Tuesday, December 07, 2010

2010 Alliance DOTY Nominee: Abbott/Reata

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™.

Has any private biotech had a better year than Reata? It's been a hell of a year for the Texas-based biotech, one filled with solid clinical data around its lead chronic kidney disease candidate bardoxolone, a large private fundraising, and, oh yeah, only the largest upfront payment we've ever seen, in a deal for a Phase II asset that doesn't even include US or Asian marketing rights.

To recap: in late September (right around the time we were explaining how up-front payments for clinical stage assets were declining, ahem) Abbott Labs agreed to pay $450 million up-front for non-US, non-Asia rights to the CKD hopeful, a first-in-class anti-oxidant inflammation modulator (AIM) that activates Nrf2, a transcription factor regulating the production of more than 250 antioxidant and detoxification proteins. Asian rights had gone to Kyowa Hakko Kirin in January 2010 for $35 million up-front and Reata plans to hang onto US rights for itself. With $450 million, even as it has to foot the bill for a 1000-patient Phase III trial of the drug, it can afford it.

And more. 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. The company's most recent equity raise was the $61 million second tranche of its Series G, raised in July, a round that set the company up nicely for partnering discussions around bardoxolone.

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 (and BTW we're not nominating this deal so Abbott doesn't have mobsters break our legs, but we do consider that a bonus). 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.

Reata presented full data from its Phase IIb bardoxolone program (the data that moved Abbott to write such a large check) in late November at the American Society of Nephrology's Renal Week. The trial results essentially clarify what an earlier Phase IIa trial had suggested: bardoxolone can not only slow chronic kidney disease's progress, but reverse it in some patients, reported our colleagues at "The Pink Sheet". In more than 60% of CKD patients in the new study who were categorized with advanced kidney disease prior to receiving treatment, severity of the disease retreated by an entire stage - from stage IV to stage III, for example - at the six-month endpoint.

Twelve month data should arrive in the new year, around when Reata will begin its Phase III program. That's when we crown IVB's Deals of the Year. Coincidence?

image from flickr user twinkleboi used under a creative commons license

1 comment:

Anonymous said...

Can't argue too much with that, the first nomination might be the easiest sell. Link to Pink sheet is broken btw. Great "business of science" news though.