Deals Of The Week Wonders What Merck's Latest Biosimilars Move Really Means

Ever since Merck jumped into the biosimilar field in 2008 with a ferocious go get ’em attitude more fitting of an NFL tackle than a big pharma, we’ve been following their progress – and then lack of progress – closely. Back when most pharmaceutical manufacturers were still griping about defending their biologic brands, Merck’s early aggressive ambitions made an interesting case study in how a big pharma might strike offensively by positioning itself as a contender in the biosimilar space.

So the company’s announcement Feb. 20 that it has partnered with Korea’s Samsung Bioepsis to develop multiple undisclosed biosimilar candidates, while delivered quietly in a concise statement, struck us as a noteworthy change in strategy.

You didn’t have to read tea leaves to see that Merck’s original strategy wasn’t working out. In 2008, Merck established a business unit devoted to the field and pledged to invest $1.5 billion and launch six or more biosimilars between 2012 and 2017. But last year, as we reported here, the company closed Merck BioVentures, the unit it created devoted to biosimilars, and folded the research into biologics and vaccines at Merck Research Labs. And Mike Kamarck, the charismatic proponent of biosimilars who led Merck’s charge into the field, left the company.

Now, we can’t help but wonder what the latest announcement means for Merck’s biosimilar strategy.
Is it a reaffirmation of the company’s commitment to biosimilars, albeit through a more modest path, or is Merck effectively washing its hands of biosimilars while still holding out for some hope of an eventual commercial reward? Samsung will be responsible for preclinical and clinical development, manufacturing, clinical trials and registration of any candidates, while Merck will commercialize the products. It’s not clear how much Merck is putting behind the effort either, as the financials of the deal were not disclosed; Merck is paying Samsung an upfront and has agreed to milestones.

Merck declined to offer further insight on the move, but said the deal with Samsung will complement its internal effort. The only biosimilar Merck has in its internal pipeline that has been publicly disclosed, however, is a copy of Roche/Biogen Idec’s Rituxan, the one drug Samsung Bioepsis won’t be developing because the company – formed in 2011 out of joint venture between Samsung Biologics and Biogen – won’t make any biosimilar versions of Biogen products.

Given Merck’s inability to get new drugs to market of late, the decision to take a contract research approach to biosimilars may be the best way for Merck to hold onto the potential commercial upside of biosimilars without the investment internal development requires. Merck ran into the field at high speed, and we admired their optimism, but given the evolving regulatory and commercial dynamics, a cautious path may be the wiser one.

And let’s not forget why the decision to jump into biosimilars was easier for Merck to make than for some other big pharmas: Merck never had a history in biologics and hasn’t traditionally had treasured blockbuster biologic brands to protect. It gained some knowledge of the field and rights to Remicade in certain territories outside the U.S. through its mega-merger with Schering-Plough. But it’s hard to envision Merck’s inexperience as a competitive advantage in a notoriously difficult field like biologics. Development and manufacturing is just as hard for biosimilars, even when manufacturers have a reference molecule to use as a road map.

Three years after the U.S. government laid a regulatory framework for biosimilars, no applications have yet been filed through the new pathway with FDA. Today, while Merck has adopted a more subtle tone when it comes to biosimilars, Amgen – a biologics expert – is crowing about its grand ambitions for the field.

Roche/Chiasma: Roche and privately held Chiasma Inc inked a deal Feb. 18 to develop and commercialize the Israel-based biotech’s proprietary pill Octreolin, initially for acromegaly and, afterwards, for neuroendocrine tumors (NET). Their pact brings a new Phase III drug to Roche’s pipeline, targeting both an oncology (NET) and non-oncology indication (acromegaly). It gives Roche worldwide exclusive license to Octreolin, and Chiasma receives upfront payments of $65 million and future milestone payouts of up to $530 million, along with tiered, double-digit royalties on Octreolin net sales. Roche said it decided to partner with Chiasma and commercialize Octreolin in part because of the convenience and improved quality of life an oral therapy might offer patients. The pill may consequently command a higher price to injectables and there appears to be little oral competition on the horizon near-term. Delivering octreotide orally twice daily would be a major advantage for patients with acromegaly as they would avoid the painful monthly injections involved in current treatment options such as Novartis' Sandostatin LAR. - Sten Stovall

Chiesi/Cornerstone: Cornerstone Therapeutics’ majority shareholder is looking to buy out the company. North Carolina-based Cornerstone announced Feb. 20 that it received a letter from its majority shareholder – Italy’s Chiesi Farmaceutici – offering to buy the remaining outstanding shares of the company. Chiesi offered $6.40 to $6.70 per share for the 40% of the company it doesn’t already own – valuing the specialty pharma at $177 million. In a letter from Chiesi to the board of directors of Cornerstone, Chiesi’s CEO Ugo Di Francesco said the company “has adequate liquidity available and excellent relationships with our banks to effect an all cash bid.” Di Francesco added that Chiesi has “conducted an extensive review of Cornerstone based on publicly available information, our own deep experience in the pharmaceutical industry and consultations with our outside advisors.” The Italian drug maker plans “to move promptly” in regard to the bid “and is committed to working vigorously and expeditiously with [Cornerstone] to complete a transaction.” Cornerstone said in a statement that “no decisions have been made by the board of directors with respect to Chiesi’s proposal.” The two companies paired up in May 2009 when Chiesi granted Cornerstone an exclusive U.S. license to sell its porcine-derived lung surfactant Curosurf (poractant alfa) for a 10-year period. In return, Chiesi took an equity stake in the company that now accounts for a 60% share. - Lisa LaMotta

Janssen/Pharmacyclics/Abbott: Partners Janssen Biotech and Pharmacyclics will work with Abbott to develop a molecular diagnostic test to identify patients with a genetic sub-type of chronic lymphocytic leukemia (CLL). Abbott will develop the test using its proprietary FISH (fluorescence in situ hybridization) technology; the test will identify hard-to-treat CLL patients who have a deletion within chromosome 17p (del17p). These patients are likely to respond to ibrutinib, a small molecule inhibitor of Bruton tyrosine kinase (BTK). At the American Society of Hematology conference in December, the partners presented positive Phase Ib/II data in a subset of relapsed/refractory CLL patients with the 17p deletion. The partners have an ongoing Phase II trial for ibrutinib in CLL patients with the 17p deletion. The company expects enrollment in this trial will take about 12 months to complete. On Feb. 12, FDA granted breakthrough designation to ibrutinib to treat two B-cell malignancies: relapsed or refractory mantle cell lymphoma (MCL) and Waldenstrom’s macroglobulinemia (WM). This could mean an approval for ibrutinib as soon as early next year. Pharmacyclics’ share price has been on a white-hot streak since last May, climbing more than 200%. News of the breakthrough designation bumped shares up about 20%. Details of the Abbott partnership remain undisclosed. - Stacy Lawrence

Eisai/Valeant: Valeant Pharmaceuticals announced Feb. 21 that it has acquired U.S. rights from Eisai Inc., the U.S. subsidiary of Japan's Eisai Co. Ltd., for cutaneous T-cell lymphoma treatment Targretin (bexarotene). Eisai received $65 million up front and is eligible for additional payments tied to undisclosed milestones. In March 2011, Eisai granted exclusive rights to Minophagen Pharmaceutical to develop and commercialize Targretin in Japan, expanding that agreement in April 2012 to cover Asia, Oceania, the Middle East, Eastern Europe and other regions. And in a deal similar to the Valeant agreement, in December 2012, Eisai sold U.S. commercial rights to Gliadel Wafer (carmustine) for glioblastoma to Arbor Pharmaceuticals. Gliadel and Targretin are aging products. However, the company’s cancer pipeline – oncology is 70% of Eisai’s revenues – has shown recent signs of stumbling. Farletuzumab, which entered Eisai’s pipeline with its 2007 acquisition of Morphotek, demonstrated disappointing results last January in platinum-sensitive ovarian cancer, not meeting the primary PFS endpoint in its first Phase III attempt. And Halaven (eribulin), approved in the U.S. in 2010 for metastatic breast cancer, missed its primary endpoints last year in a head-to-head Phase III superiority study against Xeloda (capecitabine). Much of the excitement around eribulin at the time of its approval was the likelihood of extending its label, which is now drawn into question. Eisai said the deal with Valeant would maximize the product’s value in the U.S. It went on to add that the agreement would enable Eisai to “strategically reallocate resources to other mid-to-long-term business growth areas” but it didn’t elaborate. As for Valeant, this deal continues its strategy of acquiring what it considers to be undermanaged commercial assets. - Mike Goodman

UCB/ConfometRx: Belgium’s mid-sized pharma company, UCB, is to link up with the Santa Clara, Calif.-based G-protein coupled receptor (GPCR) structural biology firm, ConfometRx, to discover new drugs in UCB’s sweet spot, the neurosciences. As often stated, GPCRs are the target for 25%-30% of marketed products, but GPCR research is hampered by the difficulty in extracting active receptors from cell membranes for use in research and drug screens. ConfometRx is developing crystallization techniques for GPCRs to make the screening process easier for GPCR-targeted drugs and antibodies. The two-year, multi-target research collaboration between UCB and ConfometRx is intended to gain insights into modulating GPCR targets in order to design differentiated drugs, the companies said Feb. 21. ConfometRx will receive an upfront payment, research funding and milestones, but further details of the agreement were not disclosed. UCB is building “super-networks” of innovation, which include tie-ups with Harvard University and the University of Oxford’s medical sciences division over the past three years. ConfometRx already is collaborating on various GPCR-related research projects with Bristol-Myers Squibb, Novo Nordisk and Lundbeck, while other companies active in providing research insights in the GPCR space include Heptares Therapeutics of the U.K., France’s Domain Therapeutics and San Diego-based Receptos. - John Davis

Photo credit: Wikimedia Commons

Deals of the Week Has Playoff Fever and Poison Ivy

Deals of the Week! doesn't usually get up on our soapbox and complain unless it's to gripe about undisclosed deal terms, vaguely worded press releases, or an unwillingness to make CVRs tradeable.

But c'mon, pharma, it's time to develop some new products against poison ivy.

This week we saw loads of deals -- alliances, options, out-licensing, deals, deals, and tweaked deals and no-deals. But were any of them around poison ivy treatments? No. A quick search of clinicaltrials.gov for 'poison ivy' or the dreaded 'urushiol' turn up zilch. Our own databases reveal very little poison ivy dealmaking in the past twenty years. Did Project Bioshield or any of its ilk fund research into this scourge? Nope. This makes no sense. If this blogger's back yard is anything to go by, the market will be huge.

Now please excuse us while we scratch the hell out of our legs and go invest another $50 in bandages and feeble lotion at CVS. Oh, and go Phillies!

You're gonna need an ocean of ...

Fate Therapeutics/Becton Dickinson: Fate Therapeutics of San Diego will bring its induced pluripotent stem (iPS) cells to market thanks to a commercial deal it signed with biomedical equipment provider Becton, Dickinson, the firms said Oct. 14. No financial terms were disclosed, but BD will pay Fate an upfront fee, research funding, commercial milestones and royalties on the products BD sells. Fate is one of a handful of biotechs reprogramming adult cells into iPS cells -- an alternative to stem cells derived from human embryos -- with the goal of using iPS cells as lab tools for drug discovery. BD will be responsible for commercial-scale cell production and marketing. In an interview with the IN VIVO Blog, Fate CEO Paul Grayson declined to say specifically when the cells would reach the market. The partners will only sell what Grayson called "plain vanilla" iPS cells, not yet differentiated into various cell types. Fate is working on differentiated cells but for now keeping them for internal use. With the BD deal, Fate becomes the second firm to sell iPS cells. Cellular Dynamics, spun out of the pioneering Wisconsin lab of James Thompson, has been selling iPS-derived cardiomyoctes for nearly a year. -- Soon to be Disappointed SF Giants Fan Alex Lash

Exelixis/BMS: In a turbulent year during which it changed CEOs and laid off staff, Exelixis’ low point might’ve come in June, when key partner Bristol-Myers Squibb Co. walked away from the companies’ agreement to co-develop Phase III cancer-fighting drug XL184. Yet the two are already working together on new programs in diabetes and inflammation: In a series of deals announced October 11, BMS said it would pay $60 million upfront for exclusive development and commercialization rights to a preclinical Exelixis diabetes program that includes the TGR5 agonist XL475, as well as the right to collaborate on a discovery-stage inflammatory disease program centering on RAR-related orphan receptor antagonists. Milestone payments could add $505 million to the deal, plus Exelixis would garner royalties if the programs produce marketable drugs. Simultaneously, BMS and Exelixis said they would unwind some existing oncology agreements; Exelixis opted out of a co-development arrangement on Phase Ib cancer drug XL139 in exchange for a milestone payment, while BMS waived its final option on a 2006 deal covering three targets. The deals bring much-needed cash to the notoriously spendy Exelixis, which despite some recent cost-cutting is now shouldering the high cost of moving XL184 forward by itself.--Paul Bonanos

Merck/Lundbeck: With a large number of atypical antipsychotics competing for attention, any new entrant will have an uphill battle to gain traction, and so Merck has called in the cavalry. The Big Pharma has licensed to CNS-specialist H. Lundbeck exclusive commercialization rights to its recently approved Sycrest (asenapine) for all markets outside of the US, China and Japan. The Danish company paid an undisclosed upfront fee for the rights, and will also make product supply payments to the US company. Asenapine was launched in the US as Saphris by Merck last year, for schizophrenia and for mania associated with bipolar disorder, but has so far disappointed. Making matters trickier in the EU, the schizophrenia indication was turned down in there because regulators were not convinced of the agent's clinical effectiveness. -- John Davis

Lundbeck/Genmab: When you have a product that accounts for around half of your revenue, and that product is nearing patent expiry, you know you have your work cut out for you. Lundbeck, whose antidepressant Cipralex/Lexapro (escitalopram) accounted for 56% of its revenues in the first half, announced last month that it wanted to work with more external partners, and would cull some of its own researchers, as part of a new R&D strategy. The first fruits of this new policy were seen this week, in the Merck deal noted above and in a tie-up with fellow Danish firm Genmab, which will create novel human antibodies to CNS targets identified by Lundbeck. Genmab will receive an upfront payment of €7.5 million and, if the collaboration is successful, it could receive €38 million in milestones, and single-digit royalties as well. Genmab has an option to pursue non-CNS leads that it identifies during the course of the work, and in that case would pay milestones and royalties to Lundbeck. Genmab has been through a torrid time in the past few months, and wants to use its antibody research capabilities as a “profit center, not just a cost center,” according to newly appointed CEO Prof. van de Winkel. -- JD

Pfizer/King: In its first “bolt-on” acquisition since the mega-merger with Wyeth last year, Pfizer has reached an agreement to purchase King Pharmaceuticals for $3.6 billion. The deal, announced Oct. 12, is subject to a tender offer under which Pfizer would buy up outstanding stock in King for $14.25 a share – a 40% premium over the specialty pharma’s closing price on Oct. 11 – but both companies’ boards have agreed to the sale, with closing anticipated in fourth-quarter 2010 or the first quarter of next year. In recent months, Pfizer has outlined a strategy for bolstering its finances prior to the U.S. patent expiration of Lipitor late next year under which it would look for transactions valued at between a few billion to several billion dollars that complement the company's core businesses and add incremental revenues. King will bring to Pfizer a narrow portfolio of highly specialized pain therapies and a well-trained specialty sales force, as well as Remoxy, a tamper-resistant formulation of oxycodone under review at FDA. Pfizer believes King offers commercial synergies: some of King's drugs can be dropped into the Big Pharma's primary care sales force bags, an area where Pfizer is strong and King is not. Pfizer's two key marketed pain products, Lyrica and Celebrex, in turn, can benefit from the support of King's specialized sales force; currently Pfizer's detailing emphasis for them is on primary care doctors. –Joseph Haas and Wendy Diller

UCB/Synosia: An accomplished in-licensor of pharma's unwanted assets, Synosia Therapeutics has finally found itself on the other side of a deal: On Oct. 12 the biotech said it out-licensed its two lead Parkinson's disease candidates, SYN-115 and SYN-118, to Belgian CNS specialist UCB, which will conduct Phase III clinical trials and commercialize them. The companies will also set up a broader alliance, under which compounds from either group will be evaluated by Synosia through to the end of Phase II, at which point UCB will conduct further development and commercialization. In return for rights to the two Parkinson's disease products, UCB will make an undisclosed upfront payment and pay regulatory and commercial milestones, which could give rise to an additional $725 million in funding for Synosia. UCB has also led a $30 million series C funding in Synosia with an equity investment of $20 million. The other $10 million came from existing investors, which include Versant Ventures, 5AM Ventures, Novo A/S, Aravis Venture, Investor Growth Capital and Swiss Helvetia Fund. The deal goes some way toward validating Synosia's in-licensing strategy: '115 and '118 came from Roche and Syngenta, respectively. -- JD

Novartis/Immunogen: Last week we at IVB rhetorically asked one another: where are all the deals in antibody-drug conjugation technology, an exiting area seemingly bereft of deals lately. Well well. Just like that, antibody-drug conjugate developer ImmunoGen licensed its platform technology to Novartis for $45 million upfront to create enhanced cancer-fighting antibodies against unspecified targets of Novartis's choosing. ImmunoGen would get up to $200.5 million in milestones for each target that leads to a conjugate, plus royalties on sales if the drugs reach the market. Announcing the deal Oct. 11, the companies declined to say how many targets Novartis has rights for, but ImmunoGen retains ownership of the cytotoxic small molecules and chemical linkers plus other know-how that it contributes to each therapeutic. The Novartis deal comes just as ImmunoGen and Roche released promising interim Phase II data for T-DM1 in first-line treatment of HER2-positive metastatic breast cancer. That compound, a combination of ImmunoGen's small molecule maytansinoid DM1 and Roche/Genentech antibody Herceptin (trastuzumab), is currently industry's most advanced ADC candidate. --S.t.b.D.S.F.G.F.A.L.

Mingsight/Pfizer: Big pharmas are in the throes of revamping their R&D pipelines and that means deprioritizing certain assets. But does that mean outlicensing? Maaaybe. An analysis in the soon-to-be-published October IN VIVO shows that outlicensing volume has declined dramatically since 2007, when a total of 54 programs from big pharma, big biotech, and specialty players were offloaded to new partners. This year through August 31, there have been only 10 such deals. But for the VCs and biotech execs looking to jump-start a newco with already validated molecules, this week’s alliance between Pfizer and MingSight proves that outlicensing in the biopharma wilderness, truly a rare bird, does still exist. MingSight, a still stealthy biotech with bases of operation in both China and San Diego, has acquired exclusive worldwide rights to two preclinical compounds from Pfizer that are being developed as treatments for diabetic retinopathy, and potentially uveitis and dry eye. Under the terms of the agreement (which really weren’t disclosed in any substantive way), MingSight has agreed to pay Pfizer an upfront fee, paid in the form of cash and a convertible note, as well as development and sales related milestone payments, and royalties on future sales. MingSight’s dual citizenship is noteworthy; this kind of hybrid approach, with its emphasis on keeping R&D burn low by moving the work to the still lower-cost China, is becoming an increasingly attractive model in the start-up arena, where the mantra of the day is capital efficiency. In-licensing has been the model du jour for founding ophthalmology companies for much of the past decade, as companies look to repurpose drugs that have already been vetted in preclinical or clinical studies in non-ophthalmic indications for use in the eye.—Ellen Foster Licking

Ablynx/Merck-Serono: Ablynx has proven to be the master of Merck-Serono's domain (antibodies) as the two companies are doubling down on their collaboration in the space. On Monday Ablynx announced it would receive €10 million up-front to develop its proprietary Nanobody domain antibodies against a M-S nominated inflammatory disease target. Ablynx will hand off the package to M-S at the IND stage, handling all discovery and preclinical activities (and covering costs, excluding manufacturing costs) on its own. When (if?) Merck-Serono takes over Ablynx will receive a €15 million milestone and can opt-in to a 50/50 co-development deal on the project -- if not, Merck gets worldwide rights and Ablynx will receive milestones and royalties down the road. The companies have been working together since September 2008, on two targets in oncology and immunology. -- CM

image by flickr user cygnus921 used under a creative commons license

2009 M&A/Alliances DOTY Nominee: GSK/UCB

It's time for the IN VIVO Blog's Second Annual Deal of the Year! competition. This year we're presenting awards in three categories--that's 300% more fake prizes than last year!--to highlight the most interesting and creative deal making solutions of the year. The categories are: Big Pharma Deal of the Year, M&A/Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (roughly half a 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™.


OK, it involves some far away places we never think of – even beyond the fabled BRIC countries. But the January deal in which GSK paid UCB $670 million for commercial operations in more than 50 non-core countries, as well as rights to sell some primary care drugs in those territories, could be the IT deal of 2009.

After all, it captures so many of 2009's biggest trends: the land grab in emerging markets, the tug of regionalization versus globalization, the ongoing shake up in primary care, and diversification--the bluster of the big versus the commitment of the focused.

On one level, the deal shows how two companies with very different strategies are reacting to the mania about emerging markets. GSK is looking to be a geographically diversified global provider of medicines at all price points to as many countries as possible—and says its far-flung infrastructure, deep pockets, and global expertise make it the go-to company for late-stage deal-making in emerging markets. In other words, it can be a Big Brother.

UCB, on the other hand, is concentrating on what it does best: it is in effect taking a "master craftsman" approach. At a fraction of the size of GSK or other Big Pharma, it can't be everywhere selling everything. And so, it is joining a small, but important group of biopharma—including the much bigger Bristol-Myers Squibb and Lilly—that has chosen to intensify its focus rather than diversify. It recently repositioned itself as a spec pharma focused on CNS and inflammatory diseases and is extending that idea globally.

GSK's funds enable UCB to pay down its burdensome debt by shedding non-core assets—which were attractive enough for GSK to pay nearly 4X sales. UCB is not giving up on emerging markets, by any means, and still plans to sell specialty drugs in the BRIC countries, along with Mexico, Canada and South Korea. But it won't be stuck with infrastructure or products it can't afford.

GSK is another matter. Even as it cuts expenses in its Western markets, it is bulking up in emerging markets, where antiquated Western terms like "sales force arms race" and "shortage of human capital" –are real business concerns, not just pleasant reminders of the now-gone good old days in the West.

And that strategy is based on fortifying its product portfolio with a series of deals in the mature products and primary care sectors of the pharma industry; the assets UCB sold to GSK include rights to the anti-epileptic Keppra and the allergy drugs Zyrec and Xyzal in certain countries in Africa, the Middle East, the Asia Pacific region and Latin America.

GSK is being ultra-aggressive: along with Sanofi it's been a high-profile deal maker in emerging markets in 2009. Pre -2009, GSK was a player in four of the 10 fastest-growing therapeutic areas in the Middle East and North Africa. Now, the company is in nine of the top 10 therapeutic areas in those countries—a stat it's been communicating as it circles the globe for partners.

Eventually, it expects doors in emerging countries to open for its novel, proprietary specialty drugs. Meanwhile, it, like others, is making hits of some of primary care drugs that are flailing back home, for in emerging markets, primary care drugs still have good value. Hard to believe, but GSK's second largest product in emerging markets is the antibiotic Augmentin, which is growing 30% a year, even as it faces competition from 15-20 generics--people there are so eager for quality, they're willing to pay more out of pocket for branded, proprietary drugs, despite generic alternatives. Now that's a market worthy of a land-grab, and a deal worthy of IVB's Deal of the Year.

image from flickr user mondayne used under a creative commons license.

FDA Gives Cimzia the Thumbs Up in RA—At Last

UCB’s Cimzia deserved a break. After a troubled developmental and regulatory history (read about it here and here) the drug finally received FDA approval for RA today, earlier than most expected, and with a label that analysts describe as “the best possible.”

Brussels-based UCB received a complete response letter for the pegylated anti-TNF antibody in January, requesting a new safety update. That led most analysts to predict approval towards the end of this year at best—even though UCB had submitted its safety update at the end of April. Nor had anyone held much hope of approval with a pre-filled syringe and the option of dosing both fortnightly or once-monthly, since neither were tested in all Phase III trials. The approval grants both.

That’s lucky, since UCB will need all the tail-wind it can find to gain market share in a highly competitive market. Already on the market since last May for Crohn’s disease, Cimzia will be the fifth anti-TNF in RA, joining well-established incumbents including Abbott Laboratories’ twice-monthly Humira, which sold over $1 billion in the first quarter of this year, and Johnson & Johnson’s recently-approved once-monthly golimumab (Simponi). Humira’s pre-filled syringe formulation has already given it a huge lead over J&J/Schering-Plough’s Remicade, which is given by infusion. As such, “we have cautious expectations for Cimzia,” writes Piper Jaffray’s Richard Parkes, adding that the drug might eventually garner a 5% share of the RA biologics market, or about €593 million in peak sales.

But UCB is doing its damnedest to trump even Humira’s pre-filled syringe with a device, developed in conjunction with consumer products company OXO, that it describes as state-of-the-art. According to the press release, it’s ‘easy-to’ everything: open, grip, plunge, read….in sum, it’s a device designed to make self-injection as simple as pie for RA patients.

UCB isn’t solely banking on super-duper finger grips and easy-to-push syringe plungers to provide sufficient differentiation versus Simponi, and on a once-monthly dosing option to help it steal share from Humira, though. “We’ll sell it on efficacy,” a company spokesperson told The IN VIVO Blog, pointing to the drug’s fast-onset and long-lasting effects that result from its being the only pegylated anti-TNF. “I think it will go beyond $1 billion,” the spokesperson continues.

That would certainly be nice, since UCB faces a tough 2010, with its biggest-selling epilepsy drug levetiracetam (Keppra) facing generics in Europe (it’s already generic in the US), allergy drug levocetirizine (Xyzal) losing exclusivity in the US (and in the EU in 2011), and a loss of royalty income inherited from its 2004 acquisition of Celltech.

“You don’t have to be first to be best,” points out UCB, and that’s true. It’s also true that docs are calling for more choice in a market that’s growing, and where many patients don’t respond to existing drugs. But it will be an uphill battle for UCB even with a favorable label and a snazzy device—particularly now, when even Humira is suffering a growth slowdown as patients back away from pricey biologics.

UCB is desperate to prove the skeptics wrong. “I don’t blame them [the analysts] for their caution,” says the spokesperson, given Cimzia’s dodgy track record with FDA. But now that it’s through, UCB’s 150-strong US RA sales force is in place and the drug will go to its first patient within 24 hours, the company says. “We’ll prove we can get more than 5% market share,” the spokesperson says. “We’ll walk the talk.”

image of delirium tremens (belgian ale) by flickr user Nic Launceford used under a creative commons license

Shire: Switching Attention to Europe and RoW

“I’m very confident that this year we’ll consummate some more deals,” said Shire CEO Angus Russell at a lunch announcing the group’s full-year results yesterday. And why shouldn’t he be? The company generated $1.2 billion cash last year (while driving a 27% increase in product sales and a 36% step-up in non-GAAP earnings per share).

The deals have started, with today’s announcement that Shire is to acquire worldwide rights (ex-US, Canada and--of course--Barbados) to Equasym IR and Equasym XL for treating Attention Deficit Hyperactivity Disorder. This hasn’t exactly made a dent in the $1.2 billion—Shire will pay the seller, UCB, just €55 million in cash, which is just over three times the products’ 2008 net sales, plus undisclosed milestones if pre-defined sales targets are met.

So it’s a tiny deal (New River it ain't), but a tidy deal: UCB divests drugs (and 20 sales personnel) in markets that aren’t core to it, furthering its focus on "bringing new innovative medicines to people living with severe neurological conditions,” according to Troy Cox, President CNS operations for UCB. (And indeed, the Equasym drugs –which are immediate release and extended release methylphenidate hydrochloride—aren’t innovative, and ADHD doesn’t really classify as a severe neurological condition. That said, UCB’s hanging on to the US market, where the drug is sold as Metadate CD and competes with the likes of Ritalin and Concerta.)

But for Shire, the products fit right in. The group is already a leader in the US ADHD market, with sales of almost $1.5 billion last year. They came from lead drug Adderall XR (a mix of amphetamine salts, likely to face generics from April 1 this year), newly-launched Vyvanse, to which Shire is busily converting Adderall XR patients—pricing it at half the cost of A-XR helps!--plus capturing a growing adult ADHD market given Vyvanse’s 13-hour plus duration of action, and Daytrana, a methylphenidate patch. Equasym fills out the armamentarium.

But most importantly, it provides a bridge into Europe, where Shire doesn’t currently sell any ADHD drugs (the Adderalls were never approved in the EU, where the disorder was only much more recently recognized as a medical condition). This deal helps the company prepare for Vyvanse’s European launch, planned for 2011. And although the products are currently sold in European markets, buying worldwide ex-US rights provides Shire with a cheap, established treatment that may be more suited to some developing markets.

By 2015, Shire hopes to have reduced its dependence on the US and top five European markets—which accounted for 70% and 25% of total 2008 sales, respectively—and to have quadrupled its share-of-sales from RoW markets to 25%. It isn’t alone in understanding where future industry growth lies. The move into BRIC countries will be spearheaded by Shire’s Human Genetic Therapies franchise, the new star of Shire’s show, expected to account for 30% of net sales by 2015, up from 18% today. This makes sense, given that HGT products—such as, for instance, enzyme replacement therapy Elaprase for the rare Hunter Syndrome) are high margin and require little infrastructure.

But for all the value in reducing its dependence on ADHD and on Adderall XR (a dependence long perceived by analysts at Shire’s Achilles heel), the company’s not going to ignore its core as it diversifies geographically—especially as many of its non-HGT products, as cheaper, non-biologicals, may better suit BRIC economies. Phosphate-binder Fosrenol, whose growth is shrinking in the US given competition from Genzyme, will be a close second candidate in the international push. Its sales grew 55% ex-US last year. The company also plans international launches this year for ulcerative colitis drug Mezavant.

“How to develop in those markets [like BRIC countries] that want cheap medicines....when we sell expensive treatments for rare diseases...is a [business development] challenge we’ll be addressing this year,” Russell told The IN VIVO Blog yesterday. Indeed it is.

DotW: The Inaugural Edition

It may have been a short week stateside, but it certainly wasn't devoid of news. Americans reveled in the opportunity to feel smug as they watched the peaceful transfer of power from Bush II to Obama, our nation's first African-American president.

They also got a civics tutorial thanks to Supreme Court Justice John Roberts's mangling of the historic oath--an event that confirmed our inalienable right to boldly split infinitives, according to Harvard psychology professor and chairman of the American Heritage Dictionary Usage Panel Steven Pinker.

To stamp out conspiracy theories, Chief Justice Roberts and President Obama took a mulligan on the solemn vow. In a private ceremony held Wednesday night, the two Harvard braniacs faithfully--and slowly--repeated their duet in the White House Map room.

Here in biopharma-land, meanwhile, a number of companies boldly muddled along...if not where no man has gone before. In a show-down of the diversified giants, Abbott took the bragging rights from J&J--at least in terms of quarterly earnings reports. One day after J&J announced less than stellar news, Abbott announced that its fourth-quarter net income jumped 28% to $1.54 billion, helped out by increased sales of the company’s Xience heart stent and Humira arthritis drug.

Meantime the lackluster economy has forced smaller players to take a hard look at their assets and either off-load them to interested parties for a song (Panacos, see below), fold-up shop (Akesis), or find ways to spin them off (e.g. Abraxis's announcement of its intention to create Abraxis Health).

Oh, and did we mention Pfizer's desperate attempt to avoid falling off the patent cliff?

According to Article Two, Section One, Clause Eight of The IN VIVO Blog Constitution, this blogger does solemnly swear to faithfully execute--and even execute faithfully--the office of under-paid analyst, bringing context and snark to the week's most important deals...

Pfizer/Wyeth: Okay, maybe we ought to peg Pfizer's rumored interest in Wyeth as a future deal of the week. Rumors have been circulating for months that Pfizer was interested in buying Wyeth or Bristol-Myers Squibb or ImClone Systems or... pick your favorite company and insert name here. Speculation of an impending deal intensified on Friday when the WSJ reported that unnamed sources close to Pfizer and Wyeth had confirmed the two companies were in negotiations. The proposed take-out price for Wyeth? Somewhere north of $60 billion.

There are lots of arguments against this mega-merger. For starters, it seems entirely antithetical to the new business model structure Pfizer created just last fall, which puts a premium on flexibility and quick decision making. At a time when Pfizer is already over-infrastructured, the addition of whatever-remains-post-synergizing of Wyeth's more than 50,000 employees and additional facilities seems counter-intuitive -- or at least a move back to the future (remember Pharmacia and Warner Lambert?)

Nonetheless, such a deal may be the only possible way Pfizer can recoup sales as its flagship brands Lipitor, Aricept, Geodon, and Caduet go generic in the 2011 - 2012 time frame. According to Credit Suisse analyst Catherine Arnold, Pfizer is on track to lose 70% of its 2007 revenues by 2015. And it's possible to make the case that as tortured as the Pharmacia acquisition was for Pfizer -- largely thanks to the post-Vioxx collapse of the Celebrex business, for which Pfizer had bought the company in the first place --that deal and the mammoth take-out of Warner-Lambert for full rights to Lipitor ensured Pfizer's continued existence as a corporate entity. In a Jan. 23 research note Sanford Bernstein analyst Tim Anderson summed up Pfizer's spot between Scylla and Charybdis: "Is buying Wyeth an ideal solution for Pfizer? No, but we're not sure Pfizer has any other realistic choice."

So what would Pfizer get for its $60 billion? Biologics and vaccines, including the controversial Phase III bapineuzumab and the pneumococcal conjugate vaccine Prevnar. Perhaps as importantly, the move would allow Pfizer to surreptitiously re-enter the consumer health biz after selling its stake in that arena to J&J in 2006. Pfizer's premature exit from the consumer business is one that has apparently caused much hand-wringing, especially given J&J's success launching an OTC version of Zyrtec.

And it's probably a mistake to assume that Pfizer intends to handle this merger the way it has previous big take-outs. In addition to the normal cost-cutting efforts that accompany such moves, Pfizer may try and bundle unwanted assets together and spin them off (that Pfizer hasn't yet managed to spin off the assets it's already said it was going to spin off does, however, make us wonder about the likelihood of even bigger deals). Still the move comes at a curious point in time. Even though Pfizer has plenty of cash on hand, it seems likely that it will have to finance the deal with at least some debt. As executives at Roche and Teva well know, accessing that amount of capital ain't easy these days. And granted Pfizer does pull the financing together -- what effect will that have on its already threatened dividend...the generous size of which is the only reason a lot of investors are holding the stock.

Teva/Lonza:Big Pharmas interested in follow-on biologics better watch out. Even as companies such as Merck, AstraZeneca, and GlaxoSmithKline attempt to develop their FOB strategies, Teva took a step this week to solidifying its position as a leader in the biosimilar movement. On Jan. 20, the world's largest generic company announced a tie-up with the privately held Swiss contract manufacturing group Lonza. Financial details of the partnership were lacking, but the companies, who will develop, manufacture, and market "generic equivalents" of selected biological products, expect to begin their collaboration some time this quarter. Teva indicated its intent to compete in the US biosimilars market in early 2008 when it purchased privately-held CoGenesys for it's next-generation protein fusion technology. If that deal added novel biologics capabilities, Teva's subsequent acquisition of Barr seven months later gave the company considerable muscle in the space, providing a means to extend the Israeli firms's valuable Copaxone franchise. The Lonza tie-up, meanwhile, ensures Teva will have the requisite capacity it needs to make a big splash in FOBs as soon as a US pathway for their approval is achieved. That could happen in 2009 given the health care goals of the incoming Obama Administration and Henry Waxman's leadership position at the House Energy & Commerce Committee.

GSK/UCB: GlaxoSmithKline's continued interest in emerging markets is illustrated in its Jan. 23 €505 million deal with UCB for that mid-sized European's commercial operations and product distribution rights in selected Far Eastern, Middle Eastern, Latin American and African markets. The UCB deal follows on GSK's earlier "transformational deal" with Aspen Pharmacare Holdings as well as its $210 million and $36.5 million acquisitions of BMS’s Egypt and Pakistan businesses. The moves are part of a broader diversification strategy that also includes bulking up on consumer medicines. The overarching goal: to be less reliant on risky traditional pharma R&D output and collect some more stable and reliable--if less exciting--revenue streams. But this is more than a geographic strategy to breathe new life into so-called mature (a nice way of saying generic) products. There is clearly a recognition by many Big Pharma that their continued future growth depends on developing successful sales outlets in rapidly developing countries where rising incomes and the lifestyle changes that come with them have resulted in a steep increase in chronic diseases such as hypertension and obesity, as well as the economic wherewithal to treat said conditions. If they can develop those sales channels now, while simultaneously extending the runway for their older products, why wouldn't they? The choice to play in emerging markets is tougher for a smaller specialty-focused plays like UCB, however, which run the risk of spreading themselves too thin if they try to play in all world markets. Better to be targeted—focusing on the countries most likely to give steady revenue growth nearer term. Indeed, that’s likely why the tie-up with GSK explicitly excludes hot emerging markets such as Brazil, Russia, India, and China, as well as Mexico and South Korea. Moreover, UCB has made sure to retain worldwide rights to "core products" such as Vimpat, Neupro, and Cimzia.

Myriad Pharmaceuticals/Panacos: As Myriad Pharmaceuticals prepares to spin out from parent Myriad Genetics, it strengthened its clinical pipeline with a deal that illustrated the value-for-money available thanks to the troubled economic climate. For just $7 million--and no downstream sales milestones or royalties--the company in-licensed all rights to Panacos Pharmaceuticals' Phase II HIV maturation inhibitor, bevrimat. It's been no secret that Panacos has suffered its own economic woes: as of late November that company had just $4.7 million in cash after paying Hercules Technology Growth Capital $17.9 million to resolve a dispute over whether the biotech had defaulted on a 2007 loan. But even as the news broke that Panacos was off-loading its promising product at a fire-sale price, the Watertown, MA-based biotech attempted to dispel rumors that additional, darker announcements were forthcoming. "We now turn our full attention to our other promising HIV programs and seeking additional financing and partnerships to continue the development of our spectrum of HIV programs," Panacos CEO Alan Dunton said in a release. Although financially healthier than Panacos, Myriad has had its own troubles, including the spectacular failure of its Phase III Alzheimer's Disease drug Flurizan. The growing divide between the Salt Lake City biotech's profitable testing franchise, which includes BRACAnalysis, Colaris, and Melaris, and the money-losing pharmaceutical division pushed the company to announce its intention in October to spin out Myriad Pharmaceuticals. As it takes baby-steps toward an independent future, the subsidiary has pared its clinical focus to focus on infectious disease and oncology. Importantly, Panacos's bevrimat nicely complements the company's preclinical and Phase I HIV maturation inhibitors MP-461359 and Vivecon.

Tragara/S*BIO: Singapore-based S*BIO announced a licensing deal with San Diego-based Tragara for its multi-kinase inhibitor for leukemia, SB1317, on Jan. 21. The back-end loaded deal could total as much as $112.5 million for S*BIO: it includes an undisclosed upfront fee, plus sales milestones and double-digit royalties should SB1317, which appears to work via a unique mechanism involving both the cyclin dependent kinase pathway as well as the FLT3 pathway, make it to market. While the up-front money is presumably not outstanding, the deal is a major milestone for S*BIO, which was founded in 2000 as a joint venture between Chiron (now part of Novartis) and the Economic Board of Singapore, for it represents the Singapore biotech's first outright licensing deal. Just two weeks ago S*BIO signed another agreement--an option-type arrangement with Onyx Pharmaceuticals related to two JAK2 inhibitors. As our sister publication PharmAsia News notes, the most recent deal has S*BIO handing over all IND-enabling development and commercialization to Tragara. Pharmas and biotechs have been looking to the Far East as a means to outsource their manufacturing and IND-enabling chemistry for some time. But drug firms haven't necessarily gone East in search of innovation (one notable exception: Eli Lilly which has teamed up with Hutchison MediPharma on some early stage development work).

Photos courtesy of flickr users scarlatti2004 and Mike Licht through a creative commons license.

Well-Traveled GSK Bulks Up Again in Emerging Markets

Today’s announcement that GlaxoSmithKline would pay €505 million for UCB’s commercial operations and product distribution rights in selected Far Eastern, Middle Eastern, Latin American and African markets shows in some ways just how irrelevant many emerging markets will be to some specialty pharmaceutical companies.

UCB is in the midst of implementing its so-called SHAPE program, a restructuring that will focus the company on "its core areas in CNS and immunology and to strengthen its presence in strategic markets," which to be sure include the hot emerging markets of Brazil, Russia, India and China, as well as Mexico and South Korea, which are all excluded from the GSK deal. The deal also excludes UCB's "new core products," Vimpat, Neupro, and Cimzia.

GSK, on the other hand, has shown itself to be an aggressive acquirer of emerging market businesses in the past year, and we're not just talking the so-called BRIC countries. Besides today's UCB deal, over the past few months GSK signed what it called a "transformational agreement" with the South African generics company Aspen Pharmacare Holdings and followed up with the $210 million and $36.5 million acquisitions of BMS’s Egypt and Pakistan businesses.

It's tempting to chalk all this up to the Brits' love of travel, but truth be told, the moves are part of a broader diversification strategy that also includes bulking up on consumer medicines. The overarching goal: to be less reliant on risky traditional pharma R&D output (where GSK's ongoing CEDD-based experiment continues--read more in next month's IN VIVO) and collect some more stable and reliable--if less exciting--revenue streams.

Bulking up in emerging markets--which are growing at a much faster clip (albeit from a tiny base compared to established markets) than the US and Europe--is a long-term strategy that relies primarily on marketing mature, often generic, products. Focusing on high-margin specialist products for niche indications--an increasingly popular strategy among pharmaceutical and biotech companies alike--puts many emerging markets and their enormous growth potential in a kind of commercial blind spot.

For smaller companies this is of course pretty much irrelevant. For mid-sized firms like UCB, hanging onto a presence in the larger BRIC countries is likely enough--provided patients there can afford your drugs. But for those behemoths with large primary care portfolios and the quickly approaching patent cliff to navigate, emerging markets are both the silver lining and an increasingly important source of revenue. GSK is wise to keep collecting those customs stamps.

image from flickr user mondayne used under a creative commons license.

DotW: The Hype Machine

It's J.P. Morgan time. And as the immortal James Brown sang (or did he shout): "Get on up, Get on up. Stay on the scene, like a hype machine."

Okay, so the lyrics were a tad different. But you get the point. The impending JPM meeting is THE industry confab, and if ever our industry needed a little boost of hype--kind of like Botox--it's now.

A report in Friday's VentureWire confirms what START-UP readers already knew: venture capital needs a plan B. Meanwhile, companies such as Wyeth and Merck are ramping up their diversification spin, in part because of the continued troubles associated with bringing traditional pharmaceuticals to market.

Perhaps it was the holiday break...or perhaps companies felt the need to generate their own buzz ahead of JPM, but IVB couldn't help but notice a torrent of deal-making news this week. (Maybe folks want to get an early start on IVB's 2009 Deal of the Year Award.) Not to toot our own horn, but we weren't just ahead of the news, we made news with the signing of Pharmalot blogger, Ed Silverman. Consider this your official welcome, Ed.

Moving on... at least four companies emerged from stealth mode this week: Anaphore, FORMA Therapeutics, Kolltan Therapeutics, and Satori, and its likely these companies and their backers will find their dance cards full in San Francisco.

We suspect the JPM presentations of Wyeth, Genentech and Roche will also be packed. Genentech and Roche because people are still itching to know if the biggest potential deal of 2008 will actually come to fruition in 2009. Wyeth because of news leaked earlier this week indicating its interest in vaccine maker Crucell.

But until the full assault on your liver begins--we know you really go to JPM for the presentations (wink wink)--we bring you this interlude. Our own analysis of the week's hype, pulled together by an able team of writers from "The Pink Sheet" DAILY, PharmAsia News, and the greater IN VIVO Blog team.

UCB/Wilex: In a deal structure that might best be described as double-jointed, Belgian pharma UCB and German oncology-focused biotech Wilex have entered a risk-sharing partnership in which Wilex will develop UCB’s preclinical oncology pipeline with UCB holding repurchase rights for each program. Under the terms, UCB has granted the rights to five preclinical oncology programs to a new legal entity wholly owned by UCB and funded with €10 million. Wilex, in turn, will acquire the entity in a process that involves issuing about 1.8 million new shares. As a result of the deal, UCB will own 13 percent of Wilex. UCB can buy back the programs after first clinical feasibility studies finish, and take over development and commercialization, in which case Wilex would get milestone payments and royalties. If UCB opts not to re-purchase, Wilex keeps rights and pays milestones plus royalties to UCB.
The shrewd risk-and-cost-sharing arrangement helps UCB handle its delay of the rheumatoid arthritis drug Cimzia, stalled earlier this month by a complete response letter from FDA. UCB said the collaboration will enable it to focus on its own R&D priorities, especially central nervous system and immunology therapies. Reminiscent of prior deals between Genentech and Xoma and Lilly’s risk- and reward-sharing deal with India’s Nicholas Piramal, the UCB/Wilex tie-up may provide a template for future deal-making in the industry--Joseph Haas.

Johnson & Johnson/Vanderbilt: Dealing with last year’s loss of exclusivity for its schizophrenia drug Risperdal, Johnson & Johnson is turning to an academic partner in an effort to develop novel therapies for that disease. What’s unique, though, is that Vanderbilt University’s Program in Drug Discovery will advance the collaboration’s compounds to the IND stage before J&J affiliate Janssen will step in to continue development. As reported by Reuters and the Wall Street Journal, Vanderbilt gets $10 million upfront from J&J in exchange for exclusive worldwide license to compounds university researchers have developed to target a neurotransmitter receptor. J&J will fund research for three years, during which time it will have the option to license new discoveries produced by the effort. Per the agreement, Vanderbilt could realize up to $100 million in milestones through the collaboration. J&J, which has launched its own generic version of Risperdal along with a long-acting formulation of the drug, may be especially desperate to find new schizophrenia candidates, since its own candidate, paliperidone palmitate, has been stalled at FDA due to a “complete response” letter--Joseph Haas.

Alnylam/Cubist: We can only assume that having won our 2008 Deal of the Year award for their tie-up with Takeda, execs at Alnylam are addicted to the rush. The RNAi licensor extraordinaire starts the year with more news: a co-development and profit-sharing collaboration for its respiratory syncytial virus program, including Phase II candidate ALN-RSV01. In a Jan. 9 note, Rodman & Renshaw lauded the deal, noting its similarity to the Alnylam/Takeda deal. Cubist, which has launched its once-daily anti-bacterial Cubicin with seven commercialization partners worldwide, will pay Alnylam $20 million upfront for worldwide commercialization rights to the RSV program, excluding Asia, where Kyowa Hakko Kirin holds rights. Alnylam also could receive development and sales milestones up to $82.5 million along with double-digit royalties. Alnylam is currentlyinvestigating ‘RSV01 in adult lung-transplant patients, but the larger opportunity is children and high-risk adults. AstraZeneca’s Synagis, an RSV prophylactic, is nearing blockbuster status--Joseph Haas.

Merck/Galapagos: Belgium’s Galapagos, already partnered with Lilly in osteoporosis and Boehringer-Ingelheim in autoimmune disease has struck a target discovery platform deal with Merck to seek novel therapies for obesity and diabetes. Merck, which has been aggressive in lifecycle management efforts for top diabetes products Januvia and Janumet, will pay Galapagos €1.5 million upfront ($2.01 million) along with discovery, development and regulatory milestones that could pass €170 million ($228.3 million) for multiple products. For any product that reaches market, Galapagos will also be eligible for unspecified sales milestones and royalties. Using its proprietary SilenceSelect platform, Galapagos will perform preclinical research on targets selected by a joint screening committee. Merck then will have the option to take candidates produced by this process into development, although Galapagos may perform some Phase I clinical studies and will retain development and commercialization rights to any compounds Merck does not pick up. The back-end loaded nature of the deal shows the power Big Pharma partners have to set deal terms in the current environment. However, we aren't surprised to see Galapagos in the news since it's one of Europe's star biotech companies--Joseph Haas.

Endo/Indevus: Endo’s $370 million acquisition of Indevus will enable the former to move into new therapeutic areas while helping the latter get its hypogonadism injectable, Nebido, to the finish line at FDA. Nebido, a long-acting testosterone product, has been held up at FDA due to safety concerns about injection-related cough. Endo's purchase involves more than half of the $632.9 million it had on hand as of Sept. 30, and also calls for $267 million in milestones. The goal of the combined company is to create a specialty powerhouse, with sales force teams dominating in three areas: urology, enodcrinology, and pain. Currently Endo markets overactive bladder therapies Sanctura and Sanctura XM, advanced prostate cancer drug Vantas, central precocious puberty drug Supprelin LA, and hypogonadism product Delatestryl. Indevus plans to resubmit its NDA for Nebido by the end of this quarter and says FDA ultimately will be comfortable with the drug’s risk-reward profile--Randall Osborne.

Roche/Plexxikon: In its second major deal with Roche, Plexxikon gets $60 million upfront and the opportunity for $275 million in milestones plus double-digit royalties in exchange for worldwide exclusive rights to PLX5568, an Raf kinase inhibitor in Phase I for polycystic kidney disease. Plexxikon expects to begin Phase II study of ‘5568 this year and notes about $100 million in milestones is tied to development markers. The biotech also gets U.S. co-promotion rights for the compound in indications other than PKD. The high-value deal shows that Big Pharma remain willing to pay handsomely for early-stage assets--a phenomenon we first discussed in this 2006 feature. As "The Pink Sheet" DAILY noted, privately-held Plexxikon, which was founded in 2001, has done an amazing job of raising non-dilutive financing. Still, we can't help but wonder if the firm's venture backers, which include Pappas Ventures, Alta Partners, and Advanced Technology Ventures, are hankering for an exit. If so, it will be interesting to see if the most recent tie-up with Roche limits the biotech's options. In a better financial climate, Plexxikon would have been a perfect IPO candidate. But with the IPO window firmly shut, exit by acquisition is the only game in town. Roche has a history of trying before it buys--GlycArt, anyone--but if it doesn't bite, other Big Pharma might be hesitant to pay big bucks for a company whose major programs are already off the table--Emily Hayes.

Onyx/S*BIO: This week Onyx Pharmaceuticals inked a potential $550 million deal with Singapore’s S*BIO to co-develop two Janus kinase inhibitors. S*BIO gets $25 million upfront and can receive up to $525 million in equity purchase, options and license fees over the life of the deal, which covers Phase I candidate SB1518 and preclinical SB1578. Onyx gets rights to develop and commercialize the JAK inhibitors for any indication in the U.S., EU and Canada, while S*BIO, which would receive double-digit royalties on Onyx’s product sales from the partnership, is still free to develop and partner the compounds elsewhere. SB1518 is in Phase I for myelofibrosis, with data expected mid-year, and Phase II expected to begin later in 2009. SB1578 is expected to reach the clinic in 2010--Tamra Sami.

Boston Scientific/Labcoat: UPDATED. Information was missing from the previous edition due to an editing error. Bonus device deal of the week! (Who says we only cover biopharma?) If you are impressed with the sharp color images or photo resolution you get from your printer, imagine using the same technology to paint coronary stents with a thin coating--think less than one micron--of a biodegradable polymer and drug formulation. That's the technology Boston Scientific acquired when it bought Galway-based Labcoat this week. With this deal, BSC is looking to maintain its current market leadership position in drug-eluting stents by employing Labcoat's novel coating technology for its next-generation devices. Boston currently has more than 50% of the US DES market through its unique two-drug strategy that employs both paclitaxel and everolimus on its current Taxus and Promus stents. Concerns raised in recent years regarding the risk of late stent thrombosis from DES have caused companies to look back to the good old days of bare-metal stents. Efforts are now underway to minimize the amounts of drug and polymer necessary to prevent restenosis in such stents. The Labcoat deal represents Boston's first efforts with a bioerodable polymer, which the company plans to employ on its next generation Element stent platform. Labcoat's approach applies the polymer and drug--and only small quantities of both--to the outside of the stent, thereby minimizing the amount of both substances on the stent's inner surface where endothelial cell growth is required for healing. Moreover, as the polymer degrades, the end result is a bare-metal stent--Steve Levin.

DotW: The Heat Is On

The temperature has been hot--and so has the deal-making. We counted at least 273 deals in the past five days. Not really. We actually stopped counting on Tuesday because there were already too many to keep track of. And that was before the week's biggest deals: the Ranbaxy/ Daiichi Sankyo and Invitrogen/ Applied Biosystems tie-ups (see below).

It's an odd week for heavy deal flow, coming so quickly on the heels of the ASCO and ADA meetings and in advance of next week's shin-dig in San Diego. But perhaps the soaring temperatures provided various biz dev teams no incentive to leave their nicely air-conditioned offices. And maybe this was a way for Invitrogen execs to ensure that the masses came to their tacos and beer party next week. (BIO Nebraska's Omaha steak fete and Positively Minnesota's raffle for a universal electronic charger offer stiff competition, after all.) Alternatively, it's possible staffers were simply jonesing to play BioRad's shoot-em-in gene transfer video game.

Other news hot off the computer screen? AstraZeneca is burning up the competition when it comes to market share in China, according to this Wall Street Journal article. And employees at Jazz Pharmaceuticals, Schering Plough, Mylan, GlaxoSmithKline, and Sanofi-Aventis are on the hot seat: all firms announced lay-offs this week. Perhaps the job cuts include the people responsible for the name of Sanofi-Aventis's new injectable insulin, Apidra. Doug Farrago, MD, a hilarious, disruptive physician, lambasts the company in this YouTube send-up.

Need to cool off? By all means, dive in to another edition of ...

Genentech/Symphogen: Danish polyclonal antibody play Symphogen said on Tuesday that it was collaborating with Genentech in the infectious disease space. The three-undisclosed-target deal has a total potential value of $330 million inclusive of an upfront payment, equity investment and milestones, and grants Genentech worldwide exclusive license to any candidates. This is the first external demonstration of Genentech’s stated commitment to developing large molecules against infectious diseases and Symphogen’s third deal, but by far the biggest validation of its Symplex and Sympress technologies.

Janssen/Astex: Johnson & Johnson’s Janssen Pharmaceutica is taking a license to Astex Therapeutics’ novel fibroblast growth factor receptor (FGFR) inhibitor program and is starting new discovery programs on two additional drug targets. The deal, announced Monday, sees Janssen paying $37 million in upfront, cash and equity payments and research funding to Astex as well as potential milestones and royalties. Janssen’s Ortho Biotech arm is responsible for all preclinical and clinical development on all three programs. Astex retains an option to co-commercialize any FGFR projects in the US. Astex CEO Harren Jhoti, PhD, told IN VIVO’s sister publication “The Pink Sheet” Daily that the lead FGFR program is only at the lead optimization stage but given the strong interest in the program—which, he says, is highly specific and should therefore avoid side effects that have hindered other firms’ efforts—“we were able to command pretty significant financials.”

Daiichi Sankyo/ Ranbaxy: On Wednesday, Daiichi announced it had agreed to buy a 34.8% stake in Ranbaxy from the Indian company's founders, the Singh family. The company will finance the acquisition--priced at a handsome 31% premium to Ranbaxy's closing price Tuesday--with a combination of cash and financing. Analysts reckon the combined company will be worth about $30 billion and called the transaction "bold and entirely out of character." Unlike Japanese brethren Takeda and Eisai, which have inked their own multi-billion dollar transactions in recent months to increase R&D capabilities and a US presence, Daiichi chose to invest in a company focused primarily on generics and geographically situated in a very important emerging market. The deal could also give Daiichi an important leg-up in its home generics business. According to an article published on in-Pharma technologist's website, Alan Thomas, IMS Japan's global account director, compared with the rest of the world, Japan has an extremely high proportion of brands that have come off patent - 41 per cent - but an extremely low generic penetration on the market - at only 3.4 per cent. And Japan's generics industry is expanding at an annual rate of nearly 9%. That may seem like small pills (er, potatoes), but it's currently the fastest growing segment of that country's drug business. Seems like there are now two clear schools of thought in pharma, those pursuing a focused approach (Bristol-Myers Squibb and Takeda have both made important moves in this direction) and those pursuing a diversified strategy – Novartis and now Daiichi. Perhaps Pfizer is interested in jumping on the diversified bandwagon? The Business Standard reported late Thursday that Pfizer may bid for the 65 per cent non-promoter stake in Ranbaxy.

UCB/ Otsuka Pharmaceuticals: Daiichi wasn't the only Japanese pharma gunning for a deal this week. The smaller company Otsuka Pharmaceuticals teamed up with UCB to co-promote the Belgian firm's anti-epileptic drug Keppra and the anti-TNF alpha drug, Cimzia for the treatment of Crohn's Disease. UCB and Otsuka will also co-develop and co-promote both medicines in other indications, while UCB will join Otsuka in co-promoting the anti-platelet agent Pletaal to selected accounts for a limited period. Deal terms were definitely on the small side: UCB receives up-front and milestone payments of up to €113 million, as well as funding for clinical development. Contrast that with Takeda's February deal with Amgen, where the deep-pocketed pharma paid out $300 million up-front, or the company's early April deal with Cell Genesys worth $50 million up-front and likely a great deal more for a Phase III immunotherapy product.

Invitrogen/ Applied Biosystems: Invitrogen offered to acquire Applera Corp.'s Applied Biosystems Group for $6.7 billion, in a move that would unite major players in the life-sciences tools field to create an end-to-end outfit that can tap into the very hot personalized medicine market. Applied Biosystems produces advanced instrumentation, while Invitrogen makes chemical kits that help analyze DNA samples. The companies hope that combining their specialties will better serve their overlapping customer base. Invitrogen CEO Greg Lucier said the complementary product lines would create a company "unrivaled in the world" for the breadth and depth of its life-sciences capabilities, but investors didn't buy the heady language, sending Invitrogen shares down $4.62, or 11%, to $38.73 Thursday. The WSJ reports that Alastair Mackay, of Garp Research & Securities Co. in Baltimore, said it isn't clear how well the merged entity will fend off competition from rivals such as Roche's Molecular Diagnostics division and Illumina. It's an interesting twist in what has been a long and storied history for Applera, which also owns Celera, once hoped to be a premiere pharmaceutical player that has retrenched to focus on diagnostics. The merger of Invitrogen and Applied Bio is consistent with a trend we've been watching for some time--the migration of tools companies into the testing market. (For more, read here.) Still, the new entity won't be competitive with Celera in the short run. Invitrogen/ Applied Bio signed a non-compete agreement with Celera in the specific areas where Celera is on or near market with products. Still executives claimed on the conference call announcing the news that this “won’t constrain the company” in terms of its diagnostic ambitions.

(Photo courtesy of Flikr user Roger Smith via a creative commons license.)

Cimzia Launch: Nothing Simple About It

When UCB Pharma CEO Roch Doliveux delivered a status report to shareholders 10 days ago on the company's progress in transitioning to life after Zyrtec, one detail caught our eye: he crowed about UCB's ability to launch the TNF inhibitor Cimzia just 48 hours after approval.

In a follow-up press release, the company even identified the first patient to receive the drug!

You can understand UCB's excitment. The Cimzia approval for Crohn's disease was a much needed dose of good news, driving shares up 20% overnight, and surprising a lot of skeptics who wondered whether the drug would make it to the US market anytime soon. (And, yes, we certainly didn't expect it to be approved this soon.)

So a little cheerleading is understandable. But there are at least two reasons why UCB's rapid launch of Cimzia is worth further reflection.

First, it was not so long ago that product launches typically came weeks or even months after FDA approval. Before the beginning of the user fee era 15 years ago, the agency truly was a black box, where sponsors would have no way of knowing when (or if) FDA would be giving an answer. So valuable patent time would tick away while the sponsor digested the approval, scaled up manufacturing and prepared promotional materials for a launch.

Now, full-scale launches within hours of approval are routine. That is the value of the predictability and transparency of reviews in the user fee era. And that is a reminder of what is at stake if FDA fails to maintain that predictability during a period of intense strain. (Read more about how FDA is struggling to preserve predictability even as it plans to miss more user fee deadlines here.)

But there was nothing routine about the Cimzia review, and that is the second reason why Doliveux is right to applaud the work that went into the rapid launch. The Cimzia team faced an unprecedented challenge in getting the drug into the hands of patients: it is the first new molecular entity approved by FDA subject to the new Risk Evaluation & Mitigation Strategy and mandatory post-marketing commitment requirements of the FDA Amendments Act signed into law in September 2007.

The world has changed considerably since Cimzia was first submitted to FDA in early 2006. Its not just that UCB had to create a risk management plan for the drug; that has become a standard approach for many pharma companies for several years.

But it had to take that program and adapt it to the new REMS model, while the application was pending. Indeed, UCB did not know for certain earlier this year whether the REMS provisions would even apply to its product: that section of the law took effect in March, but FDA and industry have an extra six months to convert existing risk management plans into formal REMS. The law said nothing about pending applications; in the event, FDA decided to apply the new legal procedures to Cimzia.

So, not only did UCB have to design a risk management program--which it is calling CIMplicity--that would be robust enough to please FDA, it needed to ramp it up and roll it out on launch. That seems like enough reason to brag about getting the drug out in 48 hours. But doing all that while working through the uncertainy of the regulatory framework for the program is even more impressive. UCB had to stay abreast of FDA's thinking on whether and how the new law would apply to its product, and then make sure to involve everyone in the company who needed to sign off on a formal commitment to comply with the terms of the REMS.

Add to that the now mandatory post-marketing study requirements, another new challenge UCB had to navigate. According to FDA's approval letter for the product, UCB agreed to half-a-dozen post-marketing trials, signing off on them just two weeks before approval.

These are not the "we'll give it our best shot" pledges industry is used to in Phase IV, but legally binding agreements enforceable with fines. So when UCB agreed on April 8 that it would conduct a 10-year, 4,000-patient observational safety study, this was not a simple matter of giving FDA whatever it wants--this is a large undertaking that needs a great deal of organizational support.

So Doliveux is right to shower praise on the Cimizia launch team. The risk management plan may be called CIMplicity, but when it came to getting this product to patients in 48 hours, there is nothing simple about it.