Financings of the Fortnight Waits For the IPO Parade To Start

Will the recent IPOs of Pacific Biosciences, a cut-rate Aegerion Pharmaceuticals, and a reportedly massive debut by a Chinese drug maker with a huge distribution network unleash a parade of life-science debuts? We don't know the answer to that question, but we thought it would be interesting to check in with the folks at Zealand Pharma, which said Nov. 3 it plans to raise up to $146 million on the Copenhagen stock exchange (yes, Zealand is based in Denmark, not the southwest Pacific).

Let's step back a second. If you abide by the oft-chanted mantra that the IPO is no longer an exit but another round of financing, then the real test of an IPO is how it positions the company. Certainly the most startling post-IPO exit in recent history belongs to another European biotech, Movetis. It debuted on the Euronext in November 2009, raising about $140 million and winning our Exit/Financing of the Year nod; nine months later it was betrothed to Shire in a $565 million deal.

Now here comes Zealand, which tried five years ago to go public. If it meets its fundraising goal, Zealand's coming-out would make it the biggest in Europe since Movetis. Like its Belgian brother, Zealand has a late-stage asset with potential broad market appeal: the Phase III GLP-1 analog lixisenatide, partnered to Sanofi-Aventis. It plans to file for approval in the EU in 2011 and a year later in the US, according to Zealand CEO David Solomon.

Solomon also told our Pink Sheet colleagues that an IPO "isn't a requirement for us." (How nice to have that flexibility.) But it's hard to believe its investors, who've piled $145 million into the company, are blissfully ignorant of the parallels to Movetis. Of course, Zealand doesn't need to go public to be bought at a tasty premium, but once public, it's that much harder for Big Pharma to force a target's shareholders to accept earnouts.

One thing to keep in mind: Zealand's shareholders, which include Denmark's Sunstone Funds and LD Pension, France's CDC Innovation and Allianz Private Equity, and the Netherland's Life Science Partners, will be subject to a 360-day lock-up period following the IPO.

For sheer cash on the barrel head impressiveness, no one will outpace Pacific Biosciences, whose IPO we describe below. But we're leery about correlating enthusiasm for sequencing technology with drug lust, so to speak. So if you want to know which way the biopharma wind is blowing, Zealand is a better place to hoist your sails -- at least until next April, when once again this is the place to be. But don't stay out in the cold, especially since it's not even winter yet. Curl up next to our hot stove with the latest edition of...


Karyopharm Therapeutics: Karyopharm derives its name from karyophrerins, proteins that shuttle from the nucleus to the cytoplasm, and has attracted $20 million in Series A financing to further its work on selective inhibitors of nuclear export (SINE). The Series A came entirely from Cyprus-based Chione Ltd., the investment vehicle for an unnamed wealthy individual, according to Karyopharm director Michael Kauffman, MD, PhD. Newton, Mass.-based Karyopharm started last year with $1 million from angel investors. It's using computational chemistry technology invented by its CSO and acting president Sharon Shacham, PhD, who used to head up drug development at now-defunct Epix Pharmaceuticals. Epix licensed Dr. Shacham the technology before the company filed for bankruptcy in 2009. Both Shacham and Kauffman, the former Epix CEO, helped establish the start-up, which is interested in oncology, autoimmune disorders, inflammation, and viral diseases including HIV. It will soon nominate a lead candidate for cancer and focus on hematological malignancies. To destroy tumors and ensure healthy cells retain tumor suppressor proteins in their nuclei, Karyopharm is developing small molecules that prevent the nuclear export of multiple proteins from the diseased cell, allowing the drug candidates to modulate the activity of key cancer pathways. The company’s platform targets the main culprit: CRM1, the nuclear pore complex that facilitates the import and export of the tumor suppressor proteins between the nucleus and cytoplasm. The 3-D structure of CRM1, which was discovered by Yuh Min Chook, PhD , was published in Nature in 2009. -- Amanda Micklus

Pacific Biosciences: DNA sequencing instrumentation specialist PacBio got the gold in late October, netting $186 million from a 12.5 million share IPO priced at $16. This comes four months after closing a $109 million Series F financing, which included a $50 million investment from strategic partner Gen-Probe as part of the companies’ June 2010 R&D collaboration. With Gen-Probe, PacBio's long-term goal, not to mention that of its competitors, is the clinical diagnostics market as featured recently in IN VIVO. But as is typical for life science tools providers, the company will first target the smaller academic and applied research market. PacBio has received orders for eleven of its instruments including from several of the best-known large-scale sequencing centers in the US and from Monsanto for agricultural research, according to its IPO prospectus. PacBio is also looking beyond DNA sequencing to potential applications for its technology in the study of chemical and structural modifications of DNA and processing of RNA and proteins, and it believes it can provide these additional capabilities through enhancements to software and consumables without the need for modifications to its basic hardware. As the cost of taking sequencing measurements drops due to innovations from PacBio and others, commercial success will depend at least as much on the ability to provide extensive high-quality data analysis as on hardware. Indeed, as noted in our recent discussion of Merck’s intention to utilize the sequencing capabilities of BGI in China, the resources dedicated to sequencing have flipped from the front end to the back end -- from being measurement heavy to being computation and data analysis (bioinformatics) heavy. -- Mark Ratner

Omeros: A year after netting $63.4 million from its IPO, the first for a pure-play U.S. biotech after the market crashed in 2008, Omeros has sealed a $20 million PIPE deal with Microsoft cofounder Paul Allen's private investment firm Vulcan Capital and its affiliate, Cougar Investment Holdings. In tandem with the financing, Washington State’s Life Sciences Discovery Fund (LSDF) also provided a $5 million grant to Seattle-based Omeros. The biotech says it will use the money to advance its G protein-coupled receptor program, aiming to perform high-throughput screening of about 120 “orphan” GCPRs, or those without a ligand. The goal is to identify what it believes could be up to 65 new druggable targets for a broad range of indications. In exchange for their investment, Vulcan and LSDF are eligible to receive tiered net proceeds earned by Omeros from the GCPR program, including product sales and specified partnership arrangements such as milestone payments. Vulcan is better known for its media and technology investments but has a life science track record. A year ago IN VIVO estimated Vulcan made ten times its investment in BiPar Sciences -- it led the Series A and reupped twice -- when BiPar was bought by Sanofi-Aventis. For their Omeros bet, Vulcan and LSDF will receive a blended percentage in the mid-teens on the first $1.5 billion in proceeds from the GCPR program; beyond that threshold, the percentage decreases to 1% of net proceeds. Vulcan also received three sets of five-year warrants, each good for 133,333 shares in Omeros, at exercise prices of $20, $30 and $40. Omeros, which sold its IPO at $10 per share, closed at $8.02 on Nov. 3. -- Joseph Haas

Mind-NRG: Always curious about asset financing strategies, we took notice when Index Ventures on Oct. 27 pledged up to €10 million ($13.4 million) to Swiss start-up Mind-NRG. Index has made a habit of asset-centric financings, backing development of a single candidate, or a small handful of candidates with a single mechanism of action, typically housed within companies with ultra-lean overheads and minimal staff. There are few examples, industry-wide, of success, but Index can point with justification to Abbott Laboratories' 2009 purchase of PanGenetics -- effectively a single-asset acquisition -- as its good-news story in this field. Abbott paid a whopping $170 million up-front for a Phase I antibody targeting nerve growth factor. Mind's asset, NRG-101, is a pre-clinical peptidic neurotrophic factor that crosses the blood brain barrier and may therefore have disease-modifying potential in diseases such as Parkinson's or Alzheimer's. The molecule was sourced from German proteomics group ProteoSys for no cash, just a 38% stake in Mind. Index holds the rest. -- Melanie Senior

Photo courtesy of flickr user Zack Sheppard.

Notes from AASLD: Apples and Oranges and Null Responders

The liver disease community – if not the investment community – has largely moved on from the novelty of comparing Vertex Pharmaceuticals' telaprevir and Merck's boceprevir, the two direct-acting antivirals that together form the threshold to a new era in hepatitis treatments if the buzz at the American Association for the Study of Liver Diseases is any indication.

Instead, physicians are celebrating the fact that two therapies may soon be available that can help patients achieve success rates that handily best the current 50% success rate from the standard of care interferon and ribavirin therapy, which is described as 48 weeks of constant flu-like symptoms and PMS.

The sense of promise is palpable at AASLD, now under way in Boston, where many of the sessions are standing room only.

A lot of the excitement now is around the IL28b genetic marker and its implication for better cure rates, and the lure of a still-years-away all-oral therapeutic regimen.

But first, there will be protease inhibitors. Merck and Vertex, who are jockeying to be first-to-market with a direct-acting antiviral for hepatitis C, plan to complete FDA submissions by the end of the year, with approval possible in mid-2011.

Based on overall profile, the odds-on favorite for best-in-class in this initial class of two seems to be telaprevir, but boceprevir may find a top-rung niche in experienced patients.

However, comparisons can be tough. Vertex had no short-course option in the Phase III study of telaprevir in experienced patients, REALIZE. Final results in that study have not yet been reported, but top line data showed 65% of experienced patients treated with telaprevir achieved SVR compared to 17% in the control arm.

Meanwhile, Merck released data at AASLD showing their response-guided therapy plan, which shortens the treatment period for patients who respond early, can work in prior treatment failures.

Another question frequently asked of presenters this year at AASLD concerns the definition of null responder, that is, patients who have had the poorest results with standard of care.

The definition of null responder used by Merck in RESPOND-2 is those who achieved less than 1 log decrease in viral load after the four-week lead-in period with standard of care. According to the abstract on the trial presented at AASLD, 33% of null responders (15/46) in the response-guided arm achieved SVR, a statistically significant improvement over the control arm, in which none of 12 patients had a cure. Null responders in the 44-week triple therapy arm had a 34% cure rate (15/44), also statistically significant.

That null-responder definition, however, appears to be at odds with the FDA guidance. In the document, FDA describes that population as people with "less than a 2 log10 reduction in HCV RNA at week 12" of standard of care therapy, the point at which the therapy is typically dropped for futility.

A footnote in the draft indicates that "other definitions for null response have been proposed, such as less than 1 log decline in HCV RNA at week four of treatment. However, failure to achieve a greater than 2 log decline … at week 12 has typically been used as a treatment futility criterion," and use of the 1 log decline definition "causes a gap in classification for individuals with a viral load reduction" that falls between the two.

Vertex has used that definition in its REALIZE study in experienced patients. In an interview, Robert Kauffman, chief medical officer at Vertex, reasoned that using what he called the "standard definition" prospectively to identify patients at the time of enrollment, rather than "on treatment," ensured that all patients were in the appropriate group.

To test the difference in the two definitions, Vertex used a four-week induction arm in REALIZE, and looked at the correlations between less than a 1 log drop at week four of the delayed start and the standard definition, Kauffman explained.

The outcome of the analysis was "a clear difference," he said. The two groups had different responses to the triple therapy. In addition, he said, the trial showed that both groups can have a "very, very good response."

A subanalysis of REALIZE reported at AASLD showed that among combined partial responder and relapser patients in the lead-in arm, 18% (31/171) fit the less than 1 log reduction definition at the end of the lead-in with standard of care. Of those patients 58% (18/31) went on to achieve SVR compared to 31% (46/147) patients prospectively-defined as prior null responders using the "standard" definition.

– Shirley Haley

flickr image by e g g used under a creative commons license.

French Doctors' Deal Provokes Fuss, so It Must Be Working...

Funny what happens at Halloween. Yours truly was looking up the latest on the French doctors' pay-for-performance scheme, the CAPI (Contrat d'Amelioration des Pratiques Individuelles) and she comes across the Centre for Advanced Paranormal Investigation. Rather spookily Halloweenic.

In the real, mostly pumpkin-free world of biopharma, CAPI represents France's first step towards Anglo-Saxon capitalism: rewarding docs with good old cash when they hit their performance targets--targets aimed at lowering drug costs, boosting generics and improving outcomes. The scheme was introduced last year as part of a host of changes aimed at cutting the mega-deficit. (Read about other more recent measures here.)

As one has come to expect of our French neighbours, there was outrage when CAPI came along. Outrage from physicians' councils ("...contrary to ethical guidelines!"), and from the drug industry association ("...this will be a brake on innovation!").

A year on, however, the scheme is undoubtedly working. (In tough times, money speaks louder than principles.) After a strong start in mid-2009, it had pulled in almost 15,000 doctors by September 2010, according to Le Quotidien du Medecin.

And most of those are apparently doing what the scheme--which is voluntary, by the way--wants them to do: prescribe more generics, do more screenings and vaccinations. Two thirds of CAPI doctors have met their one-year objectives and received, on average, €3,101--or their "thirteenth month"'s salary, as the assurance maladie describes it.

But there's always a reason to complain, it seems. This time, the anger's with the one third of CAPI-affiliated docs (about 1700) that didn't get their money. It's a scam, say some. Others claim the measures on which docs are assessed are inappropriate and unreliable. And besides, they ask, how can the same body that sets the objectives for the scheme be the one to measure whether those objectives have been met?

We'll spare you most of the details (you can read about some of them, in French, here). One complaint that seems fair, though, is that the authorities, in setting the scheme's objectives (in terms of numbers of diabetics remaining compliant, number of mammograms carried out, for example) didn't control for the prevalence of these particular diseases in particular areas. So for some doctors it might be much easier to clock up the figures than for others.

But all this misses the more important point that CAPI is working. It's making doctors prescribe more generics (generic prescription targets are set at 90% for antibiotics, at least 80% for PPIs and 70% for statins) and it's making them more aware of long-term outcomes. So assuming that happy doctors with a bonus continue to outweigh unhappy ones without (and encourage the unhappy ones to try harder rather than to have a tantrum and pack it all in), CAPI--the non-paranormal version--may yet prove an important component of France's ongoing attempts to rein in the deficit. Spooky.

image from flickr user ...antonio... used under a creative commons license.

Deals of the Week Gets Its Exercise On

It's always nice to see option buyers out there Sweatin to the Oldies. Last week's exercisers Cephalon and Purdue followed through on their deals with BioAssets Development Corp. and Infinity, respectively. We salute your exertions.

Ablexis/ Pharma 5: This week next-generation antibody company Ablexis, which can also be thought of as Abgenix 2.0, announced the formation of a five-member consortium that includes Pfizer and four other top global drug companies. The alliance gives the pharmas non-exclusive access to Ablexis’s proprietary AlivaMab mouse technology, a next-generation platform for the discovery of antibodies. Financial details of the alliance were not explicitly revealed. However, as part of the transaction, each consortium member paid an undisclosed and non-refundable seven-figure fee to Ablexis as a down payment on the souped-up mice strains in development. Upon delivery of the AlivaMab mice, the drugmakers will each pay an additional eight-figure sum. While the consortium is officially closed to new drug makers, Ablexis is interested in additional partnerships related to its transgenic mouse platform, according to Ablexis CEO Larry Green, who says the nonrefundable upfront payments provide the biotech with “a comfortable runway for building out the technology.” Although the existence of the consortium was only announced October 26, the deal has been in the works for many months; its possibility was one of the primary attractions allowing the San Francisco-based biotech to pull in a $12 million Series A in June from a syndicate that includes Third Rock Ventures and (interestingly) Pfizer Venture Investments. Forming a consortium in order to get a bolus of non-dilutive money near term is one way to solve what has become a chicken and egg problem for platform start-ups. With the IPO market still challenging, and the value of platform alliances dropping significantly in recent years, it’s hard for investors to recoup their outlay in such biotechs in rapid fashion. But Green said in an interview “the back-end obligatory payments by licensees provide a very attractive return for our investors.” According to Green, Ablexis, which is a structurally a limited liability company as opposed to a “C company”, will not require any additional venture money. The start-up will return cash to its investors based on their relative ownership stakes. That’s one reason the LLC structure for Ablexis is so critical. Had the biotech been a standard corporation, the cash distributions would have been taxed heavily. Because of the non-exclusivity, it's clear that various consortium members are free to go after the same target(s) if they desire. What's not clear is how the intellectual property related to the mice are divvied up. If for instance, Pfizer's researchers tweak the mice to improve antibody production, does the consortium own the knowledge? Pfizer? Ablexis? IN VIVO Blog asked Green for clarification but learned only that "those elements of the collaboration will remain confidential."--Ellen Licking

Kadmon/Three Rivers: Former ImClone Systems Chief Executive Sam Waksal’s new biotech Kadmon Pharmaceuticals has officially emerged from stealth mode, purchasing privately-held Three Rivers Pharmaceuticals in a mostly cash deal that is rumored to be worth more than $100 million. Three Rivers will serve as the commercial and operational cornerstone of Kadmon, which is focused on oncology, infectious disease, and immunology. The new biotech has raised over $200 million in debt and equity from investors in Japan and China. Three Rivers will contribute a portfolio of three marketed hepatitis C treatments including Infergen, Ribasphere, and RibaPak, as well as the fungal treatment Amphotec. Kadmon is expected to keep the Three Rivers headquarters in Warrendale, Pa. and its manufacturing plant. Waksal hopes to follow up on the success of ImClone, which was acquired by Eli Lilly in 2008 for $6.5 billion. While Waksal is famous for his contributions to ImClone; he is infamous for his stint in jail after an insider trading scandal involving homemaking guru Martha Stewart erupted in 2002.--Lisa LaMotta

Hikma/Baxter: In an apparent bargain, Hikma’s US subsidiary West-Ward Pharmaceuticals has snapped up the generic injectables business of Baxter Healthcare for $112 million in cash. Multi-Source Injectables, as the group was called, sold roughly 40 different drugs in a variety of dosages and presentations and is on track to book revenue of $180 million in 2010, according to the companies. The deal elevates Hikma to the number two spot behind Hospira in the interesting US generic injectables space and boosts the group’s market share from 1% to 16% by adding Baxter’s suite of chronic pain, anti-infective and anti-emetic products. Hikma and West-Ward executives pointed to the solid strategic fit between the two groups, noting the company was one of the few logical homes for Baxter’s many DEA-scheduled controlled substances products – an area Hikma’s small injectable generics business was already familiar with. Nevertheless, Jason Grenfell-Gardner, sales and marketing VP at West-Ward told “The Pink Sheet”, there is very little overlap between the two companies’ portfolios. Hikma wants to expand the market for Baxter’s products in other territories, and plans to reintroduce heparin to the company’s line up. Beyond portfolio, Hikma adds Baxter’s 20-strong sales force to its current group of 8, as well as Baxter’s Cherry Hill, NJ manufacturing facility and a warehouse/distribution center in Memphis, TN – all told shifting 750 employees from Baxter to Hikma. The deal also shifts the center of balance for Hikma, a multinational with historic strengths in the Middle East and North Africa.--CM

Teva/Merck KGAA's Théramex: Israeli generics maker Teva has been quietly building up its biz dev activities, particularly in the oncology and respiratory arenas. This week, via its acquisition of Merck Serono’s Théramex division for €265 million, comes proof of its desire to deepen its geographic reach in women’s health, especially the contraceptive space. Teva has agreed to acquire 100% of Monaco-based Théramex’s operations, gaining a solid European presence, especially in France and Italy, a diversified portfolio of branded products, and perhaps most importantly, a seasoned sales force. In addition to the upfront payment, Merck Serono stands to receive undisclosed performance-based milestones. The deal’s upfront price is roughly 2.5x Théramex’s 2009 sales; major products of interest include Colopotrophine (promestriene), Lutenyl (nomegestrol acetate), and a combined estrogen/progestin contraceptive currently under development and in partnership with Merck & Co.For Merck Serono, the divestiture should not be viewed as evidence of the company’s lack of interest in women’s health. The company is retaining its valuable fertility franchise, after all. However, it does provide sizeable cash with which to build its oncology and neurology franchises. In September, the maker of Rebif (interferon beta) suffered an unexpected blow when its oral multiple sclerosis medicine cladribine was rejected by European regulators; a decision by US regulators is expected in the fourth quarter of 2010. For Teva, the Théramex transaction is also critically important as its builds out capabilities in Europe, following its acquisition earlier this year of ratiopharm. Group. That deal solified Teva’s number one position in the European generics industry, especially in Germany, where it had heretofore been only a minor player.--EL

Sanofi/BMP Sunstone: Sanofi-Aventis, which is already feeling the revenue impact of generic competition to its Lovenox (enoxaparin) franchise, continues to send a signal to the marketplace that it isn’t idly waiting around for Genzyme to realize the wisdom of its $69-a-share offer. The French drug maker’s hostile offer is stalled in “he said, he said” mode, as Genzyme’s CEO Henri Termeer tries to persuade investors to hold out for a significantly higher offer. In the meantime, Sanofi’s bid to acquire BMP Sunstone for $520.6 million, helps the drugmaker reach its goal of doubling over-the-counter sales– a plan Viehbacher announced in early 2009, when annual nonprescription revenues were $1.4 billion. With BMP Sunstone, which reported $146.9 million in sales in 2009, Sanofi gains a leadership position in China's OTC cough/cold market, thanks to popular brands such as the pediatric cough/cold medicine Hao Wawa (Good Baby) and Kang Fu Te (Confort) for women’s health. Sanofi estimates China’s consumer health space is worth about $16.55 billion. Perhaps more importantly, the BMP Sunstone tie-up gives Sanofi an in-country base of operations from which it can distribute Western OTCs. Certainly, the acquisition builds on Sanofi’s ongoing dealmaking in the region. In October, Sanofi established Hangzhou Sanofi Minsheng Consumer Healthcare Co. – the result of a joint venture with vitamin and supplement company Minsheng Pharmaceutical Group announced in early 2010.--Dan Schiff & EL

GlaxoSmithKline/Amicus Therapeutics: GSK unveiled a standalone rare-disease unit in February and has been aggressively filling its portfolio. On Friday, Oct. 29 it added its nearest-term commercial prospect yet. GSK will pay Amicus Therapeutics $60 million upfront for rights to the Phase III Fabry disease treatment Amigal (migalastat HCl). Half the upfront is an equity purchase of 6.9 million shares of Amicus stock, or 19.9% of the company. GSK is also paying an undisclosed portion of Amigal's development, and the cash infusion will be enough to see Amicus through U.S. approval of Amigal, said the biotech’s CEO John Crowley. The deal could also pay Amicus up to $170 million in milestones, some of which could come in 2011, Crowley said. Genzyme’s manufacturing flubs in its rare-disease business further emboldened Big Pharma competitors to push into orphan and rare diseases, but they were already moving in that direction as industry economics have forced them to look beyond blockbuster primary-care indications. GSK's other rare-disease deals include a March partnership with Isis Pharmaceuticals to use that firm's antisense drug discovery platform to develop new drugs against five targets including infectious disease and conditions causing blindness; an October 2009 agreement with Prosensa to develop four RNA-based compounds for the treatment of Duchenne muscular dystrophy; and the purchase of a nearly 17% stake in Japan's JCR Pharmaceuticals, which makes recombinant biologicals for orphan diseases.--Alex Lash

Celtic Therapeutics/Resolvyx Pharmaceuticals: Private equity investor Celtic Therapeutics Holdings has bought an option to the rights to Resolvyx's RX-10045, a treatment for dry eye syndrome that is slated for Phase III trials in 2011. Financials details were not disclosed, but Celtic has an option to acquire and license rights to RX-10045, which is administered as a topical eye drop, in all ophthalmic indications. It also has an option to license a second Resolvyx compound. As part of the transaction, Celtic also bought a note convertible to Resolvyx equity. Resolvyx is one of several companies in the past several years to benefit from a flurry of venture interest in ophthalmology, a therapeutic area where small, privately backed companies have a possibility of commercializing a product if an attractive alliance or acquisition doesn’t materialize. Resolvyx’s most recently announced round of funding, a $25 million Series B, came in 2008 and was led by QVT Financial LP. The round included new investors Radius Ventures and Biogen Idec New Ventures, as well as existing investors. It's the fourth deal Celtic Therapeutics has made in its new incarnation after founders of Celtic Pharma, which aimed originally to invest $1 billion mainly in assets, not companies, went their separate ways, drastically paring back their ambitions as the model for project financing struggled during the recession.--AL

Boehringer Ingelheim/MacroGenics & Boehringer Ingelheim/ Pfizer: Antibody drug discovery startup MacroGenics Inc. struck two new platform deals that will help compensate for the Phase III failure of type 1 diabetes treatment teplizumab, which it had been developing in conjunction with Eli Lilly & Co. Inc. The broader agreement of the two is with Boehringer Ingelheim GmbH, and represents one of the first signs that the privately-owned German drug maker is serious about deepening its pipeline of biologics offerings. Under the terms of the deal, Boehringer committed an initial $60 million over three years to discover drugs around ten combinations molecular targets using MacroGenics’ trademarked DART platform, which creates compounds that react with two different antigens simultaneously. If any of the molecules becomes a marketable drug, MacroGenics would receive milestone payments worth up to $210 million for each. The partnership will first address immunological disorders, but could extend into oncology, respiratory, cardiometabolic and inflammatory diseases. MacroGenics’ alliance with Pfizer is narrower in scope, covering two dual-action antibodies engineered to redirect the body’s own effector T-cells against tumor cells. Financials of the Pfizer alliance—including the upfront payment—remain undisclosed. MacroGenics, which is privately-held, has raised more than $135 million over a decade from a syndicate of investors that includes Alta Partners, InterWest Partners, and TPG Ventures. Both alliances provide the biotech with important non-dilutive funding as a time when exit options for all venture-backed start-ups are constrained and builds on the $41 million MacroGenics received when Lilly licensed teplizumab.--Paul Bonanos

Endologix/Nellix: Can we call this a venture exit financing? Or a private investment in a public equity that’s buying one of our companies. (PIPETBOOOC)? Well, the branding of this deal clearly needs work. But Essex Woodlands Health Ventures rightfully earned some creativity points from other venture investors for its crafting of an exit/PIPE investment in the form of the announced acquisition of its portfolio company Nellix by publicly traded Endologix Inc. Nellix, which is developing a device to treat abdominal aortic aneurysms, will be acquired by Endologix for $15 million in stock. (Final payout could reach $39 million, all in stock.) At the close of the deal, Essex Woodlands – Nellix’ largest shareholder – will buy $15 million in Endologix stock to fund the continued development and the planned 2012 European launch of Nellix’ device. Essex Woodlands also will take a seat on Endologix’ board. At a time when it’s difficult for venture capitalists to exit companies with development stage products, the transaction gives Essex Woodlands and Nellix investors a somewhat clearer exit route now that it holds public instead of private stock. The returns aren’t great, based on the initial terms, since Nellix raised $30 million from venture investors. Of course, Essex Woodlands says it doesn’t intend to sell any time soon even after the one-year lock up expires. Instead, it and other Nellix investors hope to see the value of their holdings – now in Endologix stock – increase as the publicly traded company uses its existing and future sales teams to push Nellix’ endograft system in an increasingly competitive AAA market.--Tom Salemi

Valeant/Acadia & Valeant/Santhera: One of the inevitable consequences of M&A is the unwinding of certain alliances that aren’t central to the buying company’s strategy. This week’s news that Valeant Pharmaceuticals International has terminated a pair of partnerships and returned the drugs—both Phase III assets to treat Parkinson’s disease—to their originators is further proof of the phenomenon. The moves come four months after Valeant agreed to merge with Canadian biotech Biovail Laboratories Inc., which originated the high risk, high reward collaborations in its efforts to transform itself into a CNS powerhouse. Thus the “no deals” are consistent with Valeant’s desire to pursue a traditional specialty pharma model - i.e. one that doesn’t emphasize in-house research - with a strong focus on emerging markets. As part of a post-merger review following the $3.3 billion union with Biovail, Valeant will return the compound pimavanserin, being evaluated as a treatment for psychosis related to Parkinson’s, to Acadia Pharmaceuticals. As a balm, Acadia will also receive an $8.75 million payment to wrap up the transaction. In May 2009, Biovail agreed to pay $30 million upfront, plus milestone payments, to license the drug in the U.S. and Canada. Separately, Valeant returned fipamezole, a late-stage candidate to treat dyskinesia in Parkinson’s patients, to Swiss drug developer Santhera, after paying the first $12 million of a development and licensing deal covering U.S. and Canadian development rights. An ongoing licensing agreement with Ipsen for fipamezole will continue.--PB & EL

No More NICE by 2013?

Any drug developer who showed up at the Royal Society of Medicine in London this morning could have been forgiven for thinking Christmas has come early. By 2013, NICE probably won't be doing cost-effectiveness analyses of individual drugs anymore, according to Lord Howe, Parliamentary Under Secretary of State in the Department of Health.

Speaking at the joint ABPI/BIA conference entitled "Our Vision for a New Decade" (where a few other worthy initiatives were announced), Howe declared that those highly visible, and controversial, opinions delivered by NICE on whether a particular new medicine should be reimbursed by the UK National Health Service "will probably be somewhat redundant" in a few years' time.

Don't get too excited: it's not that cost-effectiveness assessments are going away. It's just that, according to Howe's plan, by then the UK will have a spanking new value-based pricing system which will see a drug's value assessed and quantified during pricing discussions. That system will replace the current PPRS (Pharmaceutical Price Regulation Scheme, which caps companies' profits rather than drug prices directly) which expires at the end of 2013.

According to Howe, the new set-up will see "the price of a drug reflecting everybody's agreed perspective on the value it provides". We were unable to establish exactly who 'everybody' is, and how they might 'agree' on such a matter. But despite scant details, it appears that companies may in future discuss value with pricing authorities directly rather than have NICE--usually post hoc--impose its judgment on a drug's cost-effectiveness.

So it's not quite Christmas. But it seems the industry associations have done a good job lobbying for greater influence in pricing and value decisions, and for NICE's teeth to be blunted somewhat. (Perhaps the writing was on the wall in 2009 after Sir Ian Kennedy published his report on NICE's methodologies.) Plus a system wherein value is discussed at the same time as pricing is, arguably, simpler, and "anything that's simpler is better," says Roch Doliveux, CEO of UCB and a significant investor in the UK (largely courtesy of the 2004 Celltech acquisition).

No-one will admit outright that NICE is about to take a back-seat in cost-effectiveness decisions. Universities and Science Minister David Willetts was quick to refute that there will be a "lesser" role for NICE, saying instead it would be a "changing role". A more "advisory" role. NICE will move away from single technology assessments (drug assessments) towards setting quality standards more broadly for public health and for care within the NHS, including in social care.

Here's the Department of Health's summary of where NICE will fit in:

"We respect the expert independence of NICE, and believe that it must be allowed to continue to issue guidance free from political interference. However, we believe that there are fundamental failings within the wider system for drug pricing and access. We are determined to address this and are clear that NICE plays a vital advisory role."

Vital its advisory role in establishing a new drug pricing system may be, but a NICE focused on setting quality standards for public health will certainly be less controversial than in its existing form. And less powerful. Today, a NICE decision can--and quite often does--shatter a drug's commercial prospects in the UK. That power looks uncertain post-2013.

HbA1c Smackdown: FDA’s Woodcock, UK’s Breckenridge Go Toe-To-Toe Over Diabetes Drug Approval Standards

Just when you think everything that can be said about Avandia has been said, along comes an impromptu, verbal sparring match between high-level officials of the U.S. and UK drug regulatory agencies over the role and value of hemoglobin A1c reduction in diabetes drug approval.

In one corner: Sir Alasdair Breckenridge, chairman of the UK’s Medicines and Healthcare products Regulatory Agency, better known as the MHRA.

And in the other corner: FDA Center for Drug Evaluation and Research Director Janet Woodcock.

The setting: the Third Annual Risk Management and Drug Safety Summit in Washington, D.C. on Oct. 18.

Woodcock, who was the first presenter at the meeting, spoke about CDER’s efforts to improve risk management and drug safety since passage of the FDA Amendments Act. She was followed at the podium by Breckenridge, who presented the European perspective on risk management and a pharmacovigilance “tool kit” for assessing and mitigating drug risks.

Near the end of his presentation, Breckenridge turned to the recent regulatory decisions on Avandia, GlaxoSmithKline’s beleaguered thiazolidinedione. Even though FDA and the European Medicines Agency took different regulatory paths – with FDA restricting distribution under a Risk Evaluation and Mitigation Strategy, and EMA suspending rosiglitazone’s license – Breckenridge stressed the extensive collaboration between the two agencies that culminated in simultaneous announcements on Sept. 23.

“If you think about the difference between what Europe has done and what the U.S. has done, in fact I would suggest there was very little difference indeed, and it was an example of regulatory authorities working together in a global manner,” he said. ("The Pink Sheet" offers an analysis of why they diverged in their final judgment.)

Following these glowing remarks about alignment among regulators on both sides of the Atlantic, Breckenridge took the Avandia post-mortem a step further, and perhaps one too far for Woodcock.

“The question I’ve asked myself is if Avandia came through for licensing today, with the information we had, what should be done, what would we have done? How has regulation advanced? Well firstly, it wouldn’t have been approved for efficacy on a surrogate marker [HbA1c]. That would not be accepted,” he said. Some in industry concur that there is now a higher hurdle, at least commercially, for diabetes products.

Fortunately for the audience, Woodcock hung around after her presentation to hear Breckenridge’s speech, and during a question and answer session, while still sitting in the audience, Woodcock pounced on the British knight’s skepticism toward HbA1c. Here is an abbreviated transcript of the exchange, along with some first-hand, editorial observations noted in brackets:

Woodcock: “If you’re not going to use hemoglobin A1c or serum glucose … what are you going to use for efficacy in diabetes? No drug in type 2 diabetes has ever been shown to improve cardiovascular outcomes.”

Breckenridge: “I believe this illustrates the problem with antidiabetic drugs. I believe it’s going to be increasingly difficult to develop any drug for diabetes which has got a suggestion that Avandia did have, and I think drugs like Avandia are going to die at a much earlier stage and be killed at a much earlier stage than developed.”

Woodcock: “I would say the question with rosiglitazone is a safety issue, it’s not an efficacy issue … I think hemoglobin A1c is more than a surrogate … I date as an internist from the era when people walked around with untreated type 2 diabetes. They hit my emergency room they were in hyperosmolar coma. That’s a life-threatening disease. Or they had severe invasive soft tissue infection with gram negative organisms, or they were dehydrated and had blurry vision and CNS issues.”

Breckenridge: [apparently attempting to explain that not all type 2 diabetics are in such dire straits] “I can remember as well, and I’m not sort of swapping stories with you, but patients with type 2 diabetes are the rather large ladies who you see walking around in the United Kingdom and I’m afraid Washington as well.” [disapproving murmurs from the audience]

Woodcock: “But if you go untreated long enough with type 2 diabetes that’s what you get into. It’s a progressive disease. So the idea that you don’t need treatments for type 2 diabetes I think is an incorrect …. ”

Breckenridge: “I’m not suggesting that ….”

Woodcock: “You will get renal failure, you’ll get amputation … It’s a symptomatic disease. People have studied this and they’ve looked at central nervous system effects of hyperglycemia … There are people walking around with blood sugar 300, 400 and so on. That is not good for you, acutely. And sub-acutely, glycemic control has been shown to be correlated with progression of retinopathy, renal failure and so forth, and neuropathy to some extent. [By now standing, holding the microphone and looking as comfortable as a talk show host on a TV production set] So I would take issue with the fact that hemoglobin A1c is a bad surrogate. I think it’s a very good surrogate for efficacy. I don’t think it tells you anything about safety of a drug just like most surrogates for efficacy.”

Breckendridge: “I’m afraid I disagree with you there, Janet. I think by the definition of a surrogate, hemoglobin A1c fulfills all the criteria … and the point I was trying to make was that if you take, in the development of a drug in the latter phase of the drug, and you had a drug which was effective by affecting the surrogate, but it had some other not just potential but huge changes, big changes which were known at the time in a possible adverse event which diabetics are already prone to, the manufacturers, I would suggest, would have a very, very careful look at that before continuing with its development.”

Woodcock: “I don’t think we’re in disagreement, I’m simply saying I thought the earlier definitions [of a surrogate] were mainly done by statisticians, like Prentiss and others … that it should contain all outcomes. That’s completely naive from a biological perspective, because you may perfectly control the disease and kill people from something else. It’s unrelated to the pathway of the disease. So I think expectation that a surrogate for efficacy would take care of your safety evaluation is unrealistic, and I think we’re saying the same thing, which is for chronic diseases there’s going to have to be a much more thorough safety evaluation, it’s longer term, includes more patients, looks for more outcomes than we have traditionally had.”

Breckenridge: “And I think diabetes is an especially difficult case for the reason I described. If you’ve got a disease whose natural history is to develop vascular disease anyway, then a drug which is going to influence that in any kind of adverse way is not good news.”

Woodcock: “The sulfonylureas have long had a warning in the United States for cardiovascular disease because the only time that was studied long-term there was a signal.”

Breckenridge: “And so do the thiazide diuretics, too.”

Woodcock: [laughing] “So there’s a lot of things we don’t know.”

During a break in the meeting later in the day, Breckenridge was overheard describing Woodcock as “feisty.”

Feisty? Perhaps. But definitely defensive of the view strongly held within CDER’s Office of New Drugs that HbA1C reduction, not cardiovascular benefit, is an appropriate efficacy endpoint for new antidiabetics. Woodcok's eagerness to enter the ring on the issue is especially interesting given that outcomes data is now essentially required to demonstrate the safety of the products.

– Sue SutterPhoto "Natalya" by flickr user Snerkie used under Creative Commons License.

DotW Strategies

As 2010’s days grow shorter, the pharmaceutical industry’s larger players face fundamental challenges, both in how they invest in internal research and how they ensure continued growth commercially for their medicines in the face of increasing scrutiny from regulators and payers. An analysis of Elsevier’s Strategic Transactions database in the October IN VIVO shows that, to date, most companies have adapted with a three-pronged strategy that places an emphasis on externalization, emerging markets, and unmet medical need.

This week’s edition of deals of the week doesn’t stray far from these established themes. (Poison ivy was apparently considered optional.)

Sanofi-Aventis’s alliance with Harvard University illustrates the ongoing allure of academic relationships, as drugmakers look to identify innovative new medicines ever earlier in the development cycle. Meantime, Glaxo’s tie-up with two Italian foundations in the development of a gene therapy to treat a disorder affecting only a few hundred people worldwide shows that no disease is too rare to attract Big Pharma’s interest--as long as the unmet medical need is high. Finally Pfizer’s deal with Indian biotech Biocon, illustrates drugmakers’ growing interest in both diabetes AND emerging markets.

GlaxoSmithKline/Fondazione Telethon & Fondazione San Raffaele: Big Pharma’s interest in rare diseases shows no signs of waning. This week’s rare disease pact – it seems like one a week is now pro forma for DOTW – aligns GlaxoSmithKline and two Italian foundations. On October 18, GSK announced plants to pay Fondazione Telethon and Fondazione San Raffaele €10 million upfront (about $14 million) for worldwide rights to a Phase I/II stem cell-based gene therapy for ADA-SCID, also known as "bubble boy disease." ADA-SCID, a single-gene defect which prevents the body from producing the enzyme adenosine deaminase, afflicts about 350 children worldwide, with about 14 EU patients and 12 U.S. patients born each year. (Thus, this isn’t simply GSK investing in a rare disease; ADA-SCID counts as one of those “ultra” orphan indications, a valid term even if it makes industry and advocacy groups squeamish.) Beyond the ADA-SCID program, the two foundations will partner with GSK on clinical programs in Wiskott-Aldrich Syndrome and metachromatic leukodystrophy, as well as four additional programs, all currently in preclinical development. In addition to the upfront payment, the foundations could earn specified development milestone payments for each program. In a same day business presentation, GSK’s Global Head of Rare Diseases Marc Dunoyer offered additional color about the rare disease unit’s strategic intent. The pharma intends to address 200 rare diseases with a focus in four primary areas: metabolism and inherited disorders, central nervous system and muscle disorders, immuno-inflammation, and rare malignancies and hematology. It continues to build its portfolio via dealmaking, including ongoing collaborations with Isis, Prosensa, and JCR Pharmaceuticals.—Joe Haas

Genentech/Biogen Idec: The longtime Rituxan partners have amended their co-development terms for next-generation anti-CD20 compounds. Biogen now gets slightly higher royalties on sales of the still-experimental compounds ocrelizumab and GA101, and their introduction will not trigger lower Rituxan royalties, as was previously outlined in their agreement. The firms squabbled for years over rights to what comes after Rituxan, and an arbiter ruled last year that Biogen had the right to participate in all anti-CD20 program development decisions. Historically Biogen has received 30% of the first $50 million in US and Canadian operating profits, then 40% of everything over $50 million, a threshold passed by Rituxan in the first quarter in each of the last three years, according to ISI Research analyst Mark Schoenebaum. Commercialization of ocrelizumab will no longer reduce Biogen's share of Rituxan profits, but certain regulatory and sales milestones of GA101 will. Also, Genentech will pay for all ocrelizumab development in multiple sclerosis, with Biogen receiving between 13.5% and 24% of US sales. With GA101, which in 2008 Genentech licensed from Glycart -- itself wholly owned by Roche -- Biogen will now pay 35% instead of 30% of US development costs and receive between 35% and 39% of profits based on certain sales milestones. GA101 is in advanced development for CLL and NHL. Ocrelizumab is in Phase II for multiple sclerosis but is no longer being tested in rheumatois arthritis. -- Alex Lash

Pfizer/Biocon: Pfizer and India's biotechnology flag-bearer Biocon finally -- after months of speculation -- announced a comprehensive global commercialization pact to bring to market a range of insulins including analogs of medicines marketed by Sanofi-Aventis, Novo Nordisk and Eli Lilly. Pfizer is doling out $200 million in upfront payments to Biocon, with the Indian biotech eligible for further milestone payments of up to $150 million. Biocon will also be entitled to additional payments linked to Pfizer's sales of its four insulin biosimilar products across global markets. As part of the deal, Biocon will take up clinical development, manufacture and supply of the biosimilar insulin products and regulatory activities needed for approvals in various geographies. Pfizer has told analysts that the deal will be "incremental," not "instrumental" to its strategy in emerging markets, biosimilars, and established products. Pfizer will be responsible for commercializing the products, while Biocon will develop and manufacture them. "Pfizer's participation in this market does raise the bar for the major producers of insulin over the long term," Leerink analyst Seamus Fernandez wrote in a same-day note. But it won't have a near-term impact because Pfizer brings little to the table beyond marketing muscle and the biggest opportunity lies in developed markets, where some of the products are patent protected for several more years. Sanofi's Lantus, for example, doesn’t lose exclusivity until 2015. – Vikas Dandekar

Romark/Intercell: Romark Laboratories and Intercell said they will collaborate on their hepatitis C programs by conducting trials on a combination therapy that will include Romark’s anti-viral drug nitazoxanide and Intercell’s HCV vaccine, IC41. The combination will seek to improve on the standard of care by adding IC41’s immune-boosting properties to nitazoxanide’s ability to slow cell replication without inducing mutations. The drug pairing will be studied side-by-side with the currently used combination of Pegasys (peginterferon alfa-2a) and Copegus (ribavirin), as well as a three-way combo of nitazoxanide, IC41, and Pegasys in a European Phase II trial slated for the first half of 2011. Nitazoxanide, an anti-infective agent in the drug class known as thiazolides that appears to activate protein kinase R, is already marketed to treat diarrhea caused by viral infections. It has been studied in conjunction with peginterferon and ribavirin as well. Tampa, Fla.-based Romark and Vienna-based Intercell did not announce financial terms of the deal.—Paul Bonanos

Sanofi-Aventis/Harvard University: Technically the tie-up between Sanofi and Harvard is a deal of last week, but with so much industry activity--and playoff mania--IVB somehow overlooked a deal that ought to be seen as a sign of the times. On October 14, Sanofi and Harvard announced they were joining forces in a broad translational alliance that gives the French pharma an early look at cutting edge science that could be important future pipeline substrate. Deal terms were not disclosed, but the collaboration is designed as a grants program, with a joint steering committee from both entities awarding funding based on scientific merit and “the potential to generate translational insight and value to biomedical research.” The boon for Harvard: scientists get access to flexible and rapidly available funding without spending hours – it’s really more like weeks or months – writing up government grants. Sanofi, in turn, has the opportunity to develop diagnostic, therapeutic, and prognostic applications of any discoveries made under the collaboration. Partnerships with academia have shown a marked uptick in number in 2009 and 2010 compared to years prior. According to Elsevier’s Strategic Transactions, the number of industry-academia partnerships jumped from 6 in 2007 to well over a dozen thus far in 2010. Nor are these the typical outsourcing relationships of yore; most are structured as true partnerships that aim to share both risk and reward. Notable recent examples: AstraZeneca’s alliances with University College London and Cancer Research Technology to create stem cell therapies for ophthalmic diseases and novel cancer medicines, respectively.--EFL

GE/Clarient: With cancer diagnosis and characterization in the vanguard of molecular diagnostics development and investment, it’s no surprise that GE Healthcare chose the area for its first major external investment in molecular test content. On Friday it announced an approximately $580 million tender offer for Clarient, which provides laboratory tests using important clinically validated cancer molecular markers including BRAF, EGFr, and KRAS. The deal, at $5 per share, is roughly a 25 % premium over its closing price yesterday of $3.77. Clarient hit profitability earlier this year, taking in $28.7 million for its testing services in the second quarter ending June 30. It utilizes most of the standard cancer testing technologies including immunohistochemistry, flow cytometry, FISH, and imaging. GE, working through its subsidiary in the UK (the former Amersham, which it acquired in 2003), expects to combine Clarient’s chemistry and molecular platforms with its own diagnostic imaging expertise, which would give it a full suite of triage and cancer diagnostic capabilities. In a sense, the link to imaging brings Clarient full circle. It originated as ChromaVision, a developer of digital microscopes, then morphed from an equipment maker into a service provider. Safeguard Scientifics, a 26% owner of Clarient going back to its ChromaVision days, said it will net approximately $145 million in the deal.-- Mark Ratner

St. Jude Medical/AGA Medical: St. Jude Medical’s announcement on Monday that it would pay $1.3 billion ($20.80 per share, a 43% premium) for AGA Medical, which had sales in 2009 of just $199 million, likely caused jaws around the industry to drop. Pick your chins off the floor, people. The transaction makes sound strategic sense, driving growth in key areas where St. Jude has significant resources but slower growing products. Case in point: St. Jude’s atrial fibrillation business grew by only single digits in the past year in the US, and the cardiac rhythm management sector is forecast to grow on a global basis by only 3% in the coming year. In contrast, AGA, operating in structural heart disease--a product segment that includes heart valves and various closure devices--enjoys double digit growth thanks to its leading share of the $250 million market for PFO closure. AGA also offers a number of new product areas to drive growth for St. Jude, including a next-generation vascular plug technology to replace embolic coils and a proprietary mesh-braided nitinol platform that will enhance the big device maker's product pipeline. In the company’s recent third quarter conference call, St. Jude Chairman and CEO Daniel Starks described the acquisition as a bolt-on to its cardiovascular franchise; the company is keeping on AGA president and CEO John Barr as head of the 550-person division. St. Jude’s recent deal flow indicates the company is trying to enter new markets via the business development suite. In September, the cardiovascular giant invested $60 million in remote monitoring company CardioMEMS, developing an implantable sensor for AAA and congestive heart failure monitoring. Early this year St. Jude also acquired intravascular imaging company Light Lab Imaging Inc. for $90 million.--Mary Stuart

Image courtesy of flickrer Neil Boyd used with permission via a creative commons license.

Financings of the Fortnight Ponders Haircuts and Waves Its Freak Flag High

There was an unexpected twist last weekend in the health care reform implementation: Docs based in the Delaware Valley got hit harder than expected. It was a rather freaky turn of events, and as of this writing, the boys from our nation's medicine chest (hey, how about working on a better anti-emetic?) are clinging to faint hopes that they can repel the upstarts from the world's biggest biotech hub, also home of some of the world's leading research on cannabinoid receptor agonists.

In its younger, rasher days, Financings of the Fortnight might have begun to gloat, but there's still more baseball to play. Our foam FOTFingers are crossed. Yes. We. Cain.

Away from the diamond, Aegerion Therapeutics has its fingers crossed, too. Its IPO is scheduled for this week, but as of noon Thursday, no word. If it can't get out, it'll be the firm's third IPO swing and miss. It withdrew efforts in 2007 and 2008, and now it's gunning for a $70 million debut. Its latest terms were 4.67 million shares for sale between $14 and $16 a pop. If it gets out, don't be surprised if executives doff their caps to reveal drastic haircuts.

Seven pure-play biotechs have gone public in the US this year with debuts that have averaged 28% below their original target. Add more discounts post-IPO, as six of the seven are below their debut price. It's not that investors are generally IPO-shy. Overall IPO returns are above 15% so far this year, with average first-day "pops" of 7%, according to Renaissance Capital. Yet there's still no clear path forward for biotech issues.

One biopharma-related firm managed to squeeze through the door this week: ShangPharma, a Chinese CRO whose contracts with GlaxoSmithKline and Eli Lilly account for 37% of its revenues, raised $87 million by selling 5.8 million depository shares and is now listed on the New York Stock Exchange. It priced at $15 a share, within its target range of $14.50 to $16.50.

Our advice to Aegerion as it steps up to the plate: Don't worry about the haircut, or even eine kleine chin musik. But fear the beard. Go Giants! It's another installment of...

Celgene: Celgene's $1.25 billion debt issue closed Oct. 7, and it tells us at least two things. First, the financing, its first big debt raise, cements Celgene as a drug company that can raise a ton of cash in an uncertain economy, something bigger brethren Amgen, Pfizer, Merck and Novartis have done during the financial crisis. If there were any doubts about Celgene in the industry's inner circle, dispel them. (Celgene is also under investigation for improperly fighting generic competition. We told you they're all grown up.) Second, and more interesting to this blog, is the debt issue as a tacit stamp of approval of Celgene's run of growth by acquisition. For many years Celgene shunned dealmaking; not so anymore, as our DOTW colleagues are more than happy to discuss. Celgene's long-term R&D partnership with Agios is certainly going to get some votes for "Deal of the Year." And Celgene seems to get more creative as it goes along; no doubt some of the $1.25 billion raised will go toward transactions. (It just sealed its acquisition of Abraxis BioScience that included cash, stock and -- speaking of creative dealmaking -- a tradable contingent value right coupon.) The Celgene debt is in three tranches: $500 million at 2.45% interest will mature in October 2015 and are priced to yield 2.481% ; $500 million at 3.95% will mature in October with 3.981% yield; and $250 million at 5.7% interest will mature in October 2040 with 5.713% yield. Citigroup, JP Morgan and Morgan Stanley are the underwriters. -- Alex "UUUU-RIBE" Lash

Pearl Therapeutics: South San Francisco-based Pearl Therapeutics, which spun out of Nektar in 2006, announced a monster $69 million Series C on October 19. According to Elsevier’s Strategic Transactions, the financing is the 5^th largest private placement this year, outclassed only by by Pacific Biosciences, Archimedes, AiCuris, and Immatics. The money, which comes from Pearl’s existing venture syndicate of Clarus, New Leaf, and 5AM Ventures and includes new investor Vatera Healthcare, will be used to support ongoing clinical trials of the biotech’s PT003, currently in Phase IIb trials for patients with chronic pulmonary obstruction disorder. PT003 is a combination of glycopyrrolate, a long-acting muscarinic antagonist (LAMA), and formoterol, a well-known long-acting β2-agonist (LABA), delivered via a metered dose inhaler (MDI). The drug is being positioned as superior to Boehringer Ingelheim’s Spiriva, the only once daily COPD medicine currently approved in the U.S. which generated over €1 billion in 2009 sales. PT003 will be administered twice daily, but Pearl’s interim CEO Howard Rosen doesn’t think that will curb uptake, especially if the data from ongoing head-to-head trials with Spiriva show superiority. Data will be available by year’s end. Of the backers, Vetara is a relative newbie in the staid, clubby world of venture, founded and funded in 2007 by Michael Jaharis, former co-founder of Kos Pharmaceuticals. Jaharis and his team should provide Pearl valuable commercial advice as the biotech moves PT003 along, having already successfully shephered combo products to market. -- Ellen Foster "Buster" Licking

Synosia Therapeutics: The Swiss biotech's latest round of equity funding coincided with a licensing deal, as Belgian biopharma UCB contributed $20 million of Synosia’s new $30 million Series C round while licensing a pair of Parkinson’s Disease drugs from the startup. Existing investors Versant Ventures, 5AM Ventures, Novo A/S, Aravis Venture, Investor Growth Capital and Swiss Helvetia Fund also participated in the round, which brings Synosia’s total funding to about $90 million. The UCB arrangement also included a non-dilutive upfront payment of undisclosed size, and milestone payments built into the deal could yield up to $725 million. The partnership covers adenosine A2a antagonist SYN-115 and 4-hydroxyphenyl-pyruvate dioxygenase inhibitor SYN-118 for Parkinson’s. Synosia will complete Phase II work on the two drugs on its own before handing them over to UCB for Phase III development and commercialization. The agreement also includes provisions for collaboration on additional drugs originating from either company, at terms to be negotiated in the future. Synosia, which typically obtains compounds abandoned by other pharmas including Roche, also has drugs in its pipeline targeting Alzheimer’s, cocaine dependence and bipolar depression. Aravis and IGC led Synosia’s CHF 32 million ($29 million) Series B round in January 2009. -- Paul "Babe Ross" Bonanos and John "The Count" Davis

Regeneron Pharmaceuticals: The antibody company tapped the public markets for $175 million in an oversubscribed public offering of 5.5 million shares plus 825,000 more for the underwriter, Citi. It's the first follow-on offering for Regeneron since 2006, when it also scooped up $175 million. Meanwhile, the firm secured a steady source of cash by partnering long-term with Sanofi-Aventis, a deal that turns Rengeneron into Sanofi's main source of antibody R&D; the big pharma has options on all molecules from the . The December 2009 extension of their relationship promises Regeneron $160 million a year through 2017, though Sanofi can dial it back to $130 million after 2013. The full skinny on the deal is here. So why the huge injection of dilutive follow-on cash? One answer lies in Regeneron's ambitions. It has programs outside its collaboration with Sanofi, the most advanced being Arcalyst (rilonacept), on the market for the ultra-orphan cryopyrin-associated periodic syndrome (CAPS) and in Phase III for gout. Officials make no bones about their goal of becoming a FIPCO; pushing Arcalyst to market in gout would get them a lot closer. -- A.L.

Wolfe vs. Rappaport (Part 2): Embeda Warning Letter Raised During Abuse-Resistant Opioids Ad Comm

Advisory committees are always interesting, but you really have to expect the unexpected when Public Citizen Health Research Group Director Sid Wolfe is on the panel.

The last time the FDA Drug Safety & Risk Management Advisory Committee member participated in a panel discussion, he wanted to discuss a past off-label promotion settlement during a review of a pending application from Jazz Pharmaceuticals seeking an expanded label for sodium oxybate to treat fibromyalgia.

As we reported at the time, Wolfe was cut off by the committee chair and then chastised by Division of Anesthesia & Analgesia Products Bob Rappaport for bringing up a topic that was not relevant to the discussion—and for not at least bringing it to the agency’s attention in advance as something he wanted discussed. As we first reported, Rappaport then read into the record a statement essentially telling the committee to disregard the issue.

To us, it seemed like Wolfe had a point, that a discussion focused entirely on the appropriate method for marketing a drug like sodium oxybate should at least consider the question of whether the sponsor would or would not actually follow the pathway set down by the agency. Whether or not the committee agreed with Wolfe on that point, they agreed almost unanimously that Jazz needed to rethink its approach to managing this product in the post marketing setting, and voted overwhelmingly against approval. (The agency formally rejected the application this month.)

Wolfe is back on a panel today, part of a meeting to review post-marketing study requirements for opioids that are designed to be abuse resistant. The purpose of the meeting is to determine what standards FDA should set for demonstrating abuse resistance in the real world. (Read the preview in "The Pink Sheet" DAILY, here.)

That is a fascinating topic in itself; probably a glimpse of the future (or a potential future) for essentially all big drug classes.

But the meeting began with Rappaport pointing out an unusual late addition to the committee’s briefing materials: a copy of the warning letter FDA sent to King Pharmaceuticals in 2009, shortly after it launched the abuse-resistant product Embeda. The letter, Rappaport noted, is not the type of thing FDA typically gives to committees, but Wolfe emailed the agency yesterday to ask for it to be distributed. And so it was handed out at the meeting (even though, Rappaport stressed, it is a marketing issue and so not really relevant to a scientific discussion about post-marketing study designs).

The letter hasn't been mentioned since--but King doesn't present until tomorrow morning.

King’s management team told us in an interview earlier this year that the video news releases that prompted the warning were a mistake that it would not repeat. But—as we discussed here—it certainly sets a standard for getting off on the wrong foot with an important new product.

And Wolfe, at least, sees it as evidence that FDA cannot rely on sponsors to do things the right way when it comes to making sure new drugs are used appropriately. So far (the meeting is two days and things are just getting going), Wolfe is pushing for more of the research in the pre-market setting. That doesn't seem to be getting any traction with FDA.

Interestingly, Wolfe doesn’t seem to have asked for any materials to be shared on the other product directly affected by the ongoing meeting: Purdue’s Oxycontin. That company, of course, was prosecuted for misbranding, with the government claiming Purdue’s marketing helped contribute to the widespread abuse of the drug.

Since the entire FDA effort on abuse resistance essentially flows from the Oxycontin controversy, Wolfe apparently doesn't feel like he needs to do anything to draw that connection for the committee.

Piper Jaffray Exits Euro Stocks

Europe's biotechs have long suffered from a lack of decent analyst coverage; now there's even less. Piper Jaffray's six-strong European-based analyst team (led by Sam Fazeli) got the chop last night, victims of a 'restructuring of European operations' made public today by the Minnesota-based investment bank and securities house.

The bank says it wants to instead focus on 'two areas of strength: distributing US and Asian securities to European institutional investors' and providing M&A advice to European-based clients. In other words, its European-focused investment research operation--across health care (biotech/medtech), IT, software and consumer--wasn't driving enough lucrative deals to justify its existence; indeed it was dragging the overall Euro operation into the red. "Our goal with this change is to return our European operation to profitability," declared chairman and CEO Andrew Duff in the release.

Perhaps the news isn't so much of a surprise: whatever one thinks about the quality of European stocks (no worse, given careful selection, than anywhere else, we'd argue), PJ never really made the full commitment to the region that other banks like Jefferies International have, and as such,"it was a question of either investing, or chopping," says one insider. "We only covered three sectors; you really need five or six to make it worthwhile," the source continues. PJ's US coverage universe is far wider.

No doubt Fazeli and his colleagues will find pastures new, if they haven't already. The companies they covered, though--especially smaller fry like Germany's MediGene, or Ark, Antisoma or Vernalis in the UK--won't likely see many fresh analysts knocking at their doors. Not the traditional kind, anyway, that live within investment banks--too many questions are being posed more widely within the financial sector about their internal ROI.

Life's not much rosier for Europe's private biotechs, either: we hear that VCs including Atlas Venture and Alta Partners have also decided to throw in the towel in Europe. Roll on government grants and corporate VC.

image by flickr user billselak used under a creative commons license.