Friday, August 02, 2013

Deals Of The Week: A Feeding Frenzy Over ROR Gamma T Modulators?

A little-heralded deal between Amgen and Japan’s Teijin Pharma  July 31 marked the sixth since 2009 around compounds that modulate the ROR (retinoic acid-related orphan receptor) gamma t pathway, offering potentially a new small-molecule approach to addressing multiple autoimmune indications.

Drugs that hit RORγt might be able to modulate differentiation and regulation of Th17 cells, which play a role in inflammation related to many autoimmune disorders. It’s not just that the RORγt space has been fairly busy – a look at the names of the companies working in this arena indicates significant investment and potential. Bristol-Myers Squibb, Merck & Co., Pfizer and Johnson & Johnson all have made deals with smaller companies around RORγt assets in recent years.

A seventh deal could be looming as well, as Vitae Pharmaceuticals currently is considering partnering its lead-op stage RORγt inhibitor program. CEO Jeffrey Hatfield recently told “The Pink Sheet” that Vitae’s early data are being reviewed by roughly one-dozen potential partners and the company is looking to announce a deal, if it decides to make one, in September or October.

“Those [prior RORγt deals] seem to us to have been done in very early stages of discovery,” he said. “They were not particularly big deals, and there wasn’t a lot of buzz around the work done by the biotechs before the deals were announced. The sense I get from other companies is that the state of the art is not very advanced.”

Hatfield said the interest he has seen in his program, including one term sheet that came in before Vitae reached preclinical proof-of-concept, suggests RORγt is becoming one of those “hot spaces” that almost every player wants a part of.

“Everybody wants a program,” the exec asserted. “There just aren’t enough programs to possibly go around to meet demand.” Beyond MS and RA, Hatfield suspects RORγt modulation might have potential in psoriasis, ankylosing spondylitis and irritable bowel disease. Ultimately, he thinks targeting RORγt might enable modulation of a broader range of pro-inflammatory cytokines than currently is possible with anti-TNF drugs such as fusion protein Enbrel (etanercept), monoclonal antibody Humira (adalimumab) or MS treatment Tysabri (natalizumab).

Amgen and Teijin announced their collaboration on July 31, a discovery, development and commercialization agreement that would give Amgen worldwide rights except for Japan to compounds discovered in the joint R&D collaboration. Teijin, which gets an undisclosed upfront payment along with potential milestones and royalties, would retain marketing rights in its home market and also hold the right to co-promote any resulting products in select Asian markets.

Deal-making around this target kicked off in Japan when Japan Tobacco and San Diego’s Orphagen Pharmaceuticals announced a partnership in January 2009 aimed at inhibition of Th-17 cells to treat psoriasis. Then, in October 2010, Bristol in-licensed preclinical TGR5 agonist XL475 and discovery-stage RORγt inhibitors from Exelixis. The South San Francisco, Calif., biotech received $35 million upfront for XL475 and another $5 million upfront for the RORγt program.

Two more deals followed in 2011: First, Merck signed a collaboration with Lycera in March to co-discover autoimmune disease candidates based on the Michigan biotech’s RORγt research. Lycera, which received $12 million upfront, triggered the first milestone under the agreement in December of 2011 – total deal-related milestones could reach $295 million. As a possible indication of Merck’s assessment of Lycera’s technology, the two companies signed a second autoimmune R&D deal in February of 2013.

In December 2011, Pfizer signed an R&D pact with Karo Bio to discover and develop RORγt modulating compounds. This deal brought the Swedish biotech an undisclosed upfront payment – the companies revealed publicly that Karo Bio could earn up to $217 million in combined upfront cash and milestones, along with potential royalties, while Pfizer would fund all of the R&D work.

Prior to the Amgen/Teijin transaction, the most recent RORγt deal involved J&J’s Janssen Biotech licensing exclusive rights to a set of molecules discovered by Phenex Pharmaceuticals. The German company can earn up to $135 million in upfront cash and development and regulatory milestones under the December 2012 pact, along with sales milestones and royalties.

It was an extremely active week for deal-making outside the RORγt space as well, as July melted into August. Most noteworthy were Perrigo’s acquisition of Elan Corp. along with Cubist Pharmaceuticals’ two buyouts, of Optimer Pharmaceuticals and Trius Therapeutics. For the other highlights, read on as we unveil ...

Perrigo/Elan: By buying Dublin-based Elan, Perrigo of Allegan, MI, will re-domicile itself in Ireland where the corporate income-tax rate is a low 12.5%, offering fertile soil for international growth. The purchase also will give Perrigo access to royalties for the multiple sclerosis drug Tysabri (etanercept), which Elan discovered and then sold to Biogen Idec on Feb. 6. 2013. Elan began looking a buyer this year after Royalty Pharma tried to acquire it. The deal, announced July 29, ends a bitter takeover saga in which Elan rejected three hostile bids by Royalty Pharma and management clashed with shareholders about strategy. Perrigo, which manufactures over-the-counter pharmaceutical products for the store-brand market and has a market value of about $12 billion, will pay $6.25 per share in cash plus $10.25 per share in stock, a premium of about 10.5 percent over Elan's closing price on July 26. “We believe this transaction is compelling for Elan shareholders and fully takes into account the value of Elan’s assets, including a large cash balance and a double-digit royalty claim on Tysabri, a blockbuster product that generated revenues of $1.6 billion last year and has been growing at a compound annual growth rate of 19%,” Perrigo CEO Joe Papa said. - Sten Stovall

Antibiotics marketer Cubist Pharmaceuticals made a pair of moves July 30 that complement its hospital-based antibiotic franchise, acquiring current partner Optimer Pharmaceuticals and clinical-stage anti-infectives developer Trius Therapeutics.The simultaneous, all-cash deals will cost Cubist at least $1.24 billion by the end of 2013, when they’re expected to close. Cubist will pay $10.75 per share, or $535 million, upfront for Optimer, and $13.50 per share, or $707 million, upfront for Trius. The upfront payments represent a 15% premium over San Diego-based Trius’ July 30 closing price, but a 19% discount to Optimer’s July 30 closing price. Yet the upfront prices may not be the acquisitions’ final values. Both deals include contingent value rights which could deliver substantial additional returns to the acquired companies’ shareholders, and are based on the net sales performances of their key drugs. Peak sales for both therapies in territories that belong to Cubist could run between $600 million and $1 billion, Cubist management estimated. They expect the deal to be accretive starting in 2015. Optimer currently sells Dificid (fidaxomicin) in the U.S. and Canada to treat diarrhea associated with Clostridium difficile infections. If the drug generates $250 million in net sales by the end of 2015, Optimer’s shareholders would receive an additional $3 per share. If sales reach $275 million or $300 million, they would receive $4 or $5 per share, respectively. That could drive the deal’s overall value as high as $801 million. Trius has the Phase III drug tedizolid, also known as TR-701, for Gram-positive and other bacterial infections. Its shareholders would receive an additional $1 per share if tedizolid produces $125 million in net sales during 2016, and up to another $1 if it sells between $125 million and $150 million that year, delivered on a pro rata basis. The buyout could be worth $818 million in total if the CVR is realized fully. - Paul Bonanos

AstraZeneca/Fibrogen: Privately held FibroGen already had a territorial partner in Astellas Pharma for its late-stage anemia drug FG-4592. Now, the San Francisco-based company has teamed with AstraZeneca to share rights to the drug in other major markets. The new deal covers the U.S., China and other unspecified territories, not including those in which Astellas already holds rights: Europe, the Commonwealth of Independent States, the Middle East and South Africa. AstraZeneca and FibroGen say they’ll collaborate to promote the drug. AstraZeneca will commercialize the drug in the U.S., although FibroGen will promote it in end-stage renal disease patients. In China, FibroGen will handle the regulatory process, manufacturing and medical affairs, while AstraZeneca will take the lead on promotion and distribution. The British pharma paid $350 million upfront, including non-contingent short-term payments, for rights to the candidate. Developmental milestones could add $465 million to the deal, while unspecified sales milestones could further add value. If the drug is approved, AstraZeneca will also owe FibroGen royalties in the “low 20% range,” according to a joint statement. FG-4592 induces red blood cell production, or erythropoiesis, by inhibiting a protein called hypoxia-inducible factor, thereby mimicking the body’s natural response to high altitude. Well-funded start-up Akebia Therapeutics has a Phase III-ready HIF inhibitor, while GlaxoSmithKline has a Phase II candidate. FibroGen also has FG-3019, a Phase II connective tissue growth factor inhibitor that has shown promise in idiopathic pulmonary fibrosis, liver fibrosis due to hepatitis B and pancreatic cancer. - P.B.

Actelion/Ceptaris: Actelion Pharmaceuticals' options deal to acquire Ceptaris Therapeutics is a small, but important and relatively risk-free step in the biotech’s efforts to diversify away from its heavy reliance on its highly successful treatment for pulmonary arterial hypertension, Tracleer (bosentan). On July 31, Europe’s largest biotech announced that it is paying $25 million upfront for an option to buy Ceptaris, contingent upon the latter’s receiving FDA approval for its only asset, Valchlor (mchlorethamine gel). Valchlor’s PDUFA date is Aug. 27. If Valchlor gets a regulatory green light, Actelion will pay Ceptaris investors an additional $225 million, plus undisclosed commercial and sales-based milestones. Actelion’s internal R&D track record is mixed, leaving its near-term diversification strategy highly dependent on efforts to launch a next-generation PAH treatment, macitentan. Macitentan’s NDA is pending before FDA, with a PDUFA date of Oct. 19, and it also awaits EU authorization. In the meantime, the Swiss firm sees Ceptaris as a way to obtain an asset that is “meaningfully differentiated,” rapidly accretive and focused enough so that it will not distract from the effort around macitentan, said Actelion SVP Roland Haefeli. Valchlor, if successful, will be the only FDA-approved topical formulation of mechlorethamine for treatment of early-stage mycosis fungoides-type cutaneous T-cell lymphoma, a rare form of non-Hodgkin’s lymphoma. - Wendy Diller

Kolltan/MedImmune: Cancer-focused Kolltan Pharmaceuticals in-licensed a monoclonal antibody targeting the HER3 receptor tyrosine kinase from MedImmune, the global biologics arm of AstraZeneca, on July 29. Financial terms were not disclosed but privately held Kolltan said in a release that both companies have the potential for future cost-, risk- and profit-sharing arrangements related to the antibody after the New Haven, CT-based biotech completes early clinical testing. Based on the candidate’s current status, Kolltan expects to initiate a Phase I study of the antibody during the first quarter of 2014. - Joseph Haas

Celgene/Array: In its second licensing arrangement of the month, Array BioPharma signed a strategic collaboration with Celgene July 29 focused on a preclinical development program targeting an undisclosed novel inflammation pathway. Boulder, CO-based Array gets $11 million upfront, while Celgene obtains an exclusive option for multiple potential clinical development candidates under the deal. In addition to the upfront, Array can earn total development, regulatory and sales milestones of up to $376 million as well as royalties. It will retain all rights to programs that Celgene does not select. Previously, on July 10, Array licensed an undisclosed preclinical oncology compound and related intellectual property to Aisling Capital-backed start-up Loxo Oncology. Array got an ownership stake in the new company under that deal, as well as potential for up to $434 million in milestones and royalties. - J.A.H.

Bristol/Samsung: Bristol and South Korea-headquartered Samsung BioLogics inked a 10-year agreement July 29 under which Samsung will manufacture a commercial antibody cancer drug at its new plant in Songdo Incheon, South Korea. Financial terms were not disclosed. In a release, Bristol said technology transfer and trial production began in July, while commercial production will start once regulatory approval is obtained. In a statement, Louis Schmuckler, Bristol president, global manufacturing and supply, said the arrangement is part of the pharma’s focus on establishing long-term relationships with quality manufacturing partners worldwide. “This agreement increases our biologic manufacturing capacity to help ensure sufficient long-term supply of our commercial products,” he said. - J.A.H.

Photo credit: Wikimedia Commons

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