Friday, July 26, 2013

Deals Of the Week, Once Again, Ponders Biosimilars

Teva Pharmaceutical Industries Ltd.’s and Lonza Group’s announcement on July 25 that they were formally ending their four-year-old biosimilars joint venture was hardly a surprise, given that late last year both companies said they were reviewing their relationship. Their decision certainly reflects the complexities of developing biosimilars, but it also is the consequence of each company’s new leadership, which has different priorities than those who forged the original deal.

Signed at a time when biosimilars seemed like an incredibly promising, albeit vague, long-term opportunity for an assortment of generics and pharma companies, the original deal was ambitious in scope. Each company committed to spend $300 million over six years on the alliance, estimating the cost of developing one biosimilar would be roughly $100 million – considered a lot at the time. Teva saw biosimilars “as a major growth driver” and positioned itself as “a leader in this market,” then President and CEO Shlomo Yanai said at the time. Lonza would bring large-scale biologics manufacturing and development expertise to the table, while Teva offered experience in clinical development and marketing of generic and branded drugs.

Four years later, even as the EU and U.S. regulatory pathways for biosimilars gain some clarity, the overall landscape for the field is as complex as ever. Like their competitors, Teva and Lonza held much of their work close to their vests, but they had counted on developing a franchise around a biosimilar version of Roche’s $7 billion Rituxan (rituximab) franchise, only to halt clinical development last October due to “changes in the regulatory and competitive environment.” They weren’t the only ones to face setbacks on rituximab programs: Celltrion Inc. and its partner Hospira Inc., and the Samsung Biologics/Quintiles Transnational Holdings Inc. alliances also are also in the midst of re-evaluating their biosimilar rituximab programs.

More telling, perhaps, new CEOs at each company are set on revamping priorities across the board. Lonza’s new CEO, Richard Ridinger, who joined the company in April 2012, is in the midst of re-organizing the company into two core areas, pharma and biotech and specialty ingredients. On an earnings call also on July 25, he said the company, which accounts for about a third of all mammalian cell culture manufacturing worldwide, would reduce its manufacturing footprint, including closing two plants. Lonza indicated that it holds CHF100 million ($107.6 million) in assets on its balance sheet in relationship to the joint venture and has expensed CHF38 million since its formation. The company estimates it will save CHF150 million by ending the deal.

Teva releases its second-quarter numbers on August 1, so the company isn’t providing accounting details or elaborating on the announcement. But CEO Jeremy Levin, who assumed his position in May 2012, is emphasizing greater selectivity and focus across the board, rationalizing overlapping projects, and improving the efficiency of an organization that had become unwieldy and unfocused, even as it has grown rapidly in the past decade. A lot of that rationalization is taking place in Europe, where markets are relentlessly unforgiving and where Teva’s –and its competitors’ – first attempts at biosimilars launches are occurring.

Biosimilars work continues at Teva internally. In comments earlier this year, both Levin and Chief Scientific Officer Michael Hayden said they would pursue biosimilars as part of a broader biologics program. Teva currently has several generic versions of marketed biologics on the market, although it went through traditional regulatory routes to get approvals: TevaGrastim, a generic version of Amgen Inc.’s Neulasta (pegfilgrastim) has been available in Europe for several years, for example. “I would say that in the biosimilars space, we still remain enthusiastic, but we’re going to be smart about it,” said Hayden in an investor call late last year, noting. “We're going to be in biosimilars in a very focused way.”

And since Teva is mum on the subject, it’s worth noting an observation by Frederick Wilkinson, president of Teva competitor Actavis Inc.’s specialty brands unit, on the latter’s own earnings call the same day as the Lonza-Teva announcement. Actavis has a joint venture in biosimilars with Amgen and Wilkinson said it expects a news update from that endeavor in August.  “I wouldn't actually read too much into it,” Wilkinson said of the ‘no deal.’ “If you looked at the Teva biosimilar program, they at some point had bought enough different companies that they had multiple projects going on the same product. And so, I think what they've done is probably very efficiently pruned their product line down to the leading entities within their biosimilar portfolio. Lonza for the last year has been out selling or trying to solicit use of space, so it has been obvious that the Lonza Teva relationship was not going to be as deep as it originally was [planned to be].” 

If you're looking for deals that may be smaller scale, but have a fresh start, here are some of the newest developments in what was generally a quiet deal-making week:--Wendy Diller

Adimab/Biogen &Adimab/GSK: Adimab’s tech transfer deals with GlaxoSmithKline  and Biogen Idec represent the small biotech’s greatest business development and financial successes to date.

The deals, each announced July 26, see Adimab setting up its technology platform inside its partners’ R&D shops. By licensing non-exclusive rights and transferring this antibody discovery and protein engineering platform to GSK and Biogen, Adimab enables its partners to expand their use of a technology that the biotech has until now tightly controlled. Both Biogen and GSK had previously allied with Adimab (GSK through the acquisition of Adimab partner Human Genome Sciences Inc.), but like the biotech’s 19 other partners, they were limited to one- or two-target “trials.”

GSK’s agreement is for an indefinite number of years, with unlimited product licenses across all therapeutic areas. Biogen’s deal is more limited – a seven year (renewable) term, limited to certain disease areas where Biogen has a presence, and a limited number of commercial licenses. Both companies can use the technology to pursue any antibody format – including antibody-drug conjugates or bispecific antibodies – and have retained options to access any future improvements or additions to the Adimab platform.
The financial specifics of the two new Adimab deals were not disclosed. In each, Adimab will receive a “significant” upfront cash payment, annual license fees for the lengths of the deal, R&D milestone payments, and royalties and commercial milestones on a defined number of therapeutic products.

The upfront funding from the two deals make Adimab a decidedly profitable discovery engine for the foreseeable future, and the company will make its first dividend payment to its venture investors later this year. It expects to sign one more platform transfer deal this year, and three per year through 2015.--Chris Morrison.

Kolltan/Children’s Hospital Of Philadelphia: Cancer-focused biotech Kolltan Pharmaceuticals announced a license of intellectual property and research agreement with Children’s Hospital of Philadelphia July 18 around discovery efforts for neuroblastoma therapeutics targeting anaplastic lymphoma kinase (ALK). Terms of the deal were not disclosed. Based in New Haven, Conn., Kolltan’s focus is on large-molecule approaches to receptor tyrosine kinase (RTK) inhibition – it has six programs ongoing at the discovery and preclinical stage and plans to file an IND for its first clinical candidate before year’s end. The firm will collaborate with researcher Yael Mosse, who studies the causes and potential therapeutic approaches for treatment of children diagnosed with neuroblastoma. In a statement, Mosse said ALK-targeted immunotherapy or antibody-drug conjugates may offer the best approach for patients whose tumors have an ALK mutation or amplification. “We believe immunotherapy and ADCs may provide a therapeutic option for the majority of patients with high-risk disease given the widespread expression of ALK on the cell surface of most neuroblastoma tumors,” she said.--Joseph Haas

Lilly/Transition: Transition Therapeutics  has obtained a worldwide exclusive license for Eli Lilly’s small molecule transcriptional regulator TT-601 for the treatment of osteoarthritis pain, the biotech announced on July 23. The compound has completed preclinical development, and Transition plans to take it into the clinic during the first half of 2014. TT-601 modulates the activity of a novel nuclear receptor target. Tony Cruz, CEO of Transition, says that molecules in this class “have shown target engagement in the joint space and efficacy in multiple animal models of joint pain.” Twenty-seven million Americans have OA. Under the agreement, Transition gets the rights to develop and possibly commercialize TT-601. Lilly keeps an option to reacquire the agent on review of proof-of-concept data, in which case Transition would be eligible for milestone payments of approximately $130 million and a high single-digit royalty on the sale of potential products containing TT-601.

Should Lilly not take the option, and the product comes to market, Lilly would be eligible for a low single-digit royalty from Transition. There’s a good chance Lilly will pull the trigger on the option. This deal comes on the heels of Lilly’s June 17 decision to exercise its option to reacquire another compound licensed to Transition, TT-401 for diabetes. Transition took a $7 million option fee, and could get up to $240 million in milestones from that deal. That goes back to a March 2010 deal between the partners in which TT-401 was included among a few other preclinical candidates from Lilly. Their partnering history began in 2008 with a non-option deal in which Lilly licensed TT-223 and other gastrin-based therapeutics for both Type I and II diabetes from Transition.--Michael Goodman

PolyTherics And Antitope Merge: Britain’s privately owned PolyTherics  and Antitope have merged their biopharma services businesses to tap growing demand from Big Pharma for services and technologies used in the search for biologics such as antibody-drug conjugates.

The enlarged group has a strong client base in the biotechnology and pharmaceutical industry, including the top ten biggest drug makers. It will offer conjugation technologies to generate more stable and homogeneous antibody drug conjugates, technologies to optimize the pharmacokinetics of biologics, technologies for immunogenicity screening, technologies to re-engineer antibodies, and proteins to reduce their immunogenicity, and cell line development technologies.

Antitope, founded in 2004, tests immune responses caused by antibody therapies and engineers modifications for the drugs. That expertise should complement the conjugation and polymer technologies from PolyTherics, which was created in 2002 as a University College London spin-off.

PolyTherics financed the merger with £13.5 million ($20.1 million) raised from a group of backers that includes Imperial Innovations, Invesco Perpetual, Mercia Fund Management, Advantage Enterprise & Innovation Fund, ProVen Health, Oxford Technology VCTs and high net worth individual's funds managed by Longbow Capital.--Sten Stovall

Thursday, July 25, 2013

Financings of the Fortnight Says Up You Worms! You Butterflies!

Forgive us if you don’t have small children, but events of the past fortnight have put a certain Dr. Seuss book in mind.

IPOs are certainly up. Not just the number of biotech firms going public – more than 20 this year, just past the half-way mark – but the pop for companies that, a couple years ago, public investors probably would have sneezed at. Bluebird bio, a gene therapy developer, nearly double its IPO price; Epizyme, doing epigenetic work, more than double its IPO price; rare-disease firm Prosensa Holdings, more than double. US IPO indices, where the bulk of the IPO activity is happening, are up about 20% for the year.

How much are the warm breezes blowing through the IPO window contributing to venture optimism? That’s a question we’re asking START-UP’s third annual life science venture survey. Here are the previous two years’ results. First, 2011:

And 2012:

In Seussian terms, 2011 and 2012 were not great years for up. This year? We don't want to unblind the data yet; the survey is still open. But we can tell you this: So far the VCs who feel positive about the industry say the IPO window is a major factor.

Can it continue? As we write this, yet another preclinical biotech has breached the public barricade; Agios Pharmaceuticals, which only recently filed its first IND, raised more than $100 million (see blurb below). We like to think the early-stage firms – the Agioses, Epizymes, Verastems, and Reguluses (Reguli?) -- are an excellent gauge of investor sentiment. The public side is listening to the early-stage story.

The venture investment data don’t all reflect the same bounce. According to the MoneyTree survey from the National Venture Capital Association and PwC, there have been 202 biotech investments in the US through the first half of 2013. The pace will need to pick up substantially to match 2012’s total of 477 deals, according to the survey (though seeing how pace usually picks up in the second half, don’t bet against it). Total dollars in are about on pace: $2.2 billion invested so far this year, slightly more than half of 2012’s total of $4.2 billion.

The Dow Jones VentureSource data has different numbers but the same trends: 127 biopharma venture deals so far this year, less than half of last year’s total of 279; and $1.9 billion into biopharma so far this year, roughly half of last year’s total of $3.7 billion.

It’s not our job to make predictions, but we're confident that if the IPO issues continue apace, those fair-to-middling half-year venture investment numbers will be a distant memory. The lure of the public markets is strong – even stronger when it’s rewarding companies that are years away from significant clinical data -- and it also should pull investment into companies that want to use IPOs as leverage in acquisition negotiations.

It will be interesting to see how the IPO window affects the need for corporate venture, which has been increasingly important the past few years. In the 2012 START-UP survey, 60% of respondents said it was important to maintain healthy life science industries and 19% said it was crucial. We haven’t closed out this year’s survey, but so far we haven’t seen any indication of those numbers fading. (For results and analysis from the 2011 survey, click here; for 2012, click here.)

On a related note, the current IN VIVO has an inside look at the corporate venture team at General Electric, dubbed healthymagination, which has recruited health care veterans from Kleiner Perkins Caufield & Byers and Mohr Davidow to help the GE behemoth see – and potentially acquire – disruptive technologies before they become billion-dollar acquisitions. They shy away from pharmaceuticals, so you won’t see a lot of FOTF ink spilled about their investments, but it’s an insightful read nonetheless.

You’ll find no greater disruptive technology in children’s literature than Dr. Seuss's Cat in the Hat, by the way. If you’ve never read it, it’s not too late, no matter how old you are. But first, we encourage you to finish the rest of this edition of…

Agios Pharmaceuticals: Chalk up another IPO win for an early-stage biotech. Agios sold 5.9 million shares at $18 apiece July 23 to raise $106 million, a step up from the 5 million shares it hoped to sell in the $14 to $16 range. Working on metabolism targets to treat cancer and rare metabolic disease, Agios just recently filed its first IND for its lead candidate, AG-221, a small molecule that targets cancers with mutations in the enzyme isocitrate dehydrogenase 1, or IDH1. The company expects to start clinical trials this year. Some of the firm’s work is promised to partner Celgene, which signed a broad co-development deal with Agios in 2010, later revised in 2011. Before the IPO, Celgene was Agios’ second largest shareholder with 17% ownership and was expected to buy more shares in the offering, worth $12.75 million, according to regulatory filings. ARCH Venture Partners and Flagship Ventures each held 16.4%. The largest pre-IPO shareholder was Third Rock Ventures (23.7%), and the upsized offering represents the venture firm’s second big IPO haul – at least on paper – this summer. Third Rock was also top owner of bluebird bio, a gene therapy developer which debuted in June at $17 per share and has since doubled its share price. Bluebird and Agios are the first IPOs from Third Rock’s portfolio of mainly early stage biotechs, and it is benefiting from the public markets’ sudden embrace of riskier endeavors based on relatively new area of research. Recent successful debuts include Epizyme, an epigenetics company, OncoMed Pharmaceuticals, working on cancer stem cells (see blurb below), and Prosensa and PTC Therapeutics, with drugs tackling the rare Duchenne’s muscular dystrophy. Preclinical cancer stem cell company Verastem went public in early 2012.  J.P. Morgan and Goldman Sachs led the Agios underwriting team, which has the option to sell an extra 883,333 shares. – Alex Lash

Merrimack Pharmaceuticals: The oncology developer raised $148 million in parallel equity and debt offerings as it moves several compounds through early clinical trials. Both sales closed July 17, the first financings for the firm since its IPO in 2012. The $125 million debt component consisted of convertible notes that bear 4.5% interest a year and mature in 2020. On the equity side, Merrimack sold 5.75 million shares at $5 each, which includes the option exercised by underwriters to sell an extra 750,000 shares. It netted the company $27 million. Merrimack’s science is based on building simulations of cancer pathway networks, which has led them to create several drug types: monoclonal antibodies, bispecific antibodies, antibody mixtures, and nanoparticle-formulated chemotherapies. Its most advanced compound is MM-398, an encapsulated irinotecan currently in Phase III, with orphan designation in the US and Europe for metastatic pancreatic cancer in patients who have failed gemcitabine treatment. The underwriters, led by JP Morgan and BofA Merrill Lynch, also have an option to sell an additional $18.75 million in convertible notes. Before its IPO last year, Merrimack had raised $270 million in private financing. – A.L.

OncoMed Pharmaceuticals: The developer of cancer treatments netted $89 million through its initial public offering on July 17. Including the overallotment, the company sold 5.6 million shares at $17, higher than the anticipated $14-16 range. OncoMed, which targets cancer stem cells with both biologics and small molecules, plans to use the IPO proceeds to advance its key projects through Phase II trials and to support ongoing partnerships. Cancer stem cells are the subset of cells within a tumor that help a cancer regenerate and proliferate even after treatment, although their existence and function is still a matter of debate in solid tumors. OncoMed’s wholly-owned demcizumab, which inhibits DLL4 in the Notch signaling pathway, is in Phase Ib trials for solid tumors including pancreatic and non-small cell lung cancers. Its most advanced partnerships are for OMP59R5, in Phase Ib/II, and the Phase I anti-Notch MAb OMP52M51, both shared with GlaxoSmithKline. OncoMed’s other key collaboration is with Bayer to develop biologics and small molecules that target the Wnt pathway. Since its 2004 inception, OncoMed has raised close to $170 million in two rounds of venture funding. Pre-IPO, US Venture Partners was the company’s largest shareholder (17.3%), followed by Latterell Venture Partners and GSK. OncoMed reported $24.7mm in revenues for 2012 (on a $22 million loss), and had about $60 million in cash on hand as of March 31, 2013. – Beth Detuzzi

Alcresta: The small Newton, Mass.-based nutritionals company has raised a $10 million Series B round that it says will get it to commercialization and provide options when entering partnering discussions. Alcresta’s original three investors – Third Rock Ventures, Frazier Healthcare Ventures and Bessemer Venture Partners – have returned to provide the B round. Founded by former Alnara Pharmaceuticals executives Alexey Margolin and Robert Gallotto, Alcresta is developing a nutritional supplement with omega-3 and omega-6 fatty acids that are more easily digested and absorbable for patients who have digestive problems. The fatty acids are an important part of cardiovascular and brain health. Most nutritional drinks and infant formula include the triglyceride form of the fatty acids, but certain patients – including premature infants, some elderly, and cancer patients – lack the proper enzymes to digest the nutrients in the triglyceride form. Gallotto told our Pink Sheet colleagues that Alcresta has yet to burn through its Series A financing. It chose to raise more money before it receives product approval to keep the option of commercializing its first product on its own. The company currently has two point-of-care products in development, one for patients who need to be fed with a feeding tube and one for patients who can swallow their own food. Both products are designed to be mixed with nutritional supplements that patients are already taking. If they work as planned, they would jumpstart the digestive process. Alcresta has an unusual business model. It shares its staff, headquarters, and investors with a sister company, Allena, which is developing similar enzyme-based products that will be considered pharmaceuticals. Allena focuses on innovative non-systemic oral protein therapeutics to treat nephrologic and urologic conditions. – Lisa LaMotta

All The Rest: In addition to closing a $14M Series A round, Amphivena Therapeutics also secured an option-to-acquire from Janssen…to support Phase II studies of AbGn-168H for psoriasis, AbGenomics received $9.6M in funding…RusnanoMedInvest led a $6.7M add-on to Lithera’s Series C, which now totals $27.3M…transgenic mice producer Harbour Antibodies raised 2.3M and signed a concurrent deal with Pfizer…UK firm ReNeuron grossed £25.35M through a private placement and also received a £7.8M grant from the Welsh government…after closing its reverse merger with Tranzyme, Ocera closed on a $20M PIPE…a sole health care-dedicated investor backed Rexahn in a $5.7M RDO…oral drug delivery company Oramed raised $4.6M in an RDO…to fund lead candidate Arikace for orphan lung infections, Insmed completed a $62.4M FOPOVerastem, which is targeting cancer stem cells, publicly raised $55M…acute and chronic pain drug developer AcelRx grossed $51M in a secondary offering…microRNA-targeting Regulus closed on a $42.8M follow-on…cancer company TG Therapeutics did a $35M FOPO…with a focus on back-of-the-eye diseases, pSivida raised $10.8M publiclyOxygen Biotherapeutics completed a $5.7M public offering of Series C 8% convertible preferred stock…Heat Biologics, developer of allogeneic cellular vaccines for cancer and infectious diseases, priced its IPO at $10, the bottom end of its range, to gross $25M…Onconova and Iroko set terms for their advance of a Series B round planned for later this year, Immunomic Therapeutics raised $3M in debt…and Quest Diagnostics gained $485M by selling to Royalty Pharma rights to future royalties on the Phase III cancer candidate ibrutinib. -- Amanda Micklus

Friday, July 19, 2013

Deals Of The Week: Kicking The Tires

Apparently, virtually by the time it became “news,” it transformed into “non-news.” News reports of Roche’s interest in acquiring ultra-rare disease focused Alexion Pharmaceuticals surfaced suddenly July 12 and just as rapidly evaporated the following week, as Wall Street analysts noted the prohibitive premium price and lack of cost-saving synergies.

That doesn’t mean that “tire-kicking” season is over in biopharma, if indeed it ever ends. During a steamy summer season highlighted by the running of the bulls in Spain, the jockeying for position of the bikers in France, and world-class tennis being followed quickly by world-class golf in the U.K., renewed speculation about the fate of cancer specialist Onyx Pharmaceuticals after it it put itself up for sale in in late June surfaced just as the Roche/Alexion story sputtered to an end.

Recall that Amgen got the ball rolling on Onyx speculation with a $120-per-share bid confirmed by Onyx on June 30. Onyx declined the offer but also put itself on the auction block, hoping to attract an even greater price tag. Now, perhaps four or more companies are interested in the oncology firm, possibly including its long-time partner Bayer and competitors in the multiple myeloma space such as Celgene and Takeda.

Media reports also cited Bristol-Myers Squibb and Gilead Sciences as possible suitors, while Pfizer was mentioned as a player, then backed off due reportedly to the price premium. Also not in the running, according to speculation, are Sanofi, GlaxoSmithKline, Novartisand Biogen Idec.

Roche’s reputed interest in Alexion, while understandable because of the Connecticut biotech’s all-out success with Soliris (eculizumab), the highest-priced drug in the world, also is puzzling because of questions about how the Swiss pharma would derive value from such a pricey acquisition. The company has only one commercial product – for a pair of ultra-orphan diseases – albeit a rapidly growing, billion-dollar product, bolstered by an up-and-coming robust pipeline. Reports – unconfirmed – had Roche looking over financing vehicles in order to make a purchase in the range of $25 billion for Alexion.

Deutsche Bank analyst Robyn Karnauskas wrote July 15 that while many European large pharma companies might be able to afford Alexion, they would balk at the price. Roche likely would be better off pursuing “a product/company with more strategic fit or transformational potential,” she said. Projecting Alexion total revenues of $1.7 billion in 2014 and $2.6 billion in 2015, the reported Roche bid would translate into multiples of 15x next year and 10x in 2015, she estimated.

An analyst at UBS Investment Research, Matthew Roden, who covers Alexion, wrote July 15 that the company is an attractive and likely take-out target but would offer few points of potential synergy with Roche. It would be more of a “bolt-on” transaction than a “fold-in” acquisition, he suggested.

“Since the Alexion business model requires a high degree of patient touch and very specialized sales force to reach idiosyncratic PNH (paroxysmal nocturnal hemoglobinuria) and aHUS (atypical hemolytic uremic syndrome) markets, we see limited capability for SG&A cost savings through a deal beyond regulatory structure,” Roden said.

His U.K.-based colleague Andrew Whitney, who covers Roche, noted July 15 that an offer of about $130-per-share for Alexion would represent 35 times the UBS projections for 2014 earnings by the biotech.
So, while Roche/Alexion apparently is not happening and Onyx could end up in the hands of a big pharma, a big biotech or some business model in between, DOTW can offer these transactions that reached the point of signatures along the dotted line …

Spectrum/Talon: Spectrum Pharmaceuticals acquired Talon Therapeutics in the hopes of expanding the indications for Marqibo. The liposomal form of vincristine received accelerated approval from FDA in August 2012 to treat third-line patients with Philadelphia chromosome-negative acute lymphoblastic leukemia (ALL). Spectrum hopes Phase III data to treat newly diagnosed, elderly non-Hodgkin’s lymphoma patients will pan out and lead to an approval in NHL, thereby significantly expanding the potential market for Marqibo. A Phase III trial of Marquibo in newly diagnosed ALL patients also is ongoing. This trial is intended to serve as a confirmatory trial for the accelerated approval. Disclosed on July 17, the deal was slated to close a day later. Spectrum paid $11.3 million in cash, in addition to 3 million of its shares. Spectrum shares closed at $8.77 on July 17. At that price, Spectrum paid $37.6 million in cash and stock, plus contingent value rights (CVRs) worth up to $195 million. CVRs are tied to Marqibo sales milestones and an approval for Menadione, a Phase II topical lotion for the treatment of the skin toxicity associated with epidermal growth factor receptor anti-cancer (anti-EGFR) agents. Spectrum plans to launch Marqibo before early December, with a price point similar to other improved formulations of oncology treatments, like Abraxane, a long-acting, nanotech formulation of paclitaxel, or Doxil, a liposome-encapsulated doxorubicin. Private equity firm Warburg Pincus and hedge fund Deerfield Management recapitalized Talon in 2010, buying at least $69 million in equity in the last three years. - Stacy Lawrence

Pfizer/Sequella: Anti-infective drug specialist Sequella has licensed a mid-stage tuberculosis antibiotic from Pfizer. The privately held Rockville, MD, company acquired worldwide rights to sutezolid, previously known as PNU-100480, for an undisclosed amount. Pfizer previously investigated the oxazolidinone antibiotic in both drug-sensitive and multi-drug resistant tuberculosis, conducting Phase II and pivotal trials in Africa and Russia respectively. Sutezolid complements the Phase II drug SQ109, Sequella’s lead program in Mycobacterium tuberculosis; the company plans to investigate pairing the two in a combination therapy. The 16-year-old company has another TB drug, SQ609, as well as programs in Helicobacter pylori, Clostridium difficile and M. avium paratuberculosis. Sequella traditionally has supported itself by raising capital from hedge funds and other private investors as well as government grants. It also completed a partnership with Maxwell Biotech Venture Fund in 2011, giving the Russian investor territorial rights to SQ109. Pfizer said it is shifting its anti-infective focus from treatment to prevention, and has been seeking to partner drug candidates such as sutezolid. The drug also could be studied in Gram-positive infections such as methicillin-resistant Staphylococcus aureus and vancomycin-resistant Enterococcus, as well as other forms of tuberculosis. – Paul Bonanos

Medtronic/Amgen: Medtronic reps who sell the firm’s interventional spine devices will need to expand their skill set to include drug sales beginning this month. Under a three-year strategic partnership with Amgen, announced July 15, Medtronic will start promoting the biotech's Prolia (denuosumab) to U.S. spine specialists by July 31. Prolia is an FDA-approved biologic for the treatment of postmenopausal women with osteoporosis at high risk for fracture. For Amgen, the deal offers access to Medtronic’s expansive customer base of spine physicians, “who are at the forefront of evaluating and treating women with fractures caused by [postmenopausal osteoporosis],” said Marion McCourt, a VP with Amgen, in a July 15 press release. “This partnership allows us to intervene shortly after an osteoporosis-related fracture has occurred, and encourage therapeutic interventional to help reduce the risk of a subsequent fracture.” The upshot for Medtronic is not as clear cut. Financial terms of the agreement were not disclosed. “This new agreement increases awareness and access to our current base of orthopedic and spine physicians already treating patients with osteoporotic vertebral compression fractures,” said Doug King, president of Medtronic Spine. “Identifying successful treatment options and access to care at the site of service for the growing number of women with osteoporosis at high risk for fracture is our primary objective.” - David Filmore

Royalty/Quest: Quest Diagnostics has divested its stake in the highly-anticipated cancer drug ibrutinib as it continues to refocus its business on information services and simplify its operations. Quest sold the single-digit royalty stream to Royalty Pharma for $485 million, the companies announced July 18. Ibrutinib, an oral Bruton’s tyrosine kinase inhibitor (BTK), is being developed by Pharmacyclics and Johnson & Johnson for the treatment of chronic lymphocytic leukemia, small lymphocytic lymphoma and mantle cell lymphoma. Pharmacyclics submitted an NDA for the drug to FDA on July 10. Earlier this year, the regulatory agency granted the drug its new breakthrough designation, a means of pushing highly-effective drugs through regulatory approval more quickly. The drug is expected to receive a fast track review and could be on the market by early next year. Analysts estimate worldwide peak sales between $2 billion and $3.5 billion. Royalty Pharma buys up royalty streams from other companies – the investment firm has stakes in several of the largest drugs on the market, including AbbVie’s blockbuster rheumatoid arthritis drug Humira (adalimumab), Pfizer’s fibromyalgia pill Lyrica (preagbalin), J&J’s RA drug Remicade (infliximab), Biogen Idec’s recently approved multiple sclerosis pill Tecfidera (dimethyl fumarate), and Merck’s diabetes blockbuster Januvia (sitagliptin). - Lisa LaMotta

Auxilium/Sobi: Auxilium Pharmaceuticals has found a new partner to take over commercialization of its treatment for Dupuytren’s contracture and Peyronie’s disease, Xiapex (collagenase clostridium histolyticum), in Europe after its prior partnership fell through due to slow sales of the drug. Swedish Orphan Biovitrum (Sobi) will take over where Pfizer left off, taking on commercialization of the drug in the 28 EU member countries, Switzerland, Norway, Iceland, 18 Central Eastern Europe/Commonwealth of Independent countries, including Russia and Turkey, and 22 Middle Eastern & North African countries. In exchange for the commercialization rights, Auxilium will receive tiered double-digit royalties on all sales and will be eligible for up to $40 million in milestone payments that are tied to undisclosed sales benchmarks. Pfizer originally signed on to commercialize Xiapex in Europe in 2009. At the time, Pfizer paid Auxilium $75 million upfront, and agreed to pay $150 million in regulatory milestones and $260 million based on undisclosed sales milestones. In addition, Auxilium was to receive increasing tiered royalties based on sales in Pfizer's territories. Pfizer to pull out of the partnership in November 2012, but did not stop promoting the product until the end of March. It will continue supplying the product to physicians until mid-October. - L.L.

Rexahn/University of Maryland, Baltimore: Rexahn Pharmaceuticals has in-licensed a novel drug delivery platform, Nano-Polymer-Drug Conjugate Systems (NPDCS), from the University of Maryland, Baltimore, the company announced July 17. The technology delivers chemotherapeutics directly into tumors, potentially increasing efficacy and reducing toxicity. Rexahn plans to use the technology to develop RX-21101, a preclinical-stage polymer conjugated form of docetaxel. By minimizing the circulating concentration of docetaxel in the blood and maximizing the concentration in the cancer tumor, RX-21101 may increase anti-tumor activity while lowering adverse events. The financials were not disclosed. Rexahn, based in Rockville, Md., has three oncology candidates in clinical development, the lead of which is Archexin, an akt1 inhibitor partnered with Teva Pharmaceutical Industries. - Jessica Merrill

Bausch & Lomb/Mimetogen: Eye-care company Bausch & Lomb has acquired the option to license a Phase II compound for dry eye syndrome from Mimetogen Pharmaceuticals. The compound, MIM-D3, stimulates the production of mucin, which is essential for lubrication of the eye. The drug was shown to be effective and safe in Phase II studies and a late-stage trial is expected to begin before the end of the year. B&L paid Mimetogen an undisclosed option fee and will have the opportunity to pursue development upon Phase III results. At that time, B&L will assume all development costs and will pay Mimetogen development and sales milestones, as well as royalties. Dry eye affects 25 million people in the U.S. alone and tends to affect more people as they age. The global market is currently worth $2.5 billion and is growing at a rate of 10% annually. - L.L.

Alexion/Ensemble: Bringing to a close a week highlighted by Roche’s apparent buyout interest, Alexion signed a drug-discovery collaboration July 18 with Ensemble Therapeutics. Financial terms were not disclosed, but Ensemble gets an upfront payment and research funding, along with potential for development and commercial milestones under the agreement. Ensemble, whose Ensemblin technology platform can produce novel small-molecule candidates to address targets normally addressed by biologic therapies, will screen more than 10 million macrocyles against undisclosed disease drug targets specified by Alexion. Alexion, which focuses on life-threatening, ultra-rare disorders, will have exclusive worldwide rights to develop and commercialize any candidates emerging from the collaboration. Recently hired Executive VP and Head of Global R&D Martin Mackay said this transaction is meant to expand Alexion’s product portfolio. “We seek to broaden the number of pathways toward developing potentially transformative first-in-class drug candidates for patients with selected severe and life-threatening ultra-rare disorders,” he said in a release. - Joseph Haas

Ocera/Tranzyme: Ocera Therapeutics has made its way to the public markets through a reverse merger with the publicly-traded biotech Tranzyme. The new company will focus on developing Ocera’s lead drug, an ammonia scavenger OCR-002 in development for hyperammonemia, the ammonia build-up in the blood when the liver is no longer able to remove toxic substances from the blood. That build-up can cause hepatic encephalopathy, marked by worsening brain function, which eventually can lead to brain swelling, coma and death. Ocera’s investors also committed $20 million in a private placement financing, cash that will see the company through most of a Phase IIb trial testing OCR-002. Becoming a publicly-traded company wasn’t the impetus for the transaction, however, CEO Linda Grais said. “The strategic rationale was really the strength of the combined management team, particularly bringing the clinical development team from Tranzyme together with the program from Ocera,” said Grais. “We realized that this was a team that would take us a long time to build from scratch.” Though Tranzyme’s research was focused in gastrointestinal disease, its Research Triangle Park, NC, team led by Chief Medical Officer Franck Rousseau has extensive experience in liver disease. Before joining Tranzyme, he worked at Gilead asTherapeutic Area Head, Hepatic Diseases and VP Clinical Development. Tranzyme ran into trouble in 2012 when a Phaes III trial in postoperative ileus on lead drug TZP102 failed to meet its primary and secondary endpoints. It began reviewing strategic options early this year. - J.M.

Photo credit: Wikimedia Commons

Friday, July 12, 2013

Deals of the Week: Is Botox On The Block?

Allergan Inc., the maker of blockbuster Botox (onabotulinimtoxinA), might be the next megadeal candidate for Big Pharma buyers. The specialty pharma and medical device maker’s market cap has taken a couple of big hits in 2013, dipping nearly 30% between mid-April and late June. That’s led to speculation, including a recent Bloomberg report, suggesting that interested buyers might want to move quickly while its stock price is depressed.

Neither of Allergan’s two primary setbacks was related to its Botox franchise, which brought in revenues of $1.8 billion in 2012 for both its cosmetic and non-cosmetic indications. The drug is known best for its wrinkle-remedying properties, but 52% of Botox sales last year were for other indications, including migraine prevention, overactive bladder, spasticity and underarm sweating. Botox accounted for roughly 30% of Allergan’s $5.7 billion in sales overall, and about 36% of its pharma revenue. (About a sixth of Allergan sales come from the device side, which includes cosmetic implants and obesity treatments such as Lap-Band.)

Rather, Allergan’s stock price has dipped for reasons related to a separate migraine drug and an eye-care product. In April, its inhalable Levadex (dihydroergotamine) for migraine received a second dreaded “Complete Response” letter from FDA, further delaying Allergan’s attempt to grab a larger share of the non-triptan migraine drug market with a convenient formulation. (Allergan recently bought out MAP Pharmaceuticals Inc., the manufacturer of Levadex and its dose-metering canister, for $884 million.) And last month, FDA said it wouldn’t require human clinical trials on generic competitors to dry-eye medication Restasis (cyclosporine), an $800 million drug facing patent expiration in  2014. That could lead to lost sales much sooner than previously expected.

While the setbacks raised some analysts’ doubts about Allergan’s long-term growth, the company still has a lot going for it. “Allergan could represent an attractive opportunity – a good, but recently diminished pipeline, a growing emerging markets strategy, a better cash-pay mix in the U.S. than traditional pharma, and some very durable franchises, such as Botox,” wrote BMO Capital Markets’ David  Maris in a June 25 note.

Allergan’s largest business segment is eye care, which generated $2.7 billion in revenue last year largely on the strength of dry eye remedies and glaucoma treatments. Given the recent pharma interest in ophthalmology, particularly around such areas as age-related macular degeneration and diabetic macular edema, its eye care specialty could prove appealing.

Many companies are sitting on large piles of cash, but few could match Allergan’s current market capitalization of about $26.5 billion, let alone the premium they’d owe to buy it outright. Past megabuyouts have included both stock and cash components. Pfizer Inc. paid $44 billion in cash for Wyeth, representing about two-thirds of the deal’s total value, while other mega-mergers have been weighted in favor of stock components. Merck & Co. Inc.’s $42 billion acquisition of Schering-Plough Corp. featured roughly 56% in equity, while Johnson & Johnson’s $21.7 billion deal for Synthes Inc. was tilted about 65%/35% in favor of stock.

At a price sure to exceed $30 billion, who might be interested? GlaxoSmithKline PLC already sells Botox in China and Japan, and could strike; it was rumored to be interested in buying out Allergan four years ago as well. And Merck was said to be in the running for Bausch & Lomb Inc. before Valeant Pharmaceuticals International Inc. swooped it up for $8.7 billion in May. Merck shares Allergan’s interests in ophthalmology, allergy medicines, and migraine as well as other areas of neurology.

Allergan was even sold once before, way back in 1980, when Deals of the Week was but a mimeographed note delivered via carrier pigeon. According to a Los Angeles Times story from back in the day, SmithKline Corp. acquired it for the princely sum of $259 million, built its revenues all the way up to $80 million in 1988, then spun it out in the summer of 1989. Those were the days. - Paul Bonanos

We hope you spend the weekend reminiscing about your salad days too, but before you step out into the summer afternoon, take a look back at...

Amgen/Servier: A complex partnership between Amgen Inc. and Servier SA, with rights to compounds going in both directions, likely will provide the California  biotech with a quick entry into the cardiovascular therapy market. The move comes several years before Amgen hopes to launch AMG 145, a Phase III monoclonal antibody in development for hyperlipidemia. In the collaboration, announced July 9, Amgen obtains U.S. commercial rights to  the French company’s Procoralan (ivabradine), a novel, oral drug with utility in stable angina and chronic heart failure. Procoralan was approved in Europe in 2005 and now is marketed in more than 100 countries, but the privately-held Servier  never filed for its U.S. approval. The drug’s sales rose healthily after Servier garnered a second indication last year in chronic heart failure, tallying about $280 million in net sales in 2012, roughly a 30% increase over 2011 totals. Amgen soon plans to file an NDA for ivabradine, relying strongly on the filings Servier compiled for the EU registration. The biotech will pay a $50 million upfront for the U.S. rights to the drug, and Servier also could earn undisclosed milestones and royalties related to ivabradine. The U.S. firm also gets an option to develop and commercialize a second heart failure compound, S38844, in the U.S. Little is known about the Phase II candidate, with Amgen volunteering only that it shares a “similar” mechanism of action to ivabradine with potential for once-daily dosing. Meanwhile, Servier obtains European commercialization rights to Amgen’s Phase II heart failure compound omecamtiv mecarbil. No terms around S38844 or omecamtiv were disclosed. - Joseph Haas

Forma/Cancer Research Technology: Forma Therapeutics Holdings announced also on July 9 a collaboration with Cancer Research Technology Ltd., the for-profit arm of Cancer Research UK, to discover drugs that target a large protein family with implications in the broad and emerging field of protein homeostasis. As Forma and CRT advance compounds that target deubiquitinating enzymes, they will create separate corporate entities to house the drug candidates and their intellectual property. No financial details were released, but the new partners said that the separate entities, which Forma has dubbed Asset Discovery and Development Companies, or ADDCos, would be wholly owned subsidiaries of Forma. CRT would take no equity stake, but it is eligible for performance milestones and a share of revenue as the compounds progress. Forma will pay research costs. CRT has named five principal investigators to shepherd the collaboration from among its network of researchers, all of whom are at least partially funded by the private charity Cancer Research UK. The ADDCo structure is a twist on the asset-financing model gaining popularity in biotech, as investors look to place bets on specific products without having to support research infrastructure. Forma says it would like to sign up other academic groups for similar arrangements. - Alex Lash

Immunocore/GlaxoSmithKline: Immunocore has scored a second high-profile partner in as many weeks through a deal inked with GlaxoSmithKline. The UK-based biotech will receive £142 million ($210.7 million) in preclinical milestones across several targets as well as £200 million ($296.7 million) in development and commercial milestone payments for each target that reaches the market, plus double-digit royalties on sales. Immunocore develops ImmTACs, a new class of bispecific therapeutic proteins that consist of high-affinity T-cell receptors linked to an antibody fragment, anti-CD3, which activates the immune system. T-cell receptors recognize intracellular changes that occur, and Immunocore’s ImmTACs are designed to target and destroy cancer cells without affecting healthy cells. Cancer immunotherapy has become a hot space of late with several Big Phramas putting a lot time and money behind programs in this space. Two weeks prior to the GSK tie-up, Immunocore signed its first significant partner in Roche’s Genentech. In that arrangement, Immunocore will receive an upfront payment of $10 million to $20 million for each program, as well as $300 million in development and commercial milestones related to each target and tiered royalties. - Lisa LaMotta

Array/Loxo: Array BioPharma has added to its laundry list of partners for its oncology platform, with the addition of Loxo Oncology, a venture-backed start-up that is centering its resources around an Array asset. According to the companies, Array will handle preclinical development of an undisclosed oncology target in exchange for an equity stake in Loxo, as well as the potential for $434 million in milestone payments and eventual royalties on any products that result. Loxo was founded in May 2013 by Josh Bilenker, a partner in Aisling Capital, a life science venture firm headquartered in New York. Aisling currently is investing out of its $650 million third fund. Array has done a number of deals around its platform resulting in more than 11 clinical candidates, eight of which are in Phase II/III. The company uses the funds garnered through upfront payments and milestones to fund the development of its two wholly owned programs: ARRY-520 for multiple myeloma and ARRY-614 for myelodysplastic syndrome. ARRY-520 is in Phase II and Array intends to announce its plans for pursuing approval before the end of the year. The company also is finishing up Phase I trials of ARRY-614 and intends to make a decision regarding proof-of-concept trials by the end of 2013. - L.L.

Chiesi/uniQure: Chiesi Farmaceutici and uniQure BV announced on July 9th a co-development and commercial deal in which Chiesi will sell Europe’s first approved gene therapy, Glybera (alipogen tiparvonvec) for the ultra-orphan monogenic disease lipoprotein lipase deficiency and another uniQure gene therapy, now in Phase I/II for hemophilia B, in Europe and selected emerging markets. UniQure retains commercial rights on both products in the U.S., Japan, parts of Latin America and Asia, and Australasia. The deal paves the way for an emerging field that has been long in the making and is only now beginning to deliver on its early promise. Chiesi will pay uniQure €17 million ($21.8 million) in upfront cash and will make an equity investment of $18 million. It will also pay royalties ranging from 20%-30% over time on both products. In addition, Chiesi will fund and collaborate on the remaining clinical program for the hemophilia B product. Chiesi’s investment triggered the conversion into new uniQure shares of $18.1 million in outstanding convertible debt that uniQure raised last May from Coller Capital and other investors. Chiesi, an acquisitive and innovative midsize Italian pharma, has recently increased its focus on rare diseases in addition to its respiratory and hospital products franchises. Armed with a fresh infusion of $58 million in total equity and collaborative funding, uniQure’s immediate task, according to CEO Jörn Aldag, is twofold: develop its substantial pipeline of gene therapy programs and build out commercial infrastructure especially in North America in preparation for FDA approval of Glybera. Longer range, the company must pioneer the pricing for an unprecedented therapeutic modality so that it can build a sustainable company and reward its investors. - Michael Goodman

Vivus/Menarini: While it waits for results from a contentious proxy contest, Vivus Inc. is still striking deals. The company is still fending off a challenge centering on its marketing plan for weight-loss drug Qsymia (phentermine and topiramate), but it’s found a partner for erectile dysfunction treatment Stendra (avanafil). Italy’s Menarini Group agreed July 9 to pay €16 million ($21 million) to obtain Stendra’s rights in Europe, Australia and New Zealand, although Vivus says it expects another €23 million during the first year of the deal. Milestone payments could add €79 million to the deal, which also includes a provision under which Menarini will pay Vivus’ obligations to Mitsubishi Tanabe Pharma Corp. and a ten-year supply agreement. Menarini already markets premature ejaculation drug Priligy (dapoxetine) in Europe, and says it will field a sales team of 1,350 representatives for Stendra. The Italian company plans to conduct a commercial launch in early 2014. Stendra is a phosphodiesterase-5 inhibitor in the same class as Viagra (sildenafil citrate). Top Vivus shareholder First Manhattan Co. is challenging company leadership, which elected not to choose a marketing partner as it launched Qsymia, a slow seller in danger of being eclipsed by Eisai Co. Ltd. and Arena Pharmaceuticals Inc.’s rival drug Belviq (lorcaserin) despite a first-to-market advantage. - P.B.

Mitsubishi/Medicago: Mitsubishi Tanabe has been a small stakeholder in Canadian vaccine developer Medicago Inc. for a couple of years, but the Japanese pharma now plans to acquire 60% of the company. In a deal announced July 12, Mitsubishi said it would pay C$1.16 per common share, a 22% premium to Medicago’s July 11 closing price, to obtain the majority stake. The deal has a maximum price of C$179 million ($172.6 million); Philip Morris International Inc. will retain the 40% of Medicago shares it currently owns. Mitsubishi Tanabe has held a 6% share in Medicago since 2011, and the companies signed a deal in March 2012 to collaborate on vaccines – including rotavirus – using Medicago’s virus-like particles. Medicago announced June 20 it successfully produced a rotavirus vaccine based on virus-like particles (VLP) that comprised all four rotavirus antigens and filed an international patent application for the product, claiming it was the first time for a rotavirus VLP to be produced in plants. Medicago’s lead compound is an H5N1 vaccine currently in Phase II development that uses plant technology instead of egg-based or cell production, followed by a quadrivalent seasonal influenza vaccine in Phase I. Medicago has a rabies vaccine in preclinical development as well as an undisclosed target in collaboration with a top 10 pharma, according to the company’s pipeline. - Dan Poppy

Thanks to Flickr user vancouverlaser for the Botox shot, reproduced under Creative Commons license.