A Rush And A Push And The Financings Of The Fortnight Is Ours

Meet us at the St. Francis, and bring your own damn water!

Happy Morgan's Eve, everyone. If you’re like FOTF, you’ve been preparing for the week ahead by breaking your day into 25-minute conversations. If our kids need to talk to us, we tell them to take the stairs to the tenth floor, run down the hall, squeeze past 120 people coming out of the bathroom, steal some bottled water left outside a partnering suite, and find Room 1450. Come in, sit down, just  wait while we finish a few emails on our phones. Yes? You can’t sleep? Not exactly an unmet medical need. We’ve also wondered a few times if a toddler’s point blank sneeze into one’s mouth counts as a new form of immunotherapy.

For those of you with older children, you might be practicing for JPMorgan this week when the conversation inevitably turns to financing. Hit your yard-work milestones to trigger the next allowance tranche. That’s the way it is as long as you live under my term sheet, er, roof. 

Whatever the year, there’s always a sensation of falling out of a holiday tree, or warm cozy bed, directly into the boiling JPMorgan cauldron. This year, organizers gave us a bit of a break, pushing the conference back one week, but the slight lag was immediately filled up by a breakneck filing of IPO documents: Six so far in the new year alone, adding to several that squeezed their paperwork through before the ball dropped on New Year’s Eve. (We have details on one of those filers, Flexion Therapeutics, in our roundup below.) A few of those, plus others still in the IPO queue after filing in the back half of 2013, have significant Phase II or Phase III clinical milestones. Yet others that haven’t declared publicly their IPO intentions also have big milestones upcoming, and we can’t help but think their S-1’s won’t be too far behind if a few companies currently in the queue make their debuts soon.

In the next Start-Up, our colleague Stacy Lawrence previews several private companies with upcoming late-stage clinical data, and one thing’s clear: There’s not a lot of 100% novel technology working up the pipeline. That’s not to say the companies in question aren’t doing important or technically difficult work. But many of the products due for data have an element of de-risking that made for faster development and a more reasonable investment thesis, especially worth noting when the company is making a push in an indication where approval has been an elusive target.

For example, Intarcia Therapeutics is delivering an off-patent diabetes drug, exenatide, via a subcutaneous pump that carries a year’s worth of treatment. Intarcia hasn’t filed an S-1 yet, not publicly anyway, but its deep roster of crossover investors makes one hear a ticking clock -- or is that the beat of the subcutaneous pump?

We can’t help but pump Start-Up's upcoming A-List, the annual roundup of the year’s top Series A financings. The 2013 winners include entrants from the fields of gene therapy, immunotherapy, epigenetics and food allergies, and a few have had very unusual financial backers. Learning who's who will be your reward for surviving next week.

And a year from now, perhaps the 2014 A-Listers will include a biotech that has launched with equity crowdfunding. That would be a first. One crowdfund platform that we’ve reported on before, Poliwogg, will try to make a splash in San Francisco next week, so stay tuned to our colleagues from "The Pink Sheet" and Start-Up for more on that. We regret to inform, however, that splashing is generally frowned upon these days in California. Unlike IPOs, raindrops are in short supply, and 2013 was the driest year on record. So we ask you out-of-towners to think twice before showering while you’re here, and if a stranger on the street looks longingly at your Evian, be kind. We’re parched. Better yet, you can save water by drinking your fill of 2014’s first installment of...

Flexion Therapeutics: As its clinical candidates for treating osteoarthritis inch closer to pivotal studies, Flexion has joined the IPO parade. In case anyone’s knees hurt from all that marching, Flexion’s three compounds are formulated for long-lasting pain relief and injection directly into the knee joint. FX006, Flexion’s lead product for front-line use, is a formulation of a common steroid, triamcinolone, that in 2013 posted solid Phase IIb results, but the company still has work to do: it plans a second Phase IIb trial that is set to begin in the second quarter of 2014, to determine the drug’s optimal dose before Phase III. A second product, FX005, is a sustained-release p38 inhibitor; Flexion is positioning the product for end-stage (pre knee replacement) osteoarthritis pain. The company aims to file an IND for a third product, the TrkA antagonist FX007 for post-op pain, later this year. Both ‘005 and ‘007 were licensed from AstraZeneca PLC, in separate deals. Flexion’s founders, Michael Clayman and Neil Bodick, famously institutionalized “A-Team”-style rapid and inexpensive to-proof-of-concept drug development at Eli Lilly & Co. as creators of that company’s ‘Chorus’ model, and struck out on their own in 2007 to monetize POC assets as a stand-alone biotech. At the time, they anticipated that by licensing in pharma assets they could develop and flip them quickly. But the economics they were offered weren’t going to provide the kind of returns they originally anticipated. The company’s reinvention underscores the difficulty of timing biotech models to pharmaceutical tastes, and – at least during the comparably leaner years of 2011-12 – pointed to industry’s increased avoidance of clinical risk. Flexion’s private backers – Versant (~30%), Sofinnova (~19%), Pfizer (~17%), 5AM (~16%), and Novo AS (~11%) – surely hope that timing public investors’ enthusiasm for biopharma is an easier task. – Chris Morrison

AC Immune: When the big Alzheimer’s Phase III trials featuring anti-amyloid treatments failed in 2012, many eyes in the field turned to AC Immune. With arguably the deepest Alzheimer’s pipeline of any private biotech, the Swiss firm said January 9 it has raised a Series D round of 20 million Swiss francs ($22 million) from existing investors. It also said it has launched a Phase I trial of a vaccine to stimulate a patient’s antibodies against phosphorylated tau, a protein that accumulates in tangled formations within neurons. Tau tangles, along with amyloid plaques, are considered two signposts of Alzheimer’s disease, but much debate remains whether the pathologies are treatable or simply an effect of disease progression. Meanwhile, one of the world’s most closely watched Alzheimer’s trials has just begun dosing patients with AC Immune’s monoclonal antibody crenezumab. The trial is funded by Genentech, the Banner Institute, and the US National Institutes of Health, and it involves people in Colombia with high genetic risk of Alzheimer’s who have yet to show cognitive decline. If successful, it would be one of the first signals that anti-amyloid therapy has a preventative effect if administered before symptomatic onset. Dosing began in December, according to AC Immune. The firm has raised 84 million Swiss francs since its 2003 inception, all from individual investors. – Alex Lash

Receptos: Seven months after completing its IPO, Receptos turned back to public shareholders to raise more money, grossing $102 million in a follow-on public offering on January 8. The biotech sold 3.3 million shares for $30.75, a 120% increase from its $14-per-share IPO price. Days before the offer closed, Receptos started enrolling patients in the Phase III portion of its RADIANCE trial of lead candidate RPC1063 for relapsing multiple sclerosis. RPC1063 is being tested in a separate Phase II trial in ulcerative colitis, and Receptos plans to release top-line data on both indications in mid-2014. Recently the USPTO issued composition-of-matter patents on RPC1063, giving the compound patent coverage until at least May 2029. Receptos is busy with others in the pipeline too: it’s designing a Phase II study of RPC4046 in active eosiniphilic esophagitis. AbbVie partnered the anti-interleukin-13 antibody with Receptos in May. Once the study results are published, AbbVie has an option to enter into a worldwide co-development deal with Receptos, which would retain co-promotion rights and split US profits. In addition, this year Receptos expects to select a lead agent from its glucagon-like peptide-1 receptor small-molecule positive allosteric modulator program and start IND-enabling studies in Type II diabetes. -- Amanda Micklus

Blueprint Medicines: The Cambridge, Mass. biotech said January 7 it had secured a $25 million Series B round as it pushes its selective kinase inhibitors, aimed at specific mutations mapped through its platform, toward the clinic. It says its lead compounds should enter the clinic in 2015. They are an inhibitor of the mutation that drives both systemic mastocystosis, an overproduction of mast cells in various organs and tissues, and a subset of gastrointestinal stromal tumors; and an inhibitor of a mutation that leads to a specific type of hepatocellular carcinoma. The firm was initially funded by Third Rock Ventures and Fidelity Biosciences, but neither of those deep-pocketed groups has taken the lead for the B round. Instead, Swiss oncology investment specialists Nextech Invest led the round, with crossover investors Biotech Value Fund and Casdin Capital, Third Rock, and Fidelity, and other undisclosed investors joining in. The crossovers could be a sign that Blueprint is gathering itself for a run at the public markets this year. The firm has been led since last spring by an interim CEO, Third Rock partner Alexis Borisy, who took over for co-founder Chris Varma without an announcement. – A.L.

Best of the Rest (Highlights of Other Activity This Fortnight): Alexar Therapeutics, the latest biotech to come out of asset-based financing entity NeXeption, closed on a $21.5 million Series A round led by New Science Ventures and Third Point Ventures to support work on a topical liver X receptor agonist for inflammatory cutaneous disorders…Auspex, which has a S-1 on file to go public, raised more venture dollars: the orphan disease-focused biotech received $20 million in Series E financing and $15 million in a venture loan...Neuralstem will advance cell therapeutics and small molecules, including lead spinal cord stem cell-derived NSI566 for ALS, thanks to a $20 million registered direct offering…after postponing its IPO in November, GlycoMimetics revived the offering and set terms at 5.75 million shares for $8…and GW Pharmaceuticals, maker of cannabinoid prescription drug Sativex, raised $88 million in a FOPO. -- AM

Stampeding wildebeests (heading to the Celgene presentation?) courtesy of t3rmin4t0r under Creative Commons license.

How Vitae Tries To Provide An Optimal Environment For Innovation

One of the best things about having time to sit down with a company's executive team and discuss matters such as pipeline and business strategy at leisure is the chance to intersperse more philosophical questions that address how a company views itself and the work environment it tries to provide.

In meeting a few weeks ago with the executive team at Vitae Pharmaceuticals near Philadelphia for a profile in "The Pink Sheet," I got more information than I could process on the firm's structure-based drug design process, the genesis of its proprietary Contour technology platform and its plans for pipeline assets in indications such as chronic kidney disease and acute coronary syndrome.

Vitae Pharmaceuticals CEO Jeff Hatfield

But as I spoke with CEO Jeff Hatfield, CFO Tina Fiumenero and Chief Scientific Officer Richard Gregg, all of whom came to the clinical-stage company from Bristol-Myers Squibb, I wanted to ask about the best environment for innovation in drug discovery and what precisely the term "biotech" even means in 2013, if such a definition can be nailed down.

As Hatfield explained that he brought in Gregg after initial CSO and company co-founder John Baldwin retired, he noted both the depth of Gregg's Rolodex and the fact that he had led discovery in all areas at Bristol. Therapeutic agnosticism is important for a company that wants to go where its technology takes it. Hearing Gregg talk about Vitae's quicker, streamlined decision-making and its speed in drug discovery against challenging targets, I posed the question: "Coming from big pharma, would you say it's necessary to leave big pharma if you want to innovate in drug discovery?"

Vitae CSO Richard Gregg

Gregg's response to the somewhat loaded question is a bit on the cautious side, but still interesting.

"I think that one does not have to leave big pharma but it is easier [to innovate] in a biotech environment. It’s not that big pharma can’t [do it] but with a lot of the bureaucracy and decision-making processes, they make it difficult to be truly innovative there. I’m not going to say it’s impossible, but it’s easier in biotech," he said.

Hatfield then elaborated on the innovation topic: "I think there’s an awful lot to the culture and environment that people work in ... I don’t think the scientific talent is different in either direction - I don’t think it’s better in big pharma, I don’t think it’s worse in big pharma. What is really different is the culture that exists between a large organization, whether it’s in pharmaceuticals or manufacturing Twinkies, it doesn’t matter, big organizations have an organizational behavior, a culture, that by necessity is more structured, more controlled, and in a small organization, that’s much less the issue."

Culture is a big part of what defines biotech, in 2013 as in 1999, the CEO added. But does Vitae, with its focus on small-molecule drugs for primary-care indications, really fit the definition of biotech?

"Everybody has a slightly different definition of biotech," Hatfield said. "Yes, we do view ourselves as biotech, because we are innovative and I think that's a better essence of what biotech is supposed to represent, not whether it is small molecule or large molecule. It's pursuit of innovation to make a difference in the world."

But, besides its technology, what makes a company like Vitae innovative? Hatfield thinks getting buy-in from the ground-floor level R&D team is a good place to start. In other words, innovation comes from motivation, which may stem partly from comfort level.

"When we were getting this company going [it was founded in 2002, and Hatfield signed on as chief in 2004], I asked a group of bench scientists to define the culture. I said ‘tell me the environment you want to work in.’ And so they did, and it was not management-driven in the slightest bit. They came up with five principles of what they wanted the focus to be," he explained.

Those five tenets selected by the bench scientists themselves in 2006 as the company's modus operandi? Not surprisingly, the first was innovation - to create rather than copy. Next, they wanted to be evaluated on the basis of success, not the amount of activity, on helping to produce the right compound, rather than just a lot of compounds.

As Gregg alluded to, a third important value for the R&D team was quick decision-making, which the group called "sense of urgency." The scientists made clear they didn't want to hear about committees being organized to ponder the latest idea. They also wanted a teamwork-driven environment in which the chemists and biologists communicate directly and trouble-shoot together.

Finally, easier said than done, they wanted a fun place to work. Which is about as easily defined as what biotech means in 2013. But on the other four measures, the results to date suggest that Vitae may be living up to its own chosen values. Whether that proves to be a lucrative formula remains to be determined.

The Real Story Behind FDA’s Delayed Approval Of Eliquis

With what seemed to be stellar results from the ARISTOTLE trial, showing the first superiority over warfarin on bleeding and mortality for a novel oral anticoagulant, Bristol-Myers Squibb/Pfizer’s Eliquis (apixaban) was expected to have a clean trip through FDA.

So why was agency approval of the third novel oral anticoagulant to come down the regulatory pathway in recent years delayed by nine months?

The answer, which was largely hidden from investors and competitors, boils down to study conduct and oversight – things that should have been a piece of cake for experienced sponsors.

It turns out that the much-ballyhooed, 18,000-patient ARISTOTLE trial had a few problems, according to FDA review documents that are dissected in the June issue of Elsevier Business Intelligence’s Pharmaceutical Approvals Monthly, part of a regular series of drug review profiles (see the lead story, free for the next 30 days, here).

What were the problems? Well, for one thing there was documented evidence of fraud by employees of BMS and its contract research organization, PPD, at a Chinese study site. It seems these individuals altered source records ahead of an FDA inspection to cover up good clinical practice violations.

FDA’s need to further investigate this issue, as well as the data integrity for other Chinese sites and the impact on the overall ARISTOTLE results, led to a three-month extension in the original PDUFA date.

Publicly, BMS/Pfizer said only that the review extension resulted from its submission of a “major amendment to the application.” An accurate statement? Absolutely. But the fact that this “major amendment” comprised a more detailed accounting of the fraud was a juicy, and likely market-moving, tidbit not shared with the public at-large.

To its credit, BMS discovered the fraud and reported it to the FDA, and the alleged perpetrators were terminated. In contrast, the agency had to root out on its own answers to the second major problem that delayed apixaban’s approval – dispensing errors in ARISTOTLE.

Buried on page 88 of the clinical study report was a statement that 7.3% of subjects in the apixaban group and 1.2% of subjects in the warfarin arm received “a container of the wrong type” of medicine at some point during the double-blind, double-dummy study. This overall high rate of dispensing errors, and the disparity between treatment arms, troubled FDA, in part because these figures were based only on the sponsor’s analysis of one incomplete source of data.

FDA believed further investigation into the true rate of dispensing errors was warranted. Furthermore, agency reviewers seemed incredulous that the unusual number of medication errors failed to prompt a “serious inquiry” by the sponsor prior to NDA submission and that such errors occurred throughout the course of the trial without meaningful corrective measures, suggesting shortfalls in trial oversight.

So annoyed were agency reviewers by the whole situation, including BMS/Pfizer’s partial and evolving responses to FDA’s questions, that the team leader on the application said the NDA would have received a “refuse-to-file” letter had agency staff known about the dispensing errors issue at the time of submission.

Ultimately, FDA issued a “complete response” letter specifically directing the sponsor to get to the bottom of the problem – not that you would have known this from the sponsor’s public statements.

In a press release, BMS/Pfizer said only that the letter requested “additional information on data management and verification from the ARISTOTLE trial.” Again, not a falsehood, but also not exactly the type of information that would have been helpful to assessing what was really going on with apixaban’s prospects for a near-term approval.

Ultimately, the companies submitted data that convinced FDA reviewers that even under a worst-case scenario, the dispensing errors would not have disturbed the key efficacy and safety findings in ARISTOTLE.

So, all's well that ends well for BMS and Pfizer, right?

Well, not exactly. Eliquis failed to gain a coveted mortality benefit claim in the Indications statement, which would have set it apart from its two competitors who beat it to market, Boehringer Ingelheim GMBH’s Pradaxa (dabigatran) and Bayer AG/Johnson & Johnson’s Xarelto (rivaroxaban) (see PAM's analysis of how FDA reviewers picked apart the statistical significance here [$]).

Eliquis generated just $22 mil. in its first full quarter on the market, according to Bristol's first-quarter earnings report.

-- Sue Sutter (s.sutter@elsevier.com)

Under One Roof: Roche Talks Up In-House Advantages In Cancer

Roche had a number of pithy taglines to splash around its oncology business review at ASCO: "we take cancer personally," or with a slightly more ominous tone, "doing now what patients need next." But the more powerful refrain may have come from execs' repeated mention of how much Roche has "under one roof."

With so many companies targeting oncology and talking up their strategies to move up the leader board, the onus is on the market leader to maintain its position. That may not actually be a large internal priority at Roche, as their acquisition of Genentech gave them a comfortable lead. Roche oncology sales in 2012 were almost three times as much as its nearest competitor, Novartis--$19 billion, versus $6.6 billion, respectively for the full year, according to IMS Health.

Karl Mahler, Roche's head of investor relations, cited the HER2 franchise as the model of how Roche is differentiated from other companies, changing standard of care, building lines of therapy and moving towards combinations. That's what Roche is looking to do in hematology, moving from the rituximab base to new drugs like GA101. "We have a number of scenarios that can help us both extend the franchise and potentially replace and extend the franchise," Roche Pharma COO Daniel O'Day said. 

There was an underlying theme in the firm's annual ASCO presentation: how well their model works, how they can repeat that success, and how big their position in oncology actually is. Part of the success is positioning and building off their existing business, where O'Day touted the firm's in-house capabilities - especially in the growing field of rational anti-cancer combinations.

The foundation for Roche's oncology business are the three pillars of the anti-HER2 franchise, the anti-CD20 franchise and the anti-angiogenesis franchise. "Obviously we want to continue to improve upon those," O'Day told the June 2 meeting in Chicago, "but we'll be adding that the many, many new targets that we have and new pathways, things like our MetMAb, PI3 kinase, Bcl-2, others." There's also the antibody-drug conjugate platform, which beyond the recently launched Kadcyla includes 20-25 new compounds. "Add to that the immunotherapy and I think it gives you the richness of the combination therapies being able to really come to play."

"Of course, you can do that across companies in different ways," O'Day added, "but we think there are significant strategic advantages to do that within one organization." And Roche has the "diversity and mass ... in each one of these areas" that can make that doable within one company.

There's a similar situation with companion diagnostics, he added, "because often the value on these combination therapies is obviously more obtained on the pharma side than on the diagnostic side, and that's one of the advantages of the Roche Group strategy that's allowed us to move diagnostics ahead very aggressively, as well."

O'Day returned to the pharma side in 2012 after a seven year stint heading the diagnostics division. He played up how his "good relationship" will help the company as it considers strategies to optimize the pharmaceutical pipeline in oncology.

An early test of these beliefs comes from the PD-1/PDL-1 inhibitor class, the promising immune checkpoint area that has been a hotbed at ASCO. Roche has its own version, but it remains to be seen if its or Merck's or Bristol's or anyone else's emerges as the optimal partner - though execs argued that Roche's PDL-1 is looking good. The company also has an assay that could have a pivotal place as the field takes off.

The shift to two or more agents combining in immune checkpoint "really does highlight how valuable it might be to have many of these reagents under one roof, because the collaborations across companies are always challenging," Hal Barron, Roche's head of global pharmaceutical development, said. "We would always pursue them if that's where the biology went, but we have an opportunity to define how the future looks by having these."

It also means not having to share the value. Companies can do that, "but I do think it gives us a tremendous competitive advantage to have as many products within one company as possible, because it allows us to look at a global pricing strategy where we have set out a certain range," O'Day said. (And with new combinations will come the need for an evolving pricing strategy, O'Day admitted. We'll have more to say on that in the next issue of "The Pink Sheet".)

Though Barron rebuffed a question about the company's wishlist for opportunities it doesn't have in its own pipeline - not wanting to tip its cards - the exec revealed part of its business development strategy:  "Our approach is, oftentimes, to ask ourselves is there a way of improving on those within that pathway? I won't go into great detail about that, but we are constantly looking at drugs that are active and saying, not just do we wish we had those, but could we then take those and that pathway and make it better? I think our strategy is to really have as many things as we could."

Most companies looking to build their oncology presence talk up the importance of expertise. Roche spread that around the (very crowded) room -- during the Q&A, it became clear that many company experts were seeded throughout the space, ready to impress.

Mahler laid it out from the start of the meeting. Over half of Roche's R&D budget is dedicated to cancer care. "And we are not currently only in the lead, but we also intend to stay in the lead by spending appropriate money for this," he promised.

As long as Roche is willing to put money where its mouth is, it very well may wind up in the end just as it started -- in the lead.

Deals Of The Week: A Better Way To Investigate Clinical Trial Investigators?

In tandem with a 10-company effort launched in September to resolve clinical development hurdles, three pharmas are coming together to establish a databank that participants will be able to use to evaluate potential clinical trial sites and investigators. The Investigator Databank initially will be a joint effort of Johnson & Johnson, Merck & Co. and Eli Lilly, but other participants from the non-profit TransCelerate BioPharma initiative are expected to join in eventually.

Andreas Koester, head of clinical trial innovation/external alliances for J&J’s Janssen R&D, said the initiative’s primary goal will be to “avoid redundancy” in paperwork for selecting and approving trial sites and in training clinical trial investigators.

Koester, who will lead the effort, told Deals of the Week that the Investigator Databank should be ready to go by the end of this year. The initial three participating firms already have uploaded their information into the databank but it is behind firewalls for now so none of the companies can access another’s data until the initiative begins. Other companies participating in TransCelerate are expected to begin contributing information by the middle of 2013.

“The R&D team at Janssen came together last year to look at our clinical-trial process and see what could be improved upon and what could be streamlined,” Koester said. “There were some things that needed a common solution and would only work if we teamed up with our peers.”

The databank, which will not include any patient data, is intended to serve as a one-stop repository where key information about trial sites, such as what equipment a site does or doesn’t have and the Good Clinical Practice (GCP) training records of its personnel, can be accessed by any participating company. The expectation is that the jointly provided data will minimize redundacy in much of the site- and investigator-selection process, such as prequalification and CGP training. To aid the effort, each participating company will agree to acknowledge one another’s GCP protocols and work toward an industry standard, Koester noted.

J&J and Lilly were among the 10 pharma companies (Merck was not, however) that announced Sept. 18 the creation of TransCelerate and its five goals, one of which was the centralization of trial site prequalification and training. TransCelerate CEO Garry Neil said the databank’s work will be aligned with the non-profit’s focus on clinical study execution.

“Industry collaboration, including pre-competitive data-sharing, is critical to ensuring continued progress to improve industry-wide clinical trial practices,” Neil said.

Beyond the benefits of time conservation, the databank also is expected to benefit clinical trial quality by making it more feasible for investigators to participate in multiple trials. Koester said that many investigators don’t participate in more than one or two clinical trials because the paperwork tends to be too time-consuming and takes away from time spent with patients. Companies therefore churn through investigators and often have trouble finding more.

“Sharing our investigator databases will help optimize administrative activities by mutually recognizing training and other essential information that is required of our investigators, as well as allow us the ability to include key investigators around the world with whom we have not worked in the past,” said David Detoro, head of global trial management for Merck Research Laboratories. “All of this will help lead to more efficient clinical trial execution – a critical component of getting novel products to patients in a timely fashion.”

While biopharmaceutical companies are finding ways to work together to make clinical trials more efficient, they nonetheless continue competing in the business development world. For the latest examples, check out our latest summary of  …

Forest/Adamas: Adamas Pharmaceuticals and Forest Laboratories are counting on simplification and reduced frequency of dosing to carry Arimenda, a fixed-dose combination of two long-marketed drugs to treat dementia associated with Alzheimer’s disease. Privately held Adamas out-licensed the drug to Forest Nov. 14 in a deal that includes a $65 million upfront payment as well as potential milestone payments and sales royalties. The deal, under which Forest will assume all developmental and commercialization costs for the drug in the U.S. market, brings Adamas a $65 million upfront payment. In addition, Adamas could earn up to $95 million in development and regulatory milestones, as well as royalties on net sales beginning five years after U.S. launch of the memantine/donepezil combo product. Arimenda is a fixed-dose combination of extended-release memantine (Forest’s Namenda XR) and immediate-release donepezil (Eisai/Pfizer’s Aricept), which Adamas was developing using its own extended-release technology. However, Forest, which has been working to ameliorate a looming patent cliff as Namenda and antidepressant Lexapro (escitalopram) lose exclusivity, bought out U.S. rights to Arimenda with a plan to use its own proprietary extended-release memantine formulation in the product. That formulation, combined with several Adamas patents, will give the new product patent protection into 2029 and could help Forest extend the life of its franchise. It’s unclear if Forest intends to use the Arimenda brand name. – Joseph Haas

Colby/MannKind: Small, privately held Colby Pharmaceutical has built a portfolio of clinical-stage assets, focused mainly in cancer, in the last year through in-licensing and acquisitions. The most recent of three transactions is a licensing deal with MannKind, announced Nov. 13. Colby acquired worldwide rights to develop and commercialize disease-specific antigen compounds and intra-lymph node delivery technologies from MannKind’s novel MKC1106 immunotherapy programs, currently being studied for the treatment of melanoma, prostate cancer and hematological disorders. In exchange, Colby agreed to pay $140 million in upfront and potential milestone payments to MannKind. The San Jose, Calif.-based company plans to further develop the MKC1106-MT regimen in a Phase II melanoma trial. It is the most advanced intra-lymph node injection regimen from the program, and also plans to study the technology with its lead compound, the cancer adjuvant JVRS-100, a cationic lipid-based immune activator, and eventually with other adjuvants that might be in development outside the company. The partnership with MannKind is one of three deals Colby has completed since September 2011. At that time, Colby acquired worldwide rights to the lipid-based immune activator JVRS-100 from Juvaris BioTherapeutics, along with the company’s broader technology platform, called cationic lipid-DNA complex. Colby also acquired Othera Pharmaceuticals in September, obtaining a portfolio of small-molecule compounds for Nrf-2 regulated diseases characterized by oxidative stress injury. – Jessica Merrill

Pernix/Cypress/Hawthorn: Houston-based specialty drug manufacturer Pernix Therapeutics Holdings announced a deal to acquire generic drug maker Cypress Pharmaceuticals and its subsidiary Hawthorn Pharmaceuticals, a branded business, on Nov. 14. Under the terms of the agreement, Pernix will pay $68.5 million upfront in cash along with $12.5 million in equity. A delayed payment of $10 million will be paid out in December 2013 and the final $10 million will be paid in milestone payments, the triggers of those milestones were not disclosed. Cypress and Hawthorn are privately held companies founded in 1993 and based in Madison, Miss. They are expected to report out revenues of about $50 million in 2012. More than half of the company’s sales come from generic products including cough and cold medications, nutritional supplements, analgesics, urinary tract remedies and women’s health treatments. The remaining 46% of revenues were brought in by the branded side of the business under the Hawthorn name, which includes pharmaceutical products for allergy, respiratory, iron deficiency, nephrology and pain management. The acquisition is expected bring Pernix’s 2013 revenues to a range of $135 million to $145 million. The deal also will have synergies with the last acquisition Pernix made – its $4.9 million acquisition of Houston-based contract manufacturer Great Southern Laboratories in July. – Lisa LaMotta

Foundation Medicine/AstraZeneca/Ariad: Cancer genomic analysis play Foundation Medicine announced a pair of partnerships Nov. 12-13, bringing its number of disclosed partnerships to seven this year. Financial details weren’t disclosed for either deal. The AstraZeneca collaboration is a multi-year tie-up in which the partners will work to identify alterations in cancer-related genes to help predict patient response or resistance to targeted therapies. AstraZeneca hopes to use the information to aid drug development. Foundation Medicine also was granted right-of-first-negotiation for developing diagnostics as part of the deal. The Ariad Pharmaceuticals partnership is focused on genomic profiling for a specific candidate, AP26113. The companies will develop genomic profiles of patients in an ongoing Phase I/II trial to treat non-small cell lung cancer and match them to clinical observations on the activity and selectivity of AP26113. The idea is to identify the best patient population for the dual-inhibitor of ALK and EGFR, which could speed development time. Foundation Medicine launched its first product in June, FoundationOne, which enables physicians to identify the molecular alterations involved in a particular patient’s cancer and match them with relevant approved therapies and clinical trials. The firm raised $42.5 million from 10 investors in a Series B financing that closed in September. – Stacy Lawrence

Alnylam/Tekmira: In our “Revised Deal of the Week,” Alnylam Pharmaceuticals has settled a trade-secrets suit brought by partner Tekmira Pharmaceuticals and inked a new licensing agreement that restructures their relationship. The twin actions free Alnylam from a thorny legal problem and enable it to manufacture its own drug candidates. Under the new agreement, Alnylam will make a one-time payment of $30 million to Tekmira to buy out manufacturing obligations so that Alnylam can independently manufacture lipid nanoparticle (LNP) technology for RNA interference (RNAi) therapeutics. In addition, Alnylam said it will make a one-time payment of $35 million related to the termination of prior license agreements and a “significant reduction in milestone and royalty payments” for its lead RNAi programs, ALN-VSP, ALN-PCS and ALN-TTR02. In a Nov. 13 conference call, Alnylam CEO John Maraganore said that over the past year the company has developed internal capabilities and proprietary processes for manufacturing LNP-based products. He noted that Alnylam would be able to manufacture its lead compound ALN-TTRO2, being developed for treatment of transthyretin-mediated amyloidosis, for the start of Phase III trials and expects to supply the drug at least through the early stages of commercialization. Phase II trial data on ALN-TTRO2 are expected in mid-2013 and the pivotal study is to begin by the end of 2013. Tekmira also is eligible to receive an additional $10 million in near-term milestones – a $5 million payment when ALN-TTR02 enters a pivotal trial and a $5 million payment when clinical trials for ALN-VSP begin in China. Tekmira also will receive five additional non-exclusive licenses to develop and commercialize RNAi therapeutics based on Alnylam’s siRNA payload technologies and will pay Alnylam milestones and royalties for these products. – Brenda Sandburg

TG Therapeutics/Ildong Pharmaceutical: Korea’s Ildong Pharmaceutical signed a licensing agreement with TG Therapeutics on Nov. 15 to co-develop and commercialize the latter’s anti-CD20 antibody ublituximab (TGTX-1101) in South Korea and Southeast Asia. MedCI LLC served as licensing advisor and provided assistance to TG Therapeutics, a clinical-stage biopharmaceutical company focused on the acquisition, development and commercialization of treatments for cancer and other underserved therapeutic needs. Under the terms of the agreement, TG Therapeutics is receiving an upfront payment of $2 million in addition to sales-based milestone and royalty payments in exchange for exclusive rights to develop and commercialize Ublituximab for all therapeutic indications in the territory, which also includes Taiwan, Singapore, Indonesia, Thailand, Philippines, Myanmar and Vietnam. TG Therapeutics is developing ublituximab for hematologic malignancies and other B-cell lymphoproliferative disorders. Currently, it is being evaluated in a North American Phase I/II clinical trial in patients with relapsed or refractory non-Hodgkin's lymphoma. – Peter Chang

But those weren't the only deals made during the past business week. Here is a roundup of other business development transactions occurring in the biopharmaceutical arena in the past seven days:

• MedImmune and biOasis Technologies entered an R&D agreement Nov. 14 to investigate the latter's Transcend technology for delivery of compounds to the brain;
• Reckitt Benckiser made a $1.4 billion offer Nov. 15 to buy out Schiff Nutritional, topping an earlier offer from Bayer AG;
• GlaxoSmithKline and Aptuit announced a multi-year expansion of their drug-development partnership in Verona, Italy, on Nov. 13;
• Boehringer Ingelheim and BaroFold signed a non-exclusive license on Nov. 13 to use BaroFold's PreEMT (Pressure Enabled Manufacturing Technology) platform for protein refolding work in BI's drug production; and
• Synthetic Biologics acquired clinical-stage beta-lactamase assets for prevention of Clostridium difficile infections Nov. 12 from Prev AbR LLC.

Photo credit: Wikimedia Commons

Deals Of The Week: Clinical Failures Result From Predictable Business Development Strategy

Wall Street analyst Raghuram Selveraju likens today’s drug-development landscape to the changes seen in men’s professional tennis between the era of Bjorn Borg and John McEnroe and the completely different game played today by the likes of Roger Federer and Novak Djokovic. In today’s tennis, the ball is hit much harder and yet at the same time there is almost no margin for error. Likewise, he says, in drug-development today, companies must navigate tougher regulatory requirements for both efficacy and safety.

“The margin for error is razor thin and if you miss it, you lose big time. Aspirin would not get approved at the FDA in today’s atmosphere,” said Selveraju, managing director and head of health care equity research at Aegis Capital.

His comments reflected the news of Oct. 18 of yet another big pharma/biotech collaboration undone by devastating results in the clinic, the latest being Reata Pharmaceuticals’ termination of its Phase III trial for bardoxolone in chronic kidney disease due to excess serious adverse events and mortality in the study-drug arm. Abbott Laboratories had paid $450 million upfront in 2010 for ex-U.S. rights to bardoxolone, with another $350 million possible in milestones and royalties, and then doubled-down in 2011 by partnering with Reata on second-generation antioxidant inflammation modulators.

Abbott hardly is alone, though, in seeing a major investment in early- or mid-stage biotech science blow up in its face in recent months. In August, Bristol-Myers Squibb had to pull the plug on hepatitis C candidate BMS-986094 due to cardiotoxicity, just months after acquiring the Phase II nucleoside polymerase inhibitor by buying out the company that discovered and initially developed it, Inhibitex, for $2.5 billion.

In January, one of the most-celebrated of big pharma/biotech tie-ups died in the clinic as Pfizer finally gave up on Medivation's Alzheimer’s disease candidate Dimebon (latrepirdine) following several failed attempts to demonstrate efficacy. Then, in March, Merck accepted failure in a $60 million investment in Cardiome Pharma’s oral anti-arrhythmic drug vernakalant in March, saying the regulatory hurdles were just too high. In May, Roche ceased development of dalcetrapib, in-licensed from Japan Tobacco for dyslipidemia, due to lack of significant efficacy data.

And in March, AstraZeneca announced its latest setback in a long collaboration with Targacept around neuronal nicotinic receptors, saying it no longer would investigate TC-5214 for major depressive disorder. That news followed a 2011 decision by AstraZeneca to opt out of a partnership with Targacept around TC-5619 in schizophrenia, which itself followed a 2010 decision to drop an attention deficit/hyperactivity disorder compound, AZD1446, on which the two firms were partnered.

On the surface, it is difficult to find a common thread in these thwarted transactions – as Selveraju pointed out, some of the drugs failed due to safety implications, others due to insufficient efficacy. “What all of these deals had in common was the desperation of big pharma, because its R&D productivity has been dropping and we’ve known that for a long time,” he said.

That desperation leads to the repetition of familiar mistakes which derive from the predictable thinking of too many business development executives at big pharma, Selveraju opined. First, when looking for licensing opportunities, pharmas very often seek out their comfort zone – a potential product for which they can deploy an existing sales force or promote to doctors they already know and communicate with. Also, to be confident in an experimental drug’s preclinical and clinical data, pharmas often want to go into areas where their competitors also have a compound as well as into validated targets.

“Basically, they’re a bunch of lemmings,” Selveraju said. “As soon as a target becomes hot, they all have to have a molecule in that space, hitting that target. We’ve seen that multiple times: with the DPP4 inhibitors, the statins, the S1P inhibitors now, the nucs in hepatitis C.” Bristol paid $2.5 billion for Inhibitex and its nuc in part because months before Gilead had paid $11 billion for Pharmasset and its promising, mid-stage nuc.

“Bristol felt at the time that it could afford to pay a high price for the Inhibitex molecule because this was a validated mechanism of action,” Selveraju said. “What was the real risk that it was taking? All Bristol had to do was what Pharmasset did; Pharmasset wrote the blueprint for them, and they’re home and dry. I’m pretty sure Lamberto Andreotti knew that he was overpaying for Inhibitex but he went ahead and did it anyway, because Bristol thought it was money in the bank. That’s the problem with the way that big pharma does licensing; it only goes after things that it thinks are money in the bank.”

And it’s just not that easy, at least not today. The low-hanging fruit largely has been picked – there is no preponderance of easy-to-hit, druggable targets available to business development groups, Selveraju explained. Faced instead with a panoply of more difficult to address therapeutic indications, business development officials often must make decisions based on incomplete data and at the same time pay out huge premiums because of the competition with other companies to find “the next big thing.”

“Big pharma chases targets and it chases indications,” he said. “That’s what leads to these deals with outsized valuations and to the disappointingly high failure rate. If big pharma were to take a more pragmatic approach, a more rational approach, then we might not be seeing so many of these failures and we’d certainly be seeing more judiciously priced deals.”

What then is Selveraju’s prescription for better business development practices? It might disappoint those who want pharma to be in the vanguard of innovation. He recommends incremental innovation – using FDA’s 505b2 pathway to develop products with already defined efficacy and safety – as well as biosimilars and re-purposing. Pharma also should focus on niche and specialty indications, and largely eliminate primary care products and the large commercial operations that come with them.

That may be an unappealing remedy for many, but given the spate of recent blow-ups in pharma/biotech deal-making, something needs to change. Right?

In the meantime, the deal-making continues, so we bring you ...

BioCryst/Presidio: BioCryst announced Oct. 18 that it intends to merge with privately held Presidio Pharmaceuticals to create a new company that will be focused on the development of an all-oral hepatitis C treatment. The all-stock transaction, which values Presidio at $101 million, is expected to close in the first quarter of 2013. Closing is contingent upon a $60 million financing, $25 million of which Presidio shareholders already are committed to contractually. The new company will shift its focus to three early-stage HCV drugs – PPI-668, a Phase II-ready NS5A inhibitor; PPI-338, a preclinical pan-genotypic non-nucleoside polymerase inhibitor; and BCX5191, a nucleoside analog. PPI-338 is expected to begin clinical trials in the first quarter and BCX5191 will begin human trials before the end of 2012. BioCryst/Presidio’s biggest advantage at this point – considering how far behind the competition the company is – is its wholly-owned pipeline; possessing three drugs that activate different targets and could potentially could be used in combination gives the company a leg up. This allows the company to test the drugs in various combinations. “Having the ability to do these [combination] studies creates greater value than out-licensing our new nuc after, say, Phase Ib. That was really the rationale for doing this,” said BioCryst CEO Jon Stonehouse. – Lisa LaMotta

Merck/AiCuris: Antiviral startup AiCuris GMBH got its first big pharma partner – and €110 million upfront ($143.5 million) – in a deal with Merck for a portfolio of treatments for human cytomegalovirus, in a deal announced Oct. 15. The deal includes worldwide rights to AiCuris’ lead drug letermovir, which is ready to move into Phase III clinical trials in transplant patients. In addition, Merck gains rights to develop and commercialize a backup candidate and other Phase I assets that work through an alternate mechanism in exchange for the upfront and €332.5 million ($433.7 million) in development, regulatory and commercial milestones. Now AiCuris – a German drug developer spun out from Bayer in 2006 – is focused on finding another development partner for its other late-stage asset, a nucleoside analogue AIC316 for the treatment of the herpes simplex virus. The company is currently seeking a partner for AIC316, which has also completed Phase II testing, according to CEO Helga Rübsamen-Schaeff. The company plans to use the cash from the Merck collaboration to push forward one of the earlier-stage projects; it has earlier stage projects in development for hepatitis B infection, HIV and bacterial infections. For Merck, letermovir and the other HCMV molecules will complement the big pharma’s existing antiviral portfolio, which includes drugs like Isentress for HIV and Victrelis for hepatitis C. The deal marks Merck’s second recent infectious disease collaboration. In July, Merck partnered with Chimerix on a Phase I HIV asset, CMX157, paying $17.5 million upfront for worldwide rights 14120724001. – Jessica Merrill

Kite Pharma/National Cancer Institute: Kite Pharma will enhance its pipeline significantly under an arrangement with the National Cancer Institute in which it will provide R&D funding for novel engineered peripheral blood autologous T cell (eACT) therapeutics for a variety of oncologic indications. The Cooperative Research and Development Agreement (CRADA) announced Oct. 16 also gives Kite an exclusive option to license any or all candidates resulting from the tie-up. Based in Los Angeles, Kite raised a $15 million Series A in 2011 from a 40-investor syndicate including TPG Capital founder David Bonderman. Its initial program was a virus-based alpha fetoprotein (AFP) vaccine to fight against hepatocellular carcinomas that express AFP. NCI partially funded that program. No financial terms related to the CRADA were disclosed, although Kite CEO Aya Jakobovits explained that licensing agreements will be written as needed for the programs her firm might option. The work centers on candidates, some already in the clinic, discovered and developed by NCI using its proprietary tumor-specific T Cell Receptors (TCRs) and Chimeric Antigen Receptors (CARs). Through its surgery branch, NCI already has advanced some of these programs into single-site trials in patients with hematological and solid tumors. Early clinical evidence has shown that patients’ peripheral blood T cells engineered with TCRs or CARs and then administered as an intravenous infusion can recognize tumor-specific molecules that will enable them to traffic directly to tumor sites, become activated upon engagement with the tumor antigen and then selectively kill the tumors, Kite says. – Joseph Haas

Amdipharm Group/Cinven: Two months after buying another U.K.-based specialty company, Mercury Pharma Group, the European private equity company Cinven has acquired the Patel family-owned niche pharmaceuticals business Amdipharm for £367 million ($593.3 million). Buyout specialist Cinven said in August that its strategy was to consolidate the specialty pharmaceuticals sector, and after the Amdipharm acquisition it is continuing to hint at more international acquisitions to come. Amdipharm was founded in 2002 by brothers Vijay and Bhikhu Patel, to acquire medicines from research-based pharmaceutical companies, particularly medicines for niche indications and patients, both branded and generics. It has annual revenues of more than £110 million, and the founders will retain a significant minority stake in the business after it is combined with Mercury. Amdipharm's business is international, with products sold in more than 60 countries, while Mercury is more U.K.-focused. The brothers founded in 1984 the U.K.-based pharmaceutical distributor and importer Waymade Healthcare PLC and are active in generics through the generics marketer Sovereign Medical. – John Davis

AstraZeneca/Charles River: AstraZeneca has tapped yet another outsourcing partner to conduct in depth research, most recently choosing Massachusetts-based Charles River Laboratories to provide it with safety assessment and development drug metabolism and pharmacokinetics testing. The British drug maker on Oct 17 said it chose the U.S. CRO as its preferred strategy partner, raising their previous ad hoc relationship to another level. The news comes hard on the heels of AstraZeneca’s discovery partnership with Chinese CRO Pharmaron Beijing. Charles River was selected from a shortlist of competitors who tendered for the role, which will see it and AstraZeneca work closely as partners and allow the CRO to intimately understand the pure pharma group’s portfolio. The current plan is to work together on small-molecules. But both hope that their arrangement can expand into large-molecules involving AZ’s U.S.-based biologics arm, leading to eventual partnering in promising discovery areas that AZ wants to outsource under its new R&D regime. Charles River’s Chief Science Officer Nancy Gillett says that hopefully would come from both sides working together and understanding AstraZeneca’s preferences, formats and reporting times and trust-building. AstraZeneca will be committing at least 10 scientists. Most of the work will be conducted in AstraZeneca’s R&D site in Edinburgh, Scotland, while several Charles River sites will be used in the U.S. Gillett said the partnership as currently outlined will involve at least 100 researchers at Charles River and probably more as time passes. Charles River currently has another larger-scale partnership with an as-yet unidentified big pharma company which extended an in vivo pharmacology collaboration into an in vivo biology partnership. Charles River has relationships with most big pharma companies but the AstraZeneca relationship will be unique for the CRO. It will have a six-person steering committee and a multi-layered governance structure from the bottom up that aims to improve the partnership over time. James Lynch, vice president of global drug metabolism & pharmacokinetics at AstraZeneca, said the deal is all part of trying to simplify its supplier base, in this case bundling most of what it had outsourced in the toxicology and DKMP space. He said the difference between the Pharmaron deal and that with Charles River is that with the Chinese CRO, AstraZeneca effectively is buying a capacity which will have AstraZeneca-dedicated scientists there who will work exclusively on AstraZeneca chemistry and drug metabolism screening for the British-based company. The Charles River partnership’s preclinical work will be later in the value chain and in the research and development process, focusing on early development through to late development to make use of Charles River’s width and breadth of science in a scalable manner, depending on individual program requirements. The three-year agreement extends into 2015. AstraZeneca began the process of transferring programs to Charles River earlier this year. AstraZeneca’s latest partnering arrangement is another example of pharma’s changing working paradigm, in response to its need to improve efficiencies, maximize resources while raising productivity and also be able to make fast decisions around its portfolios. This trend allows global CROs such as Charles River to get involved, offer capabilities to come in and take control of portions of portfolios, freeing up big pharma scientists who then can focus more on discovery and science decision-making as they progress compounds into development. – Sten Stovall

Merck/Theravance: Merck inked a deal Oct. 19 with San Francisco-based Theravance for the discovery, development and commercialization of treatments for hypertension and heart failure. Merck will pay Theravance $5 million upfront, as well as research funding. Under the deal, Theravance also could earn $148 million in milestone payments for the first indication as well as royalties. The deal is the second in as many weeks for Theravance. It just granted Alfa Wassermann an option to its gastrointestinal motility disorder compound velusetrag. Theravance also maintains an ongoing relationship with GlaxoSmithKline for the development and commercialization of respiratory disease therapeutics. Merck has said over the last year that it has plans to maintain its presence in the cardiovascular space despite many of its competitors pulling out of the area. Yet, the pharma announced in August that it had made the decision to put one of the key cardiovascular drugs in its pipeline, MK-0524B, on hold indefinitely. MK-0524B was a combination of the investigational drug Tredaptive (long-acting niacin/laropiprant), aka MK-0524A, and Merck’s blockbuster simvastatin (Zocor), which went off patent in 2006. The combination was meant to lower the amount of fatty substances in the blood like LDL cholesterol and boost HDL cholesterol. It no longer will be put forth for FDA approval in 2014 as Merck had intended. – LL
Photo credit: Wikimedia Commons

Financings of the Fortnight Ponders Neurodegenerative Death And Taxes

The big funding news this fortnight doesn’t come from public or private investors, it comes from taxpayers. As "The Pink Sheet" DAILY reported May 15, the Obama administration formally rolled out its national Alzheimer’s plan, which has been in the works for more than a year.

Alzheimer’s and other dementia-related diseases were already slated to get $450 million in National Institutes of Health funding in 2012, with the same amount proposed by the White House for 2013, but the new plan adds extra money: $50 million right away this year and $80 million proposed for next year, with another $20 million for caregiver support, education, data collection and other services.

Intriguing, then, that in a field where clinical trial costs are often cited as a major barrier to an already-skittish industry getting more deeply involved, nearly half of the extra $50 million for 2012 is earmarked for clinical trials. It won't help struggling biotechs push promising treatments, mind you; $16 million is going toward a prevention trial using the Roche/Genentech-sponsored antibody crenezumab to test still-healthy members of extended families in and around Medellin, Colombia, who share a rare genetic mutation that almost assures them of early-onset Alzheimer’s. The study, which the sponsors consider to be a Phase II adaptive trial, will cost an estimated $100 million. A private research group, the Banner Alzheimer’s Institute of Phoenix, is in charge, and chose crenezumab as the agent last December because it has demonstrated a better safety profile so far in early Alzheimer’s trials conducted by Genentech.

In addition to the NIH’s $16 million, Banner is putting up $15 million. Genentech will pay the remaining costs, but it’s unclear who will pay if the cost runs beyond $100 million. (Genentech spokeswoman Robin Snyder declined to speculate on additional costs but said the company doesn’t expect funding to be an issue.)

However it plays out, the fact of mighty Roche getting subsidies for as much as one-third of a major trial is, at the least, a sign of the importance of making progress – any progress at all – in Alzheimer’s R&D. We’re not complaining; if $16 million of our national treasure brings about an Alzheimer’s breakthrough, or simply speeds the progress toward one, it’s money well spent and a pittance compared to the costly burden of the disease now and a generation from now.

But to be clear: Neither Banner nor NIH accrue any rights to crenezumab, which Genentech licensed from Swiss biotech AC Immune in 2006, so if the trial points toward crenezumab as a viable treatment, Genentech/Roche could be sitting on a gold mine. The trial is expected to run five years, with an interim analysis after two. At that point the investigators would evaluate continuation of the trial to support an application for approval, said Snyder. “We are hopeful that the trial will support an indication, the specifics of which are yet to be discussed with regulatory authorities,” she wrote in an email. “If it works we would like crenezumab to be as broadly available to patients who may be eligible.”

The Banner Institute plans at some point to test the same antibody in people at higher risk for the more common form of Alzheimer’s.

A side note: Steering millions of federal dollars toward potentially groundbreaking Alzheimer’s trials hasn’t yet provoked the same skepticism as the millions being steered toward other drug discovery and development efforts under the new translational center known as NCATS.

Funding crucial Alzheimer’s trials is of course a different proposition than, say, repurposing drugs that have sat on industry shelves or fallen out of use, one of the mandates of NCATS, which had a $575 million budget this year. But both efforts are dollars spent that, in a parallel universe, perhaps, might have gone toward basic biomedical research, a common refrain from critics. (Our START-UP colleagues, who profile a different source of funding for biotech innovation every month in the “Capital Matters” column, wrote about one of the NCATS programs, the Therapeutics for Rare and Neglected Diseases, or TRND, a few months ago. You can read it here.)

Our friends at Pink Sheet are all over the NCATS story, and we suggest you follow along. It will require a subscription, but to paraphrase the late Donna Summer, they work hard for the money. So hard for it, honey. Rest in peace, disco queen, and same to you, go-go king. No one loves to love you, baby, more than…

Arena Pharmaceuticals: Wasting little time, Arena announced May 16 it priced a secondary stock offering and grossed $60.5 million just six days after an FDA advisory committee voted 18-4 in favor of Arena’s weight-loss drug lorcaserin. Arena sold 11 million shares at $5.50 per share, although shares reached as high as $7.02 on May 11, the day of the committee vote. Shares closed May 16 at $5.67. The vote doesn’t guarantee approval of lorcaserin, but it’s a notable reversal. The panel voted down the drug in September 2010, largely due to data that showed an increase in tumors in rat studies. A reassessment of that data, plus new information on the tumors’ causes, reassured the panel this time around that the cancer risk is negligible. Obesity drugs need to meet only one of two criteria set out in FDA’s draft guidance on weight management products: they either must provide a 5% weight loss in 35% of patients on-treatment and twice as many patients on-treatment as on-placebo; or there must be at least a 5% difference between weight loss in the active-product and placebo groups. Lorcaserin met the former standard, but not the latter. (More details about the panel’s decision is here, courtesy of our Pink Sheet colleagues.) Lorcaserin’s PDUFA date is June 27, so Arena’s new cash reserves give it a boost for commercialization, although in a deal expanded just before the committee vote, Eisai owns commercial rights to the drug in the US, Mexico, Canada and Brazil. Underwriters Jeffries & Co. and Piper Jaffray & Co., with help from BMO Capital Markets, have the option to sell up to 1.65 million additional shares. Two other sponsors of obesity are vying for FDA approval. Qnexa from Vivus has a PDUFA date of July 17, and Orexigen Therapeutics, which agreed to conduct a cardiovascular outcomes trial, hopes to re-file Contrave for approval in 2014. -- Cathy Dombrowski and Alex Lash

OncoMed Pharmceuticals: One of the first cancer stem cell companies, OncoMed is now hoping to cash in on the cancer stem cell hype (which just happens to be the subject of a forthcoming feature in Start-Up magazine). After all, OncoMed, founded in 2004, is a relative graybeard of the field, with a couple of alliances under its belt and three programs in the clinic. Tiny Verastem notched a $63 million IPO in late January without anything yet in the clinic, and another company, Stemline Therapeutics, filed its IPO papers in April. OncoMed hasn’t set terms yet, but it won’t be a surprise if it aims sky-high. Venture backers have put at least $170 million into the company since its founding, most of it coming in a massive Series B in 2008. There are seven venture funds and one strategic investor with stakes of 5% or more in OncoMed, led by U.S. Venture Partners (17%), Latterell Venture Partners (12%), and GlaxoSmithKline (12%), which also owns options for worldwide rights to two OncoMed antibodies. GSK can exercise the options at either the end of Phase I or Phase II proof of concept trials. OncoMed owns exclusive rights to its lead compound, the antibody demcizumab, and is currently testing it in two Phase Ib trials, both in combination with chemotherapy agents.  -- A.L.

Egalet: In its second incarnation, Danish pain management firm Egalet Ltd. has raised $14.3 million in Series B financing. The firm restructured and recapitalized in 2010, shedding its cardiovascular program to focus on its abuse-resistant Egalet technology for the development of opioid and non-opioid pain medications.  The company is preparing to advance lead candidate EGP066, an extended-release form of morphine, into Phase III studies. The Egalet platform creates tablets that erode at a controlled rate to produce prolonged- or delayed-release delivery. It also prevents the drug ingredient from being easily extracted, which deters drug abusers from chewing, snorting, or injecting it. First-time investor CLS Capital joined returning shareholders Atlas Venture, Omega Funds, Sunstone Capital, and Index Ventures, which committed to a two-tranched €2 million ($2.6 million) Series A round in August 2010.  Prior to the recap, Egalet A/S had raised at least $60mm in venture financing. In December 2009, it out-licensed its CV compound, the beta blocker EGP042, to RedHill Biopharma. The firm has a second formulation technology, Parvulet, that creates a soft pudding-like substance that can be eaten with a spoon. Farther down its pipeline are extended-release versions of oxycodone, hydrocodone, and hydromorphone. -- Amanda Micklus

Dynavax Technologies: Like Arena, Dynavax is a veteran biotech hoping to soon celebrate its first product launch, with the hepatitis B vaccine Heplisav now before the FDA for review. Dynavax tapped the public markets, raising $74.4 million on May 9 before deductions and expenses. It sold 17.5 million shares at $4.25 apiece, adding more than 10% of its share count to the outstanding base. If that’s not enough dilution, underwriters have the option to sell another 2.6 million shares. What’s more, Dynavax also announced just before the share sale that longtime CEO Dino Dina will step aside for a more commercially experienced successor. He’ll remain CEO until the search is complete, and he’ll also keep his board seat, Dynavax said. Investors didn’t take kindly to the CEO news or the offering, which was priced 17% below the previous day’s close of $5.09. Shares have continued to decline, closing May 17 at $3.76. But Dynavax needs the cash, as it owns full rights to Heplisav, for now at least, and says it intends to launch it independently in the US. Historically, biotechs that keep worldwide or at least US rights to their first commercial products fare better in the long term, but a successful launch is no guarantee. Dendreon’s prostate cancer treatment Provenge (sipuleucel-T) and Human Genome Sciences’ breakthrough lupus drug Benlysta (belimumab), both hailed as welcome additions in under-served indications, have faltered badly out of the gate. That's led to new management for Dendreon and, for HGS, a hostile takeover bid from marketing partner GSK. -- A.L.

Image courtesy of flickr user brain_blogger. How appropriate.

"The Trenton Patient"

In Tuesday's New York Times, biotech writer Andrew Pollack has an overview of the work in progress to reach a cure for HIV, a story that we covered in the October issue of Start-Up.

Our favorite part of the story is Pollack's quotes from the anonymous HIV-positive patient whose early-stage clinical results were highlighted in September by Sangamo BioSciences. Sangamo's treatment SB-728-T aims to replace an HIV-positive person's immune cells with versions that lack the CCR5 receptor, the virus's main avenue of infection, and render them resistant to HIV.

The patient, who participated in a Phase I trial of SB-728-T at the University of Pennsylvania, was a lively interview. Identified only as "the Trenton patient," he told Pollack that the Sangamo treatment has made him feel both "like Superman" and "like Oliver Twist," the Dickensian orphan who held out his empty bowl and asked for more, please.

He might get his wish. As we explained in Start-Up (excerpted below), the Trenton patient's results were remarkable enough to encourage two more clinical trials, including one in patients who carry the same genetic quirk: 

The Penn trial also included a three-month interruption of the patients' HAART regimens to see if the gene therapy had any effect on viral load. In one patient, viral load went down until the virus was undetectable and stayed that way until the end of the treatment interruption. That patient turned out to be heterozygous; one of his two CCR5 genes was already mutant, which means the treatment resulted in a higher amount of biallelic modification in the patient – in other words, mutations to both copies of CCR5 genes. It's what [Sangamo CEO Edward] Lanphier calls "an important clue" that biallelic modification could have a strong correlation to reduction of viral load, and it will be the basis for Sangamo's next two studies scheduled to start in the first half of next year, with their clinical phase not yet determined. One study will focus on heterozygous patients specifically to see if results from the Penn trial patient can be repeated; the second study will use engraftment enhancement techniques already in use for cancer treatments to boost biallelic modification and make SB-728-T potentially applicable to a much broader HIV-positive population, not just heterozygotes.

For more on the revival of hope in HIV treatment, as well as some hard questions about who will fund the important work, read our story and let us know what you think.

Image courtesy of flickr user Sully Pixel via a Creative Commons license. 

Guest Post: Advancing Next-Generation Combo Therapy in Oncology

By Aidan Finley, Consultant, Health Advances

We are all well aware that oncology is rapidly undergoing significant changes. Encouraged by recent FDA guidance, we've begun a transition from empirical combinations developed post-approval to rational combinations co-developed in the clinic. In this month's IN VIVO, Health Advances addresses the past and future of combination therapy for oncology.

As demonstrated by the recent launches of Xalkori and Zelboraf, the right ingredients are finally in place: more comprehensive genetic and biologic understanding of tumors, better tumor pathway definitions, availability of companion diagnostics, and a burgeoning armamentarium of clean targeted single and multi-kinase inhibitors. To transform these ingredients into successful drugs is no mean task: both clinical trial design and dealmaking need to change.

Fortunately, clinical trials are changing. We see an increase in combination trials, not just of established assets, but of novel agents early in development. For example Novartis recently combined its novel mTOR inhibitor Afinitor with Pfizer’s aromatase inhibitor Aromasin to great effect in breast cancer, showing PFS and OS survival benefits. And Syndax Pharmaceuticals released findings at AACR showing beneficial combination of its HDAC inhibitor entinostat with exemestane in breast cancer, and published a trial of entinostat in combination with Vidaza in NSCLC.

We also see more development of precisely dual targeted kinases, like Roche’s dual PI3k/MTOR inhibitor (GDC-0980) or Novartis’s competing dual P13k/MTOR inhibitor (BEZ235), or VEGF/FGF inhibitor dovitinib. Clinicians are also embracing the potential of new agents and combinations to affect resistance, a durable unmet need: At this moment at the MGH there are 4 trials opening for patients resistant to BRAF inhibitor in melanoma and 10 trials for patients with resistance to targeted agents in lung cancer. Collectively, these trials and abstracts represent the growing consensus around next generation combination therapy and the route by which sponsors, clinicians, regulatory authorities, and patients can advance care.

But biopharma partnership strategies need to evolve to allow for testing of more and better drug combinations (and we see more room for improvement here). Ultimately, developers need to balance the control of intramural development with the flexibility and risk-sharing of partnerships and joint ventures. AstraZeneca and Merck famously began their ALK and MEK collaboration in 2009 in part because their research directors bumped into one another at a security queue while traveling to a conference. Despite growth in cancer-specific partnerships since (e.g. Merck-Serono and Sanofi in 2010, Roche and BMS in 2011), has a better mechanism for identification and execution of partnership been identified?

One necessary change is a tighter coordination between R&D and BD. R&D efforts can no longer be siloed, or pursued in isolation without consistent reference to corporate strategic goals. BD efforts need to be partially focused on identifying both potential strategic partnerships and as well as agent-extending in-licensing efforts. Staying on top of the literature, BD can work to bring in complementary agents to better achieve dual inhibition of a target (e.g. to achieve something like the demonstrated benefits of trastuzumab and pertuzumab in Her2+ breast cancer) or actively seek agents targeting newly validated targets like EML4-ALK rearrangements after high-profile publications.

Given these factors, it makes perfect sense that oncology deal-making is aggressively moving earlier (pointed out by Campbell Alliance, here). But in-licensing alone cannot satisfy Pharma and Biotech’s need to mitigate risk. Companies need to get better at working together, using the Merck/AstraZeneca joint venture as a template. Sharing risk by sharing assets, development costs, trial designs, and ultimately regulatory risk will be necessary to capture full value for these complex oncology assets.

The situation gets even more complicated when biomarkers are considered. Using an established biomarker developer like Roche or Abbott will make negotiations between the existing two members of the partnership more complex, but these players may be the only ones capable of arbitraging the clinical and economic risk of companion diagnostic development. Pfizer and Abbott had their own difficulties developing their partnership over crizotinib, though the companies surmounted these difficulties with a successful joint application. Unfortunately for Abbott, they will receive only $1,500 per patient, compared with Pfizer’s $9,600 per month.

The market is already focusing on modular, diagnostic-aware, targeted therapies that can be slotted into multiple therapeutic lines and extended by combination or mechanism into adjacent indications. We want to see both intelligent in-licensing driven by R&D/BD alignment and data-driven opportunism as well as more structured joint ventures and collaborations focused on mitigating risk and better delivering complex, multi-company, multi-agent trials of out-of-the-box combination therapies. These are exciting times in oncology, and it is important to create the types of agents and combinations capable of dramatically advancing standard of care.