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Friday, September 30, 2011

Deals Of The Week: It's All About Access

One of the week's most interesting news events came from across the pond as the International Structural Genomics Consortium (SGC) made waves with news of $48.9 million in new funding and two new big pharma drug partners: Eli Lilly Canada and Pfizer.

Whether it's politics, invites to the cool parties, or the next potential blockbuster drug, what's important these days is access --especially when you are on a budget.

Recognizing that it costs a bundle to lock up rights to the next potential hot new drug (witness GSK's spend on Sirtris), big pharmas are devoting more resources to building relationships with academia and the venture community (whether it's through corporate venture efforts or as a strategic limited partner.) But they are also flirting with precompetitive alliances -- and the expanding pool of participants in the SGC consortium is a reminder of the growing importance of this trend.

Indeed, both SGC's newest consortium members have been active in other kinds of open innovation plays. Back in 2008 Pfizer and Lilly joined PureTech Ventures to stake Enlight Biosciences, an early-stage company developing new technologies --for instance novel drug delivery or imaging capabilities-- that could lead to better medicines. And in 2010, Pfizer also joined forces with four other pharmas to fund Ablexis, a next-generation antibody discovery play founded by ex-Abgenix execs.

Lilly, meanwhile, has spent the last two years building a web portal that allows outside researchers to submit compounds for interrogation using its proprietary drug-discovery assays. The project, which this week was expanded and rebranded the Open Innovation Drug Discovery initiative (OIDD), is part of an ongoing effort by Lilly to promote collaboration via providing biotechs and unis free access to nearly a dozen assays designed to measure cellular responses and mechanism of action data to potentially interesting compounds.

The SGC collaboration, like the Ablexis and Enlight efforts, is also focused on new tools that could be critical to drug discovery. As its name implies, one key element is the creation of three-dimensional protein structures for use in structure-based drug discovery. With the additional funding from Lilly and Pfizer, however, SGC is expanding its focus to epigenetics, a hot area of science that has been the focus of early-stage deal making and spawned the creation of two A-list biotechs, Epizyme and Constellation. SGC aims to use its protein structure and synthesis capabilities in this arena to create new chemical compounds and antibodies that block potential proteins that cause disease by epigenetic mechanisms. The findings, including the actual reagents, will be made available to the worldwide research community.

Why would Lilly and Pfizer, as well as existing SGC consortium members GlaxoSmithKline and Novartis, put money and in-kind med chem resources into an effort that will broadly disseminate its findings to the biopharma community at large? Because the companies are betting they will be more successful competing at the level of the compound rather than in the development of the technology itself. In other words, they have a better chance of creating the first-in-class or best-in-class version of compound X if they have access to better, more robust technologies, which by the way take time and are expensive to develop in-house.

Is such open access going to solve the industry's R&D productivity crisis as some have claimed? Probably not, given the redundancies of human biology and the reality that drug development is intrinsically hard. But a mindset that resources can be shared, thus obviating the need for duplicative infrastructure, is an important step forward and a trend likely to gain steam as successes mount from SGC and other public-private endeavors like the Innovative Medicine Initiative.

In the meantime, IVB is open 24 hours a day, seven days a week with an inside track to the week's deal making news in another edition of...

Karuna Pharmaceuticals/Vanderbilt: In the latest neuroscience-focused tie-up between Vanderbilt University researchers and a biopharmaceutical company, the Vanderbilt Center for Neuroscience Drug Discovery has licensed three preclinical compounds for schizophrenia to Boston-based start-up Karuna Pharmaceuticals. No financial terms were disclosed for the deal, which centers on glycine transporter one (GlyT1) inhibitors designed to address not only the hallucination and delusion associated with schizophrenia but also depression, ahnedonia, and memory loss, symptoms that can prevent patients from holding down jobs and living independently. VCNDD, which focuses on molecules that target the brain’s glutamate system, developed the GlyT1 compounds in part with $10 million in grant funding from the National Institute of Mental Health. VCNDD has been creating a lot of R&D buzz lately: in mid-September, it pulled in an undisclosed milestone payment after delivering preclinical candidates for fragile X syndrome to Seaside Therapeutics; thanks in part to grants from the Michael J. Fox Foundation, it's also advanced three mGluR4 agonists into the latter stages of preclinical development for Parkinson’s disease. Interestingly that latter arrangement allows VCNDD to retain all the intellectual property tied to the mGluR4 agonists. The next step could be another out-licensing, since VCNDD is looking for a biopharma partner to bring them into clinical development.—Joseph Haas

Ipsen/Photocure: Back in June, mid-sized Ipsen promised disgruntled investors it would shift to a specialty pharma strategy in its uro-oncology franchise, jettisoning R&D in favor of late-stage and commercial in-licensing. The company’s Sept. 27 in-licensing of worldwide ex-U.S and ex-Nordic rights to Photocure’s marketed bladder cancer diagnostic, Hexvix, suggests it’s doing what it said it would. There’s no technological or regulatory risk associated with Hexvix: it’s already approved in Europe (since 2006) and in the U.S. (since 2010). The product is designed to induce fluorescence only in malignant cells in the bladder during a cystoscopic procedure, thus improving the detection and resection of non-invasive bladder cancer.The risk is on commercial execution: Hexvix is a drug-device procedure that requires more sophisticated selling than a pill or even an injection.It’s reimbursed in ‘most major European markets’, according to the company, but sales have been patchy. Certainly GE Healthcare, which had held ex-Nordic rights to sell Hexvix since 2006, was apparently happy to give it up, citing a strategic shift away from urology. Hexvix sales are estimated to reach €14 million for 2011, giving an immediate, if small, boost to Ipsen’s revenues. And since the French group will give Hexvix to an existing sales force detailing prostate-cancer treatment Decapeptyl (a GnRh analog), incremental costs will be minimal. Ipsen pays €19 million up front, most of which goes to GE, which built up the current sales base in Europe. Photocure takes €1.5m at signing and €5m tied to some additional transition milestones in the next month, according to COO Kathleen Deardorff. More importantly, the Norwegian group is in line for double-digit sales royalties and manufacturing revenue. It also books top line revenue in the Nordic region, and retains US rights.--Melanie Senior


Lundbeck/Proximagen: Denmark's Lundbeck might be facing the imminent loss of patent protection on its blockbuster antidepressant, escitalopram (Cipralex/Lexapro), but it's still finding the time to look for early-stage product opportunities. It announced September 28 that it was going to work closely with the UK biotech, Proximagen, applying its clinical development expertise to three of that company's research programs in return for an opportunity to negotiate rights to interesting products. The areas of focus? Neuro-inflammation, neuropathic pain and epilepsy. Lundbeck will also make an equity investment of $16.1 million in Proximagen, giving it a 9% stake in the biotech. The companies have been working on setting up the strategic partnership for some time, and the alliance shows how in the competitive CNS space, players like Lundbeck, which is increasingly competing for high priority CNS assets with deeper pocketed pharmas, see an opportunity by aligning ever earlier in the drug development process. Proximagen raised more than $80 million two years ago, and is pursuing a risk-mitigating strategy of acquiring compounds at good-value prices and developing them with partners, while holding onto certain rights, usually for Europe.--John Davis

Biotie/Newron: In a deal weighty with balanced risk, Finland’s Biotie Therapies agreed to acquire Newron Pharmaceuticals of Italy in an all-stock deal. The agreement, which values Newron at €38 million ($52 million) plus €7 million in contingent value rights, gives it the potential upside of Newron’s Phase III Parkinson’s candidate safinamide, already partnered with Merck Serono. If the drug is approved, Biotie could receive milestone payments estimated at €48 million, plus sales milestones worth up to €60 million and royalties. But if the drug fails, Biotie will essentially be out €28 million, since Newron currently has €10 million in cash. It won’t cost Biotie much otherwise, since Merck Serono is funding safinamide’s late-stage trials. Further Phase III data are expected in the first half of 2012. The deal brings very weak returns to Newron’s stakeholders, who have invested about €200 million since 1999, but represents a 38% premium over its last closing price prior to the Sept. 27 deal. Biotie’s other drug candidate, nalmefene for alcohol dependence, is partnered with Lundbeck and is due to be filed for approval later this year; Newron withstood the failure of late-stage neuropathic pain candidate ralfinamide last year. – Paul Bonanos and Melanie Senior

Image: flickrer Ben Zvan / Creative Commons.

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