Friday, October 25, 2013

DOTW Wonders: Where Have the Private Biotech Take-Outs Gone?

We do like a nice, frothy biotech IPO market. But is it coming at the expense of stellar acquisitions of private biotechs? We miss the kind of M&A that got VCs boasting about multiples and sent ripples of excitement through the industry.

So, being the data geeks that we are, that sent us rifling through recent deals. Turns out that there have indeed been fewer decent-sized acquisition of private biotechs. This year there were only 16 worth more than $50 million, down from 26 at this time last year, according to Elsevier’s Strategic Transactions database.

And the really eye-popping deals are largely absent. Only three of this year’s private biotech acquisitions even had the biobuck-aided potential to be worth more than $500 million. Through October 2012, there were at least 10 take-outs that fit that description – although to be fair, a couple of those were of big, private specialty pharmas that were long-past any venture investment. And among this year’s biotech IPO class, 12 out of the 38 already have a market cap of more than $500 million.

Perhaps the longstanding truism that the best biotechs get bought and the rest go public has been turned on its head for a bit. Maybe IPO valuations are so rich that they’re driving up private company comps, giving potential strategic buyers pause.

There is one big biopharma buyer who’s been relentlessly active this year: AstraZeneca . It’s bought three private biotechs so far; all of them among the largest private acquisitions in 2013. Not that this comes as a huge surprise. DOTW wondered in January if then-new AstraZeneca CEO Pascal Soriot would go on a buying spree and expand into earlier stage deals.

Earlier this month, AstraZeneca bought antibody-drug conjugate oncology company Spirogen, which was in Phase II with its lead candidate, for $200 million upfront and up to $240 million in milestones. In August, it bought immune-stimulatory cancer company Amplimmune for $225 million upfront and up to $275 million in milestones.

In June, the big pharma made its biggest buy and the only private biotech acquisition this year potentially worth more than a billion when it acquired Pearl Therapeutics. Terms included $560 million upfront and up to $450 million in clinical and regulatory milestones, with an additional up to $140 million in sales-based milestones. (In total that’s up to $1.15 billion for those of you keeping score at home.) Pearl was a Phase III respiratory disease company.

While AstraZeneca is alone in its level of activity right now, recently industry’s larger companies have whole-heartedly embraced a deal structure that locks up promising early-stage assets at a reasonable price. This, of course, is the “exclusive option to acquire.” One big biopharma in particular has warmed to this approach – doing at least five of this kind of deal with private biotechs in the last couple of years. (Celgene, you know we’re talking about you.)

Celgene’s most recent option to acquire a private biotech was divulged earlier this month when it did a deal alongside a Series A round for PharmAkea Therapeutics, a small molecule cancer and fibrotic disease company that the biopharma seeded with funding last year. This time, Celgene paid $35 million for a three year discovery and development deal, and it also bought an undisclosed equity stake, alongside Bay City Capital, which invested $10 million. Celgene has an exclusive option to buy PharmAkea, which was founded by three execs from fibrotic disease play Amira Pharmaceuticals, which sold to Bristol-Myers Squibb for up to $475 million in 2011.

This week, a similar option-to-acquire deal together with a Series A came along. Sideris Pharmaceuticals garnered a partnership with Novartis worth up to $300 million, which includes the exclusive option to acquire the biotech. It also landed a $32 million Series A round from MPM Capital, Hatteras Venture Partners and Osage University Partners. Sideris is focused on developing drugs to treat transfusion-related iron overload; the partnership and the financing are intended to get its lead candidate through Phase II.

Novartis did another option-to-acquire deal alongside a Series A round with inflammatory and thrombotic diseases company Selexys Pharmaceuticals last year.

We see how an option-to-acquire deal alongside a Series A financing would be attractive. For big biopharmas, it sews up good-looking assets without fully committing, thereby providing more time to wait and see without risking losing out. For VCs, it lines-up a strong potential buyer and helps defray R&D costs from the outset in exchange for a known, possible outcome.  For biotechs, it greatly lessens financing risk, ties it close and early to a partner that can help define how it conducts its trials and gives it a built-in potential exit.

Plus, it takes the vagaries of the IPO and the M&A markets almost entirely out of the equation.  While companies and VCs risk losing out on the tantalizingly highest highs, they also can follow a known path to an exit. And while froth may be fun, it’s not at all stable.

What is entirely reliable is your DOTW team, who has yet again brought you a delightful sampling of this week’s heartiest deals. Quaff deeply of this week’s edition of  . . . .

Mesoblast/Intrexon/Ziopharm: Three partners – Mesoblast, Intrexon and Ziopharm Oncology – will be involved in an oncology drug discovery and development collaboration that could evolve into a joint venture, the firms announced Oct. 23. The initial deal is less of a commitment, however. Under the technology sharing arrangement, the partners will bring their respective expertise to the table to develop new treatments, with a first focus on lung cancer. The team will use Mesoblast’s Mesenchymal Lineage Cells and Intrexon’s RehoSwitch Therapeutic System (RTS) platform to co-develop complex transgene-enabled cell-based treatments. The resulting products should have both tumor targeting characteristics and controlled gene expression. Financial details were undisclosed. The deal is actually a 50/50 collaboration between Mesoblast and Ziopharm because Ziopharm is previously partnered with Intrexon on the technology to design and optimize therapeutic gene expression in the MLCS under a 2011 collaboration. - Jessica Merrill

deCODE/NextCODE: Like any classic Icelandic saga, the story of deCODE Genetics seems endless. The genetic diagnostics company has new life as NextCODE Health, with $15 million in Series A backing from Polaris Partners and ARCH Venture Partners. deCODE was a dot-com era high flier that aimed to mine blood samples from Iceland’s homogeneous population and meticulous record-keeping for clues to the genetic factors of disease. Following a $170 million IPO in 2000 deCODE spent a decade chasing the dream of developing its own drugs. It filed for bankruptcy in late 2009. A consortium of investors led by Polaris and ARCH, who were original deCODE investors and cashed out after the IPO, spent about $14 million to take deCODE private in 2010. Back at the helm, they did away with the drug-development ambitions and turned back to genetic research and diagnostics. They were rewarded when Amgen bought the recapitalized deCODE in 2012 for $415 million in cash up-front. Now, with Amgen focused on applying the deCODE technology to drug discovery, NextCODE has a five-year exclusive license to clinical diagnostics applications. The company says it already has contracts with clinical centers affiliated with Queensland Hospital in Australia, Boston Children’s Hospital in the U.S., Newcastle University in the UK, and Saitama University in Japan. Two top executives from the early days of deCODE, Hannes Smaranson and Jeff Gulcher, have returned to run the company as CEO and president/CSO, respectively. - Alex Lash

Amgen/Roche: As part of its international expansion and to shore up product revenues, Amgen reacquired rights from Roche to Neupogen (filgrastim) and Neulasta (pegfilgrastim) in about 100 markets for an undisclosed amount. Roche had held rights to the pair since 1989, under a license with Kirin-Amgen, a joint venture between Amgen and Kirin Holdings., in Eastern Europe, Latin America, Asia, the Middle East and Africa. Amgen is working toward building a presence in 75 countries and it will exceed that with this deal. In 2012, Neupogen and Neulasta generated about $200 million in sales in those territories. In the third quarter, Amgen reported $1.1 billion in Neulasta revenues and $466 million in Neupogen revenues. These were up 9% and 50%, respectively, from the same quarter during the prior year. (The big boost for Neupogen was entirely attributable to a $155 million order from the U.S. government during the quarter.) Both are used during chemotherapy to boost white blood cell count, thereby reducing the risk of infection for chemotherapy patients. The deal will become effective Jan.1, 2014. Amgen expects it will start to be accretive in 2014. In places where Amgen doesn’t have a presence, Roche or its distributors will continue to market products for an interim transition period. Kyowa Hakko Kirin will continue to market the drugs in some Asian territories, including China and Japan. - Stacy Lawrence

Alzheon/Bellus Health: A new neurodegenerative disease start-up is being built on the back of a failed Alzheimer’s disease compound. Start-up Alzheon has exclusively licensed a pro-drug of tramiprosate, ALZ-801, from Bellus Health, formerly Neurochem. Tramiprostate completed Phase III clinical testing in 2007 and the data were inconclusive. Alzheon plans to start a Phase II trial in Alzheimer’s disease patients, which it says will be aided by the clinical data and sub-population analyses from the more than 2,000 patients in Phase III studies of tramiprosate. The license includes rights to a family of analogs, along with an associated platform of chemotypes and clinical datasets. Alzheon expects this will provide the company with a drug development platform, as well as clinical and biomarker datasets in this patient population. Beyond ALZ-801, Alzheon expects to build a pipeline that includes additional prodrug candidates from this platform, as well as in-licensed programs.The idea is to take compounds that have demonstrated clinical proof-of-concept and apply improved clinical trial design, informed by existing patient sub-population data, more appropriate clinical endpoints and biomarkers. The newco will be led by Martin Tolar, who is its founder, president and CEO. He has previously headed biotechs including human genome interpretation system company Knome and cancer therapeutics play NormOxys Tolar was also chief business officer at Alzheimer’s-focused CoMentis, which licensed its lead beta-secretase inhibitor, then only in Phase I, to Astellas Pharma AS in 2008 $100 million up front. No financial details of the deal were disclosed; Alzheon hasn’t given any financing details yet. - S.L.

AstraZeneca/Evotec: AstraZeneca and the German drug discovery services company Evotec entered into an agreement Oct. 21 to discover novel targets and compounds with disease-modifying activity for the treatment of chronic renal disease, one of the key research areas for the restructured R&D efforts at the UK multinational. AstraZeneca will fund research on a series of molecules identified by Evotec in a program designed to explore a key mechanism of chronic kidney disease. In return, Evotec has received an undisclosed upfront payment and will receive clinical and regulatory milestones, and additional payments if products are commercialized. Renal diseases such as diabetic nephropathy, end-stage and chronic kidney disease are key targets within AstraZeneca's research effort into cardiovascular and metabolic diseases, one of three core areas for the company and based at its facilities in Molndal, Sweden. The agreement with Evotec comes just three months after AstraZeneca entered into a strategic collaboration with the private U.S. company FibroGen to develop and commercialize that company's FG-4592, a late-stage potential oral therapy for anemia in chronic kidney disease and end-stage renal disease in selected markets including China and the U.S. Evotec has a number of other big pharma collaborators for its drug discovery services, including with Roche and Boehringer Ingelheim, and a 2010 diabetes collaboration with AstraZeneca's biologics division, MedImmune, extended by the two companies at the start of 2013. - John Davis

Depomed/PDL: As it transforms from a research-oriented company to a product-focused one, Newark, Calif.-based Depomed is planning additional acquisitions to fortify its pain and neurology portfolio. Thanks to the $240.5 million sale of its type 2 diabetes royalties to PDL BioPharma, it will have plenty of cash to spend. Depomed sold milestone and royalty streams for marketed products and pre-approval compounds in the Oct. 21 deal. Most of the value currently lies in escalating royalties from Santarus’s sales of Glumetza (metformin HCL extended-release tablets), which generated $42.8 million in royalties during 2012 and $27.5 million during the first half of 2013. It also includes royalties from Merck’s sales of Janumet XR (sitagliptin and metformin), potential streams from investigational programs in the hands of Boehringer Ingelheim and Janssen Pharmaceuticals, and geographic royalties from LG Life Sciences in Korea and Valeant Pharmaceuticals  in Canada. Depomed built its own sales force to market Gralise (gabapentin) for shingles pain after it reacquired rights to the compound from Abbott Laboratories in 2011, and has since added pain drugs Zipsor (diclofenac potassium) and Lazanda (fentanyl) via acquisition. CEO Jim Schoeneck told conference call participants it would look to buy products already on the market or “those that are beyond clinical risk” at the registration stage. PDL once discovered antibodies, but now reaps royalties from license agreements based on its patents. The last of a key set of patents expires in 2014. If royalties from the new deal reach a total of $481 million, or twice the sale price, PCL and Depomed will split further royalties 50/50. - Paul Bonanos

Roche/Samsung: Samsung Group and Quintiles may have created their Samsung BioLogics joint venture primarily to develop and manufacture biosimilar drugs, but the Incheon, Korea-based drug factory operator is now striking new partnerships as a contract manufacturer for pharmas. An Oct. 22 deal with Roche calls for a long-term manufacturing partnership covering proprietary commercial biologics, which Samsung BioLogics will craft at two local facilities, one of which is still under construction. Financial terms weren’t disclosed and Roche didn’t reveal which medicines Samsung BioLogics will manufacture. It’s the second CMO deal since the summer for Samsung BioLogics, following a 10-year agreement with Bristol-Myers Squibb announced in July, covering an unnamed cancer antibody. Since the creation of Samsung BioLogics, Samsung forged a second JV with Biogen Idec in February 2012, creating Samsung Bioepis to develop biosimilars; it has since clarified that Samsung BioLogics will operate a CMO business while Samsung Bioepis will focus on biosimilars. - P.B.

(Thanks to Vault Brewing in Yardley, Penn. for use of their photo of a draft of Rye Pale Ale. It’s a favorite of EBI’s Chris Morrison – who hopes this mention will get him a free pint this weekend.)

Friday, October 18, 2013

Deals Of The Week: Academic Drug-Discovery Alliance Capturing Industry's Notice

Nashville hosted the first annual conference of the Academic Drug Discovery Consortium

It’s become a familiar story in biopharma, as Big Pharma X announces that in the wake of the patent cliff, health care-spending pressures in Europe and diminished returns from internal R&D, it will be forced to cut back on R&D spending and make staff reductions primarily in sales and lab positions.

As the industry retrenches on early drug-discovery work, however, the need for innovation has not diminished and so the private sector frequently looks more and more to the academy for early research breakthroughs that might translate into therapies that will bolster the quarterly earnings reports a decade from now. In an effort to take advantage of that trend, some of the more forward-thinking university-based drug-discovery outfits in the U.S. have banded together to create a consortium they hope will facilitate and ease partnerships between academic institutions and the biopharmaceutical industry.

The brainchild of a meeting in Baltimore two autumns ago, the Academic Drug Discovery Consortium was more or less dreamed up by Barbara Slusher, director of the Translational Program at the Brain Science Institute at Johns Hopkins University, and Jeffrey Conn, director of the Vanderbilt Center for Neuroscience Drug Discovery, with input from three other founding institutions: University of North Carolina, Harvard University and University of California, San Francisco.

But in a relatively short time, ADDC’s membership has grown to 83 institutions, including six outside the U.S., and more than 550 individual members. And, just as importantly, big pharma has taken notice.

“They started out with two groups, Vanderbilt and Johns Hopkins, and now they have 83 members,” said Bruce Harris, Roche’s director of academic alliances and an attendee and speaker at ADDC’s first annual conference Oct. 9-11 in Nashville.” All of these institutions are trying to incorporate drug discovery and translate some of the biological discoveries occurring in their laboratories into drug-discovery projects and, if you think about it, that’s an incredible resource for the industry and the early portion of our pipelines.”

It is a necessary development as well. “The area I work in, CNS, probably has been hit the hardest because it’s a risk area where companies are decreasing their internal efforts and several companies have just gotten out (altogether),” said Slusher, co-founder and president of ADDC.

She and Harris both point to an increased government funding interest in translational research that has occurred more or less in tandem with private industry’s cutbacks in discovery work. Specifically, they site the NIH Roadmap efforts undertaken during the tenure of former NIH Director Elias Zerhouni. “This has been a major change in the pharmaceutical industry,” Slusher said. “But as pharma has been decreasing some of its internal efforts, simultaneously what you see is NIH increasing its interest in activities in discovery and translation.”

While overall NIH funding has been roughly flat in recent years, she noted, funding for its National Center for Advancing Translational Science (NCATS) was increased by 11% for federal fiscal year 2013.

ADDC also reflects the exponential growth taking place in academic drug discovery. There were six U.S. academic institutions performing drug-discovery research in 1990, a number that had nearly tripled as of a decade ago. Now, there are more than 100 such units, and 78 of them have membership in ADDC, Slusher pointed out.

In addition to its domestic members, ADDC also has drawn the support of six international research outfits – the Centre of Applied Medical Research at the University of Navarra in Spain, the Karolinska Institute’s Chemical Biology Consortium Sweden, the genetic engineering and biotechnology labs at Shaqra University in Saudi Arabia, the Platform of Chemical Biology and ADME at the University of Strasbourg in France, the Spanish National Cancer Research Centre and Cancer Research UK.

While ADDC has a focus on facilitating partnerships with the private sector, Harris thinks another important role it can play is fostering research efforts across national borders. “I could easily see these U.S.-based academic institutions collaborating on drug-discovery work with their European colleagues,” he said. “Science is global and so are economies, so for them to work together without national boundaries is just natural.”

As Roche searches for programs and assets to invest in at the academic level, Harris said his emphasis will be on the company’s therapeutic areas of focus – oncology, neuroscience and infectious disease. Those priorities dovetail well with what is occurring in U.S. academic research – of the ADDC centers, 73% say they work in oncology, 65% in infectious disease, 63% in neurological disorders and 45% in immunology.

One of ADDC’s initial goals is to create a searchable database of the projects being undertaken by member institutions. Both institutional and individual membership in ADDC is free, meaning this should be a significant resource for academic alliance seekers, like Roche’s Harris. (The organization also is not planning to take a cut from members’ tech transfer deals as a funding mechanism. Instead, it has lined up more than 20 biopharma and service provider firms to sponsor ADDC activities so far, Slusher said.)

Meanwhile, ADDC has no plans, in the near term at least, to serve as a central negotiating point for tech transfer deals or to develop uniform documents and practices for such transactions. Harris said right now that activity seems neither necessary nor terribly feasible.

“I’m not sure that it would be useful to standardize all of the legal documents and arrangements because each university has its own mission within a given state or [based upon] who is supporting it,” Harris added. “They have to go by their own regulations, so having a common set of documents across multiple tech transfer offices at U.S. universities would be a monumental challenge, I think, and probably expensive from a legal point of view.”

And while we await a slew of deals between ADDC member institutions and the biopharma industry, we present this week’s roundup of ....

MedImmune/Spirogen/ADC Therapeutics: AstraZeneca’s biologics unit MedImmune will expand its early oncology pipeline with a new platform to make potent antibody-drug conjugates through the acquisition of U.K.-based Spirogen. Britain’s second-biggest drug maker said it was acquiring privately held Spirogen Oct. 15, paying up $200 million upfront and with another $240 million in potential earn-outs based on predefined milestones for Spirogen’s ADC technology, which has the potential to directly target cancer tumors while protecting healthy cells. Spirogen has developed a novel class of cytotoxic “warheads” based on pyrrolobenzodiazepine (PBDs), which are DNA minor-grove binding agents that bind to specific sites of DNA in cancer cells, according to MedImmune. This blocks the cell division and growth without distorting the DNA helix of cancer cells, which potentially could prevent the emergence of drug resistance. AstraZeneca is in the midst of a concerted push in oncology under the direction of CEO Pascal Soriot, who has revamped the company’s R&D direction over the past year and selected oncology as one of three focal therapeutic areas for the company. MedImmune now is focused on two key areas in oncology development – ADCs and immune-mediated cancer therapy – and says the acquisition of Spirogen fits that strategy perfectly. In connection with the deal, AstraZeneca simultaneously announced a coinciding agreement with Swiss-based ADC Therapeutics, which has a licensing agreement with Spirogen. Under that arrangement AstraZeneca will pay $20 million to take an equity investment in the company. The investment will be matched by Auven Therapeutics, the majority shareholder in both ADC Therapeutics and Spirogen. AstraZeneca will collaborate with ADC Therapeutics to develop two programs from a defined list and pay an undisclosed upfront payment and development milestones. ADC Therapeutics will have a profit-sharing arrangement and gets the option to co-promote one of the products in the U.S. The products to be developed using Spirogen’s technology are preclinical assets, so the latest deal will not yield commercially viable new medicines for several years. It is not yet clear when the products could move forward into clinical tests. Spirogen has been developing its PBD technology for more than 10 years, including a standalone PBD agent in a Phase II study in acute myeloid leukemia. Its business model has been to partner its technology with pharma and biotech for use in the development of novel drugs. It has a number of industry collaborations, including collaborations with Genmab in June 2013, Genentech in 2011 and with ADC Therapeutics announced in 2012. - Sten Stovall

AstraZeneca/Taris Biomedical: Bladder-disease focused Taris Biomedical signed a research agreement with AstraZeneca Oct. 16 to work on novel treatments for bladder cancer. No financial details were disclosed, but the pharma gets an option to license any products resulting from the collaboration. The partnership will involve using Taris’ proprietary delivery platform in combination with targeted bladder cancer drugs developed by AstraZeneca. The Lexington, Mass.-based biotech says its technology involves a soft and flexible device that is deployed into and retrieved from the patient’s bladder “using standard urological office procedures.” The technology is designed to provide continuous local delivery of a therapeutic agent to the bladder for days or weeks. “Their novel technology has the potential to enable the delivery of the right drugs to the tumor tissue in the right concentration and over a prolonged period,” said Susan Galbraith, head of AstraZeneca’s Oncology Innovative Medicines Unit in a release. “This could combine the ability to target the right tissue – the tumor – with the right genetically targeted therapy and therefore represent a step change in the treatment of this disease.” Taris is a clinical-stage firm focused on developing therapies for bladder cancer, overactive bladder and interstitial cystitis. Its lead candidate, LiRIS, is in Phase II in interstitial cystitis. In April, the biotech raised $12.5 million in a Series C round funded by returning investors Flagship Ventures, Flybridge Capital Partners, Polaris Partners and Third Rock Ventures. - Joseph Haas

AmpliPhi Biosciences/University of Leicester: U.S. company AmpliPhi BioSciences announced an agreement Oct. 17 with a British academic group that has succeeded in identifying and characterizing bacteriophage (“phage”) that kill pathogenic strains of Clostridium difficile, a major cause of hospital-acquired severe diarrhea and vomiting. The University of Leicester  researchers will collaborate with AmpliPhi and another U.K. research team at the University of Glasgow on using the “bacteria-eating viruses” for clinical applications, with AmpliPhi funding the research, making milestone payments and paying royalties on any eventual products sales. In return, AmpliPhi receives rights to patents and intellectual property covering the Clostridium difficile-targeted phage research.
In a September 2013 report, the Centers for Disease Control & Prevention called C difficile an urgent threat, causing 250,000 infections every year in the U.S. AmpliPhi believes it is conducting the only phage-based development program for this critical condition. Phage could yield ideal candidates for treating gastrointestinal infections, as they infect and kill a specific strain or species of bacteria, and should not affect beneficial gut bacteria. The research agreement is the third by AmpliPhi in the past six months, having linked up previously with the synthetic biology company Intrexon and the U.S Army. AmpliPhi expects its first therapeutic phage-based product, targeting Staphylococcus aureus and developed in collaboration with the U.S. military, to enter clinical trials next year. AmpliPhi is headquartered in Richmond, Va., but has operations in Colworth, U.K., and Sydney, Australia. - John Davis

Zydus Cadila/Pieris: India’s Zydus Cadila is teaming with Germany’s Pieris to develop and commercialize multiple novel protein therapeutics derived from the anticalin protein molecule. In an Oct. 16 announcement, the companies said the partnership would combine Pieris capabilities in drug discovery and early drug development with Zydus’ expertise in regulatory affairs and development and manufacturing of biologics. No financial terms were disclosed, but the companies said in a release that they will share licensing revenues under mutually agreed-upon terms. The collaboration is intended to develop candidates to proof-of-concept and then seek out-licensing in Pieris’ commercial territories. The most advanced program under the partnership is PRS-110, an anticalin protein specific for c-MET, a target that has been validated in a broad spectrum of tumor types. The candidate is a pure antagonist due to monovalent target engagement and in animal models has demonstrated the ability to inhibit ligand-dependent and –independent c-MET activity. - J.A.H.

Photo credit: Wikimedia Commons

Financings of the Fortnight Is Putin' Rusnano In The Spotlight

Rarely has a sovereign fund been as high-profile in the life sciences as Rusnano, which is investing $10 billion of Russian government money in companies from a variety of industries, including life sciences/biomedicine.

In a country that’s had a painful relationship with capitalism since the Soviet state collapsed, it’s no surprise the idea of a giant state-backed fund making bets on private companies has drawn skepticism – including from then-Russian president Medvedev four years ago.

Now, six years after Russia's Vladimir Putin authorized the group, it’s undergoing a shakeup and a corruption audit, apparently with Putin’s blessing. (A related project, Skolkovo – an attempt to build a Silicon-Valley-like cluster near Moscow – has also been dogged by similar investigations, allegations of corruption, and political pressure.)

Seeing how about 20% of Rusnano’s investments have landed in the life sciences so far, what happens next should be of keen interest to many in our corner of the world. That’s why we’re pointing out our colleague Stacy Lawrence’s one-on-one interview with Rusnano chairman Anatoly Chubais in the current issue of “The Pink Sheet.

Chubais was a key figure in the post-Soviet privatizations that concentrated wealth in the hands of so-called oligarchs, and he has run Rusnano since 2008. He survived the recent shakeup, during which several directors left the fund.

Despite the turmoil, Chubais says he’s pressing ahead with more privatization plans, transforming Rusnano from a vast sovereign fund to a private management firm that runs several funds. Here’s how he described it in “The Pink Sheet”: 
“We decided to transform Rusnano into a private equity fund, which means that we will be a separate management company from Rusnano and we will transform it into a GP, which will attract investors and create a family of private equity and venture funds. And the GP itself will be privatized stage by stage… it should start next year and maybe finish between 2016 and 2017.”

Anatoly Chubais (right) is listening. (Courtesy Michael Popov.)
That's still rather murky, so we won't be surprised if plans shift in the next couple years according to the political winds within Russia. Rusnano has set off alarms – at least within certain factions of the Russian government – by posting much larger than expected losses within its portfolio. It’s unclear how much of them are associated with its life science deals, which have included big names in the US. Among its direct investments are BIND Therapeutics and Selecta Therapeutics, both built around technology from the lab of Bob Langer, a Massachusetts Institute of Technology professor and the ne plus ultra of the American ideal that combines academic and capitalist freedom. It doesn’t get more apple pie, biotechnologically speaking, than a Langer spin-out.

Going into BIND’s initial public offering in September, Rusnano owned 11.5% of the company and according to documents bought more than 200,000 shares at the IPO price, leaving it with a 9.3% stake in the company currently worth $22.3 million.

Through subsidiary RMI Investments, Rusnano also has moved heavily into Regado Biosciences, first by leading its Series E round in late 2012, then buying more shares at IPO, which took place only because Regado accepted a drastic haircut. At the end of August, RMI owned nearly 26% of Regado. The cardiovascular treatment developer debuted in late August at $4 a share and closed October 16 at $5.71.

On top of its direct investments, Rusnano has committed $200 million to Burrill & Co.’s fourth general venture fund, which began investing in late 2011. Topping that, it has earmarked $330 million to invest side by side with Domain Associates, the US venture fund, in a deal that also aims to build Russian manufacturing capacity for the products that emerged from the firms’ jointly-funded portfolio companies.

It’s a significant source of capital for hungry biotechs, but there are strings attached. Non-Russian firms that take Rusnano money must establish a footprint in Russia, part of the firm’s remit to build a domestic pharmaceutical industry through the Pharma 2020 initiative, which, as our IN VIVO colleagues explain here, is as much a proclamation as it is a specific roadmap.

Here’s how Chubais describes the tightened scrutiny of his operation: 
“We had a very, very deep check from the special state auditors and there was not a single corruption allegation, which is positive. We have about 100 portfolio companies and for some of them, they have some grounds for further investigation for their efficiency of using money from Rusnano. That’s an investigation which is going on now and we don’t know if it’s a ‘yes’ or ‘no.’”
You can scrutinize the entire Chubais interview and pelmeni more stories about the nascent Russian biomedical initiatives in our sister publications. Or, if you just want to keep it on the blog, that's your pirogitive, go ahead and stuff yourself full of…

SAGE Therapeutics: The Cambridge, Mass. CNS startup has raised a $20 million Series B, with ARCH Venture Partners, joining original backer Third Rock Ventures to help move into the clinic the first compound of what the company hopes will be an epilepsy franchise. The new money and the clinical transition comes in the first few months of the tenure of new CEO Jeff Jonas, who previously ran Shire’s regenerative medicine group. SAGE’s platform is dubbed PANAM, for “positive and negative allosteric modulation.” Its compounds are designed to dial up or dial down activity around receptors such as gamma-aminobutyric acid, or GABA, and N-methyl-D-aspartate, or NDMA, without acting directly upon the ligand binding sites of the receptors themselves. The Series B round is nearly half the amount SAGE raised in its $38 million Series A, which was disclosed two years ago and came mainly from Third Rock. (ARCH, it turns out, also topped off the Series A last month with nearly $3 million, but Jonas declined to say why ARCH’s cash was allocated in that fashion.) ARCH Managing Director Robert Nelsen joined SAGE’s board. Jonas said the company will soon file an IND for SGE-547 to treat status epilepticus, a type of seizure that lasts several minutes and can be life-threatening. With an eye toward building a franchise, SAGE will investigate the role of GABA in other epilepsies, and could add indications to ‘547 or develop other seizure drugs that act around the receptor. ARCH and Third Rock know each well. The syndicate partners previously co-invested in a pair of this year’s high-profile IPO companies: cancer metabolism company Agios Pharmaceuticals Inc. and gene therapy developer bluebird bio Inc. With its new fund, SAGE is “comfortable well into next year,” Jonas told “The Pink Sheet” DAILY, and more private funding might not be necessary. – Paul Bonanos

Macrogenics: The antibody developer raised $92 million by selling 5.75 million shares at $16 each in its October 9 IPO. In baseball terms, it hit the triple crown despite a choppy broader market. It upsized its deal; priced at the top of its range; and traded up 56% in the first day. MacroGenics has two candidates in the clinic, with another two expected to advance into clinical testing in 2014. The most advanced is margetuximab, a monoclonal antibody that targets HER2-expressing tumors, which is in Phase IIa testing. It’s intended to be a bio-better of Herceptin (trastuzumab) that not only will be more effective killing tumor cells expressing a lower level of HER2, but also enhance the immune system’s ability to kill cancer cells. Prior to the IPO, Macrogenics raised an astonishing $547 million, including $342 million from partners Gilead Sciences, Pfizer, and Boehringer Ingelheim, among others; $151 million in equity; and $54 million in government grants and contracts. These deals could keep it from leaning too heavily on shareholders; it stands to receive more than $100 million in milestone and other partnership payments by the end of 2015. Venture investors include TPG (11.6% pre-IPO stake), Alta Partners (10.5%), InterWest Partners (10%) and MPM Capital (9.4%). This is MPM’s fifth biotech IPO this year, placing it among the most active in 2013. Only ARCH Ventures, Flagship Ventures and crossover investor Fidelity have been behind as many biotech IPOs this year. – Stacy Lawrence

G1 Therapeutics: North Carolina biotech veteran Christy Shaffer, who left Inspire Pharmaceuticals shortly before Merck purchased it in 2011, has returned with the start-up G1 Therapeutics. The Chapel Hill-based company on October 16 announced a $12.5 million Series A financing that will enable it to bring its lead chemo-protectant candidate into Phase I in 2014. G1’s technology focuses on inhibition of cyclin-dependent kinase (CDK) 4 and 6 to shield cancer patients’ bone marrow from the myelosuppressive effects of chemotherapy. Early on, G1 is planning two development courses for its lead candidate: as an intravenous infusion in small cell lung cancer patients, and as an oral version to protect against radiological-induced myelosuppression, a condition that could result from a nuclear weapon strike. Shaffer joined North Carolina-based Hatteras Venture Partners in 2011 to head up its Hatteras Discovery initiative focused on incubating start-ups derived from academic research. Hatteras Discovery seeded G1 with $600,000 in 2012 and now has invested in the A round, led by MedImmune Ventures, with participation from Mountain Group Capital. With the seed funding and NIH grants, G1 selected a lead candidate, and it hopes to file the IND by summer 2014 and begin Phase I by the end of the year, Shaffer said. With potential to protect all four lineages of blood cells, G1 hopes the candidate will earn first-in-class status. – Joseph Haas

TD1 Innovations: The Juvenile Diabetes Research Foundation said October 15 it has pledged to put up to $5 million into a new company, TD1 Innovations, which will scout new pharmaceutical, device and diagnostic technologies related to type-1 diabetes, the autoimmune version of the disease. If JDRF and its partner in the effort, PureTech Ventures, find compelling technologies, they’ll spin them out into new companies and provide seed funding, with hopes of advancing them far enough to find outside investors or industry partners on the other side of the so-called valley of death. It’s the first project under PureTech’s “Valley of Life” initiative, which aims to give nonprofits a legal structure to make philanthropic investments in for-profit companies without violating the tax code. With venture capitalists and pharma companies reticent to fund early stage biomedical innovation, disease foundations, patient advocacies and other nonprofits have looked to push treatments into clinical trials. To trigger JDRF’s full $5 million investment in TD1 Innovations, PureTech must raise matching funds, but the partners hope the fundraising goes well beyond that, up to $30 million, which they estimate would allow them to spin out roughly 10 new companies. Others have tried so-called “venture philanthropy” – including the Bill and Melinda Gates Foundation) – but this appears to be the first time a nonprofit will have a hand, and a financial stake, in building new companies from scratch. -- Alex Lash

All the Rest: Astellas not only contributed to Mitokyne’s Series A, which brought in $45mm, but also signed a concurrent drug discovery alliance and has an option to acquire the company...a $46mm Series D by immatics biotechnologies GmbH will fund Phase III of IMA901 for renal cancer…Seragon Pharmaceuticals revealed that the value of its Series A, which closed in August, was $30mm..genome and exome sequencing company Personalis completed a $22mm Series BAslan Pharma’s $22mm Series B will support Phase IIb trials for gastric cancer candidate ASLAN001…Versartis$20mm Series D round will go towards Phase III of VRS317 for pediatric growth hormone deficiency…French vaccines developer Theravectys raised $20mm...Curemark (enzyme replacement candidate for autism) brought in $18.5mm in what looks to be its Series C round…PharmaLink raised $15mm in a Series C round…a Series A round by PharmAkea Therapeutics brought in $10mm concurrent with an alliance with Celgene, which took a stake and has an option to acquire the start-up…Molecular Templates (antibody-drug conjugates for cancer) completed an $8.5mm Series CAxioMx fetched $2mm in a Series B round…Mid Atlantic Bio Angels invested $400k in Immunomic Therapeutics...Arrowhead Research netted $60mm through the private sale of common and preferred shares…Cytos Biotech hopes to raise CHF17.6mm ($19.5mm) in a rights offering of up to 6.3mm a private placement to institutional investors, Pharming brought in $16.3mmRexahn raised $5.3mm in a registered direct offering…VG Life Sciences concluded a $2.2mm private placement...multiple players completed follow-on public offerings: Portola Pharmaceuticals (hematological and inflammatory disorders) $151mm...$113mm for dermatology-focused Kythera; generic drug maker Lannett netted $71.9mm; Prothena (antibody therapeutics) $71.6mm; Dyax (phage display technology) $56.4mm; cell therapy developer NeoStem $33mm; CytRx (cancer therapeutics) $24.3mm; Cel-Sci (immunotherapeutics)  $16.4mm; Tekmira (RNAi therapeutics) $30mm; and Advaxis (cancer and infectious immunotherapies) $23mm...Aerie Pharmaceuticals set terms for its initial public offering hoping to sell 5.25mm shares between $12-14…Ruthigen set IPO terms too: 1.5mm shares at $12-14...several other biotechs filed for IPOs: GlycoMimetics (lead compound for sickle cell disease); Karyopharm (cancer and inflammation); Trevena (GPCR compounds); Xencor (MAbs);  Celladon (calcium dysregulation); Vital Therapies (liver disease); and Egalet (abuse-deterring pain drugs)…BioMarin priced five-year 0.75% senior subordinated convertible notes ($340mm) and 1.50% seven-year 1.50% senior subordinated convertible notes ($340mm)…European Investment Bank provided Norgine with an $81.2mm loan to help with product acquisitions. -- Maureen Riordan

Putin art photo courtesy of flickr member volna80.

Friday, October 11, 2013

Deals of the Week: Value Surprise!

There’s a lot of talk about valuation these days. Sort of like the porridge in the nursery tale, it’s either too high, or it’s too low, but it’s almost never just right.

Start-ups and micro-caps are frequently valued on the strength of their lead candidate, with earlier-stage programs, certainly anything in research, heavily or entirely discounted. But it sometimes turns out that the real value was in these lowly, neglected candidates or technologies and not the glitzy lead.

Acquisitions, particularly serial acquisitions, often delay these early-stage programs, and sometimes bury them altogether. But decades later, the ones that squeak by sometimes go on to dizzying heights.  And in a few rare examples, the companies that birthed these hidden gems go on to do it again and again.

Take Sugen. An early specialist in kinase biology, it was founded in 1991, went public in 1994, and was acquired by Pharmacia in 1999 for $728 million. Pharmacia was acquired by Pfizer Inc. in 2003, and most of Sugen’s staff was let go. The few that remained were absorbed into Pfizer’s La Jolla campus. Sunitinib, a follow-on compound to Sugen’s lead angiogenesis inhibitor SU5416, was filed by Pfizer and approved in 2006 for advanced kidney cancer and gastrointestinal stromal tumor (GIST). 2012 sales of Sutent were a shade over $1.2 billion.

Pfizer’s next cancer launch, another Sugen discovery called crizotinib, was a more interesting story. Former Sugen researcher James Christensen, a senior director of precision medicine at Pfizer’s La Jolla campus, told us that it began as a c-Met inhibitor program in the early 2000’s. Around 2006 there was reason to think that ALK was an off-target effect, but the Pfizer team didn’t know what the application would be. In 2007, Nature magazine published an article on the role of ALK translocation in NSCLC. Xalkori launched 4 years later in 2011. 2013 sales are projected at around $290 million.

Fourteen years later, Sugen has returned many times its purchase price. With ALK screening issues out of the way, Pfizer executives expect Xalkori sales to climb. And Pfizer La Jolla may be working on other Sugen-discovered kinase surprises.

The next example was likewise buried under layers of acquisitions. In 1999, Millennium Pharmaceuticals (now Millennium: The Takeda Oncology Co.) acquired fellow Cambridge biopharm LeukoSite for $585 million. The first LeukoSite alumnus, Campath (alemtuzumab, licensed from BTG PLC in 1997), was ultimately approved for CLL in 2001. It never made much headway in that indication. But Sanofi/Genzyme Corp. are hoping it will fare better in multiple sclerosis, where the company has rights acquired from former Millennium partner Bayer AG in 2009, and have recently won approval for the drug as Lemtrada in Europe. LeukoSite also advanced Velcade (bortezomib) after acquiring ProScript, a foundering Cambridge biotech, a few months before being gobbled up by Millennium. Millennium went on to win approval for it in multiple myeloma, seven years after its initial synthesis, in 2003.

But the real buried value may lie in another LeukoSite antibody, vedolizumab, an alpha-4-beta-7 integrin which is expressed only on lymphocytes. It is essentially a targeted therapy for gut inflammation. Takeda Pharmaceutical Co. Ltd. filed in the U.S. for ulcerative colitis, and FDA recently gave it priority review. Tachi Yamada, head of R&D at Takeda, told us at Elsevier’s recently-held PSA: The Pharmaceutical Strategy Conference in New York that vedolizumab, which we thought had originated in Millennium’s labs, ultimately came out of LeukoSite’s antibody libraries.

Yamada said that when he started at Takeda in 2011, he saw the potential of vedolizumab and put resources behind it. “This was a little bit of a program that was being operated by a group of people under the radar,” he said. “We always understood the value of this library of antibodies, and we are looking through them very carefully for other potential applications.”

Nothing new here. Big fishes eat little fishes. Management hierarchies and scientists change. And so do portfolio priorities. Programs are killed or neglected, and sometimes redirected. And once in a rare while they’re spotted, and quietly pursued. -- Michael Goodman  (Thanks to for use of the photo)

Speaking of the vicissitudes of value, here's the latest edition of . . .

Janssen/GSK: Johnson & Johnson’s Janssen Pharmaceuticals Inc. is determined to own a hefty slice of the oral hepatitis C market. The company now has Phase II antiviral candidates in three different classes, thanks to an Oct. 8 deal with GlaxoSmithKline PLC giving it worldwide rights to GSK2336805, an inhibitor of the non-structural 5a protein. Financial terms weren’t released.

Janssen already has an earlier-stage NS5a inhibitor in its pipeline, but plans to study ‘805 in combination with its other oral direct-acting antivirals. Potential two- and three-drug cocktails could include combos with protease inhibitor simeprevir, which has a Nov. 28 PDUFA date, and/or non-nucleoside polymerase inhibitor TMC647055. Janssen is already testing simeprevir in combination with Gilead Sciences Inc.’s nucleoside polymerase inhibitor sofosbuvir and Bristol-Myers Squibb Co.’s NS5a inhibitor daclatasvir, but the new deal gives it a chance to own all the parts of a combo therapy.

With the sale, GlaxoSmithKline has effectively exited the oral HCV arena, although it will complete an ongoing Phase II trial of ‘805 in combination with ribavarin and pegylated interferon. GSK and Vertex Pharmaceuticals Inc. agreed in November 2012 to conduct a Phase II study of ‘805 with Vertex’s nucleoside polymerase inhibitor VX-135. -- Paul Bonanos

Quintiles/Muscular Dystrophy Association: Quintiles, the global CRO, is reaching further into the world of patient registry development. The Muscular Dystrophy Association has tasked it to develop a neuromuscular disease registry which will provide real world evidence to help researchers, physicians, and patients understand the cause of the disease and identify effective treatments. Financial details were not disclosed. 

MDA will use the registry to study the natural history of muscular dystrophy and related muscle diseases such as ALS and SMA, collect information on practice patterns, inform care guidelines, and improve the quality of patient care. The registry is currently available at 25 clinics within MDA’s national network, with plans to expand to their full network of 200 clinics by 2015.

A Quintiles spokesman wouldn’t comment on the CRO’s plans to grow its registry practice, but he noted that patient registries “are an increasingly important component of real-world evidence development.” The CRO has touched the world of registries before through its Quintiles Outcome division which specializes in observational and real-world research. Quintiles said that the unit, “our real-world and late-phase division, has managed patient registries previously.” -- Michael Goodman

Vivus/Auxilium: Auxilium Pharmaceuticals Inc. stuffed another men’s health drug into its sales reps’ bags Oct. 11 when it licensed rights to Vivus Inc.’s Stendra (avanafil) in the U.S. and Canada. Auxilium will pay Vivus $30 million up front for the erectile dysfunction drug, and is on the hook for an additional $15 million contingent upon a label revision for the drug that reflects an even-better-than-Dominos-Pizza-15-minutes-or-less onset claim.  Further regulatory and sales milestones could eventually take the total outlay to $300 million, and Vivus will receive an undisclosed royalty on sales.

When Auxilium launches the drug at the end of 2013, Stendra will complement its Testim testosterone gel and other men’s health products. (FDA approved the drug in April 2012, though Vivus had yet to launch it.) Auxilium hopes to differentiate the product from its entrenched competition – led by Pfizer’s Viagra (sildenafil) – based on the onset claim. In July 2013, Vivus licensed rights to market the drug in Europe, Australia, and New Zealand to Menarini Group, for $21 million up front plus milestones and royalties.

Vivus, beset by multiple changes at the top of its management ranks this year, is largely valued on the promise of its Qsymia (phentermine/topiramate) obesity drug. With Stendra in the hands of a men’s health specialist, Vivus and new CEO Seth Fischer should now be able to focus on improving sales and/or finding a partner for its main asset. -- Chris Morrison

Lilly/Hutchison MediPharma: Eli Lilly & Co. and Chi-Med's Hutchison MediPharma Ltd. subsidiary have signed an agreement to co-develop and market a small-molecule drug discovered by Hutchison, HMPL-013 (fruquintinib), for treating a variety of solid tumors. Under the agreement, Lilly is to pay Hutchison as much as $86.5 million in upfront payments and development and regulatory milestones, plus tiered royalties based on net sales if the drug reaches the China market. The two firms will share future development costs, which would be carried out by Hutchison. Additional terms were not disclosed.

A vascular endothelial growth factor (VEGF) inhibitor, fruquintinib demonstrated clinical activity in patients with various heavily pre-treated advanced cancers, according to Hutchison MediPharma. Currently, a single arm Phase II study is on-going in China with results expected to be released in early 2014. In July 2013, HMP received Phase II/III Clinical Trial Application approval from China FDA. In the planned Phase II/III clinical trials, fruquintinib will be studied in patients with a variety of solid tumors.

“The collaboration with Lilly will allow for fruquintinib to be developed across various tumor types in China and at a far greater speed than if we went alone,” said Chi-Med CEO Christian Hogg in a statement. 

“In Lilly’s emerging markets business, we are focused on providing patients with innovative medicines from our own pipeline and through collaborations with respected science-based companies such as HMP,” added Jacques Tapiero, Lilly Senior Vice President and President of Emerging Markets. -- Tamra Sami

Novartis/ImmunoGen: Novartis AG has taken exclusive rights to ImmunoGen Inc.’s antibody-drug conjugate (ADC) technology for use in developing cancer therapies against an undisclosed target. This is the second license Novartis has taken onthe technology; the first, in 2010, involved a predetermined number of oncology targets, selected by Novartis. In 2010, Novartis paid ImmunoGen $45 million upfront and up to $200.5 million in milestones for each target resulting in a cancer compound, and royalties. Milestones in the latest deal are also valued at up to $200 million, not including the undisclosed upfront.

Novartis is responsible for development, manufacturing and commercialization of the products.  ImmunoGen’s ADC technology, known as TM1, uses a tumor-targeting engineered antibody that links to a cancer therapy and delivers that therapy to the cancer cells; it aims to be better tolerated and more effective. Roche/Genentech Inc.’s Kadcyla, which combines ImmunoGen’s ADC technology and Roche’s well-established trastuzumab antibody, recently was approved in the U.S. and elsewhere for previously treated HER2-positive metastatic breast cancer patients. ImmunoGen also has partnerships with Bayer Healthcare, Amgen Inc., Biotest AG and Sanofi.

Despite a string of platform deals, FDA approval of a key cancer agent that validates the biotech’s ADC platform, and a wildly optimistic run up overall in biotech stocks, ImmunoGen’s stock has traded within a narrow range for the past 12 months.  Investors are waiting for more data on its lead in-house compound, IMGN901, a small cell lung cancer drug which hit a delay last spring due to dosing adjustment in PII trials. -- Wendy Diller

Takeda/Immunomedics: Takeda will return rights to the humanized anti-CD20 antibody veltuzumab to Immunomedics Inc., not because of any issues that arose in clinical trials, according to Immunomedics, but because of lack of progress on the program. Immunomedics had filed arbitration proceedings against Nycomed (now owned by Takeda) concerning delays in the development of veltuzumab, which the company argued was a material breach in the licensing agreement. Neither Nycomed nor Takeda completed a single trial on the program. Immunomedics says it will continue to pursue arbitration procedures for damages due to the delay in development.

It is weighing its options for the program including signing a new partner or developing it independently. Nycomed in-licensed rights to veltuzumab in non-cancer indications in July 2008 for $40 million up-front and $580 million in potential milestones, with the aim of developing the drug for rheumatoid arthritis. After Nycomed was acquired by Takeda in 2011, it changed the development plan to focus on lupus instead, resulting in further setbacks, according to Immunomedics. In addition to the $40 million up-front payment, Immunomedics also received a total of $20 million in three follow up payments. Immunomedics is separately studying veltuzumab for the treatment of lymphoma. -- Jess Merrill

Friday, October 04, 2013

Deals of the Week: For Astex Shareholders, Will 8 1/2 Do?

A month after Otsuka Pharmaceutical agreed to buy cancer drug developer Astex Pharmaceuticals for $886 million, a top shareholder is challenging the deal. Sarissa Capital Management issued an open letter Oct. 2 to announce its opposition, lamenting a price it found underwhelming, an auction process it found flawed, and an executive team whose motivations it believes to be suspect. A separate shareholder class action is already pending, alleging that the deal won’t deliver fair value as proposed.

Sarissa is a life science-focused hedge fund operated by Alex Denner and Richard Mulligan, onetime associates of activist investor Carl Icahn. The fund’s operators believe its 5% stake in Astex is worth more than the $8.50 per share Otsuka agreed to pay in the Sept. 4 deal, and the firm is not planning to tender its shares. Moreover, the firm expressed surprise at the deal’s timing, saying it was “inexplicable and disturbing” that Astex would sell before it reveals key Phase I/II clincal data from oncology candidate SGI110 in December, with more data to come in 2014. The drug has shown promise in acute myeloid leukemia and myelodysplastic syndromes.

The letter also alleged that Astex failed to engage all potential bidders, and favored terms that would keep existing structures intact while rewarding top executives with individual long-term compensation incentives. Sarissa’s co-founders called the executive-retention terms “extraordinarily upsetting,” said the executives’ intentions were compromised, and accused management of trying to “hide important issues about [their] motivations."

Astex fired back with its own open letter Oct. 2. The Dublin, Calif.-based company described a sale process in which 33 potential suitors were engaged and five showed serious interest, but only Otsuka submitted a final proposal. Astex says it negotiated the $8.50 price up from $7.75, and received interest from another buyer in the $6 to $7 range. (Shares hovered between $5 and $6 for most of July and August.) Astex claims it hasn’t received any competing buyout offers since the Otsuka deal was revealed last month, and denied that it had discussed specific employee retention arrangements with the Japanese buyer.

Most of Astex’s speculative value is tied up in pipeline drugs SGI110, a DNA hypomethylating agent that reactivates gene expression, suppressing tumor cell growth; and AT13387, an HSP90 inhibitor targeting multiple cancers. The company also reaps royalties on sales of Dacogen (decitabine) for myelodysplastic syndromes, sold by Eisai in North America and Janssen Cilag elsewhere.

Could a solution come in the form of a contingent value right that could add a further payout to a deal long after it’s consummated? Astex’s SGI110 data presentation at December’s American Society of Hematology conference represents a near-term milestone that could tempt both sides to settle for a contingency, but SGI110 and AT13387 still have a long way to go. The two sides would have to settle soon; Otsuka’s offer is set to expire Oct. 10. Stalling might work, too. If the current deal falls apart but the December data are encouraging, additional suitors could line up as potential buyers or partners. Astex could then command a much higher price, with a somewhat de-risked asset in its pipeline. And even in the short term, the suggestion that Astex could be worth more might compel more shareholders to get on board with Sarissa’s demands. - Paul Bonanos

Even if your life isn't just like a Fellini film, we hope you enjoy la dolce vita this weekend. And please enjoy...

Johnson & Johnson/Effimune/Merus/CureVac/DCPrime: J&J's London Innovation Center announced deals between the Big Pharma and four European biotech companies on Oct. 3, timed to coincide with a meeting between J&J researchers and UK political and research movers-and-shakers at the six-month-old center. The center is one of four ICs around the world, set up to invest or collaborate with academics, entrepreneurs and early-stage companies. All four deals were concluded with help from the IC. In the first, J&J's Janssen Biotech Inc. entered into a global option and license agreement with French company Effimune concerning a preclinical pegylated anti-CD28 antibody fragment, FR104, which has potential in immune-mediated disorders. If the option is exercised, Janssen will make milestone payments and pre-specified royalty payments on worldwide net sales of the product. In the second deal, Utrecht, Netherlands-based Merus has received an equity investment from J&J Development Corporation as part of a €31 million ($42 million) extension to a Series B financing round that now totals €47.6 million. Existing investors include two other corporate investors, the Novartis Venture Fund and Pfizer Venture Investments, as well as Bay City Capital, Life Science Partners and Aglaia Oncology Fund. Merus is building a pipeline of single cell-derived human bispecific antibodies for use in cancer therapy. In the third deal, Germany's CureVac will collaborate with Janssen Pharmaceutica Inc.'s Crucell Holland to develop an influenza vaccine based on CureVac's RNActive technology. And lastly, the Leiden, Netherlands-based DCPrime BV has entered into a research collaboration and optional license agreement with Janssen Pharmaceuticals Inc. on a potential dendritic cell-based vaccine; one candidate has completed a Phase I/IIa trial in acute myeloid leukemia. - John Davis

Tri-Institutional Therapeutics Discovery Institute: With a personnel contribution from Takeda Pharmaceutical, three New York-based academic research institutions will team up to create the Tri-Institutional Therapeutics Discovery Institute (Tri-I TDI), a non-profit organization that will seek to expedite advancement of basic biomedical research into innovative therapies and treatments across a broad spectrum of therapeutic areas, including cancer. Initial work will focus on small molecules, but eventually the institute plans to branch out into monoclonal antibodies and molecular imaging agents. Announced Oct. 1 in New York City, the collaboration will bring together under one roof researchers from Memorial Sloan-Kettering Cancer Center, Rockefeller University and Cornell University’s Weill Cornell Medical College. This is hardly the first time these three institutions have come together for a joint research initiative. In 2011, each was among seven New York research institutes electing to partner with Pfizer in an initiative to apply open innovation toward the development of biologic therapies across all therapeutic areas. In addition, each institution has pursued its own tech-transfer deals with private industry over the years. The institute begins its work with $20 million in philanthropic funding. It has received a $15 million grant from Lewis and Ali Sanders and $5 million from Howard and Abby Milstein. In addition, the three institutions will make equal contributions to an operating budget, while Takeda’s initial investment will be in the form of medicinal chemists based at the institute. Carl Nathan, chairman of Weill Cornell’s department of microbiology and immunology, said Takeda’s participation will be unusual, in that the personnel it lends to the effort will perform medicinal chemistry and take those processes much farther along than would be possible at the academic level, but without any guarantee of an economic benefit to the Japanese pharma. - Joseph Haas

Intrexon/Sun: Fresh off an August initial public offering that raised $184 million, synthetic biology specialist Intrexon created a  joint venture with India’s Sun Pharmaceutical to discover and develop new drugs for eye disorders. The companies plan to unite Intrexon’s technology platform, including the proprietary RheoSwitch Therapeutic System to control protein expression, with Sun’s global specialty pharma development and manufacturing expertise, and target chronic disorders such as “dry” age-related macular degeneration, glaucoma, and retinitis pigmentosa. Intrexon’s business model is built on partnerships, typically providing novel in vivo and ex vivo biological engineering techniques to another company with a specialized area of focus. (It struck a separate deal with Oragenics this week, concerning new therapies for oral, throat, sinus and esophagus disorders.) Led by billionaire Randal J. Kirk, Germantown, Md.-based Intrexon has struck at least eleven deals since its formation in 2007 as GT Life Sciences. Financial details weren’t released, and neither Intrexon nor Sun would comment beyond a statement. It’s not clear whether the two parties are equal owners, nor whether they invested equal amounts. Although they will share in the profits, it’s also unclear how decisions guiding the JV will be made. - P.B.

Enteris/Nordic Bioscience: Enteris BioPharma inked its first-ever licensing deal, just three months after it was formed from the assets of defunct Unigene Laboratories. The Boonton, N.J.-based company licensed its proprietary oral formulation platform, Peptelligence, to Nordic Bioscience subsidiary KeyBioScience Sept. 30, in order to develop oral versions of peptide drugs targeting metabolic diseases. Terms weren’t released, although Enteris acknowledged that it will receive both fee-for-service payments and royalties on any products that result from the deal. Nordic previously formed a joint venture with Enteris’s predecessor in 2011, studying Unigene’s calcitonin analogs for type 2 diabetes, osteoarthritis and osteoporosis. Chicago hedge fund Victory Park Capital is the sole owner and funder of Enteris. The company was launched after Unigene, hobbled by debt and by negative regulatory decisions, was sold in pieces.  The company believed that Unigene had neglected technologies such as Peptelligence all along, and hopes potential partners will see its value in extending drug franchises with convenient formulations and renewed patent life. - Lisa LaMotta

Celgene/PharmAkea: Celgene is making a habit out of equity/option deals. The Summit, N.J. drugmaker’s latest arrangement gives it an opportunity to buy PharmAkea Therapeutics, a small-molecule discovery company created last year to develop drugs for fibroproliferative diseases. Celgene will invest $35 million over three years, take an equity stake in PharmAkea, and hold an exclusive option to acquire it.  The companies will explore three targets concerning connective tissue and the link between fibrotic disease and cancer. PharmAkea believes it can begin Phase I trials on two programs within three years; Celgene holds the option to extend the arrangement for 18 months or buy the company outright. The deal was announced simultaneously with PharmAkea’s $10 million Series A funding from Bay City Capital. It’s a now-familiar strategy for Celgene, a company that took a similar option to buy Quanticel Pharmaceuticals for $45 million after Versant Ventures incubated the company for several months in 2011. Celgene also paid $100 million for an exclusive option to acquire five-year-old epigenetics drug developer Acetylon Pharmaceuticals in July, after investing in the company’s Series B round previously. Celgene seeded PharmAkea last year, allowing it to recruit a management team that includes several executives from Amira Pharmaceuticals, sold to Bristol-Myers Squibb for $325 million upfront in 2011, and BrainCells Inc. - P.B.