Winners & Losers: Shire Hands Back Juvista As Renovo Sinks

Shire's made some brilliant calls over the years. Buying genetic-diseases-focused Transkaryotic Therapies in 2005 for $1.57 billion was just one of them; the deal not only looks dirt cheap against Sanofi Aventis' tortured and expensive ($20 billion!) purchase of Genzyme, but also turned into what is now Shire's fastest-growing division, Human Genetic Therapies. (Yeah, ok, the 1997 Richwood purchase was another; with that $160 million deal came Adderall, the company-maker. But we digress.)

So Shire got the big things right. These days, thanks in part to some happy regulatory news, its shares are trading at an all-time-high (but maybe not high enough to prevent a take-out...oh dear we're digressing again.) One of Shire's smaller deals didn't work out, though: late on Wednesday evening it handed back rights to scar revision treatment Juvista to its maker, Renovo, after Phase III trials failed. Shire had already started to get cold feet on the drug in March 2010, after some equivocal Phase II results in certain settings, so in a damage-limitation move, it decided not to start U.S. trials (the ones it was due to fund) before seeing the results of E.U. trials (which Renovo funded).

The $75 million in up-front cash and $50 million equity that Shire paid for the drug in 2007 begins to look like small change in the context of Shire's $3 billion plus 2010 sales. Spare a thought, though, for Renovo, which is cutting 100 staff (estimated headcount: 110) and yes, dropping Juvista. Prof. Mark Ferguson, Renovo's founder and CEO, sounded utterly perplexed at how the Phase III trial could have faltered, given Phase II results showing some lovely scar healing. Call it "doing drug development". And call it a bit of a trend right now -- sadly -- in U.K. biotech. (We aren't looking at you, Antisoma.)

So we must look back to Shire, then, for our lessons in success. (Shire was a U.K.-based company once, before it moved its HQ to Ireland in 2008 for tax reasons.) And we must listen to CEO Angus Russell on April 1, one of the keynotes at BIO/Windhover's Pharmaceutical Strategic Outlook conference. The topic: how to apply the value-proving, unmet-need-fulfilling principles so core to rare diseases to the wider, less niche-y parts of the portfolio, including ADHD and GI. (If you're there, you can ask about any potential lessons from Juvista, too.)

image by flickrer Gary Simmons used under creative commons

Washing Away Post-Deal Blues With A De-Sanofizer

There's nothing like a gathering of insiders to generate some candid chat about the latest doings, and that's what you can hear at the BioWindhover Pharmaceutical Strategic Outlook conference this week at the Grand Hyatt Hotel in New York. Despite threatening forecasts of snow and more snow (and it's falling heavily right now), some 300 or so people have gathered to swap tales and insights into the latest dealmaking trends.

On the topic of back-end loaded deals, Shelagh Wilson, a GlaxoSmithKline vice president who heads the European arm of the drugmaker’s Center of Excellence for External Drug Discovery, said Glaxo is making a point of adding milestones for achieving reimbursement, not just for achieving regulatory or sales goals. "What is driving all of this is the pressure from the payers for us to produce differentiated medicines, and the risk associated with that,” she said. “We’ve got to be innovative, not just in the drugs we bring forward, we’ve got to be innovative in the early stages of drug discovery, and that means taking more risk."

Of course, a perennial wild card for investors is gauging the FDA's next move, not only as a result of safety scandals - can you spell Vioxx or Avandia? - but with the hiring last year of FDA commish Margaret Hamburg, who continues to insist the agency will become more responsive to such problems. "The biggest issue with us for our in-licensing deals (for our portfolio companies) is misprojecting where FDA is going with regards to safety or efficacy," said Brian Atwood, managing director of Versant Ventures, explaining why his firm doesn't make investments in cardiovascular or metabolic opportunities.

Hoyoung Huh, meanwhile, garnered the day's biggest laugh. The chairman of BiPar Sciences, which Sanofi-Aventis acquired last year for $500 million and now operates as a wholly owned, independent subsidiary, confessed that retaining BiPar's culture can be challenging. So what did some employees do to underscore the point? "If you walk into the BiPar offices, the first thing you do is walk up to a hand sanitizer and it's called 'de-sanofizer,'" he said with a big grin. "It's not that we're trying to be rambunctious or nasty, though." And who was sitting two seats away? Sanofi's Philippe Goupit, vice president of corporate licenses.