Friday, August 30, 2013

DOTW Looks At How 2013 Biotech Deal Stats Stack Up After Amgen/Onyx

Quick! What's large and vanilla and a late summer treat?

It’s the last week of summer, and while one might expect business development pros would have turned on their out-of-office auto-replies, the drug industry’s execs were too busy closing deals to be bothered with the beach or other lazy summer pursuits.

We should have known biopharma’s summer had ended early the moment Amgen Inc. and Onyx Pharmaceuticals Inc. announced they had finally negotiated a takeover Aug. 25, before the market even had a chance to wake up Monday morning. The deal left us wanting in some regards: no cliff hangers, juicy tidbits or surprise white knights emerged. But while nothing about Amgen’s acquisition of Onyx astonished (not the buyer, the seller, the rationale or even the final $125 per share purchase price, which ultimately landed squarely in the middle of where most industry watchers thought it would), biotech mega-deals just don’t happen every day.

We couldn’t help but get excited about it, especially wondering how significantly the addition of Onyx will impact Amgen's ambition of becoming a leading oncology player.

The acquisition price of $10.4 billion makes Onyx Amgen’s largest acquisition in over a decade. The amount is $800 million less than the staggering $11.2 billion Gilead Sciences Inc. paid for Pharmasset Inc., a deal that had everyone talking in 2011.

Unlike Onyx, Pharmasset had no commercial products, but presented an opportunity to transform Gilead with its potential best-in-class hepatitis C drug. Onyx may not end up being as transformative to Amgen’s top-line over the long-term as Pharmasset could be to Gilead, but the merger is still a notable moment in biotech and it will go a long way toward raising the industry’s 2013 merger stats, which were stark before high summer kicked into gear.

In addition to Amgen/Onyx, the busy summer deal sweep included two biotech acquisitions by Cubist Pharmaceuticals Inc. in the antibiotic space and Perrigo Co.’s takeover of Elan Corp. PLC. Those four deals gave a significant boost to the 2013 tally of U.S. public biotech acquisitions, which was in a drought for the first six months of the year. All-in-all, six U.S. public biotech acquisitions with a value over $100 million have been announced in 2013; four of those took place in July and August, according to Elsevier’s Strategic Transactions database. In comparison, there were a total of seven U.S. public biotech take outs announced in 2012 and six in 2011.

The hefty values of Amgen/Onyx and Perrigo/Elan lifted the average deal value in 2013 to $3.51 billion, well above the average deal value of $2.07 billion seen in 2012. Excluding those two mega-deals, however, the average deal value through August would be a comparatively meager $592.5 million. The four remaining biotechs that have been acquired play in niche commercial markets like antibiotics (Trius and Optimer) or fish oil (Omthera).

In comparison, of the seven acquisitions announced in 2012, five were valued at over $1 billion, reflecting more acquisitions in broader commercial markets like cancer, diabetes and autoimmune disease.

The summer may be winding down, but the last few months of the year are always a busy time for deal-making. There is sure to be more industry consolidation on the way, perhaps even Bristol-Myers Squibb Co. will buy Shire PLC. Just wait until after Labor Day weekend, okay? -- Jessica Merrill

Lilly/Zealand: Zealand Pharma AS has entered into a research and development agreement with Eli Lilly & Co. to design and develop potentially novel therapeutic peptides for Type 2 diabetes and obesity that the U.S. drug maker has discovered. The Danish group and says the collaboration could last more than 15 years and may eventually expand to other disease areas. Under the multi-target collaboration, announced Aug. 29, 2013, the duo will share in the funding, risk and reward of the program. No clinical details were given nor financial terms disclosed. But Zealand’s CEO David Solomon said the peptide therapeutics the two will be exploring are not glucagon-like peptide-1 (GLP-1) agonists, nor sodium glucose co-transporter 2 (SGLT-2) inhibitors, nor a dipeptidyl peptidase-4 (DPP-4) inhibitors, but rather a potentially whole new class of diabetes treatments. It’s the latest in a number of partnerships that the Copenhagen-based biotech has with Big Pharma. Eli Lilly said their project will revolve around a novel peptide hormone-based approach that its scientists discovered and which has the potential to lower blood glucose as well as body weight. -- Sten Stovall

Endo/Boca: It’s not a big surprise that Endo Pharmaceuticals Inc.’s first business development play under its new leadership was on the generics side. New CEO Rajiv de Silva has been talking up the company’s existing generics business Qualitest as an important growth driver as its branded business confronts generic competition. The company announced plans Aug. 28 to acquire mid-sized generic manufacturer Boca Pharmacal for $225 million. Qualitest is known for its strong capabilities in controlled substances. It leads the U.S. market in liquids manufacturing and was the sixth largest generics company in the country at the end of 2012, according to IMS Health. Florida-based Boca will add to the portfolio with generic forms of products like low-strength generic form of the hydrocodone drug Xodol. The company also produces generics of the inflammatory pain reducer Disalcid (salsalate) and the anti-anxiety medication Xanax (alprazolam). Endo will need to deliver more business development deals if it is to make up the revenues that will be lost from sales of its best-seller, the pain patch Lidoderm (lidocaine), in September. -- Lisa LaMotta

Akorn/Hi-Tech Pharmacal: Continuing the theme of generic consolidation, ophthalmology-focused Akorn Inc. announced plans Aug. 27 to increase its portfolio, pipeline and manufacturing capabilities by purchasing Hi-Tech Pharmacal Co. Inc. for $650 million. The deal will bring a broad range of generic, prescription and over-the-counter products, including eye drops, and render Akorn the third-largest generic ophthalmology drug firm in the U.S. CEO Raj Rai predicted the acquisition would increase the specialty pharma’s annual revenues to above $500 million, be immediately accretive and yield run-rate synergies of between $15 million and $20 million within 12 months of closing. Akorn reported sales of nearly $151 million for the first six months of 2013. The purchase price amounts to $43.50 per share for Hi-Tech, a 23.5% premium over its closing price on Aug. 26. Akorn says it will fund the purchase with cash and about $600 million in borrowing. The deal is small compared to some recent ophthalmology transactions. Most recently, Valeant Pharmaceuticals International Inc. grabbed headlines in late May with an $8.7 billion debt-and-equity deal to purchase ophthalmology giant Bausch & Lomb Inc. -- Joseph Haas

MedImmune/Amplimmune: Integrating Amplimmune Inc. into AstraZeneca PLC’s MedImmune LLC subsidiary shouldn’t be too much of a headache. The companies are neighbors in a Gaithersburg, Md., office park. Maybe it was only a matter of time before this deal got done. AstraZeneca, vaulting for a business turnaround, has been on a quest to fix its problems through business development. Its acquisition of Amplimmune for $225 million, announced Aug. 26, will bring the company an anti-PD-1 antibody for cancer nearly ready for the clinic. Privately held Amplimmune’s shareholders also could earn up to $275 million in development milestones as part of the transaction, expected to close during the third quarter. The milestones mainly will be tied to AMP-514, which should be ready for an IND filing in October. The acquisition offers a healthy return on investment for Amplimmune’s shareholders. The company was founded in 2007 with a $20 million Series A round from InterWest Partners LLC and the Wellcome Trust. Since then it has financed its operations with a pair of deals. In 2010, it got $23 million upfront from GlaxoSmithKline PLC for exclusive worldwide rights to AMP-224, an Fc-fusion protein of the B7-DC ligand now in Phase I/II study in cancer. Earlier this year, the biotech licensed the Phase I-ready B7-H4 fusion protein AMP-110 for autoimmune indications to Japan’s Daiichi Sankyo Co. Ltd. for an undisclosed option fee and research funding. AMP-514 is the key to the transaction, but MedImmune also values Amplimmune’s preclinical molecules targeting the B7 pathways. -- J.H.

Sangamo/Ceregene: Gene therapy developer Sangamo BioSciences Inc. is strengthening its expertise in the field with the addition of Ceregene Inc.’s adeno-associated virus technology platform. The company announced plans to acquire Ceregene in a stock transaction Aug. 26; Sangamo will issue 100,000 shares to Ceregene shareholders. Sangamo has also agreed to pay milestone payments related to the two Phase II programs that Ceregene brings. The lead program, CERE-110, uses AAV technology to deliver nerve growth factor (NGF), a naturally occurring protein that maintains survival of nerve cells, to the region of the brain that contains the majority of cholinergic neurons. The goal is to restore and preserve nerve function in an area of the brain thought to play a significant role in cognitive function and memory in patients with Alzheimer’s disease. A Phase II study of the drug is expected to report out in 2014. -- L.L.

Chiesi/Zymenex: With the ambition of building a standalone rare disease business, Italy's mid-sized pharma Chiesi Farmaceutici SPA will acquire Danish biotech Zymenex AS, the firms announced Aug. 26 The Parma-based company already markets medicines for cystic fibrosis and neonatal lung disease, and last month became pioneers in the marketing of gene therapy products in Europe by licensing uniQure BV’s Glybera (alipogene tiparvovec). The company’s interest in Zymenex lies in its recombinant enzyme replacement therapy Lamazym (rhLAMAN), which is being studied in a 25-patient Phase III trial for the treatment of the ultra-rare lysosomal storage disease, alpha-mannosidosis. The experience of Zymenex's researchers in developing other rare disease drugs could be useful to Chiesi's continuing push into the sector. In 2008, Zymenex sold a Phase II enzyme replacement therapy, Metazym (arylsulfatase A), to Shire for $135 million. Although the financial terms of the current deal were not disclosed, Zymenex’s majority shareholder, Danish VC firm Sunstone Capital, undoubtedly welcomed the opportunity to make a further return on its investment. -- John Davis

Meda/Acton: Swedish specialty pharma Meda AB is buying Acton Pharmaceuticals Inc. to get the privately held group’s Aerospan inhaler for treating asthma, approved by FDA in September 2012 and poised – pending satisfying further manufacturing requirements – for a U.S. launch in early 2014. Meda, which describes itself as the world’s 50th largest drug company, is paying $135 million plus a potential milestone payment of $10 million and royalty based milestones to buy the Marlborough, MA-based company. The Swedish group has its own respiratory portfolio and views Aerospan, which contains the active substance Flunisolide, as a promising addition in its quest for share of the $2 billion U.S. market for inhaled mono-corticosteroid asthma products. Meda aims to close the takeover by the end of 2013, and predicts Aerospan under its guidance will generate at least SEK2 billion ($300 million) in revenue within five years. A respiratory-focused development company with no products yet on the market and only nine employees, Acton was founded in 2008 and is owned by private equity group Sequoia Capital and the group’s executive management. A perpetual licensing agreement with Forest gives Acton exclusive global rights to develop and market Aerospan. Acton also has exclusive U.S. rights to Sanofi’s FDA-approved aerosol nasal allergy treatment Nasacort HFA (triamcinolone acetonide). Neither Meda nor Acton would comment on what the takeover of Acton would mean for that arrangement. -- S.S.

Teva/Rexahn: It appears Rexahn Pharmaceuticals Inc.’s solid-tumor therapy RX-3117 is at least one casualty of new leadership and changing priorities at Israel’s Teva Pharmaceutical Industries Ltd. The two companies terminated a 2009 collaboration centered around the drug after Teva declined to exercise its option on the product. Rockville, Md.-based Rexahn now has all rights to the compound, which inhibits DNA and RNA synthesis and induces apoptosis. Teva submitted an IND for the drug last month, as dictated by the now-defunct partnership’s terms. Teva said RX-3117 no longer fits its oncology strategy, despite harboring some potential. The decision is in line with statements Teva’s new CEO Jeremy Levin has made about narrowing Teva’s focus in oncology. Teva made an up-front payment of $3.5 million to Rexahn in the form of an equity investment four years ago, then made multiple equity investments over the course of the partnership as RX-3117 advanced through pre-clinical trials. It had acquired an equity stake of 6.3% by July 2013. Teva also unwound a four-year-old biosimilars agreement with Lonza Group Ltd. last month. -- Paul Bonanos

flickr image courtesy Chiot's Run under creative commons license. Holy ice cream headache, batman.

Friday, August 23, 2013

Financings of the Fortnight Checks The Corporate Venture Numbers

How important is corporate venture capital right now to the life sciences? That’s one of the key questions in this year’s START-UP Life Science VC survey, the results of which will be published in a few weeks.

When asked about themselves, corporate VCs mainly said they were important (77%), and the rest (23%) minority said they were crucial. Not exactly unexpected.

But traditional life science VCs were right there behind their corporate counterparts. 22% said CVC was crucial and 69% said important. Of the rest, 7% agreed with the statement “It’s of growing importance but will be relegated to the sidelines once traditional VC returns,” and 2% said CVC was insignificant.

That’s even more glowing than what institutional VCs said in the 2012 survey. Here are the institutional VCs' answers in 2012 and 2013:

Click to embiggen.
 Corporate investors’ Q ratings are going up at the same time their wallets are opening. According to the National Venture Capital Association and PricewaterhouseCoopers, 18.3% of biotech deals in 2010 and 2011 combined had CVC participation, accounting for 8.0% of biotech venture dollars. The average investment per round was $4.0 million.

In 2012, the average investment per round jumped 20%, to $5.0 million, and 19.5% of all biotech deals had CVC participation. The share of CVC dollars was 10.9%. Tack on the first half of 2013, and the last 18 months continue along those lines: corporate venture was involved in 19.2% of all biotech venture deals from the start of 2012 through June 2013, and their dollars accounted for 10.1% of all biotech venture. The average amount of participation per round was $4.9 million.

We’re not just tracking the corporate venture story for biopharma. Here’s a story that looks at the growing influence of hospitals and insurers in health care venture; and here’s one that examines the flow of corporate venture to medical device start-ups. Those sectors have also seen an increase in corporate venture dollars, according to the NVCA. (You can download all their corporate venture reports here.)

With all the IPO activity this year, we’ll also be able to update another corporate venture story we track closely: the financial returns of start-ups with corporate investors on board. Look for an update of those numbers this fall or early winter. Last time we checked was October 2012, and we found that biotechs with corporate venture backing averaged a 1.6x step-up at IPO, slightly lower than the 1.8x for those without corporate investors. That’s the opposite of what we uncovered for acquisitions: corporate-backed biotechs fare better when selling, with an average 4.3x step-up, compared with those without (3.5x).

Is this the reality from now on? As one VC said in the survey comments, “It wasn't all that long ago that corporates were the last folks you'd call to raise money, and you'd only do so if you were desperate or if they were willing to pay up."

It's hard to imagine traditional VC roaring back to fill the early stage coffers of platform and early technology companies, a niche the corporates have begun to claim (more on that in the upcoming survey). But overall, let's not forget that even with this apex, CVC participates in one of five biotech venture rounds. There's a long way to go before corporate venture dominates the landscape the way, say, the freely available bi-weekly biotech financing roundup is dominated by...

Retrophin: Martin Shkreli’s fledgling biotech got another injection of capital on August 16 when the company tapped new and existing institutional investors for a $25 million PIPE (private investment in public equity) financing. Retrophin sold approximately 5.6 million shares of common stock and warrants. The company conducted a similar financing in February, issuing 3,333,332 shares of common stock and warrants to purchase an additional 1,530,559 shares of common stock, which resulted in $10 million in proceeds. The new PIPE proceeds will help advance the company’s early-stage pipeline. Proceeds will also help license an autism treatment from an undisclosed major pharmaceutical company. None of the programs in Retrophin’s pipeline have made the advancements the 30-year-old Shkreli has been promising since the company’s inception a few years ago.
A Phase II pivotal study of RE-021, its lead compound, was intended to begin in early 2013 for the treatment of focal segmental glomerulosclerosis but has yet to enroll patients, and timelines continue to be pushed back. The company has yet to conduct any clinical trials in humans for any of its compounds, but has released what it believes to be promising data from studies in mice. Shkreli started the company after leaving his hedge fund MSMB Capital, which he started in 2000. He wasn’t shy about making waves as a hedge-fund manager, such as when he led an activist shareholder battle against AMAG Pharmaceuticals in 2011. Shkreli and his fund pushed for the ousting of the company’s management should the merger with Allos Therapeutics take place; the issue was dropped when the merger failed. – Lisa LaMotta

Sophiris Bio: It wasn't pretty, but the Canadian-American biotech raised $65 million in an initial NASDAQ listing after nine years of being public on the Toronto Stock Exchange (TSE). The funding is expected to take it through 2015, including top-line data by the end of 2014 for a Phase III trial of lead candidate PRX302 (topsalysin) that's slated to start this half. PRX302 is a genetically modified protein to treat benign prostatic hyperplasia (BPH), also known as an enlarged prostate. Activated by prostate specific antigen (PSA), PRX302 binds to the GPI-anchored receptors on the cell surface of prostate cells. It induces cell death once activated. This, in turn, can relieve BPH-associated lower urinary tract symptoms such frequent and urgent urination, as well as a higher risk of urinary tract infections, urinary stones and bladder damage. Existing shareholders, including Tavistock with its 30.5% pre-IPO stake, committed to buy about $22.4 million worth in the offering. Other existing investors include Warburg Pincus (27.8%) and BC Advantage (6.6%). To lift its share price ahead of the offering, Sophiris executed a 52-1 reverse stock split on August 9. By August 14, that put its share price on the TSE at US $8.32. The offering priced at US $5 per share and sold 13 million shares on August 15; that's well below the last price on TSE. It had planned to sell only 5 million shares, when its TSE shares were each about US $13. In 2011, Sophiris moved its headquarters to San Diego from Vancouver, BC. – Stacy Lawrence

Regado Biosciences: The IPO window may be wide open for life sciences companies, but that doesn’t mean going public is always easy. Anticoagulant developer Regado scaled down expectations for its August 21 listing, finally pricing at just $4, far below its anticipated $14 to $16 range. The company sold 10.75 million shares in the offering, more than twice its original goal of 5 million, but still raised $43 million rather than the $75 million it hoped to take in. Regado will use the funds for a Phase III study of lead program REG1, a two-component anticoagulant used during heart surgeries. The therapy includes a therapeutic aptamer, pegnivacogin, and a control agent called anivamersin that reverses the aptamer’s effects. Physicians use the combination to balance the risks of ischemic events and excessive bleeding that can occur during percutaneous cardiac interventions. Shareholders in the Basking Ridge, N.J. company include Russian investment firm Rusnano, Fastenal Co. founder Robert Kierlin, Domain Associates, Edmond de Rothschild Investment Partners, Aurora Ventures, Quaker BioVentures and Baxter International Inc. Insiders purchased nearly $31.7 million worth of the shares sold in the offering, well more than 50%. – Paul Bonanos

Tigercat Pharma: The third project in the hands of Velocity Pharmaceutical Development Corp., the CMEA Capital-funded operator of virtual companies, now has a name. Tigercat Pharma was founded last year to study VPD-737, also known as serlopitant, as a treatment for chronic itching, or pruritis. Velocity and partner investor Remeditex Ventures of Dallas have since invested an undisclosed amount in it. A January regulatory filing suggests that Tigercat plans to raise up to $15 million, but at that time it had taken in $500,000 from a single investor. Tigercat licensed serlopitant from Merck & Co. Inc., which previously studied the neurokinin-1 receptor antagonist for overactive bladder. A clinical trial showed that it was no more effective than Pfizer Inc.’s Detrol (tolterodine) in treating the disorder, although it was well-tolerated by patients. Tigercat joins Spitfire Pharma Inc., Corsair Pharma Inc. and an as-yet-unnamed program among Velocity’s projects, funded by Velocity Pharmaceutical Holdings and operated by Velocity Pharmaceutical Development employees. Spitfire has VPD-107 for type 2 diabetes, and Corsair has VPD-380 for a pulmonary indication; neither has been tested in humans. (We’re guessing that the fourth project will also be named for a fighter aircraft, and we’re guessing it won’t be Fokker.) Velocity and Remeditex separately pledged to explore investment opportunities jointly. Regionally-focused Remeditex has confined its investments to Texas and Colorado previously, but expects to broaden its reach with the deal. – P.B.

What If Deals Of The Week Had A Party And Nobody Showed Up?

What if they had a week and no biopharma deals happened? We’re not quite at that point but it has been slow-going, to put it mildly, on the deal-watching front.

Did everybody go on vacation all at once? Well, your trusty correspondent got back from his time off about two weeks ago and Deals of the Week has a schedule to keep. Let’s see what activity we can find.

There have been a few deals the week of Aug. 19, although none of the blockbuster sort or even all that close (see below). In fact, deal rumors may have outnumbered actual signed deals this week – they certainly set more tongues wagging. The biggest news in business development and M&A likely was renewed speculation that rare disease specialist Shire might be a buyout target for big pharma. The rumor gained in plausibility coming on the heels of Perrigo’s $8.6 billion acquisition of Elan on July 29 for the primary purpose of benefiting from Irish tax laws.

Focused on over-the-counter products, nutritionals and generic drugs, Perrigo bought out Elan largely for its appealing tax structure, as well as the royalties it earns from multiple sclerosis blockbuster Tysabri (natalizumab). Because Perrigo is merging with Dublin-based Elan, rather than just moving to Ireland, the new combined company will be able to take advantage of that country’s tax rates, which are considerably lower than those in the U.S.

On Aug. 15, Perrigo held its first earnings call since the transaction, saying that its expectations for increased global business are expected to offset slowing U.S. revenues in its OTC business. The company reported overall record net income of $967 million for its fourth quarter, a 16% increase from the year-ago period, and income of $3.5 billion for its fiscal 2013, which ended on June 30, a 12% increase from 2012.

While sales for its consumer health care business, which includes OTC drugs and pet-care products, grew 16% to $562.4 million for the quarter, Perrigo executives said during the call that sales in some OTC categories are slowing, a trend that likely will continue. Perrigo’s nutritionals sales, comprising supplements and infant formula, reached $150 million, an 11% increase year-over-year, with all categories within the segment growing and new product sales reaching $7 million.

It’s unclear whether Bristol-Myers Squibb, said to be reprising its interest in acquiring Shire, would be looking for tax advantages – Shire is headquartered in Ireland, as well, but also maintains corporate offices in Philadelphia and Cambridge, Mass.

Industry analysts on Wall Street and in London have said the pharma’s main interest might be Shire’s business model of producing and selling high-priced drugs for small specialist populations that discourage generic competition because they are hard to make and extremely targeted. However, if Bristol bought Shire, Irish tax rates would apply to any existing Shire products sold by Bristol and it likely could use the Irish rate on future products of its own, resulting in a reduced, blended tax rate for its overall business.

Shire has pursued an interesting business development strategy, using small to mid-sized acquisitions, particularly of companies with late-stage or commercial assets, to transform itself. The centerpiece of this strategy was the 2005 buyout of Transkaryotic Therapies that led to the establishment of its growing Human Genetic Therapies division and became a primary competitor to Sanofi’s rare-disease subsidiary Genzyme.

In an effort to build a franchise around bio-engineered skin-substitute product Dermagraft, Shire bought out Advanced BioHealing for $750 million in 2011, but to date that deal has not succeeded greatly in growing the Regenerative Medicines unit. On July 25, Shire announced that sales of Dermagraft, the primary motive for the acquisition, declined 57% to just $22 million during the second quarter.

Overall, however, the company reported sales growth of 7% during the quarter and said it was on track for double-digit full-year sales growth as it had projected.

Recently, it was reported that Shire has hired Lazard as a financial investor to assist it if a hostile takeover bid emerges. Bristol reportedly was going to offer nearly $17 billion to purchase Shire this past May. Shire’s share price has been trending up lately, nosing over the $100 mark on July 11 and continuing to incline. The stock closed trading Aug. 21 at $114.02, undoubtedly helped by the new rumors of possible takeout interest.

While DOTW waits for that potential story to percolate, we point you to these actual transactions that occurred over the past week:

Shire/Santaris: Meanwhile, Shire transacted some actual business, announcing an extension Aug. 23 of its strategic alliance with Santaris Pharma to discover and develop RNA-targeted therapies for rare diseases. Specific financial terms were not disclosed. Under the original deal, signed in 2009, Santaris has been using its proprietary Locked Nucleic Acid (LNA) platform to discover and begin development of preclinical oligonucleotides against rare genetic disorder targets selected by Shire. Shire paid $6.5 million upfront for access to the technology along with research funding and $13.5 million for completion of early studies in the original deal, which specified five targets. Santaris also was eligible for up to $72 million in milestones for each program, plus sales royalties on any product reaching the market. The revised deal adds an undisclosed number of additional targets to the collaboration. Santaris gets upfront cash and research funding, and again can earn milestones and royalties if a product derived from the target research gets to market. As with the initial agreement, Shire holds worldwide development and commercialization rights to any resulting compounds.

Adimab/Celgene/Innovent: Less than a month after antibody-engineering firm Adimab signed a pair of non-exclusive R&D partnerships with GlaxoSmithKline and Biogen Idec, the New Hampshire biotech struck again, announcing a pair of deals Aug. 20. This time, Adimab has signed discovery partnerships with Celgene and Innovent, again to generate therapeutic antibody candidates against multiple targets. The July deals brought Adimab’s total to 19 partners, including a “who’s who” of big pharma and big biotech, and the company said it expects to sign at least three tech-transfer deals a year through 2015. However, the deals with GSK and Biogen transferred non-exclusive rights to Adimab’s antibody discovery and protein-engineering platform, giving them expanded use of the technology beyond prior tie-ups with the biotech. In the Celgene agreement, Adimab will use the platform to generate antibodies against multiple, undisclosed therapeutic targets. Adimab receives an undisclosed upfront payment, while Celgene will have the option to develop and commercialize all antibody candidates resulting from the collaboration. For any candidate that Celgene options, Adimab will receive a licensing fee and be eligible for clinical milestones and royalties on product sales. Meanwhile, Adimab and China-based Innovent will partner on a single program to discover, develop and commercialize an antibody-based therapeutic against an undisclosed target. Innovent will coordinate all initial product development, including manufacturing and clinical trials. Each company will retain the right to develop and commercialize any resulting drug candidate in its respective geographic territories. Innovent will hold those rights in China, while Adimab retains U.S., European and Japanese rights to the program. Innovent will compensate Adimab for discovery and optimization of therapeutic leads, while Adimab will reimburse Innovent for specific development costs.

Evotec/Jain Foundation: Germany’s Evotec AG, a drug-discovery alliance and development partnership company, and the Jain Foundation announced Aug. 21 that they have extended and expanded their research collaboration in skeletal muscular dystrophy diseases. No financial details were disclosed. Based in Bellevue, Wash., Jain is a privately funded foundation whose goal is to cure muscular dystrophies caused by deficiency of dysferlin protein. In a release, foundation CEO Plavi Mittal said the collaboration is moving toward the screening of compound libraries with Evotec. “This is an important step toward accomplishing our mission of finding a therapy for Limb-girdle muscular dystrophy type 2b/Miyoshi Myopathy,” he said. Earlier this year, Evotec partnered with Harvard University to identify and develop a new class of small-molecule inhibitors of bacterial cell wall synthesis. Evotec is applying its drug-discovery technologies and expertise toward developing anti-bacterial agents that target peptidoglycan biosynthesis, while the university brings assays, anti-bacterial chemical starting points and x-ray crystallography tools to the collaboration.

Mount Sinai Medical Center/Exosome Diagnostics: Mount Sinai Medical Center (NY)’s Icahn School of Medicine is collaborating with Exosome Diagnostics Inc. on research and development of real-time nucleic acid-based body-fluid diagnostics to advance personalized medicine in areas such as oncology and inflammation. From the work, Exosome anticipates pursuing commercial development of potential in vitro diagnostics. Under the five-year collaboration, Mount Sinai researchers will get early access to Exosome technology for use in targeted molecular research, the two New York-based organizations said Aug. 21. The Exosome technology enables real-time capture of genetic biomarkers that are responsible for disease directly from blood, urine and cerebrospinal fluid without need for a tissue biopsy. The medical center will retain rights to molecular biomarkers associated with disease progression and drug response under the agreement, while Exosome will get commercial development rights to any molecular in vitro diagnostic products that may result from the collaboration.

Photo credit: Wikimedia Commons

Friday, August 16, 2013

Deals of the Week Sells During Slow Season

Capitalism knows no holiday, but people need a break sometimes. The dog days of summer often slow the pace of pharma deals, and 2013 is no exception. If you traded boardroom time for surfboard time last week, or just hung out at home with a glass of lemonade and the sprinkler, Deals of the Week is here to help you catch up with what you’ve missed.

Speaking of front lawn scenes, word is that TPG Capital put a “For Sale” sign in Aptalis Pharma’s yard earlier this year, according to published accounts. Reuters reports that the private equity firm wants $3 billion but hasn’t yet found a suitor for Aptalis, a global specialty pharma whose diversified holdings include several products for gastrointestinal and digestive disorders. The firm engaged JP Morgan Chase and Evercore Partners to pursue the sale.

TPG acquired predecessor company Axcan Pharma US for $1.2 billion in late 2007, taking it private. Then in December 2010, the firm funded Axcan’s buyout of public Dutch company and former partner Eurand NV for $590 million. The merged entity was renamed Aptalis two years ago.

Aptalis’s top sellers include Carafate (sucralfate) for duodenal ulcer disease and Canasa (mesalamine) for ulcerative proctitis, and it owns three of the five approved drugs for pancreatic enzyme insufficiency: Zenpep, Ultrase, and Viokase (pancrelipase, in three formulations). The company also expanded its cystic fibrosis holdings with the acquisition of another former partner, Mpex Pharmaceuticals in 2011 for $62.5 million in up-front and subsequent non-contingent payments, giving it Phase III candidate Aeroquin (aerosol levofloxacin). A late-stage trial revealed some encouraging data about the drug in January, but Aptalis hasn’t made its next step clear.

Parties interested in buying Aptalis have included Elan Corp. prior to its own acquisition by Perrigo Co.; Forest Laboratories, which is currently dealing with a CEO transition; Sun Pharmaceutical Industries; and Salix Pharmaceuticals, but all have reportedly walked away. Buyers would get a company that posted a loss of $66.4 million on $470 million in revenues during fiscal 2011, the last time it reported full-year earnings.

If no buyer materializes, TPG could pursue an initial public offering for Aptalis. The private equity firm was a top stakeholder in contract research organization Quintiles Transnational’s May offering, which raised $1.1 billion at a valuation of $6 billion. TPG holds stakes in numerous biotech and pharma companies, and bought Par Pharmaceutical for $1.9 billion last year.

It’s also possible that Aptalis could be broken apart, either before or after a sale. It’s a diversified company, but one addressing several disparate niches. The value of its cystic fibrosis program is unclear, and might not fit squarely with a buyer’s goals as well, so TPG might not find anyone willing to pay full value for all of Aptalis’s parts. - Paul Bonanos

September's coming soon, and I'm pining for the moon. But for now, summer's here and the time is right for...

Quintiles/Novella Clinical: Quintiles put some of its IPO war chest to work this week, when it revealed an Aug. 14 deal to acquire Morrisville, N.C.-based CRO Novella Clinical, a specialist in oncology, medical devices and biopharmaceuticals. Fifteen-year-old Novella has about 800 employees in North America and Europe, including locations in Ohio, Colorado, Ontario and the UK. Financial terms of the deal weren’t released, although Quintiles said the deal won’t have a material impact on its 2013 earnings. It expects to operate Novella as a standalone division named “Novella Clinical, a Quintiles company.” Analyst Eric Coldwell of Baird Equity Research estimated that Novella will produce $150 million in revenue this year. Before the IPO, Quintiles said it would use the proceeds in part to pursue acquisitions that would broaden its service lines or deepen its expertise. Since 2011, it purchased Outcome Sciences, VCG&A, Advion Bioservices, and Expression Analysis for a total of about $280 million. The CRO had $585.7 million in cash and cash equivalents on its balance sheet June 30, along with more than $867 million in accounts receivable and unbilled services. - P.B.

Pfizer/Sanford-Burnham: The NYC-based Big Pharma has inked a collaboration with Sanford-Burnham Medical Research Institute in Orlando, where scientists will work to screen and discover new targets that could lead to treatments for diabetes and obesity. The pharma-institute tie-up, announced Aug. 13, will focus on identifying targets and compounds that interfere with the accumulation of fat in muscle cells in hopes of finding new treatments for diabetes and obesity. Research has shown that abnormalities in lipid metabolism in muscle are associated with insulin resistance. As fat accumulates in muscle tissue, it becomes insulin-resistant and glucose is not cleared effectively from the blood. Neither party would disclose the financial arrangements surrounding the deal, but Pfizer will be funding all the research efforts. Work will be conducted in both Pfizer's and Sanford-Burnham’s labs. Decision-making within the collaboration largely will be decentralized, and research decisions will be made separately in each lab with the two organizations meeting regularly for updates and to decide on next steps. All intellectual property will remain with the organization making the discovery, with any jointly-invented IP being shared. The collaboration is set to last three years, but may be extended.- Lisa LaMotta

Boehringer Ingelheim/Brigham & Women’s Hospital: Boehringer Ingelheim Pharmaceuticals Inc. and Brigham & Women’s Hospital are partnering on a long-term comparative effectiveness study to assess the use of oral anticoagulants for reduction of stroke risk in U.S. patients with non-valvular atrial fibrillation. B&W researchers will lead the study, which Boehringer is sponsoring. The objective is to better understand the real-world safety and effectiveness of warfarin and newer oral anticoagulants such as Pradaxa (dabigatran), introduced by Boehringer in the U.S. in late 2010. The analysis will be based on claims data from UnitedHealth Group, which covers more than 80 million individuals. The announcement reflects increasing industry interest in sponsoring long-term real-world evidence studies. It also reflects intense interest in the clinical role and safety of new oral anticoagulants, which, in addition to Pradaxa, include Bayer/Janssen’s Xarelto (rivaroxaban) and Pfizer/Bristol-Myers Squibb’s Eliquis (apixaban). The partners did not specify a timeframe for the study, but Sebastian Schneeweiss, vice chief, division of pharmacoepidemiology and pharmacoeconomics at B&W noted in a press release it would take place over several years.  Some 5 million people with non-valvular atrial fibrillation in the U.S. are at increased risk of stroke, Boehringer says. All of the new agents are being scrutinized by the medical community for safety, notably for increased risk of bleeding. This has been a particular concern regarding Pradaxa due to some early reports of severe bleeding by doctors, but a late 2012 FDA review of Mini-Sentinel real world data found Pradaxa did not cause increased bleeding compared to warfarin. So far, there are no head-to-head comparative prospective clinical trials of the new agents, but B&W’s work should provide some RWE insights. - Wendy Diller

Biomotiv/Torrey Pines: Cleveland-based drug developer/accelerator BioMotiv’s asset-based financing model found another backer Aug. 12, when it signed a $40 million deal with Torrey Pines Investment. Each company will contribute $20 million to a collaborative program that will fund early-stage companies over the next seven years. BioMotiv intends to in-license preclinical assets from academic and private-sector researchers, then advance them to Phase Ib or IIa for out-licensing. Assets will be housed in separate corporate structures designed to be sold individually, with returns passed back to investors. CEO Baiju Shah told START-UP in June that BioMotiv will accept smaller up-front payments than VCs typically do, allowing for earlier exits than many start-ups can expect. Further terms, including what San Diego-based Torrey Pines will receive or contribute beyond cash, weren’t released. BioMotiv raised $25 million earlier this month from investors including first-time backer Nationwide Mutual Insurance and founding investors University Hospitals of Cleveland and the Harrington family, as well as individuals. That built upon $21 million in initial funding from the founding backers. The start-up aims to raise a total of $100 million for its projects, not counting the money in the Torrey Pines deal. BioMotiv currently has seven preclinical candidates, but hopes to have 20 in development at once. - Joseph Haas

Thanks to Flickr user the-tim for the overgrown photo, reproduced via Creative Commons license.