Happy Thanksgiving from Deals of the Week!

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

As always, thanks for reading. Happy Thanksgiving!

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

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

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

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

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

Deals of the Week Lovingly Massacrees the Classics

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

Now it all started four Thanksgivings ago; it was four years ago on Thanksgiving, when Chris Morrison and I started writin' a blog about deals, but not every day, just once a week. And writin' about deals once a week, you know it's a lot of work. (Hint. Hint.)

And there's a lot of garbage you gotta sift through, but we decided it would be a friendly gesture on behalf of readers. So we trolled around the Internet with our shovels and rakes and other implements of destruction (a.k.a. EBI's Strategic Transactions database) looking for deals to analyze. But then a big bad editor (also known as Officer Roger) said why are you doin' that? We are closed on Thanksgiving.

And we had never heard of a blog closed on Thanksgiving before (we don't get out much) so with tears in our eyes we drove off into the sunset looking for another place to dump our garbage -- I mean our deals.

We didn't find one. So we wrote our post anyway, went back and had a Thanksgiving Day that couldn't be beat, went to sleep, and didn't get up until the next morning when we got a call from Officer Roger... And it's been a recurring feature here at IVB ever since.

But fortunately, not another case of American blind justice since we always arrive at the truth of the matter and it doesn't even require 27 eight-by-ten color glossy pictures with circles and arrows and a paragraph on the back of each one.

In honor of the day, we hope you consider joining the IN VIVO Blog Movement. All you've got to do is walk into the office wherever you are, just walk in and say ,"You can get anything you want at IN VIVO Blog." And walk out.

You know if one person, just one person does it, they might think he's really sick and they won't take him... And can you, can you imagine fifty people a day, I said fifty people a day (okay, we'd really like 1000) walking in, quoting a line from IN VIVO Blog and walking out?

And friends, they might think its a movement. And that's what it is, the IN VIVO Blog Movement.

Remember Deals of the Week? (This is a post about Deals of the Week.)

Without further ado, we bring you this week's installment. Feel free to sing along in four-part harmony. With feeling. Cuz'...

You can get anything you want at IN VIVO Blog.
You can get anything you want at IN VIVO Blog.
Log right in, it's a click away.
Just a finger tap. You don't have to pay.
You can get anything you want at IN VIVO Blog. (Excepting Roger.)

Alice parody by Ellen Licking, Arlo Guthrie's original here (or catch it on Thursday -- we'll be listening to WMMR at 2p). Happy Thanksgiving from EBI's IN VIVO Blog.




Algeta/Ablynx: Ablynx and Algeta hope that by linking their cutting-edge technologies in a joint feasibility study they can make a quantum leap in cancer therapy innovation. Their 12-month “targeted radiotherapy” project entails Ablynx generating a nanobody that will deliver Algeta’s alpha-particle emitting radio therapeutic thorium-227 against an undisclosed cancer target. Algeta will also provide the linker technology for the conjugate. Financial terms were not disclosed. Ablynx’s nanobody will deliver the thorium radiotherapeutic payload to a cancer cell, where the high energy of the alpha particle emitted by the attached thorium would kill the tumor tissue at a distance of a few cell diameters while sparing the remaining body. The therapeutic principle is akin to that of antibody-drug conjugates, such as Roche’s T-DM1, where a chemotherapeutic is selectively targeted to cancer cells to kill the malignant cell while sparing healthy tissues.--Sten Stovall

Pfizer/Cystic Fibrosis Foundation: Following up on the January approval of Vertex Pharmaceuticals Inc.’s Kalydeco (ivacaftor), the first drug to address the underlying cause of cystic fibrosis, Pfizer Inc. and the Cystic Fibrosis Foundation are teaming up in a $58 million, six-year extension of an existing R&D alliance to bring additional root-cause-focused drugs into clinical development for cystic fibrosis. Maryland-based CFF is partnered with multiple companies, including Vertex and Genzyme Corp., to help fund CF drug development. CFF President and CEO Ronald Beall says the foundation will invest about $114 million in medical science efforts in 2013, with about $80 million of that going to support drug-discovery and development. Pfizer’s work in CF stems from its 2010 acquisition of FoldRx Pharmaceuticals Inc., a biotech that focused on developing oral therapeutics for protein-misfolding-related conditions. That buyout was part of the world’s largest pharma’s move into drugs for orphan and rare diseases. The goal of the Pfizer/CFF agreement, announced Nov. 19, is to bring one or more drug candidates addressing mutations of the Delta F508 protein, a misfolding defect implicated in roughly 90% of CF cases, into the clinic.--Joseph Haas

Paladin Labs/Ativa Pharma: Montreal-based Paladin Labs is expanding its Mexican operations with the acquisition of Guadalajara-based Ativa Pharma. The deal, announced Nov. 19, will give the specialty pharmaceutical company an established distribution network in the country and an existing team that is familiar with the Mexican regulatory authorities. Paladin estimates that the Mexican pharmaceutical market could be worth $8.1 billion. The company will be introducing several of its own products to the market, including Travelan, a traveller’s diarrhea prevention; Abstral for breakthrough cancer pain; and Tostran for hypogonadism. The company will also seek approval for several compounds already in Ativa’s pipeline. Paladin expects that the first regulatory approvals and commercial launches will begin in the second half of 2013. The company would not reveal any financial details pertaining to the acquisition.--Lisa LaMotta

Shire/Boston Children’s Hospital: Shire PLC is expanding its presence in rare diseases, an area that already makes up about one-third of the company’s business, through a collaboration with the Boston Children’s Hospital. Announced Nov. 20, the three-year agreement will focus on developing treatments for pediatric diseases with high unmet medical needs. The partnership will leverage Shire’s commercial expertise in the area, as well as Boston Children’s Hospital’s understanding of pediatric disease and its clinical network. In exchange for an option to license any products that emerge from the collaboration, Shire will make an undisclosed upfront payment to fund specific programs. The Hospital will receive milestone payments and royalties upon commercialization of any products.--Lisa LaMotta

NeuroVive/Sihuan: The importance of China as a growing market for pharmaceuticals was underscored Nov. 20 when NeuroVive, a tiny Swedish biotech, forged its first product development agreement, with Sihuan Pharmaceutical Holdings, one of the largest domestic pharmaceutical companies in China. The deal also is the first Sihuan has entered into with a non-Chinese pharmaceutical company. Sihuan will conduct clinical trials in China on NeuroVive's two investigational tissue repair products, CicloMulsion and NeuroSTAT, which have potential in the treatment of acute cardiovascular and neurological conditions, respectively. CicloMulsion, a formulation of cyclosporine A found in initial studies to protect mitochondria from destruction during trauma, is in a Phase II/III study in Europe, and NeuroSTAT, another cyclosporine A formulation, is about to start a Phase IIa study. Sihuan is paying just $7.5 million in upfront and milestone payments initially, reflecting Sihuan's funding of the Chinese development work and its pioneering nature, but will pay a 10% royalty on any sales. At the same time, the alliance will go some way to validate NeuroVive's research focus on mitochondrial medicine. The Chinese market for acute cardiovascular and neurological conditions is currently worth around RMB 2 billion ($321 million) annually.--John Davis

Wright Medical/BioMimetic: Wright Medical Group gains a near-term commercial opportunity in regenerative medicines with the acquisition of BioMimetic Therapeutics Inc. for what could amount to $380 million. Under the deal announced Nov. 19, Wright Medical will pay $190 million down in cash and stock, plus up to $190 million more in milestone payments. BioMimetic’s key product is the Augment bone graft, which is under review by FDA as a replacement for autologous bone graft in foot and ankle fusion procedures. The product could receive PMA approval “between late April next year and … the end of the year,” Wright Medical CEO Robert Palmisano said during a Nov. 19 analyst call announcing the deal. Wright is obviously confident in the approvability of Augment, despite FDA’s initial “not approvable” determination in January. BioMimetic submitted a PMA amendment in June responding to questions raised by the agency. FDA’s Orthopaedic and Rehabilitation Devices advisory panel had narrowly supported approval at a May 2011 meeting. Augment is a synthetic alternative to autologous bone graft, made of recombinant human platelet-derived growth factor (rhPDGF-BB) and beta-tricalcium phosphate (β-TCP) granules, which form a scaffold to support cell attachment. The two components are mixed during surgery and applied directly to the surgical site during open orthopedic procedures. Besides Augment, BioMimetic also markets its Augmatrix biocomposite bone graft substitute line of products for orthopedic indications. -- Sue Darcy 

BASF/Pronova BioPharma: German chemical firm BASF casts a voluntary cash offer of NOK4.845 million ($846 million) to hook omega-3 fatty acid maker Pronova BioPharma ASA on Nov. 21. While some Pronova investors were disappointed with the 24% premium offer of NOK12.5 per share, according to media reports, BASF said it already has irrevocable pre-acceptance commitments from shareholders representing approximately 60% of Pronova’s share capital. It needs at least 90% of the total shares for the deal to move forward, the firm says in a release. BASF says closure of the deal, which is expected in the first quarter of 2013, “immediately” would give BASF “a leading position in the global market for omega-3 fatty acids,” when combined with its prior acquisition of omega-3 fatty acid maker Equateq Ltd. The deal would give Pronova, which makes the omega-3 heart prescription drug Lovaza for GlaxoSmithKline PLC, enhanced manufacturing capabilities through BASF’s global platform and resources, the Norwegian firm says in a Nov. 21 release. The deal reflects industry’s growing interest in omega-3s, which also led to the recent acquisition by Royal DSM NV of Ocean Nutrition Canada Ltd. in May.--Elizabeth Crawford

Deals of the Week's Thanksgiving Day Massacre (In 4-Part Harmony, Of Course)

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

Now it all started four Thanksgivings ago; it was four years ago on Thanksgiving, when Chris Morrison and I started writin' a blog about deals, but not every day, just once a week. And writin' about deals once a week, you know it's a lot of work. (Hint. Hint.)

And there's a lot of garbage you gotta sift through, but we decided it would be a friendly gesture on behalf of readers. So we trolled around the Internet with our shovels and rakes and other implements of destruction (a.k.a. EBI's Strategic Transactions database) looking for deals to analyze. But then a big bad editor (also known as Officer Roger) said why are you doin' that? We are closed on Thanksgiving.

And we had never heard of a blog closed on Thanksgiving before (we don't get out much) so with tears in our eyes we drove off into the sunset looking for another place to dump our garbage -- I mean our deals.

We didn't find one. So we wrote our post anyway, went back and had a Thanksgiving Day that couldn't be beat, went to sleep, and didn't get up until the next morning when we got a call from Officer Roger... And it's been a recurring feature here at IVB ever since.

But fortunately, not another case of American blind justice since we always arrive at the truth of the matter and it doesn't even require 27 eight-by-ten color glossy pictures with circles and arrows and a paragraph on the back of each one.

In honor of the day, we hope you consider joining the IN VIVO Blog Movement. All you've got to do is walk into the office wherever you are, just walk in and say ,"You can get anything you want at IN VIVO Blog." And walk out.

You know if one person, just one person does it, they might think he's really sick and they won't take him... And can you, can you imagine fifty people a day, I said fifty people a day (okay, we'd really like 1000) walking in, quoting a line from IN VIVO Blog and walking out?

And friends, they might think its a movement. And that's what it is, the IN VIVO Blog Movement.

Remember Deals of the Week? (This is a post about Deals of the Week.)

Without further ado, we bring you this week's installment. Feel free to sing along in four-part harmony. With feeling. Cuz'...

You can get anything you want at IN VIVO Blog.
You can get anything you want at IN VIVO Blog.
Log right in, it's a click away.
Just a finger tap. You don't have to pay.
You can get anything you want at IN VIVO Blog. (Excepting Roger.)

Convergence/Selcia: Barely more than a month after it was spun out of GlaxoSmithKline, CNS-focused Convergence Pharmaceutical bagged its first drug discovery collaboration, with Essex, UK-based CRO Selcia Ltd. No financials were disclosed, but Convergence isn’t short of cash, having raised $35.4 million on inception in one of Europe’s largest A rounds. Run by CEO Clive Dix, of PowderMed fame, Convergence already has two clinical-stage assets and six earlier-stage programs targeting ion-channels involved in chronic pain. In this deal, the partners will hunt further molecules for chronic pain, with Convergence applying the ion channel biology, medicinal chemistry and preclinical development expertise it inherited from GSK, and Selcia contributing synthetic chemistry and chemistry support services. The collaboration shows that Convergence, like its parent GSK (and indeed many other Big Pharma), is willing to embrace others’ drug discovery approaches, and to tap into drug discovery resources and technology on a flexible basis.--Melanie Senior

Medtronic/Ardian: Back in the summer of 2008, Ardian sought out corporate investors to participate in the company’s targeted $30 million Series C financing, thinking some corporate oomph and expertise would help drive clinical testing of its Symplicity Catheter System, used for treating hypertension and related conditions. The following spring Medtronic led a $47 million round, acquiring 11% of the company in what was – and still is - a rare up round. Now, Medtronic is going all in, announcing that it will acquire the rest of Ardian for $800 million up front, setting a record purchase price for a medical device company that doesn’t have an FDA-approved device. (Medtronic topped the mark it set in 2009 with the $700 million of CoreValve Inc., a percutaneous heart valve company.) Medtronic also agreed to pay commercial milestones equal to the annual revenue growth through the end of Medtronic’s fiscal year 2015. Ardian’s system allows doctors to deliver radiofrequency energy to the renal sympathetic nerves surrounding the renal arteries. Decreasing conduction of these nerves is seen as a way of triggering the body’s own regulation mechanisms to lower blood pressure. For the past six months, Ardian has been releasing positive results from its ongoing clinical trials with the most recent bit of good news at the American Heart Association meeting this month.--Tom Salemi

Boehringer Ingelheim/f-star: Boehringer's R&D collaboration with f-star this week is yet more proof that the privately-held German drug maker is ramping up its large molecule capabilities. This is the fourth antibody deal Boehringer has done this year alone according to Elsevier's Strategic Transactions, building on collaborations with 4-Antibody, Micromet, and most recently MacroGenics. Financial terms of the latest transaction weren't disclosed, but f-star, a former Series A-list all-star that has pulled in more than $25 million in venture dollars, will receive an initial technology access fee, research-based funding, and of course the potential for downstream regulatory and commercial milestones. In return, f-star will use its modular antibody technology to develop novel therapeutics against up to seven targets nominated by Boehringer that span multiple therapeutic areas. Biobucks for each of the seven targets, to which BI of course holds worldwide rights, could total up to €180mm ($247mm), excluding royalties. (Prompting unintentionally hilarious headlines about the "$1.7 billion" deal.) f-star's technology allows it to introduce additional binding sites into antibodies or antibody fragments, engineering large molecules that can target multiple proteins in a single molecule. Note this isn't the first time BI has signed an alliance focused on antibody fragments (that honor goes to Ablynx back in 2007) or bi-specific antibodies (MacroGenics' DART technology competes with f-star). Such second-generation approaches are a means of circumventing established IP claims for successful traditional antibody therapeutics and may advantages over Mother Nature's molecules, as they are potentially easier to manufacture and can have greater tissue penetration.--EFL

GlaxoSmithKline/Dr. Reddy's: GlaxoSmithKline's deal with Dr. Reddy's for the big pharma's United States oral penicillin facility and product portfolio is an interesting spin on regional deal making. Under the terms of the agreement, GSK transfers ownership of its penicillin manufacturing site in Tennessee and U.S. rights to Augmentin and Amoxil brands to Dr. Reddy's for an undisclosed sum. That GSK would opt to sell out of the US penicillin market isn't too surprising. Back in 2008 the drug maker announced plans to lay off the 200+ workers employed at the 400,00-square-foot manufacturing site by fall 2009 in preparation for sale of the plant because of declining sales of Augmentin stateside as a result of generic competition. Thus, the deal makes everyone happy, allowing GSK to downsize in a market no longer deemed valuable, while still allowing the drug maker to preserve ownership RoW, where GSK sees the potential for growth via its branded generics strategy. Dr. Reddy's, meanwhile, has been angling to scale up its generics business in North America. Thus, this deal gives the India-based giant entree into the US penicillin-containing antibacterial segment and a physical footprint to boot.--EFL

Roche/Ligand: Around the same time Roche decided to close out its R&D work in RNA interference, the Swiss pharma also notified Ligand Pharmaceuticals that it was ending a partnership to develop RG7348 (formerly MB11362) for hepatitis C. This no-deal officially ends the circuitous relationship between La Jolla, Calif.-based Ligand and the Swiss pharma. The tie-up began in August 2008, when Roche paid $10 million upfront to initiate a two-year collaboration with Metabasis Therapeutics to apply the latter firm’s HepDirect platform to Roche’s lead nucleoside candidates for HCV. In June 2009, the two companies chose ‘7348, which had since advanced to Phase I, as their lead candidate, with Roche paying a $2 million milestone to the biotech. Fast-forward to October 2009, when Ligand bought out Metabasis, inheriting the HCV deal. Since Ligand/Metabasis, Roche has paid up another $6.5 million in milestones; for the bean counters in the audience, $2.7 million of that went to Metabasis shareholders who had received contingent value rights in the original sale. Ligand, which says it learned of Roche’s decision on Nov. 19, also completed a one-for-six reverse stock split that same day, reducing current outstanding shares of common stock from 117.7 million to 19.6 million. Despite the no-deal, Ligand still boasts partnerships a plenty, boasting of ongoing alliances with Pfizer, GlaxoSmithKline, Merck, and Bristol-Myers Squibb, among other.—Joseph Haas

HAPPY THANKSGIVING FROM IVB!

This Charming CEO

Well, well, well. Of all the people to replace CEO Jim Mullen, the ever-more-Icahnized Biogen Idec tabbed George Scangos, the chief of Exelixis. Scangos' replacement is less of a surprise (small hint above), but more on that in a moment.

There are plenty of fun juxtapositions -- East Coast/West Coast, rumpled Mullen/dapper Scangos -- but one that can't be waved away is that Biogen Idec is squarely a commercial company, squeezing as much revenue as possible from its multiple-sclerosis leader Avonex and turning more and more to business development to bolster its pipeline; while Scangos, for all his revving of Exelixis' oncology discovery engine, has never brought a drug to market, let alone run a four-billion-dollar commercial operation.

"The Pink Sheet" Daily will dissect the major move in greater detail, so we don't want to steal our sister publication's thunder. [UPDATE: Here's the PSD piece.] Meanwhile, we point you to the other man behind the Exelixis engine, Michael Morrissey, the R&D chief who now steps into Scangos's CEO shoes.

Morrissey? We can't help wonder which song he'll use to take the stage at his first investor conference as CEO...

"A Rush and a Push and the Kinase is Ours"
"How Soon is NDA?"
"Please Please Please Let Me Get XL184 Approved"
"Panic" (Hang the VP, hang the VP, hang the VP...)

Feel free to suggest your own. If you're not a Smiths fan, just tap your foot to whatever song is in your head.

Photo courtesy of flickr user Djenan.

And Now, It's Time for a Rap About Stem Cells

h/t Gilman.

DOTW: Smells Like '10 Spirit!

Whew. That was rough, but we made it through 2009. Well, some of us. Put down your knapsacks, scouts, and let's do a head count. Kindler? Present! Maraganore? Yo! Termeer? Uh, Henri, why are you hiding behind that tree? Mullen? Mullen? Funny, I just saw him a minute ago.

Let's keep going. Levinson? Anyone seen Art? No? Hassan? Poussot? Stylli? Hollis?... [Four hours and tens of thousands of researchers and sales reps later...] Excuse me, but where the hell is everyone?

All right. We'll have to move on into 2010 without them, though no doubt many will be back. Risking accusation of being an industry cheerleader, IVB would like to propose a marching song to keep things upbeat. How about "Smells Like '10 Spirit"? It's the smell, if not of victory, then at least the hope that a little biotech with big dreams can actually scratch up the cash (we found it hard, it's hard to find) for a worthwhile program, maybe even two, without a vulture sitting on its shoulder. Or that this time around, a giant merger will actually work. (The denial! The denial!) Or that the final health care reform bill that emerges from the Congressional meat grinder doesn't leave us all saying well, whatever, never mind.

We don't mean to be curt, but we've come back from the holidays with a ton of work. So load up on guns, bring your friends, it's time for the year's first edition of...

Novartis/Alcon: We've just finished The Deals of The Year, but it's not too early to create a new category: Quietest $50 Billion Merger. Novartis said Jan. 4 it would exercise its option to purchase Nestle's remaining 52 percent stake in eye-care group Alcon for $28.1 billion. Novartis has had the option since April 2008 when it bought the first 25 percent stake from Nestle for $10.4 billion.

Add to that Novartis' intent to buy out the minority shareholders for $11.2 billion at a price lower than what it's offering Nestle -- $153-per-share instead of $180 -- et voila! a pas-de-trois $50 billion takeover, second only in recent years to the Pfi-Wy tie-up. The attempt to squeeze out minority owners also marks the end of Novartis's promise to keep Alcon at arm's length. And Novartis CEO Dan Vasella had more hard cheese for Alcon's minority owners. He said under Swiss law they won't have recourse, but given the legal tangles we wonder how much of Novartis's posture is a scare tactic to get minority holders to sell quickly. Perhaps it won't be so quiet, after all. On the product side, Novartis is buying a huge ophthamalogic portfolio that has little overlap with its own. Novartis has contact-lens business Ciba Vision and pharmaceuticals such as age-related macular degeneration drug Lucentis. Meanwhile most of Alcon's $6.3 billion 2008 sales came from surgical products and devices such as artificial intra-ocular lenses. -- Melanie Senior

Genzyme/Hospira: Just when Genzyme finds the aspirin to relieve its self-inflicted headaches (hint: go to the four-minute mark) at its Allston Landing, Mass., manufacturing plant, Carl Icahn goes bang-bang-bang with his silver hammer on the company's head. First, the aspirin: Genzyme said Jan. 5 it would outsource fill and finish responsibilities for four drugs, including its cash cows Cerezyme and Fabrazyme, to Hospira. Genzyme said the deal was more about creating redundant capacity than about problems in Allston. OK, sure, but let's review the problems: A six-week shutdown last summer to clean viral contamination in one of its bioreactors led to shortages of Cerezyme and Fabrazyme. Then a five-week FDA inspection last fall resulted in 49 observations and a two-year corrective plan. (Early-stage production of the two drugs will continue at Allston, and some fill/finish work is being transferred to Genzyme’s facility in Ireland.) But the Hospira deal is unlikely to make any immediate difference, as the fill/finish work cannot begin until approved by FDA, a process expected to take six to eight months. And here comes the hammer: An anonymous source told Reuters Jan. 7 that Icahn is gearing up for a proxy battle more than two years after he took his first tiny stake in the firm. Genzyme is lining up defenses, however, by cutting a friendly deal with Ralph Whitworth of Relational Investors. Whitworth can join the board in return for his public support for Genzyme's nominees at shareholder meetings. -- Joseph Haas and Alex Lash

Kyowa Hakko Kirin/Dicerna: The $4 million upfront might be small beer for Kyowa Hakko Kirin, but the deal announced Jan. 4 gives the Japanese brew crew-slash-biopharma access to Dicerna's dicer substrate platform. It's a method of building RNA interference-based therapeutics with longer strands of oligonucleotides dubbed DsiRNAs that engage the RNAi cellular machinery earlier in the process. Dicerna says the longer molecules are more potent and bioavailable, and they skirt the considerable patent position of the field's leaders. But no one really knows how the IP will play out in the space until a drug comes to market, which is years away. KHK takes a license to develop drugs against an undisclosed solid-tumor target, with $120 million in milestones down the road. The companies can expand the alliance to 10 or more targets and beyond oncology, with the financial structure for each target about the same as the first. Dicerna is gearing up for a second round of venture funding, with its three A-round investors all signed on, said CEO Jim Jenson. -- A.L.

Kyowa Hakko Kirin/Reata: It's double duty for KHK this week. The firm spent $35 million for Asian rights to Reata's Phase 2 chronic kidney disease treatment bardoxolone methyl, with $237 million more in milestones to come as KHK takes the drug through the clinic in Japan. Reata first tested the anti-inflammatory bardoxolone, a once-daily pill, in an oncology setting but pivoted to CKD when the patients showed improving renal function, according to Reata CEO Warren Huff. Reata has raised a total of $117 million in venture funding since its inception in 2002. Its latest round was led by CPMG and Novo, which has been an investor since 2006, and includes a $63 million tranche contingent upon positive Phase 2b data in June. Reata hopes to use some of the cash to move two additional molecules into first-in-man studies. -- A.L.

Pfizer/Debiopharm: Swiss specialty pharma Debiopharm will put Pfizer’s cancer immunotherapy tremelimumab through a Phase III trial of melanoma patients who are identified as treatment responders by a biomarker. According to the deal, announced Jan. 7, Debiopharm will run the trial in Stage IV melanoma, and Pfizer will handle worldwide commercialization. Financial terms were not disclosed, but the deal is worth noting for Pfizer's "split the middle" approach. In the run-up to the Wyeth merger, Pfizer decided to stop R&D and divest non-core areas. Oncology remained onboard, but with tremelimumab, a fully human anti-CTLA4 monoclonal antibody, Pfizer is taking a modified out-sourcing approach to spread the risk. Last year, Pfizer discontinued a Phase III trial evaluating the drug as a single agent in patients with advanced melanoma after an interim review showed it performed no better than standard chemotherapy. But retrospective analyses showed the treatment worked better in some patients, paving the way for the development of a biomarker to identify responders. -- Emily Hayes

Creative commons image courtesy of flickr user davetoaster. Rock on, Dave.

DotW: You Can Get Anything You Want At IN VIVO Blog

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

You can get anything you want at IN VIVO Blog.
You can get anything you want at IN VIVO Blog.
Log right in, it's a click away.
Just a finger tap. You don't have to pay.
You can get anything you want at IN VIVO Blog.

Now it all started two Thanksgivings ago, two years ago on Thanksgiving, when Chris Morrison and I started writin' a blog about deals, but not every day, just once a week. And writin' about deals once a week, you know it's a lot of work. (Hint. Hint.) And there's a lot of garbage you gotta sift through, but we decided it would be a friendly gesture on behalf of readers.

So we trolled around the Internet with our shovels and rakes and other implements of destruction (aka Elsevier Business Intelligence's Strategic Transactions database) looking for deals to analyze. But then a big bad editor (also known as Officer Roger) said why are you doin' that? We are closed on Thanksgiving.

And we had never heard of a blog closed on Thanksgiving before (we don't get out much) so with tears in our eyes we drove off into the sunset looking for another place to dump our garbage -- I mean our deals.

We didn't find one. So we wrote our post anyway, went back and had a Thanksgiving Day that couldn't be beat, went to sleep, and didn't get up until the next morning when we got a call from Officer Roger...

And it's been a recurring feature here at IVB ever since. (Fortunately, not another case of American blind justice since we always arrive at the truth of the matter and it doesn't even require 27 eight-by-ten color glossy pictures with circles and arrows and a paragraph on the back of each one.)

In honor of the day, we hope you consider joining the IN VIVO Blog Movement. All you've got to do is walk into the office wherever you are, just walk in and say ,"You can get anything you want at IN VIVO Blog." And walk out.

You know if one person, just one person does it, they might think he's really sick and they won't take him... And can you, can you imagine fifty people a day, I said fifty people a day (okay, we'd really like 1000) walking in, quoting a line from IN VIVO Blog and walking out?

And friends, they might think its a movement. And that's what it is, the IN VIVO Blog Movement.

Remember Deals of the Week? (This is a post about Deals of the Week.) Without further ado, we bring you this week's installment inspired by Arlo Guthrie. Feel free to sing along in four-part harmony. With feeling. 'Cuz you can get anything you want at the IN VIVO Blog. (Excepting Roger.)

Clovis Oncology/Clavis Pharma: What's a letter of the alphabet between friends? Pat Mahaffy and his former Pharmionites at Clovis have started to spend the huge $145 million A round they announced in May. Their first deal is for intravenous CP-4126, what they hope to be an improved version of Eli Lilly's Gemzar, under development at Norwegian firm Clavis.

Clovis is paying $15 million upfront and up to $365 million in milestones to take over clinical trials in pancreatic cancer and other indications and develop a companion diagnostic. Clovis gets rights in the Americas and Europe and will double enrollment to 250 patients in a recently launched Phase 2 for newly-diagnosed advanced pancreatic cancer. Clavis's proprietary platform adds a lipid vector to existing drugs that, if early data bears out, will boost efficacy without adding safety concerns.

For CP-4126, the proposition is to boost uptake of gemcitabine in patients who fare poorly on the parent drug because they have low levels of a nucleoside transporter protein known as hENT1 required for entry into tumor cells. The lipid vector allows gemcitabine to bypass hENT1 and find another way into the cell, Clavis officials say. No doubt careful attention will be paid to the low-hENT1 population in Phase II studies. Pay careful attention, too, to Clovis, to see how far $145 million can take a specialty-focused cancer startup these days. Let's see, $15 million upfront, plus clinical trial costs (including the diagnostic development), plus milestones to Clavis, plus operations in three locations (Boulder, Colo., San Francisco, London), plus other deals the firm no doubt wants to do...it adds up fast. With its mid-recession A round, Clovis showed it could buck economic trends. Will we see a B round soon? As Clavis CEO Geir Christian Melen told "The Pink Sheet" DAILY this week, Clovis's Mahaffy has "strong shareholders with deep pockets." -- Alex Lash

Novartis/Incyte: To whet your appetite for the multi-layered yumminess of turducken, official Thanksgiving Beast of the IN VIVO Blog, check out the deal Incyte announced this week.
It's not just two drugs wrapped into one deal, it's two kinds of upfront cash! Novartis is paying a $150 million signing fee plus an immediate $60 million milestone for rights to two compounds, an oral JAK1/JAK2 inhibitor in Phase III for myelofibrosis, and an oral cMET inhibitor about to enter Phase 1 for multiple cancers. The $60 million is a reward for INCB18424, the JAK inhibitor, having started Phase 3 in July of this year. Novartis gets ex-U.S. marketing rights to the compound in all hematology-oncology indications and will pay tiered, double-digit royalties. Incyte keeps rights in the States as well as rights in the psoriasis indication. For the cMET inhibitor, INCB28060, Novartis takes over worldwide development after Phase 1 and also has worldwide commercial rights with royalties back to Incyte. Incyte also keeps a co-development and co-promotion option on the compound. Total biobucks for the deal could top $1 billion, though with the cMET inhibitor so early in development, chances of Novartis paying every last dollar are roughly the same as seeing a turducken in the wild. -- Alex Lash

Jubilant/University of Alabama/Southern Research Institute: These days drug makers are looking to trim their overly fat infrastructure even as they bulk up on much needed pipeline products. How best to do this while maintaining a lean budget? One increasingly popular approach is to leverage the lower cost innovation available in India and China. (FIPNets!) Another is to take advantage of the knowledge within the world's ivory towers--in other words, deals with academia. In an interesting twist on the virtual R&D model, Jubilant Organosys, one of the go-to India companies for major pharma players, is seeking out innovation by forging ties with the University of Alabama and Southern Research Institute to develop new meds in the oncology, metabolic disease, and infectious disease space. The press release calls it "a unique US-India arbitraged and leveraged partnership." So based on the trickle down economics theory of deal affordability, transactions with emerging-market players provide pharmas more generous terms than with US or European biotechs, but partnerships with academia are an even better bargain. (What about deals with Indian or Chinese universities?) This is the second academic partnership Jubilant has signed this month--it inked an agreement with Duke University on Nov.10 to translate Duke discoveries into new medicines. Specific financial details of the most recent tie-up with UAB/SRI weren't disclosed. But the three groups are definitely working together to identify and develop the most promising targets discovered at their various organizations with the goal of shepherding programs through Phase II before out-licensing to other drug makers. Should a partnership materialize, revenues stemming from these alliances--presumably milestones and royalty streams--will be distributed to the three investment participants in some fashion. -- Ellen Licking

Cephalon/Ception: Okay, it's not really a "no deal"; the Cephalon/Ception transaction is more accurately described as a "no deal yet." That's because Cephalon is extending (we'd say postponing) its option-to-acquire Ception Therapeutics after a Phase II/III study of the smaller co's lead compound, reslizumab, yielded disappointing results in treating the rare autoinflammatory disease eosinophilic esophagitis (EE). Recall that way back in January, Cephalon acquired the rights to buy Ception for $250 million on top of a healthy $100 million upfront pending a positive outcome in the EE trial. It's possible the deal may still come to fruition -- reslizumab isn't leftover turkey, yet -- but now Ception has to prove the drug has the goods (i.e. Phase II data) in a different indication, eosinophilic asthma, before Cephalon ponies up the money. Results from these asthma studies are expected to be revealed sometime in the first quarter of 2010.

There's no question reslizumab, an anti-interleukin 5 monoclonal antibody, is an important asset to Cephalon. It's one of the company’s only near-term pipeline opportunities given the pending genericization of Provigil. Indeed, Cephalon execs highlighted reslizumab and its expected mid-2010 BLA filing as a near-term growth driver during a recent R&D day. It's also clear Cephalon is hitching its wagon to therapeutics that treat inflammation. In addition to the Ception transaction, in the past year the company has inked three deals in the space, with ImmuPharma, Arana, and most recently BioAssets. -- Jessica Merrill and Ellen Licking

Elan and J&J: We Can Work It Out?

Call it Elan's $100 million miscalculation. That figure could be the difference between the deal announced July 2 by Elan Corp. and Johnson & Johnson and the new terms of the deal that the companies could announce at any time, according to reports this weekend in the Wall Street Journal and Reuters.

The companies have to renegotiate their $1.5 billion pact, which gives J&J 18.4% of Elan and slight majority control over Elan's Alzheimer's disease programs, because a federal judge ruled Sept. 3 that a component of the deal violated a longstanding contract between Elan and Biogen Idec. Elan didn't even disclose the component for three weeks because its outside counsel Charles Gilman of Cahill, Gordon & Reindel didn't think it was material. That's what he told the court Sept. 3.

Biogen wasn't amused. Soon after the side deal came to light in late July, it accused Elan of breach of contract. The companies have been development and marketing partners for nearly a decade on Tysabri, a multiple sclerosis drug that has slowly gained the trust of patients and doctors after it was taken off the shelf for a year soon after its late 2004 launch. Tysabri recently hit $480 million in half-year sales, though analysts are split how much larger its market will grow, due to its continued link to a rare but deadly brain infection.

The Journal reported J&J wants to shave at least $100 million from the equity portion of the Elan deal, with the $500 million committed to the Alzheimer's development to remain unchanged.

The difference is a pittance to J&J, but Elan has tabbed the cash from J&J's equity purchase to pay down debt. It had $1.8 billion in long-term debt at the half-year mark.

After browbeating Biogen's lawyer throughout the hearing, Judge Deborah Batts ruled in his favor, setting off choruses in our heads, if not in the courtroom itself, of "Cruel to Be Kind." She ordered Elan to fix the breach of contract by Sept. 26 or risk losing to Biogen its half of the Tysabri rights. The breach centered on Elan giving J&J the right to finance a buyout of Biogen's half of Tysabri, if and when Biogen is ever the subject of a change of control.

Over Elan's objections, the judge ruled the financing right was, in legal terms, an "assignment of rights" -- Elan handing its power in the Tysabri relationship to J&J without Biogen's consent. The case came down to this: Where there's money, there's power. Elan said J&J's money -- its option to help finance a future buyout -- was merely a banking relationship and didn't give it power until the money was in Elan's hands. Biogen said no, that money is power even before changing hands, and the judge agreed.

Speaking of "Money," we wonder if Pink Floyd's version ever made the in-flight rotation on the private company planes that raised so much investor ire. I think I need a lear jet, indeed.

For those who want to parse the legalese, the case turned on the phrase "the sole discretion of the non-acquired party." That phrase is in the Biogen-Elan contract, written up in 2000. If either partner is ever bought out, the other -- the "non-acquired party" -- must decide whether to enter negotiations to buy out the Tysabri rights from the acquired party. The judge said J&J's financing option shifted that discretion to J&J, and she pointed to language in the Elan-J&J agreement to make her ruling.

The agreement, still under seal but quoted extensively in the Sept. 3 hearing, said that once Biogen is subject to change of control, Elan must take up negotiations for Tysabri "in a manner directed by J&J." Elan would sit at the negotiating table, but J&J would whisper in its ear. Or, in the words of Biogen outside counsel Michael Gruenglas of Skadden, Arps, Meagher & Flom of New York on Sept. 3, "In section 2B it says that, starting in the second line, J&J shall give written notice to Elan either instructing Elan to exercise the Elan right and to undertake the [negotiating] process provided for in [the Biogen-Elan contract]. Elan's not in the driver's seat. They're not even in the car." Beep-beep, beep-beep, yeah!

Elan counsel Gilman pointed to wording in the J&J-Elan contract that guaranteed Elan would keep all its rights, but the judge, in one of the rare instances she challenged Gilman during the hearing, shot back that just because it says so in the contract doesn't mean it's true.
J&J can walk away from the entire Elan deal by Tuesday, Sept. 15, so the clock is ticking.

If indeed Elan and J&J renegotiate their contract to eliminate the offending financing option -- or more specifically the apparent power over Tysabri rights the option seems to give J&J -- the next question is whether Biogen will approve it or go for the throat. Bet on the former: Gruenglas in court said more than once that Biogen doesn't want to grab Elan's Tysabri rights, it only wants Elan to "cure" the breach. Though take note: More than once in this case things have not been as they seem. That certainly sounds like a song waiting to be written.

Bio-Rad "GTCA," FTW

Hat tip to Bnet Pharma, where Trista Morrison provides a great overview of the battle of the lab equipment supplier viral videos. Happy Friday.




Email subscribers, click here if you can't see the video.

Ode to Tamiflu Tearing Up the Charts

We figured it was only a matter of time before Roche broke out a Tamiflu song. But unhappy to have to take the drug after some classmates fell ill, a teenager from south London has beaten them to it. (It isn't based on Van Halen's "Panama" as we hoped but it'll do for a Friday.) Harry ain't pleased about the side effects, which apparently include the urge to hoard red hats.

Story here.

Roche Rocks? With Impedance!

There are times when a picture--or a video--is worth a thousand words and simultaneously leaves you speechless. This is one of those times. (email/RSS subscribers if you can't see the video, click here to view it.)

Call Roche's XCelligence rock video a piece of intelligent (marketing) design--we aren't completely sure what the rock band is trying to sell. Hair products? Leather? Tattoos? An '80s rock compilation? How about a pioneering "microelectronic biosensor system for cell-based assays providing dynamic, real-time, label-free cellular analysis for a variety of research applications in drug development, toxicology, cancer, medical microbiology, and virology"? Seriously, WTF?

Take a moment and savor the Def Leppard/Poison/Guns N Roses/Van Halen mash-up that harkens back to a different time, when real men wore headbands and codpieces.

It's tempting to speculate that this video and a companion ballad piece (because all great Heavy Metal bands have a sensitive side too--see the ballad below) are the true reason behind Art Levinson's departure from Genentech. He doesn't have the locks--or the ink or the tongue (?)--to be the David Lee Roth/Gene Simmons wannabee.

Or maybe it just proves what Genentech lovers have said all along: Roche clearly could afford to spend more than $95-a-share on the iconic biotech. At the very least we hope the videos make you smile.

Bio-rad? Your move.

DotW: You Can Get Anything You Want at IVB

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

You can get anything you want at IN VIVO Blog.

You can get anything you want at IN VIVO Blog.

Log right in, it's a click away.

Just a finger tap. You don't have to pay.

You can get anything you want at IN VIVO Blog.

Now it all started one Thanksgiving ago, was on--last Thanksgiving, when Chris Morrison and I start writin' a blog about deals, but not every day, just once a week. And writin' about deals once week, you know it's a lot of work, and there's a lot of garbage you gotta sift through, but we decided it would be a friendly gesture on behalf of readers.

So we trolled around the Internet with our shovels and rakes and other implements of destruction (aka FDC-Windhover's Strategic Transactions database) looking for deals to analyze. But then a big bad editor said why are you doin' that? We are closed on Thanksgiving.

And we had never heard of a blog closed on Thanksgiving before (we don't get out much) and with tears in our eyes we drove off into the sunset looking for another place to put the garbage--I mean our deals.

We didn't find one. So we wrote our post anyway, went back and had a Thanksgiving Day that couldn't be beat, and it's been a recurring feature here at IVB ever since.

In honor of the day, we hope you consider joining the IN VIVO Blog Movement. All you've got to do is walk into the office wherever you are, just walk in and say "You can get anything you want at IN VIVO Blog." And walk out.

You know if one person, just one person does it, they might think he's really sick and they won't take him...And can you, can you imagine fifty people a day, I said fifty people a day (okay, we'd really like 1000) walking in, quoting a line from IN VIVO Blog and walking out?

And friends, they might think its a movement. And that's what it is, the IN VIVO Blog Movement.

Remember Deals of the Week? (This is a post about Deals of the Week.) Without further ado, we bring you this week's installment inspired by Arlo Guthrie. Feel free to sing along in four part harmony. With feeling.

King/Alpharma: King Pharmaceuticals' is finally king of pain. Its relentless--and often contentious--battle to win Alpharma came up aces this week. The two companies announced Nov. 24 that they have signed a definitive merger agreement in a deal that values Alpharma at $37 a share or roughly $1.6 billion. The deal, which remains subject to approval by the Federal Trade Commission, substantially bolsters King's pipeline of marketed pain products, adding Kadian and the Flector pain patch. The merger also gives King Alpharma's experimental Embeda, an abuse-resistant oral form of morphine that won a positive but not overwhelming vote of support from the FDA's Anesthetic and Life Support Drugs and Drug Safety and Risk Management Advisory Committee on Nov. 14. Together with King's own tamper-resistant version of oxycodone, Remoxy XRT, whose approval also is under review at FDA, the addition of Embeda stands to make the Bristol, Tenn.-based specialty pharma a leader in the abuse-deterrent opioid market. Analysts lauded the news: Corey Davis, of Natixis Bleichroeder called the deal "a no-brainer for King", while Cowen and Company's Ian Sanderson wrote in a same-day research note that "the merger is a strategic and financial plus for King. Still it almost didn't come to pass. Even after Alpharma had a change of heart and began entertaining the offer, King still had to come up with the financing to get the deal done--no mean feat in the current business climate. In the end, the company's lenders came up with a smaller total loan package than was originally proposed: a combined debt financing that provides King with $775 million in cash to complete the Alpharma acquisition and another $430 million on the books post-acquisition for drug development and additional deal-making. But it didn't come cheap: Cowen's Ian Sanderson estimated the proposed interest rates on both facilities were LIBOR plus 500 basis points, or 7.15 percent. "The debt repayment terms are fairly onerous, reflecting the risk aversion of the lending banks even to a well-capitalized merger transaction," he said in an interview with "The Pink Sheet" DAILY.

Novo Nordisk/Merrion: Diabetes powerhouse Novo Nordisk announced Nov. 24 that it would continue it's collaboration with Merrion Pharmaceuticals to develop and commercialize oral insulin analogs, despite its wishy washy approach to another alternate delivery technology, inhaled insulin. Under the deal, Merrion will apply its proprietary GIPET process to synthetic insulin candidates selected by Novo Nordisk. In return, the Dublin, Ireland-based biotech will receive €47.5 million ($58 million) in up-front fees and milestone payments, plus royalties, for the first product developed under the partnership. In an interview with "The Pink Sheet" DAILY, Merrion CEO John Lynch declined to break out the upfront and milestone-based deal figures. (Translation: there ain't a lot of money flowing into Merrion's coffers just yet.) The move isn't too surprising. Novo Nordisk has a history of hedging its bets when it comes to insulin delivery. That was very much the company's strategy when it partnered with Aradigm for that biotech's inhalable insulin. But following the failure of Exubera in the marketplace--and the rapid exits of both Pfizer and Lilly from the inhaled insulin stage, Novo Nordisk quickly followed suit, transferring its entire portfolio of inhaled-insulin patents to Aradigm earlier this year. Merrion might want to have a chat with another Novo partner: Emisphere. Earlier this summer Novo and Emisphere teamed up to develop an oral version of Novo's long-acting GLP-1 analog Victoza in a deal worth $10 million up-front. Emisphere is no stranger to the oral insulin field. It gave up on that delivery route some months ago.

Roche/Memory: Thanks for the memories, Memory Pharmaceuticals. The latest cash-strapped biotech lost its battle for independence on Tuesday Nov. 25, when Roche announced it would put an end to its partner's misery, buying the company for just $50 million, or 61 cents per share. Having seen its share price drop to just pennies on the dollar, the struggling Memory Pharmaceuticals faced an impending NASDAQ delisting on Dec. 3 and had just a few months of cash left in its coffers. The acquisition gives Roche full ownership to Memory’s nicotinic alpha-7 agonist program, including the Phase IIa drug R3487/MEM 3454 currently in Phase IIa trials for Alzheimer’s disease and cognitive impairment associated with schizophrenia, as well as the Phase Ia Alzheimer’s medicine R4996/MEM 93608. “This deal represents a 319 percent premium to the previous day’s closing price of $0.15, which we believe is fair given the current environment for small cap biotechnology valuations and Memory’s balance sheet,” wrote Rodman & Renshaw analysts Christopher James and Jason Butler in a Nov. 25 research note. Hmm. Wonder if Memory's private investors, which include MPM Capital and Great Point Investors, feel the same way. With just $20 million on its books and another $50 million from Roche, this can't be a money-making deal for investors. According to FDC-Windhover's Strategic Transactions database, Memory raised $80.3 million through a variety of financings, including an $11 million debt placement and a PIPE worth $32.7 million since it went public in 2004. According to the company's CFO, Michael Smith, the news for investors is even more grim: since its founding Memory has accumulated $250 million in deficits. We are tempted to sing a revised version of "Where have all the flowers gone?"--"Where has all the money gone?" Perhaps "Brother can you spare a dime?" is more appropriate.

Cephalon/ImmuPharma: Analysts such as Barbara Ryan at Deutsche Bank may wring their hands at Big Pharma's unwillingness to buy assets (Roche and J&J being this week's exceptions). But we aren't surprised to see more deals like tie-up between Cephalon and ImmuPharma announced this week. The terms of the deal give Cephalon an option to obtain exclusive worldwide rights to ImmuPharma's experimental lupus medication Lupuzor, currently in Phase IIb clinical trials, for a $15 million up-front fee. Cephalon--like King--fits what T. Rowe Price portfolio manager Kris Jenner believes is the profile of the industry's less obvious deal-makers. “There are lots of cash-rich companies short on product flow,” he argues in an upcoming IN VIVO feature. Moreover, while investors are clamoring for acquisitions, licensing arrangements that provide pharmas with valuable products and biotechs with cash to keep the lights on--could become the norm in today's tough business climate. Certainly, the Cephalon/ImmuPharma deal fits that model. ImmuPharma gets some much needed cash right away--as of June 30, the company was down to it's last £1.6 million according to its quarterly filings. (In July, the company announced a private placement worth £2.7 million, making its cash position marginally better. But still...) And if the drug works as advertised, ImmuPharma also stands to gain up to $500 million in various milestones. Cephalon, meanwhile, gets to defray the commercial and regulatory risks associated with buying 100% of Lupuzor until it is much further along in the clinic, when much of the scientific uncertainty about the product has been removed. If Cephalon exercises its option, it will assume all expenses for Phase III studies and beyond. "Our current cash position has created the opportunity to make this type of deal, which helps to position Cephalon and our pipeline for longer term growth," Frank Baldino, chairman and CEO of Cephalon, said in a press release announcing the news.

J&J/Omrix: Johnson & Johnson began its cash tender offer for biosurgical sealant specialist Omrix Biopharmaceuticals this week, valuing the company at $438 million or $25 per share. Omrix will operate separately and report through J&J’s Ethicon unit, which already sells Omrix’s fibrin sealant and thrombin-based product lines. Ethicon will also get a line of antibody-based immunotherapy products for immune deficiencies and various infectious diseases. Sales of those products hit $10.1 million in 3Q 2008, up 40% from the same period in 2007. J&J will take a $120 million charge to complete the deal, which could signal the beginning of an opportunistic J&J buying spree as the medical products giant looks to use its $14.8 billion in cash to buy up assets from companies pressured by shrinking valuations. Leerink Swann analyst Rick Wise calculates Omrix will add a tenth of a percent to 2009 top-line growth, as J&J weathers declines in Procrit and Cypher sales (5% and 3% of total 2007 sales, respectively) and generic pressure on Risperdal and Tomamax, which accounted for just under 10% of total 2007 sales. Although J&J already had a relationship with Omrix and the deal can be seen mainly as a low-risk way to leverage its sales force in new territories, it also shows the logic of Omrix’s development strategy of sourcing multiple products from human plasma (fibrin, thrombin, immune globulins). It stands in contrast to thrombin competitor ZymoGenetics, whose recombinant human thrombin Recothrom, a higher priced product, has been struggling to gain market share since its launch in early 2008. In the face of Recothrom’s troubles and a poor cash position, on November 21, Zymogenetics’ CEO Bruce Carter retired--Mark Ratner.

Just remember. You can get anything you want at IN VIVO Blog. Excepting Roger. Happy Thanksgiving!

DotW: Changin' Times

A quick review of the week's news suggests change is afoot. The Dow dropped below 11,000; the second coming of the Jesus phone occurs today (not that Apple needs press from us); and three pharma companies have teamed up to form a for-profit biotech called Enlight Biosciences to develop drug discovery enabling technologies. What next?

For starters, the FDA seems determined to play nice, admitting this week that although epilepsy drug come with the potential for suicide, that isn't enough to warrant a so-called black box warning. Is this the same safety conscious FDA we've come to know and love? Yes, apparently concerned that a warning label might cause doctors and patients to abandon treatment, an advisory committee voted 14-4 against adding the dreaded black box. (Almost certainly, they hadn't overdosed on Chantix.)

In another sign of its new openness, our august regulatory body has also decided to do away with the oxymoron, "approvable letter," which far as we can tell means the exact opposite. The FDA's new stamp of non-approval will be a “complete response” letter that “will describe specific deficiencies and, when possible, will outline recommended actions the applicant might take to get the application ready for approval,” the agency said in a statement. (We are waiting for the "incomplete response letter", but maybe that can't be tied to a PDUFA date.)

And there are shifts on the follow-on biologics front, as Insmed announced results of a study showing bioequivalence between its INS-19 compound and Amgen's blockbuster Neupogen. That could trigger renewed discussion of biogenerics legislation on the Hill. Neupogen, after all, rang up $1 billion in sales in 2007 alone.

Finally, BNet's David Hamilton believes that big changes are afoot at Pfizer, which continues to struggle with the new math of this century's blockbusters. According to Hamilton, "Pfizer is starting to restructure itself into into a marketing-centric, research-light drug company that will most likely be looking for acquisitions in order to restock its depleted drug pipeline." We can but hope. And who knows, perhaps generics--or at least the word diversification--will be part of is mantra. For more on Pfizer's strategy, check out Roger Longman's recent IN VIVO feature. (Coincidentally, Merck KGaA's CEO Karl-Ludwig Kley told the German newspaper Handelsblatt that his company's chemicals division, which makes liquid crystals and specialty chemicals, is 'part of our DNA,' indicating he rules out a sale of the business.)

If true, perhaps Pfizer can dodge Dylan's prophecy: "As the present now will later be past, the order is rapidly fadin'. And the first one now, will later be last. The times they are a changin'" Come gather round people, wherever you roam, it's time for...

Fresenius/APP and Fresenius/Galenica: The German health care products and services company Fresenius gets fearless investor of the week honors for wading into the heparin controversy via a $4.6 billion (at least) buyout of APP, and for following up by acquiring rights to Galenica’s injectable iron product Injectafer—currently “not approvable” at FDA following an advisory committee review that concluded that the drug has a mortality disadvantage compared to oral iron. Of course, there’s a nicer way of spinning things. The APP acquisition gives Fresenius Kabi, a “cornerstone” to build a hospital products pharma presence in the US—and does it at a time when APP is generating explosive profit growth since finding itself as the sole supplier of heparin in the US. Fresenius will be able to ride that wave—though it will also pay more for APP if profits are higher than projected. (You can read the deal terms here.) So far, APP has looked like the hero in the heparin story. The company has also jacked up the price of its product now that is the sole supplier in the US—as much as tripling the price—which could be a risky move given the political attention to the heparin market after Baxter’s catastrophe. (APP defends the price increase in part by noting that its product is still significantly cheaper than any possible alternatives like low molecular weight heparin or Angiomax.) The acquisition, though, may make it less obvious how big a windfall APP reaps from heparin, since its numbers will now be consolidated into the new parent. That could limit its political exposure.

The Galenica deal involves a different division of Fresenius, the dialysis services company Fresenius Medical Care. And the immediate focus is on Galenica’s two marketed injectable iron brands (Venofer and Ferinect). The two companies are creating a joint venture focused specifically on the dialysis market; and in North America a second agreement with Galenica’s partner Luitpold secures the same split responsibilities. Venofer alone is about a $250 million product in the US. And Fresenius will have rights to Injectefer if and when it reaches the market. Despite the regulatory setback, Fresenius says Injectefer “is expected to enhance the treatment of anemia in the dialysis patient population through the application of innovative drug administration techniques.”

Novartis/Speedel: A series of insider stock sales by executives of the Swiss biotech Speedel will add up to the acquisition of the company by its main partner Novartis. On July 10th Speedel said officers of the company, including founder and CEO Alice Huxley, sold their stakes—totaling 51.7% of the outstanding shares—to Novartis at CHF 130 per share. Add to that Novartis’ existing 9.7% stake and the Big Pharma was obliged to make a mandatory public offer to buy the rest of the company’s shares. The acquisition—which values Speedel at about $880 million—is neither unexpected nor particularly expensive, especially in the light of Speedel’s recent stock market decline and the companies’ symbiotic relationship. Speedel in 1999 in-licensed its lead renin inhibitor aliskiren (Tekturna/Rasilez) from Novartis, and Novartis clawed back the drug in 2002 (a 2004 discussion of Speedel’s business model is here). Though successfully approved, the drug has underperformed, putting pressure on Speedel’s stock and disappointing Novartis. That said, the drug remains Novartis’ best post-Diovan strategy (that antihypertensive goes off patent in 2012) and even at $880 million analysts point out that the Big Pharma is essentially tapping the rest of Speedel’s renin-heavy pipeline for free.

Solvay/Innogenetics: We have a winner. Solvay trumped Gen-Probe's hostile bid for Innogenetics with a higher bid of its own, and Gen-Probe has no desire to counter the counter-offer. Analysts widely expected Solvay to up its original April bid for Innogenetics, which was only 5.75 euros a share, when Gen-Probe offered 6.10 euros-a-share in an effort to transform itself into the world's largest stand-alone moelcular diagnostics company. On Wednesday, Solvay announced it would pay 6.50 euros-a-share for the Belgian company--about $361 million--and Gen-Probe decided to take its ball and go home. For Gen-Probe, winning Innogenetics was always a long-shot. The San Diego company, which had 2007 revenue of $403 million and a market valuation of more than $2.83 billion, hasn't done an acquisition since 2003 when it bought Molecular Light Technology for $11 million. Solvay, meanwhile, is a much larger outfit with revenues of roughly $15 billion, and has the economic advantage of making a friendly offer in a stronger currency than the rapidly sliding dollar.

Thermage/Reliant: For aesthetic device companies, where sales and marketing account for the biggest costs and a number of the newer one-product companies find themselves bumping into each other at the physicians’ office, consolidation is the order of the day. Several weeks ago, Medicis purchased Liposonix. Now skin tightening firm Thermage has snapped up skin surfacing company Reliant for $95 million, paid in a combination of stock and cash. Together, these two companies, which offer complementary aesthetic technologies, had $137 million in revenues for the fiscal year that ended in March 2008, according to the press release announcing the deal. The tie-up solves a key problem for Reliant; it was running out of money, having failed to execute the IPO it filed in 2007, perhaps because of its steep post-money valuation, which was north of $200 million. Reliant will also benefit from Thermage’s unique sales model of deploying two separate sales forces, one selling capital equipment, and the other, the disposable tips its devices require. Almost certainly, Thermage’s disposables sales force can help push Reliant’s creams and skin care products.

Lilly/SGX: Lilly receives this week's award for opportunistic acquirer. On Tuesday, the pharma announced a $64 million takeout of its research partner, SGX Pharmaceuticals. Like many other biotechs, SGX has been in a pickle: As of Tuesday July 8, it was trading at a discount to its existing cash reserves--meaning investors believed the company was worth less than the number on its own bank balance. This wasn't always the case, but the company took a hit when its lead project SGX523, a MET inhibitor in Phase I, showed dose-limiting toxicities earlier than expected, and investors fled the stock. With a dwindling bank account and no hope of tapping the public market, SGX had little choice but to sell when Lilly came courting. For more check out this post from earlier in the week.

(A big thanks to fellow Windhover writers Michael McCaughan, Chris Morrison, and Mary Stuart for contributions to this post.)