Friday, April 10, 2009

Deals of the Week: Slow Start

Slow and steady may win the race, and occasionally there's something to be said for just plain slow. But not, friends, where Deals of the Week! is concerned. So when this, a holiday-filled and holiday-shortened week for many, was shaping up as the week of the weak deals (or, to put it more appropriately, a week filled with some minor transactions no doubt of great import to their transactors but not of much consequence to anyone else) we were getting a little antsy.

The island of BMS/Otsuka notwithstanding (see below), the early week was a sea of minor regional deals that together seemed bent on raising the profile of the Grand Duchy of Luxembourg to levels not seen since the 1940s. Archimedes extended its regional marketing rights for the sustained-release morphine Zomorph from the UK to include Spain, France, Belgium and Luxembourg; Takeda took back rights to its Actos diabetes drug from Lilly in Canada, Belgium, Denmark, Norway, Sweden, and Luxembourg (and eventually Turkey). Nycomed inked a couple regional deals of its own--one with HRA Pharma for marketing rights to an emergency contraceptive in the Nordic and Baltic countries and one with Allergy Therapeutics for Canadian rights to that company's older version of its hayfever vaccine.

Oh and speaking of slow, ophthalmology specialist Alimera Sciences finally saw the ten foot high writing on the wall and withdrew its plans for an IPO this week, citing current market conditions. And there are of course the rumors de jour (Renovo and Biogen on the block), but with nearly every company rumored to be for sale or on the prowl, maybe we're a bit desensitized to all the Sturm und Drang.

The drudgery wasn't limited to our dealmakers in the biotech and pharma world. Some of our favorite Nines got off to a painfully slow start (we're looking at you, Philadelphia Phillies' starting pitchers). But like the Phils the world of biopharma seemed to wake up after this week's seventh inning stretch and we had news aplenty to deal with as Sanofi's Medley deal got signed and Cardiome notched a solid deal with Merck & Co. Meanwhile Pfizer decided that two heads were better than one--hear it straight from the horses mouth(s) on our podcast.

Of course there was the regulatory news of the week too--with Genentech pulling Raptiva from the US market (not a surprise in the slightest, but still) and Novartis earning FDA's first Priority Review Voucher in conjunction with the approval of Coartem.

Feeling left behind with all this sudden acceleration? Just sit back and enjoy the ride. It's time for ...

BMS/Otsuka: We shouldn't complain, really, because this BMS/Otsuka deal is a lot to chew on. For starters BMS retains marketing rights to Otsuka's Abilify for an additional three years, extending a ten-year commercialization deal for the psychiatric drug in the US until the patent expires in 2015. BMS is paying $400 million for the privilege and the terms of the agreement have been updated: whereas BMS used to take in 65% of net sales and pay all marketing costs, now Otsuka will take home more revenue. But it also has more skin in the game, paying some some of the costs. In part 2, Otsuka will collaborate on BMS's oncology drugs Ixempra and Sprycel in the US, Europe and Japan starting in 2010, again paying some development expenses for a share of revenue. The net here for BMS is a smoother 2012 transition to life without Plavix and Avapro (both go generic in 2012) as well as a freer financial hand with which to prosecute its "String of Pearls" growth strategy. More analysis/details in our Pink Sheet Daily coverage ($ub), which is here.

Sanofi-Aventis/Medley: Sanofi the Serial Shopper continued its generics buying spree with the acquisition--anticipated in French daily Le Figaro last week—of Brazil’s number one generic firm Medley. Sanofi agreed to pay 1,500 million reals ($685.5 million) for the company, gaining some podium spots in the process: top pharma company in Brazil, with 12% market share, and the number one generics firm in both Brazil and the whole of Latin America. The Mexican market was sorted on April 2, when Sanofi became the generic leader there by buying Laboratorios Kendrick. Both this and Medley are small fry, though, relative to the French group’s €2.57 billion purchase of Zentiva completed in September 2008. Indeed, we’ve known since well before then that Sanofi is serious about branded generics, which characterize some of the fast-growing markets in the world. The strategy dovetails nicely with a more general push into emerging markets—though Sanofi-Aventis is hardly alone in this, nor indeed in its foray into non-prescription businesses.--Melanie Senior

Merck/Cardiome: Cardiome pulled down $60 million up-front in a deal with Merck & Co. for worldwide rights to the oral version of its atrial fibrillation drug vernakalant and ex-North American rights to the IV formulation (it is partnered already with Astellas in NA). Analysts loved this deal, and why not--the terms were solid, Cardiome scored a co-promote and a loan on good terms, and a partner who's making cardiovascular disease a big priority. What grabbed us most about this deal is what it means for Cardiome--and more particularly what it doesn't mean. Cardiome seems to be throwing in the towel on the biotech model, noting that the market no longer rewards pipeline so why should it invest in one? "We're kind of in a weird position," Cardiome chief biz officer Doug Janzen said on a conference call to discuss the deal. "We are a development company, and [yet] we don't truly believe in developing pipeline, the risks of developing pipeline at this point. I think Cardiome three years ago would have been delighted about spending this money on a new pipeline or spending the return of this deal on a new pipeline. That's clearly not where we are right now." It's as if, after the Superbowl when the winning quarterback is trotting off the field and is met with the familiar: "You've just won the Superbowl, whaddya gonna do now??" question, instead of the standard Disney World reply he says, "meh, not much. Probably get a shower, then retire." Ah, why bother repeating ourselves too much: here is yesterday's IVB coverage and The Pink Sheet Daily has the deal covered in-depth, here ($ub).

image by flickrer minds-eye used under a creative commons license.

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