Financings of the Fortnight Pursues The Case of The Confounding Qs and Zeds

If we were playing Scrabble, FOTF would throw down a couple double-word scores (with double-letter scores of course embedded), whup your sorry butt, take a long contented sip of hot cocoa, and call it a night. But it's never that easy, is it?

The news of the past fortnight is more question mark than answer, leaving us to purse our lips and puff distractedly on our Meerschaum calabash. The two Zeds stand for Zealand Pharma and Zogenix, two of the three firms that took advantage of the open IPO window -- such as it is -- to debut their stocks.

With a few economic indicators perking up stateside, we thought investors might start to receive new issues with a warm handshake, especially from firms with Phase III drugs or marketed products (a bar Zealand and Zogenix clear).

Certainly the two companies' debuts weren't as bad as the raspberries the Irish government's getting for punting citizens' benefits in order to bail out bankers. Still there's no denying Copenhagen-based Zealand's CEO David Solomon had to put his best face on getting half of what he hoped for, telling Our UK Correspondent that, hey, at least we got out despite Dublin burning!

Back here in the US, where officials newly elected or otherwise are trying to make grown-up noises about debt reduction, Zogenix and fellow escape artist Anacor Pharmaceuticals also misgauged investor sentiment. Each took about a 70% discount in opening share price based on initially stated goals. They made up the gap somewhat by selling more shares, but that's cold comfort to investors who saw the delta between their buy prices and potential sale prices sink like a broken boat into Mississippi mud.

More mysteries: Stealthy as Quintiles Transnational tried to be -- on the QT, dare we say? -- it couldn’t hide the fact that its former investment unit NovaQuest has become an independent, standalone organization. In a Form D filed with the SEC the day before Thanksgiving, NovaQuest revealed that it had raised the first $117 million of a planned $500 million investment fund. A Quintiles spokesman confirmed that the new NovaQuest Capital Management will function as a separate company, which will operate NovaQuest Healthcare Investment Fund LP. Quintiles will be a minority investor in the fund among six total investors, but the giant CRO will not manage its investments. Rather, several former Quintiles executives, including John Bradley, Fred Cohen and Ronald Wooten, are now listed as directors of the new fund. NovaQuest’s principals couldn’t be reached for comment, but IN VIVO Blog did learn that Wooten played guard for the New England Patriots in the 1980s.

A Quintiles’ spokesperson told us its Capital Solutions division will continue to make investments on the company’s behalf. But the carve-out of NovaQuest suggests that Quintiles’ innovative investment model – offering contract research, clinical trials and other services alongside cash in exchange for equity or other future payments – hasn’t prospered since NovaQuest was launched in 2006. The company lost big on its investment in Eli Lilly & Co.’s Alzheimer’s disease treatment semagacestat, which failed in Phase III in August. Nor has NovaQuest yet produced a notable exit or successful drug, albeit in a relatively short existence. It’s unknown whether future NovaQuest investments will be tied to Quintiles’ services, nor whether the firm will continue to invest in tandem with TPG-Axon Capital, its partner in the semagacestat arrangement and other deals.* Tangential thought: We'd rather be a Q than a Z.

There's one more letter of mystery in today's edition: A. We're gearing up for our annual A-List feature, in which we highlight the year's most significant, creative Series A fundings and sort out the underlying trends. The mystery: Who will make the list? We have some good ideas, but we'd love to hear yours, as well. You can mail a - dot - lash at elsevier - dot com, or you can tweet me @InVivoBlogAlex. One word of warning: fundings in which the amount of cash remain a secret won't be considered. So much for Collegium Pharmaceutical's spin-out of its derm assets with the backing of Essex Woodlands. We've already got enough mysteries on our hands.

Time to set aside idle palaver, Watson! The game's afoot, and it's called...

Zealand Pharma: Zealand's IPO on the Copenhagen stock exchange, announced earlier in November, was going to be the gauge of European investor appetite for biotech. When it priced shares Nov. 23, it seems investors weren't so hungry. Despite Zealand's late-stage GLP-1 asset partnered with Sanofi-Aventis and a pipeline significantly more mature than when the company first tried to float back in 2005, the Danish biotech managed only to raise €50 million, listing at DKK 86 per share, at the very low end of its projected range. Nonetheless, CEO David Solomon told IN VIVO Blog "we're satisfied" given the economic climate at the time, with Ireland on the brink of its bailout and considerable global uncertainty. "Other deals [in the US] re-priced or aborted, but we got out," he said. Yes, but Zealand effectively re-priced, too. The company adjusted expectations downwards November 18 following its investor road-show. "We decided to listen to investors," says Solomon, and the price range was reduced from DKK 86-120 to a more telling DKK 86-90. Zealand's new investors are mostly European (and mostly Nordic) institutionals. Since shares listed they have hovered well below list price, but it's early days, and volumes are low. The IPO coordinators haven't yet taken up their over-allotment option. Solomon promised a "wealth of news flow" which might put some fire into the stock. No Christmas cheer, then, yet for major shareholder Sunstone Capital – nor for other biotech IPO hopefuls. -- Melanie Senior

Anacor Pharmaceuticals/Zogenix: From A to Z, it was a fortnight of diminished expectations -- yet again -- for biotechs going public. In the case of Anacor and Zogenix, the haircuts were so severe, each in the neighborhood of 70%, you'd be forgiven for checking to make sure their scalps were still attached. Haircuts have been the rule not the exception among life-science IPOs this year, but the Anacor and Zogenix reductions were the unkindest cuts yet, and in fact rivaled only in the past few years by a little cell therapy play called Bioheart. Anacor, with a pipeline of four topical dermatology compounds, netted $55.8 million by selling 12 million shares of common stock Nov. 30 at $5 apiece, a far cry from its initial goal in the $16-$18 range. Meanwhile, San Diego-based Zogenix, which this year launched its first product, a needle-free sumatriptan injection for acute migraine and cluster headaches, sold 14 million shares at $4 per share, raising $56 million. It had hoped to sell 6 million shares in the $12-$14 range. At least Anacor could boast of tacking on some non-dilutive funding, as you'll see in the next item. -- Joseph Haas

NanoBio: Part of the small but energetic Michigan biotech cluster, NanoBio landed a $6 million grant from the Bill & Melinda Gates Foundation to push forward with a nasally-administered vaccine for respiratory syncytial virus (RSV). It's one of a just a few vaccine-related grants to for-profit companies the foundation has made among its dozens in recent years. There are currently no vaccines approved for this indication, but the biotech is likely to face competition in the race to bring one to market. Alnylam has a Phase II candidate that targets the nucleocapsid "N" gene responsible for RSV replication, whereas NanoBio touts its NanoStat platform’s ability to generate robust mucosal, systemic, and cellular Th1 immunity. MedImmune, which made its name with an antibody treatment for RSV as well as the nasal flu spray FluMist, and ViroPharma also have clinical-stage intranasal RSV candidates in the pipeline. (NanoBio wasn’t the only for-profit Gates recipient this fortnight; on the same day, newly public Anacor Pharmaceuticals received more than $2 million to fund a new collaboration with UCSF and the New York Blood Center on river blindness.) The Gates money is a sliver of ten-year-old NanoBio's accumulated $115 million in financing, which includes venture capital, grants, and partnerships such as its 2009 alliance with GSK for a Phase II OTC cold sore treatment. -- Amanda Micklus

Lpath: Also no stranger to nondilutive funding, this San Diego firm eked out nearly $5 million in a private placement of 7 million shares at 70 cents each, it announced Nov. 17. Each investor also receives warrants to buy half again as many shares as they bought in the placement. The warrants have a two-year term and can be cashed immediately for $1.00 per share into restricted shares of Class A common stock. It's not the type of funding we normally highlight, but the San Diego firm, which develops monoclonal antibodies formulated to target bioactive lipids such as sphingosine-1-phosphate, caught our attention in the summer of 2009 when it was the first recipient of a new type of government small-business grant. The National Cancer Institute has a small "Bridge" program to extend its SBIR grants to translational projects to help biotechs get across the valley of death and into the clinic. Sometimes called "SBIR Phase III" awards, the Bridge awards are a little extra cash -- up to $3 million -- for SBIR awardees beyond the traditional Phase I and II grants that will hopefully get them to a milestone or data point that attracts private investment. The recent private placement probably wasn't what Lpath had in mind. Since the Bridge award, Lpath's partnership for its lead product, the anti-cancer Asonep, ended when Merck KGaA declined to opt in at the end of Phase I. Officials said the placement proceeds will help move a different candidate into Phase II trials for wet AMD and let the company continue to explore "strategic opportunities." -- Alex Lash
*Paul Bonanos contributed the Quintiles/NovaQuest reporting.

Photo courtesy of flickr user MarkHillary.

NICE Death Reports Exaggerated, Says Dillon

"Reports of the institution's death have been greatly exaggerated," declared NICE chief executive Andrew Dillon at the FT Pharmaceutical and Biotechnology Conference in London today. Of course, it's clear from the cost-watchdog's latest spate of assessments that NICE is still going strong today.

Dillon's invocation of Twain refers to the fate of NICE post-2013, when a new value-based pricing system in the UK will necessarily change the institute's role. Lord Howe, Parliamentary Under Secretary of State in the Department of Health, recently declared that NICE's decisions on whether a new medicine should be reimbursed by the National Health Service will be "somewhat redundant". That's what prompted the death reports.

Ok, so they weren't really death reports, they were "NICE will soon have significantly less sharp teeth" reports.

And we stand by them (ours, anyway). No-one (not even Dillon) knows precisely what NICE's role will be in the UK's new value-based vision of health care provision, since the government's consultation report isn't out yet. (It's due before year-end, though, so watch this space).

Still, "what I do know is that NICE will continue to assess clinical and cost-effectiveness of new pharmaceuticals," Dillon explained. "But it seems we won't be asked to formally recommend, in the terms we have used to date, how a new drug should be used" (in other words, whether it is reimbursed or not).

So NICE's cost-effectiveness assessments of individual drugs, while still likely to happen, won't lead to stark 'yes' or 'no' recommendations. Instead, "we will articulate the outcome of our assessment in a way that makes clear the optimal use of the product," Dillon explained.

NICE will still express the output of its assessment in terms of cost-per-QALY (quality-adjusted life year), or in terms of a cost-per-QALY range, Dillon clarified to your blogger later. "But we will not be asked to say whether this cost-per-QALY is acceptable or not, as we do now."

Bye-bye the controversial £30,000 cost-per-QALY threshold for determining whether a drug will get reimbursement, in other words (although NICE tends to deny that such a cut-off exists anyway). That's the crux of it. That's the trigger for the death reports.

Instead, Dillon continued, "someone else" will decide whether that cost-per-QALY is acceptable or not, "since the drug price will be driven by someone else in the system," he continues, pointing to the UK's forthcoming value-based pricing set-up. Details of who or what that someone else is, and how they decide whether and how a new drug should be used, remain to be agreed. Formal discussions between industry and the department of health are due to begin next year.

ABPI director general Richard Barker is confident that these talks "won't be too protracted", and speaks positively about a "collaborative approach" where industry has a real say.

It seems unlikely, though, that it will be NICE which takes into account in its assessments the broader factors – including societal impact, treatment support & carer costs – which are to be included in the UK government's vision of value-based pricing and a health care system defined by "value-based pathways", as the catch-phrase appears to be.

Instead NICE will probably do broadly what it did before – and will do so in an equally transparently and consultative fashion, emphasized Dillon – but that this will be just one ingredient that's put into a bigger, as-yet-to-be-defined 'value-based' machine that will determine product usage. "I don't know for sure, though," qualified Dillon (although he did add that there are few if any concrete measures used, to date, to quantify the broader societal benefits of a particular drug…).

More important to Dillon right now is ensuring that his empire does remain a key influence on health care provision. "I want NICE to provide a point of reference on how an intervention should be used," he says."This is very important, and I expect will be expressed in the government's consultation document."

Being a 'point of reference' is somewhat different to being a key decider, as NICE is now.

So from industry's perspective, things probably look good, as far as NICE is concerned. Barker says he doesn't really care at what point these broader, less easily quantifiable elements are blended into decisions on drug usage – whether it happens within the NICE process or afterward. "We're not hung up on what institution does it." As long as it's in there, making it less likely that his members' innovative drugs are tripped up at the starting line.

OK then, NICE isn't dying. In fact it's taking on a broader remit; from 2012 NICE will look at social care, too, as well as maintaining and developing role in promoting optimal public health via general treatment guidelines. "This is a real opportunity for NICE to re-invent itself," and to make sure health care provision is value-focused and outcomes-focused, and to ensure it adequately encompasses social care, too, insists Dillon.

A NICE with a broader remit is a NICE that's spread thinner, though, with less weight in specific areas – like single drug reimbursement assessments.

Merck CEO-Designate Frazier and the Importance of Washington to Pharma

The announcement that Merck's global pharmaceutical head Ken Frazier will ascend to the CEO slot in January is hardly a shocker: he was viewed as the front-runner in a one-man race to succeed Richard Clark next year.

But this stable, planned succession is still an important marker about the climate for Big Pharma. Much will be made of Frazier background as chief counsel at Merck (he will join Jeff Kindler at Pfizer as the Lawyer-in-Chief CEO model), but we wanted to highlight Frazier's hands-on role in shaping Merck's public policy efforts throughout his career.

While Clark personally represented Merck in some of the critical events involving the health care reform debate, Frazier was very much on board with the plan -- and gave a thoughtful and compelling explanation for why Merck decided to take the risk of engaging in the reform debate during a keynote address during Elsevier Business Intelligence's FDA/CMS Summit for Biopharma Executives in December 2008.

We reprinted the full address in The RPM Report, here. But we thought Frazier's analysis of the risk of inaction was particularly compelling, and may be newly relevant as he takes over the top spot at Merck heading into the uncertain waters of a newly Republican Congress in 2011. So we've excerpted that section below.

Oh, and by the way, today is the last day to qualify for the "early bird" discount for this year's FDA/CMS Summit. In all modesty, we can't promise you will see tomorrow's CEOs today if you come to the Summit, but, as Frazier's address shows, you just might. What we can promise is that what happens in Washington continues to matter to the Big Pharma business, so you won't want to miss out on the chance to deepen your understanding of the rapidly changing public policy climate. (Click here for more on the Summit.)

Here is what Frazier said two years ago about the risk of inaction, if Merck chose not to support reform:

We understand clearly that we are entering this debate at a time when the pharmaceutical industry’s standing is low and we face challenges from many directions.

For years now, politicians, the media, and industry critics have disparaged our prices, our allegedly excessive profits, and our purportedly wasteful marketing expenditures. Most unfortunately, we have also seen critics challenge the integrity of the scientific research that is at the core of our value to patients and society.

These challenges have led to legislative proposals, here and around the world that could have serious negative impacts on our industry and on our ability to continue to innovate in the interests of patient health. In my new role overseeing the marketing of Merck medicines and vaccines around the world, I’ve seen first-hand the negative impact that some of these ideas have had.

Certainly, major health care reform action in the United States could provide a vehicle for the consideration of several harmful proposals, such as drug importation, price negotiation in Medicare Part D, and changes to the patent protection that is a necessary prerequisite to pharmaceutical innovation.

We’re also seeing these proposals at a time when Merck and other companies are facing unprecedented business challenges. The rapid and appropriate uptake of generic medicines, challenges to our patents, and setbacks in our pipelines are translating into layoffs as well as difficult research investment choices.

This is arguably the worst time for punitive government actions of the type some are proposing.

While the risks of action to us are clear, so are the risks of inaction. First and foremost, people without health insurance coverage have poorer health and, of course, reduced access to our medicines and vaccines. Those without coverage live with a day-to-day fear that most of us in this room can only imagine. It is a fear that... they are only one illness or one accident away from financial ruin or permanent disability.

If that were not enough in itself, as an industry we need to understand that until the nation reforms our health care system, including providing affordable access to quality care, the issues of access to medicines and the price of medicines will remain flashpoints in political and economic discourse. Further, more time without action will only embolden those who advocate anti-competitive approaches such as universal government delivered health care.

Termeer Touts Campath-Linked CVRs

While the US digests its Thanksgiving turkeys, life, work and...yes, pre-takeover posturing continues on this side of the pond. We're talking Sanofi-Aventis' attempt -- thus far too cheap -- to buy Genzyme, naturellement.

Speaking to French national daily Le Figaro (in his first interview with the French press), Genzyme chief Henri Termeer confirmed a report in the Wall Street Journal a couple of weeks ago that he's willing to explore Campath-linked contingent value rights (CVRs) in any future negotiations with Sanofi-Aventis. (We say 'future' coz they haven't started yet; "we have nothing on which to base a discussion," as Termeer insists).

Having CVRs pop up is not much of a surprise, though, is it. They're becoming part of the deal-making landscape, after all; soon enough they'll be as unremarkable as option-based structures. And wind-turbines.

You see, Termeer isn't opposed to selling Genzyme (shareholder value 'n all that). He's just opposed to selling it at $69/share (shareholder value 'n all that). It's all about price, he confirmed to the French newspaper.

The fact that Termeer is the one suggesting Campath-linked ways out of this stalemate hints that he's keen to squeeze more money out of his predator and get things sorted (so do the recent sales of the genetic testing and diagostics units); after all, he doesn't want his shareholders (particularly the newer ones) getting fed up and just turning over. He may say (he did say) that "we have time on our side, because our production issues are resolving themselves." But perhaps not that much time. Not more than Sanofi does, anyway.

So while Termeer sketches down his list of poison pills to buy time while the company rights itself, the valuation battle-ground may shift to Campath, and just what that drug could be worth.

There's a huge difference (surprise!) between what Sanofi thinks ($700m) and what Genzmye thinks ($3.5 billion). In Termeer's view, "this will be the most effective, cheapest and most convenient treatment for MS patients."

The Phase III trials, due next June and next autumn, may show who's right. They may also be the trigger-points for Campath-linked contingent value notes/rights/widgets to ex-Genzyme shareholders....if Genzyme is to become "a Sanofi-Aventis Rare Disease Company" by next Thanksgiving...

image by flikrer Chuck Coker, with permission

Bleak Winter for Servier

Winter is coming early to Europe this year, particularly for one company situated in the suburbs of Paris. Servier faces its first court case, filed yesterday by two patients at Nanterre, France, in connection with its diabetes drug Mediator (benfluorex).

An investigation by the French medicines regulator (Afssaps) led to claims earlier this month that Mediator, and its generic equivalents – manufactured by Myland and Qalimed – may have caused 500 deaths since 1976.

Servier is being charged with “serious deception, based on the nature, substantial quality and composition of the product”, “placing the lives of others in danger”, “administration of a noxious substance” and “involuntary homicide”.

Harsh accusations, indeed (even by pharmaceutical industry standards). However, the actual number of deaths associated with Servier's drug is derived from two separate studies assessed by Afssaps and the association is, for the most part, hypothetical. At Afssaps' request, three expert epidemiologists examined the study results and suggested that on the basis that some 7 million people were exposed to the drug between 1979 and 2009, the number of deaths was likely to be in the region of 500.

Put in that context, 500 deaths doesn't sound too unusual. But use of benfluorex also significantly increased the risk of hospitalisation as a result of thickening of the heart valve (valvulopathies), according to the pharmacovigilance studies that Afssaps pulled together.

Faced with this first case, Servier has a number of factors running in its favor. Firstly, it voluntarily withdrew Mediator from the French market in November 2009, following several reports of cardiac valvulopathy and pulmonary arterial hypertension. The European Medicines Agency followed suit in December 2009.

Next, Servier may be deemed to have a point when it retorts that the “inflated” number of deaths was the result of an “extrapolation” and therefore did not represent actual Mediator-caused deaths. Moreover, the company revealed that, even if this morbidity were proven, it would only correspond to a risk of 0.005%.

The Nanterre court will have to examine the question as to whether this represents an acceptable level of risk. It certainly may do, particularly as regulators frequently stress to the public that “no drug is risk free”.

Still, Servier would do well to use this as a test case for what may yet be to come. Success for the appellants could spell trouble, not just for Servier but also, potentially, for Myland and Qalimed too.

If this first snowflake in Nanterre turns into a snowstorm, France could be prompted to re-examine the case for class actions – which the country hasn't, until now, allowed, and which health minister Xavier Bertrand is keen to avoid. That said, given the inordinate length of the legal process in France, Servier may do well to go into hibernation until winter is over.

--Faraz Kermani

image by flikrer taivasalla used under a creative commons license

Deals of the Week's Thanksgiving Day Massacre (In 4-Part Harmony, Of Course)

This post is called Deals of the Week, and it's about deals, and the week, but Deals of the Week is not the name of the blog, that's just the name of the post. And that's why I called the post Deals of the Week.

Now it all started four Thanksgivings ago; it was four years ago on Thanksgiving, when Chris Morrison and I started writin' a blog about deals, but not every day, just once a week. And writin' about deals once a week, you know it's a lot of work. (Hint. Hint.)

And there's a lot of garbage you gotta sift through, but we decided it would be a friendly gesture on behalf of readers. So we trolled around the Internet with our shovels and rakes and other implements of destruction (a.k.a. EBI's Strategic Transactions database) looking for deals to analyze. But then a big bad editor (also known as Officer Roger) said why are you doin' that? We are closed on Thanksgiving.

And we had never heard of a blog closed on Thanksgiving before (we don't get out much) so with tears in our eyes we drove off into the sunset looking for another place to dump our garbage -- I mean our deals.

We didn't find one. So we wrote our post anyway, went back and had a Thanksgiving Day that couldn't be beat, went to sleep, and didn't get up until the next morning when we got a call from Officer Roger... And it's been a recurring feature here at IVB ever since.

But fortunately, not another case of American blind justice since we always arrive at the truth of the matter and it doesn't even require 27 eight-by-ten color glossy pictures with circles and arrows and a paragraph on the back of each one.

In honor of the day, we hope you consider joining the IN VIVO Blog Movement. All you've got to do is walk into the office wherever you are, just walk in and say ,"You can get anything you want at IN VIVO Blog." And walk out.

You know if one person, just one person does it, they might think he's really sick and they won't take him... And can you, can you imagine fifty people a day, I said fifty people a day (okay, we'd really like 1000) walking in, quoting a line from IN VIVO Blog and walking out?

And friends, they might think its a movement. And that's what it is, the IN VIVO Blog Movement.

Remember Deals of the Week? (This is a post about Deals of the Week.)

Without further ado, we bring you this week's installment. Feel free to sing along in four-part harmony. With feeling. Cuz'...

You can get anything you want at IN VIVO Blog.
You can get anything you want at IN VIVO Blog.
Log right in, it's a click away.
Just a finger tap. You don't have to pay.
You can get anything you want at IN VIVO Blog. (Excepting Roger.)

Convergence/Selcia: Barely more than a month after it was spun out of GlaxoSmithKline, CNS-focused Convergence Pharmaceutical bagged its first drug discovery collaboration, with Essex, UK-based CRO Selcia Ltd. No financials were disclosed, but Convergence isn’t short of cash, having raised $35.4 million on inception in one of Europe’s largest A rounds. Run by CEO Clive Dix, of PowderMed fame, Convergence already has two clinical-stage assets and six earlier-stage programs targeting ion-channels involved in chronic pain. In this deal, the partners will hunt further molecules for chronic pain, with Convergence applying the ion channel biology, medicinal chemistry and preclinical development expertise it inherited from GSK, and Selcia contributing synthetic chemistry and chemistry support services. The collaboration shows that Convergence, like its parent GSK (and indeed many other Big Pharma), is willing to embrace others’ drug discovery approaches, and to tap into drug discovery resources and technology on a flexible basis.--Melanie Senior

Medtronic/Ardian: Back in the summer of 2008, Ardian sought out corporate investors to participate in the company’s targeted $30 million Series C financing, thinking some corporate oomph and expertise would help drive clinical testing of its Symplicity Catheter System, used for treating hypertension and related conditions. The following spring Medtronic led a $47 million round, acquiring 11% of the company in what was – and still is - a rare up round. Now, Medtronic is going all in, announcing that it will acquire the rest of Ardian for $800 million up front, setting a record purchase price for a medical device company that doesn’t have an FDA-approved device. (Medtronic topped the mark it set in 2009 with the $700 million of CoreValve Inc., a percutaneous heart valve company.) Medtronic also agreed to pay commercial milestones equal to the annual revenue growth through the end of Medtronic’s fiscal year 2015. Ardian’s system allows doctors to deliver radiofrequency energy to the renal sympathetic nerves surrounding the renal arteries. Decreasing conduction of these nerves is seen as a way of triggering the body’s own regulation mechanisms to lower blood pressure. For the past six months, Ardian has been releasing positive results from its ongoing clinical trials with the most recent bit of good news at the American Heart Association meeting this month.--Tom Salemi

Boehringer Ingelheim/f-star: Boehringer's R&D collaboration with f-star this week is yet more proof that the privately-held German drug maker is ramping up its large molecule capabilities. This is the fourth antibody deal Boehringer has done this year alone according to Elsevier's Strategic Transactions, building on collaborations with 4-Antibody, Micromet, and most recently MacroGenics. Financial terms of the latest transaction weren't disclosed, but f-star, a former Series A-list all-star that has pulled in more than $25 million in venture dollars, will receive an initial technology access fee, research-based funding, and of course the potential for downstream regulatory and commercial milestones. In return, f-star will use its modular antibody technology to develop novel therapeutics against up to seven targets nominated by Boehringer that span multiple therapeutic areas. Biobucks for each of the seven targets, to which BI of course holds worldwide rights, could total up to €180mm ($247mm), excluding royalties. (Prompting unintentionally hilarious headlines about the "$1.7 billion" deal.) f-star's technology allows it to introduce additional binding sites into antibodies or antibody fragments, engineering large molecules that can target multiple proteins in a single molecule. Note this isn't the first time BI has signed an alliance focused on antibody fragments (that honor goes to Ablynx back in 2007) or bi-specific antibodies (MacroGenics' DART technology competes with f-star). Such second-generation approaches are a means of circumventing established IP claims for successful traditional antibody therapeutics and may advantages over Mother Nature's molecules, as they are potentially easier to manufacture and can have greater tissue penetration.--EFL

GlaxoSmithKline/Dr. Reddy's: GlaxoSmithKline's deal with Dr. Reddy's for the big pharma's United States oral penicillin facility and product portfolio is an interesting spin on regional deal making. Under the terms of the agreement, GSK transfers ownership of its penicillin manufacturing site in Tennessee and U.S. rights to Augmentin and Amoxil brands to Dr. Reddy's for an undisclosed sum. That GSK would opt to sell out of the US penicillin market isn't too surprising. Back in 2008 the drug maker announced plans to lay off the 200+ workers employed at the 400,00-square-foot manufacturing site by fall 2009 in preparation for sale of the plant because of declining sales of Augmentin stateside as a result of generic competition. Thus, the deal makes everyone happy, allowing GSK to downsize in a market no longer deemed valuable, while still allowing the drug maker to preserve ownership RoW, where GSK sees the potential for growth via its branded generics strategy. Dr. Reddy's, meanwhile, has been angling to scale up its generics business in North America. Thus, this deal gives the India-based giant entree into the US penicillin-containing antibacterial segment and a physical footprint to boot.--EFL

Roche/Ligand: Around the same time Roche decided to close out its R&D work in RNA interference, the Swiss pharma also notified Ligand Pharmaceuticals that it was ending a partnership to develop RG7348 (formerly MB11362) for hepatitis C. This no-deal officially ends the circuitous relationship between La Jolla, Calif.-based Ligand and the Swiss pharma. The tie-up began in August 2008, when Roche paid $10 million upfront to initiate a two-year collaboration with Metabasis Therapeutics to apply the latter firm’s HepDirect platform to Roche’s lead nucleoside candidates for HCV. In June 2009, the two companies chose ‘7348, which had since advanced to Phase I, as their lead candidate, with Roche paying a $2 million milestone to the biotech. Fast-forward to October 2009, when Ligand bought out Metabasis, inheriting the HCV deal. Since Ligand/Metabasis, Roche has paid up another $6.5 million in milestones; for the bean counters in the audience, $2.7 million of that went to Metabasis shareholders who had received contingent value rights in the original sale. Ligand, which says it learned of Roche’s decision on Nov. 19, also completed a one-for-six reverse stock split that same day, reducing current outstanding shares of common stock from 117.7 million to 19.6 million. Despite the no-deal, Ligand still boasts partnerships a plenty, boasting of ongoing alliances with Pfizer, GlaxoSmithKline, Merck, and Bristol-Myers Squibb, among other.—Joseph Haas

HAPPY THANKSGIVING FROM IVB!

Deals Of The Week Looks For Quarters Under The Couch Cushions

In today’s cash-constrained environment, drug markers are doing everything possible to limit the burn, while finding new sources of innovation. Hence this week’s news that Pfizer is teaming up with UCSF in an $85 million research collaboration (see below), as well as the respective emphasis at Roche and Novartis on “operational excellence” and “focused diversification”.

This desire to wrest as much value out of available resources is also the driving force behind various big pharmas’ decisions to outlicense deprioritized assets, whether they are single-asset focused arrangements or spin-outs of actual whole departments.

In the good old days, pharma didn’t have to think too hard about such measures. With abundant free cash flow and blockbuster projects these activities were a distraction deemed not worth the time and effort required.
But like graduate students searching for additional cash underneath their sofa cushions, big pharmas can no longer afford not to monetize, monetize, monetize.

Thus, AstraZeneca’s desire to sell off its medical device subsidiary Astra Tech, which manufactures dental implants and medical devices for surgery and urology, is hardly surprising given the drug maker’s patent cliff. (What is surprising is that it took this long for AZ to see the wisdom of the strategy.)

Astra Tech is forecasted to pull in roughly $533 million in 2010 according to analysts; that’s just 1.6 percent of AZ’s overall sales. Given the biz is entirely separate from the drug maker’s pharma initiatives – Astra Tech’s areas of expertise don’t even give AZ’s sales and marketing team an extra call point – the proposed divestiture makes a ton of sense (provided AZ can get a decent price for the subsidiary).

And therein lies the rub. Over a year ago, Elan tried – and failed – to spin-out its drug delivery business, which arguably could have closer ties to its overall strategic plans than dental implants and urology devices do to AZ’s. But the biotech has shelved its efforts because it can’t find a buyer that values the company as richly as it does.

One other option: tap the public markets, which while still chilly, are finally thawing, especially for companies with products and revenues. (And yes we know device IPOs remain a rare beast, but they do happen.) This is what Bristol-Myers Squibb, which faces its own steep cliff with Plavix and Avapro, did so brilliantly a year ago with its divestiture of Mead Johnson in two acts, first via an IPO that sold a small percentage of the company and then via a stock swap that increased BMS’s earnings-per-share. (It also won a DOTY nomination for its efforts.)

Such creative deal making can yield a lot of spare change – the Mead Johnson IPO alone pulled in 2.88 billion quarters, proving that more banal assets like baby food provide a very big cushion in the post-patent cliff world.

It's time to get out from under the couch cushions and read...

Stromedix/UCSF: Privately held Stromedix in-licensed exclusive, worldwide rights to a preclinical monoclonal antibody to integrin alpha-v-beta-5 Nov. 18 from the University of California, San Francisco. Deal terms were not disclosed. Stromedix, a Cambridge, Mass., biotech backed by several venture capital firms and Biogen Idec, is focused on developing new therapies for fibrosis and resulting organ failure. Its lead program, in-licensed from Biogen in 2007, is STX100, a monoclonal antibody that inhibits the activation of transforming growth factor by targeting integrin alpha-v-beta-6, a cell-surface adhesion molecule and TGF activator. STX100 has completed Phase I studies, with Phase II trials in idiopathic pulmonary fibrosis and chronic allograft neuropathy in planning, Stromedix says. Noting that preclinical research suggests alpha-v-beta-5 plays a key role in a variety of acute and chronic organ failure settings, Stromedix believes the monoclonal, which regulates endothelial barrier function, could be a second candidate for treating fibrotic disease, particularly conditions associated with vascular leakage. CEO Michael Gilman said Stromedix would apply its proprietary biomarker database to the antibody to discover a biologically active dose for the purpose of investigating anti-fibrotic activity in a small trial.—Joseph Haas

Pfizer/UCSF: The Stromedix deal was only one of two deals inked by UCSF this week. On November 16, the university announced a sweeping arrangement with Pfizer that goes well beyond the transfer of intellectual property around an interesting target. It’s no secret that big pharmas are increasingly looking to tap the innovative science contained within academia’s ivory towers. It’s one way drug makers can revitalize their early stage R&D organizations that is also cost-effective (to put it bluntly, we mean cheap). Even though the $85 million Pfizer is pledging to UCSF over a five year period is significantly more than its ever put to work in its previous academic deals, the dollars are still a drop in the bucket for a company its size. Moreover, based on a conversation with Anthony Cole, who heads a new division within the drug maker called Global Centers for Therapeutic Innovation (GCTI) responsible for spearheading such collaborations, it seems likely more of these partnerships are in the offing. In exchange for funding that broadly supports biotech research at UCSF, Pfizer receives joint ownership of early-stage drugs and exclusive options to develop them once they complete Phase I studies, with additional milestone and royalty payments due back to the university if an option is exercised. Any compounds that Pfizer elects not to develop further will be returned to UCSF, which will be free to negotiate with other potential partners, although royalties may still be due to Pfizer. The Big Pharma will also open a private laboratory, which will focus on multiple therapeutic areas of interest, with at least 20 staffers at UCSF’s Mission Bay Campus in San Francisco; approximately the same number of UCSF researchers will work jointly with the local Pfizer staff. – Paul Bonanos

Sekisui/Genzyme: It's two down, one to go for Genzyme, which announced Nov. 18 that it will sell its diagnostics products business to the Japanese chemical manufacturer Sekisui Chemical Co. for $265 million in cash. It is not as lucrative a deal as the $925 million agreement Genzyme announced for the sale of its genetic testing unit to Lab Corporation of America back in September. But it is one more item Genzyme can check of its to-do list as the Cambridge, Mass.-based biotech cleans up its business, potentially ahead of a sale. Genzyme announced in May plans to divest the diagnostics and genetic testing businesses, as well as its pharmaceutical intermediaries unit, as part of a strategic plan to increase shareholder value, mainly by sharpening its focus on core areas like rare diseases. Sekisui will employ the diagnostic unit’s 575 employees and maintain operations in all current locations, according to Genzyme. The business sells raw materials, enzymes, clinical chemistry reagents and rapid tests to manufacturers and clinical laboratories. You may not have heard, but Genzyme is in the midst of an attempted hostile takeover by Sanofi-Aventis. Despite recent rumors that Takeda – the largest Japanese pharma – may be interested in bidding for Genzyme, no white knight has officially materialized. Takeda seems an unlikely buyer for Genzyme anyway, given the awkward strategic fit and the fact that Takeda would have to finance about half of the $20 billion or so acquisition.—Jessica Merrill

BTG/Biocompatibles: News of BTG's planned acquisition of UK drug-device group Biocompatibles seems unremarkable at first glance. It's worth £177 million ($282 million) in cash and shares, meets BTG's well-documented aim of adding specialist products to its pipeline, and is earnings-enhancing for BTG in its first full year. But drill down and there’s an interesting financial component to the transaction worth noting. Rare is the acquisition that comes without an earn-out element these days; lo and behold, BTG's proposed deal includes a "Partial CVN Alternative" -- referring to Contingent Value Notes, which are essentially Contingent Value Rights (CVR), better known as earn-outs. The deal sees Biocompatibles shareholders receiving 1.6733 new BTG shares and 10p in cash, valuing Biocompatibles at a premium of about 28% to its closing price prior to the announcement. But Biocompatibles shareholders can, if they like, forego the 10p cash element in exchange for a CVN, worth €0.56/share (about 48p), linked to whether or not AstraZeneca exercises its near-term option to license Biocompatibles' GLP-1 analog compound. It appears, then, as if Biocompatibles' shareholders are being offered a choice to forfeit their 10p/share today in exchange for rights to the possibility of 48p/share tomorrow. That's interesting since most previous examples of CVRs or CVNs don't involve a price, as such. BTG doesn't quite see it that way, though. This wrinkle in the deal resulted, they say, from Biocompatibles' (quite reasonable) demand that their shareholders, and they alone, be given the opportunity to share in the significant (€25 million) milestone payable by AstraZeneca if it options-in the program.—Melanie Senior

Eisai/Forma: How much are platform technology deals worth these days? This week’s tie-up between Japanese pharma Eisai and privately-held FORMA Therapeutics provides one benchmark. On November 16, the two parties announced a strategic drug discovery collaboration that gives Eisai non-exclusive access to FORMA’s proprietary Diversity Oriented Synthesis (DOS) chemistry-generated library and cell-based screening platform. For access to the technology FORMA gets an undisclosed upfront payment and committed funding of $20 million over three years. That’s a far cry from the economics Alnlyam was able to wring via its series of non-exclusive alliances with Roche, Novartis, and Takeda in past years. But for companies not named Agios or Regeneron, the value of platform technology deals has been trending steadily downward in recent years. FORMA has no desire to hitch its wagon to any one drug maker – and as such is trading off value for the ability to play the field. The Cambridge, MA-based biotech has raised approximately $50 million from its venture backers since its founding in early 2009 and inked numerous deals with a variety of partners, including Novartis, Cubist, and the Leukemia and Lymphoma Society. At this stage of the game, when there’s little appetite in the public markets for a high risk but interesting technology, the biotech needs multiple relationships with potential acquirers in order to set itself up for a robust M&A process. –Ellen Foster Licking

Image courtesy of flickrer MarkelConnors used with permission via a creative commons license.

BTG/Biocompatibles: 10p Now, or 48p Later?

At first glance this morning, news of BTG's planned acquisition of UK drug-device group Biocompatibles looked unremarkable, if sensible. It's worth £177 million ($282 million) in cash and shares, progresses BTG's well-documented aim of adding specialist pipeline and specialist hospital products (Biocompatibles sells chemotherapy-eluting beads, among other things), and is earnings-enhancing for BTG in its first full year. Cue those stock-phrases from the CEO; "high complementarity", "faster growth", "acceleration of our path to create a self-sustaining health care company".

Now, we know that these days, rare is the acquisition that comes without an earn-out element. It's still a buyers' market, and buyers like to reduce risk. So lo and behold, BTG's proposed deal includes a "Partial CVN Alternative" -- referring to Contingent Value Notes.

The deal sees Biocompatibles shareholders receiving 1.6733 new BTG shares and 10p in cash, valuing Biocompatibles at a premium of about 28% to its closing price prior to the announcement. But Biocompatibles shareholders can, if they like, forego the 10p cash element in exchange for a Contingent Value Note, worth €0.56/share (about 48p), linked to whether or not AstraZeneca exercises its option to license Biocompatibles' GLP-1 analog compound.

It appears, then, as if Biocompatibles' shareholders are being offered a choice to forfeit their 10p/share today in exchange for rights to the possibility of 48p/share tomorrow -- to pay for their CVN, in other words. That's interesting since most previous examples of CVRs or CVNs (it's all the same stuff, really), don't involve a price, as such.

BTG doesn't quite see it that way, though. This wrinkle in the deal (which is still, incidentally, only a board-recommended deal) resulted, they say, from Biocompatibles' (quite reasonable) demand that their shareholders, and they alone, be given the opportunity to share in the significant (€25 million) milestone payable by AstraZeneca if it options-in the program.

"We agreed a price for the business, but Biocompatibles felt that their shareholders -- and not those of the larger, combined group -- should benefit exclusively from the upside from this particular milestone, agreed in their deal with AstraZeneca ... because it's so near-term," explains a spokesman.

In other words, the CVNs in this deal are less about BTG's wish to push out its costs and mitigate risk, and more about offering Biocompatibles' stakeholders their deserved piece of the action down the line. 10p-today is an offer for the more risk-averse shareholders or those that want out, calculated "via risk-discounted NPV and a negotiation," says the spokesperson. (And these CVNs, unlike Celgene's Abraxane-linked ones in its deal with Abraxis, aren't tradeable.)

Per a Dec. 2008 deal, AZ can exercise its option on Biocompatibles' GLP-1 analog during a 90 day period after a fourth Phase I/IIa trial of the compound is complete, expected sometime around the end of 2011 or during the first half of 2012. If it does, it pays €25 million up front.

It might not, though. That's why the acquisition document includes five bullet points' worth of text as to why the payment may not occur, or what the downsides of accepting the CVNs could be. There are GLP-1s on the market, sure, and it promises to be a lucrative segment of the diabetes market. But other contenders have stumbled, and the program in development is a twice-daily GLP-1 that's not competitive in its current formulation.

Even those taking the 10p today will benefit if AZ does exercise its option, however: the Big Pharma will owe a further €37.5 million in pre-commercialization milestones, up to €256mm in sales milestones, plus royalties ranging from single digits up to the mid-teens.

Bayer Cuts Jobs in the Name of Growth

Spare a thought and perhaps an aspirin for Bayer AG employees this morning who found out first via the wires that their company is planning to cut 4,500 of their jobs worldwide by 2012. Apparently a leak forced the German health care and crop science conglomerate to issue its press release yesterday, a day earlier than planned.

Precisely where the axe is going to fall remains unclear (since German law requires Bayer to discuss first with its employees and employee representatives before divulging its plans to the public; fair enough.) But a letter to employees at pharma division Bayer Schering Pharma from chairman Andreas Fibig reveals that this division will see headcount cut by 900 globally by 2012, not just in admin and support functions at HQ and in marketing and sales, but also in R&D and product supply.

Fibig's message emphasized growth, though (he was hardly going to dwell on job-cuts). This 'resource re-direction' is about mobilizing the (financial) resources necessary to fully exploit the company's key late stage growth drivers, including blood-thinner Xarelto (rivaroxaban), he said.

The cuts will affect 1,700 jobs in Germany across the entire group, although Bayer Schering AG's Berlin HQ "will remain important", we're told. But about 2,500 new jobs will be created, mostly in emerging markets -- 1,000 of those will be in pharma. The group plans annual cost savings of €800 million, starting in 2013.

Does this need explaining? Not really. Bayer is joining a pharma bandwagon when it comes to head-count cuts and efficiency improvements. Roche announced it was slashing almost 5,000 jobs Nov. 17, following similar moves by Bristol, Pfizer and others.

Like its peers, Bayer's being hit by generic competition, not least to its oral contraceptive Yaz in the US. Meanwhile Bayer's flavor of diversification (perhaps unlike Novartis') isn't apparently helping it weather the global economic storm much: having a Material Science division dragged the group's numbers down in 2009.

So these structural changes are all about becoming "better and faster", as Bayer management board chairman Marijn Dekkers puts it in the release. For pharma specifically, they're about wringing out the funds necessary to fund expensive late-stage development programs. Xarelto (which has already cost €2 billion to develop) was shown recently to prevent strokes in afib patients better than standard therapy with warfarin, raising the prospect of its taking a good chunk of the $14 billion-sized market for new blood thinners (even though it's behind Boehringer's Pradaxa).

That's certainly a shot worth taking, but hitting the target ain't a certainty: the drug still has to get past the FDA (it's approved in Europe and Canada for VTE prevention in patients that have gone through hip or knee replacement surgery), and there are hints of possible safety issues, at least in the stroke-prevention context. Sure, Johnson & Johnson helps pay for development, per the companies' 2005 deal, but 14,000- patient trials still cost a fortune (the overall development program will enroll almost 50,000 patients) And who knows what more FDA may require.

But while FDA is J&J's problem, Bayer hopes to launch Xarelto in four new indications in Europe and has other near-term launch assets including Eylea, Alpharadin, Riociguat and Regorafenib to think about. Plus China. Resources need to be shifted to China, says Fibig in his letter; "this isn't a downsizing exercise for us, but a shift of resources, resulting in a net positive effect on our workforce."

Financings of the Fortnight Stops Complaining And Learns To Love The Man

Back when FOTF was young, idealistic, and unshaven, the worst thing imaginable was going off to work for The Man, man. I mean, come on, man: What a drag. Wearing suits. Driving in traffic. Kissing middle-management butt. We wanted to be free to work on our start-ups, away from the corporate agenda and soul-sucking office parks. No bureaucracy, no joint steering committees, no bean counters in Basel or New York or New Brunswick telling us what to do!

Funny how a recession can realign one's ideology. The Man, it turns out, is a fairly hip guy, kind of like Don Draper when he sneaks off to party with his boho Village girlfriend. "Corporate venture" once felt like an ingredient in a Groucho Marx one-liner, but now, everybody knows the secret knock to the underground jazz club.

We've been noting the rising influence of corporate venture funds starting in May 2009 and continuing this summer, when we calculated that Series A and B rounds with corporate funds in the syndicate were richer than those without. We even asked a year ago whether corporate venture would remain a mainstay if the economy improved.

Well, the economy has improved. In fact, it's grown for five straight quarters, though most Americans apparently refuse to believe it. We don't know for sure the answer to our question from last year, but this fortnight's activity sure makes us think corporate venture is here to stay. (Then again, who ever figured Don and Betty Draper would divorce? Such a perfect couple!)

Of the nine biopharma-related venture rounds disclosed in the past two weeks, five have included one or more strategic investors. The most obvious strategic link goes to Aires' Pharmaceuticals Inc., whose $20 million B round was led by MPM Capital's Novartis-backed strategic fund. (Strategic indeed: Novartis also nabbed other perks, as our Duchess of Deals spelled out last week.)

We also saw strategics out front leading rounds: Lilly Ventures led the way on Cerulean Pharma Inc.'s $24 million C round, and Johnson & Johnson Development Corp. headed up the $22 million C round for consumer genetics maker 23andMe Inc. (OK, not quite biopharma. So sue us.)

Throw in the corporate participation in rounds from Syntaxin Ltd. and Sutro Biopharma, detailed below, and we count $131 million, including promised future tranches, in those five rounds alone. The four non-CVC rounds -- announced by RedHill BioPharma Ltd., Ceregene Inc., Delenex Therapeutics AG, and Verastem Inc. (which we also profile below) -- add up to $49 million.

Comparing those two numbers and drawing any conclusions would be an egregiously unscientific exercise, but you can be sure that even if private biotech firms rev it up and follow General Motors onto the public turnpike, strategic venture funding isn't ready to return to the backseat. After all, The Man drives with the top down, shades on, and the radio tuned to....

Verastem Inc.: The $16 million Series A financing of Boston's Verastem, a cancer stem cell company, is one of the few this fortnight not to include a strategic investor in its syndicate, but we were tempted to count it as such. That's because one of its investors and its chairman, Christoph Westphal, is president of GlaxoSmithKline's corporate venture group SR One. SR One wasn't part of Verastem's Series A, but Westphal's newly minted Longwood Founders Fund, which has raised at least $50 million thus far and is still in fund-raising mode, played a leading role. (Westphal cofounded LFF with longtime sidekick Michelle Dipp and Boston biotech veteran Richard earlier this year.) Indeed, Westphal’s ability to simultaneously wear two VC hats has caused consternation despite his insistence that Longwood and SR One have different strategic priorities. (He and Dipp were also, uh, triple-dipping, selling resveratrol supplements online through a nonprofit, but after Xconomy wrote about it, GSK forced them to stop.) Since his days at Polaris, Westphal’s investment philosophy has centered around great scientists and high-concept, potentially transformative technology. (Momenta Pharmaceuticals and Alnylam Pharmaceuticals are two others). Verastem doesn’t stray far from this recipe. The company is tackling one of the hottest areas in oncology: the eradication of cancer stem cells. Unlike most malignant cells, cancer stem cells are able to self renew and differentiate into multiple cell types, giving them a leading role in the recurrence of certain kinds of tumors. Verastem is apparently developing proprietary technology to identify drugs that specifically target these rare bad actors, building on research published in two Cell papers in 2008 and 2009. The brain trust working on the technology includes luminaries such as MIT’s Robert Weinberg and Eric Lander, who are also co-founders. In addition to Longwood, Bessemer Venture Partners, Cardinal Partners, and MPM Capital also participated in the financing round. -- Ellen Foster Licking

Sutro Biopharma Inc.: Protein platform firm Sutro said Nov. 17 it had raised a $20 million tranche of a $36.5 million Series C round, cash that will help it scale its protein synthesis platform to meet Good Manufacturing Practice standards. That's not just a side note; it's key to Sutro's business plan. The South San Francisco, Calif. startup is working on a cell-free protein synthesis system that can be scaled for commercial use. It's looking to open its platform to partners that want to make all manner of proteins faster and cheaper, and it says it wants to make its own biobetters and novel therapeutics. That's the pitch, at least, and it's worth noting that two corporate investors, Lilly Ventures and Amgen Ventures, two firms with an obvious strategic interest in Sutro's work, jumped into the C round. Sutro president and COO Daniel Gold told START-UP last year that founder Jim Swartz, a Stanford University professor and Genentech alumnus, figured out how to prepare an E. coli extract that contains transcription and translation machinery sufficient to produce protein from nearly any DNA message. Skyline Ventures led the round, with participation from existing investors SV Life Sciences and Alta Partners. If it nabs the second tranche of its C round Sutro will have raised nearly $60 million since its founding in 2003. -- Alex Lash

Cadence Pharmaceuticals Inc.: One week after U.S. approval for Ofirmev, its intravenous formulation of acetaminophen to treat pain and fever in hospital settings, Cadence tapped the public markets for $86.2 million in a follow-on public offering. The transaction is Cadence’s second FOPO of 2010, following a February offering of $86.6 million; the company also obtained a $30 million secured loan facility in July, which included a $10 million tranche that kicked in upon Ofirmev’s approval. The new offering refills Cadence’s coffers, which showed $60.9 million in cash and short-term investments at the end of September, in advance of Ofirmev’s U.S. launch during the first quarter of 2011. The IV drug has been used in Europe to treat post-operative pain since 2002. Cadence has another reason to shore up its balance sheet: It has an option to acquire electronic fentanyl patch developer Incline Therapeutics Inc., a startup whose management team includes former Cadence executives, for up to $135 million by June 2011. It can also obtain a second option to buy the company for up to $285 million by the end of 2013. Cadence considered buying the patch outright from Johnson & Johnson but instead helped engineer a complicated venture-backed spin-out of the technology to create Incline (described in detail here), which could be a nominee for our humble blog's upcoming Deals of the Year competition. Ladies and gents, start your NPV calculations.-- Paul Bonanos

Mylan Laboratories: One of the world's biggest generic drug makers, Mylan tapped the debt markets for $800 million for cash to prepay previous loans. It said Nov. 9 it had priced the 6% notes, which come due in 2018, at an issue price of 98.45%. Mylan president Heather Bresch told "The Pink Sheet" that the firm, which grabbed a 71% stake in Indian active pharmaceutical ingredients maker Matrix Laboratories Ltd. in 2007, would continue to be "opportunistic around the maturity schedule" of the firm's long-term debt, which hit $5.2 billion at the end of the third quarter. The refinance comes as Mylan is touting its version of a user fee structure even as FDA holds talks about the merits of a generic industry user fee (GDUFA). At first Mylan zagged while the rest of the industry zigged. It originally proposed fees on inspections, plants, and approved medicines, but not on applications, but it fell closer into line with its brethren in October by changing its proposal to include median review times and an upfront application fee. -- A.L.

Image and late '70s nostalgia courtesy of flickr user Vibracobra23.