Friday, May 09, 2008

Deals of the Week: It's All in the Spin

Spin control is the operative phrase in pharma land this week. Merck PR again worked overtime, trying to put the 1200 job cuts announced Monday in a positive light. It's all part of the company's "Plan to Win" strategy, said Kenneth Frazier, the company's president of Global Human Health in a press release. (For an alternate viewpoint, check out this poem written by a Merck employee who sadly has a little too much time on his or her hands. Hat tip: Pharma Marketing Blog.) At least this time the company opted not to leak the news in a PowerPoint presentation. That's how some Merck natural products researchers found out about their early retirement according to C&EN. Meanwhile, Merck's partner in...Vytorin, Schering has its hands full regarding news that the Department of Justice--via federal prosecutors in unspecified U.S. Attorneys’ offices--is investigating the company.

We've also got to give Ken Johnson, a PhRMA VP, his due. The gentleman rose to the industry's defense in advance of Thursday's Congressional hearing concerning direct-to-consumer ads with this stirring tribute in the WSJ: consumer advertising for prescription drugs "brings patients into their doctors' offices and helps start important doctor-patient conversations about conditions that might otherwise go undiagnosed or untreated." (So that's why Robert Jarvik was skulling (er, is it shilling?) for Pfizer.)

Meanwhile, you can bet Amgen's PR team didn't thank CEO Kevin Sharer when he responded to angry shareholders with this comment uttered at Wednesday's Westlake, CA meeting: "I felt real economic pain." (Personally, this blogger would love to say that she took a 29% cut in pay from her 2006 salary and still managed to bring home more than $13 million.)

Are you looking for a different spin on the industry's news? We bring you this edition of:

Enzon/Icahn: Carl Icahn (for oh, yes I can) finally got his way--at least regarding Enzon. A few months back, Icahn upped his stake in the New Jersey-based pharma to almost 7% and quickly started making noises about a possible sale or spin-out. This week comes news that Enzon will be spinning out its biotechnology business into a new public entity that has yet to be named. (Our suggestion: Celian Inc., after Carl of course. It's got a nice ring to it--and its subtle too.) Enzon will gift the newco with $150 million of funding, expected to cover two to three years of research, and Enzon's pegylation and Locked Nucleic Acid (LNA--via Santaris) drug delivery technologies. Jeffrey Buchalter, Enzon's current CEO, will take the reins of the start-up, while Craig Tooman, currently CFO, will move up to the top spot at Enzon. Tooman's slimmed down Enzon retains rights to four marketed products (Abelcet, Adagen, DepoCyt, and Oncaspar), rights to current PEG royalty revenues, and a manufacturing facility in Indianapolis. The news isn't all that surprising--Carl can be a persuasive guy (unless you are Biogen Idec). In addition, Enzon was very much at a point in its life cycle where it was appealing to two very different kinds of investors--those who appreciate the stability and earnings provided by its marketed products and those drawn to the potential of its risky drug delivery/discovery capabilities. We're not sure which camp Icahn belongs to (we're guessing the former), but it's safe to say that lately investors haven't viewed drug delivery too kindly. Last December, David Steinberg told START UP: "The old model of drug delivery is completely broken down. To be successful you have to think far more innovatively." Maybe with this split Buchalter's newco will have the luxury of serving just one shareholder master.

Stiefel Laboratories/ABR: On Tuesday, Duluth, Ga.-based Stiefel announced it was acquiring the shares of two French companies, ABR Invent and ABR development, which make the dermal filler Atlean. Financial terms of the deal weren't disclosed. "Stiefel Laboratories has been looking for the right dermal filler to add to our aesthetic portfolio for quite some time," said Charles W. Stiefel, chairman and CEO, Stiefel Laboratories in a press release. ABR's Atlean consists of tricalcium phosphate particles suspended in a hyaluronic acid (HA) gel. As we reported in this March 2008 Medtech Insight Report, HA is the active component in all of the most popular fillers, including Restylane and Juvderm. Recent advances in HA filler technology--especially the introduction of highly cross-linked HA products that are more durable, easier to handle, and provide immediate cosmetic results without the need for pre-injection allergy skin testing--have resulted in rapid market adoption of these products. Even though sales over the next three years are expected to slow thanks to the sluggish US economy, analysts still predict the annual market for dermal fillers could reach $950 million by 2010. Oh, and we'd be remiss if we didn't mention this acquisition probably wouldn't have been possible without the $500 million in walking around money that Blackstone Group supplied to Stiefel last August.

NuVasive/Osiris Therapeutics: Spinal company Nuvasive announced late Thursday that it was acquiring Osiris' Osteocel biologics business for $35 million in cash upon close of the deal, and milestones worth up to $50 million, which are payable in cash or a combination of cash and stock. For its money, NuVasive gets a proprietary adult stem cell bone graft product derived from mesenchymal stem cells, as well as a processing facility to boost capacity. NuVasive said in a press release that it expects Osteocel revenues to jump from $15 million in 2008 to $25 million in 2009 and that the purchase will have no impact on Nuvasive's EPS, excluding an in-process R&D charge. NuVasive went public in 2004; since then it has acquired a nucleus disc replacement product, AMI Holdings' Neodisc, and a biomaterials platform from Radius Medical LLC. Two years ago, we speculated about Osiris' potential transformation into a orthopedics company. Osteocel was a big part of Osiris initial success. Because the MSC product is labeled as human tissue for transplant, it didn't have to go through clinical trials, making its path to mrket very straightforward. This helped pave the way for the company's 2006 IPO, which raised $35.8 million. Seems likely that Osiris will use the money from this most recent deal to fund ongoing Phase III clinical trials of its Prochymal product for graft vs host disease. In addition to the NuVasive deal, Osiris also announced Thursday that it has been given regulatory clearance to initiate an expanded access treatment program for Prochymal that makes the investigational stem cell product available to children with life-threatening GvHD.

Pfizer/NicOx: It was a bad news/good news kind of week for French spec pharma NicOx, which specializes in reprofiling existing drugs by grafting nitric oxide onto them. On May 6, partner Pfizer announced it would not advance PF-03187207, an experimental glaucoma therapy, into Phase III trials based on lackluster clinical data. Shares of NicOx tumbled 38% as a result. The "spinnable" news? Pfizer might consider continued development of the drug for potential registration in Asia, depending on the results of an on-going Phase II trial in Japan. In addition, despite the set-back with PF-03187207, Pfizer said it remains "commited to our joint program with NicOx, where the follow-up compounds...have produced encouraging results." It's worth remembering that the two companies have collaborated since 2004. In 2006, they significantly broadened their relationship when Pfizer agreed to pay nearly $30 million up-front and more than $350 million in milestones for exclusive, across the board rights to NicOx's technology in ophthalmology. NicOX's tumbing share price could put pressure on its execs to ink a deal for the company's still unpartnered Phase III Naproxcinod, a nitric oxide–donating form of naproxen. Analysts have hailed that compound as as a blockbuster alternative to the blighted Cox-2s. (For more, check out this February IN VIVO piece.)

(Image courtesy of Flickr user ilmungo through a Creative Commons license.)

No comments: