Deals of the Week Meditates on Medivation's Medication

We dare you to say the phrase three times fast. Can’t do it? Maybe you should switch to Russian. Google translator not working? Try this simple phrase instead: Блин!

All kidding and alliteration aside, that was likely Pfizer’s reaction this week after the big pharma and its biotech partner announced two Phase III trials of the highly anticipated Alzheimer’s treatment dimebon failed to meet either of their primary endpoints.

The news had tongues wagging, and not just because this is yet another high profile late stage failure Pfizer can ill afford. Dimebon is a decades-old allergy drug that appeared to work in Alzheimer's by some unknown mechanism. The skeptics' chorus began in July 2008, when Medivation published stunning Phase II/III data showing drug-treated patients did significantly better than placebo-treated patients when assessed using standard neuropsychiatric evaluations. But that study comprised just 183 patients and was conducted in just one country, giving new meaning to the phrase “from Russia with love." Certainly Medivation loved the data; just two months after it published its study, the biotech inked a lucrative partnership with Pfizer worth $225 million up-front.

But this week we learned anew how alliance-driven love is a many-splintered thing. Medivation’s stock is down 70%, last we checked. And Pfizer has lost a chance to extend its Alzheimer’s franchise beyond Aricept, which goes generic at the end of this year.

We can't help but wonder what it all means for biotechs with unpartnered Alzheimer’s programs. Dimebon is far from the first to go belly-up after apparently successful Phase II data. (Remember Myriad Genetics’ Flurizan?) That’s bad news for companies such as Allon Therapeutics and Prana Biotechnology, which have Phase II meds in need of deeper-pocketed developers. Indeed, as big pharmas pledge their desire to play in this most lucrative CNS space, we won't be surprised if more go for financing strategies a la Lilly’s 2008 deal with TPG and Quintiles. At the very least, we expect upfront values to decline and more emphasis on milestone driven terms. (Not that this wasn’t happening anyway, especially for later stage assets.)

Which brings us to the end of our meditation on Medivation. Omm. If we have one piece of advice for Kristin Peck, the new SVP of business development at Pfizer, it would be to practice this mantra: Option-based deals. Option-based deals. Option-based deals. Ahh. Isn't that better?

As you watch your thoughts float by like clouds, please remember, there is no you or me, there is only...



Watson/Columbia Laboratories & Watson/Population Council: Watson announced a pair of deals this week to bolster its branded women’s health care products line, purchasing Columbia Laboratories’ marketed infertility drug, Crinone/Prochieve, and Population Council’s Phase III contraceptive vaginal ring. Watson will pay an upfront fee of $47 million in exchange for 11.2 million newly issued shares in Columbia and U.S. rights to Crinone/Prochieve, which pulls in about $20 million in annual sales. But the real opportunity for the infertility therapy is the prevention of preterm birth. Here Columbia will continue to lead development of the product (it’s in Phase III), but its costs are capped, with Watson picking up the tab if expenses exceed an undisclosed limit. Watson will also pay $45.5 million in clinical and regulatory milestones in this new indication. Financial details of Watson’s second tie-up of the week were undisclosed but apparently include the usual upfront, regulatory and sales milestones, and royalties. While both deals provide Watson’s 350-person sales force with additional branded products to sell, it’s worth remembering that the drug maker’s overall business is still primarily focused on generic offerings, which last year generated $2.3 billion in revenue. Still, in an interview with “The Pink Sheet” DAILY, CEO Paul Bisaro argues his company has made great strides in the branded market, noting the firm is on the verge of providing an array of women’s products, including a novel oral contraceptive and an emergency contraceptive currently under review at FDA.

Astellas/OSI Pharmaceuticals: On Mar. 1 Astellas launched a hostile $3.5 billion, $52-a-share bid for OSI Pharmaceuticals to grab part of the growing revenues of lung- and pancreatic-cancer treatment Tarceva. Astellas made a relatively modest U.S. oncology-focused purchase when it bought the Santa Monica, Calif. antibody R&D shop Agensys for $537 million in 2007, but it would love a larger commercial footprint in the U.S. similar to what its Japanese peers Takeda Pharmaceutical and Eisai have bought in recent years with their Millennium Pharmaceuticals and MGI Pharma deals, respectively. But at least one major OSI shareholder says not so fast, $60 a share is fair price, likely emboldened by the fact that during the year-long unsuccessful wooing of OSI management, Astellas kept suggesting a $55-to-$57 range. Not surprisingly, OSI's share price has traded all week between $56 and $57. Funny, that. The situation bears some resemblance to Astellas's $1 billion hostile bid for CV Therapeutics last year: a 40% premium, a lawsuit to prevent a poison pill, and a threat of a proxy fight. But Gilead Sciences rode in with a $1.4 billion topper and Astellas quickly backed away. This time, will OSI partner Roche play the white knight? Does it have to? After all, it already keeps 80% of ex-U.S. sales of Tarceva, and its U.S. arm Genentech co-promotes Tarceva stateside. Stay tuned, Astellas's tender offer ends Mar. 31. -- Alex Lash

Bausch & Lomb/NicOX: In August 2009, when NicOx took back full rights to its Phase II glaucoma drug NCX116, it promised investors to have a partner for the program in 2010. This week, the company made good, announcing an alliance with Bausch & Lomb. Since being taken private by private equity firm Warburg Pincus in 2007, B&L has been quietly rebuilding primarily by acquisitions or alliances that target innovative products. Interesting deals include the firm’s 2008 take-out of intraocular lens player eyeonics and alliances with the likes of Pfizer, Croma Pharma and Tubilux Pharma. Still the upfront value B&L is paying NicOx -- just $10 million for a Phase III-ready program -- suggests wariness. (Milestones up the potential deal value significantly to $170 million.) Thetrepidation is probably warranted. Recall that Pfizer lost interest in the program because mid-stage trials suggested modest clinical benefit at best compared to Pfizer's juggernaut Xalatan. That’s relevant because Xalatan will soon go generic; in the current payer-dominated environment, pricy new glaucoma medicines will have to show much better results in the clinic to warrant coverage by managed care plans.

Shionogi/QuatRx: Shionogi's U.S. subsidiary, Shionogi Pharma (formerly Sciele Pharma), acquired global development and marketing rights to QuatRx Pharmaceuticals' selective estrogen receptor modulator ospemifene, building on the company's sexual medicine and women's health portfolio. Shionogi Pharma will pay $25 million upfront and up to $100 million in milestone payments, and it expects to file a U.S. NDA in the second half of 2010 for the treatment of postmenopausal vulvovaginal atrophy. If approved, the once-daily tablet would be the first non-estrogen treatment option for vaginal atrophy; SERMs that are currently marketed in the U.S. have not shown beneficial effect for vaginal atrophy symptoms. QuatRx posted positive Phase III results in January 2008, announcing statistically significant results for all primary endpoints in its first Phase III study. At the time, the company planned to market the product on its own in the U.S. and partner elsewhere. -- Daniel Poppy

Merck KGaA/Millipore: There’s life in the tools sector yet. After disappointing investors with lackluster 2009 financial results, Merck KGaA put its own spin on diversification with a proposed acquisition of Massachusetts-based Millipore for €5.3 billion (US$7.2 billion). The addition of Millipore, which had interest from a number of suitors, adds $1.7 billion in sales to Merck KGaA's coffers and bulks up its chemicals division, which will now be responsible for an estimated 35% of the German firm’s revenues. But the move surprised analysts, in part because it was Merck's non-pharma divisions -- life-science chemicals and liquid crystals -- that had a poor 2009, dragging down overall revenues. However, the acquisition may add the benefit of much-needed biologics manufacturing expertise. Merck's therapeutic cancer vaccine, Stimuvax , is in Phase III clinical trials, and its recombinant protein atacicept is in Phase II/III trials for autoimmune disease. -- John Davis

GlaxoSmithKline/Abbott: As part of an ongoing collaboration, the companies said Mar. 3 that Abbott is developing a molecular test for selecting patients with melanoma who could benefit from GSK’s therapeutic vaccine targeting the MAGE-A3 antigen, which is expressed on melanoma cells but not normal cells. Last July, GSK engaged Abbott to develop a test for the first product expected out of its Antigen Specific Cancer Immunotherapy (ASCI) program: a diagnostic to select patients for its MAGE-A3 ASCI vaccine for non-small-cell lung cancer (NSCLC). MAGE-A3 ASCI is in Phase III trials in both melanoma and NSCLC. The latter study is more advanced, with enrollment slated for completion in 2011. Abbott will have to run separate trials to clinically validate its molecular test for the melanoma indication, and while the target is the same, there may be differences in sample prep because it is assaying a different tumor type. That said, the new development likely says more about GSK’s goals in immunotherapy than Abbott’s already-established skills as a companion diagnostics partner. As we chronicled last summer in IN VIVO, GSK’s immunotherapy program will span almost two decades before an anticipated first approval. Clearly, GSK wants to be comfortably armed with trial data using a validated companion diagnostic when it goes for approval, perhaps having used the Abbott screening test to identify a subset of patients with a sufficiently high delay in time to relapse. -- Mark Ratner

AstraZeneca/Merck: This week AZ officially swung the R&D axe and cut staff in 10 specific disease areas, including depression and anxiety, hepatitis C, acid reflux, and thrombosis. But it's still spending cash on cardio. AZ announced Mar. 1 it would payMerck $647 million to regain full rights to a group of drugs, including marketed hypertension medicines Atacand, Lexxel, and Plendil, plus the potential blockbuster Brilinta currently under review by the FDA and the EMA. Ties between the two big pharmas go back to 1982 when AZ predecessor Astra teamed up with Merck to co-develop and co-market several drugs in the U.S. Astra bought out Merck’s 50% ownership of the joint venture in 1998, setting up a series of option dates on which Astra -- or its successors -- could regain full rights. Thanks to this deal, AZ now owns all products from the JV except those related to the purple pill franchise Nexium and Prilosec. (Those meds are part of a second option agreement which can be exercised as soon as 2012.) Of the marketed products now wholly owned by AZ, only Atacand can truly be considered a blockbuster, with more than $1.4 billion in worldwide sales in 2009. Much of the deal was almost certainly driven by a desire to own full rights to Brilinta, which posted superior results to Sanofi/Bristol’s Plavix in an 18,000-patient trial in November 2009. According to Cowen and Company analyst Steve Scala, Brilinta if approved could generate annual sales of $600 million in 2012 and $1.5 billion in 2015.



Merck/GTX: As we noted in an earlier post this week, sometimes the bear really does get you.

Image courtesy of flickrer connerdowney used with permission through a creative commons license.

DotW: Singing in the Rain

It's raining cash! Hallelujah, it's raining cash!

Forgive us our exclamatory punctuation, but we had a Gene Kelly moment given the number of financings announced this week. From planned follow-on public offerings by Arena and Xenoport to Jazz's private placement to additional fundraises by start-ups Viamet, Taiwan Liposome, Intellikine, and Zosano, it did seem as if the financial heavens opened, raining manna upon the starving in our industry.

Vertex managed to get in on the action, too announcing this morning its intention to sell the future milestone payments associated with the filing, approval and launch of its first-in-class protease inhibitor telaprevir in Europe? (We're still a bit bemused by the pre-deal press release, but admit to being easily confused.)

In any event, this is the kind of rainy weather designed to put smiles on the faces of biotech CEOs. (A far cry from the kind that had some in the Northeast signing up for DIY ark building classes at the local Home Depot.)

It's also raining positive data--at least for Amgen and Rigel. Amgen's stock tipped up on news that the key to its future, denosumab, appears to be superior to Novartis’ Zometa in a Phase III head-to-head study in breast cancer-linked bone complications. And Rigel is positioning itself for a future edition of DOTW after reports that its oral rheumatoid arthritis drug showed positive results in mid-stage trials. (Amylin also annouced positive trial results for its mid-stage obesity drug, but investors didn't swoon on the news primarily because of the delivery challenges associated with a twice-daily injectable.)

This just in: it's raining approvals too. Regulators approved Lilly/Daiichi's anti-clotting drug prasugrel, which will be marketed (effectively we assume) under the name Effient.

Meantime Big Pharma and Big Biotech must be pleased with the innovator friendly proposal by Ted Kennedy this week for a follow-on biologics pathway that includes 13.5 years of exclusivity (What happened to Piven and 10 years?), while believers in personalized medicine see the positives of Francis Collins as the leader of the National Institutes of Health.

What else happened this week? Just a little write-up we like to call


Merck/Portola: Portola is another company soaking up the cash this week, thanks to its deal with Merck for the Phase II Factor Xa inhibitor betrixaban. According to the terms of the deal, announced July 9, Merck will pay $50 million upfront for betrixaban, plus another $420 million in milestone payments and double-digit royalties. It’s the second major collaboration this year for the privately-held Portola. In February, Novartis paid $75 million upfront for rights to the biotech’s anti-thrombotic elinogrel. As news of the Merck deal and it biobucks surfaced, one of the central questions was whether Merck had gotten a relative steal. Recall that Pfizer paid BMS $250 million upfront for a 50% share of the competing molecule apixaban back in 2007. In fairness to Portola, its molecule is at a much earlier stage of development compared to apixiban. Also Merck is picking up 100% of the development costs of the program (Pfizer is paying 60% of apixaban’s R&D costs, while the two pharmas jointly split profits/losses and worldwide commercialization costs.) That’s a real boon for the biotech, given that Phase III trial costs could easily run to $350 million or more. Portola has an estimated $175 million on its balance sheet after the Merck deal and won’t need to hunt for additional capital anytime soon. But if financing risks are off the table, the company’s venture backers, which include Frazier Healthcare Ventures, Alta Partners, and MPM Capital (among others), are still in the hole and waiting for their exit. (The company has raised an estimated $200 million in venture money and another $20 million in debt since its 2003 founding.) And with the company’s two major programs partnered, the pool of potential acquirers has effectively shrunk to Novartis and Merck, who are now waiting to see how elinogrel and betrixaban pan out in later stage trials. With "two, multi-billion dollar products," Portola could be well-received, but for the foreseeable future, the market is "amazingly challenging," Frazier Healthcare Ventures’s Alan Frazier said in an interview with “The Pink Sheet” DAILY.--Ellen Foster Licking and Emily Hayes

MedImmune/Catalyst: Privately held Catalyst Biosciences remains in the news , announcing its second discovery and preclinical development deal in as many weeks. Hot on the heels of Catalyst’s June 30 tie-up with Wyeth to develop Factor VIIa therapeutics for hemophilia, Catalyst and AstraZeneca's MedImmune are working together on an undisclosed target in the autoimmune and inflammatory disease space, with MedImmune holding an option to expand the work to a second target any time during the deal’s three-year term. Financial terms were not broken out, but Catalyst says it could realize $195 million in upfront licensing fees and milestones during the life of the deal. In addition, MedImmune will fund an undisclosed number of full-time research personnel at Catalyst and will pay royalties to the biotech for any product arising from collaboration that reaches the market. As is typical in these kinds of arrangements, Catalyst will be responsible for discovery and early-stage research, and then turn the molecules over to MedImmune for further development. The deal illustrates AstraZeneca/MedImmune’s desire to expand biologics efforts beyond antibodies. Catalyst, after all, has developed a next generation protein engineering platform to create souped-up proteases called Alterases that are designed to degrade or modulate proteins involved in hemophilia and inflammatory disease. With these two recent tie-ups, Catalyst is likely to remain off the Deals of the Week page for some months to come, unless a significant opportunity arises. "We won't do any small deals at this time because we're full-up, plus we have our own internal programs," Usman said in an interview with "The Pink Sheet" DAILY.--Joseph Haas

iZumi/Pierian: It's also raining stem cell news due to this week’s International Society for Stem Cell Research meeting in Barcelona. An early announcement came from iZumi Bio, which has merged with a still-mostly-conceptual outfit out of Harvard called Pierian to create iPierian. As part of the merger—terms were mostly undisclosed—Pierian backers MPM Capital and FinTech Capital Partners are investing $11.5 million in the new company, Pierian’s founders (Harvard faculty members George Daley, Doug Melton, and Lee Rubin) are joining the company’s SAB along with three other Harvard stem cell scientists, and Corey Goodman (Pfizer’s former BBC chief) will become the combined groups’ chairman. MPM’s Ashley Dombkowski will join the company’s board. The company aims to apply its cellular reprogramming technology to create in vitro models of disease that can be used, as a first step, to discover small molecule treatments for neurodegenerative diseases like spinal muscular atrophy and amyotrophic lateral sclerosis. We’ll have more to say about iPierian’s induced pluripotent stem (iPS) cell technology in the next issue of Start-Up. For now, suffice it to say that between these guys and Fate Therapeutics we might have a new Alnylam/Sirna thing going on in the iPS cell space. --Chris Morrison


Shionogi-Sciele/Victory Pharma: Ugly. In mid-May Shionogi’s Sciele announced it was purchasing the privately-held pain specialist Victory Pharma for $150 million. But on July 10, in a tersely worded press release that was short on details but long on mystery, the two companies announced they were terminating the proposed tie-up. The news is a blow to Victory’s backers—Ampersand and Essex Woodlands—who had committed $45 million to the company back in March. (Essex's cash-on-cash return likely wasn't what it wanted, but as we noted in a previous edition of DOTW, the internal rate of return (3x in just a few months) would have been most impressive. What scuppered the deal isn't clear -- “an unforeseen development that occurred after the agreement was signed,” says the press release. So we'll speculate a bit and hypothesize that changing views at the FDA about the potential dangers of acetaminophen and NSAIDs had something to with the deal's collapse. Victory markets Naprelan, the only branded, once-daily sustained release formulation of the NSAID naproxen. And it's in the final stages of securing approval for a new tablet strength version of Naprelan, with an anti-nausea medicine in pivotal trials. In addition to Naprelan, Victory also markets Fexmid and two acetaminophen containing products, Dolgic for tension headaches and Xodol, a combination hydrocodone/acetaminophen product for pain. On June 30, an FDA advisory committee narrowly ruled to recommend the removal of acetaminophen from combination prescription and OTC products. Both Dolgic and Xodol would appear to be affected by the new recommendations, but the fall-out in terms of market potential is likely worse for Xodol since the potential for abuse of the hydrocodone-only containing drug means it will be subject to stricter prescribing limits and potentially a REMS under the new guidelines. And the rug might be pulled out from under Naprelan as well. FDA continues to refer to the "hazards of NSAID products" and recently started requiring REMS for new brands of diclofenac products.--EFL

AstraZeneca/MAP Pharmaceuticals: Poor Map Pharmaceuticals. Shares of the biotech fell 16% and then rebounded Thursday July 9, after partner AstraZeneca announced it was pulling out of their collaboration on the planned development of the pediatric asthma drug budesonide. Recall that AZ and MAP are still newlyweds. Thinking the MAP drug could extend its own budesonide franchise, Pulmicort Respules, the Big Pharma ponied up $40 million upfront and promised biobucks in the $750 million range in late December 2008. The end of the deal isn’t all that surprising: in February, MAP revealed the drug had failed to meet the main goals of a late-stage trial in children with mild asthma. But the obits for the drug—if not for MAP—were swift. “The drug is essentially dead,” Wedbush Morgan Securities analyst Liana Moussatos told Reuters. Analysts like Moussatos expect the news won’t permanently cripple Map, mostly because of promising results associated with the biotech’s orally inhaled migraine drug Levadex, which is in late stage clinical trials. That medicine is still unpartnered and the company has been careful not to speak publicly about any potential future deal other than to say there has been “strong interest from people in the migraine area.” But with an estimated $67 million in cash and a quarterly burn rate of around $16 million, there is pressure on Map to ink a deal for the migraine product sooner rather than later.--EFL

DotW: Damned If You Do, Damned If You Don't

Alliances are a necessary evil.

Despite all the verbiage around the softer virtues of collaboration, the fact is that most companies would just prefer to be left alone. Doing the tango, as the Argentian exhibitors at BIO demonstrated, takes too much work. And frankly costs too much.

Thus this week: Onyx is now suing its partner Bayer for double-crossing it on a next-generation Nexavar (see Ed Silverman's Pink Sheet Daily analysis). Naturally, Bayer would love to find a compound of its own that’s as good as Nexavar and which doesn’t cost it a profit-share. For its part, Onyx says the follow-own is a close chemical brother to Nexavar, discovered as part of the collaboration (well – legally, that is: anything discovered in the field by either company before January 31, 2000 counts as part of the collaboration).

Think about the big acquisitions – most of them are transformations of alliances that looked more expensive than they were worth. Pfizer’s acquisitions of Warner-Lambert and Pharmacia were most fundamentally about the larger company getting 100% of the jointly promoted products (respectively: Lipitor and the Cox-2 franchise, including the star player Celebrex). By our reckoning, Roche’s acquisition of Genentech was fundamentally a response to that extraordinarily successful alliance’s costs – in duplicate infrastructure, royalties, joint decision-making.

And to our minds, the most interesting alliances of the last few months aren’t really alliances but tactics to pool resources without having to actually do all that much ongoing collaboration. The GlaxoSmithKline/Pfizer joint venture in HIV creates an independent company which starts out buying its research from its parents – but can go its own way later. Meanwhile, the Purdue/Mundipharma/Infinity deal seems to be as much an anti-collaboration as an alliance: the funders (Mundipharma and Purdue) basically don’t interfere in any way with Infinity’s research or development or, for that matter, the registration process.

Even most of the option deals we’ve seen recently (and which will be the subject of an in-depth analysis from Ellen Licking in the coming issue of Start-Up) are anti-alliance alliances – the small company does a bunch of work independently; the big company then decides whether there’s enough evidence to buy the thing. Novartis just made that logic explicit – see below in our write-up of its re-arrangement with Elixir.

Novartis announced another variation of the non-alliance alliance this week in its re-structuring of its respiratory collaboration with Schering-Plough. Which is probably a good deal to start with in this week’s edition of ...

Novartis/Schering-Plough: Why share two pies, when you can have one each? Especially when each gets to eat the one it prefers. Novartis and Schering-Plough this week undid two previous co-development and co-commercialization deals around two respiratory combination drugs, each agreeing to instead take full rights to one.

In what’s essentially an un-deal, Novartis gets exclusive worldwide rights to develop and market QMF 149, a fixed-combination of its own indacaterol (a long-acting beta-2 adrenergic agonist) with Schering-Plough’s inhaled corticosteroid mometasone (un-doing this 2006 deal). Schering-Plough, meanwhile, gets similarly full rights to a combination of mometasone with Novartis’ formoterol, another long-acting beta-2 adrenergic agonist (un-doing this 2003 deal).

It’s certainly neat—no money changed hands according to Novartis’ CEO and Chairman Dan Vasella, who added that “we wanted to complete that disentanglement.” Indeed, history has shown that co-developments, co-promotes, co-anything is generally more complicated and likely to end in tears than a pure-play effort—particularly perhaps in this case with newly-enlarged Schering-Plough (though the parties had been discussing this divorce well before the Merck merger was announced, according to Vasella).

Behind what looks like a tidy sharing of the booty, we’re sure there’s some small print (or an awfully complicated equation around the sales-based royalty-sharing arrangement on the compounds). But by and large, it appears that Schering-Plough was happy to accept a later-stage compound (Phase III completed) with less risk and cost to come, in exchange for granting Novartis a combo that’s still in Phase II, but which uses Schering-Plough’s Twisthaler device.

Novartis is taking on more cost, then, but reckons it’s worth it to build up its own respiratory franchise around indacaterol (currently under review as a standalone, and a component of other development combos including one with a compound from UK biotech Vectura)—and to avoid the tangles of co-development and co-commercialization. – Melanie Senior

Shionogi-Sciele/Victory Pharma: And you thought the Chinese were financing the US economy. The Japanese have spent more than $18 billion buying US and European biopharmaceutical companies since 2007. And if you figure CV Therapeutics wouldn’t be part of Gilead had not Astellas launched its hostile bid, well, add another $1.4 billion to the total. Now some more deals – Takeda’s acquisition of IDM (see below) and Sciele’s $150 million acquisition of Victory Pharma, bankrolled by Sciele’s still brand-new owner, Shionogi. Essex Woodlands and Ampersand had committed $45 million to the company back in March – which means that, at least for Essex (Ampersand had been in the company longer, through an acquisition), its IRR on the deal has got to be pretty impressive (and its limiteds pretty happy with the new fund). Indeed, Essex is one of those venture funds sitting pretty right now -- $900 million in a new fund, mostly raised pre-crash, and half a dozen exits over the past year or so (most recently from Dow Pharma for Valeant’s $285 million plus earnouts and – ok, sort of an exit – its $100 million option-to-sell Ception to Cephalon). Essex has been focused on growth companies (revenue generating and close to, or at, profitability, like Victory). But with all that cash, a plethora of cheap deals, and most of the early-stage venture guys sitting on their hands, Essex is probably going to move further upstream and start bankrolling some of those discovery guys.

GSK/Oxford BioTherapeutics: Bankrolling discovery is exactly what GSK has been doing with its seemingly neverending string of option-alliance deals. But this one announced early in the week by Oxford BioTherapeutics has a bit of a twist: GSK will be doing some of the early stage work itself, generating antibodies to oncology targets provided by OBT. GSK will also get an exclusive option to license a monoclonal antibody that OBT will develop through to clinical proof-of-concept. OBT got an undisclosed up-front payment and will receive clinical, regulatory and commercial milestones plus a double-digit royalty on any sales for products OBT took to POC, and single-digit royalties on GSK mabs against OBT targets. If GSK opts out of any programs, OBT has the option to pick them up. OBT's target expertise comes from its Oxford Genome Anatomy Project database, which it calls the world's largest cancer protein database. OBT has one other antibody discovery deal, with Amgen, signed back in 2007 when OBT was still Oxford Genome Sciences.

Takeda/IDM Pharma: It's roughly a week until ASCO and--here's a surprise--cancer immunotherapy is back in the news. But even though Dendreon's positive Provenge results prove naysayers wrong (for now--the drug still isn't approved) Big Pharma is still in "show me the data'' mode when it comes to this novel form of therapy. The upshot? Companies can find partners--or even buyers--but those deals aren't likely to happen until there's been a major de-risking of the compound. That was the case this week for IDM Pharma.

On May 18, Takeda announced it would acquire the immunotherapy developer for $75 million. The Big Pharma waited until the biotech's novel therapeutic for osteosarcoma, Mepact, was approved by European regulators. That Takeda held off until there was regulatory approval shows that you can teach an old pharma new tricks. Recall that last year Takeda bet $50 million on a partnership with Cell Genesys for its GVAX vaccine for prostate cancer. Let's just say things didn't exactly work out as planned; by year's end the two parties had called off the realtionship, thanks to the failure of GVAX.

For IDM Pharma, the news couldn't have come at a better time. About a week ago, the struggling biotech disclosed first-quarter earnings, noting cash and cash equivalents of $7.4 million as of March 31, down from $12.8 million at the end of last year. To survive, IDM shut down all development programs except Mepact and slashed staff headcount from 80 to 15.

Cancer vaccine makers probably shouldn't expect partners to come courting just because the field's seen one small-ish deal. While Takeda's interest in Mepact was great, IDM's other products, which include a dendritic cell-based melanoma vaccine called Uvidem, were less appealing because of their risky profile, according to the deal's orchestrator, Anna Protopapas, SVP corporate development at Takeda's Millennium Pharmaceuticals unit.

Interestingly, this is the first deal Protopapas and her team have announced since Takeda purchased Millennium for nearly $9 billion one year ago. Thus far, the aim to run Millennium as a stand-alone biotech seems to be working. We aren't exactly sure if Millennium is the Takeda oncology company or simply a Takeda oncology company, however. A closer look at the Mepact arrangement has Takeda Cambridge, the drug firm's European outpost, handling the immunotherapy's commercialization, not Millennium--which also happens to be in Cambridge--Ellen Licking.

Novartis/Elixir Pharmaceuticals: Another week, another option based deal. On Tuesday, Elixir announced that it had granted Novartis the option to acquire the biotech in a deal worth more than $500 million. The acquisition is dependent on Elixir's ability to move it's preclinical oral diabetes drug--a ghrelin antagonist--through successful Phase IIa trials. The announcement was actually just one of two made by Elixir: in addition to Novartis staking a claim on the company, the Novartis/MPM side-fund, which was created in 2007 as an attempt to more closely align Novartis' corporate venture and business development efforts, participated in the biotech's $12 million Series D.

This is actually the second option style deal Elixir has done with Novartis. Back in 2007, Novartis/MPM invested in the biotech, with Novartis taking an option on a different program--a ghrelin agonist. As part of the agreement announced earlier in the week, the two companies have terminated their earlier pact, and all rights to the oral ghrelin agonist compound revert to Elixir.

The equity financing, plus the non-dilutive funding from the option (believed to be nominal--we couldn't identify the actual amount Novartis paid on top of the financing to acquire the company though we tried), put Elixir in a far more secure cash position. According to Elixir's CEO, Paul "Kip" Martha, the company was one of many in the industry operating with less than six months worth of cash. "This is a dramatic turn-around for us," he said in an interview with IN VIVO Blog.

This is the third option-style deal Novartis has done since the start of 2009 and its structure recalls almost exactly the March deal brokered for the rights to acquire Proteon, which is developing a recombinant human elastase designed to improve the outcome of arteriovenous fistula procedures in patients with end-stage renal disease. It used to be hammering out the terms for these kinds of arrangements was tough--traditional VCs and biotech CEOs worried that the option might cap a company's upside. That's less of a concern these days when cash is a biotech’s most important resource; thus, CEOs have accepted the hard reality that non-dilutive funding now and the greater certainty of a deep-pocketed partner or buyer in the future outweigh the potential reduction in overall deal economics necessitated by option arrangements.

Finally this tie-up highlights a potential advantage of the option structure--keeping a Big Pharma engaged and potentially deepening the relationship. In 2007, Novartis's option was much more limited--it was strictly a licensing deal. This latest announcement suggests Novartis is impressed enough with Elixir’s pipeline that it sees value in owning the company outright--Ellen Licking.

Johnson & Johnson/Cougar Biotechnology: Finally, we should note that this has been -- on the investment front -- a relatively good week for biotech. We haven't seen this many acquisitions for a while. And thus, last night, J&J provided us with a pleasant send-off for the Memorial Day Weekend: its $870 million acquisition of Cougar (for more in-depth comments, see this post from earlier today).

Image from Flickr user Mike "Dakinewavamon" Kline used under a creative commons license.