Financings of the Fortnight's Forecast Calls for Pennies From Heaven

Turn your frowns -- and your umbrellas -- upside down. When the biopharma financial world unpacks its bags in San Francisco next week, instead of raindrops there might be dollars falling from the sky, fluttering in the California sunshine.

OK, let's not exaggerate. The icy biopharma funding climate won't completely thaw overnight. But did you see the rounds announced this week? Even if the big-money flurry can be chalked up to PR maneuvering (shocking!) to get in front of a post-vacation, pre-JPMorgan audience, you can't help but notice the totals: the four private companies highlighted down below, plus two more (TetraLogic Pharmaceuticals, DBV Technologies) account for $265 million in new cash in hand or pledged through future tranches. That's still a lot of pennies, no matter how you sing it.

Still, while larger economic indicators point to a hastening recovery in 2011 in Motown and other places, here in biopharma financing land, we're not ready to call a return to the good old days. (But stick a couple pink tail fins on a Chevy Volt, and maybe we could party like it's 1959.)

For example: biotechs looking for a first round of funding still find their options crimped. As our colleagues at START-UP will tell you soon, 2010 was a dismal year for "A" rounds, with total and average cash raised even worse than 2009. "Worse than 2009" is generally not a phrase you want associated with your industry. Perhaps the $30 million pledged to PanOptica, described below, by Third Rock Ventures and SV Life Sciences will kickstart 2011. (No coincidence that Third Rock and SV were two of an elite group of VCs to raise new funds in 2010.)

One of our JPMorgan tasks this year is to ask every venture-backed company with even a hint of Phase II data if they see IPO on the horizon. And we'll be on the lookout for companies that have taken unusual routes to put themselves in that position, such as the Shire spinout Supernus Pharmaceuticals, which incorporated around Shire's spun-out formulation business in late 2005. On Dec. 23 it filed its intent to go public with a $100 million placeholder target. That figure will almost certainly change, as nearly every biopharma IPO in 2010 ran into investor resistance in the form of giant scissors, with many revising downward their fundraising goals by 30% or more.

A timely IPO would represent a fast exit for its venture backers, who invested $45 million across two Series A tranches, all the sweeter because Supernus supplemented its venture financing with $75 million in debt, a rarity for a biotech. Because it was spun out with formulation technology that had helped create commercial products, Supernus in 2008 was able to turn the royalty streams from those products into upfront cash. It will pay back its debtors with the proceeds from the royalty streams, and the IPO cash would go entirely toward operations. Its leads are two extended-release anti-epileptic drugs, one in Phase III, and the other poised for an NDA filing this quarter.

Clever, yes, but replicable? Ah, well, for fear of tipping our hands too much, that's another question you'll soon find answered in our sister START-UP. Consider this little chat the first tranche of our latest equity issue. That's a print joke, folks. Laugh now, or pay later. And save a few pennies for a rainy-day edition of...

PanOptica: In stealth mode since SV Life Sciences’ seed investment in summer 2009, ophthalmological drug developer PanOptica revealed a $30 million Series A round that also includes Third Rock Ventures. PanOptica also obtained rights from Astellas Pharma to a topical formulation of a vascular endothelial growth factor inhibitor, intended to treat the “wet” form of age-related macular degeneration, that can be administered as an eye drop. Pharmacologically similar to but distinct from Novartis and Roche’s Lucentis (ranibizumab), the standard of care for wet AMD, the compound was originally studied by Astellas for oncology, and is expected to enter Phase I trials next year. PanOptica, whose officials have put much thought into reimbursement issues, says it also intends to license two more compounds for other eye disorders such as glaucoma, dry eye, and the “dry” form of AMD. Astellas received equity in PanOptica as well as a cash payment, and is due milestone payments and royalties as the compound moves toward regulatory approval. Specific terms weren’t disclosed. If approved, the drug would compete with both Lucentis and off-label prescriptions of Roche’s Avastin (bevacizumab), normally a cancer drug that is much less expensive than Lucentis when prescribed for wet AMD. -- Paul Bonanos

NovImmune: Armed with Genentech as its new top partner, Swiss firm NovImmune secured an additional CHF20 million ($20.6 million) in Series B financing from returning investor BZ Bank. Director of business development Luca Bolliger told The IN VIVO Blog this was the third tranche to the B round, which pulled in CHF58 million in October 2006 and another CHF62.5 million in May 2009. Added to the CHF15 million Series A raised in 2000, two years after the company spun out of the University of Geneva, NovImmune has amassed CHF155.5 million ($160 million) in venture funding. In July, Genentech signed on for exclusive worldwide rights to NI1401, an anti-IL-17 antibody in preclinical studies for immune and inflammatory diseases, plus back-up antibodies, in exchange for an undisclosed up-front fee, milestones, and royalties. Genentech becomes NovImmune's most prominent partner, as the firm in May 2009 bought back rights to its lead candidate NI0401 from MerckSerono. (Based on the word at the 2009 BIO conference, Serono was reviewing its pipeline and decided the project didn’t fit in with its strategy.) According to NovImmune CEO Jack Barbut, the new financing will allow the company to complete validation of its DiversityTrap bispecific antibody platform, which has produced seven antibodies so far. The company will now be able to obtain proof-of-concept data for at least two of them. -- Amanda Micklus

Genocea Biosciences: The vaccine maker inoculated itself against a funding drought with a $35 million B round to bankroll Phase I trials of its herpes simplex type 2 vaccine. Apart from the hefty shot in the arm the cash provides, the round was significant for the presence of new investors J&J Development Corp. and MP Healthcare Management, the venture arms of Johnson & Johnson and Mitsubishi Tanabe Pharma Group. Genocea executives were frank with our Pink Sheet colleagues, saying the added corporate venture presence gives Genocea a better chance at exit-by-acquisition at a time when exit-by-IPO is a dicey proposition. GlaxoSmithKline's SR One invested in Genocea's Series A. Glaxo is one of the world's leading vaccine makers, and it had a herpes simplex virus vaccine program that washed out of a Phase III trial in 2010. J&J's own vaccine program lags behind GSK and other major producers, but the healthcare giant has bid €1.75 billion ($2.3 billion) for Dutch vaccine developer Crucell, of which it already owns a 17.8% stake. Genocea is developing both therapeutic and prophylactic vaccines for HSV-2, the strain of herpes more likely to cause genital sores as opposed to lesions around the mouth, but the startup will concentrate its resources primarily behind the therapeutic program. -- P.B.

Symphogen: Danish biotech Symphogen can now lay claim to the largest ever private financing round for a European biotech: €100 million ($131 million), which brings the firm's total cash raised to €208 million since its inception in 2000. Novo A/S and private equity play Essex Woodlands led and each contributed €35 million. The size of the sum meant that previous investor Novo Ventures' parent holding company Novo A/S, which manages the assets of the Novo Nordisk Foundation, made the decision. The difference isn't likely to affect exit strategy or other external considerations, but it's worth noting that when Novo goes big, the holding company makes the investment. In March 2010 it led one of the largest European private rounds, the £65 million ($100 million) raised by specialty pharma firm Archimedes Pharma Ltd. The funds will be used to accelerate development of lead product Sym004, which is just completing a Phase I/II safety trial in patients with advanced solid tumors, and to push additional cancer candidates into the pipeline. Sym004 combines two antibodies without conjugation against epidermal growth factor receptor (EGFR), each of which targets different, non-overlapping EGFR epitopes. Company officials tout '004 as a "me-much-better product than Erbitux." The firm can also put the cash toward the Phase II immune thrombocytopenic purpura candidate rozrolimupab (Sym001) that development Swedish Orphan Biovitrum AB handed back to Symphogen last month. Coincidentally or not, the previous richest European round before Symphogen was Biovitrum's $130 million raise when it spun out of Pharmacia in 2001. -- Melanie Senior

And the Roger Goes To ... Your 2010 In Vivo Blog Deals of the Year Winners

Thank you, dear IVB readers, for your decisive voting this year. Gone are the days when a DOTY winner squeaked through with only 27% of the vote (we're looking at you, Roche's acquisition of Genentech). Again this year it seems that you'd rather vote on some categories and not others -- a hint for 2011? -- but at least you've managed to come to a consensus.

In short, everything's turning up Jersey in this year's contest, with Celgene apparently given a mandate to do as it pleases. But we're getting ahead of ourselves. The envelopes, please...


The IN VIVO Blog 2010 M&A Deal of the Year, with a shade over 50% of the vote, goes to Celgene/Abraxis, the $2.9 billion cash-and-stock-and-(whew!)-CVRs deal that puts Celgene deeply into solid tumors. Congratulations. Coming in second, with nearly 24%, is Abbott/Piramal, and third, with 18%, is Pfizer/King. No love for generics (Teva/Ratiopharm, 5%) or Endo's acquisition of Healthtronic (3%).

The IN VIVO Blog 2010 Alliance Deal of the Year, with a whopping 55% of the vote, goes to Celgene and Agios. This early-stage pact, in the area of cancer metabolism, was worth $130 million in upfront cash and equity payments and gives Celgene an option on Agios programs at the end of Phase I. Pfizer/Biocon was no slouch with nearly 32% of the vote, while four nominees were relegated to also-ran status: Abbott/Reata (7%), GSK/Amicus (2.5%), Pfizer/UCSF (3%) and Biogen/Knopp (less than 1%).

The IN VIVO Blog 2010 Exit/Financing Deal of the Year, with about 46.5% of the vote, goes to Ablexis. The mouse that roared! The company's June 2010 Series A from Third Rock and Pfizer Venture Investments twinned with its five-pharma consortium deal for its antibody discovery technology won the day in a well-qualified field. Incline took in 23%, Ironwood had 19%, and Castlight nearly 12%.

Thanks everyone for voting and if Celgene, Agios or Ablexis would care to make an acceptance speech, please contact us here.

Ideal Replacement for Sharfstein; Right Down the Hall at FDA

Josh Sharfstein's departure back to the friendly Democratic climes of Maryland left HHS management and FDA Commissioner Margaret Hamburg with a decidedly tough bill to fill.

Where do you find someone who (1) has expereince testifying on Capitol Hill, (2) does not incite more animosity from the GOP House investigators, (3) who understands the arcane inner workings of FDA recalls and enforcement authority (a current Congressional interest), (4) is viewed favorably by regulated industry, and (5) still embodies the qualities of diversity and activism espoused by the Democratic administration?

Luckily right in the commissioner's current staff. Hamburg has already recruited that individual previously and he currently holds a top position at FDA: John Taylor, Counselor to the Commissioner for the past 14 months.

Taylor was named acting principal deputy commissioner on the day of the official announcemnet of Sharfstein's departure to head the Maryland Department of Health. Taylor's first term is for 60 days.

Taylor has 20 years of working experience with FDA issues (four outside the agency working for Abbott, 2005-2007, and two with BIO, 2007-2009) and virtually a lifetime of understanding of the agency, having grown up in a family with long service to FDA.

Taylor has worked within FDA's chief counsel's office during the Bush I and Clinton Administrations (1991-1996), was a senior policy advisor to FDA Commissioner Jane Kenney. He stayed on into the Bush II administration and served in enforcement and regulatory affairs positions under Mark McClellan.

The expereince with McClellan and with former GOP Congressman Jim Greenwood (the head of BIO) gives him the type of GOP sponsors who may get him a more civil hearing on Capitol Hill than would have been been given to Sharfstein, a protege of California Democrat Henry Waxman.

Taylor is a great immediate choice. It may be hard to find someone better after 60 days.

Sharfstein Leaving FDA: What Does It Mean? Consider the Source

The news that FDA Deputy Commissioner Joshua Sharfstein is leaving the agency broke late yesterday, via a tweet by CQ HealthBeat. If you are wondering what it means for FDA, we suggest you consider the source.

Symbolically, we love the irony of a big FDA story breaking on social media, even as industry is growing increasingly impatient for formal guidance from the agency on the ground rules on engaging in social media based marketing.

Recall that Sharfstein's tenure began with a series of letters sent to biopharma companies citing sponsored links on Google. Those letters were in the works before Sharfstein joined FDA, but that nuance didn't much matter to marketing organizations who saw the warnings as setting up social media regulation as a defining issue for his tenure at FDA.

So it does seem appropriate that the end of Sharfstein's stint at FDA was announced on Twitter.

But more important, though, is who broke the story: Congressional Quarterly. That suggests that the place to start in thinking about the implications of Sharfstein's departure is on Capitol Hill.

Sharfstein's appointment as Maryland's Secretary of Health will be formally announced tomorrow, the very day that the new Republican Congress convenes.

The announcement will be made by Democratic Governor Martin O'Malley, who previously made Sharfstein Baltimore city health commissioner in 2006, when O'Malley was mayor.

But Sharfstein's public health background is less important here than his political background. He once served on the staff of Democratic Rep. Henry Waxman and also worked for Public Citizen. It was those Democratic bona fides that catapulted him into consideration for the commissioner post in the first place--and that also scared the heck out of plenty of industry folks who worried about a sharp change in direction at FDA.

It also made him a tempting target for score-settling in the new Congress, which has declared its intention to make oversight of the Obama Administration a key priority. Waxman, in particular, never really saw eye-to-eye with Incoming Oversight and Government Reform Committee Chairman Darryl Issa, who is promising subpoenas galore in 2011.

Call it triangulation if you want, or consider it simply a tactical move to present a lower profile to a hostile Congress, but we see Sharfstein's departure means first and foremost as a change in positioning for FDA facing the incoming Republican majority in the House.

After Delays, Merck Takes Cardiome Drug To Heart

After months of waiting on edge -- dare we say with its heart all a-flutter? -- Vancouver-based Cardiome Pharma said Dec. 29 that its partner Merck & Co. has "confirmed its plans for development" of an oral formulation of Cardiome's atrial fibrillation compound vernakalant.

Merck's decision gives Cardiome a lifeline it wasn't sure it had. Merck was supposed to start Phase III clinical trials in summer 2010, but those plans were delayed because Merck "continue[d] to optimize the clinical plan," Cardiome CEO Doug Janzen told analysts in August. Investors took that vague explanation with the same skepticism that greets a sports team owner's assurance that a troubled coach's job is safe; Cardiome's stock price lost nearly half its value in the three months following Janzen's description. (A setback in its injectable vernakalant program in October didn't help, either.)

Vernakalant, which would be used as maintenance therapy to prevent recurrence of AF in people with a history of the condition, is important for Merck, but it's crucial to Cardiome. The Canadians have no other notable mid-to-late-stage assets in their pipeline except for the IV formulation, which this summer received EU marketing authorization under the brand name Brinavess. In the US, where it is in Phase III trials, Astellas Pharma has development and commercial rights.

Janzen said in August that Merck was being "very, very thorough," "thoughtful," and "big" -- a reasonable proposition, he said, given the $250 million estimated price tag of a late-stage global cardiovascular program and the number of internal committee reviews a behemoth requires for even a modest change of course. After all, the asset had survived the gauntlet of Merck's internal review after its acquisition of Schering-Plough.

Now Cardiome says in a release that Merck has completed another review and that "we [at Cardiome] look forward to working with them as they advance the vernakalant (oral) program to maximize its potential." The release didn't elaborate on what those next steps will be, but Janzen has previously observed that Merck is looking only for a first-in-class, best-in-class compound, so its trials will have to demonstrate superior heart rhythm maintenance to Sanofi's Multaq, against which it will compete. "That is the question to ask and will likely be the basis of the clinical program," he said at a Piper Jaffray conference in New York in December. Whether that program would include an outcomes study or head-to-head clinical trials, isn't clear - but that could be where the clinical program is headed.

Image courtesy of flickr user Vintage Collective (lots of other cool stuff, too; check out the samurai frogs).

Out of the Blue, Roche Grabs Marcadia

If at first you don't succeed, buy buy again. That could be Roche's diabetes motto these days.

The Swiss drug and diagnostic giant told our Pink Sheet colleagues Wednesday, Dec. 29 it has agreed to buy Marcadia Biotech, a private Indiana outfit that has already struck a couple Big Pharma partnerships, most recently licensing a preclinical glucagon analog to neighbor Eli Lilly & Co. for use in an injector pen.

Marcadia's lead program MAR701, a GLP-1/GIP dual agonist, is in Phase I, so it has a long way to go to replace what was Roche's most advanced experimental diabetes asset, the Phase III taspoglutide. Roche pulled the plug on trials of the drug earlier this year. At a conference in October, Roche's top clinical executive for metabolism Anders Svensson said insurers have set a much higher bar for Type-2 diabetes drugs, and that developers must do more than just demonstrate glycemic control: "For now diabetes is not nearly as attractive as it was a couple of years ago."

No financial details were forthcoming about the Marcadia buyout. We'll have to wait until Roche's next quarterly earnings call, a spokesman said. But "The Pink Sheet" Daily has more on the story, including reaction from Kelly Close, an industry consultant who first reported the merger in her newsletter. -- Lisa LaMotta

Photo courtesy of flickrer Rutger de Moddertukker.

Post-Christmas Pain

There was more bad news on Dec. 27 for those developing anti-nerve growth factor (NGF) drugs: U.S regulators put Regeneron's candidate REGN475, in development with Sanofi-Aventis, on hold late last week, Regeneron said in a regulatory filing Monday.

The latest setback for an NGF inhibitor was triggered by a patient in another company's trial developing a serious bone disorder, known as avascular necrosis. It's caused when a lack of blood supply causes bone tissue to die.

Following similar concerns around other NGF-targeting drugs in 2010, it's no surprise that by now FDA believes the whole class of drugs could be unsafe. Regeneron says as much in its filing: "The FDA believes this additional case provides evidence to suggest a class-effect." No word yet if or when REGN475, also known as SAR164877, will get a green light, but Regeneron noted that there are no current trials of the drug either enrolling or recruiting patients.

Trials in osteoarthritis pain of Pfizer's anti-NGF candidate tanezumab, believed to have been the most advanced in development, were put in hold in June 2010 following FDA concerns that a number of patients' osteoarthritis symptoms were worsening, rather than improving. In some cases this led to joint replacements. Because of the hold, Pfizer terminated most of its tanezumab trials earlier this year, but it is pressing on with two trials to study the drug, one in combination with opioid medication, the other as a standalone treatment in patients with chronic pancreatitis, according to clinicaltrials.gov.

None of this will provide much Yuletide cheer to the likes of Abbott, which paid a whopping $170 million up-front for PanGenetics' Phase I anti-NGF antibody last year, or AstraZeneca, whose MedImmune subsidiary has a Phase I stage anti-NGF antibody for osteoarthritic pain in the knee. J&J picked up a similar candidate from Amgen in 2008. [UPDATE: AZ and J&J have in fact suspended their programs, reports Bloomberg.]

Also in the pain domain but more positive was the news that King Pharmaceuticals and Pain Therapeutics' re-submission of abuse-resistant oxycodone (Remoxy) was accepted by FDA. This time, Pfizer will be pleased: it has agreed to buy King for a cool $3.6 billion.

Image by flikrer johnnyalive used under a creative commons license.

DOTW: Santa Baby Edition

Santa baby, slip an NDA under the tree for me,
It’s been such a transformative year
Santa baby, so hurry down the chimney tonight.

Santa baby, we’ll take some convertible debt – I bet
We’ll roll it into a Series B before long
Santa baby, so hurry down the chimney tonight

Think of all the M&As!
Are IPOs a choice for biotech pure-plays?
Next year, the milestones will come
An exit by earnout, baby, that’s the new way.

Santa baby, our ex-US rights we’ll shop, you’ll drop
Cash upfront plus biobucks
Santa baby, so hurry down the chimney tonight!



IN VIVO Blog's Deals of the Week crew wishes you a happy and healthy 2011. In the meantime, sign your X on the line just like Eartha says, and point your sleigh toward...

Pfizer / Lpath: If you're on an L-path, and you cross two bridges, you arrive at Pfizer. That's this week's DOTW Zen koan. First, grasshopper, the deal: Pfizer paid the San Diego biotech $14 million for an option for worldwide rights to its Phase I wet AMD antibody Isonep, and it will split costs of upcoming Phase Ib and IIa trials. Pfizer will then have an undisclosed period of time to decide if it wants to fully take over Isonep. If it does, it will pay an undisclosed option fee, plus milestones up to $497.5 million and tiered double-digit sales royalties. Pfizer also gets a time-limited right of first refusal to another antibody Asonep, which Lpath plans to move into a pair of Phase IIa trials next year. During a call Dec. 21, Lpath CEO Scott Pancoast said Pfizer would have roughly two to three years to decide whether it wants to acquire the cancer candidate. Oh, the bridges? The first was a National Cancer Institute "Bridge" grant Lpath received in 2009, a new form of small-business grant to help life science companies make headway on translational projects and reach the clinic. The second was a $5 million private placement (7 million shares at 70 cents each) Lpath announced in November. Each investor also got two-year warrants to buy half again as many shares as they bought in the placement. Lpath's closing share price Dec. 22 was $1.02. -- Alex Lash

Biogen/Neurimmune: Neurimmune received its Christmas present early this year, but will investors? On Dec. 21 came news the Swiss biotech was selling three preclinical neurodegenerative programs to Biogen Idec for $32.5 million upfront and another $395 million in milestone payments. As part of the deal Biogen takes on responsibility for all further development—and importantly cost—for the compounds, which target the neurotoxic proteins alpha-synuclein, tau, and TDP-43. If Biogen seems enamored with Neurimmune’s proprietary Reverse Translational Medicine platform (this is the second time its inked a deal with Neurimmune), it’s a sure bet the biotech’s founders, Karsten Henco and Edward Stuart of HS Life Sciences aren’t complaining. The two gentlemen staked the company with $6 million nearly four years ago, and haven’t had to put in another dime, letting the partnerships fund the company’s growth. (Now that’s capital efficiency.) IN VIVO couldn’t determine if Neurimmune will pull a Knopp and return cash to Messieurs Henco and Stuart, but, by itself, the Dec. 21 upfront would seem to yield a tidy exit. Meantime, the deal is in keeping with Biogen Idec’s strategy of “focused diversification,” pretty words suggesting the company’s desire to amass capacity in areas closely related to its historical strength in multiple sclerosis. Alas, the very early nature of Neuroimmune assets means they can’t do anything to help Biogen, which is overly dependent on franchise products Avonex and Tysabri, from a revenue stand point. The need for additional marketed or very late stage clinical products suggests Biogen, which is in the process of hiring a new head of corporate development, could be on the prowl for bigger deals. It would be good to start 2011 off with a strong DOTY candidate, wouldn’t it?—Ellen Licking

GlaxoSmithKline/Proximagen: Santa baby, just slip an alpha-7 nicotinic acetylcholine receptor modulator under the tree for me. (Okay, so the rhyme scheme doesn’t really work.) We interrupt Santa’s mad dash around the globe to report a big pharma out-licensing event. Despite all the highfalutin talk about the need to balance the internal R&D spend with financing from external partners, big pharmas haven’t really demonstrated a willingness to out-license. GlaxoSmithKline, which spun out two investigational pain products into a new CNS company called Convergence Pharmaceuticals earlier this year, is one notable exception. This week comes news it’s out-licensing two development programs targeting cognition disorders and Parkinson’s disease to the British biotech Proximagen. Even though GSK notified the biopharma community in February that it was exiting certain CNS areas like depression, anxiety, and pain, it sounds like the asset transfer wasn’t for the faint of heart. According to “The Pink Sheet” DAILY, it still took nearly a year for Proximagen to get the compounds, which are positive allosteric modulators of the alpha-7 nicotinic acetylcholine and dopamine D1 receptors, out of the big pharma.Financial terms of the deal weren’t disclosed.--EL

Sanofi/Ascendis: Sanofi continues its bid to become an end-to-end player in the diabetes space, inking a drug delivery deal this week with specialty player Ascendis Pharma. The global licensing and patent transfer agreement gives Sanofi access to Ascendis’TransCon Linker and Hydrogel carrier technology, which are designed to release molecules in the body in a precise, time-controlled fashion without the initial burst and high drug load that can come with other formulations. That would, of course, be a real boon in creating a better version of insulin. Sanofi currently has a lock on the long-acting insulin market with its juggernaut Lantus, but Novo Nordisk is giving the company a run for its money with competitor Degludec. Formulation changes to improve Lantus’ delivery would be one means of extending the life cycle of one of Sanofi’s most important products—and the only one not facing near-term patent expiration. The strategy also borrows a page out of Novo’s playbook. The Danish firm has used a strategy of incremental large molecule innovation to build its dominant position in insulin.--EL

Pfizer/Phylogica: Australian peptide drug discovery specialist Phylogica has struck its third licensing deal in the past year, agreeing to allow Pfizer to discover peptide-based vaccines using its proprietary platform. Pfizer will pay just $500,000 upfront for the license, but downstream payments, options and royalties of undisclosed size could potentially drive the deal’s value as high as $134 million. Founded in 2001, the Perth-based company has also signed separate licensing agreements with Roche and AstraZeneca’s Medimmune subsidiary. The Roche deal covers a mechanism allowing large molecules to attack disease targets inside of cells, while the MedImmune deal addresses antimicrobial peptides that attack the Gram-negative bacterium Pseudomonas aeruginosa. The latter deal, revealed in August 2010, includes a small upfront commitment of just $750,000 plus a 12-month commitment that will double that amount.—PB

Gilead/Arresto: Gilead Sciences took a step beyond its traditional focus in infectious disease by acquiring Palo Alto, CA-based Arresto Biosciences, which is developing disease-modifying drugs that target extracellular enzymes to treat fibrotic disease and cancer. The deal’s price tag is a robust $225 million and includes potential earn-outs; that’s striking in a period when pharmas have shown a greater interest in alliances than acquisitions and is also notable given the development stage of Arresto’s assets. Arresto’s lead candidate is a Phase I drug for idiopathic pulmonary fibrosis, a condition in which the lungs become scarred for unknown reasons. If approved, its compound AB0024 would be the first biologic drug for the condition, currently treated only through lung transplants. This is an area Gilead knows well, having spent considerable time trying to develop its own medicine in the space, Letairis (ambrisentan). Did Saint Nick arrive with the Arresto acquisition in the nick of time? On Dec. 22, after the market’s close, Gilead announced it was scuppering development of Phase III Letairis, which only slows disease progression but doesn’t address its root cause. Arresto, which is three years old has raised an undisclosed amount from a syndicate of backers including Kleiner Perkins Caufield & Byers, HealthCare Ventures, Northgate Capital, DAG Ventures, and Abbott Biotech Ventures.--PB


Pfizer / Adolor: The name is supposed to mean "without pain," but after this week you could read it with a melancholy sigh: Ah, dolor. In its latest setback, Adolor said in a regulatory filing Dec. 21 Pfizer would sever ties three years after it licensed rights to two of Adolor's pain programs, ADL5859 and ADL5747. The termination is effective March 2011. Pfizer said during its R&D day Sept. 27 that '5859 was among several drugs it was dropping from its pipeline, but there was no mention of '5747. Still, the writing has been on the wall since June, when the companies reported disappointing Phase IIa results for both delta opioid receptor programs in osteoarthritis. Neither drug performed better than placebo. Originally signed in December 2007, the deal called for $30 million upfront, nearly $2 million in immediate R&D reimbursement, and up to $232.5 million in milestones for the two programs. The first payment was due at the start of Phase IIb trials. Adolor was responsible for development through Phase IIa, and in for the US market could look forward to a reasonable split of costs and revenues -- 60% for Pfizer, 40% for Adolor -- plus a co-promote option. For the rest of the world, Pfizer had full rights, with sales royalties going to Adolor. – AL

AstraZeneca/Abbott Laboratories: Nothing like burying bad news in the slow days ahead of a holiday. Abbott and partner AZ, which hasn’t had much good news to report recently, announced Dec. 22 that they have decided to discontinue the development of Certriad (rosuvastatin calcium and fenofibric acid), and will unwind their licensing and co-development agreement in January 2011. Certriad is a combination pill that brings together AstraZeneca's statin Crestor and Abbott's fibrate TriLipix and is meant to lower bad cholesterol and improve good cholesterol in patients at risk of heart disease. The companies said the decision was made “after careful review and consideration” of the “complete response” that was handed down by FDA in March 2010. Little information about the complete response was given to shareholders at the time of its issue, but analysts at Leerink Swan speculated a “worst-case scenario in which the FDA might require more long-term data” was a possibility. Adding credence to this assertion, AstraZeneca said in its Dec. 22 statement that “development of Certriad is no longer commercially attractive.”—Lisa LaMotta

And the 2010 M&A DOTY Nominees Are ...

OK, IN VIVO blog readers, it's time to have your say. We've supplied the nominations but YOU will decide the winners. Once again we've created a special page so you can vote on all three categories in one place. Remember you much click on the "VOTE" button in each individual category--Alliance, M&A, and Exit/Financing--to record your choices.

CLICK HERE TO GO TO THE VOTING BOOTH.

Below, in no particular order, are the nominees for IVB's 2010 M&A Deal of the Year!

ENDO/HEALTHTRONIC: This acquisition, which was the first of a 2010 Endo buying spree that eventually led to an uptick in the company's share price, illustrates how pharma needs to change given physician access grows tougher and differentiation may come by offering a continuum of products. The $258 million deal moved Endo from pain to pelvic health, adding about $185 million in annual revenues, and a new asset in a deal that is immediately accretive. Most importantly, it allows Endo to combine drugs, devices, and services in an area far less competitive than pain, providing the company new skill sets as health care reform and concerns about cost of treatment increasingly factor into strategic decision making. Read our full nomination post here.

PFIZER/KING: Pfizer's October acquisition of pain play King Pharmaceuticals for $3.3 billion takes advantage of the near-unique size and scale that will allow it to play virtually anywhere it likes in the pharmaceutical space. It illustrates one possible future for Pfizer's business development strategy (the era of the bolt-on deal) while at the same time highlighting abuse-resistant opioids, a class of drugs at the center of commercial and regulatory brouhaha. Of course Pfizer also gets King's auto-injectors and animal health businesses, further helping it diversify. But in addition to the resources necessary to drive forward those abuse-resistant opioids like Remoxy, it's King's specialty marketing sales force that can now go off and market some of Pfizer's pain franchise and the added heft Pfizer's primary care reps can give to some of King's portfolio that really drives this deal. Read our full nomination post here.

TEVA/RATIOPHARM: Germany's number-two generics firm had been up for sale since January 2009, following Adolf Merckle's suicide. There were believed to be three suitors, Pfizer, Actavis and Teva. Given Teva's ambitious growth plans and its very weak position in Germany, the largest European market, it's easy to see why the Israeli group did stump up $4.9 billion for the booty, including $820 million in debt--exceeding analysts' expectations, and apparently also exceeding what even Pfizer was willing to pay. Teva needed to solidify its position in the European generics sector, where it promised sales would increase to $9 billion from just over $5 billion in 2009. Read our full nomination post here.

ABBOTT/PIRAMAL: Abbott's whopping $3.72 billlion ($2.1 billion in cash) May 2010 deal to buy the branded generics business of Piramal Healthcare boasts a valuation that is an unheard of: nine-times sales and 31 times earnings. The deal, which put India's fourth largest pharma company under Abbott's wing, has kept global biopharma tongues wagging for months about over-heated valuations in emerging markets, and in particular, of course, India, as well as Big Pharma's true long-term intentions in Asia versus their short-term opportunistic motivations. It catapulted Abbott, which until last year could be diagnosed as emerging-markets deficient, into the number one spot in India. That's a steep climb from 2009, when it barely cracked the high teens, and puts it ahead of MNC India virtuosos like GSK and Sanofi. Abbott's move changed not only Abbott, however, but the entire Indian pharmaceutical landscape forever. Read our full nomination post here.

CELGENE/ABRAXIS: Celgene hasn't been shy about striking creative deals. The $2.9 billion cash and stock acquisition of Abraxis Bioscience fits that mold. After building its bona fides in liquid tumors with Thalomid (thalidomide) and the now-blockbuster Revlimid (lenalidomide), the New Jersey firm is spending nearly $3 billion to expand into solid tumors, an aggressive move at a time when retrenchment (Biogen Idec), reorganization (Genentech, via its parent Roche), desperate defense (Genzyme) and urgent reinvention (Amgen) are the main trends for big biotechs. In late 2007, Celgene's dealmakers high-stepped into the spotlight after years of relative silence, and they haven't relinquished the stage. The Abraxis deal, dollar-wise, is Celgene's largest yet, gaining it the breast cancer drug Abraxane. It's a modest seller so far -- $360 million in 2009 revenue -- but Celgene sees promise in other solid tumor indications, including a potential submission for use in non-small cell lung cancer in the first half of 2011, and that and other Abraxane progress is linked to significant CVRs. Read our full nomination post here.

And the 2010 Alliance DOTY Nominees Are ...

OK, IN VIVO blog readers, it's time to have your say. We've supplied the nominations but YOU will decide the winners. Once again we've created a special page so you can vote on all three categories in one place. Remember you much click on the "VOTE" button in each individual category--Alliance, M&A, and Exit/Financing--to record your choices.

CLICK HERE TO GO TO THE VOTING BOOTH.

Below, in no particular order, are the nominees for IVB's 2010 Alliance Deal of the Year!


ABBOTT/REATA: Abbott Labs agreed to pay $450 million up-front for non-US, non-Asia rights to the Reata's bardoxolone for chronic kidney disease. In connection with the Abbott transaction Reata has doled out some of that record-breaking upfront to investors who've poured $178 million into the company since its formation in 2002. Just based on the sheer size of the deal's upfront payment, Abbott/Reata deserve a Deal of the Year nod. But there's more about the tie-up that piques our interest. Not least, Abbott has proven itself to be an adventurous biopharma dealmaker and could well reach the podium in more than one category this year. Moreover at a time when industry seems to be scrambling for quality assets and belt-tightening at every opportunity, it's exciting to be reminded that there are drug candidates out there that generate significant interest because of their potential to change the course of disease and define new treatment paradigms. Read our full nomination post here.

CELGENE/AGIOS: In exchange for $130 million in upfront cash and equity investment, Agios, one of the leaders in a happening scientific space called cancer metabolism, gives Celgene an exclusive option to develop any drugs resulting from its research platform at the end of Phase I. Celgene can extend the exclusivity period – if Agios agrees – but it will have to provide additional funding for the privilege. On each program Celgene licenses, Agios could receive up to $120 million in milestones, as well as royalties on sales. It's the latest on big-bro-little-bro dealmaking; note that Agios remains the one running the discovery and early translational work until an option is exercised--and the biotech has a say if Celgene wants to delay bringing a program in house. Read our full nomination post here.

PFIZER/BIOCON: The terms are pretty plain vanilla - Pfizer pays $200M upfront to Indian biotech Biocon and an additional $150M in development and regulatory milestones, plus payments tied to commercialization. In exchange, it gets rights to sell Biocon's portfolio of biosimilar insulins throughout most of the world. While the structure of Pfizer/Biocon is quite traditional, the concept is anything but. Indeed, the union of these two companies is, in fact, blatantly ambitious and could have far reaching implications. It demostrates a new way of doing business for pharma, touching on an battery of industry hot topics: biosimilars, pricing flexibility, diversification and emerging markets. Read our full nomination post here.

GSK/AMICUS: Faced with slack pipelines and increasing payor demands, big pharma CEOs spouted the words "niche" and "orphan" more often then "primary care" and "blockbuster" this year (though they have been biting their tongues behind the scenes or crossing their fingers behind their back). Nonetheless, GSK has gone beyond talk with action on the deal-making front, even creating a business unit exclusively devoted to rare diseases back in February. GSK's alliance with Amicus, announced in October, is the big pharma's fifth in the rare disease space in just over 12 months, and it also involves the latest-stage candidate of the bunch. Under the deal, GSK gains worldwide rights to the Phase III Fabry disease treatment Amigal (migalastat HCI), a potential first oral treatment for the genetic disease. Read our full nomination post here.

PFIZER/UCSF: Pfizer's five-year, $85 million commitment to fund academic research at UCSF is the company's latest and largest push into the so-called Valley of Death that lies between the university laboratory and the commercial sector. Like other Big Pharmas, Pfizer has inked deals with universities before, and even established a presence on UCSF's campus when it launched its Biotherapeutics & Bioinnovation Center in 2008. Still, the new UCSF deal is a more expensive, closer-knit arrangement. For Pfizer, the agreement offers access to research at the point of creation, joint ownership of drug candidates (thought to be split 50-50 with UCSF), and options to develop compounds internally after Phase I trials are completed. The university will receive royalties or other payments as the drugs march bravely toward commercialization, while also receiving a view into Pfizer's library of antibodies, reagents and other compounds. Read our full nomination post here.

BIOGEN/KNOPP: It's not necessarily how much, but what Knopp will do with, the money. Biogen Idec paid $80 million upfront -- $20 million as a fee and $60 million in equity -- for worldwide rights to KNS-760704 (dexpramipexole), which had hit its primary endpoint in a Phase II trial for ALS. Dexpramiprexole came with orphan designation in both the US and Europe, and fast track FDA status. Milestones to Knopp could add up to $265 million more, as well as tiered, double-digit royalties on worldwide sales. $80 million was more than Knopp needed for its ongoing operations, so it planned to return extra cash to investors -- a mix of low-profile institutional investors, angels and foundations. But it was no exit or share buyback, according to Knopp. Instead the investors who got the distribution kept all their equity: in essence, a one-off dividend. Read our full nomination post here.