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Twas DOTW Before Christmas ...

Twas DOTW before Christmas, when all through the house
Not a creature was stirring, not even a mouse.
The term sheets were hung by the chimney with care,
In hopes that St Gilead soon would be there.

The VCs were nestled all snug in their beds,
While visions of 20x danced in their heads.
Though mamma's kerchief biz had a low market cap,
As reverse-merger shell we'd name it after a cat.

When out on the lawn--

With apologies to Clement Clarke Moore, we'll stop there. It's a long damn poem and we've got a surprising amount of deals to get to this week -- nearly enough that we almost switched to a Twelve-Days-of-Christmas theme. It was not to be, but in any case, joyous readers who haven't yet shut down your laptops for some inexplicable reason, do feel free to finish or improve upon our parody for us in the comments. And to all a good ...

AstraZeneca/Hutchison MediPharma & AstraZeneca/Astellas: Avid followers of AstraZeneca's R&D pipeline have had a rollercoaster ride this week, with the U.K. pharmaceutical company announcing early-stage deals with Hutchison MediPharma and the Astellas subsidiary Prosidion, just a day after revealing it had suffered setbacks with two late-stage compounds, olaparib and TC-5214. The approach of the company’s patent cliff and the seemingly constant misfiring of AstraZeneca's R&D engine has sparked suggestions that larger-scale M&A might be a better option for AZ than the slow slog of building a research pipeline. AZ is paying Shanghai-based Hutchison MediPharma $20 million upfront for global licensing, co-development and commercialization rights to volitinib, an IND-stage c-Met receptor tyrosine kinase inhibitor. Hutchison MediPharma will continue to lead the compound's development in China; AZ is leading and funding development elsewhere. Hutchison could receive up to $120 million in clinical development and ‘first sale’ milestones. Additional commercial milestones and up to double-digit percentage royalties on net sales sweeten the pot. AstraZeneca has made significant investments of its own in China, including an R&D facility and its recently opened global clinical operations hub. It is the second largest-selling pharmaceutical company in the country, with a turnover of more than $1 billion in 2010. Hutchison MediPharma already has discovery deals in place with a raft of other multinationals, including Johnson & Johnson, Eli Lilly, and Merck KGaA, but this is the first time it has out-licensed one of its own research programs. Hutchison MediPharma is majority owned by UK-AIM listed Chi-Med, a healthcare group primarily based in China.

AstraZeneca's second in-licensing deal this week adds to the company's already significant efforts in the diabetes area. It picked up an option to acquire two of Prosidion's early-stage diabetes assets, PSN821 and PSN842. Both are potentially first-in-class GPR119 receptor agonists – the GPR119 receptor regulates incretin and insulin secretion, and in preclinical studies the compounds have lowered blood glucose, reduced food intake and reduced body weight. Financial terms were not revealed, other than to say AstraZeneca has paid a non-refundable fee, and will make upfront and milestone payments if it decides to exercise the option after Phase IIa. -- John Davis

Amgen/Watson: Amgen has finally tipped its hand regarding its biosimilar strategy after playing both sides of the issue for years. The Big Biotech and Watson Pharmaceuticals announced on December 19th an alliance to build an oncology biosimilars business focused on monoclonal antibodies. Amgen will make pre-commercial investments, taking the lead in R&D, manufacturing, and initial commercialization; while Watson will contribute $400 million to the venture along with its expertise in commercialization and life cycle management in highly competitive markets. The partners come late to the biosimilars party but still in time for the second wave of more complex biologics, most notably MAbs, projected to lose exclusivity post-2016. Watson, with its lower cost structure and competitive culture will take over commercialization if and when a certain level of maturity and competition sets in. How that level will be defined will be flexible, based on geographic and product characteristics. Neither company would disclose specifics as to how commercial responsibilities will evolve over time. Amgen’s proprietary oncology drugs are excluded from the deal, although both parties agreed that that provision could be revisited later. Should Amgen reverse that decision, Watson will have right of first refusal to negotiate a deal on those drugs. Importantly, Watson is free to develop biosimilar versions of Amgen’s drugs independent of the deal, either on its own or with partners. The deal allows both parties to pursue the biosimilar market together and independent of the alliance, an arrangement that could pit them against each other in the future. Amgen enters the biosimilars field in the context of a weak late-stage pipeline, competitive pressures, a mixed record on recent launches, and the recent departure of its CEO and head of R&D. -- Mike Goodman

Takeda/Intellikine: In one of two deals this week around inhibitors of phosphoinositide-3 kinase (PI3K), Takeda added to its US biotech holdings by purchasing Intellikine for $190 million upfront. In the deal announced Dec. 21, the Japanese pharma’s Millennium unit will take over global development responsibility for Intellikine’s two anti-cancer clinical programs. Intellikine, founded in 2007 and backed with $41 million in venture capital funding, also could earn up to $120 million in milestone payouts tied to potential clinical development events. With the acquisition, Millennium/Takeda also go into business with Infinity Pharmaceuticals, which paid $13.5 million upfront last year for a license to INK1197, a dual PI3K delta/gamma-selective inhibitor for inflammatory conditions. Now called IPI145, that compound moved into a pair of Phase I trials this past October. Driving the buyout were INK128, an mTOR C1/2 inhibitor slated to enter Phase II next year, and INK1117, a selective inhibitor of PI3K alpha, which entered clinical testing in September. -- Joseph A. Haas

Merck/Exelixis: In the other PI3K inhibitor deal this week, Merck on Dec. 21 paid $12 million upfront for an exclusive worldwide license to Exelixis’ PI3K-delta R&D program, including lead compound, XL499. Phase I-ready, the compound has shown potential application in preclinical study in rheumatoid arthritis, allergic asthma and hematologic malignancies, Exelixis says. Under the deal, Exelixis, whose internal focus is on the development of Phase III dual MET/VEGF inhibitor cabozantinib in multiple cancer indications, could earn regulatory and development milestones of up to $239 million from Merck, along with sales-performance milestones and royalties on net sales should any of its PI3K molecules reach the market. -- J.A.H. UPDATE: Exelixis announced via 8-k on Friday that it had parted ways with partner Sanofi -- the two companies had been working in the PI3k space since 2009.

ImmunoGen/Lilly: Despite a licensing deal with Eli Lilly & Co. announced on Dec. 20, ImmunoGen CEO Dan Junius says that the company’s first priority is still its wholly-owned pipeline (which currently has one compound in the clinic and another in IND), a stance the company announced in early 2011. Yet, in an interview Junius acknowledges that partnerships – like the one with Lilly – help the company “leverage its resources and affords ImmunoGen a scale that would not be possible otherwise." ImmunoGen will receive a $20 million upfront in exchange for the rights to an undisclosed number of licenses to ImmunoGen’s TAP (Targeted Antibody Payload) technology. The TAP technology will be used with Lilly’s monoclonal antibodies to develop antibody-drug conjugates (ADC) for the treatment of cancer. ImmunoGen will potentially receive $200 million in milestones for each target that is developed under the collaboration, as well as royalty payments. Any compounds that result for the collaboration will be added to Lilly's cancer portfolio, which includes Alimta (pemetrexed) and Gemzar (gemcitabine), which has seen declining sales since going generic. ADC technology, which allows a monoclonal antibody to carry a therapeutic payload that can target a specific tumor type, has become a hot area in the oncology space. Look for a new feature on the next generation of ADC drugs and drug developers in the next START-UP. -- Lisa LaMotta

Agenus/NewVac: Massachusetts-based Agenus announced Dec. 19 that it has signed a development and commercialization agreement with Russia’s NewVac, a subsidiary of ChemRar High Tech Center, whereby NewVac will commercialize Agenus' Oncophage in Russia and other CIS countries. Oncophage (HSPPC-96; vitespen) is a non-cell based protein pharmaceutical that uses a patient’s own tumor cells to activate an immune response through recognition of their cancer’s unique antigens. The vaccine is currently approved in Russia for the treatment of renal cell carcinoma in the adjuvant setting; a population of about 5,000 to 6,000 people. Agenus currently manufactures the vaccine in Lexington, Mass. NewVac will build a manufacturing facility in Russia where it will begin to make the product itself, and Agensus will get an unspecified royalty on sales. NewVac also will begin studying Oncophage in other indications – specifically melanoma, ovarian cancer and lung cancer. It will be responsible for all costs of development, but Agenus will again receive royalties. Agenus (nee Antigenics) has been having a tough time over the last few years as its stock price dipped below $1 after the failure of Oncophage to meet certain endpoints in renal cancer in a pivotal trial and the rejection of the drug by European authorities. Despite the trial failure, the company had enough clinical evidence to pursue approval in Russia. -- L.L.

Metamark/Janssen: Privately held Metamark Genetics has inked a deal with Johnson & Johnson subsidiary Janssen Biotech for its cancer diagnostic platform. The Massachusetts-based company will get an undisclosed upfront, as well as $365 million in potential milestone payments and royalties on products associated with the companion dx -- no small feat for a diagnostics play. Metamark's Prognosis Determinants platform is meant to identify specific cancer targets that may play a casual in promoting tumor progression. -- L.L.

BMS/Gladstone: Bristol-Myers Squibb and the Gladstone Institutes in San Francisco are teaming up for three years to investigate novel targets in Alzheimer's disease, the groups said Thursday, December 22. The partnership will focus on tau-mediated dysfunction. Tau is one protein in the brain implicated in Alzheimer's; normally it provides internal structure to healthy neurons, but as neurons die, the tau aggregates into clumps, or "tangles," in the brains of Alzheimer's patients, although it's unclear if the tangles are a cause or an effect of the pathology of the disease. Other companies such as TauRx and Allon Therapeutics have investigated tau-related interventions, but most clinical development in Alzheimer's has focused on amyloid beta (a-beta), the protein that aggregates into tell-tale plaques in the brains of victims. BMS and Gladstone did not disclose terms of their three-year discovery-stage collaboration. They have a common bond: Gladstone president R. Sanders "Sandy" Williams is on the BMS board of directors. The next year should be a big one in Alzheimer's research, with data due from high-profile Phase III trials of bapineuzumab, an anti-a-beta treatment developed by Elan and now mainly in the hands of Johnson & Johnson and Pfizer. Bristol's most advanced Alzheimer's treatment is in Phase II trials. -- Alex Lash

Viropharma/Meritage: Viropharma has paid $7.5 million up-front, and could pay $12.5 million more in development milestones, for the right to acquire Meritage Pharma at pre-set terms. We love a good option-to-buy around here. As we've seen before, they don't always work out, but as in the case of the recently abandoned Actelion/Trophos option, they can provide a good way to both finance development of a rare- or orphan-disease drug candidate as well as set up investors with a tidy if not home-run return. To wit, Meritage is pursuing development of oral budesonide against eosinophilic esophagitis, a chronic inflammatory condition for which no drug is approved. Phase IIb data from a pediatric study were presented in May 2011 at the DDW conference. The company, which emerged from the rubble of the once-promising pediatric specialty play Verus Pharmaceuticals, is narrowly focused around oral budesonide and backed by $30.5 million from Domain Associates, Laterell Venture Partners and the Vertical Group. Like Verus (and a large handful of other biotechs) it's the brain-child of founder, chairman and prolific entrepreneur Cam Garner. Following the completion of additional Phase II work, and once FDA has agreed on a Phase III plan for oral budesonide, Viropharma can opt to pay $69.9 million plus earn-outs to acquire the program. --CM

Baxter/Momenta: Baxter and Momenta said on Dec. 22 that they would team up to develop and commercialize follow-on biologics (that's biosimilars to some of you). Momenta gets $33 million up-front and up to $470 million $391 million in potential future milestones, $28 million in potential option fees, plus royalties. The deal adds Baxter to current Momenta partner Sandoz, which sells Momenta's generic Lovenox and hopes to one day sell its generic Copaxone as well, and comes on the heels of a flurry of activity in the biosimilars space. Besides Amgen/Watson, above, two weeks ago Biogen got together with Samsung Biologics in a biosimilars JV. Now that everyone's into the pool, expect to see a lot of splashing around. As a November feature in IN VIVO describes, for several recent entrants, the biosimilars game isn't just about creating copies; it's about promoting and branding a new kind of hybrid proposition where the innovation isn't in the molecule, but in how you make it, position it, and support it. In this sense biosimilars reflect the broader payor-driven push away from scientific novelty toward a focus on value. --CM & MS

Financings of the Fortnight Wraps Up The Year With Rare Gifts

We here at FOTF holiday headquarters (not pictured above) can't think of a better Hannukwanzamas present than a treatment for a rare disease whose patients previously had few or no options to help them. One of the big stories this year in our neck of the woods is that many in the biopharma industry are thinking the same thing, too. Of course, motivations for some are fueled in part by premium pricing and favorable regulatory pathways, terms that don't exactly invoke the holiday spirit. But if remedies come to market, we won't quibble. Capitalism is the worst of all pharmaco-economic systems except for all the others.

We've already noted several fundings, including the new companies Ultragenyx and Orphazyme, in this column this year; in the upcoming issue of START-UP, the Capital Matters team will examine a new NIH program, dubbed Therapeutics for Rare and Neglected Diseases, or TRND, that helps both academics and biotechs bring rare-disease programs across the valley of death. TRND has already helped push treatments for sickle-cell anemia and relapsed chronic lymphocytic leukemia into the clinic, with hopes for two more clinical programs in 2012. (TRND's full roster of programs is here.)

Now Atlas Venture and the specialty pharma firm Shire, which has aggressively built a rare-disease business to complement its ADHD franchise, are teaming to vet rare-disease programs and, if considered worthy, house them in entities co-financed by the two partners. 

The arrangement is a spin on an idea Atlas has already implemented and that other VCs are working on, as well: Since acquisitions these days are practically the only way to exit an investment, bring the potential buyer in early, preferably as a funding partner. For every project Atlas and Shire fund upfront, Shire gets an option to purchase down the road within a pre-negotiated time frame. Shire already has had notable success in the rare diseases arena, as its human genetic therapies unit continues to lead its sales and revenue growth. In 2010, the HGT unit generated 64% sales growth over the prior year, thanks to strong sellers such as Elaprase (idursulfase), Vpriv (velaglucerase alfa) and Replagal (agalsidase). 

Atlas has its Atlas Venture Development Corp. (AVDC), a group that's looking to in-license compounds, develop them quickly through proof of concept, and if possible sell them back to the original licensee. Its first deal was for an Eli Lilly & Co. migraine drug, now housed in an LLC called Arteaus Therapeutics. 

Versant Ventures also likes the find-the-buyer-early approach. It recently launched a cancer genomic analysis firm Quanticel Pharmaceuticals with $45 million from Celgene, which gets exclusive use of Quanticel's technology and exclusive rights to buy Quanticel, including any pipeline candidates Quanticel develops on its own, within three and a half years. 

With Shire, Atlas might find rare-disease programs that lend themselves to an asset-financing, virtual-development approach, but it could take a "platform approach" and perhaps build a more substantial stand-alone operation, as Atlas principal Ankit Mahadevia told our colleagues at "The Pink Sheet".

If you haven't noticed, both Atlas (for Arteaus) and Versant (for Quanticel) are nominees for our Deal of the Year in the exit/financing category, and voting just started. Cast your vote, please; it's all we want for Christmas, other than a little less unmet medical need in the world. Have safe, peaceful holidays, and we'll see you in 2012 with the next edition of...

Ember Therapeutics: Third Rock Ventures launched Ember Therapeutics Dec. 15 with a $34 million Series A round. As Ember’s lone investor right now, Third Rock will seek another backer that can offer the right expertise in the relatively new field of targeting brown fat augmentation to fight obesity, as well as insulin sensitivity, an approach to diabetes that has been plagued by safety problems. Ember's programs are currently in the preclinical stage. Louis Tartaglia, a Third Rock partner and interim CEO of Ember, told The Pink Sheet that a new investor could be a traditional VC or a venture arm of a pharmaceutical company "with which we do a large R&D alliance." If the latter, the corporate venture investor would likely be brought into the A round, Tartaglia said. Ember will be Third Rock’s third entry into the metabolic health arena, following Zafgen, which is working on methionine aminopeptidase 2 (MetAP2) inhibition to treat severe obesity, and Rhythm Pharmaceuticals, which is focused on MC5 agonists to treat obesity and type 2 diabetes. Ember is Third Rock's fifth publicly disclosed Series A investment in 2011. -- Joseph Haas

 

Aviir: The Irvine, CA company and Stanford University spinout disclosed it has raised $10 million of a planned $30 million Series B round to push its TruRisk cardiac risk diagnostic test to market. The round was led by Merck Global Innovation Fund, the fund's first disclosed investment as parent company Merck looks to put venture cash to use both directly and indirectly. (The January IN VIVO has a Q&A with Merck's new top dealmaker, Roger Pomerantz, which you can read here.) Previous Aviir investors New Leaf Venture Partners, Aberdare Ventures, and Bay City Capital joined Merck in the B round. Those three also contributed more than $11 million to a planned $25 million round disclosed in regulatory filings in 2007, but it's unclear how much more Aviir raised in that round -- which documents also classified as a Series B -- or how much venture funding total the firm has brought in. A company spokesman did not return requests for clarification. TruRisk measures a patient's blood level of seven proteins associated with arterial plaque at risk of breaking off and causing heart attack. -- Alex Lash

Covidien: Diversified life-science firm Covidien said Dec. 15 it would spin out its pharmaceutical business into a standalone publicly traded company and keep its medical devices and supplies, which currently contribute 83% of sales to the US-Irish firm. (Covidien was formerly TycoHealthcare.) The pharma unit, which consists of generic and branded drugs, active pharmaceutical ingredients and imaging agents, posted a compound annual growth rate of zero between 2007 and 2011. It accounts for about $2 billion in annual sales of products such as bulk acetaminophen, generic methadone for opioid addiction, and the painkiller Exalgo (hydromorphone). There were no immediate estimates of the amount Covidien could raise in the spin-out of the unit. Executives say they've been planning the move for years. The pharma unit has been without a president for about a year, but executives said recently that they have hired someone to run the unit before the spin-out. The hire will come on board in early 2012, and the pharma unit will be prepared for a sale in September, Covidien CEO Jose Almeida said last week. Abbott Laboratories is another diversified firm that plans to divest pharma holdings, but unlike Covidien, Abbott will keep its generic drug products under the same roof as devices and diagnostics.  -- David Filmore

Ariad Pharmaceuticals: Cancer drug developer Ariad said Tuesday, Dec. 20 it had finalized its $243 million secondary offering, selling 24.7 million shares at $10.42 each, as it prepares for life as a commercial company. A marketing application for its mTOR inhibitor ridaforolimus has been submitted to authorities in the US and Europe by its partner Merck & Co., with an FDA decision expected in mid-2012. Ariad plans to co-promote the sarcoma treatment in the US. Next year, the firm could submit pan-BCR-ABL inhibitor ponatinib for leukemia. It is currently in a pivotal Phase II trial, with interim results released earlier this month. The perils of first-time launches for biotechs are legion as they shift resources away from R&D and into sales and marketing, all while investors typically shun the company's stock in a habit known as "shorting the launch." Those that manage to stay independent for the long haul tend to outperform their peers, although giving up some of their marketing rights can cloud the picture, as this analysis in July's IN VIVO shows. Meanwhile, Ariad's stock price is trading above the offering price. Shares closed Wednesday, Dec. 21 at $11.60 a piece. Underwriters bought their full extra allotment of 3.2 million in the deal. J.P. Morgan, Cowen and Co., and Jefferies & Co. were the lead underwriters. -- A.L.

Thanks to Joe Haas for his contribution to this week's intro. 

Photo courtesy of flickr user Howard Dickins.  

IVB's 2011 Deals of the Year: Vote Here!

The three polls below HERE (make sure to vote in all three!) will stay open until 3pm ET on January 4th.

Please vote, tell your friends, families, colleagues and pets to vote. (But resist the urge to vote seventeen times, we rely on your discretion.)

Thanks for participating, and we look forward to crowning our new DOTY winners in two weeks.

We've relocated the polls to make them easier to view: CLICK HERE TO GO TO THE VOTING BOOTH

And the Nominees for IVB 2011 Exit/Financing of the Year Are ...

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

CLICK HERE to go to the voting booth!

In no particular order, the nominations for In Vivo Blog's 2011 Exit/Financing of the Year are:

Ascletis: One of the largest Series A rounds ever in biopharma -- $50 million in the first tranche, with another $50 million guaranteed to follow when the company hits certain milestones -- and a serious nod toward the growth of China on the global biopharma stage. Click here for the deal nomination post.

BMS/Amira: This $325 million buyout was a great return for Amira's backers and the result of an interesting structure that sees former Amira assets seeding a handful of newco's. Click here for the deal nomination post.

Radius Pharma: The twin moves that garnered Radius a DOTY nomination came on the heels of what might become a frequent occurrence in the option-heavy dealmaking world we live in: partner Novartis declined to pursue the company's Phase III ready osteoporosis compound. To go it alone, Radius nailed down a $91 million cash-and-debt Series C and floated its shares via reverse merger with a public shell company. Click here for the deal nomination post.

Eisai/SFJ: In a move that gives it greater development bandwidth, Eisai is handing the bill for Phase III studies of its thyroid cancer treatment lenvatinib to SFJ. 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. . Click here for the deal nomination post.

Quanticel: This Stanford-grown genomic analysis company's emergence illustrates an important trend in biotech financing: linking investment to exit, even if that means ruling out a home-run return. Quanticel, backed by Versant Ventures, took in $45 million from Celgene for rights to its platform for three and a half years and an exclusive option to buy the company. Click here for the deal nomination post.

Arteaus: Asset financing as a concept isn't quite new, but 2011 saw several venture investors build out the asset-centric model in a way that's uniquely suited for these capital-constrained times. Arteaus is the first asset-financing play out of Atlas Venture's Atlas Venture Development Corp. The molecule in question, a migraine drug candidate, has Lilly roots and potentially a Lilly future, as that Big Pharma has lined up an option to reacquire the asset from Atlas. Click here for the deal nomination post.

And the Nominees for IVB 2011 M&A of the Year Are ...

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

CLICK HERE to go to the voting booth!

In no particular order, the nominations for In Vivo Blog's 2011 M&A of the Year are:

Sanofi/Genzyme: Something for everyone: publicly traded earnouts, rare diseases, diversity, and one heck of a long, drawn out negotiation over price. Oh yeah, $20 billion for an industry trailblazer. Click here for the deal nomination post.


Endo/AMS: Every good company constantly evolves, but only a few complete radical makeovers as rapidly as Endo has. The acquisition of AMS really cements Endo's transition from drug co to 'pelvic health' company, drugs, devices, services and all. Click here for the deal nomination post.

Daiichi/Plexxikon: An extremely solid exit driven by a well executed partnering strategy on one of the year's most watched and important drugs. There aren't too many 12x deals out there. Click here for the deal nomination post.

Takeda/Nycomed: This $13.7 billion acquisition gives Takeda sought-for diversity by moving it further into OTC, branded generics and emerging markets. Nycomed's PE investor base had long aimed for an exit -- via sale or more recently rumored IPO. This is a tidy one indeed. Click here for the deal nomination post.

Abbott/Abbott Pharma: Is it really M&A? Who cares. Diversified Abbott has jettisoned its Humira-dominated pharma business in a spin out with roughly $18 billion in revenue.   Click here for the deal nomination post.

Gilead/Pharmasset: When $14 billion speaks, people listen. Pharmasset's record-setting sale to Gilead put a smile on the face of the biotech's investors that could be seen from space. It was by a long stretch the largest ever acquisition of a clinical-stage company and cranks up the heat in the already intense HCV development space. Click here to see the deal nomination post.

And the Nominees for IVB 2011 Alliance of the Year Are ...

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

CLICK HERE to go to the voting booth!

In no particular order, the nominations for In Vivo Blog's 2011 Alliance of the Year are:

Pfizer's CTIs: Pfizer's city-based networks of medical institutions will, in theory, throw up the projects that the pharma giant needs to fuel is biopharmaceutical pipeline. The biggest academic-alliance splash in ... forever? Click here for the deal nomination post.

Lilly/Boehringer: Lilly married its struggling diabetes franchise with what's still only a pipeline at private German group Boehringer Ingelheim -- the year's biggest pharma-pharma alliance and a template for deals to come? Click here for the deal nomination post.

Genentech/Forma: Isn't it about time that biotech alliances began looking more like acquisitions? This deal, which offers the potential of some liquidity for Forma's backers, helps to provide return-without-exit and if successful offers a new path for biotech independence. Click here for the deal nomination post.

Pfizer/Puma: Don't call it a cougar -- the next big cat in Alan Auerbach's menagerie licensed an intriguing cancer asset from Pfizer, raised $60 million, and went public via reverse merger. Click here for the deal nomination post.

Merck/Roche: Long adversaries in the HCV treatment space, Merck and Roche teamed up this year to sell Merck's first-to-market direct antiviral Victrelis as well as test out new HCV therapy combinations. Score one for pragmatism, pharma-pharma pre-commercial cooperation, and frenemies everywhere. Click here for the deal nomination post.

AZ/Healthcore: What's development and regulatory success without the means to convince payors and patients to shell out their cash for your drug? In 2011 we saw a flurry of pharma-payor dealmaking that illustrates industry's awakening to addressing the needs of those who hold the purse strings. Click here for the deal nomination post.

Reata/Abbott: AIM high and vote for the second huge deal between these two companies -- and their second DOTY nomination -- in the past two years. Reata gets $400 million up-front for worldwide co-dev/co-promo rights to its preclinical antioxidant inflammation modulator portfolio. The private company is sitting on at least $850 million in Abbott cash and has set itself up nicely for an independent future. Click hear to read the deal nomination post.

2011 Alliance of the Year Nominee: Abbott/Reata

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™.

Do you like sequels? We know, they're never quite as good as the original (we're looking at YOU, Temple of Doom). But sometimes they surprise on the upside. And that was the case for last week's Abbott/Reata deal, which just makes it in under the wire to close out our 2011 DOTY competition nomination process.

Last week Reata said Abbott would pay $400 million up-front for worldwide co/co rights to its preclinical stable of antioxidant inflammation modulator compounds. That's on top of the $450 million up-front that Abbott paid Reata last year for ex-US rights to the company's lead AIM compound, bardoxolone. Those of you with long memories may remember that the first Abbott/Reata deal put in a suprisingly iffy showing in the 2010 DOTY contest, finishing with just 7% of the vote. The sign of a strong field, perhaps, but equally likely is the voting public wasn't swayed by the large upfront payment for Reata's Phase II asset.

This time around there are some more interesting wrinkles. First, it's a preclinical deal. And that means, among other things, a measure of DOTY revenge. Last year's DOTY/alliance winner was Celgene/Agios, which at $130 million upfront was until last week the largest ever downpayment on preclinical assets, according to our Strategic Transactions database. Reata's haul vaults it to the top of the preclinical deal charts, by a mile.

Second, Abbott isn't paying Reata milestone payments. This is an oft-discussed but seldom-seen type of structure that allows Reata to cash in immediately and set itself up as an independent biotech for years to come, and to plan for the potentially burgeoning clinical pipeline it may have in a year or so.

That brings us to the third facet that makes this deal sequel better than the original: its broad scope. The global agreement covers a wide range of molecules in several therapeutic areas, with the two companies slated to split development and commercialization costs, as well as profits, equally, except for rheumatoid arthritis and other autoimmune indications. In those categories, Abbott will cover 70% of costs and also take 70% of any profits.

Finally, the Abbott angle. You've seen the Abbott split-up (one of our M&A noms this year) and know about Abbott Pharma's continued reliance on Humira. The bet Abbott has made on Reata's compounds -- at least $850 million so far, not counting any clinical expenses around bardoxolone -- suggests the Big Pharma sees the AIM platform as a key aspect of its diversification strategy going forward. 

Who knows, perhaps bardoxolone clinical success could set this Abbott/Reata sequel up as part two of an epic trilogy. For that you'll need to wait for a future DOTY competition.

image via thisblogrules

2011 M&A of the Year Nominee: Gilead/Pharmasset

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're not sure we've got to sell this one, folks. Why vote for Gilead's acquisition of Pharmasset for IVB's M&A of the year?  We've got eleven billion reasons for you.

If the sheer enormity of Pharmasset's $11 billion price tag doesn't sway you -- and as a reminder it was by far the largest price paid for a clinical stage biotech, nearly four times the value of the previous record -- you mightn't have a pulse. But to be fair, bigger isn't always better, but in this case we've got more than just dollar signs to convince you.

Ask around, and you'll hear a range of responses from industry business development people. They range from the conspiratorial to the astounded to the unintelligible to the silent, wide-eyed, mouth-agape, frozen-faced and slightly head-bobbing look that you see on sitcoms that kind of says "holy crap, right?" The kind of silent, wide-eyed, mouth-agape, frozen-faced and slightly head-bobbing look that translates into DOTY votes.

Mostly, non-Gilead people think Gilead overpaid. The safety signal in a Phase IIb trial of PSI-938 that emerged last week would seem to support that view, but in reality the value attached to anything outside of PSI-7977, another of Pharmasset's hepatitis C polymerase inhibitors and the hottest drug candidate in the clinic, is probably minimal.

What's not up for argument is that Gilead now wholly owns the hottest molecule in the hottest clinical space around. Nevermind that they'll need to get it to market quickly and make it a blockbuster several times over without taking their sweet time about it to make the deal pay off.

Vote Gilead/Pharmasset for the size, sure. Vote for the deal because it demonstrates that even in today's troubled times, there's seemingly no ceiling on the value of a top asset -- even a Phase II one -- in the right hands. Vote for it because HCV will continue to be one of the most rapidly-evolving and intriguing development and commercial spaces to come along for some time. Or just because of that face people make when you ask them what they think of it.  That face is priceless.

2011 Exit/Financing of the Year Nominee: Arteaus

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™.

 

Blink and you might have missed it, although our Pink Sheet colleagues didn't.

In October, Atlas Ventures made its first asset-financing play under the umbrella of its Atlas Venture Development Corp. (AVDC), teaming with OrbiMed Advisors to share the funding of Arteaus Therapeutics with an $18 million A round. Arteaus is one thing and one thing only: an in-licensed migraine drug; no office, no outside management, and no backup R&D programs.

As we've been discussing for a couple years now, funding single assets instead of entire biotechs is an intriguing model for VCs who don't want -- or can't afford -- to see a company through to a sale or an IPO. In fact, in this story we compared AVDC and CMEA Capital's Velocity fund before either had an asset under their roofs. (Velocity still hasn't announced a first project.)

We nominate Arteaus not only because it's the first out of the gate, but also because of its odd circumstances. The migraine drug comes from Eli Lilly, which has made plenty of noise in the past year or so about building a network of three "mirror" funds to do what Atlas is doing: take compounds that Lilly doesn't want to develop on its own, bring in outside funding help, and give Lilly a "clawback" option once the drug reaches an agreed-upon milestone. But wait a minute: Atlas isn't one of Lilly's mirror funds. Which either means Atlas and OrbiMed gave Lilly a deal it couldn't refuse, or the mirror fund thing is a bigger headache than first expected. Well, we knew the latter already, to some extent: Before launch, CMEA's Velocity was supposed to be one of the mirror funds; Lilly was even named as a strategic backer in the Velocity fundraising material. But those plans disintegrated in late 2010 or early 2011, and when Velocity formally launched in June, it was no longer a Mirror fund. (Velocity is being funded from the current CMEA VII, and the San Francisco firm has no plans to raise an eighth fund.)

Another twist is that AVDC will contract with Lilly's Chorus division, a semi-autonomous R&D group meant to drive proof of concept development faster than Lilly's traditional process, to run the migraine compound's Phase I and II trials. Lilly has an option to re-acquire the drug after proof of concept. If it does, Atlas and OrbiMed would be owed undisclosed payments and royalties, as well as an upfront payment that would allow them to exit (thanks to Arteaus being structured as a limited liability corporation).

The compound in question, by the way, is a monoclonal antibody that binds with calcitonin gene-related peptide, or CGRP, a potent vasodilator linked to migraines and implicated in transmission of pain. The larger point is that Lilly wanted to share the risk of developing it, and Atlas has provided a vehicle for doing just that, all while separating the value of the asset from the distraction of building a standalone company to house that asset. Or, you might say, the distraction of fighting for resources inside Lilly.

Photo courtesy of flickrer Quinn.Anya via a Creative Commons license.