Financings of the Fortnight Works On Its "A" Game

There have been a lot of shifts lately behind the reasons people start new biotech companies. Academic and nonprofit sources of biomedical innovation are growing more eager to take on “translational” duties to make their research more palatable to the private sector. Cuts in Big Pharma research groups have created larger pools of available talent. New government regulations now let private companies test public investor sentiment without announcing to the world their IPO intentions. (Regulations are loosening more; the Securities and Exchange Commission just voted to allow direct solicitation of the public in securities offerings.)

The reasons might be more compelling, but are they drawing more investors back to startup-land?

The folks at our sister publication Start-Up have always liked to use Series A rounds as a way to gauge the temperature surrounding biomedical company formation. They’ve been doing what they call The A-List since 2004, tallying the year’s newly disclosed A rounds and all the data around them. It’s about numbers, but also sentiments and attitudes. For example, in the most recent A-List, we asked VCs if all worthy early-stage companies were getting funded. (Click image to enlarge.)

We’re looking forward to asking that question again at the end of 2013. For now, let's take a peek at the Series A financings for the first half of the year to see if we can stir up the tea leaves.

By FOTF’s count, there have been 41 new Series A fundings for device, diagnostic and biopharmaceutical companies with the amount disclosed (and four more without). The funds disclosed total $567 million. That’s well ahead of the 2012 first-half deal flow of 33 rounds and $423 million.

If the pace quickens in the second half of 2013 as it did last year (final 2012 tally: 103 Series A rounds), we could see deal flow akin to the pre-crisis years of 2007 and 2008. That’s one big takeaway.

As usual, biopharma makes up the bulk, with 35 deals and $481 million in disclosed dollars. That’s an average of $16 million per round for the companies that disclosed dollars, a 10% jump over last year’s biopharma average, as noted in the most recent A-List:



We might also be seeing a change in syndicate composition. By this time last year, 10 Series A were solo efforts, the largest being Third Rock Ventures’ debut of Global Blood Therapeutics, and people were telling us how difficult early-stage syndicates were to arrange. This year, only three deals have been announced as solo deals, with Third Rock again taking the top spot with its $47 million commitment to Jounce Therapeutics. (For an in-depth look at Third Rock’s strategy, check out the latest Start-Up cover story.)

Among therapeutic areas, by the way, nine of the 45 companies say they’re in oncology, seven say neurology, and six say cardiovascular disease. Infectious disease, metabolic disease, and gynecology/urology have four or five.

Based on the half-year numbers,our next full-blown A-List might reflect the optimistic bent that the IPO markets have helped create this year. Might, we emphasize. Six months of deal announcements are a squirrely sample size, so take our little foray simply as a guide to things to watch for the rest of the year.

And for the rest of this hour, how about kicking back with the latest edition of...

Prosensa Holding: On June 28, Dutch biotech Prosensa netted $83.4 million in an IPO on Nasdaq through the issuance of 6.9 million shares at $13, the high end of its $11-13 range. Prior to its IPO, the firm had raised €56.4 million ($73 million) through private equity rounds. Company president Hans Schikan says Nasdaq offered a healthier financial opportunity than European exchanges. With an RNA modification technology platform licensed exclusively from neighboring Leiden University Medical Centre, the 11-year-old company aims to develop antisense therapeutics that induce skipping of exons (disrupted gene coding sections). It’s getting a good start: just prior to the IPO filing, it got word of receipt of FDA breakthrough designation status for its lead compound drisapersen (PRO051), a program it partnered with GSK in a 2009 deal that’s worth up to $667 million in pre- and post-commercialization milestones, plus double-digit sales royalties. Earlier in the year, some of the company’s other programs were granted EU orphan drug status in the muscle-wasting disease Duchenne muscular dystrophy indication. Of the European biotechs with initial public offerings (including Belgian cell therapy company Cardio3 BioSciences, see below),  Prosensa has raised the most and has continued to climb. On its June 28th opening, it closed at $19.02, a 46% premium over its offering price, and it closed July 11 at $26.26. -- Maureen Riordan

MannKind: Despite regulatory setbacks, and facing long odds following the poor reception of Pfizer/Nektar’s Exubera and eventual withdrawal of the drug from the market in 2007, MannKind is forging ahead with its own late-stage inhaled insulin candidate Afrezza, and on July 1 announced a $160 million debt financing to support further development. Deerfield Management committed to buying 9.75% senior secured notes, maturing in 2019, in four equal $40 million tranches contingent upon MannKind achieving certain milestones that include the release of Phase III data in Type I and II diabetic patients (using the newer-generation Dreamboat inhaler), paying down debt, and Afrezza’s FDA approval. After an undisclosed period following disclosure of the clinical data (expected later this summer), Deerfield has the option to convert a portion of its notes into common stock. In return for an $18.9 million up-front payment, the investment firm also receives milestone rights, entitling it to up to $90 million based on strategic and sales goals. MannKind is also working in the oncology area but last year partnered some of those programs with Tolero Pharmaceuticals and Colby Pharmaceutical in order to put resources towards Afrezza. Since the start of 2012, MannKind has raised nearly $316 million, including two FOPOs plus the current fundraising, to fund Afrezza efforts. In Q4 2013, the company hopes to submit an amendment to its existing NDA (first filed in March 2009). -- Amanda Micklus

OncoEthix: Privately held Swiss biotech OncoEthix has raised $19 million in a Series B funding to progress its early-stage cancer treatment OTX015 into Phase II proof-of-concept studies, at which point its owners hope to sell or license out the novel medicine to a pharmaceuticals group. The BET bromodomain inhibitor belongs to a new class of medicines which researchers are testing to learn whether they can trigger cancer cell death. SV Life Sciences led the round and was joined by new investor Edmond de Rothschild Investment Partners. Existing investors including Index Ventures and Endeavour Vision also participated. The proceeds will be used to progress OTX015 into Phase II proof of concept, and a potential [investor] exit at that point, CEO Bertran Damour told "The Pink Sheet" Daily. The fundraising brings OncoEthix’s total venture capital up to $30 million and will keep the biotech running for the next 24 months, Damour predicted. The company was founded in 2009 by Esteban Cvitkovic, Kay Noel, Yves Paternot, and Patrice Herait, all experienced oncology drug researchers who set out to establish a portfolio of three to five new cancer medicines through in-licensing. Between them the founders have been involved in bringing 37 drugs to market, according to CEO Damour. OTX015 was in-licensed from Mitsubishi Tanabe Pharma Corp. in 2012. After reaching proof-of-concept, the company plans to out-license drug candidates to pharma partners. – Sten Stovall

Cardio3 Biosciences: Another biotech from The Low Countries debuted this fortnight and almost immediately had to weather a storm. The Belgian firm debuted on the NYSE Euronext Brussels and Paris, selling 1.38 million shares at €16.65 ($21.76) each. Cardio3's lead product C-Cure uses a patient's own hematopoetic stem cells harvested from bone marrow and programmed outside the body to differentiate into heart muscle cells and, re-injected back into the patient, to repair damaged heart tissue. The issue raised €23 million for the regenerative medicine firm, and it raised the eyebrows of UK researchers and subsequently Forbes columnist Larry Husten, who highlighted several data discrepancies in a Cardio3 paper that helped fuel the IPO, as well as a conflict of interest with one of the paper's authors. Husten's column has been updated with a sharp response from Cardio3 and a rather sarcastic one from the UK professor leading the criticism against Cardio3. The firm says the criticism is unfounded; so far investors have mainly rolled with the punch, and the stock closed July 11 at €18.73, down from a brief high of €21.45 but by no means a sign of sauve-qui-peut, as they say in Wallonie. -- Alex Lash

All The Rest: Heliae, a start-up developing algae-based products for the therapeutic, nutraceutical, personal care, and agroscience markets, received $24.8mm in an early-stage VC funding round...regenerative medicine company ViaCyte (developing a stem cell therapy for diabetes) raised $10.6mm in Series C-1 funds from backers including J&J Development Corp., Sanderling Ventures, and Asset Management Co…in an $6mm add-on to its February 2012 Series A round, Mnemosyne Pharmaceuticals garnered a total of $11.4mm...In what appears to be its Series A round, viDA Therapeutics has raised $1.8mm in new VC funding following the second tranche of its seed funding in April…University of Bath spin-out Glythera added £700k ($1mm) to its 2008 Series A, which is expected to total £2mm over the next three years in tranches of a similar size and contingent on the achievement of certain milestones…In an early venture round, Cantargia – a Swedish developer of leukemia therapeutics – added $1mm to its coffers…ETH Zurich spin-off BioVersys (antibiotics) raised an undisclosed oversubscribed Series A round..Publicly traded AntriaBio (metabolic disorders) completed a $12mm private placement…AmpliPhi BioSciences (antibacterials) grossed $7mm through the private placement of 5mm Series B preferred shares that convert into 10 common shares…Avanex Life Sciences (Alzheimer's disease therapeutics) completed a $2.6mm PIPE, plus a $10mm funding commitment from Lincoln Park Capital with $100k received so far…Cancer drug developer Merrimack, which went public last year, proposed concurrent $50mm follow-on and $75mm notes offerings…Amarin completed a FOPO of 21.7mm ADSs priced at $5.60 netting $121.5mm…A few companies set IPO terms: OncoMed Pharmaceuticals (cancer) plans to offer 4mm shares at a $14-16 range; Conatus Pharmaceuticals (liver disease therapeutics) anticipates selling 5mm shares at a $10-12 range; and human cell manufacturer Cellular Dynamics set a range of $12-14 for a planned 3.8mm share offering…Heat Biologics (cancer and infectious disease immunotherapies) increased its proposed number of IPO shares, to 2.3mm (from 1.65mm) at the same $10-12 price range…And three companies filed for IPOs: Emcure Pharmaceuticals, an Indian manufacturer and developer of APIs across a variety of therapy areas; Can-Fite spin-off OphthaliX (has a Phase III candidate for dry-eye syndrome); and synthetic biology technologies company Intrexon…Specialty CNS pharmaco Avanir has tentative plans for a $50mm debt financing…Biodelivery Sciences brought in $20mm through a senior secured loan from an affiliate of Midcap Financial LLC…regenerative medicine firm Tengion raised $18.6mm through the sales of senior secured convertible notes concurrent with a $15mm equity investment from Celgene…In fund news, Kohl Kohlberg Kravis Roberts closed a $6bn Asia-Pacific region fund focusing on consumer products, retail, health care, education, and industrial companies.

Big thanks to Maureen Riordan and Amanda Micklus for help with Series A data. 

Photo courtesy of flickr user IMLS DCC. Click that link if you like old boats.

Deals Of The Week Wonders: Who Will Buy Onyx?

When was the last time biotech had a really juicy, successful, high-stakes bidding war? Likely the $10.2 billion Pharmasset acquisition by Gilead Sciences announced in late 2011, which since has played out quite nicely for the latter. Not only did that deal help drive Gilead shares up by about 150% since the deal announcement, but it also tipped off the start of a very long bull-run for the sector.

If Onyx Pharmaceuticals attracts a bevy of bidders, garners a tidy premium for shareholders, and proves a strong asset for an acquirer, its activities could help bolster a flagging biotech stock market. Mostly in June, the NASDAQ Biotechnology Index has shed almost all of a tidy 9% it gained in the first few weeks of May.

If a competitive Onyx acquisition plays out, a deal could come in the fall. That would coincide perfectly with a roster of large-cap clinical and regulatory milestones – which together might breathe life back into a biotech rally that’s getting very long-in-the-tooth.

For now, Wall Street seems certain that the biotech will attract a flock of suitors, culminating in a deal. In fact, Onyx shares are trading well above Amgen’s $120 per share bid, which Onyx publicly confirmed on June 30 that it had rejected. It hired Centerview Partners to contact other potential acquirers, but said it already had interest from undisclosed third parties. Onyx shares closed at $133.52 on July 3, giving the biotech a $9.7 billion market cap.

Potential bidders could include a number of pharmas with existing oncology franchises that need to bolster their bottom lines, such as Pfizer and Merck & Co. Also in line could be established players in the multiple myeloma (MM) market including Celgene and Takeda, in addition to likely pharma players betting on MM monoclonal antibodies such as Bristol-Myers Squibb and Johnson & Johnson. J&J is partnered with Takeda on MM treatment Velcade (bortezomib).

Onyx investor Oliver Marti of Columbus Circle Investors expects to see more than a half-dozen potential suitors emerge, with an acquisition taking about three months to play out. He expects other companies ultimately will prove more aggressive than Amgen, although he does expect Amgen to raise its bid. Marti thinks $140 per share would be an acceptable price.

Amgen has done only a handful of billion-dollar deals. In 2001, Amgen acquired inflammation company Immunex for $17.9 billion in cash and stock. That’s its only deal for more than a couple billion dollars. Since then, it’s done four deals in the roughly $1 billion to $2 billion range including $2.2 billion for antibody play Abgenix  in 2005, $1.3 billion in a stock swap for gene expression regulation company Tularik  in 2004, up to $1 billion in cash and milestones for cancer vaccine company BioVex  in 2011 and $1 billion in cash for antibody company Micromet in 2012, according to Elsevier’s Strategic Transactions database.

“Pfizer and Bayer are natural candidates, Takeda could be a player as well,” added Dallas Webb of BB Biotech, also an Onyx investor. He anticipates the next round of bids will start at $130 and “depending on the number of bidders should go north of that.” He expects more clarity within the next month on the acquisition process.

Various analysts have pegged a likely Onyx per-share sale price in the roughly $135 to $148 range. On top of that, there could be a contingent value right, particularly for oral MM proteasome inhibitor oprozomib. Gene Mack of Brean Capital proposed a $135 buyout share price, with a CVR of about $30 tied to oprozomib approvals in relapsed/refractory and newly diagnosed MM patients, as well as sales milestones based on up to $2 billion.

Pfizer and Bayer are major Onyx partners. Kidney and liver cancer drug Nexavar (sorafenib) as well as colorectal cancer and gastrointestinal stromal tumor treatment Stivarga (regorafenib) both resulted from the Bayer partnership. Bayer evenly splits Nexavar profits globally with Onyx, excluding Japan, and pays Onyx a 20% net royalty on Stivarga global net sales. The partners recently submitted in the U.S. and EU for Nexavar to treat thyroid cancer.

Onyx co-promotes Stivarga under a fee-for-service arrangement, Bayer has the right to terminate the Stivarga co-promote under a change-of-control agreement. But the Nexavar and Stivarga royalties would survive a change-of-control. Onyx was savvy enough to add that to an October 2011 renegotiation of its Bayer partnership, likely in preparation for a clean acquisition down the road.

Wall Street is skeptical that Bayer would buy Onyx in its entirety, although it may seek to fully capture Nexavar and Stivarga rights. Analyst Tim Race of Deutsche Bank, who covers Bayer, noted in a June 28 call that Bayer long has maintained that buying its biotech partners usually is too expensive and that, given its full pipeline, it doesn't need a major new product at this time. He added that Bayer is very hard-nosed about price and likely to walk away from a high valuation. In addition, Bayer would need to raise debt, a move that would damage its credit rating – something Race sees Bayer as unlikely to do.

Onyx partner Pfizer may be a more likely bidder, as the big pharma has made building an oncology franchise a top priority. Onyx and Pfizer have a partnership dating back to 1995 for high-profile Phase III breast cancer candidate palbociclib (formerly PD-991), which recently received breakthrough therapy designation from FDA.

Onyx stands to earn an 8% royalty on palbociclib should the compound get to market. That revenue stream could amount to almost a half-billion in 2026, when analysts expect the drug could generate around $6 billion in sales. If Pfizer really believes in this product, it might be motivated to capture all the palbociclib upside and also add likely blockbuster multiple myeloma drug Kyprolis (carfilzomib).

Existing MM competitors also are likely Onyx acquirers. Celgene's revenue is underpinned largely by MM immunomodulator Revlimid (lenalidomide), which increasingly is being used and tested in combination with Onyx’s Kyprolis. Takeda and J&J market MM proteasome inhibitor Velcade (bortezomib), which Takeda gained when it bought Millennium Pharmaceuticals Ltd.. With the same mechanism of action as Kyprolis and a 2017 patent expiry, Takeda likely needs a replacement. For now, it’s focused on developing its own oral MM proteasome inhibitor, MLN9708.

BMS and J&J also have bets on MM monoclonal antibodies, which are expected to bear fruit in the next few years. AbbVie and Bristol are partnered on Phase III elotuzumab, while Genmab and Janssen Biotech, a unit of J&J, have Phase I/II daratumumab. Daratumumab has Fast Track and Breakthrough Designations for fourth-line MM. These are likely to be used sequentially or in combination with Kyprolis, making Onyx a potentially good fit.

Speculation already has started about which biotech with potential oncology blockbuster companies could be next for a potential take-out. Mark Schoenebaum of ISI Group suggested Ariad Pharmaceuticals, Seattle Genetics and Medivation.

A long Onyx sale saga is likely just at the beginning of unfolding. While DOTW waits for the next shoe to drop, take a look at some actual deals in this week's edition of …

Pfizer/Bioventus: Pfizer will license worldwide rights to its bone morphogenic protein (BMP) portfolio to orthopedic biologics specialist Bioventus. In return, Pfizer will receive an upfront payment, milestones and royalties. Financial terms were not disclosed. The products include a BMP in development and an rhBMP-2 in unspecified indications. The rh-BMP-2 product appears to have entered Pfizer’s portfolio with its acquisition of Wyeth; Wyeth’s pipeline as of May 2009 described a BMP-2 program with indications in fracture repair and hip osteoporosis. Pfizer has agreed to undertake certain early development work for the BMP asset in soft-tissue indications and will manufacture the rhBMP-2 for Bioventus. Bioventus was spun out of U.K. device firm Smith & Nephew with funding from Essex Woodlands in 2012. The company recently has retained the services of BMP experts John Wozney and Howard Seeherman. It plans to soon open a research laboratory in Boston to develop and commercialize the BMP assets. With this deal, Pfizer continues to cull and prioritize its portfolio. The BMP agreement follows a spate of out-licensing in the wake of the Wyeth acquisition, including the CTLA-4 monoclonal antibody tremelimumab to AstraZeneca PLC and the irreversible TKI neratinib to newly formed Puma Biotechnology, both in October 2011. -- Mike Goodman

Merck/Xencor: Xencor already has a string of big pharma partners, but the small California-based biotech is hoping to get the financial flexibility to bring its own internal programs forward. Its latest deal brings the company one step closer to its goals.Xencor announced on July 2 that it has granted Merck a license to a Xencor Fc engineering patent for a monoclonal antibody for use in an undisclosed product that Merck is already working on. The New Jersey pharma also has an option to license the same intellectual property for future products. Merck paid an undisclosed upfront and agreed to pay annual maintenance fees, as well as milestone payments and sales royalties on any products that result. “Merck found an antibody that they needed that we had already patented,” said Xencor CEO Bassil Dahiyat. “They needed it for a use that we hadn’t thought of until they called us,” he added. The companies did not disclose what product the patent applies to or how it would be used. -- Lisa LaMotta

Avanir/OptiNose: CNS-focused Avanir Pharmaceuticals is licensing a proprietary intranasal delivery system from OptiNose for use in developing and commercializing a fast-acting, dry-powder inhaled form of sumatriptan for acute migraine. In the deal announced July 2, Avanir is paying $20 million upfront to license OptiNose’s Breath Powered delivery system; Avanir said it should be ready to file an NDA by early 2014 for AVP-825, the resulting drug/device combination product. The two companies will share development costs and work together on putting together the NDA submission. Avanir will assume responsibility for regulatory, manufacturing, supply-chain and commercialization activities for the product. OptiNose could earn up to $90 million in clinical, regulatory and commercial milestones related to ‘825, as well as tiered royalties on North American sales. Avanir says ‘825, if approved, would the first and only fast-acting, dry-powder inhalable version of sumatriptan for migraine. In a Phase III clinical trial, the OptiNose device demonstrated rapid absorption and provided relief using approximately 80% less drug than is contained in the most commonly prescribed oral sumatriptan product, the company added. -- Joseph Haas

Deals of the Week Gets Better Connected, Dips A Toe In Digital Health

Digital health is a bit of a catch-all. It encompasses everything from inexpensive exercise- and diet-recording gadgets to sophisticated multimillion dollar disease management systems, online pharmacies and website-based behavioral therapies. Truth be told, this DOTW correspondent, like many pharma execs, has always put the drugs first.

But there's no denying the clamor of expert opinion claiming digital health will be a powerful disrupter of health care markets in the future, potentially transforming pharma and device companies into service providers. "Digital health is going to happen, it may take time and will advance in fits and starts, but it will happen without the help of the establishment," Simon Cook, CEO of VC firm DFJ Esprit, told the London meeting of the Digital Health Forum, DHF13, earlier this month. "Nine out of 10 digital health businesses will fail, but a few will succeed and change the health care system." DFJ has investments in biopharma companies like Kiadis Pharma and Oxford Immunotec, as well as the internet nutritional company, Graze.

The transformation is coming faster now than two or three years ago, Cook said, because of the increasing pressure on individuals to take control of their own health, coupled with the increasing pervasiveness of smart phones and apps, making people comfortable with digital technology.

The investment community also is more engaged. Low-capital intensity business models are starting to emerge for digital health companies and are "incredibly compelling" for venture capitalists, said Alex van Someren, managing partner of seed funds at Amadeus Capital Partners. Amadeus, along with Archimedia Investments, put £1.6 million ($2.4 million) into the health care cloud platform, Qinec, in November 2012, and took part in May 2013 in a £2 million financing round for TrialReach, a company trying to improve patient awareness of clinical trials.

But small investment rounds, which characterize the digital health sector, often slip below the radar, or are not disclosed publicly, leading to a lack of comprehensive information about deal flows and valuations.

In the increasingly hot area of patient engagement and consumer health, much of the attention devoted to digital health has focused on continuous health monitoring followed by instant intervention via 24/7 connectivity. Innovators have focused on the concept for years, progressing slowly, but newcomers say they're at a turning point. U.K-start-up CellNovo, backed by investors and VCs to the tune of more than $40 million, is one of a slew of companies trying to address this challenge, and believes it is the most advanced in the diabetes sector.

Cellnovo has developed algorithms and software which allow physicians to monitor patients remotely in a sophisticated manner not seen with other company's systems. It anticipates a commercial launch of its digitally interconnected blood sugar monitor, insulin patch pump and exercise diary later this year, said Executive Chairman Eric Beard.

The theory that digital tools can improve the quality of care while saving money is exactly what the US and other countries are striving for as they work to reform their health care systems. In that sense, digital health tools are aligned with systemic priorities, and its benefits have not gone unnoticed by pharmaceutical companies as they and others try to grapple with harsh demands. Johnson & Johnson's business unit, Janssen Healthcare Innovation (JHI) is accelerating J&J's change from a product-centric to a health care solutions company. The company has noticed digital health start-ups often struggle to scale-up, and intends to offer master classes to European entrepreneurs in business development, to enhance the digital health ecosystem, in collaboration with partners.

But while we await the detonation of digital disruption, pharma and biotech have continued to forge deals and agreements, as we unveil ...

AstraZeneca/Roche: AstraZeneca and Roche are teaming up in a medicinal chemistry data-sharing collaboration with the aim of accelerating drug discovery. The deal announced June 26 is a sign big pharma may be more willing to work together in the pre-competitive space to improve the pace of drug development than in the past. Under the arrangement,  the two companies will use a technology called matched molecular pair analysis (MMPA) to identify chemical modifications that can be applied to each company's individual compounds to improve metabolism, pharmacokinetics or safety. The aim is to identify potential new drug candidates faster by using their combined databases of experimental results. Roche and AstraZeneca are committed to making the data generated by the program available to the broader research community, and are open to additional drug manufacturers joining the collaboration. The data-sharing will be managed by MedChemica, an expert in MMPA technology. - Jessica Merrill

MorphoSys/Celgene: Germany's MorphoSys has forged a potentially transformative alliance with Celgene, under which the latter receives worldwide rights to MorphoSys' CD38-targeting antibody, MOR202. The product, which is in Phase I/IIa trials in multiple myeloma, is believed to be Celgene's first clinical-stage antibody for the disease, a therapeutic area it dominates. In return for the rights, MorphoSys receives an upfront fee of $92 million, and Celgene will purchase $60 million worth of shares in MorphoSys at a premium of at least 15% to the biotech's closing share price of $37.06 on June 26. MorphoSys also will receive development, regulatory and sales milestones, plus double-digit royalties outside of a co-promotion territory in Europe, the companies announced June 27. The deal gives the partners the financial firepower to speed MOR202 to the market, while potentially broadening its indications beyond multiple myeloma. - John Davis

Aspen/Merck: South Africa's Aspen Pharmacare Holdings, the largest generics drug firm in Africa, continued its geographic, manufacturing and portfolio expansion efforts in a complex deal valued at more than $1 billion with Merck, roughly one week after revealing it hopes to acquire two mature thrombosis drugs and a manufacturing site from GlaxoSmithKline. For approximately $600 million, Aspen will buy a portfolio of 14 drugs from Merck and acquire active pharmaceutical ingredient manufacturing and related sales sites in the Netherlands and the U.S. In the deal, Aspen will get the Boxtel site in the Netherlands as well as part of two other API plants in that country, along with a manufacturing site in Iowa. Sales offices in the Netherlands and Illinois also will be included in the package. News surfaced June 18 that GSK is mulling an offer from Aspen to purchase Arixtra and Fraxiparine, which generated aggregate sales of $670 million in 2012, as well as a manufacturing site in France. - Joseph Haas

Cytokinetics/Astellas: Cytokinetics has signed a two-year research collaboration including rights to its skeletal muscle activator CK-2127107 with Astellas Pharma. The deal, announced June 25, is the second Cytokinetics has signed in two weeks, extending the company's cash runway and providing financial flexibility to carry on with the development of its lead drug tirasemtiv independently. Like '107, tirasemtiv is a skeletal troponin muscle activator, currently being tested in a Phase IIb clinical trial in patients with amyotrophic lateral sclerosis; data are expected by the end of the year. The license for '107 to Astellas is for non-neuromuscular disorders. The development plan encompasses potential indications like cachexia and sarcopenia. The deal does not exclude the potential to study other skeletal activator mechanisms that may emerge from the research in neuromuscular indications. Cytokinetics will receive $40 million initially from Astellas, including a $16 million upfront payment and $24 million in R&D reimbursement over the first two years of the collaboration. The biotech stands to receive as much as $450 million in development and commercial milestones, as well as royalties on any drugs emerging from the collaboration. Cytokinetics announced an expanded collaboration with Amgen June 12, under which it received $25 million upfront in exchange for giving Amgen rights to the heart failure candidate omecamtiv in Japan; the two already are partnered in other parts of the world - JM

Seattle Genetics/Bayer/Agensys: Antibody-drug conjugate specialist Seattle Genetics executed its seventh partnership since the start of 2009 around its auristatin-based ADC technology platform on June 25. This time, the Bothell, Wash., biotech will receive $20 million upfront from Bayer for a multi-target oncology collaboration. Seattle Genetics could earn up to $500 million in milestones under the Bayer agreement, as well as royalties on any products reaching the market. Targets were not disclosed. Bayer will be responsible for all R&D costs, plus manufacturing and commercialization. Seattle Genetics, which brought the first ADC to market for oncology with the 2011 U.S. approval of Adcetris (brentuximab vedotin), now has partnerships with five of the 12 big pharma companies, as well as three Japanese pharma and four biotech firms. In a release, VP of Corporate Development Natasha Hernday said Seattle Genetics has 15 ADCs in clinical development between proprietary and partnered programs, and is in line to earn up to $3.5 billion in milestones and royalties from its strategic partnerships. The biotech also announced June 27 it had taken an option under its 2007 collaboration with Astellas-affiliated Agensys. Seattle Genetics will fund 50% of the future development costs of ASG-15ME, a potential ADC therapy for bladder and lung cancer for which an IND has been submitted to FDA. - JAH

ADC Therapeutics/VivaMab: Swiss-based ADC Therapeutics is adding to its preclinical pipeline of around 10 antibody-drug conjugates by licensing a novel internalizing antibody, VM101, from BioAtla LLC's therapeutic division, VivaMab LLC. The antibody conjugated with a cytotoxic warhead has already shown in vivo efficacy against models of intractable hematological cancers, the companies reported June 24. ADC Therapeutics plans to start pre-IND development of the antibody-drug conjugate immediately for the treatment of a hematological cancer, with San Diego-based VivaMab providing development support and receiving undisclosed milestones and royalties. The antibody binds to antigens on the surface of tumor cells, is internalized and then releases the cytotoxic pyrrolobenzodiazepine payload. The Swiss firm say it intends to move multiple drugs into the clinic over the next three years. Upon successful proof of concept, it will seek to license the antibody-drug conjugates to pharmaceutical companies. - JD

Immunocore/Genentech: Genentech has become the first major partner of the privately held UK biotech Immunocore, which is developing a new class of bispecific therapeutic proteins called ImmTACs. The companies have entered into a research collaboration and licensing agreement for the discovery and development of multiple novel cancer agents, with Immunocore receiving an initation fee of $10-20 million for each program, the companies announced June 27. Immunocore will also receive more than $300 million in development and commercial milestones for each target program, and tiered royalties. The company's lead product, IMCgp100, which is in a Phase I/II clinical trial in patients with late-stage melanoma, is  not part of the deal. ImmTACs consist of high-affinity T-cell receptors linked to an antibody fragment, anti-CD3, which activates the immune system. T-cell receptors can recognize intracellular changes tha occur during cancer or viral infections, and ImmTACs are expected to target and destroy cancer cells without affecting healthy cells. - JD

Tesaro/Myriad Genetics: Tesaro, a three-year-old company focusing on cancer and moving at lightning speed, will use Myriad Genetic's BRCA1 and BRCA2 mutation tests to screen patients for enrollment in Phase III trials for one of its lead drugs, niraparib. The drug, a PARP inhibitor, which Tesaro in-licensed from Merck in 2012, is geared to patients with BRCA1 & 2 mutations who have breast or ovarian cancers. Myriad is the only company offering an FDA-approved version of this test, so the alternative would be to go to laboratories offering home grown versions, but the latter may not be as robust, a downside for inclusion in pivotal trials. Both studies will be initiated in mid-to-late 2013. Tesaro told Robyn Karnauskas, an analyst with Deutsche Bank, that its PARP inhibitor program is its most de-risked development strategy, based on very specific input from EMA and FDA. Women with germline BRCA 1 or 2 mutations have increased risk of developing high-grade ovarian and breast cancers, which are particularly sensitive to PARP inhibitors. Management further believes that the drug may be effective in other indications. - Wendy Diller

Nicox SA/Immco Diagnostics: Nicox, a French ophthalmics company, has entered into an exclusive agreement with Buffalo, NY-based Immco Diagnostics to promote a proprietary laboratory test targeted at early detection and diagnosis of Sjoegren's syndrome, an autoimmune disease that destroys the ability to produce tears and saliva. Under the terms of the deal, Nicox will detail the test to ophthalmologists in North America, to whom patients with the syndrome often present because dry eye is a symptom. Immco will be responsible for processing the test and all regulatory activites and reimbursement. Nicox will receive a majority of revenues generated from the ophthalmologists and has a nine-month option to exercise ex-U.S. commercial rights to the test as well. The disease destroys the exocrine glands that produce saliva and tears. Current diagnostic techniques for Sjoegren's syndrome are only moderately effective and detect disease only at advanced stages. The new test aims to diagnose the disease at earlier stages, when it is more treatable. Dry eye is a primary symptom of the disease, which is chronic, and the test is aimed at helping early diagnosis and more efficient management of it; rheumatologists are also involved in treatment. The test was approved in the U.S. in 2013, with a commercial launch expected in the second half of the year - WD

Photo credit: Wikimedia Commons

Financings of the Fortnight Spins A Big LP

 

Since when did “LP” stand for “Lavish Pharma” – as in, lavishing cash upon the life science venture world?

Everyone in our corner of the playground has known for some time that corporate venture groups are making more direct investments, especially in funding early-stage biotechs. “We’re going in earlier and earlier,” Jens Eckstein, the head of GlaxoSmithKline’s longstanding venture arm SROne, told "The Pink Sheet" recently. “We’re now incubating companies and creating companies on our own.”

In 2012, 28% of the nearly 80 biopharma or diagnostic start-ups that raised A rounds had at least one corporate investor on board (and often had more). In 12 of those deals, the corporates took the lead. Eckstein also said that SROne invested $53 million in 2012, its most active year yet.

Big Pharma is filling the void left by limited partners, too. Again, one of the most aggressive spenders is GSK. The latest example, announced last week, is its $23 million investment in a fund run by French firm Kurma Life Sciences Partners to focus on rare diseases. Officially Kurma Biofund II, it’s the first instance of a fund specific to a disease or indication subsector that we can recall since Kleiner Perkins Caufield & Byers said it would set aside $200 million for a “pandemic and biodefense” fund in the midst of the avian flu frenzy. (That link is well worth clicking, by the way, if only for the San Francisco Chronicle file photo of Brook Byers rocking That ‘70s Hairdo.)

Glaxo, like most of its Big Pharma brethren, wants products with the possibility of accelerated approval and high prices that won’t get push-back from payors. The rare-disease rush has gone on for quite some time, prompting our colleagues to ask a year ago if it were a precarious bubble. Apparently GSK and Kurma’s other LPs that include New Enterprise Associates don’t think so.

To be clear, the money GSK is pouring into venture funds is separate from the capital under management at SROne. (SROne used to make LP investments but hasn’t for about six years, Eckstein said.)  In the case of Kurma, GSK feels its smaller partner is better suited to sniff out the opportunities in European research labs, a similar story it told when it agreed earlier this year to co-fund up to 10 single-asset startups with Avalon Ventures in San Diego. (Again, the cash did not come from SROne’s capital pool.) GSK isn’t a limited partner in the Avalon deals, per se, but it is leaning heavily on Avalon’s scouting expertise. “If we can’t find ten cutting-edge programs, we’re not going to get into ten,” Lon Cardon, GSK’s SVP of alternative discovery and development, told Start-Up in April. “But we’re pretty confident Avalon can source four, five, or six without too much trouble.”

The Avalon arrangement also gives GSK an option to purchase each entity as it produces a clinical candidate that can move into IND-enabling studies. But in its more straightforward LP relationships – at least the ones publicly disclosed – it invests with no such strings attached.

Since the start of 2012, GSK has made other big commitments. In March 2012 Index Ventures said it had closed its first life-science-only fund at €150 million ($220 million) with GSK and Johnson & Johnson combining to commit half the total.

In January 2013 GSK said it would pump $50 million into Sanderling Ventures’ new $250 million fund, a surprising bit of news if only because Sanderling’s previous fund closed eons ago in 2004. Based near San Francisco, Sanderling’s West Coast location, where GSK had not partnered with a venture firm at the time, was a factor in GSK’s decision. (Since that announcement, during this year’s JPMorgan conference, Sanderling has not filed any regulatory updates that would indicate more progress toward the $250 million goal.)

GSK also has invested in Boston-based Longwood Founders’ Fund, run by Boston biotech veterans Christoph Westphal, Michelle Dipp, and Rich Aldrich. Dipp and Westphal were GSK executives for a relatively brief and controversial time after the company bought their Sirtris Pharmaceuticals. The amount of GSK’s Longwood investment was not disclosed.

(Other examples of Pharma LP investments: VenBio’s first fund backed by Amgen, Baxter International, and the CRO Pharmaceutical Product Development; Merck & Co.’s Research Venture Fund initiative, which includes an investment in Flagship Ventures’ latest fund; and Eli Lilly’s “Mirror Funds,” which after a big opening splash in 2010 hasn’t produced news since 2011.)

The $64,000 question – or multibillion-dollar question, really – is whether all this activity will pay off with more drug revenue for GSK and its peers. There’s strong evidence that direct corporate venture bets have rarely led to the parent company acquiring the investment targets, but there’s nothing yet to help glean how much Pharma’s LP activity has helped. Let's take GSK: From 2010 to 2012, the firm was 461 million pounds in the red based on its purchase and sale of equity investments, so assuming the SR One and LP activity counts against those figures, it’s hard to say GSK is getting a good financial return. But all this corporate venturing, whether as GP or LP, not just a financial exercise; GSK personnel take scientific advisory positions in the funds it invests in, where they have a window into dealflow and emerging ideas and technology.

Perhaps it’s instructive to note that of all the Big Pharma, GSK has made the most noise about re-organizing its internal research with a more venture-like mindset. As companies like GSK, Merck, and J&J cozy up to innovative entrepreneurs and financiers, is the warm fuzziness of innovation rubbing off? That's their hope. And even though there's been little correlation between corporate investors and corporate acquirers, as noted earlier, it's no predictor of future behavior, so don't be surprised if the investments lead to buyouts. Pharma's co-investors -- the other LPs in their strategic funds and the VCs who syndicate with their corporate venture funds -- are likely to do well. (They already do; companies with corporate VC investment command better acquisition multiples than companies without.)


What remains to be seen is the influence Pharma's cash has on the recipients of said cash. A curmudgeon might note that big Pharma advice -- the bow wrapped around the gift of its early-stage investment dollars -- hasn't resulted in productive R&D within its own walls over the past decade. Directing more resources -- human and financial -- toward what Pharma thinks it wants right now may mean that other opportunities (ones Pharma doesn't realize it needs later on) might not get funded. Then again, without those Pharma dollars propping up the early stage ecosystem, we might see far fewer companies and drug candidates altogether.

Whew. With that, we've managed to put the "long-playing" back in LP. But DJ FOTF is never done dropping old-school science; we put the needle on the record when the drumbeats go like...

Esperion Therapeutics: The anti-cholesterol drug developer just pulled off what sounds like a zen koan or knock-knock joke: An initial public offering for the second time. The Michigan firm priced its IPO on June 26 and will raise $70 million by selling 5 million shares at $14 a pop, giving it at first a market capitalization over $200 million. It’s not really the firm’s second IPO; a previous iteration, also called Esperion, went public in 2000 and was bought by Pfizer in 2004 for more than $1 billion. The program Pfizer brought in ended up stalling, and the current version of Esperion was created to spin it back out. The program is ETC-1002, designed to lower LDL-C (the so-called bad cholesterol) in statin-resistant patients, and is currently in Phase II. The through-line in all this is Roger Newton, leader of the team that discovered Lipitor (atorvastatin) in the previous millennium at Warner-Lambert. He founded the first Esperion in 1998, stayed on at Pfizer after the first Esperion’s acquisition, and spun back out with ETC-1002 in 2008 to form the second Esperion with $23 million in venture backing from Alta Partners, Aisling Capital, Domain Partners and others. Longitude Capital Partners led a $33 million Series B. Pfizer also took a small stake at the time of the spinout; Esperion’s regulatory filings show Pfizer as a 10% owner before the IPO, thanks in part to a conversion of debt into equity, but Pfizer holds no rights or royalties to ETC-1002. Pre-IPO, Esperion’s largest shareholders were Alta, Aisling and Domain, all with nearly 20% stakes. Not unusual these days, existing investors including Newton pitched in to make the IPO happen, buying 1.2 million of the shares, or more than 20%. Newton owned more than 7% of the company before the IPO. Credit Suisse and Citi led the underwriting and will be able to buy up to 750,000 more shares. – Alex Lash

XO1: The Cambridge, UK start-up has formed to develop an anti-clotting antibody with an $11 million Series A investment from Index Ventures, the venture firm’s largest solo A round to date. The preclinical anticoagulant, ichorcumab, was synthesized by a University of Cambridge research team, based on an antibody produced by a patient with unusual blood-clotting patterns. Index’s David Grainger was a longtime Cambridge research scientist who became an advisor to Index in 2008, then joined as a venture partner in 2012. He told our Pink Sheet colleagues that his close ties to the school led to a quick deal, rather than a competitive process.XO1’s key asset was created after a head-injury patient in her fifties exhibited a rare trait. Grainger said the patient in question had “a benign tumor of the immune system,” naturally producing a previously unseen antibody at an “out-of-control” pace. Her rare condition allowed her to survive a hematoma without bleeding to death, despite a clotting profile apparently similar to that of a hemophiliac. Cambridge researchers produced a similar effect synthetically with an antibody that targets exosite 1 of the thrombin molecule. Index invested from its €150 million ($200 million) Index Life VI fund that closed in March 2012. As noted earlier in this column, half the fund’s money came from GSK and Johnson & Johnson, but neither receives special rights to the portfolio companies in return. – Paul Bonanos

PTC Therapeutics: Rare diseases make for frequent IPOs these days. The latest debut for a biotech working on treatments for orphan indications belongs to PTC, which sold 8.4 million shares at $15 each to net itself $117 million. The deal was upsized from the 6.9 million shares it aimed to sell in the $13 to $16 range. Founded in 1998, the firm raised more than $300 million in private cash and tried to go public in 2007, only to withdraw its filing. The company is spending most of its resources on ataluren, in Phase III in the US for Duchenne’s muscular dystrophy caused by nonsense mutations and under review for market approval in the European Union. It is also in Phase III for nonsense mutation cystic fibrosis, only one of a handful of firms working on a disease-modifying drug in the area. PTC’s IPO came days after bluebird bio, a gene therapy firm going after rare blood-borne diseases, raised $116 million in its debut. Another rare-disease firm, Prosensa Holding, could follow soon.-- A.L.

Valeant Pharmaceuticals: In the last fortnight, specialty pharma and serial acquirer Valeant raised a total of $5.5 billion in funds to pay for its most expensive takeover to date, eye care company Bausch & Lomb. On June 24, Valeant closed on a public offering of 27.1 million shares (including full exercise of the 3.5 million-share overallotment) to gross $2.3 billion, selling stock at $85 apiece. Days earlier, the company launched a private offer of $3.2 billion principal amount in senior unsecured notes due in 2021 and 2023. Valeant announced in late May the $8.7 billion acquisition of Warburg Pincus-owned B&L, creating one of the largest ophthalmology companies in the world that will sell prescription and OTC drugs, including Valeant’s existing AMD treatment Macugen, gained through the 2012 Eyetech acquisition, plus contact lens products and surgical devices. Warburg Pincus will receive $4.5 billion of the purchase price, and the remainder will be used to retire B&L’s outstanding debt. Valeant has previously focused on dermatology and neurology drugs, as well as branded generics. The B&L deal marks Valeant's 25th acquisition in the last five years, for an aggregate $19.4 billion in up-front payments and potential earn-outs, according to Elsevier’s Strategic Transactions. -- Amanda Micklus


All The Rest: In a Series B round led by Stanley Family Foundation, with Clarus Ventures and Takeda Ventures also participating, Heptares (GPCR drug discovery) raised $21mm…3-V Biosciences brought in $20mm in Series C funding to advance its Phase I cancer candidate…protein therapeutics firm Complix NV raised a $15.5mm Series B…Vasopharm GMBH completed a $6.5mm Series F round to fund start of Phase III of VAS203 for traumatic brain injury…Trigemina’s Series A-1 round garnered $4.5mm to advance Phase II TI-001, an intranasal oxytocin migraine candidate…A Series A round for Numedii led by Claremont Creek Ventures and Lightspeed Venture Partners brought in $3.5mm…University of Turku spin-out Forendo Pharma (treatments for endometriosis and low testosterone levels) received the first €1.2mm ($1.57mm) tranche from Karolinska Development, which gains a 21% ownership and over a three-year period will invest a total of  up to €3mm…Following a 2012 recapitalization, predictive biosimulation company Entelos received additional undisclosed venture funding from Clearlake Capital Group and Michaelson Capital…epigenetic neurological drug start-up Rodin Therapeutics received undisclosed seed funding from J&J Development and Atlas Ventures…Formed late last year by the merger of public European antibody and vaccine developers Vivalis and Intercell AG, Valneva SE raised €40mm ($53.5mm) in an underwritten rights offering…Repros completed a follow-on offering of 3.75mm shares at $19 for net proceeds of $67mm…FOPOS were also completed by Intercept Pharmaceuticals, $61.7mm; Cempra Pharmaceuticals, $47.7mm; Progenics, $35.2mm; Mast Therapeutics, $23mm; Biodel, $18.5mm; Echo Therapeutics, $10.1mm; and Soligenix, $9.2mm…Four initial public offerings went final: Gene therapeutics firm bluebird bio raised $108mm through the sale of 6.8mm shares at $17, above its initial $14-16 range; Esperion (cardiometabolic drugs) netted $65.1mm, selling 5mm shares at $14, the midpoint of its anticipated range; Aratana Therapeutics, which had postponed its filing of 4.3mm shares at an $11-$13 range, amended its IPO terms to sell 5.8mm shares at $6, raising $35mm; and Canadian drug design company Antibe Therapeutics netted $2mm, selling 3.9mm shares at $0.55…Prosensa Holding BV announced terms of a 5mm ordinary share IPO priced between $11-13…Several firms filed for IPOS: Liver disease therapeutics developer Conatus Pharmaceuticals; outsourced medical services provider Envision Healthcare; small-molecule cancer therapies developer Onconova Therapeutics (Baxter holds a 14.7% stake and a 2012 alliance with the company worth up to $565mm); and specialty pharmaco Iroko Pharmaceuticals…Through a $25mm senior secured term loan facility led by GE Capital, Navidea Biopharmaceuticals gains support for its Lymphoseek radiopharmaceutical agent platform…Hercules Technology Growth Capital provided Rockwell Medical (end-stage renal and chronic kidney disease treatments) with $20mm in debt financing…To help Phase II trials for its lead candidate for primary brain cancer, Diffusion Pharmaceuticals brought in $5mm through the sale of convertible notes to existing investors, adding onto a $5mm convertible note sale of September 2012…Following Elan Corp.'s withdrawal of its offer to acquire private Austrian drug company AOP Orphan Pharmaceuticals, AOP spun off its 80% ownership in cancer business Activartis Biotech GMBH to a group of private investors.

Photo courtesy of flickrer technochick, aka Angie Linder. Thanks, Angie!

Deals of the Week Watches The Stakes Rise

The wide-open IPO window has given private companies more liquidity options, so maybe it’s no wonder that pharmas are willing to pay more than usual for closely-held start-ups. Judging by some recent acquisitions, pharmas are digging deep to buy assets they believe will become blockbuster cancer drugs. The mid-June buyout of Aragon Pharmaceuticals by Johnson & Johnson for $650 million up front is among the cancer sector’s largest takeouts of a privately-held, clinical-stage company ever – and comes despite a lingering lawsuit and a prominent competitor.

Among purchase prices for pure-play oncology start-ups, J&J’s down payment for Aragon is nearly peerless. Daiichi Sankyo's buyout of Plexxikon in 2011 leads the pack at $805 million up front; if Plexxikon wasn’t technically a pure-play, virtually all of its value was tied up in a key cancer asset. Like the Aragon deal, the Plexxikon deal was heavily front-loaded: Just $130 million was tied to milestones, while J&J will be on the hook for $350 million more if Aragon hits all its marks. And compared to other cancer deals in recent memory, such as Amgen Inc.’s 2011 purchase of cancer immunotherapy developer BioVex Inc. ($425 million up front) and Gilead Sciences Inc.’s 2011 deal for Calistoga Pharmaceuticals Inc. ($375 million up front), it’s a giant step richer. 

Catherine of Aragon, via Wikimedia commons

Aragon CFO Paul Cleveland declined to discuss specifics of Aragon’s earn-out, but the deal centers on Phase II program ARN-509, an androgen receptor inhibitor for castration-resistant prostate cancer. For its hefty purchase price, J&J gets an asset that’s already withstood one court challenge from rival Medivation Inc., and could face another. Medivation’s Xtandi (enzalutamide) shares lineage with ARN-509; both were discovered based on the research of University of California, Los Angeles professor Charles Sawyers, and Medivation alleged that the school hid ARN-509’s existence while out-licensing Xtandi. A judge affirmed that Aragon owns ARN-509 in January, but Medivation is appealing the ruling; a resolution might not come until next year.

Apparently the uncertainty wasn’t enough to spook J&J, but it’s possible that a different uncertainty spurred it to buy: Aragon’s choice regarding whether to conduct an IPO. The queue for new biotech listings is a long one, and it might be as easy as ever to go public. Even bluebird bio Inc., a mid-clinical-stage company in the once-untouchable gene therapy field, priced above expectations in mid-June, signifying that appetites are high for new offerings – even ones that carry a lot of risk. Indeed, Cleveland told “The Pink Sheet” that Aragon had a “very feasible go-it-alone strategy” that included a partnership and/or an IPO. (The strategy has apparently been in place for awhile, as CEO Richard Heyman told us last year.) Rather than risk letting Aragon brave the public markets, J&J moved to buy now.

In the end, J&J gets a drug that could succeed its existing prostate cancer therapy Zytiga (abiraterone), whose key patents expire in 2016. In the process, it extends a franchise that will compete with Xtandi, a drug S&P Capital IQ equity analyst Herman Saftlas said could deliver $2.5 billion in annual sales by 2015. And Aragon’s investors? Well, they get liquidity at a handsome multiple, but as part of the arrangement, they’ll also roll over some of their cash returns into a new company, Seragon, into which Aragon will spin out its Phase I selective estrogen receptor degrader ARN-810. -- Paul Bonanos

We know you have choices of your own, so thanks for choosing….

MedImmune/NGM: MedImmune, the biologics arm of AstraZeneca, signed on with privately held NGM Biopharmaceuticals June 17 to collaborate on the discovery and development of novel peptide or antibody therapeutics for type 2 diabetes and obesity. No financial terms were disclosed, but NGM will receive an up-front payment and research funding with the potential to earn development, regulatory and commercial milestones, as well as worldwide royalties on any products resulting from the partnership. The deal is the latest by MedImmune’s Innovative Medicines Unit for cardiovascular and metabolic diseases. Currently, bariatric surgery, which bypasses part of the patient’s intestines, is not reversible, and presents an array of gastrointestinal side effects, is reserved mainly for morbidly obese patients, who sometimes also suffer from out-of-control type 2 diabetes. “It’s not for every individual,” Christina Rondinone, chief of MedImmune’s cardiovascular and metabolic disease IMED said. “What we plan to do is develop a product that will mimic the benefits of surgery, avoid the side effects, and that every individual with diabetes can use. Our goal is not to treat the disease but reverse it with a drug.” Founded in 2008, South San Francisco, Calif.-based NGM now has signed three partnerships around its technology for understanding the roles that hormones play in certain diseases. In 2012, it partnered with Daiichi Sankyo to discover and develop drugs for type 1 and type 2 diabetes that modulate beta cell regeneration. Then, in January, NGM agreed to an exclusive collaboration with Janssen Pharmaceuticals Inc. to discover and develop novel therapeutics for type 2 diabetes. - Joseph Haas  

Teva/MicroDose: The Israeli firm Teva Pharmaceutical Industries Ltd. said June 17 it would acquire privately held MicroDose Therapeutx Inc. for $40 million up front and up to $125 million more in post-acquisition milestones. The New Jersey company’s two unpartnered clinical candidates are MDT-637, a treatment for respiratory syncytial virus, and a nerve agent antidote, both delivered via the company’s own inhalation technology platform. It acquired the anti-RSV candidate from ViroPharma Inc. in 2009. The firm has other delivery platforms, but Teva highlighted MicroDose’s respiratory technology and pipeline, saying the acquisition would strengthen its respiratory franchise. Underscoring Teva’s focus, the firm said it would also pay sales-based milestones and royalties upon commercialization of MDT-637 and an earlier stage asthma/COPD compound. Teva has expanded its generic empire as well as the branded side of its business through acquisition, although it has kept a fairly low profile since its $6.8 billion takeover of Cephalon Inc. in 2011. The firm has three branded respiratory products: QVAR for asthma, ProAir HFA for bronchospasm, and QNASL, a nasal spray for allergies. - Alex Lash  

Perrigo/Fera: Michigan-based Perrigo Co. said June 17 it would add to its smorgasbord of generic, over-the-counter, and animal health products by licensing a portfolio of nine generic ophthalmic offerings from specialty firm Fera Pharmaceuticals LLC of New York. Perrigo will pay $93 million, with $36 million more in contingent payments if more products are licensed. The portfolio includes sterile ointments and solutions and brought in more than $30 million in net revenue in 2012, according to Perrigo. Fera launched in 2009 with an ophthalmic portfolio that it acquired from Fougera Pharmaceuticals Inc., then the US arm of Nycomeduntil Takeda Pharmaceutical Co. Ltd. bought Nycomed in 2011. Fougera was owned by a private equity group until 2012, when Sandoz, the generics division of Novartis AG, bought it. Fera CEO Frank DellaFera and other top management were formerly with Sandoz. Perrigo claims to be the largest manufacturer of over-the-counter pharmaceuticals for the private label or “store brand” market. - A.L.  

Sanofi/Curie: A research collaboration between Sanofi and Institut Curie will revisit the basic biology that leads to ovarian cancer, according to the two entities’ joint statement issued June 19. Financial terms weren’t disclosed. The companies plan to identify targets that lead to cancer by revisiting a library of tumor samples that the Institute has preserved. Sanofi’s oncology division will work with Curie-Cancer, the Institute’s partnership organization, to address ovarian cancer using a translational approach. Sanofi plans to select targets based on tumor genome sequences, which are compared with healthy tissues to identify molecular alterations. It’s the second partnership Paris-based Curie-Cancer has formed with a major pharma this year. Roche and Curie-Cancer said in May that they would expand an existing four-year research deal reached in 2009, which had given Roche access to Curie’s pre-clinical research models. - P.B.  

DARA Biosciences/T3D Therapeutics: As it aims to focus wholly on oncology support therapeutics, North Carolina-based DARA BioSciences Inc. has spun out the last of its unrelated assets. DARA announced June 18 that T3D Therapeutics has licensed the worldwide rights to DB959, an oral, dual nuclear receptor agonist whose primary target is peroxisome proliferator activated receptor delta (PPARd). DARA has already developed the drug through Phase I for diabetes and dyslipidemia. T3D, which was founded by DARA’s former Chief Scientific Officer John Didsbury, intends to refocus the molecule as a treatment for Alzheimer’s disease. T3D is paying $250,000 up front, another $250,000 before the end of the year, plus commercial and development milestone payments. DARA will now focus solely on the commercialization of products that help with the side effects of cancer treatment – the company currently has three marketed products that fit this category, including a cream for skin irritation caused by radiation treatments. The company is looking to in-license other commercial-ready products and to find a partner that will develop the cancer support product it has in its pipeline. - Lisa LaMotta  

Protalix/Fiocruz: Israel’s Protalix BioTherapeutics Inc. reached an agreement with Brazil’s Ministry of Health that will allow the Brazilian government to manufacture the Gaucher disease treatment Uplyso (alfataliglicerase). The June 19 supply and tech-transfer agreement between Protalix and Fundação Oswaldo Cruz, known as Fiocruz, calls for the Brazilian health group to purchase $280 million worth of Uplyso from Protalix. Fiocruz will construct a facility and receive a license to manufacture its own Uplyso after seven years, once the purchase agreement is fulfilled. Uplyso, known in the U.S. and Israel as Elelyso, is an enzyme replacement therapy for Gaucher disease, a lysosomal storage disorder. Pfizer Inc. had licensed the drug locally and received Brazilian marketing approval in March, but returned rights to Protalix in exchange for $12.5 million in annual payments. Fiocruz is obligated to buy $40 million worth of Uplyso during the first two years of the agreement, and $40 million each year subsequently until it reaches the full $280 million. The seven-year agreement may be amended to add an additional five-year term to fulfill the financial terms. - P.B.

The Real Story Behind FDA’s Delayed Approval Of Eliquis

With what seemed to be stellar results from the ARISTOTLE trial, showing the first superiority over warfarin on bleeding and mortality for a novel oral anticoagulant, Bristol-Myers Squibb/Pfizer’s Eliquis (apixaban) was expected to have a clean trip through FDA.

So why was agency approval of the third novel oral anticoagulant to come down the regulatory pathway in recent years delayed by nine months?

The answer, which was largely hidden from investors and competitors, boils down to study conduct and oversight – things that should have been a piece of cake for experienced sponsors.

It turns out that the much-ballyhooed, 18,000-patient ARISTOTLE trial had a few problems, according to FDA review documents that are dissected in the June issue of Elsevier Business Intelligence’s Pharmaceutical Approvals Monthly, part of a regular series of drug review profiles (see the lead story, free for the next 30 days, here).

What were the problems? Well, for one thing there was documented evidence of fraud by employees of BMS and its contract research organization, PPD, at a Chinese study site. It seems these individuals altered source records ahead of an FDA inspection to cover up good clinical practice violations.

FDA’s need to further investigate this issue, as well as the data integrity for other Chinese sites and the impact on the overall ARISTOTLE results, led to a three-month extension in the original PDUFA date.

Publicly, BMS/Pfizer said only that the review extension resulted from its submission of a “major amendment to the application.” An accurate statement? Absolutely. But the fact that this “major amendment” comprised a more detailed accounting of the fraud was a juicy, and likely market-moving, tidbit not shared with the public at-large.

To its credit, BMS discovered the fraud and reported it to the FDA, and the alleged perpetrators were terminated. In contrast, the agency had to root out on its own answers to the second major problem that delayed apixaban’s approval – dispensing errors in ARISTOTLE.

Buried on page 88 of the clinical study report was a statement that 7.3% of subjects in the apixaban group and 1.2% of subjects in the warfarin arm received “a container of the wrong type” of medicine at some point during the double-blind, double-dummy study. This overall high rate of dispensing errors, and the disparity between treatment arms, troubled FDA, in part because these figures were based only on the sponsor’s analysis of one incomplete source of data.

FDA believed further investigation into the true rate of dispensing errors was warranted. Furthermore, agency reviewers seemed incredulous that the unusual number of medication errors failed to prompt a “serious inquiry” by the sponsor prior to NDA submission and that such errors occurred throughout the course of the trial without meaningful corrective measures, suggesting shortfalls in trial oversight.

So annoyed were agency reviewers by the whole situation, including BMS/Pfizer’s partial and evolving responses to FDA’s questions, that the team leader on the application said the NDA would have received a “refuse-to-file” letter had agency staff known about the dispensing errors issue at the time of submission.

Ultimately, FDA issued a “complete response” letter specifically directing the sponsor to get to the bottom of the problem – not that you would have known this from the sponsor’s public statements.

In a press release, BMS/Pfizer said only that the letter requested “additional information on data management and verification from the ARISTOTLE trial.” Again, not a falsehood, but also not exactly the type of information that would have been helpful to assessing what was really going on with apixaban’s prospects for a near-term approval.

Ultimately, the companies submitted data that convinced FDA reviewers that even under a worst-case scenario, the dispensing errors would not have disturbed the key efficacy and safety findings in ARISTOTLE.

So, all's well that ends well for BMS and Pfizer, right?

Well, not exactly. Eliquis failed to gain a coveted mortality benefit claim in the Indications statement, which would have set it apart from its two competitors who beat it to market, Boehringer Ingelheim GMBH’s Pradaxa (dabigatran) and Bayer AG/Johnson & Johnson’s Xarelto (rivaroxaban) (see PAM's analysis of how FDA reviewers picked apart the statistical significance here [$]).

Eliquis generated just $22 mil. in its first full quarter on the market, according to Bristol's first-quarter earnings report.

-- Sue Sutter (s.sutter@elsevier.com)