Friday, September 11, 2009

DotW: Not Dead Yet

Obama's rousing speech on the issue of health care reform Wednesday night ensures that the issue is not dead yet. Given the number of democrats in Congress the odds of no bill passing hasn't really ever been the issue. The question has always been: can we get a bill passed that provides substantive change? Did those odds go up Wednesday night? Maybe.

They were certainly helped by Congressman Joe Wilson, whose outburst went a long way to proving Obama's point that the entire debate has been side-railed by incivility. (Though many have suggested Wilson must have confused Capitol Hill with Britain's House of Commons, Ezra Klein helpfully points out the infraction even broke the decency rules of our loud and unruly neighbors across the pond.)

True to form, Obama lost no time in seeking a teachable moment, using Wilson's quickly issued statement of regret to his advantage: “I do think that, as I said last night, we have to get to a point where we can have a conversation about big important issues that matter to the American people without vitriol, without name calling,’’ he said in response to questions from reporters at his Thursday Sept. 10 Cabinet meeting.

But despite checking off a number of boxes on a must-do list that included outlining both the dangers of maintaining the status quo and the specific advantages of his plan, many wondered in the aftermath whether Obama did enough for a cause that has become a linchpin of his presidency. Over at his blog at the New Yorker, Atul Gawande, whose work is now required reading in the Oval Office, soberingly summarized his take as follows:

"He checked all the boxes on my list. And yet I remain concerned that he may not have done enough. Our current health-care system—-bloated, Byzantine, and slowly bursting—-presents seemingly insurmountable difficulties. It is too big, too complex, too entrenched. What may be most challenging about reforming it is that it cannot be fixed in one fell swoop of radical surgery. The repair is going to be a process, not a one-time event. The proposals Obama offers, and that Congress is slowly chewing over, would provide a dramatic increase in security for the average American. But they will only begin the journey toward transforming our system to provide safer, better, less wasteful care. We do not yet know with conviction all the steps that will rein in costs while keeping care safe. So, even if these initial reforms pass, we have to be prepared to come back every year or two to take another few hard and fiercely battled steps forward."
Not very uplifting is it?

Outside of health care, the week was full of "not dead yet" moments. Swine flu is an epithet that continues to hog the limelight, despite pleas from Agriculture Secretary Tom Vilsack and the pork lobby. (Actually AP style says it's acceptable to use "swine flu" on first reference to H1N1. Seriously, we keep track via twitter.) Meanwhile, Almirall is determined to resurrect its COPD drug aclidinium. And then there's Dynavax's Heplisav.

In biopharma deal-making, the Elan-JNJ deal is certainly a candidate for "not dead yet" but the clock is ticking, with next Tuesday the deadline for the two companies to reach a resolution on their Alzheimer's collaboration after a potential side deal linked to Tysabri caused Elan's other partner Biogen to cry foul.

For more dealmaking antics of "not dead yet" biotechs (and a few healthy ones too) read on for an always looking on the bright side edition of...

Evolva/Arpida: Swiss biotech Arpida's pain is Evolva's gain. The two biotechs announced a tie-up this week that enables Evolva to go public via the reverse merger route. The event won't stand to give Evolva much liquidity: the company's existing backers, which include Aravis, Astellas Pharma, Dansk Innovations, and Novartis Venture Fund, plan to close an equity financing round prior to the merger. The good news is the round--which Venture Wire reports includes three undisclosed new European venture capital investors--should give Evolva plenty of dry powder for the next couple of years, meaning the company won't have to try and tap the public markets for cash. According to VW, the biotech has already reeled in more than $24 million in commitments toward that round. According to reports, the boards of both companies have recommended the deal to their respective shareholders; with the merger, Arpida shareholders will own one third of the combined company, which will trade on the Swiss stock exchange under the Evolva name. The news is the official death knell of Arpida, which has suffered since an FDA advisory committee recommended last November that additional clinical data would be required for the approval of the biotech's intravenous antibiotic iclaprim, which is designed to treat complicated skin and skin structure infections. Nor does it sound like Evolva will attempt to resurrect iclaprim. The focus of the combined company will be on Evolva's pipeline, which include a renal/arterial thrombosis-targeted treatment in Phase I and preclinical programs for influenza and fungal infections. In a press release announcing the news, AndrĂ© Lamotte, Chairman of Arpida’s Board of Directors, noted the tie-up is "expected to generate [the] most value for Arpida’s shareholders." Oh really? We'd only note that reverse mergers have a mixed track record.

Biotechnol/Digna Biotech/Genentech: Despite management changes that appear to upend the scientific culture at Genentech, making it worthy of the appelation Rochentech, Genentech is not dead yet, announcing an out-licensing deal to a biotech consortium with locations in Portugal and Spain. Under the terms of the deal, Biotechnol and Digna Biotech will develop and commercialize Cardiotrophin-1 for potential use in specific liver indications, gaining full access to Genentech's CT-1 IP in return for paying an undisclosed up-front. If CT-1 proves to be a major success story, Genentech (and by extension, Roche) isn't shut out of future upside either. The big biotech has an exclusive option to development and commercialization rights to CT-1 proteins in the liver disease arena. If it exercises said options Genentech will have to reimburse the consortium its development costs and pay pre-agreed milestone payments and royalties on sales.

Genzyme/Targeted Genetics: Targeted Genetics is still on life support, but refuses to go gentle into that good night. (We hereby nominate the company for DOTW's award for best interpretation of the Black Knight.) Whether the company has found the holy grail to success is another story. As Luke Timmerman at Xconomy reports, the biotech pulled itself back from the brink with an 11th hour deal, selling off its most valuable intellectual property--its gene therapy manufacturing and adeno-associated viral vector technology--to Genzyme for $7 million. There's probably no other biotech that typifies the boom to bust, scrappy nature of biotech than Targeted Genetics, which spun off from Immunex in 1992 in the heyday of gene therapy's hype, has yet to cure anything, and has burned through more than $300 million in investor capital. But even this deal still means the company is running on fumes. Targeted Genetics gains just $3.5 million at the deal's close and another $3.5 million in installments tied to the successful completion of "specified transfer plan deliverables." Even as most other big pharma and big biotech tread cautiously when it comes to risky technologies such as stem cell therapy and gene therapy, Genzyme has been one of the few early adopters as it attempts to bolster its technical capabilities beyond the comparatively simple field of enzyme replacement therapy. Among the Big Biotech's gene therapy deals: two tie-ups in 2007, including one with Fovea for a gene therapy for retinal dystrophies and a manufacturing deal with Chinese biotech Sunway to help produce Genzyme's gene therapy candidate, Ad2/HIF-1a, being studied as a treatment for peripheral arterial disease. It's possible the Targeted Genetics deal is a recognition by Genzyme that it needs help with its AAV manufacturing process (In 2007, Genzyme brought in Sunway to design, fund, and perform Phase I and Phase II trials in China for various forms of PAD, with Sunway producing the molecule for clinical trials using Genzyme's manufacturing process.)

Abbott/Evalve: Percutaneous heart valves represent one of the hottest areas in the cardiovascular device industry today. What was once a one-on-one competition between a small company (Corevalve) and a big one (Edwards Lifesciences) is now turning into a clash of Titans. In March, Medtronic paid almost $1 billion to become the dominant player in the market for percutaneous aortic valve repair, via its acquisitions of European market leader Corevalve and next-generation company Ventor Technologies. Now Abbott enters the game, offering $730 million ($320 million in cash and potential milestones worth $410 million,) for Evalve, which is years ahead of competitors in the market for percutaneous mitral valve repair, a market that dwarfs that of aortic valve repair and replacement. There are 8 million people in the US with significant mitral valve regurgitation and 600,000 new cases diagnosed each year. If these numbers sound very similar to the immense problem of heart failure, that’s no coincidence. MR is implicated as both a byproduct and a cause of chronic heart failure. Evalve’s MitraClip is the first non-surgical mitral valve repair device on the market—in 7 countries in Europe--and a US approval is anticipated early next year. Abbott announces this new purchase for its interventional cardiology division on the heels of the launch of its Xience drug-eluting stent, allowing the company to capitalize on its popular stent to build a bigger cardiology business not wholly reliant on DES, a dependency that hurt competitor Boston Scientific because it had no second act after launching its Taxus stent. Abbott won’t be exposed to the same risk; for one thing, much of its market cap is sustained by its pharmaceutical business, and in devices, it’s clearly not just going to sit on its laurels. --Mary Stuart

Facet Biotech/Biogen: Just days after Biogen Idec went hostile in attempt to take over partner Facet Biotech, the object of its $355 million affection offered a strongly worded rejection. Facet was once the R&D side of PDL, a pioneering biotech that held key patents underpinning several top-selling humanized monoclonal antibodies, including Avastin, Herceptin, and another drug much in the news, Tysabri. Recall that PDL split in two last year, with the so-called Queen patents going into a holding company that kept the PDL name, and the R&D shop adopting the moniker Facet. In addition to $375 million in startup cash from PDL, Facet also received a pipeline that included two compounds which are co-owned with Biogen Idec since 2005: daclizumab for multiple sclerosis and voloxicimab for solid tumors. Perhaps Biogen, under the leadership of new biz dev head Michael Lytton, saw an opportunity to rebuild its multiple sclerosis franchise (regaining 100% of Tysabri will also help). Last month the Massachusetts-based biotech made an unsolicited offer of $15-a-share. After Facet agreed to in-license a CLL therapy from Trubion in late August, Biogen played hardball, dropping its offer $0.50. Facet management said Biogen's latest offer, which is roughly equal to the cash and equivalents Facet held as of June 30, "places no value" on its clinical and preclinical programs. Is this simply grandstanding by Facet to drive the deal price upward? (If so, can you blame them?) As we noted in this Pink Sheet Daily story, it appears Biogen can afford to go higher. Based on Facet's on-hand cash and current burn rate, Geoffrey Meacham at JP Morgan estimates the $355 million offer would cost Biogen less than $50 million when all is said and done.

1 comment:

Anonymous said...

I thought it might tickle you that the GSK-Chroma deal that you lampooned a while ago last night won an award.

"Best Biotech Fundraising: Chroma Therapeutics

Winner: Chroma Therapeutics - for its $1bn deal with GSK and a £15m equity investment

Runners-up: BioVex, Synairgen

Chroma Therapeutics is a privately-held biotechnology company which is developing a pipeline of drugs targeting high-prevalence cancers and inflammatory disorders. Chroma is the first company to systematically assemble intellectual property in chromatin biology and has established a strong network of academic collaborators.

In June 2009, Chroma struck a deal with GSK to develop novel macrophage-targeted drugs, with one of the European industry's largest headline values at $1bn, and simultaneously received a Series D funding round from existing investors and GSK worth £15m. Chroma is based at Milton Park near Oxford."

Three Cheers for Chroma!