Biosimilars: Dead Before They Really Got Started?

That was a conclusion that it was possible -- even feasible -- to draw after listening to several of the sessions at the European Generics Association's International Symposium on Biosimilar Medicines in London last week.

Most overtly, it was a suggestion by Alan Sheppard, Principal and generics expert at IMS Health. After showering the audience with numbers, he concluded -- albeit with the caveat that this was his personal view, not IMS'-- that, "as we move towards modified biologics, it may be nearly the end for biosimilars already."

You'd think that with billions of dollars' worth of patent expiries happening now or due before the end of 2012 and the rash of austerity drives by payers across the globe, it would be biosimilars' hey-day. They're copies of those most expensive biologics, after all. And those biologies are what's helping push the global drugs bill up and up -- by about $50 billion each year.

But no. Global biosimilar sales might have doubled each year since 2007, but the global market was still worth only $235 million in mid-2010, according to IMS. And in the one example of a biosimilar capturing decent (60%) market share, EPO in Germany, "it looks as if penetration may be slowing off," Sheppard ventured. Meanwhile, biosimilar growth hormone in Germany just hasn't happened: with less than 4% market share, it has been a failure.

"If I'm absolutely honest, people are disappointed," admitted a former senior executive at Teva during coffee.

Some of the problems are well-known. Lack of interchangeability is probably the most significant: if pharmacists can't automatically substitute an originator drug with a biosimilar, it means doctors need to actively prescribe biosimilars. Most don't feel confident doing so. "At the moment, biosimilars create uncertainty in the doctor's office. Innovator drugs offer a solution. Biosimilars don't have that clear advantage, and actually, they may carry some unknown risk," given the limited trial results supporting their use, relative to that of the innovator drug. That was the view of Arnold Vulto, a practicing pharmacists and Deputy Head Hospital Pharmacy at Erasmus University Medical Center in Rotterdam, Holland.

His point: doctors need reliable and accessible information, particularly around proof of bioequivalence, to change their minds. That information is missing, for now.

Meanwhile, originators have got their act together and are busy launching life-cycle managed enhancements to their drugs -- new delivery pens or longer-acting versions.

They're also enjoying biosimilars' effective lock-out of the US, where the regulatory pathway remains unusable, Sanford Berstein analyst Ronny Gal reminded the audience in London. That' because it's so easy for originators to sue hapless biosimilar firms for infringement, thus blocking approval for up to 42 months -- however shaky the infringement claim may be.

And Europe hasn't escaped the lawsuits either: Norway, a land of low drug prices, embraced biosimilars enthusiastically, adding biosimilar filgrastim to its automatic substitution list in mid-2010. The country's health department had, via a hospital tender system, secured a price for the biosimilar copy that was less than a third of that of the original, Amgen's Neupogen. But Amgen sued -- and was successful, in part because the country's laws aren't sufficiently up to date, according to Steinar Madsen, Medical Director at the Norwegian Medicines Agency. The health department will shortly decide whether to appeal the decision.

Madsen reported that Norway's doctors -- like those elsewhere across Europe -- want to see interchangeability studies, proving the drugs' safety even through several switches backwards and forwards, and robust pharmacovigilance tracking systems. New European-wide pharmacovigilance legislation will help a bit.

But fundamentally, said Madsen -- a doctor himself -- the only way to increase biosimilars' market share is reduce the influence of doctors, and allow insurers to tender for the cheapest drugs and ensure they are used from the start of treatment. "EMA should modify their position that choice [of treatment] should be left to the doctor," he declared.

That's hardly likely. But all is not lost. The generics proponents are waiting for the next, they say far more valuable chapter in biosimilars' short history: antibodies. "Biosimilar antibodies have far more potential than this first round of drugs," the former Teva executive told The In Vivo Blog. They'll go into less competitive markets than the likes of growth hormone, GCSF and EPO, and will thus support higher prices," he said.

Given their complexity, mAb lookalikes are hardly going to coast past the regulators, though, nor past those uncertain doctors seeking a reason to prescribe. Still, the tough reality of health care economics -- plus the commitment of large players like Teva, Sandoz and Merck, who continue to invest despite the challenges -- mean we haven't seen the last of biosimilars yet.

image by flikrer TuTuWoN used under creative commons

Deals Of The Week: Moving On

Finally. The months of waiting are over. (No, we aren’t talking about the Phillies’ attempt to dominate in the National League (it's a long season); or, in the AL, the rise of the Cleveland Indians.) We are referring instead to the resolution of one of the major overhangs to the 2009 Merck/Schering Plough reverse merger: ownership of distribution rights to the juggernaut rheumatoid arthritis franchise Remicade/Simponi.

Just in time for the quarterly earnings show (it’s nice to have something positive to talk about, isn’t it?), Merck and J&J settled their ongoing dispute. The terms of the agreement require Merck to relinquish marketing rights in three territories comprising 30% of total Remicade/Simponi sales: Canada; Central and South America; and the Middle East, Africa, and APAC. The resolution, which also requires Merck to make a one-time $500 million payment to J&J, means the Whitehouse Station, NJ-based drug maker will forgo an estimated $900 million in ongoing sales in these regions. In territories where Merck retains marketing rights—EU, Turkey, and Russia—its profit share of the drug drops from 58% to 50% this July, instead of the more gradual decrease outlined under the original Schering/J&J alliance.

Analysts covering both Merck and J&J reacted positively to the news, albeit for different reasons. For Merck, the settlement takes off the table a bothersome question that has routinely cropped up on quarterly calls and lets Merck begin to spin a more positive story. Analysts anticipate that narrative to include a dividend hike to offset some of the recent negative clinical trials results and potentially, a spin-off of the consumer biz, which includes the Coppertone and Dr. Scholl’s brands. (Hey, it’s hip these days to copy BMS and shed business units outside the innovative core.)

For J&J, the 50/50 profit split in the territories retained by Merck is a bonus, and you can’t deny the allure of cold hard cash. Morgan Stanley analysts predict the resolution will be roughly 2 to 2.5% accretive to 2014 earnings per share. (Don't forget, though, about other tailwinds affecting J&J, including the dilution it took to acquire 100% of Crucell.)

With J&J and Merck moving on to more important matters (Merck: Pipeline! J&J: Quality Control and a Synthes acquisition(?)), it’s time for IN VIVO Blog to get going with another edition of…

Axcan Pharma/Mpex Pharmaceuticals: Privately-held specialty pharma Axcan will buy Mpex for an undisclosed amount, the firms announced April 14. The deal, which contains an unspecified upfront and milestone payments, gives Montreal-based Axcan full rights to Aeroquin, Mpex's lead product, a proprietary aerosol formulation of the antibiotic levofloxacin in Phase III trials for the treatment of pulmonary infections in patients with cystic fibrosis. It's one of several antimicrobials currently in the late-stage pipeline for CF patients; as a group, these anti-infectives have been the subject of recent regulatory debate over endpoints. The companies said Axcan would spin out all Mpex assets not associated with Aeroquin into a new company that will remain in San Diego, Mpex's hometown. Mpex's investors include Investor Growth Capital, which led the firm's $40 million Series D round in 2009, SV Life Sciences, RiverVest Venture Partners, and others. The deal comes two months after Axcan completed its $583 million takeover of Eurand, a Belgian specialty firm that last year celebrated the approval of its lead product, an enzyme replacement treatment of exocrine pancreatic insufficiency. -- Alex Lash

BiogenIdec/Amunix: Any doubts about Biogen’s ongoing commitment to the hemophilia space, look no further than this week’s research collaboration with Mountain View, Ca.-based start-up Amunix. Founded by serial entrepreneur William “Pim” Stemmer, Amunix uses its proprietary protein engineering technology to create longer-acting versions of clinically validated molecules. Biogen, of course, has been talking up its “focused diversification” strategy, bolting on capabilities in neurology outside its MS warhorses Tysabri and Avonex, even as it sheds its oncology assets. But Biogen’s nearest opportunity to diversify is via its recombinant protein therapies to treat hemophilia A and B, respectively in Phase II and III trials. Biogen’s molecules have significantly longer half-lives than competing marketed products and offer a significant dosing advantage over current standard-of-care that’s likely to be well received by patients, physicians, and payors. But that also means the big biotech must make sure its late-stage products aren’t obsolete when a new technology allows for the creation of even longer-acting molecules. Hence the tie-up with Amunix. No financial deets were disclosed, but the two firms are jointly conducting preclinical research, with Biogen paying an upfront plus R&D funding in exchange for clinical development, manufacturing, and commercialization rights of any therapeutic candidates. Amunix also stands to receive future milestones and royalty payments. -- EFL

Debiopharm Group/Aurigene Discovery Technology: A long-running research collaboration between the Lausanne, Switzerland-based developer Debiopharm and India’s Aurigene has yielded a promising approach to an undisclosed target in oncology. This week Debiopharm licensed worldwide development and commercialization rights to the lead compound, named Debio 1142, with plans to take it through clinical development and registration before outlicensing to an interested drug maker. Financial details were not disclosed, but Aurigene will receive milestone payments as the compound progresses. The stated plan is right in line with Debiopharm's usual business model. For example, it in-licensed oxaliplatin from Japan’s Nagoya City University, relicensing the product to Sanofi-Aventis for sale as Eloxatin. It’s also a variation on the European specialty pharma model that seems to be working well for Debiopharm. (See the April IN VIVO for more on various models in play.) -- John Davis

Daiichi/Pieris: Privately-held Pieris announced Tuesday, April 12 a two-target partnership with Tokyo-based Daiichi Sankyo. It is the latest in a string of alliances the German firm has inked to demonstrate the utility of its proprietary anticalin scaffolding technology. As part of the deal, Daiichi agreed to pay more than €7 million ($10 million) upfront for worldwide rights to two undisclosed targets, as well as dedicated research funding and milestones that could reach €200 million if both products reach the market. The Japanese pharma will also pay tiered “mid- to mid-high” single digit royalties on sales of any compounds that result. While the structure and limited scope of the Daiichi deal hews closely to Pieris' previous deals, the biotech’s CEO Stephen Yoder told “The Pink Sheet” DAILY that these alliances are designed to showcase the wide potential of the platform. Alliances are important, of course, but they don't provide Pieris' backers with an exit. Next-generation protein players such as Domantis, GlycArt, and GlycoFi were gobbled up during 2006 and 2007 thanks to a wave of biotech M&A as big drug firms attempted to strengthen their biologics capabilities. Since then, however, licensing deals have become the preferred transaction type, making an exit by acquisition more difficult. Since its inception in 2001, Pieris has raised €45 million in cash from a syndicate that includes OrbiMed Advisors, Novo Nordisk Biotech Fund, Global Life Science Ventures, Gilde Healthcare Partners, and Forbion Capital Partners. -- EFL

Endo/American Medical Systems: Valeant’s dogged pursuit of Cephalon is just one example of the anti-R&D movement at work within the biopharma industry. This week comes news of another deal exemplifying the trend: Endo’s $2.9 billion acquisition of urology device specialist American Medical Systems. The proposed deal represents a 34% premium over AMS' April 8 closing price, and it's three times the device maker’s 2010 sales of $538 million. Once dependent on Lidoderm (lidocaine 5% patch) for revenues, Endo has undergone a makeover under CEO David Holveck. Since he took the helm of Endo in 2008, the company has completed four acquisitions, all to position the company as a diversified healthcare solutions provider focused on pelvic disorders and pain: Qualitest Pharmaceuticals ($1.2 billion); Penwest Pharmaceuticals ($168 million); HealthTronics ($223 million); and Indevus Pharmaceuticals ($370 million). The acquisition of AMS is Endo's largest yet, and it substantially alters the company's portfolio and reinforces its commitment to devices, which sets Endo apart from other specialty players of a similar size who haven’t sought this kind of diversification. More and more, drug makers have been talking about moving into the device space as the traditional pharmaceutical R&D model has come under increasing pressure, in part because devices, at least historically, have shorter, less expensive product development time lines, as well as favorable pricing and reimbursement. The grass is always greener. -- Wendy Diller & Jessica Merrill

Takeda/Heptares: Takeda, which has targeted new central nervous system drugs as a core therapeutic research area, entered into a back-end loaded research collaboration April 11 with U.K. biotech Heptares Therapeutics to characterize a G-protein coupled receptor (GPCR) believed to play a role in CNS disorders. Takeda will pay $7.4 million in upfront cash and equity to Heptares, and milestone payments of up to $100 million, plus royalties on product sales. The tie-up is Takeda's second research collaboration in CNS this year. In March, the Japanese pharma agreed with New York-based Intra-Cellular Therapies to co-develop phosphodiesterase type 1 inhibitors for cognitive impairment associated with schizophrenia, in a $500 million-plus deal. In October 2010, Takeda signed a deal with Jupiter, Fla.-based Envoy Therapeutics to research new schizophrenia therapies. In the current two-year deal, Heptares' technology will be used to stabilize and characterize an unnamed GPCR thought to be important in CNS disorders but intractable to approaches to make it “druggable." Takeda researchers then will collaborate with Heptares researchers on generating leads, and the Japanese company will assume responsibility for preclinical and clinical development of any new drug candidates. The Takeda collaboration is Heptares’ second big pharma partnership, showing that its ability to go after difficult targets –- the so-called high hanging fruit –- is a strategy that can pay off. -- JD

Image courtesy of flickrer themonnie used with permission through a creative commons license

Bill Clinton: Pharma Got a "Good Deal" in Health Reform

Bill Clinton, the man who once called drug manufacturers "profiteers" literally in their own territory, got two standing ovations at the PhRMA annual meeting in Jersey City.

We checked, and we hadn't entered a vortex in the time-space continuum. The applause was real.

The warm reception may be a marker of the political balance the drug industry has achieved by working with Democrats on passing the Patient Protection & Affordable Care Act (PPACA)-a perception that was helped along with Clinton following one of the rising stars of the Republican Party, New Jersey Governor Chris Christie.

The former President of the United States tackled wide ranging topics—energy, poverty, healthcare reform, Walmart, the economy, climate control, and even subatomic particles.

Clinton praised the drug industry for going first in negotiating with the White House on the healthcare deal. How did the industry fare in its measured risk?

"I thought that a good deal was made by pharma in the health care bill because you gave up a few billion dollars after the Mckinsey study came out three or four years ago saying that in the US we paid approx $66 bil. a year more than we would pay in any other country, including other countries with vigorous pharmaceutical industries," Clinton said. PhRMA Chairman and Sanofi-Aventis CEO Chris Viehbacher would later note: “We were the first ones to come to the table.”

The analysis in question found that the US overpaid for brand drugs by 77% compared to the rest of the world, when the premium should be around 30%. The report findings were used as a frequent talking point at town hall meetings by the President in the buildup to the passage of healthcare reform.

Clinton keyed in on a number of Obama’s proposals in his long-term deficit reduction plan, which included government price negotiation and/or rebates in Medicare Part D; reducing market exclusivity for biologics; prohibitions on “pay for delay” patent settlements; and increased power for the Independent Payment Advisory Board for Medicare (IPAB) due to new cost-containment triggers.

“I can understand why you’re opposed to what the President said,” Clinton added. “But my argument to you is the same argument that I made to my friends involved with the White House: if you don’t like it, come up with a counter proposal.”

The former President cast the healthcare challenges facing the country, as well as other problems, as an issue of systems. He said in the developing world there is an absence of systems, whereas in developed countries such as the US, we are continuously trying to remake our existing systems.

“In the developed world, we have exactly the reverse problem. We have systems. America built the greatest scientific establishment in the world and you were a part of it. It’s part of the reason I’m here giving this speech and not under the ground somewhere being visited by a tourist.”

Specifically citing Medicare and general health care spending, Clinton said “we’ve got a lot of out of whack systems.”

He explained the US spends 17.2% of its gross domestic product on health care, while many other nations spend a significantly smaller percentage. Clinton cited Switzerland as a health system, basically a publicly funded system delivered by the private sector that offers supplemental services as well, that spends roughly 11.5% of its GDP; conservatives have frequently cited the Swiss system as a model for the US. “Incidentally, the Swiss plan is most like the one Hillary and I proposed in 1993-1994.”

While Clinton demonstrated his intellectual flexibility, he also put his political, scene-stealing skills, purposefully or not, on full display.

After Christie's address, which was very well received by the audience, the lights went down and an introductory video with music came on while Christie was still on stage thanking his gracious hosts. Then Clinton took his time appearing on the stage. Why? He was chatting with Governor Christie.

He then joked that he was going to say some nice things about Governor Christie but given the current vitriolic political environment, it would only help to dim his future in politics.

Clinton was scheduled to speak from 10:30 to 11:10 in the morning. His remarks ended at around 11:50am, leaving about 10 minutes for the next panel, which featured a number of high profile industry scientific experts, including AstraZeneca President of R&D Martin Mackay and Alkermes CEO Richard Pops.

Financings of the Fortnight Knocks on a Boutique Door

To the chagrin of many, the biggest banks emerged from the recession not just intact but with engines full throttle and little fear of a yellow flag from regulators. The bulge bracket is a few members smaller, what with the demise of Bear Stearns and Lehman Bros., but no less powerful. But biotech has always leaned on the vitality of smaller banks, the boutiques, to help raise cash and find deal partners. So when FOTF heard that under-the-radar bank GCA Savvian, the product of the 2007 merger of a Japanese M&A advisory firm and a San Francisco boutique, had hired West Coast health care banking veteran Cabot Brown, we decided to check in.

As he takes the helm of the global health care practice at the 225-person firm, Brown says his group will rely on M&A for two thirds of its business. Two thirds will also be US, one third overseas, and half of clients will be on the private side. The split between pharma, device and diagnostics is about 30/30/20, says Brown, with the rest in IT and services. In other words, he'll be spending much of his time trying to find buyers for US venture-funded drug and device companies. There will be financings, too, but probably not IPOs. There was a glimmer of hope at the dawn of the new year, Brown says, but first quarter activity fizzled. A company with a clever approach to a big therapeutic category might get investor attention, but "as a routine course of financing a business and realizing value, no one I know is counting on the IPO market." When companies get out, he says, "it's a matter of luck and circumstance."

Brown says "people are also wising up" to the important threshold of $300 million in market capitalization, below which it's tough for a company to tap into the "virtuous circle" of attention from institutional investors and analysts. Only three venture-backed US drug firms that have gone public since the window re-opened in late 2009 have market caps over $200 million, and only Ironwood Pharmaceuticals is north of $1 billion. Even if IPOs return, Brown isn't sure the boutiques can make a viable business from them, as the bulge bracket banks so thoroughly dominate. "The chance you'll get more than 30% of the economics underwriting a deal is zero," he says, which means helping take companies public is a loss-leader for boutiques, he says.

The sorry state of institutional venture means more room for corporate VCs. "With one thing I'm working on now, the lead investor is a corporate investor who will invest on same terms as other investors. The corporate VCs sense weakness in the venture community, and the corporate business-development people see venture as a way to demonstrate action" to their higher-ups, says Brown. "It's a lot easier to go to your board and say 'I know I shouldn't buy things, but I need a window on important innovations.' It's allowing activity to continue in a risk-adjusted way."

Even when buying, big firms are generally doing so tactically, not strategically. In other words, without much long-term vision. Marching orders boil down to "we've got a few holes to fill, go fill them, but don't get caught up in filling the pipeline two years out," says Brown. "We say to potential buyers, look at your business two or three years out and think about how this asset fits in, and they say, 'Great analysis, but I don't care.'"

When we discuss the frustration of VCs, such as Avalon's Kevin Kinsella, who accused Big Pharma of "predatory business practices," Brown holds a certain amount of sympathy for the Big Pharma BD people. "The news comes that another 15,000 were just fired, and you're asking me to spend time on a high-risk, very interesting, early-stage therapeutic company that may or may not be useful in our pipeline, which itself may or may not exist in two months. Am I being a jerk if I drag my feet?"

Risk adjustment is everywhere. Another manifestation is earn-out heavy deals, already common in buyouts of private companies and spreading quickly to the public side, as our colleagues have noted frequently. "Earn-outs have always been there, especially for early stage deals, but now the ability for seller to say 'I'm only doing a full acquisition' is gone," says Brown. "This is a market where venture funds are under pressure to get realizations. Financings are dear. People have to be pragmatic."

How much pressure are VCs feeling? "There are a number of firms not raising their next fund, or one a quarter size of the previous fund, or quietly saying no new investments, just focusing on their current portfolio. They're hanging in with the assets they want to support, looking for a good outcome, but they're not going to support companies at the bottom of the portfolio, and it's happening to a much greater extent than I've ever seen," says Brown.

No surprise that emerging markets and product diversification are squarely on Brown's radar. He cites Endo Pharmaceutical Holdings' $2.9 billion buyout of American Medical Systems, a urology device maker, as part of a "bold and distinctive strategy." FOTF asked if taking over a firm with deep Japanese roots in the wake of the earthquake and tsunami has changed his outlook or strategy. He noted that the shock to the country's infrastructure could spur Japanese drug firms, aggressive the past few years with international expansion, to be even more so. Mostly, though, he was struck by his colleagues' demeanor, "the Japanese version of the British 'stiff upper lip,'" he says.

Our show, too, must go on. Or, as they say in Japan, 頑張る("Ganbaru"). Welcome to another edition of...

Ascletis: Lately some well-connected entrepreneurs have avoided taking VC money, opting instead for large angel rounds in which wealthy individual investors stand in for institutional ones. The biggest deal yet of that kind belongs to Ascletis, which raised a $100 million Series A to build a pharma company that will split operations between the U.S. and China. Real estate billionaire Jinxing Qi led the first $50 million tranche alongside other unnamed individuals. Ascletis will aim to develop and commercialize drugs in a two-way pipeline, in-licensing pharmaceuticals to seek approval, manufacturing and commercialization in China while discovering and developing new compounds that can be partnered out for global sales. Although its current eight-person staff is centered in Chapel Hill, N.C., CEO Jinzi Wu anticipates that about 80% of Ascletis’ scientists will eventually be based in Hangzhou, China. Not every U.S.-Chinese hybrid company has taken off -- LEAD Pharmaceuticals, for example, sold for a disappointing $18 million up-front last year -- but Ascletis and its investors are betting that China’s burgeoning life-sciences talent pool and booming middle-class spending power will bring it success. The company hopes to in-license a drug for sale in China, likely for cancer or infectious disease, within five years. -- Paul Bonanos

Blueprint Medicines: While Ascletis preferred hands-off investors, oncology startup Blueprint is working with the most hands-on variety. Third Rock Ventures, known for its intensive guidance of its portfolio, incubated the company and provided all of its $40 million in Series A money. The deal is Third Rock’s largest first-round funding ever and its latest commitment to cancer research, following investments in such companies as Constellation Pharmaceuticals and Agios Pharmaceuticals. Blueprint’s lofty goal is to screen for molecular mutations, genetic translocations or other aberrations that lead to various cancers, then develop drugs such as kinase inhibitors that can be linked to patients with those traits or resistances to existing drugs. Ideally, those drugs would follow in the footsteps of Gleevec (imatinib), which turned chronic myeloid leukemia into a manageable condition. With that in mind, Blueprint has hired Gleevec’s discoverers, Nicholas Lydon and Brian Druker, for its scientific advisory board. Blueprint says it will use proprietary software and both public and private data sets to compare normal and diseased tissue and build its own chemical library in search of drug candidates. It hopes to choose a preclinical candidate before seeking additional funding, which could include a Series B round with new investors. Third Rock made another investment this week as well, leading an $18.3 million Series B for bladder disorder specialist Taris Biomedical alongside existing backers Flagship Ventures, Flybridge Capital Partners and Polaris Venture Partners. -- P.B.

Tranzyme: Five months after filing its S-1, GI- and metabolic-focused Tranzyme completed its IPO on April 4, grossing $54 million. The company sold 13.5 million shares at $4, a steep discount to the $11 to $13 price range it had planned, continuing a trend that we've seen since the IPO window re-opened in late 2009: companies squeezing through but only by taking drastic haircuts. In its 13-year history Tranzyme raised more than $73 million privately from backers including HIG Ventures, Thomas, McNerney & Partners, Quaker BioVentures, and BDC Venture Capital, and it has secured a pocketful of partnerships, thanks in large part to the medicinal chemistry technologies gained through its 2003 acquisition of Neokimia. Tranzyme found Big Pharma validation for its MATCH (Macrocyclic Template Chemistry) platform, which enables creation of synthetic libraries of orally administered, drug-like, macrocyclic compounds, in its 2009 drug discovery deal with BMS. And the biotech recently partnered lead candidate ulimorelin (TZP101), an intravenous ghrelin receptor agonist in Phase III for postoperative ileus, with Dutch spec pharma Norgine, which received rights in Europe, Australia, New Zealand, the Middle East, South Africa, and North Africa in exchange for $8 million up front and up to $150 million in total milestones. Tranzyme reported 2010 revenues of $8.5 million and a $7.3 million net loss. Up next, perhaps, is specialty injectables firm Sagent Pharmaceuticals, which on April 6 set a goal of selling 5 million shares at $14 to $16 each. -- Amanda Micklus and Maureen Riordan

Royalty Pharma: We don't often highlight the funder instead of the fundee, but the private-equity fund Royalty Pharma said April 4 it has spent $487 million for the rights to royalty streams of two drugs, Lexiscan (regadenoson) and Cubicin (daptomycin), from the same undisclosed seller. We couldn't sleuth out the anonymous seller by press time, but we did find a whole bunch of intriguing connections. First, the cardiovascular imaging agent Lexiscan originally belonged to Astellas Pharma (then Fujisawa), which licensed North American rights to CV Therapeutics in 2000. CV sold 50% of those royalties, for $185mm, to TPG-Axon Capital in 2008. As you might remember, TPG-Axon ventured into project financing for two Eli Lilly Alzheimer's drugs, one of which, semagacestat, hit a late-stage clinical setback last fall. Gilead Sciences now owns Lexiscan after its $1.3 billion purchase of CV in 2009. The other drug in the Royalty Pharma deal, Cubicin, also has Gilead and Lilly connections. The antibiotic to treat drug-resistant staph infections was originated by Lilly, which licensed rights to Cubist Pharmaceuticals in 1997. In 2001, Gilead licensed exclusive rights to commercialize Cubicin (then known as Cidecin) in 16 European countries, but the deal was terminated a year later. Also worth noting: Royalty and Gilead know each other, having joined up in 2005 to pay $525 million for Emory University's royalty rights to the antiretroviral drug Emtriva (emtricitabine). -- Maureen Riordan

Updated 04/15/2011 (1:30pm). In a previous version of this post, IN VIVO Blog incorrectly identified Third Rock as a backer of Epizyme. We regret the error.

Image courtesy of flickr user B€rn@rd.

N.J. Governor Christie: "A Friend of This Industry"

We knew there was a reason the Pharmaceutical Research & Manufacturers wanted to hold their annual meeting in Jersey City.

New Jersey Governor Chris Christie received a friendly welcome from attendees at the PhRMA meeting, as the governor himself admitted that he was a man amongst friends.

Christie started his address at the PhRMA meeting by saying he was "a friend of this industry" and citing 46,500 thousand individuals employed by the state in the biopharmaceutical industry. Christie was not so subtle about keeping and attracting companies to New Jersey: he highlighted the need to get the "government's foot off the neck of businesses" in the state and that he was proposing hundreds of millions in incentives and breaks for businesses in his budget.

Christie used Bayer as an example of a drug manufacturer moving to New Jersey from neighboring New York "because they understand they have a governorship who will listen." (New York, incidentally, has a Democratic governor.)

Moreover, Christie boasted, regulations on business are down by one-third if one compares the first year of his administration to the last year of the previous administration.

Christie also tried to marry his everyday challenges with those facing biopharma executives making tough strategic choices. For example, Christie explained when he came into office, he received New Jersey cash flow charts "except they didn't look like your cash flow charts...we literally were not going to make payroll for the second pay period of March." He added: "We were literally killing the goose that laid the golden egg." It was an "I feel your pain" moment out of the Bill Clinton playbook (who spoke directly after Christie).

The governor characterized New Jersey as a leader in the movement to cut out-of-control spending, saying the state had cut more public service jobs than any other in the country. He went back to healthcare costs to make his point several times, for example, saying he believed public employees have to pay for 30% of their medical coverage costs. "I believe you have to have skin in the game."

Having cut a deal to support health care reform with billions in new rebates, discounts and fees, PhRMA certainly understands that last point.--By Ramsey Baghdadi

Regulatory Risk Remains a Key Theme for Biopharma CEOs in 2011

The Pharmaceutical Research & Manufacturers of America annual meeting kicked off today in Jersey City with the address by Chairman Christopher Viehbacher, whose day job is CEO of Sanofi-Aventis.

Viehbacher cited a number of challenges facing the drug industry, but made it a point to emphasize up top that "regulatory risk" isamong the steepest hurdles biopharmaceutical companies are encountering in the US.

He specifically mentioned FDA and the importance of the fifth reauthorization of the prescription drug user fee act (PDUFA), which is currently being negotiated. Viehbacher said the science behind pharmaceutical and biologic medicines is advancing rapidly. "We need to have a regulatory process that can keep pace with that," Viehbacher remarked. "We need some predictability."

To bring home the point, Viehbacher recounted a meeting between Eli Lilly CEO John Lechleiter and President Barack Obama, where Lechleiter made clear to the President that one of the primary issues holding research and development and innovation is heightened regulatory risk in the US.

Viehbacher's address carried a more sobering tone than some of the more recent chairman's remarks to the trade group annual meeting, when healthcare reform was gaining momentum at different phases in the life, death, and resurrection of the legislation. For example, he highlighted the impact on state budgets of implementing the reform law, global economic uncertainty (noting half jokingly that the credit rating agency Moody's may have more sway over the success of biopharma than any other single factor), and using pharma as a target with deep pockets to cut the deficit.

"Are they going to go after an industry that they see as fat and rich?" Viehbacher asked rhetorically.

He noted Obama's signature speech on deficit reduction and said it contained a number of initiatives that will be "detrimental" to research and development.

Viehbacher said PhRMA will focus on Three Ts going forward: transparency, truth, and trust. "We have allies. We don't have them everywhere and we don't have a lot of them but we have them. They're not going to be interested in earnings per share." --By Ramsey Baghdadi

DOTW: Passing The Hat

The potential impending government shut-down is the top no-deal of the week as Republicans and Dems struggle with the “c” word. (Compromise is such an adult concept.)But the fall-out from a work stoppage could have real consequences for the drug industry, and not just in the much-discussed delayed food and drug inspections.

As FDA Law Blog spelled out in early March, the practices put in place at the Food and Drug Administration during last year’s Snowmageddon may become the operating standard if a government shutdown causes the agency to furlough a significant number of its 13,000 workers.

Bare minimum, submissions received during the closure are likely not to be marked as “received”, which could delay the time ticking on the regulatory clock. Pending PDUFA and MDUFU decisions would also be extended; that’s, bad news for companies expecting decisions near term such as Eisai and Pfizer (who are expecting a regulatory decision on their transdermal version of Aricept), Shire (Lialda), Horizon Pharma (HZT-501), and Sanofi-Aventis (Menactra). (For more on the potential impact, keep an eye out for coverage from Pink Sheet colleagues, and breaking analysis on the blog.)

This has IN VIVO Blog wondering if it should pass the hat; sadly we don’t exactly have a budget either. Perhaps we can get big tobacco to sponsor? After all, of FDA’s nine centers, only the 275-person Center for Tobacco Products will continue to be fully operational during a shut down since it’s funded by user fees paid by tobacco manufacturers and importers.

In the interim, we never resort to stop-gap measures, somehow finding a way to profile deal makers who--at least this week-- won’t have to sing “Brother Can You Spare A Dime”. It’s time for your favorite Friday column...

Vertex/the Cystic Fibrosis Foundation: Vertex is one company that doesn’t need to pass the hat, pulling in a cool $75 million from the CFF as it expands one of the most successful public-private partnerships in existence. Since its founding, CFF has put hundreds of millions of dollars to work supporting industry R&D via its non-profit drug discovery affiliate, Cystic Fibrosis Foundation Therapeutics Inc. CFFT has worked directly with Vertex since 2001, when the biotech purchased Aurora Biosciences and its first-in-class CF therapy, VX-770. Recently reported positive results from two late-stage trials testing '770 have set the stage for an NDA submission later this year and show Vertex growing beyond its anti-viral bona fides. In the meantime, the latest tie-up is five year deal funding R&D activities related to two other early-stage CF drugs, VX-661 and VX-809, which work by a different mechanism than '770. Of the two, ‘809, which is already in Phase II trials is the furthest along. In return for its support, CFFT gains royalties on future net sales of drugs developed as part of the research collaboration. Despite reporting cash and cash equivalents of roughly $1 billion in its 2010 annual report, Vertex faces some big expenses as it gears up to launch its juggernaut Hep C treatment, telaprevir, in the coming months (the drug has a May 23 PDUFA date). Thus, without additional support from CFF, Vertex might have opted to reduce its R&D burn by developing ‘661 and ‘809 in series rather than simultaneously. Thanks to CFF, however, Phase II trials of ‘661 will commence later this year. The news is a reminder that venture philanthropy is alive and well, and it isn’t just private biotechs who want to avail themselves of all important non-dilutive financing.--EFL

Optimer/Cubist: Optimer, maker of the late stage Clostridium difficile therapy Dificid (fidaxomicin), announced a two-year co-promotion tie-up with Cubist Pharmaceuticals this week. The April 6 deal came one day after an FDA advisory panel backed approval of the drug, 13-0, based on its non-inferiority to vancomycin in producing an end-of-treatment cure. (The drug's PDUFA date is May 30.) After partnering Dificid rights in Europe and other territories earlier this year, it’s a fair bet this wasn’t necessarily the kind of partnering industry wags anticipated, with the most obvious alliance being a US-focused deal for a sizeable up-front that gave Optimer a future co-promotion option. Although the actual deal ensures Optimer retains significant ownership of the product, it means the biotech continues to shoulder significant costs too. As it works with Cubist to reach prescribers in the 1,100 hospitals where 70% of C. diff cases occur, Optimer will hire and train a 100-person sales team of its own. (Cubist, on the other hand, should be able to mobilize its existing crack team of Cubicin sales reps, with Dificid becoming yet another drug it can sell at the same call point.) For its efforts, Cubist will receive quarterly service fees of $3.75 million beginning after the first commercial sale of Dificid. The company is eligible to receive another $5 million in the first year after the first commercial sale and $12.5 million in the second year if annual sales targets are met, as well as a share of Optimer's gross profits from net sales above the annual sales target. – Cathy Dombrowski

Pfizer/Zacharon Pharmaceuticals: In the latest big-pharma grab for a tiny patient population, Pfizer has tapped startup Zacharon to collaborate on drugs to treat lysosomal storage disorders (LSDs), a family of rare diseases such as Fabry and Gaucher that have become the basis of big business and mega-deals. Pfizer and Zacharon didn’t disclose the deal’s upfront, but the total package could eventually bring the tiny biotech $210 million, the companies said April 7. As noted in this 2009 START-UP profile, the firm spun out of the Univeristy of California, San Diego with high-throughput screening technology for glycan-targeting small molecule candidates. The deal comes out of Pfizer's newly-formed orphan and genetic disease group, which is scrambling to catch up to Genzyme -- soon to be part of Sanofi-Aventis--and Shire. Pfizer's first big foray was a late 2009 partnership with Israeli firm Protalix BioTherapeutics, in which Pfizer paid $60 million upfront for commercial rights to Uplyso, a Gaucher's disease treatment, as well as access to Protalix's plant-based protein drug production. In February, the FDA declined to approve Uplyso, sending it back to Pfizer and Protalix for more data. In addition to developing drugs, Zacharon is working on a diagnostic tool with the Mayo Clinic to screen newborns for LSDs. The firm has received government grants and private investments, but the only institutional investor so far is Avalon Ventures, which provided a $3.5 million Series A round in 2008. How timely: Avalon and its preference for flying solo in early stage investments is the subject this month of START-UP's inaugural Capital Matters column.-- Alex Lash

Millennium/Biogen Idec/Sunesis Pharmaceuticals: In its first divestment since it pledged last November to get rid of its oncology programs, Biogen Idec transferred rights to two preclinical kinase inhibitors to Millennium, the US oncology subsidiary of Takeda Pharmaceutical. Announced April 5, the deal itself involves little money changing hands, at least publicly. The originator of the two compounds, Sunesis receives a $4 million payment from Millennium. Otherwise, the terms of the licensing deal Sunesis struck with Biogen Idec in 2004 stay about the same, with Millennium taking over from Biogen and responsible for up to $60 million in milestone payments to Sunesis for each compound. Millennium is compensating Biogen as well, but terms were not disclosed. The more advanced compound is a pan-RAF kinase inhibitor that has demonstrated anti-cancer activity in melanoma and other tumor models. In Millennium's hands the compound could begin a Phase I dose-escalation trial in patients with solid tumors this year, according to Sunesis CEO Daniel Swisher. Biogen Idec will keep working on the kinase inhibitors in immunology but has yet to conduct IND-enabling studies, Swisher said. Beyond the kinase inhibitors, Biogen still has a number of oncology compounds for out-licensing or a potential spin-out, including galiximab (originally developed by IDEC), volociximab (in-licensed from Protein Design Labs Inc. in 2006), and the HSP-90 inhibitor BIIB-021. For a recent look at Biogen's strategy see this January 2011 IN VIVO feature.--AL

Merck/Inspire: In one of its biggest deals and only its second acquisition since it bought Schering-Plough for $42 billion in 2009, Merck has agreed to pay $430 million in cash for the specialty pharma company Inspire Pharmaceuticals, the maker of Azasite for bacterial conjunctivitis and Restasis for dry eye At a price of $5 a share, a 26% premium to Inspire's closing stock price on April 4, the deal hardly breaks the bank for Merck—especially when Inspire's $94 million in cash holdings are taken into account. All told, Inspire had sales of $106 million in 2010, bringing the deal multiple to roughly four times sales. The boards of directors of both companies have approved the sale, and Warburg Pincus, the private equity firm that owns nearly 28% of Inspire, has also agreed to the deal. Warburg had invested $75 million into Inspire in July 2007, according to Elsevier's Strategic Transactions database. –Wendy Diller

SuperGen/Astex Therapeutics: On April 6, SuperGen announced it was buying private U.K group Astex Therapeutics in a cash and stock deal designed to create a cancer-focused group with over $120 million in cash, three Phase II pipeline assets and over $50 million in expected royalty revenues for 2011.SuperGen will pay Astex shareholders $25 million in up-front cash, and grant them 35% of the combined company's total shares post-closing. Given SuperGen's current market capitalization of about $200 million, and assuming this represents 65% of the new larger entity, the deal values Astex at about $100 million. Astex's backers will receive a further $30 million, to be paid in cash or stock, over the following 30 months. Although this money is guaranteed, according to Astex CEO and co-founder Harren Jhoti, its timing is linked to milestones within several of Astex's current drug discovery partnerships. As for the up-front cash component: it's roughly equivalent to the £17 million Astex held at the end of 2010. Thus, this deal doesn't represent a great return for Astex's VC backers, which include Abingworth, Advent International and Alta Partners. Astex has raised over £80 million in equity in the eleven years since its inception, according to Jhoti, but thanks to the company's successful partnering strategy, it hasn’t sought VC money since 2003. – Melanie Senior

Time to Retire “Post-Marketing”?

FDA’s recently published guidance on Post Marketing Studies and Clinical Trials is a study in the importance of the mot juste.

The guidance defines two crucially different regulatory concepts: (1) post-marketing commitments (or PMCs, but better known as Phase IV studies), which have long been a staple of the drug approval process; and (2) post-marketing requirements (or PMRs), studies that are mandated by FDA under authority granted to the agency in the FDA Amendments Act. The guidance also elucidates the differences between “studies” and “trials,” as FDA sees it, since Congress used those terms—apparently intentionally—to distinguish between two types of, um, studies.

We aren’t going to explain all of those differences here. (You can read the guidance here, and coverage in “The Pink Sheet” DAILY, here.)

Instead of asking whether these activities are called studies or trials or commitments or requirements, we want to know why they are called “post-marketing”?

That term has been around for a long time, and was useful in the regulatory context to distinguish between “pre-marketing” trials, where the only way to access the drug is on an experimental basis, and the fundamental question of risk vs. benefit has yet to be definitively answered. In that sense, the term “post-marketing” trials suggests that the goal is to gather new information about a product already deemed safe and effective in at least some patients.

But use of the term “post-marketing” has become standard to distinguish between essentially anything FDA does during a product review (“pre-approval”) and what it does after an application is approved.

That difference used to be crucial, since FDA’s post-approval powers were distinctly limited compared to the power to grant (or withhold) approval in the first place. Moreover, when Prescription Drug User Fees were created, they were explicitly not supposed to fund “post-marketing” activities.

That has all changed. First, user fees are now used for many post-approval activities. More importantly, FDAAA gave FDA a host of new authorities to regulate real world use of medicines (REMS are the most prominent, but also new authorities over advertising, the ability to dictate labeling changes, mandatory safety assessments of new molecules after 18 months, etc.).

Those authorities are routinely described as new “post-marketing” safety tools. Here’s the thing: what FDA is actually doing is regulating the marketing of drugs. There is nothing “post-” about it.

The semantics matter because the label “post-marketing” helps perpetuate the fiction that the commercial life of a product is somehow separate from its clinical development. R&D organizations embrace (however reluctantly) the notion that FDA is a key customer: a primary goal of the clinical development plan has to be to satisfy FDA’s always evolving expectations for benefits versus risks.

But commercial organizations too often view FDA’s role solely as that of a mere traffic cop. No marketer wants to run afoul of FDA’s rules, but few actually embrace the idea that what they do—marketing—is now irrevocably a part of the FDA regulatory structure.

The agency’s review of new drugs routinely involves consideration of risk management plans and the imposition of potentially onerous research obligations on sponsors. The line between “pre” and “post” just isn’t what it used to be.

So let’s stop talking about “post-marketing” authorities to describe FDA’s new reach into commercial activities. FDA is regulating marketing.

As a side benefit, that allows “post-marketing” fill a new niche: describing the part of the product lifecycle after a drug has been withdrawn from the market. Because, alas, one implication of the evolving regulatory model is that more and more products will eventually find themselves entering that phase.

Ascletis Takes $100mm To Span The Pacific

For all the new business opportunities China presents in the 21st Century, it's been difficult for start-ups to find a new pharma model that brings together the best aspects of Western expertise and Chinese growth. The latest, best-funded endeavor will come from newly-launched Ascletis Inc., with lofty goals and a massive $100 million Series A round to match its ambitions.

Ascletis hopes to fund a drug pipeline that eventually flows both in and out of China, according to CEO Jinzi Wu. For now, its North Carolina-based management team plans to in-license drugs to be approved and sold in the Chinese market, selectively choosing first-in-class opportunities in that country with a goal of bringing at least one drug to market within three to five years. Meanwhile, over the next two years, it plans to build a Hangzhou-based discovery team of about 100 scientists who will identify drug candidates that can be partnered globally. Ascletis will focus on oncology and infectious disease.

Interestingly, Ascletis has chosen to eschew working with traditional VCs, tapping angels to raise its mammoth first round, which will be delivered in two $50 million tranches. On the hook for a good chunk of the Series A is billionaire Chinese real estate mogul Jinxing Qi, co-founder and lead investor of the start-up. Via his firm Hangzhou Binjiang Investment Holding Co. Ltd., Qi has worked to pull in additional unidentified private backers from China, the U.S., and elsewhere.

Wu describes Qi's financial contribution as a gesture of trust, given the investor's relative lack of expertise in the life sciences, but says the arrangement also affords the start-up a longer growth timeline than it would have with comparatively impatient VCs, who might press for an exit after a few years. (That's an increasingly familiar sentiment as we noted in this recent Start-Up feature.) Ascletis won't rule out working with VCs eventually, but Wu says the company has cash to support five years of activities.

Formed initially in December, the still-tiny Ascletis has an eight-person staff, but could have 50 scientists on board a year from now, Wu says. Alongside Wu, a veteran of GlaxoSmithKline's HIV drug discovery team, are longtime Novartis drug discovery team member Emil Fu and ex-GSK chief scientist Jun Tang. Most of the new hires will be in China, with about 20% of staff remaining in Research Triangle Park, N.C.

Ascletis's emphasis on angels and the significant cash raised make the deal stand-out. But it's desire to be a hybrid East-West play echoes a model that remains attractive to investors wary of a China-only approach. Still despite the interest in the model (especially by VCs based in Europe and the U.S.), there are few successful examples to point to. In late 2007, California-based LEAD Therapeutics Inc. raised $17 million with the goal of using China-based scientists to discover new compounds. Last year, the company was sold to BioMarin for a disappointing $18 million up front, although an earn-out could add as much as $79 million to the deal. Other hybrid companies, none funded at Ascletis's scale, have operations underway as well: ChinaBio Therapeutics is seeking to in-license drugs for development by Chinese scientists, while NovaMed Pharmaceuticals has built sales and marketing infrastructure to bring drugs to China from outside the country.

Ascletis stands to receive the second tranche of its Series A when it needs resources to manufacture and market its first drug. In the meantime, the company if focused on adding staff in the U.S. and China and in-licensing its first compound. According to Wu, Ascletis is already kicking the tires on a Phase IIb drug in an unspecified area; given Wu's stated areas of interest that may mean HIV, tuberculosis or cancer. Whichever compound it licenses, it'll be a test for Ascletis' hybrid model, and a potential bellwether. We'll be watching.

Image from Flickr user Pingouino used under Creative Commons license.

SR One Posts Help Wanted Ad, Again

Wanted: Senior investor to oversee strategy for one of the largest -- and certainly the oldest -- biopharma corporate venture groups. Brand management and team building skills a must. May report directly to CEO--or not. (Details TBD.) Persons interested in a long term stint need not apply.

Admittedly, this isn't the kind of ad GlaxoSmithKline would actually publish as it searches -- yet again -- for a new head of its corporate venture group, SR One. But given the rapid turn-over in the top spot, senior investors might want to think twice before throwing their names into the ring for consideration.

It's hard to believe SR One isn't a mess. Just over a year after Russell Greig departed from the corporate venture group, comes the April 4th announcement that his successor, Christoph Westphal, is also jumping ship. Westphal is leaving to devote his energies to his other venture fund, Longwood Founders Fund, which announced an $86.9 million close in December 2010. In a statement, GSK's head of R&D Moncef Slaoui recognized Christoph's contributions, noting "he has brought an entrepreneur’s perspective to our thinking on venture capital investments and deals."

It's been a revolving door for SR One's leadership since 1999, when the group's original founder, Peter Sears departed. (If you are keeping tabs, in addition to Greig and Westphal, Brenda Gavin (now with Quaker Bioventures), Barbara Dalton (now with Pfizer Investment Group), Tamar Howson (currently at JSB-Partners), and Joyce Lonergan, have all held top honors at the firm over the years.)

Not that Westphal's departure is all that surprising. His tenure has been rife with controversy. First there was considerable debate about how the founder and former CEO of Sirtris could realistically wear two venture hats simultaneously, a potential conflict of interest that was explained away by the very different investment theses of the two groups. More problematic, however, have been Westphal's ties to the Healthy Lifespan Institute.

Founded in 2009, the non-profit group's mission is to educate the public about the aging process and research non-pharmaceutical approaches to living longer, healthier lives. But the Institute entered some very murky waters when it subsequently began selling a dietary supplement version of resveratrol, potentially undercutting GlaxoSmithKline, which thanks to its $720 million purchase of Sirtris in 2008 was developing a proprietary form of the compound, SRT501.

That compound has had it's own troubles, with the GSK division halting enrollment of new patients in a Phase II clinical trial testing the substance as potential multiple myeloma treatment (for more see here, here, and here).

The Healthy Lifespan debacle was a distraction SR One didn't need. Recall Wesphal's predecessor Greig was brought on in 2008 to remake SR One, ambitiously retooling the organization with a two-fold mission of making external investments while simultaneously spinning out start-ups founded around wholly owned GSK IP. It's a strategy SR One attempted--and failed to realize--in the past, but with Greig reporting directly to CEO Andrew Witty, industry wags thought a transformation was in the offing.

But with Westphal taking over last year, whatever retooling was underway seemed to come to a full stop. Back in October 2010 GSK announced the rare spin-out: After a portfolio cull, the big pharma jettisoned late stage pain and depression assets, working with VCs SV Life Sciences and New Leaf to form Convergence Pharmaceuticals. But SR One didn't play a role in the new co's creation; that honor goes to Simon Tate, previously a VP in GSK's Pain and Epilepsy Discovery Performance Unit (he's now CSO of Convergence), who took the idea for the spin-out, plus a letter of intent from outside VCs, directly to GSK's R&D Executive Committee.

Given spin-outs are notoriously hard to do, it's perhaps not surprising SR One hasn'tblazed a trail in this area. But it's not as if the VC has been on a dealmaking tear since Westphal became its leader. In 2010 SR One staked just three new companies, co-leading or leading the Series B financings of NeuroTherapeutics, Constellation Pharmaceuticals, and Semprus Bioscience Group. According to Elsevier's Strategic Transactions, the group has announced just one deal in 2011, participating in the $35 million Series B of vaccine developer Genocea Biosciences. (It was also a Series A backer.)

If Westphal's departure, which will come some time later this year, isn't surprising, it's probably also no accident. GSK, in the vanguard to improve big pharma R&D productivity via the creation of smaller, more biotech like units, is also remaking its business development team. Come April 18, Ian Tomlinson, currently head of Biopharmaceutical R&D, will take on the additional role as head of world-wide business development. (He'll be replacing long time SVP Ad Rawcliffe -- who also once helmed SR One -- who moves to a new role as head of finance for GSK's North American Pharmaceuticals business.)

It's a fair bet that Tomlinson, who also has entreprenuerial bona fides having co-founded the second-generation antibody play Domantis, may want to weigh in on who captains the SR One ship. With R&D and biz dev rapidly converging, it's natural to think SR One can operate in a strategic role bolstering the activities of the transactions team, making investments in early stage companies not yet ripe for traditional business development deals. Such investments give GSK an early look -- and potentially a deal-making IN (though that's controversial) -- into potentially important cutting edge technologies and/or drug targets.

At this juncture, more questions than answers swirl around the future of SR One. Will the group's modus operandi change yet again? (Maybe the stalwart will embrace the more new fangled option style financings best associated with Novartis' option fund, where in addition to equity there's also the potential for a licensing transaction.) Will it continue to report to Witty or, like most other corporate venture groups, report into either finance or the R&D organization? How should such a group support the external goals of GSK's changing business development team?

Clarity will hopefully come when a new leader is named later this year. Stay tuned.

Image courtesy of flickrer cote used with permission through a creative commons license.