Friday, September 14, 2012

Deals Of The Week Goes To PSA

Here’s some facts you ought to know about emerging markets – and why they are driving deals these days. Emerging markets dominated deal news this past week, notably inked by Merck, Pfizer & AstraZeneca in China, as the companies seek to  expand their broader, established product portfolio further to tap that vast country' s inland cities and rural areas, and by Sinclair IS and Quintiles in Mexico:

Sales in emerging markets will grow by $150 billion or more between 2011 and 2016, according to IMS Health.

China is in the midst of a 12th five-year plan (2011-2015), which lists biotechnology as one of seven strategic areas for investment.
A host of Chinese biotechs are starting to jump start their R&D pipelines by in-licensing compounds from Western developers: Asceltis Inc., Aslan Pharmaceuticals Pte. Ltd., and Hua Medicine, to name a few. Some Western firms, such as Merck and AstraZeneca, have invested in Chinese biotechs that are aiming to bring innovative new drugs to market. 

The Russian government's Pharma 2020 program aims for 50% of pharmaceuticals (and 90% of essential drugs) to be manufactured domestically by 2020. In addition, it wants 60% of local drugs (by value) to be innovative products and to grow pharma exports by eight times compared to 2008. President Vladimir Putin has pledged nearly $4 billion to make it happen, according to Elsevier's PharmAsiaNews.

India has strong capabilities in nanotechnology, aggregation and analysis of genomic databases, and translational research, according to a report released last spring by The Boston Consulting Group.

Closer to home, deal-making also continued apace, as companies tap academic institutes, biotechs, and venture philanthropy for innovation and financing.

See you at PSA 2012 in New York beginning Monday.... and/ or at PharmAsia Shanghai Summit on Sept.--Wendy Diller

Meanwhile onward with dealmaking...

Merck/ Simcere and Pfizer/ Hisun: After watching several rounds of price cuts on branded generics, which account for roughly 80% of multinational companies’ business in China, Merck  and Pfizer hope to boost volume of off-patent products via partnerships with local companies. First, Merck and Simcere Pharmaceutical Group officially launched a joint venture in Shanghai Sept. 12, and the following day, Pfizer announced the launch of its JV with Zhejiang Hisun Pharmaceutical Co. Ltd.

Both moves should be seen in the greater context of China healthcare reforms, including the expansion of basic health insurance to virtually all of China’s 1.3 billion people. The reforms, in particular, have fueled rapid growth in lower-tier cities and rural markets, areas that have been the commercial domain of domestic pharma companies, whereas multinationals historically focus on larger cities. Merck signed its agreement with Simcere last August, and the JV, called SMSD (Simcere-MSD), was granted a business license in July 2012. SMSD has recruited a team of 400 employees to cover all provinces in China, and headcount is expected to double to 700-800 by year end. Merck’s affiliate in China Merck Sharp & Dohme Ltd. owns a 51% stake in the JV and Simcere holds the remaining 49% of SMSD.

In contrast to Merck and Simcere, Pfizer signed a memorandum of understanding to form its JV with Hisun – Hisun-Pfizer Pharmaceuticals Co. Ltd. – to develop, manufacture and commercialize off-patent pharmaceutical products in China and global markets in June 2011. Earlier this year, Pfizer and Hisun signed an additional framework agreement, and have since been waiting for government approval to launch the JV.

In a reverse of the Merck/ Simcere structure, Hisun will control a 51% stake in the JV and Pfizer will hold 49%. Aggregate investment in the JV is $295 million and registered capital is $250 million.--Tamra Sami, Brian Yang.

MedImmune/ WuXi AppTec: The joint venture between MedImmune and WuXi announced on Sept. 10 supports key ambitions of both partners – MedImmune’s aspiration to commercialize innovative biologics in important markets such as China and WuXi’s aim to build out its manufacturing services as a source of revenue growth ([A#28120910015]). WuXi’s biggest business is in contract research, but it has been expanding a manufacturing pipeline.

The agreement revolves around MedImmune’s monoclonal antibody MED15117 for rheumatoid arthritis. The JV will develop and commercialize the compound, with WuXi providing local regulatory, manufacturing, pre-clinical and clinical development support, while MedImmune offers technical and development expertise. But the JV is more than an opportunity for WuXi to expand manufacturing capabilities – it also offers the Chinese company an opportunity to learn through exposure to a global biologics company. For MedImmune, it is a chance to take advantage of China’s fast-track regulatory pathway, which is open only to domestic companies and to obtain access to local biologics manufacturing, which China also requires for development of a compound that is not already approved elsewhere.

It is the first JV between a foreign and Chinese company focused on developing an innovative biologic for China, according to analysts. MedImmune will have the option to acquire full rights to commercialize MEDI5117, and if it does not exercise that option, the joint venture will have the right to commercialize the product. WuXi will earn revenue based on services provided to the JV, and MedImmune will receive milestone payments as the program progresses.--T. Sami, B. Yang.

Pfizer/ Visterra: Pfizer took a flyer on early-stage infectious disease research this week, when it struck a deal with Cambridge, Mass.-based start-up Visterra. In an agreement revealed Sept. 11, Pfizer paid an undisclosed amount up-front to collaborate on drug discovery with the biotech, an antibody developer hoping to bring its first drug candidate into the clinic by 2014. Financial details weren’t released, but the companies said the deal includes research funding, milestones and royalties as well. The parties also haven’t said which specific disorders their collaborative research will aim to treat, or what rights Pfizer will receive to drugs discovered. Visterra’s own lead program, VIS410, is a preclinical influenza therapy. 

Early data also released at ICAAC on Sept. 10 showed that VIS410 provided both therapeutic and prophylactic protection in 100% of mice infected with multiple strains of influenza A. Visterra’s platform allows it to view proteins in three dimensions and examine their network structure, according to CEO Steven Brugger. Pfizer markets several infectious disease products, including Zyvox (linezolid) for Gram-resistant pathogens and the Prevnar (pneumococcal 13-valent conjugate) vaccine franchise. Visterra was founded in 2007 to develop products based on research conducted by MIT professor Ram Sasisekharan; it has won $19 million in support to date from Flagship Ventures, Lux Capital and Polaris Venture Partners.--Paul Bonanos

Pulmatrix/Cystic Fibrosis Foundation:  Lexington, Mass.-based Pulmatrix will receive $1.4 million in upfront and milestone-driven funding to support its lead drug PUR118 for cystic fibrosis as part of a collaboration with the Cystic Fibrosis Foundation Therapeutics, Inc., the nonprofit drug discovery and development affiliate of the Cystic Fibrosis Foundation. The award will support Pulmatrix’s Phase Ib clinical trials of PUR118 to reduce the risk of acute exacerbations in CF patients, the company said Sept. 14. PUR118 is an inhalable dry powder formulation that is in development for cystic fibrosis and chronic obstructive pulmonary disease. It is currently being studied in a Phase I study in cystic fibrosis and two Phase Ib studies in COPD. The company recently closed a $14 million Series B extension financing including existing investors Polaris Venture Partners, 5AM, Novartis Venture Fund and ARCH Venture Partners.--Jess Merrill
Quintiles Transnational Corp./ Sinclair IS Pharma PLC: What can small pharma companies do to tap buoyant emerging markets when they lack the size and infrastructure to do so on their own? Well, Quintiles, best known as a contract research organization, says it’s got the answer. Based in North Carolina, it signed a deal Sept. 13 with Sinclair IS Pharma, which will give the small U.K.-based specialist pharmaceuticals company its first step into the Latin American market. The 10-year collaboration and licensing agreement is exclusively for the Mexican market, but both parties have their eye on expanding into Brazil.

That’s not surprising given that Quintiles opened operations there only two months ago. Quintiles estimates Brazil's biopharma market at $17.1 billion, and  will set up sales and marketing operations there to help its customers cash in on the burgeoning demand. Quintiles can help biotechs "navigate the complexities these markets present,” said Quintiles Senior Vice President of Commercial Strategy James Featherstone. No financial details of the agreement were given.-- Sten Stovall

Bristol-Myers Squibb Co./ Vical Inc.: Vaccine-focused biotech Vical announced Sept. 13 that it has licensed its platform DNA immunization technology and its Vaxfectin adjuvant to Bristol-Myers Squibb. Under the non-exclusive agreement, BMS will use the platform to produce antibodies. Financial terms of the agreement were not disclosed. Vical’s pipeline is focused on infectious diseases and cancer products. It formed a collaboration with Japan’s Astellas Pharma in July 2011 to develop and commercialize the biotech's cytomegalovirus (CMV) vaccine, TransVax. Vical received $25 million initially from Astellas, plus another $10 million when the Phase III trial design was finalized. The company has the potential to receive $103 million in total potential upfront and milestone payments. Vical will receive double-digit royalties on sales should the product get to market and has the right to co-promote TransVax in the U.S. Astellas will be responsible for all development and commercialization costs; yet, Vical will assist in certain development and regulatory functions. “This agreement represents a meaningful step toward monetizing a common use of our broadly applicable intellectual property asset, and establishes a template for additional agreements with others working in the field,” said Vijay B. Samant, Vical's President and CEO, in a statement.--Lisa Lamotta

AstraZeneca PLC/The Broad Institute: British drug-giant AstraZeneca has tapped the Broad Institute of MIT and Harvard to help it discover new antibiotics to treat infectious diseases. The company is hoping that being able to mine the Broad Institute’s library of 100,000 chemical compounds will help it speed development of antibiotics and other anti-infectives that could help treat antibiotic-resistant superbugs. The chemical library contains customized molecules known as Diversity-Oriented Synthesis compounds that are  designed to contain molecular shapes and structures not found anywhere else and hit challenging biological targets. Under the agreement, screening and hit-to-lead chemistry will take place in the Broad’s Chemical Biology Platform and AstraZeneca will optimize, develop and commercialize any potential compounds found under the two-year agreement. The Broad Institute was founded in 2003 by MIT, Harvard and their affiliate hospitals to help advance science and discovery related to genome-based knowledge.--LL

Bayer HealthCare/ Teva's U.S. Animal Health Business: In its second foray into the U.S. animal healthcare sector this year, the diversified German multinational firm, Bayer AG, is to acquire Teva's U.S. animal health business  for an upfront payment of $60 million and up to $85 million in additional payments tied to manufacturing and sales targets. Bayer will acquire dermatologicals, nutraceuticals, anti-infectives and reproductive hormones used in food animals and pets, the companies announced Sept. 14. In February 2012, Bayer also bought the animal health business of Houston, Texas-based specialty chemicals company, KMG Chemical Inc., for an undisclosed sum. The acquisitions are part of Bayer's strategy to boost its animal health division, which reported sales of €679 million ($893 million) in the first six months of the year, up 9.2% on the previous year, although sales in the U.S. were reported to have "receded" compared with the same period in 2011. Animal health is one of the smaller of Bayer's business units: sales by its crop science division reached €4.8 billion in the first six months of 2012, and its material sciences business clocked up €5.7 billion. Bayer's moves to grow its veterinary business can be contrasted with Pfizer's desire to jettison its animal health division, which it wants to divest via an IPO, with the name Zoetis; the split is expected in  2013.--J.Davis

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