At EuroBiotech, Teva The Contender

We've long thought that the largest, most successful generics companies can teach big pharma a thing or two about efficiency and execution. After all, Teva's profit margins rival those of Big Pharma, and could soon surpass them on average(Teva's net margin was 21.8 percent in 2009 and analysts project it will be 25.7 percent this year, compared to 23.6 percent for Big Pharma's group average, according to a consensus analysis by EvaluatePharma, but that's another story).

In addition to efficiency, Teva also believes it can compete with Big Pharma in dealmaking and has chosen some of the most competitive, expensive therapeutic areas to make its mark—oncology, neurology and auto-immune diseases.

Teva's not the obvious choice in these categories. It isn't at all clear that the company is willing to pay top dollar for high-quality assets, and most of its deals to date on the innovative side have been small with tiny upfronts. Still, it seems to be making some in-roads.

According to Gerard van Odijk, president of Teva Europe, however, Teva has a slightly different profile compared with big pharma. “We are attractive because we are quick, and we make deals happen. And when we commit, that’s our deal in a particular area,” van Odijk told Elsevier Business Intelligence’s 17th annual Euro-Biotech Forum last week.

Teva derives about 30 percent of its revenues from branded products, a balance it aims to retain even as it moves to double revenues by 2015. To help maintain that ratio, van Odijk said the company is always seeking either clinical or preclinical partnerships with biotech companies and academic institutions in its areas of expertise.

“There is no lengthy process of debate: if it’s the right fit, the right product, you will get the right decision,” he said. Once its business development group vets an asset, a small group of its top executives signs off on the decision, including van Odijk and his North American counterpart, Bill Marth. Other potential advantages include a highly experienced intellectual property team, and a strong global marketing presence, he said.

That may resonant with biotechs, some of which appear frustrated by the dichotomy between Big Pharma's message, which is that it needs innovation, and its reality: many Big Pharmas striving for greater R&D efficiency, warn that each in–licensed program means a cut from some internal project, leading to higher hurdles to get organizational support for a deal and cautious and slower decision making.

For biotechs thinking about their products' future commercial support, Teva's presence in neurology is obvious, but it is also a leading oncology company in many countries through its generic oncologics, and its subsequent knowledge of the market, van Odijk pointed out. It now has three proprietary oncology drugs in mid-to-late clinical trials, all of which it gained through partners, including an antisense drug in-licensed from Oncogenex in December for $20 million upfront, a $10 million equity stake and up to $370 million in potential milestone payments, and a stem cell product, which is in Phase III for patients with haematological cancers and is being developed by a Gamida Cell-Teva joint venture.

Teva likes to see strong IP and in vivo proof of concept, and not necessarily toxicology studies, and is happy to consider either equity investments or licensing approaches to deals. “There is no one size fits all, we take a pragmatic approach,” he remarked.

With company acquisitions, it was no secret that Teva was interested in increasing its market share in southern Europe, Central and South America, and some Asian markets, he told the crowd. -- John Davis

DOTW: Fireworks

Ahead of the U.S.’s birthday celebration and the required playing of Stars and Stripes Forever and the 1812 Overture, biopharma dealmakers this week set off some fireworks of their own.
The biggest confirmed acquisition of the week was Celgene’s $2.9 billion take-out of Abraxis Biosciences, the developer of a novel nanoparticle-formulation of paclitaxel called Abraxane (see below).

Not to be outdone, Sanofi-Aventis may be getting ready for its own light show. On the eve of a long holiday weekend, Bloomberg reported the French drug maker was in discussions to acquire an unnamed U.S.biopharma company for $20 billion. Perhaps a Bastille Day announcement awaits? (Or maybe Viehbacher wants to ruin the holiday weekend for us hardworking stateside journos…)

IN VIVO Blog’s Magic 8-Ball rattled off a number of potential candidates, but none of them are perfect. Biogen Idec? Come on, why would Icahn Partners have gone to all that trouble to find a CEO it could work with? Vertex? Sanofi doesn’t have much of a presence in antivirals, but we suppose the Vertex offerings could be combined with the vaccines biz.

What about Allergan? Hmm...an intriguing possibility. It would bolster the company’s interest in ophthalmology and diversify Sanofi into devices. But with Allergan's $18 billion market cap, deal terms would need to be richer. It's unlikely to be Celgene for the same reason, though it would be a coup for Sanofi's recently created oncology business unit. Cephalon might be a fit but $20 billion or more would be an extremely generous premium. On the private side, what about Purdue Pharma, which has recently been presenting at investor conferences, perhaps as a prelude to an IPO or a sale?

With Sanofi’s aggressive diversification there are a host of consumer and generics players that could fetch a $15 billion to $20 billion price tag. And it’s not out of the realm of possibility that the drug maker is considering a diabetes device outfit, given its desire to become an end-to-end solutions provider.

We've all run enough things up the flagpole for today. Now it’s time to enjoy the stars and stripes with BBQs, fireworks, and IVB’s favorite beverage of choice, a cool Anchor Steam. As you enjoy the weekend’s pyrotechnics, here’s a review of this week’s firecrackers, sparklers, and rockets.


AstraZeneca/Medicines for Malaria Venture: Following recent Big Pharma deals with Pfizer and Merck to develop malaria vaccines, Medicines for Malaria Venture announced a tie-up with AstraZeneca June 28 under which the non-profit will get no-charge screening access to about 500,000 AZ proprietary compounds to see if they have potential as anti-malarials. The collaboration involves no upfront financials, but if MMV researchers identify compounds with promise, the two parties will negotiate terms for co-development, an AstraZeneca spokesman told "The Pink Sheet" DAILY. Not only does it want to help find therapies for malaria, but AstraZeneca also considers its work with MMV as a way to see compounds it has already discovered have potential outside of the clinical areas in which the pharma specializes, which is an echo of AZ's July 2009 tie-up with Alcon in ophthalmology. --Joseph Haas

Sanofi-Aventis/TargeGen: Sanofi has purchased privately-held TargeGen for $75 million upfront and another $485 million in milestones to gain access to the biotech’s Phase III myelofibrosis drug, TG101348. The upfront alone won’t provide an exit to TargeGen’s 10 venture capital backers, who invested a total of $110 million over four funding rounds. However, TargeGen CEO Peter Ulrich stressed in an interview with "The Pink Sheet" DAILY that none of the biobucks are pegged to post-approval achievements. For Sanofi, the June 30 transaction adds another promising asset to its oncology portfolio, which includes a Phase III PARP inhibitor for triple negative breast cancer developed by BiPar and the recently approved prostate cancer therapy Jevtana. In early January, the French pharma created an oncology business unit to streamline operations and allow the company to react more flexibly. It’s a move reminiscent of operational shifts undertaken by Pfizer, Novartis, and others. --JH

Arena/Eisai: Arena Pharmaceuticals won an early race against Vivus and Orexigen Therapeutics to find a commercial partner for its obesity drug candidate lorcaserin. All three companies are vying to bring the first new obesity drugs to the market in over a decade, with FDA action dates for the three drugs scheduled between October and January. Given uncertainties that range from benefit/risk balance to reimbursement challenges, Arena's ability to secure a partner ahead of its Oct. 22 PDUFA date is a coup. San Diego-based Arena announced a U.S. marketing and supply agreement with the Japanese pharma Eisai July 1, including an upfront payment of $50 million. Arena stands to earn another $90 million upon regulatory approval and the delivery of finished product for launch. In lieu of royalties, much of Arena’s potential downstream earnings from lorcaserin stem from supplying the drug to Eisai for a purchase price that will begin at 31.5% of annual net sales. In addition, Arena could receive a one-time purchase price adjustment of up to $1.16 billion based on annual net sales. The adjustment would kick in when sales reach $250 million and top out if revenues climb to $2.5 billion. -- JH

GlaxoSmithKline/Genmab: There are plenty of reasons for smaller biotech partners to keep co-development rights for their drug candidates, but saving cash in the near term just ain’t one of them. Genmab this week joined the list of biotechs that in retrospect -- and in the wake of clinical setbacks, management turmoil and restructuring -- bit off a bit more than they could contractually chew. On July 1, the biotech amended its co-development and commercialization deal with GSK around the anti-CD20 ofatumumab (Arzerra), an antibody in development for both autoimmune and oncology indications. GSK now takes over development and associated costs in autoimmune diseases, and Genmab will forfeit development milestones and its first two sales milestones in this therapeutic area. The two companies continue to plough ahead together in oncology, and the new deal terms call for GSK to pay £90 million up-front. Genmab’s financial contribution to the mAb’s oncology program will be capped at £145 million in total and £17 million per year for six years, starting in 2010. Considering the drug is being studied in upwards of 20 Phase II and Phase III trials, that cap is pretty low. As such, milestones due to Genmab on the candidate’s progress in oncology will be halved. The upshot: Genmab is sacrificing long-term upside for short-term financial considerations.--Chris Morrison

IBM/Roche’s 454 Life Sciences: The so-called third generation sequencers are getting their deal-making ducks in a row. Two weeks ago, Gen-Probe aligned with Pacific Biosciences, with the former paying $50 million in exchange for equity and an exclusive development collaboration. [In the original post, we incorrectly named PacBio's partner as being Life Technologies -- MR]]] Now IBM is handing off its nanopore-based real-time single molecule sequencing platform to Roche Applied Science’s 454 Life Sciences, which will fund continued development of the technology within IBM and add its own sequencing resources. Roche will develop and market all products based on the “DNA Transistor” technology, designed to pass a single molecule of DNA through a nanopore and read the sequence as it’s going through without the need for any chemical synthesis for analysis. The move is in keeping with 454’s goal of moving its own technology from research into clinical applications, as it and other developers validate their technologies and continue to drive down sequencing costs. We’ll be tackling the when and how the impact of sequencing will be felt in clinical practice in the July/August issue of IN VIVO.--Mark Ratner

Celgene/Abraxis: Celgene is acquiring Abraxane developer Abraxis Biosciences and planning an aggressive development and marketing push for the novel nanoparticle formulation of paclitaxel, with the aim of driving the drug's sales to $1 billion by 2015. The $2.9 billion cash and stock deal could be sweetened by milestone payments based on future Abraxane approvals in new indications. The acquisition certainly isn't a steal for Celgene. The company is paying a 17% premium over Abraxis' closing share price June 29. And Abraxane, approved for second-line treatment of metastatic breast cancer, is Abraxis' only marketed drug, generating just $314.5 million in 2009. Celgene sees significant future potential in Abraxane, and plans to re-energize the marketing strategy around the drug in breast cancer, while expanding into additional indications like first-line breast cancer, lung cancer and pancreatic cancer. In addition, Abraxis has five other drugs in development based on its proprietary nanoparticle albumin-bound technology platform. Celgene has been building its portfolio in an effort to expand beyond the multiple myeloma blockbuster Revlimid as part of its transition to a diversified biotech. (Remember that alliance with Agios?) If the Abraxis deal is finalized, it will be the company's third large acquisition in the past three years, coming on the heels of its purchases of Pharmion for $2.6 billion in cash and stock and Gloucester Pharma for up to $640 million in upfront cash and earn-outs.--Jessica Merrill

Sanofi-Aventis/Juvenile Diabetes Research Foundation: AZ wasn’t the only Big Pharma to team up with a non-traditional partner this week. On July 1, Sanofi announced an early stage collaboration with JDRF to fund novel approaches to combat Type 1 diabetes. JDRF will tap its network of researchers to help identify exciting science developed at universities and non-profits, and Sanofi will add its drug development skills to speed up the translation into real therapies. Financial terms of the three-year commitment were not disclosed, but the two parties have created a joint steering committee that will allocate grants in a streamlined fashion, according to Sanofi’s head of External Innovations and Partnering Sridaran Natesan. The arrangement is proof again that Sanofi takes diabetes seriously. Until early January, when the French drug maker created its diabetes unit, efforts were largely confined to marketing its long-acting basal insulin Lantus. Since January, however, the company has inked partnerships with glucose-monitoring company AgaMatrix and beta-cell regenerative biotech CureDM, as well as revised the terms of its alliance with Zealand Pharma in order to create a combination GLP-1/Lantus combo.--EL

Eli Lilly/Marcadia: Eli Lilly broadened its diabetes portfolio by licensing an injectable glucagon pen technology from Carmel, Ind.-based Marcadia Biotech, a startup whose founding management team includes several Lilly veterans. Glucagon can be injected to stave off hypoglycemic episodes and is typically included in emergency kits carried by diabetics. Current kits require several preparation steps, including mixing a powdered form of glucagon with a diluent, but Marcadia’s kits keep the glucagon in liquid solution at room temperature for easier delivery, similar to the epinephrine pens carried by people with severe allergies to prevent anaphylactic shock. Financial terms of the June 25 alliance weren’t announced, but Marcadia said it retained U.S. development rights to its technology, which is still preclinical. Lilly will develop the products outside the U.S. and retain rights to worldwide commercialization. Lilly currently leads the U.S. market in glucagon kits, while Novo Nordisk dominates elsewhere. We're watching to see if the Marcadia deal sparks interest in Marcadia competitor, Enject, which is working on a pen in which the powder and diluent are mixed just before injection.--Paul Bonanos

Musical Chairs on CER: Industry Picks in Tune, But Who Will Represent Government?

There is plenty of interest in industry in the question of who, exactly, will be overseeing the launch of a new federal comparative effectiveness research effort in the US.

Under the health care reform law, that effort will be overseen by a public/private partnership called the Patient-Centered Outcomes Research Institute.

With the June 30 nomination deadline past, it turns out that the pharmaceutical industry's two biggest trade associations--the Biotechnology Industry Organization and the Pharmaceutical Research & Manufacturers of America--are on more-or-less the same page when it comes to who should serve.

As we report in "The Pink Sheet" DAILY, BIO and PhRMA each nominated the same four candidates, with BIO's slate including two additional choices to serve on the board of governors of PCORI.

Of course, they won't all get seats: by law, PCORI will have three industry reps, and they are supposed to represent the pharmaceutical, biotech and device sectors. So figure on two of the six PhRMA/BIO nominees actually getting seats.

The choice, incidentally, is to be made by the Comptroller General of the US, otherwise known as the head of the Government Accountability Office. That is currently Gene Dodaro, who has been acting CG since David Walker stepped down in March 2008. Congress is supposed to send a bipartisan list of nominees to the President for selection of a successor--but Congress couldn't agree on a list and now it isn't clear when or if Obama will pick a permanent head. That should make everyone in BIO and PhRMA proud that they were able to agree on a relatively short list of nominees.

Settling on the industry reps will be fun, but there is an even more interesting choice to be made in rounding out the board of governors.

PCORI's 19 member board has only four slots reserved for government officials, and two of those are filled by statute (National Institutes of Health Director Francis Collins and Agency for Healthcare Research & Quality Administrator Carolyn Clancy). That leaves only two open slots for the board--and way more than two interested government agencies.

Remember: the Federal Coordinating Council for Comparative Effectiveness Resarch that was formed a year ago had 15 representatives, all from government. The FCC was dissolved upon enactment of the health care reform law. That means that when the music stops, 11 members of that team will not have seats on the PCORI board.

Who gets the two vacant seats for government agencies? Easy. The Food & Drug Administration and the Centers for Medicare & Medicaid Services, right?

Not so fast. We are hearing that the Department of Veteran's Affairs is sure to take one of the slots. That may not be intuitively obvious to us regulatory-centric types, but it is perfectly logical: VA operates a massive, fully integrated health care system and claims to have pioneered the field of CER.

So that leaves one slot open, and 10 people still standing. Should be an interesting choice....

Financings of the Fortnight Gets an Earful in the Hall of Byers

For a guy with the good fortune to speak in front of hundreds of people under the roof of a building that carries his own name, Brook Byers was sure in a cranky mood this week.

The venture veteran of Kleiner Perkins Caufield & Byers was part of a panel discussing academia-industry ties at the University of California, San Francisco's Mission Bay campus. It was the capper of an open house to showcase the school's research departments and its desire, which rivals the Massachusetts Institute of Technology, to encourage entrepreneurial ties to venture and industry.

The event took place in the side-by-side Genentech and, ahem, Byers Halls (see picture). And if Byers' participation didn't emphasize enough the deep connections everyone was celebrating, another panelist was UCSF's new chancellor Susan Desmond-Hellman. We've heard she once had something to do with Genentech.

As the panel, rounded out by Pfizer chief scientific officer Uwe Schoenbeck, BayBio chief Gail Medaris, and QB3 director Regis Kelly, cooed over innovation as if it were a gently swaddled newborn, Byers was the cranky uncle banging his coffee cup on the table for a refill.

Of course, he's all for innovation, which in our world is as sacred and gauzy a concept as "freedom" is at a gun show. You just don't mess with it, pal. But while everyone else kept the conversation sunny, Byers cast a rather Nixonian shadow, sowing blame on various parties for the economic gloom.

First came the media: He took the New York Times to task for a feature on MIT's Deshpande Center and other entrepreneurial engines on academic campuses that failed to mention all the similar activity happening at UCSF. Later, after Kelly asked about the dearth of venture money for start-up companies these days, Byers seemed to hold himself in check. "I was going to say something not very nice," he said, then proceeded to suggest negative media coverage is helping keep investors on the sidelines.

He also wished out loud for policy changes. Many VCs these days are fending off attacks to tax carried interest as regular income -- although some think it is a fine idea (be sure to read the comments, too) -- and in grumbling about the issue Byers said he was "very frustrated right now" with President Obama even though "I helped elect him."

Byers had a few words for the innovation-stifling FDA, too, especially for the confusion that forced one of Kleiner's anti-infective companies developing a MRSA treatment to re-do re-design a Phase III trial. That sounds a lot like Trius Therapeutics, which had to postpone its IPO because of the trial do-over re-design. (Don't mess with innovation can also mean Don't mess with my money.) [Correction: Trius has not yet begun its Phase III trial; it reached agreement with FDA on a special protocol assessment last month.]

Byers isn't alone: DowJones VentureSource reports that venture-backed companies that went public this past quarter took a median 9.4 years to exit, the longest the service has ever recorded. In a different data set, the NVCA/Thomson Reuters quarterly exit poll showed that biotech and health care accounted for 4 of 17 venture-backed IPOs and 8 of 92 venture-backed acquisitions in the second quarter. Overall IPO volumes are up, but -- sorry if this is accentuating the negative, Brook -- post-IPO performance isn't encouraging. That's not our opinion: even NVCA chief Mark Heesen says so. Nothing in the data so far points to anything but a "washout" of health-care venture firms. Again, that's not our opinion: Ask Jim Garvey of SV Life Sciences.

As the panel wrapped up, Byers tried to make amends by ending on a more positive note. When we caught him outside, we apologized with a smile on behalf of our journalistic brethren for prolonging everyone's financial bummer. He smiled, too, and said a lot of his comments on the panel were deliberately provocative, a favor to Kelly to spice things up. But seriously, we asked: Are we missing something from the big picture? We lay out the data, we slice and dice it, we talk to investors and entrepreneurs all the time. Byers amicably eased away; dinner with his fellow panelists beckoned. That, he said, would have to be part of a longer conversation.

Until then, we will always have...

Incline Therapeutics: Investors in Incline's new $43 million Series A round have already lined up a buyer. Along with Incline’s June 21 announcement, Cadence Pharmaceuticals of San Diego said it had acquired options to buy Incline for up to $285 million sometime in the next 42 months, based on performance milestones. The two companies share more connections: Incline management includes former Cadence executive David Socks and Alan Levy, also a partner with Cadence investor Frazier Healthcare Ventures. Cadence CEO Ted Schroeder sits on Incline’s board. Founded in 2009, Incline has acquired rights from Johnson & Johnson's Alza division to the IONSYS transdermal patch, used to deliver the painkiller fentanyl to hospital patients after surgeries. Approved in both the U.S. and Europe but marketed only briefly overseas, the system was recalled in 2008 because corrosion in circuit boards could have led to accidental overdoses. Incline and its investors apparently see an easy fix, and J&J was ready to wash its hands of the product. With cash from Frazier, 5AM Ventures, Adams Street Partners, Technology Partners, Saints Capital Partners and Emergent Medical Partners, Incline aims to regain regulatory approval and bring IONSYS back to market. (For more deal details and a look at why Cadence didn't simply buy IONSYS outright, stay tuned for the upcoming issue of START-UP.) -- Paul Bonanos

SV Life Sciences: As we noted above, SV chairman Jim Garvey predicted a washout among venture firms. What we didn't note was that SV will stay high and dry. The health-care-only firm said June 29 it has closed one of this year's largest funds, right behind Orbimed's $550 million close this spring. At $523 million, the firm's fifth fund since inception comes during a time of contraction in the venture world, with other firms scaling back or folding up shop. If you squint you could call this scaling back, too: SV's fourth fund was $572 million, and instead of investing in 32 to 37 portfolio companies, it plans a slightly smaller range of 30 to 32 companies. That's scaling back the same way that ten days in Fiji instead of 12 in Bora Bora is a penny-pinching vacation. SV even plans to hold steady with its investment mix: about 50% biopharma and the rest spread between diagnostics, devices, services and IT. -- Alex Lash

Bind Biosciences: This Cambridge, Mass. nano-play reeled in a $12.4 million venture round that caught our eye for a couple reasons. First, the company makes nanoparticle drug encapsulation that it says will pair with existing or new drugs. It hasn't reached the clinic yet with its lead '014, a formulation of docetaxel; that should come later this year. Once in the clinic, good results might be lucrative, as rival nanoparticle designer and chemo-reformulator Abraxis found out with Celgene's $2.9 billion cash-and-stock acquisition offer June 30. Abraxis' lead is paclitaxel encapsulated in nanometer-sized shells of albumin, a common protein in the blood. We also took note of Bind's odd nomenclature for the round, what it called a Series "C-1." It's not unheard of, so we asked why not call it the second tranche. Because, replied a spokeswoman, it wasn't. The $11 million C round came only six months ago. This was a brand-new up round with at least one new investor, Endeavour Vision, a Swiss group that's a bit heavier into high-tech than biotech. Hmm, we replied, so why not call it a "D round"? "Nuance and technicality" was the answer. Unfortunately, we couldn't dig any deeper by press time. Besides, nuance and technicality make our heads hurt. -- Jessica Merrill and A.L.

Calistoga Pharmaceuticals: Among oncology targets, PI3K (phosphoinositide-3 kinase) has piqued a lot of investor and partnership interest of late. Calistoga's lead candidate CAL-101, an oral delta-selective PI3K inhibitor in several Phase I trials for certain types of hematologic cancers such as non-Hodgkins lymphoma, is unpartnered, but investors have anted up again with a $40 million C round announced June 30. It comes a year after a $30 million B round, and the new cash should help push CAL-101 into a registration trial later this year, the company said in a release. The round was led by Quogue Capital with existing investors Alta Partners, Amgen Ventures, Frazier Healthcare and Three Arch Partners and new investor Latterell Venture Partners also on board. Frazier's Jamie Topper was a busy man this fortnight; he was also in the middle of the Incline financing, described above. -- A.L.

Let's Dance But Be Practical: Novartis at Euro-Biotech

Novartis is structuring more of its product and company acquisitions so that its risks are shared with the seller, Novartis Pharma’s CFO Jonathan Peacock told a crowd at Elsevier Business Intelligence’s 17th annual Euro-Biotech Forum meeting in Paris, France, this week.

An example of this is its acquisition of privately-held Corthera earlier this year, where Novartis paid $120 million as an upfront payment, with an additional $500 million linked to key milestones.

The company is also keen to acquire products that complement its current portfolio, like the recent acquisition of a broad-spectrum antibiotic from Paratek, Peacock said. The compound is active against methicillin-resistant Staphylococcus aureus (MRSA), and complements Cubicin, another antibiotic in Novartis’s portfolio.

But whenever Novartis does a external licensing deal or acquisition, its strict resource allocation rules means that something has to go from the internal R&D portfolio, Peacock noted. Resource allocation decisions are tough, but Novartis is getting better at making them, he contended. Licensed products are nevertheless important to the company – around 30% of its in-market sales come from licensed products.

As Novartis faces one of the biggest patent cliffs beginning in 2012, when its bestselling Diovan is certain to face generic competition, it expects to make up for a proportion of the lost revenues through a rejuventated line of new products and growth in emerging markets. The company is waiting for regulatory approval of Gilenia, the first oral drug for multiple sclerosis.

Peacock pointed out the bulk of Novartis' new products will be targeted therapies, which start out with narrow indications that can be broadened over time. Asked whether he thought Novartis was truly interested in licensing products with smaller sales potential, the company exec said that there was always a degree of uncertainty over sales potential, pointing to the company’s own experience with Glivec, which became a multi-billion dollar product having originally been forecast to be a much smaller selling medicine.

Another key change in Novartis’s business practice –aimed at changing market access dynamics--is that it is becoming more a “key account” management business than a sales-force driven business, according to Peacock.

The company is developing a “more granular” understanding of what is happening in each region, and is allocating resources to more profitable sales territories, away from nonprofitable territories. Its U.K. sales force is probably a third the size it was a few years ago for example, he said, adding that commercial restructuring can improve sales and profitability, if it is done correctly. Given the nuances and variations in territories, it has experimented with a variety of pilot programs to achieve the right balance. --John Davis

This Charming CEO

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

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

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

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

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

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

Photo courtesy of flickr user Djenan.

VEGF & Colorectal Cancer: How Do You Know When to Stop?

Fifty million Elvis fans can't be wrong. What about nine Phase III trials?

Avastin is a $5.7 billion drug, with activity in at least five tumor types with every indication of gaining more (it's pending for approval in gastric cancer based on data presented at the 2009 ASCO annual meeting [it is not (Herceptin is!); IVB regrets the error] and positive data in ovarian cancer was presented at the plenary of the 2010 meeting). Some projections have it becoming the top selling drug in the world in 2014 with annual sales of $9 billion. (For more on Avastin's performance in ovarian cancer, check out "The Pink Sheet.")

But it all started out with colorectal cancer.

With success like that, and the VEGF mechanism of action seemingly proven in the setting, of course other drug development projects followed. "There is clearly room to improve on anti-angiogenic therapy in CRC," Scott Kopetz from MD Anderson Cancer Center said at this year's ASCO meeting, and agents with oral bioavailability and lower production costs could have real market advantages.

But, as Kopetz reminded us during an ASCO session on novel possibilities for treating colorectal cancer, small molecule angiogenesis inhibitor options – including the multi-targeted receptor tyrosine kinase inhibitors – haven't worked. Fourteen small molecule VEGF receptor antagonists have been tested (and failed) in CRC – among them early disappointments like AstraZenenca/Schering's PTK787 and more recent failures with Pfizer's sunitinib, GlaxoSmithKline's pazopanib, Bristol-Myers Squibb's brivanib, and AstraZeneca's vandetanib and cediranib just weeks ago. (see Pharmaceutical Approvals Monthly). That includes a total of nine Phase III trials and over 10,000 patients studied, by Kopetz's calculations.

And - "despite over 10,000 patients enrolled," he said, "unfortunately there's no evidence yet that anti-angiogenic agents, besides bevacizumab, confer benefit."

With such a host of attempts and no positive results, maybe it's time to move beyond VEGF in colorectal cancer. After all, there's scads of other pathways to pursue – from MEK to PI3 kinase to Src to Notch to Hedgehog, as Wells Messersmith from the University of Colorado mapped out.

Maybe it isn't quite time to call it quits on angiogenesis, though. Kopetz held out a little hope – and from the back of a McCormick Place hangar it was hard to see how much of a veil of Avastin glory was in his eyes – there's still the large molecule angiogenesis projects out there.

The Phase III on VEGF-Trap, sanofi-aventis/Regeneron's aflibercept, should report out in December. So perhaps we should all keep our hopes up a little longer.

While You Were Getting Eliminated

Ah, the World Cup Not a pleasant weekend to be an American or English fan of the beautiful game; we could, um, parrot the experts, but we'll spare you. Let's just say it was very disappointing. Of course if you read the press in England, you could be forgiven for thinking it was the end of the world.

But life goes on. ADA continues this week in Orlando -- plenty of GLP and insulin news, below -- and our very own EuroBiotech Forum starts Tuesday in Paris. It's not too late to sign up for two days of partnering and excellent content, including keynote talks from Novartis Pharma CFO Jonathan Peacock and Teva Pharmaceuticals Europe president and CEO Gerard van Odijk.

While you were watching the drugs that watch your blood sugar ...

• Morphosys has licensed a Phase I anti-CD19 antibody from Xencor. The last time we checked in with Morphosys regarding its in-licensing ambitions, CEO Simon Moroney told us "The review isn't complete and we're optimistic, but the ground isn't littered with jewels." We're glad they finally found something shiny enough to pay $13mm u/f for. Xencor will run Phase I for what is now known as MOR208 and then Morphosys picks up development, paying Xencor milestones and royalties on worldwide sales.


• Will Novartis need to up its bid for the eyecare giant Alcon? That company's independent directors committee certainly thinks so, and it has an expert backing it up, reports Reuters.


• Boehringer Ingelheim will work with Marinomed to commercialize in various markets an OTC nasal spray for the common cold. Marinomed gets about €1 million u/f and could receive milestones based on market entry and royalties.


• AstraZeneca and Medicines for Malaria Venture announced a partnership whereby MMV will have access to AZ's compound library for discovery efforts against malaria parasites.


• ADA: Novo Nordisk's diabetes drugs were on display at ADA -- liraglutide bested Januvia as an add-on to metformin and proof of concept achieved for ultra-long-acting insulin Degludec. Analysts report this morning that Novo also began talking about liraglutide Depot, a longer-acting version of the peptide.


• ADA: BMS and AZ put out a trio of releases on Saturday with Onglyza and dapagliflozin data. Onglyza and metformin as first line combo therapy? Check. Onglyza/metformin non-inferiority study vs glipizide/metformin? Check. Dapagliflozin add-on Phase III? Check.


• ADA: There's plenty more from Byetta, Januvia, canagliflozin, taspoglutide and all your other favorites. News roundup here.

image from flickr user baldheretic used under a creative commons license

Deals of the Week in a Parallel Dimension

It's ADA season, and this week didn't disappoint with diabetes deals coming out of the woodwork. But if FOTF can go a little off-piste, permit your favorite deals roundup to stray as well , straight into uncharted regulatory and reimbursement territory. (We promise to get to the juiciest deals eventually.)

This week FDA and CMS agreed to routinely share data in what could serve as a first step toward parallel reviews by FDA and CMS for marketing approval and medicare coverage. We're already seeing reimbursement milestones popping up in deal terms, and we can imagine that a parallel review by the massive government insurer would only mean they'd be even more common.

To be sure this isn't a new discussion, as our colleagues from "The Gray Sheet" wrote this week. But there may be more substance to this new effort, under which the agencies are "seriously exploring the ability to start, at a manufacturer's request, a Medicare national coverage determination process" while a medical device is under FDA review. That remark, from FDA center for devices and radiological health director Jeff Shuren, was made before a device-oriented audience, but he clarified that the memorandum of understanding between FDA and CMS will apply "FDA-wide."

Hmmm. Who will be the first to channel his/her inner Ray Stantz and order FDA and CMS to "cease any and all supernatural activity and return forthwith to your place of origin?"

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Before we get to the deals this week please allow us a moment to say GOOOOOOOOAAAAALLLLLLL!

Oh and yes, we did the movie thing last week, but it's hard to resist this one. We had the same reaction as Derek Lowe to the idea of Lilly launching a statin in 2010 -- surely someone threw us in a DeLorean, cranked up the Huey Lewis, scored some Lybian plutonium and sped up to 88 miles per hour, because we all went Back to the Future this week.

Never mind that Biff guy, it's time for ...


Sanofi/Regulus: Sanofi-Aventis made its first foray into the emerging microRNA field by forging a collaborative development agreement with Regulus Therapeutics, a startup co-owned by publicly traded Alnylam Pharmaceuticals and Isis Pharmaceuticals. For an upfront payment of $25 million and an equity investment of $10 million, Sanofi received options to license four Regulus compounds, beginning with a co-development agreement targeting fibrosis. If all milestones are reached on all four, Sanofi could pay Regulus more than $750 million; Sanofi also has a $50 million option to expand the partnership into a broader alliance that to us recalls the first broad RNAi deal between Alnylam and Novartis. MicroRNAs regulate gene expression by binding to target messenger RNA transcripts and developers hope that disruption by a single microRNA can interfere with disease pathways. Nearly all microRNA-based therapies have yet to reach the clinic. Regulus, which has programs in oncology, cardiovascular and metabolic diseases, also has two separate partnerships with GlaxoSmithKline. One gives GSK four options in Regulus’s immunological and inflammatory disease portfolio, and the other pertains to a specific hepatitis C treatment. The deals collectively are a sign of Big Pharma’s renewed interest in innovative early-stage technologies.--Paul Bonanos

Valeant/Biovail: While complementary lines of business played an important role, it was probably Biovail’s advantageous tax setup that led larger specialty pharma Valeant to merge with it in a deal announced June 21. Canada (and hockey?) will be a major focus for the newco – to be named Valeant Pharmaceuticals International but based in Biovail’s hometown of Mississauga, Ontario, rather than Valeant’s current home of Aliso Viejo, Calif. The new Valeant’s four main business areas will be specialty central nervous system (comprising Biovail’s CNS franchise and Valeant’s neurology business), dermatology, Canada, and branded generics/emerging markets. Valeant CEO J. Michael Pearson, who will run the new company, said each firm currently has a roughly $100 million business in Canada, and both are experiencing a better than 20% growth rate. Asked to estimate what the new company’s effective tax rate would be, Biovail CEO Bill Wells, who will be chairman of the new company, said Biovail currently pays in the 5 percent to 8 percent range. The combined company’s rate will be somewhat above that but far below Valeant’s tax rate of 36 percent, he said. Biovail has done its manufacturing in Canada, generating excess net operating losses. Now, those NOLs will help shelter Valeant’s considerable income in Canada. The new company also will retain Biovail’s principal subsidiary in Barbados, where intellectual property is developed, funded and managed, taking advantage of that country’s very low tax rates. The merged company also should realize $175 million in cost synergies in 2011 before tax savings are even factored in, derived partly from combining commercial operations in Canada, which will detail both specialty and primary care products.—Joseph Haas

J&J/Metabolex: Metabolex's first deal this week sees Johnson & Johnson taking time out from their OTC recall issues to boost its diabetes pipeline. In addition to licensing a type 1 diabetes vaccine from Swedish biotech Diamyd (see below), J&J's Ortho-McNeil-Janssen unit snapped up worldwide rights to several undisclosed first-in-class preclinical drug programs for type 2 diabetes from Metabolex. The deal is the companies' second, following on a 2006 alliance around two Metabolex PPAR-gamma programs, which are now both in Phase II development. In the current deal, Metabolex gets an undisclosed up-front payment and the typical assortment of development, regulatory and sales milestones plus royalties. If the stars align, the biotech could see up to $330 million.--CM

J&J/Diamyd: The same day OMJ inked its deal with Metabolex it also signed up Sweden's Diamyd, paying $45 million up-front for that company's Phase III type-1 diabetes vaccine. The vaccine could slow or halt the disease by protecting insulin producing pancreatic cells. Development and commercial milestones on the deal total $580 million, and Diamyd is eligible for tiered royalties on potential sales. The companies are sharing the costs of the vaccine's ongoing EU Phase III trial, and J&J can take over development if it chooses based on the results of that study. J&J's strategy is clearly one designed to leverage its presence in diabetes devices -- it does not market any diabetes drugs, yet, but its two deals this week augment an internally and externally sourced suite of compounds the roots of which goes back at least ten years to a research deal with Mitsubishi-Tanabe in 2000. --CM

Sanofi-Aventis/Metabolex: Sanofi-Aventis may not be making big news at this year's 70th Scientific Sessions of the American Diabetes Association but that doesn’t mean it isn’t creating its own buzz—and no vuvuzelas required. On June 25, the company announced its third deal since March 31 in the diabetes space, becoming the second pharma to ink a deal this week with Metabolex. The global licensing agreement is for the biotech’s Phase II, oral GPR119 receptor agonist, MBX-2982, for the treatment of type 2 diabetes. Specific deal terms of the Sanofi partnership weren’t disclosed but biobucks could total $375 million. It’s no secret that Sanofi has grand ambitions to become one of the leading players in diabetes but to do that, the company will need to diversify beyond its juggernaut Lantus. As Sanofi bolsters its pipeline, the focus has been on novelty and diversification—the March alliance with Agamatrix gives the French firm a foot in the blood glucose monitoring space; the tie-up with privately-held CureDM gives Sanofi a potentially first-in-class compound in the islet cell regeneration space. Agonists of GPR119 represent a first-in-class oral treatment for type 2 diabetes that simultaneously increase insulin secretion while stimulating the release of GLP-1 from the intestines. (They are also an au courant target as evidenced by last week’s deal between Neurocrine and Boerhinger Ingelheim.) —Ellen Foster Licking

Gilead/CGI: Finding a use for some of the $4.6 billion of cash it has on hand and also seeking some diversification beyond the antiviral space, Gilead Sciences June 25 announced that it would buy privately held CGI Pharmaceuticals for up to $120 million in cash. Gilead said the majority of the payment would be an upfront purchase price with the remainder paid out in clinical development milestones but did not break down the exact amounts. CGI, formerly known as Cellular Genomics, has nothing in the clinic but is doing discovery and development in three platform areas, of which Gilead seems most intrigued by its spleen tyrosine kinase inhibitor (Syk) program, which includes a lead preclinical compound with potential to treat rheumatoid arthritis. Under the deal, CGI would continue operating as a fully-owned Gilead subsidiary at its current headquarters in Branford, Conn. Gilead Chief Scientific Officer Norbert Bischofberger cited CGI’s scientific expertise as “a strategic fit with Gilead’s existing research organization” and said Gilead will work to move CGI programs into clinical development. Standard & Poor’s analyst Steve Silver called the transaction a “modestly priced opportunity to broaden Gilead’s long-term pipeline.” GCI's backers are probably seeing about a 2x multiple on the deal, should those milestones materialize; the company had not raised money since a 2004 Series C led by Lilly Bioventures that brought in $34.9 million.—JH


Bristol-Myers Squibb/Exelixis: Exelixis revealed June 21 that Bristol is walking away from its late-stage partnership on the biotech's lead compound XL184, a multikinase inhibitor in Phase III trials for medullary thyroid cancer (MTC). GlaxoSmithKline had an option on '184 but passed in late 2008, soon after which Bristol swooped in with a lucrative deal, $240 million in upfront and near-term milestones. With Bristol's decision, the question becomes whether Exelixis can find another home for the drug. It insisted the data were sound, and officials on both sides of the no-deal talked vaguely about portfolio conflicts and pipeline reviews. Two investigators working on XL184 trials told "The Pink Sheet" they knew of no clinical problems serious enough to merit BMS's decision, but some analysts were skeptical that Bristol would give up rights, given what it has already spent, on a drug with serious potential. Fresh from layoffs of nearly 30% of staff, Exelixis said it will push on with XL184 and start a Phase III trial in glioblastoma by the end of 2010 and file an NDA for MTC in the second half of 2011. The firms' partnership on XL281 remains intact. -- Emily Hayes

Image courtesy of flickrer TheAlieness GiselaGiardino23.

While You Were Calling the Old Man

A belated happy fathers day to all you dads out there, and a happy solstice to the rest of you. The news this weekend was largely confined to spills of oil and sports, but we've dug out a few noteworthy tidbits from this morning to get you started this week.

While you were diving/collapsing/going Gaga ...

• Biovail and Valeant are merging. The nearly 50/50 transaction is a bit complicated but suffice to say the two specialty pharma companies will combine operations under the Valeant banner but with Biovail's corporate structure and HQ'd in Canada. Valeant investors (who will hold 49.5% of the newco) get a one-time payout of $16.77 per share plus 1.7809 shares of Biovail for each share of Valeant. Valeant CEO J. Michael Pearson will become CEO of the newco while Biovail CEO Bill Wells will become chairman.
• Affymax and Takeda released this morning their top-line Phase III results for Hematide -- all looks good except for the adjusted cardiovascular composite safety endpoint in non-dialysis patients in two of the four pivotal trials ...
• Sosei is acquiring Japanese drug formulation company Activus for 500 million yen.
• GSK has licensed rights to a topical lip-patch from Germany's Labtec GmbH for the treatment of cold sores.
• And finally ... Exelixis has regained full development and commercialization rights to its Phase III MET/VEGFR2/RET inhibitor from partner Bristol-Myers Squibb Co. BMS entered a 50/50 dev-co arrangement for '184 as part of a deal signed in December 2008 that also included the Phase I cancer candidate XL281. Both drugs had been passed over by GSK when its broad option-alliance with Exelixis ended earlier that year. As part of this weekend's breakup BMS will pay Exelixis $17 million. There has been no major hiccup in '184's development, and the drug is in testing in more than a dozen tumor types. So what happened? As part of the 2008 agreement, goes Exelixis' statement, "BMS and Exelixis had originally agreed to certain clinical development plans, and Exelixis maintained key rights regarding timing and funding of current and future clinical trials. Given the recent progress of BMS’ wholly-owned oncology pipeline and positive data generated by XL184, Exelixis and BMS were not able to align on the scope, breadth and pace of the ongoing clinical development of XL184." The companies will continue to work together on other oncology candidates.