What Is the Buoyant Biotech IPO Scene Doing to Private Biotech M&A Trends? FOTF Says: Not Much

Despite a slight slowdown, there's considerable cash already sloshing around the biotech IPO space. There's (still!) plenty more stacked up in investor suitcases from California to the New York Island just waiting to back anything with a pulse. The momentum is here! This land grab is your land grab!

All of which should mean that biotech boards weighing exit options the past year or so have had choices that didn't exist for most companies in the preceding four or five years. Remember the lean times? The doldrums? You don't?

That revived optionality should translate into fewer companies agreeing to pharma takeovers. For the ones that do opt for the warm embrace of a bigger drug company, it should also translate into leverage. Those biopharma start-ups that choose to pull the M&A exit cord should be driving better bargains. But data we compiled from Strategic Transactions suggests neither is true. At least not yet.

It's worth remembering that even during the coldest days of the Biotech Winter, when asset prices were at their most depressed, pharma companies flush with cash didn't really go on a shopping spree. Volume of private biotech M&A never really spiked. We reported that in 2009, and it pretty much held true the next few years. Why? Assets were cheap, but pharma was picky. Prices slackened a bit, and it won't be surprising if they tick up now as biotech booms (despite this week's hiccup among the larger issues). But volume has stayed fairly constant.

In fact, the roughly two dozen private biotech M&A deals from 2013, compared with the past five years or so decade of data, slots in at just about average. Part of this might be due to company building strategies, born or embraced in the lean years, that emphasized capital efficiency, single-asset structures and baked-in-buyouts. Those were good ideas for the lean years, and they're still good ideas for these times-o-plenty.

Now, what about prices? Data is of course limited; not every acquired company discloses a price tag, and absolute values tend to be worthless unless you know how much money went into the target prior to a deal. Instead, we looked at step-up multiples, and by-and-large, those haven't changed much either.

Instead, up-front deal values on average have bounced around the 3x line for quite a while, and that's roughly in line with, and perhaps a a bit better than, the average pre-money to post-money step-ups we've seen in the biotech IPO space. But acquisition multiples are where we've heard, anecdotally, that things may be changing. So long as biotechs have the kind of optionality that public investors provide - i.e. not just getting onto the market but raising enough cash to have a credible alternative to a pharma partnering deal or outright acquisition - those upfronts might start sliding up. Or perhaps, instead, biobucks that are locked-up in earn-out payments will become easier to attain.

Speaking of optionality we know you've got choices for your every-other-week biopharma financing wrap-up. Thanks for sticking with ...

Acadia Pharmaceuticals: Just a week after reporting in its fiscal 2013 results that its cash on hand at year end totaled $185.8M, thanks mostly to a $108M secondary offering in May 2013, Acadia increased its cash position again on March 4, netting $171M in a FOPO of 6.4M shares for $28.50. The company, which could realize an additional $27M if underwriters buy up to 960k shares in the overallotment, is preparing to file an NDA in late 2014 for pimavanserin in psychosis associated with Parkinson’s disease and is working on pre-launch activities.  Acadia presented pivotal Phase III data at the March 2013 meeting of the American Academy of Neurology. Studies showed the serotonin 5HT2A antagonist/inverse agonist significantly reduced psychosis over placebo (the primary endpoint) and helped maintain patients’ motor control. There were also clinically meaningful benefits in measures of nighttime sleep, daytime wakefulness, and caregiver burden. At the end of 2013, Acadia began testing pimavanserin in Phase II for Alzheimer’s-related psychosis. The company also recently advanced into preclinical studies a muscarinic agonist for glaucoma through its deal with Allergan. --Amanda Micklus

Neurocrine Biosciences: The San Diego biotech focused on neurological and endocrine-based diseases priced a follow-on public offering February 26 to sell 8 million shares at $17.75 each, with net proceeds of $133.5 million. Neurocrine said it would use the proceeds to fund its R&D.  Primary among its programs is NBI-98854, a wholly owned vesicular monoamine transporter 2 (VMAT2) inhibitor in Phase II for tardive dyskinesia. In 2012, the biotech reported mixed results from a Phase IIa study of ‘98854 in which patients at one of eight sites fared better on placebo than study drug. Neurocrine has said it plans to keep that program for itself as it attempts to evolve into a fully integrated pharmaceutical company. If successful, it would be quite a turnaround story. In 2006, the firm was rocked by the FDA's refusal to approve its insomnia drug indiplon, then partnered with Pfizer. Its comeback began in earnest with strong clinical data from its gonadotropin-releasing hormone (GnRH) antagonist elagolix, which is now partnered with AbbVie and in Phase III for endometriosis and Phase II for uterine fibroids. This is the second large FOPO by Neurocrine in slightly over two years – it raised $83.2 million in January 2012 by selling 10.9 million shares at $8.10 apiece. This time around, it granted underwriters Jefferies and J.P. Morgan a 30-day option to buy up to 1.2 million additional shares. The stock closed trading March 5 at $17.84 per share, with a 52-week high of $20.29 and a low of $8.57. – Joseph Haas

Aquinox Pharmaceuticals: IPO activity slowed the past couple weeks, but Aquinox debuted March 6 by selling 4.2 million shares at $11 each. It hit the midpoint of its proposed range, but it ended up selling 14% more shares than it originally intended. Its lead compound, AQX-1125, is in Phase II for two indications, chronic obstructive pulmonary disease and bladder pain syndrome. Both trials started in 2013 after the firm pulled in an $18 million Series C round led by Johnson & Johnson Development Corp. and with participation from new investor Augment Investments and returnees Pfizer Venture Investments, Ventures West Capital and Baker Brothers Investment. AQX-1125 is an activator of the enzyme SHIP1, a modulator of the PI3 kinase pathway and, the company says, particularly important in preventing abnormal inflammation at mucosal surfaces. The founders of the Vancouver, BC firm discovered SHIP1 while at the University of British Columbia and created a mouse model whose immune system lacks SHIP1. The asset that became AQX-1125 came from Aquinox's 2009 deal for one of Swedish firm Biolipox's compound libraries. Lead underwriters Jefferies and Cowen, along with Canaccord Genuity, have the option to buy up to 555,000 additional shares.  – Alex Lash

Human Longevity: Pioneering biologist Craig Venter’s newest project will aim to compile a vast amount of genomic data to treat disorders associated with aging, with an eye on adding decades to the human lifespan. The former genome-mapping CEO of Celera Corp. and founder of the J. Craig Venter Institute unveiled the project March 4, revealing an initial funding round of $70 million. HLI didn’t name the full list of investors, but it includes lead backer KT Lim, a Malaysian billionaire whose holdings include a long list of casinos and resorts. Another investor, Illumina Inc., supplied HLI with two systems that can sequence a genome for $1,000, and normally list for $10 million apiece. The remainder of the roster includes an assortment of high net worth individuals, Venter said. HLI says it will initially create 40,000 genomic sequences annually, and may soon obtain 100,000. At first, most will come from consenting patients in University of California, San Diego research programs. HLI plans to unite genomic, microbiome and metabolome data to create profiles of healthy and unhealthy patients from all ages, including infants and supercentenarians. It will also investigate the associations between depleted stem cells and aging-related diseases, and will first address cancer before moving on to neurological, cardiovascular and liver disorders. – Paul Bonanos

Best Of The Rest (Highlights Of Other Activity This Fortnight): Novel dermatology drug developer Thesan Pharmaceuticals has now raised close to $66M, thanks to a $49M Novo Ventures-led Series B round that closed on February 24…days after Endo completed its $1.5B buy of Paladin, Paladin spin-off Knight Therapeutics, which will own rights to the rare disease drug Impavido for leishmaniasis, grossed $Cdn71M by selling warrants to GMP Securities, Cormark Securities, and other investors…Pain treatment maker Recro Pharma priced its IPO, selling 3.8 milion shares at $8 each to raise $30 million...Ampio Pharma netted $64M in a follow-on public offering to complete clinical trials of Ampion and Optina (for osteoarthritis of the knee and diabetic macular edema, respectively) and submit regulatory filings…using momentum from its recently filed NDA for Alzheimer’s combination memantine ER/donepezil (partnered with Forest), Adamas Pharmaceuticals filed for its IPO…and Abingworth closed its tenth life sciences fund, worth $375M. --Amanda Micklus

And The Roger Goes To ... Our Deals of the Year Winners!

To Claim Award: Ctrl-P, cut along border, tape to plaque (note: plaque not included).

M&A of the Year: Amgen/Onyx

Congratulations to Amgen and Onyx, who've won, with more than 62% of the vote, our M&A of the Year nod. The voters chose the biggest deal -- though there were other interesting nominees we aren't surprised -- and we'll all be watching Kyprolis to see whether the price was right.

Alliance of the Year: Celgene/Oncomed

This one was never in doubt. Celgene and Oncomed knew how to canvass, their Get Out The Vote strategy was clearly second to none (the alliance category tallied about 1000 more votes than the other categories). And even a late push from GSK/Community Care of North Carolina (no doubt helped by voters turning up to support GSK in its close race below) couldn't derail Celgene and Oncomed's cancer stem cell alliance from the top spot. It finished with about 63% of the vote.

Financing of the Year: GSK/Avalon

As of this morning the two leaders in this category -- Children's Hospital of Philadelphia funding Spark Therapeutics and GSK/Avalon -- were separated by only a few dozen votes out of thousands cast. Finally, a race worth watching 'til the end. Spark began to pull away, stretching its lead to a few percentage points with an hour to go. And then GSK/Avalon swung back, pipping them at the post in the waning moments of voting. GSK/Avalon 48%, Spark 47%. The achievement is even more impressive in light of the nature of the also-rans. Calico, Juno, and Editas were all noteworthy debuts in 2013. Ophthotech had possibly the best IPO in a crowded biotech IPO field. None of those four deals received more than a tiny sliver of the vote. 

As always our winners are welcome to make an acceptance speech in the form of a guest post here on In Vivo Blog. Winners, please reach out if you'd like to do so. Thanks everyone for voting again this year, and congratulations to our winners!

And The Nominees for IVB's 2013 Financing of the Year Are ...

We've nominated six 2013 deals for Financing of the Year. It's time for you, esteemed readers of The In Vivo Blog, to decide the winner. From Series A to IPO, from twinkle-in-the-eye science to Phase III drug candidate, we've got it all. Our polls will stay open through the New Year, until Noon ET on Tuesday, January 7. Good luck to the nominees! VOTE BELOW! IF YOU ARE VIEWING VIA EMAIL AND CAN'T SEE THE POLL, CLICK HERE.

Ophthotech's IPO: In a year filled with impressive public market debuts when public market debuts of biotechs were one of *the* top stories, Ophthotech's IPO hauled in $192 million and rightfully sits atop a heap of newly public biotech offerings. And Ophthotech might need every bit of that cash, and maybe more, for an ambitious Phase III program. Read the full nomination here.

Editas' Series A: Polaris, Third Rock, and Flagship more often than not will work in stealth on new potential breakthrough technologies on their own. Not the case with Editas, where the trio have teamed up to turn one of the hottest research tools around into a new wave of therapeutics. One might call it gene therapy, version 2.0: the technology known as CRISPR/Cas9 allows researchers working with cells or model organisms to delete genes or replace them with new ones, but in ways considered more precise than other gene-editing systems currently in use. Read the full nomination here.

Google backs Calico: Just Google, Art Levinson, and a small handful of drug discovery and development luminaries getting together to combat diseases of aging. Anyone else out there planning to 'solve death'? Read the full nomination here.

CHOP backs Spark Therapeutics: Spark sprung nearly fully formed (with a Phase III asset) from CHOP this year, with $50 million in funding. That's enough to carry its lead program to market, a gene therapy for an inherited form of blindness. In doing so it is riding a wave of recent high-profile investment in gene therapy. Read the full nomination here.

Juno Therapeutics' Series A: Juno unites researchers from three different institutions: Fred Hutchinson Cancer Center and the Seattle Children’s Research Institute in Seattle, and Memorial Sloan-Kettering Cancer Center in New York to pursue multiple avenues of cancer immunotherapy, and its $120 million Series A instantly sets the Seattle-based company up to become a major player in the rapidly evolving sector. Read the full nomination here.

GSK/Avalon Ventures: Pharma needs innovative pipeline candidates. VCs need faster, cheaper and easier exits. The partnership between Avalon Ventures and GlaxoSmithKline aims to accomplish both. The model sees up to $30 million from Avalon and up to $465 million from GSK come together to fund up to 10 new companies, each built around a single drug candidate. Read the full nomination here.

2013 M&A of the Year Nominee: The Ibrutinib Royalty

It's time for the IN VIVO Blog's Sixth Annual Deal of the Year! competition. This year we're once again presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A of the Year, Alliance of the Year, and Financing of the Year. We'll supply the nominations (about a half dozen in each category throughout over the next week or so) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

Royalty deals have long been the provenance of more conservative private-equity vehicles. Then came... The Ibrutinib Royalty, soon to be a major motion picture starring Matt Damon.

But seriously, it was odd not just to see two venture firms join the royalty deal but also to hear how much each was putting up. Aisling Capital and Clarus Ventures said in August they had paid $48.5 million for a tiny slice of sales royalties from ibrutinib, a cancer drug that hadn't been approved yet.

It's approved now; the FDA granted accelerated approval for mantle cell lymphoma (MCL) to its sponsor Pharmacyclics in November, and it goes by the name Imbruvica. (The Imbruvica Approval, starring Daniel Craig as Richard Pazdur!)

Please, would you pay attention, 007: The PDUFA date for a much larger indication, chronic lymphocytic leukemia, comes in late February 2014. Ibrutinib could be a best-seller. If it isn't, Aisling and Clarus will have trouble recouping their cash. Certainly it’s a less risky investment than they and their brethren are accustomed to. But even if ibrutinib can garner multi-billion dollar sales at its peak, will it bring venture-like returns to Clarus and Aisling?

Here’s some math: in an interview in “The Pink Sheet” DAILY, Royalty Pharma officials pegged the royalty stream in the mid-single digits as a percentage of total ibrutinib sales. We don’t know the exact number, so let’s call it 5%. Clarus and Aisling have each bought 10% of that stream; let’s call it 0.5% of total sales apiece. Under that scenario, it will require nearly $10 billion in ibrutinib sales for each firm to recapture its investment; more than $19 billion to double it, and $29 billion to capture a “venture-like” 3x return.

Even by optimistic projections – this summer, Barclays Capital estimated peak annual sales between $2 billion and $3.6 billion, while others have gone higher – it will take ibrutinib years to reach those figures. Venture firms like Aisling and Clarus investing from the tail ends of their funds need extremely patient limited partners to wait years, but the ibrutinib scenario could play out – and pay out – in two different ways.

First, the VCs will have a steady stream of returns to pass through to LPs as soon as sales begin. Such near-term returns, however incremental, would be far less likely if the VCs had spread the $50 million among a few earlier-stage biotech companies or other investments.

Second, now that ibrutinib is approved, the value of the royalty stream will probably jump. Other investors, including other royalty funds, don’t take pre-commercial risks the way Aisling, Clarus, and Royalty Pharma, the lead investor in the deal, did. With those risks all but eliminated, perhaps Clarus and Aisling could flip their royalty rights to new buyers. Aisling’s Dennis Purcell and Clarus’ Nick Simon acknowledged as much earlier this year, before the drug's approval.

The firms joined Royalty Pharma, the 800-pound gorilla of royalty funds, to buy the ibrutinib royalty rights from Quest Diagnostics for $485 million, a deal first announced in mid-July without disclosure of the VCs’ names or financial details.  (Quest obtained the rights in 2011 when it bought Celera Corp. for its diagnostics business.)

Royalty funds – firms that pay up-front cash to scientists, institutions, biotechs, and pharmas for royalty rights that they collect over time – don’t typically risk regulatory failure on top of commercial uncertainty. But Royalty Pharma has been more creative of late, even making an acquisition play for Elan Corp PLC that was ultimately unsuccessful.

Meanwhile, Clarus and Aisling have looked for deals that emphasize shorter timelines to potential returns as they invest from the tail ends of their current funds. In July, an Aisling-backed start-up, Loxo Oncology, in-licensed an undisclosed preclinical oncology candidate from Array BioPharma, with trials to start in 2014.  Clarus has invested in a series of clinical development companies – mini-CROs, of a type – that run late-stage trials of drugs owned by Pfizer and other big drugmakers, with milestone and royalty payments on offer if the drugs succeed.

It’s all part of a scramble within life sciences venture to woo back limited partners turned off by poor returns the past decade. The 2013 IPO boom might help bolster venture returns, but with the fickle window, life science VCs aren’t likely to abandon the pursuit of deals that shorten the time to exit and shore up lower risk, lower reward returns.

flickr image courtesy Deb Roby, creative commons

2013 Financing of the Year Nominee: Juno Therapeutics

It's time for the IN VIVO Blog's Sixth Annual Deal of the Year! competition. This year we're once again presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A of the Year, Alliance of the Year, and Financing of the Year. We'll supply the nominations (about a half dozen in each category throughout over the next week or so) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

With a name connoting royalty and godliness, it’s no wonder Juno Therapeutics received one of the year’s richest rounds of funding. And although its namesake’s existence was only in the minds of her ancient followers, the ambitious start-up’s $120 million Series A funding was no myth. Launched in December, the Seattle-based company instantly became a major player in the rapidly evolving cancer immunotherapy sector.

Juno unites researchers from three different institutions: Fred Hutchinson Cancer Center and the Seattle Children’s Research Institute in Seattle, and Memorial Sloan-Kettering Cancer Center in New York. Prior to the deal creating Juno, MSKCC’s closely watched chimeric antigen receptor T cell program was conspicuously un-partnered, especially after the cancer center revealed in March that it had induced a complete response – total remission – in a handful of patients; at December’s American Society of Hematology meeting in New Orleans, it unveiled further data showing full remission in 15 out of 17 patients treated with its immunotherapy.

That data has researchers ecstatic, and persuaded investors to fund Juno’s clinical research. The company uses autologous cell therapies, in which a patient’s own immune cells are removed from the body, genetically modified, and re-infused into the body so that they target tumor cells. The Hutch had a similar CART program underway, as well as a high-affinity T cell receptor program that aims for specific proteins inside tumor cells. Investor and board member Robert Nelsen of ARCH Venture Partners told us that Juno plans to begin no fewer than 13 trials by the end of 2014, in a variety of cancers. (ARCH invested alongside the Alaska Permanent Fund, a diversified, state-operated group.)

Juno is also notable because it unites cancer centers sometimes seen as rivals; Nelsen said they’ll essentially fight it out scientifically in pursuit of the best treatments. “Everyone has the big goal in mind,” he said. “We’ll run parallel programs and let the data decide. The scientists are perfectly willing to throw competing programs in, and see which ones are better.” Others are competing too. Novartis struck a deal for the University of Pennsylvania professor Carl June’s well-regarded CART program in August 2012, bypassing VCs altogether and taking rights for an undisclosed upfront payment and future milestones; at ASH, the pharma released data showing full remission in 19 of 22 patients.

Juno is well-positioned to capitalize on multiple trends. Barriers are falling in the broader area of genetic modification of cells using viral vectors, the field of gene therapy; the European approval of uniQure’s Glybera (alipogene tiparvovec) last year led to a spate of fundings in 2013. And BMS’s antibody Yervoy (ipilimumab) for melanoma, a cancer immunotherapy that doesn’t require genetic tweaking, is one of the year’s success stories; analysts believe sales will clear $1 billion this year.

Researchers don't talk about curative treatments lightly, but the "C" word has been tossed around when discussing Juno's and June's techniques. If it's too early to say Juno has achieved that goal, there's still time for it to claim a smaller victory in 2013, if only you'll consider it for the Roger in our Financings category.

Thanks to Flickr user Richard Mortel for bringing his camera to the Vatican; we've reproduced his photo under Creative Commons license.

2013 Financing Of The Year Nominee: GSK/Avalon Team Up

It's time for the IN VIVO Blog's Sixth Annual Deal of the Year! competition. This year we're once again presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A of the Year, Alliance of the Year, and Financing of the Year. We'll supply the nominations (about a half dozen in each category throughout over the next week or so) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

Pharma needs innovative pipeline candidates. VCs need faster, cheaper and easier exits. The partnership between Avalon Ventures and GlaxoSmithKline aims to accomplish both.

In April, the pair put their money where their chocolate-and-peanut-butter-filled mouths are: up to $30 million from Avalon and up to $465 million from GSK will fund up to 10 new companies, each built around a single drug candidate. We'd say that that's a lot of "up to," but like our headphone-wearing pals in the video below, you'd be all "WHAT?" So never mind.

The pharma's portion includes funds for seed financing and R&D support, as well as preclinical and clinical milestones. The initial financing for each company is expected to be around $10 million, with about $3 million coming from Avalon and the remainder from GSK.

The co-investors plan to take about three or four years to create all the newcos. The first company resulting from the deal, Sitari Pharmaceuticals, was disclosed just last month. The start-up was staked by Avalon and GSK with a $10 million Series A round (though GSK's contribution isn't necessarily cash, but could be in-kind services).  Sitari is working to address celiac disease, an autoimmune digestive disease caused by intolerance to gluten, by inhibiting the transglutaminase 2 (TG2) pathway. The intellectual property licensed from the Stanford University lab of Chaitan Kholsa. (Oh and if you're sitting there saying, 'hey In Vivo Blog, doesn't this belong in the alliance category?' Well then just imagine the nomination is for Sitari. Feel better?)

Celiac disease isn’t a precise fit with GSK’s major product areas, which are infectious diseases, cancer, heart disease, respiratory indications including asthma and chronic obstructive pulmonary disease (COPD), as well as epilepsy.  But GSK does have a handful of autoimmune clinical candidates such as vercirnon, a CCR9 antagonist that is in Phase III testing to treat Crohn’s disease. It also has at least three Phase II autoimmune candidates: a Sirtuin 1 (SIRT1) activator to treat psoriasis, a Janus kinase 1 (JAK1) inhibitor to treat lupus and psoriasis and a chemokine receptor 1 (CCR1) antagonist to treat rheumatoid arthritis.

Under the Avalon/GSK structure, the pharma can exercise an option to acquire each newco once it produces an IND-ready candidate. If GSK declines to exercise an option, Avalon retains all rights to that asset and can proceed with IND-enabling work on its own or with other partners.

An acquisition would return three to four times Avalon’s investment, Avalon managing director Jay Lichter told our START-UP colleagues. Once in GSK’s hands, a drug’s progress could earn Avalon milestone payments and bump the return to 14x by the time it launches.

Avalon sometimes favors a strategy of founding a company, investing a minimal amount and then partnering or selling the company; it’s had at least a couple of exits matching that description this year.

Avalon and GSK also plan to save money by sharing managerial, operational and R&D resources among their portfolio companies. To that end, they created COI Pharmaceuticals, which stands for Community of Innovation. It will provide operational support, a fully equipped R&D facility and an experienced leadership team to Sitari and the other start-ups, including Avalon portfolio companies.

If it works, the Avalon/GSK model could provide a less painful and more seamless model for VCs and pharma to transition academic research projects into pharma clinical candidates.

"WHAT?" Just vote for Avalon/GSK and enjoy your Reese's.

2013 Financing of the Year Nominee: CHOP Launches Spark

It's time for the IN VIVO Blog's Sixth Annual Deal of the Year! competition. This year we're once again presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A of the Year, Alliance of the Year, and Financing of the Year. We'll supply the nominations (about a half dozen in each category throughout over the next week or so) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

In October, the Children’s Hospital of Philadelphia launched Spark Therapeutics with $50 million in funding, enough to carry its lead program to market, a gene therapy for an inherited form of blindness. In doing so it is riding a wave of recent high-profile investment in gene therapy, as witness the hefty series A rounds for Audentes Therapeutics and GenSight Biologics.

So gene therapy is gaining steam (again); but Spark is unique, or at least unusual, and we think it deserves your vote for Financing of the Year. First, it has sprung, nearly fully formed (with a Phase III asset), from a research hospital. CHOP is neither the first nor the only hospital to incubate a technology and commercialize it through a wholly-owned company. Cincinnati Children’s Hospital, Boston Children’s Hospital, and Cleveland Clinic Innovations have all engaged in various flavors of company creation.

But CHOP has taken it to another level. The RPE65 gene was first cloned in the 1990s; in 2004, Dr. Katherine High persuaded CHOP to take on the research that culminated in the launch of Spark a decade later. Think about it: a research hospital deciding to pull the trigger on a program that it has nurtured to Phase III, and to launch it into the rough and tumble commercial world with enough cash and with the right mix of clinical/regulatory/manufacturing/commercial capabilities to bring it to market.

Venture companies don’t typically do that. Their cash is too impatient. In fact, the investment is also noteworthy for what it may portend for the beleaguered world of life science VC or technology-hungry pharma.

Note that CHOP did not seek venture funding for its technology. Though Spark is free to turn to venture or other sources of support in the future, including a pharma partner, CHOP apparently felt that Spark the newco, like the decade-long R&D that CHOP sponsored around the RPE65 gene, needed time and a shielded environment to succeed.

And where research hospitals have traditionally licensed their technologies to for-profit companies at bargain-basement single-digit royalty rates, CHOP may be re-writing the book on how better-capitalized hospitals could monetize their inventions in the future. Not that it has foregone its traditional avenues for raising money – clinical activity is still the biggest source of revenue, along with royalties on its proprietary research. But there’s no doubt it’s getting smarter. In 2008, the hospital sold the royalty on its rotavirus vaccine, now Merck’s Rotateq, to Royalty Pharma for $182 million.
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CHOP, as majority owner, gets a healthy cut of Spark’s revenue, a not inconsiderable boon to a research institution in a time of uncertain support from Federal funding. CHOP CEO Steve Altschuler said that the spin-out of a for-profit vehicle like Spark is part of a broad process of diversifying its revenue streams.

Talk about diversification – Spark has a full pipeline of gene therapies. It has a Hemophilia B program in Phase I/II, as well as other hematological programs, and preclinical programs in neurodegenerative diseases that take it out of the orphan monogenic space. In fact, Spark is following in the footsteps of uniQure BV, which won EU approval of the first gene therapy, the first such approval in the major markets. uniQure has helped investors to visualize a clinical and regulatory path to market for gene therapy.

Now Spark is competing with uniQure to bring the first FDA approved gene therapy to market.

We’ll know soon if the blindness program gets a regulatory nod. If so, it will derisk Spark’s other programs, providing CHOP/Spark with lots of potential exit options for its pipeline, and possibly whetting CHOP’s appetite for more company creation. We’re nominating the launch of Spark Therapeutics because it stands at the crossroads of tomorrow’s medical treatments and how they get funded.

spark image via flickrer adeak reprinted under creative commons license

2013 Financing of the Year Nominee: Calico

It's time for the IN VIVO Blog's Sixth Annual Deal of the Year! competition. This year we're once again presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A of the Year, Alliance of the Year, and Financing of the Year. We'll supply the nominations (about a half dozen in each category throughout over the next week or so) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

Across the pharma industry, companies are developing symptomatic treatments, therapies that attack the root causes of diseases, prophylactic vaccines, and occasionally, holy-grail cures that eliminate diseases from patients entirely. But Calico, a new company launched in September by Google founder Larry Page, aims for an even bigger kahuna: it’s trying to “solve death.”

That’s the way Time put it when it introduced Calico in a splashy cover story. And while some prefer the softer terms “anti-aging” and “life extension” to describe Calico’s aims, make no mistake: It’s the latest well-funded effort to discover treatments that slow down, arrest or reverse the gradual process of atrophy that makes us all older and more vulnerable to disease. If its ambitions seem outsized, its creator has company in Silicon Valley, where audacious goals occasionally take form as hundred-billion-dollar companies just a few years after they’re dreamt up.

Google employs futurist/inventor Ray Kurzweil, who has written a couple of books about life extension. PayPal founder and Founders Fund partner Peter Thiel has voiced a desire to be a supercentenarian, and has contributed funds to related projects. And a group including Facebook founder Mark Zuckerberg, his wife Priscilla Chan, 23andMe founder Anne Wojcicki (Page’s soon-to-be-ex-wife) and Russian billionaire/Valley investor Yuri Milner has launched the Breakthrough Prize in Life Sciences, which awards grants to scientists “curing intractable diseases and extending human life.”

If that just seems like a bunch of techies trying to become more like the robots they like to create, well, Calico has brought in one seasoned biotech veteran to steer the ship toward realistic outcomes. Longtime Genentech CEO Art Levinson – still Genentech’s chairman, a Roche director, and Apple’s chairman – is Calico’s chief executive. In a Google+ post at the time of the company’s launch, Levinson wrote that Page and Google Ventures partner Bill Maris approached him about a project “that would take the long-term view on aging and illness”; Page’s own post described the project as “a long-term bet” that might tackle decreased mobility, loss of mental acuity, and life-threatening diseases that afflict the elderly. (Page said Google itself had invested in the project; the Google Ventures web site doesn’t list Calico as a portfolio company. The venture arm has its own data-driven ambitions, as we discussed in this Start-Up profile.)

Calico – short for “California Life Company” – hasn’t revealed much more since its September launch, but it hired a few more industry vets and academic figures during the fall. Former Roche EVP of global product development and chief medical officer Hal Barron will lead Calico’s R&D. Ex-Princeton prof David Botstein, who ran the university’s Lewis-Sigler Institute for Integrative Genomics and won one of those Breakthrough Prizes, signed on as Calico’s chief scientific officer. Both are Genentech veterans. Also, former Genentech Senior Oncology Fellow Bob Cohen was named a Calico Fellow, while UCSF professor and researcher Cynthia Kenyon signed on as a Calico scientific advisor.

It wouldn’t kill you to consider Calico for this year’s Roger in the financing category, now, would it? (Though it remains to be seen if Calico can repay the favor with a little life extension.)

Thanks to Flickr user UlfBodin for the photo of a sun-kissed kitty, reproduced here under Creative Commons license.

2013 Financing of the Year Nominee: Opthotech's $192 Million IPO

It's time for the IN VIVO Blog's Sixth Annual Deal of the Year! competition. This year we're once again presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A of the Year, Alliance of the Year, and Financing of the Year. We'll supply the nominations (about a half dozen in each category throughout over the next week or so) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

Ophthotech had a grand vision: its IPO would help fund Phase III testing of its lead candidate, platelet-derived growth factor inhibitor Fovista (E10030) to treat wet age-related macular degeneration. That motivated it to be aggressive in its IPO dealings, leading to the largest biotech IPO fundraising this year: $192 million. And in a year filled with impressive public market debuts when public market debuts of biotechs were one of *the* top stories, Ophthotech's IPO deserves your vote for financing of the year.

How'd they pull it off? Rather than aim for a specific amount, Ophthotech upsized the deal to maximize fundraising in the still-sweltering September IPO market. It increased its IPO price range once and then priced above the second range, at $22. It also increased the number of shares sold to 8.7 million from an initial 5.7 million.

Now that investor IPO interest has cooled, Opthotech’s all-out pragmatic approach seems particularly prescient. “As far as the IPO size, we always believed it best to take any potential financing risk off the table,” Ophthotech CEO David Guyer told our sister publication START-UP. “In biotech, there are always things that come up – the need to enrich a trial or pre-commercial activities. We always thought that if we were fortunate enough, we would increase the size of the offering.”

In May, ahead of the IPO, Ophthotech also got $83 million from a royalty financing worth up to $125 million with existing investor Novo A/S and a $50 million mezzanine venture round. All told, that gave the biotech $319 million in cash at Sept.  30.

Ophthotech might need every bit of that cash, and maybe more, for an ambitious Phase III program. The company initiated two Phase III trials for Fovista in combination with Lucentis (ranibizumab) in August and plans to start a third Phase III trial in the first quarter of 2014. The three trials are expected to enroll 1,866 patients at about 225 locations globally. Fovista is intended to work in combination with anti-VEGF (vascular endothelial growth factor) drugs like Lucentis, Eylea (aflibercept) and Avastin (bevacizumab), which are the current standard of care for wet age-related macular degeneration (AMD), though Avastin is used off-label.

Fovista came out of Eyetech Pharmaceuticals, which kicked off the first post-genome bubble IPO window in 2004. Although the Eyetech IPO went well, the main product as anti-VEGF Macugen (pegaptanib) was soon crushed by competitors. OSI Pharmaceuticals (now part of Astellas Pharma) acquired Eyetech for $935 million in 2005 and then spun-out the anti-PDGF projects, including Fovista, into Ophthotech. Valeant later picked up Macugen for a mere $22 million.

Ophthotech investors are likely to wait a while for the next big milestone – initial top-line data from the Phase III program isn’t expected until 2016. But even as IPO valuations have been sliding into winter, Ophthotech has added to its initial IPO upside. In its first day of trading, Ophthotech was up 20%; by Dec. 11, it had added 27% from the offer price. That gives the company a market cap of $886 million. All this signals that investor hopes are still riding high, undeterred by flagging 2013 IPO returns or the long wait until a major milestone. If all this financial finagling gets investors the wholly owned blockbuster they are hoping for, then it will have been well worth it.

Coming Soon ... DEALS OF THE YEAR 2013!

2013's IN VIVO Blog Deals of the Year competition is right around the corner ... nomination posts will begin this week and as always our readers will vote for the winners in three categories: M&A, alliance, and financing. Who's got what it takes to win this year?

It's Time to Vote for IN VIVO Blog's Deals of the Year!

 

PLEASE CLICK HERE TO VOTE!

Financing Deal of the Year Nominee: Rusnano/Domain and CoDa Therapeutics

It's time for the IN VIVO Blog's Fifth Annual Deal of the Year! competition. This year we're once again presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (a half dozen in each category throughout December) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

How about voting for a deal that turns conventional wisdom on its head.

The biopharma industry has looked to emerging markets for near-term revenues and cost efficiencies, but not for scientific or commercial innovation. An umbrella deal between Rusnano, a five-year-old $10 billion Russian sovereign fund, and the US venture capital firm Domain Associates, announced in March, and a subsequent tie up with Domain portfolio company CoDa Therapeutics, goes some way toward erasing those misperceptions. At the same time, the partners’ tie up reflects sovereign funds’ increasingly important role in shaping the life sciences industry.

And it does so in such a creative, enticing way that Russia, not typically known as a life sciences innovator, is generating excitement among US VCs and biopharma companies. Rusnano is linked to Russia’s Pharma 2020 program, which is already impacting Big Pharma’s development decisions, as indicated by their deal-making activities in the country. At the same time, Domain’s commitment to the joint effort has also been intense, but the relationship is worth the effort because it’s potentially so lucrative, according to Domain partner Brian Dovey.

The size and structure of the partners’ deals are noteworthy: Rusnano, which has a mandate to broadly invest in nanotechnology around the globe, and Domain, the quintessential US VC, are investing up to $330 million each in Domain’s portfolio life sciences companies and up to $190 million to build a manufacturing facility in Russia for the products that would be sold in Eastern Europe out of the Domain companies.

The aim is to “spur modernization of the Russian healthcare market” by providing that country, along with Eastern Europe and the former Soviet Commonwealth of Independent States, with next-generation pharmaceuticals, medical devices and diagnostic products, Rusnano executives said at the time of the announcement. Under the agreement, roughly 20 existing and potentially new US-based Domain portfolio companies will benefit from the collaboration, and the partners can also co-invest in third-party technology.

In July, after months of review, the partners announced their first beneficiary: Domain’s wound-healing biotech CoDa Therapeutics. The San Diego-based company is licensing rights to its technology in Russia and the CIS to the new Domain/Rusnano-backed Russian pharma company. In exchange, Domain, along with current CoDa investors GBS Ventures and BioPacificVentures, and new investor Rusnano, committed nearly $40 million to CoDa, closing a Series B financing that began in 2011.  The VC syndicate and Rusnano are each contributing equal amounts. CoDa, as with all Rusnano life sciences investments, has to establish R&D operations in Russia as well.

Domain isn’t the only US investor Rusnano is working with, nor is Rusnano the only tool the Russian government is working with to entice US venture capitalists and biotech entrepreneurs. It’s also established a business school and life sciences incubator, Skolkovo, in a collaboration with Massachusetts Institute of Technology, and has other stimulus programs aimed at building a biotech industry. But by bringing in US innovators and offering them the carrots they need most: attractive financing, potential market opportunities, and acknowledgement of American’s entrepreneurial savvy, Russia may be demonstrating a new model for building a much needed ecosystem.

--Wendy Diller

image via

Financing Deal of the Year Nominee: bluebird bio

It's time for the IN VIVO Blog's Fifth Annual Deal of the Year! competition. This year we're once again presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (a half dozen in each category throughout December) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

With its cummingsesque orthography and ornithological name, bluebird bio has a certain innocuousness at first blush. But bluebird bio is certainly serious about its gene therapies for rare diseases, which have attracted serious capital to make it a very serious contender for this year’s Roger in the exit/financing category.

Closed in July, bluebird bio’s $60 million Series D round was a little like a few other Roger contenders. Like Warp Drive Bio, backed with $125 million in a January Series A round, bluebird bio enjoys close ties to early-stage powerhouse investor Third Rock Ventures. And like Intarcia Therapeutics, bluebird bio raised its latest round largely from institutional investors including Ramius Capital Group, Deerfield Partners and RA Capital rather than traditional venture firms. But bluebird bio’s round was a standout unlike any other, for several reasons.

First, bluebird bio’s investors doubled down on the company just weeks before uniQure BV’s Glybera (alipogene tiparvovec) received European approval, becoming the first gene therapy cleared for marketing in the world. The approval of Glybera, which uses a viral vector to insert genetic material into cells containing malfunctioning genes, is thought to pave the way for more gene therapy approvals.

The approval has emboldened a sector once regarded as terribly risky, but now considered viable by some investors, thanks to larger data sets and a more transparent regulatory process. And while bluebird bio’s original investors, including Forbion Capital Partners (also a uniQure investor), Third Rock, ARCH Venture Partners and TVM Capital, had already poured $50 million into the company prior to this summer, the massive Series D round would be a prescient investment if VCs increasingly look to the sector and drive valuations north.

Moreover, bluebird bio showed forethought by rejecting the second tranche of its April 2011 Series C round, for which it had negotiated a call option, then offering the same Series C investors the choice of participating in the Series D round at a higher valuation. The unusual step resulted in bluebird bio giving away a pinch less equity in the deal, while receiving the same amount of cash from those VCs.

Cambridge, Mass.-based bluebird bio will focus initially on its Phase II/III program in childhood cerebral adrenoleukodystrophy, as well as Phase I/II programs in beta-thalassemia and sickle-cell disease. The company’s approach involves extracting a patient’s bone marrow stem cells, modifying them ex vivo by inserting a lentivirus containing genetic material, and reintroducing the cell’s to the patient’s body. The technique is somewhat unlike uniQure’s, which uses a non-dividing adeno-associated virus that has been stripped of its replicating abilities.

Though development is costly, bluebird bio says its manufacturing process has been streamlined heavily over the past couple of years, allowing it to create therapies at what its executives call “industrial scale.” Those techniques could be very important in the future, especially if gene therapies are eventually approved for disorders other than rare diseases. (Glybera is approved for lipoprotein lipase deficiency, an orphan disease.) And since bluebird bio aims to address sickle-cell disease, a widespread disorder in some geographies, manufacturing and production at a reasonable cost will be vital.

In a year when one gene therapy was approved, other companies such as Celladon raised big rounds, and more gene therapy start-ups are known to be raising money, bluebird bio’s round was the biggest in the promising sector. Consider it for the Roger as it takes flight.

--Paul Bonanos
flickr image via petrazone // creative commons

Financing Deals of the Year Nominee: Foundation Medicine

It's time for the IN VIVO Blog's Fifth Annual Deal of the Year! competition. Once again we're presenting awards in three categories to highlight the most interesting and creative deal making of the year. The categories are M&A Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply a half dozen nominations in each category throughout December, and you, the voting public, will decide the winners, voting early and often once we've announced all the nominees. Strap yourselves in, it's The Race for the Roger™.

It’s difficult for physicians to access wide-ranging genomic analyses for patients and to then incorporate those into their treatments. But Foundation Medicine aims to make that process simple. It provides oncologists with a genomic analysis of a patient’s tumor. And then takes the next step – offering information on drugs and clinical trials that might be useful based on the patient’s genomic information.

Foundation Medicine made the Deals of the Year short-list with a $42.5 million Series B round to finance the marketing of its first product, FoundationOne. Launched in June, this test identifies all classes of genomic alterations (including copy number alterations, insertions, deletions and rearrangements) in about two hundred cancer-related genes. These are genes known to be altered in solid cancer patients, based on the scientific and clinical literature. FoundationOne also provides a list of drugs associated with the specific alterations that are FDA approved, in clinical testing or likely to enter the clinic in the next 12 to 24 months.

The idea is to delve deeper into a larger number of genetic alterations than is now typically analyzed, thereby enabling more accurately targeted treatment. FoundationOne found at least one genomic alteration that leads to a subsequent actionable treatment in 325 (77%) of 441 solid tumor patients, according to data presented by the company in June. Of these 325 patients, only 35% had genetic alterations that would have been found with currently available “hot spot” or single gene tests.

In addition to data on a specific patient, oncologists will someday be able to access a database about patients with similar genetic alterations as well as their treatments and outcomes.

The logistics of FoundationOne go like this: physicians’ offices send a standard tissue sample from a biopsy that is formalin-fixed and paraffin-embedded via overnight delivery. Then, within 14-21 days, the company provides a paper or online report to the doctor. Pellini said the 21-day deadline is crucial to oncologists, who typically schedule a follow-up patient visit to determine therapy around that time. He added that Foundation is aiming to reduce that gap closer to 14 days.

The list price for FoundationOne is $5,800. The company negotiates with the insurer to determine the reimbursement amount. Commercialization won’t be easy to navigate, as Foundation navigates adoption and reimbursement issues. Plus, major cancer genomics players like Illumina and Life Technologies are likely to get increasingly savvy about making their products more useful for and accessible to physicians, not just scientists. But the quest of the big boys to establish themselves in genomic cancer analysis may also provide a field of potential acquirers for Foundation.

This year’s financing was designed to get Foundation generating sufficient revenue to help push the business to the next level. The company anticipates a 2013 launch of a test for genetic alterations in hematologic malignancies. It also expects to release several datasets supporting the usage of its tests during 2013 and 2014.

In 2012, Foundation was very active on the deal-making front with at least seven newly disclosed partnerships with drug makers to help develop genetic tests for candidates in clinical development.

All the new investors in the Series B round were either public crossover investors or strategic investors. The former include Deerfield Management, Casdin Capital and Redmile Group, while the latter include Roche Venture Fund, WuXi Corporate Venture Fund and one undisclosed investor.

Third Rock Ventures, the founding investor, Google Ventures and Kleiner Perkins Caufield & Byers were all existing investors before the most recent round. Since inception in April 2010, Foundation has raised $86 million in total venture financing.

--Stacy Lawrence

image by flickr user Paul Goyette under creative commons license

Deals Of The Week: Has BioCryst Struck Out?

As baseball executives gathered at the Opryland Hotel in Nashville during the week of Dec. 3 for the trade and free agency frenzy known as the winter meetings, the deal-making also continued in the biopharma corner. But just as executives from many major league teams were waiting for the strategies of big spenders like the Texas Rangers and Los Angeles Dodgers to materialize so they could make their corresponding moves, it was a week of frustration at BioCryst and Presidio as a planned merger that might have created a new significant player in the hepatitis C space crumbled under the weight of three rapid clinical setbacks.

In the aftermath of a third setback, FDA placing a clinical hold on oral hereditary angioedema compound BCX4161 the week of Nov. 26, the two companies announced Nov. 30 that they mutually had decided against a planned all-stock merger announced on Oct. 18 that would have created a new company with a wholly owned portfolio of three oral antiviral candidates for hepatitis C.

During an investor call Dec. 7, BioCryst announced that it will cut its staff by 50% while reducing planned cash-burn for 2013 by as much as 45% while it narrows its focus on the HAE and HCV programs, as well as preclinical broad-spectrum antiviral BCX4430. CEO Jon Stonehouse explained that the three clinical setbacks - the delay of a clinical trial for NS5B inhibitor BCX5191 in HCV because of toxicity concerns and the likely clinical failure of flu candidate peramivir - had eroded the North Carolina biotech's stock price.

"Despite these setbacks, we have a path forward for BioCryst to rebuild shareholder value because of our promising compounds," the exec said. "Following the review of BioCryst's assets, resources and cost structure, we concluded that restructuring and a highly focused approach to our development programs was required. This will preserve cash and enable BioCryst to reach near-term milestones that will give us greater insight regarding the opportunity and risk associated with our three core programs."

The planned merger with privately held Presidio not only would have combined HCV assets, but also would have brought BioCryst a needed injection of cash. The deal valued Presidio at $101 million and would have involved 24.5 million new shares in BioCryst being issued to Presidio's investors. At the same time, Presidio shareholders would commit to providing $25 million of a planned $60 capital raise for the new company.

Now, the retrenched BioCryst will cut down from 75 positions to a headcount of 37, which Stonehouse said reflected reductions evenly spread throughout the organization. Instead of spending $40 million in R&D and associated costs in 2013, the company now anticipates a cash-burn of $22 million to $25 million, excluding deal-related and restructuring costs. BioCryst will record a restructuring charge of between $2 million and $4 million during fourth quarter 2012.

The revised R&D plan is to study low doses of '5191 in HCV-infected chimpanzees in an attempt to demonstrate meaningful antiviral activity at lower doses than previously used in clinical trials. In November, BioCryst withdrew an IND for '5191 due to safety concerns regarding renal toxicity at the dosage thought needed to benefit human patients. BioCryst expects go-or-no-go data from the chimpanzee studies in early 2013, Stonehouse told the investor call.

The company also hopes to begin a Phase I study of '4161 in January 2013 to demonstrate the safety, level of drug exposure with oral administration and pharmacodynamic effects of the kallikrein inhibitor. BioCryst, which hopes to position '4161 as an oral prophylactic against HAE attacks, thinks such a product would be a game-changer in the rare disorder space. For now, however, the drug is stalled as FDA implemented a clinical hold on '4161 due to concerns about compounding of the drug at trial sites.

BioCryst also plans to seek medical journal publication of a manuscript describing the activity of '4430 in certain filoviruses. That candidate's prospects loom crucially because peramivir is considered virtually dead after a Phase III trial was ended due to poor efficacy findings.

While BioCryst and Presidio were mired in a "No-Deal," however, other biopharma companies were proactive just like the executives in the baseball world during the past week. Now, it is time to "play ball" with ...

Baxter/Gambro: In an effort to extend its global footprint to areas like Latin America, Europe and the Asia Pacific, Baxter International has agreed to pay $4 billion including the assumption of debt to acquire Swedish dialysis company Gambro, which reported revenues of $1.6 billion annually. Baxter is using its cash held overseas to pay for the transaction and the deal is expected to close in the first half of 2013. “With Baxter generating more than two-thirds of its cash overseas, we view the Gambro acquisition as a smart way to put that money to work,” wrote Leerink Swann analyst Danielle Antalffy in a note to investors. The acquisition rounds out Baxter’s kidney dialysis business, adding Gambro’s suite of hemodialysis products to its own peritoneal dialysis offerings. Gambro’s products typically are used in the hospital setting, while Baxter’s products usually are used in the home. Baxter expects to see $300 million in cost synergies by 2017 and add approximately 7% to sales over the next five years. The company currently brings in revenues of $13.8 billion. “Over the last three years, Gambro’s growth has been roughly flat, and Baxter's renal business has grown about 4%,” wrote Morgan Stanley analyst David Lewis. “Pro forma for the deal, Baxter believes it can accelerate growth to [about] 6% by investing to relieve Gambro capacity constraints, leveraging Baxter’s global selling infrastructure, using Gambro to accelerate the home HD launch, and using the new breadth of the business to pursue public/private partnerships.” - Lisa LaMotta

Optimer Pharmaceuticals/AstraZeneca: Building on its regional partnering strategy for Dificid (fidaxomicin), Optimer Pharmaceuticals has signed AstraZeneca to market the antibiotic in South America, including in Brazil, Central America, Mexico and the Caribbean in a deal announced Dec. 3. AstraZeneca has a “major market position in three key Latin American markets, Brazil, Mexico and Columbia, according to Optimer CEO Pedro Litchtinger. AstraZeneca will pay Optimer $1 million upfront, up to $3 million in milestones upon first commercial sale in certain countries, and up to $19 million in other milestones contingent on the achievement of sales-related targets in the region. In a related supply agreement, Optimer also stands to receive payments from AstraZeneca that amount to a double-digit percentage of net sales in the territory. One of a few big pharmas still investing in antibiotic drug development, AstraZeneca is Optimer’s fourth commercial partner. The company already has signed a co-commercialization deal with Cubist Pharmaceuticals in the U.S., and deals with Astellas Pharma in Japan and Europe and Specialised Therapeutics in Australia. It’s all part of a strategy Optimer says is focused on finding commercial leaders in key regions of the world while focusing its own attention and resources on North America, where it is building a commercial organization. The company still expects to sign at least one more partner to bring its Clostridium difficile infection treatment to China. - Jessica Merrill

Ironwood/Protagonist: Constipation drug seller Ironwood Pharmaceuticals and peptide discovery platform company Protagonist Therapeutics said Dec. 6 that they have expanded an existing partnership. The parties did not disclose terms or specifically differentiate the expanded partnership from its two-year-old predecessor, but expressed that both sides are pleased with the progress of the existing deal to discover new therapeutics addressing unmet needs, based on Protagonist’s Disulfide Rich Peptide (DRP) platform. Like the January 2011 deal, the new arrangement includes an upfront payment by Ironwood, along with milestones and royalties if a product advances through the clinic and is approved and marketed; Ironwood will continue to fund full-time staff within Ironwood’s walls in order to evaluate and develop potential products. The companies did not identify which therapeutic areas are covered under the existing or new partnership, and they have not announced any product candidates from the original collaboration yet. Ironwood says it has discovered most of its pipeline on its own thus far; it currently markets Linzess (linaclotide) for irritable bowel syndrome with constipation and chronic idiopathic constipation. Protagonist established a separate discovery collaboration with Zealand Pharma in June 2012. - Paul Bonanos

MD Anderson Cancer Center/GlaxoSmithKline – University of Texas’ MD Anderson Cancer Center has tapped GlaxoSmithKline to help it develop and commercialize an antibody discovered by scientists at the center. Anderson will handle preclinical activities, while GSK will be responsible for clinical development and commercialization. Under the deal announced Dec. 7, the cancer center will receive an undisclosed upfront payment as well as research funding and development milestones. Anderson indicated that the deal could result in $335 million in payments for the center, as well as royalties on any commercial products that are developed. The antibodies activate OX40, a protein that stimulates the immune response in T-cells against cancer. "This agreement is not only a testament to the vision shared by GSK and MD Anderson that successful clinical development of oncology drugs requires seamless integration of drug development expertise and deep biological knowledge," said Giulio Draetta, director of the Institute of Applied Cancer Science at Anderson, in a statement. - L.L.

Mediolanum/Genovax: Eporgen Venture, one of Italy’s first suppliers of seed capital to life science companies from a network of private, non-institutional Italian investors, reported on Dec. 4 the first major transaction by one of its portfolio companies, Genovax, which has sold its Phase II-ready potential therapeutic cancer vaccine, GX-301, to the Italian pharma company Mediolanum Farmaceutici. Eporgen President Konstantinos Efthymiopoulos expects several other transactions involving Eporgen-supported companies to complete in the next few months, and is aiming to raise up to €10 million ($13 million) in additional financing to develop other assets to proof-of-concept in its portfolio companies, which ideally but not necessarily would be clinical proof-of-concept. Italian research and science is as good as in other European countries, Efthymiopoulos said, although he acknowledged that life science entrepreneurship and the network of academic technology transfer offices is not as highly developed. It is only a question of time before the country catches up with its neighbors, he asserted. GX301 will boost its research interests in oncology, Mediolanum said; it will take over all future development and commercialization activities for GX301. A Phase II study in patients with prostate cancer is expected to start in the first half of 2013. - John Davis

StemBANCC: One of the largest European “open innovation” projects to date will see Switzerland’s Roche and the U.K.’s Oxford University coordinate the work of nine other pharmaceutical companies and 22 other academic institutions in Europe on creating more than 1,500 human-induced pluripotent stem cell lines to use as disease models to discover new therapies. This and other new EU projects announced Dec. 5 echo themes for TransCelerate BioPharma, an initiative announced Sept. 18 involving 10 international drug companies which also seeks to identify and solve common drug-development challenges, although focused more on regulatory than research issues. The EU’s StemBANCC project, a public-private partnership formed as part of the EU’s Innovative Medicines Initiative (IMI) will have a budget of €55.6 million ($73 million). The funding will include €26 million from IMI’s EU funds and “in-kind” funding of €21 million from the participating drug companies. The in-kind funding includes company employees and their costs, access to research equipment, facilities and database access. The cell lines, of which 500 will be derived from patients, will be used to set up models of disease, like diabetes or dementia, in order to accelerate the drug-development process. - J.D.

Photo credit: Wikimedia Commons