Invitation: Join PharmAsia News' Twitter Chat On China Pharma Issues

Over the last month China pharma issues have been on the front page as the government has launched a wide-ranging probe focused on compliance. The probe comes at a time when many players are already re-assessing business models in China to find new avenues for growth.

Opportunities still abound in China given huge unmet medical needs, demographic changes (e.g., an aging population, adoption of Western lifestyles), and China's health care reforms, which have extended basic medical insurance to virtually all of the country’s 1.3 billion citizens.

But challenges abound too. Sustaining growth will require new models and flexibility: smaller cities are now growing faster than Tier I cities; off-patent medications are under more severe pricing pressure, threatening the traditional business model of multinationals; and compliance has taken center stage.

While support for biopharma innovation is a major government goal, so is curbing health care costs. How can pharma companies collaborate and thrive in this environment?

To take a closer look, PharmAsia News' Twitter site, @PharmAsiaNews, will host a half-hour Twitter chat (hash tag #PAS13) Sept. 19 (3-3:30 pm EST) to discuss hot topics related to the China pharmaceutical industry. The chat will include special industry guests and PharmAsia News editors, and is sponsored by the PharmAsia Summit.

We invite you to join the discussion, ask a question, or just tune in and watch the chat live. It’s a great way to learn the latest on China pharma without leaving your laptop, tablet or smart phone.

For more information, please see below, or contact our editor Joshua Berlin via email or Twitter . We hope to see you there!

• Who: The chat is hosted by @PharmAsiaNews and includes China industry consultants @GeorgeBaeder and @DebraYuPharma , and PharmAsia News editors @TamraPharmAsia and @BioPharmaJosh.

• What: A half-hour Twitter chat to discuss the latest hot topics in the China pharma industry.

• When: Thursday, Sept. 19, 3-3:30 pm EST (for those who can’t attend the chat live, we will provide a link to the discussion at a later date). Go to @PharmAsiaNews at 3 pm to tune in or participate.

• Where: The chat is hosted on the Twitter page of @PharmAsiaNews. To follow the chat, join the discussion or ask a question, go to @PharmAsiaNews or follow hashtag #PAS13.

• Why: China represents the fastest-growing large pharma market, but new models are needed to succeed in a rapidly changing environment. Our Twitter chat is a great way to tune in for a half hour and learn the latest on China pharma.

• How: To join the discussion or ask a question, use hash tag #PAS13 and reference @PharmAsiaNews. Or reply to our ongoing discussion on @PharmAsiaNews using hash tag #PAS13.

Deals of the Week Looks At How Amgen’s Global Expansion Affects Partnering

why yes, these are Japanese flip-flops, why do you ask?

Amgen Inc. has made a big deal about expanding into Japan and eventually building a standalone subsidiary there. Now, the biotech’s Japanese expansion strategy is paying off for at least one of its partners: Cytokinetics Inc.

The two companies announced June 12 that they have expanded an existing collaboration for the heart failure drug omecamtiv mecarbil and other related compounds to include Japan. Cytokinetics will receive $25 million from Amgen in the form of a $15 million upfront fee and a $10 million stock purchase, sold at a 36% premium. The company is also eligible to receive up to $50 million in pre-commercialization milestone payments for the development of omecamtiv in Japan, as well as royalties on sales of the drug in the country. Amgen will also reimburse Cytokinetics for the cost of a Phase I study that will support the inclusion of Japanese patients in a potential Phase III program for the drug.

For investors, the deal represented a vote of confidence in omecamtiv, and Cytokinetics stock opened June 12 up 15% over the prior day’s closing price. The $25 million in cash is also important to Cytokinetics, which ended the first quarter of 2013 with $61.6 million.

Omecamtiv, a novel cardiac myosin activator, is one of Cytokinetics’ two lead programs. A Phase IIb trial evaluating an intravenous form of the drug in acute heart failure patients has completed enrollment, and a Phase II trial evaluating an oral formulation in outpatients with heart failure started in the first quarter. Amgen is conducting the trials.

Under the original 2006 collaboration, which excluded Japan, Amgen paid Cytokinetics $42 million upfront and paid $33 million to buy stock in exchange for an option to license omecamtiv. Amgen exercised that option in 2009 after positive Phase IIa data read out, and paid Cytokinetics another $50 million upfront and agreed to pay $600 million in milestones.

It looks as though the Cytokinetics deal expansion may be a one-off case, however. A review of Elsevier’s Strategic Transactions database revealed Amgen doesn’t have many other licenses that specifically exclude Japan. One example is KAI Pharmaceuticals Inc., which Amgen acquired in 2012 for $315 million. That acquisition excluded Japan, where Ono Pharmaceutical Co. Ltd. had previously bought the license.

But Japan remains the world’s second largest pharma market, and Amgen’s efforts to rebuild in the region could help future partners, both in terms of deal value and in that signing a single global partner can sometimes speed up the drug development process. Amgen announced plans earlier this year to aggressively expand in Japan and build a Japanese subsidiary by 2020. That reversal comes only five years after the company left the market in 2008, when it out-licensed 13 compounds to Takeda Pharmaceutical Co. Ltd. for $200 million upfront and $702 million in R&D funding and milestones. As part of that deal, Takeda acquired Amgen’s Japanese subsidiary Amgen KK for an undisclosed price.

In May, Amgen unveiled more details about how it will execute on its re-entry plan, namely through a partnership with Astellas Pharma Inc. with which it will form a joint venture to bring Amgen products to market in Japan. The Tokyo-based JV will be 51% owned by Amgen and 49% owned by Astellas and operate as Amgen Astellas BioPharma KK. The deal is structured to allow Amgen to turn the operations into a wholly-owned Japanese affiliate as early as 2020.

Amgen declined to provide any valuable insights on what might be next in terms of partnering in the region. But one thing is certain, we can expect more. CFO Jonathan Peacock specifically commented on Japan and China during the Goldman Sachs Global Healthcare conference June 11. “We’ll continue to branch out and make targeted investments in the markets that are important to our future growth,” he said. -- Jessica Merrill

We could never decline to provide you more valuable insights -- how could we when it's time for ...

AstraZeneca/Pearl Therapeutics: British pharma AstraZeneca PLC has made a big play in respiratory disease with the $1.15 billion acquisition of Pearl Therapeutics Inc. AstraZeneca will pay $560 million upfront, as well as $450 million in development and regulatory milestones related to early-stage pipeline assets to acquire all shares of privately-held Pearl. Pearl shareholders are also eligible to receive $140 million in milestones related to sales of its lead pipeline candidate. The deal puts AstraZeneca in the midst of the fiercely competitive and changing treatment space for chronic obstructive pulmonary disease. The company gains PT003, a fixed-dose combination of glycopyrrolate, a long-acting muscarinic antagonist (LAMA), and formoterol, a long-acting beta-2-agonist (LABA), in Phase III development. It also gets an earlier-stage triple combination that includes a LAMA, LABA and inhaled corticosteroid (ICS). The drug is only in preclinical development, but AstraZeneca plans to move it into Phase II testing immediately. Triple combinations are expected to eventually play a major role in the market. Respiratory disease is one of three key therapeutic areas AstraZeneca is focusing on as part of its turnaround strategy, and the company has increased the pace of development of several projects. The acquisition of Pearl comes just a week after AstraZeneca announced it was pulling out of one of its other late-stage programs with partner Rigel Pharmaceuticals Inc. after the Phase III rheumatoid arthritis drug fostamatinib produced disappointing results. --Lisa LaMotta

Xenon/Isis: In a reversal of its usual out-licensing strategy, Xenon Pharmaceuticals Inc. has exercised an option to in-license a potential treatment for anemia developed under a 2010 alliance with RNA technology specialist Isis Pharmaceuticals Inc. The firms announced June 10 that Xenon will pay $2 million to Isis to license XEN701, a molecule in preclinical development that is designed to inhibit the production of hepcidin, a protein produced in the liver. By inhibiting hepcidin, XEN701 could offer a non-erythropoietin receptor-based mechanism for the treatment of anemia. It is the first drug to enter development from Isis’ collaboration with Xenon. Under the original deal, Xenon paid Isis an undisclosed fee in the form of a convertible promissory note in exchange for using the latter’s antisense technology to discover and develop drugs against hepcidin and hemojuvelin for anemia. Xenon also gained an option to license worldwide development and commercialization rights to candidates produced from the partnership. Isis also is eligible for milestones and royalties. Vancouver-based Xenon has been more active out-licensing its human clinical genetics platform out to larger pharma partners, including Merck & Co. Inc., Teva Pharmaceutical Industries Ltd. and Roche. --JM

Questcor/Novartis: Questcor Pharmaceuticals Inc. announced June 11 that it has acquired rights to develop Synacthen (tetracosactide) and Synacthen Depot from Novartis AG in the U.S. and plans to acquire rights in certain other countries subject to closing conditions. The deal is another example of big pharma’s increased willingness to sell-off non-priority assets, and Questcor appears intent on breathing new life into a mature brand, similar to how it has revitalized its existing Athcar Gel (repository corticotropin injection). The Synacthen products are already approved in 40 countries for certain autoimmune and inflammatory conditions, including rheumatoid arthritis and multiple sclerosis, and are also approved as a diagnostic test for adrenal insufficiency, but they have never been approved in the U.S. Questcor plans to develop the products for the U.S. market and use the drugs as an opportunity to build an international presence. Synacthen is a synthetic 24 amino acid melanocortin receptor agonist, an area of research Questcor specializes in with Athcar. Questcor has successfully built Athcar into a high-growth brand with sales of more than $500 million in 2012 by broadening its use from a niche indication in infantile spasm to larger patient populations like multiple sclerosis and nephrotic syndrome. But the company has also drawn criticism from insurers and some in the health care community for aggressively raising the price from $2,000 per vial to $28,000 per vial as part of its repositioning of the drug to fit in the rare disease business model. --JM

AstraZeneca/Cancer Research UK: Building on existing collaborations with Cancer Research UK, AstraZeneca is providing scientists funded by the world’s biggest cancer charity with compounds for use in developing potential new oncology drugs. One new project, announced June 14, will involve scientists at the University of Manchester testing compounds targeting a key protein involved in DNA damage response. AstraZeneca has first rights to any molecules discovered through the agreement and can choose to continue further development. In return, Cancer Research Technology Ltd, the UK charity’s commercial arm, will receive royalty payments when the project reaches certain milestones. CRT also has the option to develop the molecules further if AstraZeneca decides to pass. Britain’s second-biggest drug maker has also invited Cancer Research UK scientists from the Paterson Institute to test AstraZeneca’s compound collection against a potential oncology target at its UK research center in Alderley Park. It is the first time AstraZeneca has invited an external party to screen such an extensive set of compounds within its screening facility. AstraZeneca will have first rights of negotiation on any resulting projects. CRT has a growing, 90-strong in-house drug discovery effort which has expanded with the help of funding from Cancer Research UK – and has access to clinical development capabilities in conjunction with Cancer Research UK's drug development office. This includes CRUK’s Clinical Development Partnerships initiative, designed to move de-prioritized pharma assets into the clinic. This wide-ranging R&D capability and close linkage with academia has attracted in AstraZeneca to CRT, with the two first partnering in 2010 [W#201020370]. --Sten Stovall

BioLineRx/Jiangsu Chia-Tai Tianging Pharmaceutical: Israeli biotech BioLineRx Ltd. lined up a rare early-stage out-licensing partner for one of its two candidates for hepatitis C this week. Liver disease-focused Jiangsu Chia-Tai Tianqing Pharmaceutical (CTTQ) licensed development, manufacturing and commercial rights in China and Hong Kong to BL-8030, a preclinical second-generation protease inhibitor for HCV. BioLineRx receives an undisclosed upfront payment plus potential development, regulatory and commercialization milestones that could total $30 million for the compound. The Israeli company also could earn high-single-digit royalties on sales if ‘8030 reaches market. BioLineRx also will have access to CTTQ’s clinical data for the compound and can use the data for regulatory purposes outside the territories licensed by the Chinese firm. BL-8030 is one of two HCV candidates being developed by BioLineRx, along with Phase I/II BL-8020, an inhibitor of HCV-induced autophagy. Both compounds were in-licensed from France’s GenoScience Pharma in early 2012[W#201220060]. In a release, CTTQ President Jian Sun Emba noted that HCV prevalence is high in China, with about 3.2% of the population, or roughly 43 million individuals, infected with the virus. –-Joseph Haas

BMS/Simcere: In their third deal in three years, Bristol-Myers Squibb Co. and Simcere Pharmaceutical Group will collaborate in China to co-develop and commercialize a subcutaneous formulation of Bristol’s rheumatoid arthritis treatment Orencia (abatacept), the companies announced June 14. Simcere, based in Nanjing, will perform and fund all development and regulatory activities required to obtain marketing approval in China based on a pre-agreed development plan. The companies will share responsibility for commercializing Orencia SC in China, and will share profits and losses related to Orencia SC there. Financial terms were not disclosed. If approved, Orencia would become Bristol’s first biologic to enter the Chinese market. The novel T-cell co-stimulation modulator is approved already in the U.S., Europe and Japan, and booked global sales of $1.2 billion in 2012. It would theoretically launch into a very competitive RA market in China, which includes novel biologics, biosimilars, and is dominated by NSAIDs. Although Simcere would not comment on development timelines for China, the company confirmed to PharmAsia News that it would need to conduct certain clinical studies in China to obtain regulatory approval for Orencia. BMS and Simcere first tied up in 2010 to co-develop BMS-817378, a small molecule c-Met inhibitor in preclinical development. Under that deal, Simcere is funding and taking the lead for clinical trials in China through proof-of-concept in return for exclusive China marketing rights for the oncologic, while BMS retains marketing rights in the rest of world. In a second deal, announced in 2011, BMS and Simcere are co-developing a preclinical CETP (cholesteryl ester transfer protein) inhibitor, BMS-795311, in China. --Josh Berlin

photo from flickrer nb360 used under creative commons license

Deals Of The Week Is Keeping Score – Valeant Wants Actavis, Which Covets Warner Chilcott …

Whether the pastime is baseball, Broadway or the daytime soaps, the old adage is that you can’t keep track of the players without a scorecard. The M&A front involving specialty pharma and generic drug makers has become similarly frenzied, as Canada’s acquisition-driven Valeant Pharmaceuticals sought after the newly minted Actavis, with Actavis then turning to a pursuit of Warner Chilcott once negotiations with Valeant broke down.

What, exactly, is going on here? And just as vitally, why?

Recall that the dust only recently settled on Actavis, the re-branded Watson Pharma, following the merger of those two firms last year. At an investor day presentation Jan. 25, CEO Paul Bisaro proclaimed that the new Actavis could boast a widened geographic footprint and a diversified portfolio comprising regular and branded generics, brand-name pharmaceuticals and over-the-counter products.

With the Watson/Actavis combination, the resulting company merely was trying to keep pace in a consolidating generics industry that had seen sector-leader Teva continually branching out into branded drugs and perhaps biosimilars and Mylan increasing its capabilities and geographic reach via a run of targeted deal-making.

In late April, reports surfaced that talks of a merger between Valeant and Actavis had collapsed, apparently due to Actavis shareholder concerns over valuation. Actavis has been a centerpiece of Wall Street discussion in recent months, due to a consistently rising share price. (Or has the conversation lifted the share price? A chicken vs. egg conundrum, to be sure.) The stock opened trading March 1 at $85.17, and rose to $92.33 on April 1 and to $105.24 on May 1. At the close of trading on May 16, Actavis’ stock price stood at $123.61.

Meanwhile, it was not necessarily clear who was the suitor in the Valeant/Actavis talks, although the safer bet seemed to be Valeant, helmed by acquisition-hungry CEO Michael Pearson. A Wall Street investment analyst said that the Valeant/Actavis talks seemed to be the catalyst for the resulting Actavis/Warner Chilcott rumors as well as possibly emerging interest in buying out Actavis from Mylan and from Novartis.

“We know that Valeant is an aggressive negotiator in terms of valuation,” the analyst said. “Going by their track record, they’re not going to pay some kind of excessive premium. The question we had was if nothing happened, did Valeant learn something really negative about Actavis during its due diligence?”
The analyst opined that the talks might have been a power-play by Bisaro himself, with the Actavis CEO picturing himself as the leader of a combined company with Valeant. “If Bisaro is talking with Pearson and trying to sell the business for $120 a share, isn’t he sending a signal that the game is up?,” asked our source. “Now, Bisaro might be saying Actavis is undervalued and going to do all these things, but his wallet is doing the talking. Actions speak louder than words, and they’re saying now is the time to pull the ripcord on the parachute.”

But if Valeant was the pursuer, Actavis’ current gambit for Warner Chilcott might have a “poison pill” element, an effort to make Actavis too rich for the Canadian specialty pharma to swallow. “It seems too coincidental that this happened so quickly after the Valeant story,” the analyst said.

In any event, the analyst perceives an Actavis/Warner Chilcott merger as highly likely, given how much the Irish firm has to lose if it puts itself up for sale and fails for a second year in a row. It would broaden Actavis’ portfolio in women’s health and dermatology and a strong sales force that could bolster Actavis’ commercial capabilities. What’s more, a reverse merger would domicile the resulting business in Ireland, providing tax advantages.

More elements were added to the story mid-week: Pittsburgh-based Mylan was reported to have made a roughly $15 billion offer to acquire Actavis, and then multinational pharma Novartis was said to be weighing its own bid. Novartis later publicly denied interest in Actavis, however. - Joseph Haas

The final chapters of that story remain to be written, but other biopharma deal-making has come to fruition in the latest installment of …

Elan/Theravance: In one of the more interesting deals of the past week, or for that matter the year, Elan announced a deal May 13 in which it agreed to pay Theravance $1 billion upfront in exchange for a portion of the potential future royalty payments it will receive from four respiratory programs partnered with Theravance. It’s a hefty up-front that many analysts believe exceeds the value of the interest Elan would acquire. The deal is the first of several Elan plans to make as it looks to reinvent the company through licensing and acquisitions. The announcement also comes as Elan looks to push back a hostile takeover bid from Royalty Pharma. Under Irish takeover law, the Theravance deal will require approval from investors, who already are considering an $11.25 per share buyout offer from Royalty. Elan would gain a 21% interest in potential future royalty payments to Theravance from GSK on four partnered respiratory drugs, including Breo Ellipta, which was approved by FDA May 10 for the treatment of chronic obstructive pulmonary disease. It also includes Anoro Ellipta, a combination of vilanterol with the LAMA umeclidinium, which is pending at FDA with a Dec. 18 user fee date, as well as in a bifunctional muscarinic antagonist-beta1 agonist (MABA) monotherapy and vilanterol monotherapy, both in development. For Theravance, the deal would have been hard to refuse given the rich terms, even though the company recently announced a separation to form one entity to manage the royalty revenue stream from Breo. Management said the arrangement will complement the company’s previously announced plan to separate into two companies. The firm said April 25 it will split into two entities, a royalty company called Royalty Management. Co. with a focus on near-term profitability and returning capital to shareholders, and Theravance Biopharma, a research-focused biopharmaceutical company. - Jessica Merrill

Alvine/AbbVie: On May 14, AbbVie signed its second deal since spinning out from parent company Abbott Laboratories in January, this time with San Carlos, Calif.-based biotech Alvine Pharmaceuticals. AbbVie agreed to pay $70 million upfront for an option to either acquire Alvine outright or license all of the assets related to its lead compound ALV003 for the treatment of celiac disease. The disease, which is characterized by gastrointestinal inflammation due to the ingestion of gluten-containing foods, affects about 3 million Americans and currently has no treatment options other than limiting gluten intake. ALV003 has completed a Phase IIa study and Alvine is prepared to take the drug through a 500-patient Phase IIb study, slated to read out in late 2014. Should AbbVie opt into the program, it will pay a “substantial” option fee, as well as further near-term milestone payments. The amount of those payments was not disclosed. The relationship between Alvine and AbbVie has a rich history; AbbVie’s venture arm (then Abbott Biotech Ventures) backed the biotech in May 2010 when it invested an undisclosed amount. AbbVie’s funds were an extension of Alvine’s Series A – the initial tranche was $21 million in 2006 led by Sofinnova Ventures with additional participation from Prospect Venture Partners, InterWest Partners, Cargill Ventures and Flagship Ventures. Another $21.5 million was raised when Panorama Capital and Black River Asset Management joined the syndicate in 2009. - Lisa LaMotta

RuiYi/Genor/CMC Biologics: China-U.S. hybrid RuiYi announced May 16 a series of partnerships to develop RYI-008, a novel anti-interleukin-6 monoclonal antibody in China to treat autoimmune disease and cancer. Formerly Anaphore, the hybrid is 90% a Chinese company, and about 10% U.S.-based, CEO Paul Grayson said. RuiYi conducts research at a facility in the Zhangjiang Hi-Tech Park in Pudong Shanghai, China, with only its executive management team based in offices in La Jolla, Calif. The antibody, in preclinical development now, will be developed first in China, and the company has forged a partnership with three other companies to get it there. China has said it would make biotech innovation a priority, but few companies have been bold enough to develop innovative biologics in the country, choosing instead to focus on biosimilars and generics for China, Grayson said. RYI-008, formerly ARGX-109, was in-licensed from Belgian/Dutch biotech arGEN-X in October 2012. RuiYi inked an exclusive licensing and co-development agreement with Shanghai-based Genor Biopharma to develop RYI-008 in China. Financial details of the deal were not disclosed. The company was chosen partly due to its close relationship with China FDA and its deep knowledge of China’s regulatory environment. Founded in 2007, Genor is focused on development and commercialization of therapeutic mAbs and Fc-fusion proteins. The company has more than 10 products in its pipeline, three of which are at IND and clinical stages. Danish contract manufacturer CMC Biologics will develop a cell line for RYI-008 for global manufacturing in all markets. Specific terms of the agreement were not disclosed. - Tamra Sami
Roche/Curie-Cancer: France’s Curie-Cancer and Roche announced May 15 that they are building upon a four-year partnership to expand their translational research programs and hasten development of new cancer treatments. In 2009, they agreed to partner around a preclinical research program which gave Roche access to a platform of preclinical models developed by the research teams at the Institut Curie. Curie-Cancer develops Institut Curie’s industry partnership activities. The Roche Institute for Research and Translational Medicine is the Swiss group’s arm there which aims to identify leading French academic research teams and build partnerships with them in areas of shared interest. The initial partnership gave Roche access to preclinical models that are highly representative of the tumors observed in patients. Using the platform, Roche determined in which sub-type of breast cancer an antibody was most effective. The Institut Curie also owns the Reverse Phase Protein Analysis platform, which gives researchers better understanding of how a Roche antibody works on the cancer cells at the molecular level, and also helps to identify predictive response markers. Curie-Cancer and Roche currently are working on a number of translational research programs involving Roche molecules that make use of the same technology. For example, a team of Curie-Cancer clinicians, anatomopathologists and researchers are working on developing a new Roche molecule targeting tumors. No financial details of the partnership were disclosed. - Sten Stovall

Quintiles/Merck Serono: Merck-Serono and newly public CRO Quintiles Transnational announced May 15 a five-year strategic collaboration that appears to go beyond the typical consolidation which the provider services industry’s larger pharmaceutical companies have pursued over the past few years. The deal, which the companies described as “first of its kind,” will create a drug-development engine by combining “expertise and experience” from the two organizations. Merck-Serono will lead strategically while Quintiles will handle the nuts and bolts of clinical trial planning and execution. In short, this is about more than saving money for Merck-Serono, a company that apparently is saving quite a bit these days. The mid-sized pharma’s parent company Merck KGAA reported May 14 during its quarterly earnings call that it was ahead of schedule in executing on its restructuring – which involved the closure of Merck-Serono’s Geneva headquarters – and that it would move forward its financial targets from 2014 to this year. Merck-Serono Executive VP and Global Head of Development and Medicine Annalisa Jenkins said that the partnership transcends the typical preferred-partnership outsourcing model. The deal moves beyond trading volume for “a better rate card,” she said. Quintiles has the benefit of seeing across different companies throughout industry, she said, and of integrating that knowledge, adding, “it’s remarkable that we don’t make a greater attempt to embrace and integrate that knowledge in how industry plans and executes studies.” The Merck-Serono/Quintiles tie-up does just that, she said, and “financially the incentives are set up to drive to more efficient decision making.” Specifics of the financials weren’t disclosed. The deal is Quintiles’ first since its public market debut May 8. The industry’s largest CRO and its existing investors sold more than 27 million shares combined at $40 apiece, raising about $950 million (Quintiles netted about $500 million). - Chris Morrison

AbbVie/Galapagos: AbbVie made further news May 17 when it and partner Galapagos announced that they will extend their 2012 collaboration centered on GLPG0634, a Phase II Janus kinase inhibitor, to development in Crohn’s disease. Under the revised agreement, the Belgian biotech will fund and complete a Phase II trial in Crohn’s, which should facilitate rapid progression into Phase III. AbbVie will pay Galapagos $50 million upon completion of the study, expected in mid-2015. Galapagos will initiate what is planned as a 20-week, Phase IIa/b study of ‘0634 in Crohn’s patients in early 2014, investigating for both disease remission and early maintenance of the drug’s beneficial effects. The study will be performed in parallel with a Phase IIb study in rheumatoid arthritis, pursuant to the agreement Galapagos signed with then Abbott Laboratories in February 2012. At the time, Abbott paid $150 million upfront with a commitment for $200 million more if the JAK inhibitor met pre-determined criteria in Phase II study in RA. - J.A.H.
Photo Credit: Wikimedia Commons

Deals of the Week Doubles Down on Neuroscience

Hit me! While many Big Pharmas have shied away from central nervous system drugs lately, at least one is placing bets on early-stage scientific advancements in neuroscience. AstraZeneca's new neuroscience innovative medicines unit (iMED) is still a virtual company division, but it is showing some real concrete progress in its deal-making, making a pair of deals that redouble its commitment to neurodegenerative diseases.

On July 12 (a warm summer's evening, on a train bound for nowhere?), it announced its second and third agreements since the division was set up earlier this year, acquiring a portfolio of small molecule assets from the U.S. company Link Medicine and, separately, entering into a research alliance, dubbed the A5 alliance, with four academic laboratories to evaluate the role of apolipoprotein E4 (ApoE) in Alzheimer's disease.

In the Link Medicine deal, AZ's neuroscience iMED has acquired a number of molecules in the clinical and preclinical stage that target the enzyme farnesyltransferase and modulate autophagy – the process whereby cells degrade and recycle their own misfolded or damaged proteins. Neurodegenerative diseases such as Parkinson's and Alzheimer's diseases are characterized by a build-up of such incorrectly folded, aggregated or neurotoxic proteins.

Established in 2005 by two philanthropists and Harvard Medical School neuroscience researcher Peter Lansbury, Link Medicine will receive unspecified upfront and milestone payments, while AZ will assume all R&D activities with the programs. Link Medicine has courted little publicity since it was established, although it did raise $40 million from a couple of VCs, Clarus Ventures and SV Life Sciences, in 2008, in a series C funding round.

With the A5 alliance, AZ will join with Dr. Steven Paul of Weill Cornell Medical College, Dr. David Holtzman of Washington University, St. Louis, Dr. Peter Davies of the Feinstein Institute for Medical Research, and Dr. Cheryl Wellington of the University of British Columbia, to try to identify, validate and risk reduce ApoE-related drug targets in Alzheimer's. Although ApoE is well-known to be a risk factor in Alzheimer's, second only in importance to age, no drugs have been developed which target ApoE-related mechanisms. AZ will fund the research. Since being set up in February 2012, AZ's neuroscience iMED, through the pharma's biologics arm MedImmune, has also forged an agreement with the U.S. company Axerion Therapeutics involving preclinical antibodies for Alzheimer's disease.

As AZ places its bets, some other companies have doubled down with pairs of deals. We hope you'll take a chance on us with the latest installment of...

Verastem/Pfizer and Verastem/Eisai: Verastem had a busy week, striking two separate deals that will help build its cancer stem cell-focused pipeline. On July 11, Verastem in-licensed Pfizer Inc.’s focal adhesion kinase (FAK) inhibitor formerly known as PF-04554878, which Pfizer decided to stop developing after a strategic review of its portfolio. Pfizer is not currently developing any FAK inhibitors, but GlaxoSmithKline Inc. and Boehringer Ingelheim GMBH are both developing compounds against this target that are currently in Phase I. VS-6063, as the compound will now be known, has completed a Phase I safety study in 36 patients with advanced solid tumors that was presented at the American Society of Clinical Oncology meeting last year. The study showed that the compound was well-tolerated and showed signs of clinical activity. Verastem will receive all intellectual property surrounding ’6063, including a composition of matter patent that will last until 2029, and in exchange Pfizer will reportedly receive an upfront payment of $1.5 million in cash, about $2 million in stock and the potential to earn $125 million in milestones. Verastem will be solely responsible for the development of the compound. Hours later, the company announced that it inked a deal with Eisai Inc. to collaborate on its Wnt inhibitor program, based on its compound VS-507. The 12-month collaboration will focus on analogs of VS-507 and Verastem will have full ownership of any compounds that result. Verastem will use its Wnt signaling and cancer stem cell assays to test the resulting analog compounds for selectivity. Eisai will be eligible for royalities and will have the right of first negotiation on any compounds that result. Having concluded the agreement with Eisai, Verastem announced that it will deprioritize the development of ‘507 as it pushes the FAK inhibitor program into the clinic. – Lisa LaMotta

 

Alnylam/Ascletis:  Looking for a partner for its Phase II-ready RNAi candidate for hepatocellular carcinoma (HCC) for more than a year now, Alnylam found one – at least for China and three other small Asian markets – in a licensing deal with U.S./China hybrid Ascletis. Announced July 12, the deal provides Ascletis, headquartered in both Hangzhou, China, and Research Triangle Park, N.C., with rights to develop and commercialize ALN-VSP in China, Hong Kong, Macau and Taiwan. Although Alnylam is eligible for milestones and sales royalties, it receives no upfront payment in the deal. Alnylam Chief Business Officer Laurence Reid told our sister publication PharmAsia News that gaining the rights to use Ascletis’ trial data for registrational efforts in other countries matters more to his company than an upfront payment. “From our perspective, the largest HCC population is in the Asian region, particularly China, where it’s driven by the dreadful prevalence of hepatitis virus infections, so having them finance the advance of the drug in that population and us getting rights to the data, that’s the basic value-swap of the deal,” Reid said. About 55% of new diagnoses of HCC each year occur in China. Ascletis CEO Jinzi Wu said his firm would negotiate a Phase II protocol with China’s State FDA, with a plan to test ALN-VSP in about 100 patients with a primary endpoint of progression-free survival.— Joseph Haas

Janssen/Evotec/Harvard: Regenerating ailing pancreatic islet beta-cells inside a patient's body is the aim of a new three-way collaboration announced July 11 between the J&J unit, Janssen Pharmaceuticals Inc., the German drug discovery services company Evotec AG, and Harvard University. The deal comes only a year after Evotec forged links with the Harvard laboratories of Prof. Doug Melton, to help advance research on small-molecule and biological substances that appear to regenerate beta-cells, and move closer to a potentially curative approach to diabetes; the project's name, CureBeta, highlights the ambitious nature of the enterprise. Janssen has paid a relatively modest $8 million upfront to take potential products arising from the research through clinical trials and on to the market, with Evotec and Harvard sharing in milestones worth a $200-300 million per product, and royalties on sales. The size of the split was not revealed. The research should add to Janssen's efforts in diabetes which notably include a new type of antidiabetic, canagliflozin, which ws recently submitted for marketing approval in the U.S and Europe. The German company's role in providing a bridge between academia and the pharmaceutical company is a new one  – making academic research more attractive to the industry through "industrial-standard" experimentation in industrial-grade infrastructure, rather than its usual role of providing discovery development services for biotech and pharma companies. Perhaps buoyed by CureBeta's success, Evotec has set up similar projects in other areas, including CureNephron, another collaboration with Harvard set up in February 2012; CureNeuron and CureHeart. – J.D.

Janssen/Genmab: Separately, Janssen's U.S.-based immunology, oncology and nephrology unit Janssen Biotech will collaborate with Danish biotech Genmab to identify and develop bi-specific antibodies for multiple disease targets, under the terms of a deal announced July 12. Janssen agreed to pay DKK 21 million ($3.5 million) up-front in the deal, which also includes potential milestone and licensing payments valued at DKK 1.06 billion ($175 million) for each drug. Janssen will fund research on panels of antibodies supplied by Genmab, for disease targets Janssen has identified. Although the companies didn’t specify the disease areas on which they will focus, Genmab typically uses its “DuoBody” platform to discover and develop drugs for cancer, autoimmune and infectious diseases, and central nervous system disorders. Publicly traded in Denmark, Genmab previously introduced the antibody Arzerra (ofatumumab), approved by FDA for chronic lymphocytic leukemia in 2009. – Paul Bonanos

John Davis reported on both AstraZeneca deals. Thanks to Flickr user twobobswerver for taking a chance with a five and a six, and sharing via Creative Commons.

2011 Exit/Financing of the Year Nominee: Ascletis

It's time for the IN VIVO Blog's Fourth 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™.

Emerging biotech Ascletis Inc. is embarked on a truly ambitious attempt to create a trans-global pharma company and, in doing so, has raised one of the largest Series A rounds ever in biopharma -- $50 million in the first tranche, with another $50 million guaranteed to follow when the company hits certain milestones. Based on those achievements alone, Ascletis surely qualifies as a top-gun deal-maker of 2011.

The money speaks for itself—only 10% of 2011’s year-to-date Series As raised more than $40 million—and of those, only one other, Hua Medicine, also a Chinese biopharma, raised $50 million.

Asceltis’ round was the largest by far but the company is distinct in other ways that enable it to creatively exploit a host of industry-wide trends. Its strategy is to search globally for appropriate clinical-stage in-licensing candidates, which it can develop and eventually commercialize in China. It also plans to discover new drugs internally and bring them through mid-stage trials before seeking global partners for large-stage development and commercialization.

The aim, it says, is creation of a true hybrid model, poised, on the one hand, to capitalize on the innovation and strategic expertise of Western trained executives and scientists and, on the other hand, China’s capital efficiencies and opportunities for accelerated research. To drive its point, Ascletis recently broke ground on a new China headquarters and R&D center in the Zhenjiang Province in China and is planning a U.S. headquarters in Research Triangle Park, NC.

With la creme de la creme Western-trained management talent moving to China, more opportunities for savvy in-licensing deals exist there. The therapeutic areas of interest are oncology and infectious diseases, reflecting the expertise of its co-founders and scientific advisors, Jinzi Wu, a former VP, global HIV drug discovery at GlaxoSmithKline, Xiao-fan Wang, a professor of cancer biology at Duke University Medical Center, and Allan Baxter, former global head of medicines development at GSK.

And the financial largesse stems from the generosity of one angel investor, real estate billionaire Jinxing Qi, with additional commitments from unnamed private investors in the U.S. and China and elsewhere. That in itself is a trend, as angel investors, stepping in seem likely to be playing increasing, albeit limited, roles in early-stage biotech financing. And, of course, China itself is a massive commercial opportunity for the right talent, with a CAGR of 17% estimated between 2011 and 2015, according to IMS Health, which predicts China will be the world's second largest pharma market by 2016, up from No. 3 in 2010.

Of course, finding solid development stage assets is a hurdle, even for large, deep-pocketed companies. And the hybrid U.S.-China combined development strategy didn’t pan out for some earlier companies. But Ascletis, by dint of its multi-faceted strategy, highly experienced, globally-oriented management team, and angel-backed financial cushion, is de-risked more than most, even as it positions itself to benefit from one of the industry’s biggest current opportunities. A deal-maker of this caliber surely deserves Deal Of The Year recognition.

Podcast: How's Your Guanxi?

You may have heard of the Chinese business concept of guanxi, but do you really understand it? The term, loosely defined as "relationship," can be maligned in the West, but there's more to it than cronyism.

The Food and Drug Law Institute held its first conference in China June 13-14 in Beijing to try to tackle some of the persisting challenges of doing business in China. (See here for full info.) They gathered top-notch speakers from FDA, China's SFDA, and some of the leading regulatory and legal experts from companies operating in China (not to mention our own PharmAsia News – see our coverage here and here; or register for a free trial here).

In partnership with FDLI, we are happy to be able to share a podcast from one of the more interesting panels, featuring Robert Poole – vice president of China operations for the US-China Business Council – Covington and Burling partner Timothy Stratford, Cargill Investments China Director Omar Sadeque and Charlene Zhu, general counsel for GE Healthcare China.

The US-China Business Council polls its member companies every year for the most burdensome aspects of the Chinese business environment. Poole addresses challenges ranging from intellectual property protection to sharing a market with massive state-owned enterprises (SOEs). And as Stratford, a former assistant U.S. trade representative, points out, it's important to be careful when negotiating with SOEs, because the Department of Justice views SOE employees as government officials under the Foreign Corrupt Practices Act. Sadeque and Zhu share insight with on-the-ground perspective on navigating China's life sciences market, including the much-discussed – but misunderstood – concept of guanxi.

All four panelists can speak Mandarin, and yet only one of them grew up in China. How's that for a metaphor on the shift taking place in market priorities? Don't worry; they speak English for this podcast.

Editor’s note: The original post omitted that the panel was moderated by Becker & Associates Consulting CEO Ron Ginor.

-- Dan Poppy
image from flickr user Matt512 used under creative commons license

Deals Of The Week: Managing Expectations

Amgen issued its first dividend ever this week, a move that may officially settle the debate over the Thousand Oaks, Calif. firm's status as biotech or pharma.

Either way, it’s ironic that as it finally gave back cash to its investors, Amgen’s share price dropped roughly 4% to close April 21 at $53.69.

Maybe investors didn’t like the idea that Amgen has officially "pharma-fied" itself. More likely, the reaction stems from unmet expectations.

Amgen has a lot of cash in its coffers, about $17 billion, and even with plans to return much of it to shareholders over the next five years, the initial pay out was smaller than hoped for and well below the threshold set by bigger drug makers. (Proof, yet again, that if you want to act like the big boys you have to play by their rules.)

Still, Amgen deserves some credit for trying to assuage investors and still maintain financial discipline. Amgen’s Prolia/Xgeva franchise has launched with mixed success, with osteoporosis sales lagging as oncology sales are off to a stronger-than-expected start. For the drug maker to meet the ambitious goals outlined by CFO Jonathan Peacock in his business day review (see here for more), the company has no choice but to continue to invest in denosumab’s commercialization--especially in the primary care setting. And it's going to take cash to deploy sales reps to educate physicians, patients and payers about the benefits of Prolia over Zometa and generic alternatives.

And with the Epogen franchise on the wane, Amgen also needs to show investors it can move beyond an all-denosumab-all-the-time strategy. Thus, it can’t afford not to invest in its pipeline, which in turn means maintaining a high R&D burn. (Not a popular sentiment in any corner of our industry these days, but especially in the eyes of Valeant’s CEO Michael Pearson.)

In doing the right thing with its new dividend, however, Amgen got slapped on the hand anyway, a useful reminder that success in this business is as much about managing investors’ expectations, when it can take years to deliver positive results. Here at IN VIVO Blog, we have no problem under-promising and over-delivering. (That’s one benefit of being a free publication.) In honor of Earth Day, chocolate rabbits, and egg rolls (not the brown and crispy but the hard boiled variety) we bring you another edition of...

Sanofi-Aventis/Stanford University: At the JP Morgan confab this winter, Sanofi CEO Chris Viehbacher promised his company would do R&D better. If this week’s tie-up between the French pharma and Stanford University’s interdisciplinary Bio-X Center doesn’t convince you that one crucial leg of Sanofi’s R&D plan is partnerships with academia, well, you haven’t been paying attention. In March, the company inked deals with Columbia University (diabetes) and the French Vision Institute (ophthalmology, bien sur), having already allied itself with institutions such as Cal Tech, Harvard, and MIT. The Stanford collaboration hews closely to the other research partnerships in its structure and ambitions, not to mention in the lack of disclosed financials. As we explained in this IN VIVO feature, Sanofi’s view of academia-industry partnerships puts heavy emphasis on aligning with the top minds in a particular field and building mutual trust via joint-steering committees. Under the terms of this most recent collaboration, a funding committee staffed by Stanford and Sanofi researchers will fund up to five programs annually. Sanofi will also host an annual research forum to bring together Sanofi and BIO-x researchers to discuss science, and may even host post-docs at the company. (Stanford also has the option to invite Sanofi scientists to be visiting scholars.) As we note in this 2009 Start-Up feature, such moves are becoming more and more common, as industry players hope to develop stronger relationships with bright scientists in their efforts to amp up the innovation in their pipelines. --EFL

Ariad Pharmaceuticals/ReGenX: Ariad has struck three new licensing deals for its Argent cell-signaling regulation technology to help further fund its internal oncology programs ponatinib, ridaforolimus and AP26113. Through the three agreements, Ariad will receive undisclosed upfront fees, as well as potential milestone and royalty payments. Privately-held, Washington, DC-based ReGenX Biosciences will use Argent as a complimentary tool to its internally developed NAV gene delivery technology, giving the smaller biotech access to technology that increases its ability to control the genetic payload being delivered. The start-up, which was founded in 2009, has proprietary technology that uses recombinant adeno-associated viral vectors to deliver genes to cells. Ariad's alliance with ReGenX also includes an equity stake, so should any of these discoveries bear out, Ariad stands to gain outside the clinical milestone payments and royalties that are standard licensing fare. Bellicum Pharmaceuticals of Houston, TX, meanwhile, is licensing Ariad's technology for its experimental cancer vaccine and cell therapies. Bellicum has used the Argent technology in Phase I/II trials of the BPX-101 DeCIDe immunotherapy and CaspaCIDe DLI. The third agreement was struck with Clontech Laboratories, a Mountain View, CA-based research reagents provider. Clontech has licensed the technology to provide it to researchers worldwide. -- Lisa LaMotta

Baxter/Prism Pharmaceuticals: Specialty pharma Baxter International entered an agreement to buy privately-held Prism Pharmaceuticals April 18, in a deal slated to include a $170 million upfront payment and up to $168 million in potential future milestones tagged to sales of Prism’s FDA-approved anti-arrhythmic drug Nexterone (amiodarone HCl). The two companies expect the transaction to close during this quarter. Prism first obtained FDA approval of Nexterone in December 2008, but waited to commercialize the drug until after gaining approval for a more convenient, intravenous pre-mixed bag formulation. That formulation was approved in November 2010. Baxter said that formulation should offer numerous conveniences to clinicians in the acute care setting. The ready-to-use product requires no admixing, which helps eliminate potential medication errors associated with compounding, and it can be stored for two years at room temperature. Having been selected as contract manufacturer for the premixed IV bags by Prism, Baxter likely brought considerable knowledge of Nexterone to the transaction. Morgan Stanley analyst David Lewis, in an April 18 note, was bullish on the deal, saying it would bolster momentum and is consistent with Baxter’s stated M&A strategy. “Prism is likely a low-risk deal that will leverage Baxter’s strong sales channel in IV injectables,’ he wrote. “We expect to see more deals in the several hundred million dollar range in coming quarters.” -- Joseph Haas

SciClone/NovaMed: On April 18, SciClone Pharmaceuticals announced it was taking out privately-held NovaMed Pharmaceuticals, a Shanghai-based specialty pharma backed by US venture groups. The deal is worth $62 million upfront, with $24.7 million coming in the form of cash, and another $37.1 million in SciClone stock. For NovaMed’s backers, which include Atlas Venture and Fidelity Asia Ventures, the upfront cash alone appears to provide an exit, though barely. Since its founding, NovaMed has raised $18.8 million via two financings, meaning the cash portion of the deal provides a step up of 1.3. (The SciClone stock is a nice sweetener, but it doesn’t provide the liquidity most VCs really want.) The deal also includes earn-outs worth up to $43 million tied to revenue and earnings targets for legacy NovaMed products. If all the milestones are met, we calculate the step up for Atlas and Fidelity increases to a healthy 5.6. The deal significantly broadens SciClone’s commercial footprint in China, increasing its current number of sales reps more than three-fold to 680. NovaMed’s CEO, Mark Lotter, will stay on to manage the commercial team, and SciClone says the group will be structured as an independent entity. In contrast to big pharmas (see below), biotechs have been slower to commercialize their products in China, but the country has been of strategic interest to SciClone for some time. The firm has been selling its flagship immunomodulator Zadaxin in China since 1996 and has two oncology products, DC Bead and Ondansetron RapidFilm, winding through China's regulatory process. -- Josh Berlin and EFL

Pfizer/Shanghai Pharmaceutical Holdings: On April 21, Pfizer and China's second-largest distributor Shanghai Pharmaceutical Holdings announced a memorandum of understanding to explore business opportunities in China, including the potential to jointly register, commercialize and distribute an undisclosed branded Pfizer product. But near-term the value of the memorandum is undoubtedly increased sales potential of Pfizer’s Prevnar 7 vaccine, which is the drug maker’s biggest revenue generator after Lipitor. For Big Pharmas looking to commercialize products in China, distribution alliances with in-country players are one way to rapidly gain market share, even as they add their own “boots on the ground” capabilities. Indeed, such strategies makes sense given China’s highly fragmented health care market and the difficulty penetrating its rural markets. Pfizer and SPH have a long working history already, with the Chinese pharma acting as the multi-national’s largest distributor in this region. Apart from joint commercialization of Pfizer's innovative products, Pfizer and SPH are also exploring a range of future potential collaborations in R&D, manufacturing and other potential areas. -- Dai Jailing

(Image courtesy of flickrer iaintait used with permission through a creative commons license.)

Financings of the Fortnight Knocks on a Boutique Door

To the chagrin of many, the biggest banks emerged from the recession not just intact but with engines full throttle and little fear of a yellow flag from regulators. The bulge bracket is a few members smaller, what with the demise of Bear Stearns and Lehman Bros., but no less powerful. But biotech has always leaned on the vitality of smaller banks, the boutiques, to help raise cash and find deal partners. So when FOTF heard that under-the-radar bank GCA Savvian, the product of the 2007 merger of a Japanese M&A advisory firm and a San Francisco boutique, had hired West Coast health care banking veteran Cabot Brown, we decided to check in.

As he takes the helm of the global health care practice at the 225-person firm, Brown says his group will rely on M&A for two thirds of its business. Two thirds will also be US, one third overseas, and half of clients will be on the private side. The split between pharma, device and diagnostics is about 30/30/20, says Brown, with the rest in IT and services. In other words, he'll be spending much of his time trying to find buyers for US venture-funded drug and device companies. There will be financings, too, but probably not IPOs. There was a glimmer of hope at the dawn of the new year, Brown says, but first quarter activity fizzled. A company with a clever approach to a big therapeutic category might get investor attention, but "as a routine course of financing a business and realizing value, no one I know is counting on the IPO market." When companies get out, he says, "it's a matter of luck and circumstance."

Brown says "people are also wising up" to the important threshold of $300 million in market capitalization, below which it's tough for a company to tap into the "virtuous circle" of attention from institutional investors and analysts. Only three venture-backed US drug firms that have gone public since the window re-opened in late 2009 have market caps over $200 million, and only Ironwood Pharmaceuticals is north of $1 billion. Even if IPOs return, Brown isn't sure the boutiques can make a viable business from them, as the bulge bracket banks so thoroughly dominate. "The chance you'll get more than 30% of the economics underwriting a deal is zero," he says, which means helping take companies public is a loss-leader for boutiques, he says.

The sorry state of institutional venture means more room for corporate VCs. "With one thing I'm working on now, the lead investor is a corporate investor who will invest on same terms as other investors. The corporate VCs sense weakness in the venture community, and the corporate business-development people see venture as a way to demonstrate action" to their higher-ups, says Brown. "It's a lot easier to go to your board and say 'I know I shouldn't buy things, but I need a window on important innovations.' It's allowing activity to continue in a risk-adjusted way."

Even when buying, big firms are generally doing so tactically, not strategically. In other words, without much long-term vision. Marching orders boil down to "we've got a few holes to fill, go fill them, but don't get caught up in filling the pipeline two years out," says Brown. "We say to potential buyers, look at your business two or three years out and think about how this asset fits in, and they say, 'Great analysis, but I don't care.'"

When we discuss the frustration of VCs, such as Avalon's Kevin Kinsella, who accused Big Pharma of "predatory business practices," Brown holds a certain amount of sympathy for the Big Pharma BD people. "The news comes that another 15,000 were just fired, and you're asking me to spend time on a high-risk, very interesting, early-stage therapeutic company that may or may not be useful in our pipeline, which itself may or may not exist in two months. Am I being a jerk if I drag my feet?"

Risk adjustment is everywhere. Another manifestation is earn-out heavy deals, already common in buyouts of private companies and spreading quickly to the public side, as our colleagues have noted frequently. "Earn-outs have always been there, especially for early stage deals, but now the ability for seller to say 'I'm only doing a full acquisition' is gone," says Brown. "This is a market where venture funds are under pressure to get realizations. Financings are dear. People have to be pragmatic."

How much pressure are VCs feeling? "There are a number of firms not raising their next fund, or one a quarter size of the previous fund, or quietly saying no new investments, just focusing on their current portfolio. They're hanging in with the assets they want to support, looking for a good outcome, but they're not going to support companies at the bottom of the portfolio, and it's happening to a much greater extent than I've ever seen," says Brown.

No surprise that emerging markets and product diversification are squarely on Brown's radar. He cites Endo Pharmaceutical Holdings' $2.9 billion buyout of American Medical Systems, a urology device maker, as part of a "bold and distinctive strategy." FOTF asked if taking over a firm with deep Japanese roots in the wake of the earthquake and tsunami has changed his outlook or strategy. He noted that the shock to the country's infrastructure could spur Japanese drug firms, aggressive the past few years with international expansion, to be even more so. Mostly, though, he was struck by his colleagues' demeanor, "the Japanese version of the British 'stiff upper lip,'" he says.

Our show, too, must go on. Or, as they say in Japan, 頑張る("Ganbaru"). Welcome to another edition of...

Ascletis: Lately some well-connected entrepreneurs have avoided taking VC money, opting instead for large angel rounds in which wealthy individual investors stand in for institutional ones. The biggest deal yet of that kind belongs to Ascletis, which raised a $100 million Series A to build a pharma company that will split operations between the U.S. and China. Real estate billionaire Jinxing Qi led the first $50 million tranche alongside other unnamed individuals. Ascletis will aim to develop and commercialize drugs in a two-way pipeline, in-licensing pharmaceuticals to seek approval, manufacturing and commercialization in China while discovering and developing new compounds that can be partnered out for global sales. Although its current eight-person staff is centered in Chapel Hill, N.C., CEO Jinzi Wu anticipates that about 80% of Ascletis’ scientists will eventually be based in Hangzhou, China. Not every U.S.-Chinese hybrid company has taken off -- LEAD Pharmaceuticals, for example, sold for a disappointing $18 million up-front last year -- but Ascletis and its investors are betting that China’s burgeoning life-sciences talent pool and booming middle-class spending power will bring it success. The company hopes to in-license a drug for sale in China, likely for cancer or infectious disease, within five years. -- Paul Bonanos

Blueprint Medicines: While Ascletis preferred hands-off investors, oncology startup Blueprint is working with the most hands-on variety. Third Rock Ventures, known for its intensive guidance of its portfolio, incubated the company and provided all of its $40 million in Series A money. The deal is Third Rock’s largest first-round funding ever and its latest commitment to cancer research, following investments in such companies as Constellation Pharmaceuticals and Agios Pharmaceuticals. Blueprint’s lofty goal is to screen for molecular mutations, genetic translocations or other aberrations that lead to various cancers, then develop drugs such as kinase inhibitors that can be linked to patients with those traits or resistances to existing drugs. Ideally, those drugs would follow in the footsteps of Gleevec (imatinib), which turned chronic myeloid leukemia into a manageable condition. With that in mind, Blueprint has hired Gleevec’s discoverers, Nicholas Lydon and Brian Druker, for its scientific advisory board. Blueprint says it will use proprietary software and both public and private data sets to compare normal and diseased tissue and build its own chemical library in search of drug candidates. It hopes to choose a preclinical candidate before seeking additional funding, which could include a Series B round with new investors. Third Rock made another investment this week as well, leading an $18.3 million Series B for bladder disorder specialist Taris Biomedical alongside existing backers Flagship Ventures, Flybridge Capital Partners and Polaris Venture Partners. -- P.B.

Tranzyme: Five months after filing its S-1, GI- and metabolic-focused Tranzyme completed its IPO on April 4, grossing $54 million. The company sold 13.5 million shares at $4, a steep discount to the $11 to $13 price range it had planned, continuing a trend that we've seen since the IPO window re-opened in late 2009: companies squeezing through but only by taking drastic haircuts. In its 13-year history Tranzyme raised more than $73 million privately from backers including HIG Ventures, Thomas, McNerney & Partners, Quaker BioVentures, and BDC Venture Capital, and it has secured a pocketful of partnerships, thanks in large part to the medicinal chemistry technologies gained through its 2003 acquisition of Neokimia. Tranzyme found Big Pharma validation for its MATCH (Macrocyclic Template Chemistry) platform, which enables creation of synthetic libraries of orally administered, drug-like, macrocyclic compounds, in its 2009 drug discovery deal with BMS. And the biotech recently partnered lead candidate ulimorelin (TZP101), an intravenous ghrelin receptor agonist in Phase III for postoperative ileus, with Dutch spec pharma Norgine, which received rights in Europe, Australia, New Zealand, the Middle East, South Africa, and North Africa in exchange for $8 million up front and up to $150 million in total milestones. Tranzyme reported 2010 revenues of $8.5 million and a $7.3 million net loss. Up next, perhaps, is specialty injectables firm Sagent Pharmaceuticals, which on April 6 set a goal of selling 5 million shares at $14 to $16 each. -- Amanda Micklus and Maureen Riordan

Royalty Pharma: We don't often highlight the funder instead of the fundee, but the private-equity fund Royalty Pharma said April 4 it has spent $487 million for the rights to royalty streams of two drugs, Lexiscan (regadenoson) and Cubicin (daptomycin), from the same undisclosed seller. We couldn't sleuth out the anonymous seller by press time, but we did find a whole bunch of intriguing connections. First, the cardiovascular imaging agent Lexiscan originally belonged to Astellas Pharma (then Fujisawa), which licensed North American rights to CV Therapeutics in 2000. CV sold 50% of those royalties, for $185mm, to TPG-Axon Capital in 2008. As you might remember, TPG-Axon ventured into project financing for two Eli Lilly Alzheimer's drugs, one of which, semagacestat, hit a late-stage clinical setback last fall. Gilead Sciences now owns Lexiscan after its $1.3 billion purchase of CV in 2009. The other drug in the Royalty Pharma deal, Cubicin, also has Gilead and Lilly connections. The antibiotic to treat drug-resistant staph infections was originated by Lilly, which licensed rights to Cubist Pharmaceuticals in 1997. In 2001, Gilead licensed exclusive rights to commercialize Cubicin (then known as Cidecin) in 16 European countries, but the deal was terminated a year later. Also worth noting: Royalty and Gilead know each other, having joined up in 2005 to pay $525 million for Emory University's royalty rights to the antiretroviral drug Emtriva (emtricitabine). -- Maureen Riordan

Updated 04/15/2011 (1:30pm). In a previous version of this post, IN VIVO Blog incorrectly identified Third Rock as a backer of Epizyme. We regret the error.

Image courtesy of flickr user B€rn@rd.