Deals Of The Week: Can Endo Succeed By Copying The Valeant Model?

Santa’s sleigh may be loaded to the brim with gifts come Christmas Eve but it was Deals of the Week that carried a heavy load during the final full business week before the Yuletide holiday. That’s roughly 20 business development transactions, and counting, for the week of Dec. 16-20 as this column went to press.

Below are some of the highlights, but let’s start with the latest stocking-stuffer at Endo Health Solutions, which has always relied on deal-making to fill its pipeline but may be poised to increase its prior business development pace since Rajiv De Silva signed on as CEO from perpetual deal-maker Valeant Pharmaceuticals in February. On Dec. 16, Endo agreed to acquire NuPathe and its recently approved sumatriptan patch, Zecuity, for $105 million upfront plus potential contingent payments pegged to future sales of the migraine product.

This closely followed the Nov. 5 $1.6 billion buyout of Canadian specialty pharma Paladin Labs, a move that would expand Endo’s international footprint to Canada, South Africa and Mexico, while providing tax advantages by allowing the suburban Philadelphia company to re-domicile in Ireland. It’s been a frenetic pace since De Silva took over and moved toward a Valeant-like pursuit of expansion via M&A activity.

While Wall Street did not rave about the NuPathe acquisition, perceiving it as mainly the acquisition of a single asset likely to post smallish sales but also enhance Endo’s pain product portfolio, analysts told Deals of the Week they approve of De Silva’s approach to re-making Endo.

“I actually like the strategy he’s pursuing,” said UBS Investment Research analyst Marc Goodman. “De Silva came in and said ‘we need to restructure this place first because our costs are out of whack with our revenues.’ That’s pretty much the same thing Valeant did a few years ago. The second thing he did was look at the assets and ask what they wanted to be in and what they didn’t. They decided to get rid of [urological services provider] HealthTronics, so that’s on the block. And it wouldn’t surprise me if in 2015 or afterward, once they fix [medical device unit] AMS that they sell AMS.”

Speaking to the Credit Suisse Healthcare Conference Nov. 12, De Silva said plans to divest HealthTronics, termed “not … a strategic fit with us anymore,” are making solid progress. “We have retained an investment bank and we are in the midst of doing management presentations and are optimistic about the level of interest that has been expressed so far,” the exec said. He didn’t address any plans to sell off AMS but said that apart from its women’s health offerings, the unit is showing quarter-to-quarter performance improvement, including year-to-date revenue growth compared with 2012.

The $105 price tag for NuPathe works out to about $2.85 per share. But if Zecuity, approved by FDA in January but not yet launched, meets certain sales thresholds, NuPathe investors stand to get additional payouts. They’ll get $2.15 per share if net sales of Zecuity top $100 million during any four-quarter period up to the ninth anniversary of the first commercial sale of the product. And they can obtain an additional $1 per share if the product reaches $300 million in sales during a four-quarter period during that same time span.

The only FDA-approved prescription patch for migraine, Zecuity is a disposable, single-use, battery-powered transdermal patch that delivers sumatriptan through the patient’s skin. Its approval was based on a Phase III program that tested nearly 10,000 units of the product in 793 patients.

While Goodman thinks Zecuity is unlikely to top the sales marks established under the deal’s contingent payment language, he believes the technology behind the patch product will make it hard to duplicate, frustrating attempts at generic competition and providing Endo with a “very long tail” of revenue (sumatriptan itself, developed and sold by GlaxoSmithKline, has been generic since 2008).

UBS initially will include annual sales of less than $100 million in its modeling for Endo, because of the highly genericized competition in migraine, the resulting pricing pressure and the possibility that doctors with patients who failed to obtain relief on an oral sumatriptan product might not be greatly inclined to try a sumatriptan patch in those very same patients. “I just wonder about the pecking order,” Goodman said.

Meanwhile, Morningstar analyst David Krempa sees the transaction as keeping with the tradition of bolt-on deals De Silva would have learned to value while serving as president and chief operating officer at Valeant.

“It’s a relatively small deal that basically fits in with the strategy they talked about, pursuing bolt-on deals similar to what we saw at Valeant, combined with the occasional mega-deal like we saw with Paladin,” Krempa noted. “Those are the kinds of deals that Valeant has had success with, ones in which it can acquire a product or asset and take out all the revenue without needing to add on any expenses. They don’t need the sales force that [NuPathe] has and so they add the new product onto their existing sales force’s portfolio and get all of the sales without taking on much of the expense that typically would go along with it.”

But Krempa shares Goodman’s concerns about the viability of the migraine space and pain therapy in general. Endo needs to seek out business areas offering “less pricing pressure and better organic growth prospects,” he said, citing dermatology, ophthalmology, branded generics and over-the-counter products as possible targets. The Paladin acquisition gives Endo entrée into some of those spaces, he added.

Meanwhile, plenty of other companies, including Valeant of course, were negotiating their own deals during the final shopping days before Christmas. Read on as we present a red-and-green tinged edition of ....

Valeant/Solta Medical: Serial buyer Valeant moved to expand its aesthetics business this week with the addition of Solta Medical, the makers of medical device systems for aesthetic applications. Valeant announced Dec. 16 it will acquire Solta for $250 million in the latest in a string of acquisitions by the Canadian firm in recent years, including several that have expanded the company’s portfolio in medical devices and dermatology. Solta will complement Valeant’s portfolio on both fronts by augmenting its offerings to dermatologists and plastic surgeons. Its 2012 revenues were $145 million, coming from products like Thermage CPT radiofrequency skin-tightening system, Fraxel skin repair system and the Clear + Brilliant laser skin-resurfacing system. Solta has made a number of major acquisitions in recent years, including Sound Surgical Technologies in February 2013, and the LipoSonix business from Medicis Pharmaceutical in 2011. Valeant ultimately acquired Medicis in 2012 for $2.6 billion, building significantly on its dermatology and aesthetic offerings at the time. - Jessica Merrill

Merck/GlaxoSmithKline: Merck announced Dec. 18 that it is teaming up its highly anticipated early-stage cancer compound, MRK-3475, with GlaxoSmithKline’s kidney cancer drug Votrient (pazopanib), which was approved in October 2009. The two pharmas will test the protein kinase inhibitor with the anti-PD-1 immunotherapy in a Phase I/II clinical trial that will evaluate the safety and efficacy of the combo in treatment-naive patients with advanced renal cell carcinoma, they said in a statement. Financial details of the collaboration were not disclosed. But the dollar amount attached to the deal is almost irrelevant; for Merck, the anti-PD-1 immunotherapy is one of its few programs to garner much enthusiasm of late – both inside and outside the company – as the New Jersey pharma struggles to move drugs through its pipeline successfully. Merck is relying heavily on the cancer immunotherapy – which has shown a lot of promise but is still very early – to deliver its first blockbuster in several years; and the company intends to partner, partner and partner some more. “We look forward to initiating further collaborations to investigate MK-3475 in combination with other anti-cancer agents across a range of tumor types,” said Iain Dukes, SVP of Licensing and External Scientific Affairs at Merck Research Laboratories. So expect to see plenty more of these little tie-ups in 2014 – but don’t hold your breath for any financial terms to be revealed. - Lisa LaMotta

Pfizer/Siemens: Pfizer and Siemens Healthcare Diagnostics have entered into a master collaboration agreement to design, develop and commercialize diagnostic tests for therapeutic products across Pfizer’s pipeline. Siemens is providing in vitro diagnostic tests that Pfizer can use in its clinical trials and potentially as companion diagnostics for Pfizer drugs. Terms were not disclosed, nor were development priorities, but Trevor Hawkins, SVP, strategy & innovations, diagnostics division of Siemens Healthcare, said the deal is open-ended and could be applied to Pfizer’s entire portfolio, from early-stage development to commercialized drugs. The partners already have two active programs, one of which requires Siemens to identify a marker for a compound and the other of which requires Siemens to develop a test for a biomarker that Pfizer has identified already. The partners have set up a joint governance committee, which is meeting weekly. Both companies have partnerships with others around companion diagnostics, but those are mostly one-offs; Siemens, for example, in June, entered into a global agreement with Janssen Pharmaceutica to create a companion diagnostic for an early-stage heart failure therapeutic. Pfizer has at least three companion diagnostic deals, including one with Qiagen, which it signed in 2011 to develop a molecular test for dacomitinib, then in Phase III for non-small cell lung cancer. And in 2012, it signed a deal with Roche Diagnostics Corp. to develop an immunohistochemistry companion test for Xalkori (crizotinib), also for NSCLC. Pfizer isn’t the first pharma to enter into a master agreement around companion diagnostics; Eli Lilly has one with Qiagen. As the deal’s reach shows, pharma’s inherent skepticism about the value of companion diagnostics is gone, although many uncertainties remain, both technical and commercial, about the field. - Wendy Diller

Bristol-Myers Squibb/AstraZeneca: AstraZeneca announced Dec. 19 that it will acquire the entirety of Bristol-Myers Squibb’s interests in their diabetes alliance, including drug assets, staff and infrastructure, paying $2.7 billion on deal completion, $1.4 billion in regulatory and commercial milestones, and royalties up to 2025. The deal ends a seven-year diabetes alliance between the two parties that culminated in the 2012 co-purchase of Amylin Pharmaceuticals for $7 billion. With the dissolution of the alliance, AstraZeneca gets all patents and global rights to DPP-4 inhibitor Onglyza (saxagliptin) in all combinations and formulations, SGLT4 inhibitor dapagliflozin (Forxiga in Europe), metreleptin (recombinant leptin) for treatment of lipodystrophy, and Amylin’s GLP-1 assets Bydureon (exenatide, weekly injection) and Byetta (exenatide, twice-daily injection). The transaction illustrates the divergence in strategy between the two companies, as AstraZeneca believes its geographic reach and its scale in diabetes assets, infrastructure and capabilities position it to succeed. Bristol, on the other hand, will use the breakup to accelerate its transformation into a sharply focused specialty care company and to re-allocate its resources toward its PD1 program and its immuno-oncology franchise, said CEO Lamberto Andreotti on a same-day business update call. AstraZeneca’s focus in 2014 will be on its upcoming launch of dapagliflozin in the U.S., on building the Bydureon brand, and on life-cycle management of Onglyza. - Mike Goodman

Bayer/Algeta: Everyone likes to see a billion-dollar acquisition or two quickening the markets a bit going into the annual industry festival that is the JPMorgan Healthcare Conference. Obligingly, Algeta and its partner Bayer are providing one; the biotech said on Dec. 19 that it has agreed to be acquired by the pharma for $2.9 billion. Algeta originally disclosed an offer from Bayer on Nov. 26. In the intervening weeks, it got the pharma to sweeten the pot a bit to NOK 362 per share from NOK 336. That increase raised the offer from the original price of about $2.65 billion. The price is a 37% premium to the closing price on Nov. 25, the day before it disclosed the original Bayer offer. The pair partnered on prostate cancer therapy Xofigo (radium-223 dichloride), which was approved and launched in the U.S. in May. It subsequently was approved in the EU in November. In a market crowded with new and expensive entrants, the therapeutic offers a new mechanism of action and is aimed specifically at the treatment of castration-resistant prostate cancer in patients with symptomatic bone metastases, a critically ill subset. In Xofigo’s first full quarter of sales, it had $17 million in revenue during the third quarter. Administration sites have to be licensed to sell the product because of its radioactivity; as of Oct. 18, Algeta said there were 626 facilities licensed to treat patients with Xofigo in the U.S. That number had progressed faster than expected. Algeta received €100 million ($137 million) in Xofigo milestones during the first three quarters of 2013. Half of this amount came due on the FDA submission for Xofigo, with the other half tied to the first sale of the product. Under the terms of the 2009 partnership, Bayer paid €42.5 million up front. Then in 2012, Algeta exercised its option to co-promote Xofigo in the U.S., which entitled it to a 50/50 split with Bayer of profits and commercialization costs. Bayer owns sole rights ex-U.S., paying Algeta a tiered double-digit royalty on product sales. Analysts estimate Xofigo will be a blockbuster. Bayer clearly was unwilling to share any upside with its biotech partner and, with enough cash, it didn’t have to. - Stacy Lawrence

Jazz/Gentium: Recently re-domiciled in Ireland, as Endo now is planning to do, Jazz Pharmaceuticals signed an agreement Dec. 19 to purchase Italy’s Gentium for $57 a share, a bid that would total out to about $1 billion. Key to the deal is Defitelio (defibrotide), approved by the EU this past October to treat veno-occlusive disease in adult and pediatric patients undergoing hematopoietic stem-cell transplantation. The sale is structured as a tender offer – both companies’ boards of directors have approved the transaction. Based on a single-stranded oligodioxyribonucleotide extracted from DNA in pig intestines, defibrotide had been filed for approval in the U.S. but Gentium withdrew its NDA in August 2011 after learning that FDA would refuse to file the application over questions of data quality and the conduct and monitoring of clinical trials. “Incorporating Gentium into Jazz Pharmaceuticals is a strong strategic fit, as Defitelio would diversify our development and commercial portfolio and complement our clinical experience in hematology/oncology and our expertise in reaching targeted physicians who treat serious medical conditions,” Jazz Chairman and CEO Bruce Cozadd said in a release. “Because Defitelio is already approved in the EU, the acquisition would add a new orphan product that has potential for short- and long-term revenue generation, high growth and expansion of our multinational commercial platform.” In a Dec. 20 note, Brean Capital analyst Gene Mack said the acquisition should be immediately accretive for Jazz, with defibrotide bringing in a projected $71 million in sales in 2014, crossing the $200 million annual sales threshold in 2018 and nearing $500 million in 2023. - Joseph Haas

Photo credit: Wikimedia Commons

Deals of the Week Visits The Winner's Circle

Celgene Corp. continues its march to win the hearts and minds – or at least the votes – of the biopharma industry, as measured by The IN VIVO Blog’s Deals of the Year poll.

When the polls closed Jan. 4 for the 2012 contest, Epizyme Inc.’s April tie-up with Celgene walked away with nearly 60% of the vote in the Alliance category – the largest vote percentage in all three categories.

It's the second win in five years for a Celgene deal, following its $2.9 billion cash-and-stock-and-contingent value rights deal with Abraxis Bioscience targeting solid tumors in 2010.

This achievement could reflect widespread industry recognition for Celgene’s deal strategy over the years. Or perhaps it reflects a vigorous get-out-the-vote campaign in some quarters that would spark jealousy in Washington (and given our editors’ frequent entreaties to vote early and often, it's heart-warming to think our readers are listening).

Also taking the winners' circle this year was the Amylin Pharmaceuticals Inc./Bristol-Myers Squibb Co./AstraZeneca PLC three-way deal in the M&A category, barely edging out Biogen Idec Inc.’s acquisition of Stromedix Inc. The unique collaboration raises the stakes in the diabetes drug market, particularly the increasingly competitive market for glucagon-like peptide-1 agonist therapies, and its unusual structure allowed two pharmas to share the spoils of the recently-approved potential blockbuster Bydureon (long-acting exenatide).

And in the financing category, Foundation Medicine Inc.’s Series B took the honors, topping gene therapy company bluebird bio's funding. (One impassioned commenter devoted kind words to Intarcia's $210 million funding as well.) Foundation's funding was one of the smaller-sized deals vying for voters' favor, but the company has attracted interest from a large number of pharma companies for its genomics testing technology. The company raised a $43.5 million Series B round to fund marketing of its first product, FoundationOne, a test to identify all classes of genomic alterations (including copy number alterations, insertions, deletions and rearrangements) in about 200 cancer-related genes. 

As in past years, the IN VIVO Blog invites the winners to make acceptance speeches in this space. As for the new year, we've already got some new tales to tell. To the winners go the spoils, and to you, we present 2013's first...

AstraZeneca/Cellular Dynamics: Madison, Wisc.-based stem cell research company Cellular Dynamics International Inc. said AstraZeneca PLC will use its technology to conduct drug safety tests as part of the drug discovery process. In a deal announced Jan. 3, CDI said AstraZeneca would both use its broad-ranging, commercially available iCell products and genetically engineer new products using CDI’s MyCell lines for specific patient groups, as part of the discovery and testing process for novel compounds, including in vitro disease research. CDI markets induced pluripotent stem cell products, which are modified cells from biopsies taken from adult patients rather than harvested from embryonic lines, and can be differentiated into various tissue cell groups from an individual’s own stem cell line. The company, which has raised at least $100 million since 2004, believes that its cells can be used during the drug discovery and pre-clinical testing phases to reveal information about safety and efficacy while avoiding ethical concerns and reducing clinical costs.CDI also counts Roche as a customer and partner, under agreements dating to 2008 and since expanded multiple times. Financial terms of the new deal with AstraZeneca weren’t disclosed. -- P.B.

Pfizer/Philogen: The Italian-Swiss targeted antibody company Philogen SPA has attracted another big pharma collaborator, Pfizer Inc., for its angiogenesis-related products. The two companies announced Jan. 3 a worldwide licensing agreement to develop Philogen's Phase I antibody product, Dekavil, in autoimmune diseases. Pfizer intends to evaluate Dekavil in inflammatory bowel disease, as well as continuing Philogen's current clinical program in rheumatoid arthritis. The product consists of an antibody targeting inflammatory disease sites coupled to the immunoregulatory cytokine interleukin-10 (IL-10). Because IL-10 modulates immune responses rather than suppressing them, the companies hope Dekavil will not be associated with unwanted side effects. Philogen will receive an upfront payment and will be eligible to receive milestone and royalty payments, while Pfizer will have exclusive rights to market any products developed in the collaboration. Further terms were not disclosed. Pfizer already has a smaller collaboration with a Philogen unit, Philochem, involving the discovery of cancer targets. Philogen is also collaborating with New Jersey-based Actinium Pharmaceuticals Inc. on attaching alpha-particle emitting radionuclides to its antibodies, with Merck Serono on molecular biomarkers, and with MedImmune on encoded chemical libraries. Philogen researchers helped pioneer the targeting of cytokines, radionuclides, and drugs to the site of disease using antibodies against stromal (connective tissue) antigens. It has five products in Phase I/II studies: darleukin (L19 antibody linked to interleukin-2); teleukin (F16 antibody linked to IL-2); fibromun (L19 antibody linked to tumor necrosis factor); radretumab (F8 antibody labeled with I-131); and Dekavil (F8 antibody linked to Il-10). Back in 2011, Bayer withdrew from a near 12-year strategic collaboration with Philogen on radretumab and darleukin, citing a change of strategy and scuppering Philogen's planned IPO on an Italian stock exchange. -- John Davis

Sanofi Pasteur/Sutro: Protein therapeutics platform developer Sutro Biopharma Inc.’s latest partner intends to create new products using its cell-free protein synthesis technology. The privately held, South San Francisco-based start-up’s newest ally is vaccine specialist Sanofi Pasteur, which plans to develop two new vaccines based on Sutro’s platform. Specific terms of the deal, announced Jan. 3, were not revealed.

Sutro typically uses its platform to develop antibody-drug conjugates and bifunctional antibodies for oncology, but the new deal may range into new territories; the companies did not disclose which targets they will pursue. In December, Sutro announced a tie-up with Celgene Corp. under which the companies will discover ADCs and bifunctional antibodies; that alliance could be worth up to $500 million. Venture investors including Skyline Ventures, Lilly Ventures, Amgen Ventures, SV Life Sciences and Alta Partners have supplied Sutro with nearly $60 million since its 2003 inception, with the latest $18 million tranche of its Series C round arriving in May 2012. The company also inked a multi-year partnership with Pfizer in early 2011 to discover novel peptide-based therapeutics. -- P.B.

Pfizer/Repligen: Pfizer continued its multi-deal first week of 2013 on Jan. 3 by acquiring exclusive worldwide license to Repligen Corp.’s program for spinal muscular atrophy (SMA), led by Phase I, small-molecule candidate RG3039. Pfizer, which will pay Repligen $5 million upfront with the potential for up to $65 million in milestones and royalties on sales of any product reaching market for SMA, also gets backup compounds and enabling technologies from the Waltham, Mass.-based biotech.Repligen previously in-licensed ‘3039 from the patient group Families of SMA, which had invested more than $13 million in preclinical development. Under the deal, Repligen will complete two active cohorts of an ongoing Phase I trial in healthy volunteers, expected to finish during the first quarter of this year. At that point, Repligen will transfer the program to Pfizer, which will be responsible for all subsequent clinical development of ‘3039. The compound has orphan drug status in both the U.S. and Europe. Repligen President and CEO Walter Herlihy said the transaction is consistent with his firm’s strategic decision announced in August 2012 to seek external partners for its drug-development programs while focusing internally on bioprocessing. -- Joseph Haas

Takeda/Amylin: This was one tie-up that didn’t survive a change of control. Four months after the Roger-winning Bristol/AZ takeout of Amylin, a co-development partnership for obesity compounds between Amylin and Takeda was formally severed. It didn’t come as a shock: the partners had in fact discontinued development of their top candidate, the Phase II pramlintide/metreplin combo, in August 2011. Takeda had originally paid $75 million upfront in late 2009 to initiate the partnership. Development and sales milestones across the multiple programs could have totaled more than $1 billion. The deal called for development milestones up to $200 million for two specific products and up to $50 million for any additional products. Commercial milestones were set at $140 million per product related to first sale of the products and up to $800 million per product for other sales-based milestones. Amylin was responsible for all development through Phase II in the United States, with Takeda taking over for Phase III and for all phases outside the U.S. It is unlikely Takeda ever paid any milestones.-- Alex Lash

Thanks to Denise Peterson for this week's lead section.

M&A Deal of the Year Nominee Bristol-Myers/Amylin/AZ

It's time for the IN VIVO Blog's Fifth Annual Deal of the Year! competition. This year we're once again presenting awards in three categories to highlight the most interesting and creative deal making solutions of the year. The categories are: M&A Deal of the Year, Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (a half dozen in each category throughout December) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

For size alone, the $7 billion acquisition of Amylin Pharmaceuticals jointly by Bristol-Myers Squibb and AstraZeneca deserves consideration as 2012's M&A deal of the year. But there's more to 2012's largest acquisition than size. Among the fascinating features: an innovative, two-part, three-party structure; two rather troubled Big Pharma companies aiming to turbocharge their push further into diabetes; and a U.S. biotech facing stiff competition now and in the near future for its lead products.

BMS paid $5.3 billion to purchase Amylin, and assumed $1.7 billion in net debt and a contractual obligation to Amylin's former partner Eli Lilly & Co. Then, AstraZeneca paid $3.4 billion to BMS to acquire 50% of Amylin, and later paid an additional $135 million to have equal governance over the asset.

The deal was said to be set up this way to simplify it: in the business world, it's complicated for a seller to deal with two buyers who want to buy an asset jointly. Much easier all round for Amylin to deal with one buyer, and for the acquirers to flesh out their own arrangements later. Even if one assumes that all adverse eventualities were covered contractually, the rarely used arrangement must still have required more than a soupçon of good faith and trust between the parties involved. If only for the reason that faith and trust, which are so rare to find these days, played their part, the acquisition deserves your vote.

It’s usually true that two heads are better than one. (Except, of course, in politics, where coalitions invariably go sour, but that's another story.) BMS and AstraZeneca are hoping to use their expertise, across different physician groups (primary care, secondary care) and geographies (Western countries, emerging markets) to maximize the potential of Amylin's diabetes GLP1-agonist therapies, twice-daily Byetta (exenatide) and once-weekly Bydureon (extended-release exenatide).

Some might quibble the acquisition smacked of desperation, that the joint marketing of the oral antidiabetic DPP-4 inhibitor Onglyza (saxagliptin) by BMS and AZ under an alliance formed in 2007 was already going nowhere, and their other innovative antidiabetic, the SGLT-2 inhibitor, Forxiga (dapagliflozin), was floundering at the regulators. Others said that at $31 a share, the companies had overpaid, which they could ill-afford.

We're having none of it. BMS and AZ fervently believe they can re-invigorate the sales growth of the once weekly GLP1 agonist Bydureon, which is the launch phase, by not only the deployment of their marketing assets but also through the development of new formulations and administration devices.

It’s a tough challenge because of the tremendous competitive pressure expected in the market from already launched competitors like Novo Nordisk with its GLP1 agonist, Victoza (liraglutide) and those nearing the market with GLP1 offerings, such as Sanofi/Zealand (lixisenatide), GlaxoSmithKline (albiglutide), Lilly (dulaglutide) and others.

But it's not as if either BMS or AstraZeneca lack recent experience in assimilating companies and products, at least on their own. In 2012, AstraZeneca also bought U.S. biotech Ardea Bioscience for $1.26 billion to gain access to its Phase III gout therapy, lesinurad, and BMS acquired Inhibitex for $2.5 billion, for its hepatitis C targeted nucleotide polymerase inhibitor, INX-189.

Other goodies likely to accrue to BMS and AstraZeneca from the Amylin acquisition are operating synergies and tax advantages too, making it a standout acquisition for those reasons as well. What are you waiting for? Vote for this acquisition.

--John Davis

Deals Of The Week: A New Sound For The Fourth Of July

Certain sounds signify the Fourth of July season in the U.S. – the pop and boom of fireworks, the sizzle of burgers and hot dogs on the grill, the crack of the bat as baseball reaches mid-season. And, oh yes, the sound of the other shoe dropping in the pharma/biotech M&A arena.

Wait, the next shoe dropping in biopharma M&A? That’s exactly what the industry and its followers are awaiting in the immediate aftermath of Bristol-Myers Squibb’s $5.3 billion buyout of Amylin Pharmaceuticals just prior to the holiday. Now, industry analysts are studying that and other recent deals for trends or clues about what is coming.

Near-term, Wall Street awaits the outcome of GlaxoSmithKline’s bid for its Benlysta (belimumab) partner Human Genome Sciences. On June 29, GSK extended its hostile, $13-per-share offer for the Maryland biotech through July 20, while HGS again turned down the bid and said it is accepting counter-offers until July 16.

Salveen Richter, managing director, biotechnology equity research, at Cannacord Genuity Securities, pointed to recent pharma buyouts of biotechs such as Gilead Sciences/Pharmasset, Bristol/Inhibitex, Amgen/Micromet and AstraZeneca/Ardea Biosciences, saying pharma seems to be focused on acquisitions that offer later-stage assets or proven revenue generation or profitability.

“Overall, we’re seeing pharma be opportunistic, picking assets to build their R&D engines or showing interest in later-stage, proven assets, but they have avoided limited-product companies in the initial drug launch phase,” she said.

AstraZeneca/Ardea clearly was a continuation of the U.K. pharma’s interest in bolt-on acquisitions, she added. “AstraZeneca obviously made an investment in rheumatology through its partnership with Rigel Pharmaceuticals, but the recent Ardea acquisition was a bolt-on as they could just add that asset for gout right onto the rheumatology franchise – and they have publically stated they are looking for more,” Richter noted. “If a company is in a therapeutic area with built-out commercial infrastructure or plans to [build], bringing in an asset in the same category is highly leveragable.”

With some speculating that the Amylin purchase will lead to a run on companies focused on diabetes or obesity, Stephen Willey, director, equity research, biotechnology, at Stiefel Nicolaus, wondered if such assets, particularly in the diabetes space, are in plentiful supply.

“The diabetes space is tough only because you don’t see a lot of companies playing in it,” he said. “That’s because it’s a large, primary care market and one of these opportunities whereby the acquirer is going to be held hostage to finding a partner. I’m not sure there’s necessarily a ton of read-through on the Amylin take-out; to me that was company-specific.” Buying Amylin was a response by Bristol to its clinical setbacks with dapagliflozin, which created a hole in its revenue projections for 2015-2016, he explained.

But to the extent M&A interest turns to diabetes, as it did with hepatitis C in 2011, Willey cites Lexicon Pharmaceuticals as a potential target. “Their Phase III-ready asset [LX-4211, an oral dual inhibitor of sodium-dependent glucose transporters 1 and 2 (SGLT1/SGLT2)] is probably better than any other diabetes asset that we’ve seen in development,” he asserted. “I would argue that the way that drug works, once-daily oral, has the potential for making the GLP-1 analogues obsolete in five years.”

Simos Simeonidis, senior biotechnology analyst with Cowen & Co., does not see any unusual trends in this year’s M&A activity – just a further recognition by big pharma of its ongoing need to respond to the patent cliff in varying ways.

“It’s part of a continuum – we’ve seen a lot of pharma acknowledge that their internal innovation engines are not working well and they’re cutting,” he said. “They’re realizing that they’re not effective, so they’re saying ‘let’s cut some of the R&D function’ and out-source it to their business development and M&A budgets because there are some late-stage assets they should bring in instead of waiting for their own programs to happen.”

If there is a wave coming, though, Simeonidis thinks it may be in the obesity space. Arena Pharmaceuticals recently obtained FDA approval of weight-loss drug Belviq (lorcaserin), but was required to delay launch because the drug is classified as a controlled substance. That means Vivus still has a chance to beat lorcaserin to market with Qnexa (phentermine/topiramate), which has a July 17 PDUFA date.

“Qnexa is an asset that should be in the hands of big pharma,” Simeonidis said. “I think it’s the best obesity drug of the three [Orexigen Therapeutics’ Contrave (naltrexone/bupropion) is a third candidate]. Lorcaserin is approved but it won’t be on the market for four to six months, so Vivus could [have its drug] approved and on the market before Arena, assuming there is not a similar delay. And there’s a big difference between the two drugs – the Vivus drug is a lot more effective so if big pharma looks into obesity, it will grab Vivus.”

Whoever grabs what, Deals of the Week will be there to record and interpret the action. Now on to  …

Janssen/CorImmun: Johnson & Johnson subsidiary Janssen-Cilag revealed that it has acquired German biotech CorImmun for an undisclosed amount. The deal, which came to light June 28, nets Janssen a Phase II drug candidate for heart failure. CorImmun had been investigating the small cyclic peptide COR-1, which is thought to reduce the autoimmune effects of antibodies that act against the beta-1 adrenergic receptor, thereby improving heart function and mitigating myocardial damage in patients in the midst of heart failure. A mid-stage trial of the drug began in September 2011. Janssen will assume responsibility for further development in exchange for an upfront payment, although it may owe a further payment based on a clinical milestone as well. Investors in CorImmun included MIG Verwaltungs AG, Bayern Kapital, BioM AG, HighTech Gruenderfonds and KfW Bank; the company raised a €7.45 million ($9.23 million) second round of funding in October 2010. – Paul Bonanos

AstraZeneca/Cellworks: AstraZeneca said it will collaborate with Saratoga, Calif., start-up Cellworks to discover and develop new combination therapies for drug-resistant forms of tuberculosis. The collaboration also will receive support from Wellcome Trust, the U.K.’s largest medical charity. Cellworks, which has an R&D center in Bangalore, India, will use its platform to identify potentially efficacious drug combinations with few toxic side effects. AstraZeneca will “validate” the 10 best models using both in vitro and in vivo techniques, according to a company statement issued July 2. Although the companies initially will address drug-sensitive and resistant tuberculosis, they say they will aim to treat multi-drug-resistant TB (MDR-TB) down the road. Founded in 2005, Cellworks already has used its predictive platform to identify oncology and autoimmune drugs, including a rheumatoid arthritis treatment it says is ready for clinical development. Artiman Ventures backed the company in a $7.5 million Series A round during early 2009. – P.B.

Ferring/Albireo: Gastroenterology-focused Ferring Pharmaceuticals licensed a Phase III-ready constipation drug from AstraZeneca spinout Albireo on July 3 in a deal involving an undisclosed upfront fee, milestones and tiered double-digit royalties on sales. Ferring, which also is taking over development costs for the drug, elobixibat, gains worldwide rights except for Japan, South Korea, Thailand, Indonesia, Vietnam and Taiwan. Albireo licensed Asian rights to the compound to Japan’s Ajinomoto, also for undisclosed terms, in April. Elobixibat, a first-in-class compound that modulates enterohepatic circulation of bile acids by partially inhibiting the ileal bile acid transporter, increasing colonic fluid secretion and motility, is about to enter Phase III in chronic idiopathic constipation and Phase IIb in irritable bowel syndrome with constipation. Ferring said the drug will strengthen its gastroenterology portfolio, led by the inflammatory bowel disease drug Pentasa (mesalazine). Sweden-based Albireo was founded in 2008 when AstraZeneca spun out a set of gastrointestinal compounds into the new company, which was backed in a $27 million Series A by Nomura Phase4 Ventures, TVM Capital and Scottish Widows Investment Partnership.  – Joseph Haas

ADC Therapeutics/Cancer Research UK: Switzerland-based antibody-drug conjugate developer ADC Therapeutics has revealed one of the sources of the antibodies required to target its "warheads" to cancer cells. It has signed an agreement, announced July 6, with Cancer Research Technology, the commercial arm of charity Cancer Research UK, to exploit antibodies and peptides identified by researchers working for the charity, and one antibody co-owned by the University of Copenhagen, Denmark. These will be combined with warheads and linkers obtained from Spirogen Ltd. under an agreement signed in March 2012, through which ADC Therapeutics can use Spirogen's pyrrolobenzodiazepines (PBDs) against 10 specific targets, cancer-associated receptors and the like. The PBDs are released when the conjugates are internalized into cells, and bind deep in the minor groove of DNA to block replication. But the neat bit is that they usually are overlooked by DNA-repair enzymes, so they might not be associated with the development of resistance. The antibody-PBD conjugates will be taken forward into preclinical studies initially funded by ADC Therapeutics and conducted in the laboratories of three London universities, Queen Mary, UCL and King's College London. Financial details of the collaboration were not disclosed. ADC Therapeutics, which was established at the start of 2012 by the private equity firm Celtic Therapeutics Management LP, also is the majority owner of Spirogen. – John Davis
 Photo credit: Wikimedia Commons

DOTW: This Is Spinal Tap Edition

In the immortal words of one Bobbi Flekman, "money talks and bull**** walks."

And on 11.11.11, a day some are lauding corduroy and many are honoring our veterans and active service men and women, we look across the pond for the big money deal.

That's right. In a week when "most blokes, you know, will be playing at ten," Lundbeck and Otsuka took it to eleven with a multi-faceted alliance centered around two late-stage products from the Japanese pharma and up to three earlier stage programs from the Danes. (No word yet on whether Lundbeck's CEO Ulf Wiinberg or Otsuka's President Tatsuo Higuchi will play the role of Nigel Tufnel, alas.) The pipeline- and profit-sharing, co-development, co-commercialization deal requires Lundbeck to pay Otsuka 1.1 billion Danish Kroners, or 200 million George Washingtons, up front and potentially another $1.6 billion in development, regulatory, and sales milestones.

In spirit, Lundbeck/Otsuka recalls the major alliance Lilly and Boehringer Ingelheim struck in diabetes earlier this year --the consequences of that deal, as you will read about below, are still causing ripples. Interestingly today's eleven alliance sees two companies -- both heavily dependent for the bulk of their revenue on a single product that will soon go generic -- try to diversify not only their pipelines but also geographic reach. That Lundbeck is the one on the economic hook stems from the fact that its patent cliff is not only steeper but also arrives in a few months time.

The $200 million upfront Lundbeck is undoubtedly hefty, but analysts and investors in Denmark didn't smell anything rotten, sending the company's stock price, which trades on the Copenhagen exchange, up nearly 10% on the news. "We see this deal as clearly positive for Lundbeck and it bodes well for long-term revenue, top-line diversification and company perception" Nordea analysts wrote in a note to clients.

The reason for the optimism? Recall that Lundbeck is overly dependent on Cipralex (which is partnered with Forest in the US where it is sold as Lexapro) for sales revenue. In 2010, close to 40% of the company's DKK 14.8 billion in revenue came from the antidepressant, whose key patents begin to expire in 2012. And for this upfront payment, Lundbeck gets co-dev/co-commercialization rights in certain regions (North and Latin America, Europe, Australia, and "some other countries") to two late stage Otsuka products that can help smooth its revenue line starting in 2013.

The first is the Japan pharma's depot formulation of aripiprazole, which is the same active ingredient in Otsuka's anti-sychotic juggernaut, Abilify, a drug that is partnered with BMS and goes off patent in 2015. The second is OPC-37415, a partial D2 dopamine receptor agonist in Phase III trials for schizophrenia and major depressive disorder. According to the press release announcing the deal, Otsuka plans to submit an NDA for aripiprazole depot to US regulators "soon" -- and to EMA authorities in 2013.

Lundbeck has done other big deals in the past in a bid to deemphasize its reliance on Cipralex, including its 2009 acquisitions of Ovation and Life Health to gain access to the chorea treatment Xenazine. Those deals certainly helped bolster Lundbeck's US CNS presence (especially after the failed 2008 $100 million alliance with Myriad Genetics around Alzheimer's therapy Flurizan), but are nothing compared to the potential it might reap with this Otsuka alliance, should aripiprazole depot and '37415 both make it to market and enjoy strong payer traction.

And reimbursement remains an open and intriguing question, especially for aripiprazole depot. Note that $1.4 billion of the milestone payments are tied to development and regulatory advances not actual reimbursement, meaning Lundbeck is still on the hook, even if payers ding the next-generation anti-psychotic. And that could well happen. The anti-psychotic market is not only competitive, but ripe with cheaper alternatives, including since October 2011 a generic version of Lilly's Zyprexa. Over a year ago Medco and genetic test developer SureGene, meantime, launched a research project to validate biomarkers that could improve the cost effectiveness of atypical antipsychotic treatments.

For its part, Lundbeck and Otsuka seemed to play up in the press release the known safety and efficacy of the depot formulation, noting there may be an outcomes-based reason to prescribe the more patient-friendly version of Abilify. After all it has been designed to "reduce the chance of reoccurence of symptoms for the patients who sometimes forget to take their medication". Patient adherence to anti-psychotic regimens is admittedly a big problem; whether Otsuka has data convincing payers of this benefit is another question. It's also one that the Japanese pharma, and now Lundbeck, will need to answer effectively to make the economics of the new alliance work for both parties.

As David St. Hubbins would no doubt tell you it's such a fine line between stupid and clever. In the meantime, turn the amperage all the way to the right 'cuz you'll feel much worse if you aren't under such heavy sedation. With none more black than IVB, it's time for...


Merck Serono/Ablynx: In a move that might reduce the sting of last week’s announcement that Pfizer was handing back a pair of anti-TNF-alpha programs, Ablynx said this week that partner Merck-Serono would expand its alliance with the Nanobody specialist. The new deal will see the partners co-discovering and co-developing Ablynx’s brand of single-domain antibodies against two targets in osteoarthritis. Ablynx gets €20 million up-front (paid as two tranches over the next three months) and will conduct and fund all pre-clinical work on the programs. Merck-Serono can then opt in at IND stage at a price of €15 million per program, after which Ablynx gets the choice to move forward as a 50/50 partner or choose a more traditional milestone/royalty-based licensing structure. This is the two companies' third deal since 2008; they’re currently also working on programs in oncology, immunology and inflammation. The deal has done little to reverse the slide in Ablynx’s market value since the Pfizer news, however. That drop worsened this week when Ablynx said its lead proprietary asset, the IV-formulated anti-vWF ALX-0081, did not meet its primary endpoint in Phase II studies. – Chris Morrison

Salix/Oceana: Gastroenterology-focused Salix Pharmaceuticals will expand its product portfolio and increase its revenues almost immediately with the planned $300 million acquisition of privately held Oceana Therapeutics. Announced during Salix’s third-quarter earnings call Nov. 8, the acquisition brings the specialty pharma two marketed products – Solesta for fecal incontinence and Deflux for vesicoureteral reflux. The company’s optimism about Oceana seems largely based on the upside potential of Solesta, an injectable gel approved by FDA as a Class III medical device in June, to win a large share of the fecal incontinence market. Oceana launched Solesta in September at a price of $3,690 per treatment. It can be administered on an out-patient basis without anesthesia. By contrast, surgical methods for treating fecal incontinence are thought to cost about $30,000 per patient. Salix did not say how much Solesta has earned to date but CEO Carolyn Logan predicted the product could produce peak-year sales greater than $500 million. Also an injectable gel, Deflux was approved by FDA in 2001. It is indicated for children affected by Grade II to Grade IV vesicoureteral reflux, a bladder malformation that can result in severe kidney infections and irreversible renal damage. It also is approved and marketed in 40 countries outside the US and posted net sales of about $26 million through the first nine months of 2011. –Joseph Haas

Amylin/Lilly: Once a fruitful partnership, the nine-year tie-up between diabetes specialist Amylin Pharmaceuticals and Eli Lilly around the GLP-1 agonist exenatide is being unwound. Although the agreement produced an $800 million drug in Byetta, a twice-daily injectable compound that stimulates insulin production in the pancreas, and a potential blockbuster follow-on in the once-weekly Bydureon, the writing’s been on the wall for some time, as their relationship became frostier over time. Lilly co-developed a different drug, DPP-4 antagonist Tradjenta (linagliptin) alongside Boehringer-Ingelheim; that led to a lawsuit, as Amylin believed Lilly breached their confidentiality agreement by using a shared sales force for both Byetta and Tradjenta. To remedy the situation, Lilly will return worldwide exenatide rights to Amylin in exchange for $250 million up-front plus 15% of sales, the latter of which could be worth up to $1.2 billion. All related litigation will be dropped. The separation occurs as Amylin awaits approval of Bydureon in the US; the drug has a PDUFA date of January 28, 2012. In the meantime, as this "Pink Sheet" Daily story discusses, Amylin plans to build its domestic sales force while seeking an international partner to sell Bydureon, which is already approved in Europe. Some observers, however, think Amylin could be acquired by another pharma instead. – Paul Bonanos

Leptin Fails Again: The Thin Line Between Hope and Hype

Sanofi Aventis CEO Chris Viehbacher is upset that Wall Street places no value on drug industry pipelines. As he put it during a recent media briefing sponsored by the brand name trade association PhRMA, “If you made chocolates and soda, you are going to be a better investment than in R&D today.”

Viehbacher clearly has a point (though we can’t resist pointing out that Viehbacher’s own questions about the value of Genzyme’s pipeline held up the consummation of that deal).

And it is an exaggeration to say there is no value in R&D. When Merck’s vorapaxar stumbled, for instance, it was clear that there was a great deal of value in that particular asset. Of course, when Pfizer announced R&D cuts, the stock went up—suggesting, if anything, a negative value for those assets.

Still, Big Pharma doesn’t really have to care that much about how investors value R&D. Deliver steady earnings growth and life will be fine. (Easier said than done with the looming patent cliff, but still.)

Not so for biotech companies. There, the pipeline is (generally) the only asset. And if investors place no value on R&D, well, no more biotech.

Things aren’t quite at that point yet: A company like Vertex can post annual losses of three quarters of a billion dollars and still command a $9 billion market capitalization, thanks to enthusiasm for the company’s hepatitis C pipeline (and a soupcon of excitement about a cystic fibrosis opportunity as well).

But it’s not like there are a whole lot of billion dollar market caps out there based on nothing but the promise of an early stage pipeline.

We’ve written before about the “original sin” of biotechnology: the seeming necessity of hype—incredibly unrealistic expectations for early stage ideas—to attract capital for the hard (and invariably disappointing) work of converting those ideas into real products.

We’re writing about it again because of yesterday’s news from Amylin, announcing the suspension of Phase II clinical studies of a leptin-based obesity compound. The announcement was terse, but suggested a pretty significant problem with the compound (metreleptin): some kind of neutralizing antibody to leptin.

The announcement caused a stir and a quick drop in Amylin’s share price, but the stock rebounded and actually closed the day up a smidge, once investors remembered that the only thing they really care about is whether Amylin’s once-weekly line extension for the Byetta diabetes line ever makes it to market. This is clearly a case of a pipeline asset with something close to zero value.

Compare that to the value of leptin when the hormone itself was first described. The publication of a paper describing the genetic basis of a role for leptin in regulating weight in 1995 prompted a one day jump in the market cap of Amgen of nearly $600 million, since Amgen held a license to the “ob” gene described in the paper.

At the time, Amgen wasn’t quite the giant that it is today, but it did have two fast-growing blockbuster franchises (Epogen and Neupogen). But that was an era of excitement and, yes, hype—and at least for one day leptin was an incredibly valuable asset. And it wasn’t even in clinical studies!

Leptin died a quiet death at Amgen, also in Phase II, when the company dropped the hormone itself in favor of some “back up compounds” that were never heard from again.

So maybe this is a case where putting no value on an asset makes a lot of sense. After all, Amgen gave up on leptin more than a decade ago.

But for the future of biotech, it would be nice if people got excited by something like leptin again.

image via wikimedia commons

DotW: Sesame Street

In case you failed to run a Google search this week, you may not have realized that on Tuesday Nov. 10, Sesame Street turns 40. You gotta admit, the show doesn't look a day over five--and that's without Botox.

If you've forgotten how to get to Sesame Street, we have a few reminders--and ear worms-- appropriately tailored for the biopharma industry--hey, it's our version of personalized medicine and it doesn't require a companion diagnostic.

1. Baby We Were Born To Add: For all the CFO types who reported earnings this week--from King, Biovail, Acorda, Facet, Crucell, and dozens of others (25-plus on Thursday alone).

2. It's Not Easy Being Big (er, I mean) Green: In honor of Merck's Dick Clark and Pfizer's Jeff Kindler, of course. And for you Wyeth and Schering types, Kermit offers the definitive explanation on why size matters.

3. Soliloquy on B: For all those biotechs with less than 6 months of cash who are pondering whether 'tis better to--you guessed it--be or not to be.

4. Get Along: Our legislators--Republicans and Democrats not martians and muppets--working to pass a health care reform bill. (GSK and Pfizer execs you can skip this one. The creation of ViiV suggests you've already learned this lesson. We're waiting for the ophthalmology collaboration.)

5. ABC-DEF-GHI: Maybe Big Bird can explain what I. P. O. means to biotech investors. Alimera and Aldagen can only hope.

6. Near and Far: For any biotech exec mulling an acquisition tied to earn-outs. Hint: if you are having trouble seeing the relevance, substitute 'upfront' for 'near' and 'earn-out' for 'far'--or read this amusing rant.

7. Ma Nah Ma Na: Biotech and Big Pharma CEOs who need to change the subject fast when dogged by a reporter. Start singing this, and the press will be crooning "doobie do" along with you.

8. Honker Duckie Dinger Jamboree: Because JP Morgan is only two months away. It's the latest; it's the greatest; it's the only place to be.

9. Just the Way You Are: For Roger Longman, from the IN VIVO Blog Staff.

This week's edition is brought to you courtesy of the letters D, O, T, W, and the number 4.

Roche/Alnylam: Roche’s willingness to pay $331 million up front for access to RNAi pioneer Alylam’s technologies two years ago raised eyebrows because of its price tag and generous (at least for Alnylam) non-exclusivity provisions. Now the companies say they are pleased with their progress and ready to move into the next phase of their relationship: a collaboration to jointly discover and develop specific RNAi compounds for select therapeutic areas, using a shared potpourri of experimental delivery technologies to move the chosen RNAi drugs to their targets. Commercial rights in the US will also be shared, and, ex-US, Alnylam gets royalties and additional milestones. Alnylam has become the poster-child for how to do business development right: although it is an early stage company, its deal-making savvy, expertise in a young and rising field, and IP have enabled it to snare at least three deals with Big Pharma potentially worth billions of dollars. But it's hard to tell whether any more deals like this one with Roche are in Alnylam's future. Most Big Pharma interested in RNAi have already placed their bets and Alnylam's prices are out of reach for nearly all smaller players. Too bad. Looks like there won't be a repeat Deal of the Year for Alnylam this time around.--Wendy Diller

Takeda/Amylin: In recent months, Big Pharma has resisted the urge to gobble up obesity compounds, leaving the market littered with late-stage, unpartnered assets. But on Nov. 1, Takeda announced it was teaming up with Amylin, taking two obesity candidates off the table: pramlintide/metreleptin and davalintide. For Takeda, the deal is an opportunity to build on its heritage in diabetes and metabolic disease, and the price tag shows its desperation. Depending on how the research progresses, the drugs could help fill the holes left by setbacks with the company's DPP-IV inhibitor alogliptin and the genericization of Actos. Under the arrangement, Amylin will receive $75 million upfront and development and sales milestones that could total more than $1 billion. (Near and far, people.) Amylin is also eligible for double-digit royalties on sales. Importantly, Amylin gets someone else to foot what is sure to be a pricey development bill for two drugs that will probably need cardiovascular outcomes studies. Amylin will be responsible for development of potential candidates through Phase II for regulatory approval in the U.S., while Takeda will lead development beyond Phase II in the U.S. and all development outside the U.S.--Jessica Merrill

Biovitrum/Swedish Orphan: Swedish company Biovitrum got in on the deal-making action just one week after unloading its drug discovery unit, Cambridge Biotechnology (CBT) and a number of its own drug development programs to Proximagen Neuroscience. Cuz really who needs drug discovery when you can market a portfolio of 60 orphan/hyper-specialist products? Yep, that's what Biovitrum is buying, having made the decision to plunk $501.59 million down to access Swedish Orphan in a transaction that included a modest earn-out. The move completes Biovitrum's evolution in the specialist direction; Swedish Orphan is one of those new "rare disease players" with two proprietary drugs, Multiferon and Orfadin, along with a diverse in-licensing portfolio of another 50 products. Therapeutic areas include oncology, metabolic disorders, hematology, infectious diseases, urology/nephrology, and emergency medicines. Given Big Pharma's suddenly got religion about playing in the ultraniche disease space--remember GSK's tie-up with Prosensa?--it's interesting to speculate on the deal terms, especially the upfront cash. A competitive bidding process or just PE backers unwilling to accept those terms? The combined company, which will go by the name Swedish Orphan Biovitrum (The name recalls a certain Swedish chef--sorry, wrong group of muppets) forecasts sales of over SEK 5 billion (roughly $716.30 million ) by 2015, with an EBIT margin of over 30% based on its current portfolio and pipeline. Check back with IN VIVO Blog later for a more detailed discussion of the deal.--Ellen Licking


AstraZeneca/Micromet: Your "No deal" deal of the week has been one months in the making. Remember when AstraZeneca/MedImmune opted out of a codevelopment deal for Micromet's blinatumomab, an antibody being studied in hematological cancers. The March deal gave MedImmune the option to reacquire North American commercialization rights if the antibody won FDA approval. At the time, neither company detailed why AZ was exiting the collaboration, but Micromet's CEO Christian Itin speculated the antibody's therapeutic focus on rare malignancies might not be seen as enough of a lucrative opportunity to merit the Big Pharma's attention. (Clearly AZ didn't get the message about ultraniche diseases.) Now the staged divorce is complete (and you thought staged acquisitions were all the rage.) On November 5, Micromet announced it had bought out MedImmune's option on the North American commercialization rights to blinatumomab, bringing an end to a partnership that began in 2003. To regain full rights to its lead program, Bethesda, Md.-based Micromet will pay MedImmune a $6.5 million upfront fee, undisclosed regulatory and strategic milestones and low single-digit royalties on North American sales of blinatumomab should the Phase II mAB reach the market. --Joe Haas