After months of waiting on edge -- dare we say with its heart all a-flutter? -- Vancouver-based Cardiome Pharma said Dec. 29 that its partner Merck & Co. has "confirmed its plans for development" of an oral formulation of Cardiome's atrial fibrillation compound vernakalant.
Merck's decision gives Cardiome a lifeline it wasn't sure it had. Merck was supposed to start Phase III clinical trials in summer 2010, but those plans were delayed because Merck "continue[d] to optimize the clinical plan," Cardiome CEO Doug Janzen told analysts in August. Investors took that vague explanation with the same skepticism that greets a sports team owner's assurance that a troubled coach's job is safe; Cardiome's stock price lost nearly half its value in the three months following Janzen's description. (A setback in its injectable vernakalant program in October didn't help, either.)
Vernakalant, which would be used as maintenance therapy to prevent recurrence of AF in people with a history of the condition, is important for Merck, but it's crucial to Cardiome. The Canadians have no other notable mid-to-late-stage assets in their pipeline except for the IV formulation, which this summer received EU marketing authorization under the brand name Brinavess. In the US, where it is in Phase III trials, Astellas Pharma has development and commercial rights.
Janzen said in August that Merck was being "very, very thorough," "thoughtful," and "big" -- a reasonable proposition, he said, given the $250 million estimated price tag of a late-stage global cardiovascular program and the number of internal committee reviews a behemoth requires for even a modest change of course. After all, the asset had survived the gauntlet of Merck's internal review after its acquisition of Schering-Plough.
Now Cardiome says in a release that Merck has completed another review and that "we [at Cardiome] look forward to working with them as they advance the vernakalant (oral) program to maximize its potential." The release didn't elaborate on what those next steps will be, but Janzen has previously observed that Merck is looking only for a first-in-class, best-in-class compound, so its trials will have to demonstrate superior heart rhythm maintenance to Sanofi's Multaq, against which it will compete. "That is the question to ask and will likely be the basis of the clinical program," he said at a Piper Jaffray conference in New York in December. Whether that program would include an outcomes study or head-to-head clinical trials, isn't clear - but that could be where the clinical program is headed.
If at first you don't succeed, buy buy again. That could be Roche's diabetes motto these days.
The Swiss drug and diagnostic giant told our Pink Sheet colleagues Wednesday, Dec. 29 it has agreed to buy Marcadia Biotech, a private Indiana outfit that has already struck a couple Big Pharma partnerships, most recently licensing a preclinical glucagon analog to neighbor Eli Lilly & Co. for use in an injector pen.
Marcadia's lead program MAR701, a GLP-1/GIP dual agonist, is in Phase I, so it has a long way to go to replace what was Roche's most advanced experimental diabetes asset, the Phase III taspoglutide. Roche pulled the plug on trials of the drug earlier this year. At a conference in October, Roche's top clinical executive for metabolism Anders Svensson said insurers have set a much higher bar for Type-2 diabetes drugs, and that developers must do more than just demonstrate glycemic control: "For now diabetes is not nearly as attractive as it was a couple of years ago."
No financial details were forthcoming about the Marcadia buyout. We'll have to wait until Roche's next quarterly earnings call, a spokesman said. But "The Pink Sheet" Daily has more on the story, including reaction from Kelly Close, an industry consultant who first reported the merger in her newsletter. -- Lisa LaMotta
There was more bad news on Dec. 27 for those developing anti-nerve growth factor (NGF) drugs: U.S regulators put Regeneron's candidate REGN475, in development with Sanofi-Aventis, on hold late last week, Regeneron said in a regulatory filing Monday.
The latest setback for an NGF inhibitor was triggered by a patient in another company's trial developing a serious bone disorder, known as avascular necrosis. It's caused when a lack of blood supply causes bone tissue to die.
Following similar concerns around other NGF-targeting drugs in 2010, it's no surprise that by now FDA believes the whole class of drugs could be unsafe. Regeneron says as much in its filing: "The FDA believes this additional case provides evidence to suggest a class-effect." No word yet if or when REGN475, also known as SAR164877, will get a green light, but Regeneron noted that there are no current trials of the drug either enrolling or recruiting patients.
Trials in osteoarthritis pain of Pfizer's anti-NGF candidate tanezumab, believed to have been the most advanced in development, were put in hold in June 2010 following FDA concerns that a number of patients' osteoarthritis symptoms were worsening, rather than improving. In some cases this led to joint replacements. Because of the hold, Pfizer terminated most of its tanezumab trials earlier this year, but it is pressing on with two trials to study the drug, one in combination with opioid medication, the other as a standalone treatment in patients with chronic pancreatitis, according to clinicaltrials.gov.
None of this will provide much Yuletide cheer to the likes of Abbott, which paid a whopping $170 million up-front for PanGenetics' Phase I anti-NGF antibody last year, or AstraZeneca, whose MedImmune subsidiary has a Phase I stage anti-NGF antibody for osteoarthritic pain in the knee. J&J picked up a similar candidate from Amgen in 2008. [UPDATE: AZ and J&J have in fact suspended their programs, reports Bloomberg.]
Also in the pain domain but more positive was the news that King Pharmaceuticals and Pain Therapeutics' re-submission of abuse-resistant oxycodone (Remoxy) was accepted by FDA. This time, Pfizer will be pleased: it has agreed to buy King for a cool $3.6 billion. Image by flikrer johnnyalive used under a creative commons license.
Santa baby, slip an NDA under the tree for me, It’s been such a transformative year Santa baby, so hurry down the chimney tonight.
Santa baby, we’ll take some convertible debt – I bet We’ll roll it into a Series B before long Santa baby, so hurry down the chimney tonight
Think of all the M&As! Are IPOs a choice for biotech pure-plays? Next year, the milestones will come An exit by earnout, baby, that’s the new way.
Santa baby, our ex-US rights we’ll shop, you’ll drop Cash upfront plus biobucks Santa baby, so hurry down the chimney tonight!
IN VIVO Blog's Deals of the Week crew wishes you a happy and healthy 2011. In the meantime, sign your X on the line just like Eartha says, and point your sleigh toward...
Pfizer / Lpath: If you're on an L-path, and you cross two bridges, you arrive at Pfizer. That's this week's DOTW Zen koan. First, grasshopper, the deal: Pfizer paid the San Diego biotech $14 million for an option for worldwide rights to its Phase I wet AMD antibody Isonep, and it will split costs of upcoming Phase Ib and IIa trials. Pfizer will then have an undisclosed period of time to decide if it wants to fully take over Isonep. If it does, it will pay an undisclosed option fee, plus milestones up to $497.5 million and tiered double-digit sales royalties. Pfizer also gets a time-limited right of first refusal to another antibody Asonep, which Lpath plans to move into a pair of Phase IIa trials next year. During a call Dec. 21, Lpath CEO Scott Pancoast said Pfizer would have roughly two to three years to decide whether it wants to acquire the cancer candidate. Oh, the bridges? The first was a National Cancer Institute "Bridge" grant Lpath received in 2009, a new form of small-business grant to help life science companies make headway on translational projects and reach the clinic. The second was a $5 million private placement (7 million shares at 70 cents each) Lpath announced in November. Each investor also got two-year warrants to buy half again as many shares as they bought in the placement. Lpath's closing share price Dec. 22 was $1.02. -- Alex Lash
Biogen/Neurimmune: Neurimmune received its Christmas present early this year, but will investors? On Dec. 21 came news the Swiss biotech was selling three preclinical neurodegenerative programs to Biogen Idec for $32.5 million upfront and another $395 million in milestone payments. As part of the deal Biogen takes on responsibility for all further development—and importantly cost—for the compounds, which target the neurotoxic proteins alpha-synuclein, tau, and TDP-43.If Biogen seems enamored with Neurimmune’s proprietary Reverse Translational Medicine platform (this is the second time its inked a deal with Neurimmune), it’s a sure bet the biotech’s founders, Karsten Henco and Edward Stuart of HS Life Sciences aren’t complaining. The two gentlemen staked the company with $6 million nearly four years ago, and haven’t had to put in another dime, letting the partnerships fund the company’s growth. (Now that’s capital efficiency.) IN VIVO couldn’t determine if Neurimmune will pull a Knopp and return cash to Messieurs Henco and Stuart, but, by itself, the Dec. 21 upfront would seem to yield a tidy exit. Meantime, the deal is in keeping with Biogen Idec’s strategy of “focused diversification,” pretty words suggesting the company’s desire to amass capacity in areas closely related to its historical strength in multiple sclerosis. Alas, the very early nature of Neuroimmune assets means they can’t do anything to help Biogen, which is overly dependent on franchise products Avonex and Tysabri, from a revenue stand point. The need for additional marketed or very late stage clinical products suggests Biogen, which is in the process of hiring a new head of corporate development, could be on the prowl for bigger deals. It would be good to start 2011 off with a strong DOTY candidate, wouldn’t it?—Ellen Licking
GlaxoSmithKline/Proximagen: Santa baby, just slip an alpha-7 nicotinic acetylcholine receptor modulator under the tree for me. (Okay, so the rhyme scheme doesn’t really work.) We interrupt Santa’s mad dash around the globe to report a big pharma out-licensing event. Despite all the highfalutin talk about the need to balance the internal R&D spend with financing from external partners, big pharmas haven’t really demonstrated a willingness to out-license. GlaxoSmithKline, which spun out two investigational pain products into a new CNS company called Convergence Pharmaceuticals earlier this year, is one notable exception. This week comes news it’s out-licensing two development programs targeting cognition disorders and Parkinson’s disease to the British biotech Proximagen. Even though GSK notified the biopharma community in February that it was exiting certain CNS areas like depression, anxiety, and pain, it sounds like the asset transfer wasn’t for the faint of heart. According to “The Pink Sheet” DAILY, it still took nearly a year for Proximagen to get the compounds, which are positive allosteric modulators of the alpha-7 nicotinic acetylcholine and dopamine D1 receptors, out of the big pharma.Financial terms of the deal weren’t disclosed.--EL
Sanofi/Ascendis: Sanofi continues its bid to become an end-to-end player in the diabetes space, inking a drug delivery deal this week with specialty player Ascendis Pharma. The global licensing and patent transfer agreement gives Sanofi access to Ascendis’TransConLinker and Hydrogel carrier technology, which are designed to release molecules in the body in a precise, time-controlled fashion without the initial burst and high drug load that can come with other formulations. That would, of course, be a real boon in creating a better version of insulin. Sanofi currently has a lock on the long-acting insulin market with its juggernaut Lantus, but Novo Nordisk is giving the company a run for its money with competitor Degludec. Formulation changes to improve Lantus’ delivery would be one means of extending the life cycle of one of Sanofi’s most important products—and the only one not facing near-term patent expiration. The strategy also borrows a page out of Novo’s playbook. The Danish firm has used a strategy of incremental large molecule innovation to build its dominant position in insulin.--EL
Pfizer/Phylogica: Australian peptide drug discovery specialist Phylogica has struck its third licensing deal in the past year, agreeing to allow Pfizer to discover peptide-based vaccines using its proprietary platform. Pfizer will pay just $500,000 upfront for the license, but downstream payments, options and royalties of undisclosed size could potentially drive the deal’s value as high as $134 million. Founded in 2001, the Perth-based company has also signed separate licensing agreements with Roche and AstraZeneca’s Medimmune subsidiary. The Roche deal covers a mechanism allowing large molecules to attack disease targets inside of cells, while the MedImmune deal addresses antimicrobial peptides that attack the Gram-negative bacterium Pseudomonas aeruginosa. The latter deal, revealed in August 2010, includes a small upfront commitment of just $750,000 plus a 12-month commitment that will double that amount.—PB
Gilead/Arresto: Gilead Sciences took a step beyond its traditional focus in infectious disease by acquiring Palo Alto, CA-based Arresto Biosciences, which is developing disease-modifying drugs that target extracellular enzymes to treat fibrotic disease and cancer. The deal’s price tag is a robust $225 million and includes potential earn-outs; that’s striking in a period when pharmas have shown a greater interest in alliances than acquisitions and is also notable given the development stage of Arresto’s assets. Arresto’s lead candidate is a Phase I drug for idiopathic pulmonary fibrosis, a condition in which the lungs become scarred for unknown reasons. If approved, its compound AB0024 would be the first biologic drug for the condition, currently treated only through lung transplants. This is an area Gilead knows well, having spent considerable time trying to develop its own medicine in the space, Letairis (ambrisentan). Did Saint Nick arrive with the Arresto acquisition in the nick of time? On Dec. 22, after the market’s close, Gilead announced it was scuppering development of Phase III Letairis, which only slows disease progression but doesn’t address its root cause. Arresto, which is three years old has raised an undisclosed amount from a syndicate of backers including Kleiner Perkins Caufield & Byers, HealthCare Ventures, Northgate Capital, DAG Ventures, and Abbott Biotech Ventures.--PB
Pfizer / Adolor: The name is supposed to mean "without pain," but after this week you could read it with a melancholy sigh: Ah, dolor. In its latest setback, Adolor said in a regulatory filing Dec. 21 Pfizer would sever ties three years after it licensed rights to two of Adolor's pain programs, ADL5859 and ADL5747. The termination is effective March 2011. Pfizer said during its R&D day Sept. 27 that '5859 was among several drugs it was dropping from its pipeline, but there was no mention of '5747. Still, the writing has been on the wall since June, when the companies reported disappointing Phase IIa results for both delta opioid receptor programs in osteoarthritis. Neither drug performed better than placebo.Originally signed in December 2007, the deal called for $30 million upfront, nearly $2 million in immediate R&D reimbursement, and up to $232.5 million in milestones for the two programs. The first payment was due at the start of Phase IIb trials. Adolor was responsible for development through Phase IIa, and in for the US market could look forward to a reasonable split of costs and revenues -- 60% for Pfizer, 40% for Adolor -- plus a co-promote option. For the rest of the world, Pfizer had full rights, with sales royalties going to Adolor. – AL
AstraZeneca/Abbott Laboratories: Nothing like burying bad news in the slow days ahead of a holiday. Abbott and partner AZ, which hasn’t had much good news to report recently, announced Dec. 22 that they have decided to discontinue the development of Certriad (rosuvastatin calcium and fenofibric acid), and will unwind their licensing and co-development agreement in January 2011. Certriad is a combination pill that brings together AstraZeneca's statin Crestor and Abbott's fibrate TriLipix and is meant to lower bad cholesterol and improve good cholesterol in patients at risk of heart disease. The companies said the decision was made “after careful review and consideration” of the “complete response” that was handed down by FDA in March 2010. Little information about the complete response was given to shareholders at the time of its issue, but analysts at Leerink Swan speculated a “worst-case scenario in which the FDA might require more long-term data” was a possibility. Adding credence to this assertion, AstraZeneca said in its Dec. 22 statement that “development of Certriad is no longer commercially attractive.”—Lisa LaMotta
OK, IN VIVO blog readers, it's time to have your say. We've supplied the nominations but YOU will decide the winners. Once again we've created a special page so you can vote on all three categories in one place. Remember you much click on the "VOTE" button in each individual category--Alliance, M&A, and Exit/Financing--to record your choices.
Below, in no particular order, are the nominees for IVB's 2010 M&A Deal of the Year!
ENDO/HEALTHTRONIC: This acquisition, which was the first of a 2010 Endo buying spree that eventually led to an uptick in the company's share price, illustrates how pharma needs to change given physician access grows tougher and differentiation may come by offering a continuum of products. The $258 million deal moved Endo from pain to pelvic health, adding about $185 million in annual revenues, and a new asset in a deal that is immediately accretive. Most importantly, it allows Endo to combine drugs, devices, and services in an area far less competitive than pain, providing the company new skill sets as health care reform and concerns about cost of treatment increasingly factor into strategic decision making. Read our full nomination post here.
PFIZER/KING: Pfizer's October acquisition of pain play King Pharmaceuticals for $3.3 billion takes advantage of the near-unique size and scale that will allow it to play virtually anywhere it likes in the pharmaceutical space. It illustrates one possible future for Pfizer's business development strategy (the era of the bolt-on deal) while at the same time highlighting abuse-resistant opioids, a class of drugs at the center of commercial and regulatory brouhaha. Of course Pfizer also gets King's auto-injectors and animal health businesses, further helping it diversify. But in addition to the resources necessary to drive forward those abuse-resistant opioids like Remoxy, it's King's specialty marketing sales force that can now go off and market some of Pfizer's pain franchise and the added heft Pfizer's primary care reps can give to some of King's portfolio that really drives this deal. Read our full nomination post here.
ABBOTT/PIRAMAL: Abbott's whopping $3.72 billlion ($2.1 billion in cash) May 2010 deal to buy the branded generics business of Piramal Healthcare boasts a valuation that is an unheard of: nine-times sales and 31 times earnings. The deal, which put India's fourth largest pharma company under Abbott's wing, has kept global biopharma tongues wagging for months about over-heated valuations in emerging markets, and in particular, of course, India, as well as Big Pharma's true long-term intentions in Asia versus their short-term opportunistic motivations. It catapulted Abbott, which until last year could be diagnosed as emerging-markets deficient, into the number one spot in India. That's a steep climb from 2009, when it barely cracked the high teens, and puts it ahead of MNC India virtuosos like GSK and Sanofi. Abbott's move changed not only Abbott, however, but the entire Indian pharmaceutical landscape forever. Read our full nomination post here.
CELGENE/ABRAXIS: Celgene hasn't been shy about striking creative deals. The $2.9 billion cash and stock acquisition of Abraxis Bioscience fits that mold. After building its bona fides in liquid tumors with Thalomid (thalidomide) and the now-blockbuster Revlimid (lenalidomide), the New Jersey firm is spending nearly $3 billion to expand into solid tumors, an aggressive move at a time when retrenchment (Biogen Idec), reorganization (Genentech, via its parent Roche), desperate defense (Genzyme) and urgent reinvention (Amgen) are the main trends for big biotechs. In late 2007, Celgene's dealmakers high-stepped into the spotlight after years of relative silence, and they haven't relinquished the stage. The Abraxis deal, dollar-wise, is Celgene's largest yet, gaining it the breast cancer drug Abraxane. It's a modest seller so far -- $360 million in 2009 revenue -- but Celgene sees promise in other solid tumor indications, including a potential submission for use in non-small cell lung cancer in the first half of 2011, and that and other Abraxane progress is linked to significant CVRs. Read our full nomination post here.
OK, IN VIVO blog readers, it's time to have your say. We've supplied the nominations but YOU will decide the winners. Once again we've created a special page so you can vote on all three categories in one place. Remember you much click on the "VOTE" button in each individual category--Alliance, M&A, and Exit/Financing--to record your choices.
Below, in no particular order, are the nominees for IVB's 2010 Alliance Deal of the Year!
ABBOTT/REATA: Abbott Labs agreed to pay $450 million up-front for non-US, non-Asia rights to the Reata's bardoxolone for chronic kidney disease. In connection with the Abbott transaction Reata has doled out some of that record-breaking upfront to investors who've poured $178 million into the company since its formation in 2002. Just based on the sheer size of the deal's upfront payment, Abbott/Reata deserve a Deal of the Year nod. But there's more about the tie-up that piques our interest. Not least, Abbott has proven itself to be an adventurous biopharma dealmaker and could well reach the podium in more than one category this year. Moreover at a time when industry seems to be scrambling for quality assets and belt-tightening at every opportunity, it's exciting to be reminded that there are drug candidates out there that generate significant interest because of their potential to change the course of disease and define new treatment paradigms.Read our full nomination post here.
CELGENE/AGIOS: In exchange for $130 million in upfront cash and equity investment, Agios, one of the leaders in a happening scientific space called cancer metabolism, gives Celgene an exclusive option to develop any drugs resulting from its research platform at the end of Phase I. Celgene can extend the exclusivity period – if Agios agrees – but it will have to provide additional funding for the privilege. On each program Celgene licenses, Agios could receive up to $120 million in milestones, as well as royalties on sales. It's the latest on big-bro-little-bro dealmaking; note that Agios remains the one running the discovery and early translational work until an option is exercised--and the biotech has a say if Celgene wants to delay bringing a program in house. Read our full nomination post here.
PFIZER/BIOCON: The terms are pretty plain vanilla - Pfizer pays $200M upfront to Indian biotech Biocon and an additional $150M in development and regulatory milestones, plus payments tied to commercialization. In exchange, it gets rights to sell Biocon's portfolio of biosimilar insulins throughout most of the world. While the structure of Pfizer/Biocon is quite traditional, the concept is anything but. Indeed, the union of these two companies is, in fact, blatantly ambitious and could have far reaching implications. It demostrates a new way of doing business for pharma, touching on an battery of industry hot topics: biosimilars, pricing flexibility, diversification and emerging markets.Read our full nomination post here.
GSK/AMICUS: Faced with slack pipelines and increasing payor demands, big pharma CEOs spouted the words "niche" and "orphan" more often then "primary care" and "blockbuster" this year (though they have been biting their tongues behind the scenes or crossing their fingers behind their back). Nonetheless, GSK has gone beyond talk with action on the deal-making front, even creating a business unit exclusively devoted to rare diseases back in February. GSK's alliance with Amicus, announced in October, is the big pharma's fifth in the rare disease space in just over 12 months, and it also involves the latest-stage candidate of the bunch. Under the deal, GSK gains worldwide rights to the Phase III Fabry disease treatment Amigal (migalastat HCI), a potential first oral treatment for the genetic disease. Read our full nomination post here.
PFIZER/UCSF: Pfizer's five-year, $85 million commitment to fund academic research at UCSF is the company's latest and largest push into the so-called Valley of Death that lies between the university laboratory and the commercial sector. Like other Big Pharmas, Pfizer has inked deals with universities before, and even established a presence on UCSF's campus when it launched its Biotherapeutics & Bioinnovation Center in 2008. Still, the new UCSF deal is a more expensive, closer-knit arrangement. For Pfizer, the agreement offers access to research at the point of creation, joint ownership of drug candidates (thought to be split 50-50 with UCSF), and options to develop compounds internally after Phase I trials are completed. The university will receive royalties or other payments as the drugs march bravely toward commercialization, while also receiving a view into Pfizer's library of antibodies, reagents and other compounds.Read our full nomination post here.
BIOGEN/KNOPP: It's not necessarily how much, but what Knopp will do with, the money. Biogen Idec paid $80 million upfront -- $20 million as a fee and $60 million in equity -- for worldwide rights to KNS-760704 (dexpramipexole), which had hit its primary endpoint in a Phase II trial for ALS. Dexpramiprexole came with orphan designation in both the US and Europe, and fast track FDA status. Milestones to Knopp could add up to $265 million more, as well as tiered, double-digit royalties on worldwide sales. $80 million was more than Knopp needed for its ongoing operations, so it planned to return extra cash to investors -- a mix of low-profile institutional investors, angels and foundations. But it was no exit or share buyback, according to Knopp. Instead the investors who got the distribution kept all their equity: in essence, a one-off dividend. Read our full nomination post here.
OK, IN VIVO blog readers, it's time to have your say. We've supplied the nominations but YOU will decide the winners. Once again we've created a special page so you can vote on all three categories in one place. Remember you much click on the "VOTE" button in each individual category--Alliance, M&A, and Exit/Financing--to record your choices.
Below, in no particular order, are the nominees for IVB's 2010 Financing/Exit Deal of the Year!
ABLEXIS: Ablexis, which is developing a next-generation antibody-discovery platform around its proprietary AlivaMab mice, was founded in December 2009 and raised a $12 million Series A from Third Rock and Pfizer Venture Investments in June 2010. The company's nomination is less for its Series A and more about the baked-in exit for investors provided by the biotech's five-member pharma consortium. Those companies have non-exclusively opted-in to receive Ablexis' mouse platform for an undisclosed seven-figure fee and will owe an undisclosed eight-figure sum upon delivery. That cash can then be distributed to Ablexis' investors. Read our full nomination post here.
INCLINE THERAPEUTICS: The story of Incline Therapeutics’ $43.5 million Series A funding begins with Johnson & Johnson's decision to close Alza and sell its Ionsys electronic fentanyl patch to this start-up, backed by Cadence Pharma and some of that company's investors. As part of the deal Cadence has structured a two-time option to acquire Incline should that patch perform between now and 2013. Thus, Incline's financing is a sign of the times, demonstrating that when VCs commit large amounts of capital, they’re willing to negotiate upfront for a speedy, healthy return. Read our full nomination post here.
IRONWOOD PHARMACEUTICALS: Ironwood's monster $203 million IPO didn't just provide temporary financial independence or give the company the biggest pre-money IPO valuation for a biotech in history. More importantly, it made real the company's unusual dual-class share structure, which concentrates decisions around change-of-control (and only change of control) in the hands of long-term, pre-IPO shareholders as a means of warding off hostile offers and unwanted activist shareholder involvement. If Ironwood is able to build a freestanding pharmaceutical company on the back of its promising IBS/constipation drug candidate linaclotide, the reason it will be able to remain independent was cemented into place with this offering. Read our full nomination post here.
CASTLIGHT: If ever a financing represents the new business and market opportunities now in play because of health care reform, surely it's the Castlight deal, a $60 million Series C inked in June. Castlight, founded in 2008 as Ventana Health Services, aims to solve one of the thornier wickets of health care delivery: the issue of pricing transparency for medical services. Castlight aims to illuminate the murky arena of health care pricing, creating an algorithm that allows users to search a database of providers to determine out-of-pocket costs for various procedures. Read our full nomination post here.
It's time for the IN VIVO Blog's Third Annual Deal of the Year! competition. This year we're presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (four or five in each category throughout December) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.
GlaxoSmithKline's pact with Amicus Therapeutics sums up a theme that resurfaced again and again in 2010: the rare disease renaissance.
Faced with slack pipelines and increasing payor demands, big pharma CEOs spouted the words "niche" and "orphan" more often then "primary care" and "blockbuster" this year (though they have been biting their tongues behind the scenes or crossing their fingers behind their back).
Nonetheless, GSK has gone beyond talk with action on the deal-making front, even creating a business unit exclusively devoted to rare diseases back in February. GSK's alliance with Amicus, announced in October, is the big pharma's fifth in the rare disease space in just over 12 months, and it also involves the latest-stage candidate of the bunch. Under the deal, GSK gains worldwide rights to the Phase III Fabry disease treatment Amigal (migalastat HCI), a potential first oral treatment for the genetic disease.
Partnering with Amicus required only a small upfront on the part of GSK, which paid $60 million for a 19.9% equity stake in Amicus in addition to worldwide rights to Amigal. GSK also agreed to pay $170 million in milestones, clinical development costs and tiered double-digit royalties on sales. But it stands to gain in return. As a reference point, the market-leading enzyme replacement therapy for Fabry disease – Genzyme's Fabrazyme – generated $494 million in sales in 2008, the year before Genzyme's manufacturing problems negatively impacted sales. GSK is betting there is plenty of upside potential for a more convenient oral brand. And with Genzyme embroiled in a manufacturing debacle and a hostile takeover battle by Sanofi-Aventis, it opens the door for rivals to stake a claim for the space.
For Amicus, the deal provides enough cash to see it through to the US approval of Amigal, according to management, and getting GSK on board as a partner helps validate its pharmacological chaperone technology.
Whether or not big pharmas' increasing emphasis on rare diseases ultimately plays out in its favor is yet to be seen, but we think giving it a serious shot – at least as one platform in a multi-pronged growth strategy – is worth a DOTY nod.
It's time for the IN VIVO Blog's Third Annual Deal of the Year! competition. This year we're presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (four or five in each category throughout December) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.
Castlight's $60 million June Series C wasn't the biggest venture round of 2010. (That honor belongs to Archimedes, which pulled in a stunning $100 million from new and existing investors in March). In fact according to Elsevier's magic eight ball (also known as Strategic Transactions), Castlight's financing -- certainly a large sum -- wasn't even enough to merit a top five ranking, inched out by the raises of European companies Immatics and AiCuris, and on the U.S. side by Relypsa, Cerenis, and Pearl Therapeutics. Why, then, does it merit your vote for IN VIVO's DOTY in the Exit/Financing class?
Call it a vote for the new world order.
You probably know that earlier this year Congress passed a small piece of legislation called the Patient Protection and Affordable Care Act. We at IVB thought about nominating health care reform for DOTY, but after a couple of years of running this competition, we knew better. HCR is too big, too vast, too encompassing a topic to capture the voting public's imagination. You, dear reader, want something more tangible that you can point to and say yes, here's a deal that embodies a larger trend at work.
And if ever a financing represents the new business and market opportunities now in play because of health care reform, surely it's the Castlight deal. Castlight, founded in 2008 as Ventana Health Services, aims to solve one of the thornier wickets of health care delivery: the issue of pricing transparency for medical services.
Downloadable smart phone apps such as TheFind can tell you whether Amazon or WalMart or Best Buy has the best price on the fancy new GPS system you want to buy your girl friend with the poor sense of direction. But it can't tell you where to get the best price on a colonoscopy or a dental cleaning or an MRI. And with the advent of high deductible health care plans and an ever larger percentage of costs being passed on to the consumer (er, patient), that's valuable information to have.
Castlight aims to illuminate this murky arena, creating an algorithm that allows users to search a database of providers to determine out-of-pocket costs for various procedures. Its business model is simple: the company aims to sign contracts on a monthly per-employee fee with businesses that self-insure or are encouraging their own employees to make smarter--i.e. more cost-conscious--health care choices. But it's easy to imagine the model could evolve over time to an open access system where pricing is based on a per-use fee and anyone can sign up to use it. To date, Castlight already has one customer: the grocery store giant, Safeway, which employs about 200,000 workers.
Castlight has plenty of competition too. Small start-ups such as Change: Healthcare, along with insurers such as Aetna, or even information service providers like Thomsen-Reuters, are getting into this game. Though Castlight is small compared to some of those established players, it boasts an impressive roster of founders and backers, which include not just traditional venture backers such as Maverick Capital, Oak Investment Parnters, and Venrock, but also the Wellcome Trust and the Cleveland Clinic.
It certainly helps that one of Castlight's founders, CEO Giovanni Colella, is no neophyte in the health care services arena. He sold his previous firm, Relay Health, which enables doctors to communicate with patients via secure web-based technology, to McKesson in 2006. An added bonus is surely the involvement of investor Alan Garber, a professor of medicine at Stanford who also happens to run that university's Center for Health Policy.
Analysts have long said the only way to rein in skyrocketing health care costs is to make patients understand what they are paying for and why. But for most of us health care is heavily subsidized by our employer. With some one else footing most of the bill, there ain't a huge incentive to ask the neurologist treating your headaches if an expensive MRI is must-have data that will change his or her treatment plan for you. If it's not, knowing the costs of the MRI versus a 10-pill prescription for generic sumatriptan become valuable data points that help guide decision making--especially if you have to pay a portion of the tab.
It's perhaps surprising that with the passage of health care reform, VCs aren't talking up the opportunities in actually delivery of care with greater enthusiasm. Conventional wisdom is such technology plays are risky--unlike drugs or devices, these tools can be commoditized and don't have the same intellectual property protections that limit the playing field.
But the IP protection enjoyed by drugs and devices is a red herring. Health care reform means comparative effectiveness will be the rule not the exception and that means biopharma and medtech companies face increasing competition not less as payers, physicians, and patients evaluate the costs and benefits of various therapeutic options. Already companies have pivoted, talking about differentiation and unmet need as being important drivers of innovation.
By that definition, doesn't the information Castlight provides represent innovation with a capital "I"?
And that's why Castlight deserves your vote for the exit/financing deal of the year. It's a vote for innovation -- maybe a different kind of innovation than you are used to --but innovation nonetheless.
Heceta Head Lighthouse courtesy of flickrer dezz, courtesy of a creative commons license.
Novartis is moving its infectious disease research group across the country to the San Francisco Bay Area and hiring as its new chief Donald Ganem, a high-profile University of California, San Francisco professor with a taste for virus hunting.
Novartis will start shifting some of its 120 current staffers from Cambridge, Mass. by mid-2011. The group's new HQ will be the old Chiron campus, part of the package when Novartis bought vaccine specialists Chiron in 2006 for more than $5 billion. Ganem is co-inventor of the "ViroChip" assay that identifies and diagnoses viral infection. He and research partner Joseph DeRisi, also a UCSF professor, characterized the coronavirus behind the SARS epidemic in 2003; they also have worked on the "colony collapse" mystery that has afflicted honey bees. Ganem should have plenty to discuss with his new neighbors. The Emeryville campus also houses Novartis' vaccine and diagnostics groups.
Novartis has been aggressive in pursuing hepatitis C and vaccines, often through licensing and acquisition. But Novartis spokesman Jeffrey Lockwood declined to comment on Ganem's research priorities at Novartis. "When Don gets in he'll look at the portfolio," said Lockwood.
According to its Web site, the Ganem Lab at UCSF has focused of late on the herpes virus that causes Kaposi's sarcoma, an opportunistic infection often related to HIV infection; and on the search for novel viral agents in diseases that are suspected to be caused by infection.
For a full version of this story, read tomorrow's "Pink Sheet" DAILY. Photo courtesy of flickr user PhillipC.
It's time for the IN VIVO Blog's Third Annual Deal of the Year! competition. This year we're presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (four or five in each category throughout December) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.
Impressive? Oh, hell yes. Is that the reason we think you should vote for Ironwood's IPO as IVB's exit/financing of the year? Not so much.
Then Ironwood deserves a DOTY award for the $203 million it netted at the offering, right? After all that's the most money any biotech has pulled in since 2000, when Lion Bioscience, Tanox, Lexicon were filling their coffers via the public markets.
No, that's not the reason either. And we certainly aren't nominating Ironwood for any post-IPO performance metric: the company hasn't fared so badly, but it's basically treading water (there, Aveo Pharmaceuticals, up 56% from its March IPO price, out-performs the 2010 class).
The real reason for the nomination of Ironwood -- a company founded in 1998 as Microbia that finds itself, after several twists and turns, on the precipice of filing its first NDA -- is rooted in how the biotech structured its IPO in the first place to ensure the company's independence and allow it to focus on long-term strategy instead of short term financial gain.
The IPO didn't just provide temporary financial independence. More importantly, it made real the company's unusual dual-class share structure, which concentrates decisions around change-of-control (and only change of control) in the hands of long-term, pre-IPO shareholders as a means of warding off hostile offers and unwanted activist shareholder involvement.
That's right -- Ironwood wants to build a pharmaceutical company that can stay in business for the long haul. After a few false starts and clinical setbacks throughout the past decade, it seems to be onto a winner with its Phase III linaclotide compound for IBS and chronic constipation. Phase III studies have thus far been impressive. It has linaclotide partnerships with Forest, Almirall and Astellas in key geographic areas and cash to see it through to the finish line and then some. It has seasoned drug developers and the substrate to build a pipeline.
And now it has takeover insurance. Ironwood's IPO locked in a system that won't attract short-term shareholders looking for a quick M&A-infused bump. The company won't garner the potential takeout premium that its peers might enjoy because it simply isn't for sale any time soon, even if linaclotide – or the next drug down the bench – is approved.
The guarantee of independence is a rare commodity in biotech. And of course there's no real guarantee Ironwood won't be sold. But its dual class structure allows long-term holders to call the shots, its significant financial cushion was inflated by its IPO haul, and the promise of linaclotide in the near term suggests Ironwood's growth won't be stunted. And it hasn't had to surrender large swathes of geographic territory or pawn its pipeline to get there either, part of the compromises of big-sibling protection that is the closest thing we've seen to true independence. (Just look to Genentech to see just how that can turn out in the long run).
Ironwood thinks it can innovate its way to long-term biotech success. The innovation it has shown in shareholder structure, cemented in place by arguably the most successful biotech IPO ever, will give it a chance to do so.
And that's THE reason the biotech deserves this year's Roger for best Exit/Financing.
It's time for the IN VIVO Blog's Third Annual Deal of the Year! competition. This year we're presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are M&A Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (four or five in each category throughout December) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.
It wasn't, actually. But it was no less exotic, and well worth nominating for our Alliance Deal of the Year. The deal itself was straightforward: Biogen Idec paid $80 million upfront -- $20 million as a fee and $60 million in equity -- for worldwide rights to KNS-760704 (dexpramipexole), which had hit its primary endpoint in a Phase II trial for ALS, also known as Lou Gehrig's disease. Dexpramiprexole came with orphan designation in both the US and Europe, and fast track FDA status. Milestones to Knopp could add up to $265 million more, as well as tiered, double-digit royalties on worldwide sales.
Knopp told our Pink Sheet colleagues that the $80 million was more than it needed for its ongoing operations, and it would return extra cash to investors -- a mix of low-profile institutional investors, angels and foundations.
But it was no exit or share buyback, according to Knopp. Instead the investors who got the distribution kept all their equity: in essence, a one-off dividend. (Biogen's $60 million equity purchase was directly from Knopp.) And spokesman Tom Petzinger said there was no quid pro quo, either. If and when Knopp finds itself in need of cash, the investors are under no obligation to re-up.
Petzinger and the rest of management like to think their gesture will create investor goodwill that will be remembered in the future. "It might be a highly unusual move, but it doesn't mean it's not highly appropriate or strategic," Petzinger said.
The deal was also notable as the first consummated in Biogen's Scangos Era, announced less than a month after George Scangos took over as chief executive. Under Scangos, Biogen has pledged to retrench around neurology and hemophilia, with its oncology and cardiology programs now on the block.
Dexpramiprexole is a reverse-image twin of Boehringer Ingelheim's Parkinson's disease drug Mirapex (pramiprexole). Biogen believes its version has the potential for greater neuroprotective activity because it has less affinity for dopamine receptors and can be used at higher doses. Thus far, the molecule has survived the R&D shake-up; indeed, executives highlighted it at a Nov. 30 R&D roundtable and reiterated last month Biogen would start a Phase III study in 804 ALS patients in the first half of 2011.
However exotic the arrangements of the deal that put dexpramiprexole in Biogen's hands, rarer -- and indeed more welcome -- would be market approval, as to date only one drug to treat the disease has come to market, according to the ALS Association. -- Alex Lash
On the first day of Christmas, IN VIVO gives to you an earn-out in a pear tree On the second day of Christmas, IN VIVO gives to you two consumer deals On the third day of Christmas, IN VIVO gives to you regional alliances On the fourth day of Christmas, IN VIVO gives to you hostile deals now friendly On the fifth day of Christmas, IN VIVO gives to you ON-CO-LO-GY On the sixth day of Christmas, IN VIVO gives to you biotech spin-offs On the seventh day of Christmas, IN VIVO gives to you biobucks a plenty On the eighth day of Christmas, IN VIVO gives to you eight pharma partners On the ninth day of Christmas, IN VIVO gives to you platform biologics On the tenth day of Christmas, IN VIVO gives to you billion dollar skin care On the eleventh day of Christmas, IN VIVO gives to you a new eye care unit
On the twelfth day of Christmas, IN VIVO...needs a break. Please read (instead)...
MedImmune/Evotec: Big pharma’s love affair with primary care is on the wane, making cardiovascular deals as rare as partridges in pear trees. But it’s a different story for metabolic disease, where drug makers see large opportunity in growing waistlines. Think Merck’s take-out of SmartCells or Sanofi’s spate of alliances to build itself into an end-to-end solutions provider. Now comes news that AstraZeneca's biologics group MedImmune is aligning with Evotec in a broad R&D deal centering on regeneration of insulin-producing beta cells. As with most early stage alliances, the deal is heavy on the back-end payments, with the German biotech due €5 million upfront and up to €254 million in milestones down the road. But should Evotec deliver the goods, it would prove a nifty return on the biotech's acquisition of DeveloGen, a deal completed less than three months ago for up to €14 million in cash and stock, plus potential earn-outs. It's DeveloGen's metabolic target discovery platform that MedImmune is tapping into, and it adds a third alliance to the subsidiary's portfolio. Meanwhile, MedImmune and parent AstraZeneca are looking to fill a hole in their pipeline. -- Alex Lash
Reckitt Benckiser/Para Pharmaceuticals: Reckitt Benckiser Group pushed further into the consumer health business and India on Dec. 14 when the household cleaning products maker announced its £460 million ($727.3 million) acquisition of India’s Para Pharmaceuticals from private equity group Actis and minority shareholders. The acquisition, which is 31 times Para’s EBITDA, gives Reckitt access to one of India’s most popula cold-and flu-remedies, D’Cold. Still that’s a steep price to pay to boost exposure in an emerging market, where Reckitt already sells Dettol, Durex and Disprin. (At that price, IN VIVO blog thinks Para should throw in at least two turtle doves.) The company’s consumer healthcare unit now accounts for one-quarter of sales and will become increasingly more important since its household cleaning division faces pressure from competition like Procter & Gamble.—Lisa LaMotta
GlaxoSmithKline/Maxinutrition: As part of its pre-Christmas shopping spree, Glaxo says no to French Hens, but yes to muscle shakes, acquiring U.K. sports nutrition firm Maxinutrition Group Holdings for £162 million. The deal diversifies Glaxo’s Nutritional Healthcare business, adding the smaller player’s line of protein-rich body building, weight management, and endurance products onto the big drug maker’s carbohydrate business Lucozade and Horlicks (also known internally as a @calcium micronutrients business"). GSK's Nutritional Healthcare sales were already on a tear climbing 12% to $408.6 million for the third quarter of 2010. But with this new triumvirate, the pharma sees a recipe for growth. It can leverage the selling power of Horlicks while tapping into the sports nutrition business, a sector still growing strong in established markets that, globally, could be worth nearly $5 billion. – Dan Schiff
Ramius/Cypress: It took four calling birds, but Cypress Bioscience finally got a buyout offer from Ramius that was music to its ears. On Dec. 15, the San Diego biotech announced it had accepted a $255 million takeover offer from Ramius. The deal values Cypress at $6.50 per share, 63% more than Ramius’ $4-per-share offer in July. When Ramius launched its pursuit, it ripped Cypress management in an open letter, blasting the company’s decision to license a schizophrenia drug from Israel’s BioLineRx and declaring its 2008 acquisition of diagnostics company Proprius a failure. Since then, Ramius has incrementally increased its offer, including a $6.00 per share deal that Cypress’s board rejected. The parties finally agreed on the $6.50-a-share price, and agreed to extend the tender offer in order to complete the deal. Cypress garners most of its revenue from fibromyalgia drug Savella (milnacipran), and completed small-money deals in August to acquire rights to an autism drug from Marina Biotech and a smoking cessation product from Alexza Pharmaceuticals.—Paul Bonanos
Sanofi-Aventis/Merck Serono: ON-CO-LO-GY! In the drug world, viable cancer drugs are definitely as valuable as five golden rings. But as the recent U.S. regulatory decision around Avastin in metastatic breast cancer shows, incremental efficacy against an unmet medical need ain’t enough any more. Some companies are trying to overcome wily tumor cells by combining targeted therapies that work via different mechanisms into a single agent. And as the Dec. 17 alliance between Sanofi-Aventis and Merck Serono shows, they are willing to forge ties with competitors (excuse me, external parties) if that’s what it takes. According to the deal’s terms, Sanofi contributes two novel small molecule kinase inhibitors (both incidentally inlicensed from Exelixis in 2009): a PI3 kinase/ mTOR inhibitor SAR245409, and a class I PI3K inhibitor, SAR245408. Merck Serono, meanwhile, supplies its MEK inhibitor, MSC1936369B. (All three molecules are currently being studied in independent Phase I trials.) Here’s how the sharing works: Sanofi will conduct trials combining Merck’s MEK with its PI3K/mTOR inhibitor, while Merck will study the other PI3K blocker in combination with its medicine, and both drug companies will fund their own studies. Beyond breathy prose about “personalizing and stratifying cancer care” and maximizing the portfolio, details about the collaboration were vague, meaning what happens after Phase I, and importantly how the financials will be sorted, remain mysteries. Structurally – and therapeutically – the deal is almost an exact duplicate of the 2009 tie-up between Merck & Co. Inc. and AstraZeneca. (No word if an overly long airport security queue also played a role in this most recent alliance, however.) -- EFL
Xention/Provesica: Rather than divide its focus between two largely unrelated programs, UK-based Xention and its investors have elected to divide and conquer, spinning out the biotech's overactive bladder program into a new, separate company called Provesica. Two of Xention’s stakeholders, Forbion Capital Partners and Seroba Kernal, have supplied not six geese-a-laying but something much more important: cold hard cash to the tune of £4 million ($6.2 million). Beyond setting up an independent Provesica, the money will support Phase II trials of its lead compound, a vanilloid TRP (transient receptor potential) receptor antagonist, which affects the detrusor muscle in the bladder. Xention, which recently raised £8 million in Series D funding, will continue to advance its atrial fibrillation program, aimed at developing inhibitors to selectively block ion channels in the heart’s atria but not its ventricles. In conjunction with the spin-off, Xention has restructured, with holding company Xention Pharma Ltd. operating an R&D subsidiary.—PB
GlaxoSmithKline/Impax: GlaxoSmithKline, which now faces generic competition for its only Parkinson’s disease drug, Requip, swam back into that space Dec. 16, inking a co-development and commercialization deal with Impax Pharmaceuticals for the smaller firm’s lead program, IPX066. (Seven swans were apparently optional.) GSK will pay $11.5 million upfront along with up to $175 million in potential milestones and tiered, double-digit royalties on sales of IPX066, an extended-release combination of levodopa and carbidopa now in Phase III, in exchange for worldwide rights outside the U.S. and Taiwan. Impax, the CNS-focused, branded drugs division of generic player Impax Laboratories, will continue to make and supply the medicine to GSK. Impax completed a Phase III trial (APEX-PD) in early-stage Parkinson’s earlier this year with strong results and expects data from a second Phase III study (ADVANCE-PD) in patients with advanced Parkinson’s in the second quarter of next year. An NDA filing could come as soon as end of 2011.—Joseph Haas
Adimab/Lilly, Adimab/Genentech, Adimab/HGSI: On the eighth day of Christmas Adimab dispensed with the 8 maids-a-milking (and drug development too) and focused on the cream of the crop: its platform. At a time when most biotechs can’t monetize their platforms through discovery stage deals, privately-held, yeast-based antibody discovery biotech Adimab (alongside DOTY nominee Ablexis) remains the rare bird. Adimab watchers shouldn’t be surprised the company has inked more deals – three of them actually, with the likes of Lilly, Genentech and Human Genome Sciences. Nor do these recent deals stray far from the company’s previous single-target antibody discovery alliances, which emphasize non-exclusivity around a target and pay the biotech undisclosed financials that include an upfront, plus milestones and royalty payments. Why is Adimab the belle of the antibody discovery ball? “Our technology platform is not only faster than conventional antibody technology but it yields more relevant therapeutic leads with a higher probability of success,” CEO Tillman Gerngross, PhD, told us for a piece we did earlier this week in “The Pink Sheet” DAILY. The upshot of all Adimab’s dealmaking is that the cash-flow positive biotech (it announced two milestone payments to go along with the three deals this week) is restructuring to an LLC to return cash to shareholders in a tax-efficient way. – Chris Morrison
Mitsubishi Tanabe/Anaphore: At least one lady (if not nine) is surely dancing on the news of Mitsubishi’s R&D tie-up with Anaphore, a San Diego-based biotech developing trimeric proteins called Atrimers. Anaphore’s CEO Katherine Bowdish tells sister publication “The Pink Sheet” DAILY, “this first partnership does a great job of validating our technology platform.” It’s certainly a nice first and Mitsubishi’s willingness to contribute research funding is a decided plus, but Anaphore isn’t going to win any DOTY nominations based on the deal terms – a $5 million upfront, $110 million in milestones, and tiered royalties on sales of any products resulting from the option-style collaboration, which could be expanded to up to three targets. Still the tie-up, focused in auto-immune disease, is a reminder that drug makers remain interested in accessing novel technologies, especially if said platforms can create medicines against intractable drug targets or are inaccessible because of preexisting IP. Anaphore is especially interested in creating novel proteins that bind receptors in the so-called TNF super-family. The biotech’s most advanced candidate, the still preclinical ATX3105, antagonizes the interleukin-23 receptor, which plays a role in autoimmune disorders. -- Shirley Haley & EFL
Galderma/Q-Med: Lords a leaping! Leading Swiss dermatology company Galderma’s $967 million bid for medical implant manufacturer Q-Med will roughly double the acquirer’s sales and substantially increase its presence in aesthetic dermatology, a sub-segment of dermatology that is growing worldwide. Galderma, a joint venture of Nestle and L’Oreal, sells prescription and non-prescription dermatology products worldwide and is the largest manufacturer of topical dermatology therapies in the U.S. Q-Med makes dermal fillers including Restylane, which competes against Allergan’s successful Botox. The deal is non-traditional in that it offers different terms for the majority shareholder, Lyftet, which owns 47.5% of Q-Med, and the remaining shareholders. Bengt Agerup, Lyftet’s CEO, has already agreed to accept an irrevocable offer of 58.94 SEK in upfront cash, with up to 16.02 SEK in additional payments if certain development and business milestones are met. The remaining Q-Med shareholders would receive a flat cash payment of 75 SEK per share. Q-Med investors will have between Jan. 4, 2011 and Jan. 25, 2011 to tender their shares.—Wendy Diller
Novartis/Alcon: On Dec. 15, Novartis AG finally acquired the remaining 23% of eye care company Alcon Inc. that the Swiss-pharma giant didn’t already own. Alas, the announcement, which requires Novartis to pay independent shareholders the same average share price it doled out to Nestle, came without much fanfare. (In what was surely an oversight given the months it took to finalize the transaction, there were no pipers piping or drummers drumming.) The deal, which is a stock swap, will cost Novartis another $12.9 billion, driving the total price of the Alcon acquisition to $51.6 billion. In dollar terms, that rivals the mega-mergers of Pfizer/ Wyeth, Merck/Schering and Roche/Genentech. Is an ophtho company worth that much? The beauty of a deal is always in the eye of its beholder, but this particular therapeutic sector is enjoying a renaissance. Ophthalmologists are a technically savvy bunch, so having a strong device presence will likely help Novartis leverage its existing ophthalmics medicine business, which along with consumer-focused CIBA Vision and Alcon will be folded into a new eye care unit run by Alcon CEO Kevin Buehler. – Lisa LaMotta & EFL
It's time for the IN VIVO Blog's Third Annual Deal of the Year! competition. This year we're presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are M&A Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (four or five in each category throughout December) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.
As we noted a week ago, Celgene hasn't been shy about striking creative deals. The $2.9 billion cash and stock acquisition of Abraxis Bioscience fits the mold, for reasons we'll explain in a minute, but the creativity isn't what makes this deal worthy of a DOTY nomination.
It's actually Celgene's bet itself that intrigues us: after building its bona fides in liquid tumors with Thalomid (thalidomide) and the now-blockbuster Revlimid (lenalidomide), the New Jersey firm is spending nearly $3 billion to expand into solid tumors, an aggressive move at a time when retrenchment (Biogen Idec), reorganization (Genentech, via its parent Roche), desperate defense (Genzyme) and urgent reinvention (Amgen) are the main trends for big biotechs. In late 2007, Celgene's dealmakers high-stepped into the spotlight after years of relative silence, and they haven't relinquished the stage. The Abraxis deal, dollar-wise, is Celgene's largest yet.
For what, exactly? Abraxis' only marketed product is Abraxane, a reformulation of the generic chemotherapy paclitaxel using albumin nanoparticles that's been approved for metastatic breast cancer. It's a modest seller so far -- $360 million in 2009 revenue -- but Celgene sees promise in other solid tumor indications, including a potential submission for use in non-small cell lung cancer in the first half of 2011. Abraxis owns the "nab" nanoparticle delivery technology; whether Celgene puts it to use to reformulate other drugs remains to be seen. Investors at first were befuddled at the June 30 deal announcement, driving Celgene's stock below $50 from a high of $56.58, but they've since come round. Celgene ended trading Thursday, Dec. 16 at $58.79.
Terms of the acquisition were complicated and suggest this was a product Celgene had to have. In the end, Celgene paid $2.5 billion in cash and issued 10.7 million shares of common stock worth $58.21 each, or about $620 million, on Octo. 15, the day the acquisition finally closed.
In addition, Celgene has promised significant earn-outs, or contingent value rights (CVRs), to Abraxis shareholders -- most especially founder Patrick Soon-Shiong (pictured, right). The CVRs include a $250 million cash payment upon approval of Abraxane by FDA for NSCLC with a progression-free survival claim; either a $300 million or $400 million cash payment upon approval of Abraxane by FDA for pancreatic cancer with an overall survival claim; and potential cash royalty payments if Abraxane and certain pipeline drugs reach established sales thresholds.
It's hard to say CVRs are creative deal-making when so many acquisitions these days require them, though in the public markets, unlike the private side, they're still the exception, not the rule. There was an added twist, as well. To get the deal past the finish line, Celgene agreed to make the CVRs tradeable -- in essence, a tracking stock that follows the value of one product, Abraxane. Very few CVRs have ever been converted into tradeable securities, and Soon-Shiong has been involved in two of the most prominent examples as we discuss here.
Industry pundits continue to opine about the wisdom of spending billions for a single asset, but this diversification into solid tumors makes sense for Celgene. Data released at ASH suggests Revlimid may face headwinds in the maintenance setting for multiple myeloma. That could stymie the product's growth, a worrisome fact since it now accounts for 70% of Celgene's total revenue. Celgene wants to be one of the leaders in the increasingly competitive oncology space and it's not afraid to spend money or meet the deal requirements of the companies its courting. That chutzpah deserves your vote for DOTY, if nothing else.
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After months of waiting on edge -- dare we say with its heart all a-flutter? -- Vancouver-based Cardiome Pharma said Dec. 29 that its partner Merck & Co. has "confirmed its plans for development" of an oral formulation of Cardiome's atrial fibrillation compound vernakalant.
Back in August, hacking through the thickets of the 
MedImmune/Evotec: Big pharma’s love affair with primary care is on the wane, making cardiovascular deals as rare as partridges in pear trees. But it’s a different story for metabolic disease, where drug makers see large opportunity in growing waistlines. Think 
