Deals Of The Week: Can Endo Succeed By Copying The Valeant Model?

Santa’s sleigh may be loaded to the brim with gifts come Christmas Eve but it was Deals of the Week that carried a heavy load during the final full business week before the Yuletide holiday. That’s roughly 20 business development transactions, and counting, for the week of Dec. 16-20 as this column went to press.

Below are some of the highlights, but let’s start with the latest stocking-stuffer at Endo Health Solutions, which has always relied on deal-making to fill its pipeline but may be poised to increase its prior business development pace since Rajiv De Silva signed on as CEO from perpetual deal-maker Valeant Pharmaceuticals in February. On Dec. 16, Endo agreed to acquire NuPathe and its recently approved sumatriptan patch, Zecuity, for $105 million upfront plus potential contingent payments pegged to future sales of the migraine product.

This closely followed the Nov. 5 $1.6 billion buyout of Canadian specialty pharma Paladin Labs, a move that would expand Endo’s international footprint to Canada, South Africa and Mexico, while providing tax advantages by allowing the suburban Philadelphia company to re-domicile in Ireland. It’s been a frenetic pace since De Silva took over and moved toward a Valeant-like pursuit of expansion via M&A activity.

While Wall Street did not rave about the NuPathe acquisition, perceiving it as mainly the acquisition of a single asset likely to post smallish sales but also enhance Endo’s pain product portfolio, analysts told Deals of the Week they approve of De Silva’s approach to re-making Endo.

“I actually like the strategy he’s pursuing,” said UBS Investment Research analyst Marc Goodman. “De Silva came in and said ‘we need to restructure this place first because our costs are out of whack with our revenues.’ That’s pretty much the same thing Valeant did a few years ago. The second thing he did was look at the assets and ask what they wanted to be in and what they didn’t. They decided to get rid of [urological services provider] HealthTronics, so that’s on the block. And it wouldn’t surprise me if in 2015 or afterward, once they fix [medical device unit] AMS that they sell AMS.”

Speaking to the Credit Suisse Healthcare Conference Nov. 12, De Silva said plans to divest HealthTronics, termed “not … a strategic fit with us anymore,” are making solid progress. “We have retained an investment bank and we are in the midst of doing management presentations and are optimistic about the level of interest that has been expressed so far,” the exec said. He didn’t address any plans to sell off AMS but said that apart from its women’s health offerings, the unit is showing quarter-to-quarter performance improvement, including year-to-date revenue growth compared with 2012.

The $105 price tag for NuPathe works out to about $2.85 per share. But if Zecuity, approved by FDA in January but not yet launched, meets certain sales thresholds, NuPathe investors stand to get additional payouts. They’ll get $2.15 per share if net sales of Zecuity top $100 million during any four-quarter period up to the ninth anniversary of the first commercial sale of the product. And they can obtain an additional $1 per share if the product reaches $300 million in sales during a four-quarter period during that same time span.

The only FDA-approved prescription patch for migraine, Zecuity is a disposable, single-use, battery-powered transdermal patch that delivers sumatriptan through the patient’s skin. Its approval was based on a Phase III program that tested nearly 10,000 units of the product in 793 patients.

While Goodman thinks Zecuity is unlikely to top the sales marks established under the deal’s contingent payment language, he believes the technology behind the patch product will make it hard to duplicate, frustrating attempts at generic competition and providing Endo with a “very long tail” of revenue (sumatriptan itself, developed and sold by GlaxoSmithKline, has been generic since 2008).

UBS initially will include annual sales of less than $100 million in its modeling for Endo, because of the highly genericized competition in migraine, the resulting pricing pressure and the possibility that doctors with patients who failed to obtain relief on an oral sumatriptan product might not be greatly inclined to try a sumatriptan patch in those very same patients. “I just wonder about the pecking order,” Goodman said.

Meanwhile, Morningstar analyst David Krempa sees the transaction as keeping with the tradition of bolt-on deals De Silva would have learned to value while serving as president and chief operating officer at Valeant.

“It’s a relatively small deal that basically fits in with the strategy they talked about, pursuing bolt-on deals similar to what we saw at Valeant, combined with the occasional mega-deal like we saw with Paladin,” Krempa noted. “Those are the kinds of deals that Valeant has had success with, ones in which it can acquire a product or asset and take out all the revenue without needing to add on any expenses. They don’t need the sales force that [NuPathe] has and so they add the new product onto their existing sales force’s portfolio and get all of the sales without taking on much of the expense that typically would go along with it.”

But Krempa shares Goodman’s concerns about the viability of the migraine space and pain therapy in general. Endo needs to seek out business areas offering “less pricing pressure and better organic growth prospects,” he said, citing dermatology, ophthalmology, branded generics and over-the-counter products as possible targets. The Paladin acquisition gives Endo entrée into some of those spaces, he added.

Meanwhile, plenty of other companies, including Valeant of course, were negotiating their own deals during the final shopping days before Christmas. Read on as we present a red-and-green tinged edition of ....

Valeant/Solta Medical: Serial buyer Valeant moved to expand its aesthetics business this week with the addition of Solta Medical, the makers of medical device systems for aesthetic applications. Valeant announced Dec. 16 it will acquire Solta for $250 million in the latest in a string of acquisitions by the Canadian firm in recent years, including several that have expanded the company’s portfolio in medical devices and dermatology. Solta will complement Valeant’s portfolio on both fronts by augmenting its offerings to dermatologists and plastic surgeons. Its 2012 revenues were $145 million, coming from products like Thermage CPT radiofrequency skin-tightening system, Fraxel skin repair system and the Clear + Brilliant laser skin-resurfacing system. Solta has made a number of major acquisitions in recent years, including Sound Surgical Technologies in February 2013, and the LipoSonix business from Medicis Pharmaceutical in 2011. Valeant ultimately acquired Medicis in 2012 for $2.6 billion, building significantly on its dermatology and aesthetic offerings at the time. - Jessica Merrill

Merck/GlaxoSmithKline: Merck announced Dec. 18 that it is teaming up its highly anticipated early-stage cancer compound, MRK-3475, with GlaxoSmithKline’s kidney cancer drug Votrient (pazopanib), which was approved in October 2009. The two pharmas will test the protein kinase inhibitor with the anti-PD-1 immunotherapy in a Phase I/II clinical trial that will evaluate the safety and efficacy of the combo in treatment-naive patients with advanced renal cell carcinoma, they said in a statement. Financial details of the collaboration were not disclosed. But the dollar amount attached to the deal is almost irrelevant; for Merck, the anti-PD-1 immunotherapy is one of its few programs to garner much enthusiasm of late – both inside and outside the company – as the New Jersey pharma struggles to move drugs through its pipeline successfully. Merck is relying heavily on the cancer immunotherapy – which has shown a lot of promise but is still very early – to deliver its first blockbuster in several years; and the company intends to partner, partner and partner some more. “We look forward to initiating further collaborations to investigate MK-3475 in combination with other anti-cancer agents across a range of tumor types,” said Iain Dukes, SVP of Licensing and External Scientific Affairs at Merck Research Laboratories. So expect to see plenty more of these little tie-ups in 2014 – but don’t hold your breath for any financial terms to be revealed. - Lisa LaMotta

Pfizer/Siemens: Pfizer and Siemens Healthcare Diagnostics have entered into a master collaboration agreement to design, develop and commercialize diagnostic tests for therapeutic products across Pfizer’s pipeline. Siemens is providing in vitro diagnostic tests that Pfizer can use in its clinical trials and potentially as companion diagnostics for Pfizer drugs. Terms were not disclosed, nor were development priorities, but Trevor Hawkins, SVP, strategy & innovations, diagnostics division of Siemens Healthcare, said the deal is open-ended and could be applied to Pfizer’s entire portfolio, from early-stage development to commercialized drugs. The partners already have two active programs, one of which requires Siemens to identify a marker for a compound and the other of which requires Siemens to develop a test for a biomarker that Pfizer has identified already. The partners have set up a joint governance committee, which is meeting weekly. Both companies have partnerships with others around companion diagnostics, but those are mostly one-offs; Siemens, for example, in June, entered into a global agreement with Janssen Pharmaceutica to create a companion diagnostic for an early-stage heart failure therapeutic. Pfizer has at least three companion diagnostic deals, including one with Qiagen, which it signed in 2011 to develop a molecular test for dacomitinib, then in Phase III for non-small cell lung cancer. And in 2012, it signed a deal with Roche Diagnostics Corp. to develop an immunohistochemistry companion test for Xalkori (crizotinib), also for NSCLC. Pfizer isn’t the first pharma to enter into a master agreement around companion diagnostics; Eli Lilly has one with Qiagen. As the deal’s reach shows, pharma’s inherent skepticism about the value of companion diagnostics is gone, although many uncertainties remain, both technical and commercial, about the field. - Wendy Diller

Bristol-Myers Squibb/AstraZeneca: AstraZeneca announced Dec. 19 that it will acquire the entirety of Bristol-Myers Squibb’s interests in their diabetes alliance, including drug assets, staff and infrastructure, paying $2.7 billion on deal completion, $1.4 billion in regulatory and commercial milestones, and royalties up to 2025. The deal ends a seven-year diabetes alliance between the two parties that culminated in the 2012 co-purchase of Amylin Pharmaceuticals for $7 billion. With the dissolution of the alliance, AstraZeneca gets all patents and global rights to DPP-4 inhibitor Onglyza (saxagliptin) in all combinations and formulations, SGLT4 inhibitor dapagliflozin (Forxiga in Europe), metreleptin (recombinant leptin) for treatment of lipodystrophy, and Amylin’s GLP-1 assets Bydureon (exenatide, weekly injection) and Byetta (exenatide, twice-daily injection). The transaction illustrates the divergence in strategy between the two companies, as AstraZeneca believes its geographic reach and its scale in diabetes assets, infrastructure and capabilities position it to succeed. Bristol, on the other hand, will use the breakup to accelerate its transformation into a sharply focused specialty care company and to re-allocate its resources toward its PD1 program and its immuno-oncology franchise, said CEO Lamberto Andreotti on a same-day business update call. AstraZeneca’s focus in 2014 will be on its upcoming launch of dapagliflozin in the U.S., on building the Bydureon brand, and on life-cycle management of Onglyza. - Mike Goodman

Bayer/Algeta: Everyone likes to see a billion-dollar acquisition or two quickening the markets a bit going into the annual industry festival that is the JPMorgan Healthcare Conference. Obligingly, Algeta and its partner Bayer are providing one; the biotech said on Dec. 19 that it has agreed to be acquired by the pharma for $2.9 billion. Algeta originally disclosed an offer from Bayer on Nov. 26. In the intervening weeks, it got the pharma to sweeten the pot a bit to NOK 362 per share from NOK 336. That increase raised the offer from the original price of about $2.65 billion. The price is a 37% premium to the closing price on Nov. 25, the day before it disclosed the original Bayer offer. The pair partnered on prostate cancer therapy Xofigo (radium-223 dichloride), which was approved and launched in the U.S. in May. It subsequently was approved in the EU in November. In a market crowded with new and expensive entrants, the therapeutic offers a new mechanism of action and is aimed specifically at the treatment of castration-resistant prostate cancer in patients with symptomatic bone metastases, a critically ill subset. In Xofigo’s first full quarter of sales, it had $17 million in revenue during the third quarter. Administration sites have to be licensed to sell the product because of its radioactivity; as of Oct. 18, Algeta said there were 626 facilities licensed to treat patients with Xofigo in the U.S. That number had progressed faster than expected. Algeta received €100 million ($137 million) in Xofigo milestones during the first three quarters of 2013. Half of this amount came due on the FDA submission for Xofigo, with the other half tied to the first sale of the product. Under the terms of the 2009 partnership, Bayer paid €42.5 million up front. Then in 2012, Algeta exercised its option to co-promote Xofigo in the U.S., which entitled it to a 50/50 split with Bayer of profits and commercialization costs. Bayer owns sole rights ex-U.S., paying Algeta a tiered double-digit royalty on product sales. Analysts estimate Xofigo will be a blockbuster. Bayer clearly was unwilling to share any upside with its biotech partner and, with enough cash, it didn’t have to. - Stacy Lawrence

Jazz/Gentium: Recently re-domiciled in Ireland, as Endo now is planning to do, Jazz Pharmaceuticals signed an agreement Dec. 19 to purchase Italy’s Gentium for $57 a share, a bid that would total out to about $1 billion. Key to the deal is Defitelio (defibrotide), approved by the EU this past October to treat veno-occlusive disease in adult and pediatric patients undergoing hematopoietic stem-cell transplantation. The sale is structured as a tender offer – both companies’ boards of directors have approved the transaction. Based on a single-stranded oligodioxyribonucleotide extracted from DNA in pig intestines, defibrotide had been filed for approval in the U.S. but Gentium withdrew its NDA in August 2011 after learning that FDA would refuse to file the application over questions of data quality and the conduct and monitoring of clinical trials. “Incorporating Gentium into Jazz Pharmaceuticals is a strong strategic fit, as Defitelio would diversify our development and commercial portfolio and complement our clinical experience in hematology/oncology and our expertise in reaching targeted physicians who treat serious medical conditions,” Jazz Chairman and CEO Bruce Cozadd said in a release. “Because Defitelio is already approved in the EU, the acquisition would add a new orphan product that has potential for short- and long-term revenue generation, high growth and expansion of our multinational commercial platform.” In a Dec. 20 note, Brean Capital analyst Gene Mack said the acquisition should be immediately accretive for Jazz, with defibrotide bringing in a projected $71 million in sales in 2014, crossing the $200 million annual sales threshold in 2018 and nearing $500 million in 2023. - Joseph Haas

Photo credit: Wikimedia Commons

Deals of the Week: GSK's Stealth Move To The Coasts

GlaxoSmithKline is following some of its big pharma peers to key innovation hubs in the U.S. by opening satellite R&D centers in San Diego and Cambridge, MA.

When Johnson & Johnson opened its innovation center in Boston earlier this year, the company made a big to-do about the move and announced plans to fund two startups there. Pfizer, meanwhile, announced a significant $100 million investment through a collaboration with local hospitals and academic institutions when it anointed the Boston area the headquarters for its academic deal engine, the Centers for Therapeutic Innovation.

GSK, on the other hand, went in a different direction with its announcement, unveiling the move … via blog post. We couldn’t help but notice the difference in tactics and wonder if GSK’s decision to downplay the announcement reflects its ambitions for the satellite offices.  Whatever the reason, GSK clearly views the expansion as an evolution of its business development strategy, not a seismic shift in the way it approaches R&D.

GSK’s Damien McDevitt, VP Business Development, R&D Therapy Areas, will run the California center. He confirmed details in an interview Dec. 10. "These are both small virtual offices,” he said. “They are not large R&D centers by any stretch of the imagination.” The San Diego office will host about five to 10 scientists and the Boston office will have about 10 to 12, with a heavy emphasis on business development, he said.

"We have always had collaboration activities in these two locations, but what we haven’t had, at least on the West Coast, is a satellite office to be able to work more closely with all the groups we work with, including academia, venture and biotech,” he said. The company’s main U.S. R&D offices are located in Research Triangle Park, NC, and Philadelphia. GSK’s venture group, SR One, has offices in San Francisco and Boston. And its most recent venture effort, Action Potential Venture Capital, is headed by Imran Eba, who recently relocated to Cambridge to open up that shop.

GSK views its California and Boston R&D outposts as bridges to strengthen its existing relationships and forge new ones. A big focus, at least for the West Coast, will be on its partnership with VC firm Avalon Ventures. Earlier this year, the partners announced plans to fund 10 new single-molecule drug companies. Their first biotech, celiac disease drug developer Sitari Pharmaceuticals, was hatched with a $10 million Series A in November.

McDevitt said GSK and Avalon are aiming to establish at least three or four new companies by the end of 2014. But the new R&D centers won’t be solely focused on venture funding opportunities. They will be scouting new partnerships with academia and biotech, while also strengthening ties to existing partners. GSK has collaborations with some 22 West Coast partners, McDevitt pointed out.

GSK will be agnostic about therapy areas when it comes to new projects, and will consider both platform technologies and new products, with an emphasis on preclinical programs. Mostly, he said, the point is “keeping an open mind” and looking for breakthrough science. - Jessica Merrill

Our minds are always open, but we’re here to tell you when the deals are closed. With that in mind, here’s this week’s edition of...

Roche/Prothena: Prothena's new deal with Roche, worth $45 million in upfront payments and near-term clinical milestones and potentially up to $600 million to the biotech in the long run, gives it a major pharma partner that recently cited central nervous system diseases as a core R&D priority. In turn, Roche gets access to a synuclein antibody program that is ready for the clinic and has been guided by scientists who are world-class drug developers. The Dec. 10 deal revolves around PRX002, a Phase I-ready antibody that targets alpha-synuclein, believed to play a role in Parkinson’s and other neurodegenerative diseases. But it also gives the partners opportunities to collaborate on related conditions. Prothena is receiving most of the first tranche of $45 million from Roche up front, but a small portion of that amount will be a milestone payment when Prothena moves the drug into Phase I, an event that it expects will happen in the first half of 2014, said CEO Dale Schenk.  Prothena also has a no-cost option, which it can exercise prior to approval, to co-promote PRX002 in the U.S. Costs, revenues and profits will be divided 70-30 between the partners, with Roche assuming the larger burden and reaping the larger bounty. Prothena has been looking to out-license PRX002 in order to concentrate on some of the compounds it is targeting for diseases in smaller populations. Roche traditionally has been strong in central nervous system diseases, but, as with other parts of its business, it has moved away from large-population conditions treated largely by primary care doctors, such as depression, to more complex CNS disorders, treated by specialists.- Wendy Diller

Biogen Idec/Proteostasis: Already no stranger to Alzheimer’s disease treatments, Biogen Idec has licensed another program showing promise in neurodegenerative diseases including Alzheimer’s and Parkinson’s. In a Dec. 9 deal, the biopharma disclosed a new partnership with Proteostasis Therapeutics to study and develop therapeutics inhibiting the enzyme ubiquitin specific peptidase 14, or Usp14. It’s believed that blocking Usp14 modulates proteasome activity and thereby speeds up degradation of toxic proteins such as alpha-synuclein in Parkinson’s and tau in Alzheimer’s, potentially spelling a disease-modifying approach. The deal includes research funding and potential development and commercial milestones totaling $200 million, as well as tiered royalties. The partners will jointly pay for and conduct preclinical research to identify lead compounds for clinical development. At undisclosed, pre-specified development points, Proteostasis will have the option to receive milestones or exercise an option for global co-development and co-commercialization rights. In addition, Biogen Idec is making an equity investment in Protestasis of undisclosed size. Biogen Idec already has Phase Ib anti-beta amyloid antibody candidate BIIB037, which could be moved directly to Phase III as soon as 2015 if trial data are strong enough, SVP of Neurology Al Sandrock said at Deutsche Bank’s BioFEST Conference in early December.  Cambridge, MA-based, privately held Proteostasis is backed by HealthCare Ventures, Fidelity Biosciences, New Enterprise Associates, Novartis Option Fund and Genzyme Ventures. - Stacy Lawrence

Retrophin/Kyalin/Novartis: Retrophin is making good on its plan to expand beyond its initial focus on ultra-rare diseases. On Dec. 12, it announced an agreement to acquire San Diego-based Kyalin Biosciences for an undisclosed sum. Kyalin’s lead asset carbetocin, a synthetic, nasally administered formulation of the hormone oxytocin, is in Phase I for symptoms of autism. On the same day, Retrophin made good on an August announcement that it would license in a drug to treat autism and schizophrenia from an unnamed major pharmaceutical company. The mystery licensor is Novartis, and the asset is Syntocinon (oxytocin), another synthetic, nasally delivered form of the same drug. Retrophin paid $5 million upfront plus undisclosed milestones and royalties for an exclusive U.S. license. Novartis had marketed the drug in the U.S. to assist with initial postpartum milk ejection, but discontinued it in 1997 for commercial reasons. The proceeds from a $25 million PIPE financing in August helped pay for the transactions. The licensing of Syntocinon also gives Retrophin a market-ready prescription treatment addressing a lactation deficiency for which there are no current therapies. Retrophin plans to re-launch it for that indication in the second quarter of 2014, providing an immediate, if likely small, revenue stream. As for the decision to double down on oxytocin, CEO Martin Shkreli said while Syntocinon is FDA approved, carbetocin is far behind in the clinic. “It might never be approved,” he said, “but it has superior qualities [to Syntocinon]. For instance, it’s longer-acting. So, there is a rationale to replace one with the other over time.” He added that there is a considerable amount of applied research and clinical experience behind the use of oxytocin in autism and schizophrenia. - Michael Goodman

GlaxoSmithKline/Inserm Transfert: Continuing a busy year of collaborations, the French National Institute for Health (INSERM) signed a worldwide licensing agreement Dec. 11 with GlaxoSmithKline to investigate the use of immune-checkpoint molecules in cancer treatment. GSK will pay Inserm Transfert, the tech-transfer subsidiary of INSERM, an undisclosed upfront fee with the possibility of development milestones and sales royalties. The pharma gets rights to develop and commercialize monoclonal antibodies that modulate the inducible T-cell costimulator (ICOS) protein, which offers the potential to enhance anti-tumor immune response. The agreement is part of a larger, long-term strategic alliance between INSERM and GSK. The collaboration “is making progress and illustrates a shared vision by GSK and Inserm Transfert that successful development of new drugs requires proactive action and alignment from both sides,” Inserm Transfert Executive VP, Head of Business Unit Open Innovation Augustin Godard said in a release. - Joseph Haas

Crealta/Savient: Start-up Crealta Pharmaceuticals will buy the gout drug Krystexxa (pegloticase) and other assets of troubled Savient Pharmaceuticals following an auction in bankruptcy court, the firms announced Dec. 11. Crealta will pay $120.4 million for the assets, marking its first significant investment toward becoming a specialty pharmaceutical company. Private-equity firm GTCR formed Crealta in August in partnership with Crealta’s CEO, Ed Fiorentino, and said it would invest up to $200 million to support the company. It’s the second company launched by Fiorentino and the PE firm. The two established Actient Holdings LLC in March 2009 and developed it into a diversified specialty pharmaceutical company through a series of five acquisitions, with GTCR providing a similar initial $200 million investment. Urology specialist Auxilium Pharmaceuticals acquired Actient earlier this year for $585 million upfront plus contingency payments. Now GTCR appears to be following a similar playbook in hopes of another successful exit, though turning around Krystexxa will take some effort. The drug was approved in 2009, but never achieved its perceived potential, challenged by Savient’s poor commercial planning and a market dominated by low-cost generic allopurinol. Savient never regained its footing after failing to sign a marketing partner for Krystexxa, and despite several leadership changes and a cost-reduction program, sales of the drug never led Savient into the black.- J.M.

Thanks to Flickr user ah zut for the lovely shot of one of our favorite coastlines, reproduced under Creative Commons license.

Deals Of The Week Looks At Pricing Conundrums

Some technologies are so unprecedented, so spanking new that they present hitherto unknown and formidable commercial hurdles.

Consider gene therapy and non-invasive vagus nerve stimulation. The pricing challenges remain significant, even as these therapies gather regulatory approvals, high-caliber partners and investors.

uniQure BV is the scrappy Dutch biotech that spun out of Amsterdam Molecular Therapeutics BV to win approval for the first gene therapy to be accepted by regulators in the major world markets. After several false starts and near-death experiences, Glybera (alipogene tiparvovec) got EU approval in November 2012 for the ultra-orphan disease lipoprotein lipase deficiency. LPD is a childhood genetic disorder in which a protein needed to metabolize fat molecules is missing, causing a large amount of fat to build up in the blood.

The company has partnered commercial rights covering Europe and selected major emerging markets for Glybera and a mid-stage hemophilia B gene therapy to Italy’s Chiesi Farmaceutici SPA. It has forged ahead with building U.S.-based manufacturing capacity, particularly in advance of an FDA filing for Glybera pending ongoing discussions with the agency. It has hired a CEO and preliminary staffing for its Boston-based U.S. operations, to build out clinical, regulatory, and commercial infrastructure. It’s busy planning launch strategy, identifying patients, and meeting with payers.

But there’s a problem. We asked uniQure’s CEO, Jörn Aldag, how he planned to price his gene therapies. Our discussion focused on the hemophilia B treatment, next in line for approval. Aldag noted that, unlike the long-acting factors being readied for market by Biogen Inc. and others, where patients may be able to infuse every other week, “we’re offering a one-shot treatment. The patient would not have to come back to the hospital for many, many years.”

Aldag said ten patients in the first hemophilia B Phase I/II trial, still ongoing at St. Jude Hospital in Memphis, TN, have been treated and required no or significantly reduced prophylactic treatment for up to three years.

This is truly wondrous news for patients with hemophilia B. The issue is that each gene therapy carries an unknown duration of effect.  Will those patients enrolled in the St. Jude trial require a booster next week? Or will they continue for another 3 years, 10 years, indefinitely?

Aldag is grappling with the same issue with Glybera, and now Chiesi is weighing in on the discussions. The options they’re considering boil down to whether to ask for a front-loaded “down payment, or do we ask for annuity payments,” says Aldag, describing a system of payments over time. He allows that the pricing paradigm will change when he moves beyond orphan monogenic diseases, for instance, into larger-population neurodegenerative disorders, such as Parkinson’s disease (uniQure has a Parkinson’s gene therapy which is currently in Phase I/II). “Those would not command as high a price.”

New-Jersey based electroCore LLC (which, like uniQure, was absent the day the teacher taught proper capitalization) is at the forefront of companies developing noninvasive vagus nerve stimulation (VNS) devices – DOTW is typically all-pharma, all-the-time, so forgive our excursion into the world of medical devices. These are small, hand-held devices that deliver a mild electrical charge to the cervical branch of the vagus nerve. VNS technology has been around for decades in implanted devices – some are even FDA approved for partial-onset epilepsy and refractory depression. But implanted VNS is expensive and carries the risk and inconvenience of surgery. And that has inhibited adoption of the technology.

But VNS has been validated as a safe and effective alternative to drug therapy in a broad range of indications, says Mir Imran, a device inventor and founder of InCube Ventures. Imran told us that, with regard to epilepsy, the efficacy of VNS is comparable to pharmacotherapy, with similar success rates of 30% to 40%.

So noninvasive VNS, electroCore CEO J.P. Errico believes, “is something that can compete [with drugs] at the front end of the continuum of care.” Merck & Co. Inc.’s Global Health Innovation Fund, which was attracted to electroCore’s technology because it can be used in the home setting, fitting in with the fund’s focus on technologies featuring flexible access to care, apparently agrees. Merck’s fund joined with two other private equity groups to fund electroCore’s $40 million series A round earlier this year.

electroCore is currently in four registration trials for indications including cluster and migraine headache. It expects to launch its first product, gammaCore, in the U.S. in the next two years. Besides headache, electroCore is developing gammaCore for anxiety, epilepsy, depression, as well as for inflammatory conditions like gastroparesis, COPD, and asthma.

But there’s a rub. Because essentially the same device would be used across all indications, patients using it for migraine who hear about a trial testing the device in, say, gastroparesis, might try to self-treat for gastroparesis. Patients using the device for one indication may also experience the unintentional resolution of symptoms in other indications. Patients could possibly even share devices. Any of these scenarios could cut into the commercial opportunity for electroCore.

Errico says electroCore might offer different products based on specific usage. “If the person’s going to use it only to treat acute headaches, there may be a cheaper entry point for them than if they’re going to need the device to last for a very long period of time and use it over a period of years,” he says. But usage could be further complicated by electroCore’s preliminary finding that the amount of required treatment is not so much dependent on the specific disease state or severity; it’s more related to individual patient response.

All of this informs how the company will model usage of its products, and therefore, how to appropriately price them.

Both uniQure and electroCore need to proceed carefully. A miscalculation could be costly. -- Mike Goodman

Here are some of the deals that caught our eye this week . . .

Celgene/OncoMed: Celgene Corp. struck again Dec. 3, inking its ninth deal this year and adding to its impressive roster of oncology partners. This time, the company will put up $155 million upfront in a six-program partnership with OncoMed Pharmaceuticals Inc. centered on a Phase Ib monoclonal antibody being tested in pancreatic and non-small cell lung cancer. Celgene will also make a $22.3 million equity investment in OncoMed. In exchange, Celgene will receive option rights on six novel anti-cancer stem-cell therapeutic candidates, including the lead asset, demcizumab (OMP-21M18), a humanized MAb inhibitor of Delta-Like Ligand 4 (DLL4) in the Notch signaling pathway.

The deal also covers five preclinical or discovery-stage large-molecule programs - Celgene gets full license to one of the preclinical programs, while OncoMed retains U.S. co-development and co-commercialization rights on the other assets. If Celgene options demcizumab, the companies will share global development costs, with Celgene covering two-thirds of the expense. If the drug is approved by FDA, they will co-commercialize it in the U.S., with 50/50 profit sharing. Outside the U.S., Celgene would develop and commercialize the antibody, with OncoMed eligible for milestones and tiered double-digit royalties.

Celgene also gets rights to OncoMed’s preclinical anti-DLL4/vascular endothelial growth factor bispecific antibody, as well as four preclinical or discovery-stage biologics programs that target other cancer stem cell pathways, including RSPO-LGR. Celgene’s exclusive license is to one of those four biologics programs. For the four programs not outright-licensed by Celgene, the Redwood City, Calif., biotech gets terms similar to those negotiated for demcizumab – two-to-one global development cost-sharing with Celgene covering the larger portion, 50/50 U.S. co-commercialization with profit-sharing, and mid-single-digit to mid-double-digit royalties on sales outside the U.S. For the licensed program, OncoMed can earn mid-single-digit to mid-double-digit royalties on worldwide sales. Total earn-outs could exceed $3 billion.-- Joe Haas

Forest/Merck: Forest Laboratories Inc. will acquire U.S. commercial rights to Merck & Co.’s antipsychotic Saphris (asenapine) for $240 million upfront and undisclosed sales milestones, marking CEO Brent Saunders first business development initiative since becoming CEO in October. The companies announced the deal Dec. 2, the same day Forest announced a $500 million cost reduction program intended to right-size the company and $1 billion in new financing to fund share repurchases and additional bolt-on acquisitions.

Saphris, which was approved by FDA in 2009, generated sales of $150 million in the 12 months ended September 2013, according to Forest. Forest expects its expertise in marketing drugs for central nervous system disorders will help to drive growth of the brand. The drug will be marketed by Forest’s existing commercial team, which already sells the antidepressant Viibryd (vilazodone) and expects to soon be selling Fetzima (levomilnacipran), a serotonin and norepinephrine reuptake inhibitor (SNRI) that was approved for depression in July.

Having the three CNS drugs together in one portfolio is a powerful proposition that creates upside without adding cost, Saunders said. It is not only more efficient, but it also improves the quality of Forest’s sales team, he added. “When our rep walks into a psych office, they are not just a one-product detail. They have a whole portfolio of products to talk about depending on what is on the physician’s mind, and it creates a much more relevant rep,” he said. That multi-product commercial strategy is one Saunders would like to carry over to areas like gastrointestinal disease and cardiovascular disease.-- Jess Merrill

The Medicines Company/Rempex: The Medicines Co. has lost no time enlarging its fledgling infectious disease franchise by acquiring Rempex Pharmaceuticals Inc. and its pipeline of assets targeting serious bacterial infections. For $140 million upfront and $434 million in development, regulatory, and commercial milestones, MDCO acquires several anti-infective assets in varying stages.  Chief among them is Carbavance, a Phase II-ready drug for IV treatment of hospitalized patients with multi-drug resistant gram negative infections. It will enter registration studies in 2014. MDCO will market Minocin IV (minocycline for injection) for resistant infections due to Acinetobacter, a pathogen that is especially prevalent in intensive care units. MDCO plans to submit for U.S. approval an improved formulation of Minocin IV in 2014. Finally, MDCO will continue Rempex’s discovery programs focused on beta-lactamase inhibitor-based combination products designed to overcome resistance mechanisms in gram-negative organisms. The Rempex assets complement MDCO’s oritavancin, which targets gram positive complex skin infections and which is slated to file for a late 2013 NDA and a first quarter 2014 MAA in Europe.

The acquisition gives MDCO high-caliber antibiotic discovery and development capabilities to supplement its own development and commercialization strengths. It also gives MDCO a marketed product to better leverage its infectious diseases salesforce, which is typical of the hospital specialist’s deal style, while continuing its interest in early-stage assets that first came to notice with its licensing last February of Alnylam Pharmaceuticals Inc.’s ALN-PCS, a PCSK9-targeting RNAi agent for dyslipidemias. -- Mike Goodman

Roche/Molecular Partners: Roche and the Swiss biotech Molecular Partners AG have signed a research collaboration and licensing pact to discover, develop and commercialize therapeutics using the privately-held biotech’s DARPin platform. DARPins are non-antibody-based small proteins engineered for target binding to hone in on and penetrate deep into solid tumors, making them ideal targeting vehicles to deliver toxic agents to tumors to kill cancer cells. Under the deal, Roche has rights to develop and commercialize several DARPin-based products. Molecular Partners will get a starting payment of $60 million, research funding to support the partnership, and potentially more than a billion dollars in milestone payments, as well as tiered royalties on any successes.

The alliance signals growing interest in the DARPins which, due to their ability to bind to different epitopes than antibodies do – and to bind to multiple epitopes or targets in parallel at the same time – might offer a higher selectivity for tumor cells compared to other biologics, including antibody-drug conjugates.  DARPins are based on a class of proteins found in the body called ankyrin repeat proteins, which contain specific amino acid sequences, including a repeated sequence, which bind to proteins. They are easy to manufacture in E. coli, and are highly soluble and stable, according to Molecular Partners. The strategy is similar to that of using armed antibodies to fight cancer, like Roche's antibody-drug conjugate Kadcyla (ado-trastuzumab emtansine). Molecular Partners has already established alliances with Allergan Inc. and Janssen Biotech Inc., among others. -- Sten Stovall

Theraclone / PharmAthene: Theraclone Sciences Inc. and PharmAthene Inc. have called off a merger, announced in August. Under the plan, privately-held Theraclone would have absorbed publically held PharmAthene in an all-stock, merger of equals. The surviving company, which would have retained the PharmAthene name, would have had a clinical-stage pipeline of four assets and several pre-clinical compounds, centered around infectious diseases. According to news accounts, PharmAthene opted out of the deal. Neither party disclosed reasons, but the decision came a week after the federal government’s Biomedical Advanced Research and Development Authority (BARDA) rejected TheraClone’s application for a grant for its pandemic flu program, TCN-032, which has completed a Phase IIa trial. TheraClone will pay PharmAthene a $1 million termination fee. [CORRECTION: PharmAthene will pay TheraClone the $1 million termination fee. Thanks to IVB reader David for pointing out the mistake.]

Theraclone’s pipeline is built from its antibody platform I-STAR (in-situ Therapeutic Antibody Rescue), which rapidly screens memory B cells for rare human antibodies that may be developed into next-generation antibody-based drugs. TCN-032, a recombinant, fully human monoclonal antibody, is also in development for patients severely ill with seasonal influenza. TCN-032 is partnered in Japan with Zenyaku Kogyo Co. Ltd., and the company is evaluating “opportunities to advance TCN-32 with other potential strategic partners for commercial markets,” CEO Clifford Stocks said in a press release disclosing the bad news about BARDA. In addition, the company has asked to meet with BARDA to gain further insight into the reasons for the decision. Theraclone also has an ongoing partnership with Pfizer Inc.  to identify three targets in infectious disease and / or cancer. 

Theraclone also has a recombinant fully human MAB for treatment and prevention of cytomegalovirus (CMV) infections.    PharmAthene, a biodefense company, is developing a recombinant protective anthrax vaccine, SparVax, which is set to enter Phase II trials, and a medical countermeasure for nerve agent poisoning.  It is also developing Valortim, a fully human monoclonal antibody for prevention of anthrax infection.  CEO Eric Richman said the company will continue to “seek to identify opportunities to maximize value for shareholders.” -- Wendy Diller

Happy Thanksgiving from Deals of the Week!

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

As always, thanks for reading. Happy Thanksgiving!

Bayer/Algeta: Not quite a deal just yet, but we give thanks for the heads up this slow holiday week: On Nov 25 details began trickling out about Bayer's NOK14.8 billion ($2.4 billion) bid to buy Xofigo partner Algeta. The companies have high hopes for Xofigo, the recently launched prostate cancer therapy, and it's unsurprising that Bayer might move to control 100% of the potential blockbuster. The NOK336 per-share bid represents a 27% premium to Algeta's price before the brouhaha. Analysts expect Bayer to sweeten the bid for the Norwegian biotech -- of course they do! -- with which it has been partnered since 2009. For now, neither company is talking (someone's leaking, of course, but talking? Not so much). Not about the potential and probable deal anyway. Algeta's been out talking to analysts and investors during its recent Capital Markets days, pointing out its technological prowess and pipeline of assets beyond Xofigo. All that chatter might be helpful especially if Bayer decides it only wants Xofigo (sometimes the Bayer gets only part of you? Sorry). We'll have more in next week's issue of "The Pink Sheet". -- CM

Merrimack/Actavis: Merrimack Pharmaceuticals’ stock got a boost Nov. 26 from back-to-back announcements including encouraging Phase II data on one of its lead cancer drugs, the HER3 blocker MM-121, and a drug delivery technology deal with Actavis Inc. The stock closed the day up about 11% at $3.50, though that's only half what it debuted at in March 2012. Still that's some trick, considering one of the announcements was for a trial that didn't meet its primary endpoint. Most of the bump probably came from that Phase II data, which only trended in favor of MM-121 in patients with ER/PR+ and HER2- breast cancer, but suggested even better results in a subpopulation of patients with an undisclosed biomarker. That asset is partnered with Sanofi, which has seen its share of bad luck in its oncology pipeline lately, so the silver lining is particularly welcome. Meanwhile, the deal with Dublin-based Actavis offers revenue upside, the company said. Under the arrangement, Actavis will pay the cancer specialist $2 million upfront. In exchange, Merrimack will use its nanoliposomal technology platform to develop and manufacture various drugs for Actavis. It already uses the technology in some of its own drug candidates. Merrimack is eligible to receive another $13.5 million in funding and milestone payments tied to development, regulatory and sales milestones related to the first product to come out of the collaboration. It will also receive a double-digit share of profits on future sales of any commercialized products. -- Jessica Merrill

Egalet/Shionogi: Egalet Corp. will get access to cash ahead of a planned IPO in a deal with Shionogi & Co. Ltd. announced Nov. 26. The Danish specialty pharma will receive $10 million upfront from Shionogi, which has also agreed to buy approximately $15 million in common stock in a private placement to close with the IPO. In exchange, Shionogi gets rights to multiple oral abuse-deterrent hydrocodone opiod product candidates in preclinical development. Egalet specializes in abuse-deterrent technology and has developed two drug delivery systems that can be applied to multiple drug candidates. The deal will give Egalet some cash and breathing room as it prepares for the IPO while still allowing the company to retain its priority assets, two abuse-deterrent formulations, one morphine and one oxycodone, both in clinical development. In its registration statement filed with the Securities and Exchange Commission Oct. 16, Egalet said it had just $3 million in cash. Egalet could also receive $300 million in development and regulatory milestone payments and tiered royalties on sales, as well as $100 million in sales-based milestones. For Shionogi, the deal builds on the company’s existing presence in pain. The company manufactures the hydrocodone product Xodol, the oxycodone product Magnacet and several other pain therapeutics it acquired from Victory Pharma Inc. in 2011. On Nov. 19, Shionogi announced a licensing deal with Mundipharma International Ltd. under which Shionogi would sell Oxycontin Neo tablets, a tamper-resistant version of oxycodone, and an oxycodone/naloxone combination product in Japan. -- JM

SillaJen/Jennerex: The Korean CRO SillaJen is buying the cancer vaccine company Jennerex for up to $150 million (no specifics on the breakdown of payments have been disclosed). News of the deal came Tuesday from the french biotech Transgene, which is both a Jennerex shareholder as well as its partner in development Jennerex's lead vaccine Pexa-Vec, which did not meet its primary endpoint in a Phase IIb study in advanced liver cancer earlier this year. Transgene said that the companies' Pexa-Vec development and commercialization deal will "remain intact," with SillaJen taking over Jennerex's end of the bargain, and the companies plan to continue development of the GM-CSF vaccine in multiple other indications. SillaJen has been a partner and "major investor" in Jennerex since 2006, according to the latter company's web site.  -- CM

Myriad Genetics/Crescendo Bioscience: On Tuesday, Myriad Genetics expressed its desire to merge with fellow molecular diagnostics maker Crescendo Bioscience, under a three-year option it obtained as part of a $25 strategic debt investment in Crescendo in 2011. (We wrote then about how the deal strengthened Myriad’s expertise in protein-based testing and would potentially help diversify its revenues beyond oncology [Crescendo launched its Vectra DA rheumatoid arthritis test in November 2010].) The move by Myriad, which is subject to completion of due diligence, was triggered by Crescendo’s having reached a minimum revenue milestone set under the 2011 agreement: as noted in a November 27 Myriad 8-K filing, the purchase price will be based on a multiple of revenue determined by the revenue growth rate of Crescendo at the time of option exercise. If Myriad ultimately declines the option, Crescendo might opt for an initial public offering, an event that would allow Myriad to convert the debt to equity at the IPO price. An IPO would be tempting given the recent IPOs of several standout molecular diagnostics firms including Veracyte and Nanostring. -- Mark Ratner

Deals Of The Week Wonders: Will Pharma Ever Pay More For Companion Diagnostics?

 

Two deals this past week between pharmas and diagnostics developers put a spotlight on the ever-growing focus on the importance of companion diagnostics in drug development.

Eli Lilly & Co. and Qiagen NV announced a deal Nov. 18 to develop and commercialize a companion diagnostic for a novel undisclosed Lilly lung cancer compound. BioMarin Pharmaceutical Inc. announced a collaboration with Myriad Genetics Inc. Nov. 20 to use Myriad’s Homologous Recombination Deficiency test to identify tumors that might be sensitive to its investigational PARP inhibitor BMN 673.

In the last five years, pharma’s acceptance of companion diagnostics has gone from a lukewarm handshake to full embrace, with pharma acknowledging that the tests are useful tools that can help speed drug development, increase the chance of getting a new drug to market and support commercial reimbursement. As a result, deal-making in the space is moving earlier-stage and increasingly into therapeutic areas outside of oncology, areas such as autoimmune disease, neurological conditions and anti-infectives.

But there is still little in the way of hard evidence to show pharma’s softer side is showing up at the deal-making table. Given the increasing importance of a companion diagnostics to the success of a drug, it would seem intuitive that pharma might need to share more risk or give up more of the long-term financial reward or so its friends on the diagnostic side might argue. But, so far, that doesn’t seem to be the case, in part because it can be difficult for diagnostics companies to demonstrate they’re providing something unique to a pharma partner.

It’s hard to know for certain because the economics of companion diagnostic deals are rarely disclosed, but most if not all diagnostic companies are being paid by their pharma partners to develop the test in a fee-for-service style arrangement or through fixed milestone payments. Diagnostic companies also would like to receive royalties on sales of the drug or sales-based milestones as a way to share some of the long-term value of the product.

Qiagen appears to have established a valuable partnership with Lilly, through what it deems a “master agreement,” under which Qiagen will develop companion diagnostics for multiple drugs across all of the pharma’s therapeutic areas. The two previously were partnered on the KRAS test for Erbitux (cetuximab), which was approved in 2012, and partnered in 2011 to develop a test for a clinical-stage Janus kinase 2 inhibitor for blood cancer. They broadened their partnership to include the master agreement in February, and the Nov. 18 collaboration was the first to come out of that framework.

But during an investor meeting the same day, CEO Peer Schatz acknowledged the company depends on securing strong pricing and reimbursement for companion diagnostics to get a return on its investment.

“We make money off the development process, but not really a lot,” he said. “We are more focused on the kit coming forward.” The hope is that FDA-approved companion diagnostics will be able to secure better reimbursement than those that don’t go through the rigorous process, important because tests are easily reproduced and often have limited intellectual property protection.

In an interview, Myriad’s Mark Capone, president of Myriad Genetics Laboratories, said most companion diagnostics deals include development milestones and require the diagnostic company to obtain reimbursement once the product is commercialized to receive a return.

“We know there are discussions of pharmaceutical companies compensating diagnostic companies in the commercial phase, and that could come either in the form of royalties or direct reimbursement in the case that the pharmaceutical company wants to distribute the diagnostic, but I think most of those discussions are theoretical in nature,” he said.

He declined to discuss the financials of any deals Myriad has to develop companion diagnostics. It has several non-exclusive deals, primarily for its BRACAnalysis test to identify patients with BRCA-mutated breast and ovarian cancer, with partners including BioMarin, AstraZeneca PLC and AbbVie Inc.

“We have seen some baby steps,” diagnostics consultant Kristen Pothier said during a panel at IN VIVO’s very own PSA: The Pharmaceutical Strategy Conference in September. That includes some instances in which pharma companies have agreed to foot the bill for a voucher program to cover the cost of the test once it is on the market to alleviate some of the risk if the test does not get reimbursed at a high price.

But as for royalties, she said that remains a “dream” of diagnostic firms. What, we wonder, will it take to make that wish come true?

Clovis/EOS: Boulder, Colo.-based Clovis Oncology Inc. enjoyed a June bump in its share price, after it received positive data on two compounds. Now, the company is putting its Street strength to work by making an acquisition. The company agreed to buy Italian cancer drug developer EOS SPA for $200 million upfront, netting Clovis territorial rights to lucitanib, a Phase IIa inhibitor of fibroblast growth factor and vascular endothelial growth factor tyrosine kinases that has shown promise in breast cancer and other cancers. Most of the purchase price was paid in stock, as EOS shareholders received $190 million worth of Clovis shares and $10 million in cash. If lucitanib is approved in the U.S., Clovis will pay an additional $65 million in cash; EOS shareholders will also receive an additional €115 million ($155 million) in cash based on further milestones, under an existing agreement with Servier SA. Clovis shares have kept most of their recent gains, and the company has been planning to make moves for some time. EOS licensed lucitanib’s rights in Europe and most of the world to Servier in a 2012 deal; the acquisition gives Clovis full rights in the U.S. and Japan, and Clovis plans to collaborate with Servier on development and commercialization in other territories. Servier is obligated to pay for the first €80 million in lucitanib’s clinical development costs, and the two will share further costs. Clovis also stands to receive €350 million plus royalties from Servier if the drug achieves downstream milestones. -- Paul Bonanos

Versant/Celgene/Bayer: Two deals announced this past week demonstrate Versant’s willingness to develop drug assets, instead of full-blown companies, with single buyers holding options to acquire each one. On Nov. 19, Versant unveiled plans for a biotech incubator in downtown Toronto to draw from the neighboring medical research community. If all goes well, the incubator, which Versant has named Blueline Bioscience, will spin out at least two single-asset companies by the end of 2014. And if all goes really well, those companies will be bought by Celgene Corp., which already has agreed to fund the incubator in exchange for option rights. Versant and Celgene are familiar partners. In 2011, the two firms launched genomic analysis firm Quanticel Pharmaceuticals Inc., with Celgene holding a series of time-based options to acquire the company outright. Celgene will invest an undisclosed amount, but will not receive equity in Blueline or, initially, in the companies it incubates. The second deal Versant announced this week is the spin-out of a new single-asset company from Versant’s wholly owned drug-discovery group, Inception Sciences Inc. The spin-out is simply named Inception 4 Inc., and it houses an ophthalmology program; Bayer AG has an exclusive option to acquire it down the road at undisclosed milestones. Inception Sciences is a hybrid of a drug-discovery firm and holding company. The company discovers drugs with a team of scientists and spins each program into a separate corporate entity, typically with $5 million to $10 million in initial funding. The numbered spin-outs are positioned for eventual sale, while the discovery engine remains housed within Inception Sciences. -- Alex Lash

Vertex/Janssen: It’s not a new deal but the end of a long-existing one. Vertex Pharmaceuticals Inc. announced Nov. 20 it had sold its royalty rights for sales of protease inhibitor telaprevir outside of North America to Janssen Inc., the company that holds marketing rights to the hepatitis C drug, branded as Incivo, in Europe, South America, the Middle East, Africa and Australia. Janssen acquired those rights in a 2006 co-development agreement under which it paid Vertex $165 million upfront along with annual royalties in the mid-20% range. Under the revised arrangement, Janssen will pay Vertex $152 million during the fourth quarter of 2013, then cease paying any further royalties on Incivo sales beginning in 2014. Vertex’s decision is in line with planning outlined on its Oct. 29 third quarter earnings call as the Cambridge, Mass., firm, which markets telaprevir as Incivek in North America, decreases its emphasis on the HCV space to focus more on its cystic fibrosis franchise and other pipeline projects. In a Nov. 20 note, analyst Geoff Meacham of J.P. Morgan said the move made sense for Vertex and should help bolster the company’s finances. He forecast royalty revenue of $115 million this year for ex-North American sales of telaprevir, falling to $25 million in 2014 and $11 million in 2015. -- Joseph Haas

Pfizer/GSK: Pfizer Inc. and GlaxoSmithKline PLC are making good on industry promises to test cancer drugs in combination, even across big pharma’s research halls, with a research collaboration announced Nov. 21. The companies have agreed to test GSK’s MEK1 and MEK2 inhibitor trametinib, approved in the U.S. as Mekinist for melanoma, in combination with Pfizer’s investigational palbociclib, an inhibitor of cyclin dependent kinases 4 and 6 in a Phase I/II study in patients with BRAFV600 wild type advanced metastatic melanoma. The open-label trial is designed to determine a recommended combination regimen and also will study the effect of the combination on tumor biomarkers and anti-cancer activity and safety. GSK will run the study and the terms of the deal were not disclosed. Palbociclib is a cornerstone of Pfizer’s cancer pipeline and is being developed for the treatment of breast cancer after demonstrating significant improvement in progression-free survival in patients with ER+, HER2- breast cancer.

Patheon/DSM Pharmaceutical Products: Consolidation is afoot in the CRO market, with news that Canada’s Patheon Inc. is merging with Royal DSM NV’s pharmaceutical division, DSM Pharmaceutical Products (DPP), to create a whole new company that will aim to product full-service outsourcing for the pharma industry. “Our customers have indicated a strong desire to streamline their outsourcing network, at the same time, increasing their outsourcing,” said Jim Mullen, current CEO of Patheon. “They want to work with fewer companies with broader capabilities and capacity.” The new company, which will be based in Durham, N.C., will have a global footprint of 23 sites across North America, Europe, Latin America and Australia. Mullen, who held the top slot at Biogen Idec Inc. for seven years prior to joining Patheon, will be CEO. Patheon shareholders will receive $9.32 per share in an all-cash transaction that is expected to close within three to four months. The deal is subject to approval of various regulatory authorities in several countries, including the U.S., Canada, Turkey and Mexico. The per-share price values the deal at $2.6 billion and is a 64% premium to Patheon’s closing price on the Toronto Stock Exchange on Nov. 18, the day before the deal was announced. Private equity firm JLL Partners will own a 51% stake in the new company and DSM will own the remainder. JLL currently is the largest shareholder of Patheon with a 66% stake in the company. The deal requires the majority approval of Patheon’s minority shareholders to proceed. -- Lisa LaMotta

Unilife/Hikma: Unilife Corp. which specializes in the production and sale of injectable drug-delivery systems, announced a 15-year commercial supply contract with Jordan-based Hikma Pharmaceuticals PLC Nov. 20. Under the agreement, Unilife will supply Hikma with customized prefillable delivery systems from its Unifill platform. Hikma, focused on the production and sale of a range of branded and non-branded generic products principally in the Middle East and North Africa, as well as in the U.S. and Europe, will use the syringes with a range of generic injectable drugs, beginning with an initial list of 20 generic injectables. The deal reflects the growing market preference for prefilled syringes over vials. Unilife CEO Alan Shortall sees the deal with Hikma as an entrée for his products into the fast-growing market for generic injectables. Unilife will begin product sales to Hikma in early 2014, and going forward, will supply Hikma with a minimum volume of 175 million units/year following a rapid, high volume ramp up period. In addition to an undisclosed share of product sales, Hikma will pay Unilife $40 million in staggered upfront payments beginning with $5 million immediately and $15 million during 2014; the final $20 million will be paid in milestone-based installments in 2015. In return, Hikma gets exclusive global rights to Unifill’s prefilled syringes. Unilife can use the payments: It has been in the red for the past 11 years. In fiscal 2013, the York, Pa.-based company made $2.74 million in sales and reported a net loss of $63.2 million. -- Mike Goodman

Amicus/Callidus: In what it is calling a “highly synergistic strategic combination,” rare-disease focused Amicus Therapeutics Inc. has acquired privately held Callidus Biopharma Inc. for $15 million in Amicus common stock plus earn-outs pegged to Phase II development of Callidus’ enzyme-replacement therapy for Pompe disease and to late-stage development, regulatory and approval milestones related to three products. Shareholders in Callidus, which raised a $4.6 million Series A round from undisclosed investors in May, can earn up to $10 million for the Pompe disease Phase II work and up to $105 million related to that program and two others being added to the Amicus pipeline. The deal was announced on the same day that Amicus said GlaxoSmithKline PLC would give back rights to its lead drug candidate (see below); the biotech also simultaneously announced a $15 million private placement, a planned $25 million debt financing and a staff cut down to 91 employees that is expected to save the biotech $4 million next year. -- JAH

Amicus/GSK: Amicus and partner GSK are parting ways, kind of, but the biotech didn’t describe its new relationship with GSK as a “highly synergistic strategic no-deal.” We’ve done that for them. Instead, also on Nov. 21, New Jersey-based Amicus described the handover as a “revision” of its partnership with GSK around the pharmacological chaperone program migalastat (monotherapy and co-administered with enzyme replacement therapy), which was focused on Fabry disease. During a same-day conference call with analysts, Amicus CEO John Crowley noted a $3 million equity investment by GSK in Amicus (it had made two prior equity purchases, giving it a 19.9% ownership stake) and called the company a “passive partner” in migalastat. So GSK isn’t entirely gone – for now, it remains an Amicus shareholder. But it’s a shareholder that clearly sees its own future in the rare diseases space a lot differently than it did only a couple years ago, a view that should have other GSK partners on alert. Nevertheless, the big pharma retains some upside potential around migalastat: GSK is entitled to a mix of royalties and commercial milestone payments on monotherapy and combination products in certain territories. Crowley described the family of transactions as a culmination of events that will re-make the biotech into a “better resourced” firm focused more sharply on biologic therapies for rare disorders. -- JAH

image via flickr user Jordan Colley Visuals used under creative commons license