Deals Of The Week: Hunting For Dengue Fever Drugs Amid Climate Change

                                      Aedes aegypti busily transmitting virus

Dengue fever is on the move. This mosquito-borne viral disease is invading new parts of the world, helped by climate change, urbanization and increased travel. Europe last autumn had its first big outbreak since 1920 on the Portuguese island of Madeira, while in Florida, where Dengue fever was largely eradicated in the 1930s, around 10 cases were reported in August.

With no approved vaccines on the market to fight the virus, this DOTW reporter was heartened to learn that Johnson & Johnson’s Janssen Inc. is joining the hunt for drugs to treat the world's fastest-spreading tropical disease by linking with academic researchers in Belgium and Britain’s Wellcome Trust medical charity.

The tie-up between Janssen and researchers at the University of Leuven, who have received backing from Wellcome, will build on the discovery of a series of chemical compounds that are highly potent in preventing the replication of dengue virus. The compounds, which have yet to be tested in clinical trials, are active against all four types of the virus and have been shown to work in animal tests. Janssen will have the option of an exclusive, worldwide license to progress and commercialize compounds developed through the research program. Financial terms were not disclosed but Janssen will make upfront, milestone and royalty payments to the University of Leuven.

The collaboration, although long-term, reflects confidence in the feasibility of making an effective medicine against Dengue fever, which is sometimes known as tropical flu. Dengue fever is spread by the Aedes aegypti mosquito, which is now found in 150 countries. To put concerns in context: malaria causes more deaths, but it is on the decline and affects fewer than 100 countries, according to the World Health Organization (WHO). Dengue fever, on the other hand, affected only a handful of areas in the 1950s, but is now officially present in more than 125 countries, exposing half the world's population to the disease. The danger is greatest in the developing world, but the disease is also prevalent in the southern U.S. and parts of southern Europe. Aedes mosquitoes are now present in 18 European countries, often arriving via the importation of bamboo and second-hand tires.

No treatment exists for Dengue fever and vaccines are still in the research stage. Hopes for an effective dengue vaccine were set asunder in 2012, when an experimental tetravalent dengue vaccine from Sanofi Pasteur proved less effective than hoped in a mid-stage clinical trial in Thailand, producing only 30% efficacy. More successful, we hope, will be the latest crop of deals of the week, including: - Sten Stovall

Sanofi/Pozen: Sanofi Pasteur’s parent Sanofi has signed a license agreement with Pozen Inc. on the commercialization of Pozen's new-and-improved aspirin therapies, being developed to reduce gastric ulcers in cardiovascular patients. The deal, which could generate more than $35 million for the U.S.-based company, gives Sanofi exclusive U.S. rights to commercialize all of Pozen's combination drugs containing the proton pump inhibitor immediate-release omeprazole and 325 mg or less of enteric-coated aspirin. This refers currently to Pozen's PA8140 and PA32540 tablets.

PA32540/PA8140 layers 40 mg immediate-release omeprazole (Prilosec) around aspirin to provide the cardiac benefits of once-daily aspirin therapy while reducing the risk of aspirin-induced gastric ulcers. PA32540 contains 325 mg aspirin while PA8140 contains 81 mg aspirin.

The Chapel, Hill N.C.-based company has built a business around developing fixed-dose combination drugs, which are sold through its partners GlaxoSmithKline PLC and AstraZeneca PLC. Prozen previously said it planned to go it alone on PA32540 after frustrating relationships with its big pharma partners and disappointing sales of its migraine treatment Treximet (sumatriptan/naproxen) and pain reliever Vimovo (naproxen/esomeprazole). Its latest deal will see Sanofi pay Pozen $15 million up front, with Pozen eligible to receive pre-commercial milestone payments of $20 million and additional payments upon achievement of certain sales milestones. Pozen will also get double-digit tiered royalties on sales of licensed products by Sanofi and its affiliates in the U.S. Sanofi will have responsibility for all sales, marketing, ongoing manufacturing and future development for the licensed PA products in the U.S. Pozen will keep responsibility for obtaining approval of the NDA, after which Pozen will transfer the application to Sanofi. The application was submitted on March 27 and accepted for filing in May by FDA. - S.S.

Otsuka/Astex: While the California biotech wouldn’t reveal how long it’s been on the block, Astex Pharmaceuticals Inc. said it found its highest bidder in Japan’s Otsuka Pharmaceutical Co. Ltd.  The deal, revealed Sept. 4 by a Japanese news organization, has Otsuka paying $8.50 per share for all outstanding shares of Astex, a 48% premium to the company’s 30-day moving average, and above its close of $6.68 on Sept. 3, the day prior to the deal announcement. Otsuka is expected to issue a tender offer within 10 days that will remain open 20 days. The transaction has been approved by the boards of both companies. The deal is expected to close in the fourth quarter.

Otsuka, which is trying to shore up its top-line from the bloodshed it expects when its blockbuster schizophrenia drug Abilify (aripiprazole) goes off patent in 2015, will benefit from the royalties that Astex brings in on its already-marketed leukemia drug Dacogen (decitabine), which another Japanese drugmaker - Eisai Inc. - has worldwide exclusive rights to commercialize. With Eisai required to pay 20% royalties on sales, escalating to a maximum of 30%, Dacogen accounts for about $60 million to $70 million in royalty revenues for Astex annually. Astex also has a fragment-based discovery platform dubbed Pyramid that turns out small-molecule drug candidates with a variety of mechanisms of action, amplifying the effects of existing drugs or resensitizing cancers to their effects - Lisa LaMotta

Ultragenyx/Kyowa Hakko Kirin: Rare disease company Ultragenyx Pharmaceutical Inc. has partnered with Kyowa Hakko Kirin Co. Ltd. to develop and commercialize a treatment for X-linked hypophosphatemia (XLH). This is the first pharma partnership for the high-profile biotech, which raised a $75 million Series B round in late 2012 that included several crossover investors.

At that time, it planned an IPO for the first half of 2014.. The pair will collaborate to develop the candidate, KRN23, for the U.S., Canada and EU with Ultragenyx leading development in the XLH indication and the pair sharing marketing and profits in the U.S. and Canada. KHK will be responsible for the commercialization of KRN23 in the EU. Ultragenyx plans to develop and commercialize KRN23 in Mexico, Central and South America. Financial details of the deal were not disclosed. KRN23 is in a Phase I/II trial in adults with XLH; the partners plan to initiate a pediatric XLH trial in 2014. XLH is a metabolic bone disorder caused by excessive loss of phosphate in the urine leading to severe hypophosphatemia. The resulting inadequate bone mineralization leads to various abnormalities. These patients have low serum phosphate levels due to high levels of FGF23, a hormone that represses the reabsorption of phosphate from the urine. KRN23 is intended to bind to and render FGF23 inactive, leading to an increase in kidney tubular absorption of phosphate and increased serum phosphate levels. This would be the first disease-modifying treatment for XLH, according to the company. The current treatment for XLH is oral phosphate and vitamin D (calcitriol) therapy; patients must be closely monitored and are at risk for various complications. - Stacy Lawrence

Baxter/Coherus: Pfizer Inc. and Amgen Inc.’s blockbuster Enbrel (etanercept) may have won extended patent coverage in the U.S., but at least two biosimilars that could challenge the drug in certain territories are under development. The latest will come from a Sept. 3 partnership between Baxter International Inc. and Redwood City, Calif.-based biosimilar specialist Coherus BioSciences Inc., which will collaborate on development of an etanercept alternative in Europe, Canada, Brazil, and other unspecified locales.  Baxter will pay Coherus $30 million up front, plus up to $216 million in additional payments contingent on clinical development and regulatory milestones, according to the deal terms. It’s not yet clear whether they’ll pursue approval in Enbrel’s largest indication, rheumatoid arthritis, or whether the companies will aim for psoriasis, psoriatic arthritis, ankylosing spondylitis or another autoimmune-related indication.

Enbrel generated $4.2 billion in 2012 sales; Amgen shares co-promote rights to the drug in the U.S. and Canada with Pfizer under a deal that ends Oct. 31, with Amgen taking back all rights. Sandoz is already developing an etanercept biosimilar, although that company is hoping to gain its first approval in psoriasis. That company believes it can challenge Enbrel’s extended exclusivity, including two U.S. patents that expire in 2028 and 2029. Baxter has teamed with Momenta Pharmaceuticals Inc. in a December 2011 deal that is expected to yield between two and six new biosimilars. - Paul Bonanos

Novartis/Regenerex: Novartis AG and Regenerex LLC have inked an exclusive global licensing and research collaboration based on the Kentucky-based biotech’s hematopoietic stem cell-based FCRx platform. Regenerex’s Facilitating Cell Therapy (FCRx ) has shown encouraging results in Phase II trials involving 15 kidney transplant recipients, inducing stable immunological tolerance and graft survival without the need for lifelong immunosuppression.  Currently, solid organ transplant recipients need immunosuppressive drugs for life to prevent rejection. FCRx is an allogeneic hematopoietic stem cell based therapy platform that also contains facilitating cells derived from a donor. The platform supports the development of tolerance, or "bone marrow chimerism," in transplant recipients and the two hope chimerism will eventually render recipients tolerant to cell, tissue or organ transplants from the same donor, enabling transplant patients to discontinue immunosuppressive medications after building stable immunological tolerance. Beyond transplant, the partners will study FCRx’s potential for correcting serious genetic deficiencies such as inherited metabolic storage disorders and hemoglobinopathies, examples being metachromatic leukodystrophy and sickle cell disease. The companies did not provide financial details or timeframe for their collaboration in the Sept. 6 announcement. Novartis did say that the FCRx platform will broaden its current cell therapy portfolio, which includes two novel cell therapy platforms initially being investigated in hematological malignancies. HSC835, currently in a Phase II trial in patients with high-risk hematological malignancies, is a novel cell therapy approach that enables an expanded single umbilical cord blood derived hematopoietic stem cell transplant in patients with limited treatment options. A second cell therapy product, CTL019 is a chimeric antigen receptor T cell therapy currently in Phase II development in acute lymphoblastic leukemia (ALL) and chronic lymphocytic leukemia (CLL). - S.S.

Thrombogenics/Bicycle: ThromboGenics NV has signed its second licensing deal in three months involving novel targets for diabetic eye disease, this time with U.K.-based Bicycle Therapeutics Ltd.  Bicycle's bicyclic peptide technology will be used to identify and optimize bicyclic peptides that inhibit what is believed to be a new target involved in vascular permeability, and ThromboGenics will have exclusive rights to clinically develop and commercialize the products. In return, Bicycle will receive an undisclosed upfront fee, development and regulatory milestones and royalties on sales, and will also collaborate with ThromboGenics on preclinical development. Their licensing pact was announced on Sept. 5. Now that ThromboGenics's lead product, the vitreomacular adhesion product Jetrea (ocriplasmin), has reached the market in the U.S and Europe, the Belgian biotech is casting around for new avenues to explore in ophthalmic diseases. It has nearly €200 million in cash, including milestone payments totaling €90 million from Jetrea's European licensee, Alcon (Novartis), so has the financial muscle to do so. In May, it licensed technology from Cambridge, Mass.-based Eleven Biotherapeutics to develop protein therapeutics aimed at another novel biologic target involved in diabetic macular edema (DME) and diabetic eye diseases. DME is of increasing interest to pharma companies because of its increasing prevalence and the possibility of improving on the current standard of care, lasers or VEGF inhibitor therapy. - John Davis

Santhera/Takeda: Santhera Pharmaceuticals AG of Switzerland reached agreement with Takeda Pharmaceutical Co. Ltd. on Sept. 3 to license back the European rights to its Phase III Duchenne muscular dystrophy (DMD) drug Catena (idebenone), increasing the Swiss company’s commercial flexibility. In return, Takeda gets an undisclosed percentage of future licensing and/or sales income generated by Santhera in DMD. Takeda acquired exclusive marketing rights for the medicine in Europe in 2005. Idebenone is a synthetic short-chain benzoquinone and a cofactor for the enzyme NAD(P)H:quinone oxidoreductase (NQO1) capable of transferring electrons directly onto complex III of the mitochondrial electron transport chain, thereby capable of restoring cellular energy levels.

The drug is in a DMD Phase III study conducted in Europe and the U.S. Santhera also obtained the right to cross-reference Takeda's idebenone data for regulatory use in any indication in any territory. If Santhera makes use of the cross-references, Takeda is eligible to obtain a percentage from future licensing and/or sales income generated by Santhera in such indications. The two companies also ended a 2005 agreement for idebenone’s use treating Friedreich's ataxia. Santhera's €1 million ($1.3 million) contingent liability payable to Takeda under that has been waived, but Takeda is eligible to receive €1 million  as a percentage from future income generated by Santhera to offset this.- S.S.



Photo credit: Wikimedia Commons.

Financings of the Fortnight Isn’t Convinced You Have Nice Assets

Skeptical kitten wants to see what comes out the other side.

Single-asset companies. Asset-centric funds. Project-based financing. Call it what you will, but with the biopharma news flow these days, you’d think the entire industry was restructuring itself to find, develop and sell single products. You’d think FIPCO dreams were exhibiting some serious unmet medical need.

Building the next Genentech, Amgen or Biogen Idec might not be a popular goal among biotech investors, but as START-UP's third annual life science VC survey is about to reveal, a sizable and growing minority of those investors aren’t interested in the asset-centric model. As the graphic below shows, the skeptics’ numbers (presented as a percentage of total biopharma-investor survey takers) keep inching up year by year.

Well then. Respondents left a lot of comments, too. Here are a few:

“Selectively appealing. Need[s] more human capital.”

“A fad.”

“This strategy requires additional caution.”

And this stem-winder:

“Not a sustainable model for more than a few specialized outfits; the asset scope is limited to anything between optimized leads up to Phase II POC - this is where, in most indications, Pharma can play as well. Again, it requires a specialized group that can identify ideas earlier [and] better than pharma groups and can execute better [and] faster. VC partnerships are in many cases not the right resource for this. [I] still believe this movement is primarily driven by a need to show LPs a new model now that returns on the old model have shown to be 'not so good.’”

Now that’s something to chew on. Because it’s becoming apparent that it’s exactly that combination – VC partnerships with Pharma – driving the model. Avalon Ventures will share the risk for some of its latest fund with GlaxoSmithKline, which is tapping Avalon to scout for assets in the San Diego area and holding options to buy those assets when they reach the cusp of IND-enabling studies. Index Ventures has raised its first life-science-only fund, with an asset-centric bent, with GSK and Johnson & Johnson as limited partners. (Neither will hold options, they say.)

And we’re now seeing the first products emerging from a new fund raised by TVM Capital, which hadn’t raised a fund since 2005. The new $150 million fund is also life sciences only – after 30 years, TVM will no longer actively invest in information technology – and could top out at $200 million by year’s end. Two thirds of it is dedicated not to building companies but to developing pharmaceutical compounds through proof of concept. And some of those assets will be tied to a buyer with an option at Phase II proof of concept. That buyer is Eli Lilly, which is seeing progress three years after announcing its intent to fund three VCs to run a “mirror” portfolio of single-asset companies, but not before some ups and downs.

TVM’s new fund is part of what Lilly used to call the mirror portfolio, now renamed the rather stodgy Capital Funds Portfolio. It’s one of two VCs involved – the other is HealthCare Ventures, which has formed five single asset companies (or, in Lilly-speak, project focused companies, or PFCs).

So there are various riffs on the basic asset-centric tune, but the only constant is the outcome: there isn’t any. That is to say, none of the larger-scale efforts we’ve seen so far have produced exits. Perhaps one or two now and again – such as Index Ventures’ sale of PanGenetics BV to Abbott Laboratories in 2009 -- but we're still waiting to see it pay off as a broader strategy.

We asked our survey takers a few other questions about asset financing: Are there plenty of good assets available to license? Is there enough development expertise to hire? Are LPs and Big Pharma interested in funding the model? Those answers should prove interesting – and they’ll be available in the upcoming issue of START-UP, as will a lot more detail about the TVM-Lilly tie-up. But until then, perhaps this investor comment is the best way to sum up asset financing, in all its various flavors: “They all need to show they work. Call me in a few years.”

That’s no skeptic talking. That’s Hubert Birner, the general partner at TVM leading the life science team, when START-UP asked him which model so far is working. With several efforts well under way, it shouldn’t take more than a few years to judge the early returns.

Speaking of early, your columnist needs to get up before the sun, and the night is growing late. So we’ll get our assets in gear and leave you with the rest of the current edition of…

iPierian/True North Therapeutics: Alzheimer’s hopeful iPierian said September 4 it has pulled in a $30 million Series C round, with part of that cash earmarked for a new company to house one of iPierian’s preclinical compounds. Both iPierian and the newco, True North, will move forward as developers of single assets, which puts iPierian’s discovery platform on the backburner. Formed from the 2009 merger of two companies that benefited from California’s public stem-cell initiative, iPierian aimed to use induced pluripotent stem (iPS) cells as the basis for drug discovery. Its current lead candidate, IPN007, has been tested in in vitro combinations of brain cells derived from iPS cells. It targets extracellular tau, a fragmented form of a protein closely associated with Alzheimer’s disease. It’s not yet clear whether iPierian will pursue approval in Alzheimer’s or a related tauopathy such as progressive supranuclear palsy or frontotemporal dementia, but CEO Nancy Stagliano told “The Pink Sheet” the company plans to file an IND in 2014. True North, bankrolled with an undisclosed amount of iPierian’s new venture round, will follow iPierian into the clinic with a compound that targets disorders of the classical complement system, a cascade that functions as part of the innate immune system. SR One, the investment arm of GSK, co-led the round with Kleiner Perkins Caufield & Byers, MPM Capital and all of iPierian’s other existing investors. iPierian’s original investors -- Kleiner Perkins, Highland Capital, MPM and FinTech -- helped establish the company with a $31.5 million Series A round announced in July 2009. Google Ventures led a Series B installment in July 2010, then SROne and Biogen Idec New Ventures topped off the round at $28 million in September 2010. – Paul Bonanos

Evotec: The German drug discovery services company has raised €30 million ($40 million) from the Biotechnology Value Fund and other affiliates of San Francisco investment firm BVF Partners, diversifying its investor base and bringing in extra funds to expand its program of collaborations with academia and biotech companies. BVF bought 11.8 million new shares in Evotec at €2.55 per share, a 3% discount to the closing price August 27, the companies announced August 31. At the same time, BVF bought an option to acquire 11.8 million Evotec shares from TVM Capital at €4 per share over the next 30 months. If exercised, BVF would be the largest single shareholder, with more than an 18% stake in Evotec. The Hamburg-based firm has turned its business around since it restructured in 2009, dropping costly work on its own product pipeline in favour of securing drug discovery alliances and helping pharma and biotech companies to find and optimize new compounds. It has long-term alliances with Bayer, Boehringer Ingelheim, Genentech, Janssen, MedImmune and Ono Pharmaceutical. This year, the company has entered into a collaboration with Harvard University to identify new antibacterials, and with Dana Farber's Belfer Institute for Applied Cancer Science, to explore epigenetic oncology targets. – John Davis

ObsEva: Announced August 29 and detailed in "The Pink Sheet" DAILY, the Swiss start-up has raised a CHF 32 million ($34.9 million) Series A round of funding to develop women’s health drug candidates obtained from Merck Serono. It’s the latest in a series of asset spinouts from Merck Serono, which has cut research staff since Merck KGAA bought Serono in 2006, but its venture group MS Ventures has dedicated funds to help launch those spinouts. (Our IN VIVO colleagues have a detailed look at Merck Serono’s post-merger blues here.) Paris-based Sofinnova Partners led the round, while Sofinnova Ventures of Menlo Park, Calif., and Novo A/S of Denmark participated. MS Ventures took an equity stake as part of the licensing deal that gave ObsEva its first drug candidates. ObsEva CEO, serial entrepreneur and women’s health specialist Ernest Loumaye co-founded the firm roughly two years after selling reproductive medicine company PregLem to Gedeon Richter for CHF 150 million up-front plus milestones. Some clinical work already has been performed on at least one candidate, a Phase II program for pre-term labor that can either reduce or prevent uterine contractions. Both Sofinnova Partners and Sofinnova Ventures, independent firms with an intertwining history, were PregLem stakeholders. PregLem provided an exceptional 5 times return for Sofinnova Ventures, the firm's General Partner Jim Healy said in an interview with our Pink Sheet colleagues. The firm led PregLem's CHF 36 million Series B round in 2007. – P.B.

Acacia Pharma: The repurposing biotech said September 2 it has raised £15 million ($23.5 million) in a Series B round to fund completion of the Phase III development of APD421, its lead product for post-operative nausea and vomiting. Other companies already market the active ingredient in APD421 in a CNS indication. The fundraising, which comes two years after the Cambridge, UK-based virtual company raised $10 million in a Series A in March 2011, adds two new VCs to its investor group, Fidelity Biosciences and Novo A/S, who join Series A contributors Lundbeckfond Ventures and Gilde Healthcare. The funds extend Acacia's cash runway to mid-2015 and are enough to complete Phase II studies of the company's second pipeline product, APD403, for the prevention of chemotherapy induced nausea and vomiting, the company said. Although the company plans to find marketing partners for its products at the end of Phase III, the strength of its financial backing means Acacia could consider commercializing its own products, he said. Acacia CEO Julian Gilbert is no stranger to repurposing medicines, having co-founded Arakis, a UK company with a similar strategy that was sold to Sosei in 2005 for £107 million.  Arakis worked to repurpose the muscarinic antagonist glycopyrronium bromide for chronic obstructive pulmonary disease (COPD), now marketed by licensee Novartis AG as Seebri Breezhaler. - J.D.

All the Rest: CNS-focused Intra-Cellular Therapies took in $60mm (18.9mm common shares and $15.3mm in bridge notes) from institutional investors, then reverse merged with a public shell to gain its listing on the OTC…developing late-stage OTO201 and OTO104 for disorders of the inner and middle ear, Otonomy brought in $45.9 million in Series C financing…Argos Therapeutics raised $42.5mm in a Series E round led by Pharmstandard OJSC, which with other first-time backer Green Cross, will take territorial rights to Argos’ AGS003 late-stage metastatic renal cell carcinoma candidate…Syndax Pharmaceuticals’ $26.6mm Series B round will help advance Phase III Entinostat, an HDAC inhibitor for metastatic breast cancer…Also in Series B rounds, antibiotics developer MicuRx took in $25mm; Arsanis, an anti-infectives developer built around Adimab’s antibody platform, with many of the same backers as Adimab, brought in $20mm; Icon Bioscience, a company with a late-stage cataract surgery candidate, raised $14.9mm; Swiss-based Mind-NRG, focused on neurodegenerative diseases, brought in $8mm; and Rani Therapeutics, developing oral drug delivery formulations for existing large-molecule pharmaceuticals, raised an undisclosed amount…Triton Algae Innovations completed a $5mm Series A to support expansion of its PhycoLogix synthetic biology platform for producing proteins in algae and commercialization of its PhycoShield line of proteins…OTC-traded immunotherapeutics developer Stellar Biotechnologies completed a $12mm placement of 11.4mm units at $1.05…Catalyst Pharmaceutical Partners, which targets rare neuromuscular and neurological diseases, completed a $15.1mm registered direct offering of 8.8mm shares at $1.72…Two biotechs filed for initial public offerings:  lipid-based nutritional ingredients and medical foods maker Enzymotec, the third Israeli company to list on Nasdaq this year; and MacroGenics, a developer of MAb therapeutics for cancer and autoimmune diseases…Three pharmacos set IPO terms: Fate Therapeutics (stem cell-modulating treatments for orphan diseases) is offering 4mm shares at a $14-16 range; Evoke Pharma (GI-focused spec pharma) plans to sell 2.1mm shares between $12-14; and protein and antibody drug developer Five Prime Therapeutics is offering 4mm shares at a range of $12-14…infectious diseases player ContraFect raised $11.8mm in an oversubscribed convertible debt offering – which initially targeted $5 million – to support CF301, its bacteriophage lysin for staphylococcus aureus bacteremia infection…concurrent with its spin-off from Elcelyx Therapeutics, NaZura BioHealth raised $5mm in debt…Oxygen Biotherapeutics completed a $4.9mm debt offering to advance its Phase IIb Oxycyte PFC emulsion for traumatic brain injury…In fund news, former Dendreon CEO Mitch Gold has partnered with investment analyst David Miller to open a new multimillion-dollar hedge fund, Alpine BioVentures, to invest in newer biotech start-ups, particularly those focused on cancer and rare diseases. -- Maureen Riordan

Skeptical kitten photo courtesy of flickrer Jeff Eaton, who also shoots sandwiches.

DOTW Looks At How 2013 Biotech Deal Stats Stack Up After Amgen/Onyx

Quick! What's large and vanilla and a late summer treat?

It’s the last week of summer, and while one might expect business development pros would have turned on their out-of-office auto-replies, the drug industry’s execs were too busy closing deals to be bothered with the beach or other lazy summer pursuits.

We should have known biopharma’s summer had ended early the moment Amgen Inc. and Onyx Pharmaceuticals Inc. announced they had finally negotiated a takeover Aug. 25, before the market even had a chance to wake up Monday morning. The deal left us wanting in some regards: no cliff hangers, juicy tidbits or surprise white knights emerged. But while nothing about Amgen’s acquisition of Onyx astonished (not the buyer, the seller, the rationale or even the final $125 per share purchase price, which ultimately landed squarely in the middle of where most industry watchers thought it would), biotech mega-deals just don’t happen every day.

We couldn’t help but get excited about it, especially wondering how significantly the addition of Onyx will impact Amgen's ambition of becoming a leading oncology player.

The acquisition price of $10.4 billion makes Onyx Amgen’s largest acquisition in over a decade. The amount is $800 million less than the staggering $11.2 billion Gilead Sciences Inc. paid for Pharmasset Inc., a deal that had everyone talking in 2011.

Unlike Onyx, Pharmasset had no commercial products, but presented an opportunity to transform Gilead with its potential best-in-class hepatitis C drug. Onyx may not end up being as transformative to Amgen’s top-line over the long-term as Pharmasset could be to Gilead, but the merger is still a notable moment in biotech and it will go a long way toward raising the industry’s 2013 merger stats, which were stark before high summer kicked into gear.

In addition to Amgen/Onyx, the busy summer deal sweep included two biotech acquisitions by Cubist Pharmaceuticals Inc. in the antibiotic space and Perrigo Co.’s takeover of Elan Corp. PLC. Those four deals gave a significant boost to the 2013 tally of U.S. public biotech acquisitions, which was in a drought for the first six months of the year. All-in-all, six U.S. public biotech acquisitions with a value over $100 million have been announced in 2013; four of those took place in July and August, according to Elsevier’s Strategic Transactions database. In comparison, there were a total of seven U.S. public biotech take outs announced in 2012 and six in 2011.

The hefty values of Amgen/Onyx and Perrigo/Elan lifted the average deal value in 2013 to $3.51 billion, well above the average deal value of $2.07 billion seen in 2012. Excluding those two mega-deals, however, the average deal value through August would be a comparatively meager $592.5 million. The four remaining biotechs that have been acquired play in niche commercial markets like antibiotics (Trius and Optimer) or fish oil (Omthera).

In comparison, of the seven acquisitions announced in 2012, five were valued at over $1 billion, reflecting more acquisitions in broader commercial markets like cancer, diabetes and autoimmune disease.

The summer may be winding down, but the last few months of the year are always a busy time for deal-making. There is sure to be more industry consolidation on the way, perhaps even Bristol-Myers Squibb Co. will buy Shire PLC. Just wait until after Labor Day weekend, okay? -- Jessica Merrill

Lilly/Zealand: Zealand Pharma AS has entered into a research and development agreement with Eli Lilly & Co. to design and develop potentially novel therapeutic peptides for Type 2 diabetes and obesity that the U.S. drug maker has discovered. The Danish group and says the collaboration could last more than 15 years and may eventually expand to other disease areas. Under the multi-target collaboration, announced Aug. 29, 2013, the duo will share in the funding, risk and reward of the program. No clinical details were given nor financial terms disclosed. But Zealand’s CEO David Solomon said the peptide therapeutics the two will be exploring are not glucagon-like peptide-1 (GLP-1) agonists, nor sodium glucose co-transporter 2 (SGLT-2) inhibitors, nor a dipeptidyl peptidase-4 (DPP-4) inhibitors, but rather a potentially whole new class of diabetes treatments. It’s the latest in a number of partnerships that the Copenhagen-based biotech has with Big Pharma. Eli Lilly said their project will revolve around a novel peptide hormone-based approach that its scientists discovered and which has the potential to lower blood glucose as well as body weight. -- Sten Stovall

Endo/Boca: It’s not a big surprise that Endo Pharmaceuticals Inc.’s first business development play under its new leadership was on the generics side. New CEO Rajiv de Silva has been talking up the company’s existing generics business Qualitest as an important growth driver as its branded business confronts generic competition. The company announced plans Aug. 28 to acquire mid-sized generic manufacturer Boca Pharmacal for $225 million. Qualitest is known for its strong capabilities in controlled substances. It leads the U.S. market in liquids manufacturing and was the sixth largest generics company in the country at the end of 2012, according to IMS Health. Florida-based Boca will add to the portfolio with generic forms of products like low-strength generic form of the hydrocodone drug Xodol. The company also produces generics of the inflammatory pain reducer Disalcid (salsalate) and the anti-anxiety medication Xanax (alprazolam). Endo will need to deliver more business development deals if it is to make up the revenues that will be lost from sales of its best-seller, the pain patch Lidoderm (lidocaine), in September. -- Lisa LaMotta

Akorn/Hi-Tech Pharmacal: Continuing the theme of generic consolidation, ophthalmology-focused Akorn Inc. announced plans Aug. 27 to increase its portfolio, pipeline and manufacturing capabilities by purchasing Hi-Tech Pharmacal Co. Inc. for $650 million. The deal will bring a broad range of generic, prescription and over-the-counter products, including eye drops, and render Akorn the third-largest generic ophthalmology drug firm in the U.S. CEO Raj Rai predicted the acquisition would increase the specialty pharma’s annual revenues to above $500 million, be immediately accretive and yield run-rate synergies of between $15 million and $20 million within 12 months of closing. Akorn reported sales of nearly $151 million for the first six months of 2013. The purchase price amounts to $43.50 per share for Hi-Tech, a 23.5% premium over its closing price on Aug. 26. Akorn says it will fund the purchase with cash and about $600 million in borrowing. The deal is small compared to some recent ophthalmology transactions. Most recently, Valeant Pharmaceuticals International Inc. grabbed headlines in late May with an $8.7 billion debt-and-equity deal to purchase ophthalmology giant Bausch & Lomb Inc. -- Joseph Haas

MedImmune/Amplimmune: Integrating Amplimmune Inc. into AstraZeneca PLC’s MedImmune LLC subsidiary shouldn’t be too much of a headache. The companies are neighbors in a Gaithersburg, Md., office park. Maybe it was only a matter of time before this deal got done. AstraZeneca, vaulting for a business turnaround, has been on a quest to fix its problems through business development. Its acquisition of Amplimmune for $225 million, announced Aug. 26, will bring the company an anti-PD-1 antibody for cancer nearly ready for the clinic. Privately held Amplimmune’s shareholders also could earn up to $275 million in development milestones as part of the transaction, expected to close during the third quarter. The milestones mainly will be tied to AMP-514, which should be ready for an IND filing in October. The acquisition offers a healthy return on investment for Amplimmune’s shareholders. The company was founded in 2007 with a $20 million Series A round from InterWest Partners LLC and the Wellcome Trust. Since then it has financed its operations with a pair of deals. In 2010, it got $23 million upfront from GlaxoSmithKline PLC for exclusive worldwide rights to AMP-224, an Fc-fusion protein of the B7-DC ligand now in Phase I/II study in cancer. Earlier this year, the biotech licensed the Phase I-ready B7-H4 fusion protein AMP-110 for autoimmune indications to Japan’s Daiichi Sankyo Co. Ltd. for an undisclosed option fee and research funding. AMP-514 is the key to the transaction, but MedImmune also values Amplimmune’s preclinical molecules targeting the B7 pathways. -- J.H.

Sangamo/Ceregene: Gene therapy developer Sangamo BioSciences Inc. is strengthening its expertise in the field with the addition of Ceregene Inc.’s adeno-associated virus technology platform. The company announced plans to acquire Ceregene in a stock transaction Aug. 26; Sangamo will issue 100,000 shares to Ceregene shareholders. Sangamo has also agreed to pay milestone payments related to the two Phase II programs that Ceregene brings. The lead program, CERE-110, uses AAV technology to deliver nerve growth factor (NGF), a naturally occurring protein that maintains survival of nerve cells, to the region of the brain that contains the majority of cholinergic neurons. The goal is to restore and preserve nerve function in an area of the brain thought to play a significant role in cognitive function and memory in patients with Alzheimer’s disease. A Phase II study of the drug is expected to report out in 2014. -- L.L.

Chiesi/Zymenex: With the ambition of building a standalone rare disease business, Italy's mid-sized pharma Chiesi Farmaceutici SPA will acquire Danish biotech Zymenex AS, the firms announced Aug. 26http://www.sunstone.eu/wp-content/uploads/2013/08/Chiesi-Sunstone-press-release-2013-08-261.pdf. The Parma-based company already markets medicines for cystic fibrosis and neonatal lung disease, and last month became pioneers in the marketing of gene therapy products in Europe by licensing uniQure BV’s Glybera (alipogene tiparvovec). The company’s interest in Zymenex lies in its recombinant enzyme replacement therapy Lamazym (rhLAMAN), which is being studied in a 25-patient Phase III trial for the treatment of the ultra-rare lysosomal storage disease, alpha-mannosidosis. The experience of Zymenex's researchers in developing other rare disease drugs could be useful to Chiesi's continuing push into the sector. In 2008, Zymenex sold a Phase II enzyme replacement therapy, Metazym (arylsulfatase A), to Shire for $135 million. Although the financial terms of the current deal were not disclosed, Zymenex’s majority shareholder, Danish VC firm Sunstone Capital, undoubtedly welcomed the opportunity to make a further return on its investment. -- John Davis

Meda/Acton: Swedish specialty pharma Meda AB is buying Acton Pharmaceuticals Inc. to get the privately held group’s Aerospan inhaler for treating asthma, approved by FDA in September 2012 and poised – pending satisfying further manufacturing requirements – for a U.S. launch in early 2014. Meda, which describes itself as the world’s 50th largest drug company, is paying $135 million plus a potential milestone payment of $10 million and royalty based milestones to buy the Marlborough, MA-based company. The Swedish group has its own respiratory portfolio and views Aerospan, which contains the active substance Flunisolide, as a promising addition in its quest for share of the $2 billion U.S. market for inhaled mono-corticosteroid asthma products. Meda aims to close the takeover by the end of 2013, and predicts Aerospan under its guidance will generate at least SEK2 billion ($300 million) in revenue within five years. A respiratory-focused development company with no products yet on the market and only nine employees, Acton was founded in 2008 and is owned by private equity group Sequoia Capital and the group’s executive management. A perpetual licensing agreement with Forest gives Acton exclusive global rights to develop and market Aerospan. Acton also has exclusive U.S. rights to Sanofi’s FDA-approved aerosol nasal allergy treatment Nasacort HFA (triamcinolone acetonide). Neither Meda nor Acton would comment on what the takeover of Acton would mean for that arrangement. -- S.S.

Teva/Rexahn: It appears Rexahn Pharmaceuticals Inc.’s solid-tumor therapy RX-3117 is at least one casualty of new leadership and changing priorities at Israel’s Teva Pharmaceutical Industries Ltd. The two companies terminated a 2009 collaboration centered around the drug after Teva declined to exercise its option on the product. Rockville, Md.-based Rexahn now has all rights to the compound, which inhibits DNA and RNA synthesis and induces apoptosis. Teva submitted an IND for the drug last month, as dictated by the now-defunct partnership’s terms. Teva said RX-3117 no longer fits its oncology strategy, despite harboring some potential. The decision is in line with statements Teva’s new CEO Jeremy Levin has made about narrowing Teva’s focus in oncology. Teva made an up-front payment of $3.5 million to Rexahn in the form of an equity investment four years ago, then made multiple equity investments over the course of the partnership as RX-3117 advanced through pre-clinical trials. It had acquired an equity stake of 6.3% by July 2013. Teva also unwound a four-year-old biosimilars agreement with Lonza Group Ltd. last month. -- Paul Bonanos

flickr image courtesy Chiot's Run under creative commons license. Holy ice cream headache, batman.

Financings of the Fortnight Checks The Corporate Venture Numbers

How important is corporate venture capital right now to the life sciences? That’s one of the key questions in this year’s START-UP Life Science VC survey, the results of which will be published in a few weeks.

When asked about themselves, corporate VCs mainly said they were important (77%), and the rest (23%) minority said they were crucial. Not exactly unexpected.

But traditional life science VCs were right there behind their corporate counterparts. 22% said CVC was crucial and 69% said important. Of the rest, 7% agreed with the statement “It’s of growing importance but will be relegated to the sidelines once traditional VC returns,” and 2% said CVC was insignificant.

That’s even more glowing than what institutional VCs said in the 2012 survey. Here are the institutional VCs' answers in 2012 and 2013:

Click to embiggen.

 Corporate investors’ Q ratings are going up at the same time their wallets are opening. According to the National Venture Capital Association and PricewaterhouseCoopers, 18.3% of biotech deals in 2010 and 2011 combined had CVC participation, accounting for 8.0% of biotech venture dollars. The average investment per round was $4.0 million.

In 2012, the average investment per round jumped 20%, to $5.0 million, and 19.5% of all biotech deals had CVC participation. The share of CVC dollars was 10.9%. Tack on the first half of 2013, and the last 18 months continue along those lines: corporate venture was involved in 19.2% of all biotech venture deals from the start of 2012 through June 2013, and their dollars accounted for 10.1% of all biotech venture. The average amount of participation per round was $4.9 million.

We’re not just tracking the corporate venture story for biopharma. Here’s a story that looks at the growing influence of hospitals and insurers in health care venture; and here’s one that examines the flow of corporate venture to medical device start-ups. Those sectors have also seen an increase in corporate venture dollars, according to the NVCA. (You can download all their corporate venture reports here.)

With all the IPO activity this year, we’ll also be able to update another corporate venture story we track closely: the financial returns of start-ups with corporate investors on board. Look for an update of those numbers this fall or early winter. Last time we checked was October 2012, and we found that biotechs with corporate venture backing averaged a 1.6x step-up at IPO, slightly lower than the 1.8x for those without corporate investors. That’s the opposite of what we uncovered for acquisitions: corporate-backed biotechs fare better when selling, with an average 4.3x step-up, compared with those without (3.5x).

Is this the reality from now on? As one VC said in the survey comments, “It wasn't all that long ago that corporates were the last folks you'd call to raise money, and you'd only do so if you were desperate or if they were willing to pay up."

It's hard to imagine traditional VC roaring back to fill the early stage coffers of platform and early technology companies, a niche the corporates have begun to claim (more on that in the upcoming survey). But overall, let's not forget that even with this apex, CVC participates in one of five biotech venture rounds. There's a long way to go before corporate venture dominates the landscape the way, say, the freely available bi-weekly biotech financing roundup is dominated by...

Retrophin: Martin Shkreli’s fledgling biotech got another injection of capital on August 16 when the company tapped new and existing institutional investors for a $25 million PIPE (private investment in public equity) financing. Retrophin sold approximately 5.6 million shares of common stock and warrants. The company conducted a similar financing in February, issuing 3,333,332 shares of common stock and warrants to purchase an additional 1,530,559 shares of common stock, which resulted in $10 million in proceeds. The new PIPE proceeds will help advance the company’s early-stage pipeline. Proceeds will also help license an autism treatment from an undisclosed major pharmaceutical company. None of the programs in Retrophin’s pipeline have made the advancements the 30-year-old Shkreli has been promising since the company’s inception a few years ago.
A Phase II pivotal study of RE-021, its lead compound, was intended to begin in early 2013 for the treatment of focal segmental glomerulosclerosis but has yet to enroll patients, and timelines continue to be pushed back. The company has yet to conduct any clinical trials in humans for any of its compounds, but has released what it believes to be promising data from studies in mice. Shkreli started the company after leaving his hedge fund MSMB Capital, which he started in 2000. He wasn’t shy about making waves as a hedge-fund manager, such as when he led an activist shareholder battle against AMAG Pharmaceuticals in 2011. Shkreli and his fund pushed for the ousting of the company’s management should the merger with Allos Therapeutics take place; the issue was dropped when the merger failed. – Lisa LaMotta

Sophiris Bio: It wasn't pretty, but the Canadian-American biotech raised $65 million in an initial NASDAQ listing after nine years of being public on the Toronto Stock Exchange (TSE). The funding is expected to take it through 2015, including top-line data by the end of 2014 for a Phase III trial of lead candidate PRX302 (topsalysin) that's slated to start this half. PRX302 is a genetically modified protein to treat benign prostatic hyperplasia (BPH), also known as an enlarged prostate. Activated by prostate specific antigen (PSA), PRX302 binds to the GPI-anchored receptors on the cell surface of prostate cells. It induces cell death once activated. This, in turn, can relieve BPH-associated lower urinary tract symptoms such frequent and urgent urination, as well as a higher risk of urinary tract infections, urinary stones and bladder damage. Existing shareholders, including Tavistock with its 30.5% pre-IPO stake, committed to buy about $22.4 million worth in the offering. Other existing investors include Warburg Pincus (27.8%) and BC Advantage (6.6%). To lift its share price ahead of the offering, Sophiris executed a 52-1 reverse stock split on August 9. By August 14, that put its share price on the TSE at US $8.32. The offering priced at US $5 per share and sold 13 million shares on August 15; that's well below the last price on TSE. It had planned to sell only 5 million shares, when its TSE shares were each about US $13. In 2011, Sophiris moved its headquarters to San Diego from Vancouver, BC. – Stacy Lawrence

Regado Biosciences: The IPO window may be wide open for life sciences companies, but that doesn’t mean going public is always easy. Anticoagulant developer Regado scaled down expectations for its August 21 listing, finally pricing at just $4, far below its anticipated $14 to $16 range. The company sold 10.75 million shares in the offering, more than twice its original goal of 5 million, but still raised $43 million rather than the $75 million it hoped to take in. Regado will use the funds for a Phase III study of lead program REG1, a two-component anticoagulant used during heart surgeries. The therapy includes a therapeutic aptamer, pegnivacogin, and a control agent called anivamersin that reverses the aptamer’s effects. Physicians use the combination to balance the risks of ischemic events and excessive bleeding that can occur during percutaneous cardiac interventions. Shareholders in the Basking Ridge, N.J. company include Russian investment firm Rusnano, Fastenal Co. founder Robert Kierlin, Domain Associates, Edmond de Rothschild Investment Partners, Aurora Ventures, Quaker BioVentures and Baxter International Inc. Insiders purchased nearly $31.7 million worth of the shares sold in the offering, well more than 50%. – Paul Bonanos

Tigercat Pharma: The third project in the hands of Velocity Pharmaceutical Development Corp., the CMEA Capital-funded operator of virtual companies, now has a name. Tigercat Pharma was founded last year to study VPD-737, also known as serlopitant, as a treatment for chronic itching, or pruritis. Velocity and partner investor Remeditex Ventures of Dallas have since invested an undisclosed amount in it. A January regulatory filing suggests that Tigercat plans to raise up to $15 million, but at that time it had taken in $500,000 from a single investor. Tigercat licensed serlopitant from Merck & Co. Inc., which previously studied the neurokinin-1 receptor antagonist for overactive bladder. A clinical trial showed that it was no more effective than Pfizer Inc.’s Detrol (tolterodine) in treating the disorder, although it was well-tolerated by patients. Tigercat joins Spitfire Pharma Inc., Corsair Pharma Inc. and an as-yet-unnamed program among Velocity’s projects, funded by Velocity Pharmaceutical Holdings and operated by Velocity Pharmaceutical Development employees. Spitfire has VPD-107 for type 2 diabetes, and Corsair has VPD-380 for a pulmonary indication; neither has been tested in humans. (We’re guessing that the fourth project will also be named for a fighter aircraft, and we’re guessing it won’t be Fokker.) Velocity and Remeditex separately pledged to explore investment opportunities jointly. Regionally-focused Remeditex has confined its investments to Texas and Colorado previously, but expects to broaden its reach with the deal. – P.B.