JPM Survival Guide: DOTW Keeps the Party Going

The last few years have been quite a bash for biotech. Astoundingly, the NASDAQ Biotechnology Index (NBI) has added more now than it did during the genomics bubble.

Since the current biotech rally started around August 2011, the NBI has increased about 1,500 points. Around the turn-of-the-millennium, the NBI rose around 1,200 points in a year and a half. Then over the following roughly two years, the NBI proceeded to give back all but about 200 points of that gain by mid-2002.

That makes the ongoing, almost two-and-a-half year upswing the longest, highest biotech rally to date. 

Does this make anyone else nervous? Apparently not, at least not yet.  (In December, Mark Schoenebaum of ISI Group circulated a succinct, hypothetical argument for the bear case in biotech. But this is not his view on the sector.)

Going into the 32nd Annual J.P. Morgan Healthcare Conference, optimism in the sector is continuing unabated. The NBI is up over 5% already this year, by market close on Jan. 10.

That doesn’t even include the phenomenal, two-day 516% climb for Intercept Pharmaceuticals after its Data Safety Monitoring Board recommended stopping early for efficacy at an interim analysis of a Phase II trial of its obeticholic acid to treat the liver disease nonalcoholic steatohepatitis. Intercept isn’t an NBI component. In one week, the biotech has leapt from mid-cap into large-cap territory; it now has a market cap of $8.6 billion, up from $1.4 billion ahead of the news.

On the news front at JPM, Wall Street expects Celgene and Acorda will pre-announce 2014 guidance at JPM. Celgene has hinted it may also update its long-term guidance for 2015 and 2017. Exceeding even the very early JPM curve, Eli Lilly and Bristol-Myers Squibb have already pre-announced their 2014 guidance.

Other likely highlights include various details from big biopharmas with recent management changes. We could get hints from Teva about the direction it plans under newly appointed President and CEO Erez Vigodman, as well as some color from Amgen on why CFO Jonathan Peacock is departing.

The above should give you a few talking points, as will the deals discussed below. That’s essential when you run into industry colleagues you are just meeting or seeing for the first time in years.

A list of all the JPM parties is also indispensable. Last year was the first time we saw a spreadsheet of all these events. Despite the fact that the Excel document ran a couple of pages, shockingly there were still a few omissions discovered by us and a hedge fund manager who shall remain anonymous.

One of this year’s versions of the JPM party list, linked to above, has been upgraded to a PDF and carefully annotated to note invitation-only parties. Although we wonder, isn’t this list specifically designed for party crashers? Or, maybe it’s just so we’ll know all the fabulous parties we weren’t invited to? The most prosperous entities at any given time always seem to commandeer the penthouse at the pricey Clift Hotel, but of course no spot is cheap at the height of the conference.

Another JPM must is a lot of hand-washing – someone at the last JPM gave DOTW a horrible case of the stomach flu that felled us by Wednesday afternoon. Not to alarm anyone, but the number of flu cases in the U.S. is peaking right now, with a heavy concentration in the Western states. And a San Jose hospital reportedly set up an over-flow tent because of all the flu patients. So, avoid shaking hands with all those Silicon Valley VCs, unless you really need their money.

And for the ladies: no high heels, please. Unless you’re a former model trained to stand the fourteen hours of pain or you are powerful enough to have a suite where everyone is coming to you. Although JPM has promised it’s working to cut back on some (non-paying) attendees this year, so perhaps there will be ample seating at every major session and the hallway traffic will flow freely. Or not.

Most importantly, remember to 'slip' at least once and call the conference H&Q. So, everyone will know you’ve been coming to the conference for a long, long time.

As promised, we continue below to give you ample party-chatter fodder with the latest on biopharma wheeling and dealing in this week’s missive of  . . .

Forest/Aptalis: Forest Laboratories continues to build on the business development strategy of new CEO Brent Saunders with its $2.9 billion buy of privately-held Aptalis on Jan. 8. The specialty pharma has been trying to flesh out its key therapeutic areas – CNS, CV, GI, respiratory, and anti-infectives – since Saunders took over the top slot in October. This strategy began with Forest’s $240 million purchase of the antipsychotic Saphris (asenapine) from Merck & Co. in December; building on the company’s central nervous system franchise, which includes the antidepressants Viibryd (vilazodone) and Fetzima (levomilnacipran). Aptalis will give Forest multiple products in the GI space – Carafate (sucralfate) for duodenal ulcer disease and Canasa (mesalamine) for ulcerative proctitis, as well as others. The privately held company also has a strong presence in the cystic fibrosis space in Europe, where it owns three of the five approved drugs for pancreatic enzyme insufficiency: Zenpep, Ultrase and Viokase (pancrelipase, in three formulations). Forest sees this as a way of bolstering its Colobreathe (colistimethate sodium) business. The drug was approved in February 2012 in Europe for the treatment of cystic fibrosis patients aged 6 years and older with chronic lung infection caused by P. aeruginosa. The spec pharma hopes eventually to bring those products to the U.S. market. Forest is acquiring all outstanding shares of the TPG Capital-backed Aptalis with a mixture of cash and debt. The company has secured a $1.9 billion bridge loan to close the deal within the first half of the year, pending regulatory review. The acquisition is expected to add $700 million to 2015 revenues and be immediately accretive to earnings. -- Lisa LaMotta

Royalty Pharma/Fumapharm investors: Royalty Pharma – the investment firm that buys up royalty streams on marketed drugs – is doubling down on its investment in Biogen Idec’s multiple sclerosis drug Tecfidera (dimethyl fumarate), the stand out drug launch of 2013. The firm announced Jan. 6 it would acquire more interest in the earn-outs payable to the former shareholders of Fumapharm for $510 million. Biogen Idec gained dimethyl fumarate with the acquisition of Fumapharm in 2006. Royalty Pharma already owns an interest in Tecfidera from a deal inked with Fumapharm investors in 2012, when it paid $761 million for some rights, back before the drug was approved by FDA. Now it’s obvious why Royalty has come back for more. Tecfidera, which launched in April, appears on pace to generate more than $1 billion in its first 12 months on the market. The royalty company won’t say how much of the sales it stands to receive. Fumapharm investors still own rights to a “substantial portion” of the earn-outs, Royalty said. Under a complicated payout scheme laid out in Biogen Idec’s SEC filings it appears the entire earn-out is worth about 10% of Tecfidera sales annually if the drug reaches $3 billion in sales, which it now seems likely to do. -- Jessica Merrill

Biogen Idec/Sangamo: In a move that could help validate its proprietary genome-editing technology and further strengthen its balance sheet, Sangamo BioSciences signed a worldwide collaboration and licensing agreement with Biogen Idec on Jan. 9 to co-develop potentially curative stem cell therapies for sickle cell disease (SCD) and beta-thalassemia. During a same-day conference call, Sangamo President and CEO Edward Lanphier noted that those two hemoglobinopathies are serious diseases with sub-optimal current treatment options. There are a number of symptomatic approaches to treating the two conditions that do not address the underlying cause of the disease. And while a bone marrow transplant of hematopoietic stem cells can be curative, such procedures are rare due to a lack of ideal matching donors and the risk of graft versus host disease. Biogen is paying $20 million upfront for worldwide license to both Sangamo’s zinc finger nuclease technology platform and its preclinical intellectual property for treating the two diseases. Richmond, Calif.-based Sangamo also can earn up to $300 million in development, regulatory, commercialization and sales milestones under the agreement with Biogen, along with double-digit royalties on any product sales. In addition, the biotech has an option to co-promote for either indication in the U.S., a decision which the company will not need to make for some time, Lanphier said. Sangamo will continue to perform all R&D activities through the first clinical proof-of-concept trial in beta-thalassemia, while the companies will work together on the IND-enabling work for the program in SCD. Biogen will be responsible for all subsequent clinical development and commercialization of both programs, and will reimburse Sangamo for its internal and external R&D costs related to both programs. -- Joseph Haas

Johnson & Johnson: To bolster its network of innovation centers, the global health care company said this week it has helped establish a new incubator in Israel and has signed early stage collaborations or made investments with eight biotech and academic groups. Johnson & Johnson is teaming with the Israeli government, Takeda, and venture firm OrbiMed Advisors to open the facility in early 2014, adding to incubators J&J has opened with partners in Montreal, Toronto, San Francisco, and Boston. J&J’s Janssen group also runs an incubator in San Diego. The collaborations or licenses are with Cambridge, Mass. biotech Scholar Rock, to pursue new biologics that target TGF-beta 1 for immune-mediated disease; Intrexon, to develop new consumer hair and skin products; University of Texas's MD Anderson Cancer Center, to develop a translational program for cancer immunotherapy; diagnostic firm Nodality, to hone J&J’s immunology R&D, particularly in rheumatoid arthritis and inflammatory bowel disease; and Dutch firm Bioceros, for exclusive rights to develop a monoclonal antibody against an immune checkpoint modulator. Through its venture arm Johnson & Johnson Development Corp., the J&J Innovation group also announced investments in Assembly Therapeutics, which is developing allosteric modulators to treat Hepatitis B and other viral infections; TopiVert, which is working on topical medicine for inflammatory diseases; and SutroVax, a new entity spun out from antibody platform company Sutro Biopharma to pursue vaccines. -- Alex Lash

And The Roger Goes To ... Our Deals of the Year Winners!

To Claim Award: Ctrl-P, cut along border, tape to plaque (note: plaque not included).

M&A of the Year: Amgen/Onyx

Congratulations to Amgen and Onyx, who've won, with more than 62% of the vote, our M&A of the Year nod. The voters chose the biggest deal -- though there were other interesting nominees we aren't surprised -- and we'll all be watching Kyprolis to see whether the price was right.

Alliance of the Year: Celgene/Oncomed

This one was never in doubt. Celgene and Oncomed knew how to canvass, their Get Out The Vote strategy was clearly second to none (the alliance category tallied about 1000 more votes than the other categories). And even a late push from GSK/Community Care of North Carolina (no doubt helped by voters turning up to support GSK in its close race below) couldn't derail Celgene and Oncomed's cancer stem cell alliance from the top spot. It finished with about 63% of the vote.

Financing of the Year: GSK/Avalon

As of this morning the two leaders in this category -- Children's Hospital of Philadelphia funding Spark Therapeutics and GSK/Avalon -- were separated by only a few dozen votes out of thousands cast. Finally, a race worth watching 'til the end. Spark began to pull away, stretching its lead to a few percentage points with an hour to go. And then GSK/Avalon swung back, pipping them at the post in the waning moments of voting. GSK/Avalon 48%, Spark 47%. The achievement is even more impressive in light of the nature of the also-rans. Calico, Juno, and Editas were all noteworthy debuts in 2013. Ophthotech had possibly the best IPO in a crowded biotech IPO field. None of those four deals received more than a tiny sliver of the vote. 

As always our winners are welcome to make an acceptance speech in the form of a guest post here on In Vivo Blog. Winners, please reach out if you'd like to do so. Thanks everyone for voting again this year, and congratulations to our winners!

2013 Alliance of The Year Nominee: Amgen/Astellas

It's time for the IN VIVO Blog's Sixth Annual Deal of the Year! competition. This year we're once again presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A of the Year, Alliance of the Year, and Financing of the Year. We'll supply the nominations (about a half dozen in each category throughout over the next week or so) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

In announcing a strategic alliance with Astellas Pharma in May, Amgen has placed an economic bet on Japan. It is also, indirectly, a bet on economic recovery in the U.S. and Europe, Japan’s two biggest export markets.

In fact, Amgen has been talking up its Asian ambitions since first broaching the idea at a business review meeting in New York last February. After rapid-fire acquisitions in Brazil and Turkey, and a partnership in Russia, “expanding into Japan and China are next on the Agenda,” said CEO Robert Bradway.

Four months later, Amgen inked a two-pronged alliance with Astellas. In the first stage, the partners co-develop and co-commercialize five Amgen drugs for the Japanese market: one in cardiovascular, one in  osteoporosis, and three oncology candidates. Among them are AMG145, the Phase III antibody against PCSK9 for hyperlipidemia and Phase II blinotumomab, the anti-CD19 bispecific BiTE antibody against hematological tumors picked up in its 2012 acquisition of Micromet. At a recent Credit Suisse event, Amgen CFO and EVP Jonathan Peacock projected the first launch in 2016.

The second stage, a joint-venture that is 51% owned by Amgen, opened in Tokyo in October. Operating as Amgen Astellas BioPharma KK, the JV is structured to allow Amgen to turn the operation into a wholly-owned Japanese affiliate as early as 2020, and a direct channel into Japan for any molecule in its portfolio including its six biosimilars in development. Eiichi Takahashi, a cardiologist in Pfizer’s Japan subsidiary who led Pfizer’s medical affairs organization for the Asia Pacific region, will head up the JV.



The move feels like a do-over. Amgen had launched a JV with Kirin Brewery in 1984, and in 1992 it formed Amgen KK in Japan, as a wholly owned subsidiary. It pulled the plug on Amgen KK in 2008, selling shares in the subsidiary to Takeda as part of an agreement in which it licensed 13 molecules to Takeda for development and commercialization in the Japanese market. Takeda paid $200 million upfront and is on the hook for over $700 million in development costs and success-based milestones, as well as Japan-specific royalties. Back in 2008, then-Amgen R&D chief Roger Perlmutter insisted to IN VIVO that Amgen was not "abandoning Japan." Rather, partnering was the answer.

And to be sure, partnering is still the answer. The Big Biotech knows first-hand the challenges, particularly as regards recruitment, in establishing a de-novo presence in Japan. But it is confident that it’s chosen the right partner in Astellas, whose strong cardio franchise and whose savvy moves in oncology recommended it to Amgen.

And it is confident that it’s targeted the right region in Japan, whose economy was the fastest growing in the developed world this year, goosed by the fiscal expansionary policies of Abenomics and by a recovery in exports – particularly car shipments, which grew 31% year-over-year last October. And according to Evaluate Pharma, Japan was the best performing region – using government-reported data – in terms of US$ Rx sales, posting 17% growth in 2010/2011 compared to 3.8% for Europe and 1.5% for the US, and likewise clobbering the US and Europe in terms of local currency growth.

And while the Japanese drug market has recently been slowed by biennial price reductions, generic inroads, and a price constraining national health budget, the future holds an easing of regulatory burden, an aging demographic, and a strong pipeline. Traditional regulations protecting the domestic market have crumbled over the past two decades, ushering in western investment and the presence of western firms. Takeda’s recent announcement naming GSK vaccines chief Christophe Weber as COO, putting him in line to succeed Yasuchika Hasegawa as CEO, is a symptom of this larger opening to the west.

In a canny move, Amgen, in its bold deal with Astellas, finds itself at the intersection of these global trends, and poised to cash in. Definitely worthy of our alliance of the year accolade. 

Thanks to Eddie O. for the flickr image // creative commons

2013 M&A Of The Year Nominee: Amgen/Onyx

It's time for the IN VIVO Blog's Sixth Annual Deal of the Year! competition. This year we're once again presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A of the Year, Alliance of the Year, and Financing of the Year. We'll supply the nominations (about a half dozen in each category throughout over the next week or so) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

Step right up and cast your vote. No reason to hem or haw. Amgen’s $10.4 billion acquisition of Onyx Pharmaceuticals deserves your vote for M&A of the year.

What’s that you say? The deal held no intrigue? No eleventh-hour white knight who stepped in and drove a nail-biting bidding war? No surprises that made you dribble coffee down your chin while reading the morning news?

Well, it’s not as though every deal can be shrouded in as much conspiracy as Roche’s takeover of Genentech, or done at a price that leaves you staggering to the water cooler ala Gilead’s acquisition of Pharmasset.

But what’s so bad about a straightforward acquisition that hedges for the buyer and still rewards the seller, one where the purchase price, at $125 per share, meets a middle ground? Remember how Amgen originally offered $120 per share, which was rejected by Onyx, which thought it could get more like $130 to $140 per share?

How civilized then that they settled squarely on $125 without dragging us through a drawn out campaign. Onyx’s investors still ended up receiving a hefty payout, with the final price representing a 43.9% premium over the stock’s closing price in June before Amgen’s original offer was disclosed.

And, $10.4 is nothing to shrug at either. Amgen’s acquisition of Onyx was the most expensive M&A of the year, reason enough to cast your vote in its favor.

Don’t forget the perfectly sensible strategic rationale behind Amgen’s decision to buy Onyx. The big biotech gains the proteasome inhibitor Kyprolis (carfilzomib) for multiple myeloma, and Nexavar (sorafenib) partnered with Bayer, for liver and kidney cancer, drugs that are already on the market in the U.S. and will immediately contribute to Amgen’s top-line. The company needs new drugs to fill a revenue gap. Before the acquisition it was expecting that sales would be lower in 2015 than in 2013.

The addition of Kyprolis fills that void – and it gives Amgen some street cred in oncology, a therapeutic area it has targeted for future growth, though its marketed cancer portfolio mainly includes supportive care products, not cancer interventions.

Onyx serves as a leg up for Amgen as it looks to establish itself as a major oncology innovator and bring forward a pipeline of oncology drugs it has cobbled together partly through acquisitions.

Wait, you’re still not sold? You’d prefer a deal that’s more high-risk, high-reward? Well, you can rest assured Amgen’s still has plenty of risk to absorb. Kyprolis made it to the market through an accelerated review, but Amgen needs the results of two ongoing Phase III trials, ASPIRE and FOCUS, to play out in the drug’s favor before it can secure full approval and expand into Europe.

In November, a Bank of America analyst issued a note citing reports of cardiovascular events with Kyprolis. That, understandably, has spooked some investors while they wait for the Phase III data to report out in 2014. Amgen called the whole flap a misunderstanding that stemmed from the analyst’s dinner meeting with Celgene management and clarified that event rates are no different from what is already included in the Kyprolis label. The data monitoring committee overseeing the study has not reported any specific safety concerns, Amgen added. There's your intrigue!

Still, these things do get you thinking about the $10.4 billion Amgen paid for Onyx and what could happen between now and when the company reaps a return. In the drug industry, things are never straightforward despite how they might appear. Are you happy now? Then step right up and cast your vote.

flickr image via Dr Colleen Morgan under creative commons

DOTW Wonders: Where Have the Private Biotech Take-Outs Gone?

We do like a nice, frothy biotech IPO market. But is it coming at the expense of stellar acquisitions of private biotechs? We miss the kind of M&A that got VCs boasting about multiples and sent ripples of excitement through the industry.

So, being the data geeks that we are, that sent us rifling through recent deals. Turns out that there have indeed been fewer decent-sized acquisition of private biotechs. This year there were only 16 worth more than $50 million, down from 26 at this time last year, according to Elsevier’s Strategic Transactions database.

And the really eye-popping deals are largely absent. Only three of this year’s private biotech acquisitions even had the biobuck-aided potential to be worth more than $500 million. Through October 2012, there were at least 10 take-outs that fit that description – although to be fair, a couple of those were of big, private specialty pharmas that were long-past any venture investment. And among this year’s biotech IPO class, 12 out of the 38 already have a market cap of more than $500 million.

Perhaps the longstanding truism that the best biotechs get bought and the rest go public has been turned on its head for a bit. Maybe IPO valuations are so rich that they’re driving up private company comps, giving potential strategic buyers pause.

There is one big biopharma buyer who’s been relentlessly active this year: AstraZeneca . It’s bought three private biotechs so far; all of them among the largest private acquisitions in 2013. Not that this comes as a huge surprise. DOTW wondered in January if then-new AstraZeneca CEO Pascal Soriot would go on a buying spree and expand into earlier stage deals.

Earlier this month, AstraZeneca bought antibody-drug conjugate oncology company Spirogen, which was in Phase II with its lead candidate, for $200 million upfront and up to $240 million in milestones. In August, it bought immune-stimulatory cancer company Amplimmune for $225 million upfront and up to $275 million in milestones.

In June, the big pharma made its biggest buy and the only private biotech acquisition this year potentially worth more than a billion when it acquired Pearl Therapeutics. Terms included $560 million upfront and up to $450 million in clinical and regulatory milestones, with an additional up to $140 million in sales-based milestones. (In total that’s up to $1.15 billion for those of you keeping score at home.) Pearl was a Phase III respiratory disease company.

While AstraZeneca is alone in its level of activity right now, recently industry’s larger companies have whole-heartedly embraced a deal structure that locks up promising early-stage assets at a reasonable price. This, of course, is the “exclusive option to acquire.” One big biopharma in particular has warmed to this approach – doing at least five of this kind of deal with private biotechs in the last couple of years. (Celgene, you know we’re talking about you.)

Celgene’s most recent option to acquire a private biotech was divulged earlier this month when it did a deal alongside a Series A round for PharmAkea Therapeutics, a small molecule cancer and fibrotic disease company that the biopharma seeded with funding last year. This time, Celgene paid $35 million for a three year discovery and development deal, and it also bought an undisclosed equity stake, alongside Bay City Capital, which invested $10 million. Celgene has an exclusive option to buy PharmAkea, which was founded by three execs from fibrotic disease play Amira Pharmaceuticals, which sold to Bristol-Myers Squibb for up to $475 million in 2011.

This week, a similar option-to-acquire deal together with a Series A came along. Sideris Pharmaceuticals garnered a partnership with Novartis worth up to $300 million, which includes the exclusive option to acquire the biotech. It also landed a $32 million Series A round from MPM Capital, Hatteras Venture Partners and Osage University Partners. Sideris is focused on developing drugs to treat transfusion-related iron overload; the partnership and the financing are intended to get its lead candidate through Phase II.

Novartis did another option-to-acquire deal alongside a Series A round with inflammatory and thrombotic diseases company Selexys Pharmaceuticals last year.

We see how an option-to-acquire deal alongside a Series A financing would be attractive. For big biopharmas, it sews up good-looking assets without fully committing, thereby providing more time to wait and see without risking losing out. For VCs, it lines-up a strong potential buyer and helps defray R&D costs from the outset in exchange for a known, possible outcome.  For biotechs, it greatly lessens financing risk, ties it close and early to a partner that can help define how it conducts its trials and gives it a built-in potential exit.

Plus, it takes the vagaries of the IPO and the M&A markets almost entirely out of the equation.  While companies and VCs risk losing out on the tantalizingly highest highs, they also can follow a known path to an exit. And while froth may be fun, it’s not at all stable.

What is entirely reliable is your DOTW team, who has yet again brought you a delightful sampling of this week’s heartiest deals. Quaff deeply of this week’s edition of  . . . .

Mesoblast/Intrexon/Ziopharm: Three partners – Mesoblast, Intrexon and Ziopharm Oncology – will be involved in an oncology drug discovery and development collaboration that could evolve into a joint venture, the firms announced Oct. 23. The initial deal is less of a commitment, however. Under the technology sharing arrangement, the partners will bring their respective expertise to the table to develop new treatments, with a first focus on lung cancer. The team will use Mesoblast’s Mesenchymal Lineage Cells and Intrexon’s RehoSwitch Therapeutic System (RTS) platform to co-develop complex transgene-enabled cell-based treatments. The resulting products should have both tumor targeting characteristics and controlled gene expression. Financial details were undisclosed. The deal is actually a 50/50 collaboration between Mesoblast and Ziopharm because Ziopharm is previously partnered with Intrexon on the technology to design and optimize therapeutic gene expression in the MLCS under a 2011 collaboration. - Jessica Merrill

deCODE/NextCODE: Like any classic Icelandic saga, the story of deCODE Genetics seems endless. The genetic diagnostics company has new life as NextCODE Health, with $15 million in Series A backing from Polaris Partners and ARCH Venture Partners. deCODE was a dot-com era high flier that aimed to mine blood samples from Iceland’s homogeneous population and meticulous record-keeping for clues to the genetic factors of disease. Following a $170 million IPO in 2000 deCODE spent a decade chasing the dream of developing its own drugs. It filed for bankruptcy in late 2009. A consortium of investors led by Polaris and ARCH, who were original deCODE investors and cashed out after the IPO, spent about $14 million to take deCODE private in 2010. Back at the helm, they did away with the drug-development ambitions and turned back to genetic research and diagnostics. They were rewarded when Amgen bought the recapitalized deCODE in 2012 for $415 million in cash up-front. Now, with Amgen focused on applying the deCODE technology to drug discovery, NextCODE has a five-year exclusive license to clinical diagnostics applications. The company says it already has contracts with clinical centers affiliated with Queensland Hospital in Australia, Boston Children’s Hospital in the U.S., Newcastle University in the UK, and Saitama University in Japan. Two top executives from the early days of deCODE, Hannes Smaranson and Jeff Gulcher, have returned to run the company as CEO and president/CSO, respectively. - Alex Lash

Amgen/Roche: As part of its international expansion and to shore up product revenues, Amgen reacquired rights from Roche to Neupogen (filgrastim) and Neulasta (pegfilgrastim) in about 100 markets for an undisclosed amount. Roche had held rights to the pair since 1989, under a license with Kirin-Amgen, a joint venture between Amgen and Kirin Holdings., in Eastern Europe, Latin America, Asia, the Middle East and Africa. Amgen is working toward building a presence in 75 countries and it will exceed that with this deal. In 2012, Neupogen and Neulasta generated about $200 million in sales in those territories. In the third quarter, Amgen reported $1.1 billion in Neulasta revenues and $466 million in Neupogen revenues. These were up 9% and 50%, respectively, from the same quarter during the prior year. (The big boost for Neupogen was entirely attributable to a $155 million order from the U.S. government during the quarter.) Both are used during chemotherapy to boost white blood cell count, thereby reducing the risk of infection for chemotherapy patients. The deal will become effective Jan.1, 2014. Amgen expects it will start to be accretive in 2014. In places where Amgen doesn’t have a presence, Roche or its distributors will continue to market products for an interim transition period. Kyowa Hakko Kirin will continue to market the drugs in some Asian territories, including China and Japan. - Stacy Lawrence

Alzheon/Bellus Health: A new neurodegenerative disease start-up is being built on the back of a failed Alzheimer’s disease compound. Start-up Alzheon has exclusively licensed a pro-drug of tramiprosate, ALZ-801, from Bellus Health, formerly Neurochem. Tramiprostate completed Phase III clinical testing in 2007 and the data were inconclusive. Alzheon plans to start a Phase II trial in Alzheimer’s disease patients, which it says will be aided by the clinical data and sub-population analyses from the more than 2,000 patients in Phase III studies of tramiprosate. The license includes rights to a family of analogs, along with an associated platform of chemotypes and clinical datasets. Alzheon expects this will provide the company with a drug development platform, as well as clinical and biomarker datasets in this patient population. Beyond ALZ-801, Alzheon expects to build a pipeline that includes additional prodrug candidates from this platform, as well as in-licensed programs.The idea is to take compounds that have demonstrated clinical proof-of-concept and apply improved clinical trial design, informed by existing patient sub-population data, more appropriate clinical endpoints and biomarkers. The newco will be led by Martin Tolar, who is its founder, president and CEO. He has previously headed biotechs including human genome interpretation system company Knome and cancer therapeutics play NormOxys Tolar was also chief business officer at Alzheimer’s-focused CoMentis, which licensed its lead beta-secretase inhibitor, then only in Phase I, to Astellas Pharma AS in 2008 $100 million up front. No financial details of the deal were disclosed; Alzheon hasn’t given any financing details yet. - S.L.

AstraZeneca/Evotec: AstraZeneca and the German drug discovery services company Evotec entered into an agreement Oct. 21 to discover novel targets and compounds with disease-modifying activity for the treatment of chronic renal disease, one of the key research areas for the restructured R&D efforts at the UK multinational. AstraZeneca will fund research on a series of molecules identified by Evotec in a program designed to explore a key mechanism of chronic kidney disease. In return, Evotec has received an undisclosed upfront payment and will receive clinical and regulatory milestones, and additional payments if products are commercialized. Renal diseases such as diabetic nephropathy, end-stage and chronic kidney disease are key targets within AstraZeneca's research effort into cardiovascular and metabolic diseases, one of three core areas for the company and based at its facilities in Molndal, Sweden. The agreement with Evotec comes just three months after AstraZeneca entered into a strategic collaboration with the private U.S. company FibroGen to develop and commercialize that company's FG-4592, a late-stage potential oral therapy for anemia in chronic kidney disease and end-stage renal disease in selected markets including China and the U.S. Evotec has a number of other big pharma collaborators for its drug discovery services, including with Roche and Boehringer Ingelheim, and a 2010 diabetes collaboration with AstraZeneca's biologics division, MedImmune, extended by the two companies at the start of 2013. - John Davis

Depomed/PDL: As it transforms from a research-oriented company to a product-focused one, Newark, Calif.-based Depomed is planning additional acquisitions to fortify its pain and neurology portfolio. Thanks to the $240.5 million sale of its type 2 diabetes royalties to PDL BioPharma, it will have plenty of cash to spend. Depomed sold milestone and royalty streams for marketed products and pre-approval compounds in the Oct. 21 deal. Most of the value currently lies in escalating royalties from Santarus’s sales of Glumetza (metformin HCL extended-release tablets), which generated $42.8 million in royalties during 2012 and $27.5 million during the first half of 2013. It also includes royalties from Merck’s sales of Janumet XR (sitagliptin and metformin), potential streams from investigational programs in the hands of Boehringer Ingelheim and Janssen Pharmaceuticals, and geographic royalties from LG Life Sciences in Korea and Valeant Pharmaceuticals  in Canada. Depomed built its own sales force to market Gralise (gabapentin) for shingles pain after it reacquired rights to the compound from Abbott Laboratories in 2011, and has since added pain drugs Zipsor (diclofenac potassium) and Lazanda (fentanyl) via acquisition. CEO Jim Schoeneck told conference call participants it would look to buy products already on the market or “those that are beyond clinical risk” at the registration stage. PDL once discovered antibodies, but now reaps royalties from license agreements based on its patents. The last of a key set of patents expires in 2014. If royalties from the new deal reach a total of $481 million, or twice the sale price, PCL and Depomed will split further royalties 50/50. - Paul Bonanos

Roche/Samsung: Samsung Group and Quintiles may have created their Samsung BioLogics joint venture primarily to develop and manufacture biosimilar drugs, but the Incheon, Korea-based drug factory operator is now striking new partnerships as a contract manufacturer for pharmas. An Oct. 22 deal with Roche calls for a long-term manufacturing partnership covering proprietary commercial biologics, which Samsung BioLogics will craft at two local facilities, one of which is still under construction. Financial terms weren’t disclosed and Roche didn’t reveal which medicines Samsung BioLogics will manufacture. It’s the second CMO deal since the summer for Samsung BioLogics, following a 10-year agreement with Bristol-Myers Squibb announced in July, covering an unnamed cancer antibody. Since the creation of Samsung BioLogics, Samsung forged a second JV with Biogen Idec in February 2012, creating Samsung Bioepis to develop biosimilars; it has since clarified that Samsung BioLogics will operate a CMO business while Samsung Bioepis will focus on biosimilars. - P.B.

(Thanks to Vault Brewing in Yardley, Penn. for use of their photo of a draft of Rye Pale Ale. It’s a favorite of EBI’s Chris Morrison – who hopes this mention will get him a free pint this weekend.)

DOTW Looks At How 2013 Biotech Deal Stats Stack Up After Amgen/Onyx

Quick! What's large and vanilla and a late summer treat?

It’s the last week of summer, and while one might expect business development pros would have turned on their out-of-office auto-replies, the drug industry’s execs were too busy closing deals to be bothered with the beach or other lazy summer pursuits.

We should have known biopharma’s summer had ended early the moment Amgen Inc. and Onyx Pharmaceuticals Inc. announced they had finally negotiated a takeover Aug. 25, before the market even had a chance to wake up Monday morning. The deal left us wanting in some regards: no cliff hangers, juicy tidbits or surprise white knights emerged. But while nothing about Amgen’s acquisition of Onyx astonished (not the buyer, the seller, the rationale or even the final $125 per share purchase price, which ultimately landed squarely in the middle of where most industry watchers thought it would), biotech mega-deals just don’t happen every day.

We couldn’t help but get excited about it, especially wondering how significantly the addition of Onyx will impact Amgen's ambition of becoming a leading oncology player.

The acquisition price of $10.4 billion makes Onyx Amgen’s largest acquisition in over a decade. The amount is $800 million less than the staggering $11.2 billion Gilead Sciences Inc. paid for Pharmasset Inc., a deal that had everyone talking in 2011.

Unlike Onyx, Pharmasset had no commercial products, but presented an opportunity to transform Gilead with its potential best-in-class hepatitis C drug. Onyx may not end up being as transformative to Amgen’s top-line over the long-term as Pharmasset could be to Gilead, but the merger is still a notable moment in biotech and it will go a long way toward raising the industry’s 2013 merger stats, which were stark before high summer kicked into gear.

In addition to Amgen/Onyx, the busy summer deal sweep included two biotech acquisitions by Cubist Pharmaceuticals Inc. in the antibiotic space and Perrigo Co.’s takeover of Elan Corp. PLC. Those four deals gave a significant boost to the 2013 tally of U.S. public biotech acquisitions, which was in a drought for the first six months of the year. All-in-all, six U.S. public biotech acquisitions with a value over $100 million have been announced in 2013; four of those took place in July and August, according to Elsevier’s Strategic Transactions database. In comparison, there were a total of seven U.S. public biotech take outs announced in 2012 and six in 2011.

The hefty values of Amgen/Onyx and Perrigo/Elan lifted the average deal value in 2013 to $3.51 billion, well above the average deal value of $2.07 billion seen in 2012. Excluding those two mega-deals, however, the average deal value through August would be a comparatively meager $592.5 million. The four remaining biotechs that have been acquired play in niche commercial markets like antibiotics (Trius and Optimer) or fish oil (Omthera).

In comparison, of the seven acquisitions announced in 2012, five were valued at over $1 billion, reflecting more acquisitions in broader commercial markets like cancer, diabetes and autoimmune disease.

The summer may be winding down, but the last few months of the year are always a busy time for deal-making. There is sure to be more industry consolidation on the way, perhaps even Bristol-Myers Squibb Co. will buy Shire PLC. Just wait until after Labor Day weekend, okay? -- Jessica Merrill

Lilly/Zealand: Zealand Pharma AS has entered into a research and development agreement with Eli Lilly & Co. to design and develop potentially novel therapeutic peptides for Type 2 diabetes and obesity that the U.S. drug maker has discovered. The Danish group and says the collaboration could last more than 15 years and may eventually expand to other disease areas. Under the multi-target collaboration, announced Aug. 29, 2013, the duo will share in the funding, risk and reward of the program. No clinical details were given nor financial terms disclosed. But Zealand’s CEO David Solomon said the peptide therapeutics the two will be exploring are not glucagon-like peptide-1 (GLP-1) agonists, nor sodium glucose co-transporter 2 (SGLT-2) inhibitors, nor a dipeptidyl peptidase-4 (DPP-4) inhibitors, but rather a potentially whole new class of diabetes treatments. It’s the latest in a number of partnerships that the Copenhagen-based biotech has with Big Pharma. Eli Lilly said their project will revolve around a novel peptide hormone-based approach that its scientists discovered and which has the potential to lower blood glucose as well as body weight. -- Sten Stovall

Endo/Boca: It’s not a big surprise that Endo Pharmaceuticals Inc.’s first business development play under its new leadership was on the generics side. New CEO Rajiv de Silva has been talking up the company’s existing generics business Qualitest as an important growth driver as its branded business confronts generic competition. The company announced plans Aug. 28 to acquire mid-sized generic manufacturer Boca Pharmacal for $225 million. Qualitest is known for its strong capabilities in controlled substances. It leads the U.S. market in liquids manufacturing and was the sixth largest generics company in the country at the end of 2012, according to IMS Health. Florida-based Boca will add to the portfolio with generic forms of products like low-strength generic form of the hydrocodone drug Xodol. The company also produces generics of the inflammatory pain reducer Disalcid (salsalate) and the anti-anxiety medication Xanax (alprazolam). Endo will need to deliver more business development deals if it is to make up the revenues that will be lost from sales of its best-seller, the pain patch Lidoderm (lidocaine), in September. -- Lisa LaMotta

Akorn/Hi-Tech Pharmacal: Continuing the theme of generic consolidation, ophthalmology-focused Akorn Inc. announced plans Aug. 27 to increase its portfolio, pipeline and manufacturing capabilities by purchasing Hi-Tech Pharmacal Co. Inc. for $650 million. The deal will bring a broad range of generic, prescription and over-the-counter products, including eye drops, and render Akorn the third-largest generic ophthalmology drug firm in the U.S. CEO Raj Rai predicted the acquisition would increase the specialty pharma’s annual revenues to above $500 million, be immediately accretive and yield run-rate synergies of between $15 million and $20 million within 12 months of closing. Akorn reported sales of nearly $151 million for the first six months of 2013. The purchase price amounts to $43.50 per share for Hi-Tech, a 23.5% premium over its closing price on Aug. 26. Akorn says it will fund the purchase with cash and about $600 million in borrowing. The deal is small compared to some recent ophthalmology transactions. Most recently, Valeant Pharmaceuticals International Inc. grabbed headlines in late May with an $8.7 billion debt-and-equity deal to purchase ophthalmology giant Bausch & Lomb Inc. -- Joseph Haas

MedImmune/Amplimmune: Integrating Amplimmune Inc. into AstraZeneca PLC’s MedImmune LLC subsidiary shouldn’t be too much of a headache. The companies are neighbors in a Gaithersburg, Md., office park. Maybe it was only a matter of time before this deal got done. AstraZeneca, vaulting for a business turnaround, has been on a quest to fix its problems through business development. Its acquisition of Amplimmune for $225 million, announced Aug. 26, will bring the company an anti-PD-1 antibody for cancer nearly ready for the clinic. Privately held Amplimmune’s shareholders also could earn up to $275 million in development milestones as part of the transaction, expected to close during the third quarter. The milestones mainly will be tied to AMP-514, which should be ready for an IND filing in October. The acquisition offers a healthy return on investment for Amplimmune’s shareholders. The company was founded in 2007 with a $20 million Series A round from InterWest Partners LLC and the Wellcome Trust. Since then it has financed its operations with a pair of deals. In 2010, it got $23 million upfront from GlaxoSmithKline PLC for exclusive worldwide rights to AMP-224, an Fc-fusion protein of the B7-DC ligand now in Phase I/II study in cancer. Earlier this year, the biotech licensed the Phase I-ready B7-H4 fusion protein AMP-110 for autoimmune indications to Japan’s Daiichi Sankyo Co. Ltd. for an undisclosed option fee and research funding. AMP-514 is the key to the transaction, but MedImmune also values Amplimmune’s preclinical molecules targeting the B7 pathways. -- J.H.

Sangamo/Ceregene: Gene therapy developer Sangamo BioSciences Inc. is strengthening its expertise in the field with the addition of Ceregene Inc.’s adeno-associated virus technology platform. The company announced plans to acquire Ceregene in a stock transaction Aug. 26; Sangamo will issue 100,000 shares to Ceregene shareholders. Sangamo has also agreed to pay milestone payments related to the two Phase II programs that Ceregene brings. The lead program, CERE-110, uses AAV technology to deliver nerve growth factor (NGF), a naturally occurring protein that maintains survival of nerve cells, to the region of the brain that contains the majority of cholinergic neurons. The goal is to restore and preserve nerve function in an area of the brain thought to play a significant role in cognitive function and memory in patients with Alzheimer’s disease. A Phase II study of the drug is expected to report out in 2014. -- L.L.

Chiesi/Zymenex: With the ambition of building a standalone rare disease business, Italy's mid-sized pharma Chiesi Farmaceutici SPA will acquire Danish biotech Zymenex AS, the firms announced Aug. 26http://www.sunstone.eu/wp-content/uploads/2013/08/Chiesi-Sunstone-press-release-2013-08-261.pdf. The Parma-based company already markets medicines for cystic fibrosis and neonatal lung disease, and last month became pioneers in the marketing of gene therapy products in Europe by licensing uniQure BV’s Glybera (alipogene tiparvovec). The company’s interest in Zymenex lies in its recombinant enzyme replacement therapy Lamazym (rhLAMAN), which is being studied in a 25-patient Phase III trial for the treatment of the ultra-rare lysosomal storage disease, alpha-mannosidosis. The experience of Zymenex's researchers in developing other rare disease drugs could be useful to Chiesi's continuing push into the sector. In 2008, Zymenex sold a Phase II enzyme replacement therapy, Metazym (arylsulfatase A), to Shire for $135 million. Although the financial terms of the current deal were not disclosed, Zymenex’s majority shareholder, Danish VC firm Sunstone Capital, undoubtedly welcomed the opportunity to make a further return on its investment. -- John Davis

Meda/Acton: Swedish specialty pharma Meda AB is buying Acton Pharmaceuticals Inc. to get the privately held group’s Aerospan inhaler for treating asthma, approved by FDA in September 2012 and poised – pending satisfying further manufacturing requirements – for a U.S. launch in early 2014. Meda, which describes itself as the world’s 50th largest drug company, is paying $135 million plus a potential milestone payment of $10 million and royalty based milestones to buy the Marlborough, MA-based company. The Swedish group has its own respiratory portfolio and views Aerospan, which contains the active substance Flunisolide, as a promising addition in its quest for share of the $2 billion U.S. market for inhaled mono-corticosteroid asthma products. Meda aims to close the takeover by the end of 2013, and predicts Aerospan under its guidance will generate at least SEK2 billion ($300 million) in revenue within five years. A respiratory-focused development company with no products yet on the market and only nine employees, Acton was founded in 2008 and is owned by private equity group Sequoia Capital and the group’s executive management. A perpetual licensing agreement with Forest gives Acton exclusive global rights to develop and market Aerospan. Acton also has exclusive U.S. rights to Sanofi’s FDA-approved aerosol nasal allergy treatment Nasacort HFA (triamcinolone acetonide). Neither Meda nor Acton would comment on what the takeover of Acton would mean for that arrangement. -- S.S.

Teva/Rexahn: It appears Rexahn Pharmaceuticals Inc.’s solid-tumor therapy RX-3117 is at least one casualty of new leadership and changing priorities at Israel’s Teva Pharmaceutical Industries Ltd. The two companies terminated a 2009 collaboration centered around the drug after Teva declined to exercise its option on the product. Rockville, Md.-based Rexahn now has all rights to the compound, which inhibits DNA and RNA synthesis and induces apoptosis. Teva submitted an IND for the drug last month, as dictated by the now-defunct partnership’s terms. Teva said RX-3117 no longer fits its oncology strategy, despite harboring some potential. The decision is in line with statements Teva’s new CEO Jeremy Levin has made about narrowing Teva’s focus in oncology. Teva made an up-front payment of $3.5 million to Rexahn in the form of an equity investment four years ago, then made multiple equity investments over the course of the partnership as RX-3117 advanced through pre-clinical trials. It had acquired an equity stake of 6.3% by July 2013. Teva also unwound a four-year-old biosimilars agreement with Lonza Group Ltd. last month. -- Paul Bonanos

flickr image courtesy Chiot's Run under creative commons license. Holy ice cream headache, batman.

Deals Of the Week, Once Again, Ponders Biosimilars

Teva Pharmaceutical Industries Ltd.’s and Lonza Group’s announcement on July 25 that they were formally ending their four-year-old biosimilars joint venture was hardly a surprise, given that late last year both companies said they were reviewing their relationship. Their decision certainly reflects the complexities of developing biosimilars, but it also is the consequence of each company’s new leadership, which has different priorities than those who forged the original deal.

Signed at a time when biosimilars seemed like an incredibly promising, albeit vague, long-term opportunity for an assortment of generics and pharma companies, the original deal was ambitious in scope. Each company committed to spend $300 million over six years on the alliance, estimating the cost of developing one biosimilar would be roughly $100 million – considered a lot at the time. Teva saw biosimilars “as a major growth driver” and positioned itself as “a leader in this market,” then President and CEO Shlomo Yanai said at the time. Lonza would bring large-scale biologics manufacturing and development expertise to the table, while Teva offered experience in clinical development and marketing of generic and branded drugs.

Four years later, even as the EU and U.S. regulatory pathways for biosimilars gain some clarity, the overall landscape for the field is as complex as ever. Like their competitors, Teva and Lonza held much of their work close to their vests, but they had counted on developing a franchise around a biosimilar version of Roche’s $7 billion Rituxan (rituximab) franchise, only to halt clinical development last October due to “changes in the regulatory and competitive environment.” They weren’t the only ones to face setbacks on rituximab programs: Celltrion Inc. and its partner Hospira Inc., and the Samsung Biologics/Quintiles Transnational Holdings Inc. alliances also are also in the midst of re-evaluating their biosimilar rituximab programs.

More telling, perhaps, new CEOs at each company are set on revamping priorities across the board. Lonza’s new CEO, Richard Ridinger, who joined the company in April 2012, is in the midst of re-organizing the company into two core areas, pharma and biotech and specialty ingredients. On an earnings call also on July 25, he said the company, which accounts for about a third of all mammalian cell culture manufacturing worldwide, would reduce its manufacturing footprint, including closing two plants. Lonza indicated that it holds CHF100 million ($107.6 million) in assets on its balance sheet in relationship to the joint venture and has expensed CHF38 million since its formation. The company estimates it will save CHF150 million by ending the deal.

Teva releases its second-quarter numbers on August 1, so the company isn’t providing accounting details or elaborating on the announcement. But CEO Jeremy Levin, who assumed his position in May 2012, is emphasizing greater selectivity and focus across the board, rationalizing overlapping projects, and improving the efficiency of an organization that had become unwieldy and unfocused, even as it has grown rapidly in the past decade. A lot of that rationalization is taking place in Europe, where markets are relentlessly unforgiving and where Teva’s –and its competitors’ – first attempts at biosimilars launches are occurring.

Biosimilars work continues at Teva internally. In comments earlier this year, both Levin and Chief Scientific Officer Michael Hayden said they would pursue biosimilars as part of a broader biologics program. Teva currently has several generic versions of marketed biologics on the market, although it went through traditional regulatory routes to get approvals: TevaGrastim, a generic version of Amgen Inc.’s Neulasta (pegfilgrastim) has been available in Europe for several years, for example. “I would say that in the biosimilars space, we still remain enthusiastic, but we’re going to be smart about it,” said Hayden in an investor call late last year, noting. “We're going to be in biosimilars in a very focused way.”

And since Teva is mum on the subject, it’s worth noting an observation by Frederick Wilkinson, president of Teva competitor Actavis Inc.’s specialty brands unit, on the latter’s own earnings call the same day as the Lonza-Teva announcement. Actavis has a joint venture in biosimilars with Amgen and Wilkinson said it expects a news update from that endeavor in August.  “I wouldn't actually read too much into it,” Wilkinson said of the ‘no deal.’ “If you looked at the Teva biosimilar program, they at some point had bought enough different companies that they had multiple projects going on the same product. And so, I think what they've done is probably very efficiently pruned their product line down to the leading entities within their biosimilar portfolio. Lonza for the last year has been out selling or trying to solicit use of space, so it has been obvious that the Lonza Teva relationship was not going to be as deep as it originally was [planned to be].” 

If you're looking for deals that may be smaller scale, but have a fresh start, here are some of the newest developments in what was generally a quiet deal-making week:--Wendy Diller

Adimab/Biogen &Adimab/GSK: Adimab’s tech transfer deals with GlaxoSmithKline  and Biogen Idec represent the small biotech’s greatest business development and financial successes to date.

The deals, each announced July 26, see Adimab setting up its technology platform inside its partners’ R&D shops. By licensing non-exclusive rights and transferring this antibody discovery and protein engineering platform to GSK and Biogen, Adimab enables its partners to expand their use of a technology that the biotech has until now tightly controlled. Both Biogen and GSK had previously allied with Adimab (GSK through the acquisition of Adimab partner Human Genome Sciences Inc.), but like the biotech’s 19 other partners, they were limited to one- or two-target “trials.”

GSK’s agreement is for an indefinite number of years, with unlimited product licenses across all therapeutic areas. Biogen’s deal is more limited – a seven year (renewable) term, limited to certain disease areas where Biogen has a presence, and a limited number of commercial licenses. Both companies can use the technology to pursue any antibody format – including antibody-drug conjugates or bispecific antibodies – and have retained options to access any future improvements or additions to the Adimab platform.
The financial specifics of the two new Adimab deals were not disclosed. In each, Adimab will receive a “significant” upfront cash payment, annual license fees for the lengths of the deal, R&D milestone payments, and royalties and commercial milestones on a defined number of therapeutic products.

The upfront funding from the two deals make Adimab a decidedly profitable discovery engine for the foreseeable future, and the company will make its first dividend payment to its venture investors later this year. It expects to sign one more platform transfer deal this year, and three per year through 2015.--Chris Morrison.

Kolltan/Children’s Hospital Of Philadelphia: Cancer-focused biotech Kolltan Pharmaceuticals announced a license of intellectual property and research agreement with Children’s Hospital of Philadelphia July 18 around discovery efforts for neuroblastoma therapeutics targeting anaplastic lymphoma kinase (ALK). Terms of the deal were not disclosed. Based in New Haven, Conn., Kolltan’s focus is on large-molecule approaches to receptor tyrosine kinase (RTK) inhibition – it has six programs ongoing at the discovery and preclinical stage and plans to file an IND for its first clinical candidate before year’s end. The firm will collaborate with researcher Yael Mosse, who studies the causes and potential therapeutic approaches for treatment of children diagnosed with neuroblastoma. In a statement, Mosse said ALK-targeted immunotherapy or antibody-drug conjugates may offer the best approach for patients whose tumors have an ALK mutation or amplification. “We believe immunotherapy and ADCs may provide a therapeutic option for the majority of patients with high-risk disease given the widespread expression of ALK on the cell surface of most neuroblastoma tumors,” she said.--Joseph Haas

Lilly/Transition: Transition Therapeutics  has obtained a worldwide exclusive license for Eli Lilly’s small molecule transcriptional regulator TT-601 for the treatment of osteoarthritis pain, the biotech announced on July 23. The compound has completed preclinical development, and Transition plans to take it into the clinic during the first half of 2014. TT-601 modulates the activity of a novel nuclear receptor target. Tony Cruz, CEO of Transition, says that molecules in this class “have shown target engagement in the joint space and efficacy in multiple animal models of joint pain.” Twenty-seven million Americans have OA. Under the agreement, Transition gets the rights to develop and possibly commercialize TT-601. Lilly keeps an option to reacquire the agent on review of proof-of-concept data, in which case Transition would be eligible for milestone payments of approximately $130 million and a high single-digit royalty on the sale of potential products containing TT-601.

Should Lilly not take the option, and the product comes to market, Lilly would be eligible for a low single-digit royalty from Transition. There’s a good chance Lilly will pull the trigger on the option. This deal comes on the heels of Lilly’s June 17 decision to exercise its option to reacquire another compound licensed to Transition, TT-401 for diabetes. Transition took a $7 million option fee, and could get up to $240 million in milestones from that deal. That goes back to a March 2010 deal between the partners in which TT-401 was included among a few other preclinical candidates from Lilly. Their partnering history began in 2008 with a non-option deal in which Lilly licensed TT-223 and other gastrin-based therapeutics for both Type I and II diabetes from Transition.--Michael Goodman

PolyTherics And Antitope Merge: Britain’s privately owned PolyTherics  and Antitope have merged their biopharma services businesses to tap growing demand from Big Pharma for services and technologies used in the search for biologics such as antibody-drug conjugates.

The enlarged group has a strong client base in the biotechnology and pharmaceutical industry, including the top ten biggest drug makers. It will offer conjugation technologies to generate more stable and homogeneous antibody drug conjugates, technologies to optimize the pharmacokinetics of biologics, technologies for immunogenicity screening, technologies to re-engineer antibodies, and proteins to reduce their immunogenicity, and cell line development technologies.

Antitope, founded in 2004, tests immune responses caused by antibody therapies and engineers modifications for the drugs. That expertise should complement the conjugation and polymer technologies from PolyTherics, which was created in 2002 as a University College London spin-off.

PolyTherics financed the merger with £13.5 million ($20.1 million) raised from a group of backers that includes Imperial Innovations, Invesco Perpetual, Mercia Fund Management, Advantage Enterprise & Innovation Fund, ProVen Health, Oxford Technology VCTs and high net worth individual's funds managed by Longbow Capital.--Sten Stovall