Friday, January 08, 2010

DOTW: Smells Like '10 Spirit!

Whew. That was rough, but we made it through 2009. Well, some of us. Put down your knapsacks, scouts, and let's do a head count. Kindler? Present! Maraganore? Yo! Termeer? Uh, Henri, why are you hiding behind that tree? Mullen? Mullen? Funny, I just saw him a minute ago.

Let's keep going. Levinson? Anyone seen Art? No? Hassan? Poussot? Stylli? Hollis?... [Four hours and tens of thousands of researchers and sales reps later...] Excuse me, but where the hell is everyone?

All right. We'll have to move on into 2010 without them, though no doubt many will be back. Risking accusation of being an industry cheerleader, IVB would like to propose a marching song to keep things upbeat. How about "Smells Like '10 Spirit"? It's the smell, if not of victory, then at least the hope that a little biotech with big dreams can actually scratch up the cash (we found it hard, it's hard to find) for a worthwhile program, maybe even two, without a vulture sitting on its shoulder. Or that this time around, a giant merger will actually work. (The denial! The denial!) Or that the final health care reform bill that emerges from the Congressional meat grinder doesn't leave us all saying well, whatever, never mind.

We don't mean to be curt, but we've come back from the holidays with a ton of work. So load up on guns, bring your friends, it's time for the year's first edition of...

Novartis/Alcon: We've just finished The Deals of The Year, but it's not too early to create a new category: Quietest $50 Billion Merger. Novartis said Jan. 4 it would exercise its option to purchase Nestle's remaining 52 percent stake in eye-care group Alcon for $28.1 billion. Novartis has had the option since April 2008 when it bought the first 25 percent stake from Nestle for $10.4 billion.

Add to that Novartis' intent to buy out the minority shareholders for $11.2 billion at a price lower than what it's offering Nestle -- $153-per-share instead of $180 -- et voila! a pas-de-trois $50 billion takeover, second only in recent years to the Pfi-Wy tie-up. The attempt to squeeze out minority owners also marks the end of Novartis's promise to keep Alcon at arm's length. And Novartis CEO Dan Vasella had more hard cheese for Alcon's minority owners. He said under Swiss law they won't have recourse, but given the legal tangles we wonder how much of Novartis's posture is a scare tactic to get minority holders to sell quickly. Perhaps it won't be so quiet, after all. On the product side, Novartis is buying a huge ophthamalogic portfolio that has little overlap with its own. Novartis has contact-lens business Ciba Vision and pharmaceuticals such as age-related macular degeneration drug Lucentis. Meanwhile most of Alcon's $6.3 billion 2008 sales came from surgical products and devices such as artificial intra-ocular lenses. -- Melanie Senior

Genzyme/Hospira: Just when Genzyme finds the aspirin to relieve its self-inflicted headaches (hint: go to the four-minute mark) at its Allston Landing, Mass., manufacturing plant, Carl Icahn goes bang-bang-bang with his silver hammer on the company's head. First, the aspirin: Genzyme said Jan. 5 it would outsource fill and finish responsibilities for four drugs, including its cash cows Cerezyme and Fabrazyme, to Hospira. Genzyme said the deal was more about creating redundant capacity than about problems in Allston. OK, sure, but let's review the problems: A six-week shutdown last summer to clean viral contamination in one of its bioreactors led to shortages of Cerezyme and Fabrazyme. Then a five-week FDA inspection last fall resulted in 49 observations and a two-year corrective plan. (Early-stage production of the two drugs will continue at Allston, and some fill/finish work is being transferred to Genzyme’s facility in Ireland.) But the Hospira deal is unlikely to make any immediate difference, as the fill/finish work cannot begin until approved by FDA, a process expected to take six to eight months. And here comes the hammer: An anonymous source told Reuters Jan. 7 that Icahn is gearing up for a proxy battle more than two years after he took his first tiny stake in the firm. Genzyme is lining up defenses, however, by cutting a friendly deal with Ralph Whitworth of Relational Investors. Whitworth can join the board in return for his public support for Genzyme's nominees at shareholder meetings. -- Joseph Haas and Alex Lash

Kyowa Hakko Kirin/Dicerna: The $4 million upfront might be small beer for Kyowa Hakko Kirin, but the deal announced Jan. 4 gives the Japanese brew crew-slash-biopharma access to Dicerna's dicer substrate platform. It's a method of building RNA interference-based therapeutics with longer strands of oligonucleotides dubbed DsiRNAs that engage the RNAi cellular machinery earlier in the process. Dicerna says the longer molecules are more potent and bioavailable, and they skirt the considerable patent position of the field's leaders. But no one really knows how the IP will play out in the space until a drug comes to market, which is years away. KHK takes a license to develop drugs against an undisclosed solid-tumor target, with $120 million in milestones down the road. The companies can expand the alliance to 10 or more targets and beyond oncology, with the financial structure for each target about the same as the first. Dicerna is gearing up for a second round of venture funding, with its three A-round investors all signed on, said CEO Jim Jenson. -- A.L.

Kyowa Hakko Kirin/Reata: It's double duty for KHK this week. The firm spent $35 million for Asian rights to Reata's Phase 2 chronic kidney disease treatment bardoxolone methyl, with $237 million more in milestones to come as KHK takes the drug through the clinic in Japan. Reata first tested the anti-inflammatory bardoxolone, a once-daily pill, in an oncology setting but pivoted to CKD when the patients showed improving renal function, according to Reata CEO Warren Huff. Reata has raised a total of $117 million in venture funding since its inception in 2002. Its latest round was led by CPMG and Novo, which has been an investor since 2006, and includes a $63 million tranche contingent upon positive Phase 2b data in June. Reata hopes to use some of the cash to move two additional molecules into first-in-man studies. -- A.L.

Pfizer/Debiopharm: Swiss specialty pharma Debiopharm will put Pfizer’s cancer immunotherapy tremelimumab through a Phase III trial of melanoma patients who are identified as treatment responders by a biomarker. According to the deal, announced Jan. 7, Debiopharm will run the trial in Stage IV melanoma, and Pfizer will handle worldwide commercialization. Financial terms were not disclosed, but the deal is worth noting for Pfizer's "split the middle" approach. In the run-up to the Wyeth merger, Pfizer decided to stop R&D and divest non-core areas. Oncology remained onboard, but with tremelimumab, a fully human anti-CTLA4 monoclonal antibody, Pfizer is taking a modified out-sourcing approach to spread the risk. Last year, Pfizer discontinued a Phase III trial evaluating the drug as a single agent in patients with advanced melanoma after an interim review showed it performed no better than standard chemotherapy. But retrospective analyses showed the treatment worked better in some patients, paving the way for the development of a biomarker to identify responders. -- Emily Hayes

Creative commons image courtesy of flickr user davetoaster. Rock on, Dave.

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