Deals Of The Week: Academic Drug-Discovery Alliance Capturing Industry's Notice

Nashville hosted the first annual conference of the Academic Drug Discovery Consortium

It’s become a familiar story in biopharma, as Big Pharma X announces that in the wake of the patent cliff, health care-spending pressures in Europe and diminished returns from internal R&D, it will be forced to cut back on R&D spending and make staff reductions primarily in sales and lab positions.

As the industry retrenches on early drug-discovery work, however, the need for innovation has not diminished and so the private sector frequently looks more and more to the academy for early research breakthroughs that might translate into therapies that will bolster the quarterly earnings reports a decade from now. In an effort to take advantage of that trend, some of the more forward-thinking university-based drug-discovery outfits in the U.S. have banded together to create a consortium they hope will facilitate and ease partnerships between academic institutions and the biopharmaceutical industry.

The brainchild of a meeting in Baltimore two autumns ago, the Academic Drug Discovery Consortium was more or less dreamed up by Barbara Slusher, director of the Translational Program at the Brain Science Institute at Johns Hopkins University, and Jeffrey Conn, director of the Vanderbilt Center for Neuroscience Drug Discovery, with input from three other founding institutions: University of North Carolina, Harvard University and University of California, San Francisco.

But in a relatively short time, ADDC’s membership has grown to 83 institutions, including six outside the U.S., and more than 550 individual members. And, just as importantly, big pharma has taken notice.

“They started out with two groups, Vanderbilt and Johns Hopkins, and now they have 83 members,” said Bruce Harris, Roche’s director of academic alliances and an attendee and speaker at ADDC’s first annual conference Oct. 9-11 in Nashville.” All of these institutions are trying to incorporate drug discovery and translate some of the biological discoveries occurring in their laboratories into drug-discovery projects and, if you think about it, that’s an incredible resource for the industry and the early portion of our pipelines.”

It is a necessary development as well. “The area I work in, CNS, probably has been hit the hardest because it’s a risk area where companies are decreasing their internal efforts and several companies have just gotten out (altogether),” said Slusher, co-founder and president of ADDC.

She and Harris both point to an increased government funding interest in translational research that has occurred more or less in tandem with private industry’s cutbacks in discovery work. Specifically, they site the NIH Roadmap efforts undertaken during the tenure of former NIH Director Elias Zerhouni. “This has been a major change in the pharmaceutical industry,” Slusher said. “But as pharma has been decreasing some of its internal efforts, simultaneously what you see is NIH increasing its interest in activities in discovery and translation.”

While overall NIH funding has been roughly flat in recent years, she noted, funding for its National Center for Advancing Translational Science (NCATS) was increased by 11% for federal fiscal year 2013.

ADDC also reflects the exponential growth taking place in academic drug discovery. There were six U.S. academic institutions performing drug-discovery research in 1990, a number that had nearly tripled as of a decade ago. Now, there are more than 100 such units, and 78 of them have membership in ADDC, Slusher pointed out.

In addition to its domestic members, ADDC also has drawn the support of six international research outfits – the Centre of Applied Medical Research at the University of Navarra in Spain, the Karolinska Institute’s Chemical Biology Consortium Sweden, the genetic engineering and biotechnology labs at Shaqra University in Saudi Arabia, the Platform of Chemical Biology and ADME at the University of Strasbourg in France, the Spanish National Cancer Research Centre and Cancer Research UK.

While ADDC has a focus on facilitating partnerships with the private sector, Harris thinks another important role it can play is fostering research efforts across national borders. “I could easily see these U.S.-based academic institutions collaborating on drug-discovery work with their European colleagues,” he said. “Science is global and so are economies, so for them to work together without national boundaries is just natural.”

As Roche searches for programs and assets to invest in at the academic level, Harris said his emphasis will be on the company’s therapeutic areas of focus – oncology, neuroscience and infectious disease. Those priorities dovetail well with what is occurring in U.S. academic research – of the ADDC centers, 73% say they work in oncology, 65% in infectious disease, 63% in neurological disorders and 45% in immunology.

One of ADDC’s initial goals is to create a searchable database of the projects being undertaken by member institutions. Both institutional and individual membership in ADDC is free, meaning this should be a significant resource for academic alliance seekers, like Roche’s Harris. (The organization also is not planning to take a cut from members’ tech transfer deals as a funding mechanism. Instead, it has lined up more than 20 biopharma and service provider firms to sponsor ADDC activities so far, Slusher said.)

Meanwhile, ADDC has no plans, in the near term at least, to serve as a central negotiating point for tech transfer deals or to develop uniform documents and practices for such transactions. Harris said right now that activity seems neither necessary nor terribly feasible.

“I’m not sure that it would be useful to standardize all of the legal documents and arrangements because each university has its own mission within a given state or [based upon] who is supporting it,” Harris added. “They have to go by their own regulations, so having a common set of documents across multiple tech transfer offices at U.S. universities would be a monumental challenge, I think, and probably expensive from a legal point of view.”

And while we await a slew of deals between ADDC member institutions and the biopharma industry, we present this week’s roundup of ....

MedImmune/Spirogen/ADC Therapeutics: AstraZeneca’s biologics unit MedImmune will expand its early oncology pipeline with a new platform to make potent antibody-drug conjugates through the acquisition of U.K.-based Spirogen. Britain’s second-biggest drug maker said it was acquiring privately held Spirogen Oct. 15, paying up $200 million upfront and with another $240 million in potential earn-outs based on predefined milestones for Spirogen’s ADC technology, which has the potential to directly target cancer tumors while protecting healthy cells. Spirogen has developed a novel class of cytotoxic “warheads” based on pyrrolobenzodiazepine (PBDs), which are DNA minor-grove binding agents that bind to specific sites of DNA in cancer cells, according to MedImmune. This blocks the cell division and growth without distorting the DNA helix of cancer cells, which potentially could prevent the emergence of drug resistance. AstraZeneca is in the midst of a concerted push in oncology under the direction of CEO Pascal Soriot, who has revamped the company’s R&D direction over the past year and selected oncology as one of three focal therapeutic areas for the company. MedImmune now is focused on two key areas in oncology development – ADCs and immune-mediated cancer therapy – and says the acquisition of Spirogen fits that strategy perfectly. In connection with the deal, AstraZeneca simultaneously announced a coinciding agreement with Swiss-based ADC Therapeutics, which has a licensing agreement with Spirogen. Under that arrangement AstraZeneca will pay $20 million to take an equity investment in the company. The investment will be matched by Auven Therapeutics, the majority shareholder in both ADC Therapeutics and Spirogen. AstraZeneca will collaborate with ADC Therapeutics to develop two programs from a defined list and pay an undisclosed upfront payment and development milestones. ADC Therapeutics will have a profit-sharing arrangement and gets the option to co-promote one of the products in the U.S. The products to be developed using Spirogen’s technology are preclinical assets, so the latest deal will not yield commercially viable new medicines for several years. It is not yet clear when the products could move forward into clinical tests. Spirogen has been developing its PBD technology for more than 10 years, including a standalone PBD agent in a Phase II study in acute myeloid leukemia. Its business model has been to partner its technology with pharma and biotech for use in the development of novel drugs. It has a number of industry collaborations, including collaborations with Genmab in June 2013, Genentech in 2011 and with ADC Therapeutics announced in 2012. - Sten Stovall

AstraZeneca/Taris Biomedical: Bladder-disease focused Taris Biomedical signed a research agreement with AstraZeneca Oct. 16 to work on novel treatments for bladder cancer. No financial details were disclosed, but the pharma gets an option to license any products resulting from the collaboration. The partnership will involve using Taris’ proprietary delivery platform in combination with targeted bladder cancer drugs developed by AstraZeneca. The Lexington, Mass.-based biotech says its technology involves a soft and flexible device that is deployed into and retrieved from the patient’s bladder “using standard urological office procedures.” The technology is designed to provide continuous local delivery of a therapeutic agent to the bladder for days or weeks. “Their novel technology has the potential to enable the delivery of the right drugs to the tumor tissue in the right concentration and over a prolonged period,” said Susan Galbraith, head of AstraZeneca’s Oncology Innovative Medicines Unit in a release. “This could combine the ability to target the right tissue – the tumor – with the right genetically targeted therapy and therefore represent a step change in the treatment of this disease.” Taris is a clinical-stage firm focused on developing therapies for bladder cancer, overactive bladder and interstitial cystitis. Its lead candidate, LiRIS, is in Phase II in interstitial cystitis. In April, the biotech raised $12.5 million in a Series C round funded by returning investors Flagship Ventures, Flybridge Capital Partners, Polaris Partners and Third Rock Ventures. - Joseph Haas

AmpliPhi Biosciences/University of Leicester: U.S. company AmpliPhi BioSciences announced an agreement Oct. 17 with a British academic group that has succeeded in identifying and characterizing bacteriophage (“phage”) that kill pathogenic strains of Clostridium difficile, a major cause of hospital-acquired severe diarrhea and vomiting. The University of Leicester  researchers will collaborate with AmpliPhi and another U.K. research team at the University of Glasgow on using the “bacteria-eating viruses” for clinical applications, with AmpliPhi funding the research, making milestone payments and paying royalties on any eventual products sales. In return, AmpliPhi receives rights to patents and intellectual property covering the Clostridium difficile-targeted phage research.
In a September 2013 report, the Centers for Disease Control & Prevention called C difficile an urgent threat, causing 250,000 infections every year in the U.S. AmpliPhi believes it is conducting the only phage-based development program for this critical condition. Phage could yield ideal candidates for treating gastrointestinal infections, as they infect and kill a specific strain or species of bacteria, and should not affect beneficial gut bacteria. The research agreement is the third by AmpliPhi in the past six months, having linked up previously with the synthetic biology company Intrexon and the U.S Army. AmpliPhi expects its first therapeutic phage-based product, targeting Staphylococcus aureus and developed in collaboration with the U.S. military, to enter clinical trials next year. AmpliPhi is headquartered in Richmond, Va., but has operations in Colworth, U.K., and Sydney, Australia. - John Davis

Zydus Cadila/Pieris: India’s Zydus Cadila is teaming with Germany’s Pieris to develop and commercialize multiple novel protein therapeutics derived from the anticalin protein molecule. In an Oct. 16 announcement, the companies said the partnership would combine Pieris capabilities in drug discovery and early drug development with Zydus’ expertise in regulatory affairs and development and manufacturing of biologics. No financial terms were disclosed, but the companies said in a release that they will share licensing revenues under mutually agreed-upon terms. The collaboration is intended to develop candidates to proof-of-concept and then seek out-licensing in Pieris’ commercial territories. The most advanced program under the partnership is PRS-110, an anticalin protein specific for c-MET, a target that has been validated in a broad spectrum of tumor types. The candidate is a pure antagonist due to monovalent target engagement and in animal models has demonstrated the ability to inhibit ligand-dependent and –independent c-MET activity. - J.A.H.

Photo credit: Wikimedia Commons

Deals Of The Week: A Feeding Frenzy Over ROR Gamma T Modulators?

A little-heralded deal between Amgen and Japan’s Teijin Pharma  July 31 marked the sixth since 2009 around compounds that modulate the ROR (retinoic acid-related orphan receptor) gamma t pathway, offering potentially a new small-molecule approach to addressing multiple autoimmune indications.

Drugs that hit RORγt might be able to modulate differentiation and regulation of Th17 cells, which play a role in inflammation related to many autoimmune disorders. It’s not just that the RORγt space has been fairly busy – a look at the names of the companies working in this arena indicates significant investment and potential. Bristol-Myers Squibb, Merck & Co., Pfizer and Johnson & Johnson all have made deals with smaller companies around RORγt assets in recent years.

A seventh deal could be looming as well, as Vitae Pharmaceuticals currently is considering partnering its lead-op stage RORγt inhibitor program. CEO Jeffrey Hatfield recently told “The Pink Sheet” that Vitae’s early data are being reviewed by roughly one-dozen potential partners and the company is looking to announce a deal, if it decides to make one, in September or October.

“Those [prior RORγt deals] seem to us to have been done in very early stages of discovery,” he said. “They were not particularly big deals, and there wasn’t a lot of buzz around the work done by the biotechs before the deals were announced. The sense I get from other companies is that the state of the art is not very advanced.”

Hatfield said the interest he has seen in his program, including one term sheet that came in before Vitae reached preclinical proof-of-concept, suggests RORγt is becoming one of those “hot spaces” that almost every player wants a part of.

“Everybody wants a program,” the exec asserted. “There just aren’t enough programs to possibly go around to meet demand.” Beyond MS and RA, Hatfield suspects RORγt modulation might have potential in psoriasis, ankylosing spondylitis and irritable bowel disease. Ultimately, he thinks targeting RORγt might enable modulation of a broader range of pro-inflammatory cytokines than currently is possible with anti-TNF drugs such as fusion protein Enbrel (etanercept), monoclonal antibody Humira (adalimumab) or MS treatment Tysabri (natalizumab).

Amgen and Teijin announced their collaboration on July 31, a discovery, development and commercialization agreement that would give Amgen worldwide rights except for Japan to compounds discovered in the joint R&D collaboration. Teijin, which gets an undisclosed upfront payment along with potential milestones and royalties, would retain marketing rights in its home market and also hold the right to co-promote any resulting products in select Asian markets.

Deal-making around this target kicked off in Japan when Japan Tobacco and San Diego’s Orphagen Pharmaceuticals announced a partnership in January 2009 aimed at inhibition of Th-17 cells to treat psoriasis. Then, in October 2010, Bristol in-licensed preclinical TGR5 agonist XL475 and discovery-stage RORγt inhibitors from Exelixis. The South San Francisco, Calif., biotech received $35 million upfront for XL475 and another $5 million upfront for the RORγt program.

Two more deals followed in 2011: First, Merck signed a collaboration with Lycera in March to co-discover autoimmune disease candidates based on the Michigan biotech’s RORγt research. Lycera, which received $12 million upfront, triggered the first milestone under the agreement in December of 2011 – total deal-related milestones could reach $295 million. As a possible indication of Merck’s assessment of Lycera’s technology, the two companies signed a second autoimmune R&D deal in February of 2013.

In December 2011, Pfizer signed an R&D pact with Karo Bio to discover and develop RORγt modulating compounds. This deal brought the Swedish biotech an undisclosed upfront payment – the companies revealed publicly that Karo Bio could earn up to $217 million in combined upfront cash and milestones, along with potential royalties, while Pfizer would fund all of the R&D work.

Prior to the Amgen/Teijin transaction, the most recent RORγt deal involved J&J’s Janssen Biotech licensing exclusive rights to a set of molecules discovered by Phenex Pharmaceuticals. The German company can earn up to $135 million in upfront cash and development and regulatory milestones under the December 2012 pact, along with sales milestones and royalties.

It was an extremely active week for deal-making outside the RORγt space as well, as July melted into August. Most noteworthy were Perrigo’s acquisition of Elan Corp. along with Cubist Pharmaceuticals’ two buyouts, of Optimer Pharmaceuticals and Trius Therapeutics. For the other highlights, read on as we unveil ...

Perrigo/Elan: By buying Dublin-based Elan, Perrigo of Allegan, MI, will re-domicile itself in Ireland where the corporate income-tax rate is a low 12.5%, offering fertile soil for international growth. The purchase also will give Perrigo access to royalties for the multiple sclerosis drug Tysabri (etanercept), which Elan discovered and then sold to Biogen Idec on Feb. 6. 2013. Elan began looking a buyer this year after Royalty Pharma tried to acquire it. The deal, announced July 29, ends a bitter takeover saga in which Elan rejected three hostile bids by Royalty Pharma and management clashed with shareholders about strategy. Perrigo, which manufactures over-the-counter pharmaceutical products for the store-brand market and has a market value of about $12 billion, will pay $6.25 per share in cash plus $10.25 per share in stock, a premium of about 10.5 percent over Elan's closing price on July 26. “We believe this transaction is compelling for Elan shareholders and fully takes into account the value of Elan’s assets, including a large cash balance and a double-digit royalty claim on Tysabri, a blockbuster product that generated revenues of $1.6 billion last year and has been growing at a compound annual growth rate of 19%,” Perrigo CEO Joe Papa said. - Sten Stovall




Cubist/Optimer/Trius: Antibiotics marketer Cubist Pharmaceuticals made a pair of moves July 30 that complement its hospital-based antibiotic franchise, acquiring current partner Optimer Pharmaceuticals and clinical-stage anti-infectives developer Trius Therapeutics.The simultaneous, all-cash deals will cost Cubist at least $1.24 billion by the end of 2013, when they’re expected to close. Cubist will pay $10.75 per share, or $535 million, upfront for Optimer, and $13.50 per share, or $707 million, upfront for Trius. The upfront payments represent a 15% premium over San Diego-based Trius’ July 30 closing price, but a 19% discount to Optimer’s July 30 closing price. Yet the upfront prices may not be the acquisitions’ final values. Both deals include contingent value rights which could deliver substantial additional returns to the acquired companies’ shareholders, and are based on the net sales performances of their key drugs. Peak sales for both therapies in territories that belong to Cubist could run between $600 million and $1 billion, Cubist management estimated. They expect the deal to be accretive starting in 2015. Optimer currently sells Dificid (fidaxomicin) in the U.S. and Canada to treat diarrhea associated with Clostridium difficile infections. If the drug generates $250 million in net sales by the end of 2015, Optimer’s shareholders would receive an additional $3 per share. If sales reach $275 million or $300 million, they would receive $4 or $5 per share, respectively. That could drive the deal’s overall value as high as $801 million. Trius has the Phase III drug tedizolid, also known as TR-701, for Gram-positive and other bacterial infections. Its shareholders would receive an additional $1 per share if tedizolid produces $125 million in net sales during 2016, and up to another $1 if it sells between $125 million and $150 million that year, delivered on a pro rata basis. The buyout could be worth $818 million in total if the CVR is realized fully. - Paul Bonanos

AstraZeneca/Fibrogen: Privately held FibroGen already had a territorial partner in Astellas Pharma for its late-stage anemia drug FG-4592. Now, the San Francisco-based company has teamed with AstraZeneca to share rights to the drug in other major markets. The new deal covers the U.S., China and other unspecified territories, not including those in which Astellas already holds rights: Europe, the Commonwealth of Independent States, the Middle East and South Africa. AstraZeneca and FibroGen say they’ll collaborate to promote the drug. AstraZeneca will commercialize the drug in the U.S., although FibroGen will promote it in end-stage renal disease patients. In China, FibroGen will handle the regulatory process, manufacturing and medical affairs, while AstraZeneca will take the lead on promotion and distribution. The British pharma paid $350 million upfront, including non-contingent short-term payments, for rights to the candidate. Developmental milestones could add $465 million to the deal, while unspecified sales milestones could further add value. If the drug is approved, AstraZeneca will also owe FibroGen royalties in the “low 20% range,” according to a joint statement. FG-4592 induces red blood cell production, or erythropoiesis, by inhibiting a protein called hypoxia-inducible factor, thereby mimicking the body’s natural response to high altitude. Well-funded start-up Akebia Therapeutics has a Phase III-ready HIF inhibitor, while GlaxoSmithKline has a Phase II candidate. FibroGen also has FG-3019, a Phase II connective tissue growth factor inhibitor that has shown promise in idiopathic pulmonary fibrosis, liver fibrosis due to hepatitis B and pancreatic cancer. - P.B.

Actelion/Ceptaris: Actelion Pharmaceuticals' options deal to acquire Ceptaris Therapeutics is a small, but important and relatively risk-free step in the biotech’s efforts to diversify away from its heavy reliance on its highly successful treatment for pulmonary arterial hypertension, Tracleer (bosentan). On July 31, Europe’s largest biotech announced that it is paying $25 million upfront for an option to buy Ceptaris, contingent upon the latter’s receiving FDA approval for its only asset, Valchlor (mchlorethamine gel). Valchlor’s PDUFA date is Aug. 27. If Valchlor gets a regulatory green light, Actelion will pay Ceptaris investors an additional $225 million, plus undisclosed commercial and sales-based milestones. Actelion’s internal R&D track record is mixed, leaving its near-term diversification strategy highly dependent on efforts to launch a next-generation PAH treatment, macitentan. Macitentan’s NDA is pending before FDA, with a PDUFA date of Oct. 19, and it also awaits EU authorization. In the meantime, the Swiss firm sees Ceptaris as a way to obtain an asset that is “meaningfully differentiated,” rapidly accretive and focused enough so that it will not distract from the effort around macitentan, said Actelion SVP Roland Haefeli. Valchlor, if successful, will be the only FDA-approved topical formulation of mechlorethamine for treatment of early-stage mycosis fungoides-type cutaneous T-cell lymphoma, a rare form of non-Hodgkin’s lymphoma. - Wendy Diller

Kolltan/MedImmune: Cancer-focused Kolltan Pharmaceuticals in-licensed a monoclonal antibody targeting the HER3 receptor tyrosine kinase from MedImmune, the global biologics arm of AstraZeneca, on July 29. Financial terms were not disclosed but privately held Kolltan said in a release that both companies have the potential for future cost-, risk- and profit-sharing arrangements related to the antibody after the New Haven, CT-based biotech completes early clinical testing. Based on the candidate’s current status, Kolltan expects to initiate a Phase I study of the antibody during the first quarter of 2014. - Joseph Haas

Celgene/Array: In its second licensing arrangement of the month, Array BioPharma signed a strategic collaboration with Celgene July 29 focused on a preclinical development program targeting an undisclosed novel inflammation pathway. Boulder, CO-based Array gets $11 million upfront, while Celgene obtains an exclusive option for multiple potential clinical development candidates under the deal. In addition to the upfront, Array can earn total development, regulatory and sales milestones of up to $376 million as well as royalties. It will retain all rights to programs that Celgene does not select. Previously, on July 10, Array licensed an undisclosed preclinical oncology compound and related intellectual property to Aisling Capital-backed start-up Loxo Oncology. Array got an ownership stake in the new company under that deal, as well as potential for up to $434 million in milestones and royalties. - J.A.H.

Bristol/Samsung: Bristol and South Korea-headquartered Samsung BioLogics inked a 10-year agreement July 29 under which Samsung will manufacture a commercial antibody cancer drug at its new plant in Songdo Incheon, South Korea. Financial terms were not disclosed. In a release, Bristol said technology transfer and trial production began in July, while commercial production will start once regulatory approval is obtained. In a statement, Louis Schmuckler, Bristol president, global manufacturing and supply, said the arrangement is part of the pharma’s focus on establishing long-term relationships with quality manufacturing partners worldwide. “This agreement increases our biologic manufacturing capacity to help ensure sufficient long-term supply of our commercial products,” he said. - J.A.H.


Photo credit: Wikimedia Commons

M&A Deal of the Year Nominee: Biogen/Stromedix

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

When Biogen Idec paid $75 million up-front in February 2012 to acquire Stromedix, that biotech became the third start-up in the niche idiopathic pulmonary fibrosis space to get snapped up in just over a year. Stromedix and the others (Arresto, acquired by Gilead for $225 million u/f at the end of 2010 and Amira, bought by BMS in 2011 for $325 million u/f) were no doubt at the vanguard of a scientifically and commercially compelling, if developmentally daunting, space. That a trio of the biopharma world’s savvy dealmakers was jumping into the fray is no doubt exciting.

But Stromedix’s focus on fibrosis and the exciting opportunity IPF and other fibrotic diseases represent isn’t why we’ve selected this deal for a DOTY nomination.

Nor are the deals terms what locked it down. At roughly 2.5 times the total capital invested paid out on the up-front (and $487.5 million in earn-outs possible), the deal was a winner for Stromedix’s backers Atlas, Bessemer Venture Partners, Red Abbey Venture Partners, New Leaf Venture Partners and Frazier Healthcare Ventures.

But it wasn’t the biggest deal of the year and doesn’t boast a fancy new structure.

What makes Biogen’s acquisition of Stromedix stand out in the crowd of up-front-plus-earnout private biotech deals is the fact that to land Stromedix’s lead asset, Biogen first had to set it free.

In 2005, former Biogen head of research Michael Gilman left the company and joined Atlas Venture. Hunting around for a drug in the fibrosis space he eventually, in 2007, alit on what became STX-100, Stromedix’s lead asset. STX-100 is a monoclonal antibody targeting integrin alpha-v-beta-6, a cell-surface adhesion molecule and activator of transforming growth factor beta, itself a popular target in a variety of indications including fibrosis and oncology.

The drug candidate had been in active development for IPF when Gilman left Biogen. By 2007 Biogen had filed an IND with FDA but the asset was mothballed during a round of portfolio prioritization. Biogen out-licensed STX-100 to Stromedix – and retained no future rights to the asset (though it did retain an equity stake in the biotech). Stromedix planned to develop the molecule to prevent kidney fibrosis following a transplant. It hit the clinic in early 2008.

In the end, the renal transplant idea didn’t play out the way Gilman hoped it would. Eventually Stromedix made its way back around to IPF, and years after waving goodbye, the researcher and drug candidate have returned to the fold.

But it’s interesting to think about the things that needed to go right for STX-100 to make its way back to Biogen. Gilman had to know about the compound; it wasn’t part of an active out-licensing effort at Biogen. Biogen had to be willing to let it go – and on terms that would allow Stromedix and its initial backers Atlas and Frazier to build enthusiasm to support the drug’s development. And both Stromedix and Biogen (the latter under all-new management since the time Stromedix signed its initial deal) had to change course, and believe the drug had a bright future in the IPF space.

If you love something, set it free. If it comes back to you, just maybe it was meant to win IN VIVO Blog’s Deal of the Year.

image by flickr user ajari, creative commons license

Alliance Deal of the Year Nominee: Tolero/Mannkind

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

When is a licensing deal, well, not exactly a licensing deal? How about a deal in which the out-licensor can opt back in to the program being sold off, with the related “bio-bucks” then flowing in the opposite direction – that is, to the company that in-licensed the assets in the first place?

In a deal structure that perhaps could best be described as “double-jointed,” in April new company Tolero Pharmaceuticals licensed exclusive worldwide rights to MannKind Corp.’s preclinical Bruton’s tyrosine kinase (BTK) inhibitor program, which Tolero believes could yield novel therapies for hematological cancers and inflammatory diseases. We think the deal could yield the companies this year's Roger in the alliance category.

MannKind, of course, is focused almost exclusively on its perennially troubled effort to develop a recombinant inhaled insulin product, Afrezza. The deal with Tolero puts development of the BTK compounds in the hands of the privately held, Utah-based biotech, but allows MannKind the ability to opt back in after Phase I if it likes what Tolero has uncovered. If MannKind opts back in to develop the compounds, the potential milestones and royalties would flow instead to Tolero.

“It’s a different model that we proposed and one that I think MannKind really liked,” Tolero Chairman and CEO Dallin Anderson told “The Pink Sheet” DAILY at the time. “It aligned incentives and made our negotiation progress very smooth. I think us proposing a structure that de-risked the opportunity for MannKind and gave them a chance to still be involved down the road helped us with not only terms but also to get to an agreement that makes sense for both parties.”

Tolero paid an undisclosed upfront amount with the potential for development, approval and commercialization milestones going to MannKind, along with tiered royalties on any product sales. The upfront and milestones could total $130 million, Anderson said. However, MannKind also retains the right to re-acquire the BTK assets at pre-specified terms up to 60 days after the conclusion of Tolero’s first Phase I study. If MannKind elects this option, it would assume all development and commercialization responsibilities and costs.

“BTK currently represents one of the most exciting therapeutic targets in oncology, and we feel that our collaborative approach to targeting BTK may uncover some novel utilities not yet fully realized,” Anderson said. He did not elaborate, however, on what those additional “utilities” might be.

Much about Tolero remains unknown – founded in 2011 and based in Salt Lake City, the firm is not backed by venture capital or institutional investors. Anderson, who noted his background as having co-founded Montigen Pharmaceuticals Inc. in 2003 and then selling to SuperGen in 2006 at a significant multiple, would say only that his company is funded by a number of private investors. Its own programs, including two compounds – TP-0413 for cancer-related anemia and TP-0829 for B-cell malignancies – are slated to enter clinical development in the next year and derive from a discovery approach based upon single genetic alterations that drive cellular signaling pathway abnormalities.

--Joseph Haas

image from flickrer flightofdestiny2008, creative commons license

Deals Of The Week: Tolero Introduces Itself In "Double-Jointed" Deal With MannKind

In a deal structure that perhaps could best be described as “double-jointed,” new company Tolero Pharmaceuticals has licensed exclusive worldwide rights to MannKind Corp.’s preclinical Bruton’s tyrosine kinase (BTK) inhibitor program, which Tolero believes could yield novel therapies for hematological cancers and inflammatory diseases.

MannKind, of course, is focused almost exclusively on its perennially troubled effort to develop a recombinant inhaled insulin product, Afrezza. The deal with Tolero puts development of the BTK compounds in the hands of the privately held, Utah-based biotech, but allows MannKind the ability to opt back in after Phase I if it likes what Tolero has uncovered. In the case that MannKind opts back, “bio-bucks” slated to go to MannKind under the deal would flow instead to Tolero.

“It’s a different model that we proposed and one that I think MannKind really liked,” Tolero Chairman and CEO Dallin Anderson said in an interview. “It aligned incentives and made our negotiation progress very smooth. I think us proposing a structure that de-risked the opportunity for MannKind and gave them a chance to still be involved down the road helped us with not only terms but also to get to an agreement that makes sense for both parties.”

Tolero will pay an upfront amount with the potential for development, approval and commercialization milestones going to MannKind, along with tiered royalties on any product sales. The parties did not disclose precise deal terms, but Tolero said the upfront and milestones could total $130 million. However, MannKind also retains the right to re-acquire the BTK assets at pre-specified terms up to 60 days after the conclusion of Tolero’s first Phase I study. If MannKind elects this option, it would assume all development and commercialization responsibilities and costs, with Tolero entitled to the potential earn-outs specified in the April 30 deal.

“BTK currently represents one of the most exciting therapeutic targets in oncology, and we feel that our collaborative approach to targeting BTK may uncover some novel utilities not yet fully realized,” Anderson said. Pressed for details on what those additional “utilities” might be, however, the CEO remained mum.

Much about Tolero remains unknown – founded in 2011 and based in Salt Lake City, the firm is not backed by venture capital or institutional investors. Anderson, who noted his background as having co-founded Montigen Pharmaceuticals in 2003 and then selling to SuperGen in 2006 at a significant multiple, would say only that his company is funded by a number of private investors. Its own programs, including two compounds – TP-0413 for cancer-related anemia and TP-0829 for B-cell malignancies – are slated to enter clinical development in the next year and derive from a discovery approach based upon single genetic alterations that drive cellular signaling pathway abnormalities.

Tolero also is not disclosing the specific source of its technology, although Anderson alluded to some research relationships with the academic community in Utah, specifically the University of Utah and Brigham Young University. The company’s website says it “seeks to target diseases from a pathway-centric approach by identifying and developing pathway-specific inhibitors and then identifying specific diseases (i.e., cancer subtype) and genetic backgrounds where these pathway inhibitors exhibit enhanced efficacy.”

TP-0413, which targets signaling involved in the regulation of serum iron levels, a pathway implicated in rheumatoid arthritis as well as cancer, is in advanced preclinical and IND-enabling studies, with a goal of beginning clinical development in the second half of this year. Tolero also hopes TP-0829 will move into the clinic early next year, with potential activity in non-Hodgkin lymphoma, chronic lymphocytic leukemia and multiple myeloma.

Elsewhere, it was a typically busy week on the biopharma deal-making front – let’s get caught up with the latest round-up of:

Sandoz/Fougera: Novartis' generics unit, Sandoz, announced May 2 that it will be acquiring Melville, N.Y.-based Fougera Pharmaceuticals in an all-cash transaction worth $1.53 billion that is expected to close some time in the second half of 2012. Fougera, which produced sales of about $430 million in 2011 and has about 700 employees, will make Sandoz the largest manufacturer of generic dermatology products in the world. For Sandoz, the acquisition was “a strategic bolt-on with synergy potential,” said Jeff George, global group head, in an interview. According to Sandoz, once the acquisition is complete, the generic dermatology unit will take in about $620 million in sales globally, with most of that coming from the U.S. On the worldwide market, the company will compete with the likes of Watson Pharmaceuticals, Mylan, Sanofi and Teva Pharmaceutical Industries. Fougera, previously Nycomed US Inc., was the dermatology business of Swiss-based Nycomed Pharma AS before it was acquired by Takeda Pharmaceutical for $13.6 billion in 2011. Takeda decided to pass on the U.S.-based part of the business because it lacked expertise in dermatology and was uninterested in building out the assets. Since the Takeda takeover, Fougera has remained the asset of private investors – Nordic Capital, DLJ Merchant Banking (a Credit Suisse Group affiliate) and Avista Capital Partners. The acquisition by Sandoz gives those investors a good return with a multiple of about 8.8 times the company’s 2011 earnings before interest, taxes, depreciation and amortization (EBITDA) of $173 million. – Lisa LaMotta

Abbott/Action Pharma/Zealand: Abbott Laboratories boosted the renal pipeline of its soon-to-be-separate pharma division AbbVie by acquiring worldwide rights to Action Pharma’s AP214, a Phase IIb drug designed to treat acute kidney injury that can occur during cardiac surgery. Unlike most licensing deals for pipeline assets, Abbott obtained rights to the drug for a single payment, a $110 million cash transaction that won’t be followed by milestone or royalty payments. (Abbott has made this type of bet at least once before, paying PanGenetics $170 million upfront for a Phase II anti-NGF asset in 2009. Yet there’s one complicating factor: Denmark-based Action had developed the drug using structural peptide technology licensed from Zealand Pharma, another Danish company. In the new arrangement, Action rather than Abbott will pay Zealand DKK 62 million ($11 million), and Zealand is due a royalty in the low single digits if Abbott commercializes the drug. The old agreement between Action and Zealand has been terminated. Abbott will begin a second Phase IIb study on the drug this fall. No treatment has yet been approved for acute kidney injury in patients who have undergone cardiac surgery. Abbott already holds ex-U.S. rights to Phase III chronic kidney disease candidate bardoxolone, licensed in September 2010 from Reata Pharmaceuticals, as well as atrasentan, an internally developed Phase II endothelin-receptor antagonist in diabetic kidney disease. – Paul Bonanos


AstraZeneca/Axerion: AstraZeneca’s new virtual neuroscience drug discovery and development unit reached its first partnership agreement May 1, with a licensing and co-development pact centered on preclinical antibodies for Alzheimer’s disease discovered by Axerion Therapeutics. No financial terms were revealed, but Axerion will receive an upfront payment and research and development funding and be eligible to earn milestones and sales royalties if any compound reaches market. The New Haven, Conn., biotech will work with MedImmune, the biologics subsidiary of AstraZeneca, to optimize and develop antibodies that block the binding of amyloid-beta oligomer to cellular prion protein (PrP-C) in the brain. MedImmune has bought into Axerion’s program, in-licensed from Yale, in the hope that this approach could yield a disease-modifying therapy for one of the most challenging indications currently targeted in drug development. The Axerion partnership is AstraZeneca’s first since it announced plans during a quarterly earnings call Feb. 2 to streamline much of its R&D function, including going to a virtual model in neuroscience. At the time, R&D President Martin Mackay said the pharma’s goal was a “leaner, simpler, more innovative organization with a lower and more flexible cost base.” – Joseph Haas

Merck/Trevena: Pennsylvania-based Trevena announced May 2 that Merck & Co. will be the latest company to utilize its G-protein coupled receptor (GPCR) biased ligand platform. The company hopes to identify ligands that turn on only some biological responses, instead of a whole variety of biological responses, by using what it terms "biased ligands.” The company said that Merck, through a subsidiary, has signed on to use the technology to research biased ligands against an undisclosed receptor. Financial details of the transaction were not disclosed. Trevena, which raised a $35 million Series B round in 2010, has other research under way, including its mid-stage lead compound, a drug meant to treat acute heart failure called TRV120027. GPCRs are protein structures that wind across the cell wall, crossing the cell membrane seven times, and common drug targets. When a ligand binds to a GPCR's extracellular part, it triggers a response inside the cell. – LL

Gilead/AnaptysBio: On the heels of inking a partnership with Celgene in April, AnaptysBio has signed a fifth major pharma partner for its antibody discovery platform. This time, it is Gilead Sciences that wants access to AnaptysBio’s SHM-XEL platform for antibody discovery. The companies announced a partnership to develop novel antibody therapeutics May 1. Gilead will pay an undisclosed upfront fee and pay development milestones and royalties on sales of any drugs that emerge from the partnership. AnaptysBio’s technology platform uses the natural biological process by which antibodies are generated, somatic hypermutation (SHM); the company claims its technology can create antibodies with different antigen-binding regions and better binding affinities. Its other pharma partners include Merck, Roche and Novartis. – Jessica Merrill

Hologic/Gen-Probe: Women’s health-focused Hologic, a developer and supplier of diagnostics, imaging and surgical products, is buying molecular diagnostics provider Gen-Probe for $3.7 billion in cash, to be paid for largely by taking on debt. Adding Gen-Probe’s automated instrument platforms gives Hologic critical mass in the molecular diagnostics market. Hologic already owns a molecular diagnostics platform: the Invader technology it acquired when it bought Third Wave Technologies for $580 million in 2008. That gave Hologic an entrée into the molecular testing space, including its own HPV test – a broadening of Hologic’s core focus in women’s health, which includes mammography and, via its merger with Cytyc Corp. in 2007, cervical and breast cancer diagnostics. Gen-Probe gives the company the automation and menu to grow the diagnostics market more quickly – by implication, something that the Third Wave acquisition failed to do. A buyout of Gen-Probe has been in the air since April 2011, when the company reportedly retained Morgan Stanley seeking a buyer. What’s unclear is why Hologic made its move now. There’s speculation that the deal foreshadows a weakness in Hologic’s business. “Based on their forward-looking diligence [statements], that does not appear to be the case,” says Piper Jaffray analyst Bill Quirk. Clinical adoption of new Hologic’s tomosynthesis breast-imaging platform appears to be keeping pace with expectations. It brought on the Gen-Probe business as “one of the elements in building diagnostics so that it performs like [the] breast health [business], not so that it makes up for [it],” Hologic CEO Robert Cascella told investors. Post-acquisition, 50% of Hologic’s revenues will be in diagnostics, 38% in women’s imaging and 12% in surgical. – Mark Ratner

Royalty Pharma/Fumapharm – Royalty Pharma announced May 2 that it acquired an interest in the earn-outs payable to former shareholders of Fumapharm, which includes an interest in Biogen Idec’s multiple sclerosis candidate BG-12, for $761 million in cash. Based in New York, Royalty Pharma says it is the industry leader in acquiring royalty interests in approved and late-stage pharmaceuticals, including interests in Abbott’s Humira (adalimumab), Pfizer’s Lyrica (pregabalin) and Genentech’s Rituxan (rituximab). Biogen bought out Fumapharm in 2006 for $215.5 million and with it the German company’s lead product, psoriasis drug Fumaderm (fumaric acid esters) as well as BG-12. In April, Biogen announced positive data from the Phase III CONFIRM trial, its second pivotal study in relapsing-remitting MS. The compound was filed for approval in RRMS at FDA in February and with the European Medicines Agency in March. – JAH

Image courtesy of Wikimedia Commons

2011 Alliance of the Year Nominee: Pfizer/Puma

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

Hard to say what we like best about Puma Biotechnology and the sequence of deals in which Alan Auerbach repeated the formula by which he jumpstarted Cougar Biotechnology and later sold it to J&J for just shy of a cool billion. Was it the speed and ingenuity of the three-step transaction or the audacity of in-licensing a novel-acting agent against a tumor type owned by an entrenched powerhouse?

Yes and yes. The cat man is back and he’s telegraphing his intention to prove that his little guy’s solution to the IPO squeeze is replicable. How else to interpret the fact that puma is another name for cougar? Or that the reverse merger unfolded in the same way – reverse merge a start-up biotech into a Form 10 shell concurrent with raising money through a private placement. Or that, once properly funded, the same speed-to-market clinical strategy was implemented at both companies. This time around, however, the trick was fine tuned.

For starters, the time frame was compressed into a matter of days. Where Cougar licensed in abiraterone two years prior to reverse merging into the public shell SYRK 4, Puma licensed in neratinib from Pfizer days before reverse merging into Innovative Acquisitions Corp and raising $60 million in two tranches from its institutional investors. That raise, by the way, was the biggest for a reverse merger since Athersys pulled the same maneuver in 2007. Innovative Acquisitions, indeed.

Speed and size weren’t the only distinguishing features this time around. By licensing in neratinib – a potent, oral, pan-ErbB (Erb 1, 2, and 4) kinase inhibitor against Her2/ErbB2 positive breast cancer in adjuvant and metastatic settings – Puma is going up against Roche’s Herceptin. And it’s doing so in what’s shaping up to be a crowded field, with about 50 trials of agents against Her2+ metastatic breast cancer in Phases II and III.

We assume that Puma will aim to exploit well known vulnerabilities of Herceptin – its controversial efficacy in early-stage cancers, its IV formulation, and its risk of heart damage. Also, neratinib’s irreversible binding to the tyrosine kinase offers a mechanistic difference from Herceptin. And as Wyeth established, the pan-ErbB approach has promise in a variety of solid tumors, including gastric and lung cancers. For now, though, Auerbach is following the abiraterone playbook – winding down two Wyeth trials in early stage patients and gearing up to test (and launch) the drug as a second-line treatment in advanced HER2+ breast cancer patients.

Auerbach has upped his game with Puma. The terms of the deal with Pfizer, which were partially disclosed in Puma’s S-1 form filed on December 2, called for “substantial payments upon the achievement of certain milestones totaling $187.5 million, if all such milestones are achieved.” The agreement also calls for royalties on net sales of any compounds, including neratinib, licensed from Pfizer. Neratinib, after all, has undergone big pharma testing in phase II and III trials. That’s different from abiraterone, which was in a tiny Phase I trial when Cougar licensed it from small UK specialty firm BTG International Ltd.

But why do we really like this deal? In his first outing, Auerbach demonstrated that company creation around a cheap, innovative asset, and development to proof-of-concept and a successful exit-by-acquisition can be done fast and on a shoestring budget. In a way, he helped to democratize the financing of drug development. Of course, it didn’t hurt that he was a savvy, ex-sell side analyst who knew how to source, vet, and develop an early-stage cancer asset. Cougar was an object lesson in resourceful financing and hyper-capital efficiency. With Puma, he’s up to the same game, but he’s come back to show he can play with the big boys.

image by victor+ via flickr courtesy creative commons license

Deals of the Week Has Playoff Fever and Poison Ivy

Deals of the Week! doesn't usually get up on our soapbox and complain unless it's to gripe about undisclosed deal terms, vaguely worded press releases, or an unwillingness to make CVRs tradeable.

But c'mon, pharma, it's time to develop some new products against poison ivy.

This week we saw loads of deals -- alliances, options, out-licensing, deals, deals, and tweaked deals and no-deals. But were any of them around poison ivy treatments? No. A quick search of clinicaltrials.gov for 'poison ivy' or the dreaded 'urushiol' turn up zilch. Our own databases reveal very little poison ivy dealmaking in the past twenty years. Did Project Bioshield or any of its ilk fund research into this scourge? Nope. This makes no sense. If this blogger's back yard is anything to go by, the market will be huge.

Now please excuse us while we scratch the hell out of our legs and go invest another $50 in bandages and feeble lotion at CVS. Oh, and go Phillies!

You're gonna need an ocean of ...

Fate Therapeutics/Becton Dickinson: Fate Therapeutics of San Diego will bring its induced pluripotent stem (iPS) cells to market thanks to a commercial deal it signed with biomedical equipment provider Becton, Dickinson, the firms said Oct. 14. No financial terms were disclosed, but BD will pay Fate an upfront fee, research funding, commercial milestones and royalties on the products BD sells. Fate is one of a handful of biotechs reprogramming adult cells into iPS cells -- an alternative to stem cells derived from human embryos -- with the goal of using iPS cells as lab tools for drug discovery. BD will be responsible for commercial-scale cell production and marketing. In an interview with the IN VIVO Blog, Fate CEO Paul Grayson declined to say specifically when the cells would reach the market. The partners will only sell what Grayson called "plain vanilla" iPS cells, not yet differentiated into various cell types. Fate is working on differentiated cells but for now keeping them for internal use. With the BD deal, Fate becomes the second firm to sell iPS cells. Cellular Dynamics, spun out of the pioneering Wisconsin lab of James Thompson, has been selling iPS-derived cardiomyoctes for nearly a year. -- Soon to be Disappointed SF Giants Fan Alex Lash

Exelixis/BMS: In a turbulent year during which it changed CEOs and laid off staff, Exelixis’ low point might’ve come in June, when key partner Bristol-Myers Squibb Co. walked away from the companies’ agreement to co-develop Phase III cancer-fighting drug XL184. Yet the two are already working together on new programs in diabetes and inflammation: In a series of deals announced October 11, BMS said it would pay $60 million upfront for exclusive development and commercialization rights to a preclinical Exelixis diabetes program that includes the TGR5 agonist XL475, as well as the right to collaborate on a discovery-stage inflammatory disease program centering on RAR-related orphan receptor antagonists. Milestone payments could add $505 million to the deal, plus Exelixis would garner royalties if the programs produce marketable drugs. Simultaneously, BMS and Exelixis said they would unwind some existing oncology agreements; Exelixis opted out of a co-development arrangement on Phase Ib cancer drug XL139 in exchange for a milestone payment, while BMS waived its final option on a 2006 deal covering three targets. The deals bring much-needed cash to the notoriously spendy Exelixis, which despite some recent cost-cutting is now shouldering the high cost of moving XL184 forward by itself.--Paul Bonanos

Merck/Lundbeck: With a large number of atypical antipsychotics competing for attention, any new entrant will have an uphill battle to gain traction, and so Merck has called in the cavalry. The Big Pharma has licensed to CNS-specialist H. Lundbeck exclusive commercialization rights to its recently approved Sycrest (asenapine) for all markets outside of the US, China and Japan. The Danish company paid an undisclosed upfront fee for the rights, and will also make product supply payments to the US company. Asenapine was launched in the US as Saphris by Merck last year, for schizophrenia and for mania associated with bipolar disorder, but has so far disappointed. Making matters trickier in the EU, the schizophrenia indication was turned down in there because regulators were not convinced of the agent's clinical effectiveness. -- John Davis

Lundbeck/Genmab: When you have a product that accounts for around half of your revenue, and that product is nearing patent expiry, you know you have your work cut out for you. Lundbeck, whose antidepressant Cipralex/Lexapro (escitalopram) accounted for 56% of its revenues in the first half, announced last month that it wanted to work with more external partners, and would cull some of its own researchers, as part of a new R&D strategy. The first fruits of this new policy were seen this week, in the Merck deal noted above and in a tie-up with fellow Danish firm Genmab, which will create novel human antibodies to CNS targets identified by Lundbeck. Genmab will receive an upfront payment of €7.5 million and, if the collaboration is successful, it could receive €38 million in milestones, and single-digit royalties as well. Genmab has an option to pursue non-CNS leads that it identifies during the course of the work, and in that case would pay milestones and royalties to Lundbeck. Genmab has been through a torrid time in the past few months, and wants to use its antibody research capabilities as a “profit center, not just a cost center,” according to newly appointed CEO Prof. van de Winkel. -- JD

Pfizer/King: In its first “bolt-on” acquisition since the mega-merger with Wyeth last year, Pfizer has reached an agreement to purchase King Pharmaceuticals for $3.6 billion. The deal, announced Oct. 12, is subject to a tender offer under which Pfizer would buy up outstanding stock in King for $14.25 a share – a 40% premium over the specialty pharma’s closing price on Oct. 11 – but both companies’ boards have agreed to the sale, with closing anticipated in fourth-quarter 2010 or the first quarter of next year. In recent months, Pfizer has outlined a strategy for bolstering its finances prior to the U.S. patent expiration of Lipitor late next year under which it would look for transactions valued at between a few billion to several billion dollars that complement the company's core businesses and add incremental revenues. King will bring to Pfizer a narrow portfolio of highly specialized pain therapies and a well-trained specialty sales force, as well as Remoxy, a tamper-resistant formulation of oxycodone under review at FDA. Pfizer believes King offers commercial synergies: some of King's drugs can be dropped into the Big Pharma's primary care sales force bags, an area where Pfizer is strong and King is not. Pfizer's two key marketed pain products, Lyrica and Celebrex, in turn, can benefit from the support of King's specialized sales force; currently Pfizer's detailing emphasis for them is on primary care doctors. –Joseph Haas and Wendy Diller

UCB/Synosia: An accomplished in-licensor of pharma's unwanted assets, Synosia Therapeutics has finally found itself on the other side of a deal: On Oct. 12 the biotech said it out-licensed its two lead Parkinson's disease candidates, SYN-115 and SYN-118, to Belgian CNS specialist UCB, which will conduct Phase III clinical trials and commercialize them. The companies will also set up a broader alliance, under which compounds from either group will be evaluated by Synosia through to the end of Phase II, at which point UCB will conduct further development and commercialization. In return for rights to the two Parkinson's disease products, UCB will make an undisclosed upfront payment and pay regulatory and commercial milestones, which could give rise to an additional $725 million in funding for Synosia. UCB has also led a $30 million series C funding in Synosia with an equity investment of $20 million. The other $10 million came from existing investors, which include Versant Ventures, 5AM Ventures, Novo A/S, Aravis Venture, Investor Growth Capital and Swiss Helvetia Fund. The deal goes some way toward validating Synosia's in-licensing strategy: '115 and '118 came from Roche and Syngenta, respectively. -- JD

Novartis/Immunogen: Last week we at IVB rhetorically asked one another: where are all the deals in antibody-drug conjugation technology, an exiting area seemingly bereft of deals lately. Well well. Just like that, antibody-drug conjugate developer ImmunoGen licensed its platform technology to Novartis for $45 million upfront to create enhanced cancer-fighting antibodies against unspecified targets of Novartis's choosing. ImmunoGen would get up to $200.5 million in milestones for each target that leads to a conjugate, plus royalties on sales if the drugs reach the market. Announcing the deal Oct. 11, the companies declined to say how many targets Novartis has rights for, but ImmunoGen retains ownership of the cytotoxic small molecules and chemical linkers plus other know-how that it contributes to each therapeutic. The Novartis deal comes just as ImmunoGen and Roche released promising interim Phase II data for T-DM1 in first-line treatment of HER2-positive metastatic breast cancer. That compound, a combination of ImmunoGen's small molecule maytansinoid DM1 and Roche/Genentech antibody Herceptin (trastuzumab), is currently industry's most advanced ADC candidate. --S.t.b.D.S.F.G.F.A.L.

Mingsight/Pfizer: Big pharmas are in the throes of revamping their R&D pipelines and that means deprioritizing certain assets. But does that mean outlicensing? Maaaybe. An analysis in the soon-to-be-published October IN VIVO shows that outlicensing volume has declined dramatically since 2007, when a total of 54 programs from big pharma, big biotech, and specialty players were offloaded to new partners. This year through August 31, there have been only 10 such deals. But for the VCs and biotech execs looking to jump-start a newco with already validated molecules, this week’s alliance between Pfizer and MingSight proves that outlicensing in the biopharma wilderness, truly a rare bird, does still exist. MingSight, a still stealthy biotech with bases of operation in both China and San Diego, has acquired exclusive worldwide rights to two preclinical compounds from Pfizer that are being developed as treatments for diabetic retinopathy, and potentially uveitis and dry eye. Under the terms of the agreement (which really weren’t disclosed in any substantive way), MingSight has agreed to pay Pfizer an upfront fee, paid in the form of cash and a convertible note, as well as development and sales related milestone payments, and royalties on future sales. MingSight’s dual citizenship is noteworthy; this kind of hybrid approach, with its emphasis on keeping R&D burn low by moving the work to the still lower-cost China, is becoming an increasingly attractive model in the start-up arena, where the mantra of the day is capital efficiency. In-licensing has been the model du jour for founding ophthalmology companies for much of the past decade, as companies look to repurpose drugs that have already been vetted in preclinical or clinical studies in non-ophthalmic indications for use in the eye.—Ellen Foster Licking

Ablynx/Merck-Serono: Ablynx has proven to be the master of Merck-Serono's domain (antibodies) as the two companies are doubling down on their collaboration in the space. On Monday Ablynx announced it would receive €10 million up-front to develop its proprietary Nanobody domain antibodies against a M-S nominated inflammatory disease target. Ablynx will hand off the package to M-S at the IND stage, handling all discovery and preclinical activities (and covering costs, excluding manufacturing costs) on its own. When (if?) Merck-Serono takes over Ablynx will receive a €15 million milestone and can opt-in to a 50/50 co-development deal on the project -- if not, Merck gets worldwide rights and Ablynx will receive milestones and royalties down the road. The companies have been working together since September 2008, on two targets in oncology and immunology. -- CM

image by flickr user cygnus921 used under a creative commons license

Merck Puts Up Its Asset-Sale Shingle

Big Pharma has been slow to adopt out-licensing strategies for a plethora of reasons: fear it will regret giving up something that could turn out to be a hit, the perception that out-licensed compounds are tainted, and an ingrained mentality that it could afford to develop everything worthwhile on its own.

Merck is the latest company to change its tune in the face of a resource-constrained reality however; Lilly, Pfizer and others started earlier, by far, as IN VIVO has long tracked. At Elsevier's Pharmaceutical Strategic Outlook conference Thursday morning in NY, David Nicholson, the company's new SVP and head of Worldwide Licensing and Knowledge Management, gave the largely biotech and Big Pharma audience a message loud and clear: Merck's new out-licensing department is open for business-or will be shortly. "We have set up an out-licensing group, headed by Meeta Chatterjee," and are now looking at "what we want to out-license" and "how," he said in a talk with Elsevier's Roger Longman.

"In the past, Merck didn't out-license because out-licensing was traditionally used to jettison "rubbish," but that is not the case anymore," noted Nicholson, who previously headed worldwide licensing at Schering-Plough. The company has some very attractive assets, but there is "no way Merck can afford to develop everything" in its R&D program. "Our R&D model is to generate a lot of output—more than we can deal with. So we have to make some tough choices and it poses the question: What do we do with these other assets?" And who might be potential in-licensors? Take note: Merck's not only interested in talking to biotechs and small pharma—its Big Pharma competitors could take a look too.

Details have yet to be worked out – Merck's looking at the best business models and deal structures for outlicensing and "brainstorming" ideas. And the company is generating a list of out-licensing assets.

Meanwhile, its in-licensing program is also moving forward. Now that its merger with Schering is completed, it's finalizing a list of its revamped pipeline, which it will announce in the next few weeks, and shortly after that it will "be able to talk to the world," Nicholson said.

Nicholson also spoke –albeit generally-- about Merck's partnership strategy going forward, i.e. biotechs will remain an incredibly important to Merck, because "the vast majority of new science is done outside Merck's walls," he said. "There are more opportunities outside than inside," and Merck wants to partner with all kinds of technologies, companies, and at all stages of development."


That includes externalizing discovery- a hot topic within Big Pharma at the moment, especially in light of a recent Morgan Stanley report, which argued that Big Pharma isn't doing worthwhile research and should evolve its "R&D" model to an "S&D" or search and develop model. Nicholson quarreled with the report's conclusions, but noted it did raise "interesting questions" about how much discovery research pharma should be doing internally versus externally.

Nicholson's message –a willingness to work with new kinds of partners in new ways--wasn't new for Merck – but it honed in on a trend that's been ongoing in Big Pharma for several years now, and practiced with more urgency as patent cliffs loom: In a growth constrained reality, companies need to evaluate what they can and can't afford to do internally and work with partners in new ways as they become more cost efficient and upgrade pipelines.

--Wendy Diller