Friday, March 26, 2010

Deals of the Week: Health Care Reformation

Behold the health care reformation. Clearly the biggest deal of the week -- or in the words of our excitable veep Joe Biden, a big f***ing deal -- was passage of the US health care reform bill.

It was certainly an historic moment, a piece of legislation that its backers hope will become as transformational as the 95 Theses of Contention Martin Luther nailed to the door of the Schlosskirche in 1517. At 2,700 pages, quite the doorstop, the bill certainly is heavier than Martin Luther's masterwork. Like ML, however, its authors also had to fight against indulgences, what with the Republicans offering 40 amendments designed to derail the bill, including a comical proposal to restrict sex offenders' access to erectile dysfunction drugs like Viagra.

As we noted earlier in the week, drug makers played their cards wisely, securing market expansions and intellectual property protections beyond what many thought possible, while simultaneously resuscitating their public image. (For now the insurance industry is wearing the bright-red bull's eye.) Even with the challenges of a risk-adverse FDA and lagging R&D productivity, there's plenty of reason for pharma to celebrate.

But we're also guessing certain factions -- the tea partiers and Republicans, for starters -- have not yet begun to fight. Will the November elections be Obama's Diet of Worms? (A sure-fire weight-loss scheme, by the way, but is it reimbursable?) Does Glenn Beck get to be Pope Leo?

Obama already has his game face on. Telling Republicans to "go for it" at an Iowa rally, he warned of an uphill battle for repeal come November as voters begin to feel the benefits of near-universal coverage. Like Luther, who famously uttered before the Holy Roman Emperor "I can and will not retract, for it is neither safe nore wise to do anything against conscience," call it the prez's "Here I stand" moment.

We also say bring it on. Mining the twists and turns of the bill, and all the future amendments sure to spring forth, will keep journos like us occupied -- if not gainfully employed -- for years to come. In the meantime, there's always that little weekly round-up we like to call...

Pfizer/GSK/Global Alliance for Vaccines and Immunisation: On March 23, Pfizer and GlaxoSmithKline signed what other media outlets termed "a landmark 10-year deal" to supply hundreds of millions of pneumococcal vaccine doses to developing nations at reduced prices. It's the latest example of big pharma's desire to do well by doing good. It's also the first deal to debut under a new Advanced Market Commitment scheme that helps poor nations secure vaccines, while guaranteeing a market for the drug companies, by setting a maximum price for the preventive shots. Over the next decade GSK will supply up to 300 million doses of its Synflorix vaccine to GAVI, while Pfizer plans to donate an unspecified number of Prevnar 13 shots. According to the AMC, the companies will charge $7 a dose for the first 20% of supplied vaccine, and then just $3.50 a dose for the remaining 80%. That's far less than the $54 to $108 per-shot fee GSK and Pfizer charge in developed countries. Canada, Italy, Norway, Russia, the United Kingdom and the Bill & Melinda Gates Foundation have collectively offered $1.5 billion to fund this first AMC. (The US isn't participating, but the FDA's priority review voucher is designed to expedite development of medicines for neglected diseases.) If it goes as planned, it will likely be the first of many such tiered pricing arrangements. Pfizer and GSK have both expressed interest in future AMCs. Rotavirus vaccines and a still-experimental treatment for malaria are good candidates for future GAVI tie-ups.

Ipsen/GTx: In need of non-dilutive financing after its selective androgen receptor modulator deal with Merck came to an end three weeks ago, GTx this week revised an existing collaboration with Ipsen. It calls for Ipsen to pay GTx $58 million pegged to Phase III trial milestones for toremifene, which is being tested to reduce fractures in prostate cancer patients receiving androgen deprivation therapy. The money will certainly come in handy, but GTx is paying a heavy price. The Memphis firm will forgo some longer-term payments that Ipsen would have owed had toremifene suceeded, as well as right of first negotiation to the Phase II prostate cancer drug, GTx-758. In an interview with 'The Pink Sheet' DAILY, Rodman and Renshaw analyst Simos Simeonidis said GTx "doesn't have a lot of wiggle room right now." That's because toremifene in November garnered a complete response letter from FDA that requested a second Phase III trial to demonstrate efficacy. With just $49 million in the bank and no more money coming from Merck, GTx calculated near-term cash was more important than downstream financial rewards. It's yet another example of the new math being practiced by cash-strapped biotechs.

AstraZeneca/Xenome: On March 23, Australian biotech Xenome announced AstraZeneca's MedImmune exercised its option, originally inked in 2009, to license four peptides designed to hit an undisclosed target involved in a key pain pathway. Financial terms remain confidential, which probably means they're not very lucrative for the privately-held Xenome, which most recently raised money ($6 million) in 2008. To develop its library of 2000 peptides, Xenome turned to Mother Nature for a little help. Its potentially innovative molecules are derived from cone snail venom. Should any of the recently optioned molecules succeed in the clinic, it wouldn't be the first time gastropod poison has yielded fruit -- er, success. Elan already markets Prialt, a drug for managing chronic pain based on the same venom. It's worth noting the deal comes a few weeks after MedImmune's mothership AZ pared its internal R&D efforts in certain CNS areas such as depression and schizophrenia.

Biovail/Cortex Pharmaceuticals: If there's a prize for revamping one's business via dealmaking, we nominate Biovail. On Friday, March 26th, the company announced its eighth transaction since its 2008 decision to become a CNS specialty pharma. Recent examples include the January deal with Amgen around GDNF rights and the tie-up with Alexza for the NDA-filed candidate, AZ004, for agitation associated with schizophrenia or bipolar disorder. Biovail is paying Cortex $9 million upfront for CX717, in Phase II studies as a treatment for respiratory depression, a brain-mediated breathing disorder. The deal also gives Biovail IP and rights to preclinical ampakine compounds. Biovail will likely pay a $1 million near-term milestone and perhaps $15 million more in milestones tied to clinical success and product approval. With AZ004, the Cortex program could add another product to the detail bags of Biovail hospital specialty-focused sales force.

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