Deals of the Week Sells During Slow Season

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

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

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

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

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

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

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

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

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

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

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

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

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

How Vitae Tries To Provide An Optimal Environment For Innovation

One of the best things about having time to sit down with a company's executive team and discuss matters such as pipeline and business strategy at leisure is the chance to intersperse more philosophical questions that address how a company views itself and the work environment it tries to provide.

In meeting a few weeks ago with the executive team at Vitae Pharmaceuticals near Philadelphia for a profile in "The Pink Sheet," I got more information than I could process on the firm's structure-based drug design process, the genesis of its proprietary Contour technology platform and its plans for pipeline assets in indications such as chronic kidney disease and acute coronary syndrome.

Vitae Pharmaceuticals CEO Jeff Hatfield

But as I spoke with CEO Jeff Hatfield, CFO Tina Fiumenero and Chief Scientific Officer Richard Gregg, all of whom came to the clinical-stage company from Bristol-Myers Squibb, I wanted to ask about the best environment for innovation in drug discovery and what precisely the term "biotech" even means in 2013, if such a definition can be nailed down.

As Hatfield explained that he brought in Gregg after initial CSO and company co-founder John Baldwin retired, he noted both the depth of Gregg's Rolodex and the fact that he had led discovery in all areas at Bristol. Therapeutic agnosticism is important for a company that wants to go where its technology takes it. Hearing Gregg talk about Vitae's quicker, streamlined decision-making and its speed in drug discovery against challenging targets, I posed the question: "Coming from big pharma, would you say it's necessary to leave big pharma if you want to innovate in drug discovery?"

Vitae CSO Richard Gregg

Gregg's response to the somewhat loaded question is a bit on the cautious side, but still interesting.

"I think that one does not have to leave big pharma but it is easier [to innovate] in a biotech environment. It’s not that big pharma can’t [do it] but with a lot of the bureaucracy and decision-making processes, they make it difficult to be truly innovative there. I’m not going to say it’s impossible, but it’s easier in biotech," he said.

Hatfield then elaborated on the innovation topic: "I think there’s an awful lot to the culture and environment that people work in ... I don’t think the scientific talent is different in either direction - I don’t think it’s better in big pharma, I don’t think it’s worse in big pharma. What is really different is the culture that exists between a large organization, whether it’s in pharmaceuticals or manufacturing Twinkies, it doesn’t matter, big organizations have an organizational behavior, a culture, that by necessity is more structured, more controlled, and in a small organization, that’s much less the issue."

Culture is a big part of what defines biotech, in 2013 as in 1999, the CEO added. But does Vitae, with its focus on small-molecule drugs for primary-care indications, really fit the definition of biotech?

"Everybody has a slightly different definition of biotech," Hatfield said. "Yes, we do view ourselves as biotech, because we are innovative and I think that's a better essence of what biotech is supposed to represent, not whether it is small molecule or large molecule. It's pursuit of innovation to make a difference in the world."

But, besides its technology, what makes a company like Vitae innovative? Hatfield thinks getting buy-in from the ground-floor level R&D team is a good place to start. In other words, innovation comes from motivation, which may stem partly from comfort level.

"When we were getting this company going [it was founded in 2002, and Hatfield signed on as chief in 2004], I asked a group of bench scientists to define the culture. I said ‘tell me the environment you want to work in.’ And so they did, and it was not management-driven in the slightest bit. They came up with five principles of what they wanted the focus to be," he explained.

Those five tenets selected by the bench scientists themselves in 2006 as the company's modus operandi? Not surprisingly, the first was innovation - to create rather than copy. Next, they wanted to be evaluated on the basis of success, not the amount of activity, on helping to produce the right compound, rather than just a lot of compounds.

As Gregg alluded to, a third important value for the R&D team was quick decision-making, which the group called "sense of urgency." The scientists made clear they didn't want to hear about committees being organized to ponder the latest idea. They also wanted a teamwork-driven environment in which the chemists and biologists communicate directly and trouble-shoot together.

Finally, easier said than done, they wanted a fun place to work. Which is about as easily defined as what biotech means in 2013. But on the other four measures, the results to date suggest that Vitae may be living up to its own chosen values. Whether that proves to be a lucrative formula remains to be determined.

DOTW Ponders Quality In The Wake Of Compounding Pharmacies, Hurricane Sandy,And A Deal

image via

Lots of news this week either directly or indirectly highlighted concerns about the quality of everything related to infrastructure, products, and services. Starting front and center with Hurricane Sandy, right down to our own neck of the woods, biopharma deal making, quality has become a high-profile and challenging priority for the industry.

It is hard to avoid discussion of Sandy when reflecting on the week’s events, especially as this columnist resides in Manhattan, where after the storm, a stark contrast emerged between electricity haves and have nots. The haves, while inconvenienced, were largely able to access the normal comforts of the modern world and every day stresses that go with it, while the most fortunate have-nots struggled through the mess, and the less fortunate continue to suffer greatly.

Hurricane Sandy tested the emergency response planning in the Northeastern U.S., where, like, elsewhere, dense populations inhabit a complex world combining state-of-the-art technology and decades, even centuries-old infrastructure. New Jersey, which has been a manufacturing, R&D, and management headquarters for the biopharma industry over many decades, was hit particularly hard by the storm. While the industry has diversified geographically over the years, the state remains an important center of biopharma activity. No one is even broaching the cost of overall business damages, and the storm may not have significantly disrupted the biopharma industry’s supply chain.

But the quality of that supply chain is under strain regardless, as witnessed in a high-profile article which appeared in The New York Times detailing the agency’s decision that a 300-milligram dose of bupropion manufactured by Impax Laboratories was not bioequivalent to the anti-depressant Wellbutrin XL. As a result, the agency said it would be more careful about monitoring the way generic drug makers make extended release drugs. “The Pink Sheet” has been tracking the issue for industry, but The Times article brought it to the mainstream public's attention. According to the Times, which obtained its information from IMS Health, 120 extended-release drugs were sold in the U.S. in 2011.

And that article came on top of rising concern about compounding pharmacies in the wake of a nationwide outbreak of meningitis due to fungal contamination of preservative-free methylprednisolone acetate produced and distributed by The New England Compounding Center. Compounding pharmacies play an important role in distribution of many medicines.

Of course, for investors, problems and shifts in trends are business opportunities. And Patheon Inc.’s announcement on Oct. 29 that it planned to acquire the N.C.-based contract manufacturer Banner Pharmacaps for $255 million is one indication that pursuit of high quality manufacturing is a business opportunity.  Patheon provides contract manufacturing and development expertise to the biopharma and generics industries.

A private equity firm, JLL Partners, owns 55% of the company, which is listed on the Toronto Stock Exchange. Patheon’s stock is trading near its 52-week high of $3.90 a share, but clearly, its owners have it on an ambitious track. More than a year ago, its board brought in James Mullen, who led Biogen-Idec Inc. for seven years, to undertake a strategic revamp, and he, in turn, has hired a group of high-level senior pharma executives to become part of his management team. As Patheon sees it, there’s an opportunity to do roll ups in what is currently a highly fragmented industry with about $12 billion in sales and a vulnerability to manufacturing gafus as the global supply chain gets more complex and buckles under to cost pressures.

In addition to manufacturing capacity for solid oral dosage formulations, Banner brings to Patheon a pipeline of technologies for developing higher-margin, value-added proprietary products and a strong presence in Latin America, particularly Mexico, where it sells OTC and prescription drugs under its own brand. This will enable Patheon to pursue more and larger customers, fitting with an industry trend towards forming strategy partnerships with CMOs to outsource capital-intensive manufacturing.

Patheon may not be focused on the industry’s bread and butter, innovative R&D, but it has ambitions to bring more modest technological innovation to the industry, namely in formulations and manufacturing.  In January, it partnered with a Columbian maker of soft-gel capsules, ProCaps SA, giving it rights to ProCaps’ proprietary soft-gel technology and manufacturing capabilities in Europe, the U.S. and Asia.

Although the industry has far too much manufacturing capacity in general, for both small molecules and biologics, it also faces a shortage of certain kinds of facilities, for things like state-of-the art sterile fill finish, points out Michael Lytton, Patheon’s EVP, corporate development and strategy, who previously was EVP, corporate and business development at Biogen. Patheon, by dint of its focus, has greater operational efficiencies, and can better manage complexity than larger companies focusing on new drug development, particularly for problem areas like sterile injectables, said Lytton. Because its processes are state of the art and highly automated, Patheon can provide high quality without great additional cost, Geoffrey Glass, EVP, global sales and marketing said.

Whether it’s easier for investors to win on the services side of the pharma industry than on the bread-and-butter of betting on R&D innovation remains to be seen. Meanwhile the search for innovation goes on.

GlaxoSmithKline/Vertex and Janssen Pharmaceuticals/Vertex: Vertex announced on Nov. 1 separate agreements pairing its nucleoside VX-135 with GKS's NS5A inhibitor and Medivir AB/ Janssen Pharmaceuticals’s protease inhibitor for Phase II trials. The deals end speculation about when the Cambridge, Mass., biotech would enter the intra-industry mix-and-match in search of an interferon-free combination regimen to treat hepatitis C. Both collaborations are non-exclusive, with an even split of expenses to support Phase II proof-of-concept trials to begin early in 2013. The deals did not provide for up-fronts or milestones, and the agreements cover only the trials.

Glaxo has not had a high-profile in the hepatitis C space, and Bristol Myers Squibb was thought the more likely candidate along with Janssen parent Johnson & Johnson for a Vertex clinical partnership. In fact, the clinical deal may be the first significant step into hepatitis C for Glaxo, an otherwise established player in the antiviral space.

The announcement solves the mystery of when and with which big pharma candidate(s) Vertex would test one of the few clinically viable nucleoside polymerase inhibitor candidates remaining in the industry. Attrition has been high for that antiviral class, exemplified by Bristol’s announcement in August that it would cease development its nuc BMS-986-094 following a Phase II cardiac toxicity incident.

The latest casualty is BioCryst Pharmaceuticals Inc.’s BCX5191, developed in house by the Research Triangle Park, N.C., biotech.

AstraZeneca/U.K. Academia: AstraZeneca  said Oct. 31 that it is expanding its dealings with academia in its latest experiment with new R&D models involving increased interaction with external partners. In late 2011, Britain’s second-largest drug maker made 22 compounds available to U.K-based scientists at no charge to see if they can develop new medicines from them. Academics submitted more than 100 proposals, from which the Medical Research Council on behalf of AstraZeneca selected 15 to further investigate for a range of potential new drugs covering Alzheimer's, cancer, and lung disease. Winners include a University of Bristol project investigating whether a compound originally evaluated for the treatment of prostate cancer could delay, or even reverse, the progression of Alzheimer’s disease; a team at the University of Manchester conducting a small clinical trial of a new treatment for chronic cough using a compound developed to treat heartburn; and scientists at the Royal Veterinary College, University of London hoping to re-purpose a lung disease drug to treat muscular dystrophies.

The 15 projects will be financed using £7 million ($11 million) provided by the MRC. Under the arrangement, AstraZeneca will retain its existing rights relating to the compounds and any new research findings by the academic institution will be owned by the academic institution.

The open innovation project is unique to Britain. It has already created a number of partnerships between researchers from academia and industry and should lead to future collaborations across the sector.--Sten Stovall

Astex/Cancer Research Technology/Newcastle University: Open innovation and knowledge sharing were major themes in Britain this week, during which U.S.-based Astex Pharmaceuticals TK inked a strategic cancer drug discovery alliance with Cancer Research Technology Ltd. and Newcastle University in northern England. Astex said that over the course of the partners’ five-year alliance it will provide £1 million ($1.6 million) annually to Newcastle University for research across biology, chemistry, pharmacology and imaging to identify new cancer drugs and associated biomarkers for diagnostic tests. The three-way pact builds on a previous collaboration between Astex, Newcastle and the CRT on fibroblast growth factor receptor, a key cancer target, which led to the development of a clinical candidate that Astex partner Janssen Pharmaceuticals recently took into Phase I clinical trialing.

Astex will retain options to exclusive worldwide licenses to develop and commercialize pharmaceutical products from each alliance project.  CRT is a non-profit organization that links discoverers of new cancer compounds to potential partners which can develop and potentially commercialize the compounds. The three-way partnership makes CRT and Newcastle University eligible to receive development and regulatory milestone payments on exercise of the options, and on products that Astex takes into development, and royalties on sales.  Financial terms of the milestone payments and royalties were not disclosed.--SS

Menarini Group/Oxord BioTherapeutics: Oxford BioTherapeutics Ltd. has entered a pact with Italy’s biggest drug maker, the family-owned Menarini Group, to jointly develop a portfolio of antibody-based oncology drugs, the firms announced Oct. 29. The deal covers five of OBT’s antibody and antibody drug conjugate (ADC) programs, each of which is in pre-clinical stages and focused on a different cancer indication using a different novel oncology target. Menarini, which has around €4 billion in annual revenues, says it is pumping €800 million into the collaboration, though would not divulge details on how that cash breaks down into R&D funding, access payments, and milestones. Its British president Andrew Slade says the deal resulted after Menarini’s main ADC hope turned out to be a dud, which sent him scurrying to find alternative assets and interviewing more than 100 companies. OBT won the contest on the strength of its discovery expertise using a platform for the development of antibody-dependent cellular cytotoxicity (ADCC) enhanced antibodies. Slade says the long view investment approach that family-owned drug makers can offer biotechs is very attractive in the current financing environment. Family-owned drug makers – most usually found in continental Europe – can offer stable management, access to long-term funding for long-term projects, and traditionally have low turnover of staff.--SS

Boehringer Ingelheim/Ensemble Therapeutics: The German pharma Boehringer Ingelheim became the latest drugmaker to strike a deal with privately held, Cambridge, Mass.-based Ensemble Therapeutics, which uses a proprietary chemistry platform to discover orally available macrocyle drugs that affect protein-protein interactions. The parties said the deal includes an up-front payment and research funding, as well as milestone payments that could bring its total value to $186 million plus royalties, if multiple drugs are developed, approved and commercialized. Specific details, including the number of drug targets covered, therapeutic areas involved, and size of the initial payments, weren’t released. BI will choose the targets, making the deal similar to Ensemble’s existing arrangements with Genentech, Bristol-Myers Squibb, and Pfizer. Ensemble chief executive Michael Taylor said that although the company’s 2009 Bristol deal covered eight targets, Ensemble has since pursued smaller partnerships. Eight-year-old Ensemble is also developing a pipeline of its own, including an interleukin-17 antagonist it expects to partner sometime in 2013. The company now subsists largely on non-dilutive capital, and is unlikely to raise more beyond the $38.5 million it took in two rounds from Flagship Ventures, CMEA, ARCH Venture Partners, Harris & Harris, Kisco Ltd., and Boston University.--Paul Bonanos

While Awaiting New CEO, AstraZeneca Already Busy On The Business Development Front

Every player in big pharma is facing a patent cliff to some extent, but while some are dealing with their losses through diversification or a targeted approach to deal-making activity, it is unclear what direction AstraZeneca, the pure-play pharma among the giants, will take now that Seroquel IR (quetiapine) is off-patent, to be followed soon enough by Crestor (rosuvastatin).

A good portion of this uncertainty stems from the vacancy in the chief executive’s office. CFO Simon Lowth has been serving as acting CEO since predecessor David Brennan stepped down June 1 under a plan announced during the Anglo/Swedish pharma’s first quarter earnings call in April. The second quarter review occurred July 26, but while the impacts of patent expiries to top-selling AstraZeneca products are becoming clear, with a new permanent CEO not selected yet, the company’s strategy going forward remains a source of much speculation.

AstraZeneca focused largely on recent launches and late-stage pipeline prospects during the call, while Brennan’s successor was not discussed and current executives did not offer much new in the way of corporate strategy for the near term. In talking up its pipeline, AstraZeneca said it has 90 candidates in clinical development, although it counts seven drugs in the approval and launch stage among that number – an instance of trying to have its cake and eat it too?

Still, an 83-candidate pipeline is nothing to sneeze at, although Wall Street generally does not enthuse about AstraZeneca’s internal R&D. Instead, citing Leerink Swann analyst Seamus Fernandez as an example, the call is for significant M&A to yield a new future for AstraZeneca. In his July 26 note reiterating a “market perform” rating for AstraZeneca’s shares despite an 18% year-over-year decline in revenues, Fernandez re-issued an earlier call for “aggressive” M&A activity.

“We continue to believe the most realistic path forward for AstraZeneca is a more aggressive M&A strategy … but if current trends continue, additional and likely substantial restructuring may be necessary to sustain profitability necessary to deliver on the company’s “balanced” capital allocation strategy,” he wrote.

On May 31, on the cusp of Brennan’s departure, Fernandez opined that an “increased reliance on international sales growth from Japan and the emerging markets” would not be sufficient to overcome a precipitous revenue decline in the U.S. Indeed, AstraZeneca reported emerging markets revenue growth of just 1% during the second quarter, the same growth as during the first quarter, but attributed the lackluster pace to supply-chain issues stemming from new IT snags at a manufacturing site in Sweden. But for those weak links, the chain would have produced 8% growth in emerging market sales during the quarter, AstraZeneca execs claimed.

Still, there has been a clamor for growth-by-acquisition. And in a year that has seen plenty of biopharma M&A already, AstraZeneca has contributed its share of deals.

It teamed up with Bristol-Myers Squibb earlier this month to buy Amylin Pharmaceuticals for a whopping $7 billion. While Bristol is the actual buyer, AstraZeneca will send Bristol $3.4 billion after the deal goes through, almost half the purchase price, and then the two pharmas will use Amylin’s Byetta (exenatide) and Bydureon (exenatide extended-release) to bolster their combined diabetes portfolio.

In fact, it seems only accurate to describe AstraZeneca’s business development approach as aggressive already, even if it let Bristol take the lead in the Amylin buyout. Just since April, AstraZeneca has participated in eight deals, highlighted by a $1.27 billion purchase of Ardea Biosciences centered around gout candidate lesinurad. During that period, the pharma also has signed partnerships and licensing agreements with Cellworks Group, Link Medicine, Axerion Therapeutics, Amgen and The Medicines Co.

During the July 26 call, Lowth and President, R&D, Martin Mackay indicated that those deals should be seen as part of an ongoing business development strategy the AstraZeneca will continue to pursue. While Mackay focused on open innovation and numerous R&D tie-ups with partners of all sizes, Lowth said the company is pleased with the three significant deals it has completed (Ardea, Amgen, Amylin) this year, adding “there’s a whole host business developments and collaborations going on across research and development.”

Whether a new, permanent CEO – be it Lowth, Mackay or someone from outside the organization – will bring a new direction is unknown, but it is fair to say that AstraZeneca already is pursuing an active and hectic business development course. – Joseph Haas

Now, here is our weekly look at other developments in the world of biopharma deal-making …

Merck/Chimerix and Merck/Yamasa: The marketer of billion-dollar HIV drug Isentress (raltegravir), Merck & Co., struck two July 24 deals to bolster its pipeline of compounds that fight the same virus. Merck paid $17.5 million upfront to privately held Chimerix for worldwide rights to the Phase I drug CMX157, a lipid-antiviral conjugate designed to deliver the antiviral compound tenofovir to cells in high concentrations with reduced systemic effects. Milestones could add $151 million to the deal’s value, and Merck would pay Chimerix royalties if the drug is approved. CMX157 also is thought to hold promise in treating hepatitis B virus. Research Triangle Park, N.C.-based Chimerix, which has raised $101 million from venture investors, expects to put the funds toward trials on CMX101, a broad-spectrum antiviral soon to enter a Phase III study for cytomegalovirus. Separately, Merck partnered with Japan’s Yamasa Corp. in a deal of undisclosed size that gives it global rights to EFdA (4-ethynyl-2-fluoro-2-deoxyadenosine), a nucleoside reverse transcriptase inhibitor that has shown efficacy against highly resistant strains of HIV. Merck also said it would begin a Phase IIb trial on one of its own HIV pipeline drugs, MK-1439. – Paul Bonanos

Boehringer Ingelheim/Funxional: Boehringer Ingelheim is expanding its respiratory drug pipeline with the acquisition of a novel oral small molecule anti-inflammatory drug developed by Funxional Therapeutics. The companies announced a deal July 23 in which BI will acquire Funxional’s lead candidate, FX125L, a potential first-in-class somatotaxin and back up compounds for an undisclosed amount. Respiratory disease is one of BI’s core therapeutic areas; the company markets the inhaled blockbuster Spiriva (tiotropium bromide) for chronic obstructive pulmonary disease and has several respiratory drugs in late-stage development, including tiotropium for asthma and nintedanib for idiopathic pulmonary fibrosis. The addition of FX125L will give BI a first-in-class asset in a novel pathway that acts through the type-2 somatotaxin receptor (sstr2). As an oral drug, the market opportunity for FX125L could be significant given that inhaled drugs dominate the respiratory landscape. But few details are known about the drug’s clinical safety and efficacy so far. Funxional’s CEO Geoff Race said that in addition to offering the best terms, BI also had the pedigree and track record in respiratory disease that Funxional’s investors were looking for. “It is not just the initial payment that is important. It is the probability of getting the product to market that is also important,” he said. “We were pleased to have a partner like BI who we felt had the financial resources as well as the technical resources to take this product to the market.” Since its somatotaxin portfolio was essentially Funxional’s only program, the deal provides an exit for the biotech’s backers Index Ventures, Novo AS and Ventech. But Funxional may not vanish; it’s already evaluating its other earlier-stage technologies. “We are thinking about which one goes into the pipe,” Race said.” “We will take a little bit of time to think about that and start research programs later in the year.” – Jessica Merrill

Roche/AREVA: Roche and AREVA Med, a French biopharma specializing in the development of radioactive isotopes for therapeutic use, announced on July 27 that they will collaborate on a novel alpha radio-immunotherapeutic platform to focus on high-unmet need cancers. No terms were disclosed. Together, they will assess the efficacy of combining Roche’s engineered antibodies with AREVA Med’s radionuclide, Lead-212, a compound that shows promise in treating some types of cancer. Alpha radiation consists of fast-moving, high-energy helium atoms which, because of their large size, are easily stopped by a light, relatively insubstantial barrier such as a few inches of air or a piece of paper. Therefore, alpha radiation travels only short distances in human tissue. This mean that its energy is absorbed in a smaller area for improved cell death with little damage to healthy tissue. By targeting cancer cells with highly specific antibodies combined with Lead-212, there is an opportunity to more precisely irradiate and kill cancerous cells. In 2011, AREVA Med acquired Macrocyclics, a leader in metal chelators, which also will  participate in the collaboration with Roche. AREVA Med is associated with the National Cancer Institute (NCI), the University of Alabama at Birmingham (UAB) and the French National Institute of Health and Medical Research (Inserm). – Michael Goodman

Photo credit: (AZN's R&D location, Molndal, Sweden) Wikimedia Commons

Deals Of The Week's Dance Card is Full

Industry business-development executives rang in the start of what should be a most interesting New Year's (the score's been set for a while, but the performance is NOW: the biosimilars, patent cliffs, companion diagnostics, ongoing financing uncertainty and the big gorilla, health care reform) with half a dozen deals, including Forma's second big partnership in six months and a joint licensing agreement between Alnylam and Arrowhead. 


Also this week 2012 saw its first NO DEAL! as Astellas opted out of a worldwide development and commercialization agreement with Theravance over the latter's Vibativ (telavancin), a bacteriacide, once-daily injection. 


An as if to shock the troops to attention ASAP, Teva announced on New Year's Day an unexpected -- at least by most of industry -- management change, with Bristol Myers' newly resigned head of business development and strategy Jeremy Levin slated to succeed Shlomo Yanai as CEO in May, almost guaranteeing a higher biz dev profile for the global generics/specialty pharmaco.

By the end of the week the calendar new year seemed way back in the rear view as industry's own annual celebration loomed larger. And of course everyone's timing their news to next week -- deals, fundraising, and cocktails await. We'll see you in San Francisco. Meanwhile, it's ...



Forma/Boehringer Ingelheim: Cambridge, MA -based computational drug discovery platform developer Forma Therapeutics Inc. struck its second big partnership in just over six months on Jan. 5. Boehringer Ingelheim GMBH agreed to pay $65 million upfront, plus another $750 million in potential pre-commercial milestone payments, to discover oncology treatments that affect protein-protein interactions. The companies will select an unspecified number of targets jointly; a few have been determined already, but the remainder will be selected over the course of the four-year deal. In late June, Genentech Inc. and Forma agreed to discover cancer metabolism drugs in a deal of undisclosed size. Genentech received an option to acquire the program, which if exercised would return money to Forma’s venture investors. The BI deal also has “a return for our shareholders built in,” according to Forma CEO Steven Tregay, although there’s no buyout option this time. He declined to provide further details. Forma, which has additional platform discovery deals with Eisai, Cubist Pharmaceuticals Inc. and Novartis, has raised $33 million from Lilly Ventures, Bio*One Capital and the Novartis Option Fund in two venture rounds since 2008. It’s planning to develop drugs on its own as well, although Tregay said it’s still building a broad pipeline rather than concentrating on one or two candidates--Paul Bonanos.

Biogen/Isis: Isis Pharmaceuticals Inc. announced Jan. 4 that it garnered a deal with Biogen Idec for its antisense technology, adding to the list of large companies that have partnered with the biotech. Biogen and Isis have agreed to collaborate on the development of ISIS-SMN, a Phase I compound meant for the treatment of a rare genetic disorder called spinal muscular atrophy (SMA). Biogen will pay Isis $29 million upfront as well as $45 million in potential milestones for the option to license the compound after it has reached the proof of concept phase. Should Biogen choose to license the drug, it will assume full development and regulatory responsibilities. Isis will be eligible for another $225 million in milestone payments, along with double-digit royalties on sales, and also will retain some commercialization rights. Isis and Biogen may be the first companies to bring a treatment to market for SMA, but others are not far behind. Both Novartis and Roche have invested in preclinical treatments for the disorder. Roche agreed to pay as much as $490 million to PTC Therapeutics Inc. for the rights to its SMA program--Lisa Lamotta.

Alnylam/Arrowhead: With Alnylam Pharmaceuticals Inc. focusing mainly on internal pipeline efforts following the termination of collaborations with Roche and Novartis late in 2010, the pioneering RNA-interference company has licensed Arrowhead Research Corp.’s Dynamic Polyconjugate (DPC) technology to use toward developing an RNAi therapeutic. Terms were not disclosed for the deal, announced Jan. 5. Alnylam says it will deploy the DPC technology – a systemic small-interfering RNA delivery platform that enables efficient target gene silencing via polymer-based formulation chemistry – against an undisclosed target in its proprietary “5x15” pipeline, five assets it hopes to drive into advanced clinical development by the end of 2015. As part of the deal Arrowhead acquires a license to Alnylam’s intellectual property related to targeting the hepatitis B virus. Alnylam can receive milestones and royalties from Arrowhead on any product derived from its HBV RNAi intellectual property, while Arrowhead likewise can earn milestones and royalties from any marketed product resulting from Alnylam’s licensure of the DPC technology. Meanwhile, on Jan. 4, Alnylam announced it had achieved positive preliminary results from a Phase I trial of ALN-PCS, one of the 5x15 assets. In the study, ALN-PCS, which targets the PCSK9 gene to treat severe cholesterolemia, demonstrated statistically significant RNAi silencing of PCSK9, up to 66%, and reductions of more than 50% in LDL cholesterol levels in participants--Joseph Haas.

Ipsen/Oncodesign: Ipsen, the mid-sized French pharmaceutical company, is tapping the research of fellow French CRO and drug discovery firm, Oncodesign, to develop its new LRRK2 kinase inhibitors, which have potential to treat Parkinson's disease. The research collaboration could see Ipsen paying Oncodesign €115 million ($146 million) in research and opt-in fees, development milestones and sales royalties. The Ipsen deal is the first involving drug discovery with a major pharma company for Oncodesign, a private CRO set up in 1995 to provide preclinical oncology pharmacology services. Its investors include a trio of French venture capital firms: CIC-Vizille Capital Innovation, CDC Enterprises and Avenir Entreprises. At the same time, new Parkinson's disease therapies fit neatly into Ipsen's focus on neurology, one of four therapeutic areas the specialty pharma is now concentrating on. One of its major marketed products is the botulinum toxin product for dystonia, Dysport (botulinum toxin type A). Ipsen has landed two options to exclusively license worldwide development, manufacturing and commercialization rights to Oncodesign's LRRK2 inhibitor program when it successfully reaches clinical proof of concept. Oncodesign will receive a technology access fee, funding for the program's research and early development activities and upon exercise of the license options, opt-in fees and additional development, regulatory and commercial milestone payments potentially totaling €115 million for the development of molecules in two or more indications, and tiered royalties on net sales. Mutations in the LRRK2 gene, which produces a protein with multiple activities, including GTPase and kinase activities, have been linked to genetically inherited Parkinson's disease, and Oncodesign has developed a macrocyclisation process, Nanocyclix, which it says produces potent and selective kinase inhibitors.--John Davis

Ironwood/Bionomics: As it begins with various partners to traverse various global regulatory landscapes with its IBS/constipation compound linaclotide, Ironwood Pharmaceuticals Inc. has been on the prowl for earlier-stage assets to back-fill its pipeline. On Jan. 4, the company said it would pay $3 million upfront for worldwide development and commercialization rights to BNC210, a clinical-stage anti-anxiety program from Australia’s Bionomics Ltd. All told, the deal could be worth $345 million plus royalties for Bionomics, including the upfront and $10 million in payments expected in the next two years. The deal marks Ironwood’s third since last January, but the first that adds a clinical compound to its pipeline. Previous deals included a discovery alliance around Protagonist Therapeutics peptide technology and a delivery pact with Depomed Inc. BNC210 has completed two Phase Ib studies in a total of more than 80 healthy volunteers, and according to the company, acts by a novel (but undisclosed) mechanism of action that should avoid side effects common to anxiety medicines. It is Bionomics’ second most advanced project, behind the unpartnered Phase II oncology compound BNC105. Ironwood joins a stable of partners at Bionomics that includes Genmab AS and Merck Serono SA--Chris Morrison.

Endo/BioDelivery Sciences: Endo Pharmaceuticals, which has radically reshaped its product portfolio in recent years in order to diversify away from overdependence on the pain medication Lidoderm (lidocaine transdermal) is assuming worldwide exclusive licensing rights to BEMA Buprenorphine (bioerodible MucoAdhesive delivery system) from BioDelivery Sciences. The drug is a chronic opioid-based pain therapy that fits well with Endo’s pain medication franchise. Endo paid $30 million upfront, and has agreed to pay additional milestones totaling $150 million, plus tiered royalties ranging from the mid-to-upper teen percentages of net sales. The milestone breakdown is as follows: $95 million in potential pre-defined intellectual property, development and regulatory milestones, plus $55 million in commercial milestones. The BEMA delivery technology consists of a small, bioerodible, polymer-thin film, which is applied to the inner lining of the cheek. BEMA buprenorphine met primary endpoints in a Phase II trial in 2009 and is currently in Phase III trials, with potential to file in 2012. BioDelivery estimates its sales could reach $500 million--Wendy Diller

image courtesy flickr user EDubya/creative commons license

2011 Alliance Of The Year Nominee: Lilly/Boehringer

It's time for the IN VIVO Blog's Fourth 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™.

It's one of the biggest risk-sharing deals ever. It has oral drugs. It has insulins. It has biosimilars. And it's still making waves (including deal-breakers) in the already-choppy ocean that is diabetes.

Who would have expected Indianapolis-based Lilly to marry its struggling diabetes franchise with what's still only a pipeline at private German group Boehringer Ingelheim? The culture clash in itself deserves a DOTY nomination, but then there's so much more besides.

The January 2011 deal saw Lilly and BI agree to develop and market two of BI's oral diabetes compounds, a DPP-4 inhibitor Tradjenta (linagliptin) and a SGLT-2 inhibitor, and two of Lilly's basal insulin analogs, including a potential biosimilar version of Sanofi's Lantus (basal insulin glargine). So far, so fair. Except that BI gets an initial $388 million up front from Lilly, plus an option to co-develop and co-promote Lilly's chronic kidney disease antibody once it reaches Phase III.

Deal of the year for BI, then, perhaps, which gets paid to enhance its emerging diabetes portfolio and to tap into the services of an experienced diabetes marketing partner. This perceived imbalance is in part explained by Lilly's desperation, as it faces one of industry's steepest patent-cliffs, with the recent US expiry of $5 billion schizophrenia drug Zyprexa compounded by that of Gemzar in 2010, and by Cymbalta and Evista in 2013 and 2014. It's also in part about Lilly's defiant anti-M&A stance.

So to those ocean waves that, along with the chunky upfront, sheer number/size of big drugs involved (combined peak sales of $10 billion, predicts BI...), and not-to-be-sniffed at regulatory-milestones (over $800 million for BI for its hopefuls, and $650 million for Lilly for the insulins) make this a mightily strong DOTY candidate.

The effects of the Lilly/BI deal have rippled well beyond these two unlikely spouses. The deal provided a window onto the fascinating dynamics of the diabetes market, and -- importantly to those dynamics -- triggered Amylin's walk-out from its own Lilly partnership on the first-to-market GLP-1 agonist Byetta (exenatide) and once-weekly follow-on Bydureon. (No-deal-of-the-year nominee, perhaps?)

After almost ten years in bed with Lilly, Amylin felt let down by Lilly's agreement to co-commercialize BI's Tradjenta, which it felt would compete with its GLP-1s, even though the latter are injectable. After a lawsuit, Amylin paid (up to $400m in up-fronts and milestones) and left. Now the question is which of the diabetes leaders (Sanofi, Novo?), or indeed, which diabetes hopeful (GSK, Pfizer?) will buy Amylin? (Let's make that deal a 2012 nominee ... see, we're just so ahead of ourselves).

If the big-picture twisting-and-turning plot of this deal haven't convinced you yet, consider some of the commercial back-stories in the fast-moving diabetes space: can third-to-market Tradjenta carve out any niche in what has become a comfortable playing field for Merck & Co. Inc.'s first-to-arrive Januvia (sitagliptin)? And do safety concerns raised by an FDA panel over BMS/AZ's dapagliflozin, the first SGLT-2, spell the end for BI's second asset in the deal? As such, is Diabetic Investor's David Kliff right in saying that "Lilly has made a huge mistake" with this deal?

Meanwhile, can Lilly, whose strength has lain in insulins, rather than oral diabetes drugs, successfully apply the aggressive pricing tactics that have recently bought it some time (and market share) in existing insulin markets, to its insulin glargine candidate?

The story of Lilly-BI and the sub-plots it has generated is un-putdownable. There will be further series to follow. It's not a single DOTY, its a whole DOTY (and non-DOTY) franchise. Never mind those 'biggest ever', or 'most-creative ever'. Vote for the most interesting -- and get more bang for your vote.

image by flickrer watch4u, used under creative commons

DOTW: Save The Date

Miss the crowds? BIO’s just around the corner. This year there’s an added je ne sais quoi to the trade event as deal makers and execs converge on the regulatory swampland that is our nation’s capital. Amidst discussions of the state of the industry -- the strengthening IPO market (?), the venture financing climate, and the impact of both on deal making -- all eyes will be on FDA as it holds forth on Provenge and Avastin.

But while there’s no question BIO is a must-attend event, here at IN VIVO Blog, we’re admittedly biased in believing there’s another networking opportunity that is de rigueur for the industry’s top deal makers. That’s right: IN VIVO’s annual Pharmaceutical Strategic Alliances meeting, taking place September 22 and 23 in New York City at the Millennium Broadway Hotel.

Yes, we’re tooting our own horn, but once you’ve checked out our stellar line-up you’ll understand why. Key notes by Biogen Idec’s George Scangos and Bristol’s Lamberto Andreotti kick off the meeting. Then there’s an all-star discussion of biz dev on day 2 with help from Pfizer’s Kristen Peck, BMS’s Jeremy Levin, J&J’s Tom Heyman, Roche’s Joe McCracken, and Glaxo’s Ian Tomlinson.

You want deal making? We have it in spades. And not just at PSA. As we head into a summer time Friday, we bring you your weekly wrap up of the deal making headlines…

Boehringer Ingelheim/Zealand: Surprise! The Danish biotech Zealand pharma inked a deal this week for its Phase I-ready dual-acting GLP-1 and glucagon agonist for type 2 diabetes and obesity, ZP2929. But the partner, Boehringer Ingelheim, probably wasn’t the one folks expected given Zealand’s previous tie-up with Sanofi (the pharma formerly known as Sanofi-Aventis). This week’s deal, which includes a research collaboration, is worth €20 million in committed funding to the Danish biotech during 2011, and up to €41 million in the first two years. Zealand will conduct the first Phase I study with ZP2929, but Boehringer will pay for the research, development and commercialization of the compound, as well as any other additional GLP-1/glucagon agonists that eventually. Total biobucks for ZP2929, hailed by its inventors as a “next-generation GLP-1 agonist that improves on Byetta and Victoza, could reach €376 million. According to “The Pink Sheet” DAILY, Zealand, which raised nearly $60 million via the public markets in October 2010, had plenty of suitors for the compound. But with Zealand's most advanced compound, the GLP-1 agonist Lyxumia (lixisenatide) an increasingly important asset within partner Sanofi's diabetes pipeline, "we felt... it was better to diversify its partnership base," CEO David Solomon explained. Boehringer is a relative newcomer to diabetes, only unveiling its interest in the therapeutic area in 2008. Still it has moved rather quickly, and boasts a newly expanded late-stage pipeline thanks to the broad-ranging, risk-sharing deal it signing with Lilly in January of this year. As part of that tie-up, the two drug makers agreed to co-develop and co-commercialize up to five diabetes drugs, including Boehringer's DPP-4 compound Tradjenta (linagliptin), which FDA approved in May 2011, and a Phase III sodium-dependent glucose transporter-2 inhibitor. – EL

Vertex/Alios: Less than a month after FDA approval of its protease inhibitor for hepatitis C Incivek, Vertex Pharmaceuticals is looking to bolster its ability to offer potential combo therapies. Thus, it’s tie-up this week with Bay Area-based Alios Biopharma. The worldwide license to a pair of preclinical polymerase inhibitors, ALS-2200 and ALS-2158, is worth $60 million upfront to the privately-held Alios. In addition to the licensing agreement, the deal includes a research collaboration between the two companies: Vertex will provide undisclosed funding to Alios for discovery of additional polymerase inhibitors and retains an option on compounds unearthed via the collaboration. The bio-bucks owed Alios aren’t insignificant either: the biotech could earn up to $715 million in research and development milestones related to these two nucleotide analogs. Vertex has plans to move both molecules into Phase I trials during the fourth quarter of 2011. Longer-term, the big biotech intends to test the two molecules in varying combinations with telaprevir and VX-222, its Phase II non-nucleoside polymerase inhibitor, in an effort to find and develop an all-oral combo of drugs to treat HCV. Vertex said it expects to pay out $35 million in milestones this year, when both programs are scheduled to enter the clinic, but would not specify whether that also might cover other milestones to be met this year.—Joseph Haas

Sanofi/Audion: Sanofi has signed a two-year research agreement with Amsterdam-based Audion Therapeutics to discover and develop small molecule treatments for age-related hearing loss. Financial terms of the agreement weren’t disclosed, but Sanofi will have the option to license any compounds resulting from research done under the collaboration. Audion, a regenerative medicine play, aims to stave off deafness via developing compounds that protect and resurrect the inner ear hair cells, which are responsible for the amplification and transduction of sound waves to the auditory nervefor relay to the brain. As might be expected, Audion will work with Sanofi’s Aging unit, one of five new therapeutic strategic units established in the past year under the pharma’s revamped R&D model. Sanofi’s Early-to-Candidate Unit will also be involved. Paul August, U.S. head of the Early-to-Candidate unit, said his team aims to provide the Aging unit with a clinic-ready candidate by the end of the two-year collaboration. As this Start-Up feature noted, big pharma generally has stayed out of hearing loss, which has been dominated by med-tech firms providing hearing aids and, more recently, cochlear implants. Many venture capital firms and other investors see hearing loss as a potentially lucrative space, similar to ophthalmology, because of unmet medical need and demographic trends. The Sanofi/Audion tie-up is the first drug development partnership for hearing loss since Novartis licensed rights to a group of preclinical hearing loss and balance disorder programs from GenVec in exchange for a $5 million upfront payment and a $2 million equity investment last year.—JH

Pfizer/pSivida: Is Pfizer in or out of ophthalmology these days? This week’s amended deal between the big pharma behemoth and drug delivery play pSivida makes it clear Pfizer is willing to do what it must to protect its once daily glaucoma eye-drop Xalatan, which generated $1.75 billion in revenue in 2010 but lost key patent protection in March. Still, as Pfizer continues to redefine its innovative core (without, one hopes, experiencing a breach), it’s not so interested in ophtho that it wants to consider a broader deal with pSivida any longer. The Watertown, MA-biotech pSivida originally aligned with Pfizer in 2007 under a far-reaching deal that gave the big drug maker exclusive world-wide rights to its implant technology, as well as a 10% ownership stake. Under the revised agreement announced June 14, Pfizer will pay the biotech $2.3 million upfront for an option, which can be exercised at the end of Phase II, on an implant device that bathes the front of the eye with a sustained-release version of Xalatan. If Pfizer options the product, it will pay pSivida an additional $20 million and up to $146.5 million more in clinical and regulatory milestones. Despite Xalatan’s ability to effectively lower intra-ocular pressures without terribly onerous side-effects, compliance is a problem. (One main reason: Administering drops on a daily basis is a pain in the…er, eye.) As a result, there’s a lot of effort in the start-up community to develop implantable devices that improve adherence by obviating the need for daily administration. The 2007 deal revision provides significant potential upside for pSivida since it can now solicit partnerships with other drug makers. Among the most active deal makers in ophtho: Merck (which took out Inspire earlier this year), Novartis (via its Alcon group), Roche/Genentech, and of course specialty players like Allergan and Baush & Lomb. This wasn’t the only ophtho deal to be revised this week. On June 16 came news that Alcon was pulling out of its he collaboration with NovaBay, returning all rights to the first-in-class anti-infective Aganocide and back-up compounds. -- EL

Merck/Hanwha: Merck vaulted to the pole position in the race to bring a low-cost version of Pfizer and Amgen's rheumatoid arthritis blockbuster Enbrel to market this week, gaining rights to a late-stage biosimilar version of the biologic developed by South Korea's Hanwha Chemical. According to the June 13 partnership, Merck will develop and commercialize a biosimilar form of Enbrel, HD203, in all markets except Korea and Turkey, where Hanwha has retained marketing rights. In exchange, Hanwha receives an undisclosed upfront payment, and is eligible for milestones as well as tiered royalties on sales. Although financial terms of the deal were not disclosed in the official release, Hanwha Chemical spokesman Kwon HyukBum confirmed to PharmAsia News that the total potential cost of the collaboration to Merck is $720 million. Although Merck declined to confirm that figure, Merck BioVentures President Michael Kamarck said in an interview with “The Pink Sheet” DAILY that the deal is heavily back-end loaded. Nonetheless, the financial arrangement is "symbolic” of the huge opportunity for Enbrel biosimilars, he said. Merck has assembled a pipeline of biosimilar drugs since announcing the formation of Merck BioVentures in December 2008. Still, the company has revealed plans only for a couple of products, including a granulocyte colony-stimulating factor referencing Amgen's Neupogen and a pegylated version of Neulasta. Earlier plans to develop a biosimilar version of Amgen's Aranesp were scrapped in 2010, given emerging safety issues with the class. Merck continues to stand by its goal of having five biosimilars in Phase III by the end of 2012 and says it is mainly interested in harder-to-replicate monoclonal antibodies. – Peter Chang & Jessica Merrill

Private Boehringer Can Wear Two Hats

Yesterday's news that Boehringer is buying Amgen's Fremont, CA manufacturing facility is a reminder that Boehringer isn't just an R&D-based drugs giant, it's a contract manufacturer, too. It has been making Amgen's (and others') biologics for years. Expansion of its manufacturing to the West coast of the US has been underway for a couple of years, with CMO Avid Biosciences added in September 2009.

No, Boehringer doesn't have marketed biologics of its own, not yet. But they're in the works, and if/when they do appear, Boehringer will be well-placed (we, and others like Genmab, know how wobbly the manufacturing supply/demand balance can get...).

So sure, maybe Boehringer missed a trick by not making and selling its own biologics, sooner. But it doesn't really matter: that's what being private does for you. You can wear one hat, two hats, or seventeen. And they don't even have to be in fashion.

Indeed, never have the virtues of being private been quite so compelling. Economic crisis? Dismal public markets? Quarterly earnings pressures? Who cares if you have rich family backers (or equivalent) with a very long-term perspective and better things to do than churn out stock-market-requirement-meeting documentation every twelve weeks.

Germany's Boehringer is among the largest of Europe's privately-owned drug firms (Grunenthal, Servier, Pierre Fabre, Sigma Tau and Norgine are a few of the others...). Unlike most other Big Pharma (for indeed, it classifies as one; it's about Lilly-sized, or Schering-Plough pre-merger), Boehringer isn't bothering to put on the 'let's-take-R&D-through-iterative-disruptive-re-organization' hat; it's sticking with the continuity and stability headwear, which, it claims, is protecting it from the elements just fine.

Take diabetes: not many of us thought Boehringer, of Spiriva and now Pradaxa fame, was even interested. Turns out, as they revealed in October 2008, they have quite a nice full, varied pipeline, thanks. Nice enough to team up with Eli Lilly's struggling franchise to create an "innovative balanced portfolio" and double its commercial firepower (not to mention pocketing $388 million up-front).

Ok, let's not get carried away. This deal aside and despite new noises that suggest it's gearing up on the business development front, Boehringer hasn't exactly been a dealmaking pioneer; it hasn't had to be. Even the Lilly tie-up patently isn't a sign of more to come, as Boehringer's chief Andreas Barner made very clear on the call announcing the deal.

image by flickrer andyi used under a creative commons licence

Deals of the Week's Thanksgiving Day Massacre (In 4-Part Harmony, Of Course)

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

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

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

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

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

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

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

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

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

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

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

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

Convergence/Selcia: Barely more than a month after it was spun out of GlaxoSmithKline, CNS-focused Convergence Pharmaceutical bagged its first drug discovery collaboration, with Essex, UK-based CRO Selcia Ltd. No financials were disclosed, but Convergence isn’t short of cash, having raised $35.4 million on inception in one of Europe’s largest A rounds. Run by CEO Clive Dix, of PowderMed fame, Convergence already has two clinical-stage assets and six earlier-stage programs targeting ion-channels involved in chronic pain. In this deal, the partners will hunt further molecules for chronic pain, with Convergence applying the ion channel biology, medicinal chemistry and preclinical development expertise it inherited from GSK, and Selcia contributing synthetic chemistry and chemistry support services. The collaboration shows that Convergence, like its parent GSK (and indeed many other Big Pharma), is willing to embrace others’ drug discovery approaches, and to tap into drug discovery resources and technology on a flexible basis.--Melanie Senior

Medtronic/Ardian: Back in the summer of 2008, Ardian sought out corporate investors to participate in the company’s targeted $30 million Series C financing, thinking some corporate oomph and expertise would help drive clinical testing of its Symplicity Catheter System, used for treating hypertension and related conditions. The following spring Medtronic led a $47 million round, acquiring 11% of the company in what was – and still is - a rare up round. Now, Medtronic is going all in, announcing that it will acquire the rest of Ardian for $800 million up front, setting a record purchase price for a medical device company that doesn’t have an FDA-approved device. (Medtronic topped the mark it set in 2009 with the $700 million of CoreValve Inc., a percutaneous heart valve company.) Medtronic also agreed to pay commercial milestones equal to the annual revenue growth through the end of Medtronic’s fiscal year 2015. Ardian’s system allows doctors to deliver radiofrequency energy to the renal sympathetic nerves surrounding the renal arteries. Decreasing conduction of these nerves is seen as a way of triggering the body’s own regulation mechanisms to lower blood pressure. For the past six months, Ardian has been releasing positive results from its ongoing clinical trials with the most recent bit of good news at the American Heart Association meeting this month.--Tom Salemi

Boehringer Ingelheim/f-star: Boehringer's R&D collaboration with f-star this week is yet more proof that the privately-held German drug maker is ramping up its large molecule capabilities. This is the fourth antibody deal Boehringer has done this year alone according to Elsevier's Strategic Transactions, building on collaborations with 4-Antibody, Micromet, and most recently MacroGenics. Financial terms of the latest transaction weren't disclosed, but f-star, a former Series A-list all-star that has pulled in more than $25 million in venture dollars, will receive an initial technology access fee, research-based funding, and of course the potential for downstream regulatory and commercial milestones. In return, f-star will use its modular antibody technology to develop novel therapeutics against up to seven targets nominated by Boehringer that span multiple therapeutic areas. Biobucks for each of the seven targets, to which BI of course holds worldwide rights, could total up to €180mm ($247mm), excluding royalties. (Prompting unintentionally hilarious headlines about the "$1.7 billion" deal.) f-star's technology allows it to introduce additional binding sites into antibodies or antibody fragments, engineering large molecules that can target multiple proteins in a single molecule. Note this isn't the first time BI has signed an alliance focused on antibody fragments (that honor goes to Ablynx back in 2007) or bi-specific antibodies (MacroGenics' DART technology competes with f-star). Such second-generation approaches are a means of circumventing established IP claims for successful traditional antibody therapeutics and may advantages over Mother Nature's molecules, as they are potentially easier to manufacture and can have greater tissue penetration.--EFL

GlaxoSmithKline/Dr. Reddy's: GlaxoSmithKline's deal with Dr. Reddy's for the big pharma's United States oral penicillin facility and product portfolio is an interesting spin on regional deal making. Under the terms of the agreement, GSK transfers ownership of its penicillin manufacturing site in Tennessee and U.S. rights to Augmentin and Amoxil brands to Dr. Reddy's for an undisclosed sum. That GSK would opt to sell out of the US penicillin market isn't too surprising. Back in 2008 the drug maker announced plans to lay off the 200+ workers employed at the 400,00-square-foot manufacturing site by fall 2009 in preparation for sale of the plant because of declining sales of Augmentin stateside as a result of generic competition. Thus, the deal makes everyone happy, allowing GSK to downsize in a market no longer deemed valuable, while still allowing the drug maker to preserve ownership RoW, where GSK sees the potential for growth via its branded generics strategy. Dr. Reddy's, meanwhile, has been angling to scale up its generics business in North America. Thus, this deal gives the India-based giant entree into the US penicillin-containing antibacterial segment and a physical footprint to boot.--EFL

Roche/Ligand: Around the same time Roche decided to close out its R&D work in RNA interference, the Swiss pharma also notified Ligand Pharmaceuticals that it was ending a partnership to develop RG7348 (formerly MB11362) for hepatitis C. This no-deal officially ends the circuitous relationship between La Jolla, Calif.-based Ligand and the Swiss pharma. The tie-up began in August 2008, when Roche paid $10 million upfront to initiate a two-year collaboration with Metabasis Therapeutics to apply the latter firm’s HepDirect platform to Roche’s lead nucleoside candidates for HCV. In June 2009, the two companies chose ‘7348, which had since advanced to Phase I, as their lead candidate, with Roche paying a $2 million milestone to the biotech. Fast-forward to October 2009, when Ligand bought out Metabasis, inheriting the HCV deal. Since Ligand/Metabasis, Roche has paid up another $6.5 million in milestones; for the bean counters in the audience, $2.7 million of that went to Metabasis shareholders who had received contingent value rights in the original sale. Ligand, which says it learned of Roche’s decision on Nov. 19, also completed a one-for-six reverse stock split that same day, reducing current outstanding shares of common stock from 117.7 million to 19.6 million. Despite the no-deal, Ligand still boasts partnerships a plenty, boasting of ongoing alliances with Pfizer, GlaxoSmithKline, Merck, and Bristol-Myers Squibb, among other.—Joseph Haas

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