Friday, October 23, 2009

DotW: Same As The Old Boss

Whiners, do-gooders and underdogs, go back to bed. Make yourselves some herbal tea. Go write in your journal or do a little scrapbooking. Maybe you’ll feel better.

This was not your week, in which we saw nothing less than the restoration of the natural order of the universe. Here’s to the golden rule: Those with the gold make the rules! To celebrate, In Vivo Blog is leaning back in its buttery leather armchair, warming its feet by the fire, and puffing an obscenely large stogie. You don’t like it? Go complain to the Parent-Teacher Association or Toby Flenderson.

First of all, nothing says “Them’s That Got It Should Flaunt It” quite like the New York Yankees steamrolling their way through the playoffs. They didn't quite clinch the American League pennant last night, but it’s a matter of time. Inhale, my friends. You catch that? It’s called ruthless dynastic victory, and it smells like a mysterious blend of exotic saffron, blood orange and dark woods. It also smells like the $425 million the Yankees guaranteed to three free agents last winter.

But the Pinstripers got nothing on Pfizer, whose $65 billion-ish takeover of Wyeth just closed, even though along the way the biggest and baddest needed a little help from its big, bad friends, some of whom nearly brought down the global economy. (Naughty little doggies!) In January Pfizer scraped together $22.5 billion in loans -- you know, those things financial institutions theoretically give to businesses to keep the world from grinding to a halt -- from a bank consortium led by some of the biggest bailout recipients, including Citigroup and Bank of America. And they did so back when it was easier to sneak a rich man into heaven than to squeeze a loan through the eye of a banker.

Further adding to the warm plutocratic glow this week, some of Pfizer’s lenders are back in the money themselves -- because God knows they’ve earned it -- with bonuses ready to flow like champagne, or even better, in addition to champagne. Nothing like a few Benjamins soaked in Perignon and tossed onto a baccarat table to get everyone’s attention. Party on! This is what America was meant to be!

Wait a second. Who let the party pooper in?

Stay vigilant, my friends, lest the wet-blanket malaise spread to our little corner of the world. To wit, we noted a disturbing lack of dance-on-your-grave, eat-or-be-eaten M&A this week. All we got were collaborations. Alliances. Partnerships. Oh, and an option-to-acquire. It’s practically socialist. We might as well hold hands, give everyone a pat on the head and a gold star, and sing “This Land is Your Land.”

But if that’s how you like it, then slice up your tofu, lightly steam your kale, and sprinkle on your low-sodium tamari as you enjoy another edition of...

Morphosys/Daiichi Sankyo: Were we expecting Morphosys to sign the kind of antibody discovery and development alliance it inked with Daiichi Sankyo this week around its HuCAL Platinum antibody library? Not really. Because Morphosys’ ten-year discovery and development deal signed in late 2007 with Novartis—one of our favorite deals for several reasons—is designed to eventually replace Morphosys’ existing discovery deals as those alliances expire. Eventually Novartis will become Morphosys’ exclusive discovery partner in nearly all therapeutic areas, so we thought new discovery deals were off the menu. However, that lucrative Novartis pact specifically excludes infectious diseases, and on Oct. 20 Morphosys announced it would team up with Daiichi to tackle hospital-acquired infections. In addition to the technology license fees and R&D funding that Morphosys typically extracts from a development partner, Daiichi will also fund development of certain infectious disease-specific technologies inside Morphosys. The biotech didn't disclose deal terms but says they're in line with its other discovery agreements, which have included roughly €9 to 12 million in milestone payments from discovery to market (per program), followed by mid-single digit royalties on future product sales. — Chris Morrison

Cubist/Hydra: Cubist Pharmaceuticals took another step beyond nasty bugs by tapping Boston-area neighbor Hydra Biosciences in a small, two-year deal for pain-killing compounds drawn from Hydra’s ion channel program. Cubist is paying $5 million upfront and $5 million a year in R&D funding for two years, with an option to renew. The firm is best known for the antibiotic Cubicin (daptomycin), which is on track for half a billion dollars in revenue this year as methicillin-resistant staphylococcus aureus (MRSA) continues its spread. But Cubist is pushing hard to diversify beyond antibiotics and also has phase-2 candidate ecallantide, in-licensed from Dyax, to treat blood loss during on-pump cardiac surgery.

Alcon/Potentia: No ophthalmologic indication has caught VCs’ eyes more than age-related macular degeneration, with more than $600 million in funding committed in the last decade. (For more on AMD, peep this recent Start-Up feature.) Much of the interest stems directly from Genentech/Roche’s success with Lucentis, an anti-VEGF therapy. Beyond anti-VEGF, the mechanism of greatest interest is interfering with the highly conserved complement pathway, which plays a crucial but ill-understood role in triggering the inflammatory aspects of AMD. At least eight companies are aiming to develop complement inhibitors, and we finally have our first deal in the space. On Friday, Oct. 23 came news that Alcon locked up licensing rights to Potentia Pharmaceutical’s POT-4, a complement inhibitor poised to begin Phase II clinical trials in AMD. The agreement allows Alcon to investigate POT-4 in other ophthalmic disorders and gives the specialty player the right to purchase Potentia outright if specific development milestones are reached. No financial details were disclosed, so we don’t yet know the possible return to Potentia’s backers, Healthcare Ventures and MASA Life Science Ventures. But the two firms have put $17 million into the company since 2007, when Potentia raised an initial $5 million Series A. It’s the second milestone-driven acquisition Alcon has signed in the past 6 weeks. In mid-September the specialty eye company acquired large molecule player ESBATech for $150 million upfront and another $439 million in earn-outs. – Ellen Foster Licking

Human Genome Sciences/Novartis: Perhaps the biggest deal number of the week stemmed from a 2006 alliance. On Oct. 21 HGS reported it rang up a $75 million milestone from partner Novartis as it ushered hepatitis-C treatment albinterferon alfa-2b toward a filing for market approval in the U.S. and Europe, where the drug will be known as Zalbin and Joulferon, respectively. The firms will share profits stateside as well as development and marketing costs, and Novartis takes the reins in Europe. HGS has already earned $132 million under the deal, including a $45 million upfront. The deal called for a potential total of $507.5 million, so the latest milestone puts HGS about 40% there. Not bad for biobucks.

And just when all these partnerships had you ready to sing Kumbaya...

Biogen Idec/Facet Biotech: Perhaps more accurately, it’s no deal yet. Facet informed us Oct. 19 that a measly 0.1% of its stockholders had tendered shares in Biogen Idec’s hostile bid at $14.50 a share. Biogen launched the bid in September. Considering Biogen co-owns two of Facet’s key pipeline programs, it’s hard to see this ending up as no deal. The only question is how high will Biogen go.

Photo courtesy of flickr user Paul Simpson.

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