapeutics with $10 million in Series A financing… Avaxia Biologics pulled in a $6.4 million Series B to advance gut-targeted therapies… Actinium Pharma raised $5.1 million as part of a $20 million offering prior to going public via a reverse merger… Tackling hypertrophic cardiomyopathy, Heart Metabolics closed on a $4 million Series A round… Tau Therapeutics collected $3 million to develop T-type calcium channel inhibitors for solid tumors… Transcriptic reportedly crowdfunded its seed round with help from AngelList and SecondMarket… Troika Venture Capital provided undisclosed financing to cancer metabolism firm StemPar Sciences… Rare disease player Synageva closed on a $118 million FOPO… A few weeks after signing on Leica Biosystems to create a companion dx for its NeuVax breast cancer candidate, Galena publicly raised $24 million… The regenerative medicine company Cytori Therapeutics completed a $20 million public offering… Targeting bioactive signaling lipids, Lpath finalized a $12 million follow-on… In a deal with Aspire Capital, Cyclacel raised $20 million… Nymox collected $15 million in a private placement to pay for trials of NX1207 in BPH and prostate cancer… Seaside 88 has provided NanoViricides with $5 million… Tonix Pharmaceuticals closed on a $3.4 million PIPE… Cancer Genetics set IPO terms at 5 million shares for $6-8… Stemline Therapeutics upped its planned IPO offering to 2.3 million shares at $10-12... Audeo Oncology postponed its IPO… To fund Procysbi commercialization, Raptor Pharma got a $50 million loan from HealthCare Royalty Partners… Oxford Finance loaned Agile Therapeutics $15 million… Arno Therapeutics raised an additional $2.15 million in convertible debt on $12.7 million initially collected in November… To help pay for its acquisition of cancer-trating laser equipment, Pinnacle Biologic received an undisclosed amount of debt financing... ADMA Biologics received $6 million in debt financing from Hercules Technology Growth Capital… Abbott officially spun off the biopharma unit AbbVie…and nine months after START-UP wrote about it here, Wellcome Trust launched a £200 million evergreen fund. -- Amanda Micklus
Photo of Powell Street in 1959 courtesy of Roger4336. He took it himself. Please note the previous location of Lefty O'Doul's. It has since moved.