Friday, February 19, 2010

Deals of the Week Has Gold Medals and Free Money on the Brain

That was some spectacle, eh? No we're not talking about Tiger's not-a-press-conference, we're talking about The TOMAHAWK. Pretty incredible.

Meanwhile as USA's Olympic squad surges in (and around) Vancouver the Canadians have been getting some stick on and off the ice and snow. We don't mean to pile on but with Canada's 'Own the Podium' strategy not quite working out yet (there's always hockey, my Canadian friends), perhaps the hosts could learn a little something from one of their homegrown biotech's ability to turn that frown upside down. Or at least, you know, to monetize its losses.

Say what now? On Thursday, Seattle-based oncology-focused biotech Oncothyreon (yes we know that's not in Canada, but the co is an Edmontonian by birth) sold its interest in its 'indirect wholly owned subsdiary' Oncothyreon Canada Inc. and a related company for approximately C$8.425 million to an outfit called Gamehost Income Fund. Essentially the subsidiary houses Oncothyreon's non-monetizable tax losses (the IP and actual assets were transferred to Oncothyreon Inc.).

Niiice, right? Rodman & Renshaw analyst Simos Simeonidis explained it thusly in a note yesterday: "The company “owned” net operating losses from its Biomira days, which were tied to its Canadian subsidiary, and is not allowed to use them for income tax purposes in the US." Useless! Unless ...

"We point to investors that this is essentially free money in the form of non-dilutive capital, since it does not involve the sale of any ONTY shares or any rights to products, and it is simply the monetization of an asset that the company would not be able to use otherwise," pointed out Simeonidis.

Well played Oncothyreon, you get this week's DOTW gold medal. As for the rest of the podium ...

Sanofi/AVIESAN: Sanofi CEO Chris Viehbacher might have already helped shed the Big Pharma’s previous reputation for being inward-looking and somewhat Franco-French in its orientation, but he’s certainly not missing out on local opportunities as he pursues this more externalized approach. This week the group announced a research partnership with the French Life Sciences and Healthcare Alliance (AVIESAN), which groups together all the major health care players in the French academic research community, and agreed to sponsor a young researchers’ support program organized by the CNRS and INSERM. Sanofi says it will invest €50 million into these partnerships over the next five years. It’s all good stuff—enhancing life sciences knowledge, contributing to (and showing off) France’s strong position in the field, and developing projects in areas including aging and infectious disease that can directly benefit patients. But as well as keeping the French government happy (the Strategic Committee for Healthcare Industries has outlined plans to bolster funding for more tie-ups between academia and industry), it also buffs up Sanofi’s CV by positioning the group as a friendly and sharing supporter of national public research. “To encourage creativity, mutual teams, laboratories, technological platforms and even research centers for Sanofi and AVIESAN could be considered,” coos the PR. All that for just €10 million a year—bargain.--Melanie Senior

AstraZeneca/Rigel: AZ is building itself a bit of a reputation for forking out good up-front cash for mid-stage in-licensed assets: this week it signed its third deal in just five months with an upfront cash payment of $100 million or more. This time Rigel was the lucky recipient, granting the Big Pharma worldwide rights to its Phase II oral RA candidate fostamatinib and in exchange banking over $1 billion in potential development and sales milestones as well. Now sure, AZ has little choice but to win such valuable booty—fostamatinib could be among the front-runner oral drugs in a multi-billion dollar market—given the heavier-than-average near-term patent expiry burden the company faces. That’s how come it paid Nektar $120 million upfront for a Phase II OIC candidate in September, and Targacept a record-breaking $200 million for a Phase II depression-busting nicotine channel blocker in December. In the Rigel deal, AZ will cover all future development costs. The milestone payment split is up to $345 million during development, regulatory and first-commercial-sale (we read that as reimbursement!) and up to a further $800 million in sales-related payments (Rigel is expecting a further $25 million in milestones this year). AZ will also pay "significant" stepped double-digit royalties on net sales worldwide. Read our full coverage in "The Pink Sheet" DAILY--MS

Genentech (A Member of the Roche Group)/UCSF: Forgive cheeky pundits if they start calling the University of California at San Francisco's new Mission Bay campus "Genentech North." The agreement announced Feb. 19 is the latest tight connection between the neighbors, a history that stretches back to UCSF professor and Genentech co-founder Herb Boyer and the insulin work of UCSF professor Bill Rutter. Genentech will fund the work of several researchers at the UCSF Small Molecule Discovery Center (SMDC), which is run by ex-Genentecher and Sunesis Pharmaceuticals founder Jim Wells, now head of UCSF's pharmaceutical chemistry department. The team will use prior research from UCSF and Genentech to develop drug candidates, which in turn could trigger $13 million in milestones for the school, and royalties if Genentech brings a resulting product to market. It's the latest example of industry leaning on academia for early-stage and translational work, a trend that FDA drug chief Janet Woodcock this week spoke about at length, with several words of caution. UCSF is a pioneer in cross-over collaborations and deals.The school has in place several "master agreements" with private firms, including Genentech, that allow research groups to strike industry partnerships quickly. This is the first major deal since former Genentech executive Sue Desmond-Hellman took over as UCSF chancellor last summer. -- Alex Lash

J&J/Basilea: J&J handed back to Basilea full rights to ceftobriprole, the Swiss biotech's drug for complicated skin and soft tissue infections (cSSTI), after the CHMP recommended against EU approval of the drug. Unfortunately, no drug exists for complicated big pharma-small biotech alliances (cBPSBA). J&J's decision therein ends a tortuous relationship, which resulted in the drug's rejection by two regulatory agencies and an ongoing arbitration proceeding between the partners. In a conference call, Basilea execs said that they were happy to regain control of development and commercialization of the drug and are determining their strategy for it, including whether to seek a new partner or proceed independently. Execs said the arbitration, which Basilea initiated, is proceeding, with a decision expected by year end. In keeping with the rocky relationship, however, it's not a clean break: Under terms of the contract, J&J still is responsible during a year-long transition period for meeting all contract obligations—including clinical development, manufacturing, and commercialization—of the anti-infective. Basilea execs said they plan to meet with J&J to figure out a plan, which they expect will involve no cost to the Swiss biotcch. --Wendy Diller

image by flickr user LeeLe fever used under a creative commons license

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