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!

2013 M&A Of The Year Nominee: Amgen/Onyx

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™.

Step right up and cast your vote. No reason to hem or haw. Amgen’s $10.4 billion acquisition of Onyx Pharmaceuticals deserves your vote for M&A of the year.

What’s that you say? The deal held no intrigue? No eleventh-hour white knight who stepped in and drove a nail-biting bidding war? No surprises that made you dribble coffee down your chin while reading the morning news?

Well, it’s not as though every deal can be shrouded in as much conspiracy as Roche’s takeover of Genentech, or done at a price that leaves you staggering to the water cooler ala Gilead’s acquisition of Pharmasset.

But what’s so bad about a straightforward acquisition that hedges for the buyer and still rewards the seller, one where the purchase price, at $125 per share, meets a middle ground? Remember how Amgen originally offered $120 per share, which was rejected by Onyx, which thought it could get more like $130 to $140 per share?

How civilized then that they settled squarely on $125 without dragging us through a drawn out campaign. Onyx’s investors still ended up receiving a hefty payout, with the final price representing a 43.9% premium over the stock’s closing price in June before Amgen’s original offer was disclosed.

And, $10.4 is nothing to shrug at either. Amgen’s acquisition of Onyx was the most expensive M&A of the year, reason enough to cast your vote in its favor.

Don’t forget the perfectly sensible strategic rationale behind Amgen’s decision to buy Onyx. The big biotech gains the proteasome inhibitor Kyprolis (carfilzomib) for multiple myeloma, and Nexavar (sorafenib) partnered with Bayer, for liver and kidney cancer, drugs that are already on the market in the U.S. and will immediately contribute to Amgen’s top-line. The company needs new drugs to fill a revenue gap. Before the acquisition it was expecting that sales would be lower in 2015 than in 2013.

The addition of Kyprolis fills that void – and it gives Amgen some street cred in oncology, a therapeutic area it has targeted for future growth, though its marketed cancer portfolio mainly includes supportive care products, not cancer interventions.

Onyx serves as a leg up for Amgen as it looks to establish itself as a major oncology innovator and bring forward a pipeline of oncology drugs it has cobbled together partly through acquisitions.

Wait, you’re still not sold? You’d prefer a deal that’s more high-risk, high-reward? Well, you can rest assured Amgen’s still has plenty of risk to absorb. Kyprolis made it to the market through an accelerated review, but Amgen needs the results of two ongoing Phase III trials, ASPIRE and FOCUS, to play out in the drug’s favor before it can secure full approval and expand into Europe.

In November, a Bank of America analyst issued a note citing reports of cardiovascular events with Kyprolis. That, understandably, has spooked some investors while they wait for the Phase III data to report out in 2014. Amgen called the whole flap a misunderstanding that stemmed from the analyst’s dinner meeting with Celgene management and clarified that event rates are no different from what is already included in the Kyprolis label. The data monitoring committee overseeing the study has not reported any specific safety concerns, Amgen added. There's your intrigue!

Still, these things do get you thinking about the $10.4 billion Amgen paid for Onyx and what could happen between now and when the company reaps a return. In the drug industry, things are never straightforward despite how they might appear. Are you happy now? Then step right up and cast your vote.

flickr image via Dr Colleen Morgan under creative commons

DOTW Looks At How 2013 Biotech Deal Stats Stack Up After Amgen/Onyx

Quick! What's large and vanilla and a late summer treat?

It’s the last week of summer, and while one might expect business development pros would have turned on their out-of-office auto-replies, the drug industry’s execs were too busy closing deals to be bothered with the beach or other lazy summer pursuits.

We should have known biopharma’s summer had ended early the moment Amgen Inc. and Onyx Pharmaceuticals Inc. announced they had finally negotiated a takeover Aug. 25, before the market even had a chance to wake up Monday morning. The deal left us wanting in some regards: no cliff hangers, juicy tidbits or surprise white knights emerged. But while nothing about Amgen’s acquisition of Onyx astonished (not the buyer, the seller, the rationale or even the final $125 per share purchase price, which ultimately landed squarely in the middle of where most industry watchers thought it would), biotech mega-deals just don’t happen every day.

We couldn’t help but get excited about it, especially wondering how significantly the addition of Onyx will impact Amgen's ambition of becoming a leading oncology player.

The acquisition price of $10.4 billion makes Onyx Amgen’s largest acquisition in over a decade. The amount is $800 million less than the staggering $11.2 billion Gilead Sciences Inc. paid for Pharmasset Inc., a deal that had everyone talking in 2011.

Unlike Onyx, Pharmasset had no commercial products, but presented an opportunity to transform Gilead with its potential best-in-class hepatitis C drug. Onyx may not end up being as transformative to Amgen’s top-line over the long-term as Pharmasset could be to Gilead, but the merger is still a notable moment in biotech and it will go a long way toward raising the industry’s 2013 merger stats, which were stark before high summer kicked into gear.

In addition to Amgen/Onyx, the busy summer deal sweep included two biotech acquisitions by Cubist Pharmaceuticals Inc. in the antibiotic space and Perrigo Co.’s takeover of Elan Corp. PLC. Those four deals gave a significant boost to the 2013 tally of U.S. public biotech acquisitions, which was in a drought for the first six months of the year. All-in-all, six U.S. public biotech acquisitions with a value over $100 million have been announced in 2013; four of those took place in July and August, according to Elsevier’s Strategic Transactions database. In comparison, there were a total of seven U.S. public biotech take outs announced in 2012 and six in 2011.

The hefty values of Amgen/Onyx and Perrigo/Elan lifted the average deal value in 2013 to $3.51 billion, well above the average deal value of $2.07 billion seen in 2012. Excluding those two mega-deals, however, the average deal value through August would be a comparatively meager $592.5 million. The four remaining biotechs that have been acquired play in niche commercial markets like antibiotics (Trius and Optimer) or fish oil (Omthera).

In comparison, of the seven acquisitions announced in 2012, five were valued at over $1 billion, reflecting more acquisitions in broader commercial markets like cancer, diabetes and autoimmune disease.

The summer may be winding down, but the last few months of the year are always a busy time for deal-making. There is sure to be more industry consolidation on the way, perhaps even Bristol-Myers Squibb Co. will buy Shire PLC. Just wait until after Labor Day weekend, okay? -- Jessica Merrill

Lilly/Zealand: Zealand Pharma AS has entered into a research and development agreement with Eli Lilly & Co. to design and develop potentially novel therapeutic peptides for Type 2 diabetes and obesity that the U.S. drug maker has discovered. The Danish group and says the collaboration could last more than 15 years and may eventually expand to other disease areas. Under the multi-target collaboration, announced Aug. 29, 2013, the duo will share in the funding, risk and reward of the program. No clinical details were given nor financial terms disclosed. But Zealand’s CEO David Solomon said the peptide therapeutics the two will be exploring are not glucagon-like peptide-1 (GLP-1) agonists, nor sodium glucose co-transporter 2 (SGLT-2) inhibitors, nor a dipeptidyl peptidase-4 (DPP-4) inhibitors, but rather a potentially whole new class of diabetes treatments. It’s the latest in a number of partnerships that the Copenhagen-based biotech has with Big Pharma. Eli Lilly said their project will revolve around a novel peptide hormone-based approach that its scientists discovered and which has the potential to lower blood glucose as well as body weight. -- Sten Stovall

Endo/Boca: It’s not a big surprise that Endo Pharmaceuticals Inc.’s first business development play under its new leadership was on the generics side. New CEO Rajiv de Silva has been talking up the company’s existing generics business Qualitest as an important growth driver as its branded business confronts generic competition. The company announced plans Aug. 28 to acquire mid-sized generic manufacturer Boca Pharmacal for $225 million. Qualitest is known for its strong capabilities in controlled substances. It leads the U.S. market in liquids manufacturing and was the sixth largest generics company in the country at the end of 2012, according to IMS Health. Florida-based Boca will add to the portfolio with generic forms of products like low-strength generic form of the hydrocodone drug Xodol. The company also produces generics of the inflammatory pain reducer Disalcid (salsalate) and the anti-anxiety medication Xanax (alprazolam). Endo will need to deliver more business development deals if it is to make up the revenues that will be lost from sales of its best-seller, the pain patch Lidoderm (lidocaine), in September. -- Lisa LaMotta

Akorn/Hi-Tech Pharmacal: Continuing the theme of generic consolidation, ophthalmology-focused Akorn Inc. announced plans Aug. 27 to increase its portfolio, pipeline and manufacturing capabilities by purchasing Hi-Tech Pharmacal Co. Inc. for $650 million. The deal will bring a broad range of generic, prescription and over-the-counter products, including eye drops, and render Akorn the third-largest generic ophthalmology drug firm in the U.S. CEO Raj Rai predicted the acquisition would increase the specialty pharma’s annual revenues to above $500 million, be immediately accretive and yield run-rate synergies of between $15 million and $20 million within 12 months of closing. Akorn reported sales of nearly $151 million for the first six months of 2013. The purchase price amounts to $43.50 per share for Hi-Tech, a 23.5% premium over its closing price on Aug. 26. Akorn says it will fund the purchase with cash and about $600 million in borrowing. The deal is small compared to some recent ophthalmology transactions. Most recently, Valeant Pharmaceuticals International Inc. grabbed headlines in late May with an $8.7 billion debt-and-equity deal to purchase ophthalmology giant Bausch & Lomb Inc. -- Joseph Haas

MedImmune/Amplimmune: Integrating Amplimmune Inc. into AstraZeneca PLC’s MedImmune LLC subsidiary shouldn’t be too much of a headache. The companies are neighbors in a Gaithersburg, Md., office park. Maybe it was only a matter of time before this deal got done. AstraZeneca, vaulting for a business turnaround, has been on a quest to fix its problems through business development. Its acquisition of Amplimmune for $225 million, announced Aug. 26, will bring the company an anti-PD-1 antibody for cancer nearly ready for the clinic. Privately held Amplimmune’s shareholders also could earn up to $275 million in development milestones as part of the transaction, expected to close during the third quarter. The milestones mainly will be tied to AMP-514, which should be ready for an IND filing in October. The acquisition offers a healthy return on investment for Amplimmune’s shareholders. The company was founded in 2007 with a $20 million Series A round from InterWest Partners LLC and the Wellcome Trust. Since then it has financed its operations with a pair of deals. In 2010, it got $23 million upfront from GlaxoSmithKline PLC for exclusive worldwide rights to AMP-224, an Fc-fusion protein of the B7-DC ligand now in Phase I/II study in cancer. Earlier this year, the biotech licensed the Phase I-ready B7-H4 fusion protein AMP-110 for autoimmune indications to Japan’s Daiichi Sankyo Co. Ltd. for an undisclosed option fee and research funding. AMP-514 is the key to the transaction, but MedImmune also values Amplimmune’s preclinical molecules targeting the B7 pathways. -- J.H.

Sangamo/Ceregene: Gene therapy developer Sangamo BioSciences Inc. is strengthening its expertise in the field with the addition of Ceregene Inc.’s adeno-associated virus technology platform. The company announced plans to acquire Ceregene in a stock transaction Aug. 26; Sangamo will issue 100,000 shares to Ceregene shareholders. Sangamo has also agreed to pay milestone payments related to the two Phase II programs that Ceregene brings. The lead program, CERE-110, uses AAV technology to deliver nerve growth factor (NGF), a naturally occurring protein that maintains survival of nerve cells, to the region of the brain that contains the majority of cholinergic neurons. The goal is to restore and preserve nerve function in an area of the brain thought to play a significant role in cognitive function and memory in patients with Alzheimer’s disease. A Phase II study of the drug is expected to report out in 2014. -- L.L.

Chiesi/Zymenex: With the ambition of building a standalone rare disease business, Italy's mid-sized pharma Chiesi Farmaceutici SPA will acquire Danish biotech Zymenex AS, the firms announced Aug. 26http://www.sunstone.eu/wp-content/uploads/2013/08/Chiesi-Sunstone-press-release-2013-08-261.pdf. The Parma-based company already markets medicines for cystic fibrosis and neonatal lung disease, and last month became pioneers in the marketing of gene therapy products in Europe by licensing uniQure BV’s Glybera (alipogene tiparvovec). The company’s interest in Zymenex lies in its recombinant enzyme replacement therapy Lamazym (rhLAMAN), which is being studied in a 25-patient Phase III trial for the treatment of the ultra-rare lysosomal storage disease, alpha-mannosidosis. The experience of Zymenex's researchers in developing other rare disease drugs could be useful to Chiesi's continuing push into the sector. In 2008, Zymenex sold a Phase II enzyme replacement therapy, Metazym (arylsulfatase A), to Shire for $135 million. Although the financial terms of the current deal were not disclosed, Zymenex’s majority shareholder, Danish VC firm Sunstone Capital, undoubtedly welcomed the opportunity to make a further return on its investment. -- John Davis

Meda/Acton: Swedish specialty pharma Meda AB is buying Acton Pharmaceuticals Inc. to get the privately held group’s Aerospan inhaler for treating asthma, approved by FDA in September 2012 and poised – pending satisfying further manufacturing requirements – for a U.S. launch in early 2014. Meda, which describes itself as the world’s 50th largest drug company, is paying $135 million plus a potential milestone payment of $10 million and royalty based milestones to buy the Marlborough, MA-based company. The Swedish group has its own respiratory portfolio and views Aerospan, which contains the active substance Flunisolide, as a promising addition in its quest for share of the $2 billion U.S. market for inhaled mono-corticosteroid asthma products. Meda aims to close the takeover by the end of 2013, and predicts Aerospan under its guidance will generate at least SEK2 billion ($300 million) in revenue within five years. A respiratory-focused development company with no products yet on the market and only nine employees, Acton was founded in 2008 and is owned by private equity group Sequoia Capital and the group’s executive management. A perpetual licensing agreement with Forest gives Acton exclusive global rights to develop and market Aerospan. Acton also has exclusive U.S. rights to Sanofi’s FDA-approved aerosol nasal allergy treatment Nasacort HFA (triamcinolone acetonide). Neither Meda nor Acton would comment on what the takeover of Acton would mean for that arrangement. -- S.S.

Teva/Rexahn: It appears Rexahn Pharmaceuticals Inc.’s solid-tumor therapy RX-3117 is at least one casualty of new leadership and changing priorities at Israel’s Teva Pharmaceutical Industries Ltd. The two companies terminated a 2009 collaboration centered around the drug after Teva declined to exercise its option on the product. Rockville, Md.-based Rexahn now has all rights to the compound, which inhibits DNA and RNA synthesis and induces apoptosis. Teva submitted an IND for the drug last month, as dictated by the now-defunct partnership’s terms. Teva said RX-3117 no longer fits its oncology strategy, despite harboring some potential. The decision is in line with statements Teva’s new CEO Jeremy Levin has made about narrowing Teva’s focus in oncology. Teva made an up-front payment of $3.5 million to Rexahn in the form of an equity investment four years ago, then made multiple equity investments over the course of the partnership as RX-3117 advanced through pre-clinical trials. It had acquired an equity stake of 6.3% by July 2013. Teva also unwound a four-year-old biosimilars agreement with Lonza Group Ltd. last month. -- Paul Bonanos

flickr image courtesy Chiot's Run under creative commons license. Holy ice cream headache, batman.

Financings of the Fortnight Jumps On Board The A-Train

We're here to point you toward the newly published 2012 A-List, dear readers, but first let's note some big numbers. US listed biotechs raised at least $1.8 billion in stock and debt sales the past couple weeks. We've highlighted two below, Onyx Pharmaceuticals and InterMune, but the totals help highlight a broader imperative: Go public if you can. The grass is greener.

But easier said than done; the US JOBS Act, meant to ease regulation, spur IPOs, and let a million crowdfunders bloom, has so far done little of anything. Our colleagues at START-UP described here the snail's pace of the crowdfunding portion of the JOBS agenda. And the JOBS Act's so-called "IPO on-ramp" seemed after the bill became law in April to be more of an LA freeway at rush-hour, with all of eight biotechs going public in the US. Will the bottleneck clear soon? If all the institutional investors and hedge funds crossing over into biotech recently are any indication, a bunch of extremely well-funded private companies will try their hands soon.

Reeling in more private money instead of going public is still an option for some companies, but generally the numbers don't recommend doing so. Biotechs in 2012 attracted $4.1 billion, down from $4.8 billion in 2011, according to the National Venture Capital Association's Money Tree report. Medical device investments dropped to $2.4 billion in 2012, from $2.8 billion in 2011. There have been worse years in the past decade, but the decline stands out in a year that featured legislation meant to spur investment. A recent survey of investment bankers shows a lot of skepticism about the JOBS Act (h/t to Dan Primack's "Term Sheet" email), a big dip from their positive attitudes last summer. Life-science VCs never sported the rose-colored lenses, as noted in the second annual life-science venture survey that START-UP published last September.

Then again, a flurry of IPO activity this quarter or next could make that slim "Too soon to tell" majority look all the wiser. Other VCs voted for optimism with their checkbooks in 2012: the early-stage investors. There weren't a ton of them, as you might extrapolate from the overall VC numbers noted above. One way to take the temperature is to tally the disclosed Series A rounds, which is why START-UP publishes its A-List every year. Lucky you: It just went live Thursday night, and for the non-subscribers we'll share this tidbit that shows biopharma Series A activity was, in dollar terms, practically flat, but deal volume was up, making for a small decline in average deal size (UPDATE: removing deals for which no dollar figure was disclosed suggests a slight uptick in Series A average haul):

Click through, and you'll find lots more discussion. We've got device and diagnostics numbers, too, as well as The A-List itself: the 12 companies we feel best exemplify the year's scientific, financial and strategic trends in early stage life science venture: ArmaGen Technologies, Avelas Biosciences, Cibiem, Cotera, Enterome, Galera Therapeutics, Global Blood Therapeutics, Intact Vascular, Novira Therapeutics, Oculeve, Solstice Biologics, and Warp Drive Bio.

If that's not enough to make you tear down the paywall, the A-List feature also includes profiles of two very active Series A investors and a round-up of the year's activity for our A-List alumni, who stretch back to 2004. It's all so A-riffic, you'd half expect the official celebrity spokesperson to be A-Rod. A-hem. Before we get too carried A-way, let's A-vail ourselves of the latest A-dition of...

Onyx Pharmaceuticals: Intent on proving this year it isn’t a one-trick pony with the success of kidney and liver cancer treatment Nexavar (sorafenib), Onyx took advantage of a share price upswing to raise $359 million in a follow-on, selling 4.4 million shares at $81.50 each. According to Elsevier’s Strategic Transactions database, it’s the largest life sciences follow-on since orphan disease play Alexion Pharmaceuticals raised $465.1 million in May 2012.  It’s also the largest financing Onyx has done to date. As of Sept. 29, 2012, Onyx had $573 million in cash. (It also tallied an operating loss of $228.9 million in the first nine months of 2012.) The firm expects to use the cash in part for trials intended to push Kyprolis (carfilzomib) all the way up to frontline therapy. In addition, it’s waiting for data due the second half of 2013 that would be the basis of a European regulatory application; Onyx is planning to market the drug on its own there. Kyprolis was first approved in July to treat relapsed/refractory multiple myeloma. Onyx said in January it had more than $62 million in Kyprolis sales after five months on the U.S. market. Shares were up by as much as 14%, but they've since retreated to a 2% gain in the new year. Still, Onyx almost doubled its share price in 2012, so investors seem content for now to eschew profitability. But that likely won’t remain the case for too long.  — Stacy Lawrence

InterMune: More from the fortnight’s follow-on fiesta! InterMune raised $229 million in concurrent public offerings of convertible senior notes and new stock, even as it continues to work to get its potential blockbuster in idiopathic pulmonary fibrosis approved in the U.S. Priced Jan. 16, the offering netted $102 million in sales of 2.5% convertible senior notes due in 2017, along with $127 million from the sale of 13.5 million common shares at $9.90 apiece. The senior notes convert to common stock at a price of $12.87, 26% higher than InterMune’s average stock price of $10.19 before the offerings. The Brisbane, Calif. company is conducting a Phase III ASCEND trial to obtain evidence that pirfenidone, a dual inhibitor of TGF-beta and THF-alpha synthesis, can produce significant improvement in forced vital capacity in IPF patients. Already marketed in Europe as Esbriet and Japan as Pirespa, pirfenidone would be the first drug approved in the U.S. for IPF. The current standard of care is lung transplant. InterMune said it would use the proceeds to fund ASCEND and commercialization efforts for the drug, as well as to retire 5% convertible senior debts that come due in 2015. — Joseph Haas 

Versartis: Like several venture-backed companies of late, Versartis is the latest to take another round of venture funding and aim for late-stage trials on its lead program rather than strike a partnership or execute a trade sale. The Redwood City, Calif. developer of VRS-317, a long-acting version of human growth hormone intended to treat pediatric growth hormone deficiency, announced January 15 it has closed a $25 million Series C round, building on at least $32 million in previous funding. Aisling Capital led the new round, while prior investors Index Ventures, New Leaf Venture Partners, and Advent Venture Partners’ Life Science Fund provided follow-on funding. Like its successor Diartis, Versartis was spun out of extended half-life technology developer Amunix in 2010 to establish a separate, single-asset entity that would house VRS-317. Shortly after Versartis’ $11 million Series A, Amunix founder Willem "Pim" Stemmer told START-UP in 2010 that Versartis could be on the block as soon as late 2011, with one or two rounds of funding in between. Now, Versartis says it’s preparing to go long, with a 2014 Phase III trial slated to succeed the Phase Ib/IIa trial currently underway. Versartis declined to discuss its new deal. Other companies, such as Intarcia Therapeutics and Flexion Therapeutics, have also recently taken big rounds instead of crafting an exit or partnership. – Paul Bonanos

Aileron Therapeutics: The biotech with the most advanced "stapled" peptide program said January 14 it has hit a milestone and triggered the second tranche of its Series D round, bringing the total to $42 million. The cash will help push its lead drug ALRN-5281 into the clinic to treat patients with orphan endocrine disorders. The compound's clinical progress will be closely watched, as stapled peptides are one version of constrained peptides, altered to hold their shape, penetrate cells and perhaps hit previously undruggable targets. They have also sparked a recent and vigorous debate, as well, as the brand-new edition of START-UP explains. Aileron holds exclusive rights to the stapled version, which was invented at Harvard Medical School in the previous decade. Its Series D, first unveiled in 2009, was notable for a syndicate that included four corporate venture groups: SR One (of GlaxoSmithKline), Roche Venture Fund, Lilly Ventures, and Novartis Venture Fund. All four are participating in the new tranche, along with existing investors Apple Tree Partners. — Alex Lash

The Best of the Rest: BioCrossroads Indiana Seed Fund made $500k and $250k investments in, respectively, Esanex – to advance Phase I trials for an Hsp90 inhibitor for solid tumors that Pfizer acquired in its 2008 buy-out of Serenex – and Algaeon, which is developing algae cultivation technology for nutraceuticals and to date has only raised money from its founders and angel investors… From its new life sciences fund, TVM Capital has made the first investment in Kaneq Bioscience, a spin-off of Kaneq Pharma that's developing early-stage compounds for metabolic diseases and cancer... To fund Phase II trials for Aganirsen in back-of-eye diseases, including the orphan indication neovascular-associated corneal graft rejection, Gene Signal has received undisclosed funding from a group of private investors who have backed the Swiss company since its 2000 formation... Ariad Pharmaceuticals priced a $300mm FOPO of 15.3mm shares at $19.60. RNAi-based therapeutics developer Alnylam Pharmaceuticals brought in $174mm through the public sale of 9.2mm shares at $20.13… Aegerion Pharmaceuticals closed a $67.9mm public offering… A FOPO of 6.7mm shares at $7.50 brought in $47mm for Aveo Pharmaceuticals… Antibiotics-focused Trius Therapeutics raised $34.1mm in a 7.2mm share FOPO priced at $4.75… Antibody player KaloBios has set terms for its IPO of 3.85mm shares at a proposed $12-14 range… Israeli biotech Alcobra has hopes for an $18.75mm IPO on Nasdaq to advance its work on cognitive dysfunction disorders… A price range between $22-$25/share was set for the planned IPO of Pfizer’s animal-health unit Zoetis, which it’s spinning off as an independent company... Through the sale of ten-year, 2.125% convertible subordinated notes, Theravance brought in $282mm… Raising $105.7mm by selling 3.25% six-year senior notes, Pacira Pharmaceuticals will use $30mm to repay debt, the rest to fund continued commercialization and development of additional indications of Exparel, its injectable post-surgical anesthetic… Through the offering of five-year convertible senior notes, Auxilium Pharmaceuticals collected $200mm… Pharming Group secured €16.35mm ($21.71mm) in convertible bond financing through a syndicate of existing institutional investors led by Kingsbrook Opportunities Master Fund… Oculus Innovative Science is spinning off Ruthigen as an independent public company to develop RUT5860 for preventing infection in trauma and surgical procedures… Concurrent with venture funding from a group of investors led by Colorado-based High Country Venture, ViroCyt – an InDevR spin-off developing technologies that enable rapid quantification of viruses – began operations. — Maureen Riordan

A-Train photo courtesy of flickr user The Eyes of New York. 

Deals Of The Week: Pfizer Goes For An IPO

The big news this week was the deal that didn’t happen: the sale of Pfizer’s animal health division. Pfizer announced June 7 that it will split off the business into a new standalone company to be called Zoetis instead and that it is preparing to file an initial public offering of a minority ownership stake in the new company.

Investors had been anticipating either a sale of the business or a split-off since CEO Ian Read announced plans to shed the business last year along with its nutrition business, so the news isn’t exactly a surprise.

Still, Pfizer inked a deal for its nutritionals business with Nestle S.A. in April, offloading the business for $11.85 billion, a price that reflects a pretty premium over the $9 billion to $10 billion some analysts had predicted.

Pfizer’s decision to spin-out the business means rival big pharmas like Merck and Eli Lilly won’t be expanding with Pfizer’s assets. The chiefs at both companies have said they remain committed to animal health and the diversified business model. Of the three, Pfizer’s business is the largest with $4.2 billion in sales in 2011. Merck’s animal health business brought in $3.25 billion in sales and Lilly’s $1.67 billion.

A split-off offers tax advantages of a sale, which Read called out in a press release. “Our focus continues to be on taking the actions that will generate the greatest after-tax value for our shareholders,” he said. Analysts had valued a potential sale of the business at around $15 billion.

With the decision to spin-out the business, Pfizer is following a similar route to the one Bristol-Myers Squibb took when it spun-out its Mead Johnson nutritionals business in 2009. That move has been well-received on Wall Street. The initial offering was $24 per share and the stock closed June 7 at $81.12, representing around 70% growth.

Pfizer hasn’t priced the IPO, so it remains to be seen how much it will cost to buy into Zoetis, but Read has vowed to make the company independent by July 2013 so there is plenty of time to analyze the numbers and start wagering.

Elsewhere in the news, GlaxoSmithKline announced June 8 that it has extended its offer to buy Human Genome Sciences from the prior deadline of June 7 to June 29. Otherwise, it was a slowgoing week on the business development front ...

Merck KGaA/ Dr. Reddy's Laboratories – India's global generics firm Dr. Reddy's Laboratories, announced June 6 it was linking up with Merck Serono, the pharmaceutical division of Germany's Merck KGaA, to develop and commercialize biosimilar cancer products, principally monoclonal antibodies. The collaboration will exploit Merck Serono's expertise in biologics manufacturing, development and marketing, which includes the MS therapy Rebif (interferon beta-1a) and the anticancer Erbitux (cetuximab), and Dr. Reddy's pioneering role in biosimilars (it already markets four such products in India). No money is changing hands and the collaborators will share risks and rewards, with Dr. Reddy's conducting early development through Phase I, and Merck Serono taking over further clinical development and manufacturing. Merck Serono will commercialize the biosimilars globally, with Dr Reddy's receiving royalties, except for the U.S., where the companies will co-commercialize on a profit-sharing basis, and certain unspecified emerging markets, where marketing will be co-exclusive, or where Dr Reddy's will have exclusive rights. Biosimilars is a new sphere of activity for Merck KGaA, and one it can enter at a relatively low cost. That's important for the company, as it has just started an efficiency program which calls for R&D facility closures and job losses in order to make around €300 million in costs savings by 2014. For Dr Reddy's, it provides a source of research funding while keeping its options open outside of the oncology sector. – John Davis

Onyx/ Anderson Cancer Center – In just the latest of its research ties to biopharmaceutical companies, the MD Anderson Cancer Center at the University of Texas announced June 4 that it will collaborate with Onyx Pharmaceuticals in an effort to delineate the potential of that company’s anti-cancer candidates carfilzomib and oprozomib in multiple myeloma and lymphoma. Financial terms of the two-year research agreement were not disclosed. Carfilzomib, to be marketed under the brand name Kyprolis, is under review at FDA for relapsed and refractory multiple myeloma. Oprozomib, like carfilzomib, is an oral proteasome inhibitor, is Phase Ib/ II study in hematological malignancies. Onyx and MD Anderson personnel will oversee the collaboration together in a joint steering committee, with MD Anderson conducting all studies related to the agreement. The focus will be on the potential of proteasome inhibitors in tandem with other novel, early-stage cancer candidates, as well as to increase the biological understanding and enhance the clinical profile of the two Onyx compounds. MD Anderson’s most recent deal with private industry was the licensing of an experimental folate-binding protein (FBP) E39 vaccine for the prevention of recurrence of gynecological cancer to Galena Biopharma. – Joseph Haas

Picture credit: Wikimedia Commons