The Innovation Value Proposition: What To Expect At This Year's PSA

"Innovation ecosystem" is a buzzword in the biopharma industry these days – but the best way to approach building and sustaining innovation is under debate from all angles.

Most of the focus is on the developed world, where industry is wondering if it can afford to continue innovating effectively using traditional strategies amidst a payer environment focused largely on holding down healthcare costs. The uncertainty has real implications: Note the ballistic rhetoric of top executives at GSK, Sanofi and others about their commitment to conducting R&D in Europe, where reimbursement issues continue to hurt sales.

More recently, some in pharma are beginning to cite emerging markets as sources of innovation. The thinking is that emerging markets, as largely blank spaces ripe for design, are fertile sources of new ideas  that can blossom unencumbered by regulatory, territorial and infrastructure hurdles that in established markets slow adoption and raise costs. With strong government backing, some countries are even beginning to show signs of scientific creativity—ostensibly the epitome of industry goals—note recent developments in China and India. That’s a far cry from general industry thinking, which has pigeon-holed emerging markets mainly as sources of revenue growth and cost savings for clinical development, and lacking in healthcare delivery infrastructure and a deep scientific expertise.

Discussion of how to fix innovation and afford it and more will be the focus of Elsevier’s Pharmaceutical Strategic Alliances conference in New York next week (Sept. 17-19). With Paul Stoffels, worldwide chair of J&J's pharma business as a keynote speaker and others such as Andrew Baum of Citigroup Healthcare and Philip Ma of McKinsey speaking on pharma's looming value crisis, the conference hopes to provide takeaways for best approaches to a changing pharma paradigm.

Meanwhile, IVB spoke to Krishna Udayakumar, head of global innovation at Duke University’s School of Medicine and interim executive director of the year-old non-profit International Partnership for Innovative Healthcare Delivery, about the status of emerging market innovation and its implications for broader global markets. Udayakumar will be a participant on a panel dedicated to “Reverse Innovation,” i.e. innovation in emerging markets, at the conference.

In 2011, Udayakumar helped set up The Medanta Duke Research Institute in Gurgaon, India, a joint venture between Duke and Medanta, to provide early-stage clinical research through proof of concept to biopharma companies. Duke more broadly is looking at new paradigms for early-stage clinical trials and as part of that strategy, it is offering “a new model for academia to work with industry,” Udayakumar said, calling India a “greenfield opportunity to take what we have learned about workflow, patient comfort, and facility design” and efficient clinical research and apply it.  Initially, the founders expected multinational companies to provide the majority of the business for MDRI, but local pharmacos are also taking the bait—implying that local companies are starting to produce innovative compounds.

But innovation in emerging markets is about much more than scientific prowess. Witness IPIHD: the product of discussions on the part of Duke and McKinsey, the consulting firm, to promote and expedite new models of delivering care, largely in emerging markets, that help expand access to healthcare while holding down costs. That’s a goal that should be of interest to everyone in pharma these days—and the hope is that IPIHD’s efforts will not only benefit emerging markets but the broader global arena as well. Indeed, a number of pharma companies are members and active partners on some delivery programs, albeit small ones for now.

Pharmaceutical Strategic Alliances takes place Sept. 17-19 at the New York Marriott Marquis and there’s still time to register.

Medanta image from www.rediff.com

Deals Of The Week: Living With The Constancy Of Change In HCV Drug Development

One of the frequent thematic tropes found in the music of Canadian prog-rock trio Rush is the constancy of change, that change is constant, and constantly changing, etc. Anyone trying to follow hepatitis C drug development probably understands that message.

Just when it appeared that nucleoside polymerase inhibitors were the way to go in the effort to develop a paradigm-changing combination of all-oral, direct-acting antiviral drugs for the virus, a pair of recent setbacks in the “nuc” arena have made other classes of drugs and the companies developing them more relevant, and potentially more valuable.

Hence, the reported increased interest in Achillion Pharmaceuticals, which expects to produce early data for a proprietary combination of a protease inhibitor and an NS5A inhibitor during the first quarter of 2013. Once thought in danger of being left behind as the M&A mavens at big pharma circled Pharmasset, then Inhibitex, and continued to kick the tires on Idenix Pharmaceuticals, Achillion now is considered by many Wall Street analysts to be on the radar screen of HCV players such as Merck & Co., Bristol-Myers Squibb, Roche and possibly others.

Achillion raised $41.7 million in a registered direct offering just before Labor Day, placing 6.4 million new shares with QVT Financial LP at $6.57 per unit, its closing price on Aug. 31. That marked the New Haven, Conn.-based biotech’s third significant fund raise since August 2010, as it brought in $60.9 million through a follow-on public offering in June 2011, and $49.1 million under a PIPE (private investment in public equity) deal in August 2010.

But Wall Street widely expects that Achillion will have some big pharma R&D machinery behind its HCV efforts soon, maybe even before the Phase II combo data for protease inhibitor ACH-1625 (sovaprevir) and NS5A inhibitor ACH-3102 are unveiled.  (The firm also will disclose Phase I proof-of-concept data for ‘3102 this fall.)

Dismissed as barely relevant in the combo race as recently as earlier this year, Achillion may get a second chance thanks to the disastrous safety issues encountered by Bristol’s expensive nuc prospect, BMS-986094. The pharma paid $2.5 billion to buy that drug’s developer, Inhibitex, only months before shutting development of the drug down entirely in mid-August due to cardiotoxicity that killed one patient and hospitalized eight others.

The news then got worse or better, depending on your perspective, when FDA placed Idenix’s nuc, IDX184, and second-generation compound, IDX19368, on clinical hold because of concerns about their similarity in chemical structure to the Bristol nuc. It’s important to note that the “nuc” class is by no means dead – Gilead Sciences is still viewed as the leader in the HCV combo race thanks to the eye-opening data its nuc, GS-7977, is producing. And Vertex Pharmaceuticals is bringing a nuc licensed last year from Alios BioPharma into the clinic, as well.

Achillion has an analyst day presentation slated for Sept. 27, and with the expectation for POC data with ‘3102 and drug-drug interaction data for the ‘1625/‘3102 combination expected this quarter, Robert W. Baird & Co. analyst Thomas Russo thinks a partnership prior to the combo trial would make sense. “While lack of visibility makes this timing impossible to predict, generally speaking we’d view [a] non-exclusive collaboration positively because it would add shots on goal, external validation, and perhaps regimens that would augment investor excitement and conviction,” he wrote in an Aug. 8 note.

He added that Bristol and Abbott Laboratories have been demonstrating in the lab that high sustained virologic response (SVR) rates can be attained by antiviral combos not including a nuc. “Achillion’s pipeline features PIs and NS5A inhibitors that look best-in-class, complementary, and reasonably likely to succeed in interferon-free combos – all under its roof and/or via external collaboration,” Russo said. “We believe big players will fight on for some period longer, with some looking to fill gaps in their HCV pipelines and others perhaps looking for a complete solution.”

Sovaprevir, in triple-combination testing with existing standards ribavirin and pegylated interferon, has demonstrated effective inhibition of viral replication without generating “meaningful resistance,” an unending concern in the protease inhibitor class, wrote Brean Murray Carret & Co. analyst Brian Skorney on Aug. 9. “Although not a clear home run … [this is] a characteristic we believe is unique to only handful of antivirals in development for hep C,” he added.

Now, on to our weekly roundup of:

Merck KGaA/Symphogen – Danish biotech Symphogen AS has licensed its lead oncology product, Sym004, a mixture combining two antibodies targeting the epidermal growth factor receptor (EGFR) on tumor cells, to Merck KGaA for an upfront payment of €20 million ($25 million). Symphogen was evaluating Sym004 in two Phase I/II studies, which have shown initial signs of the drug’s clinical benefit and have been transferred into Merck’s control. The deal underlines the growing interest in combination therapies for cancer, as well as Merck’s desire to build on its marketed EGFR-targeted anticancer, Erbitux (cetuximab), which is its second largest-selling product, garnering sales of €855 million ($1.13 billion) in 2011. Merck receives exclusive development and commercialization rights for Sym004 worldwide, and now will fund all further development of the compound. In return, Symphogen receives the upfront and potentially could earn €225 million in clinical development and regulatory milestones, as well as €250 million in combined sales performance milestones and royalties on net worldwide sales, bringing the total potential value of the deal to €495 million. Merck is much in need of clinical-stage products that it can advance quickly following a string of late-stage product failures, which have prompted a management reorganization and the start of a cost-saving program including job losses at its R&D facilities in Switzerland, and across functions in Germany. – John Davis

Valeant/Medicis – In a move to become a leader in dermatology, Valeant Pharmaceuticals announced Sept. 3 that it has agreed to pay $44 per share, or $2.6 billion, for Scottsdale, Ariz.-based Medicis Pharmaceutical – representing a 39% premium to Medicis’ closing price of $31.56 on Aug. 31, the last trading day before the deal was announced. The Medicis acquisition, which will be funded entirely with debt, adding to the company’s $7.6 billion debt (as of the end of 2011), will make Valeant the largest dermatology player in the U.S. and second only to Galderma SA in the rest of the world. While Valeant has interests in several specialty pharma areas including dentistry and branded generics, the largest part of the business belongs to dermatologics with a focus on acne, eczema, and topical antivirals. Medicis brings a handful of products that will be complementary to Valeant’s current portfolio including the oral acne product Solodyne (minocycline oral), which will fit in with the company’s topical acne offerings. The company also makes aesthetic injectables like Restylane, Perlane and Dysport – which fit in with Valeant’s collagen stimulator Sculptra. Valeant expects $225 million in synergies – an estimate the company considers conservative and does not take into account any revenue upside or further upside from anything that may come out of the Medicis pipeline. According to Wells Fargo analyst Michael Tong, the deal will nearly double Valeant’s dermatology business, which was expected to produce revenues of $958.7 million in 2012 (analysts estimated Medicis would bring in approximately $820 million in revenues in 2012). – Lisa LaMotta

Medivir/Novadex – Achillion is not the only player in the HCV space looking to take advantage of recent stumbles by Bristol and Idenix. Medivir AB, which is developing Phase III protease inhibitor simprevir (TMC435) in tandem with Johnson & Johnson unit Janssen Pharmaceuticals for hepatitis C, announced a deal with Novadex Pharmaceuticals Sept. 6 in which it acquired a package of preclinical HCV assets, including novel nucleoside polymerase inhibitors. A release said the deal will include an upfront payment and potential milestones, but did not disclose specific terms. Medivir said the deal will include intellectual property and prodrug technologies that will further strengthen its HCV platform and know-how. The prodrug technologies could be applied to both protease inhibitors and nucleoside analogues to enhance their overall pharmacokinetic profiles, the company added. TMC435 also is being tested in combination with Bristol’s NS5A inhibitor daclatasvir (BMS790052) under a collaboration between Janssen and Bristol that was extended in April. – Joseph Haas

ImaginAb/MacroGenics – Two privately held companies in the antibody development space agreed Sept. 5 to collaborate on a pair of imaging products that could support ongoing development of new therapies. Los Angeles-based imaging specialist ImaginAb said it would develop a clinical imaging product for inhibition of the CD3 T-cell receptor based on an anti-CD3 therapy belonging to MacroGenics of Rockville, Md. The companies did not specifically name teplizumab as the therapy, but that is MacroGenics’ most advanced anti-CD3 program.ImaginAb also will develop a companion imaging agent for an immune-regulating B7-H3 target; MacroGenics’ Phase I clinical candidate, MGA271, addresses B7-H3. ImaginAb’s agents typically are used by partners to select patients and monitor responses to clinical treatments. The two companies share at least one investor, the oncology-focused Nextech Venture of Zurich. MacroGenics has raised more than $125 million from a long roster of venture investors since it was founded in 2000; five-year-old ImaginAb announced its $12.5 million Series A round in March 2012, and already has forged partnerships with drug companies such as Astellas Pharma and Oxford BioMedica, as well as a variety of cancer research organizations. Last month, ImaginAb named Eleven Biotherapeutics CEO Abbie Celniker as chair of its board of directors. – Paul Bonanos

Pfizer/SFJ Pharmaceuticals – Pfizer and SFJ Pharmaceuticals announced a collaborative development agreement Sept. 7 to conduct a Phase III trial for dacomitinib (PF-00299804), a pan-human epidermal growth factor receptor (pan-HER) inhibitor in advanced lung cancer. To be conducted at multiple sites in Asia and Europe, the Phase III trial will test the agent in patients with locally advanced or metastatic non-small cell lung cancer with activating mutations of epidermal growth factor receptor. SFJ will fund the trial and provide clinical development supervision as needed to prepare dacomitinib, an oral, once-daily, small molecule inhibitor of the HER-1, HER-2 and HER-4 tyrosine kinases, for regulatory filings as a first-line treatment in advanced NSCLC. If the compound obtains regulatory approval, SFJ will be in line to earn milestone and other earn-out payments. No other financial details were disclosed. This is the second collaboration between the world’s largest pharma and San Francisco-based SFJ, founded in 2009 a co-development partner for pharma and biotech. Earlier this year, the two partnered to run a Phase III trial in Asia of Inlyta (axitinib) for adjuvant treatment of patients at high risk of recurrent renal cell carcinoma following nephrectomy. – JAH

Photo credit: Wikimedia Commons

Financings of the Fortnight Says It's Not Ova Til It's Ova

A two-year-old biotech trying to get listed on the over-the-counter exchanges wouldn’t normally qualify for much notice. But OvaScience is different. First, its founders include Christoph Westphal, who has co-founded and either sold or taken public several companies. The OvaScience CEO is Michelle Dipp, also a co-founder, as well as a partner with Westphal in Longwood Fund. Working together, their biggest coup was the sale of Sirtris Pharmaceuticals to GlaxoSmithKline for $720 million in 2008, and they also raised a few eyebrows while still at GSK for their side project selling dietary supplements related to Sirtris’s compounds.

OvaScience, which aims to start a pivotal trial by the end of this year for its fertility enhancement product, Augment, has gone public via a route normally traveled by shell companies to attract reverse mergers, using the SEC’s Form 10. Touted by some as a new alternative to burdensome and uncertain IPOs, the route hasn’t attracted many operating companies to date. If approved via Form 10, a company has the same disclosure rules as those that undertake an initial public offering, but its shareholders don’t have anywhere to trade until it can get listed somewhere.

That’s OvaScience’s situation.  In its latest SEC filing, the company says it’s shooting for an over-the-counter listing, but makes no guarantee of attaining it. It’s contractually obligated to try; its shareholders signed on with the expectation of liquidity at some point in the not too distant future. The list of shareholders includes OvaScience’s largest institutional investors, Bessemer Venture Partners, Longwood Fund, Fidelity Investments, and General Catalyst Group, but also dozens of individuals, some of whom are biotech boldface names. For example, Skyline Ventures’ John Freund and his wife Linda Grais, a former InterWest partner and currently CEO of Ocera Therapeutics, hold more than 5,000 shares in a trust; Dicerna CEO Doug Fambrough, also a former VC, owns 1,000 shares; Alnylam Pharmaceuticals top dogs John Maraganore and Barry Greene each have 3,636 shares. (Alnylam is one Westphal’s babies, which he helped take public in 2004.) The full list is here.

Westphal and Dipp were among the cofounders of Verastem, which managed to go public in January in a risk-averse market despite its cutting-edge science targeting cancer stem cells and early-stage pipeline (nothing even in the clinic). This time, however, they’ve eschewed the IPO process for a route that proponents say makes a lot more sense. “The beauty of the Form 10 strategy is that you’re custom-building the public company in a more rational way,” says William Hicks, an attorney at Mintz Levin Cohn Ferris Glovsky and Popeo in New York. “You’re not going through the SEC review process hoping to raise the money. You’ve already raised it.”

One limitation of the Form 10 process is having enough crossover investors – those who usually invest in public companies but have the capacity to make private investments – to support a deal. One such crossover is RA Capital in Boston. “It’s nice for a company when it has enough support from investors willing to do a deal before the company has a stock symbol,” says Peter Kolchinsky, managing partner of RA Capital, which owns 3.1% of OvaScience stock. “They know it will file the paperwork and get liquid, but they don’t need to get liquid right away."

Given the friends-and-family flavor of the investor list, it's no surprise to see RA on it. It was founded by and sports the initials of Rich Aldrich, now one of Westphal and Dipp’s partners at the Longwood Fund. RA crossed over to buy into OvaScience’s $35 million Series B round, and bought again in a small private placement OvaScience offered in August 2012 after it had become public. The placement, which raised only $4 million, was mainly a way to build a shareholder base and reach toward the minimum requirement needed to list on a major exchange. For now, however, OvaScience hopes to list over the counter, which should afford its investors some measure of liquidity if they’re inclined to sell. Seeing how the investor base is handpicked, it’s unlikely shareholders will rush for the exits. The firm is gearing up to test its lead product and, because it uses autologous material -- a woman’s own mitochondria extracted from her egg precursor cells and inserted into her eggs during in vitro fertilization (IVF), to potentially boost the odds of conception -- the company claims it won’t need FDA approval. The same won’t be true of a second product OvaTure that hasn’t yet begun preclinical development.

It remains to be seen if the Form 10 route becomes fertile ground for biotechs seeking wider capital access. OvaScience looks like it's on its way, but how many others can scramble through the side door with the help of dozens of friends in high places?

Had your fill of bad puns? You'll only egg us on by reading the latest edition of...

StemCells Inc: The San Francisco Bay Area company has been awarded a second $20 million grant from the California Institute for Regenerative Medicine (CIRM) under its Disease Team Therapy Development Award program. As reported in “The Pink Sheet” DAILY, the money will support pre-IND development of adult neural stem cell technology for the treatment of Alzheimer’s disease. HuCNS-SC, which consists of purified neural stem cells derived from human brain cells, is an allogeneic treatment, administered as a direct transplant to the hippocampus, the spinal cord, or the eye during a single procedure. The grant, announced September 6, comes a few months after CIRM awarded StemCells $20 million to support the pre-IND activities of its HuCNS-SC cells in patients with cervical spinal cord injuries. Both grants are based on the expectation that StemCells will file INDs for both indications within four years. The grants will help the company move the programs forward; currently, StemCells has about $18 million in cash on hand and expects to burn cash at a rate of $18 million to $20 million annually. Data in Alzheimer’s were presented in mid-July at the Alzheimer’s Association International Conference in Vancouver, but the grant has been delayed as the company needed to prove to CIRM that the treatment does in fact migrate deep into the brain. Data showed that treated mice had significantly improved memory and recognition of their surroundings compared to untreated mice. According to StemCells, the money will start coming the next few months after its financials have been properly vetted by CIRM and terms of the grant have been negotiated. – Lisa LaMotta

Sanofi: When Sanofi bought Genzyme in early 2011 for $74 per share after a long pursuit, the book wasn’t quite closed. Part of the deal value included contingent value rights – one of a multitude of recent biotech buyouts that featured earn-outs – tied to the commercial prospects of Genzyme’s not-yet-approved multiple sclerosis therapy Lemtrada. Today, Sanofi is clearly less skeptical about that drug’s prospects than when it originally signed its $20 billion acquisition, and it said September 4 it wanted to buy back some of those CVRs while they’re still relatively cheap. The Genzyme CVRs were floated on the Nasdaq in late March 2011, and they trade under the words-with-friends friendly GCVRZ symbol. Sanofi wants to buy 86,766,040, or about 30% of them in a modified Dutch auction process that would value the biobucks somewhere between $1.50 and $1.75 per share.  A modified what? Essentially Sanofi will let holders tender their shares at any price in that 25-cent window. It will buy up to 86,766,040 of them, and price the offering at the lowest possible price that allows them to pull in that number of shares. (Once the process is complete, Sanofi will pay the same amount for each CVR, the price at which the 86,766,040th cheapest share was tendered.) Buying some of the CVRs now – there’s potentially $13 per CVR left to be paid out, but only a dollar of that is attached to pre-commercial Lemtrada milestones – could cost the French pharma from $130 million to $152 million, a 7% to 25% premium to the shares’ pre-announcement value. But the offer allows Sanofi to save a little cash in the longer term should Lemtrada win FDA approval and begin to rack up sales. Prior to the Sanofi announcement, the GCVRZ shares were trading at $1.40. They quickly shot up in value and are trading at $1.72 as of the end of September 6. The tender offer expires at 5pm Eastern on October 5. Dutch auctions in biotech sound familiar? Not too long ago WR Hambrecht & Co. was marketing its own version of the process under its OpenIPO brand, a path followed by companies like New River Pharmaceuticals and Avalon Pharmaceuticals. – Chris Morrison

Avalon Ventures: San Diego-based hybrid venture firm Avalon is attempting once again to close a fund $50 million larger than its previous vehicle. The firm disclosed in an August 30 SEC filing that it has raised the first $202 million of Avalon Ventures X, a proposed $250 million fund which would be its largest yet. It’s been just 20 months since Avalon closed its $200 million ninth fund in January 2011. That exceeded the firm’s $150 million goal, which would have matched its 2008-vintage eighth fund. The firm has enjoyed some lucrative exits lately: It had stakes in vaccine developer BioVex, sold to Amgen in 2011 for $425 million up-front, as well as Amira Pharmaceuticals, for which Bristol-Myers Squibb paid $325 million up-front later the same year. Avalon traditionally splits its funds 50-50 between life sciences and tech; the firm’s biggest recent exit arrived from the IPO of online game developer Zynga. The firm has been a holdout among hybrid firms as some other VCs have split their teams or funds in order to focus on either tech or life sciences individually. Avalon is also known for taking early stakes in life sciences start-ups and running them itself as virtual companies for a couple of years before bringing in senior management, a strategy we explored last year in START-UP’s Capital Matters column. Key partners Kevin Kinsella and Jay Lichter didn’t respond to a request for comment, so we’ll have to wait and see when the firm tops off the tank. – Paul Bonanos

Aerpio Therapeutics: This Cincinnati-based spinout of a spinout said August 30 it has raised $27 million in a Series A round to push forward a drug for diabetic macular edema, a disease characterized by leakage of blood proteins into tissues behind the macula of the eye, causing a thickening of that tissue. DME is the leading cause of vision loss in diabetics. The round was led by Novartis BioVentures and joined by Venture Investors LLC, Triathlon Medical Ventures, Kearny Venture Partners, Athenian Venture Partners and AgeChem Venture Fund LP. All were previously investors in Akebia Therapeutics, itself spun out from Procter & Gamble five years ago. Both companies are run virtually and share a CEO, Joseph Gardner, who told “The Pink Sheet” DAILY that the money will fund a Phase Ib/IIa trial of AKB-9778, a Tie-2 activator that works by inhibiting human protein tyrosine phosphatase beta, an enzyme which counteracts vascular leakage to restore Tie-2 signaling. The 28-day dose-escalation study will begin in September and will test the safety and tolerability of ‘9778 in 30 patients with DME. Gardner said the company also is hoping to see strong signs of efficacy including decreases in retinal thickness and improvements in visual acuity. Results from that study are expected next spring. Once the Phase Ib/IIa study has been concluded, the remainder of the funds raised will be used to fund a second Phase II study with 100 patients “that will get the attention of partners and make future financings a bit easier in this dry funding environment,” said Gardner. Results from this trial are expected in 2014. – L.L.

Eggcellent photo courtesy of flickr user Ecstatic Mark.

Deals Of The Week: What Will Soriot's Genentech/Roche Experience Mean For AstraZeneca?

Like Bristol-Myers Squibb, AstraZeneca has maintained a “pure-play” pharma approach to business in recent years as well as a preference for smaller, targeted “bolt-on” acquisitions, rather than the large-scale M&A pursued in recent years by Pfizer, Merck and Roche.

Some Wall Street analysts suggest that may be about to change, as the U.K. multinational announced Aug. 28 that Pascal Soriot, a chief architect of Roche’s successful absorption of Genentech, will take over as its new CEO on Oct. 1, replacing acting CEO Simon Lowth and succeeding David Brennan, who stepped down in April.

With AstraZeneca struggling through a severe patent cliff – Seroquel (quetiapine) lost U.S. patent protection earlier this year, with Nexium (esomeprazole) slated to follow in 2014 and Crestor (rosuvastatin) in 2016 – full-year worldwide pharmaceutical sales are projected to decline by 16% this year. Bernstein Research analyst Tim Anderson wrote following the Soriot announcement that AstraZeneca’s five-year financial outlook is “uninspiring,” due to a thin late-stage pipeline and a mixed track record of R&D success.

“Doing small bolt-ons, like AstraZeneca has previously described, probably won’t be enough for the company to change its trajectory quick[ly] enough,” Anderson opined in an Aug. 29 note. “Doing a larger acquisition (>$20B in size) would more immediately accomplish this goal, in our view, and AstraZeneca would likely be able to borrow an amount of this size such that its dividend would remain secure and its share buybacks might even continue.”

Bolt-on transactions have been the order of the day recently at AstraZeneca. The firm has been active in acquiring companies with late-stage or marketed products to bolster its flagging R&D pipeline, the most recent being the joint acquisition with Bristol of Amylin Pharmaceuticals. With the purchase, AstraZeneca, which will incur a cost of around $3.5 billion, and Bristol obtained two marketed anti-diabetic GLP-1 agonists, Byetta (exenatide) and Bydureon (exenatide extended-release).

AstraZeneca also announced the $1.27 billion acquisition of Ardea Biosciences to gain access to the Phase III gout drug lesinurad, on June 23. Along with bolt-ons, the company’s business strategy has focused heavily on returning cash to shareholders through share buybacks. Brennan, who announced he was stepping down on April 26, after the company reported an 11% decline in revenues year-on-year in the first quarter of 2012, was an advocate of the buybacks strategy.

But Anderson believes Soriot will be emboldened by his experience in merging Roche with Genentech, a process in which insiders say the exec successfully managed both the process and the people. “He knows both the science and the commercial side of the pharmaceutical business, and he proved himself to be a leader when folding in Genentech,” Anderson wrote. “The Roche/Genentech tie-up continues to function well, all things considered. With this experience in hand, could he be tempted to do a bigger deal at his new company?”

Another analyst, Eric Le Berrigaud of Bryan Garnier & Co., does not see major philosophical changes in the near term, however. “Soriot comes from a company that drives a pure-play strategy in the pharmaceutical industry, which suggests a change in strategy from this perspective at AstraZeneca is unlikely, i.e., no diversification on the horizon.” Just the same, Le Berrigaud also predicts that smaller-scale business development activity will continue at AstraZeneca at its recent hectic pace.

So there you have it – either Pascal Soriot will be a change agent at AstraZeneca in favor of big M&A to turn around the pharma’s prospects … or he won’t.

Yet another perspective, from our sister publication PharmaAsia News, posits that Soriot will try to replicate at his new address the strong emerging markets performance enjoyed by Roche. Particularly in China, Roche has soared in emerging market sales growth, while AstraZeneca has underperformed the industry, and in a business segment it identifies as a priority, no less,

Roche has shunned branded generics in its emerging market strategy – a business pathway pursued vigorously by AstraZeneca – and instead focused on selling innovative specialty products such as high-priced biologics, despite the potential reimbursement hurdles. The strategy has paid off – Roche reported 37% year-over-year sales growth in China during the second quarter, while AstraZeneca sales grew by 12% in that country and only 1% worldwide on the quarter.

As always, your crack deal-watching team has labored to bring you the latest edition of:

Sunovion/Elevation – Sunovion Pharmaceuticals will pay $100 million upfront and up to $430 million total to buy out privately held Elevation Pharmaceuticals in a deal announced Aug. 30. Central to the deal is Elevation’s Phase IIb candidate for chronic obstructive pulmonary disease (COPD), EP-101, which combines an aerosolized formulation of glycopyrrolate with a proprietary inhaler device, the eFlow Nebulizer System. In addition to the upfront, Sunovion (the CNS/respiratory disease-focused company created by the merger of U.S. specialty pharma Sepracor and Japan’s Dainippon Sumitomo) will pay Elevation up to $90 million in development milestones, up to $210 million in commercial milestones and potentially another $30 million if other Elevation programs are developed successfully. Elevation claims that EP-101 is the only nebulized, long-acting muscarinic antagonist (LAMA) bronchodilator in development – the intended indication is for moderate to severe cases of COPD. Phase III trials are slated to begin in the second half of 2013. The buyout provides an exit for Elevation’s venture capital backers, including Canaan Partners, Novo Ventures, TPG Biotech, Care Capital and Mesa Verde Venture Partners. Founded in 2008, Elevation raised roughly $44 million over two financing rounds. Most recently, the biotech announced a $30 million Series B in early January, but had only drawn down a $12.4 million first tranche of that round at the time of the sale’s announcement. – Joseph Haas

Janssen/Genmab – Janssen Biotech has turned again to Genmab to boost its R&D pipeline, this time licensing worldwide development and commercialization rights to the Danish biotech's clinical-stage, CD38-targeted monoclonal antibody daratumumab, in a deal valued at a hefty $1.1 billion. For that sort of money, one would expect a lot of competition for rights to the molecule, and indeed that was the case – Genmab's CEO Jan van de Winkel claimed to be still receiving approaches from other companies the day before he sealed the deal with Janssen on Aug. 30. More than a dozen companies apparently expressed an interest in the asset. The agreement includes an upfront license fee of $55 million, an equity investment of $80 million and up to $1 billion in development, regulatory, and sales milestones, in addition to tiered double-digit royalties. Just weeks before, the two companies had concluded a much smaller deal, valued at $175 million, under which Janssen Biotech will evaluate Genmab's newer bispecific antibodies against a range of therapeutically relevant targets. Daratumumab targets CD38, found widely on the surface of multiple myeloma cells, and it has the potential to be a first-in-class drug for the treatment of multiple myeloma and other hematologic cancers. Initial data have shown it offers a potent and broad spectrum of anti-cancer activity. Janssen looks to be the ideal partner, as it already markets a multiple myeloma therapy, Velcade (bortezomib), in some countries. Genmab has executed a noted turnaround in fortune, after needing to slim down and restructure in 2009-2010. Now, all three of its active clinical-stage products have big pharma partners, and its cash runway extends out four years, at which point royalty and licensing revenues just might be large enough to sustain the company. – John Davis

Alnylam/Monsanto – Alnylam Pharmaceuticals has inked an agreement with big agriculture firm Monsanto that puts Alnylam’s intellectual property in the service of developing next-wave pesticides and other agricultural products. The deal announced Aug. 28 brings Alnylam a $29.2 million upfront payment with the potential for downstream milestone payments and royalties, along with research funding. In exchange, the companies have an exclusive 10-year arrangement in which Monsanto will apply Alnylam’s RNA interference technologies to its BioDirect platform, which aims to bring innovative biological solutions to farmers. Alnylam in turn sent $1.4 million of the upfront to Isis Pharmaceuticals, under a 2004 arrangement in which Alnylam licensed IP for double-stranded oligonucleotide therapeutics that mediate RNAi. Isis also is in line to receive a portion of any milestones or royalties that Alnylam earns under its partnership with Monsanto. According to Alnylam Chief Business Officer Laurence Reid, the agreement with Monsanto is ideal because it gives his company a new source of non-dilutive funding from which it can finance its internal RNAi therapeutic development program, dubbed “5x15.” Alnylam staff will be involved somewhat in technology transfer efforts with Monsanto, but the agriculture firm will do most of the work and will provide research funding for whatever assistance it needs from Alnylam. Neither company would provide much in the way of specifics about how RNAi would be used to create next-wave agricultural products, with a Monsanto spokesperson saying it was still “early days” for determining what kinds of products might evolve from the partnership. “Our collaboration with Alnylam relates to work we have in discovery,” she said. Such products might be used to control devastating agricultural pests and diseases. Monsanto has calculated the annual worldwide market for agricultural biologics at about $1.7 billion. – JAH

Hospira/Orchid – For the second time, injectable generics seller Hospira struck a deal with India’s Orchid Chemicals & Pharmaceuticals to boost its antibiotic-manufacturing abilities. Hospira said Aug. 29 that it would pay about $200 million to acquire Orchid’s 12-year-old, 50,000-square-meter active pharmaceutical ingredient manufacturing facility in Aurangabad, India, which houses 640 chemists, engineers and technologists. The deal also includes a research and development facility in Chennai, home to 160 scientific professionals. Hospira says the acquisition will support manufacturing of key antibiotic products, including wide-spectrum beta-lactam antibiotics such as imipenem-cilastatin and injectable meropenem. The new deal is expected to close in the fourth quarter, and be break-even to slightly accretive to earnings in the first year following its close. In a deal that closed in March 2010, Hospira paid $381 million for another of Orchid’s antibiotic-manufacturing complexes and associated R&D facilities, where it manufactures finished-dosage-form injectable generics. Orchid plans to keep its cephalosporin manufacturing business, which supplies Hospira with that drug. – Paul Bonanos

Merz/Shionogi – Merz Inc., the U.S. affiliate of Merz Pharmaceuticals GMBH, announced Aug. 27 the acquisition of Cuvposa (glycopyrrolate, coincidentally the same active ingredient in Elevation’s COPD drug, EP-101, noted above) from Shionogi & Co. Financial terms were not disclosed. Cuvposa is an oral solution for sialorrhea, over-excretion of saliva, specifically for pediatric chronic severe drooling associated with neurological conditions such as cerebral palsy. Cuvposa indirectly reduces the rate of salivation by preventing stimulation of acetylcholine receptors located on peripheral tissues, including salivary glands. FDA approved Cuvposa as an orphan drug in 2010, and it has been available in the U.S. through specialty pharmacy since April 2011. It is the only FDA-approved treatment for this condition. Merz, Inc. CEO Bill Humphries said the acquisition of Cuvposa “is a promising addition to our neurology business and reflects our commitment to becoming a recognized leader in the treatment of movement disorders and related conditions.” Merz, Inc. develops and commercializes products in the U.S. for its German parent, and its portfolio comprises neurology, aesthetics and dermatology products. – Michael Goodman
Photo credit: Roche

Deals of the Week Points to a Solution to Your Phase III Woes

Early this morning the US/German biotech Agennix announced a significant restructuring whereby it would attempt to spare capital by dismissing 55% of its workforce, or 37 people. The restructuring isn't a surprise; two weeks ago Agennix said its lead program in non-small cell lung cancer failed a Phase III trial in the third-line setting. The company's market value has deteriorated accordingly; it now trades at or below the Eur22.7 million in cash it had as of the end of June. It'll certainly need a financial infusion if it plans to continue any operations beyond the first quarter of 2013. What are the odds investors buck up?

Though clearly a disappointment for patients, Agennix management, and its unusually concentrated investor base (the company is publicly traded but controlled by shareholder Dietmar Hopp, whose funds hold about 65% of Agennix's stock), the biotech's plight provides a timely illustration of some fairly common biotech problems. And it allows us to point toward a theoretical solution.

Agennix, the product of a merger of two biotechs in 2009, is a somewhat diversified company, but investors obviously based its entire value on that Phase III program. Besides developing talactoferrin alfa -- the above-mentioned immunotherapy that failed in early August -- in two NSCLC settings, other cancer indications, severe sepsis, and (as a topical formula) in diabetic foot ulcers, Agennix also has rights to a handful of unrelated oncology programs (remember satraplatin?). The biotech is far from alone in this kind of pipeline-in-a-product diversification, even if it is unusually stretched -- from lung to foot -- to the physiological maximum. It's also about average when it comes to the way investors viewed its later-stage programs (as in, if it ain't first, it don't matter). In fact, more or less, this is the default biotech valuation model.

Check out the twin pie charts at the top of this post, created with data provided by TechAtlas. At least 48 different biopharmaceutical companies are pursuing clinical-stage treatments for Type II diabetes. In NSCLC, 41 different companies have drugs that are in Phase II or beyond. Only a handful of competitors – typically the largest companies – are pursuing multiple agents against the same disease. Most NSCLC developers are like Agennix -- small, diversified, and reliant upon a single asset because it's first in the firing line. It's the larger companies, those with multiple drug candidates in development for the same indication, that therefore are able not only to identify the best single agent of the group but also to experiment with combinations pre-commercialization.

But imagine a parallel universe version of a company like Agennix, one that was diversified around a single indication instead, say NSCLC, before it reached pivotal studies. A company that instead of chasing three or four disparate indications, was wholly focused on one well-defined problem. And instead of relying heavily on a single asset and a series of clinical trials that pits that asset against placebo or standard of care, it had a handful of candidates against that single indication in the same stage of development, and tested them against one another in a proof-of-concept trial.

Wouldn't investors have more faith that the winner of that trial not just in terms of its ability to succeed in Phase III, but the likelihood that it passes muster with regulators and payors as well? Wouldn't an ecosystem populated by these solution-focused companies reduce duplicative clinical infrastructure, find it easier to recruit patients to participate in clinical trials, and attract likeminded and driven backers?

Such are the arguments that RA Capital's Peter Kolchinsky puts forth in the September issue of IN VIVO (subscribers should check out the full feature here; we'll also be discussing this model on a panel at our upcoming Pharmaceutical Strategic Alliances meeting -- Sept 17-19 in NYC).

Pulling together the foundations of a so-called Solution Development company is a tall though by no means impossible order. Beyond the central arguments about how to build biotechs and design meaningful trials, Kolchinsky suggests a role for disease foundations in identifying promising assets and even incentivizing developers to pool their candidates, as well as the opportunity for large pharmaceutical players to strike pre-negotiated deals to license the winners of these contests.

For the whole feature, get over to IN VIVO. Meanwhile we've got the solution to your late-summer Friday blues, it's time for the latest installment of ...

Allergan/Molecular Partners: Allergan must like what it sees in Molecular Partners' obscurely named DARPins, returning Aug. 21 to license another potential therapy for wet age-related macular degeneration (AMD), MP0260, and entering into a discovery collaboration to find more DARPin compounds with activity against serious eye conditions. The U.S. ophthalmics-to-dermatology specialty company already has licensed the Swiss biotech's lead compound, MP0112 (AGN-150998), which is being compared with Genentech/Novartis' Lucentis (ranibizumab) in a Phase IIb clinical study. DARPins are based on repeated peptide sequences that mediate natural protein-protein interactions and have some interesting characteristics, including a possibly longer duration of action in the eye than current AMD therapies like Lucentis and Regeneron/Bayer's Eylea (aflibercept), and maybe improved efficacy. In return for access to the cutting-edge research, Allergan is making an upfront payment of $62.5 million for the two new agreements, which include licensing options on three compounds. In total, Molecular Partners could receive up to an eye-watering $1.4 billion in development and regulatory milestones and tiered royalties on future product sales. The company signed up Janssen Biotech in December 2011 to evaluate DARPins for immunological applications, and also is developing its own pipeline of proprietary products.—John Davis

Riemser Arzneimittel AG/AXA Private Equity: The Greifswald, Germany-based specialty pharmaceutical company Riemser Arzneimittel has been sold by the founding Braun family and various minority shareholders, including TVM Capital, to the European diversified private equity firm, AXA Private Equity, for an undisclosed amount, the companies announced Aug. 21. Over the past 30 years, Riemser has made a remarkable journey, from a veterinary vaccines company based in East Germany to an international marketer of niche pharmaceuticals in the oncology, anti-infectives and dermatological fields. This has been achieved by organic growth and by the acquisition of smaller German companies and portfolios of unwanted products from other companies, supported by investments from TVM Capital and GE Capital. Riemser divested its veterinary business in 2010. AXA Private Equity intends to use its global network to support Riemser's internationalization strategy and its continued focus on niche therapeutics. A new round of company consolidation also might be in the cards in this less-risky corner of the pharmaceutical industry.—J.D.

Silence Therapeutics/MiReven: Silence Therapeutics has been tapped again for its RNA-delivery techniques that allow RNA-based drugs to reach tissues deep within the body. Australian-based microRNA company MiReven has signed a deal with Silence to use its delivery system with its cancer drug miR-7. Silence will formulate a miR-7 mimetic molecule with its proprietary lipid-delivery systems in order to evaluate miR-7 in various cancer models. It will also undertake in vitro and in vivo studies of the formulated miR-7. Silence is being paid an undisclosed fee for the collaboration. In July, Silence raised $8.8 million from new and existing investors to help extend its cash runway to 2014. The company uses its revenue from delivery partnerships, as well as funds raised to forward its own internal pipeline, which includes RNA-interference compounds. Silence Chief Scientific Officer Klaus Giese noted that this is the company’s fourth microRNA delivery technology partnership. “Whilst we remain internally focused on the delivery of our siRNA therapies, we continue to broaden the potential value of our proprietary delivery systems by collaborating with partners,” he added.—Lisa LaMotta

Pfizer/Mylan: In one corner, Pfizer wanted to expand its Established Products footprint in Japan, the world’s second-largest pharma market but only the sixth-largest generics market with room to grow. In the other, Mylan has more than 380 products in its portfolio in Japan, but has been stalled in gaining significant market share due to lacking distribution and marketing capabilities. The two firms say it was a perfect fit for an “exclusive, long-term strategic collaboration” for generics in Japan. Pfizer will slap its label on Mylan’s existing portfolio and an additional 125 compounds in Mylan’s pipeline and handle the commercial side, while Mylan is tasked with development and manufacturing of compounds in the agreement. A key to success in gaining market share in Japan’s generic market is securing preference from nationwide wholesalers. Pfizer’s status as an innovative company likely will go a long way in bumping Mylan-sourced products near the top of wholesalers’ recommendation lists for hospital sales. The companies will split revenue, but otherwise the deal does not include any capital alliance. In terms of sales, Pfizer Established Products Business Unit President Albert Bourla said the firms have “very high ambitions” to be a market leader in terms of sales by 2015.—Daniel Poppy

Bristol-Myers Squibb/Synergy: Gastrointestinal disorder-focused Synergy Pharmaceuticals signed an asset purchase agreement Aug. 23 with Bristol-Myers Squibb to acquire all assets related to FV-100, an orally available nucleoside analogue in mid-stage testing for shingles. Financial terms were not disclosed. Bristol previously had completed a Phase IIa trial of the candidate in which it was found to be well tolerated dosed at 200 mg and 400 mg in 230 patients. The trial also demonstrated clinically meaningful reductions in time to resolution of clinically significant pain and in incidence of post-herpetic neuralgia, Synergy stated in a release. "We believe that with our expanding clinical experience in utilizing patient-reported outcome tools from our GI program, a feature that will be necessary for supporting pain-related indications for FV-100, we are in a unique position to further develop FV-100 for patients not adequately treated with present-day therapy,” said Synergy CEO Gary Jacob. In July, Synergy merged with cancer-focused Callisto Pharmaceuticals, its largest shareholder, in a tax-free stock swap.—Joseph Haas

Financings of The Fortnight Sneaks A Peek At The VC Survey

Pennant races are on. Kids are back to school. (Wait, whatever happened to summer lasting until Labor Day?) And 90% of the venture capital world is on vacation. Whew. Good thing we caught more than 100 of the top life science VCs earlier this summer to participate in START-UP Magazine’s second annual Life Science VC Survey.

We’re putting the finishing touches on our package of feature stories and survey results, including a series of questions for corporate VCs, an ever-more important subset of investors whose role in funding biotech innovation has changed dramatically in the past few years. We’ve asked our participants a battery of questions, and here's a sneak preview: The overall mood hasn’t improved from last year’s survey, and unlike last year, a handful of VCs planning to hit the pavement and raise new funds now tell us that they’re willing to take lower terms and fees (virtually zero said so in 2011). Some are also moving forward with plans for smaller funds and smaller staffs.

(You can find the 2011 survey here and here. Subscription required.)

One partial counterweight to the sour mood and fundraising difficulties is the Food and Drug Administration. In 2011, not a single optimist said the FDA was a reason to feel positive, while 80% of the pessimists said the FDA was one of the largest obstacles the life science industry faced. In 2012, it’s not all horseshoes and hosannas, but 23% of the people who call themselves optimists said the FDA was a reason to feel positive -- a big jump from zero -- while 73% of the pessimists named the FDA as an obstacle. Given the consistency in recent years of the nearly comical vitriol life science VCs have aimed at FDA, any improvement is notable.

Another focus of our survey is therapeutic area. VCs are eternally curious what their peers find the most interesting areas for investment, whether to avoid the herd mentality or to avoid being left behind. Topping the list of most compelling indications or technologies on the biopharma side for the second straight year are oncology and rare disease. The latter we find particularly interesting, seeing how some observers of the field think we could be in a rare-disease bubble at the moment, typified by the Enobia Pharma sale to Alexion at the end of 2011.

One disease area that received a surprising boost of investor confidence in our survey was metabolics/diabetes, which went from solidly unattractive in 2011 to just a bit more hot than not. On the flip side, one of this year’s biggest losers was next-generation biologics platforms, perhaps an acknowledgment that the gold rush of a few years ago has played itself out.

We also asked about politics and policy, geography and stage preference, and we’re slicing and dicing the results in various ways to find out how these subgroups of respondents intersect. We’ll feed you more tidbits in our next column and on Twitter (@invivoblogalex), but if we give away more this time around we’ll have to sing for our supper. Let’s get on with our round-up. Survey says it's…

Novira Therapeutics: Anti-viral drug developer Novira said Aug. 23 it had closed a $23 million Series A round led by first-time investors 5AM Ventures and Canaan Partners. Contract research organization WuXi PharmaTech, based in Shanghai and listed in the U.S., also participated in the round. Three-year-old Novira had been backed previously by seed-stage backer BioAdvance, as well as regional angel groups Mid-Atlantic Angel Group, Robin Hood Ventures and Delaware Crossing Investment Group, which had collectively supplied about $3.5 million to date; all contributed to the new round as well. The Philadelphia-area company plans to develop novel therapies that disrupt viral replication and proliferation by inhibiting the life cycle of the capsid, the protein shell that encloses genetic material inside of viruses. It currently plans to investigate drugs for hepatitis B and HIV, although candidates have not yet been identified for either indication. The company intends to retain rights to a lead program in HBV as it progresses into mid-stage trials, while it may partner an HIV program at an earlier stage, according to CEO Osvaldo Flores. Although HIV research has spurred excitement with renewed hope for a cure, deal-making in the space remains a rare occurrence. An SEC filing indicates that Novira has collected the first $11 million of a $26.5 million round, which Flores said includes the seed money as well. – Paul Bonanos

MediciNova: MediciNova, a specialty firm that licenses approved small-molecule compounds from Japanese companies for development and approval in the U.S., has signed a two-year, $20 million common stock purchase agreement with Aspire Capital Fund. The funds will lengthen MediciNova’s runway as it tries to move a pair of lead programs into pivotal clinical trials. Aspire has bought 606,000 MediciNova shares at $1.65 per share, the firm’s closing price on Aug. 2, for a total of $1 million. Headquartered in both San Diego and Tokyo, with shares traded on both countries’ stock exchanges, MediciNova was one of the more successful biotech IPOs in 2005, raising $113 million.  The income bought additional time for MediciNova’s business model in 2009, allowing it to outlast Biotechnology Value Fund in a battle to acquire Avigen, which brought MediciNova additional cash and the compound ibudilast (MN-166/AV411), in development for progressive multiple sclerosis, neuropathic pain and drug addiction. Ibudilast is currently in grant-funded mid-stage trials for drug addiction. MediciNova’s other lead program is bedoradrine sulfate (MN-221) for acute asthma and chronic obstructive pulmonary disorder. The Aspire deal will help MediciNova advance '221 into a Phase III trial in either acute asthma or COPD by early 2013, but it's unclear how much beyond that trial the cash will last. Based on Aspire’s previous dealings with biopharmaceutical companies, which include similar equity line arrangements with Bionovo and NuPathe, MediciNova expects Aspire to be a long-term investor, with an ownership interest that should reach and then remain in the 5% to 10% range. -- Joseph Haas

Elcelyx Therapeutics: San Diego-based Elcelyx announced a $7 million extension of its Series B financing on Aug. 13, as well as a pair of executive hires, including former Biogen Idec and Mpex Pharmaceuticals business development leader Mark Wiggins as its senior VP of business development. Built upon a platform that produces first-in-class Gut Sensory Modulators (GSMs), Elcelyx plans to develop two products: Lovidia, an over-the-counter weight-loss supplement, and NewMet, a delayed-release formulation of diabetes drug metformin, which the company says will offer a much better safety profile than existing formulations. It’s the latest example of a biotech, or a management team, using a single platform to pursue a dual prescription/over-the-counter strategy. Elcelyx’s two products could offer a life cycle management opportunity for a future pharma partner. Elcelyx launched in 2010 and has raised about $20 million in venture capital over its lifespan, including $17 million under the B round. The $7 million extension was funded by existing backers Morgenthaler Venture Partners, Kleiner Perkins Caufield & Byers and Technology Partners. At present, Elcelyx is taking down $4 million of the extension, which CEO Alain Baron said will take the firm “well into efficacy trials” for Lovidia and NewMet. – J.H.

Relypsa: Still trying to get its phosphate binding agent into Phase III, Relypsa has raised nearly $50 million as part of an $80 million Series C round, according to a regulatory filing. Its lead compound, RLY-5016, is designed to linger in the GI tract and absorb excess potassium, a toxic side effect of certain drugs such as blood pressure medicine. An acute buildup of potassium is called hyperkalemia and can lead to arrhythmia or cardiac arrest. RLY-5016 has been tested in five clinical trials since entering the clinic in 2008 and currently is in a 300-patient, year-long Phase IIb trial for the treatment of diabetic nephropathy. Data from the ongoing trial are expected to be presented later this year. Two Phase III trials are expected to start in early 2013. The company plans to file for an NDA by the end of 2013 and will commercialize the drug on its own, president Gerrit Klaerner told “The Pink Sheet” DAILY. Relypsa is the reincarnation of Ilypsa, a company bought by Amgen in 2007. After paying $420 million, Amgen spun out the remaining four preclinical compounds; Ilypsa’s previous management team has overseen the business. Amgen took an equity stake in the company, less than 20%, when it was spun out. RLY-5016 appears to be tracking behind original expectations. In 2007, at the time the company was formed, management was aiming to advance RLY-5016 into Phase III trials within 18 to 24 months. Later, upon the Series B raise in 2010, the company said those funds would be used to take the compound through Phase III. – Lisa LaMotta
 

A Sneak Peek at Science Matters: Way Cool Wyss

On July 24, Harvard’s Wyss Institute for Biologically Inspired Engineering announced a Cooperative Agreement worth up to $37 million from DARPA for development of an automated instrument integrating ten human organs-on-chips. The news triggered a bout of media coverage including stories on National Public Radio and the Discovery Channel as well as the print trades.

But two weeks earlier, we had been speaking to Wyss founding director Don Ingber about another program at the institute: the development of a nanoparticle technology that uses physical shear force to target occluded blood vessels and deploy the clot-busting drug tPA, which is then effective at one-hundredth of the current therapeutic dose, preventing unwanted bleeding elsewhere. (The image above shows a blood clot within a mouse artery beginning to disappear following the injection of the nanotherapeutic.)  The drug delivery technology could conceivably be used to deliver an array of drugs to diseases characterized by vessel constriction, including heart attack and stroke. It was reported in the July 5 issue of Science Express and is the subject of next month’s Science Matters column in START-UP (a sneak peek of the story is available to readers now here).

When we spoke, Ingber also gave us a heads-up on the organs-on-chips development, which he called “a huge effort” at the Wyss. “We use microfluidics to model the physical as well as the chemical microenvironment and we can get functionality nobody’s ever seen before, in vitro,” he said. “We’ve really found that modeling the 3D physical environment is incredibly powerful for drug screening, disease models, toxicology and so forth.”

The nanoparticle technology was similarly inspired. The modeling of vascular occlusion on which it is based is an offshoot of an idea Ingber had in the 1990s, when DARPA was seeking ways to induce blood clotting in soldiers without knowing where the internal bleeding injury was, and Ingber thought to devise platelet mimetics that would use the higher shear force inside a cut blood vessel as a targeting mechanism. The nanoparticle idea takes a 180 degree turn – using the understanding of the mechanics of how platelets travel in the vasculature and settle at sites of injury to stop rather than induce clotting.

Both programs exemplify the Wyss’ mechano-biological world view. The organs-on-chips effort could greatly advance drug safety and efficacy testing. But we sense Ingber has a special soft spot for the nanoparticles. “This is one I am personally committed to giving our best shot to take it to the clinic,” he says.

Image courtesy of the Wyss Institute.

Deals of the Week Ponders PatientsLikeMe and Empowerment

Next-wave patient-based research pioneer PatientsLikeMe (PLM) struck an alliance with Merck on August 13^th to “evaluate the impact of psoriasis on patients and to inform a novel approach to improving outcomes.”

Dr. Sachin H. Jain, chief medical information and innovation officer at Merck looks to the collaboration to help it “establish and apply innovative solutions that improve disease management and enhance the patient experience.” In other words the Big Pharma is tapping into PLM’s network to gather patient-reported data it can use to tweak and tailor its psoriasis clinical strategy – one hopes to the eventual benefit of patients – but the announcement fell short on concrete terms and goals.

PLM’s model consists of organizing patients into online disease communities where they can share information about how their disease affects them, how they are treating it, the outcome of treatment, etc. The company, founded in 2004, is based on a sophisticated IT platform that, according to one of its founders, Jamie Heywood, aims to convert patients’ stories into structured information that is “computable, to change the way medicine is done and delivered.”

According to PLM’s website, it is backed by an interesting syndicate consisting of a “mission-based” investment group, technology-focused seed capital investors, and traditional private equity.  PLM’s main source of revenue is the sale of aggregate and annonymized patient information to industry, primarily drug firms. PLM lists many partners on its website, including Novartis, Abbott, Biogen Idec, Sanofi, and numerous disease associations.

PLM is totally plugged into the reigning zeitgeist of openness, sharing, connectivity, and community. Think Facebook, social networks, precompetitive consortia and collectives, open source programming – these are all cousins to PLM, although their business or operational models may differ. In a commercial context, the flipside of this zeitgeist, particularly in the world of consumer data, is crowdsourcing off the harvested information and selling it to end users. As for PLM, the company is refreshingly candid about its business model: “We take the information patients like you share about your experience with the disease and sell it to our partners (i.e., companies that are developing or selling products to patients).”

Is the information gathered and sold better – in terms of granularity, nuance, accuracy, actionability – than what can be provided through traditional means, including field and panel market research, patient diarization, etc? Do the patient communities offer more in the way of education and solace than patient groups organized by disease associations or that spontaneously assemble online?

In a video on PLM’s website, Jamie Heywood outlines the grand goal of PLM: “Everyone learns from the experience of everyone else on every meaningful variable that can affect the [health] outcome in real time across the whole medical system.” We applaud the sentiment, but wonder if it can be achieved.

And where does this leave the patient?  PLM offers no way to measure its own outcomes on patient health and happiness, or on R&D innovation, or disease management or the delivery of care. How can we know that PLM is moving the needle with respect to these lofty ends?

The patient empowerment promised by PLM and others is truly a worthy goal. But only getting downstream of the results of collaborations like this will tell us if we are really getting there. For now, we can take you, dear reader, through this week's installment of...

AstraZeneca/Regulus, Biogen Idec/Regulus: Regulus Therapeutics snagged another Big Pharma partner on Aug. 14 when it announced its agreement with AstraZeneca PLC to discover, develop, and commercialize microRNA therapeutics based on three targets for oncology, cardiovascular, and metabolic disorders. Under the deal with AstraZeneca, the Carlsbad, Calif.-based biotech will identify and prepare the pre-clinical compounds for human trials and AstraZeneca will handle clinical development and commercialization. AstraZeneca is paying $28 million up-front and is also making an undisclosed equity investment. Regulus also has the potential to receive undisclosed pre-clinical, clinical and commercialization milestones. The program will begin with Regulus’ microRNA-33, which is in pre-clinical development for treatment of atherosclerosis, a hardening of the arteries due to buildup of fat and cholesterol. The drug reduced arterial plaque size by more than 35% in pre-clinical animal models. The other two targets were not identified by the companies. Regulus added to the news flow with another announcement that it would team up with Biogen Idec to develop microRNA-based biomarkers for multiple sclerosis. Biogen will make an undisclosed upfront cash payment and equity investment in the company, as well as potential milestone payments. Biogen is hoping that Regulus will be able to help it identify the optimal patients in clinical trials, as well as in use with companion diagnostics, and to monitor disease progression and relapse. – Lisa LaMotta

Elan Corporation/Neotope: In a move that polishes Elan up for a sale after the Phase III failure of bapineuzumab, the Irish drug maker announced plans Aug. 13 to spin-out its Neotope Biosciences drug discovery business into an independent company. The news came just days after Elan’s development partners, Pfizer Inc. and Johnson & Johnson, discontinued almost all of the bapineuzumab research programs after two Phase III failures in Alzheimer’s disease. Elan developed bapineuzumab and the disappointing news leaves the company solely dependent on the multiple sclerosis drug Tysabri (natalizumab), partnered with Biogen Idec Inc., to generate revenue. One of the more appealing exits for Elan shareholders now could be the sale of the company, with the most obvious acquirer being Biogen Idec. By spinning out Neotope, Elan reduces operating expenses and positions the company as a more attractive takeout target for an acquirer interested in the Tysabri revenue stream. After, Elan will be a “focused business” that will generate immediate profits, with its primary being Tysabri, but the business will also own ELND005, a Phase II/Phase IIb ready asset in development for neuropsychiatry indications targeting non-amyloid pathologies, and the continued interest in the J&J partnership, which includes bapineuzumab. The spinout of discovery research would reduce Elan’s operating expenses by $103 million to $300 million post the transaction. Net income would be in excess of $250 million, and the company is targeting earnings per share of $1 by 2015, the firm said. Neotope Biosciences PLC will focus on discovery-stage research with a focus on transforming science into clinical stage assets. The unit mainly develops antibodies to tackle disease related to misfolded proteins, including chronic degenerative diseases. Chief Scientific Officer Dale Schenk will be the CEO. Elan plans to finance the start-up with $120 million to $130 million in capital and will retain a 14% to 18% minority equity position in the company. - Jessica Merrill

Merck/Arrowhead: Nanomedicine company Arrowhead Research Corp. has found a research partner for one of the programs it obtained in April when it acquired Alvos Therapeutics. A Merck & Co. subsidiary will evaluate a monoclonal antibody discovered using the human-derived peptide targeting program now owned by Arrowhead, according to an Aug. 14 announcement. Financial terms weren't disclosed, although the company said Merck will pay for the evaluation. It was not immediately clear what rights, if any, Merck obtained to the compound, nor what compensation Arrowhead would receive if the compound is developed further and commercialized. Spun out of the University of Texas' MD Anderson cancer research center, Alvos developed technology that generated peptides that target tumor cells or other tissues specifically. Arrowhead paid $2.13 million in stock up-front to acquire Alvos in April, although milestone payments could add $23.5 million to that deal. Arrowhead said it is currently evaluating additional programs derived from the platform in oncology and other therapeutic areas, and will assess them for partnering or internal development. - Paul Bonanos

Pfizer/AstraZeneca: Pfizer shows once again in the consumer health care products space that it will put its money where its mouth is, acquiring from AstraZeneca global OTC rights for Nexium and gaining right of first refusal on OTC rights for Rhinocort Aqua. The firms Aug. 13 said Pfizer will make an upfront payment of $250 million to AstraZeneca for to market a potential 20mg version of the proton pump inhibitor Nexium (esomeprazole), currently available only by prescription and indicated to treat the symptoms of gastroesophageal reflux disease. AstraZeneca, which is eligible to receive milestone and royalty payments from Pfizer based on product launches and sales, in June filed a marketing authorization application for an OTC Nexium tablet with the European Medicines Agency and expects in the first half of 2013 to file a new drug application with FDA for an OTC Nexium in delayed release capsules. If approved, Pfizer anticipates commercializing the product in the U.S. beginning in 2014 with launches in other markets to follow. While an OTC Nexium would enter a crowded nonprescription PPI market, an OTC Rhinocort Aqua could be a first-in-class U.S. switch as all pharmaceutical therapies for non-infectious rhinitis currently remain Rx only. The product is a pump spray containing the glucocorticosteroid budesonide, with a local anti-inflammatory effect. Both agreements underscore Pfizer’s commitment to keeping and growing its consumer health care products business, largely acquired in its takeover of Wyeth in 2009, rather than divesting the business. The firm this year launched an online health and wellness self-assessment tool, nutritionpossible.com, to help drive sales for its vitamins and dietary supplements business, led by the Centrum line added in the Wyeth deal, and acquired Alacer Corp., maker of Emergen-C vitamin C powdered drink mixes.--Malcolm Spicer

Epic Sciences/Undisclosed Partners: Epic Sciences, a cancer diagnostic company located in San Diego, announced Aug. 15 that it has signed collaborations with six major pharmaceutical companies, including two of the top four multi-national pharmas. The company works to develop circulating tumor cell (CTC) technology for companion diagnostics to help predict later-stage cancer outcomes. Epic said its collaborations include 12 clinical trials in over 40 distinct projects. "By using Epic to molecularly characterize CTCs, our pharmaceutical partners are looking to improve the success rate, decrease the cost, and expedite commercial launch of their targeted therapies,” said Epic president and CEO David Nelson in a statement.
Epic was spun out of Scripps Research Institute in 2008 and completed a Series A in March 2011, but did not reveal the amount that was brought in or its investors. -LL

Michael Goodman wrote about PatientsLikeMe this week.Close up of 'Empowerment' in Lincoln, UK from flickr user Lincolnian under creative commons.