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

Deals Of The Week Wonders: Who Will Buy Onyx?

When was the last time biotech had a really juicy, successful, high-stakes bidding war? Likely the $10.2 billion Pharmasset acquisition by Gilead Sciences announced in late 2011, which since has played out quite nicely for the latter. Not only did that deal help drive Gilead shares up by about 150% since the deal announcement, but it also tipped off the start of a very long bull-run for the sector.

If Onyx Pharmaceuticals attracts a bevy of bidders, garners a tidy premium for shareholders, and proves a strong asset for an acquirer, its activities could help bolster a flagging biotech stock market. Mostly in June, the NASDAQ Biotechnology Index has shed almost all of a tidy 9% it gained in the first few weeks of May.

If a competitive Onyx acquisition plays out, a deal could come in the fall. That would coincide perfectly with a roster of large-cap clinical and regulatory milestones – which together might breathe life back into a biotech rally that’s getting very long-in-the-tooth.

For now, Wall Street seems certain that the biotech will attract a flock of suitors, culminating in a deal. In fact, Onyx shares are trading well above Amgen’s $120 per share bid, which Onyx publicly confirmed on June 30 that it had rejected. It hired Centerview Partners to contact other potential acquirers, but said it already had interest from undisclosed third parties. Onyx shares closed at $133.52 on July 3, giving the biotech a $9.7 billion market cap.

Potential bidders could include a number of pharmas with existing oncology franchises that need to bolster their bottom lines, such as Pfizer and Merck & Co. Also in line could be established players in the multiple myeloma (MM) market including Celgene and Takeda, in addition to likely pharma players betting on MM monoclonal antibodies such as Bristol-Myers Squibb and Johnson & Johnson. J&J is partnered with Takeda on MM treatment Velcade (bortezomib).

Onyx investor Oliver Marti of Columbus Circle Investors expects to see more than a half-dozen potential suitors emerge, with an acquisition taking about three months to play out. He expects other companies ultimately will prove more aggressive than Amgen, although he does expect Amgen to raise its bid. Marti thinks $140 per share would be an acceptable price.

Amgen has done only a handful of billion-dollar deals. In 2001, Amgen acquired inflammation company Immunex for $17.9 billion in cash and stock. That’s its only deal for more than a couple billion dollars. Since then, it’s done four deals in the roughly $1 billion to $2 billion range including $2.2 billion for antibody play Abgenix  in 2005, $1.3 billion in a stock swap for gene expression regulation company Tularik  in 2004, up to $1 billion in cash and milestones for cancer vaccine company BioVex  in 2011 and $1 billion in cash for antibody company Micromet in 2012, according to Elsevier’s Strategic Transactions database.

“Pfizer and Bayer are natural candidates, Takeda could be a player as well,” added Dallas Webb of BB Biotech, also an Onyx investor. He anticipates the next round of bids will start at $130 and “depending on the number of bidders should go north of that.” He expects more clarity within the next month on the acquisition process.

Various analysts have pegged a likely Onyx per-share sale price in the roughly $135 to $148 range. On top of that, there could be a contingent value right, particularly for oral MM proteasome inhibitor oprozomib. Gene Mack of Brean Capital proposed a $135 buyout share price, with a CVR of about $30 tied to oprozomib approvals in relapsed/refractory and newly diagnosed MM patients, as well as sales milestones based on up to $2 billion.

Pfizer and Bayer are major Onyx partners. Kidney and liver cancer drug Nexavar (sorafenib) as well as colorectal cancer and gastrointestinal stromal tumor treatment Stivarga (regorafenib) both resulted from the Bayer partnership. Bayer evenly splits Nexavar profits globally with Onyx, excluding Japan, and pays Onyx a 20% net royalty on Stivarga global net sales. The partners recently submitted in the U.S. and EU for Nexavar to treat thyroid cancer.

Onyx co-promotes Stivarga under a fee-for-service arrangement, Bayer has the right to terminate the Stivarga co-promote under a change-of-control agreement. But the Nexavar and Stivarga royalties would survive a change-of-control. Onyx was savvy enough to add that to an October 2011 renegotiation of its Bayer partnership, likely in preparation for a clean acquisition down the road.

Wall Street is skeptical that Bayer would buy Onyx in its entirety, although it may seek to fully capture Nexavar and Stivarga rights. Analyst Tim Race of Deutsche Bank, who covers Bayer, noted in a June 28 call that Bayer long has maintained that buying its biotech partners usually is too expensive and that, given its full pipeline, it doesn't need a major new product at this time. He added that Bayer is very hard-nosed about price and likely to walk away from a high valuation. In addition, Bayer would need to raise debt, a move that would damage its credit rating – something Race sees Bayer as unlikely to do.

Onyx partner Pfizer may be a more likely bidder, as the big pharma has made building an oncology franchise a top priority. Onyx and Pfizer have a partnership dating back to 1995 for high-profile Phase III breast cancer candidate palbociclib (formerly PD-991), which recently received breakthrough therapy designation from FDA.

Onyx stands to earn an 8% royalty on palbociclib should the compound get to market. That revenue stream could amount to almost a half-billion in 2026, when analysts expect the drug could generate around $6 billion in sales. If Pfizer really believes in this product, it might be motivated to capture all the palbociclib upside and also add likely blockbuster multiple myeloma drug Kyprolis (carfilzomib).

Existing MM competitors also are likely Onyx acquirers. Celgene's revenue is underpinned largely by MM immunomodulator Revlimid (lenalidomide), which increasingly is being used and tested in combination with Onyx’s Kyprolis. Takeda and J&J market MM proteasome inhibitor Velcade (bortezomib), which Takeda gained when it bought Millennium Pharmaceuticals Ltd.. With the same mechanism of action as Kyprolis and a 2017 patent expiry, Takeda likely needs a replacement. For now, it’s focused on developing its own oral MM proteasome inhibitor, MLN9708.

BMS and J&J also have bets on MM monoclonal antibodies, which are expected to bear fruit in the next few years. AbbVie and Bristol are partnered on Phase III elotuzumab, while Genmab and Janssen Biotech, a unit of J&J, have Phase I/II daratumumab. Daratumumab has Fast Track and Breakthrough Designations for fourth-line MM. These are likely to be used sequentially or in combination with Kyprolis, making Onyx a potentially good fit.

Speculation already has started about which biotech with potential oncology blockbuster companies could be next for a potential take-out. Mark Schoenebaum of ISI Group suggested Ariad Pharmaceuticals, Seattle Genetics and Medivation.

A long Onyx sale saga is likely just at the beginning of unfolding. While DOTW waits for the next shoe to drop, take a look at some actual deals in this week's edition of …

Pfizer/Bioventus: Pfizer will license worldwide rights to its bone morphogenic protein (BMP) portfolio to orthopedic biologics specialist Bioventus. In return, Pfizer will receive an upfront payment, milestones and royalties. Financial terms were not disclosed. The products include a BMP in development and an rhBMP-2 in unspecified indications. The rh-BMP-2 product appears to have entered Pfizer’s portfolio with its acquisition of Wyeth; Wyeth’s pipeline as of May 2009 described a BMP-2 program with indications in fracture repair and hip osteoporosis. Pfizer has agreed to undertake certain early development work for the BMP asset in soft-tissue indications and will manufacture the rhBMP-2 for Bioventus. Bioventus was spun out of U.K. device firm Smith & Nephew with funding from Essex Woodlands in 2012. The company recently has retained the services of BMP experts John Wozney and Howard Seeherman. It plans to soon open a research laboratory in Boston to develop and commercialize the BMP assets. With this deal, Pfizer continues to cull and prioritize its portfolio. The BMP agreement follows a spate of out-licensing in the wake of the Wyeth acquisition, including the CTLA-4 monoclonal antibody tremelimumab to AstraZeneca PLC and the irreversible TKI neratinib to newly formed Puma Biotechnology, both in October 2011. -- Mike Goodman

Merck/Xencor: Xencor already has a string of big pharma partners, but the small California-based biotech is hoping to get the financial flexibility to bring its own internal programs forward. Its latest deal brings the company one step closer to its goals.Xencor announced on July 2 that it has granted Merck a license to a Xencor Fc engineering patent for a monoclonal antibody for use in an undisclosed product that Merck is already working on. The New Jersey pharma also has an option to license the same intellectual property for future products. Merck paid an undisclosed upfront and agreed to pay annual maintenance fees, as well as milestone payments and sales royalties on any products that result. “Merck found an antibody that they needed that we had already patented,” said Xencor CEO Bassil Dahiyat. “They needed it for a use that we hadn’t thought of until they called us,” he added. The companies did not disclose what product the patent applies to or how it would be used. -- Lisa LaMotta

Avanir/OptiNose: CNS-focused Avanir Pharmaceuticals is licensing a proprietary intranasal delivery system from OptiNose for use in developing and commercializing a fast-acting, dry-powder inhaled form of sumatriptan for acute migraine. In the deal announced July 2, Avanir is paying $20 million upfront to license OptiNose’s Breath Powered delivery system; Avanir said it should be ready to file an NDA by early 2014 for AVP-825, the resulting drug/device combination product. The two companies will share development costs and work together on putting together the NDA submission. Avanir will assume responsibility for regulatory, manufacturing, supply-chain and commercialization activities for the product. OptiNose could earn up to $90 million in clinical, regulatory and commercial milestones related to ‘825, as well as tiered royalties on North American sales. Avanir says ‘825, if approved, would the first and only fast-acting, dry-powder inhalable version of sumatriptan for migraine. In a Phase III clinical trial, the OptiNose device demonstrated rapid absorption and provided relief using approximately 80% less drug than is contained in the most commonly prescribed oral sumatriptan product, the company added. -- Joseph Haas

The Real Story Behind FDA’s Delayed Approval Of Eliquis

With what seemed to be stellar results from the ARISTOTLE trial, showing the first superiority over warfarin on bleeding and mortality for a novel oral anticoagulant, Bristol-Myers Squibb/Pfizer’s Eliquis (apixaban) was expected to have a clean trip through FDA.

So why was agency approval of the third novel oral anticoagulant to come down the regulatory pathway in recent years delayed by nine months?

The answer, which was largely hidden from investors and competitors, boils down to study conduct and oversight – things that should have been a piece of cake for experienced sponsors.

It turns out that the much-ballyhooed, 18,000-patient ARISTOTLE trial had a few problems, according to FDA review documents that are dissected in the June issue of Elsevier Business Intelligence’s Pharmaceutical Approvals Monthly, part of a regular series of drug review profiles (see the lead story, free for the next 30 days, here).

What were the problems? Well, for one thing there was documented evidence of fraud by employees of BMS and its contract research organization, PPD, at a Chinese study site. It seems these individuals altered source records ahead of an FDA inspection to cover up good clinical practice violations.

FDA’s need to further investigate this issue, as well as the data integrity for other Chinese sites and the impact on the overall ARISTOTLE results, led to a three-month extension in the original PDUFA date.

Publicly, BMS/Pfizer said only that the review extension resulted from its submission of a “major amendment to the application.” An accurate statement? Absolutely. But the fact that this “major amendment” comprised a more detailed accounting of the fraud was a juicy, and likely market-moving, tidbit not shared with the public at-large.

To its credit, BMS discovered the fraud and reported it to the FDA, and the alleged perpetrators were terminated. In contrast, the agency had to root out on its own answers to the second major problem that delayed apixaban’s approval – dispensing errors in ARISTOTLE.

Buried on page 88 of the clinical study report was a statement that 7.3% of subjects in the apixaban group and 1.2% of subjects in the warfarin arm received “a container of the wrong type” of medicine at some point during the double-blind, double-dummy study. This overall high rate of dispensing errors, and the disparity between treatment arms, troubled FDA, in part because these figures were based only on the sponsor’s analysis of one incomplete source of data.

FDA believed further investigation into the true rate of dispensing errors was warranted. Furthermore, agency reviewers seemed incredulous that the unusual number of medication errors failed to prompt a “serious inquiry” by the sponsor prior to NDA submission and that such errors occurred throughout the course of the trial without meaningful corrective measures, suggesting shortfalls in trial oversight.

So annoyed were agency reviewers by the whole situation, including BMS/Pfizer’s partial and evolving responses to FDA’s questions, that the team leader on the application said the NDA would have received a “refuse-to-file” letter had agency staff known about the dispensing errors issue at the time of submission.

Ultimately, FDA issued a “complete response” letter specifically directing the sponsor to get to the bottom of the problem – not that you would have known this from the sponsor’s public statements.

In a press release, BMS/Pfizer said only that the letter requested “additional information on data management and verification from the ARISTOTLE trial.” Again, not a falsehood, but also not exactly the type of information that would have been helpful to assessing what was really going on with apixaban’s prospects for a near-term approval.

Ultimately, the companies submitted data that convinced FDA reviewers that even under a worst-case scenario, the dispensing errors would not have disturbed the key efficacy and safety findings in ARISTOTLE.

So, all's well that ends well for BMS and Pfizer, right?

Well, not exactly. Eliquis failed to gain a coveted mortality benefit claim in the Indications statement, which would have set it apart from its two competitors who beat it to market, Boehringer Ingelheim GMBH’s Pradaxa (dabigatran) and Bayer AG/Johnson & Johnson’s Xarelto (rivaroxaban) (see PAM's analysis of how FDA reviewers picked apart the statistical significance here [$]).

Eliquis generated just $22 mil. in its first full quarter on the market, according to Bristol's first-quarter earnings report.

-- Sue Sutter (s.sutter@elsevier.com)

Deals of the Week Looks At How Amgen’s Global Expansion Affects Partnering

why yes, these are Japanese flip-flops, why do you ask?

Amgen Inc. has made a big deal about expanding into Japan and eventually building a standalone subsidiary there. Now, the biotech’s Japanese expansion strategy is paying off for at least one of its partners: Cytokinetics Inc.

The two companies announced June 12 that they have expanded an existing collaboration for the heart failure drug omecamtiv mecarbil and other related compounds to include Japan. Cytokinetics will receive $25 million from Amgen in the form of a $15 million upfront fee and a $10 million stock purchase, sold at a 36% premium. The company is also eligible to receive up to $50 million in pre-commercialization milestone payments for the development of omecamtiv in Japan, as well as royalties on sales of the drug in the country. Amgen will also reimburse Cytokinetics for the cost of a Phase I study that will support the inclusion of Japanese patients in a potential Phase III program for the drug.

For investors, the deal represented a vote of confidence in omecamtiv, and Cytokinetics stock opened June 12 up 15% over the prior day’s closing price. The $25 million in cash is also important to Cytokinetics, which ended the first quarter of 2013 with $61.6 million.

Omecamtiv, a novel cardiac myosin activator, is one of Cytokinetics’ two lead programs. A Phase IIb trial evaluating an intravenous form of the drug in acute heart failure patients has completed enrollment, and a Phase II trial evaluating an oral formulation in outpatients with heart failure started in the first quarter. Amgen is conducting the trials.

Under the original 2006 collaboration, which excluded Japan, Amgen paid Cytokinetics $42 million upfront and paid $33 million to buy stock in exchange for an option to license omecamtiv. Amgen exercised that option in 2009 after positive Phase IIa data read out, and paid Cytokinetics another $50 million upfront and agreed to pay $600 million in milestones.

It looks as though the Cytokinetics deal expansion may be a one-off case, however. A review of Elsevier’s Strategic Transactions database revealed Amgen doesn’t have many other licenses that specifically exclude Japan. One example is KAI Pharmaceuticals Inc., which Amgen acquired in 2012 for $315 million. That acquisition excluded Japan, where Ono Pharmaceutical Co. Ltd. had previously bought the license.

But Japan remains the world’s second largest pharma market, and Amgen’s efforts to rebuild in the region could help future partners, both in terms of deal value and in that signing a single global partner can sometimes speed up the drug development process. Amgen announced plans earlier this year to aggressively expand in Japan and build a Japanese subsidiary by 2020. That reversal comes only five years after the company left the market in 2008, when it out-licensed 13 compounds to Takeda Pharmaceutical Co. Ltd. for $200 million upfront and $702 million in R&D funding and milestones. As part of that deal, Takeda acquired Amgen’s Japanese subsidiary Amgen KK for an undisclosed price.

In May, Amgen unveiled more details about how it will execute on its re-entry plan, namely through a partnership with Astellas Pharma Inc. with which it will form a joint venture to bring Amgen products to market in Japan. The Tokyo-based JV will be 51% owned by Amgen and 49% owned by Astellas and operate as Amgen Astellas BioPharma KK. The deal is structured to allow Amgen to turn the operations into a wholly-owned Japanese affiliate as early as 2020.

Amgen declined to provide any valuable insights on what might be next in terms of partnering in the region. But one thing is certain, we can expect more. CFO Jonathan Peacock specifically commented on Japan and China during the Goldman Sachs Global Healthcare conference June 11. “We’ll continue to branch out and make targeted investments in the markets that are important to our future growth,” he said. -- Jessica Merrill

We could never decline to provide you more valuable insights -- how could we when it's time for ...

AstraZeneca/Pearl Therapeutics: British pharma AstraZeneca PLC has made a big play in respiratory disease with the $1.15 billion acquisition of Pearl Therapeutics Inc. AstraZeneca will pay $560 million upfront, as well as $450 million in development and regulatory milestones related to early-stage pipeline assets to acquire all shares of privately-held Pearl. Pearl shareholders are also eligible to receive $140 million in milestones related to sales of its lead pipeline candidate. The deal puts AstraZeneca in the midst of the fiercely competitive and changing treatment space for chronic obstructive pulmonary disease. The company gains PT003, a fixed-dose combination of glycopyrrolate, a long-acting muscarinic antagonist (LAMA), and formoterol, a long-acting beta-2-agonist (LABA), in Phase III development. It also gets an earlier-stage triple combination that includes a LAMA, LABA and inhaled corticosteroid (ICS). The drug is only in preclinical development, but AstraZeneca plans to move it into Phase II testing immediately. Triple combinations are expected to eventually play a major role in the market. Respiratory disease is one of three key therapeutic areas AstraZeneca is focusing on as part of its turnaround strategy, and the company has increased the pace of development of several projects. The acquisition of Pearl comes just a week after AstraZeneca announced it was pulling out of one of its other late-stage programs with partner Rigel Pharmaceuticals Inc. after the Phase III rheumatoid arthritis drug fostamatinib produced disappointing results. --Lisa LaMotta

Xenon/Isis: In a reversal of its usual out-licensing strategy, Xenon Pharmaceuticals Inc. has exercised an option to in-license a potential treatment for anemia developed under a 2010 alliance with RNA technology specialist Isis Pharmaceuticals Inc. The firms announced June 10 that Xenon will pay $2 million to Isis to license XEN701, a molecule in preclinical development that is designed to inhibit the production of hepcidin, a protein produced in the liver. By inhibiting hepcidin, XEN701 could offer a non-erythropoietin receptor-based mechanism for the treatment of anemia. It is the first drug to enter development from Isis’ collaboration with Xenon. Under the original deal, Xenon paid Isis an undisclosed fee in the form of a convertible promissory note in exchange for using the latter’s antisense technology to discover and develop drugs against hepcidin and hemojuvelin for anemia. Xenon also gained an option to license worldwide development and commercialization rights to candidates produced from the partnership. Isis also is eligible for milestones and royalties. Vancouver-based Xenon has been more active out-licensing its human clinical genetics platform out to larger pharma partners, including Merck & Co. Inc., Teva Pharmaceutical Industries Ltd. and Roche. --JM

Questcor/Novartis: Questcor Pharmaceuticals Inc. announced June 11 that it has acquired rights to develop Synacthen (tetracosactide) and Synacthen Depot from Novartis AG in the U.S. and plans to acquire rights in certain other countries subject to closing conditions. The deal is another example of big pharma’s increased willingness to sell-off non-priority assets, and Questcor appears intent on breathing new life into a mature brand, similar to how it has revitalized its existing Athcar Gel (repository corticotropin injection). The Synacthen products are already approved in 40 countries for certain autoimmune and inflammatory conditions, including rheumatoid arthritis and multiple sclerosis, and are also approved as a diagnostic test for adrenal insufficiency, but they have never been approved in the U.S. Questcor plans to develop the products for the U.S. market and use the drugs as an opportunity to build an international presence. Synacthen is a synthetic 24 amino acid melanocortin receptor agonist, an area of research Questcor specializes in with Athcar. Questcor has successfully built Athcar into a high-growth brand with sales of more than $500 million in 2012 by broadening its use from a niche indication in infantile spasm to larger patient populations like multiple sclerosis and nephrotic syndrome. But the company has also drawn criticism from insurers and some in the health care community for aggressively raising the price from $2,000 per vial to $28,000 per vial as part of its repositioning of the drug to fit in the rare disease business model. --JM

AstraZeneca/Cancer Research UK: Building on existing collaborations with Cancer Research UK, AstraZeneca is providing scientists funded by the world’s biggest cancer charity with compounds for use in developing potential new oncology drugs. One new project, announced June 14, will involve scientists at the University of Manchester testing compounds targeting a key protein involved in DNA damage response. AstraZeneca has first rights to any molecules discovered through the agreement and can choose to continue further development. In return, Cancer Research Technology Ltd, the UK charity’s commercial arm, will receive royalty payments when the project reaches certain milestones. CRT also has the option to develop the molecules further if AstraZeneca decides to pass. Britain’s second-biggest drug maker has also invited Cancer Research UK scientists from the Paterson Institute to test AstraZeneca’s compound collection against a potential oncology target at its UK research center in Alderley Park. It is the first time AstraZeneca has invited an external party to screen such an extensive set of compounds within its screening facility. AstraZeneca will have first rights of negotiation on any resulting projects. CRT has a growing, 90-strong in-house drug discovery effort which has expanded with the help of funding from Cancer Research UK – and has access to clinical development capabilities in conjunction with Cancer Research UK's drug development office. This includes CRUK’s Clinical Development Partnerships initiative, designed to move de-prioritized pharma assets into the clinic. This wide-ranging R&D capability and close linkage with academia has attracted in AstraZeneca to CRT, with the two first partnering in 2010 [W#201020370]. --Sten Stovall

BioLineRx/Jiangsu Chia-Tai Tianging Pharmaceutical: Israeli biotech BioLineRx Ltd. lined up a rare early-stage out-licensing partner for one of its two candidates for hepatitis C this week. Liver disease-focused Jiangsu Chia-Tai Tianqing Pharmaceutical (CTTQ) licensed development, manufacturing and commercial rights in China and Hong Kong to BL-8030, a preclinical second-generation protease inhibitor for HCV. BioLineRx receives an undisclosed upfront payment plus potential development, regulatory and commercialization milestones that could total $30 million for the compound. The Israeli company also could earn high-single-digit royalties on sales if ‘8030 reaches market. BioLineRx also will have access to CTTQ’s clinical data for the compound and can use the data for regulatory purposes outside the territories licensed by the Chinese firm. BL-8030 is one of two HCV candidates being developed by BioLineRx, along with Phase I/II BL-8020, an inhibitor of HCV-induced autophagy. Both compounds were in-licensed from France’s GenoScience Pharma in early 2012[W#201220060]. In a release, CTTQ President Jian Sun Emba noted that HCV prevalence is high in China, with about 3.2% of the population, or roughly 43 million individuals, infected with the virus. –-Joseph Haas

BMS/Simcere: In their third deal in three years, Bristol-Myers Squibb Co. and Simcere Pharmaceutical Group will collaborate in China to co-develop and commercialize a subcutaneous formulation of Bristol’s rheumatoid arthritis treatment Orencia (abatacept), the companies announced June 14. Simcere, based in Nanjing, will perform and fund all development and regulatory activities required to obtain marketing approval in China based on a pre-agreed development plan. The companies will share responsibility for commercializing Orencia SC in China, and will share profits and losses related to Orencia SC there. Financial terms were not disclosed. If approved, Orencia would become Bristol’s first biologic to enter the Chinese market. The novel T-cell co-stimulation modulator is approved already in the U.S., Europe and Japan, and booked global sales of $1.2 billion in 2012. It would theoretically launch into a very competitive RA market in China, which includes novel biologics, biosimilars, and is dominated by NSAIDs. Although Simcere would not comment on development timelines for China, the company confirmed to PharmAsia News that it would need to conduct certain clinical studies in China to obtain regulatory approval for Orencia. BMS and Simcere first tied up in 2010 to co-develop BMS-817378, a small molecule c-Met inhibitor in preclinical development. Under that deal, Simcere is funding and taking the lead for clinical trials in China through proof-of-concept in return for exclusive China marketing rights for the oncologic, while BMS retains marketing rights in the rest of world. In a second deal, announced in 2011, BMS and Simcere are co-developing a preclinical CETP (cholesteryl ester transfer protein) inhibitor, BMS-795311, in China. --Josh Berlin

photo from flickrer nb360 used under creative commons license

Deals Of The Week Ponders When $2.1 Billion Is A Steal

With the oncology high season upon us and just about everyone in the industry scrambling to decode the secrets hidden in ASCO’s abstracts, we couldn’t help but stop and reflect on how at least one company got where it is in oncology today through stellar deal-making. Bristol-Myers Squibb Co.’s $2.1 billion acquisition of Medarex in 2009, which seemed to some like a fortune at the time, catapulted Bristol into the leading position in the field of immune-oncology, an area of cancer drug development that some analysts are now calling a potential $10 billion to $20 billion market.

When the two companies, already partners, announced the acquisition in July 2009, “The Pink Sheet” called the offer “a coup for the biotech,” which got nearly double its stock price from Bristol. Fast forward four years later and it is Bristol that made out like a bandit.

There is still a lot to learn about how the immune system can be used to fight cancer, but it is increasingly evident that the immune system can indeed be directed to turn against tumors, potentially resulting in long, durable responses. Thanks to Medarex, Bristol has become one of the experts at the forefront of the research. Yervoy (ipilimumab), the immunotherapeutic targeting CTLA4 Bristol developed with Medarex, is already on the market for metastatic melanoma and could achieve blockbuster level sales this year. A second drug, nivolumab, which targets a different immune checkpoint, PD-1, has already moved into pivotal trials.

In about one week at ASCO, Bristol will release data on Yervoy and nivolumab used in combination, where the potential of immunotherapeutics is believed to be greatest. And those are just two of the immunotherapeutics Bristol has in development. The company is studying multiple immune system targets in earlier trials, some gained through Medarex and some gained through other deals. For example, the company gained a KIR receptor blocker through a licensing deal with Innate Pharma SA in 2011, and a monoclonal antibody against another target, CD-137, was developed internally. Bristol believes these drugs will ultimately be used together in different combinations to turn cancer into a potentially chronic disease.

It’s never easy to quantify the value of an acquisition years after a portfolio is integrated into big pharma, but it is safe to say Medarex turned out to be a smart buy. Investors and analysts have certainly taken note. Citi Research managing director for global pharmaceuticals Andrew Baum upgraded the company May 22 and raised the stock’s price target to $55 from $33 on the strength of the immunotherapeutics portfolio, which he said “will likely exceed $10 billion [in sales] by 2022.”

The company’s stock is up more than 11% since May 15, when the ASCO abstracts were released and Bristol’s data was highlighted in a press preview; it closed May 23 at $47. How is Wall Street valuing Medarex in the share price? “It’s at least $10. Perhaps as much as $15,” speculated ISI Group analyst Mark Schoenebaum.

All that’s not to say Bristol didn’t pay handsomely to be in the position it’s in. The company’s then-CEO James Cornelius took a big gamble on immuno-oncology when he put $2.1 billion down on Medarex as part of his “string of pearls” acquisition strategy before the Phase III data on ipilimumab read out.

The deal was one of the most expensive in oncology in the last five years, trumped only by mega acquisitions like Roche’s $43.7 billion buyout out of Genentech Inc. and Takeda Pharmaceutical Co. Ltd.’s $8.2 billion buyout of Millennium Pharmaceuticals, both in 2008, and by a couple of mid-sized acquisitions including Astellas Pharma Inc.’s acquisition of OSI Pharmaceuticals Ltd. for $3 billion and Celgene Corp.’s purchase of Abraxis BioScience Inc. for $2.9 billion.

Also, weighing in as more expensive is Eli Lilly & Co.’s $6.5 billion acquisition of ImClone Systems Inc. in 2008; ironically, Bristol was outbid by Lilly that time. Months later, Bristol turned around and acquired Medarex instead, a decision it probably doesn’t regret. Even though Medarex was expensive, the value it has brought to Bristol appears to be clear cut. Even a great deal can cost a fortune after all. -- Jessica Merrill

Which one of the deals below will pay dividends?  Check back in a few years, but for now content yourself with the latest edition of ...

Pfizer/Zoetis: Pfizer said May 22 that it will shed its remaining 80% ownership of the Zoetis animal health business that it began spinning out via IPO in February. The timing was earlier than expected. Analysts had anticipated that Pfizer would wait at least 180 days before divesting the remaining portion of the company, partly to help Zoetis establish its footing and also due to a lock-out period by underwriters. Yet, that waiting period could be waived if Zoetis established itself as standalone company, and apparently it has. Pfizer’s former animal health business seems to be adjusting to independence well; Zoetis reported first quarter earnings per share on April 30 of $0.36 per share, up 20% from what the unit reported a year earlier and three cents ahead of analysts’ expectations. The Madison, NJ-based company brought in sales of $1.09 billion, up 4% from the year-prior period. News of the swap didn’t impair Zoetis’ market performance; shares added about 1.5% to $33.55 on the day of the announcement. The Zoetis IPO, which brought in $2.2 billion for Pfizer, was a success. The offer price was above the anticipated range of $22 to $25 per share; the company sold 86.1 million shares at $26 each on Jan. 31. The stock opened at $30.74 on Feb. 1 and was up 20% on the first day. Now, Pfizer shareholders will be given the option to exchange all, some or none of their shares of Pfizer stock for Class A shares of Zoetis stock, which will be issued at a 7% discount to market price, meaning $100 of Pfizer stock would be worth $107.52 of Zoetis shares, according to the company. Though this time Pfizer won’t see any cash, the tax free swap will reduce the Big Pharma’s share count and thus be accretive to earnings per share. – Lisa LaMotta

Elan/AOP Ophan/NewBridge/Speranza: In its continuing effort to spend its way to diversification, Elan Corp. PLC announced a trio of deals this week. It acquired profitable, Central and Eastern Europe-focused orphan disease company AOP Orphan Pharmaceuticals; it invested in Middle Eastern specialty pharma NewBridge Pharmaceuticals; and it spun out its only clinical candidate into Speranza Therapeutics.
These deals come on the heels of its royalty deal with respiratory company Theravance and Elan’s struggle to remain independent. Also this week, Royalty Pharma increased its hostile bid to acquire Elan to $12.50 per share for the company, which it said is the equivalent of $4.6 billion for Elan’s remaining half of its royalties for multiple sclerosis drug Tysabri (natalizumab). That’s a 42% premium to the $3.25 billion for which Elan sold the other half of its Tysabri royalty to partner Biogen Idec Inc. in March. Elan shareholders previously rejected an $11.25 per share offer from Royalty Pharma earlier this year. Elan is acquiring AOP for €263.5 million ($339.8 million) in cash and stock, plus a potential €270 million in regulatory milestones. The Austrian company markets orphan disease products in Central and Eastern Europe and the Middle East. Elan also made a $40 million investment in specialty pharma NewBridge. Elan received a 48% equity stake and has the option to buy the remainder by 2015 for $244 million. Finally, Elan is divesting ELND005 (scyllo-inositol), which did not meet the primary endpoints in a Phase II trial to treat Alzheimer’s disease, into newco Speranza. Elan will invest $70 million for an 18% position in the company, plus royalties or commercial rights in undisclosed markets. A second undisclosed investor will invest $20 million for a 62% equity position, with the remaining 20% distributed among the management. Elan has committed to an additional potential $8 million, while the other investor may invest another $2 million. Elan CMO Menghis Bairu takes the reins at the new biotech as CEO. – Stacy Lawrence

Actavis/Warner Chilcott: Following more than a week of speculation, generics giant Actavis Group agreed to purchase specialty pharma Warner Chilcott PLC on May 20 in an all-stock transaction under which Warner shareholders will end up with a 23% interest in the combined company, to be called Actavis PLC. The deal gains Actavis a favorable tax environment in Ireland and puts to rest for now further talk of a potential Actavis/Valeant Pharmaceuticals International Inc. merger. Valued at about $8.5 billion including the assumption of $3.4 billion in debt, the merger will require approval from 75% of Warner shareholders under Irish law and is likely to close in the fourth quarter, the two companies said. Warner shareholders will receive 0.16 shares in the new company for each full share they hold in Warner, equating to a valuation of $20.08 for each existing share. That’s a 34% premium over the stock’s closing price on May 9. Aside from its core generics business, Actavis PLC will have eight women’s health products including contraceptives, infertility treatments and hormone therapies; six urology drugs across indications such as overactive bladder, testosterone replacement, prostate cancer and benign prostatic hyperplasia; two gastrointestinal drugs, both for ulcerative colitis; and one marketed dermatology product with a second slated for launch this July. It also would boast a pipeline of 25 compounds, 15 of which in the women’s health area. Actavis CEO Paul Bisaro said the merger would result in Actavis deriving about 25% of revenues from specialty branded product sales, compared with about 7% currently.– Joseph Haas

Novo/Xellia: Novo AS added the business-to-business generic anti-infectives manufacturer Xellia Pharmaceuticals AS to its portfolio of health care companies on May 21, building up a life sciences cluster in Denmark that may well be the envy of larger countries. Novo, a life sciences investor and the holding company for the Novo Group, is already the majority shareholder of three Denmark-based companies, Novo Nordisk AS, Novozymes AS and Chr. Hansen Holding AS, and said it was pleased to bring Xellia ownership back to Scandinavia. Xellia specializes in difficult-to-manufacture generic antibiotics and anti-infectives like vancomycin and colistimethate sodium, with fermentation technology not routinely available to bulk manufacturers of other antibiotics like penicillins and cephalosporins. Novo is owned by the Novo Nordisk Foundation, and like the Wellcome Trust in the U.K., the foundation is a major supporter of academic research through grants and other funding. Novo paid the U.K. private equity company 3i and minority shareholders $700 million for Xellia, a company 3i and its management bought from U.S.-based Alpharma Inc. back in 2008. Alpharma was itself created through the merger of companies based in Norway, Denmark and the U.S. 3i made a 2.3 times return on its investment in Xellia, not bad during the past five years of slow economic growth. – John Davis

BTG/Ekos/Nordion: Britain's BTG PLC announced two planned acquisitions this week, one extending its abilities in liver cancer and the other an ultrasound treatment for dissolving severe blood clots, to create an interventional medicine business with potential sales of $1 billion. BTG agreed to pay $180 million in cash and up to $40 million in milestones for Seattle-based Ekos Corp., which will provide control of EkoSonic, a new technology approved in the U.S. and Europe for treating blood clots which is enjoying 29% annual compound growth rate over the past three years. The specialty pharmaceutical group also agreed to buy the targeted therapies division of Nordion Inc., for about $200 million in a deal that adds that company’s Therasphere radioactive glass beads treatment for liver cancer. BTG believes Therasphere will complement its existing chemotherapy beads unit and wants to expand the indications of use for that product and its geographic footprint beyond Europe and the U.S. to Asia, where the prevalence of Hepatitis B – a precursor for liver cancer – is very widespread compared with the West. For example, 5% of primary liver cancers occur in China. BTG thus sees a huge market opportunity there and aims to build on the chemo bead partnerships and regulatory track record it already has in China, Japan and South Korea for promoting Therasphere. Some of the cost of buying the Nordion unit will be met from a May 23 private placement that raised $160.7 million. BTG sold 32.2 million new shares, representing just below 10% of its share capital. -- Sten Stovall

GSK/BARDA: Biopharmaceutical business development executives are oft heard claiming that every deal is different – and so breathless PR claims of “first of its kind” and uniqueness usually tend to be simultaneously overheated and paradoxically unnecessary. But this week’s deal between GlaxoSmithKline PLC and the U.S. Biomedical Advanced Research and Development Authority might fit the bill. The collaboration is essentially a grant over which BARDA exercises an unusual amount of control and will focus on developing antibiotics against resistant bugs and potential bioterror agents. BARDA retains flexibility in which GSK projects it chooses to fund over the life of the deal; it will contribute $40 million over an initial 18 month period and up to $200 million if the deal gets renewed over five years. The only specific GSK asset cited in the award contract is GSK 2140944, an antibiotic against respiratory and skin and soft tissue infections currently in Phase I studies for conventional and biothreat applications. A joint BARDA-GSK committee will determine funding allocations and select or eliminate projects for the team’s portfolio. BARDA doesn’t receive any traditional ownership or return rights (no milestones or royalties to reward its risk taking). Nor will it acquire any rights to GSK’s pre-existing IP, according to a GSK spokesperson. For IP that comes out of the relationship, the spokesperson notes that “GSK may obtain title to any patents for inventions GSK makes as part of the contract, with BARDA reserving certain government rights to such inventions.” The deal underscores the need for new models to fund R&D in a space largely underfunded by traditional means thanks to scientific difficulties and poor return on investment. GSK isn’t alone in its pursuit of new antibiotics, but it’s an increasingly small club.--CM

Deals Of The Week Untangles The String of Pearls

Speculation has abounded of late that Bristol-Myers Squibb is looking to do its largest acquisition ever – to add a crown jewel to its string-of-pearls. That’s the pharma’s loving nickname for an aggressive deal-making strategy in which it has lined up a series of about two dozen acquisitions and partnerships to complement its internal pipeline and existing products. These deals have largely been focused on cancer, cardiovascular disease, immunology, neuroscience, and virology.

BMS has made only three acquisitions worth more than $1 billion since 2007 when the pharma first put this strategy in place, according to Elsevier’s Strategic Transactions database.  Two out of three of them may eventually contribute substantially to the top-line.

The most recent, of course, was the $6.8 billion joint acquisition in August of Amylin alongside BMS’ existing diabetes partner AstraZeneca. The idea was that the pair would put their marketing muscle behind a trio of classes of diabetes drugs. In the fourth quarter, its first full quarter of U.S. sales, BMS reported revenues of $55 million for Bydureon (exenatide extended-release) and $92 million for Byetta (exenatide). The partners hope to ramp up revenue as they expand their marketing effort internationally and roll-out a pen for Bydureon.

Another BMS buy for over $1 billion was HCV play Inhibitex, which after a $2 billion acquisition early last year took a well-chronicled swan dive. Safety problems forced BMS to halt a trial for the lead acquired candidate. But BMS hasn’t given up on HCV; it’s targeting genotype 1b, which is prevalent in Japan where it accounts for 70% of HCV infection. BMS is currently in Phase III combination testing with NS5A inhibitor daclatasvir and NS3A inhibitor asunaprevir. Both of these are internal BMS candidates.

BMS expects to present data from the trial at the American Association for the Study of Liver Diseases conference in November and to file for approval of the combo in Japan by year-end. The company is also testing that regimen in genotype 1b patients in the U.S. and Europe and pursuing triple and quad HCV combination treatments. Part of these could be Peginterferon lambda-1a, which BMS gained with its 2010 acquisition of ZymoGenetics for $841 million.

So, that gives BMS one possible marketing-driven success and one outright failure among its big, recent acquisitions. The third big deal, for Medarex, has been an unabashed success. BMS acquired the biotech in 2009 for $2 billion, when its ipilimumab was in Phase III trials for metastatic melanoma. After a 2011 approval, Yervoy (ipilimumab) had 2012 sales of $706 million; it’s expected to become a blockbuster.

BMS is looking to expand upon Yervoy's success. Immuno-oncology and HCV are its two top pipeline priorities, BMS said at this week’s Cowen Health Care Conference. Its immune-oncology line-up includes Medarex candidate anti-PD1 antibody nivolumab (in Phase III testing for melanoma as well as lung and kidney cancers) and elotuzumab (in Phase III testing for multiple myeloma). BMS has rights to the latter with partner AbbVie under a 2008 deal. The original deal was with PDL Biopharma, which then spun-out Facet, which was acquired by Abbott, which itself then spun out AbbVie.

Wall Street expects that Yervoy, along with anti-fibrillation drug Eliquis (apixaban) and diabetes drug Onglyza (saxagliptin), could have blockbuster potential. Both Eliquis and Onglyza were discovered internally at BMS (and both are shared with partners -- Pfizer and AZ, respectively).

But new blockbusters aren’t coming on-line quite fast enough to replace lost revenue. Of its current stable of seven blockbusters, BMS is already losing Plavix sales to generics and stands to lose patent exclusivity on three more within the next few years – anti-psychotic Abilify (aripiprazole), HIV franchise Sustiva and hepatitis B treatment Baraclude (entecavir). Even before the string-of-pearls, dealmaking was essential to portfolio building at BMS. It acquired Sustiva in its largest deal to date – the 2001 purchase of DuPont Pharma for $7.8 billion. Its rights to Abilify stem from a 1999 partnership with Otsuka.

To do an even bigger deal, BMS would have to do some fancy wheeling-and-dealing. To execute on rumored buyouts of Biogen Idec with its $40.5 billion market cap or Shire with its $17.2 billion market cap, the $61.5 billion BMS would have to get creative and come up with a lot more cash than the $6.4 billion it had at year end. But, if nothing else, the Amylin transaction has shown BMS can do some creative deal-making.

For now, Wall Street seems to think BMS has done a good enough job stanching its hemorrhaging sales. Since announcing its 2012 net sales declined 23% to $4.2 billion on Jan. 24, BMS shares have climbed 8%. That brings its year-to-date rise to 16%; a reversal of the 8% decline in 2012.

But rather than speculate further about BMS' dealings, let's take a look at actual deals that have transpired in this edition of . . .

Celgene/Presage: Celgene is looking to identify novel drug combinations for the treatment of solid tumors with the help of Presage Biosciences’ proprietary technology platform. The companies announced they signed a collaboration, the second major deal with a pharma partner for Presage, on March 5. Celgene paid $13 million upfront and agreed to undisclosed milestone payments for access to a drug array platform that allows for micro-doses of multiple drugs to be placed through the skin and directly into a tumor, permitting drug developers to measure and compare drug responses. One advantage of the technology is that it allows a drug manufacturer to compare drug responses in a living tumor rather than in an in vitro model, which can yield misleading results or fail to correlate with what happens to a tumor in the clinic. Celgene will pay $5 million in R&D funding and $8 million in exchange for an equity stake. Presage signed its first significant deal last year with Millennium: The Takeda Oncology Co. The Seattle-based start-up’s near-term goals call for signing one more partner for a total of three technology platform deals. The company plans to focus on executing on those tight-knit relationships and on expanding the uses for its technology in other areas. - Jessica Merrill

ViiV Healthcare/Medicines Patent Pool: This is an example of Big Pharma contributing IP to enable the manufacture of generic versions of HIV drugs for developing nations. In late February, ViiV  –  a GlaxoSmithKline, Pfizer, and Shionogi joint venture focused on HIV – granted MPP a royalty-free license for pediatric formulations of the antiretroviral drug abacavir in 118 developing countries. MPP is a United Nations-backed health care organization that collects intellectual property rights for HIV drugs from originators in order to transfer them to generics companies. It facilitates broader and faster access to HIV drug IP for these generics makers supplying developing markets. MPP first invited companies to contribute HIV IP into its pool in December 2010. In addition to ViiV, NIH and Gilead Sciences have also signed agreements. Johnson & Johnson has declined to participate, but Merck, Abbott, Bristol-Myers Squibb, Boehringer Ingelheim, and Roche are all still considering contributing HIV IP to MPP. - Stacy Lawrence

Array Biopharma/Global Blood Therapeutics: Cancer-focused Array is collaborating with start-up Global Blood Therapeutics in a drug-discovery agreement to focus on small-molecule compounds for chronic blood-related diseases. No deal terms or therapeutic targets were disclosed. Boulder, Colo.-based Array says it will develop assays and screen its proprietary library of 300,000 small molecules to identify active site and allosteric modulators of targets chosen by Global Blood. Array President Kevin Koch said the companies share a goal of accelerating drug discovery and development by combining Global Blood’s expertise in disease biology and computationally supported medicinal chemistry with Array’s lead-generation abilities. Based in South San Francisco, Calif., Global Blood was founded in 2012 with a $40.7 million Series A financed by Third Rock Ventures, under which Third Rock partner Mark Goldsmith took the CEO’s chair at the new company. With a therapeutic focus of using allosteric modulation to change the shape of proteins in the blood, Global Blood’s top priority is developing a therapy for sickle cell disease. - Joseph Haas

Targacept/AstraZeneca: North Carolina biotech Targacept and its Big Pharma partner AstraZeneca have agreed to amend their partnership agreement once again. The companies announced March 5 that AstraZeneca will give back the rights to Targacept’s alpha7 neuronal nicotinic receptor modulating compounds. Previously, AstraZeneca had the right to any compounds Targacept developed for cognitive disorders and schizophrenia. The Big Pharma opted out of development of TC-5619, a selective alpha7 NNR in 2011. The two companies paired up originally in 2005 on AZD3480 (TC-1734). The companies previously chose not to pursue AZD3480 in schizophrenia or Alzheimer’s disease after poor results for two mid-stage studies, but continued development in ADHD. Development of AZD3480 was later stalled in favor of another compound. AstraZeneca has now returned all rights to this compound to Targacept.

AstraZeneca will retain the rights to Targacept’s alpha4beta2 NNR modulators, including AZD1446 . The company now has the right to develop these compounds in any therapeutic area. Previously, AstraZeneca’s rights with regard to these compounds were limited to cognitive disorders and schizophrenia. - Lisa LaMotta

Cancer Research Technology/AstraZeneca: Britain’s Cancer Research Technology - the technology transfer arm of  the charity Cancer Research UK - has extended its alliance with AstraZeneca to develop new oncology therapies in another sign of Big Pharma's growing interest in tapping academics to help overcome chronic R&D productivity difficulties. The deal aims to develop a drug pipeline targeting cancer metabolism. The partnership, initially begun in February 2010 for a three-year period, marked the first time CRT had teamed up with industry to actually seek targets and hunt for viable lead molecules together, rather than just licensing out IP. The alliance has been extended for a further two years, to early 2015. Each side has allocated 30 researchers to their alliance. No financial terms were given. CRT will use its expertise in identifying and selecting new targets from existing CR UK cancer metabolism programs; CR UK's research in this area explores the differences in how cancer cells versus normal cells make and use oxygen and energy. Working at both partners' UK research facilities, the goal of the collaboration is to develop small-molecule drug candidates that can alter a cell's metabolism and potentially starve the cancer cells of nutrients necessary for survival. AstraZeneca will advance the most promising compounds into preclinical and clinical development; for those projects reaching the clinic, it will pay CRT milestones and royalties. The alliance team will continue to work at CRT’s Discovery Laboratories in London and Cambridge, and AstraZeneca’s cancer research centre, Alderley Park, Manchester, in the United Kingdom. - Sten Stovall

Galapagos/Roche: The partners went their separate ways, concluding a discovery partnership that was first started for COPD in 2009 and then broadened into fibrosis in 2010. Roche will pay Galapagos almost €6 million for work completed in 2012, bringing the total Galapagos received under the deal to €16 million in upfront and milestone payments. Galapagos has regained rights to all fibrosis assays and targets discovered; it hopes to find another partner. The biotech chalked up the partnership dissolution to Roche’s shift in therapeutic areas of focus. - S.L.

Entangled string and pearls photo courtesy of Flickr user bhollar.

M&A Deal of the Year Nominee Bristol-Myers/Amylin/AZ

It's time for the IN VIVO Blog's Fifth 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 Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (a half dozen in each category throughout December) 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™.

For size alone, the $7 billion acquisition of Amylin Pharmaceuticals jointly by Bristol-Myers Squibb and AstraZeneca deserves consideration as 2012's M&A deal of the year. But there's more to 2012's largest acquisition than size. Among the fascinating features: an innovative, two-part, three-party structure; two rather troubled Big Pharma companies aiming to turbocharge their push further into diabetes; and a U.S. biotech facing stiff competition now and in the near future for its lead products.

BMS paid $5.3 billion to purchase Amylin, and assumed $1.7 billion in net debt and a contractual obligation to Amylin's former partner Eli Lilly & Co. Then, AstraZeneca paid $3.4 billion to BMS to acquire 50% of Amylin, and later paid an additional $135 million to have equal governance over the asset.

The deal was said to be set up this way to simplify it: in the business world, it's complicated for a seller to deal with two buyers who want to buy an asset jointly. Much easier all round for Amylin to deal with one buyer, and for the acquirers to flesh out their own arrangements later. Even if one assumes that all adverse eventualities were covered contractually, the rarely used arrangement must still have required more than a soupçon of good faith and trust between the parties involved. If only for the reason that faith and trust, which are so rare to find these days, played their part, the acquisition deserves your vote.

It’s usually true that two heads are better than one. (Except, of course, in politics, where coalitions invariably go sour, but that's another story.) BMS and AstraZeneca are hoping to use their expertise, across different physician groups (primary care, secondary care) and geographies (Western countries, emerging markets) to maximize the potential of Amylin's diabetes GLP1-agonist therapies, twice-daily Byetta (exenatide) and once-weekly Bydureon (extended-release exenatide).

Some might quibble the acquisition smacked of desperation, that the joint marketing of the oral antidiabetic DPP-4 inhibitor Onglyza (saxagliptin) by BMS and AZ under an alliance formed in 2007 was already going nowhere, and their other innovative antidiabetic, the SGLT-2 inhibitor, Forxiga (dapagliflozin), was floundering at the regulators. Others said that at $31 a share, the companies had overpaid, which they could ill-afford.

We're having none of it. BMS and AZ fervently believe they can re-invigorate the sales growth of the once weekly GLP1 agonist Bydureon, which is the launch phase, by not only the deployment of their marketing assets but also through the development of new formulations and administration devices.

It’s a tough challenge because of the tremendous competitive pressure expected in the market from already launched competitors like Novo Nordisk with its GLP1 agonist, Victoza (liraglutide) and those nearing the market with GLP1 offerings, such as Sanofi/Zealand (lixisenatide), GlaxoSmithKline (albiglutide), Lilly (dulaglutide) and others.

But it's not as if either BMS or AstraZeneca lack recent experience in assimilating companies and products, at least on their own. In 2012, AstraZeneca also bought U.S. biotech Ardea Bioscience for $1.26 billion to gain access to its Phase III gout therapy, lesinurad, and BMS acquired Inhibitex for $2.5 billion, for its hepatitis C targeted nucleotide polymerase inhibitor, INX-189.

Other goodies likely to accrue to BMS and AstraZeneca from the Amylin acquisition are operating synergies and tax advantages too, making it a standout acquisition for those reasons as well. What are you waiting for? Vote for this acquisition.

--John Davis