Financings of the Fortnight And the Neverending Venture Round

Somewhere out there, perhaps, is the end of NovImmune's Series B round.

More than a year ago, our friends at START-UP examined the fates of biotechs that had reeled in huge private financing rounds. Giant biotech venture rounds are back with a buzz in 2014 thanks to Juno Therapeutics, which launched in December with a $120 million Series A commitment. Last month it added on with cash from Venrock and Bezos Expeditions, aka Amazon.com chief Jeff Bezos' private money stash.

But in raw coinage, Juno's A round doesn't hold a candle to what NovImmune has raised in its Series B. Novi-who? It's a Swiss antibody developer founded 16 years ago that in 2006 first notched CHF 58 million ($46 million at the time) for its Series B. Eight years and three extensions later, the Series B now stands at CHF 200.5 million, most recently boosted by a CHF 60 million ($67 million) tranche announced February 18 and led by London life science specialists Rosetta Capital, whose partner Jonathan Hepple is joining the NovImmune board.

That makes NovImmune's Series B the largest biopharma venture round with at least one extension raised in the past decade, according to our Strategic Transactions database. FOTF reached CEO Jack Barbut via email, and he said NovImmune has kept the round open this long to create fairness for all shareholders. "This makes the share structure very easy," Barbut wrote. "For employees, common stock options (sweat equity), and for investors, preferred shares, all [have] the same liquidation rights and thus comply with Swiss statutes, which are very stringent on equal treatment for ALL shareholders." 

CEO since 2000, Barbut said when the Series B started, he didn't expect it to carry on this long. He doesn't know if this recent tranche will be the last.

We went back a decade into our Strategic Transactions database to see what kind of precedent there might be for NovImmune. We found 59 private companies whose extended rounds reached at least $50 million. Here are the handful, other than NovImmune, that topped $100 million:

Four of those companies have since gone public and one (Sangart) has gone under, shut down by its main investor, as first reported by Fierce Biotech. Meanwhile, Symphogen is in no hurry to go public, as its CEO told Start-Up in this feature last year.

NovImmune is not only top of the charts for money raised, but it also has no peer in the length of time of the round. None of the companies with blockbuster rounds took more than two years to secure their extensions. A few smaller rounds took longer. For example, Theraclone Sciences began raising its Series B in 2007 as Spaltudaq (we applaud the name change) and brought the total to $50 million about a year ago. Endocyte took five years to raise a nearly $80 million Series C before going public in 2011. And Alvine Pharmaceuticals spent more than four years building its Series A and is now waiting to find out if AbbVie will exercise an option to buy its lead Phase II program in celiac disease or the entire company outright. (If AbbVie does, it would be one of the very few corporate investors to buy out one of its portfolio companies.)

NovImmune's Barbut said his investors expect "some sort of liquidity event" too, of course, but in the nearer term he said the company is focused on finding a partner for NI-0101, its anti-TLR4 monoclonal antibody that has entered Phase I. It would also like to advance its NI-0501 program, an anti-interferon gamma antibody, and commercialize it solo. NI-0501 has orphan status in the US and EU in hemophagocytic lymphohistiocytosis, a deadly pediatric autoimmune disease, and has completed a Phase I study.

NovImmune doesn't seem to have cushioned its cash with a lot of non-dilutive funding. Its biggest deal to date is the outlicensing of an anti-IL17 antibody to Genentech in 2010, no financials disclosed. The candidate completed Phase I in 2013.

So we've got an orphan disease-focused biologics company with multiple, wholly owned clinical assets, a partnership with one top-tier biopharma, and the kind of cash runway that seems to attract more investment these days from the public markets. The IPO market has welcomed every stripe of biotech, from still-preclinical platforms to heavily capitalized specialty plays, in the past year, so NovImmune seems like an inevitable "ask." If its cards are well played -- keep in mind several banks are in NovImmune's investor pool -- an IPO could provide a nice bump for those who didn't have to ride the traditional valuation escalator (or be forced off of it) through later rounds.

We offer a bump, too -- a fist bump to Maureen Riordan, who did much of the work behind the scenes for this column. Without her this week, there would be no...

Melinta Therapeutics: Known as Rib-X Pharmaceuticals until last fall, antibiotic developer Melinta hasraised a $70 million Series 3 round led by existing investor Vatera Healthcare Partners. New investors included Falcon Flight, an affiliate of the Santo Domingo Group, and undisclosed backers. As Rib-X, the firm raised more traditionally named A, B and C rounds last decade. But a failed IPO try in 2011, and a set of new investors led by Vatera, have led to a housecleaning. In November 2012, the company disclosed a $67.5 million "Series 2" funding led by Vatera. Last fall, it unveiled its new name and new executive team, led by CEO Mary Szela. The Series 3 cash will help fund its Phase III study of antibiotic delafloxacin, a differentiated flouroquinolone in testing as an oral, single-dose therapy for uncomplicated gonorrhea. Melinta is aiming for an NDA filing in late 2014. In addition, the money will finance a two-trial Phase III program of delafloxacin in acute bacterial skin and skin structure infections, as well as lead-candidate selection from the firm’s RX-04 discovery program seeking to address serious and life-threatening Gram-negative infections via targeting of novel binding site on the bacterial ribosome. – Joseph Haas

Argos Therapeutics: Immunotherapy is hot, right? Well, yes and no. While the likes of Juno can command above and beyond $100 million in a single financing, cancer and infectious disease immunotherapy play Argos raised a mere $45 million in its February 7 IPO, its second try at launching onto the public markets. And that’s only after it had to dramatically cut the price to $8 a share from a $14 mid-point of its proposed range. It also had to increase the dilution, selling 5.6 million shares rather than the 4.3 million it had proposed. Existing investors bought 1.4 million shares of the IPO, or roughly a fourth of the deal. No word yet if the underwriters will exercise the overallotment, but the share price has largely treaded water since the offering. Argos investors can take some solace knowing the bargain-priced IPOs of 2013 ended up as top performers of the year. What's discounted now might have legs later, as Argos is one of many biotechs with notable clinical milestones in reach this year, as START-UP explored in January. Argos might see a boost later this year when it reports Phase IIb data for AGS-004 for treatment interruption in HIV/AIDS patients, although data due in 2016 -- Phase III survival data in renal cell carcinoma -- is more likely to be game-changing for Argos. The firm also expects this year to start two Phase II HIV eradication studies, one in adults and another in pediatric patients. Argos aims in these trials are ambitious – to eliminate the HIV virus or to reduce it to negligible levels. – Stacy Lawrence

Arrowhead Research: RNAi therapeutic developer Arrowhead said February 19 it grossed $104 million in a follow-on offering, selling 5.5 million shares at $18.95 a piece. Of the several public biotechs that sold $100 million-plus in stock this fortnight -- Ironwood Pharmaceuticals, Macrogenics, PTC Therapeutics and Puma Biotechnology were the others -- Arrowhead's inclusion would have been unthinkable this time last year, when it was bumping along in microcap land and had just a few million dollars in cash remaining. Arrowhead isn't strictly an RNAi developer; it has a peptide-drug conjugate in the clinic, too. But there's no doubt RNA interference, riding a revival of sorts highlighted by Alnylam Pharmaceuticals' giant deal last monthwith Sanofi/Genzyme, is driving the Arrowhead agenda. It's also worth noting that RA Capital, the hedge fund that helped propel the big Dicerna IPO, is also a key investor at Arrowhead as of last spring, having led a $35 million offering at $1.83 a share that recapped the company. With its stock now worth more than 10 times as much (it closed February 20 at $21.90) Arrowhead is pushing hard to get its lead RNAi compound, against Hepatitis B, into Phase II.  While RA, now a 9.9% owner, led a turnover in the company's cap table, it wasn't a bloodbath. Arrowhead's longtime CEO Chris Anzalone is still at the helm, and the board remains the same. – Alex Lash

Pronutria: Pronutria revealed February 13 a $12.5 million Series B round, with unnamed private investors participating alongside Flagship Ventures. CEO Robert Connelly told our colleagues at "The Pink Sheet" that Flagship provided less than half of the new round, while “business entities, individuals and family offices” supplied the remainder. Flagship created Pronutria within its VentureLabs program in 2011, quietly funding it with a $10.8 million Series A round over a two-year period before lifting the lid last October. Much of the Series B, which Connelly said is probably Pronutria's final venture round, will be used for clinical trials on two muscle-protecting candidates that preserve strength in frail, elderly people with sarcopenia, the loss of muscle mass that can occur during periods of hospitalization. The candidates, PN-107 and PN-365, are formulations of the amino acid leucine delivered as small “shot”-sized beverages similar to bottled energy products found on supermarket shelves. The specific pharmacokinetics and efficacy of each candidate, and the effects of their specific balances of amino acids, will be compared with each other in the trials. The company is still deciding on a regulatory pathway for each one, including possibly developing them as nutritional supplements, medical foods or pharmaceutical products, each of which has its own requirements. Initial clinical trials, now underway, are scheduled for completion by mid-year; Connelly said the company also is mulling parallel development of drug and non-drug formulations of similar product candidates. Further down the line, Pronutria is aiming for products addressing the metabolic, gastrointestinal, immune and renal disease areas, as well as beneficial products for patients with rare diseases and those going through chemotherapy. Whatever drug products Pronutria develops will reside in a separate business unit, which will help ease eventual sales or spin-outs. – Paul Bonanos

Best of the Rest (Highlights of Other Activity This Fortnight): Endocrine disease-focused Versartis raised $55M in Series E financing, and concurrently filed for an IPO…to support the launch of opioid dependence drug Bunavail in the second half of this year, BioDelivery Sciences grossed $60M in a registered direct offering…PTC Therapeutics publicly sold $126M in a FOPO to complete Phase III development and gain regulatory approval of ataluren in Duchenne muscular dystrophy and cystic fibrosis caused by nonsense mutations, in the wake of last month’s EMA/CHMP negative opinion on that candidate’s MAA…Concert Pharma priced its IPO at $14, the top end of its range, to net $78 million...three Israeli biotechs – Galmed, Bio Blast, and MediWound – are all hedging their bets and trying to float on Nasdaq…and PDL BioPharma, which manages patents and royalty assets, completed a $261M convertible notes offering. – Amanda Micklus

Photo courtesy of Mike Mantin  on flickr, via a Creative Commons license. 

Financings of the Fortnight Explores the Alternatives

With all the noise this year about IPOs in our little corner of the world, it’s been easy to forget that most biotechs out there are scrambling for any source of cash they can lay hands on. Assurances aside that traditional biotech VC is making relative bank, the overall pool of traditional venture capital available to invest will continue to dwindle, as respondents in START-UP’s 3rd annual life science VC survey were quite adamant about.

(The survey is now available, by the way.)

This week we got a taste of the post-VC world; or at least, a reminder of the various types of alternative funding out there for health care and biotech that, in a few years, could replace a significant chunk of traditional venture and interrupt for good the boom-and-bust cycle.

First, the elephant in the room: Google announced it would fund a new health care company, Calico, dedicated to anti-aging. The search-and-so-much-more giant is clearly obsessed with health, and doing something about the drastic – dare we say “tragic” – flaws in the care system. Our correspondent Paul Bonanos did a great job delving into Google Ventures’ health care investment strategy in this feature earlier this year, and we recommend reading it (non-subscribers can sign up for a free trial) as background to what might be going on with Calico.

Fly-on-wall fantasy: Page: How do we increase Google searches over a person's lifetime? Brin: What if we just increased the lifetime?
— Josh Berlin (@BioPharmaJosh) September 18, 2013

Paul also reminds us that the Googlers aren’t the only tech-heads with health-care ambitions: Peter Thiel, Yuri Milner and others are shifting their fortunes in small measures. And bully for them; we could certainly use fresh minds and tech-savvy strategies (Tech Tonics?), what with the data-intensive nature of health care these days.

But Silicon Valley’s libertarian streak is often at odds philosophically with another important source of biotech funding that we were reminded of this week. The National Institutes of Health announced the recipients of $45 million from the funds dedicated in 2012 to Alzheimer’s research. Those funds aren’t going directly to biotech companies, but the trials and other efforts they’re backing are much needed in an area that seems practically abandoned by industry – at least in proportion to the level of the dire medical need Alzheimer’s represents. So, indirectly, one can only hope the NIH funding can move the needle enough for biopharma, big and small, to see clearer pathways that deserve cash outlays from the private sector, as well.

Finally, we’re about to see a small but significant step toward equity crowdfunding. Title II of the JOBS Act, which loosens the rules for general solicitation of accredited investors, takes effect next week. It’s not quite crowdfunding nirvana – or the apocalypse, depending on your viewpoint – because we’re still a ways away from Mom and Pop, Joe Sixpack, and the Joneses being able to participate.  (That’s Title III.) But all manner of folks are lined up, ready to provide investment platforms for those with an eye on biotech, as our colleagues have written about here.

If you happen to be at PSA: The Pharmaceutical Strategy Conference in New York next week, you can ask Greg Simon, who’s running the equity crowdfunding site Polliwogg, all about the latest developments. (Or you can catch him on the panel “Funding Biotech: New Ways To Create Value.”)

Or, if you hate going anywhere near New York because you’re convinced it’s about to be overrun by giant drooling sea-dragon spiders, well, the people we write about have products that can help you. Until then, relax in the safety of your home or office, avoid the crowds (and their funds), and enjoy the latest edition of….



Civitas Therapeutics: From the ashes of the inhaled insulin efforts of the previous decade comes Civitas, which said September 11 it has raised a $38 million Series B financing to fund late-stage development of the company’s lead program, CVT-301, an inhaled formulation of levodopa (L-dopa) to treat debilitating motor fluctuations – known as “off episodes” -- associated with Parkinson’s disease. Civitas spun out of Alkermes' pulmonary business in 2010, then the latest casualty in Big Pharma’s complete retreat from several efforts to create inhaled insulin products. But Longitude Capital and Canaan Partners raised $20 million for a Series A, and in early 2011 new CEO Glenn Batchelder told FOTF he hoped to bring a Parkinson’s-related treatment to clinical proof of concept by the end of 2012. (Why an inhaled L-dopa for Parkinson’s? During acute “off periods,” characterized by halting or frozen movement, the Civitas technology aims to deliver drug even when it might be difficult for patients to draw a sustained breath.) CVT-301 is being positioned as an adjunct therapy to oral L-dopa. Bay City Capital led the round and was joined by crossover hedge fund RA Capital, an undisclosed blue chip public investment firm, and all returning shareholders including Alkermes, Canaan Partners, Fountain Healthcare Partners, and Longitude Capital. Partners from Bay City and RA Capital joined the company’s board. Civitas will also explore pipeline expansion with its ARCUS delivery platform for other diseases where what the company defines as a “large, precise” dose delivered from an inhalation device “would provide a significant clinical advantage.” – A.L.

DRI Capital: The Toronto health care royalty investor said September 9 it has raised a new $1.45 billion fund, its third following $240 million and $926 million vehicles, raised in 2006 and 2010 respectively. Investments under the first two funds followed a fairly straightforward set of criteria: drugs with FDA or EMA approval that offer strong efficacy and an attractive pharmacoeconomic profile and that are used to treat very serious, chronic conditions, DRI President and CEO Behzad Khosrowshahi told our “Pink Sheet” colleagues. For the third fund, however, DRI also plans to consider investments in Phase III assets and the higher returns that might come from higher-risk investments. It’s part of a larger but still subtle trend of royalty firms dipping toes into pre-commercial assets, even as traditional venture firms cross the other way and dabble in royalty investments. Khosrowshahi said that DRI has “a decent level of internal expertise” to evaluate pre-commercial risks. The drug royalty business has certainly attracted the capital to lure health care specialists, with DRI joined by competitors such as Capital Royalty L.P., Orbimed Advisors LLC and Healthcare Royalty Partners. Earlier this year, Capital Royalty raised more than $1 billion for its second fund, announcing a revised strategy under which it would emphasize debt instrument financing that would offer its deal partners a more concrete sense of the cost of capital. -- Joseph Haas

Five Prime Therapeutics: The protein therapeutic company notched on September 18 the first biotech IPO of the fall season. More than a dozen are waiting in registration, and an unknown number are also still under wraps with confidential filings. Five Prime raised $62 million by selling 4.8 million shares at $13 each, right within its projected range of $12 to $14 a share. Insiders bought about 408,000 shares. Five Prime was founded in 2001 and built at a time when VCs were more willing to wait for long-term payoffs for platforms. Five Prime’s platform consists in part of a library of 5,600 extracellular proteins to yield novel targets, and biotech or pharma partners have signed on with more than $220 million in partnership or licensing money. Its most advanced candidate FP-1039 is a selective FGF inhibitor that Five Prime and its partner GlaxoSmithKline put into a Phase Ib trial in July.  “If you were to tell a VC, ‘Give me four or five years and a chunk of money to develop this kind of platform,’ it might be a tough sell these days,” Five Prime VP of Biology Brian Wong told our sister publication START-UP earlier this year. Befitting a company that’s taken 12 years to reach the public markets, the pre-IPO ownership was spread rather widely. Only Pfizer had more than a 10% stake, with 13.7%. Venture or priate equity groups Advanced Technology Ventures, Domain Associates, Kleiner Perkins Caufield & Byers, HealthCap, Versant Ventures – from the firm’s very first fund -- and Texas Pacific Group all owned 9%. Founder and CEO Rusty Williams owned 6.8%. Jefferies led the underwriting team, which has the option to sell an additional 720,000 shares. – Alex Lash

Cubist Pharmaceuticals: The antibiotic maker said September 16 it bought $25 million in Series A preferred stock from Optimer Pharmaceuticals, a sale that was negotiated this summer as part of Cubist’s agreement to buy Optimer. That acquisition, not yet consummated, hasn’t gone over well with Optimer shareholders, who have filed suit to stop it because Optimer shares have actually been climbing since the company dumped its CEO and put itself up for sale in February. The $10.75-per-share offer, or $535 million, was at a 19% discount to Optimer’s July 30 closing price. Shareholders could earn more post-acquisition if Cubist hits sales milestones with Optimer’s Clostridium difficile treatment Dificid (fidaxomicin), a product it has been selling in the U.S. since 2011, when it signed an exclusive co-promotion deal with Optimer. The $25 million stock sale is essentially a bridge to help Optimer pay the bills – or as a Cubist spokeswoman told FOTF, “to address Optimer’s near-term cash needs” -- until the merger takes effect. The purchase repeats quarterly, so if the deal hasn’t closed in three months, Cubist will pay another $25 million, and another $25 million three months after that. As of June 30, Optimer had $73 million in cash on hand, down from $119 million at the end of 2012. Seeing how the deal was unusual for its discounted price, there certainly is a chance that the lawsuit will have legs and hold matters up for some time. The Cubist spokeswoman declined to comment on the suit. – A.L. and Jessica Merrill 

All The Rest: myoscience, developing Focused Cold Therapy devices for peripheral nerve conditions, closed on a $25M Series E round…Index Ventures is initially investing $10M into Egalet to support work on abuse-deterring pain meds, with the option for another $10M…Emmaus Life Sciences raised $7.5M to complete Phase III studies for its sickle cell candidate…to pay for its acquisition of CNS assets from Merck, Cerecor got $6.8M in Series A-1 financing…Taglich Brothers led a $3.2M round for screening and assay development services company Caldera Pharmaceuticals…Sanofi was an investor on Hadasit Bio-Holdings-portfolio company KAHR Medical’s $2.5M fundraise…BioMotiv and the NYU Innovation Fund launched autoimmune start-up Orca Pharmaceuticals…KV Pharmaceutical emerged from Chapter 11 bankruptcy, simultaneously closing on a $100M credit facility and $275M rights offering…Cell Therapeutics sold $15M in 15k Series 18 convertible preferred shares…Taiwanese biotech Amaran provided half of the $10M private investment in Stellar Biotechnologies…A $10M PIPE by NanoViricides gives the company a total of $22M in cash for the next two years to fund its FluCide and DengueCide candidates…A day after revealing positive outcomes in its Phase II glioblastoma multiforme vaccine study, Agenus raised $6.5M in an at-the-market registered direct offering…injectables developer Sagent Pharmaceuticals closed on a $75M FOPO…to continue work on ZFP Therapeutic candidates, Sangamo BioSciences completed a $64.5M secondary offering…Galena Biopharma’s $35M FOPO will help to commercialize its first product, Abstral…electroporation drug delivery company OncoSec publicly raised $12M…protein therapeutics company Acceleron priced its IPO at the top end of its range to gross $83.7M...glaucoma drug developer Aerie Pharmaceuticals filed for its IPO, while Bind Therapeutics, Ophthotech, and Enzymotec set terms for their offerings…Cubist offered $800M in two series of convertible senior unsecured notes…therapeutic protein maker Protalix BioTherapeutics closed on $69M in 4.5% convertible notes due in 2018…ProMetic Life Sciences’ $Cdn10M debt financing will help put its plasma purification facility into operations for manufacturing plasma-derived orphan drugs…Benu BioPharma established Benu BioVentures for investments in preclinical to proof-of-concept candidates…and Daiichi Sankyo teamed up with Mitsubishi UFJ Capital to launch a new fund for start-up creation; Daiichi gets rights to buy the companies and IP. -- Amanda Micklus 

Image courtesy of flickr use Kitschweb through a Creative Commons license. 

What If Deals Of The Week Had A Party And Nobody Showed Up?

What if they had a week and no biopharma deals happened? We’re not quite at that point but it has been slow-going, to put it mildly, on the deal-watching front.

Did everybody go on vacation all at once? Well, your trusty correspondent got back from his time off about two weeks ago and Deals of the Week has a schedule to keep. Let’s see what activity we can find.

There have been a few deals the week of Aug. 19, although none of the blockbuster sort or even all that close (see below). In fact, deal rumors may have outnumbered actual signed deals this week – they certainly set more tongues wagging. The biggest news in business development and M&A likely was renewed speculation that rare disease specialist Shire might be a buyout target for big pharma. The rumor gained in plausibility coming on the heels of Perrigo’s $8.6 billion acquisition of Elan on July 29 for the primary purpose of benefiting from Irish tax laws.

Focused on over-the-counter products, nutritionals and generic drugs, Perrigo bought out Elan largely for its appealing tax structure, as well as the royalties it earns from multiple sclerosis blockbuster Tysabri (natalizumab). Because Perrigo is merging with Dublin-based Elan, rather than just moving to Ireland, the new combined company will be able to take advantage of that country’s tax rates, which are considerably lower than those in the U.S.

On Aug. 15, Perrigo held its first earnings call since the transaction, saying that its expectations for increased global business are expected to offset slowing U.S. revenues in its OTC business. The company reported overall record net income of $967 million for its fourth quarter, a 16% increase from the year-ago period, and income of $3.5 billion for its fiscal 2013, which ended on June 30, a 12% increase from 2012.

While sales for its consumer health care business, which includes OTC drugs and pet-care products, grew 16% to $562.4 million for the quarter, Perrigo executives said during the call that sales in some OTC categories are slowing, a trend that likely will continue. Perrigo’s nutritionals sales, comprising supplements and infant formula, reached $150 million, an 11% increase year-over-year, with all categories within the segment growing and new product sales reaching $7 million.

It’s unclear whether Bristol-Myers Squibb, said to be reprising its interest in acquiring Shire, would be looking for tax advantages – Shire is headquartered in Ireland, as well, but also maintains corporate offices in Philadelphia and Cambridge, Mass.

Industry analysts on Wall Street and in London have said the pharma’s main interest might be Shire’s business model of producing and selling high-priced drugs for small specialist populations that discourage generic competition because they are hard to make and extremely targeted. However, if Bristol bought Shire, Irish tax rates would apply to any existing Shire products sold by Bristol and it likely could use the Irish rate on future products of its own, resulting in a reduced, blended tax rate for its overall business.

Shire has pursued an interesting business development strategy, using small to mid-sized acquisitions, particularly of companies with late-stage or commercial assets, to transform itself. The centerpiece of this strategy was the 2005 buyout of Transkaryotic Therapies that led to the establishment of its growing Human Genetic Therapies division and became a primary competitor to Sanofi’s rare-disease subsidiary Genzyme.

In an effort to build a franchise around bio-engineered skin-substitute product Dermagraft, Shire bought out Advanced BioHealing for $750 million in 2011, but to date that deal has not succeeded greatly in growing the Regenerative Medicines unit. On July 25, Shire announced that sales of Dermagraft, the primary motive for the acquisition, declined 57% to just $22 million during the second quarter.

Overall, however, the company reported sales growth of 7% during the quarter and said it was on track for double-digit full-year sales growth as it had projected.

Recently, it was reported that Shire has hired Lazard as a financial investor to assist it if a hostile takeover bid emerges. Bristol reportedly was going to offer nearly $17 billion to purchase Shire this past May. Shire’s share price has been trending up lately, nosing over the $100 mark on July 11 and continuing to incline. The stock closed trading Aug. 21 at $114.02, undoubtedly helped by the new rumors of possible takeout interest.

While DOTW waits for that potential story to percolate, we point you to these actual transactions that occurred over the past week:

Shire/Santaris: Meanwhile, Shire transacted some actual business, announcing an extension Aug. 23 of its strategic alliance with Santaris Pharma to discover and develop RNA-targeted therapies for rare diseases. Specific financial terms were not disclosed. Under the original deal, signed in 2009, Santaris has been using its proprietary Locked Nucleic Acid (LNA) platform to discover and begin development of preclinical oligonucleotides against rare genetic disorder targets selected by Shire. Shire paid $6.5 million upfront for access to the technology along with research funding and $13.5 million for completion of early studies in the original deal, which specified five targets. Santaris also was eligible for up to $72 million in milestones for each program, plus sales royalties on any product reaching the market. The revised deal adds an undisclosed number of additional targets to the collaboration. Santaris gets upfront cash and research funding, and again can earn milestones and royalties if a product derived from the target research gets to market. As with the initial agreement, Shire holds worldwide development and commercialization rights to any resulting compounds.

Adimab/Celgene/Innovent: Less than a month after antibody-engineering firm Adimab signed a pair of non-exclusive R&D partnerships with GlaxoSmithKline and Biogen Idec, the New Hampshire biotech struck again, announcing a pair of deals Aug. 20. This time, Adimab has signed discovery partnerships with Celgene and Innovent, again to generate therapeutic antibody candidates against multiple targets. The July deals brought Adimab’s total to 19 partners, including a “who’s who” of big pharma and big biotech, and the company said it expects to sign at least three tech-transfer deals a year through 2015. However, the deals with GSK and Biogen transferred non-exclusive rights to Adimab’s antibody discovery and protein-engineering platform, giving them expanded use of the technology beyond prior tie-ups with the biotech. In the Celgene agreement, Adimab will use the platform to generate antibodies against multiple, undisclosed therapeutic targets. Adimab receives an undisclosed upfront payment, while Celgene will have the option to develop and commercialize all antibody candidates resulting from the collaboration. For any candidate that Celgene options, Adimab will receive a licensing fee and be eligible for clinical milestones and royalties on product sales. Meanwhile, Adimab and China-based Innovent will partner on a single program to discover, develop and commercialize an antibody-based therapeutic against an undisclosed target. Innovent will coordinate all initial product development, including manufacturing and clinical trials. Each company will retain the right to develop and commercialize any resulting drug candidate in its respective geographic territories. Innovent will hold those rights in China, while Adimab retains U.S., European and Japanese rights to the program. Innovent will compensate Adimab for discovery and optimization of therapeutic leads, while Adimab will reimburse Innovent for specific development costs.

Evotec/Jain Foundation: Germany’s Evotec AG, a drug-discovery alliance and development partnership company, and the Jain Foundation announced Aug. 21 that they have extended and expanded their research collaboration in skeletal muscular dystrophy diseases. No financial details were disclosed. Based in Bellevue, Wash., Jain is a privately funded foundation whose goal is to cure muscular dystrophies caused by deficiency of dysferlin protein. In a release, foundation CEO Plavi Mittal said the collaboration is moving toward the screening of compound libraries with Evotec. “This is an important step toward accomplishing our mission of finding a therapy for Limb-girdle muscular dystrophy type 2b/Miyoshi Myopathy,” he said. Earlier this year, Evotec partnered with Harvard University to identify and develop a new class of small-molecule inhibitors of bacterial cell wall synthesis. Evotec is applying its drug-discovery technologies and expertise toward developing anti-bacterial agents that target peptidoglycan biosynthesis, while the university brings assays, anti-bacterial chemical starting points and x-ray crystallography tools to the collaboration.

Mount Sinai Medical Center/Exosome Diagnostics: Mount Sinai Medical Center (NY)’s Icahn School of Medicine is collaborating with Exosome Diagnostics Inc. on research and development of real-time nucleic acid-based body-fluid diagnostics to advance personalized medicine in areas such as oncology and inflammation. From the work, Exosome anticipates pursuing commercial development of potential in vitro diagnostics. Under the five-year collaboration, Mount Sinai researchers will get early access to Exosome technology for use in targeted molecular research, the two New York-based organizations said Aug. 21. The Exosome technology enables real-time capture of genetic biomarkers that are responsible for disease directly from blood, urine and cerebrospinal fluid without need for a tissue biopsy. The medical center will retain rights to molecular biomarkers associated with disease progression and drug response under the agreement, while Exosome will get commercial development rights to any molecular in vitro diagnostic products that may result from the collaboration.

Photo credit: Wikimedia Commons

Deals of the Week Gets Better Connected, Dips A Toe In Digital Health

Digital health is a bit of a catch-all. It encompasses everything from inexpensive exercise- and diet-recording gadgets to sophisticated multimillion dollar disease management systems, online pharmacies and website-based behavioral therapies. Truth be told, this DOTW correspondent, like many pharma execs, has always put the drugs first.

But there's no denying the clamor of expert opinion claiming digital health will be a powerful disrupter of health care markets in the future, potentially transforming pharma and device companies into service providers. "Digital health is going to happen, it may take time and will advance in fits and starts, but it will happen without the help of the establishment," Simon Cook, CEO of VC firm DFJ Esprit, told the London meeting of the Digital Health Forum, DHF13, earlier this month. "Nine out of 10 digital health businesses will fail, but a few will succeed and change the health care system." DFJ has investments in biopharma companies like Kiadis Pharma and Oxford Immunotec, as well as the internet nutritional company, Graze.

The transformation is coming faster now than two or three years ago, Cook said, because of the increasing pressure on individuals to take control of their own health, coupled with the increasing pervasiveness of smart phones and apps, making people comfortable with digital technology.

The investment community also is more engaged. Low-capital intensity business models are starting to emerge for digital health companies and are "incredibly compelling" for venture capitalists, said Alex van Someren, managing partner of seed funds at Amadeus Capital Partners. Amadeus, along with Archimedia Investments, put £1.6 million ($2.4 million) into the health care cloud platform, Qinec, in November 2012, and took part in May 2013 in a £2 million financing round for TrialReach, a company trying to improve patient awareness of clinical trials.

But small investment rounds, which characterize the digital health sector, often slip below the radar, or are not disclosed publicly, leading to a lack of comprehensive information about deal flows and valuations.

In the increasingly hot area of patient engagement and consumer health, much of the attention devoted to digital health has focused on continuous health monitoring followed by instant intervention via 24/7 connectivity. Innovators have focused on the concept for years, progressing slowly, but newcomers say they're at a turning point. U.K-start-up CellNovo, backed by investors and VCs to the tune of more than $40 million, is one of a slew of companies trying to address this challenge, and believes it is the most advanced in the diabetes sector.

Cellnovo has developed algorithms and software which allow physicians to monitor patients remotely in a sophisticated manner not seen with other company's systems. It anticipates a commercial launch of its digitally interconnected blood sugar monitor, insulin patch pump and exercise diary later this year, said Executive Chairman Eric Beard.

The theory that digital tools can improve the quality of care while saving money is exactly what the US and other countries are striving for as they work to reform their health care systems. In that sense, digital health tools are aligned with systemic priorities, and its benefits have not gone unnoticed by pharmaceutical companies as they and others try to grapple with harsh demands. Johnson & Johnson's business unit, Janssen Healthcare Innovation (JHI) is accelerating J&J's change from a product-centric to a health care solutions company. The company has noticed digital health start-ups often struggle to scale-up, and intends to offer master classes to European entrepreneurs in business development, to enhance the digital health ecosystem, in collaboration with partners.

But while we await the detonation of digital disruption, pharma and biotech have continued to forge deals and agreements, as we unveil ...

AstraZeneca/Roche: AstraZeneca and Roche are teaming up in a medicinal chemistry data-sharing collaboration with the aim of accelerating drug discovery. The deal announced June 26 is a sign big pharma may be more willing to work together in the pre-competitive space to improve the pace of drug development than in the past. Under the arrangement,  the two companies will use a technology called matched molecular pair analysis (MMPA) to identify chemical modifications that can be applied to each company's individual compounds to improve metabolism, pharmacokinetics or safety. The aim is to identify potential new drug candidates faster by using their combined databases of experimental results. Roche and AstraZeneca are committed to making the data generated by the program available to the broader research community, and are open to additional drug manufacturers joining the collaboration. The data-sharing will be managed by MedChemica, an expert in MMPA technology. - Jessica Merrill

MorphoSys/Celgene: Germany's MorphoSys has forged a potentially transformative alliance with Celgene, under which the latter receives worldwide rights to MorphoSys' CD38-targeting antibody, MOR202. The product, which is in Phase I/IIa trials in multiple myeloma, is believed to be Celgene's first clinical-stage antibody for the disease, a therapeutic area it dominates. In return for the rights, MorphoSys receives an upfront fee of $92 million, and Celgene will purchase $60 million worth of shares in MorphoSys at a premium of at least 15% to the biotech's closing share price of $37.06 on June 26. MorphoSys also will receive development, regulatory and sales milestones, plus double-digit royalties outside of a co-promotion territory in Europe, the companies announced June 27. The deal gives the partners the financial firepower to speed MOR202 to the market, while potentially broadening its indications beyond multiple myeloma. - John Davis

Aspen/Merck: South Africa's Aspen Pharmacare Holdings, the largest generics drug firm in Africa, continued its geographic, manufacturing and portfolio expansion efforts in a complex deal valued at more than $1 billion with Merck, roughly one week after revealing it hopes to acquire two mature thrombosis drugs and a manufacturing site from GlaxoSmithKline. For approximately $600 million, Aspen will buy a portfolio of 14 drugs from Merck and acquire active pharmaceutical ingredient manufacturing and related sales sites in the Netherlands and the U.S. In the deal, Aspen will get the Boxtel site in the Netherlands as well as part of two other API plants in that country, along with a manufacturing site in Iowa. Sales offices in the Netherlands and Illinois also will be included in the package. News surfaced June 18 that GSK is mulling an offer from Aspen to purchase Arixtra and Fraxiparine, which generated aggregate sales of $670 million in 2012, as well as a manufacturing site in France. - Joseph Haas

Cytokinetics/Astellas: Cytokinetics has signed a two-year research collaboration including rights to its skeletal muscle activator CK-2127107 with Astellas Pharma. The deal, announced June 25, is the second Cytokinetics has signed in two weeks, extending the company's cash runway and providing financial flexibility to carry on with the development of its lead drug tirasemtiv independently. Like '107, tirasemtiv is a skeletal troponin muscle activator, currently being tested in a Phase IIb clinical trial in patients with amyotrophic lateral sclerosis; data are expected by the end of the year. The license for '107 to Astellas is for non-neuromuscular disorders. The development plan encompasses potential indications like cachexia and sarcopenia. The deal does not exclude the potential to study other skeletal activator mechanisms that may emerge from the research in neuromuscular indications. Cytokinetics will receive $40 million initially from Astellas, including a $16 million upfront payment and $24 million in R&D reimbursement over the first two years of the collaboration. The biotech stands to receive as much as $450 million in development and commercial milestones, as well as royalties on any drugs emerging from the collaboration. Cytokinetics announced an expanded collaboration with Amgen June 12, under which it received $25 million upfront in exchange for giving Amgen rights to the heart failure candidate omecamtiv in Japan; the two already are partnered in other parts of the world - JM

Seattle Genetics/Bayer/Agensys: Antibody-drug conjugate specialist Seattle Genetics executed its seventh partnership since the start of 2009 around its auristatin-based ADC technology platform on June 25. This time, the Bothell, Wash., biotech will receive $20 million upfront from Bayer for a multi-target oncology collaboration. Seattle Genetics could earn up to $500 million in milestones under the Bayer agreement, as well as royalties on any products reaching the market. Targets were not disclosed. Bayer will be responsible for all R&D costs, plus manufacturing and commercialization. Seattle Genetics, which brought the first ADC to market for oncology with the 2011 U.S. approval of Adcetris (brentuximab vedotin), now has partnerships with five of the 12 big pharma companies, as well as three Japanese pharma and four biotech firms. In a release, VP of Corporate Development Natasha Hernday said Seattle Genetics has 15 ADCs in clinical development between proprietary and partnered programs, and is in line to earn up to $3.5 billion in milestones and royalties from its strategic partnerships. The biotech also announced June 27 it had taken an option under its 2007 collaboration with Astellas-affiliated Agensys. Seattle Genetics will fund 50% of the future development costs of ASG-15ME, a potential ADC therapy for bladder and lung cancer for which an IND has been submitted to FDA. - JAH

ADC Therapeutics/VivaMab: Swiss-based ADC Therapeutics is adding to its preclinical pipeline of around 10 antibody-drug conjugates by licensing a novel internalizing antibody, VM101, from BioAtla LLC's therapeutic division, VivaMab LLC. The antibody conjugated with a cytotoxic warhead has already shown in vivo efficacy against models of intractable hematological cancers, the companies reported June 24. ADC Therapeutics plans to start pre-IND development of the antibody-drug conjugate immediately for the treatment of a hematological cancer, with San Diego-based VivaMab providing development support and receiving undisclosed milestones and royalties. The antibody binds to antigens on the surface of tumor cells, is internalized and then releases the cytotoxic pyrrolobenzodiazepine payload. The Swiss firm say it intends to move multiple drugs into the clinic over the next three years. Upon successful proof of concept, it will seek to license the antibody-drug conjugates to pharmaceutical companies. - JD

Immunocore/Genentech: Genentech has become the first major partner of the privately held UK biotech Immunocore, which is developing a new class of bispecific therapeutic proteins called ImmTACs. The companies have entered into a research collaboration and licensing agreement for the discovery and development of multiple novel cancer agents, with Immunocore receiving an initation fee of $10-20 million for each program, the companies announced June 27. Immunocore will also receive more than $300 million in development and commercial milestones for each target program, and tiered royalties. The company's lead product, IMCgp100, which is in a Phase I/II clinical trial in patients with late-stage melanoma, is  not part of the deal. ImmTACs consist of high-affinity T-cell receptors linked to an antibody fragment, anti-CD3, which activates the immune system. T-cell receptors can recognize intracellular changes tha occur during cancer or viral infections, and ImmTACs are expected to target and destroy cancer cells without affecting healthy cells. - JD

Tesaro/Myriad Genetics: Tesaro, a three-year-old company focusing on cancer and moving at lightning speed, will use Myriad Genetic's BRCA1 and BRCA2 mutation tests to screen patients for enrollment in Phase III trials for one of its lead drugs, niraparib. The drug, a PARP inhibitor, which Tesaro in-licensed from Merck in 2012, is geared to patients with BRCA1 & 2 mutations who have breast or ovarian cancers. Myriad is the only company offering an FDA-approved version of this test, so the alternative would be to go to laboratories offering home grown versions, but the latter may not be as robust, a downside for inclusion in pivotal trials. Both studies will be initiated in mid-to-late 2013. Tesaro told Robyn Karnauskas, an analyst with Deutsche Bank, that its PARP inhibitor program is its most de-risked development strategy, based on very specific input from EMA and FDA. Women with germline BRCA 1 or 2 mutations have increased risk of developing high-grade ovarian and breast cancers, which are particularly sensitive to PARP inhibitors. Management further believes that the drug may be effective in other indications. - Wendy Diller

Nicox SA/Immco Diagnostics: Nicox, a French ophthalmics company, has entered into an exclusive agreement with Buffalo, NY-based Immco Diagnostics to promote a proprietary laboratory test targeted at early detection and diagnosis of Sjoegren's syndrome, an autoimmune disease that destroys the ability to produce tears and saliva. Under the terms of the deal, Nicox will detail the test to ophthalmologists in North America, to whom patients with the syndrome often present because dry eye is a symptom. Immco will be responsible for processing the test and all regulatory activites and reimbursement. Nicox will receive a majority of revenues generated from the ophthalmologists and has a nine-month option to exercise ex-U.S. commercial rights to the test as well. The disease destroys the exocrine glands that produce saliva and tears. Current diagnostic techniques for Sjoegren's syndrome are only moderately effective and detect disease only at advanced stages. The new test aims to diagnose the disease at earlier stages, when it is more treatable. Dry eye is a primary symptom of the disease, which is chronic, and the test is aimed at helping early diagnosis and more efficient management of it; rheumatologists are also involved in treatment. The test was approved in the U.S. in 2013, with a commercial launch expected in the second half of the year - WD

Photo credit: Wikimedia Commons

Financing of the Fortnight Wonders If It's Time To Join The Parade

Biotech workers of the world unite, you have nothing to exercise but your stock options. At least a few more do these days. We’re far from the cries of “Mayday!” that echoed from the bottom of the financial canyon four years ago, and as we write this, the sector is abuzz with IPO pipeline activity.

GW Pharmaceuticals, a British purveyor of pain-relieving cannabinoid drugs already listed on the AIM, just raised $31 million and made its Nasdaq debut; and Insys Therapeutics, also in the prescription pain-relief business, raised $32 million in its IPO.

Both were modest, as are most dollars raised in biotech IPOs. But they’re the eighth and ninth of the year already. To relieve investors with grumpy LPs and give workers hope that stock options will one day put a little extra scratch in their pockets, it’s volume that’s needed. More liquidity across the board, please.

It seems the waters are about to flow. Ambit Biosciences, Regado Biosciences, Receptos, Epizyme, Portola Pharmaceuticals, and others are now in the queue, along with the mega-CRO Quintiles Transnational Holdings (with private equity, not venture capital, backers). We won’t make individual assessments of the worthiness of each company at this point, but on the whole it’s a well represented group.

Those are just the ones in the public eye. There could be plenty a few steps behind, thanks to the US JOBS Act of 2012. It made IPO registration easier and stealthier at first, giving companies the chance to lay the groundwork of a possible debut without having to open up to public scrutiny. Not so fun for journalists, of course, but it gives executives and their advisors more data to consider and more time to schmooze public investors before declaring themselves in pursuit of the brass ring. And that breathing room, people say, is helping. “The ability to make initial registration statement filings confidential, plus the ‘testing the waters’ rules have made a meaningful difference in helping companies pursue an IPO,” says Fenwick & West partner Matt Rossiter, whose clients include life science companies and venture investors.
  
Kleanthis Xanthopoulos took his microRNA company Regulus Therapeutics public last year and is a big believer in a long, slow IPO process. “The roadshow should be where people make their minds up, finally, rather than where they learn about you,” he said during a discussion about the IPO landscape at the recent Allicense conference in San Francisco.

The biotech analysts at Cowen & Co. agree that the JOBS Act, by allowing more investor exposure to pre-IPO companies, has increased investor comfort. Other factors besides the new rules are helping, too. Since 2004 there have been 332 biopharma acquisitions and 119 IPOs, they say, which leaves public investors hungry for new investments and new ideas. And the past couple years, IPO investments have on average outperformed the S&P 500. (A couple months ago, our friends at “The Pink Sheet” took a detailed look at the strong Class of 2012 here.)

“It seems quite reasonable that these factors have come together to produce a market more receptive to IPOs than at any point in the previous 5 to 10 years," write the Cowen team in a recent sector report.

Yes, but… (You knew that was coming.) If public investors are showing more interest, why is insider participation in IPOs so high? It’s a phenomenon we’ve tracked for a while now. A year ago it was startling. At his Allicense talk, Xanthopoulos cited data from Lazard Equity Capital Markets and FactSet that show why: For this current IPO window that began in late 2009, 71% of offerings have included insiders, and the median amount of proceeds they’ve bought at IPO is 43%. In the previous window, from 2003-2007, insiders participated in 29% of offerings and snapped up 20% of the proceeds.

Quite a bump. What gives? A small part of the bloated totals could be due to the crossover phenomenon, with hedge funds and other public buyers getting in before the IPO and bolstering their positions at the debut. And on any particular deal you might find an insider or two who are simply thrilled with the company, hungry for more, and in no rush to exit. But with so many firms out fundraising, or winding down operations, most of those insiders are wading in deeper simply to get deals done.

So keep an eye on those insider numbers. If IPO volume continues apace, and the insiders start to do what they really want to do -- own less stock, not more, after their companies go public -- we'll know the window is wide open.

In fact, May is the perfect time to throw windows open, let in the breeze, and do some housecleaning. We'll start right now by polishing up the latest edition of...

Symphogen: The privately held Danish antibody company said May 3 it has reeled in another €41 million ($53.9 million) to push forward its antibody mixture pipeline. The firm is developing products that contain more than one full-length monoclonal antibody, an approach that few companies have tried. As described in a START-UP feature earlier this year, Symphogen has pioneered the way for antibody mixtures (or combinations, or cocktails, as some might call them) into the clinic, and in 2012, it outlicensed its lead oncology program, a two-antibody mixture to treat head and neck and colon cancers, to Merck Serono following Phase II trials. The cash from that deal, plus its massive €100 million financing round announced in 2011, and the new funds, an extension of that round, has given the firm a long runway to develop its preclinical pipeline. Its lead program is now Sym013, a six-antibody mixture designed to inhibit HER1 (aka EGFR), HER2 and HER3 to prevent tumors from switching signaling pathways and building drug resistance. Ultimately the company wants to design combinations of antibodies that hit targets not just on the tumor cell surface but in the surrounding microenvironment.  The extension was led by existing investors Novo A/S and PKA, a Danish pension fund administrator, and included Danica Pension, making its first active investment in Symphogen. Symphogen has now raised €249 million in private capital. -- Alex Lash

ScioDerm: Dermatology start-up ScioDerm has raised the first $9 million of a planned $16 million Series A round, intended primarily to support clinical trials on lead program SD-101. The Raleigh, N.C., start-up’s backers were Morgenthaler Ventures and Technology Partners, which made us do a slight double take. Turns out Morgenthaler’s life sciences team is still investing the firm’s 2008-vintage ninth fund, even though the group has already joined forces with Advanced Technology Ventures’ biotech team to create a new firm, Lightstone Ventures. Morgenthaler is not expected to make new life sciences investments from future funds. In February, ScioDerm filed an IND to study SD-101 in epidermolysis bullosa, a rare genetic disorder that results in sensitive and fragile skin, disfigurement due to wounds from blistering and tearing, and early death. It had previously conducted a Phase II study of SD-101 in some subtypes, including the simplex, recessive dystrophic, and junctional forms of the disease. Also this fortnight, ScioDerm received Breakthrough Therapy designation from FDA, potentially speeding the drug’s clinical development. A Phase I study is expected soon, with a Phase IIb/III study expected as soon as late 2013. – Paul Bonanos

Esperion Therapeutics: Longitude Capital joined a roster of investors in cholesterol-fighting drug developer Esperion, leading a $33 million Series A extension that builds on $22.75 million the company raised in 2008. Returning backers included Aisling Capital, Alta Partners, Domain Associates, Arboretum Ventures and Asset Management. Esperion is attempting to grab a piece of the market for cholesterol-lowering prescription drugs that appeal to patients who cannot or prefer not to take statins such as former Pfizer blockbuster Lipitor (atorvastatin), generic since November 2011. The company recently presented encouraging data suggesting that Phase II candidate ESP-1002 reduced low-density lipoprotein cholesterol by more than 40% in type 2 diabetes patients; it’s studying the drug in additional patient populations as well. By some estimates, a fifth of high-cholesterol patients are statin-intolerant, suffering pain or muscle weakness. Other novel drug classes, such as PCSK9 inhibitors, are being studied for statin-intolerant patients, but Esperion co-founder Roger Newton – a co-discoverer of Lipitor – said ESP-1002’s oral availability and once-daily dosage may give it an advantage over injectable alternatives. Ann Arbor, Mich.-based Esperion expects to partner the drug “in a couple of years,” according to CEO Tim Mayleben. Pfizer acquired the original Esperion for $1.3 billion in 2004 and retained several key assets, even though it shifted many to the back-burner. A management team including Newton, an original Esperion founder, engineered a 2008 spinout, establishing the new company with an external investment. – P.B. 

Intrexon: The synthetic biology company said May 1 it has reeled in a $150 million Series F round of funding to continue building operations in its four areas, health care, food, energy, and environment. Health care is where Intrexon CEO and chairman Randal Kirk amassed the fortune that he’s been plowing into Intrexon since his first investment eight years ago. Kirk was majority owner of New River Pharmaceuticals, which he sold to Shire in 2007, and Clinical Data, bought by Forest Laboratories in 2011. He became CEO of Intrexon in 2009 and much of the $509 million the firm has raised has come from him or his affiliated venture funds. A majority of the Series F round came from undisclosed new investors, according to the company. The news of the financing came on the heels of the firm’s latest biopharmaceutical deal, an agreement with Soligenix to co-produce monoclonal antibodies for the treatment of melioidosis, an infection caused by Burkholderia pseudomallei endemic to Southeast Asia and Northern Australia. Other recent health care deals include an agreement with AmpliPhi BioSciences to develop a range of anti-infectives and a license of its technology to Fibrocell Science for use in development of fibroblasts and dermal cells for aesthetic and therapeutic applications. Oragenics, Adeona Pharmaceuticals and Halozyme Therapeutics have also partnered with Intrexon. – A.L.
 
All The Rest: New investor Oracle joined in for a second closing of Proteus Digital Health's Series F round, now totalling $62.5M… Celator closed a $39.3M financing to fund a Phase III study of CPX351 in acute myeloid leukemia… HPV vaccine developer Genticel raised €18.2M in Series C funds… Synthetic biology company Gen9 received a $21M investment from Agilent… Acumen Pharma, developing the ACU193 antibody for Alzheimer’s, completed the first close in a $20M Series A… Becker Ventures led a $15M round for AltheRx, developer of overactive bladder candidate solabegron... To support technology to distill real-time patient insights from social media, Treato raised $14.5M… ActoBiotics developer ActoGeniX completed a €10.7M Series B… Anterios collected $8.5M in venture funding for its aesthetic and dermatological drug candidates… viDA Therapeutics’ $3.6M seed round will fund a granzyme B inhibitor for fibrotic, autoimmune, degenerative, and age-related chronic inflammatory diseases… US and European institutional investors put €54M into Belgian biotech Galapagos… Radius Health, which is working on the transdermal and IV candidate BA058 for osteoporosis, raised $43M… Arrowhead Research completed a $36M private offering of common and Series B convertible preferred shares…concurrent with closing its reverse merger with publicly traded Tranzyme, Ocera plans to raise $20M… Health care-dedicated institutional buyers invested $10M in Northwest Biotherapeutics… Lincoln Park Capital Fund provided Elite Pharma with $10M… As it prepares to launch its radiopharmaceutical agent Lymphoseek, Navidea privately raised $5.1M… To pay for the NDA for male hypogonadism treatment CompleoTRT, Trimel publicly sold $Cdn40M in stock… Boron chemistry platform company Anacor completed a $20M FOPO… Cell therapeutics developer NeoStem raised $10M through a public stock sale... Immunomodulating company Idera raised $8.75M in a secondary offering... Less than a year after closing a $51M Series E round, cardiovascular firm Regado Biosciences filed for its IPO… Receptos, Quintiles, and Ambit all set terms for their IPOs… Theravance is spinning off into two independent publicly traded companies, one focused on the Breo deal with GSK, and the other on small-molecule R&D… Supernus netted $72M in a convertible senior secured notes offering… Immunotherapy-focused TNI Biotech filed a Form 10 to become public reporting entity… GSK and Avalon are partnering to start up multiple drug discovery companies over the next three years with a total of $495M in potential funding… Harvard University received a $50M donation to support translational research… Atlas Venture closed its $265M ninth fund... Capital Royalty announced an $805M fund for nondilutive financing. -- Amanda Micklus

Thanks to Paul Bonanos for help with this fortnight's column.  

Photo of ILGWU members in a 1937 May Day parade courtesy of the Kheel Center, Cornell University. 

Deals Of The Week Wonders What Merck's Latest Biosimilars Move Really Means

Ever since Merck jumped into the biosimilar field in 2008 with a ferocious go get ’em attitude more fitting of an NFL tackle than a big pharma, we’ve been following their progress – and then lack of progress – closely. Back when most pharmaceutical manufacturers were still griping about defending their biologic brands, Merck’s early aggressive ambitions made an interesting case study in how a big pharma might strike offensively by positioning itself as a contender in the biosimilar space.

So the company’s announcement Feb. 20 that it has partnered with Korea’s Samsung Bioepsis to develop multiple undisclosed biosimilar candidates, while delivered quietly in a concise statement, struck us as a noteworthy change in strategy.

You didn’t have to read tea leaves to see that Merck’s original strategy wasn’t working out. In 2008, Merck established a business unit devoted to the field and pledged to invest $1.5 billion and launch six or more biosimilars between 2012 and 2017. But last year, as we reported here, the company closed Merck BioVentures, the unit it created devoted to biosimilars, and folded the research into biologics and vaccines at Merck Research Labs. And Mike Kamarck, the charismatic proponent of biosimilars who led Merck’s charge into the field, left the company.

Now, we can’t help but wonder what the latest announcement means for Merck’s biosimilar strategy.
Is it a reaffirmation of the company’s commitment to biosimilars, albeit through a more modest path, or is Merck effectively washing its hands of biosimilars while still holding out for some hope of an eventual commercial reward? Samsung will be responsible for preclinical and clinical development, manufacturing, clinical trials and registration of any candidates, while Merck will commercialize the products. It’s not clear how much Merck is putting behind the effort either, as the financials of the deal were not disclosed; Merck is paying Samsung an upfront and has agreed to milestones.

Merck declined to offer further insight on the move, but said the deal with Samsung will complement its internal effort. The only biosimilar Merck has in its internal pipeline that has been publicly disclosed, however, is a copy of Roche/Biogen Idec’s Rituxan, the one drug Samsung Bioepsis won’t be developing because the company – formed in 2011 out of joint venture between Samsung Biologics and Biogen – won’t make any biosimilar versions of Biogen products.

Given Merck’s inability to get new drugs to market of late, the decision to take a contract research approach to biosimilars may be the best way for Merck to hold onto the potential commercial upside of biosimilars without the investment internal development requires. Merck ran into the field at high speed, and we admired their optimism, but given the evolving regulatory and commercial dynamics, a cautious path may be the wiser one.

And let’s not forget why the decision to jump into biosimilars was easier for Merck to make than for some other big pharmas: Merck never had a history in biologics and hasn’t traditionally had treasured blockbuster biologic brands to protect. It gained some knowledge of the field and rights to Remicade in certain territories outside the U.S. through its mega-merger with Schering-Plough. But it’s hard to envision Merck’s inexperience as a competitive advantage in a notoriously difficult field like biologics. Development and manufacturing is just as hard for biosimilars, even when manufacturers have a reference molecule to use as a road map.

Three years after the U.S. government laid a regulatory framework for biosimilars, no applications have yet been filed through the new pathway with FDA. Today, while Merck has adopted a more subtle tone when it comes to biosimilars, Amgen – a biologics expert – is crowing about its grand ambitions for the field.

Roche/Chiasma: Roche and privately held Chiasma Inc inked a deal Feb. 18 to develop and commercialize the Israel-based biotech’s proprietary pill Octreolin, initially for acromegaly and, afterwards, for neuroendocrine tumors (NET). Their pact brings a new Phase III drug to Roche’s pipeline, targeting both an oncology (NET) and non-oncology indication (acromegaly). It gives Roche worldwide exclusive license to Octreolin, and Chiasma receives upfront payments of $65 million and future milestone payouts of up to $530 million, along with tiered, double-digit royalties on Octreolin net sales. Roche said it decided to partner with Chiasma and commercialize Octreolin in part because of the convenience and improved quality of life an oral therapy might offer patients. The pill may consequently command a higher price to injectables and there appears to be little oral competition on the horizon near-term. Delivering octreotide orally twice daily would be a major advantage for patients with acromegaly as they would avoid the painful monthly injections involved in current treatment options such as Novartis' Sandostatin LAR. - Sten Stovall

Chiesi/Cornerstone: Cornerstone Therapeutics’ majority shareholder is looking to buy out the company. North Carolina-based Cornerstone announced Feb. 20 that it received a letter from its majority shareholder – Italy’s Chiesi Farmaceutici – offering to buy the remaining outstanding shares of the company. Chiesi offered $6.40 to $6.70 per share for the 40% of the company it doesn’t already own – valuing the specialty pharma at $177 million. In a letter from Chiesi to the board of directors of Cornerstone, Chiesi’s CEO Ugo Di Francesco said the company “has adequate liquidity available and excellent relationships with our banks to effect an all cash bid.” Di Francesco added that Chiesi has “conducted an extensive review of Cornerstone based on publicly available information, our own deep experience in the pharmaceutical industry and consultations with our outside advisors.” The Italian drug maker plans “to move promptly” in regard to the bid “and is committed to working vigorously and expeditiously with [Cornerstone] to complete a transaction.” Cornerstone said in a statement that “no decisions have been made by the board of directors with respect to Chiesi’s proposal.” The two companies paired up in May 2009 when Chiesi granted Cornerstone an exclusive U.S. license to sell its porcine-derived lung surfactant Curosurf (poractant alfa) for a 10-year period. In return, Chiesi took an equity stake in the company that now accounts for a 60% share. - Lisa LaMotta

Janssen/Pharmacyclics/Abbott: Partners Janssen Biotech and Pharmacyclics will work with Abbott to develop a molecular diagnostic test to identify patients with a genetic sub-type of chronic lymphocytic leukemia (CLL). Abbott will develop the test using its proprietary FISH (fluorescence in situ hybridization) technology; the test will identify hard-to-treat CLL patients who have a deletion within chromosome 17p (del17p). These patients are likely to respond to ibrutinib, a small molecule inhibitor of Bruton tyrosine kinase (BTK). At the American Society of Hematology conference in December, the partners presented positive Phase Ib/II data in a subset of relapsed/refractory CLL patients with the 17p deletion. The partners have an ongoing Phase II trial for ibrutinib in CLL patients with the 17p deletion. The company expects enrollment in this trial will take about 12 months to complete. On Feb. 12, FDA granted breakthrough designation to ibrutinib to treat two B-cell malignancies: relapsed or refractory mantle cell lymphoma (MCL) and Waldenstrom’s macroglobulinemia (WM). This could mean an approval for ibrutinib as soon as early next year. Pharmacyclics’ share price has been on a white-hot streak since last May, climbing more than 200%. News of the breakthrough designation bumped shares up about 20%. Details of the Abbott partnership remain undisclosed. - Stacy Lawrence

Eisai/Valeant: Valeant Pharmaceuticals announced Feb. 21 that it has acquired U.S. rights from Eisai Inc., the U.S. subsidiary of Japan's Eisai Co. Ltd., for cutaneous T-cell lymphoma treatment Targretin (bexarotene). Eisai received $65 million up front and is eligible for additional payments tied to undisclosed milestones. In March 2011, Eisai granted exclusive rights to Minophagen Pharmaceutical to develop and commercialize Targretin in Japan, expanding that agreement in April 2012 to cover Asia, Oceania, the Middle East, Eastern Europe and other regions. And in a deal similar to the Valeant agreement, in December 2012, Eisai sold U.S. commercial rights to Gliadel Wafer (carmustine) for glioblastoma to Arbor Pharmaceuticals. Gliadel and Targretin are aging products. However, the company’s cancer pipeline – oncology is 70% of Eisai’s revenues – has shown recent signs of stumbling. Farletuzumab, which entered Eisai’s pipeline with its 2007 acquisition of Morphotek, demonstrated disappointing results last January in platinum-sensitive ovarian cancer, not meeting the primary PFS endpoint in its first Phase III attempt. And Halaven (eribulin), approved in the U.S. in 2010 for metastatic breast cancer, missed its primary endpoints last year in a head-to-head Phase III superiority study against Xeloda (capecitabine). Much of the excitement around eribulin at the time of its approval was the likelihood of extending its label, which is now drawn into question. Eisai said the deal with Valeant would maximize the product’s value in the U.S. It went on to add that the agreement would enable Eisai to “strategically reallocate resources to other mid-to-long-term business growth areas” but it didn’t elaborate. As for Valeant, this deal continues its strategy of acquiring what it considers to be undermanaged commercial assets. - Mike Goodman

UCB/ConfometRx: Belgium’s mid-sized pharma company, UCB, is to link up with the Santa Clara, Calif.-based G-protein coupled receptor (GPCR) structural biology firm, ConfometRx, to discover new drugs in UCB’s sweet spot, the neurosciences. As often stated, GPCRs are the target for 25%-30% of marketed products, but GPCR research is hampered by the difficulty in extracting active receptors from cell membranes for use in research and drug screens. ConfometRx is developing crystallization techniques for GPCRs to make the screening process easier for GPCR-targeted drugs and antibodies. The two-year, multi-target research collaboration between UCB and ConfometRx is intended to gain insights into modulating GPCR targets in order to design differentiated drugs, the companies said Feb. 21. ConfometRx will receive an upfront payment, research funding and milestones, but further details of the agreement were not disclosed. UCB is building “super-networks” of innovation, which include tie-ups with Harvard University and the University of Oxford’s medical sciences division over the past three years. ConfometRx already is collaborating on various GPCR-related research projects with Bristol-Myers Squibb, Novo Nordisk and Lundbeck, while other companies active in providing research insights in the GPCR space include Heptares Therapeutics of the U.K., France’s Domain Therapeutics and San Diego-based Receptos. - John Davis

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