Deals Of The Week: Vaxxas To Help Shape The Next Generation Of Vaccines

Australian/U.S. biotech Vaxxas came out of stealth mode Oct. 8, announcing a deal with Merck & Co. in which the biotech’s proprietary Nanopatch technology will be tested with Merck vaccines as a delivery vehicle offering potential advantages for ease of administration and potency.

Based on technology developed in the lab of Dr. Mark Kendall at Australia’s University of Queensland, Nanopatch, a patch delivery system said to induce robust immune system activation by targeting vaccine to immunological cells just below the patient’s skin surface, may offer Vaxxas a string of licensing deals, including milestone payments and royalties, similar to a biotech offering small- or large-molecule drug candidates to bigger companies.

“As a vaccine-delivery mode, Nanopatch is capable of delivering a very potent immunogenic response that in some respects is akin to what you’d see in using an adjuvant. We call it a physical adjuvant,” Vaxxas CEO David Hoey told Deals of the Week. “Even though our business model is to partner with companies that are producing vaccines, we believe that use of the patch actually can provide a lot more than simply a delivery vehicle can by making vaccines more potent and perhaps opening new windows for use of vaccines in development.”

Merck and Vaxxas are not disclosing which vaccine will be tested with the technology. The agreement calls for Merck to make an undisclosed upfront payment and R&D funding and then pay potential development and approval milestones plus royalties on commercial sales for a vaccine which Vaxxas will test with the Nanopatch system. Merck gets an option to an exclusive license to produce a vaccine using Nanopatch, meaning that Vaxxas will not partner its technology with another company selling or developing a vaccine for the same indication.

The pharma also gets the option to expand the agreement to two additional vaccine types, although Hoey said exclusivity for additional indications will have to be negotiated between the two companies. “The structure of the initial vaccine candidate agreement is exclusive and has been defined, and the subsequent vaccine candidates have the potential to be exclusive but have not been defined yet,” he said. “At present, we have a landscape of opportunity minus the vaccine field that we’ve licensed under this arrangement with Merck.”

While R&D will continue in Australia at Kendall’s labs, Vaxxas also has opened an 18-person office in Cambridge, Mass., which  will focus on business development. The Boston area was chosen because it offers numerous potential licensing partners for the Nanopatch technology, added Hoey, previously the VP of business development at PathoGenetix.

Vaxxas raised a $15 million Australian (about $16 million) Series A in August 2011 backed by Australian venture capital firms OneVentures and Brandon Capital, U.S. VC firm HealthCare Ventures LLC and an Australian non-profit, Medical Research Commercialisation Fund. It was the largest venture round for an Australian company since anti-infectives biotech Avexa raised $12 million Australian in 2004.

Nanopatch is a stamp-sized device designed for painless vaccination over a period of two minutes. Providing direct access to immune cells in the skin, the self-administered, needle-free vaccine delivery system contains a nano-projection array patch to which the drug is dry-coated, so there is no need for refrigeration. It was tested in animals to deliver a flu vaccine at 1/150 the dose compared with syringe administration and also has been evaluated for vaccines for human papillomavirus, human simplex virus, Chikungunya disease and West Nile virus.

The patches are produced in the same facilities that manufacture chips for cell phones and computers, Hoey said. They are coated with projections a micron in length using a high-density array that can apply thousands to tens of thousands of projections to a single patch. A dry, needle-free delivery system, Hoey said he is confident the technology can work with many different companies’ vaccines without great formulation challenges.

“Most vaccines today are derived as liquids because needles and syringes are the predominant delivery method, however, the work that has been done by Kendall shows that by a pretty standard set of steps you can prepare a vaccine to be deposited and dried down on a patch,” he explained. “There’s a series of excipients that can be added to existing vaccines to make them adaptable in a format suitable for use in conjunction with the patch. So there’s no specific formulation required of the vaccine provider.”

In searching for partners, Vaxxas is not prioritizing certain indications but trying to position itself by sharing data with vaccine makers showing the technology’s potential to increase vaccine potency and offer the possibility of easier dosing, possibly even self-administration. And Vaxxas will not compete with its partners, Hoey said; the firm has no plans to develop its own vaccines using the Nanopatch technology.

Elsewhere, it was a busy week in biopharma deal-making, as we detail in our latest edition of  …

AstraZeneca/Ardelyx: In its first deal under new CEO Pascal Soriot, AstraZeneca is licensing a Phase IIb-ready kidney drug from privately held Ardelyx. Announced Oct. 7, the deal brings AstraZeneca worldwide rights to oral NHE sodium transport inhibitor RDX5791, as well as other compounds in Ardelyx’s NHE3 inhibitor program. The Fremont, Calif.-based biotech receives an upfront payment of $35 million and can earn up to $237.5 million in development and commercial milestones, along with potential double-digit royalties on product sales. NHE3 is sodium-hydrogen antiporter 3, a protein essential to absorption of sodium by the intestines. The two companies believe these compounds can address end-stage renal disease, chronic kidney disease and other disorders related to sodium and fluid overload. Ardelyx has evaluated ‘5791 in a Phase IIa trial in constipation-predominant irritable bowel syndrome as well as a pair of Phase I studies in healthy subjects to determine the compound’s ability to divert sodium absorption from the gastrointestinal tract. The deal gives Ardelyx an option to co-promote ‘5791 in the U.S. AstraZeneca will assume development costs for the drug, while the biotech will conduct Phase IIb studies. - Joseph Haas

Roche/Inception: A drug-hunting venture borne out of the Bristol-Myers Squibb/Amira Pharmaceuticals buyout in 2011 has resulted in a new opportunity for Roche. Under a novel collaboration structure involving big pharma, venture capital and biotech, Inception Science will create a third company – called Inception 3 – to discover and develop small molecule drug candidates for sensorineural hearing loss based on technology licensed from Stanford University. Roche, which will fund Inception 3’s work with milestone-based R&D payments, will hold an option to acquire the program upon the filing of the first IND based on the Stanford technology. Inception’s backer Versant Ventures, meanwhile, will provide the equity financing for the new company, under an agreement announced Oct. 10. Inception, which consists of two current small biotechs (Inception 1 and Inception 2) focused on neurology and oncology, arose from assets spun out by Bristol after it acquired Amira for $325 million upfront in July 2011. Bristol’s focus was on idiopathic pulmonary fibrosis candidate AM152, and it spun out much of Amira’s remaining intellectual property into Inception, backed by Versant and led by former Amira CEO Peppi Prasit, known around the biopharma industry for his “drug-hunting” acumen. The various parties are not disclosing any financial details about the collaboration nor providing a timeline to the potential IND filing at FDA. However, Clare Ozawa, chief business officer at Inception and a former officer at Versant, said the combined capabilities of Inception and Roche should result in rapid progress toward a clinical candidate. “Because we’re combining capabilities across both Roche and Inception, we think we have the fastest ability possible to get to IND stage as quickly as possible,” she said in an interview. - JAH

GlaxoSmithKline/Aeras: The joint development of a tuberculosis vaccine, expected to be of use in addition to BCG vaccine to prevent pulmonary TB, is the aim of a collaboration also announced Oct. 10 between GlaxoSmithKline and Aeras Global TB Vaccine Foundation, the Rockville, Md.-based non-profit TB vaccine development organization. BCG vaccine prevents some forms of TB in infants, but does not prevent pulmonary TB, which accounts for the majority of infections and deaths among adolescents and adults. A new TB antigen, M72, a fusion protein which is compatible with adjuvant containing Agenus Inc.’s QS-21 Stimulon adjuvant, has been developed by GSK, and found in initial clinical trials to induce an immune response and offer an acceptable safety profile. GSK and Aeras have agreed to each provide resources in order for a Phase IIb clinical study to be conducted in Kenya, India and South Africa next year, in healthy adults aged between 18 and 50. Aeras is supporting the development of half a dozen TB vaccine candidates, the most advanced of which is Oxford University’s MVA85A, a candidate vaccine using a modified vaccinia virus as a vaccine delivery system and two other candidates initially developed by Crucell (now Johnson & Johnson) and Sanofi. Aeras is funded by the Bill & Melinda Gates Foundation and other private foundations and governments. - John Davis

UCB/Harvard University: In the third research collaboration to be set up under an alliance forged in 2011, the Belgian mid-sized pharma UCB is to work with Harvard University researchers on exploiting the human intestinal microbiome for therapeutic molecules. The microbiome comprises the 100 trillion bacteria found in each person’s gastrointestinal tract. These bacteria influence the well-being of individuals and their immune systems, and UCB will provide up to $4.5 million to fund the microbiome-related research of three professors of immunology at Harvard: Christophe Benoist, Dennis Kasper and Diane Mathis. They will systematically mine and classify any new species they find in the microbiome, evaluate the impact of the microbiome on the immune system, and look for new immune-modulating molecules with potential therapeutic applications, UCB announced Oct. 10. Several companies, including VC-backed start-ups, already are looking to exploit the microbiome to develop new therapies. In total, UCB expects to spend $6 million in a multi-year agreement to fund specific research projects at Harvard in the fields of central nervous system disorders and immunology. The first project funded was with Prof. Gokhan Hotamisligil, to identify antibodies against an undisclosed target in metabolic diseases. The second, concluded in June 2012, was with cell biology professor Junying Yuan, who was to develop small molecules which induce autophagy. This is the process in which cells ingest intracellular components and offers potential in the treatment of neurodegenerative diseases. - JD

Sanofi/Massachusetts General Hospital: Sanofi is expanding its presence in the Boston research community through a translational medicine collaboration with Massachusetts General Hospital. MGH will work with Sanofi’s oncology division on two preclinical molecules that were discovered in Sanofi’s labs. The teams will include scientists from both organizations and will be “highly collaborative.” Financial terms of the deal were not disclosed, but it will encompass a two-year period during which the compounds are expected to enter the clinic. The deal terms are flexible enough that other molecules may be added to the collaboration in the future and the timeframe of the collaboration may be extended. The focus of the collaboration will be on translational medicine solutions in oncology. “Sanofi Oncology takes a dedicated and integrated translational medicine approach by understanding the problems that doctors and patients are facing, both from the perspective of a pharmaceutical company and that of a diagnostic company,” said Donald Bergstrom, head of translational and experimental medicine at Sanofi Oncology. Bergstrom added that finding biomarkers will be a key part of the collaboration. The researchers will be focusing on which patient groups will benefit best from the drugs being developed and how to design the clinical program to achieve successful results. - Lisa LaMotta

Roche/Lilly/Washington University: Roche and Eli Lilly will see their investigational drugs tested in a large-scale Alzheimer’s disease trial run by Washington University in St. Louis. Roche’s amyloid beta antibody gantenerumab and Lilly’s solanezumab have been chosen by the university’s School of Medicine for testing in a clinical trial to study if the drugs can prevent the loss of cognitive function in people with inherited mutations that cause early-onset Alzheimer’s disease, the university announced Oct. 10. A third drug, a beta secretase inhibitor also developed by Lilly, is under consideration as well. The trial, expected to begin in early 2013, will be conducted by the university's  Dominantly Inherited Alzheimer’s Network Trials Unit , which is funded in part by NIH, the Alzheimer’s Association, and the DIAN Pharma Consortium composed of 10 pharmaceutical companies. The Roche and Lilly drugs were selected from more than a dozen nominations, with each offering a unique approach to counter the effects of amyloid beta, which builds up in the brains of patients with Alzheimer’s disease. All three drugs have been tested in earlier clinical trials to evaluate safety and efficacy. Gantenerumab is in a Phase III trial testing the drug in early-stage Alzheimer’s patients who have not yet experienced symptoms of dementia. Solanezumab has been making headlines recently; it failed in two high-profile Phase III trials in patients with Alzheimer’s disease, but did show signs of efficacy for slowing cognitive decline in a secondary analysis of pooled data. Roche and Lilly will make the treatments available at no cost and provide supporting grants. The Alzheimer’s Association provided a $4.2 million grant. The trial will enroll 160 people with inherited mutations for Alzheimer’s at a point when they would be within 10 to 15 years of the anticipated age when symptoms of cognitive decline and dementia would appear. An additional 80 participants who did not inherit the mutations also will be monitored. - Jessica Merrill

MedImmune/Cancer Research Institute/Ludwig Institute for Cancer Research: MedImmune, the biologics arm of AstraZeneca, has set up a collaboration with two non-profit research organizations, the Cancer Research Institute and the Ludwig Institute for Cancer Research, to collaborate on clinical trials to test combinations of three novel monoclonal antibodies from MedImmune’s pipeline. The partners also said they are open to including promising non-MedImmune novel compounds in the trials. The agreement, announced Oct. 9, calls for Ludwig and CRI, with input from MedImmune, to conduct the trials using yet-to-be determined combinations of the three compounds, and/or other compounds the partners are working on, or other potential partners might offer up. One of the compounds is tremelimumab, which Pfizer gave up on several years ago and which belongs to the same class as Bristol’s successful melanoma treatment Yervoy (ipilimumab), but MedImmune and its collaborators insist that the problem with tremelimumab was due to the clinical trial design, not the compound itself. CRI’s Cancer Vaccine Acceleration Fund, a two-year-old venture philanthropy group set up to invest in and facilitate innovative cancer immunotherapy trials, is funding the trials. MedImmune is supplying the drugs and, depending on results of the clinical trials, plans to commercialize them and make milestone payments to its backers. The biotech also is continuing to develop the compounds separately, based on its original plans. - Wendy Diller

Picture credit: Nano-structure geometry

A Sneak Peek at Science Matters: Way Cool Wyss

On July 24, Harvard’s Wyss Institute for Biologically Inspired Engineering announced a Cooperative Agreement worth up to $37 million from DARPA for development of an automated instrument integrating ten human organs-on-chips. The news triggered a bout of media coverage including stories on National Public Radio and the Discovery Channel as well as the print trades.

But two weeks earlier, we had been speaking to Wyss founding director Don Ingber about another program at the institute: the development of a nanoparticle technology that uses physical shear force to target occluded blood vessels and deploy the clot-busting drug tPA, which is then effective at one-hundredth of the current therapeutic dose, preventing unwanted bleeding elsewhere. (The image above shows a blood clot within a mouse artery beginning to disappear following the injection of the nanotherapeutic.)  The drug delivery technology could conceivably be used to deliver an array of drugs to diseases characterized by vessel constriction, including heart attack and stroke. It was reported in the July 5 issue of Science Express and is the subject of next month’s Science Matters column in START-UP (a sneak peek of the story is available to readers now here).

When we spoke, Ingber also gave us a heads-up on the organs-on-chips development, which he called “a huge effort” at the Wyss. “We use microfluidics to model the physical as well as the chemical microenvironment and we can get functionality nobody’s ever seen before, in vitro,” he said. “We’ve really found that modeling the 3D physical environment is incredibly powerful for drug screening, disease models, toxicology and so forth.”

The nanoparticle technology was similarly inspired. The modeling of vascular occlusion on which it is based is an offshoot of an idea Ingber had in the 1990s, when DARPA was seeking ways to induce blood clotting in soldiers without knowing where the internal bleeding injury was, and Ingber thought to devise platelet mimetics that would use the higher shear force inside a cut blood vessel as a targeting mechanism. The nanoparticle idea takes a 180 degree turn – using the understanding of the mechanics of how platelets travel in the vasculature and settle at sites of injury to stop rather than induce clotting.

Both programs exemplify the Wyss’ mechano-biological world view. The organs-on-chips effort could greatly advance drug safety and efficacy testing. But we sense Ingber has a special soft spot for the nanoparticles. “This is one I am personally committed to giving our best shot to take it to the clinic,” he says.

Image courtesy of the Wyss Institute.

First-in-human Implantable Drug Delivery Data Airing at AAAS

As this post goes live, a 2pm press briefing is starting at the AAAS Annual Meeting in Vancouver to discuss data from Waltham, MA-based microCHIPS’ inaugural human clinical study of its implantable drug delivery chip, to be published in Science Translational Medicine. The briefing is expected to include company president & COO Robert Farra live on site, as well as founding inventors Michael Cima and Robert Langer of MIT dialing in. Given the venue and the potentially disruptive nature of the technology, we would not be surprised if it receives wide popular coverage.

The thumbnail-sized chip can be implanted and removed in a doctor’s office using local anesthetic. In the trial, it delivered the parathyroid hormone (PTH) drug Forteo daily for 19 days (20 doses), starting at day 57 post-implant. (The lag was to determine that the formation of fibrous tissue around the implant did not interfere with pharmacokintetics – apparently, it did not.)

The device functioned in seven of the eight patients, delivering a total of 132 doses. Although there were some mechanical glitches, the study validated several critical design features including hermetic sealing of each drug reservoir at or near room temperature, to prevent drug degradation, and on-command delivery. Importantly, according to Farra, the patients “found it acceptable:” they could not feel the device and were willing to repeat the procedure for another round of dosing.

An accompanying editorial to the paper, titled "Re-Engineering Device Translational Timelines," dishearteningly calls the road to commercialization of a novel therapeutic implant “a long, meandering pathway to clinical introduction,” fraught with warning signs of “many hairpin curves ahead.” In an interview, Farra sidestepped any discussion of that analogy: “There have been challenges,” he says, but “this technology is paradigm shifting…I think microCHIPS actually did this relatively quickly given the capability of this microchip,” and the need for safety and reliability for use in humans.

Farra may balk at the characterization of expectation versus reality with respect to his company’s timelines. But microCHIPS was founded in 1999 and has been on the popular science radar screen for the past 4-5 years. Literally; in 2008, co-founder and then CEO John Santini was named one of Popular Science’s “Annual Brilliant 10.” Santini later departed, as has successor Ajit Gill. Farra, who joined as head of R&D in 2007, became president in September 2011. Turnover in top management is not unusual for a start-up, but the editorialist’s general point about expectations is valid, irrespective of whether those expectations are being ginned up internally (which we are not saying is the case here) or by the media.

Successful adoption of this implant will probably also require medical infrastructure changes to take effect, such as real-time monitoring capability. The microCHIPS device has built-in diagnostics that can tell whether a dose has been delivered correctly, but it’s done retrospectively, after that information has been uploaded by a physician or caregiver. Farra envisions that in the future, the device will be linked to a cellular network so the information would be flowing to a trending database system that would automatically flag a problem in minutes or less. How quickly such an infrastructure is put in place remains to be seen.

That said, the trial results are heartening. “We needed this milestone to ensure we are spending our money wisely in developing this product,” says Farra. Having validated the 20-dose chip, the next step is to test a same-sized, higher density chip containing 365 wells, which could handle delivery for 1-2 years depending on the drug. The company has developed continuous glucose sensors and could combine sensing and drug delivery within the same microchip -- for delivering glucagon, for example, if a patient was to start going hypoglycemic (insulin delivery is not on the table as dosing is just too high to accommodate in a microchip).

The size of the microchip and its unique mechanism for releasing drug from a preprogrammed set of wells may distinguish it from other diabetes-related drug delivery technologies, such as Intarcia Therapeutics' mini-pump for delivering a years' worth of GLP-1 therapy, soon to enter Phase III testing.

Generally, the drugs best suited for use in the microchip are potent injectibles – proteins, peptides, or nucleic acids that can’t be taken orally and are delivered at low doses.

image via microCHIPS

Deals Of The Week: Hot Pursuit

Takeda is in hot pursuit of Swiss biopharma Nycomed – or maybe not. After the rumorville erupted Thursday May 12 about a possible $12 billion take-out of the private-equity owned Nycomed (which has been on the auction block for months if not years), Takeda tried to squelch the speculation.

In a 96-word statement posted on its website Friday May 13, Japan’s largest pharma noted, “The company would like to make clear that Takeda has not agreed to any such an agreement as suggested by certain news publications…there is nothing that needs to be announced at this point.”

It’s customary practice for companies not to comment on pending M&A rumors (that’s what the bankers are for). And who really wants to announce the biggest deal in their company history on Friday the 13th? That’s like asking for bad integration karma.

Still, Takeda’s action ain’t going to do much to stop the whispers. Various news outlets are simply using the statement to point out that the inevitable persons familiar with the matter say a deal is in its final stages “but might take time to conclude.”

Indeed, as we pointed out in this story from “The Pink Sheet” DAILY, one of the reasons the rumors have garnered so much traction – aside from the juicy valuation Takeda allegedly places on the company – is the logic of the tie-up. As the 15th biggest pharma worldwide, Takeda has been trying since its $8.8 billion take-out of Millennium Pharmaceuticals to become a significant multi-national player. That 2008 acquisition did more than expand the Japan co’s presence in oncology, a core therapeutic area. It also dramatically increased the company’s US footprint at a time when the its joint venture with Abbott was winding down, and bolstered Takeda’s senior executive team with the likes of Deborah Dunsire, Christoph Bianchi, and Nancy Simonian.

In the same vein, a Nycomed buy would significantly boost Takeda’s European footprint (one of Takeda’s long-stated goals), while also jump-starting its emerging markets strategy (another more recently stated goal). Like most Japanese pharma, Takeda has been behind its multinational counterparts when it comes to inking deals in various EMs. But with a single deal, the Japan drug maker could increase the percentage of sales revenues coming from this increasingly valuable part of the world. Almost 40% of Nycomed’s $4.5 billion revenues from 2010 came from emerging territories, and the company forecasts that share to increase to 60% by 2015.

It’s true that Nycomed’s therapeutic focus on respiratory diseases and inflammation doesn’t quite chime with Takeda’s areas of interest. But Nycomed’s expertise in GI seems like a natural fit; the company got its start in 1895 manufacturing and selling bismuth – the basic ingredient in Pepto-Bismol. The ability to leverage Nycomed’s strong existing OTC biz is also likely an allure; Nycomed demonstrated its prowess in this arena in 2009 when it scored Europe’s second centralized Rx to OTC switch for pantoprazole. (Coincidentally that’s the same year OTC versions of Takeda’s blockbuster PPI Prevacid hit the market.)

Certainly if Takeda wants to ramp up quickly in both Europe and EMs, there aren’t too many specialty cos that are affordable – and available for purchase. Let’s not forget that Nycomed’s ownership structure – PE firm Nordic Capital holds more than 40% with Credit Suisse’s DLJ Merchant Banking, Coller International Partners, and Avista also having stakes – means there’s increased pressure on the privately-held Nycomed to create some exit options. Thus, if the Takeda deal doesn’t materialize, it’s a fair bet another suitor for Nycomed will emerge.

Stay tuned to IN VIVO Blog as the chase for Nycomed evolves. Meantime there’s no need to delay the deal making gratification. Ever in pursuit of the week’s top deals, we bring you – signed, sealed, and delivered – another edition of ...


Alkermes/Elan Drug Technology: Nycomed isn’t the only European company that’s been looking for a buyer. In the week’s biggest confirmed deal, Alkermes announced it has snapped up Elan Corp’s Elan Drug Technology group in a cash and stock deal worth nearly $1 billion. The new company will be incorporated in Dublin but have a decidedly US look: Richard Pops, Alkermes’ current chairman and CEO will retain those job duties, while EDT’s CEO Shane Cook becomes president of the new entity. The acquisition could be a transformational event for Alkermes, which has spent the last few years trying to step out of the shadow of some big name partners (Eli Lilly, Amylin, Johnson & Johnson) and dodge the negative Exubera press that gave drug delivery a bad name. The transaction certainly deepens the drug delivery technology capabilities within Alkermes, but that’s not the story line executives are playing up. In an interview with “The Pink Sheet” DAILY, Pops was pretty clear that he didn’t want Alkermes tarred with that brush. Indeed, the biotech has spent the last several years trying to reinvent itself, emphasizing its CNS-focused product development expertise a la Vivitrol. In this case, the drug delivery expertise is a means to that end – and a pretty lucrative one. Technology from the newly combined EDT/Alkermes is embedded in more than two dozen commercial products, from Acorda’s Ampyra to J&J’s anti-pyschotics Invega Sustenna and Risperdal Consta to Eli Lilly/Amylin’s Bydureon. That means there are some nice royalties coming the new Alkermes’ way to support its drug development ambitions. As Pops told PSD, “it takes us immediately to a cash-flow positive company.” And it’s hard to argue with a balance sheet in the black.—Lisa LaMotta and EL

Shire/Heptares: The hope that new technologies can crack intractable targets continues to lure big pharma to the deal making table. But in the case of this week’s early stage R&D alliance, a tie-up between Shire and the GPCR-focused start-up Heptares, that allure wasn’t so strong that the pharma in question didn’t want to hedge its risk. Thus, Shire – not usually one to reach so far back in the value chain – has agreed to take an exclusive option on a novel adenosine A2A antagonist currently in preclinical development at Heptares for the treatment of the symptoms of Parkinson's disease. (It has the potential to treat other CNS diseases as well.) Of course, Shire already has significant business in the CNS area, with the ADHD therapy, Vyvanse (lisdexamfetamine), being its top-selling product. The financial terms of Heptares’option agreement with Shire weren’t disclosed, but include an upfront payment and, according to Heptares’ CEO Malcom Weir, significant downstream royalties. There’s also a separate payment owed if and when the option is exercised. This is the second big pharma alliance Heptares has inked in as many months; in April it announced a tie-up with Takeda worth £4.5million upfront (also CNS focused, though that particular target was not disclosed). Heptares also isn’t one to shy away from options. In 2009, eight months after the Swiss pharma’s Novartis Option Fund invested in the biotech’s $30 Series A, Novartis and Heptares announced an option-based alliance that requires the start-up to produce small molecules against a GPCR of the pharma’s choosing.–John Davis & EL

Allos/Mundipharma: Allos Therapeutics achieved a key strategic goal May 10, announcing a co-development and commercialization pact for Folotyn with the U.K.’s Mundipharma International Corporation Ltd. The deal is worth $50 million upfront to Allos, and the smaller firm gets to keep 100% of the US market. (Mundipharma has exclusive ex-US rights.) Folotyn, a folate analog metabolic inhibitor, was approved under accelerated review by FDA in 2009 for relapsed or refractory peripheral T-cell lymphoma and remains the only drug approved in the US for this indication. (Currently there are no approved drug therapies in Europe.) Still that hasn’t helped sales of the medicine, which are most diplomatically described as tepid. Folotyn’s US approval came with a requirement for four post-marketing trials, including studies that measure efficacy in previously undiagnosed PTCL patients and in combination with bexarotene in relapsed or refractory cutaneous T-cell lymphoma. Importantly, the deal requires Mundipharma to fund 40% of the costs of those trials. The cost-sharing would be split 50/50 if Folotyn garners a positive nod from the European Medicines Agency, an event that could happen in 2012. Allos also can earn commercial progress- and sales-based milestones totaling up to $310.5 million under the partnership, along with tiered double-digit royalties on sales occurring in Mundipharma’s licensed territories. Meanwhile, Allos’ monopoly in the U.S. may be short-lived, as Celgene Corp. has a June 17 PFUFA date for its application to add progressive or relapsed PTCL to the label of its HDAC inhibitor Istodax, which already is approved for second-line therapy in cutaneous T-cell lymphoma.—Joseph Haas

Pfizer/Zealand: We’re late to this break-up, which was apparently first tipped when Zealand pharma released its IPO prospectus back in 2010 and again in the biotech’s annual report, but it finally caught our eye yesterday. (Hey, the third time’s the charm.) As part of an announcement about its first quarter results, the Danish biotech said yesterday it had regained rights to danegaptide, a gap junction modifier with potential in atrial fibrillation, from former partner Pfizer. Pfizer got its mitts on the project as part of the Wyeth acquisition (Wyeth and Zealand originally teamed up in 2003) and has since made no bones about its desire to exit cardiovascular research. Specific terms of the give-back weren’t announced but Zealand now holds “all rights to and all clinical data generated with this compound,” the IV version of which has completed two Phase I studies. Zealand intends to take an oral version of the drug into Phase I and “together with a new large pharma partner we intend to prepare for the Phase IIa proof of principle study in 2012,” according to the company’s 2010 annual report. Pfizer’s decision to pull back on cardiovascular R&D reflects a broader industry trend away from an area that was once close to most pharmas’ hearts (sorry). Zealand’s search for a new partner will therefore see it knocking on fewer doors, though with a first-in-class compound with potential acute and chronic uses, it’s likely to get a look-see from the remaining cardiovascular stalwarts.—Chris Morrison

An Undearm Fix For A Low Sex Drive

Does your sex drive need a boost? We're not talking about the kind of pick-me-up that you can get from Viagra or Cialis. How about hypogonadism? You know, low testosterone levels. If you relate, just raise your hand - or instead, raise your arm and rub on some testosterone cream.

That's right. Lilly just signed a global licensing deal with Acrux to commercialize an experimental underarm testosterone solution to be called Axiron, which is being reviewed by the FDA. If approved, this would become the first testosterone product that would be as handy to use as deodorant (just make sure you reach for the correct item in the medicine cabinet. You wouldn't want to start the day overstimulated now, would you?).

Here's the nitty gritty - Acrux gets an upfront payment of $50 million, plus $3 million once manufacturing assets are transferred. If the FDA approves the cream, Acrux gets another $87 million and up to $195 million more in potential commercialization milestones and undisclosed sales royalties.

Improving sex lives is, we know, a big opportunity. In explaining its decision to invest in Axiron, Lilly cites a study suggesting that up to 39 percent of men who are 45 years old or more may have lower-than-normal testosterone levels. Yet most apparently go undiagnosed (please don't suggest they're bored with their partners).

Nonetheless, someone is using this sort of stuff - Lilly also cites IMS data indicating global sales of testosterone therapies now exceed $1 billion, with the US contributing some $700 million to that total. And Acrux, which developed its product using proprietary technology, brags that market research shows 87 percent of physicians said they would offer Axiron to existing patients.

So no matter what the problem down below, Lilly hopes to have an arsenal of medicines that can lift one's... spirits.

FDA Thinks Small: Next Steps for Nanotech

When it comes to drug development, the Food & Drug Administration is starting to think small. Really small.

Nanotechnology—the manipulation of matter on the scale of a billionth of a meter—has gotten the attention of FDA regulators. And while nanotech has been mostly used for cosmetics and OTC drugs like high-tech sunscreens, the science is starting to move in the direction of pharmaceutical and biotechnology applications.

As Ellen Licking wrote in a recent issue of START UP, there are a handful of nano-based prescription drug products out on the market, like the aprepitant nanocrystals Merck markets as the antiemetic Emend, and the albumin-coated molecules used in Abraxis Biosciences’ breast cancer drug Abraxane.

And while none of the marketed nano drug products are exactly blockbusters, there are a few drug delivery companies with dreams to change all that by producing next-generation, “me-better” therapies that are safer or more efficacious than existing products. These young upstarts include BIND Biosciences, Tempo Pharmaceuticals and Liquidia Technologies.

Those invested in nanotech have great expectations for the science. Noubar Afeyan, PhD, a managing director with the Boston-based VC firm Flagship Ventures, told START-UP that nanotechnology is a “whole new way of thinking about designing a drug…that hasn’t been available before.” And talk about bullish: David Sarphie, PhD, CEO of Bio Nano Consulting, predicts that by 2015 nanotechnology will play a critical role in the delivery process or development of up to 60% of biopharma products.

Regardless of whether one buys into the nanotechnology hype, FDA sees it as significant enough to take a closer look. An internal task force released a report on nanotech last year, the findings of which will be discussed September 8 at the latest in a series of public meetings on nanotech-y issues. Topics for discussion will include:

(1) The type of information and data that may be needed to demonstrate the safety and effectiveness of FDA-regulated products containing nanoscale materials and;

(2) The circumstances under which a product's regulatory status might change due to the presence or use of nanoscale materials (for example, making a device no longer exempt from 510(k) submission requirements).

Expect some controversy at the meeting. Like other new-tech areas like genetically modified foods, not everyone is thrilled about the prospects for nanotechnology. Do a Google search of “nanotechnology” and “safe,” and you’ll come up with a whole host of organizations that question whether FDA should be keeping tighter control over nanotech.

But there is some concern about whether FDA even has the authority and resources to regulate nanotechnology. Plus, nanotechnology extends into other sectors, like clothing and consumer goods, which raises still more questions. If the agency can regulate some nano products, but not others, will that ultimately damage the prospects for the entire science?

Those questions certainly won’t be resolved anytime soon, but given the interest in really, really small things—as well as new ways to improve upon existing products—the meeting is worth checking out. We'll certainly be there.

While You Were Augmenting Your Wardrobe

Congratulations to South African Trevor Immelman who held off the field at Augusta to win his first Masters' championship and claim the green jacket (it always fits!). We had money on Tiger knew he could do it. We're by no means avid golfers, though we enjoy watching the majors and very occasionally swing the sticks ourselves. But when you think about it, golfing's a lot like blogging. Golf, blog, both four-letter words. Both addictive hobbies. Both require minimal physical conditioning, and both go better with a few beers. Both rely heavily on links. And both provide ample opportunity to break out one's Bill Murray impersonation.

In sporting news closer to our hearts, the Flyers split the first two games of their best of seven conference quarterfinal series with the Capitals, largely by keeping the superhuman Alexander Ovechkin in check for about 114 out of a possible 120 minutes. This blogger is sticking to his Flyers-in-5 prediction.

On to the industry news where a few tidbits have begun trickling out of AACR, more news outlets are picking up on the newly infamous Vytorin "minutes", and the New York Times is running a front page story about a new pricing system for expensive medicines that is quickly becoming popular with insurers. Not so much with patients, whose co-payments are skyrocketing under the new system. Says the Times: "The system means that the burden of expensive health care can now affect insured people, too." Moving on ...

• Woe is UK biotech, repeats the Telegraph, which recounts some of the sub-sector's sadder stories. For companies to succeed they'll need new sources of finance, the piece points out--Plethora's Paul Capital deal (DOTW'd here) is the latest example of such creativity.
  
• Reuters notes that although inhaled insulin might be dead (or if you're Mannkind, not quite), but plenty of firms are still interested in inhalation delivery of other proteins. Maybe so, but chances are the safety hurdle for such therapies just got a bit higher, and post-marketing surveillance could be onerous.
  
• Plenty of news out of the big AACR meeting in San Diego. Amgen presented data on some preclinical anti-angiogenesis compounds; Introgen presented preliminary Phase III data for its Advexin head and neck cancer candidate; Infinity presented preclinical data on its IPI-926 Hedgehog antagonist. Follow all the news here.
  
• So I jump ship in Hong Kong and make my way over to Tibet, and I get on as a looper at a course over in the Himalayas. A looper, you know, a caddy, a looper, a jock. So, I tell them I'm a pro jock, and who do you think they give me? The Dalai Lama, himself. Twelfth son of the Lama. The flowing robes, the grace, bald... striking. So, I'm on the first tee with him. I give him the driver. He hauls off and whacks one - big hitter, the Lama - long, into a ten-thousand foot crevasse, right at the base of this glacier. Do you know what the Lama says? Gunga galunga... gunga, gunga-galunga. So we finish the eighteenth and he's gonna stiff me. And I say, "Hey, Lama, hey, how about a little something, you know, for the effort, you know." And he says, "Oh, uh, there won't be any money, but when you die, on your deathbed, you will receive total consciousness." So I got that goin' for me, which is nice.

Masters photo from flickr user John Trainor used under a creative commons license.

Dead AIR?

Alkermes said today that it expects Eli Lilly to discontinue the companies' AIR Insulin collaboration:

Lilly has informed Alkermes that it is evaluating its business case for AIR Insulin and Alkermes expects Lilly to make a decision to discontinue the program in the next week. Alkermes is not aware of any safety, efficacy, or manufacturing issues that have arisen regarding AIR Insulin since Lilly’s last public update on the program.

Loyal IN VIVO Blog readers won't be completely shocked--over the past few months in our writing and reporting on the demise of Exubera we've noted repeatedly the current difficulties associated with drug delivery in general and the problems with succeeding with inhaled insulin specifically.

We expect Lilly is treating Alkermes a bit better than Pfizer treated Nektar--perhaps avoiding some Howard Robin-esque harsh words and a $135 million "i'm sorry" payment.

Since this is Lilly's proprietary insulin, Alkermes presumably isn't even getting back a partnerable asset on the cusp of finishing Phase III development, with a means of delivery much more discreet than the much-maligned Exubera inhaler.

Your move, Mannkind.

UPDATE: It's official, says Lilly.

Nektar Takes A Deep Breath

Deep breath in. Deep breath out. Nektar execs, have you found your quiet place, yet?

It's been a stressful few months for Nektar employees. The company's 13-year marriage with Pfizer soured last October when the pharma unexpectedly decided to stop selling its inhaled insulin Exubera. True, Pfizer did cough up a hefty divorce settlement--a $135 million forgive-me gift, plus a promise to help with insulin supply and on-going clinical trials. (For more on the future of inhaled insulin, see here.)

Yesterday came the news that Nektar is eliminating approximately 150 positions--110 existing jobs plus 40 unfilled openings--as it restructures the company to "transition form a drug delivery service provider to a therapuetics drug development organization." In addition, the company announced that Hoyoung Huh, the company's COO and head of its pegylation business unit, is leaving to become CEO of BiPar Sciences, an up-and-coming biotech developing oncology therapies.

We've said it before. (No doubt, we'll say it again.) It's a terrible time to be in drug delivery. Making money in this space has always been tough--it's not enough anymore to take an existing molecule and dress it up with a PEG molecule to extend its shelf-life or aerosolize it for delivery to the lungs. Payers and physicians want proof that a new formulation isn't just convenient, but that it's superior to existing available medicines. As David Steinberg, an analyst with Deutsche Bank, told START UP in December: "The old model of drug delivery is completely broken down. To be successful you have to think far more innovatively."

Thing is, it takes a lot of money--and risk--to engineer a delivery system robust enough to deliver a real therapeutic advantage. Look at the field's lone success story in recent years--XenoPort. The company's share price has increased more than six-fold since its 2005 IPO, thanks to the success of its gabapentin pro-drug, XP13512, for restless leg syndrome and neuropathic pain. Last February GlaxoSmithKline agreed to fork over $75 million in cash and another $500 million in development, regulatory, and sales milestones for the compound. (Just for the record, Xenoport raised approximately $270 million in equity capital and another $160 million from partners to get enough data to convince the pharma of XP13512's value.)

So, the big lesson from XenoPort's success? Delivery technology ain't enough. XenoPort was only able to sign this monster deal with GSK because XP13512 is a new chemical entity with hard-to-duplicate molecular advantages. (The nifty formulation technology is an added bonus to investors -- a key part of its discovery platform.)

Of course, there is a corollary to this lesson (This IS a Windhover publication.) To be successful in drug delivery today means spending research dollars on two fronts: not only do you have to spend money to engineer the delivery system, but you also have to spend money to discover and develop novel, first-in-class or best-in-class compounds. Which leads this IN VIVO blogger to wonder, why even bother with the delivery piece of the puzzle?

Seem's like Nektar's board and CEO, Howard Robin, have been asking the same question. As part of the company's restructuring, Robin noted in a press release that "We are transforming Nektar into a world-class drug development company."

My friends and colleagues know I'm a big believer in the "I think I can" strategy. But it's tough to see how Nektar's transformation will occur near term. True, the company's inhaled amikacin, which is being co-developed with Bayer AG, is expected to enter Phase III clinical trials later this year, and its two leading PEGylated small molecule programs, PEG-irinotecan and oral PEG-naloxol, just entered Phase II clinical trials. But will there be the leadership to push these two products through development now that Nektar's PEG champion and resident brainiac, Hoyoung Huh, is jumping ship to take the helm of BiPar Sciences?

Maybe "the decision to step down as COO was a difficult one," as Huh asserts in another press release issued today. After all, he hasn't severed ties with the company completely. He'll be serving on the company's Board of Directors until 2009 or until a replacement has been identified according to SEC documents. Or maybe, Huh, whose CV lists an MD, a PhD, and a stint as a McKinsey partner, saw the darkening skies and approaching stormy seas and left for the relatively calmer waters of private biotech.

February 27 should be an interesting day. That's when Nektar will release results for the fourth quarter and full year of 2007. Meantime, Nektar employees, remember: deep breath in; deep breath out.

Photo courtesy of Flickr user Transguyjay through a creative commons license.

Take a Deep Breath, Pfizer, and Think Again

It's just what Pfizer didn't need: another expensive failure.

Less than six months after the much-vaunted Lipitor-replacement torcetrapib tanked, it's now official that the Exubera launch is a flop. The numbers say it, the newspapers say it, and even Pfizer’s own executives acknowledge that “we still need to figure out how to market Exubera.”

Not surprising, perhaps—Pfizer isn’t exactly a large molecule expert, and Exubera, as the first ever inhaled insulin, presents even more challenges for its sponsor than your average biologic.

First, doctors must be convinced of the drug’s advantages over existing treatments; not just longer-acting insulins such as Levemir, marketed by diabetes-leader Novo Nordisk, but also since late 2006, Merck & Co.’s star DPP-4 inhibitor sitagliptin (Januvia), a rare industry success story (to be followed by recently-approved Janumet, a combination of Januvia and metformin).

Then, time-constrained docs must learn how the inhaler device works (and adapt dosages, which are different when insulin is inhaled rather than injected). If they get past that hurdle--and aren’t swayed by detractors such as Dr. John Buse, president-elect of the American Diabetes Association, who says that Exubera may present a safety risk in Type I diabetics--then their patients must get used to carrying an umbrella-sized device around with them (and paying more for the privilege: Exubera costs $2-3 more per day than injectable insulin).

So Exubera is being chosen for just one in 500 insulin prescriptions in the US, despite Pfizer’s investment—900 part-time diabetes educators, over six months of doc-targeted marketing, and considerable sales rep resource, in part diverted from other more profitable drugs. Analysts have slashed Exubera sales forecasts, in some cases to barely more than $300 million by 2012.

But Pfizer’s not giving up. “Don’t write Exubera off,” warns a senior executive at Pfizer. “We’ve screwed up before on launch, and the drug has come back.”

The company will soon launch a fresh marketing campaign, a summer DTC advertising splurge (very unfashionable), and reckons that transferring Exubera promotion to its highly successful CV team might make the difference.

Chances are it won’t. Marketing inhaled insulin—effectively a niche drug, despite initial forecasts of peak-sales of up to $2 billion—isn’t like marketing a primary care pill. You can’t use the same tricks.

“Patients will be inhaling insulin over the next few years,” insist Pfizer executives. Sure, but how many, and whose product? By the time Pfizer figures out its promotional game, competition will be even worse, even if there is a market. The handful of inhaled insulin alternatives in Exubera's wake have smaller, more discreet devices, and will benefit from Pfizer's experience in figuring out how to make breathing in one's insulin more attractive than injecting it.

“You may wonder whether Exubera could be right for you,” says Pfizer’s product website to prospective customers. Despite its brave face, Pfizer must be wondering whether this drug is right for it, too.

But What if I Drool?

A ton of resources at Big Pharma are devoted to developing or licensing drug delivery technologies, for sure. But here's a publicly funded organization putting its money where, well, where its mouth is.

European researchers are developing an orally implantable drug delivery system that could improve compliance in patients on a wide variety of therapies. According to the developers, IntelliDrug, the fake-molar implant works thusly:

The micro-system comprises a medication reservoir and release mechanism, a built-in intelligence, micro-sensors and micro-actuators. IntelliDrug device will be placed in the oral cavity. The medicine is contained in the small reservoir. It will be released in a controlled manner accordingly to patient’s needs, for periods lasting days, weeks or months. The device will be reloaded in a simple non-invasive way. The released medicine will be either absorbed by the oral mucosa or swallowed by the patient.

Actual implant sans toothbrush and smile.

Source: BBC (via Onpharma)