Deals Of The Week: Kicking The Tires

Apparently, virtually by the time it became “news,” it transformed into “non-news.” News reports of Roche’s interest in acquiring ultra-rare disease focused Alexion Pharmaceuticals surfaced suddenly July 12 and just as rapidly evaporated the following week, as Wall Street analysts noted the prohibitive premium price and lack of cost-saving synergies.

That doesn’t mean that “tire-kicking” season is over in biopharma, if indeed it ever ends. During a steamy summer season highlighted by the running of the bulls in Spain, the jockeying for position of the bikers in France, and world-class tennis being followed quickly by world-class golf in the U.K., renewed speculation about the fate of cancer specialist Onyx Pharmaceuticals after it it put itself up for sale in in late June surfaced just as the Roche/Alexion story sputtered to an end.

Recall that Amgen got the ball rolling on Onyx speculation with a $120-per-share bid confirmed by Onyx on June 30. Onyx declined the offer but also put itself on the auction block, hoping to attract an even greater price tag. Now, perhaps four or more companies are interested in the oncology firm, possibly including its long-time partner Bayer and competitors in the multiple myeloma space such as Celgene and Takeda.

Media reports also cited Bristol-Myers Squibb and Gilead Sciences as possible suitors, while Pfizer was mentioned as a player, then backed off due reportedly to the price premium. Also not in the running, according to speculation, are Sanofi, GlaxoSmithKline, Novartisand Biogen Idec.

Roche’s reputed interest in Alexion, while understandable because of the Connecticut biotech’s all-out success with Soliris (eculizumab), the highest-priced drug in the world, also is puzzling because of questions about how the Swiss pharma would derive value from such a pricey acquisition. The company has only one commercial product – for a pair of ultra-orphan diseases – albeit a rapidly growing, billion-dollar product, bolstered by an up-and-coming robust pipeline. Reports – unconfirmed – had Roche looking over financing vehicles in order to make a purchase in the range of $25 billion for Alexion.

Deutsche Bank analyst Robyn Karnauskas wrote July 15 that while many European large pharma companies might be able to afford Alexion, they would balk at the price. Roche likely would be better off pursuing “a product/company with more strategic fit or transformational potential,” she said. Projecting Alexion total revenues of $1.7 billion in 2014 and $2.6 billion in 2015, the reported Roche bid would translate into multiples of 15x next year and 10x in 2015, she estimated.

An analyst at UBS Investment Research, Matthew Roden, who covers Alexion, wrote July 15 that the company is an attractive and likely take-out target but would offer few points of potential synergy with Roche. It would be more of a “bolt-on” transaction than a “fold-in” acquisition, he suggested.

“Since the Alexion business model requires a high degree of patient touch and very specialized sales force to reach idiosyncratic PNH (paroxysmal nocturnal hemoglobinuria) and aHUS (atypical hemolytic uremic syndrome) markets, we see limited capability for SG&A cost savings through a deal beyond regulatory structure,” Roden said.

His U.K.-based colleague Andrew Whitney, who covers Roche, noted July 15 that an offer of about $130-per-share for Alexion would represent 35 times the UBS projections for 2014 earnings by the biotech.
So, while Roche/Alexion apparently is not happening and Onyx could end up in the hands of a big pharma, a big biotech or some business model in between, DOTW can offer these transactions that reached the point of signatures along the dotted line …

Spectrum/Talon: Spectrum Pharmaceuticals acquired Talon Therapeutics in the hopes of expanding the indications for Marqibo. The liposomal form of vincristine received accelerated approval from FDA in August 2012 to treat third-line patients with Philadelphia chromosome-negative acute lymphoblastic leukemia (ALL). Spectrum hopes Phase III data to treat newly diagnosed, elderly non-Hodgkin’s lymphoma patients will pan out and lead to an approval in NHL, thereby significantly expanding the potential market for Marqibo. A Phase III trial of Marquibo in newly diagnosed ALL patients also is ongoing. This trial is intended to serve as a confirmatory trial for the accelerated approval. Disclosed on July 17, the deal was slated to close a day later. Spectrum paid $11.3 million in cash, in addition to 3 million of its shares. Spectrum shares closed at $8.77 on July 17. At that price, Spectrum paid $37.6 million in cash and stock, plus contingent value rights (CVRs) worth up to $195 million. CVRs are tied to Marqibo sales milestones and an approval for Menadione, a Phase II topical lotion for the treatment of the skin toxicity associated with epidermal growth factor receptor anti-cancer (anti-EGFR) agents. Spectrum plans to launch Marqibo before early December, with a price point similar to other improved formulations of oncology treatments, like Abraxane, a long-acting, nanotech formulation of paclitaxel, or Doxil, a liposome-encapsulated doxorubicin. Private equity firm Warburg Pincus and hedge fund Deerfield Management recapitalized Talon in 2010, buying at least $69 million in equity in the last three years. - Stacy Lawrence

Pfizer/Sequella: Anti-infective drug specialist Sequella has licensed a mid-stage tuberculosis antibiotic from Pfizer. The privately held Rockville, MD, company acquired worldwide rights to sutezolid, previously known as PNU-100480, for an undisclosed amount. Pfizer previously investigated the oxazolidinone antibiotic in both drug-sensitive and multi-drug resistant tuberculosis, conducting Phase II and pivotal trials in Africa and Russia respectively. Sutezolid complements the Phase II drug SQ109, Sequella’s lead program in Mycobacterium tuberculosis; the company plans to investigate pairing the two in a combination therapy. The 16-year-old company has another TB drug, SQ609, as well as programs in Helicobacter pylori, Clostridium difficile and M. avium paratuberculosis. Sequella traditionally has supported itself by raising capital from hedge funds and other private investors as well as government grants. It also completed a partnership with Maxwell Biotech Venture Fund in 2011, giving the Russian investor territorial rights to SQ109. Pfizer said it is shifting its anti-infective focus from treatment to prevention, and has been seeking to partner drug candidates such as sutezolid. The drug also could be studied in Gram-positive infections such as methicillin-resistant Staphylococcus aureus and vancomycin-resistant Enterococcus, as well as other forms of tuberculosis. – Paul Bonanos

Medtronic/Amgen: Medtronic reps who sell the firm’s interventional spine devices will need to expand their skill set to include drug sales beginning this month. Under a three-year strategic partnership with Amgen, announced July 15, Medtronic will start promoting the biotech's Prolia (denuosumab) to U.S. spine specialists by July 31. Prolia is an FDA-approved biologic for the treatment of postmenopausal women with osteoporosis at high risk for fracture. For Amgen, the deal offers access to Medtronic’s expansive customer base of spine physicians, “who are at the forefront of evaluating and treating women with fractures caused by [postmenopausal osteoporosis],” said Marion McCourt, a VP with Amgen, in a July 15 press release. “This partnership allows us to intervene shortly after an osteoporosis-related fracture has occurred, and encourage therapeutic interventional to help reduce the risk of a subsequent fracture.” The upshot for Medtronic is not as clear cut. Financial terms of the agreement were not disclosed. “This new agreement increases awareness and access to our current base of orthopedic and spine physicians already treating patients with osteoporotic vertebral compression fractures,” said Doug King, president of Medtronic Spine. “Identifying successful treatment options and access to care at the site of service for the growing number of women with osteoporosis at high risk for fracture is our primary objective.” - David Filmore

Royalty/Quest: Quest Diagnostics has divested its stake in the highly-anticipated cancer drug ibrutinib as it continues to refocus its business on information services and simplify its operations. Quest sold the single-digit royalty stream to Royalty Pharma for $485 million, the companies announced July 18. Ibrutinib, an oral Bruton’s tyrosine kinase inhibitor (BTK), is being developed by Pharmacyclics and Johnson & Johnson for the treatment of chronic lymphocytic leukemia, small lymphocytic lymphoma and mantle cell lymphoma. Pharmacyclics submitted an NDA for the drug to FDA on July 10. Earlier this year, the regulatory agency granted the drug its new breakthrough designation, a means of pushing highly-effective drugs through regulatory approval more quickly. The drug is expected to receive a fast track review and could be on the market by early next year. Analysts estimate worldwide peak sales between $2 billion and $3.5 billion. Royalty Pharma buys up royalty streams from other companies – the investment firm has stakes in several of the largest drugs on the market, including AbbVie’s blockbuster rheumatoid arthritis drug Humira (adalimumab), Pfizer’s fibromyalgia pill Lyrica (preagbalin), J&J’s RA drug Remicade (infliximab), Biogen Idec’s recently approved multiple sclerosis pill Tecfidera (dimethyl fumarate), and Merck’s diabetes blockbuster Januvia (sitagliptin). - Lisa LaMotta

Auxilium/Sobi: Auxilium Pharmaceuticals has found a new partner to take over commercialization of its treatment for Dupuytren’s contracture and Peyronie’s disease, Xiapex (collagenase clostridium histolyticum), in Europe after its prior partnership fell through due to slow sales of the drug. Swedish Orphan Biovitrum (Sobi) will take over where Pfizer left off, taking on commercialization of the drug in the 28 EU member countries, Switzerland, Norway, Iceland, 18 Central Eastern Europe/Commonwealth of Independent countries, including Russia and Turkey, and 22 Middle Eastern & North African countries. In exchange for the commercialization rights, Auxilium will receive tiered double-digit royalties on all sales and will be eligible for up to $40 million in milestone payments that are tied to undisclosed sales benchmarks. Pfizer originally signed on to commercialize Xiapex in Europe in 2009. At the time, Pfizer paid Auxilium $75 million upfront, and agreed to pay $150 million in regulatory milestones and $260 million based on undisclosed sales milestones. In addition, Auxilium was to receive increasing tiered royalties based on sales in Pfizer's territories. Pfizer to pull out of the partnership in November 2012, but did not stop promoting the product until the end of March. It will continue supplying the product to physicians until mid-October. - L.L.

Rexahn/University of Maryland, Baltimore: Rexahn Pharmaceuticals has in-licensed a novel drug delivery platform, Nano-Polymer-Drug Conjugate Systems (NPDCS), from the University of Maryland, Baltimore, the company announced July 17. The technology delivers chemotherapeutics directly into tumors, potentially increasing efficacy and reducing toxicity. Rexahn plans to use the technology to develop RX-21101, a preclinical-stage polymer conjugated form of docetaxel. By minimizing the circulating concentration of docetaxel in the blood and maximizing the concentration in the cancer tumor, RX-21101 may increase anti-tumor activity while lowering adverse events. The financials were not disclosed. Rexahn, based in Rockville, Md., has three oncology candidates in clinical development, the lead of which is Archexin, an akt1 inhibitor partnered with Teva Pharmaceutical Industries. - Jessica Merrill

Bausch & Lomb/Mimetogen: Eye-care company Bausch & Lomb has acquired the option to license a Phase II compound for dry eye syndrome from Mimetogen Pharmaceuticals. The compound, MIM-D3, stimulates the production of mucin, which is essential for lubrication of the eye. The drug was shown to be effective and safe in Phase II studies and a late-stage trial is expected to begin before the end of the year. B&L paid Mimetogen an undisclosed option fee and will have the opportunity to pursue development upon Phase III results. At that time, B&L will assume all development costs and will pay Mimetogen development and sales milestones, as well as royalties. Dry eye affects 25 million people in the U.S. alone and tends to affect more people as they age. The global market is currently worth $2.5 billion and is growing at a rate of 10% annually. - L.L.

Alexion/Ensemble: Bringing to a close a week highlighted by Roche’s apparent buyout interest, Alexion signed a drug-discovery collaboration July 18 with Ensemble Therapeutics. Financial terms were not disclosed, but Ensemble gets an upfront payment and research funding, along with potential for development and commercial milestones under the agreement. Ensemble, whose Ensemblin technology platform can produce novel small-molecule candidates to address targets normally addressed by biologic therapies, will screen more than 10 million macrocyles against undisclosed disease drug targets specified by Alexion. Alexion, which focuses on life-threatening, ultra-rare disorders, will have exclusive worldwide rights to develop and commercialize any candidates emerging from the collaboration. Recently hired Executive VP and Head of Global R&D Martin Mackay said this transaction is meant to expand Alexion’s product portfolio. “We seek to broaden the number of pathways toward developing potentially transformative first-in-class drug candidates for patients with selected severe and life-threatening ultra-rare disorders,” he said in a release. - Joseph Haas

Ocera/Tranzyme: Ocera Therapeutics has made its way to the public markets through a reverse merger with the publicly-traded biotech Tranzyme. The new company will focus on developing Ocera’s lead drug, an ammonia scavenger OCR-002 in development for hyperammonemia, the ammonia build-up in the blood when the liver is no longer able to remove toxic substances from the blood. That build-up can cause hepatic encephalopathy, marked by worsening brain function, which eventually can lead to brain swelling, coma and death. Ocera’s investors also committed $20 million in a private placement financing, cash that will see the company through most of a Phase IIb trial testing OCR-002. Becoming a publicly-traded company wasn’t the impetus for the transaction, however, CEO Linda Grais said. “The strategic rationale was really the strength of the combined management team, particularly bringing the clinical development team from Tranzyme together with the program from Ocera,” said Grais. “We realized that this was a team that would take us a long time to build from scratch.” Though Tranzyme’s research was focused in gastrointestinal disease, its Research Triangle Park, NC, team led by Chief Medical Officer Franck Rousseau has extensive experience in liver disease. Before joining Tranzyme, he worked at Gilead asTherapeutic Area Head, Hepatic Diseases and VP Clinical Development. Tranzyme ran into trouble in 2012 when a Phaes III trial in postoperative ileus on lead drug TZP102 failed to meet its primary and secondary endpoints. It began reviewing strategic options early this year. - J.M.

Photo credit: Wikimedia Commons

Deals Of The Week Is Keeping Score – Valeant Wants Actavis, Which Covets Warner Chilcott …

Whether the pastime is baseball, Broadway or the daytime soaps, the old adage is that you can’t keep track of the players without a scorecard. The M&A front involving specialty pharma and generic drug makers has become similarly frenzied, as Canada’s acquisition-driven Valeant Pharmaceuticals sought after the newly minted Actavis, with Actavis then turning to a pursuit of Warner Chilcott once negotiations with Valeant broke down.

What, exactly, is going on here? And just as vitally, why?

Recall that the dust only recently settled on Actavis, the re-branded Watson Pharma, following the merger of those two firms last year. At an investor day presentation Jan. 25, CEO Paul Bisaro proclaimed that the new Actavis could boast a widened geographic footprint and a diversified portfolio comprising regular and branded generics, brand-name pharmaceuticals and over-the-counter products.

With the Watson/Actavis combination, the resulting company merely was trying to keep pace in a consolidating generics industry that had seen sector-leader Teva continually branching out into branded drugs and perhaps biosimilars and Mylan increasing its capabilities and geographic reach via a run of targeted deal-making.

In late April, reports surfaced that talks of a merger between Valeant and Actavis had collapsed, apparently due to Actavis shareholder concerns over valuation. Actavis has been a centerpiece of Wall Street discussion in recent months, due to a consistently rising share price. (Or has the conversation lifted the share price? A chicken vs. egg conundrum, to be sure.) The stock opened trading March 1 at $85.17, and rose to $92.33 on April 1 and to $105.24 on May 1. At the close of trading on May 16, Actavis’ stock price stood at $123.61.

Meanwhile, it was not necessarily clear who was the suitor in the Valeant/Actavis talks, although the safer bet seemed to be Valeant, helmed by acquisition-hungry CEO Michael Pearson. A Wall Street investment analyst said that the Valeant/Actavis talks seemed to be the catalyst for the resulting Actavis/Warner Chilcott rumors as well as possibly emerging interest in buying out Actavis from Mylan and from Novartis.

“We know that Valeant is an aggressive negotiator in terms of valuation,” the analyst said. “Going by their track record, they’re not going to pay some kind of excessive premium. The question we had was if nothing happened, did Valeant learn something really negative about Actavis during its due diligence?”
The analyst opined that the talks might have been a power-play by Bisaro himself, with the Actavis CEO picturing himself as the leader of a combined company with Valeant. “If Bisaro is talking with Pearson and trying to sell the business for $120 a share, isn’t he sending a signal that the game is up?,” asked our source. “Now, Bisaro might be saying Actavis is undervalued and going to do all these things, but his wallet is doing the talking. Actions speak louder than words, and they’re saying now is the time to pull the ripcord on the parachute.”

But if Valeant was the pursuer, Actavis’ current gambit for Warner Chilcott might have a “poison pill” element, an effort to make Actavis too rich for the Canadian specialty pharma to swallow. “It seems too coincidental that this happened so quickly after the Valeant story,” the analyst said.

In any event, the analyst perceives an Actavis/Warner Chilcott merger as highly likely, given how much the Irish firm has to lose if it puts itself up for sale and fails for a second year in a row. It would broaden Actavis’ portfolio in women’s health and dermatology and a strong sales force that could bolster Actavis’ commercial capabilities. What’s more, a reverse merger would domicile the resulting business in Ireland, providing tax advantages.

More elements were added to the story mid-week: Pittsburgh-based Mylan was reported to have made a roughly $15 billion offer to acquire Actavis, and then multinational pharma Novartis was said to be weighing its own bid. Novartis later publicly denied interest in Actavis, however. - Joseph Haas

The final chapters of that story remain to be written, but other biopharma deal-making has come to fruition in the latest installment of …

Elan/Theravance: In one of the more interesting deals of the past week, or for that matter the year, Elan announced a deal May 13 in which it agreed to pay Theravance $1 billion upfront in exchange for a portion of the potential future royalty payments it will receive from four respiratory programs partnered with Theravance. It’s a hefty up-front that many analysts believe exceeds the value of the interest Elan would acquire. The deal is the first of several Elan plans to make as it looks to reinvent the company through licensing and acquisitions. The announcement also comes as Elan looks to push back a hostile takeover bid from Royalty Pharma. Under Irish takeover law, the Theravance deal will require approval from investors, who already are considering an $11.25 per share buyout offer from Royalty. Elan would gain a 21% interest in potential future royalty payments to Theravance from GSK on four partnered respiratory drugs, including Breo Ellipta, which was approved by FDA May 10 for the treatment of chronic obstructive pulmonary disease. It also includes Anoro Ellipta, a combination of vilanterol with the LAMA umeclidinium, which is pending at FDA with a Dec. 18 user fee date, as well as in a bifunctional muscarinic antagonist-beta1 agonist (MABA) monotherapy and vilanterol monotherapy, both in development. For Theravance, the deal would have been hard to refuse given the rich terms, even though the company recently announced a separation to form one entity to manage the royalty revenue stream from Breo. Management said the arrangement will complement the company’s previously announced plan to separate into two companies. The firm said April 25 it will split into two entities, a royalty company called Royalty Management. Co. with a focus on near-term profitability and returning capital to shareholders, and Theravance Biopharma, a research-focused biopharmaceutical company. - Jessica Merrill

Alvine/AbbVie: On May 14, AbbVie signed its second deal since spinning out from parent company Abbott Laboratories in January, this time with San Carlos, Calif.-based biotech Alvine Pharmaceuticals. AbbVie agreed to pay $70 million upfront for an option to either acquire Alvine outright or license all of the assets related to its lead compound ALV003 for the treatment of celiac disease. The disease, which is characterized by gastrointestinal inflammation due to the ingestion of gluten-containing foods, affects about 3 million Americans and currently has no treatment options other than limiting gluten intake. ALV003 has completed a Phase IIa study and Alvine is prepared to take the drug through a 500-patient Phase IIb study, slated to read out in late 2014. Should AbbVie opt into the program, it will pay a “substantial” option fee, as well as further near-term milestone payments. The amount of those payments was not disclosed. The relationship between Alvine and AbbVie has a rich history; AbbVie’s venture arm (then Abbott Biotech Ventures) backed the biotech in May 2010 when it invested an undisclosed amount. AbbVie’s funds were an extension of Alvine’s Series A – the initial tranche was $21 million in 2006 led by Sofinnova Ventures with additional participation from Prospect Venture Partners, InterWest Partners, Cargill Ventures and Flagship Ventures. Another $21.5 million was raised when Panorama Capital and Black River Asset Management joined the syndicate in 2009. - Lisa LaMotta

RuiYi/Genor/CMC Biologics: China-U.S. hybrid RuiYi announced May 16 a series of partnerships to develop RYI-008, a novel anti-interleukin-6 monoclonal antibody in China to treat autoimmune disease and cancer. Formerly Anaphore, the hybrid is 90% a Chinese company, and about 10% U.S.-based, CEO Paul Grayson said. RuiYi conducts research at a facility in the Zhangjiang Hi-Tech Park in Pudong Shanghai, China, with only its executive management team based in offices in La Jolla, Calif. The antibody, in preclinical development now, will be developed first in China, and the company has forged a partnership with three other companies to get it there. China has said it would make biotech innovation a priority, but few companies have been bold enough to develop innovative biologics in the country, choosing instead to focus on biosimilars and generics for China, Grayson said. RYI-008, formerly ARGX-109, was in-licensed from Belgian/Dutch biotech arGEN-X in October 2012. RuiYi inked an exclusive licensing and co-development agreement with Shanghai-based Genor Biopharma to develop RYI-008 in China. Financial details of the deal were not disclosed. The company was chosen partly due to its close relationship with China FDA and its deep knowledge of China’s regulatory environment. Founded in 2007, Genor is focused on development and commercialization of therapeutic mAbs and Fc-fusion proteins. The company has more than 10 products in its pipeline, three of which are at IND and clinical stages. Danish contract manufacturer CMC Biologics will develop a cell line for RYI-008 for global manufacturing in all markets. Specific terms of the agreement were not disclosed. - Tamra Sami
Roche/Curie-Cancer: France’s Curie-Cancer and Roche announced May 15 that they are building upon a four-year partnership to expand their translational research programs and hasten development of new cancer treatments. In 2009, they agreed to partner around a preclinical research program which gave Roche access to a platform of preclinical models developed by the research teams at the Institut Curie. Curie-Cancer develops Institut Curie’s industry partnership activities. The Roche Institute for Research and Translational Medicine is the Swiss group’s arm there which aims to identify leading French academic research teams and build partnerships with them in areas of shared interest. The initial partnership gave Roche access to preclinical models that are highly representative of the tumors observed in patients. Using the platform, Roche determined in which sub-type of breast cancer an antibody was most effective. The Institut Curie also owns the Reverse Phase Protein Analysis platform, which gives researchers better understanding of how a Roche antibody works on the cancer cells at the molecular level, and also helps to identify predictive response markers. Curie-Cancer and Roche currently are working on a number of translational research programs involving Roche molecules that make use of the same technology. For example, a team of Curie-Cancer clinicians, anatomopathologists and researchers are working on developing a new Roche molecule targeting tumors. No financial details of the partnership were disclosed. - Sten Stovall

Quintiles/Merck Serono: Merck-Serono and newly public CRO Quintiles Transnational announced May 15 a five-year strategic collaboration that appears to go beyond the typical consolidation which the provider services industry’s larger pharmaceutical companies have pursued over the past few years. The deal, which the companies described as “first of its kind,” will create a drug-development engine by combining “expertise and experience” from the two organizations. Merck-Serono will lead strategically while Quintiles will handle the nuts and bolts of clinical trial planning and execution. In short, this is about more than saving money for Merck-Serono, a company that apparently is saving quite a bit these days. The mid-sized pharma’s parent company Merck KGAA reported May 14 during its quarterly earnings call that it was ahead of schedule in executing on its restructuring – which involved the closure of Merck-Serono’s Geneva headquarters – and that it would move forward its financial targets from 2014 to this year. Merck-Serono Executive VP and Global Head of Development and Medicine Annalisa Jenkins said that the partnership transcends the typical preferred-partnership outsourcing model. The deal moves beyond trading volume for “a better rate card,” she said. Quintiles has the benefit of seeing across different companies throughout industry, she said, and of integrating that knowledge, adding, “it’s remarkable that we don’t make a greater attempt to embrace and integrate that knowledge in how industry plans and executes studies.” The Merck-Serono/Quintiles tie-up does just that, she said, and “financially the incentives are set up to drive to more efficient decision making.” Specifics of the financials weren’t disclosed. The deal is Quintiles’ first since its public market debut May 8. The industry’s largest CRO and its existing investors sold more than 27 million shares combined at $40 apiece, raising about $950 million (Quintiles netted about $500 million). - Chris Morrison

AbbVie/Galapagos: AbbVie made further news May 17 when it and partner Galapagos announced that they will extend their 2012 collaboration centered on GLPG0634, a Phase II Janus kinase inhibitor, to development in Crohn’s disease. Under the revised agreement, the Belgian biotech will fund and complete a Phase II trial in Crohn’s, which should facilitate rapid progression into Phase III. AbbVie will pay Galapagos $50 million upon completion of the study, expected in mid-2015. Galapagos will initiate what is planned as a 20-week, Phase IIa/b study of ‘0634 in Crohn’s patients in early 2014, investigating for both disease remission and early maintenance of the drug’s beneficial effects. The study will be performed in parallel with a Phase IIb study in rheumatoid arthritis, pursuant to the agreement Galapagos signed with then Abbott Laboratories in February 2012. At the time, Abbott paid $150 million upfront with a commitment for $200 million more if the JAK inhibitor met pre-determined criteria in Phase II study in RA. - J.A.H.
Photo Credit: Wikimedia Commons

Financings of the Fortnight Checks The Forecast

We’ve got forecasts on the brain this fortnight. No laughing matter: What happened on the East Coast with Hurricane Sandy was grim, and as of this writing remains so. If you haven’t yet, please take a minute to donate to the relief effort.

A continent away, we here at FOTF HQ have many colleagues, friends and loved ones directly affected by the storm; before, during and after we have watched intently. The forecast called for disaster, and the storm brought fresh appreciation for what that overused term really means. We’re always amazed how people shrug away warnings of impending danger by saying previous warnings didn’t live up to their billing. Hurricane Irene barely ruffled New York City’s feathers, so how was Sandy going to be any different? Psychologists say this all-too-human trait is a reliance on cognitive schemas – forming assumptions or predictions upon an organization of previous experience.

We here in earthquake country are taking some time this weekend to make sure our emergency supplies are refreshed and at hand. Just because there hasn’t been a Big One in our lifetimes doesn’t mean there won’t be one tomorrow.

One example of humans – indeed, Californians – trying to imagine beyond their previous experience was the creation of the California Institute for Regenerative Medicine, or CIRM, a $3 billion bond measure the state voted for in 2004 to create an untouchable reservoir of funding for stem-cell and regenerative-medicine research. Whether such a measure would pass today, with the state fighting its way through a mountain of debt, is another matter. But Californians agreed eight years ago with the forecast that warned this brave new scientific world needed a protectorate. Eight years later, those monies are slowly making their way up the R&D food chain. In our next issue of Start-Up, we’ll check in on CIRM and the effect of its public largesse, including the new stem-cell-related companies that have sprung from CIRM-funded academic projects. CIRM has also funded a handful of for-profit companies through its various grant programs, and one thing our story will explain is a new initiative that awards grants to companies with solid venture backing or corporate partnerships. One of those awards just went to bluebird bio, which we detail in our roundup below.

Bluebird also happens to be part of another story in the next issue of Start-Up. The firm's $60 million Series D round, announced earlier this year, has significant participation from crossover investors; it's one of many big venture rounds in recent months to include hedge or mutual funds. The recession drove them away from investing in pre-IPO companies for the most part, but like a slow-moving weather system, the cycle has spun back around. The crossovers are back, investing the past 12 months in a sizable number of the venture rounds of $50 million or more, and we’ll explain why – and what’s different this time.

Another company in the news this fortnight is one of the biggest crossover successes to date, Puma Biotechnology, which became public in 2011 via reverse merger but only recently gained a listing on a major stock exchange – and raised $138 million to boot, as we explain below in our roundup.
 
Meanwhile, the real fundraising begins this week in thousands of towns, from the nation's largest on down, to put lives and communities back together. We're forecasting a lot of hard work ahead, and we're keeping everyone who was in Sandy's path in our thoughts as we head into another edition of...


  
bluebird bio: The gene therapy company said October 26 it received a $9.3 million grant from the California Institute of Regenerative Medicine to push forward a Phase I/II trial of its treatment for beta-thalassemia, a genetic blood disorder. Bluebird’s lentivirus technology inserts a gene into a patient’s hematopoetic stem cells ex vivo to correct a mutation, the cells are reintroduced to the patient and prompt the bone marrow to start producing healthy red blood cells. The stem-cell angle qualifies bluebird for a grant from CIRM, which was approved by California voters as a $3 million bond in 2004 to create a steady source of stem-cell and regenerative medicine support. The bluebird grant is part of CIRM's new $60 million fund earmarked for companies that have either rounded up significant venture backing or secured a partnership. Bluebird is in the former category, having announced in July a $60 million Series D round, and puts the Cambridge, Mass. firm in the spotlight of a small renaissance for gene therapy, as we detailed in a recent Start-Up article. The field fell into disfavor for much of the previous decade, but a gene-therapy product was approved today in Europe, and bluebird has made clinical progress, with safety concerns giving way to clinical, manufacturing and commercial problems to solve. -- Alex Lash

Puma Biotechnology: The single-asset company quietly went public through a reverse merger in late 2011, but only recently did it tap the public markets for the first time, all while upgrading its listing to the New York Stock Exchange. On October 24 Puma closed out a $138 million offer, selling 8.625 million shares at $16 apiece that included more than a million additional shares purchased by the underwriters. The company was formed to develop neratinib, a small-molecule PAN-HER inhibitor licensed from Pfizer in October 20011. The compound is currently in Phase II trials to treat HER2-positive breast cancer. In November 2011, Puma reverse-merged into a shell company and raised $60 million by selling 16 million shares at $3.75 each to a group led by Adage Capital Partners, even though its stock was not listed on an exchange. It began trading publicly in April on the over-the-counter bulletin boards. Its shares closed Wednesday Oct 31 at $20.60. Part of the company’s appeal is its founder's track record. Puma is led by Alan Auerbach, who built Cougar Biotechnology around the prostate cancer drug abiraterone, brought it into Phase III, and sold it to Johnson & Johnson in 2009 for $1 billion. J&J ushered abiraterone to an FDA approval in 2011 with the trade name Zytiga. Like Puma, Cougar in 2006 reverse-merged its way to public standing and raised cash to push forward its lead candidate. The J&J deal helped peel away some of the stigma reverse mergers carry (as in, “if you couldn’t go public the normal way, how good can your company really be?”). One high-profile VC actually said last year the acquisition provided inspiration to reverse-merge the osteoporosis company Radius Health into a shell. Radius recently filed for its first public offering, aiming to bring in $56 million, and a Nasdaq listing. -- A.L.

Atara Biotherapeutics: Amgen and venture firm Kleiner Perkins Caufield & Byers jointly announced the spinout and funding of Atara Biotherapeutics on Oct. 26, creating the company to house and develop six Amgen assets. The start-up will have programs in nephrology and oncology, with assets ranging from pre-clinical to Phase I. Amgen will retain an unspecified amount of equity in the new company, while Kleiner will provide funding in its early days. A former Kleiner partner, Isaac Ciechanover, will be its chairman and CEO. Neither Amgen nor Kleiner would comment specifically on the assets or why Amgen chose not to develop them itself, and it’s not yet clear whether Kleiner will eventually close a formal Series A round or attempt to form a funding syndicate with other VCs. The biotech and venture firm have a prior relationship: Boston-based cancer drug maker Tesaro, a Kleiner portfolio company, acquired a key asset from Amgen in 2011, a year before it went public. Amgen has spun out other companies as well; it created Relypsa to house assets that formerly belonged to Ilypsa, a company it acquired in 2007. – Paul Bonanos

Aclaris Therapeutics: Newly formed dermatology start-up Aclaris announced Oct. 24 a $21 million Series A funding with the founder and former CEO of Vicept Therapeutics and  support from the same three venture capital firms that backed Vicept. Vivo Ventures and Fidelity Biosciences led Aclaris’ initial funding, and Sofinnova Ventures provided a supplementary component of the round. A $16 million Series A round from those three firms supported Vicept from its inception in 2009 through its July 2011 buyout, in which Allergan paid $75 million upfront. Aclaris CEO Neal Walker wouldn’t disclose the nature of its primary asset except to say the compound is a preclinical, topical treatment for a highly prevalent condition. The drug will have both medical and aesthetic uses. Aclaris is the second entity to emerge from NeXeption, which establishes, funds and supplies management to independent operating companies tied to individual assets it believes are potential targets for pharma partnerships. The model echoes creative asset-based financing structures that venture firms have formed, such as the Velocity group carved out of venture firm CMEA Capital, the Atlas Venture Development Corp., or Inception Sciences, which was formed by Versant Ventures to discover drugs and spin them out into single-asset virtual operating companies. But the start-ups under NeXeption’s umbrella will license rather than discover new assets, and they will be standalone entities staffed by a combination of NeXeption executives and additional employees brought in to suit their specific needs. NeXeption also shares risk with outside venture investors, while taking equity itself. NeXeption’s first company was Ceptaris Therapeutics, which is developing a topical treatment for cutaneous T-cell lymphoma. Vivo also has invested in that company, formerly known as Yaupon Therapeutics. – P.B.

 Photo courtesy of flickr user Brian Birke via Creative Commons license.

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's Summer Song

Why do so many summer songs include a twinge of regret? Take “Summer Wind,” made famous by Ol’ Blue Eyes, whose lazy August tempo belies its remembrance of a lost warm-weather love at least two seasons later. Or Chad & Jeremy’s lovely “A Summer Song,” which predicts autumn's sadness even as the lightning bugs still blink. Buffalo Tom’s poetic “Summer” is vague, but it's a past-tense tale of a wasted season of lost heroes and things left behind. And while Percy Faith’s “A Summer Place” is an instrumental that’s about as easy as listening gets, it’s also the theme from an entire movie about The One That Got Away.

(Perhaps it’s only natural that a songwriter would wrap up a story a few months onward. After all, if you start in summer and stay there, you get Seals & Crofts’ “Summer Breeze,” which has confounded us for decades. Did I have jasmine in my mind all along, and I just didn’t know it?)

At any rate, perhaps there’s something we can learn from these seasonal snapshots, particularly those that depict someone special slipping away like a handful of sand through your fingers. As VCs, execs and bankers steal away to places like Aspen and the south of France (after BIO of course), it’s easy to imagine them sleeping on a deal that could’ve been.

But with one healthy licensing arrangement, a reverse-merger that took another company public, a funding in the hotly contested epigenetics arena, and more action around the industry this week, it’s clear some are keeping their oars in the water, even as many of us dream of sticking our toes in the sand.

They say that all good things must end someday, but until then, stay cool and beat the heat with…
Abbott/Biotest: Already the owner of a strong rheumatoid arthritis franchise, Abbott Laboratories now hopes it’s found a new drug that will pick up where Humira (adalimumab) leaves off when it loses patent protection in 2016. Abbott paid $85 million up-front to license German biotech Biotest’s BT-061, a Phase II anti-CD4 antibody designed to act on a T-cell regulation pathway and combat inflammatory diseases such as RA and psoriasis. Milestone payments could add another $395 million to the deal, which also includes royalties if the drug is approved and marketed. For its cash, Abbott gets worldwide rights to the drug outside of five major European markets: U.K., Germany, France, Italy and Spain. In those countries, Abbott and Biotest will co-develop and co-promote BT-061. It’s the latest of Abbott’s moves to shore up its post-Humira pipeline. Last fall, the company paid $450 million upfront to license ex-US rights to Reata Pharmaceuticals’ bardoxolone, which announced positive data today; Abbott also bought Facet Biotech for $722 million in March 2010, giving it the multiple myeloma treatment elotuzumab, scheduled to enter Phase III later this year. Both products could be marketed before Humira’s expiry if all goes well. - P.B.

Allozyne/Poniard: The latest company to execute a reverse-merger transaction and emerge as a public company is Allozyne, a conjugated protein therapeutics specialist with a focus on autoimmune disorders. Allozyne revealed plans to merge with publicly traded Poniard Pharmaceuticals, whose stock has been trading at less than 25 cents since the beginning of June and hasn’t cracked the $1 mark for more than a year. Allozyne shareholders will receive 65% ownership of the surviving company, which will keep the Allozyne name, Seattle headquarters, and CEO, while Poniard’s stakeholders will get 35%. The combined company will seek a partner for Poniard’s primary asset, the Phase III oncology drug picoplatin, while focusing its attention on Allozyne’s portfolio. That includes AZ01, a multiple sclerosis drug set to enter Phase II, and AZ17, a preclinical antibody Allozyne says has broad potential in autoimmune and inflammatory diseases. The deal sets up a path to liquidity for Allozyne’s venture investors, who have poured at least $39 million into the company since 2005; they include MPM Capital, OVP Venture Partners, Arch Venture Partners and Amgen Ventures. Poniard shareholder Bay City Capital will loan the company $2.4 million as part of the transaction. Last month, Radius Health raised funding and concurrently reverse-merged with an as-yet-unlisted shell company, intending to go public by early next year. - P.B.

AstraZeneca/Dentsply: AstraZeneca’s pending sale of its dental supplies and medical devices business, AstraTech, to Dentsply International, the world’s largest maker of dental supplies, comes with a handsome valuation and a strategic challenge: now that it is entirely a pure-play pharma, AZ will have to deliver on growth through innovative medicines. The sale of AstraTech, announced June 22, removes AZ from a business it has been in since the 1950s. Still, with sales of roughly $535 million, that hasn't been enough buck for the required operational bang. But Dentslply's offer -- at a multiple of roughly three times sales and nearly 20 times EBITDA--gives AZ plenty of dry powder, adding substantial cash to a net cash position of just $1.5 billion based on the multi-national's first quarter filing. AZ will need that money to support strategies that bolster its top line as it enters into what analysts peg as one of the steepest patent cliffs in the industry, beginning in 2012 and lasting through 2016, with the expiration of the U.S. patent of Crestor. AZ ‘s emphasis on focus has met skepticism on Wall Street, but the recent success of pure-play Bristol Myers Squibb andequally lackluster results at diversified companies like Pfizer may change some analysts' minds. - Wendy Diller

Epizyme/LLS: Well-funded epigenetics startup Epizyme already has $54 million in VC money to play with, but that hasn’t stopped it from pursuing alternate sources of capital. The Cambridge, Mass.-based startup announced that it will receive $7.5 million in new money from the Leukemia & Lymphoma Society, intended to support preclinical and early-stage clinical development of a drug targeting Mixed Lineage Leukemia. The capital, which will be delivered in installments as certain milestones are reached, will support development through Phase I of a histone methyltransferase inhibitor targeting the gene DOT1L. In January, Epizyme struck a partnership with GSK covering a defined set of HMT inhibitors that brought in $20 million upfront, with milestone payments potentially yielding $630 million. Two months later, the biotech forged a pact with Eisai around the EZH2 enzyme worth $6 million up-front and $200 million in milestones. Enthusiasm for epigenetics has run high lately, as rival Constellation Pharmaceuticals added $15 million to a previously announced $22 million round earlier this month. - P.B.

Sanofi/Medco/UBC: Sanofi-Aventis became the second Big Pharma this year to form an alliance with a clinical outcomes research organization, tapping MedCo and its United BioSource Corp. unit to deliver payer perspective on drugs still under development. Sanofi will pay Medco and UBC an undisclosed amount for their expertise, particularly in identifying patient populations for drugs before they come to market. MedCo has pharmacy claims data for 65 million Americans, which Sanofi may find useful as it develops plans for late-stage compounds such as its Phase III dyslipidemia drug mipomerson and multiple sclerosis candidate Lemtrada (alemtuzumab). The deal follows AstraZeneca’s February agreement with health benefits provider WellPoint and its clinical outcomes unit HealthPoint, intended to provide it with “real-world” data concerning cost, clinical and comparative effectiveness as it negotiates with payers. - P.B.

Financings of the Fortnight Puts It In Reverse

LinkedIn? Might as well be in a different universe. From where we sit, it's terribly difficult to go public, let alone do it with investors making the equivalent noise of all those kids who came to see the Beatles in 1964.

There's another way to go public, however. Perhaps you've heard that Radius Health this week merged into an acquisition shell created by life-science venture firm MPM Capital. The new Radius already reports to the SEC and plans to apply directly for a listing later this year, with a goal of transitioning to the Nasdaq by early 2012.

Our Pink Sheet colleagues covered it thoroughly, but the gist is that Radius, spurned by Novartis' decision not to option its anabolic bone-building treatment BA058, now has a financial runway to fund Phase III trials and eventually find a new dance partner. If approved, BA058 would compete directly with Lilly’s Forteo (teriparatide), the only currently approved drug that builds bone mass rather than slowing resorption.

Concurrent with the reverse merger, Radius has raised $91 million in an equity-and-debt Series C round. The first tranche consists of $22 million in equity funding and $6.25 million in debt and includes a doubling-down by MPM, which returned to invest above its pro-rata. MPM's Ansbert Gadicke told our Pinkish colleagues that prostate-cancer developer Cougar Biotechnology provided inspiration for the deal. Cougar reverse-merged into a shell company in 2006; three years later Johnson & Johnson scooped it, and its Phase III drug abiraterone, for nearly $1 billion.

How often does that happen? In the last ten years, never, at least not at that price. At least five others besides Cougar have gone on to reap M&A benefits; the next priciest we could find was Solexa, a genomics company that was acquired by Illumina in 2006 for $600 million in stock.

Of 75 reverse mergers we found in our database since 2001, at least 16 included a round of financing either at the time of the merger or nearly so. Cougar nabbed $47.5 million, for example. Not all are engineered as a way to reach the public markets, of course. (Merck/Schering-Plough was technically a reverse merger, which we had a bit of fun with.) The majority are historical footnotes, as you might expect from companies that can't manage the normal route of attracting public investors.

Then again, the "normal route" doesn't exist anymore for biotech companies. Regarding Radius, the biotech has enough going for it to keep old acquaintances interested; Novartis, through its MPM-managed fund, is a new investor, as is Ipsen, the European drug firm that sold Radius the rights to BA058 in the first place in 2005. Another backer is Nordic Bioscience, a contract research firm with deep expertise in osteoporosis drugs. It's taking equity as part of its CRO fee for BA058; talk about having skin (and bone) in the game.

Spin-outs, reverse mergers, incubators, follow-ons, and A, B or C rounds: Your best bet for boning up on all of them is...

BioCritica: Blockbuster gone bad Xigris (drotrecogin alfa), which was hailed as a new sepsis treatment upon approval in 2001, has a new home. After a decade of minimal sales dogged by serious side effects, owner Eli Lilly & Co. is spinning the drug out to BioCritica, a new firm in Indianapolis that will focus on critical-care medicines. Its backers are Care Capital and NovaQuest Capital, and it also received Indiana state funding and support. No financial details were disclosed, but the NovaQuest connection is interesting, seeing how the firm -- once the investment arm of CRO Quintiles Transnational -- was deeply involved in two of Lilly's Alzheimer's drugs, one of which, semagacestat, failed in late-stage trials. NovaQuest is now operating independently of Quintiles, and as this column reported last December, is raising its own fund. BioCritica, meanwhile, is led by CEO David Broecker, who most recently served at the helm of Cambridge, Mass. biotech Alkermes, but previously worked at Lilly in marketing and product planning. BioCritica will continue Lilly's work to find the best uses of the controversial treatment, which has serious bleeding side effects and questionable efficacy in the broad sepsis patient population, but it hasn't disclosed more detailed plans. Lilly already decided a biotech was best suited for the follow-up to Xigris, a compound Lilly out-licensed to Cardiome Pharma in 2007. -- Lisa LaMotta

GenKyoTex: Edmond de Rothschild Investment Funds led a CHF 18 million Series C for GenKyoTex, a Geneva-based biotech focused on developing small molecule inhibitors of NOX family NADPH oxidases, transmembrane proteins at the beginning of the oxidative stress pathway. New investors Vesalius Biocapital Partners and MH Healthcare Venture Management and existing backers Eclosion, SGAM’s Specialized European Fund for Therapeutic Innovation, and Fondation d’Aide Aux Enterprises chipped in as well. GenKyoTex was incubated at Eclosion, the Canton of Geneva based public-private partnership that helps participating entrepreneurs tap a mix of state, university, and industrial resources. GenKyoTex plans to use the new cash to develop its lead candidate GKT137831, currently on the cusp of going into the clinic, for the treatment of diabetic neuropathy, and to support its preclinical portfolio. GenKyoTex is betting that interfering with oxidative stress by inhibiting NOX will help reduce the formation of reactive oxygen species (ROS) that can contribute to cardiovascular, neurodegenerative and metabolic diseases, cancer, and other conditions. The funding is a coming-out party of sorts for GenKyoTex, which has its roots in a three-way academic collaboration between scientists in -- you guessed it -- Geneva, Kyoto, and Texas. Along with the financing the biotech simultaneously announced a spate of executive changes: Ursula Ney, former Antisoma COO, becomes CEO; Phillipe Wiesel, formerly a medical director at Serono, is CMO; and taking on the role of chairman is PregLem CEO Ernest Loumaye. -- Chris Morrison

SpringLeaf Therapeutics: Start-up SpringLeaf has added $15 million to its coffers through a May 12^th Series B venture roundto continue work on a disposable "patch pump" that allows at-home subcutaneous of intravenous biologics, and also to work on a drug , according to CEO Frank Bobe.The cash comes from return investors Flybridge Capital and North Bridge Venture as well as lead and new backer SR One, whose Brian Gallagher, joins the company’s board. (This is SR One’s first participation in a drug delivery-focused firm since Dicerna Pharmaceuticals’ $29 million August 2010 Series B.)MIT spin-off SpringLeaf was founded as Entra Pharmaceuticals in 2007 and two years later filed a patent application entitled “Skin-Patch Pump Comprising a Changing-Volume Electrochemical Actuator.” Gallagher says the firm's “patient-centric” approach will facilitate more cost-effective therapies and the technology overcomes formulation obstacles associated with delivering existing large-volume biotherapeutics, including highly viscous drugs. CEO Bobe declined to disclose any details on the drug SpringLeaf is working on, but he said preclinical results were encouraging. The biotech, which has now raised about $27 million including a December 2008 Series A round, hopes to initiate a clinical trial by the end of 2012.-- Maureen Riordan

ImmunoGen: Best known for its antibody-drug conjugate (ADC) work, ImmunoGen said May 20 it has raised $84 million before expenses in a follow-on offering, selling 7 million shares at $12 per share. The fundraising comes as ImmunoGen's stock has reached its highest levels since the early 2000s amid growing hopes that ADCs, which attach a strong cytotoxic agent to a therapeutic antibody for a more precise attack on cancer cells, are on the cusp of medical success after three decades of frustrating clinical progress. ImmunoGen is part of the optimism; it has contributed the cytotoxin and "linker" technology used in Genentech/Roche's T-DM1, considered the next iteration of Herceptin. Indeed, ImmunoGen's stock run-up is due in part to new top-line randomized Phase II T-DM1 data released in April that showed improvement in progression-free survival in first-line metastatic breast cancer patients. Good news about T-DM1 is more a boon to ImmunoGen's platform than its immediate finances, as the firm would only receive single-digit royalties from any commercial sales. The targeted antibody, aimed at HER-2 positive breast cancer, is also in non-randomized late-stage trials. Underwriters led by Jefferies & Co. have the option to buy up to 1.05 million more shares. -- Alex Lash

Many thanks to Paul Bonanos and Amanda Micklus, who contributed mightily to this week's introduction.

Photo courtesy of flickr user Rd. Vortex via Creative Commons license.

Deals of the Week: Super Sunday Edition

The news from around the globe wasn’t pretty this week, as uprisings in the streets coincided with dangerous weather, spreading misery from Cairo to Lake Shore Drive to northern Queensland. And while Deals of the Week is sensitive to the gravity of these situations – unlike a certain fashion designer who attracted plenty of attention for putting his foot in his mouth – we’re not above a bit of diversion as the weekend approaches.

Neither are at least a hundred million Americans, who will be parked in front of their TVs on Sunday. Whether your preference runs toward bratwurst and cheese curds or a Primanti Bros. sandwich with fries on it, or whether you just like expensive commercials and the Black Eyed Peas, chances are you’ll be watching.

This year’s Super Bowl matchup got DotW thinking: What were the crucial decisions that got the Steelers and Packers to the big game? Was it a deal, or even a no-deal, and is there a lesson that pharmas could draw from what they did? Like, say, keeping one potentially lucrative compound in-house while partnering a later-stage drug, the Pack sensed it was time to bet on Aaron Rodgers and trade aging Brett Favre in 2008, allowing their young star to emerge. The Steelers, meanwhile, dealt troubled asset Santonio Holmes to the Jets, despite his potential for delivering more value in someone else’s hands, and instead looked to their pipeline for standout deep threat Mike Wallace.

Like drugs in the clinic, the players’ performances are only somewhat predictable, and require enormous financial commitments with no guarantees. But a well-timed deal can leave exiting venture investors celebrating like B.J. Raji after his fourth-quarter pick against the Bears, while mounting discontent can get a biotech subsidiary pushed out the door like Wade Phillips.

With our metaphor in mind, admittedly stretched beyond belief like Dwight Clark's fingertips as he brought down The Catch, please enjoy this super edition of…

Alexion Pharmaceuticals/Taligen Therapeutics: Announced Jan. 31, the union of Alexion and Taligen is designed to be complementary in more ways than one. Both companies have designed drugs that inhibit pathways in the complement system, a subset of the body’s innate immune system in which blood-borne proteins attack pathogens. Alexion, which has thus far specialized in orphan diseases, said it would pay $111 million upfront plus unspecified milestone payments for Taligen, whose lead program has been studied for ophthalmology as well as other disorders. Taligen had been planning to partner its lead program, TT-30, for age-related macular degeneration while keeping it in-house for orphan indications such as atypical hemolytic uremic syndrome and paroxysmal nocturnal hemoglobinuria, two rare disorders linked to deficiencies in complement factor H. Cheshire, Conn.-based Alexion already markets a complement inhibitor for PNH, Soliris (eculizumab), although it affects a different pathway. Robert W. Baird analyst Christopher Raymond speculated that TT-30 could replace Soliris as Alexion’s lead program. The deal represents a payday for Taligen’s venture investors, which had supplied at least $40 million to the Cambridge, Mass., startup since 2004. They include Sanderling Ventures, Clarus Ventures, Alta Partners and High Country Venture. -- Jessica Merrill & P.B.

AstraZeneca/WellPoint: A new agreement between Britain’s second-largest pharma and US-based health benefits provider WellPoint is designed to give AstraZeneca deeper insights into “real world data” surrounding post-market outcomes for its medications. AstraZeneca struck a four-year deal to harvest information from WellPoint’s clinical outcomes research unit HealthPoint, which will deliver data concerning cost effectiveness, clinical effectiveness and comparative effectiveness. That information could prove influential as AZ negotiates with payers to cover new pharmaceuticals. The agreement will focus especially on medications for chronic disorders including diabetes, cardiovascular disease and dyslipidemia, and will draw from a database covering 36 million enrollees in 16 US states. Specific terms of the contract weren’t disclosed, although the companies said the agreement could be extended beyond its initial term. The agreement could also be used to identify areas of unmet need in order to spur research and development initiatives, according to AstraZeneca executive James Blasetto. Although AZ has contracted WellPoint to study specific disorders before, their latest deal is the broadest yet. -- Cathy Kelly & P.B.

Allergan/Map Pharmaceuticals: Botox marketer Allergan paid $60 million upfront for rights to co-promote Map Pharmaceuticals’ orally inhaled migraine therapy Levadex, which has completed Phase III clinical trials and could be ready for an NDA submission in the first half of 2011. The deal value could increase to $157 million if milestones tied to Levadex’s approval in additional indications such as adolescent migraine are met. The first order of business is getting approval for acute migraine; while the companies establish joint steering committees, Map retains ownership of the NDA, which also means it bears the costs associated with the submission. The amount of upfront money is worth noting, given what the deal doesn’t include: Map keeps rights to promote to primary care docs in the US and elsewhere, meaning it ostensibly could capture more value for the product through a series of smart licensing deals. Still analysts and investors were puzzled why Map, which can’t afford the costs of primary-care marketing in a competitive space like migraine, didn’t seek a partner from the get-go that could broaden Levadex's commercial reach to U.S. internists and family-practice docs, as well as physicians practicing abroad. -- Ellen Licking

Valeant Pharmaceuticals International/PharmaSwiss: Focusing its growth almost completely on deal-making, Canadian specialty firm Valeant got off to a quick start this year, announcing a €350 million ($480 million) purchase of PharmaSwiss on Feb. 1. Having said in early January that Valeant planned at least five ex-U.S. deals this year, including one of significant size, CEO Michael Pearson looks to have made a smart move in acquiring the privately-held generics and over-the-counter products firm. PharmaSwiss has averaged growth rates of 20% the past five years and with its management team staying, the company will transition into Valeant’s European base of operations a year after Valeant expanded via last year’s $3.3 billion reverse merger with Biovail. In addition to tax benefits from operating in Switzerland, PharmaSwiss offers its status as partner of choice for companies such as Pfizer, Eli Lilly and Amgen that want to commercialize products in Eastern Europe without adding infrastructure. Pearson said PharmaSwiss will continue that practice under the Valeant umbrella. Separately, in a deal announced Feb. 3, Valeant acquired all U.S. and Canadian rights to topical herpes drug Zovirax (acyclovir) from GlaxoSmithKline for $300 million. -- Joseph Haas

Apeiron Biologics/Merck KGaA: Austrian immunotherapy firm Apeiron has licensed a fusion protein consisting of interleukin-2 linked to a GD2 antigen-targeting antibody from Merck KGaA, and it aims to conduct Phase II/III trials with it. Money from an out-licensing deal struck with GlaxoSmithKline a year ago enabled Apeiron to snap up the product, which CEO Hans Loibner said he has kept tabs on for some time. Apeiron believes it has the knowledge necessary to conduct trials in the very small numbers of children who develop neuroblastoma, and Merck probably recognized that, Loibner said. The immunocytokine has shown preliminary activity in a subset of children with neuroblastoma in a Phase II study. Apeiron now has full development and commercial rights and would like to take the product to market, but that decision may change, Loibner added. The companies did not disclose financial terms of the deal. Apeiron's previous deal came in October 2010, in-licensing a recombinant human superoxide dismutase (SOD) from fellow Austrians Polymun Scientific, which Loibner believes has potential as a dermatological for the treatment of skin damage associated with radiotherapy. -- John Davis

Image of "The Vince" courtesy of flickr user WBUR.