Friday, April 13, 2012

Deals Of The Week: Will Lightning Strike Twice At Shire?

The old adage is that “lightning doesn’t strike the same place twice,” but as April showers approach, Shire PLC appears to be gambling that the cliché does not ring true. On April 12, it made a move to bolster its burgeoning Regenerative Medicine division, buying out privately held Pervasis Therapeutics in a deal that reportedly could total $200 million if all milestones pay out.

Pervasis adds a Phase II cell-based therapy Vascugel, for improving hemodialysis access for end-stage renal disease patients, and its endothelial cell technology platform, to Shire’s portfolio.

And Shire executives did not bury the subtext of the transaction – the specialty pharma is hoping that with targeted acquisitions, it can become the “partner of choice” in regenerative medicine, just as its 2005 acquisition of Transkaryotic Therapies enabled Shire to become Genzyme’s main competitor in enzyme replacement therapies.

The $1.5 billion purchase of TKT was leveraged into Shire’s ever-growing Human Genetic Therapies unit. Now, by pairing tiny, two-employee Pervasis with last year’s $750 million takeout of Advanced BioHealing, which brought in the skin-substitute Dermagraft, the company is trying to tell a similar story in regenerative medicine.

“That’s definitely our intent,” Kevin Rakin, president of Regenerative Medicine at Shire, told “The Pink Sheet”. “We want to do the same thing in regenerative medicine and I think there’s a template here: [acquire a] venture capital-backed company, get some technology into man and prove the applicability, and then ideally we can be ideally the partner of choice … for regenerative medicine product development and commercialization.”

ABH took a floundering product, Dermagraft, off the hands of a large medical devices company and built it into a successful franchise. The acquisition has brought Shire development, manufacturing and commercial expertise in regenerative medicines. The acquisition of Pervasis and the renal disease product candidate Vascugel offers a number of synergies, said Jeff Jonas, Shire’s head of R&D for regenerative medicine, in an interview with “The Pink Sheet” during EBI’s Pharmaceutical Strategic Outlook conference in New York on April 12.

“We know the renal space very well from our work with Fosrenol (lanthanum carbonate, Shire’s phosphate binder for a number of chronic kidney disease indications),” he said. “We are familiar with the dialysis suite. We are familiar with cell therapies as well. It is a marriage of a number of synergies that exist in the company.”

This deal should be seen as a harbinger of things to come from Shire, Jonas added, and not as simply an incremental transaction. In regenerative medicine in particular, the specialty pharma is seeking early- to mid-stage assets with upside that it can de-risk early in the development cycle. While HGT now comprises about one third of Shire’s total business, a fraction that is growing, Jonas would not put a number on regenerative medicine’s potential other than to predict that it represents an “area of real potential growth in the next 20 years.”

And now, get out your umbrellas, it's time for the latest roundup of:

Takeda/URL: In a bolt-on acquisition, Takeda’s U.S. division will pay $800 million upfront with the potential for sales-based earn-outs beginning in 2015 to take out privately held URL Pharma. With the buyout, announced April 11, Takeda acquires the gout treatment Colcrys (colchicine).  Takeda hopes that the addition of Colcrys to its existing Uloric (febuxostat) could position the company as the provider of choice for gout therapy in the U.S. Takeda executives were not specific about how URL will be absorbed into Takeda Pharmaceuticals North America, but said the acquisition is expected to be accretive to earnings beginning in 2013. Venture capital-backed URL, headquartered in Philadelphia, markets Colcrys via a 350-person contract sales force. The firm markets three other products in addition: Qualaquin (quinine) for malaria, Fibricor (fenofibrate) for triglyceride management and the antibiotic Bactrim (trimethoprim and sulfamethoxazole). URL’s sales were roughly $600 million in 2011, led by Colcrys, an alkaloid indicated for prophylaxis and treatment of gout flares as well as familial Mediterranean fever in patients four and older, which generated $430 million in revenue. Uloric, which launched in 2009, is hardly on a blockbuster track. The drug posted net sales of $117 million in 2011. But Takeda executives said the two drugs should complement one another well, since Uloric is indicated to treat chronic gout, while Colcrys treats acute cases.--Joseph Haas

Amgen/KAI Pharmaceuticals: Amgen announced April 10 that it plans to acquire KAI Pharmaceuticals. The big biotech paid $315 million in cash for the South San Francisco, Calif., biotech with plans to move its lead compound into late-stage testing as soon as possible. KAI currently is developing KAI-4169, a peptide agonist of the calcium-sensing receptor being developed for treatment of secondary hyperparathyroidism (SHPT) in patients with chronic kidney disease (CKD) who are on dialysis. The company presented positive Phase IIa data last year that showed ‘4169 raised the levels of parathyroid hormone. A Phase IIb trial is currently ongoing and results are expected in “the near term,” Amgen said. Phase III planning is underway already and Amgen will provide the company with a loan in advance of the deal closing to support planning. Amgen will have full worldwide rights except in Japan. KAI licensed the Japanese rights to the drug to Ono Pharmaceutical in September 2011, nabbing a $13 million upfront. The drug is currently being tested in an intravenous formulation, and KAI has looked into a transdermal formulation as well. But, Amgen’s head of nephrology, Reshma Kewalramani said the company is specifically focused on the IV formulation for the moment. “The appeal of this molecule is that it can be administered in concurrence with dialysis,” she said.–-Lisa LaMotta

Celgene/AnaptysBio: Celgene and AnaptysBio announced an antibody-discovery partnership on April 9. No financial terms were disclosed. AnaptysBio will generate antibodies to oncology and inflammation targets using its proprietary SHM-XEL platform. Celgene will receive worldwide rights to develop and commercialize antibodies discovered by AnaptysBio under the terms of partnership. Privately held AnaptysBio is a leader in harnessing somatic hypermutation (SHM), the body’s natural process for generating antibodies, for antibody discovery and optimization. SHM-XEL is an in vitro platform that couples SHM with mammalian cell display to generate antibodies with desired binding and specificity properties. AnaptysBio will receive an upfront payment, potential preclinical and clinical milestone payments, and potential royalties on sales of each product derived from the partnership. The alliance is similar in structure to a pair of deals that the antibody specialist struck in January 2012: one with Novartis and another with an undisclosed company. It was Novartis’ second collaboration with AnaptysBio, the prior one having successfully delivered antibody candidates into the big pharma’s pipeline. AnaptysBio additionally has struck antibody discovery deals with Roche and Merck. This most recent partnership appears to be Celgene’s first foray into antibody therapeutics. The cancer biotech has focused its pipeline primarily on various flavors of small molecules – e.g., epigenetic, multi-mechanism IMiDs and kinases, and cytotoxic chemotherapeutics – and also on cellular therapies. As such, the deal represents a significant broadening of its early-stage portfolio.–-Mike Goodman

Arrowhead/Alvos Therapeutics: RNAi company Arrowhead Research Corp. announced April 11 that it acquired privately held Alvos Therapeutics, a developer of proprietary human-derived homing peptides, in an effort to gain delivery technology for its short interfering RNA (siRNA) compounds. Alvos shareholders will get an upfront payment of 315,467 shares in Arrowhead (about $2.13 million) and will be eligible to receive additional stock valued at up to $23.5 million if certain clinical and regulatory milestones are achieved. Alvos stockholders could receive additional stock if the first three drugs using the Alvos technology reach certain sales milestones. Targeted delivery of RNA interference candidates has been the field's premiere challenge. The Alvos technology platform, which originated at MD Anderson Cancer Center, is designed specifically to generate peptides that bind to and enter tumor cells, potentially solving the delivery problem for Arrowhead, which acquired Roche’s RNAi assets in October. Alvos, previously known as Mercator Therapeutics, will be integrated into the Arrowhead facility in Madison, Wis. Arrowhead CEO Christopher Anzalone said in a statement that the acquisition benefits the company by allowing “for the creation of new peptide-drug conjugates against cancer and other indications, thereby expanding our business and capabilities in a cost effective way." –-L.L.

Photo credit: Wikimedia Commons

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