Friday, December 19, 2008

Deals of the Year Nominee: Genzyme/Isis

Ah, awards season. Why should film critics have all the fun? And voting! It's not just for presidential elections. This year your IN VIVO Blog team is nominating a handful of alliances, acquisitions, financings, regulatory negotiations and legislative compromises in our First Annual DOTY competition. And then you, dear readers, will vote (early and often, we hope) for the winner. Imaginary federal and international biopharmaceutical statutes prohibit us from awarding a monetary prize. But our winners, when they die, on their deathbeds, they will receive total consciousness. So they've got that going for them, which is nice.

The case for Genzyme's January cholesterol deal with Isis is straightforward: it's Big. In terms of up-front money (not always easy to come by these days), it's the biggest licensing deal of 2008. And of 2007, in fact--the largest one before it was GlaxoSmithKline's Genmab alliance in December 2006.

What’s more, this deal remains top of the money-on-the-table league even after terms were adjusted following one of the year's largest clinical upsets, Schering-Plough and Merck's Enhance data.

To recap: Genzyme, allegedly up against ten other bidders, agreed to pay $325 million up front (including $150 million for shares, at roughly double the price they are today) and over $800 million in development and regulatory milestones for mipomersen, a Phase III, once weekly injectable that targets low-density lipoprotein (LDL), the bad-guy cholesterol—and is perhaps even better at doing so than statins.

Trouble was, days later, data from the notorious ENHANCE study called into question whether lower LDL actually leads to better cardiovascular outcomes—apparently undermining the entire premise on which statins—and mipomersen--is based. Vytorin scrips have been on a nosedive since then.

Small wonder, then, that the deal terms were updated in June, following a delay in April to the drug’s development timeframe thanks to a skittish FDA. Genzyme squeezed another $50 million of development funds out of Isis, bringing its total contribution up to $125 million. Isis gets certain milestones early, in exchange, but—here’s probably the biggest blow—it also shares development costs after the $125 million is used up, until the program turns a profit. (See this story.) In the original deal, Genzyme paid all the development beyond Isis’ $75 million contribution.

That matters, but only later. Mipomersen’s developers may brag that it’s more potent than statins but this isn’t a drug that’s about to displace Lipitor, at least not for a while. For now, mipomersen is being developed for a rare inherited disorder called homozygous familial hypercholesterolemia, which affects only one in a million people. Granted, FDA’s extra data requests post-Enhance will delay the planned filing date by a year (read more about that here), but this shouldn’t break the bank for Isis even under the new terms. Where it might—but where its 30% share of profits could also be significantly higher—is in the subsequent heterozygous hypercholesterolemia program (1 in 500) and the incrementally broader populations beyond that. These ramp up to people with elevated cholesterol at high risk of cardiovascular events, and then to those unable to tolerate statins or for whom statins don’t work.

Which leads us to the second part of the case for this being Deal of the Year: because of the product. Mipomersen’s pyramid-style expansion potential—starting with a tiny, orphan indication, getting the regulators and physicians on side, then broadening out, including with an orally-available follow-on—is the new way to build a blockbuster. In fact it’s probably the only way, mitigating risk and cost for all parties.

And that property of mipomersen—the potential to turn from a small product within specialist comfort zone into something worth $2 billion—explains why Genzyme left its blockbuster upfront cash-wodge on the table. Is it IN VIVO Blog's Deal of the Year?

1 comment:

Anonymous said...

The Genzyme/Isis deal is the deal of the year, but it's the people who made the deal who should receive the kudos.