Vitae and Boehringer Get on BACE

Vitae Pharmaceuticals and Boehringer Ingelheim will announce today that they're collaborating in the area of beta-secretase (a.k.a. beta-site APP cleaving enzyme 1, or BACE) inhibitors to treat Alzheimer's disease. [UPDATE: release is here.]

Vitae will get $42 million up-front in combined cash, equity payments and research funding, and will be eligible for $200 million in pre-commercial milestones in the Alzheimer's indication for one molecule, as well as commercial milestone payments and royalties, and payments for other molecules or other indications. But it's waaay early, which we'll get to in a minute.

Since re-embracing its discovery roots in 2005 (a phenomenon covered here through the prism of a 2005 deal with GSK in the renin area--a deal that has since been shuttered) Vitae has now entered three discovery alliances. Today's alliance, the GSK deal and a 2007 deal with Boehringer in the diabetes space that brought in $36.5 million up-front. In fact the two BI upfronts combine to equal just about all the other financing that Vitae has raised (not including milestone payments from deals) since its inception as Concurrent Pharmaceuticals in 2001.

This latest alliance is, on the face of it, a taller order than renin or the 11beta-HSD1 inhibitors Vitae is working on in the metabolic space. BACE inhibition is an extremely difficult area of Alzheimer's R&D, and the scarcity of assets around this target perhaps reflects the large-ish upfront payment for a program that Vitae's web site suggests is still in its infancy.

But for BACE-inhibition, $42 million for a program in lead optimization sounds about right. After all, CoMentis got $100 million up-front for its own BACE inhibitor program from Astellas. That compound was only in Phase I, and when it entered the clinic in 2007, CoMentis immediately became the subject of takeover rumors.

The Boehringer cash will augment a $13 million venture-debt deal Vitae closed last October. At the time of that loan announcement Vitae's runway ran 'into 2010' so the infusion should come as a welcome relief. Just maybe they'll get enough of a lead to steal second.

image from flickr user phillenium1979 used under a creative commons license

(Final) Deals of the Year Nominee: Lilly/TPG-Axon/NovaQuest

Ah, awards season. Why should film critics have all the fun? And voting! It's not just for presidential elections. This year your IN VIVO Blog team is nominating a handful of alliances, acquisitions, financings, regulatory negotiations and legislative compromises in our First Annual DOTY competition. And then you, dear readers, will vote (early and often, we hope) for the winner. Imaginary federal and international biopharmaceutical statutes prohibit us from awarding a monetary prize. But our winners, when they die, on their deathbeds, they will receive total consciousness. So they've got that going for them, which is nice.

Aaand, last but not least: It's not just cash-poor biotech firms that need the occasional helping hand to finance their drug development efforts. Even for the likes of Eli Lilly (and, say, Bristol-Myers, which has blazed this particular trail among larger companies), hedging pre-market risk is part of the game plan when cash is becoming more expensive and clinical development and regulatory affairs more uncertain.

In July, Lilly announced an agreement with TPG-Axon Capital and Quintiles Transnational Corp.'s NovaQuest partnering group under which Lilly's partners will pay up to $325 million in development funding for its two lead Alzheimer's disease compounds, a gamma secretase inhibitor and an A-beta antibody, each ready to begin Phase III testing.

In exchange, TPG (which provides the bulk of the capital) and NovaQuest (10% of the funding and strategic development advice) will receive success-based milestone payments and mid-to-high-single-digit royalties on future sales of the two compounds. Quintiles CRO arm will act under a traditional fee-for-service contract. Finally, to sweeten the deal and hedge the risk shouldered by TPG and NovaQuest, those partners will also receive an additional undisclosed royalty on a third, unidentified product that Lilly has out-licensed to a third party. (See our coverage of the deal here.)

Not to show you how the sausage is made, but there was some internal dispute here at IVB over what this deal signifies within pharma, if not its overall importance.

See, on one hand, the deal is forward-thinking and increasingly necessary in a difficult R&D climate; with the cost of capital increasing even for the likes of Lilly and its Big Pharma brethren it allows Lilly the flexibility to take multiple shots on goal in Alzheimer's or other diseases. It's also the first publicly announced deal (we've heard rumors of deals signed but still private) in which a private equity player takes a big financing role in a Big Pharma's development program -- something they've done in small and mid-sized companies (e.g., Symphony Capital) but which Big Pharma has always shunned.

There will now likely be further variations on this theme: former AstraZeneca CFO, now Goldman-Sachs partner Jon Symonds says he's working on putting together a pool of PE capital for developing Phase I and II Big Pharma (and maybe other) compounds, which could be pulled together as soon as January. That structure, incidentally, addresses one of the big problems for PE players (and probably one of the big sticking points of the Lilly/TPG negotiations, which apparently took about a year and a half): how do you put together a marketbasket of enough develop-able compounds to offset the awful odds facing any single on of them. The drug company wants to put as few as possible in the basket; the PE investor wants as many as it can get.

On the other hand, there is something odd about offering deal-of-the-year honors to a Big Pharma company for creative financing to mitigate risk during the year when a lot of people who are supposed to be the experts in this kind of thing are bankrupt, unemployed--or begging the taxpayers for assistance.

And it is especially odd, given that (as we wrote here) Lilly is a model of a Big Pharma company that is focusing on innovative products--rather than diversifying into OTCs or related business like some of its peers. The logic of focusing--that investors want to diversify for themselves, rather than turn their money over to Novartis management to diversify for them--seems to apply here too. Shouldn't Lilly's investors just hedge for themselves, rather than have Lilly management do it for them?

Still, everyone agrees that the deal allows Lilly to shed risk (in return for a smaller reward) in this notoriously difficult therapeutic space in a creative transaction that could prove to be a model for private equity/pharma deals going forward. It's just that we don't agree about whether that's a GOOD THING.

So there you have it--your last IN VIVO Blog Deals of the Year! Nominee. Got it in just under the wire. Why Lilly/TPG/NovaQuest? For the new-model dealmaking, for the sexy private equity angle. For the Controversy!

We'll see you later, at the ballot box.

image by flickr user jacob.theo used under a creative commons license.

Pfizer Snaps Up Dimebon

This morning, Pfizer announced that it’s paying $225 million in cash upfront and up to $500 million in development milestones, plus assuming 60% of the development costs and commercialization expenses, in exchange for a 60% share of the profits of Medivation’s dimebon, a potential treatment for Alzheimer’s Disease and Huntington’s Disease. Medivation, in addition to retaining a 40% share of the reward and the risk, also gets a US co-promote and a royalty ex-US.

The deal is not surprising given Pfizer’s recent Alzheimer’s forays. The pharma bought Rinat Neuroscience in 2006 mostly to have a large-molecule play that would round out its AD portfolio--an antibody in early-stage development now known as PFE360365 that binds Abeta peptide, one of the hallmarks of the disease. Around the same time, Pfizer also inked a deal with TransTech Pharma on a dual-mechanism antagonist of RAGE (receptor for advanced glycosylation products), a molecule that both binds Abeta peptide and may also reduce the neuro-inflammation seen in AD.

Dimebon is significantly more advanced that the Rinat and TransTech compounds, but the collaboration with Medivation isn't all that expensive in comparison with the price tag of other Pfizer late-stage partnering deals, including that apixaban deal we've talked so much about lately. It also tops the numbers on the other recent deal for one of the few late-stage AD drugs—Lundbeck’s ill-fated spend on Myriad’s Flurizan in May 2008, which included $100 million upfront. Flurizan’s development was discontinued in June after its Phase III trial failed to show any difference between treated patients and the placebo group.

Dimebon also fits the Pfizer portfolio because it differs from most of the late-stage approaches to AD, which are based on modulating the so-called amyloid cascade. The amyloid hypothesis posits that deposition of amyloid beta (Abeta) peptides and the formation of amyloid plaques in the brain are early events that trigger subsequent ones such as neurodegeneration and the formation of the neurofibrillary tangles that can destroy nerve cells and neurons.

Abeta-targeting drugs include Flurizan, the Wyeth Phase III antibody bapineuzumab, and Lilly’s two late-stage AD candidates, the gamma-secretase inhibitor LY450139 and the Abeta antibody LY2062430, whose ultimate development Lilly recently decided to share with TPG-Axon and NovaQuest (the partnering arm of CRO Quintiles), in order to hedge the clinical risk.

The data on a completed Phase II/III trial of dimebon in Russia, which got considerable play at this year’s International Conference on Alzheimer’s Disease (ICAD) in late July, had been previously reported. But the context of Flurizan, disappointing Phase II data on bapineuzumab reported in June and further discussed at ICAD (a highly anticipated explanatory presentation that did nothing to assuage doubters), and even Lilly’s seeming bail-out on its candidates (the antibody data, less noticed than bapineuzumab certainly, remain tantalizing) could only have bolstered Medivation’s bargaining position.

Dimebon also appears to be the only late-stage AD drug candidate with a shot at potentially improving disease symptoms, as opposed to delaying progression of the disease, as is the hope with other putative disease modifying AD agents in development including the Abeta targeting compounds.

The completed Phase II/III study of dimebon was a 26-week trial, with an added blinded open-label six-month extension. More than 80% of the patients decided to stay on, giving the investigators an extended look at both the drug and placebo groups.

They determined that patients given dimebon were significantly improved compared with baseline and compared to those taking placebo, for all five of the designated outcome measures including assessments of cognition, function, and behavior. The primary analysis showed a significant drug-placebo difference in change from baseline on the ADAS-cog (a cognition scale), which was similar to the difference seen in the fully evaluable population at week 26. The improvements “were evident to clinicians assessing global function (CIBIC-plus), which supports the relevance of the treatment effect,” the investigators wrote in the report on the trial in the July 19, 2008, issue of The Lancet.

Moreover, they concluded that the drug-placebo differences were not just driven by worsening of the placebo group: there was actual improvement, which also increased substantially at week 52 compared with week 26, “suggesting that benefits continue to increase with time,” they said. “The continued and increasing benefit of dimebon over the course of the study is especially important because at present no approved therapies for mild-to-moderate Alzheimer’s disease have shown increasing improvement over 12 months,” they added.

At a time when many AD drug developers are content with running Phase II trials focused more on confirming mechanism than on showing efficacy, dimebon stands out. Despite the fact that it was done on a shoestring budget, the Phase II Russia trial was designed to be potentially pivotal, according to Rachelle Doody of Baylor School of Medicine, a consultant to Medivation who was instrumental in its planning. (Doody was also the lead clinical investigator in the development of Aricept, the AD drug marketed by Pfizer and Eisai.)

If an ongoing dimebon Phase III study, set for completion in 2010, meets its endpoints, Medivation (and now Pfizer) may even be able to piggyback the Phase II study as a second pivotal trial. The investigators did the study with English reports forms and “all the things that would be required for FDA audit,” she says. “We are fully prepared to have FDA audit it. [We were] never expecting we would get it, but were being ready just in case.”

The theme of ‘what can you know and how can you know it’ in Phase II is critical in AD drug development, and is the focus of a feature article set for the upcoming issue of IN VIVO (out next week!), based largely on discussions at ICAD about the perils of late-stage clinical trial design in AD. For purely selfish reasons, we wish Pfizer had waited to announce the deal. It’s already too late to amend it in the context of the Pfizer deal. (Woe is us.) And since the article didn’t make it to print before the deal, it’s also too late for us to sound all that prescient. But for what it’s worth, the piece touches on dimebon in its conclusion, as follows:

Perhaps the greatest cause of excitement at this year’s ICAD centered on Medivation’s dimebon, which in a Phase II study conducted in Russia was safe and appeared to improve the clinical course of patients with mild to moderate AD. The drug’s potential in AD was first identified by screening known compounds for dual activity against the cholinesterase and NMDA receptors—its mechanism of action is still being debated--and dimebon is now lined up to begin a pivotal Phase III study. If the new study meets certain endpoints, the FDA has said it would accept an application for approval with the completed Phase II as a second pivotal study—a testament to that study’s design and conduct.

That’s encouraging news for the field... But at the same time, the serendipitous nature of dimebon’s discovery as an AD drug has led some to lament that, in terms of discovery approaches, it may be the best they can do. No wonder Pharma is hedging its bets.

The theme of serendipity is worth reprising here—it goes a long way to explain Pfizer’s portfolio strategy in AD and the price it needed to pay for a competitive asset like dimebon. In fact, there’s no consensus on the mechanism underlying AD: it could be Abeta, aggregation of the Tau protein that causes neurofibrillary tangles, and/or some co-factor such as oxidative stress or the consequences of a build-up of calcium in the brain. In the words of one company’s clinical director, “If there was one mechanism we were sure would work, everybody would be working on it.”

Oh, and congratulations to Medivation's president David Hung, who purchased the patent on dimebon, an antihistamine that was put on the shelf after Claritin hit the market.

Lundbeck Thanks Myriad For The Memories

Myriad Genetics announced a critical tie-up for its Phase III Alzheimer's drug, Flurizan, with the Danish pharmaceutical company H. Lundbeck A/S on Thursday May 22. In exchange for merely European commercialization rights, Lundbeck has agreed to pay Myriad a generous $100 million up-front, plus an additional $250 million in regulatory milestones as well as escalating sales royalties in the 20-39% range.

Undoubtedly, the deal terms for Myriad's so-called selective amyloid beta-42 lowering agent are rich, but the real upside seems likely to come later, when the Utah-based biotech looks to ink a revenue-sharing arrangement for the product in the US market. Such a deal may seem counter-intuitive given that Myriad has just given up product rights for a considerable portion of the globe--a fact investors won't take lightly. (For more, see our recent take on the value of alliances in the April IN VIVO.)

But in this case, the alliance may play an important and--dare we say it--validating role for Myriad. Consider that Lundbeck currently has the largest CNS sales force in Europe and experience selling Alzheimer's meds. (The company has ex-Japan marketing rights to Ebixa, known as Namenda in the US where it is marketed by Forest Labs). Given this neuro expertise, the company's willingness to pay a hefty price just for EU rights certainly gives the risky Flurizan added street cred.

Moreover, Myriad can now afford to partner Flurizan in the US for a dear but not prohibitive price. That's a situation likely to interest partners who might be interested in a biggish deal but who couldn't otherwise afford world-wide rights. "Flurizan is more affordable to a broader pool of companies and that's likely to increase the possibility of partnering" in the US, says Charles Duncan, an analyst with JMP Securities.

Which ironically means that, with the possibility of multiple bidders, the price for any future deal could go up a bit more than mid-sized companies might want to pay -- even if staying below the threshold of the industry's largest deals.

In the meantime, Myriad pockets a $100 million--about 20% of which will be paid as a sub-license royalty to Encore Pharmaceuticals--and gains access to a ready-made sales force of more than 1300 reps well versed in selling Alzheimer's drugs in the various EU nations. That's critically important, says Duncan, who believes that "Lundbeck's infrastructure in CNS maximizes the sales potential for Flurizan in Europe."

The oral Flurizan seems to work work by dialing down--but not completely inhibiting--activity of γ-secretase, the protein responsible for chopping up amyloid precursor protein into its more toxic form, Aβ42, via an anti-inflammatory cascade. Because it lowers overall levels of toxic amyloid, the thinking goes, Flurizan is able to inhibit the negative cascade of plaque formation and neurodegeneration that follow from its initial deposition.

Results from Phase II studies are certainly tantalizing. Patients with mild forms of the disease who took a once-daily 800 milligram dose of Flurizan did not decline as rapidly as those on placebo as measured by standard cognition tests and assessments of daily living. In addition, a meaningful, but not statistically significant, portion of patients experienced zero decline in cognitive ability after two years on the medication, and in some cases, actual improvement.

Currently, Myriad is conducting two Phase III clinical trials of Flurizan: a US-based study of more than 1600 patients with mild Alzheimer's disease and a second, global trial of more than 800 patients. Results of the US-based study are expected to be announced in about a month with results of the world-wide study coming before the end of 2008.

One reason Duncan is so bullish on today's announcement is that he thinks Lundbeck inked the deal solely based on publicly available clinical data. That suggests to him that Lundbeck has anecdotal information about Flurizan's efficacy in late stage trials based on its own surveys of customers. That's important because it suggests Lundbeck believes strongly in the drug's chances for approval in the EU, if not its overall efficacy. Flurizan is expected to launch in 2010.

If that happens, the consultancy Datamonitor forecasts Flurizan revenues in excess of $1.5 billion in the seven major markets and $470 million in the EU by 2016. Still there's considerable risk associated with the product. It's quite possible given the lack of statistical significance associated with the Phase II trials, that data from the pivotal studies may be subject to interpretation.

Will that be enough to limit approval? Probably not, say analysts such as Duncan. Currently available Alzheimer's treatments such as Aricept and Namenda didn't come with overwhelmingly strong data packages either. Moreover, unlike other late stage, potentially disease-modifying drugs such as Wyeth/ Elan's antibody bapineuzumab, Flurizan is without significant adverse side-effects. (Wyeth and Elan's antibody, for instance, has been linked to severe gastrointestinal bleeding making it more likely that drug will be reserved for severe cases of the disease.)

Given the overwhelming unmet medical need and significant economic burdens of Alzheimer's, Flurizan's safety profile is important -- a safe drug that offers even the potential of slowing the scourge of Alzheimer's is likely to be prescribed.

Undoubtedly that's something Myriad is betting on as it looks for a deep-pocketed partner to help establish Flurizan's US market. Any number of potential suitors might be interested in non-EU rights, including both Forest Labs and Takeda Pharmaceuticals. Meantime, Myriad can rely on the help--and yes, we'll say it again, validation--- of Lundbeck.

Image courtesy of Flickr user .nello via a creative commons license.

While You Were Considering the Alternatives

"When you come to the fork in the road, take it."

We hope the weekend gave you a chance to look in on the news of the day, Strategic Alternatives: Biogen Idec edition. We saw it coming (and said so here last Thursday). Late on Friday Biogen Idec confirmed that it is up for sale, having received offers from both strategic and financial buyers (the latter being Carl Icahn). We've noted the folly of buying Biogen for its current products, since any acquirer would have to share Rituxan with Genentech and since Elan has a change-in-control right to buy Tysabri (and the Irish drugmaker has brought in Lehman Bros. to help decide what to do with Tysabri in the event of a sale). But beyond a beef-up in biologics, such a move--likely to cost at least $30 billion--would help a primary-care acquirer to radically shift from primary care drugs into specialist marketing, an expensive kind of reality-show makeover for Big Pharma.

But what else happened this weekend?

• A team of scientists at Stanford University and elsewhere have published preliminary bu promising results of a new Alzheimer's diagnostic. The New York Times reports on the Nature Medicine article. Satoris is the company that aims to commercialize the test.


• News out of ECTRIMS in Prague: Bayer and Genzyme's good-news-bad-news Phase II results for Campath in multiple sclerosis. A Phase III is in progress.


• Reformulation specialist Orexo is buying Swedish R&D co Biolipox for SEK 856 million ($133 million). "The acquisition will create an innovative specialty pharma company [there's that term again!] with a broad product pipeline, global partnerships with major financial potential, and established sales channels" says a statement.


• Second prize, two weeks in Philadelphia! Glaxo considers CEO-also-rans for its board, says the Financial Times.


• The FT also interviews Sanofi-Aventis CEO Gerard Le Fur. What do we learn? Well lets just say there's a lot of color. For starters, Le Fur doesn't smoke marijuana. He prefers the Continental two-kiss to the Anglo one-smooch. And he's a rugby guy, so he probably had a very bad weekend!

While You Were Redesigning Your Blog

Does our blog look big in this? You may have noticed a few changes round these parts, and we hope you like them. No, not that the pace of our posting has slowed (this will surely pick up as industry deal activity awakes from its summer slumber), but moreso the new look and feel of our corner of the web.

Today you'll even see the addition of our first blogroll (in the right-hand column). If you're not already familiar with these Web sites, go check them out. For now, it's a short list, and sure to expand. There are plenty of other high-quality blogs, and rest assured we will aim to update that list relatively frequently.

We'll be rolling out a few other new features in the days, weeks, months ahead. IN VIVO Blog started out only a few months ago as an experiment, and judging by feedback we've received from readers it seems to be working.

So thanks for dropping by, tell your friends and colleagues about us, and feel free to send suggestions, tips, rants, praise, remonstrations, or commiserations about the Phillies' inevitable collapse to blog [at] windhover.com. Or, as always, speak your minds in the comments.

Now, on to some weekend news you may have missed ...

• Back in the U.S.S.R.: Several drugs in clincal trials to treat hepatitis C have suffered setbacks this year, potentially opening the door to new mechanisms of action. On Friday night Implicit Bioscience announced that a Phase IIa study of its immune modulator oglufanide disodium had commenced in Australia. The drug originally hails from Russia, where it was developed and marketed to treat severe infections.
  
• I'm So Tired: The Guardian weekend magazine has an excerpt from The Family That Couldn't Sleep: A Venetian Medical Mystery, by D.T. Max. The book describes the mystery surrounding fatal familial insomnia, along the way illuminating the history of other prion diseases like vCJD and kuru.


• Everybody's Got Something to Hide Except Me and My Monkey: The New York Times writes about functional MRI, and how a company called Omneuron is using the brain imaging technology to treat chronic pain. But the tech's first application could be in lie detection, says the CEO of the aptly named No Lie MRI.
  
• Cry Baby Cry: Results from Neurochem's Phase III trial of its Alzheimer's disease candidate Alzhemed were "inconclusive"--i.e. didn't show statistical significance--the company reported Sunday night. This is the latest setback for the company and its drug; shares of Neurochem have been in freefall since late last year.