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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

DOTW Takes A Look At Stock Movements

In the hum-drum days of August, deals have been sparse, but a spate of bad clinical trial results in recent weeks shows how risky pharma R&D is.

The news -- around J&J/Pfizer/Elan's Alzheimer's disease monoclonal antibody bapineuzumab, Merck's 0524b cardiovascular drug, Amgen's pancreatic cancer drug AMG 479, and Bristol's nucleoside polymerase inhibitor for HCV -- led DOTW to wonder about the correlation between clinical trial data releases and biopharma stock prices, and whether negative or positive data has a bigger relative impact. Of course, one can hypothesize, but few rigorous studies of the topic seem to exist, and a host of variables make generalizing difficult. 

The most recent news didn't seem to have much effect on stock prices of the sponsors, likely because investors anticipated the bad news, given the nature of the compounds and previous work done in the class of drugs involved. Nevertheless, thanks to a nudge from pharma analyst Mark Schoenebaum of ISI Group, we came across an article that appeared in Oct. 2011 in the Journal of the National Cancer Institute. Co-authored by Allan Detsky, former physician in chief at Mount Sinai Hospital in Toronto, and colleagues, it studied the stock movements of companies sponsoring Phase III oncology drug trials between Jan. 2000 and Jan. 2009.

The stock prices of companies that owned the drugs were analyzed for 120 trading days before and after the first public announcement of clinical trial results and regulatory decisions. The study found, as follows: "The mean stock price for the 120 trading days before a Phase III trial announcement increased by 13.7% (95% confidence interval) for companies that reported positive trials and decreased by 0.7% (95% confidence interval) for companies that reported negative results...Changes in company stock prices before FDA regulatory decisions did not differ statistically between companies with positive and negative decisions." The implication was that at this "later stage of drug development there is less speculative interest, given that the supporting data are already available."

I'm not entirely sure what this tells investors, given the limitations of the retrospective study and the vagaries of the stock market. But looking for the most accurate drivers of biopharma stock prices, be they clinical trial data results, deal announcements, or M&A, is a key responsibility of biopharma investors and an obsession in the biopharma industry at large. For those who track markets and are scientifically inclined, it offers an analysis in a familiar format and makes for a new ingredient to throw into the mix. Whether it is more than beach reading is in the eye of the beholder.

Now, on to deals of the week...

Novartis/University of Pennsylvania - Looking to move further into the emerging field of cancer immunotherapies, Novartis announced a collaboration with the University of Pennsylvania on Aug. 6 in which a joint team of researchers will work to discover and develop anti-cancer immunotherapies that target chimeric antigen receptors (CAR). Novartis gains worldwide rights to CART-19, a Penn-discovered anti-CD19 candidate that is being tested in a pilot clinical trial in chronic lymphocytic leukemia. No deal terms were disclosed; Novartis said it will pay Penn an upfront payment, research funding, milestones pegged to clinical, regulatory and commercial achievements and royalties on any products that reach the market. In addition, Novartis will establish an R&D facility – the Center for Advanced Cellular Therapies, where the work will take place--on the university’s Philadelphia campus. Mark Fishman, president of the Novartis Institutes for BioMedical Research, said the company will commit $20 million to pay for the R&D site. The deal grants Novartis worldwide license to all CAR compounds developed through the partnership, but the primary focus at the start is CART-19. CART-19 has yielded headline-making results in a three-patient pilot trial in CLL. The drug showed potent anti-leukemic effects in CLL patients who previously had undergone multiple courses of chemotherapy and biological therapy. Two of the patients were in remission more than one year after beginning therapy with the candidate, while a third has maintained partial remission for seven months. Novartis plans to begin a Phase II trial with CART-19 during the fourth quarter of 2012.—Joseph Haas

MEI Pharma/S*BIO: In another deal that signals industry’s interest in epigenetics, the San Diego-based oncology company MEI Pharma will acquire exclusive worldwide rights to S*BIO’s oral histone deacetylase (HDAC) inhibitor pracinostat, MEI Pharma announced Aug. 8.  Pracinostat is a selective HDAC inhibitor that has demonstrated clinical evidence of activity in patients with advanced hematologic disorders such as acute myeloid leukemia and myelofibrosis. A drug targeting hematologic disorders will broaden MEI Pharma’s portfolio, which includes two lead drugs targeting solid tumors. MEI Pharma is developing novel isoflavone-based drugs and has two candidates in early clinical development. MEI Pharma will issue $500,000 of common stock to Singapore-based S*BIO in exchange; the deal also includes potential milestones of up to $75.2 million. HDAC inhibitors are one of the main classes of epigenetic drugs, which affect gene expression by inhibiting enzymes that add, remove or recognize chemical modifications on DAN or chromosomal proteins. Dozens of HDAC inhibitors are in development, but much remains unknown about their activity.—Jessica Merrill

Cempra/Curetis: Getting ready to enroll patients in a pivotal Phase III trial of the oral formulation of its antibiotic solithromycin, Cempra will team with Germany’s Curetis in a research and development collaboration through which Curetis will use its Unyvero diagnostic system to examine patient samples for bacteria and antibiotic resistance. No financial terms were disclosed; each party can use the generated data for its own product development and regulatory filings. North Carolina-based Cempra, which went public in February, netting $57.4 million in an IPO that sold for $6 per share, is developing oral and intravenous formulations of solithromycin for community-acquired bacterial pneumonia (CABP). In previous trials, Cempra’s candidate demonstrated efficacy and a favorable safety profile compared to the current standard of care for CABP, Janssen’s Levaquin (levofloxacin). Cempra will test solithromycin in an 800-patient, 100-plus clinical site worldwide trial expected to begin in the fourth quarter and enroll patients into 2014. Curetis said the partnership will enable it to generate further data on the clinical sensitivity and specificity of Unyvero, a versatile hardware platform designed to perform all of its detection in a single run.—J.H.

Intrexon/Synthetic Biologics: Two synthetic biology companies that were already partners are planning to collaborate more closely in infectious diseases. Privately-held discovery platform operator Intrexon has licensed its technologies to Synthetic Biologics in order to develop at least three monoclonal antibodies for as-yet-undisclosed indications. The partnership, which includes use of Intrexon’s proprietary mAbLogix and UltraVector technologies, can be expanded to include up to eight targets. The new deal comes nine months after the companies agreed to develop a pulmonary arterial hypertension therapy, when Synthetic Biologics was known as Adeona Pharmaceuticals. As in the previous transaction, Synthetic Biologics will make its up-front payment in equity rather than cash, granting 3.6 million shares to Intrexon, currently worth about $7.2 million. That brings the latter's stake to about 18%. Synthetic Biologics can pay additional fees in cash or stock if it chooses to expand the partnership, and will owe milestone and royalty payments if and when drugs discovered under the partnership pass through the clinic and are commercialized. Well-funded Intrexon closed a $100 million financing in June 2011, bringing its total funding to $259 since 1998.—Paul Bonanos

Pfizer/Nodality: Pfizer has tapped San Francisco start-up Nodality in a personalized medicine partnership that will initially focus on lupus and other autoimmune diseases. While specifics of the collaboration were not disclosed, Nodality revealed that the partnership is structured like a typical biotech/Big Pharma deal with an initial upfront and potential milestone payments. Nodality will use its Single Cell Network Profiling (SCNP) technology to help Pfizer pick the right clinical trial subjects, characterize mechanisms of action, as well as develop companion diagnostics. Pfizer has been investing in the company since 2008 and co-led a $15 million venture round in Nodality in July along with TPG Biotech, Kleiner Perkins Caulfield & Byers, and Maverick Capital. Nodality also signed a partnership with Belgium’s UCB in February. “This collaboration, which is Nodality's second major strategic pharma partnership this year, provides continuing validation of the value the SCNP platform technology can bring to drug development," said Nodality CEO and Chairman Michael Goldberg.—Lisa Lamotta