Financings of the Fortnight Puts It In Reverse

LinkedIn? Might as well be in a different universe. From where we sit, it's terribly difficult to go public, let alone do it with investors making the equivalent noise of all those kids who came to see the Beatles in 1964.

There's another way to go public, however. Perhaps you've heard that Radius Health this week merged into an acquisition shell created by life-science venture firm MPM Capital. The new Radius already reports to the SEC and plans to apply directly for a listing later this year, with a goal of transitioning to the Nasdaq by early 2012.

Our Pink Sheet colleagues covered it thoroughly, but the gist is that Radius, spurned by Novartis' decision not to option its anabolic bone-building treatment BA058, now has a financial runway to fund Phase III trials and eventually find a new dance partner. If approved, BA058 would compete directly with Lilly’s Forteo (teriparatide), the only currently approved drug that builds bone mass rather than slowing resorption.

Concurrent with the reverse merger, Radius has raised $91 million in an equity-and-debt Series C round. The first tranche consists of $22 million in equity funding and $6.25 million in debt and includes a doubling-down by MPM, which returned to invest above its pro-rata. MPM's Ansbert Gadicke told our Pinkish colleagues that prostate-cancer developer Cougar Biotechnology provided inspiration for the deal. Cougar reverse-merged into a shell company in 2006; three years later Johnson & Johnson scooped it, and its Phase III drug abiraterone, for nearly $1 billion.

How often does that happen? In the last ten years, never, at least not at that price. At least five others besides Cougar have gone on to reap M&A benefits; the next priciest we could find was Solexa, a genomics company that was acquired by Illumina in 2006 for $600 million in stock.

Of 75 reverse mergers we found in our database since 2001, at least 16 included a round of financing either at the time of the merger or nearly so. Cougar nabbed $47.5 million, for example. Not all are engineered as a way to reach the public markets, of course. (Merck/Schering-Plough was technically a reverse merger, which we had a bit of fun with.) The majority are historical footnotes, as you might expect from companies that can't manage the normal route of attracting public investors.

Then again, the "normal route" doesn't exist anymore for biotech companies. Regarding Radius, the biotech has enough going for it to keep old acquaintances interested; Novartis, through its MPM-managed fund, is a new investor, as is Ipsen, the European drug firm that sold Radius the rights to BA058 in the first place in 2005. Another backer is Nordic Bioscience, a contract research firm with deep expertise in osteoporosis drugs. It's taking equity as part of its CRO fee for BA058; talk about having skin (and bone) in the game.

Spin-outs, reverse mergers, incubators, follow-ons, and A, B or C rounds: Your best bet for boning up on all of them is...

BioCritica: Blockbuster gone bad Xigris (drotrecogin alfa), which was hailed as a new sepsis treatment upon approval in 2001, has a new home. After a decade of minimal sales dogged by serious side effects, owner Eli Lilly & Co. is spinning the drug out to BioCritica, a new firm in Indianapolis that will focus on critical-care medicines. Its backers are Care Capital and NovaQuest Capital, and it also received Indiana state funding and support. No financial details were disclosed, but the NovaQuest connection is interesting, seeing how the firm -- once the investment arm of CRO Quintiles Transnational -- was deeply involved in two of Lilly's Alzheimer's drugs, one of which, semagacestat, failed in late-stage trials. NovaQuest is now operating independently of Quintiles, and as this column reported last December, is raising its own fund. BioCritica, meanwhile, is led by CEO David Broecker, who most recently served at the helm of Cambridge, Mass. biotech Alkermes, but previously worked at Lilly in marketing and product planning. BioCritica will continue Lilly's work to find the best uses of the controversial treatment, which has serious bleeding side effects and questionable efficacy in the broad sepsis patient population, but it hasn't disclosed more detailed plans. Lilly already decided a biotech was best suited for the follow-up to Xigris, a compound Lilly out-licensed to Cardiome Pharma in 2007. -- Lisa LaMotta

GenKyoTex: Edmond de Rothschild Investment Funds led a CHF 18 million Series C for GenKyoTex, a Geneva-based biotech focused on developing small molecule inhibitors of NOX family NADPH oxidases, transmembrane proteins at the beginning of the oxidative stress pathway. New investors Vesalius Biocapital Partners and MH Healthcare Venture Management and existing backers Eclosion, SGAM’s Specialized European Fund for Therapeutic Innovation, and Fondation d’Aide Aux Enterprises chipped in as well. GenKyoTex was incubated at Eclosion, the Canton of Geneva based public-private partnership that helps participating entrepreneurs tap a mix of state, university, and industrial resources. GenKyoTex plans to use the new cash to develop its lead candidate GKT137831, currently on the cusp of going into the clinic, for the treatment of diabetic neuropathy, and to support its preclinical portfolio. GenKyoTex is betting that interfering with oxidative stress by inhibiting NOX will help reduce the formation of reactive oxygen species (ROS) that can contribute to cardiovascular, neurodegenerative and metabolic diseases, cancer, and other conditions. The funding is a coming-out party of sorts for GenKyoTex, which has its roots in a three-way academic collaboration between scientists in -- you guessed it -- Geneva, Kyoto, and Texas. Along with the financing the biotech simultaneously announced a spate of executive changes: Ursula Ney, former Antisoma COO, becomes CEO; Phillipe Wiesel, formerly a medical director at Serono, is CMO; and taking on the role of chairman is PregLem CEO Ernest Loumaye. -- Chris Morrison

SpringLeaf Therapeutics: Start-up SpringLeaf has added $15 million to its coffers through a May 12^th Series B venture roundto continue work on a disposable "patch pump" that allows at-home subcutaneous of intravenous biologics, and also to work on a drug , according to CEO Frank Bobe.The cash comes from return investors Flybridge Capital and North Bridge Venture as well as lead and new backer SR One, whose Brian Gallagher, joins the company’s board. (This is SR One’s first participation in a drug delivery-focused firm since Dicerna Pharmaceuticals’ $29 million August 2010 Series B.)MIT spin-off SpringLeaf was founded as Entra Pharmaceuticals in 2007 and two years later filed a patent application entitled “Skin-Patch Pump Comprising a Changing-Volume Electrochemical Actuator.” Gallagher says the firm's “patient-centric” approach will facilitate more cost-effective therapies and the technology overcomes formulation obstacles associated with delivering existing large-volume biotherapeutics, including highly viscous drugs. CEO Bobe declined to disclose any details on the drug SpringLeaf is working on, but he said preclinical results were encouraging. The biotech, which has now raised about $27 million including a December 2008 Series A round, hopes to initiate a clinical trial by the end of 2012.-- Maureen Riordan

ImmunoGen: Best known for its antibody-drug conjugate (ADC) work, ImmunoGen said May 20 it has raised $84 million before expenses in a follow-on offering, selling 7 million shares at $12 per share. The fundraising comes as ImmunoGen's stock has reached its highest levels since the early 2000s amid growing hopes that ADCs, which attach a strong cytotoxic agent to a therapeutic antibody for a more precise attack on cancer cells, are on the cusp of medical success after three decades of frustrating clinical progress. ImmunoGen is part of the optimism; it has contributed the cytotoxin and "linker" technology used in Genentech/Roche's T-DM1, considered the next iteration of Herceptin. Indeed, ImmunoGen's stock run-up is due in part to new top-line randomized Phase II T-DM1 data released in April that showed improvement in progression-free survival in first-line metastatic breast cancer patients. Good news about T-DM1 is more a boon to ImmunoGen's platform than its immediate finances, as the firm would only receive single-digit royalties from any commercial sales. The targeted antibody, aimed at HER-2 positive breast cancer, is also in non-randomized late-stage trials. Underwriters led by Jefferies & Co. have the option to buy up to 1.05 million more shares. -- Alex Lash

Many thanks to Paul Bonanos and Amanda Micklus, who contributed mightily to this week's introduction.

Photo courtesy of flickr user Rd. Vortex via Creative Commons license.

Deals Of The Week: Outsourcing

Stop the presses! Pfizer has done the unthinkable! The Big Pharma has upended its huge R&D operation!

Reading the headlines and tweets May 26, this blogger anticipated a dramatic pronouncement from Pfizer's head of R&D Mikael Dolsten explaining exactly how the behemoth intended to strengthen its "innovative core." But we were pretty sure Pilates wasn't part of the prescription.

It was just three months ago, after all, that newly installed CEO Ian Read announced sweeping budget cuts to the R&D organization and hinted that certain business units might be ripe for spinning out. But the R&D changes announced Thursday was more ho-hum than a humdinger.

In fact, it wasn't even an R&D shake-up at all. What Pfizer has instead done is winnow its myriad clinical service providers from 17 (!) to 2, moving to a system that is less about buying clinical trials capacity than it is about buying expertise. "We think that expertise can actually help us execute trials more effectively, faster, and with better quality, which will ultimately lower costs," Pfizer's SVP of development operations John Hubbard told "The Pink Sheet" DAILY.

With the looming patent expiration of Lipitor coming in November, there's no doubt Pfizer must cut costs. But it's hardly clear how much Pfizer will actually save via its newly announced preferred provider relationships with Icon and Parexel. It's not as if the drug maker is outsourcing significantly more of its total research and development work to outside organizations after all, a move that would allow for additional job eliminations -- and cost reductions -- in the R&D organization.

According to PSD, Pfizer will increase the percentage of clinical trials work it outsources by only about 10%, with the move really designed to streamline the management of vendors, something Hubbard admits is "complex." Thus, consider this not a revamping of how R&D is done but a consolidation of already outsourced development work into the hands of just a few players. As such, the move sounds a lot like Sanofi's broad 10-year collaboration with Covance. Announced last year, that alliance also met with sweeping headlines but was in reality a more prosaic realignment designed to reduce the complexity of managing development work.

We aren't saying Pfizer's newly announced arrangement isn't noteworthy-- or smart. We're just saying its iterative rather than innovative. (And, maybe, just plain old common sense.)

What's really smart about the set-up is that Pfizer didn't pick just one preferred provider. By signing on two different CROs (can we now call them clinical repair orgs?), the drug maker has created a situation that fosters competition. Financial details of the two new partnerships, which start in June and last until 2016, haven't been disclosed, but Pfizer is apparently keeping a scorecard that benchmarks how well Icon and Parexel each execute on their assigned trials. And as Pfizer gathers data on quality, timeliness -- and perhaps most importantly cost -- that means it can pit the two service providers against each other, potentially further increasing efficiencies. Five years from now, you can imagine CROs jockeying for position to be the next preferred vendor. To merit an alliance, such outfits will be forced to guarantee they can deliver "x" by time "y", and it will only cost "z".

It's a new kind of pay-for-performance arrangement -- and it's definitely a step in the right direction.

But it's far from the sexy R&D shake-up proclaimed in the blogosphere -- and still far from what Pfizer (or any other big pharma, quite frankly) needs to do to solve its moribund R&D productivity problem.

As for the larger changes afoot in Pfizer R&D, it's anybody's guess what model (or what acronym), the drug maker will pursue. We hear CEDDs are out and TAUs and TSUs are the new fashion. (Don't forget OI -- for open innovation -- either. JNJ's promising its externally driven model will yield fruit -- and plenty of products for regulatory approval by 2015.)

Whatever. To be honest, the acronym that most excites us is B-B-Q. Before you quaff your first summer pale ale of the holiday weekend, remember to read...

Elan/Proteostasis: Elan's tie-up this week with Proteostasis replicates last year's mega Celgene/Agios tie-up on a smaller scale. The new deal, potentially worth $50 million to the privately-held Proteostasis, requires Elan to pay $20 million upfront as well as $30 million for R&D expenses over the next five years. In return, the developer of the blockbuster multiple sclerosis drug Tysabri (natalizumab) gets a 24% stake in the U.S. biotech, seats on its board of directors and scientific advisory boards, and the first right to license any neurodegenerative compounds that come out of the collaboration. Yeah, that's right. The privately-held co. has agreed to an option-style deal that gives Elan first dibs on its potentially novel disease-modifying drugs in return for the security of funding. The deal is the first industry collaboration Proteostasis has signed since its splashy debut in 2008: a $45 million Series A financing from high-profile investors, including HealthCare Ventures, Fidelity Biosciences, New Enterprise Associates, Novartis Option Fund, and Genzyme Ventures. (Hmm, wonder what happens to any Novartis options as a result?) The company has stayed under the radar in the interim, using the time and considerable financial backing to build its platform, which is designed to target the biological pathways that regulate the correct folding or placement of proteins within a cell. (For more on protein folding and disease, check out this still-relevant Start-Up feature.) Proteostasis' molecules are still preclinical but the new alliance with Elan could accelerate the biotech's clinical development plans; that's because it marries the biotech's discovery technology with Elan's proprietary animal models, biology, med-chem and clinical development capabilities. --EL

Eli Lilly/BioCritica: Attention biopharma insiders! We interrupt your regularly scheduled programming to bring you news of that rare species observed in the Rx wilderness: the spin-out. On Monday May 23 came news that Eli Lilly was spinning out US development and commercial rights to its commercially underwhelming sepsis drug Xigris to private investors Care Capital and NovaQuest Capital. The new private company, which has been christened BioCritica, will focus initially on the continued development of Xigris but the ultimate goal is to create a portfolio of critical care medicines. To bolster its pipeline, BioCritica has the option to in-license other critical care compounds in preclinical development at Lilly as well as the right to acquire ex-US rights to Xigris. In exchange, Lilly will receive royalties on US sales of the drug and an equity stake in BioCritica. The financial terms of the agreement were not disclosed.The decision to shed Xigris reflects Lilly's effort to focus development resources, according to the company. Though Xigris has been available commercially since 2001, its sales have not met Lilly's or Wall Street's expectations and Lilly has had a spate of expensive late-stage development snafus. BioCritica will continue Lilly's work on identification of the best uses of the controversial treatment, which has serious bleeding side effects and questionable efficacy in the broad sepsis patient population.--Jessica Merrill

Medco/Exagen: Can Medco do for methotrexate in rheumatoid arthritis what it's done for warfarin in the blood thinner market? An interesting alliance announced Monday May 23 between Medco's research institute and the privately-held Exagen Diagnostics shows that it is going to try. Exagen, which has raised a minimal amount of venture money since its 2002 founding, has developed proprietary software to discover and create predictive molecular tests that can aid in disease diagnosis, prognosis, or predict a likely treatment response. One of its tests, Avise PG, helps doctors and patients monitor the effectiveness of low-dose methotrexate therapy in rheumatoid arthritis patients. The oral anti-folate is, of course, decades old --it was first introduced as an oncologic in 1947 and became an important part of the RA armamentarium in the 1980s. And compared to newer TNF-alfa injectables like Humira or Remicade or Simponi the drug is definitely a cost-effective choice for treating the auto-immune disease. The problem is that establishing the right dosing regimen for patients isn't trivial, since individuals metabolize the medicine so differently. (Hmm, methotrexate's profile is starting to sound a lot like another cheap, effective, but difficult to use medicine: warfarin.) And if docs can't get the dosing right in a defined period of time, the default is to move to the costlier biologics. For payers who are increasingly concerned about the cost of specialty products -- and RA is an area of intense interest these days -- new tests that can promote the use of older, cheaper drugs are an obvious solution. But there's got to be data showing the utility. Enter Medco, whose research arm will recruit around 400 patients to participate in a pilot study (called Nimble) gauging the usefulness of Avise in RA patients beginning methotrexate therapy. Docs will send patient blood samples to Exagen's lab, which will conduct the Avise test, and report back on appropriate dosing; outcomes data will be compared to a similar cohort of patients who don't receive the Avise PG test. Why should the drug industry care? Medco's been resurrecting warfarin, conducting a series of observational studies gauging the utility of the medicine plus the genetic test versus newer, pricier drugs like Pradaxa. If the Medco/Exagen team can demonstrate the same utility for methotrexate, it's bad news for newer RA meds, creating a higher bar for adoption with payers.-- EL

Valeant/Sanitas & Watson/Specifar: Need growth? Try a branded generics firm in Central or Eastern Europe. That's the message from a duo of deals this week, both acquisitions by hitherto US-focused firms – and the first of more to come as US growth shrivels up, according to those familiar. Barely a week after Takeda finally confirmed it was forking out €9.6 billion to buy Nycomed, whose attractions also included its strength in CEE and Russia, Canadian specialty pharma Valeant announced it was paying €314 million cash for Lithuania's listed Sanitas, and Watson snapped up Greece's privately-held Specifar for €400 million, plus earn-outs linked to a tablet form of Nexium due to launch in some markets later this year. Europe's ultra-tough pricing and reimbursement environment may make it a graveyard for growth in innovative drugs, but there's plenty of upside in generics, particularly of the branded, specialist kind. The battle for Germany's ratiopharm, ultimately won in March 2010 by Teva, was one of the more high-profile asset-grabs in this field. Valeant had to pay almost four times' sales for Sanitas, a healthy multiple that reflects what was a "dynamic" auction process, according to someone close to the deal. The attraction: for starters, development prowess in dermatology, ophthalmology and hospital injectables (niche, high-margin drugs), formulation expertise, some pipeline, and a portfolio that's 80% non-reimbursed (thus circumventing the government pricing pressures). The deal furthers Valeant's stated goal of doing at least five ex-US deals this year, and follows the February 2011 acquisition of PharmaSwiss, which provided a commercial infrastructure in Eastern Europe. If Sanitas shareholders think they did well, how about Specifar's: Watson appears to have paid over five times 2010 revenues for this group, based in a country whose economy is falling apart and where generic penetration is one of the lowest in Europe. Most of Specifar's revenues come from developing and out-licensing products worldwide, and it’s highly profitable, according to a source involved in the deal. So Watson has paid for a European R&D engine to bolster the sales infrastructure and starter revenue-base it started to establish via its $1.8 billion cash and stock deal in 2009 for Western-European based Arrow. --Melanie Senior

Nestlé/Prometheus Labs: Via its newly formed Nestlé Health Science subsidiary, global food products conglomerate Nestlé SA is buying specialty pharma and diagnostics provider Prometheus Labs as part of its goal of developing personalized nutrition strategies that will help in the management and prevention of chronic health conditions, according to the company’s announcement of the deal. Prometheus, which had been looking to go public, generated revenues of $519 million in 2010 including $316.5 million from the sales of the glucosteroid Entocort EC for Crohn’s disease, which Prometheus licensed from AstraZeneca for the US market in 2004. Prometheus also began distributing Novartis’ cancer drug Proleukin in the US in February 2010, which brought in $64 million. The diagnostic services business, comprising GI tests to differentiate irritable bowel disease (IBD) and Crohn’s from other disorders and oncology services to guide the use of targeted therapies, accounted for $81.3 million for the year, according to an S-1 amendment filed in February 2011. The companies are silent on the deal price, which an analyst cited in a Bloomberg report put at somewhere north of $587 million. Nestlé has also recently added Vitaflo, a maker of nutritional products aimed at individuals with genetic disorders that affect how the body processes food, and CM&D Pharma, which produces IBD, kidney disease, and cancer-related nutritional foods. But unlike those others, the Prometheus acquisition is aimed at the physician market. Nestlé is one of several food and consumer products companies thinking about ways it can leverage its marketing and distribution capabilities to deliver medical diagnostics and personalized medicine. Unilever has engaged the VC firm Physic Ventures to explore opportunities in the area, and for years, Procter & Gamble has maintained a notable presence at personalized medicine meetings. – Mark Ratner

(Image courtesy of flickrer Scott Ingram used with permission through a creative commons license.)

The CEDD is Dead. Long Live the TAU

We've now entered a new chapter in the book of GlaxoSmithKline's 'Really Useful Abbreviations For The Way We Organize Our R&D'. In case you missed it: the CEDDs are dead. It's official. The Centers of Excellence for Drug Discovery, therapy-area focused groups spanning discovery through proof-of-concept, which flew onto the scene post-merger in 2001, are gone.

Back in the naughties, the CEDDs were considered quite radical, buzzing of smallness, accountability, and autonomy -- at least relative to the highly centralized, over-corporate, lots-of-corners-to-hide-in-style R&D of the time. They went on to inspire a host of similar initiatives elsewhere.

Now the CEDDs look sooo last decade (although we think the externally-facing CEEDD is still around). This decade the new acronym is fully-integrated Therapy Area Units (TAUs) -- five of them, covering Metabolic Pathways and Cardiovascular, Respiratory, Infectious Diseases, Immuno-inflammation, Neurosciences and Oncology R&D.

We knew which way the wind was blowing when we wrote this January IN VIVO feature. Even then it was clear GSK's R&D chairman Moncef Slaoui and SVP Medicines discovery & development Patrick Vallance wanted to move on from the notion of any sort of divide between pre- and post-proof-of-concept, the point at which the CEDDs passed suitable candidates onto the Medicines Development Centers (MDCs) for the really expensive work.

Slaoui and Vallance instead wanted full visibility from discovery through to registration and reimbursement -- not least so that payer requirements and commercial reality weren't an after thought simply pasted on in Phase III, but could actually influence which discovery programs to advance.

But don't assume the TAUs are a hark back to the pre-CEDD days of large sluggish R&D groups. That would be to forget the DPU chapter (you've still got your acronym cheat sheet right?) By 2008, these even smaller, even nimbler, even more accountable so-called drug performance units (DPUs) had begun to supercede their CEDD cousins. And given there were always a couple of standalone DPUs -- like Ophthiris in ophthalmology, for instance -- one reckons they were a harbinger of the evolving GSK.

Today, these DPUs -- which came complete with investment boards and three-year, milestone-linked funding cycles -- remain the R&D building blocks within GSK. It's just that now they have highly porous borders with downstream development. (And they're also spawning external versions, too, like the academic discovery performance unit set up at Cambridge University.)

So who are the new TAU chiefs? By and large, they're whoever won the battle between the CEDD-head and MDC-head in that particular therapy area: Zhi Hong (CEDD) in infectious diseases; Dave Allen (CEDD) in respiratory, Murray Stewart (MDC) in Metabolic Pathways & Cardiovascular, Perry Nissen in Oncology R&D (so-named because oncology is fully-integrated all the way through commercial, as at Novartis and Sanofi-Aventis). The Immuno-inflammation TAU chief has been appointed from academia but hasn't started yet, and Neurosciences apparently still has two heads.

Almost certainly, TAUs -- whose fully-integrated philosophy is also apparent within Sanofi Aventis' Therapeutic Strategy Units (TSUs?), while AstraZeneca's iMeds are more CEDD-like -- won't be the last chapter in this book. (How would consultants earn their keep?)

The next exciting bit to look forward to, though, is when the 3-year DPU funding cycle comes to an end later this year. That might kill off a few poorly-performing DPUs; indeed, "until and unless GSK actually shuts something down, no one will see the connection between data and funding, and really 'get' the model," opined one external advisor.

Slaoui isn't about to do any culling just to relay a message, though. "I may terminate a DPU even if [it] reaches [its] numbers, because the biggest limitation to numbers is that they don't [necessarily] reflect quality," he said. So by next year a few DPUs may slip away, or be tweaked...but we reckon the overall DPU concept has somewhat longer to run.

image by flickrer purplenina used under creative commons

Abbott Trilipix Demonstrates the Sponsor-As-Bystander

FDA is holding more advisory committees than ever and it’s hard for some not to get lost in the mix.

Take the May 19 Endocrinologic & Metabolic Drugs Advisory Committee meeting, for example. The committee was convened to review data from an outcomes trial that was more than a year old, with no overall safety signal, for a class of drugs that have been on the market for years.

Nevertheless, the panel meeting proved to be an important one, not only for the sponsor involved, Abbott Laboratories, but for drug developers in general.

To recall, the advisory committee was convened to review the results of the ACCORD-Lipid trial and how they relate to the approved indication for Abbott Laboratories’ Trilipix (fenofibric acid) for coadministration with a statin.

The results from the National Heart, Lung and Blood Institute-conducted ACCORD study were released in March 2010. The trial was the first major cardiovascular outcome trial to evaluate the combination of fenofibrate (Abbott’s Tricor) with a statin in a diabetic population and compare it to statin monotherapy.

After an average follow-up of 4.7 years, there were 291 (10.5%) major fatal or nonfatal cardiovascular events in the fenofibrate-simvastatin therapy study arm and 310 (11.3%) events in the simvastatin monotherapy study arm; the results were not statistically significant.

Not a great result for Abbott, to be sure, considering the company’s Trilipix/Tricor franchise generates over $1 bil. in US revenue. Panelist William Hiatt (University of Colorado Denver), a former chairman of the Cardio-Renal Advisory Committee, was blunt: “It’s a clearly negative trial.”

Abbott was clear upfront that the company had nothing to do with ACCORD. James Stolzenbach, Dyslipidemia Divisional VP, who handled the MC duties for the company during the sponsor presentation, made clear that Abbott was not seeking a new indication for Trilipix nor did the company conduct or have a role in conducting the ACCORD study; Stolzenbach “apologized in advance” to the committee if Abbott could not answer all the questions asked of them because the firm was not privy to the full dataset.

Stolzenbach’s comments underscored the fact that Abbott was a bystander for a critical regulatory re-review of one of its most important product franchises. In essence, the company was watching while one agency, FDA, was figuring out what to do with the results of a government-run study conducted by another agency, NIH.

The way the advisory committee review was set up and played out, it appeared clear that FDA has wanted Abbott to conduct another trial of a fibrate/statin combo for some time and the way to do it was take the question to panel in the absence of an overt safety signal that would trigger the agency’s authorities under the FDA Amendments Act.

In a memorandum dated April 25 from Division of Metabolism & Endocrinology Products Deputy Director Eric Colman to the committee, a key question—question 6—was originally proposed with five options for the committee to vote on and the committee could recommend more than one action:

a) allow continued marketing of Trilipix’s indication for coadministration with a statin without revision of the labeling;

b) withdraw approval of Trilipix’s indication for coadministration with a statin;

c) allow continued marketing of Trilipix’s indication for coadministration with a statin with revision of the labeling to incorporate the principal findings from ACCORD-Lipid;

d) Require the conduct of a clinical trial designed to test the hypothesis that, in high-risk men and women at LDL-C goal on a statin with residually high TG and low HDL-C, add-on therapy with Trilipix versus placebo significantly lowers the risk for MACE; and/or

e) other.

But in the draft questions to the advisory committee, question 6 was broken up into two parts, A and B. Question 6A asked the committee to vote first (“yes” or “no”) on whether FDA should require a new study as described above in d). Question 6B asked the committee to vote for only one option of the following: no change to the Trilipix indication, withdraw the indication for coadministration with a statin, or allow continued marketing of Trilipix with a revision of the labeling to include the principle findings from ACCORD.

The panel voted unanimously (13-0) that Abbott should conduct another clinical study. Specifically, the trial should study the hypothesis that in high-risk men and women at LDL-C goal on a statin with residually high triglyceride levels and low HDL-C, add-on therapy with Trilipix versus placebo significantly lowers the risk of major adverse cardiovascular events (MACE).

Now, it appears as though Abbott will have to conduct a large clinical study that, if positive, would show an outcome benefit for a more defined patient population than the broader FDA-approved indication the company already has.

We asked Cleveland Clinic cardiologist Steve Nissen, an occasional Cardio-Renal panelist, for his take on the ACCORD study. “These drugs have done amazingly well in the absence of any evidence of a health outcome benefit,” he said. “Trilipix was approved to ‘reduce triglycerides’ based upon the premise that high trigs are associated with pancreatitis. Only one problem – no one has ever demonstrated that lowering trigs with fenofibrate or fenofibric acid actually reduces the incidence of pancreatitis.”

Nevertheless, the Trilipix advisory committee review highlighted the lack of control Abbott had over the review of its product. That outcome could befall other sponsors as they are further removed from postmarket evaluations of their products.

Call it Bystander Syndrome.

Deals Of The Week Presents Last Week's Deals

Not to go all eschatological on you, but this blogger owes the IVB readership a confession. Religious broadcaster Harold Camping's exhortations (and innumerable billboards and emails) announcing May 21, 2011 as the onset of the Rapture and the ensuing end-of-days offered this blogger an excuse to book out early to enjoy a last supper with friends and family. (At which there was much speculation about the soon-to-be revealed identities of the four horsemen.)

In the blogger's defense, the signs were all there. (And no, we aren't talking about cataclysmic earthquakes, the rise of either false prophets (Beck or Trump?) or the Mississippi River, or the sky-rocketing home prices in the Bay Area tied to LinkedIn's IPO.) How can you deny it's not the end of the world, when the Cleveland Indians are leading their division, Oprah's pulling the plug on her daily tv show, and reality stars like Jersey Shore's Snooki command speaking fees higher than Nobel prize winning writers?

Thus, in the hopes of cramming celebratory fun into the final hours of May 20 (we had until 11pm PT by dear Harold's calculations), DOTW seemed a wee bit, well, unnecessary.

In the face of Armageddon, who really cares about Shire's decision to diversify into regenerative medicine with its non earn-out purchase of Advanced BioHealing? (Dermagraft, after all, can't be used to treat the gnashing of teeth.) And, really, with the world absolutely ending on Oct. 21, it's not like Takeda needs Nycomed to bridge its 2012 Actos patent cliff. (Now if Nycomed sold an OTC product to repair the rending of hair, we might pay attention given its apocalyptic best-seller potential.)

Oh wait, it's Monday May 23-- and we're still here (and so is everyone else). Damn. That means we'll be writing this column until at least December 21, 2012, which REALLY, TRULY is the end of days. With apologies for our tardiness, it's time for another edition of...

Takeda/Nycomed: The Rapture may not have come to pass but Takeda/Nycomed did. On May 19, after a week of speculation and a press release warning journos not to get too hasty, Takeda announced its €9.6 billion ($13.6 billion) purchase of privately-held Nycomed. As IN VIVO Blog told you last week, the deal satisfies a number of strategic and financial imperatives for Japan's largest drugmaker, as it faces generic competition to best-selling diabetes drug Actos from 2012 and seeks to expand its footprint beyond Japan and the U.S. The deal doubles the Japanese firm's European sales, jump-starts its emerging markets presence and provide an immediate 30% revenue boost, increasing operating income by more than 40%, according to the company. Swiss-based Nycomed brings to Takeda not only the fruits of recently-launched chronic obstructive pulmonary disease drug Daxas, but also a more diversified product mix, including OTC and branded generics, regulatory expertise, and an entrepreneurial culture that Takeda President and CEO Yasuchika Hasegawa said he hoped could "vitalize" his firm. As such, the deal helps accelerate the 2011-2013 mid-range growth plan unveiled by Hasegawa earlier this month. The transaction – worth slightly more than initial reports suggested – values the Swiss-based Nycomed at about 3.4 times its 2010 revenues, excluding its U.S dermatology business, which is not part of the deal. The higher price tag means Takeda will take a ¥600-700 billion ($7.33 billion to $8.55 billion) loan to finance the deal, which is the largest yet in the Japanese firm's aggressive ongoing bid to expand its presence and pipeline through M&A. --Melanie Senior

Shire/Advanced BioHealing: Shire/Advanced BioHealing marks the return of the IPO as a stalking horse, a private M&A deal with NO earn-outs, and an ROI greater than 10x for certain investors. True venture like returns --it must be the end of days!! Just before its planned debut on the New York Stock Exchange, Advanced BioHealing instead agreed to a $750 million all cash offer from the specialty pharma Shire, which has a history of using acquisitions to jump quickly into new lines of business. With ABH, Shire dives into regenerative medicine, grabbing the commercial product Dermagraft, a patch that uses natural cells called fibroblasts to heal diabetic foot ulcers. (Dermagraft has a long and painful history, which you can read about in greater detail here.) The current deal builds on Shire's willingness to pay healthy premiums for companies that it sees as cornerstones to new lines of business. The most striking example is Shire's 2005 purchase of Transkaroytic Therapeutics for $1.6 billion, an acquisition that gave the pharma access to enzyme-replacement drugs for rare diseases and a technology platform for further growth. As part of Shire, ABH will be run as a semi-autonomous unit, with retention of top management one of the hoped for outcomes post-integration. The all-cash offer was a 25.6% premium to the amount ABH was expected to raise had it debuted at $15-a-share, the midpoint of its expected range. Since the IPO was reportedly oversubscribed and pricing was on the upswing, a public debut might have resulted in a larger return to investors -- eventually. Still, ABH's backers, which included Canaan Partners and Safeguard Scientific had to be more than satisfied with the terms-- and certainty of exit --offered by the Shire take-out. Canaan apparently reaped a 15x return on the deal, while Safeguard's ROI was a not too shabby 13x. -- Alex Lash and EL

Roche/Merck:The two current heavyweights in hepatitis C therapy got together May 17 with a plan to co-promote Merck’s newly approved protease inhibitor Victrelis , in what was widely viewed as an effort to squeeze upstart Vertex Pharmaceuticals out of the HCV market despite superior efficacy data for its protease inhibitor, Incivek. Boceprevir was approved by FDA on May 13; telaprevir's PDUFA date is today, May 23. Under the non-exclusive agreement, Roche reps will include boceprevir as part of their promotion to health care providers on the use of Pegasys in triple combination therapy for HCV. Pegasys, part of the current two-drug backbone of HCV therapy, commands about 80% of the peg-interferon market in HCV, far ahead of Merck’s competing product, PEG-Intron. Roche will not bundle boceprevir with Pegasys, however, and the deal does not preclude Merck from marketing its HCV drugs in a discounted bundle. (Nor does it preclude Roche from inking a deal with Vertex though analysts think that's unlikely.) The two peg-interferon products will continue to be marketed separately, both companies said, and Merck added that the collaboration will not affect the pharma’s economics for its new product. Merck and Roche, each of which has other HCV compounds in clinical development, also will test their compounds together in combination therapy trials.--Joseph Haas

Stryker/Orthovita: Yes, dear readers, a device deal, which means the rapture must be coming (even though Harold Camping's calculations this time around were off). In 2010 IN VIVO wondered if Orthovita, hit hard by scientific debate about the merits of vertebral compression fracture treatment and allegations of fraud, was giving up its grand dreams. Thanks to Stryker’s $316 million acquisition last week, its independent efforts at becoming the specialty spine player are over. But with a take-out price tag that included a 41% premium, did Orthovita's investors win? The deal allows Stryker to pair its existing hardware with Orthovita’s Vitoss bone graft and Cortoss bone filler. The former can be used along with Stryker’s spinal implants while the latter might serve as a hook to help sell Stryker’s new vertebral augmentation products, giving the med-tech giant another way to differentiate itself from Medtronic’s line of Kyphoplasty products, which use traditional bone cement polymethylmethacrylate (PMMA.)If Orthovita’s products live on, it's fair to say the company never recovered from a series of er, crushing (compressing?) blows. First, in 2009, New England Journal of Medicine published two studies suggesting vertebroplasty – the filling of fractured vertebra with cement (or Cortoss) – wasn’t an effective method of relieving pain from vertebral compression fractures. The studies were published just two months after the company received FDA approval for Cortoss. Then a Medicare fraud investigation by Department of Justice forced vertebral compression procedures to move from in-patient – where Orthovita’s Vitoss and other materials are currently used -- to outpatient settings. The shift caused problems with pricing and, analysts say, distracted Vitoss sales reps. In the end, economic pressures that have been a drag on the entire orthopedics sector also weighed heavily on Orthovita, which had high hopes that Cortoss sales would quickly ramp total sales to $300 million annually. -- Tom Salemi

ThermoFisher/Phadia: The European private equity firm, Cinven, is to exit ownership of the Swedish in vitro diagnostics company, Phadia, after four years by selling it to Thermo Fisher Scientific, reportedly more than trebling its investment in the process. US laboratory equipment manufacturer Thermo Fisher Scientific Inc. aims to strengthen its allergy and autoimmune disease diagnostics business by acquiring Phadia for a hefty €2.47 billion ($3.5 billion) in cash, announced May 19. (In case you are keeping track, Phadia was spun out of Pharmacia in 2004 when Pfizer acquired the parent company, and was acquired by Cinven in 2007 in a deal that valued the company at €1.285 billion.) Phadia markets complete blood test systems to support the clinical diagnosis and monitoring of allergy and autoimmune diseases and chalked up 2010 revenues totaling €367 million thanks to strong sales in Europe and emerging markets. Thermo Fisher is using a mixture of debt financing from Barclays Capital and cash to fund the Phadia acquisition, which is expected to complete in the fourth quarter, and be immediately accretive to Thermo Fisher's adjusted earnings per share. The deal completes a busy week for Thermo Fisher, which completed its $2.1 billion acquisition of Dionex on May 17 and one day later announced the $35 million purchase of UK player Sterilin.--John Davis

Image courtesy of flickrer WarmSleepy via a creative commons license.

Market Access: Pharma's Hot Potato?

Strangely enough, given that market access is nowadays probably the single most important determinant of near-term (and indeed any-term) commercial success for pharma, there weren't that many companies attending a recent event dedicated to this topic. Instead, it was mostly consultants -- gearing up one supposes to later suck hefty fees out of said absentee firms by relaying information on how to convince payers to reimburse their drugs. (Which is what market access is, in case you'd also missed it).

Then again, maybe it was understandable that many pharma stayed away: the messages aren't happy ones. The various overhauls of Europe's market access systems (that's to say, health technology assessment methods and processes) have already had "major consequences" on drug pricing, said Pierre-Phillippe Sagnier, VP Global Market Access at Bayer Schering Pharma.

Yet it remains unclear precisely what criterial those overhauling systems use to judge the value of new drugs. Thus, in Germany, Europe's largest and arguably most influential market, all new products are now subject to a compulsory cost-effectiveness exam after just six months on the market. Moreover, while this exam determines a drug's pricing fate, the marking system remains opaque.

That matters because many European countries look to Germany when making their own pricing decisions and drug-value judgments. Thus, a bad mark in Berlin could spell disaster for a product in Europe as a whole. (Tip: Germany's hot on relative cost-effectiveness, so you can mostly forget placebo-controlled trials.)

On the other hand, most European countries do nevertheless now have their own HTA systems, with their own particular methods and biases. That means each requires a bottom-up information feed from local execs and a degree of regional tailoring. Pharmas still aren't that comfy with the trend towards regional empowerment even at the marketing level; now it has to consider regional input during development to make sure it generates appropriate data.

Partly because of the complexities required to account for these regional difference and partly because big drug makers are resistant to change, pharma apparently have little idea how to fit the market access function into their traditional basket of activities. "Market access works across all functions; it's essentially an integrating function," commented Janice Haigh, Senior Director, Pricing & Market Access for Astellas Pharma Europe. She's trying to figure out market access for the Japanese firm, which has shifted from part of Operations to Marketing. She and other executives suggest that, at the moment, no-one's really managed to position market access right. Bayer has moved it about from development to commercial and is now trying to integrate the two. "It will take some time," says Sagnier.

There are some ideas trickling through, including better mechanisms to address the global vs. local disconnect that can arise in market access. Astellas, for instance, groups payers into five or six types, according to Haigh, which share similar priorities.

But there are also signs of a wait-and-see attitude that most pharma can ill afford. Regarding the the German system, for instance, where the first outcomes are expected in August 2011, "we're quite glad we are not launching anything in 2011/2012; we're happy to see how other drugs get on, " admitted Bayer's senior market access manager, Jens Lipinski.

Top management at several Big Pharma are talking big talk about market access. It's unclear, from this blogger's lunch chats during the above-mentioned meeting, that this world view has trickled down through the ranks.

In reality shifting the commercial mentality away from pushing drugs at doctors and towards building relationships with national and regional payers requires new skills. So too, does dreaming up risk-sharing deals and embracing integrated care contracts. It's tough stuff that will remain a hot potato no one department wants to own -- let alone a subject that can attract conference attendees.

image by flickrer Jess Gambacurta used under creative commons

Deals Of The Week: Hot Pursuit

Takeda is in hot pursuit of Swiss biopharma Nycomed – or maybe not. After the rumorville erupted Thursday May 12 about a possible $12 billion take-out of the private-equity owned Nycomed (which has been on the auction block for months if not years), Takeda tried to squelch the speculation.

In a 96-word statement posted on its website Friday May 13, Japan’s largest pharma noted, “The company would like to make clear that Takeda has not agreed to any such an agreement as suggested by certain news publications…there is nothing that needs to be announced at this point.”

It’s customary practice for companies not to comment on pending M&A rumors (that’s what the bankers are for). And who really wants to announce the biggest deal in their company history on Friday the 13th? That’s like asking for bad integration karma.

Still, Takeda’s action ain’t going to do much to stop the whispers. Various news outlets are simply using the statement to point out that the inevitable persons familiar with the matter say a deal is in its final stages “but might take time to conclude.”

Indeed, as we pointed out in this story from “The Pink Sheet” DAILY, one of the reasons the rumors have garnered so much traction – aside from the juicy valuation Takeda allegedly places on the company – is the logic of the tie-up. As the 15th biggest pharma worldwide, Takeda has been trying since its $8.8 billion take-out of Millennium Pharmaceuticals to become a significant multi-national player. That 2008 acquisition did more than expand the Japan co’s presence in oncology, a core therapeutic area. It also dramatically increased the company’s US footprint at a time when the its joint venture with Abbott was winding down, and bolstered Takeda’s senior executive team with the likes of Deborah Dunsire, Christoph Bianchi, and Nancy Simonian.

In the same vein, a Nycomed buy would significantly boost Takeda’s European footprint (one of Takeda’s long-stated goals), while also jump-starting its emerging markets strategy (another more recently stated goal). Like most Japanese pharma, Takeda has been behind its multinational counterparts when it comes to inking deals in various EMs. But with a single deal, the Japan drug maker could increase the percentage of sales revenues coming from this increasingly valuable part of the world. Almost 40% of Nycomed’s $4.5 billion revenues from 2010 came from emerging territories, and the company forecasts that share to increase to 60% by 2015.

It’s true that Nycomed’s therapeutic focus on respiratory diseases and inflammation doesn’t quite chime with Takeda’s areas of interest. But Nycomed’s expertise in GI seems like a natural fit; the company got its start in 1895 manufacturing and selling bismuth – the basic ingredient in Pepto-Bismol. The ability to leverage Nycomed’s strong existing OTC biz is also likely an allure; Nycomed demonstrated its prowess in this arena in 2009 when it scored Europe’s second centralized Rx to OTC switch for pantoprazole. (Coincidentally that’s the same year OTC versions of Takeda’s blockbuster PPI Prevacid hit the market.)

Certainly if Takeda wants to ramp up quickly in both Europe and EMs, there aren’t too many specialty cos that are affordable – and available for purchase. Let’s not forget that Nycomed’s ownership structure – PE firm Nordic Capital holds more than 40% with Credit Suisse’s DLJ Merchant Banking, Coller International Partners, and Avista also having stakes – means there’s increased pressure on the privately-held Nycomed to create some exit options. Thus, if the Takeda deal doesn’t materialize, it’s a fair bet another suitor for Nycomed will emerge.

Stay tuned to IN VIVO Blog as the chase for Nycomed evolves. Meantime there’s no need to delay the deal making gratification. Ever in pursuit of the week’s top deals, we bring you – signed, sealed, and delivered – another edition of ...


Alkermes/Elan Drug Technology: Nycomed isn’t the only European company that’s been looking for a buyer. In the week’s biggest confirmed deal, Alkermes announced it has snapped up Elan Corp’s Elan Drug Technology group in a cash and stock deal worth nearly $1 billion. The new company will be incorporated in Dublin but have a decidedly US look: Richard Pops, Alkermes’ current chairman and CEO will retain those job duties, while EDT’s CEO Shane Cook becomes president of the new entity. The acquisition could be a transformational event for Alkermes, which has spent the last few years trying to step out of the shadow of some big name partners (Eli Lilly, Amylin, Johnson & Johnson) and dodge the negative Exubera press that gave drug delivery a bad name. The transaction certainly deepens the drug delivery technology capabilities within Alkermes, but that’s not the story line executives are playing up. In an interview with “The Pink Sheet” DAILY, Pops was pretty clear that he didn’t want Alkermes tarred with that brush. Indeed, the biotech has spent the last several years trying to reinvent itself, emphasizing its CNS-focused product development expertise a la Vivitrol. In this case, the drug delivery expertise is a means to that end – and a pretty lucrative one. Technology from the newly combined EDT/Alkermes is embedded in more than two dozen commercial products, from Acorda’s Ampyra to J&J’s anti-pyschotics Invega Sustenna and Risperdal Consta to Eli Lilly/Amylin’s Bydureon. That means there are some nice royalties coming the new Alkermes’ way to support its drug development ambitions. As Pops told PSD, “it takes us immediately to a cash-flow positive company.” And it’s hard to argue with a balance sheet in the black.—Lisa LaMotta and EL

Shire/Heptares: The hope that new technologies can crack intractable targets continues to lure big pharma to the deal making table. But in the case of this week’s early stage R&D alliance, a tie-up between Shire and the GPCR-focused start-up Heptares, that allure wasn’t so strong that the pharma in question didn’t want to hedge its risk. Thus, Shire – not usually one to reach so far back in the value chain – has agreed to take an exclusive option on a novel adenosine A2A antagonist currently in preclinical development at Heptares for the treatment of the symptoms of Parkinson's disease. (It has the potential to treat other CNS diseases as well.) Of course, Shire already has significant business in the CNS area, with the ADHD therapy, Vyvanse (lisdexamfetamine), being its top-selling product. The financial terms of Heptares’option agreement with Shire weren’t disclosed, but include an upfront payment and, according to Heptares’ CEO Malcom Weir, significant downstream royalties. There’s also a separate payment owed if and when the option is exercised. This is the second big pharma alliance Heptares has inked in as many months; in April it announced a tie-up with Takeda worth £4.5million upfront (also CNS focused, though that particular target was not disclosed). Heptares also isn’t one to shy away from options. In 2009, eight months after the Swiss pharma’s Novartis Option Fund invested in the biotech’s $30 Series A, Novartis and Heptares announced an option-based alliance that requires the start-up to produce small molecules against a GPCR of the pharma’s choosing.–John Davis & EL

Allos/Mundipharma: Allos Therapeutics achieved a key strategic goal May 10, announcing a co-development and commercialization pact for Folotyn with the U.K.’s Mundipharma International Corporation Ltd. The deal is worth $50 million upfront to Allos, and the smaller firm gets to keep 100% of the US market. (Mundipharma has exclusive ex-US rights.) Folotyn, a folate analog metabolic inhibitor, was approved under accelerated review by FDA in 2009 for relapsed or refractory peripheral T-cell lymphoma and remains the only drug approved in the US for this indication. (Currently there are no approved drug therapies in Europe.) Still that hasn’t helped sales of the medicine, which are most diplomatically described as tepid. Folotyn’s US approval came with a requirement for four post-marketing trials, including studies that measure efficacy in previously undiagnosed PTCL patients and in combination with bexarotene in relapsed or refractory cutaneous T-cell lymphoma. Importantly, the deal requires Mundipharma to fund 40% of the costs of those trials. The cost-sharing would be split 50/50 if Folotyn garners a positive nod from the European Medicines Agency, an event that could happen in 2012. Allos also can earn commercial progress- and sales-based milestones totaling up to $310.5 million under the partnership, along with tiered double-digit royalties on sales occurring in Mundipharma’s licensed territories. Meanwhile, Allos’ monopoly in the U.S. may be short-lived, as Celgene Corp. has a June 17 PFUFA date for its application to add progressive or relapsed PTCL to the label of its HDAC inhibitor Istodax, which already is approved for second-line therapy in cutaneous T-cell lymphoma.—Joseph Haas

Pfizer/Zealand: We’re late to this break-up, which was apparently first tipped when Zealand pharma released its IPO prospectus back in 2010 and again in the biotech’s annual report, but it finally caught our eye yesterday. (Hey, the third time’s the charm.) As part of an announcement about its first quarter results, the Danish biotech said yesterday it had regained rights to danegaptide, a gap junction modifier with potential in atrial fibrillation, from former partner Pfizer. Pfizer got its mitts on the project as part of the Wyeth acquisition (Wyeth and Zealand originally teamed up in 2003) and has since made no bones about its desire to exit cardiovascular research. Specific terms of the give-back weren’t announced but Zealand now holds “all rights to and all clinical data generated with this compound,” the IV version of which has completed two Phase I studies. Zealand intends to take an oral version of the drug into Phase I and “together with a new large pharma partner we intend to prepare for the Phase IIa proof of principle study in 2012,” according to the company’s 2010 annual report. Pfizer’s decision to pull back on cardiovascular R&D reflects a broader industry trend away from an area that was once close to most pharmas’ hearts (sorry). Zealand’s search for a new partner will therefore see it knocking on fewer doors, though with a first-in-class compound with potential acute and chronic uses, it’s likely to get a look-see from the remaining cardiovascular stalwarts.—Chris Morrison

Where To Find Biosimilar User Fees In Alphabet Soup?

Industry is looking for a PDUFA, but could end up with a FDAAA as it searches for an acronym for the biosimilar user fee to join the lexicon of bureaucratic alphabet soup.

It is an important question, mainly because the series of letters likely will become the most-recognized method of referencing the program. (Of course, how the program might actually run is another important question, one explored in this week's edition of "The Pink Sheet.")

The Prescription Drug User Fee Act is the oldest user fee and PDUFA has long been accepted as a classic acronym.

The 2007 FDA Amendments Act elicited the opposite response. It was criticized shortly after passage for its awkward, A-filled acronym. One person at the time said FDAAA was among the worst acronyms in recorded history.

Many seemed to prefer an alternate title for the bill: the FDA Revitalization Act. It would have shortened to FDARA, a much more pronounceable acronym.

So where would the biosimilar user fee fit in the acronym vernacular? BUFA or BSUFA would continue the “UFA” naming concept.

Shorter acronyms are preferred and the user fee likely will not elicit its own legislation, so maybe the “A” should be dropped. That would leave BUF or BSUF, but both seem awkward-sounding.

Indeed, negotiators for the generic user fees that are expected to be created sometimes refer to that program as GDUF, but it's unclear if they are being serious.

Maybe the biosimilar user fee will require a break from tradition, just like the negotiating process FDA is employing to create the program, and employ no acronym. After all, biosimilars are similar, but not the same, as their reference products.

Patricia Knight, president of Knight Capital Consultants, and a former chief of staff for Sen. Orrin Hatch, R-Utah, one of the principal authors of the legislation, said crafting a title for it “was just horrible.”

“We could get through some of the hardest stuff, but we were stumped on the title,” Knight said May 4 during a conference on the future of biosimilars in the U.S.

“We were throwing out ideas and we decided to pay a tribute to the Drug Price Competition and Patent Term Restoration Act, so it would be parallel to the Biologics Price Competition and Innovation Act. Truth be known, that title was picked in a contest.”

Are you more creative than Congress? Take our poll below to vote for your favorite biosimilar user fee acronym or offer your own.

– Derrick Gingery










Photo by Flickr user woody1778a used under Creative Commons license.

Financings of the Fortnight Watches The Paper Tigers Float By

Whatever image Chinese-made drugs might conjure for you -- or in this case, whatever music they plant in your ear -- a lot of people want a piece. There were 34 Chinese health-care IPOs last year, as counted by Morgan Stanley, and there's been no slowdown in 2011. Indeed, Chinese drug maker Shanghai Pharmaceutical Holdings is listing shares in Hong Kong this month in an offering worth up to $2.2 billion, which could challenge to be the largest pharmaceutical IPO ever, according to our PharmAsia News colleagues. (Japan's Otsuka Holding, diversified well beyond biopharma, raised $2.4 billion last year.)

SPH is already listed in Shanghai, but with domestic exchanges in China reserved mainly for domestic investors, going public in Hong Kong allows it to tap more easily into foreign sources of cash. High-profile sources, too: according to SPH’s prospectus, Pfizer has already pledged to buy $50 million in shares, and Singapore's state investment firm Temasek Holdings is buying $300 million. Two others, Malaysian conglomerate Guoco Group and Bank of China Group Investment, will bring the total from "cornerstone" investors to $550 million. SPH is the largest distributor of Pfizer products in China, and products from multinationals will account for 60% of its distribution business this year, it said recently.

It's not just the 500-pound pandas raising cash in the Middle Kingdom. According to the Elsevier Transactions database, the five previous Chinese pharma IPOs this year raised a total of $1.3 billion, as a wave of consolidation among manufacturers and distributors continues to jolt the Chinese market. Or shall we say Chinese "market," as the consolidation is being steered by the government and its latest five-year health plan. Under the plan, the ministry outlined its intention to encourage consolidation, with the creation of three large national drug distributors and 20 regionally based players by 2015.

Despite its exposure to outside investors, Shanghai Pharma will remain majority-owned by the regional Shanghai government. Those ties don’t completely rule out competition. As this Wall Street Journal story explains, SPH and its rival Sinopharm Group have been scrambling to get in front of the same set of investors and stepping on each other's toes in the process. Sinopharm went public for a cool $1.1 billion in 2009; its recent issue was a $440 million secondary offering.

Those are mind-boggling amounts of money, especially compared to the IPO market in the US where life science companies scratch and claw to raise $50 million. Apparently in some parts of the world, capitalists are plenty happy to lend a hand to health care socialism. Funny how the world works, eh? Don't forget your passport, you're flying first-class today with...


Array BioPharma: With Array, Deerfield Capital Management giveth, and it taketh back. Back in 2008, the cancer and inflammation therapeutics developer received an $80 million loan from Deerfield to support development of six projects through proof-of-concept studies. In return, Deerfield got six-year warrants to buy six million common shares at $7.54 apiece. In July 2009, the private equity firm committed another $40 million, bringing the loan total to $120 million, and exchanged the original warrants for new ones exercisable at a much cheaper price of $3.65. On May 2, Array announced it raised $30 million by selling more than 10,000 Series B convertible preferred shares to Deerfield, with the proceeds immediately going back to Deerfield to reduce the loan to $90 million. The parties also amended the credit facility to repay the rest of the outstanding principal and interest, with the rate staying at 7.5%. Array has agreed to apply to the loan 15% of any up-front or milestone payments it receives in deals through June 2016. It has also agreed to pay the remaining balance minus $20 million by June 2015, and the leftover debt up to $20 million by June 2016. Deerfield’s warrants will now expire on June 30, 2016 instead of April 2014. Since being founded in 1998, Array has brought in $507 million in R&D funding, up-front fees, and milestones. But despite partnerships with multiple Big Pharmas and top-tier biotechs, the company has not seen an uptick in its stock price (see here for some background). Shares closed at $2.89 on May 10, more than 25% lower than the $4.02 closing price on April 20, the day after it announced its Novartis MEK inhibitor alliance. -- Amanda Micklus

Delenex Therapeutics: Spun out of Swiss antibody fragment developer ESBATech in September 2009 when ESBATech was acquired by Alcon, Delenex has double-dipped on its Series A, opting for a second closing that more than doubles the round’s size, the company announced May 3. Six months after the first closing was announced, first-time investor Novo Ventures led the new CHF 16.7 million ($19.3 million) installment of funding, which tops off the Series A at CHF 30.2 million ($34.8 million). Existing backers, including SV Life Sciences, HBM BioCapital, HBM BioVentures, BioMedInvest and VI Partners, also followed on. The Zurich-based startup, which retained ESBATech's non-ophthalmology assets, aims to bring anti-tumor-necrosis-factor-alpha compound DLX105 to proof-of-concept in an unspecified dermatological indication. The company is seeking a partner to develop the same compound for osteoarthritis, and has other drug candidates in neuroscience and oncology. Delenex inherited an antibody fragment platform called PENTRA that produces molecules approximately one-sixth to one-third the size of a full-length immunoglobulin. -- Paul Bonanos

Naurex: The Evanston, Ill. biotech, which our colleagues recently profiled in the March issue of START-UP, said May 11 it has raised an $18 million Series A round of financing to fund Phase II trials of its lead compound GLYX-13, an NMDAR (N-methyl-D-aspartic acid receptor) modulator, for patients with treatment-resistant depression. In a Phase I trial there were no signs of schizophrenia-like side effects often associated with NMDAR modulators, a tricky class of drugs that have garnered notoriety for their recreational use, such as ketamine and PCP. Based on discoveries made at Northwestern University, GLYX-13 only partially activates NMDAR, increasing the likelihood it won’t cause unwanted side-effects. Adams Street Partners and Latterell Venture Partners led the Series A, but an interesting syndicate of corporate investors also participated, including Lundbeck, Shire, and Takeda Ventures, the Silicon Valley investment arm of the Japanese giant. Naurex is also working on second generation, orally administered preclinical NMDAR modulators that it also hopes to develop for depression and other CNS indications. Naurex was founded in 2000 as Nyxis Neurotherapeutics then renamed Naurex and recapitalized in 2007. -- Alex Lash

Fate Therapeutics: One of the few regenerative medicine companies to attract high-profile funding, Fate has now signed up its fourth strategic backer. Takeda Ventures, a busy group this fortnight, has taken an undisclosed stake in the San Diego firm, and we're guessing it's not for the surfing lessons, which Fate employees have been known to give visiting colleagues and partners. Fate is working on ways to endow adult cells with the pluripotency of their embryonic kin, then exploit the newly pluripotent cells into various differentiated cell types. Long-term, Fate wants to apply its stem-cell expertise to its own drug discovery, but nearer term, the company’s business model is more practical: the company wants to sell differentiated cells as biopharma discovery tools. In the fall of 2010, it signed up Becton, Dickinson as its distribution partner. Revenues from this service help offset the development costs of Fate’s first small-molecule candidate, FT1050, which is in early clinical trials to improve engraftment of hematopoietic stem cells in patients with blood-based malignancies receiving transplants. The Takeda investment was not part of a larger round; the firm's most recent funding was a $30 million Series B led by OVP Venture Partners that included three other corporate investors: Astellas Venture Management, Genzyme Ventures, and one undisclosed. -- A.L.

Many thanks to Maureen Riordan and Dailing Jai for help with today's introduction.

Photo courtesy of flickr user Kevin Dooley under a Creative Commons license.

AstraZeneca Polishes Up Brilinta As It Woos EU Payers

Still reeling from the FDA's knock-back to its blockbuster cardiovascular hopeful Brilinta, AstraZeneca is doing its utmost to push uptake in Europe. So on Monday the company issued a press release highlighting a health economics sub-study of PLATO – the 18,000-patient Phase III trial that underpinned EU approval in December– showing that even though Brilique (as ticagrelor is known in Europe) costs up to 20 times more than generic Plavix, it is actually, dear payers, more cost-effective…as a result of lower hospitalization costs.

The sub-study took patient data from PLATO and used it to work out event rates and thus ultimately a cost-per-quality adjusted life year (QALY) for the drug for one year, using Swedish health care costs. Since PLATO had shown a reduced rate of MI, stroke or death from vascular causes, without a significant increase in the rate of overall bleeding, relative to Plavix, the theoretical health care bill was lower. The study then used "necessary assumptions and external data sources" to extrapolate longer-term QALY data, according to a description in the International Society for Pharmacoeconomics and Outcomes Research's Value in Health journal.

The result: Brilinta's cost-per-QALY was in the €2,350-€5,700 range, making it look rather cheap against the backdrop of an informal €25,000-€38,000 cost-per-QALY threshold applied by watchdogs like NICE in England.

One of the professors behind the study described this result as "particularly impressive". Whether or not Europe's most important payers agree is still unclear. AZ concurrently announced that Scotland and Denmark had agreed to reimburse Brilique, but these tiny nations alone won't move the needle for the Big Pharma.

Decisions from Europe's biggest markets will. But France's health technology assessor has already requested further data, notably from AZ's response to FDA's complete response letter, delaying its decision (AZ withdrew its submission as a result, but plans to re-submit within months). Cost-effectiveness assessments in the UK and Germany are due to report later this year.

It's unlikely that this particular sub-study will sway NICE's decision. That agency often questions manufacturers' assumptions and models in their cost-effectiveness analyses; like many US payers, it's (probably rightly) skeptical of pharma-sponsored studies. Even the Scottish Medicines Consortium's approval document from April notes that "the manufacturer may have underestimated the potential uptake of this product" in its calculations of the impact of Brilique on the Scots' drug budget.

Meanwhile Germany has one of the highest generic usage rates in Europe and is notoriously harsh in its judgment of what constitutes innovation (and thus warrants a premium price). But it will at least appreciate that AstraZeneca bravely pitted Brilique head-to-head against the relevant competitor in its Phase III trials, rather than trying to get away with a placebo-controlled trial. Indeed, Germany now requires head-to-head trials with existing therapies before it will grant reimbursement at a premium relative to existing treatments.

As such, Gunnar Olssen, head of AZ's CV/GI iMed, reckons the company couldn't have done a lot more to prove Brilique's superiority, and thus its value to patients. "I don't believe in this case we should have done anything differently," he said. "The drug led to a statistically significant reduction in cardiovascular mortality."

At what price, that reduction, though? That's what the payers are asking.

image by engnr_chik from flickr, used under creative commons