Friday, March 02, 2012

Deals of the Week Sets Sail For The Galapagos

Abbott is readying for two major steps in its evolution. Most prominently, it’s preparing to split its pharma division from its diversified medical products business this year, creating two public companies from one. But it’s also preparing for December 2016, when its best-selling drug loses patent protection. Abbott’s injectable Humira (adalimumab) for rheumatoid arthritis and other autoimmune diseases is currently among the world’s top sellers, with $7.9 billion in 2011 sales, representing more than 46% of Abbott’s global sales of proprietary drugs. With less than five years’ time left on the clock, not to mention a looming threat of competition from oral drugs or lower-priced alternatives, Abbott is already looking for a successor.

With that evolution in mind, Abbott made like the HMS Beagle and set sail for the Galapagos this week – specificially Galapagos NV of Belgium, where among the tortoises and finches lay the crown jewel GLPG0634, a selective JAK1 inhibitor that’s already shown promising data in a Phase IIa study in rheumatoid arthritis, and is expected to enter a Phase IIb dose-range-finding study soon. In an extremely rich deal for a mid-stage candidate, Abbott paid $150 million up-front to claim worldwide rights to the drug, and will pay a second $200 million licensing fee if the Phase IIb study yields data that satisfy a set of pre-determined but undisclosed criteria. Additional milestone payments could add $1 billion more to the deal, while Abbott remains on the hook for double-digit royalty payments if GLPG0634 is ever commercialized.

For Abbott, it’s a way to make doubly sure that its autoimmune franchise is extended. Last summer, the company paid $85 million up-front to license German biotech Biotest’s BT-061, a Phase II antibody that binds to the CD4 protein and slows overreactions of the immune system. That gives it two potential successors to the same blockbuster drug, providing insurance that its sales force will have something else to sell once Humira begins to fade. And it gives Abbott another promising molecule to talk up on its current road shows, in anticipation of the looming split and the public offering that will accompany it.

It’s also just the latest in a series of deals in which Abbott has outbid and outspent its peers for assets that still carry plenty of risk. The company has twice paid Reata Pharmaceuticals top dollar for its compounds, buying ex-U.S. rights to chronic kidney disease treatment bardoxolone for $450 million in 2010 and nabbing a group of pre-clinical antioxidant inflammation modulators for $400 million late last year. If it’s going to be an independent company, Abbott’s pharma division would do well to be better-balanced, with a diverse group of revenue-generating products. Without the diversified medical products business to balance things out, its weaker quarters on the pharma side may be all the more obvious – and damaging.

That’s one reason why Galapagos’s drug seemed like a natural selection for Abbott and why we hope you’ll join us on another pun-filled voyage of…

GlaxoSmithKline/Angiochem: In the latest of a series of rare disease deals, GlaxoSmithKline has forged a collaboration with Montreal, Canada-based Angiochem to develop drugs that cross the blood-brain barrier (BBB) to treat patients with lysosomal storage diseases like Tay-Sachs disease and Fabry disease. Currently marketed enzyme replacement therapies for lysosomal storage diseases do not cross the BBB, and so do not ameliorate neurological symptoms. Angiochem is able to engineer enzymes so that they bind to the LRP (lipoprotein-receptor-related protein-1) receptor in brain tissue and are transported into the CNS. Angiochem is eligible to receive up to $31.5 million in upfront cash, research funding and other fees for one undisclosed enzyme product, although it could receive more than $300 million if GSK exercises certain rights to other compounds and pays sales-related royalties. GSK set up a rare diseases business unit in 2010, and has since then forged deals with the likes of U.S. biotech Amicus Therapeutics for its Phase III Fabry disease therapy, Amigal (migalastat), and with Dutch company Prosensa for PRO-051, its Phase III potential Duchenne muscular dystrophy therapy. – John Davis 

Dainippon Sumitomo/Boston Biomedical: Japanese pharma Dainippon Sumitomo is bolstering its U.S. presence, with a focus on oncology through the acquisition of private U.S. biotech Boston Biomedical, announced Feb. 29. In a back-end loaded deal, Dainippon will buy Boston Biomedical for $200 million upfront and an additional $540 million in development milestones and $1.89 billion in sales milestones if net sales reach $4 billion. In exchange, Dainippon will gain two potential first-in-class drugs targeting cancer stem cells and a drug discovery platform. BBI608 is expected to begin Phase III clinical testing later this year for colorectal cancer and BBI503 is in Phase I/II testing in multiple solid tumors. But Dainippon also gains a new oncology research center; the company said it plans to maintain the BBI headquarters in Norwood, Mass. as an oncology R&D base in the U.S. Its North American business, which operates under the subsidiary Sunovion Pharmaceuticals Inc., sells Latuda (lurasidone) for schizophrenia and drugs it gained through the 2009 acquisition of Sepracor: the sleep aid Lunesta (eszlopiclone), Xopenex (levalbuterol) for asthma, Brovana (arformoterol) for chronic obstructive pulmonary disease and Omnaris for allergies.The company’s primary focus in North America has been on the atypical antipsychotic Latuda, which launched in the U.S. about a year ago. Dainippon formed a global oncology business development office in June 2011 to spearhead efforts to enter the oncology drug development space. The company was already familiar with BBI, however; the two have been partners since March 2011 when Dainippon acquired Japanese rights to BBI608 for $15 million upfront. – Jessica Merrill

Avanir/Concert: Avanir, which brought a light-selling dextromethorphan formulation to market in 2010, is making a deeper plunge into developing drugs based on that active ingredient, as the Aliso Viejo, Calif.-based biotech in-licensed multiple deuterium-modified dextromethorphan (d-DM) compounds from Concert Pharmaceuticals on Feb. 29. The deal included an undisclosed up-front payment to Concert, which also can earn research, development and commercialization milestones of up to $200 million and sales royalties starting in the single digits and potentially increasing to the low double-digits if one or more of the compounds reaches market. Concert uses its DCE Platform (Deuterated Chemical Entity Platform) to alter existing therapeutic compounds to improve their plasma exposure, among other benefits. Avanir plans to develop the d-DM molecules in undisclosed neurological and psychiatric indications – it will assume all development responsibilities, while Concert will provide manufacturing support for IND-enabling studies. Previously, Concert brought in an $18.3 million upfront payment and a $16.7 million equity investment from GlaxoSmithKline in a 2009 deal giving GSK options to several DCE-modified compounds. In 2011, the companies chose CTP298, a deuterium-modified version of HIV drug atanazir, for further development. To date, Concert has earned at least $16 million in milestones under the GSK collaboration. Avanir obtained FDA approval of Neudexta (dextromethorphan hydrobromide 20 mg/quinidine sulfate 10 mg) for pseudobulbar effect in 2010 – the company thinks d-DM compounds could be therapeutically effective without the addition of an enzyme inhibitor like quinidine.—Joseph Haas

Nektar/Royalty Pharma: Risk-free cash now, or potential for risk-bearing cash later? Nektar Therapeutics opted to take the lump sum this week when it sold two royalty streams for previously out-licensed drugs to Royalty Pharma, a firm designed for such transactions. The deals netted Nektar $124 million in cash, which it will use primarily to pay down the $215 million in convertible debt it has accumulated. Nektar gives up its share of future sales of UCB Pharma's rheumatoid arthritis and Crohn's disease drug Cimzia (certulizumab pegol) and renal anemia treatment Mircera (methoxy polyethelene glycol-epoetin beta), which it had partnered away in 2000. If the drugs don't meet certain undisclosed sales thresholds during the next two years, Nektar would have to pay a Royalty Pharma affiliate $3 million next year and $7 million during 2014. Nektar's top unpartnered assets include NKTR-102, a Phase III metastatic breast cancer candidate also studied in several other cancers, and NKTR-181, a mu-opioid analgesic drug soon to enter Phase II that's designed to cross the blood brain barrier slowly and thus thwart abuse. It also has NKTR-118 for opioid-induced constipation and NKTR-119 for pain, both being developed under a partnership with AstraZeneca. - P.B. 

GlaxoSmithKline/ Daiichi Sankyo: Just two days after Takeda Pharmaceutical Co. Ltd. unveiled more details about the global expansion of its new vaccine business – which it expects to become the top vaccine supplier in Japan - Daiichi Sankyo announced March 2 a vaccines joint venture with GSK that would create the number one vaccines business in Japan. The 50-50 joint venture Japan Vaccine Co., Ltd. will be led by co-CEO representatives from each company. The JV’s stated goal is to join GSK's extensive vaccine pipeline with Daiichi Sankyo's domestic manufacturing, sales and development presence. Keeping all things equal, the companies will sell their prophylactic vaccines into the JV, and will earn for 50-50 profits. Daiichi Sankyo and GSK will also split the ¥100 million start-up capital for the venture, and each will send three executives to sit on the six-member board. Each company will be responsible for their own research, preclinical and pre-proof-of-concept and ultimately manufacturing of their own products. Japan Vaccine will step in for development after proof-of-concept. GSK has been vocal about growth opportunities in Japan. The firm's Japan business grew 30% from 2010 to 2011, largely on the back of the human papillomavirus vaccine Cervarix (human papillomavirus types 16,18), which was added to a government reimbursement program for vaccines in 2010. Since then, Japan has leapfrogged to become Cervarix' largest market. The joint venture will begin operations July 2.—Dan Poppy

Image of Conrad Martens' painting of the HMS Beagle reproduced courtesy of the Wikimedia Commons.

1 comment:

Neilesh said...

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