Friday, January 27, 2012

DOTW Diagnoses the Meaning Behind Roche’s Hostile Bid For Illumina

It’s a cat-and-mouse game in the whole-genome sequencing space, as Roche made a hostile $5.7 billion bid for Illumina on Jan. 25, which the German gene-sequencing powerhouse responded to by adopting a “poison pill.” While stating that its board of directors would review Roche’s offer to determine if it is in the best interest of its shareholders, Illumina adopted a shareholder rights agreement Jan. 26 under which shareholders will receive one preferred share of stock as a dividend for each common share held if Roche or another bidder increases its holding in Illumina to 15% or greater.

Roche’s offer represents a significant premium over Illumina’s recent share prices, which rose substantially after the unsolicited bid, but market analysts have speculated that the Swiss pharma will need to increase its bid to land its prey. (And why not: we've seen this show before, back when it was called Genentech or before that, Ventana.)

With an eye toward pushing gene-sequencing into the routine clinical diagnostic space and a longer-term goal of using the technology to create companion diagnostics for drugs, Roche has been active in acquiring gene-sequencing companies. In 2007, it bought out 454 Life Sciences for $155 million. In a related effort that demonstrated the pharma’s mettle in landing a desired target, Roche made a late increase to its bid to land genetic-testing firm Ventana Life Sciences for $3.4 billion after a seven-month struggle in 2007-08.

As our colleagues at The Gray Sheet explained, Roche’s goal is not merely to grow its diagnostics business, where it is in fierce competition with Abbott, but to accelerate the transition of whole-genome sequencing from research to clinical use. Roche projects a $2 billion-plus sequencing market in 2015 – the worldwide market for sequencing was about $1.2 billion in 2010, with Illumina reporting revenues of roughly $900 million that year.

That revenue, however, did not come from clinical diagnostics but from research applications. About 80% of Illumina’s customers are academic or government labs, with just 10% comprising pharmaceutical and biotechnology companies using the firm’s sequencing and microarray technology for drug-discovery efforts.

Daniel O’Day, chief operating officer of Roche Diagnostics, predicted that while FDA likely will delay very near-term adoption of clinical diagnostic sequencing in the U.S. as it reviews the technology, the opportunity for market applications may arrive more quickly in Europe.

“I don’t think this is something that is five or 10 years out, in Europe in particular,” he said. “I think it’s something we see already and that we can foster and begin to drive. It won’t be a black-and-white situation. There won’t be one day [when] it’s in the research world, the next days it’s in the clinic world, but it will evolve and it will evolve quicker in Europe than it will in the United States.”

While we await Illumina’s next move regarding the hostile bid from Roche, business development folk at numerous other biopharmaceutical companies kept quite busy this past week. Therefore, it’s time for another installment of …

Watson/Ascent – With an eye on expansion in the Australian market, Watson Pharmaceuticals acquired Ascent Pharmahealth, which has a strong generics base in Australia and Southeast Asia. Watson announced the acquisition Jan. 24, buying the business from Indian-based generics company Strides Arcolab Ltd. for AU$375 million ($395.8 million). The acquisition will fortify Watson’s position in Australia and Southeast Asia; the company already has a presence in Australia through its Spirit Pharmaceuticals and Willow Pharmaceuticals subsidiaries, but after the acquisition, Watson will be the fifth-largest generic pharmaceutical company in the country by revenue and the second largest in terms of molecules, according to Watson. Executive VP-Global Generics Sigurdur Olafsson explained the rationale behind the buyout during a same-day investor meeting. The Australian market is growing at about 8%, and has a fast growing penetration rate of 60% that should reach 75% by 2016. “It is a very difficult market to enter,” he added. “The top five companies are 98% of the market.” Ascent also has a strong presence in Southeast Asian markets, including Singapore, Malaysia, Hong Kong, Vietnam and Thailand. The unit had sales of approximately AU$150 million ($158.3 million) in 2011. Ascent markets generics, branded-generics, some brands and over-the-counter and dermatology products in Australia. In Southeast Asia, the company markets branded-generics and OTC products through a sales force of 45. The company employs approximately 300 employees. Strides Arcolab divested the business to focus on its specialty business called Agila, which makes hard-to-replicate sterile injectables. The deal will allow the company to reinvest in capital expenditures for the business, management said during a same-day conference call.—Jessica Merrill

Amgen/Micromet – With its eye on the market for hard-to-treat cancers, Amgen announced plans Jan. 25 to acquire Micromet, a biopharma known for its Bispecific T cell Engager (BiTE) antibody platform that can redirect the immune system to fight tumor cells. Amgen agreed to pay $1.16 billion in cash, roughly $11 per share, a 33% premium over the company’s closing price Jan. 25. In exchange, it gains a promising Phase II asset, several earlier-stage partnered assets and a validated technology platform that could have broad applications in a range of hematologic malignancies and solid tumors. The primary focus of the deal is blinatumomab, a BiTE antibody targeting CD19, Micromet’s lead asset in Phase II clinical development for acute lymphoblastic leukemia (ALL) and in Phase I testing for non-Hodgkin’s lymphoma. The rest of the company’s portfolio is in earlier stages of development – and much of it is partnered. The acquisition moves Amgen further into hard-to-treat cancers, an area where it says it wants to play, and Amgen could benefit from bolstering its oncology pipeline. And, Micromet is no stranger to Amgen. The two have been partnered since July. “We have been interested in Micromet for a long time, basically since the company was started,” Executive VP R&D Roger Perlmutter said. Amgen intends to keep Micromet’s research center located in Munich, Germany, where the company was founded in 1993 by a small team of scientists from the University of Munich. The site will operate as an Amgen R&D center of excellence, the firm said. As for Micromet’s existing partners on the BiTE technology (MedImmune, Bayer Healthcare, Sanofi and Boehringer Ingelheim), Amgen said it is committed to maintaining those relationships. Future out-licensing opportunities could even be on the table. “While we have what we think are a lot of good ideas with respect to how to use the BiTE platform, there are a lot of other smart people in the world who have other ideas, and we do not want to exclude other people from being to employ BiTE technology in order to further their programs,” Perlmutter said.—J.M.

Celgene/Avila – In a move to further diversify its product portfolio away from its Revlimid (lenalidomide) franchise, Celgene announced that it will acquire Massachusetts biotech Avila for $925 million in upfront and eventual milestone payments. The acquisition was announced just prior to Celgene’s fourth quarter earnings call on Jan. 26 and is expected to close during the first quarter. Celgene will pay $350 million upfront, as well as $195 million in milestones tied to Avila’s lead drug candidate AVL-292, a treatment for hematological cancer and autoimmune diseases. AVL-292 will begin Phase II trials in the second half of the year and be developed in conjunction with Revlimid. The deal will bring five-year-old Avila’s investors a strong exit; the aggregate invested capital multiple is almost 7x on the $350 million upfront that Celgene will pay and is more than 11x for the $575 million in milestone payments that will be paid out. “With minimal cash outlay up front (CELG generated nearly $2B in cash flow in 2011), and an asset that fits nicely into CELG’s portfolio, we view this as a nice tuck-in acquisition,” wrote Baird & Co. analyst Christopher Raymond in a note.—Lisa LaMotta

AstraZeneca/Karolinska Institutet – AstraZeneca and Karolinska Institutet of Sweden have a new research agreement – their second – to develop potential imaging biomarkers and diagnostics using Karolinska’s expertise in positron emission tomography (PET) imaging to support AZ’s drug discovery and development programs. The three-year collaborative research agreement builds on the partners’ earlier work, a joint venture, which focused on neuroscience. But the new agreement expands the focus to include pain control, gastrointestinal and cardiovascular applications; AZ has numerous compounds in Phases I and II trials in all of those areas. The joint venture, put in place in 2006, included an investment by AZ in the university’s imaging facilities and has yielded more than 10 novel ligands for PET and many more implemented in AZ’s development programs, the pharma said. These include identification and early development of two compounds that detect amyloid by PET imaging, likely useful in studying and diagnosing Alzheimer’s disease. AZ scientists will supply the expertise for synthesizing and developing new imaging molecules, while Karolinska will be responsible for radiochemistry labeling of the imaging molecules and PET studies. AZ will spend about $1.7 million a year for three years to fund seven full-time positions at Karolinska and facilitate a specific number of PET measures and joint research projects.—Wendy Diller

BioLineRx/Genoscience – Israeli biotech BioLineRx, which has five compounds in clinical development in a variety of indications as well as 12 preclinical programs, added another asset Jan. 24, when it licensed worldwide rights to Phase I-ready hepatitis C candidate BL-8020 from France’s Genoscience. No financial terms were disclosed. The news caused an instant and significant uptick in BioLineRx’s share price in trading on both the Tel Aviv exchange and NASDAQ. Additionally, there was speculation that the Israeli company could join Idenix and Achillion as a buyout target in the red-hot HCV space that has seen a pair of clinical-stage biotechs snapped up at record prices in recent months. BL-8020 offers a different approach to treating HCV, Genoscience claims, by inhibiting HCV-induced autophagy. The compound has demonstrated safety and efficacy in preclinical trials, the company says, along with a synergistic effect when used with other HCV drugs. BioLineRx believes ‘8020 could increase other drugs’ potency and reduce their adverse effects, while also enabling reduced doses of other drugs and shortening total therapy duration. The deal is BioLineRx’s fourth in-licensing transaction in the past two years, following deals to acquire cancer cachexia candidate BL6020 from Santhera, Phase II-ready irritable bowel syndrome drug BL7040 from Hebrew University and neuropathic and inflammatory pain candidate BL7050 from the tech transfer office at Tel Aviv University.—Joseph Haas

Elanco/ChemGen – In a transaction that will continue the ongoing consolidation of the animal health industry, Eli Lilly division Elanco Animal Health will buy out privately held ChemGen Corp. at undisclosed terms, the two companies announced Jan. 24. Lilly said the deal was driven by a desire to increase Elanco’s expertise and pipeline in innovative feed enzyme products that can improve the efficiency of poultry, egg and meat production. The enzymes ChemGen produces are naturally occurring digestive enhancers that help animals unlock and better utilize nutrients in the feed they receive. ChemGen, which will maintain research operations in Maryland and manufacturing activities in Indiana, will become a wholly owned subsidiary of Lilly as well as an operating unit of Elanco. Jeff Simmons, Elanco president, said ChemGen’s existing presence in poultry and swine markets in North America and Asia will benefit Elanco, while Elanco’s presence in Europe and Latin America will offer a growth opportunity for the ChemGen product line. “This acquisition allows Elanco to leverage our expertise in developing trusted, science-based solutions into the enzyme space, which is an emerging field with significant growth potential,” he added. Animal health, while producing small revenues overall for big pharma, nonetheless has offered strong growth rates in recent years, helping explain why Lilly and others have increased their emphasis on this portion of their business.—JAH

Spectrum/Bayer – Oncology drug developer Spectrum Pharmaceuticals now has full global rights to lymphoma treatment Zevalin (ibritumomab tiuxetan), thanks to a new deal to acquire Bayer AG’s license to commercialize the drug outside the U.S. The publicly traded, Henderson, Nev.-based Spectrum has held full U.S. rights to Zevalin since spring 2009, when it acquired the 50% it did not already own of a joint venture with Cell Therapeutics to market the drug; CTI had previously licensed Zevalin from its originator, Biogen Idec. For a one-time payment of €19 million ($24.7 million), Spectrum said it gains all rights to marketing, sales and intellectual property of the drug covering ex-U.S. territories, as well as access to Bayer’s existing inventory of it. Spectrum may seek additional partnerships to market the drug outside the U.S.; it says it will rely on a combination of alliances and company resources. Zevalin, a radiotherapeutic that is given by intravenous injection, is approved in more than 40 countries, including locations in Europe, Latin America and Asia, to treat follicular non-Hodgkin’s lymphoma. The merchant banking group of Burrill & Co. advised Spectrum as it completed the acquisition.—Paul Bonanos

Ipsen/Santhera – In our “No-Deal of the Week”, Ipsen returned to Santhera ex-North American and Japanese rights to Parkinson’s disease drug fipamezole on Jan. 24. Never mind that neurology – and in particular movement disorders – remain a key focus area for the mid-sized French group, following its restructuring last year. And never mind that the drug, a first-in-class selective adrenergic alpha-2 receptor antagonist for managing levodopa-induced dyskinesia in PD patients, fits perfectly with Ipsen’s dystonia treatment Dysport, one of its most important commercial assets. Ipsen gave fipamezole the boot because its development wasn’t going anywhere very fast: Biovail, which licensed U.S. and Canadian rights to the Phase II drug in mid-2009, handed back the asset – still in Phase II – in October 2010, following its acquisition by Valeant. Santhera in early 2011 said it would find a new partner for Phase III, but that didn’t materialize. So Ipsen, with its newly streamlined and de-risked R&D, isn’t about to continue forking out co-development fees for a drug that’s effectively sitting on the shelf as no one’s priority (Santhera’s focal point remains Friedreich’s ataxia drug Catena, even now that it has global rights to fipamezole). And besides, “all our R&D efforts are now focused on peptides and toxins,” as per the 2011 re-structuring, explained an Ipsen spokeswoman. Still, if fipamezole ever does get any closer to market (Santhera declares it to be ‘perceived by clinicians as one of the most promising drug candidates for PD-related dyskinesia’), Ipsen wants a way back in. That’s why it has maintained a call option for worldwide license to the program ‘under certain conditions’. We assume that means if Santhera or someone else starts to de-risk the Phase III. Meantime, Ipsen is owed milestone payments and royalties based on any future partnering and commercial success of the drug.—Melanie Senior

image by flickr user dennis defreyne via creative commons

Thursday, January 26, 2012

Financings of the Fortnight Puts Its Own Lens on Early-Stage Investments

Since we last gathered, dear FOTFriends, end-of-year venture numbers came out. According to the National Venture Capital Association and PriceWaterhouse Coopers, venture cash into biotech was up 22% from 2010, but "first-round" funding volume took a dive to its lowest level in 15 years, with only 153 drug and device companies getting seeded.

Ryan Flinn of Bloomberg News and Luke Timmerman of Xconomy translated that figure into grim news for industry start-ups, with Timmerman enumerating the fears that neither a chastened and constrained federal government, nor Big Pharma, nor other investors have the wherewithal -- or the "guts" -- to fill the early-stage venture void and turn innovation into products.

It's worth noting that the other big VC data shop, DowJones VentureWire, also released its own year-end totes and came to slightly different top-line conclusions: Total biotech funding (biopharma plus devices), for example, came to $7.2 billion in 2011 compared to $6.5 billion in 2010, an 11% rise (compared to NVCA's reported 22% rise). There are other oddities, such as DJVW attributing the entire 11% difference between 2010 and 2011 to a jump on the device side -- albeit with nine fewer companies funded.

We've pointed out before in this column how hard it is to square the two groups' data sets and sometimes divergent attitudes, so we won't try to figure out who's more accurate this time. But there's one number we'd like to circle: the 153 newly-funded companies tallied by NVCA/PWC and cited by Bloomberg as evidence for an early-stage funding crisis.

We don't have access to their raw data, but we can lean on our own database and legwork and turn to our annual The A-List, in which we count Series A rounds for drug, device and diagnostic companies. (We leave out rounds expressly called "seed" rounds, which you're welcome to take issue with, but we feel that seeded ideas worth their salt will progress to an A round.) And we found that in 2011, Series A rounds were slightly up from 2010, 97 to 88, as were the dollars committed ($1.1 billion to $876 million). It's not sunshine and donuts by any means -- it's the third lowest dollar total we've recorded since we began the A-List in 2004 -- and everyday we hear biotech people, from scientists to investors to executives, worry where funding for innovation will come from in the next decade.

But by our one small measure, we note that some of the downward trends stopped trending downward in 2011. Is it a significant shift, or a momentary upward blip in an otherwise inexorable fade? We won't go nearly as far or as fiercely as Atlas Venture partner/blogger Bruce Booth, who took to task both the above-mentioned reporters for turning positive data into negative headlines. (He also complained in a tweet that the VC quoted about the early-stage crisis was from Warburg Pincus, which isn't down in the company-formation trenches.)

Booth, who of course has much at stake in calming fears that early-stage biotech investing is a dying art, digs into the NVCA data strictly from the biopharma side (a mild case of cherry-picking, perhaps). And he finds a few trends that, in shape if not in precise number, mirror what we found in our Series A analysis: Early-stage investments made a modest recovery last year. (We should also mention that two of Atlas' A-round investments made our A-List, in large part to show how Booth and his colleagues, by experimenting with new models of company formation, have acknowledged the serious problems with traditional biotech venture.)

Your friendly FOTF correspondent is a Libra, so you astrologers out there won't be surprised to find we come down somewhere in the middle. The data show some signs of life for new companies, but those chronicling the industry from the outside can't ignore the actions that speak louder than -- or at least alongside -- the numbers: The venture firms shutting down; the titan LPs like CalPERS reducing their VC allotment; the early-stage survivors trying asset financing (Atlas) or option deals (Third Rock, Versant) to gain some down-side protection.

We were hoping that by the time you read this, we'd have an intriguing gauge of public-market sentiment: the reception of Verastem's planned IPO. But as of this writing, the pricing isn't due for another day. If investors shrug off caveats like the one we found in Verastem's S-1 a couple months ago...
"Research on CSCs [cancer stem cells] is an emerging field and, consequently, there is ongoing debate regarding the existence of CSCs."
...we'll certainly have a lot to discuss in the next column. But let's not get ahead of ourselves. We've barely even scratched the surface of our latest...

Neurocrine Biosciences: In its first financing since 2010, Neurocrine Biosciences grossed $77 million in a follow-on public offering of 9.5 million shares for $8.10, slightly lower than the stock has been trading for the past month (at its highest, shares closed at $8.66 just a couple weeks ago). Neurocrine--which was founded in 1992 and has a broad pipeline covering CNS disorders, women and men’s health, and cardiometabolic diseases--had previously focused on the insomnia treatment indiplon. Since that compound's flame out, Neurocrine has bounced back. The company is now pursuing four Phase II projects, two of them in partnerships with Big Pharma. Abbott has exclusive worldwide rights to Neurocrine’s lead candidate elagolix for endometriosis pain and uterine fibroids. This past October, Neurocrine collected a $20 million milestone payment from Abbott for holding a pre-Phase III meeting with the FDA. And GSK holds an exclusive license to the CRF1 antagonist 561679 for stress-related disorders. Earlier in the pipeline, Neurocrine has also secured another partner in Boehringer Ingelheim, for its GPR119 agonist Type II diabetes program. -- Amanda Micklus

Prosensa: The Dutch rare disease firm said January 25 it has raised €23 million ($30 million) in new venture funding, its first since a €18 million Series B round in late 2008. New investor New Enterprise Associates (NEA) led the round with participation from existing investors Abingworth, Life Sciences Partners, Gimv, Idinvest Partners and MedSciences Capital. Prosensa is cashing in on the popularity of rare disease projects among Big Pharma, which fueled big rounds for new firms Ultragenyx Pharmaceutical and Orphazyme last year, as START-UP notes in the new A-List. The Prosensa round also comes as European biotech waits for more debt-crisis shoes to drop. Despite signs of a revival in early 2011, funding deteriorated as the year went on, even more so for follow-on rounds than for Series A rounds, to add up to a particularly grim year, as our colleagues at "The Pink Sheet" report here. In that context, Prosensa did well to attract such a large round; lead investor NEA says that Prosensa is its first European biopharma investment. A Prosensa spokesman declined to say whether the latest cash is tranched. It will help the firm bring its first unencumbered compound not just into the clinic later this year but also all the way through clinical trials without a partner. Both that compound and Prosensa's lead compound, which is partnered with GlaxoSmithKline, aim to treat variants of Duchenne's muscular dystrophy. -- Alex Lash

RaNA Therapeutics: The Atlas Venture portfolio got a new addition January 18, as RaNA Therapeutics announced a $20.7 million Series A financing that should see it through IND-enabling studies for the first candidate from its long non-coding RNA (lncRNA) technology platform. RaNA's backers believe long non-coding RNA offers several advantages over earlier RNA-interference technologies. It is expected to enable selective activation of single target genes and the expression of therapeutic factors, and its therapeutics should not require a delivery vehicle. While most RNAi therapeutics in development require intravenous infusion, most lncRNA drugs should work through simple subcutaneous injection, said RaNA CEO Arthur Krieg. Atlas led the Series A, joined by SR One, the venture capital arm of GlaxoSmithKline, Monsanto and Partners Innovation Fund. Monsanto will do unspecified early preclinical work for the start-up, which says it is considering 20 indications as it works toward a first clinical candidate. Krieg comes from Coley Pharmaceutical, which was bought by Pfizer for $164 million in 2007. Atlas partner Jean-Francois Formela, who will take a seat on RaNA’s board, says GSK's involvement should give the Big Pharma, which has a significant investment in epigenetics, a better sense of the feasibility of RaNA's science. -- Joseph Haas

Trius Therapeutics: The San Diego antibiotic developer said Thursday, January 26 it has priced a public offering of its stock that should raise about $45 million. It is selling 8.6 million shares at $5.25 a share, a 9% discount to its closing price the previous day, and well off the six-month high of $8.74 from July. Shares were off an additional 7% Thursday, down to $5.39, which could also be a reaction to the company's announcement that the Securities and Exchange Commission is looking into earnings statements concerning Trius's collaboration with Bayer Pharma. The company has hit bumps before. It was planning its IPO in March 2010 when it the FDA said it had to revise its Phase III trial for skin and soft tissue infection caused by drug-resistant Stapholoccocus aurueau. Executives including CEO Jeffrey Stein learned of the FDA ruling soon after they boarded a flight to Switzerland, where they were slated to start the road show. They landed in Geneva, had dinner, and turned right around to fly back to the US. Trius finally went public in August 2010 and raised $50 million. With the new offering, underwriters have the option to buy up to 1.29 million additional shares. The deal is underwritten by Citigroup and Piper Jaffray, with help from Canaccord Genuity and Ladenburg Thalmann. -- A.L.

Self-portrait courtesy of flickr user Jen and a Camera

Friday, January 20, 2012

Deals of the Week Decompresses

Sales and earnings season kicks into full swing Jan. 22,so maybe that explains the hush that fell over the deal-making front this week.Or, after hunkering down on the battlefield known as the Westin St. Francis Hotel during the JPMorgan Healthcare Conference last week, the dealmakers went back to their desks to digest what they learned and put up their feet.

The execs at Genentech remained diligent though (theydidn’t have far to travel after all), signing a big deal in the epigenetics spacewith Constellation Pharmaceuticals. The partnership included the biggest up-front payment yet in the emerging area of science - $95 million including both up-front and research funding, way more than the $20 million GlaxoSmithKline paid upfront in its epigenetics tie-up with Epizyme last year.

Then there was the announcement Jan. 17 that Gilead closed on the $11.2 billion acquisition of hepatitis C specialist Pharmasset. Gulp.Maybe that was a big enough deal for the industry to swallow in one week. Notthat you need reminding after Gilead announced the acquisition in November, but Gilead is paying the most ever for a clinical-stage biotech, with the multi-billion dollar buyout representing an 89% premium over Pharmasset’s closing share price before thedeal was announced.

Lastly, there was a deal that fell apart. Though hardly a surprise at this point, Pfizer’s decision to end its collaboration with Medivation to develop Dimebon for Alzheimer’s disease after a second Phase III flop still had to sting. The program represents a whole lot of cash down thedrain, and Pfizer still has bapineuzumab to sweat over. We already had a feeling the dimebon deal was done though, didn’t you? - Jess Merrill

Genentech/Constellation: Cambridge, Mass.-based Constellation Pharmaceuticals is among the best-funded start-ups in the nascent field of epigenetics. Until this week, however, it was the most mature company in the sector without a commercial partner. On Jan. 17, Roche-owned Genentech and Constellation announced a three-year collaboration that covers a broad range of epigenetics programs spanning multiple target classes; Constellation’s two lead programs remain under the start-up’s full control, however. Genentech paid $95 million in up-front and research funding, making the new deal the largest yet in the epigenetics field, which relates to the science of chemically modifying specific DNA sites to amplify or suppress gene expression. For its money, which could also include milestone payments of unspecified size as well as double-digit royalties, Genentech also gets an option to acquire Constellation outright at a pre-determined but undisclosed time in the future, for a pre-negotiated price plus contingent value rights. The deal follows by a year GlaxoSmithKline’s deal with Constellation rival Epizyme, for $20 million up-front, as well as a smaller tie-up between Eisai and Epizyme in March 2011. Constellation has raised $86 million in two rounds of funding from VCs including Third Rock Ventures, the Column Group,Venrock, and Altitude Life Science Ventures, as well as SROne, GSK’s venture unit; most recently, it topped off its Series B with $15 million in June 2011. – Paul Bonanos

Bayer/Ventana: Pharma is the latest in a string of pharmas to partner with Ventana to develop a companion diagnostic for a drug in development, Ventana’s pharma partners have disclosed three other companion diagnostic deals already in the first few weeksof the year. The deal with Bayer, announced Jan. 17, is for the development of a test to identify patients most likely to benefit from a novel andibody-drug conjugate in development at Bayer. The test will be based on Ventana’s immunohistochemistry platform. None of the financials were disclosed, but Ventana President Mara Aspinall told “The Pink Sheet” DAILY that it has signed some “encouraging” deals with pharmaceutical manufacturers. We’d still like to see some actual financials. — Jessica Merrill

Life Technologies/DaAn Gene: Life Technologies, a leading U.S.-based supplier of sequencing systems and other life science tools, and DaAn Gene, based in Guangzhou, have formed a joint venture to develop in vitro diagnostic assays in oncology, infectious diseases, and genetic diseases for wide distribution in China. The first order of things is for the partners to plan the test menu for Life Technologies’ 3500Dx Genetic Analyzer for IVD, which the Chinese regulator, the SFDA, cleared in October. They have collaborated before: working with Applied Biosystems (now LifeTech’s sequencing business) DaAn brought PCR technology to China. Although LifeTech is aiming at the China market, the press release announcing the venture also highlighted DaAn’s intention to bring its products to “the global marketplace,”suggesting the capillary sequencing-based kits it develops may be appropriate for approved uses outside of China as well as within. According to its website, DaAn “claims a presence” in 70% of the molecular diagnostics market in China over the past decade. LifeTech transitioned from a local dealer network to a direct selling model in China for its sequencers in 2011 and after a bumpy start, expects better than 20% organic growth there in 2012. LifeTech declined to comment on how the joint venture will split expenses and revenues from kit development and sales. --Mark Ratner

Genzyme/Veracyte: Sanofi-owned Genzyme broadened its thyroid-related offerings via a partnership with molecular diagnostics specialist Veracyte. In a global deal for undisclosed financial terms, Genzyme said it would co-promote Afirma,Veracyte’s personalized diagnostic analysis platform for patients suspected of having thyroid cancer. Traditionally, co-promotes between pharma and diagnostics companies have been hard to pull off because the economics vary widely for various products, making it difficult for partners to align their incentives. Given the new realities of personalized medicines and targeted therapies, this one should be interesting to follow. Veracyte’s gene expression tests are designed to help cytopathologists classify indeterminate results of fine needle aspirations. The companies say current methods of FNA analysis are so challenging to interpret that most patients also undergo thyroid resection for a definitive diagnosis; even that procedure is highly imperfect. Genzyme and Veracyte claim that use of Afirma in combination with cytopathology expert analysis to interpret FNAs could prevent tens of thousands of surgeries annually in the U.S. The companies will first co-promote the procedure in the U.S., but eventually will do so elsewhere in the world. Genzyme already markets Thyrogen (thyrotropin alfa for injection), a diagnostic and adjunctive therapy for patients with well-differentiated thyroid cancers. Founded in 2008, privately-held Veracyte is backed by Domain Associates, Kleiner Perkins Caufield & Byers, Versant Ventures and TPG Biotech, and raised $28 million in Series B funding in June 2010. – P.B.

Pfizer/Medivation: After more than four years of collaborating on once-promising Alzheimer’s disease drug Dimebon (latrepirdine), Pfizer and Medivation threw in the towel after a second failed Phase III efficacy trial. On Jan. 17, the companies announced plans to discontinue development of Dimebon for all indications and to terminate their collaboration on the drug. The decision followed the failure of a second Phase III trial, CONCERT, to demonstrate efficacy in Alzheimer’s disease. Dimebon failed to demonstrate statistically significant efficacy on either of two co-primary endpoints – the Alzheimer’s Disease Assessment Scale-cognitive subscale or the Alzheimer’s Disease Cooperative Study-Activities of Daily Living. The disappointing results came less than two years after another Phase III Dimebon trial in Alzheimer’s, CONNECTION, failed to meet efficacy endpoint measures of cognition and global function inpatients with mild-to-moderate disease. For Pfizer, Dimebon represented a risky bet from the start. It entered into a development and commercialization deal with Medivation in September 2008. The big pharma agreed to pay $225 million in cash upfront and up to $500 million in development milestones while also assuming 60% of development costs and commercialization expenses, premised upon encouraging results from a Phase II/III study that enrolled 183 Alzheimer’s patients with mild-to-moderate disease at 11 sites in Russia.—Sue Sutter and Joseph Haas

--Photo courtesy of Flickr user slworking2, used under Creative Commons license.

Tuesday, January 17, 2012

Financings of the Fortnight Leaves Its Aching Feet In San Francisco

As FOTF favorite Ted Leo and the Pharmacists once sang, there was a whole lot of walking to do at last week's JPMorgan confab. One member of the team had blisters that turned his hosiery into a reprise of the Curt Schilling bloody sock incident. Another logged more than nine miles on foot in four days (2.5 miles the first day) without going more than a few blocks from the ground zero of the St. Francis.

Open wounds notwithstanding, we took the exercise as a blessing, because the annual healthcare confab is no place to eat right. (Go figure.) Soggy pre-made sandwiches, networking-break cookies, hotel catering, coffee, coffee, coffee, then instead of a proper dinner, cocktails and fried finger foods that magically appear every five minutes.

Indeed, what better place to walk off the pounds and kilos than the winter streets of San Francisco, glowing under clear 60-degree skies, and through the commons of Union Square, replete with the frequent fragrance of cannabinoid receptor agonist combustion? (Perhaps that particular odor was left lingering from the Monday night secret-society hootenanny of biotechies who surf, an offshoot of the Longboard Luau crowd who've hung ten for a good cause going on nearly two decades now.)

We kid, of course. Indeed, other than the outdoor aromas that can often surprise visitors to San Francisco, we thought the conference had a distinct lack of the getting-high-on-your-own-supply that often permeates the JPM atmosphere. FOTF chatted at the show with some of 2011's most prolific early-stage investors with plenty of cash in their pockets, but enthusiasm didn't bubble over into hype. When we mentioned that Series A investments in 2011 for biopharma were up 33% over 2010, Third Rock Ventures' Kevin Starr -- a man not shy about making a statement, sartorial or otherwise -- quickly countered that 2010 had set a depressingly low benchmark. (More coming soon on the year's Series A rounds in START-UP's annual A-List, in which we round up 11 new companies and, in a new twist for the feature, profile two investors that aren't on the list of usual early-stage suspects.)

While investors in the money were happy to chat -- Canaan Partners, Flagship Ventures and Cowen Royalty Healthcare Partners all had new funds to discuss -- the end of year venture data showed fundraising was a long way off from pre-recession highs, making more dropouts likely in the coming year. "Capital scarcity is tremendous," Forbion Capital Partners chairman Bart Bergstein told FOTF. That's good news for firms like Forbion, whose enthusiastic LPs signed up late last year for a second extra "top-up" fund of about $50 million to help push a few maturing portfolio companies toward an exit. But it's not good news for entrepreneurs who still have champagne wishes and FIPCO dreams, trying to stay afloat until they find IPO-friendly waters.

Those waters will be tested soon. The day after everyone flew home from San Francisco, Merrimack Pharmaceuticals launched its roadshow and set its sights on a $150 million IPO. Antibiotic developer Cempra Holdings and cancer stem cell biotech Versatem also set targets of $72 million and $45 million, respectively. (As we noted in this column in November, if the public market happily embraces Verastem, the bloom might be back on the rose.)

It's all about momentum, or the perception thereof. The firms vaulting from JPMorgan straight into a roadshow must be convinced that the new year's optimism has given them a running start. To that we say, never mind the blisters, here's the...

Warp Drive Bio: In a tranched deal with both equity and non-equity components totaling $125 million, newly launched Warp Drive has drawn what will surely be one of the largest Series A deals of 2012. The start-up aims to discover and synthesize new drugs based on genetic code found in naturally occurring microbes. Third Rock Ventures led the round, while Greylock Partners and Sanofi supplied the balance of the capital; the equity component is worth up to $75 million. For its contribution, Sanofi also receives collaborative development rights on an unspecified set of products, as well as a non-exclusive option to acquire the company for pre-determined terms; Warp Drive’s shareholders, on the other hand, can force a sale to Sanofi if the company reaches certain pre-set milestones as well. Third Rock partner Alexis Borisy said those terms include a potential return of 10 times the capital invested, and could value Warp Drive at more than $1 billion. Founded by Harvard professor and Third Rock partner Greg Verdine, the company has been incubated within Third Rock for a few years, but only now has officially launched; its co-founders include Harvard genetics professor George Church and University of California at San Francisco pharmaceutical sciences professor Jim Wells. -- Paul Bonanos

Synageva BioPharma: On January 10, Synageva closed a follow-on offering that reinforces public investor interest in rare diseases, an area where the venture community has also taken notice, exemplified by the recent pact between Shire and Atlas Venture. Having originally only planned to raise $60 million, Synageva ended up grossing $90 million by selling 3.6 million shares, including the overallotment, at $25.18, slightly lower than the stock had been trading in previous days. The stock then closed at $31.39 on January 10. In fact, the company’s shares have been steadily increasing the past several months since Synageva gained public status, and approximately $45 million cash on hand, by merging with publicly traded viral disease developer Trimeris in June. Synageva, which ended up with 75% ownership of the combined entity, is focused on orphan metabolic disorders, an area of great industry interest the past couple years that has produced creative liaisons such as the Shire-Atlas Venture tie-up. First up is lysosomal acid lipase deficiency, a lysosomal storage disorder that prevents the breakdown of certain fats and results in build-up of fatty material in the liver, spleen, and blood vessel walls. Synageva is tackling LAL deficiency with the enzyme replacement therapy SBC102, which completed enrollment for its first clinical trial, a Phase I/II study, in December and has orphan drug designations in the US and EU. Last year, prior to merging with Trimeris, Synageva raised $25 million in venture funding and signed two rare disease research collaborations with Mitsubishi Tanabe Pharma and to-BBB. -- Amanda Micklus

Elevation Pharmaceuticals: Respiratory disease-focused Elevation closed a two-tranche, $30 million B round on Jan. 4. With significant participation from new investor Novo Ventures, Elevation should have adequate capital to move its lead candidate, a nebulized formulation of glycopyrollate (EP-101), through to the start of Phase III. The B round will be broken into two tranches, $12 million that will be drawn down this year and another $18 million, if needed, in 2013. By the end of 2013, CEO Bill Gerhart told "The Pink Sheet," Elevation should have completed a pair of Phase IIb studies of its candidate for chronic obstructive pulmonary disease and have identified the minimum effective dose for Phase III study. Elevation may not need to use the second tranche if it lands a co-development and commercialization partner for EP-101 sooner than expected, Gerhardt said. “Our original hypothesis was that the optimal time for partnering would be just prior to entering Phase III … but we think that there might be an opportunity to partner the program earlier,” Gerhart said. The time lag between tranches let Elevation minimize dilution if it partners EP-101 but promises the necessary capital to get into Phase III if a partnership doesn't materialize. Novo Ventures led the B round, investing about half of the total proceeds, and will place partner Heath Lukatch on Elevation’s board of directors. The investors from Elevation’s Series A – Canaan Partners, TPG Growth, Care Capital and Mesa Verde Venture Partners – will provide the rest of the funds, which Gerhart described as an up round. Elevation's Series A, announced two years ago, totalled $32 million in two tranches. -- Joseph Haas

Acceleron Pharma: Just before Christmas, the Cambridge, Mass. firm announced a $30 million D round, notable in part because the firm's most important strategic partner, Celgene, participated deeply enough to place its business-development chief George Golumbeski on the Acceleron board of directors. Celgene previously had a small stake in the company from their first licensing deal, inked in 2008. The new round also pushes Acceleron's venture total over $100 million, with $180 million more raised from partnerships. All that, and it's just now taking its lead compound, ACE-011 or sotatercept, into late-stage trials in chemotherapy-related anemia in patients with metastatic non-small cell lung cancer. If eventually successful, the program would represent a nifty pivot for the firm and Celgene, which originally signed on to co-develop ACE-011 in 2008 as a bone-loss drug.-- Alex Lash

Saturday, January 14, 2012

Deals Of the Week Compares the Comparison Shoppers

One of the nice things about JP Morgan is the variety of routes a participant’s attention can take. Within any particular area, moreover, one can go as shallow or deep as desired. Big Pharma’s partnering priorities, for example, are a constant theme, as companies put forth broad comments on their criteria and interests in deal making. Even before the meeting got underway, a deal announced late on Saturday evening Jan. 8 set the tone for discussions on valuation: Bristol Myers Squibb agreed to buy Inhibitex for $2.5 billion in cash – for a nucleotide polymerase inhibitor in Phase II. Was this unique to the particular current situation in HCV and the nature of the competitive bidding process? Or will other highly competitive disease categories see similar reaching? Are expensive HCV regimens even what the market will want in five years?

The topic started off an interview with Pfizer’s Kristin Peck, EVP, worldwide business development and innovation: “I don’t really understand about that one. We at Pfizer are looking at much more risk sharing, collaborative, creative deal making,” she said, alluding to Pfizer’s growing preference for structured deals.

Late stage assets are clearly still on big pharma’s mind, although practically speaking -- i.e. valuation wise -- the pickings are slim; "We're opportunistic with late-stage deals," noted Peck. Much of the attention at JPM therefore focused on the benefits of moving existing assets into emerging markets, or for that matter buying assets in developing countries, although a dose of reality appears to have set in. Peck highlighted Pfizer’s 2010 structured acquisition of 40% of the family-owned Brazilian generics maker Laboratorio Teuto for $240 million, which includes an option to buy the remaining 60% beginning in 2014.

From another angle, GlaxoSmithKline’s CFO Simon Dingemans noted that his company is pleased with its 2009 acquisition of Stiefel, a maker of dermatology medications. “The reason we are so pleased is because we can take the portfolio, combine it with our legacy assets and push through sales into new markets," he said. Emerging markets was never one of Stiefel's strengths, "and now dermatology is one of our fastest growing parts of our emerging markets portfolio … it has had significant synergies above what we expected, improvement in quality, and we were able to fold it into our network. What we look for in our deals is, can we do something different with the asset than the existing ownership has done?”

AstraZeneca’s CFO Simon Lowth, speaking in a break out session, emphasized the company’s commitment to a “disciplined approach to deal-making” -- causing JP Morgan analyst Alexandra Hauber to wonder if strict adherence to discipline, given the competitive bidding environment, will cause AZ to “shrink.”

Loweth’s response: “That is a dangerous path to go down. We have done more than 100 deals in the last five years. The key is in situations where it is very competitive, you have to be very clear on the edge you bring.”

More to come on JP Morgan, but meanwhile as the 2012 deal-making session gets off and running in earnest, here's the latest round up of:

Shire/Janssen:  Resolor has produced minimal sales to date, but Shire increased its bet on the chronic constipation drug Jan. 10, acquiring U.S. rights to the compound from Janssen Pharmaceutica NV. Financial terms were not disclosed. Shire picked up rest-of-world rights to the selective serotonin receptor agonist in its €428 million purchase of Belgian biotech Movetis in 2010. (Like Janssen, Movetis was a subsidiary of Johnson & Johnson before being sold.) Resolor, a 5-HT4 receptor agonist, was approved by the European Medicines Agency in October 2009 for the symptomatic treatment of chronic constipation in women for whom laxatives fail to provide adequate relief. Since launched in the U.K., Germany, Ireland, Greece, Belgium and France, the drug netted Shire only $4 million in worldwide sales through the first three quarters of 2011. Resolor (prucalopride) is not yet approved in the U.S. At the time of its purchase of Movetis, Shire predicted that Resolor could achieve peak sales of greater than €300 million annually.—Joseph Haas

Pfizer/SFJ: Why pay for Phase III trials if someone else will do it for you? That’s the spirit of Pfizer Inc.’s development agreement with SFJ Pharma Ltd., announced Jan. 9. Global development company SFJ, backed by venture capitalists, has agreed to fund and supervise a Phase III trial in Asia of Pfizer’s axitinib for the adjuvant treatment of patients at high risk of recurrent renal cell carcinoma (RCC) following nephrectomy. California-based SFJ – nominated for our financing Deal of the Year for a similar pact with Eisai -- will be owed milestones, but only if the drug is approved in certain Asian territories. In that case, Pfizer is obliged to commercialize the drug in that indication, according to SFJ CEO and President Robert DeBenedetto, and would owe SFJ royalty payments “for a fairly lengthy period of time.” The milestone and royalty rates are undisclosed. But you can be sure that they’re calculated to provide a healthy payback to SFJ and its backers -- Abingworth Management Ltd., Clarus Ventures and FinTech Global Capital -- in exchange for the risk incurred. Granted, with axitinib already filed for approval in the U.S., Europe and Japan, there isn’t a ton of risk. SFJ Pharma is essentially ensuring that Pfizer’s clinical data for the adjuvant indication is ideally designed and presented to maximize the chance of regulatory approval in the Asian territories involved; the Phase III trial is being conducted in six undisclosed Asian markets. The deal frees up Pfizer to focus on other programs and compounds and, importantly, removes or at least delays a cost that it would otherwise have incurred. – Melanie Senior

Pfizer/Cell Signaling Technology/Ventana: The latest link up among Pfizer, Ventana Medical Systems Inc., a subsidiary of Roche, and Cell Signaling Technology to develop the first fully automated and standardized immunohistochemistry companion diagnostic for ALK gene rearrangements illustrates how much the company’s – and Big Pharma’s -- thinking on companion diagnostics has evolved over the past decade. The test would be linked to Pfizer’s Xalkori (crizotinib), which FDA approved with a companion diagnostic for ALK gene rearrangements in August 2011. The label specifies Xalkori is intended for non-small-cell lung cancer (NSCLC) patients who test positive for the ALK mutation on an FDA-approved test. The companion diagnostic – the Vysis ALK Break Apart FISH Probe Kit – was developed by Abbott Molecular and approved simultaneously with the drug, also ahead of its user fee deadline. Pfizer and Abbott had agreed to collaborate on a test in August 2009. But Pfizer, apparently, isn’t satisfied with just the FISH probe – FISH is a common, although manual and somewhat complex and therefore somewhat subjective method of analysis. The Ventana test will identify NSCLC patients with ALK (anaplastic lymphoma receptor tyrosinekinase) genetic mutations, who may benefit from Xalkori (about 6% to 7% of the total patient population). The test will be based on CST’s D5F3 antibody and Ventana’s Optiview DAB detection and is aimed to run on the diagnostic system’s maker’s automated testing platform. It was only seven or eight years ago that AstraZeneca PLC struggled with the best way to identify patients who would benefit from its own NSCLC targeted therapy Iressa, initiating a model trial, I-PASS – after multiple setbacks and failed approaches – that had important implications for subsequent targeted therapies.—Wendy Diller

AstraZeneca/ IMS Health: AstraZeneca PLC’s deal with information provider IMS Health Inc. to generate real-world outcomes data from European patients should give the drugmaker a leg up as it makes a value case for new products, but more fundamentally, the firm hopes the collaboration can create a clearer picture of how medicines are being used across the region to help drive research and development decisions. The three-year deal, announced Jan. 11, comes less than a year after AZ’s similar tie-up in the U.S. with HealthCore, the health outcomes research branch of insurer WellPoint Inc. It follows a broader flurry of pharma-payer collaboration driven by the need for more value-focused data to support drug reimbursement. Indeed, AstraZeneca is hoping that this partnership will, in the near-term, help it support newly-launched treatments such as clot-buster Brilinta (ticagrelor) by providing payers with the real-world evidence of a drug’s benefit, how it’s being used, and the outcomes achieved. “We see a lot of [the deal’s] value in this launch-support space,” said Greg Rossi, AZ’s VP of Payer Evidence in R&D. But ultimately, he claimed, the deal’s biggest impact will likely be further upstream, in informing early-stage R&D, helping pick rel evant comparators and “endpoints that are important to various stakeholders in the health care system.” No financials were disclosed for the IMS deal. But besides granting AZ access to clinical outcome, economic and treatment pattern data derived from IMS’ electronic health records, it also includes plans to jointly develop an IT platform that integrates disparate datasts across diverse disease states and geographies.—Melane Senior

Leo Pharma/Virobay: The Danish dermatology specialist, Leo Pharma A/S, has made no secret of its plans to use acquisitions and in-licensing deals to further its global growth strategy, and this week supplemented its R&D pipeline with an unnamed preclinical psoriasis candidate from the U.S. virtual biotech Virobay. The two companies are to collaborate on developing the compound, with Leo paying $7 million up-front, milestone payments of up to $300 million, and tiered royalties, in a deal announced Jan. 9. The compound, likely a small-molecule cysteine protease inhibitor as that is the research focus of Menlo Park, California-based Virobay Inc., is expected to enter Phase I studies in the fourth quarter of 2012, and could be the first in its class to reach the market. There are only a small number of oral psoriasis therapies on the market, and all are associated with potential side effects and the need for monitoring, according to Leo. In 2009, the Danish company, which is owned by the Leo Foundation, an independent private institution, re-acquired U.S. marketing rights to its psoriasis therapies Taclonex and Dovonex, from Warner Chilcott, and in January 2010 it established U.S. headquarters in Parsippany, New Jersey.—John Davis

Shire/ICON: Shire PLC's specialty pharmaceuticals division has selected fellow Ireland-headquartered contract research organization, ICON, to be its sole provider of central laboratory services, and one of two providers of clinical trial services. ICON will provide Shire with clinical site and study team support, medical management and medical data review, clinical trial monitoring and regulatory submission services and Shire will also use ICON's global network of central laboratories. Strategic partnerships are bringing a rich vein of new business to ICON – during 2011 it became one of two preferred global providers of clinical trial implementation services to Pfizer Inc., and extended its agreement with Bristol-Myers Squibb to include not only providing support services for BMS clinical development pipeline, but also its early-phase clinical development as well. In the third quarter of 2011, ICON's success in attracting strategic partners led it to recruit more than 500 extra staff in the quarter. That was a rare bit of good news for the pharmaceutical sector on the recruitment front, which today learnt that the Swiss company Novartis is to cut nearly 2,000 positions at its U.S. subsidiary. –John Davis

Genentech/Xenon: Known for its expertise in oncology and immunology, Genentech Inc.—then independent and now a division of Roche -- said in 2008 it would explore neuroscience more deeply. Its pipeline in that area has barely materialized since, with only one Phase II Alzheimer’s drug in the clinic. Now, thanks to a new deal with Canadian start-up Xenon Pharmaceuticals, Genentech will add pain therapeutics to its portfolio. The Roche subsidiary will pay an undisclosed amount upfront to discover and develop new drugs and companion diagnostics to treat pain. Milestone payments could bring the deal’s overall value to $646 million, if multiple products of the collaboration reach their full potential. The companies aren’t discussing specific targets of the agreement, but Xenon specializes in voltage-gated sodium channels. Genentech says it’s expanding beyond neurodegenerative diseases, with an interest in spinal cord injuries and psychiatric disorders as well. Privately held, venture-backed Xenon’s lead pain program, XEN-402, is unaffected by the new deal. The start-up struck a deal with Roche in 2006 for a program using hemojuvelin inhibitors to treat anemia of inflammation; it has other relationships with Big Pharmas, including Novartis in metabolic disease and Merck in cardiovascular disorders. – Paul Bonanos

Saturday, January 07, 2012

Deals Of The Week's Dance Card is Full

Industry business-development executives rang in the start of what should be a most interesting New Year's (the score's been set for a while, but the performance is NOW: the biosimilars, patent cliffs, companion diagnostics, ongoing financing uncertainty and the big gorilla, health care reform) with half a dozen deals, including Forma's second big partnership in six months and a joint licensing agreement between Alnylam and Arrowhead. 

Also this week 2012 saw its first NO DEAL! as Astellas opted out of a worldwide development and commercialization agreement with Theravance over the latter's Vibativ (telavancin), a bacteriacide, once-daily injection. 

An as if to shock the troops to attention ASAP, Teva announced on New Year's Day an unexpected -- at least by most of industry -- management change, with Bristol Myers' newly resigned head of business development and strategy Jeremy Levin slated to succeed Shlomo Yanai as CEO in May, almost guaranteeing a higher biz dev profile for the global generics/specialty pharmaco.

By the end of the week the calendar new year seemed way back in the rear view as industry's own annual celebration loomed larger. And of course everyone's timing their news to next week -- deals, fundraising, and cocktails await. We'll see you in San Francisco. Meanwhile, it's ...

Forma/Boehringer Ingelheim: Cambridge, MA -based computational drug discovery platform developer Forma Therapeutics Inc. struck its second big partnership in just over six months on Jan. 5. Boehringer Ingelheim GMBH agreed to pay $65 million upfront, plus another $750 million in potential pre-commercial milestone payments, to discover oncology treatments that affect protein-protein interactions. The companies will select an unspecified number of targets jointly; a few have been determined already, but the remainder will be selected over the course of the four-year deal. In late June, Genentech Inc. and Forma agreed to discover cancer metabolism drugs in a deal of undisclosed size. Genentech received an option to acquire the program, which if exercised would return money to Forma’s venture investors. The BI deal also has “a return for our shareholders built in,” according to Forma CEO Steven Tregay, although there’s no buyout option this time. He declined to provide further details. Forma, which has additional platform discovery deals with Eisai, Cubist Pharmaceuticals Inc. and Novartis, has raised $33 million from Lilly Ventures, Bio*One Capital and the Novartis Option Fund in two venture rounds since 2008. It’s planning to develop drugs on its own as well, although Tregay said it’s still building a broad pipeline rather than concentrating on one or two candidates--Paul Bonanos.

Biogen/Isis: Isis Pharmaceuticals Inc. announced Jan. 4 that it garnered a deal with Biogen Idec for its antisense technology, adding to the list of large companies that have partnered with the biotech. Biogen and Isis have agreed to collaborate on the development of ISIS-SMN, a Phase I compound meant for the treatment of a rare genetic disorder called spinal muscular atrophy (SMA). Biogen will pay Isis $29 million upfront as well as $45 million in potential milestones for the option to license the compound after it has reached the proof of concept phase. Should Biogen choose to license the drug, it will assume full development and regulatory responsibilities. Isis will be eligible for another $225 million in milestone payments, along with double-digit royalties on sales, and also will retain some commercialization rights. Isis and Biogen may be the first companies to bring a treatment to market for SMA, but others are not far behind. Both Novartis and Roche have invested in preclinical treatments for the disorder. Roche agreed to pay as much as $490 million to PTC Therapeutics Inc. for the rights to its SMA program--Lisa Lamotta.

Alnylam/Arrowhead: With Alnylam Pharmaceuticals Inc. focusing mainly on internal pipeline efforts following the termination of collaborations with Roche and Novartis late in 2010, the pioneering RNA-interference company has licensed Arrowhead Research Corp.’s Dynamic Polyconjugate (DPC) technology to use toward developing an RNAi therapeutic. Terms were not disclosed for the deal, announced Jan. 5. Alnylam says it will deploy the DPC technology – a systemic small-interfering RNA delivery platform that enables efficient target gene silencing via polymer-based formulation chemistry – against an undisclosed target in its proprietary “5x15” pipeline, five assets it hopes to drive into advanced clinical development by the end of 2015. As part of the deal Arrowhead acquires a license to Alnylam’s intellectual property related to targeting the hepatitis B virus. Alnylam can receive milestones and royalties from Arrowhead on any product derived from its HBV RNAi intellectual property, while Arrowhead likewise can earn milestones and royalties from any marketed product resulting from Alnylam’s licensure of the DPC technology. Meanwhile, on Jan. 4, Alnylam announced it had achieved positive preliminary results from a Phase I trial of ALN-PCS, one of the 5x15 assets. In the study, ALN-PCS, which targets the PCSK9 gene to treat severe cholesterolemia, demonstrated statistically significant RNAi silencing of PCSK9, up to 66%, and reductions of more than 50% in LDL cholesterol levels in participants--Joseph Haas.

Ipsen/Oncodesign: Ipsen, the mid-sized French pharmaceutical company, is tapping the research of fellow French CRO and drug discovery firm, Oncodesign, to develop its new LRRK2 kinase inhibitors, which have potential to treat Parkinson's disease. The research collaboration could see Ipsen paying Oncodesign €115 million ($146 million) in research and opt-in fees, development milestones and sales royalties. The Ipsen deal is the first involving drug discovery with a major pharma company for Oncodesign, a private CRO set up in 1995 to provide preclinical oncology pharmacology services. Its investors include a trio of French venture capital firms: CIC-Vizille Capital Innovation, CDC Enterprises and Avenir Entreprises. At the same time, new Parkinson's disease therapies fit neatly into Ipsen's focus on neurology, one of four therapeutic areas the specialty pharma is now concentrating on. One of its major marketed products is the botulinum toxin product for dystonia, Dysport (botulinum toxin type A). Ipsen has landed two options to exclusively license worldwide development, manufacturing and commercialization rights to Oncodesign's LRRK2 inhibitor program when it successfully reaches clinical proof of concept. Oncodesign will receive a technology access fee, funding for the program's research and early development activities and upon exercise of the license options, opt-in fees and additional development, regulatory and commercial milestone payments potentially totaling €115 million for the development of molecules in two or more indications, and tiered royalties on net sales. Mutations in the LRRK2 gene, which produces a protein with multiple activities, including GTPase and kinase activities, have been linked to genetically inherited Parkinson's disease, and Oncodesign has developed a macrocyclisation process, Nanocyclix, which it says produces potent and selective kinase inhibitors.--John Davis

Ironwood/Bionomics: As it begins with various partners to traverse various global regulatory landscapes with its IBS/constipation compound linaclotide, Ironwood Pharmaceuticals Inc. has been on the prowl for earlier-stage assets to back-fill its pipeline. On Jan. 4, the company said it would pay $3 million upfront for worldwide development and commercialization rights to BNC210, a clinical-stage anti-anxiety program from Australia’s Bionomics Ltd. All told, the deal could be worth $345 million plus royalties for Bionomics, including the upfront and $10 million in payments expected in the next two years. The deal marks Ironwood’s third since last January, but the first that adds a clinical compound to its pipeline. Previous deals included a discovery alliance around Protagonist Therapeutics peptide technology and a delivery pact with Depomed Inc. BNC210 has completed two Phase Ib studies in a total of more than 80 healthy volunteers, and according to the company, acts by a novel (but undisclosed) mechanism of action that should avoid side effects common to anxiety medicines. It is Bionomics’ second most advanced project, behind the unpartnered Phase II oncology compound BNC105. Ironwood joins a stable of partners at Bionomics that includes Genmab AS and Merck Serono SA--Chris Morrison.

Endo/BioDelivery Sciences: Endo Pharmaceuticals, which has radically reshaped its product portfolio in recent years in order to diversify away from overdependence on the pain medication Lidoderm (lidocaine transdermal) is assuming worldwide exclusive licensing rights to BEMA Buprenorphine (bioerodible MucoAdhesive delivery system) from BioDelivery Sciences. The drug is a chronic opioid-based pain therapy that fits well with Endo’s pain medication franchise. Endo paid $30 million upfront, and has agreed to pay additional milestones totaling $150 million, plus tiered royalties ranging from the mid-to-upper teen percentages of net sales. The milestone breakdown is as follows: $95 million in potential pre-defined intellectual property, development and regulatory milestones, plus $55 million in commercial milestones. The BEMA delivery technology consists of a small, bioerodible, polymer-thin film, which is applied to the inner lining of the cheek. BEMA buprenorphine met primary endpoints in a Phase II trial in 2009 and is currently in Phase III trials, with potential to file in 2012. BioDelivery estimates its sales could reach $500 million--Wendy Diller

image courtesy flickr user EDubya/creative commons license

Wednesday, January 04, 2012

And the DOTY Goes To ... Congrats to Our Winners

The In Vivo Blog's deals of the year, as chosen by our readers, are:

Alliance of the Year goes to Forma/Genentech, with nearly 47% of the vote,. The deal jumped out to an early lead and hung on, despite a last minute surge from AZ/Healthcore (20%) and the late entry from Abbott/Reata II (14%). Congratulations!

M&A of the Year was won by Sanofi/Genzyme, with about 29% of the vote. Oddly the M&A category, normally one that draws a lot of interest, had fewer votes than the others this year. Our runner up was Gilead/Pharmasset (24%), followed by Abbott/Abbott Pharma (19%).

Exit/Financing of the Year goes to Quanticel, with 45% of the vote. In second place was Arteus (23%), and in third BMS/Amira (20%).

Congratulations to our winners (to collect your prize, click CTRL-P and cut out the picture, then tape it to your office door [paper and tape not included in prize, some restrictions may apply]), and as in years past if any of them would like to make an 'acceptance speech' here on the blog, please let us know.

Finally, thanks to our readers who cast votes.You can see all the final tallies here. Hope to see many of you next week in San Francisco. Happy New Year from all of us at IVB/EBI.

GSK's Witty Knighted For Services To UK Economy

With the New Year in the UK comes the Honours List, recognizing outstanding achievements and service across the country. Amid a flurry of awards and medal ceremonies -- including In Vivo Blog's own highly-esteemed Deals of the Year Awards -- (voting time is now down to only a few hours, so please cast if you haven't already), joining the Honours List bestows individuals with a certain cachet that few other accolades can provide.

Henceforth, then, we'll be requesting interviews with Sir Andrew, aka GSK chief Andrew Witty, upon whom the Queen bestowed a knighthood for services to the UK economy as well as services to the pharmaceutical industry. Smith & Nephew's chairman John Buchanan also became a 'Sir', and, not forgetting R&D, Her Maj. bestowed awards on a couple of well-known biotech researchers.

Cynics may be suspicious of the timing of this flurry of biopharma-focused decorations. They came only a couple of weeks after the UK government outlined its new Life Sciences Strategy, in which much hope was placed on the sector helping to pull the UK economy out of the doldrums. Surely, though, courting the sector with awards doesn't spell a lack of confidence in the success of the goverment's apparently more solid set of support programs?

Either way, no one wants the UK to have to swallow another Pfizer Sandwich (aka the huge R&D facility that was shut down in Kent).

Sir Andrew's distinction, although fine, probably underlines the hours spent in UK Prime Minister David Cameron's Business Advisory Group. (Ouch. We don't mean that.) Sir Andrew also has a European string to his bow, as the current president of the European Federation of Pharmaceutical Industries and Associations (EFPIA), but obviously Cameron didn't hold that against him.

Still, Sir Andrew's award may have a bitter tang to some of those R&D chiefs that may have seen their Drug Performance Units culled as part of GSK's high-profile three-year review cycle (results expected to be made public in February).

The timing of Sir John's award came just prior to the latest in series of acquisitions and divestments that he has overseen since 2006 at the artificial hip and knee maker. Smith & Nephew on Jan. 4 announced it was spinning off its biologics business into a US-based JV with private equity firm Essex Woodlands.

Other knights of 2012: obesity expert Prof. Steve Bloom of Imperial College London, who co-founded the UK biotech Thiakis Ltd in 2004, to research the therapeutic potential of gut peptide hormones in controlling appetite. Thiakis was acquired by Wyeth (now Pfizer) in 2008. Prof. Mark Pepys, formerly of University College London, also becomes a Sir. He co-founded Pentraxin Therapeutics, a UCL-spin out with a focus on the rare disease, amyloidosis. Pentraxin entered into a research collaboration with GSK in 2009.

Order of the British Empire Awards (OBEs) were awarded to Richard Barker, who retired as director general of the UK trade association, the ABPI, in the middle of 2011, and Dr John Stageman, currently vice-president of UK science affairs at AstraZeneca. Stageman was closely involved in developing AZ's biotech strategy, including the acquisition of Cambridge Antibody Technology and the US company, MedImmune Inc.

image courtesy of flickrer sincerelyhiten