2011 Exit/Financing of the Year Nominee: Eisai/SFJ Pharma

It's time for the IN VIVO Blog's Fourth Annual Deal of the Year! competition. This year we're once again presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (a half dozen in each category throughout December) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

With development budgets stretched, it's difficult for burn-minded companies to conduct multiple late-stage clinical trials simultaneously. Biopharma firms with promising assets can always try to find a partner to share the risk and widen the development funnel -- but that means giving up back end rewards. Unless of course you can find someone to foot the bill without asking for a slice of the commercial pie in return.

Enter this year's latest DOTY candidate, Eisai/SFJ.

In their deal announced in September, Eisai is handing the development bill on its thyroid cancer treatment lenvatinib to SFJ, which will pay for Phase III studies. Eisai will pay milestones to SFJ only if lenvatinib gains regulatory approval, and Eisai itself conducts the global trials and also keeps all commercial rights. The financial details weren't disclosed. Levantinib, a home-grown tyrosine kinase inhibitor, is one of Eisai's three oncology assets that have reached Phase III globally; the SFJ deal will allow Eisai to spend its own cash elsewhere in its late-stage pipeline.

Though SFJ isn't conducting the lenvatinib Phase III, it's a CRO itself, and presumably has a pretty good inkling that the drug will eventually get approved. Well, SFJ isn't a CRO, exactly, but nor is it typically simply an investor, as appears the case here. It bills itself as a specialty pharma, and it raised a $45 million Series A round in early 2009, with Abingworth Management and Clarus Ventures in the lead. It hopes to in-license drugs and bring them to market in Japan itself, but has not done so yet (or at least hasn't said so publicly). In its two deals prior to Eisai, SFJ has written the clinical protocol and is conducting the trials. Data from one were supposed to be due in December.

SFJ, which limits its development and commercialization ambitions to the Japanese market, was founded by a former executive at NovaQuest, the ex-financing arm of Quintiles. (It has since split off from Quintiles.) Quintiles has a risk-sharing deal with Eisai in oncology in which the two sides develop an unspecified number of Eisai compounds to proof-of-concept. We asked SFJ President and CEO Bob DeBenedetto about the NovaQuest/Quintiles influence, and he said SFJ's partnering terms and structures were different. But that hasn't prevented them from working together. DeBenedetto told the IN VIVO Blog recently that SFJ and Quintiles are teaming up on other pharma clinical deals for which SFJ provides the cash and the two conduct the trial.

Here, SFJ is again the bankroller, but Eisai holds the clinical reins. The deal -- a straight financing -- allows Eisai to boost the bandwidth of its late-stage development program in the highly competitive oncology space. SFJ is simply making what it hopes is a solid bet -- with a near-term payout.

2011 M&A of the Year Nominee: Abbott/Abbott Pharma

It's time for the IN VIVO Blog's Fourth Annual Deal of the Year! competition. This year we're once again presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (a half dozen in each category throughout December) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

When the IN VIVO Blog polled its readers on their preferred name for the newco drug company to be spun out of the break-up of Abbott, the hands-down favorite was Costello, the hapless, blimp-like other half of the comedy duo. Once again, Sagacious Reader, you have cut to the heart of matter: Who’s on first?
We’ll get to that in a moment. First, we want to note that the decision to bust up comes at an historic moment for the industry, and captures several of the issues that make CEOs and directors wake up at night in a cold sweat:

Diversification vs Focus. Focus is in. Diversification, not so much. Leading analysts have lately been beating the drum for diversified companies to unlock value by breaking up into pure-play splitcos. The valuation argument has its dissenters – Barbara Ryan (Deutsch Bank) isn’t persuaded that split-ups have made anyone much money, though she concedes it might make sense in Abbott’s case. As to which model best serves innovation, we note that the drug divisions of J&J and Roche, both diversified companies, outshine their peers; while BMS, the poster company for slimming down, has been delivering a superb pipeline.

 Portfolio Rationalization. Is anyone minding the store? CEO Miles White has acknowledged that the pharma company was masking the value of the device company, and that its Humira-driven growth had thrown the diversified giant’s balance out of whack. Apart from questions about the value and depth of Abbott’s later-stage pipeline, analysts have fastened on the extraordinary concentration risk posed by Humira which accounts for nearly half of the pharma unit’s $18 billion in annual sales. Jami Rubin of Goldman Sachs recommends diversifying away from that risk and several analysts believe the best route to that end is through a smart acquisition.

The Influence of the Street. Rubin, who’s been the most vocal of the breakup-to-unlock-value school, appears to be getting heard in the C-Suites and boardrooms of some pharmas. Which raises the question of whether the agenda of sell-side analysts should influence the strategy of large, research-based pharmaceutical companies.

The Allure of the East. Speaking of strategy, what more powerful force is there than emerging markets for redistributing capital, infrastructure, and operations across the globe? White was clear: the device company, which will include diagnostics and the established products business, faces eastward toward China, India, Russia, and Turkey, while the drug company “is very much a developed market game.” The established products business, which includes branded generics, will be the beneficiary of the emerging market synergies of the Piramal and Solvay acquisitions.

The Abbott break-up deserves the nomination because it marks the first time that a diversified healthcare company has spun off its pharmaceutical division. In the past such split offs have been the province of global chemical companies like Eastman Kodak, Du Pont, BASF (whose drug unit, Knoll, Abbott purchased to get Humira), and Akzo Nobel. It may also mark the ascendance of investor interest in devices – the biggest life science M&A of 2011 by a good margin was J&J’s acquisition of Synthes – over drugs.

At a recent industry conference in London sponsored by the Financial Times, Miles White had to fend off speculation that Abbott’s drug business might be on the block. We don’t hear anyone speculating that the device business will be for sale. Who’s on first? Ask Miles White.

2011 M&A Of the Year Nominee: Takeda/Nycomed

It's time for the IN VIVO Blog's Fourth Annual Deal of the Year! competition. This year we're once again presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (a half dozen in each category throughout December) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

Takeda's $13.7bn acquisition of privately-held Nycomed in May was a rich deal, both monetarily, and strategically. It allowed Takeda to tick off several of its strategic imperatives in one (expensive) swoop: jumpstarting an emerging markets presence, deepening a European footprint, fashionably diversifying the product mix to include OTC and branded generics, providing an immediate revenue- and income-boost and, not least, pepping up Takeda's stuffy corporate culture.

No wonder the Japanese group was happy to stump up over three-times Nycomed's revenues, to the deep satisfaction of Nycomed's private-equity backer Nordic Capital. Nordic had long been bent on an IPO for its Swiss-based protegee, but settled for quintupling its initial 2005 investment via M&A.

It's a deal that illustrates how M&A, for all its drawbacks, can, when properly engineered, help industry players out of tight corners. Takeda's typical in facing generic competition to its biggest drug, Actos. And despite prior internationalization moves, not least its 2008 purchase of Millennium, it was also still rather typically Japanese, with too much big-company conservativism.

Nycomed allowed Takeda to show investors once again that it could act decisively and win big prizes. This was the largest cross-border transaction by a Japanese company, and, although the borrowing requirements (Y600-700bn) prompted a credit-watch from ratings agencies, taking on debt makes sense in a low-interest environment.

Coming after months of negotiations and at least a week of press speculation, the deal multiplied Takeda's emerging markets sales by eight (sensible, in today's environment), lifted its European ranking from 29th to 18th (Europe still matters, despite its problems) and should, CEO Yasuchika Hasegawa promised, deliver $375m in annual cost savings after three years, and be EPS-accretive from year one.

Never mind the numbers, Nycomed provides its new owner with regulatory expertise and infrastructure across the globe, low-cost emerging markets manufacturing, and knowledge of how to tailor product mix to meet invidual market needs -- a very important skill as reimbursement hurdles rise, both nationally and regionally.

Takeda wanted to keep "as many as possible" of the key Nycomed people on board, in order to transfer those valuable skills, but it was hardly going to keep Nycomed CEO Hakan Bjorklund: he scooted off to join private equity firm Avista Capital Partners in October 2011.

So it's not all going to be smooth sailing. Daxas, the COPD drug that was ostensibly the branded jewel in Nycomed's crown, is coming up against reimbursement hurdles. It just got slammed by U.K. cost-benefit watchdog NICE which confirmed it wouldn't recommend public reimbursement for the drug, at least not without further trials.

But at least Takeda's sails are still up. Indeed, Nycomed's European and EM infrastructure appears crucial to the group's 2012 ambition to build a global vaccine division. Any deal that permits such progress, in today's stormy pharma world, deserves an accolade.

photo by cseward via flickr, used under creative commons license

Deals of the Week Ponders 13 Ways Of Looking At A Mockingbird

Like mockingbirds, biosimilars are emerging as some of the pharma industry's best mimics, but are different indeed from their patented predecessors -- and the business models they're evoking differ from those of traditional generics. Biologic copies of compounds losing patent exclusivity are poised to become big business. But, as IN VIVO's Melanie Senior noted in this November feature story, for a biosimilar to garner market share, its owners still need not only to provide compelling evidence of bioequivalence, but also to innovate in pricing, market, positioning, production and support. That's potentially making the biosimilar a bird of a different feather altogether.

As this week's dealmaking news whirled in the autumn winds, Biogen Idec became the latest pharma to forge an agreement around biosimilars, in this case with Korea's Samsung. This week's Pink Sheet explores the deal, which creates a Korea-based joint venture with $300 million in commitments from its parent companies. Just $45 million, or 15%, will come from Biogen, while Samsung will hold the remaining stake based on its $255 million investment.

As the IN VIVO feature explains, pharmas including Merck, Pfizer, Novartis and Teva that have already gotten into biosimilars have various ways of looking at the drug mimicry market. Biogen still may still be of multiple minds (three, perhaps, if the Stevens poem is any guide), as the JV won't be launched formally for another three months. Samsung, however, has already flown into the fray, pushing ahead with a biosimilar of Biogen's own Rituxan (rituximab) for rheumatoid arthritis and certain cancers, and has set up a contract manufacturing organization as part of a separate joint venture with Quintiles, which would provide services to any drugs that come out of the Biogen deal.

Samsung insists the Biogen JV won't develop any biosimilars for Biogen drugs, calling into question whether it will continue to pursue the Rituxan descendant now that the new arrangement is in place. Likely, it'd be far behind others: At least nine companies are already developing Rituxan biosimilars; one, Dr. Reddy's Laboratories, has already launched a product in Peru, Vietnam and the Middle East, while Korean biosimilar specialist Celltrion said last week it would begin trials on a Rituxan follower it's developing with Roche.

Others in Asia, such as Korea-based Hanwha and China's 3SBio, are continuing to develop biosimilars, and Japan's Kyowa Hakko Kirin and Fujifilm said last month that they would begin clinical trials on biosimilars beginning next year. Competition seems to be heating up, particularly in the Far East, for a subset of drugs that Morgan Stanley's David Risinger said in a research note could result in a mid-to-late-decade surge of interest in the U.S. With apologies to the great Wallace Stevens, the river is flowing; the mockingbird must be flying.

Biosimilars mark the edge of one of many circles. Read all about the others in this week's installment of...

J&J/Pharmacyclics: Sunnyvale, Calif.-basedsmall-molecule drug developer Pharmacyclics has partnered one of its most advanced programs, the Phase II cancer treatment PCI-32765, with Johnson &Johnson’s Janssen Biotech division. The arrangement brings Pharmacyclics an up-front payment of $150 million, but milestone payments could add $825 million to the deal’s value. An inhibitor of Bruton’s tyrosine kinase, thought to be useful in fighting hematological malignancies, PCI-32765 acts on the B-cellantigen receptor pathway. It’s currently being studied in chronic lymphocytic leukemia, non-Hodgkin lymphoma and multiple myeloma. The two companies will split development costs 60/40 in favor of Janssen, including the bills for multiple Phase III trials. If the drug is approved, Pharmacyclics will lead U.S. commercialization initiatives, while Janssen will take the lead outside the U.S.; the two will share profits and losses equally. The two companies will also create a shared governance structure to oversee development and commercialization. – Paul Bonanos 

AstraZeneca/Guangdong BeiKang: Biogen aside, at least one other pharma made a deeper move into Asia this week as well. A day after saying it would lay off 24% of its U.S. salesforce due to a “challenging environment,” AstraZeneca PLC indicated it would continue to invest in higher-growth markets like China by acquiring injectable generics maker Guangdong BeiKang Pharmaceutical Company Ltd. for an undisclosed amount. The deal gives AZ a portfolio of medicines for infections while demonstrating its commitment to selling locally manufactured, high-quality branded generics in China. Although the company also successfully sells several innovative therapies in China, including lung cancer treatment Iressa (gefitinib), AZ, like many multinationals, has focused primarily on the branded generics market segment thus far. The British pharma says the deal is part of a strategy to increase access and affordability of medications to Chinese patients, particularly ones who are currently underserved. The company appears to be reaching for rural areas and second-tier markets beyond the major cities along China's eastern seaboard; in a statement, it noted that 800 million Chinese citizens have limited access to treatments available more broadly in larger hospitals in China's major cities. AZ previously invested $200 million on a new plant in Taizhou, China, to manufacture intravenous and oral solid dosage branded generics.- Joshua Berlin 

AstraZeneca/MedicalResearch Council - AZ announced a separate deal closer to home as well. AZ and the U.K.’s Medical Research Council announced a collaboration Dec. 5 in which 22 compounds discovered by the pharma will be made available free of charge to U.K.-based academic researchers. MRC will manage the programon AZ’s behalf and solicit proposals to study the compounds in orderto explore new treatment opportunities. MRC will award grants totaling up to £10 million for projects of up to three years, the council explained in a call for proposals published on its website. AZ moved the compounds into clinical development but then de-prioritized them for varying reasons, a company spokesman explained. “The compounds will fall into two categories: those deemed suitable for both studies in patients and in preclinical models, and those likely to be restricted to preclinical research,” he said. If a researcher chosen by MRC succeeds in producing research AZ would like to continue, the pharma holds the right to collaborate with MRC researchers working on the company or take back the intellectual property it provided through collaboration. New IP developed by the researchers will be the property of the researchers. Perhaps the best-known of the compounds AZ is providing for the research is zibotentan (AZD4054), an endothelin A receptor antagonist, which the company advanced into Phase III in prostate cancer. It was among the late-stage programs the company said it had halted in 2010 due to poor Phase III results or rejection from regulatory bodies.—Joseph Haas 

BMS/J&J: Bristol-Myers Squibb and Johnson & Johnson plan to conquer the $30 billion hepatitis C market through an interferon-free combo of their respective compounds, Bristol’s NS5A replication complex inhibitor daclatasvir and J&J subsidiary Tibotec Pharmaceuticals’ NS3 protease inhibitor TMC435. The combo will be tested in a Phase II study of patients with genotype 1 hepatitis C, slated for early 2012, on their own and in conjunction with one or both parts of the current standard of care –ribavarin and pegylated-interferon. Terms of the collaboration were undisclosed. The tie-up follows news that Gilead has bought out biotech Pharmasset for $11 billion in an effort to get its hands on its mid-stage HCVcompound PSI-7977. Interferon-free combo regimens are thought to be the next frontier of treatment for the liver disease, since the current standard of care has severe side effects. Both daclatasvir and TMC-435 are being tested in combination with Pharmasset’s PSI-7977. - Lisa LaMotta 

Momenta/Virdante: Antibody developer Virdante Pharmaceuticals raised at least $30 million across multiple tranches of a Series A round during 2008 and 2009, but now has sold key intellectual property to publicly traded biotech Momenta Pharmaceuticals for just $4.5 million, and appears to be shutting down. The sale includes $47 million in potential milestones -- roughly the amount its Series A investors were said to have committed if the final tranche of Virdante's Series A round appeared. Momenta gets Virdante's Sialic Switch technology, originally developed at Rockefeller University and thought to allow regulation of anti-inflammatory protein activity. Virdante's Web site was unresponsive late Thursday, and the company was said to be winding down operations; its investors included Thomas McNerny & Partners, Osage Partners, MedImmune Ventures, Clarus Ventures, Venrock and Biogen Idec Ventures. - Paul Bonanos

Many thanks to Joseph Haas and Melanie Senior for their biosimilars reporting.

Mockingbird photo -- "my luckiest picture," according to Flickr user andymw91 -- reproduced under Creative Commons license.

Financings of the Fortnight Ponders The Twilight of the Eurozone

Three years past the downfall of Lehman Brothers, the defining seismic event of the U.S.-led recession, life-science venture capitalists are still weak-kneed from the aftershocks. Now walls are tumbling down in Europe as the Euro heads toward, well, no one knows exactly, but the "unthinkable" -- as Sofinnova Partners managing partner Antoine Papiernik calls a potential currency break-up -- is now imminently thinkable.

So where does that leave already beleaguered life-science VCs in Europe, only a few months after the landscape was starting to brighten? Our colleagues will examine that question in detail in this week's Pink Sheet. The outlook isn't good, unsurprisingly, but not everyone is stocking up on bottled water and canned beans. Take Papiernik, who says his firm is just starting to raise its seventh fund. The currency crisis matters less than the regulatory landscape, which in Europe is far more consistent than in the U.S, says Papiernik. “Never mind the Euro," he says. "We've lived through massive fluctuations in the dollar-euro exchange rate” but still made money. “The buyers [for our companies] will be there, whether they pay in dollars, Euros or even rubles.”

As in the U.S., some firms will carry on, raise cash, and find themselves with a wide-open field to invest in. But they'll still have to hold more in reserve for portfolio companies, because the specter of supporting them farther down the road looms large. Fewer VCs mean syndicates will need to forge iron-clad commitments for the long haul "so you don’t get stuck somewhere if the pharma partner doesn’t show up on time," says Regina Hodits of Wellington Partners.

Our European editor Melanie Senior will also examine whether pharma corporate funds will (or even should) ride to the rescue, either as direct investors in biotechs or as limited partners in venture funds. We've certainly seen more enter the fray sometimes in rather complicated ways, as our IN VIVO colleagues detailed here in a feature about the American Merck's corporate venture plans.

Or will governments plug the gap? Two new funds have made news this week. In the U.K., prime minister David Cameron popped in on the Financial Times' pharma conference to announce a £180 million ($280 million) biotech fund -- half of which is new cash, the other half drawn from previous research allocations -- to help both academicians and early-stage private companies take research across the so-called "valley of death" and into the clinic. (In the U.S. a like-minded scheme under the National Institutes of Health has awarded grants to 14 projects, both public and private; we'll profile it in START-UP's next Capital Matters column.)

EMBL Ventures also announced a new fund, with €40 million ($55 million) for the first closing. The German firm is mainly backed by the fund-of-funds ERP-EIF Dachfonds, which in turn gets its cash from the German government and other European Union sources.

Keep an eye out, too, for those looking to pick up the pieces others leave behind. Accountants at Ernst & Young told the FT in the story linked above that they're fielding questions about a possible euro-zone breakup from private equity financiers who see the disruption as a time to buy. There have already been glimmers of secondary activity in life-science venture, but nothing akin to the high-tech side, where private shares of Facebook and the like have spurred new exchanges.

Whether it's picking up pieces, spinning new cloth or folding up tents, you can find all the latest life-science VC moves in...

TopiVert: In straitened times, you have to use a tea bag twice. That, or something like it, is what Imperial Innovations and SV Life Sciences are doing by investing £8 million ($12.5 million) in TopiVert, a start-up created within Imperial College, London, that’s developing topical medicines for inflammatory diseases of the eye and gut. TopiVert has licensed IP developed at RespiVert, another of Imperial Innovation’s spin out companies, acquired by Johnson & Johnson in 2010. Imperial Innovations made nearly five times its money in three years from RespiVert, and hopes to do the same again this second time around. TopiVert will build on RespiVert's chemistry and clinical work on narrow spectrum kinase inhibitors (NSKIs), but seek to leverage these compounds’ potential in treating new therapeutic areas, allowing RespiVert to concentrate on respiratory and pulmonary disease. “It keeps the start-up atmosphere, and allows faster progress than in a larger organization,” noted Maina Bhaman, Director of Healthcare Investments at Innovations and a non-exec board director at TopiVert. RespiVert (and thus J&J) gets an undisclosed, uncontrolling stake in the new seedling in exchange for the IP. Innovations and SV Life Sciences have each committed £4m to TopiVert, tranched against undisclosed milestones. Innovations is among the ‘haves’ in Europe’s austere funding landscape, after raising £140 million in December 2010. It invested £35 million during 2010 and expects 2011’s total to be similar. As such, “we have another couple of years [of investment runway] at least,” noted CEO Susan Searle. But that, it seems, is no reason not to squeeze the most out of existing assets. -- Melanie Senior

Dendreon: After its launch flub, the maker of the prostate cancer immunotherapy Provenge said Dec. 6 it sold for $125 million the royalty rights to Hepatitis C drug Victrelis (boceprivir). CPPIB Credit Investments, a fund related to Canada's national pension plan, bought the rights, which stem from intellectual property Dendreon acquired in 2003 and later licensed to Schering-Plough. Merck & Co. bought Schering-Plough in 2009 and brought Victrelis to market, with FDA approval in May 2011. The royalty rate was not disclosed, but in a Dec. 6 note, ISI Group analyst Mark Schoenebaum estimated it to be 5.5%. The extra $125 million in Dendreon's coffers helps bridge the revenue gap the company revealed in its second-quarter earnings, which showed sales of $51 million and sparked a massive sell-off of shares. Third-quarter results were 30% higher, at $66 million, although $3 million of those came from the Victrelis royalties. Dendreon plans to submit a marketing application for Provenge in Europe early next year and contract out sales, though not necessarily strike a third-party deal for marketing rights. If Dendreon goes it alone in Europe, it remains to be seen if it will need to raise new funds for that effort. -- Alex Lash

Inhibitex: One of the more eagerly watched biotechs of the moment is Inhibitex, which has unveiled impressive Phase II efficacy data for its nucleoside polymerase inhibitor INX-189 in hepatitis C. With Gilead Sciences paying $11 billion last month to acquire Pharmasset, another clinical-stage virology biotech posting impressive mid-stage data with a “nuc” in HCV, market analysts have speculated that Inhibitex is a promising and lucrative buyout target. Investment house Brean Murray, Carret & Co. recently increased its target price for the stock from $4 to $10. On Nov. 29, the biotech announced it had raised just under $20 million in an “at-the-market” financing – a vehicle more common in the real estate arena, but which is seeing modest use by life sciences companies. In April, Inhibitex had raised $44 million in a follow-on public offering, moving 11.5 million shares at a price of $4.10. In its more recent ATM deal, it managed to sell 1.95 million shares at $10.25 each, under an arrangement with McNicoll, Lewis & Vlak LLC to sell registered shares into the open market from time to time under an effective shelf registration. ATM deals offer companies advantages such as a low distribution cost ranging between 1% and 3%, much lower than a typical follow-on financing. -- Joseph A. Haas

Celsion: Celsion, a cancer-focused biotech that recently moved its corporate headquarters from Maryland to New Jersey, raised $13.9 million in a private placement that closed on Dec. 6. But the offering pointedly did not include Celsion's largest shareholder, who has been agitating against the company in public filings. The additional funding is needed to continue Celsion's Phase III trial for Thermodox (a heat-activated liposomal encapsulation of chemotherapeutic doxorubicin) to a final analysis of 380 progression-free survival events in patients with primary liver cancer. Celsion, which had about $21 million in cash on hand at the end of the third quarter, had hoped mid-stage data would be sufficient to wrap up the trial early, but the Data Monitoring Committee could not halt the trial for efficacy based on 219 PFS events at an interim look. This led Celsion to announce the private placement Dec. 1 that would sell nearly 6.5 million new shares at $2.3125 a share, plus provide five-year warrants for another 3.24 million shares at an exercise price of $2.36 per share. The placement closed without the participation of Mangrove Partners, run by Nathaniel August. The day after it announced the placement, Celsion in a regulatory filing cited Mangrove's negative attitude and opinions of Celsion's performance. Celsion said it had offered to let Mangrove participate if it would sign a standstill agreement, but the parties "were unable to agree to terms," according to Celsion's filing. Celsion also said Mangrove had sought two seats on its board but said “it is in the best interests of the company and its stockholders at this time to maintain the current composition of the board and continue the company’s current strategic plan and direction.”-- JAH

Many thanks to Melanie Senior and John Davis for their help with this week's introduction.

Image under Creative Commons license, courtesy of flickrer Images_of_Money.

Exit/Financing of the Year Nominee: Radius Pharma

It's time for the IN VIVO Blog's Fourth Annual Deal of the Year! competition. This year we're once again presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (a half dozen in each category throughout December) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

It’s been a transformative year for Radius Health. The biotech is currently developing two formulations of a novel analog human parathyroid hormone-related protein that it hopes will supplant Eli Lilly’s Forteo (teriparatide) as the standard of care in postmenopausal osteoporosis. To finance those ambitions, the Cambridge, Mass.-based biotech laid the groundwork to reach the public markets in May through a reverse-merger with a listed shell, raised $57.3 million of a planned $91 million, three-tranche, cash-and-debt series C round, and eventually floated its shares on the OTCBB. (UPDATE: The rest of that $91 million was raised, the co announced 16 Dec.)

The company's maneuverings also give us a window onto the post-option biotech world, where biotech second-acts are in part defined by second-chance opportunities with once-partnered (or spoken-for) compounds. It's this vantage and the significant capital available for solid clinical opportunities, as much as the company's fundraising efforts, that earn Radius our nomination for financing of the year.

Radius's 2011 was set in motion years earlier, by Novartis’ 2009 decision to opt out of an opportunity to co-develop its hPHrP analog (BA058), an anabolic bone-building treatment that is in Phase III in injectable formulation and about to move into Phase II in a transdermal formulation. Novartis originally took an option to the program -- an early example of the now-common deal structure -- back in September 2007. That deal's financials were never fully disclosed, but future development, regulatory and commercialization milestones would have paid the small company upwards of $500 million. Instead, Novartis walked for what Radius calls "a strategic consideration," despite Phase II data that convinced Radius and its investors that pivotal trials were worth pursuing.

What Radius did next may be a roadmap for other companies who find themselves estranged from option-holding partners thanks at least in part to shifting tastes or strategic upheavals among industry's in-licensors.

Radius merged in May with MPM Acquisition Corp., an acquisition shell created by one of its venture capital backers, MPM Capital, putting its investors on an unusual path to liquidity. (Currently, the company offers stock on the OTC Bulletin Board and plans to apply for a Nasdaq listing in 2012.)

Concurrent with the reverse-merger, Radius raised $28.5 million in the first tranche of its C round from MPM and new investors BB Biotech AG, Brookside Capital, Saints Capital, contract research organization Nordic Bioscience AS (which will manage Radius's Phase III program) and specialty pharma Ipsen Pharma SAS. Then, in November, it raised the second tranche, bringing in $21.4 million from existing backers, and $6.25 million in debt from GE Capital, Healthcare Financial Services and Oxford Finance.

For now, Radius awaits its Phase III fracture data -- expected in 2013 -- and has designs on a new partnership once that's in hand. The other hand just might be holding our DOTY award. — Joseph Haas & Paul Bonanos


flickr photo by dorena-wm, courtesy creative commons license

2011 Alliance of the Year Nominee: Pfizer/Puma

It's time for the IN VIVO Blog's Fourth Annual Deal of the Year! competition. This year we're once again presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (a half dozen in each category throughout December) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

Hard to say what we like best about Puma Biotechnology and the sequence of deals in which Alan Auerbach repeated the formula by which he jumpstarted Cougar Biotechnology and later sold it to J&J for just shy of a cool billion. Was it the speed and ingenuity of the three-step transaction or the audacity of in-licensing a novel-acting agent against a tumor type owned by an entrenched powerhouse?

Yes and yes. The cat man is back and he’s telegraphing his intention to prove that his little guy’s solution to the IPO squeeze is replicable. How else to interpret the fact that puma is another name for cougar? Or that the reverse merger unfolded in the same way – reverse merge a start-up biotech into a Form 10 shell concurrent with raising money through a private placement. Or that, once properly funded, the same speed-to-market clinical strategy was implemented at both companies. This time around, however, the trick was fine tuned.

For starters, the time frame was compressed into a matter of days. Where Cougar licensed in abiraterone two years prior to reverse merging into the public shell SYRK 4, Puma licensed in neratinib from Pfizer days before reverse merging into Innovative Acquisitions Corp and raising $60 million in two tranches from its institutional investors. That raise, by the way, was the biggest for a reverse merger since Athersys pulled the same maneuver in 2007. Innovative Acquisitions, indeed.

Speed and size weren’t the only distinguishing features this time around. By licensing in neratinib – a potent, oral, pan-ErbB (Erb 1, 2, and 4) kinase inhibitor against Her2/ErbB2 positive breast cancer in adjuvant and metastatic settings – Puma is going up against Roche’s Herceptin. And it’s doing so in what’s shaping up to be a crowded field, with about 50 trials of agents against Her2+ metastatic breast cancer in Phases II and III.

We assume that Puma will aim to exploit well known vulnerabilities of Herceptin – its controversial efficacy in early-stage cancers, its IV formulation, and its risk of heart damage. Also, neratinib’s irreversible binding to the tyrosine kinase offers a mechanistic difference from Herceptin. And as Wyeth established, the pan-ErbB approach has promise in a variety of solid tumors, including gastric and lung cancers. For now, though, Auerbach is following the abiraterone playbook – winding down two Wyeth trials in early stage patients and gearing up to test (and launch) the drug as a second-line treatment in advanced HER2+ breast cancer patients.

Auerbach has upped his game with Puma. The terms of the deal with Pfizer, which were partially disclosed in Puma’s S-1 form filed on December 2, called for “substantial payments upon the achievement of certain milestones totaling $187.5 million, if all such milestones are achieved.” The agreement also calls for royalties on net sales of any compounds, including neratinib, licensed from Pfizer. Neratinib, after all, has undergone big pharma testing in phase II and III trials. That’s different from abiraterone, which was in a tiny Phase I trial when Cougar licensed it from small UK specialty firm BTG International Ltd.

But why do we really like this deal? In his first outing, Auerbach demonstrated that company creation around a cheap, innovative asset, and development to proof-of-concept and a successful exit-by-acquisition can be done fast and on a shoestring budget. In a way, he helped to democratize the financing of drug development. Of course, it didn’t hurt that he was a savvy, ex-sell side analyst who knew how to source, vet, and develop an early-stage cancer asset. Cougar was an object lesson in resourceful financing and hyper-capital efficiency. With Puma, he’s up to the same game, but he’s come back to show he can play with the big boys.

image by victor+ via flickr courtesy creative commons license

2011 Alliance Of the Year Nominee: Pfizer's CTIs

It's time for the IN VIVO Blog's Fourth Annual Deal of the Year! competition. This year we're once again presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (a half dozen in each category throughout December) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

We can always count on Pfizer to make the biggest splash. While it might be glad to have shed its traditional image as the big clumsy beast with the largest swarms of reps and the hugest mouth to swallow up its biotech prey, Pfizer would nevertheless be proud to have its Centers for Therapeutic Innovation (CTI) network held up as one of the most prominent and ambitious examples of pharma's growing love-affair with academics.

This DOTY candidacy, then, is about the spirit of the times. Pharma's attraction to academia as the answers to their R&D problems remained, we argue, among the most important alliance trends for 2011, with ever-more deal flavors and sizes coming forward.

CTIs deserve a vote for being one of the most interesting (though let's vote in a couple of years on whether they were most productive): they're city-based networks of medical institutions that will, in theory, throw up the projects that the pharma giant needs to fuel is biopharmaceutical pipeline. In a "pioneering, open-innovation partnering model", Pfizer commits anywhere between $85m-$100m per city, sets up a physical space in those locations to pull together its chosen academic collaborators with Pfizer scientists, and invites proposals from those entrepreneurial (and reward-seeking) academics that reckon they have the kind of novel, fast-to-clinic large molecule programs that Pfizer's looking for.

The first CTI spawned in San Francisco in late 2010, since then they've popped up in New York (assembling seven medical centers with up to $100m funding) and Boston, and there are satellites in San Diego and Philadelphia. The initial plan envisioned 8 cities, including in Europe; that may be an under-estimate, though, said Tony Coyle, VP of the CTI programs, back in June 2011. The full scope depends on whether the program works, and yields clinical candidates.

And there's the crunch. Will enough scientists propose sufficient high-quality programs that meet Pfizer's tight selection criteria, or will the generous funding available simply sift out the greediest (leaving the truly talented to aim for dwindling NIH money)? Will Pfizer (and other big Pharma) hold to its promise to be fair and equitable with its academic partners (which, let's face it, wasn't the case in yesteryear's fruitless tie-ups)?

According to JC Gutierrez-Ramos, one the project's main drivers who also runs biotherapeutics R&D at Pfizer, the three CTIs have generated 14 funded programs to date (out of 280 submissions), and he expects 22 funded programs by the end of the first quarter of 2012. Selection took somewhat longer than expected in some cases, according to one academic partner, and not all institutions have contributed suitable projects as yet. But JC claims 75 Pfizer employees are now involved (of which 50 are new recruits).

So things are moving. And although they'll take time to bed down, Pfizer's aiming big: to have 40-70 CTI programs across the globe in a couple of years' time, the first clinically-validated candidates entering Phase III within 4-5 years (at a "fraction" of the cost of doing this internally) and for the overall project to hold up as a viable, productive alternative model to the VC-backed biotech start-up route.

Vote for the ambition, if not the concept.

2011 M&A of the Year Nominee: Endo/AMS

It's time for the IN VIVO Blog's Fourth Annual Deal of the Year! competition. This year we're presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (half a dozen in each category throughout December) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

Endo’s $2.9 billion in cash acquisition of American Medical Systems Inc., in June 2011, throws the spotlight on the use of deal-making to go beyond the quick fix. In doing so, Endo had to overcome internal resistance, investor second-guessing, and industry's current preference, it seems, for high-stakes specialization over diversification.

But overcoming obstacles in order to exercise a grand ambition is not the chief reason Endo deserves the DOTY reward. No, the real draw here is management’s adamant vision in the face of a changing reality. Every good company constantly evolves, but only a few complete radical makeovers as rapidly as Endo has. Clearly, external drivers forced Endo’s hand: namely its over-reliance on one therapeutic area, and one medication, Lidoderm, in particular, the ever-riskier reliance on R&D innovation, and the long-term implications of health care reform.

Faced with similar problems, however, many companies, large and small, have huckered down and focused harder on innovation in their core expertise. Others have turned to in-licensing late-stage assets, withdrawing from the R&D-based business model. Endo has taken a third approach – not ditching pharma R&D completely, but moving beyond it to define its strategy not by therapeutic area, but by its customer base, that is, through a “continuum of care” approach that binds it closer to doctors and payers.

Endo was on the finals list for DOTY in 2010 for its HealthTronics acquisition—the first of its major diversification moves--but didn’t win; its return to the polls in 2011 is a testament to management’s perseverance and guts, this time, with a deal that follows similar reasoning on a larger scale and in doing so erases all doubts.

The deal in question thrusts Endo further into urological devices and services, a sector it had little presence in two years ago. Until 2008, Endo derived close to 90% of sales from its pain medication franchise, led by the best-selling topical pain drug Lidoderm. Urology now accounts for $1 billion of its sales, or more than a third of Endo’s total revenues; its key therapeutic areas have expanded to urology and oncology -- and not just drugs but devices and services as well. AMS complements other key acquisitions that Endo has made since ex-J&J executive David Holveck took over as CEO in April 2008: Indevus Pharmaceuticals (2009), HealthTronics, Qualitest (2010), and Penwest (2010).

As such, the company has built a presence in urology that “includes a broad network of partnerships and relationships with the overwhelming majority of US-based urologists,” CFO Alan Levin told analysts at a recent investor forum. The data generated by intensifying relationships is “critical to enhancing the organic growth potential of our urology franchise,” says Holveck. The company furthermore has identified potential cross selling opportunities for several of its product lines – a sticking point, until now, with Wall Street -- and a savvy way to gain more market data. A pilot program now getting underway, for example, trains AMS' men’s health division on selling the Fortesta gel, a newly launched topical testosterone replacement for hypogonadism, which Endo gained from the Indevus deal. The pharma urology reps are getting trained on AMS men’s and women’s health products. Other opportunities for selling synergies include Endocare cryoablation therapy, which came with the HealthTronics acquisition, and AMS’s GreenLight laser for benign prostatic hyperplasia.

If R&D-focused pharmacos are struggling to find the right value in innovation, Holveck says Endo has found the right mix through diversification, both within pharma and beyond it. “Understanding how the continuum of care is given and the products that interrelate with that care,” adds value to the urology practice, he says. And it also reduces event risk, which is implicit in the branded portfolio. Health care reform’s impact is a case in point. Endo estimates it will cut $40 million from the branded pharma business’ top line due to increased discounts to payers, particularly reflecting the higher Medicaid drug rebates. But it should also lead to higher sales on the generics side of the business. And, pointed out Levin, devices have not been greatly affected by health care reform proposals, aside from a 2.5% tax on US revenues, which takes effect in 2013.

For this opportunity, Endo has paid well – the multiple for AMS, itself a spin out from Pfizer, which private equity firm Warburg Pincus acquired in 1999 -- was approximately 14 times trailing EBITDA, the Qualitest multiple slightly less. The process wasn’t at all easy, as Endo’s management is first to admit, and the combination of devices and drugs still leaves Wall Street a bit queasy. But the stock has climbed nearly 50% since Holveck came to the company in April 2008, and although it's just treading water year to date 2011, that’s better than most of the industry. Just as important, Endo is poised to move swiftly in a rapidly changing health care environment.

Deals of the Week Checks on Gilead/Pharmasset Ripples

The $11 billion Gilead Sciences paid for Pharmasset and its promising Phase II nucleoside polymerase inhibitor on Nov. 21 opened eyes, but also sparked a great deal of speculation. Particularly, what would this record-shattering deal mean for other biotechs with un-partnered candidates for hepatitis C?

Deals of the Week posed the question to Mark Schoenebaum, the highly vocal biotech and pharmaceuticals analyst for ISI Group. “It’s unknown,” he responded. Well, so are the combatants in next year’s Super Bowl, but presumably the football analysts at ESPN have their guesses.

“There’s speculation that it was a competitive process to get Pharmasset, so presumably there’s more than one company willing to pay a big number,” he continued. “So it begs the question why wouldn’t [the losing bidders] just have gone after Inhibitex, which has shown similar potency" [with Phase II nucleoside INX-189 to Pharmasset’s PSI-7977]? Idenix, in contrast, so far has not shown similar potency [with nucleoside polymerase inhibitor IDX184]. These companies in short could have turned to Inhibitex or Idenix, but he observed, “They’ve already chosen not to.”

That is a minority opinion on Wall Street, if a perusal of market analyst commentary in the past week is a good indication. Headlines about Inhibitex like “And Then There Was One … INX-189 Represents The Best Chance to Compete with Gilead’s New Hep C Franchise” (Brean Murray, Carret & Co., Nov. 29) have been plentiful.

While Inhibitex has dominated the chatter, fueled in part by new data indicating INX-189 might work better in combination with current HCV standard ribavirin than PSI-7977, Idenix and Achillion have benefitted too. William Blair & Co. upgraded Idenix’s stock to “outperform” and raised its target share price from $4 to $10, while it nudged up Achillion’s target price from $7 to $8. Meanwhile, Wells Fargo initiated coverage of Achillion with a rating of “outperform.” (Achillion CEO Michael Kisbauch, who has steered the company through multiple ups and downs, has wasted few opportunities in recent weeks to talk up his company as a burgeoning M&A target.)

Achillion will not be the sought-after party, if other HCV players, such as Merck, Roche or BMS try to match Gilead’s acquisition. While it can boast a pipeline of five clinical candidates for HCV, all are protease inhibitors, NS5A inhibitors and NS4A inhibitors — that is, certainly not first-in-class. Idenix has two clinical candidates for HCV, although its non-nucleoside polymerase inhibitor (aka “non-nuc”) currently is stalled (apparently for financial reasons) in Phase IIa.

However, Idenix has IDX184 in Phase IIb, and that class is considered the hottest item in hepatitis C as companies race to develop a combination of direct-acting antivirals that will render long-scorned (but effective) pegylated interferon unnecessary in treatment of the virus.“Presumably, people are trying to get a hold of nucleosides right now,” Schoenebaum said, dismissing Achillion as a likely acquisition. “Protease inhibitors, NS5A inhibitors and non-nucs seem to be a dime a dozen. The whole premise behind the Pharmasset acquisition was to get a nuc.”

While Inhibitex seems positioned ahead of Idenix, thanks to cure data that range closer to PSI-7977’s impressive mid-stage stats, Schoenebaum is reluctant to say that company is the next hot takeout candidate or even that a bidding war could occur among big pharma for either of these properties.“In biotech, companies that everybody thinks are going to get bought generally aren’t,” he cautioned – and vice versa. “In the last few months, people said ‘Pharmasset isn’t going to get bought, it’s too expensive now.’ Well, it got bought. Now, everyone is saying Inhibitex is going to get bought – it might. But often those are the ones that don’t get bought.”

Wall Street analysts won’t be the only ones eagerly watching the next moves in the HCV space – we’ll be on hand in the In Vivo Blog and "The Pink Sheet" to give you all the play-by-play. Now, read ahead for news on other intriguing, if not record-shattering, business development happenings over the past week. It’s time for the latest installment of …

Transcept/Purdue: On Nov. 23, FDA approved Transcept Pharmaceutical’s Intermezzo (zolpidem tartrate) for middle-of-the-night waking. A week later, the biotech’s partner Purdue Pharma exercised its option to commercialize the first-of-its-kind sleep agent in the U.S., Canada and Mexico. Intermezzo is the first fruit of Purdue’s efforts in recent years to diversify away from reliance on its flagship product OxyContin. Intermezzo was approved despite two complete response letters and lingering FDA concern about the potential for abuse and next-day impairment. As Glenn Oclassen, CEO of Transcept, announced during a business update call on Dec. 1, Purdue plans to launch Intermezzo in the second quarter, “and to invest approximately $100 million to support the first 12 months of sales and marketing.” Oclassen stated that the terms of the deal include milestone payments, royalties and a Transcept option to co-promote the drug to psychiatrists “as early as the first anniversary of the commercial launch, and as late as approximately four and a half years post launch.” But the most valuable aspect of the deal, he told investors, lies in the base royalty on U.S. sales; Purdue will pay Transcept tiered royalties ranging from the mid-teens to the mid-20% level. On exercise of the co-promote option, Transcept is entitled to additional co-promotion royalty from Purdue on net revenues from sales to psychiatrists. This additional royalty ranges from a high of 40% down to approximately 20% depending on when, post launch, Transcept begins marketing to psychiatrists. The syndicate of investors that backed the biotech included NEA, Newleaf, and Interwest.--Mike Goodman

Servier/MacroGenics: Among the dozens of antibodies MacroGenics acquired when it bought Raven Biotechnologies in 2008 was MGA271, which targets a protein over-expressed in a variety of cancers. This week, French biopharma Servier purchased an option to license the drug in Europe and many emerging markets for $20 million up-front, which it can exercise for another $40 million upon receipt of Phase I data. MacroGenics would retain rights in North America, Japan, Korea and India, while Servier’s option covers the rest of the world. MacroGenics began dosing patients in July for a Phase I study, but complete data isn’t expected for two to three years, at which time Servier has a limited window in which to exercise the option. The antibody targets B7 homolog 3, one among many B7 immune receptors that affects T-cell growth. MacroGenics CEO Scott Koenig said the March 2011 approval of Bristol-Myers Squibb’s ipilimumab, which acts on a similar pathway, spurred interest in the compound, as did an increase in published literature about the mechanism of action. MacroGenics will continue to fund the Phase I study itself, but if Servier exercises its option, the two will fund ongoing trials jointly; ongoing milestone payments could add $390 million more to the deal. In October 2010, MacroGenics announced a pair of partnerships with Boehringer Ingelheim and Pfizer simultaneously; the company took back diabetes drug teplizumab from Lilly after development was halted following receipt of discouraging Phase III data. – Paul Bonanos

Infinity/Mundipharma: Mundipharma has extended its R&D collaboration with Infinity Pharmaceuticals, making a $50 million commitment Nov. 29 to fund continued development of PI3 kinase inhibitor IPI-145 and other programs. Ultimately, that dollar amount could be increased to include funding for mid-stage Hedgehog pathway inhibitor IPI-926. Infinity is completing Phase II trials in pancreatic cancer and myelofibrosis and then will seek an end-of-Phase II meeting with FDA to determine the compound’s future development path. Mundipharma began its collaboration with Infinity in 2008 under a “big brother” arrangement in which the biotech swapped the majority of its promising pipeline in exchange for independence from the capital markets. Last year, Mundipharma agreed to provide another $110 million in R&D funding for Infinity’s programs in 2012. In total, Mundipharma has provided R&D funding of $50 million in 2009, $65 million in 2010 and $85 million this year. Including the additional commitments set for next year and 2013, Mundipharma’s total contribution to Infinity’s R&D efforts will be at least $360 million.—Joseph Haas.

Affymetrix/eBioscience: The funding pressures on academic and government R&D programs that have caused the market caps of sequencing companies like Illumina and Life Technologies to plummet similarly affect Affymetrix and its array business. Affy also has to be cognizant of the looming threat posed by sequencing, as both next-gen and targeted resequencing machines drive down the costs and widen the breadth of genomic analyses over all. Hence the company’s articulated strategic plan to diversify into markets downstream of genomics and discovery – a goal its acquisition of eBioscience, a maker of consumables for single cell, proteomic, and genetics analysis and the number two player in flow cytometry reagents (behind Becton Dickinson Pharmingen) -- fits nicely. Through prior acquisitions Panomics and USB in 2008 and 2007, respectively, the company gained a foothold in the cytogenetics and life sciences reagents businesses, supplementing its core gene expression technology. Now, Affymetrix is paying $330 million cash, or 4.5x revenue and 14x EBITDA in 2011. The steady expansion of the reagents business makes sense. Although many of eBioscience’s competitors – including BD, Sigma-Aldrich, and Beckman Coulter – have deep pockets and could make growing market share difficult, these companies have not been very aggressive in filling their channels with the reagents needed to implement newer, innovative R&D approaches like single-cell analyses.--Mark Ratner


Curis/The Leukemia & Lymphoma Society: Curis has paired up with The Leukemia & Lymphoma Society to develop CUDC-907, a Pi3K and HDAC inhibitor that has shown preclinical promise as a treatment for B-cell lymphoma and multiple myeloma. Under the terms of the agreement, LLS will fund half of development costs – up to $4 million – from now until proof of concept at either Phase Ib or Phase IIa. Curis expects its first payment from LLS for an undisclosed portion of the $4 million will be at the beginning of the third quarter next year, shortly before the company files an IND. LLS stands to receive 2.5 times its original investment -- $10 million – should ‘907 reach commercialization, whether through Curis itself or with the help of a partner. The partnership with the society will help move the pre-clinical asset forward; something Curis couldn’t do on its own. The company recently received an $8 million milestone from Big Pharma partner Roche, when its subsidiary Genentech filed an NDA for Curis’ late-stage asset vismodegib. Curis expects to begin collecting revenue from the drug in 2012. -- Lisa LaMotta

PTC Therapeutics/Roche: PTC and Roche announced Nov. 28 that they have entered into another venture, the first between the Big Pharma and the biotech since their deal in 2009. PTC, based in South Plainfield, N.J., will receive $30 million upfront and has the potential to earn $460 million in development and commercial milestones, as well as double-digit royalties. In exchange, Roche will have an exclusive worldwide license to PTC’s spinal muscular atrophy (SMA) program, including three pre-clinical assets and potential back-up compounds. Roche will handle all development funding. The collaboration includes the participation of the SMA Foundation, which has contributed $13 million to the funding of the program so far. The SMA Foundation has three clinical sites at Harvard, Columbia, and the University of Pennsylvania, where it hopes that the clinical trials will take place once the PTC compounds move into the clinic. SMA is caused by a lack of the SMN1 gene. These patients have a “back-up gene” called SMN2, but SMN2 has a splicing defect and fails to produce the proper protein, as would the SMN1 gene, Virani explained. PTC has been working to develop a method that could help fix the splicing issue with the SMN2 gene.—L.L.

Elan/University of Cambridge: The sale of its drug formulation and manufacturing unit to Alkermes Inc. earlier this year has been transformational for Elan Corp. With that deal, the Dublin, Ireland-based biotech has been able to reduce its debt pile from $1.2 billion to $600 million, and is now able to concentrate on making targeted research investments in the neuroscience field, like the $10 million tie-up announced this week with researchers at the University of Cambridge. The new Cambridge-Elan Centre for Research Innovation and Drug Discovery will bring together researchers from Elan's research facility in South San Francisco, Cal., with academics in Cambridge, U.K., in a 10-year effort to find innovative therapies for Alzheimer's and Parkinson's diseases. They will be evaluating the role of protein misfolding, long thought to be a cause of neurodegenerative conditions like Creutzfeld-Jakob disease.— John Davis


image from flickr user JPott used under creative commons license