Deals Of The Week: The ASCO Edition

ASCO is just moving into full swing, but already the press releases are flying fast and furious. Biotechs have long looked to this meeting as a means to showcase their smarts and increase their profile with public investors. But as big pharmas have set their sights on oncology as the therapeutic area of choice -- given its high unmet medical need and, historically, generous reimbursement, there's no doubt ASCO is now a critical meeting for even the biggest players in the industry.

Like last year, the particular tumor type driving a lot of investor interest at this year's Chicago confab is melanoma. Since presenting robust Phase III data at ASCO 2010 showing a survival benefit for Yervoy, Bristol-Myers Squibb has gone on to win rapid approval for its CTLA-4 inhibitor. This year, investors and clinicians will be watching for new data measuring Yervoy efficacy in pretreated melanoma patients; they'll also be monitoring the data associated with Plexxikon/Roche's vemurafenib, which is pending FDA approval for use in patients with the BRAF V600 mutation, a specific genetic abnormality observed in about 50% of melanoma patients.

As "The Pink Sheet" Daily notes, it's not entirely clear how the melanoma market will shake out when both products are finally on the market. They may be competitors, but given their different modes of action -- Yervoy stimulates the immune system, while the Plexx/Roche drug targets only tumor cells that carry the V600 abnormality -- it's equally likely they could act synergistically. Certainly neither drug on its own works in all patients or offers a long-term cure, even if both extend median patient survival in clinical trials.

Thus, the news June 2 that Roche/Plexxikon would find a way to work with BMS to study the two drugs in combination seemed almost a fait accompli. The press releases issued (from three different companies no less) were long on breathless prose and short on detail: the parties will conduct a Phase I/II study evaluating safety and efficacy of the two drugs in combo, but did not provide more clarity on the trial's design, its timing, or its enrollment. "If appropriate, the companies may conduct further development of the combination," Bristol said in its press release.

You will notice there's also no information on the economic sharing that might come from such a clinical collaboration either. That's hardly surprising. We've yet to see much in the way of financial deets for earlier tie-ups in oncology: AstraZeneca's 2009 alliance with Merck to combine development of their respective clinical-stage MEK inhibitor and AKT inhibitor; or Sanofi's December 2010 deal with Merck Serono to marry their Phase I PI3 Kinase- and MEK-targeting molecules.

Despite the increasing complexity of the oncology market, one in which payers are taking a more active role in controlling costs, such cross-collaboration remains the exception rather than the rule. There are plenty of reasons why: issues around control, valuation, and overlap with other non-partnered products mean it can be tough for two large companies to come to agreement on how to share knowledge and find ways to work together.

That BMS and Roche have found a way to do so can only be a smart thing. The reality is organizations like US Oncology, Cardinal's P4 Healthcare, and Via Oncology are going beyond traditional treatment guidelines recommended by the likes of ASCO and the National Comprehensive Cancer Network, working with payers to provide "clinical pathways" that aim to standardize treatment for a specific disease or tumor type. Aimed for now at treating the most costly cancers, these programs, which are still in pilot mode at major players like Aetna, Blue Cross Blue Shield and Highmark, reduce the wide latitude US doctors have historically enjoyed when prescribing oncologics.

The ultimate impact of these pathways on the biopharma industry isn't yet known, but as we write in this IN VIVO feature, their advent has real consequences for how companies should approach drug development. And while it's very early days to be talking about a melanoma pathway, doing clinical trials to show the merit of your drug in conjunction with a competitor, when it's highly likely to see real-world use in such a combination, just makes sense. (We also wonder how this impacts GSK's Phase III melanoma drugs, its MEK1/2 inhibitor and its BRAF protein kinase inhibitor. Can these earlier stages medicines get traction in the current competitive marketplace? GSK certainly hopes so, and has its own combo trials ongoing.)

Will we see more cross-company clinical stage oncology pair-ups in the future? We hope so. Could such alliances be broader and extend beyond on-offs to a ViiV type arrangement? We're doubtful given the deal making complexities and nearly every pharma's desire to be tops in oncology. But as crazy as that idea sounds, it'd be a clear choice for 2011's DOTY.

In the interim, we always have ASCO (if not Paris) and...

Clovis/Pfizer: Attention biopharma trend watchers! We bring you this news flash of another sighting of that rare bird in the wild: the out-licensing. On June 2, Clovis announced it was licensing Pfizer's Phase I/II Poly (ADP-ribose) polymerase (PARP) inhibitor, PF-01367338, for an undisclosed upfront sum. Under the terms of the agreement, Clovis Oncology will take over responsibility for global product development and commercialization, and in addition to paying the u/f, will owe Pfizer additional downstream fees milestones totaling up to $255 million (pending success in the clinic and commercially, of course). Interestingly, as part of the out-licensing, Pfizer Venture Investments is taking an equity stake in the biotech. (So it's a licensing AND a financing in one blow.) Not that Clovis is hurting in the cash department. Recall Clovis, a START-UP A-lister, pulled in one of the biggest Series As EVUH in 2009. PARP inhibition is, of course, a hot topic at ASCO, and a quick search of the pipeline database Inteleos, shows there are more than a dozen drugs in development against this target, including some that are much further along, including Sanofi's iniparib (Phase III, originally developed by BiPar), AstraZeneca's olaparib, and Cephalon's CEP-9722. The press release announcing the news emphasizes '338 is a "potent" PARP inhibitor, so it's a bit curious that Pfizer would give it up unless its trying to walk the talk of jettisoning anything not first-in-class or best-in-class. (But that raises other questions, including what does Clovis see in the compound?). Separately, Clovis also announced this week plans to develop in concert with Roche an in vitro PCR-based companion diagnostic linked to EGFR mutations.--EL

Johnson & Johnson/AVEO: Months after partnering its lead asset tivozanib in a lucrative deal with Astellas, Aveo has extended its network of partners with an early stage deal with Johnson & Johnson's Centocor Ortho Biotech division. The Cambridge, Mass.-based biotech announced the licensing deal for compounds targeting the RON (Recepteur d'Origine Nantais) receptor - believed to play a role in cancer development - for $15 million upfront May 31. Under the deal, Aveo will receive half of the $15 million in an upfront payment and the rest through a separate equity investment that gives J&J a 1.25% stake in the biotech. Given the early-stage nature of the deal, it's not surprising the arrangement is back-end loaded, with Aveo eligible to receive up to $540 million in development, regulatory and commercial milestones. Aveo will also receive tiered, double-digit royalties on sales of any products stemming from the collaboration. Centocor will be responsible for clinical development, manufacturing, commercialization and costs. J&J will also fund some research to be conducted by Aveo to identify biomarkers for patients most likely to respond to treatment with RON-targeted antibodies. "It is about building out a portfolio," said Aveo Chief Business Officer Elan Ezickson of the collaboration in an interview with "The Pink Sheet" DAILY. For J&J, the deal provides access to what could be an important product in oncology, an area of critical importance to the big pharma's overall business success. -- Jessica Merrill

AstraZeneca/Heptares: (Spoiler alert. No oncology refs in this deal.) UK biotech Heptares Therapeutics signed its third Big Pharma agreement in two months this week, this time with AstraZeneca. The two companies have entered into a four-year research collaboration to discover and develop new medicines that target G-protein coupled receptors (GPCRs). AstraZeneca will have worldwide commercial rights to product candidates emerging from the collaboration, with Heptares receiving $6.25 million in unconditional upfront payments plus committed research funding and future milestones. Heptares will also receive royalties on product sales. Research teams drawn from both companies will focus on a number of GPCR targets known to be linked to CNS/pain, cardiovascular/metabolic and inflammatory disorders. The deal brings to more than $13 million the total upfront money that Heptares has received from its pharmaceutical partners this year, which together add an extra 18-20 months to the biotech's cash runway, according to CEO Malcolm Weir. It also represents further validation for the four-year-old company's technology, which helps stabilize GPCR molecules. That AstraZeneca is modality-agnostic in this deal - purporting to seek both small- and large-molecule candidates - reflects the growing importance of the Big Pharma's MedImmune biologics subsidiary within its overall R&D operations.--John Davis
Johnson & Johnson/Diamyd: J&J's Ortho-McNeil-Janssen (OMJP) signed one early stage deal this week -- and called it quits on another. It was barely a year ago when Elisabeth Lindner, then President and CEO of the Swedish diabetes outfit Diamyd, pronounced on a quarterly earnings call that "a new chapter has begun" as a result of the firm's $45 million upfront licensing agreement with OMJP. That chapter closed on June 1, when OMJP returned all rights to the Phase III GAD65, an antigen-based therapeutic vaccine designed to preserve beta cells in type 1 diabetics. A big disappointment to Diamyd and its shareholders, the news can hardly be called surprising. (We're even tempted to say the writing was on the wall.) On May 9, the two companies reported clinical trial data from a European pivotal study, showing GAD65 failed to meet the primary efficacy endpoint of preserving beta cell function in new diagnosed Type 1 diabetics after 15 months of therapy. Although the company noted "a small positive effect was seen", the data weren't good enough to keep OMJP engaged -- and, importantly, willing to shoulder any additional development costs. Recall the 2010 deal stipulated the two partners would share R&D costs until results of the first Phase III study were available, at which time OMJP had the option to assume full development of the drug candidate. It can't be an easy message to give shareholders, but Diamyd's acting president and CEO, Peter Zerhouni (who replaced Lindner after her abrupt departure in late April) did his best to spin the news positively. "With all the rights to returned to us we are free to decide on how to extract the most value from GAD65 going forward," he said. Whether Diamyd can sign a new partner near term is unclear -- a therapeutic vaccine for diabetes is scientifically risky and it's hard to see a lot of interest after the disappointing Phase III study results. (Even Diamyd doesn't seem that interested. In the wake of OMJP's decision it announced it would shelve a planned longer term follow-up of patients in the European trial.) Investors may have more clarity on GAD65's potential partnerability by end of June -- at the upcoming ADA meeting Diamyd will present data on the European trial, presumably providing greater detail about the small positive effect. There's also a Phase III ongoing in the US due to read out in 2012 and two other externally funded studies that may yet result in the vaccine's resurrection.--EL

Onglyza and the Type 2 Diabetes Approval Path: The Map is Still Sketchy

Biopharma companies hoping to develop drugs to compete in the type 2 diabetes market can breathe a bit easier with the approval of Bristol-Myers Squibb/AstraZeneca’s Onglyza (saxagliptin): the final go ahead from the Food & Drug Administration July 31 unequivocally shows that it is indeed possible to meet FDA’s new cardiovascular safety guidelines for the class.

The outcome is not surprising, after an advisory committee overwhelmingly supported approval of the drug earlier this year—but given the delays and uncertainty, sponsors may be forgiven if they weren’t going to believe it until they saw it.

And now that FDA has posted the approval letter for the drug, sponsors can get to work on figuring out exactly what it will take in terms of post-marketing requirements in the type 2 market of the future.

The letter makes one thing clear: a mandatory Risk Evaluation & Mitigation Strategy will not be an inevitable price for entering the class. Onglyza was approved with a host of post-marketing study commitments, but no REMS.

As for those post-marketing studies themselves, the key commitment is exactly what sponsors would have expected: a prospective clinical trial to assess cardiovascular outcomes. That section is bound to be read carefully by sponsors eager for more clues about how onerous post-marketing trials will be in the class. But they probably won’t learn much that they don’t already know.

Recall that during the advisory committee, Bristol declared its intention to run a study to demonstrate a superior cardiovascular safety profile for saxagliptin. The approval letter (in keeping with the safety focus of the new post-marketing authorities) frames the trial differently, with the goal of showing a relative risk of 1.3 or less versus the control population.

The letter also does not include any details about numbers of patients, duration of therapy or other key trial design elements. However, FDA has made clear its preference for an event-driven trial design, which (assuming Bristol agrees) would make some of the those elements irrelevant.

The letter does detail a number of other specific risks to test for (most triggered by signals in the NDA for Onglyza, but some clearly of a classwide concern.)

And it does set some deadlines. Bristol must finish designing the trial in November, and then complete the study in less than five years.

But beyond that, there’s not much to learn.

Still, the Onglyza letter is certain to be a template for future approvals in the type 2 diabetes class, so here is how FDA describes the pivotal post-marketing trial:

"A randomized, double-blind, controlled trial evaluating the effect of saxagliptin on the incidence of major adverse cardiovascular events in patients with type 2 diabetes mellitus.

The primary objective of this trial is to establish that the upper bound of the 2-sided 95% confidence interval for the estimated risk ratio comparing the incidence of major adverse cardiovascular events observed with saxagliptin to that observed in the control group is less than 1.3.

Secondary objectives must include an assessment of the long-term effects of saxagliptin on lymphocyte counts, infections, hypersensitivity reactions, liver, bone fracture, pancreatitis, skin reactions, and renal safety. For hypersensitivity reactions, especially angioedema, reports should include detailed information on concomitant use of an angiotensin-converting enzyme inhibitor or an angiotensin-receptor blocker. For cases of pancreatitis, serum amylase and/or lipase concentrations with accompanying normal ranges and any imaging study reports should be included in the narratives.

Because renal impairment is an important complication of diabetes, you must ensure that there is a minimum of 1 year of exposure for at least 200 saxagliptin-treated patients with moderate renal impairment and at least 100 saxagliptin-treated patients with severe renal impairment.

The timetable you submitted on July 15, 2009, states that you will conduct this trial according to the following timetable:

Final Protocol Submission: by November 30, 2009


Study Completion: by July 31, 2015


Final Report Submission: by January 31, 2016.”

DotW: Sideshow

It's that time of year when reasonable folk take vacation, so perhaps that's the explanation for the carnivale nature of this week's biopharma news. Healthcare reform continues to draw heated exchanges, particularly as Congressional reps hold town-hall style meetings more prone to ranting than reason.

And there was plenty of drama--and confusion--at the circus which was yesterday's denosumab advisory committee meeting . (Did you follow our of-the-moment tweets by Ramsey Baghdadi and Lauren Smith?) The mighty regulator Richard Pazdur may have received his comeuppance when he tried to change the wording of a question late in the day only to be chastized by the advisory committee chair about FDA's disinclination to do so. Guess it doesn't matter that Padzur is FDA.

For the record, we stand by our analysis last night--and agree with Deutsche Bank's Mark Schoenebaum--that the ad com results were a huge win for Amgen despite the REMS requirement (this ain't Tysabri) and the "no votes" in post-menopausal osteoporosis prevention and treatment induced bone loss in breast cancer.

To add to the carnival nature of the week, note the reemergence of swine flu hysteria, which has rabbis praying on airplanes to create a flu free zone over Israel and Indians rushing to purchase masks after the announcement of the first death in that country. There was also the brouhaha over one Florida health department doctor's public rant against Dunkin' Donuts. And of course, who could forget Regis Philbin's tirade about that "turkey" of a pharmaceutical stock, Pfizer, on Fast Money? CNBC's Mike Huckman suggests Pfizer CEO Jeff Kindler and Regis sort things out over a Blue Moon or a Bud Light--or maybe Pfizer can get Philbin's sassy co-host, Kelly Ripa, to explain the pharma's value proposition.

Got your fill of the sideshow that is biopharma? Afraid our antidote may not help, but in case you are wondering no two-headed writers contributed to the writing of this post.

Ikaria/Fibrex: Ikaria maintained a brisk in-licensing pace with its second deal in as many months and third in under a year, agreeing Aug. 10 to acquire the worldwide license to three investigational fibrin-based peptides from Fibrex Medical. The two privately-held biotechs opted not to disclose financial terms (hey, that's their prerogative). According to this "Pink Sheet" DAILY story, Fibrex will receive an upfront payment, potential clinical development milestones, and royalties on net sales for any product that reaches the market. The transaction expands Ikaria’s portfolio of investigational critical care drugs and centers on Phase II myocardial infarction candidate FX06, which produced mixed results in last year’s F.I.R.E. (Fibrex in Ischemia and Reperfusion Injury) trial. Fibrex’s peptides bind to vascular endothelial cells to preserve endothelial barrier function and prevent tissue injury. The drug also demonstrated a reduction of two markers of muscle damage, but Ralf Rosskamp, Ikaria’s R&D chief, said his company will go “back to the drawing board” with the peptide, including new preclinical research in animal models and formulation changes. Ikaria’s goal is to set a clinical development direction for FX06 by the beginning of next year. Based in Clinton, N.J., Ikaria got into the gaseous messenger molecule space via its 2007 merger with INO Therapeutics, resulting in INO owner Linde Group getting 17 percent equity in the new company. In addition to last September’s deal with Orphan Therapeutics for North American rights to hepatorenal syndrome drug Lucassin, Ikaria last month licensed BL-1040, a Phase I/II candidate for preventing ventricular remodeling following acute heart attack from Israel’s BioLineRx.--Joseph Haas

AstraZeneca/Forest: In years gone by, practically no Big Pharma would have signed a licensing deal that didn't include U.S. rights. These days, however, the rise of China, India and other emerging markets is providing more geographic carve-out opportunities for deal-makers. Thus, in Forest Laboratories' tie-up with AstraZeneca, announced Aug. 12, the Big Pharma gets ex-U.S., Canadian and Japanese co-development and commercialization rights to the specialty pharma's Phase III broad-spectrum antibiotic ceftaroline, in development for the treatment of complicated skin and skin structure infections (cSSSI) and community-acquired bacterial pneumonia (CABP). Financials weren't disclosed, but for a signing fee, AZ takes on responsibility for development and regulatory approval in its licensed territories and will pay sales-related royalties and milestones to Forest. For AZ, this deal signals the continued importance of emerging markets--especially China--to the company's future growth, and plugs a hole in its anti-infective pipeline, which is largely built around the antibiotic Merrem, the phase II anti-TNF antibody for sepsis, CytoFab, and a number of antivirals. For Forest, the deal--it's second of the week--provides confidence in the approvability of its late-stage candidate and will help boost worldwide sales - both welcome given the patent expiry in 2012 of the company's highest-selling drug, depression and anxiety treatment Lexapro. Although neither AZ or Forest will comment on the deal terms, Basilea's 2005 tie-up with J&J may provide some clues about ceftaroline's partnership economics: although a worldwide deal, it was also signed when ceftobiprole was in Phase III and provided Basilea with $25 million up front and up to $310 million in milestones, 75 percent of which are said to be pre-launch.--Melanie Senior

Forest/Nycomed: Forest's other deal this week was the in-licensing of Nycomed's PDE-4 inhibitor Daxas, which is pending full Phase III results and regulatory approval in chronic obstructive pulmonary disease. U.S. commercialization rights to the program didn't come cheap, costing Forest $100 million up-front plus undisclosed regulatory and commercial milestones. But Forest, which needs to bulk up its pipeline given the pending expiry of Lexapro (we know we mentioned it already but it's a critical event for Forest), likely saw potential synergies since the deal allows the specialty pharma to gain a foothold in the COPD market while developing its own products, the Phase III aclinidium and Phase II oglemilast. If approved, Daxas adds an additional growth product to Forest's drug stable, which includes Bystolic and Savella. For Nycomed, the Daxas partnering was a welcome event given the drug's long and sometimes rocky development path. Initially developed by the German pharma Altana, which Nycomed purchased in 2007, earlier Daxas clinical trials yielded mixed results, forcing the mid-sized European pharma to focus on its use in the most severely-ill patients. Moreover, Nycomed has been talking up a partnering event for the drug for months given its lack of interest in building a U.S. sales force (for more see this "Pink Sheet" DAILY story). Daxas partnering might also help bolster investor interest in the company; Nycomed's private equity backers are thought to be mulling a possible IPO and may consider the timing suitable given this week's respective debuts by Cumberland Pharmaceuticals and Emdeon on the NASDAQ and NYSE.--Emily Hayes and Ellen Foster Licking

CombinatoRx/Clinical Data: Fresh off its adjustable-stake merger with Neuromed, CombinatoRx is teaming up with Clinical Data to test the latter's preclinical adenosine A2A agonist, ATL313, in a combination treatment for multiple myeloma and other B-cell cancers. There appears to be no upfront payment but CombinatoRx is paying for preclinical and clinical development and Clinical Data retains a co-development opt-in after Phase IIa. According to a CombinatoRx 8-k, Clinical Data's subsidiary PGxHealth LLC can exercise its option up to 90 days after Phase IIa data is available by paying CombinatoRx 50% of the drug's previous development costs and evenly splitting future costs. If the option is declined CombinatoRx can maintain its exclusive license by paying $5 million to Clinical Data, which will be eligible for $50 million in clinical and regulatory milestones for an initial indications, another $50 million for clinical and regulatory milestones in a second indication, and potential sales milestones and royalties. For CombinatoRx the move is a relatively low-cost way to access pipeline opportunities while it waits on the approval of Neuromed's Exalgo painkiller, which has a PDUFA date in November 2009 and was recently licensed to Covidien's Malinckrodt.--Chris Morrison

Image courtesy of flickrer New York Observer via a creative commons license.

DotW: Open Your Mind

To the possibilities...

The week started off on a positive note with the interesting news that AstraZeneca and Merck had come together to conduct a clinical trial combining their two promising but early stage oncology assets. Can you imagine? Two pharmaceutical companies actually pooling assets (see below).

While we are more interested about what potentially could come next--will this lead to future pipeline sharing deals, for instance?--we admit to being impressed by the news, and are almost willing to say that the tie-up counts as one of this year's most interesting deals (the other being the GSK/Pfizer joint-venture in HIV, of course).

Who else opened their minds this week? Shareholders at Biogen Idec seemed swayed by the arguments of "Team Icahn", awarding at least one board seat to the dissident shareholder group. Alex Denner, the managing director of Icahn Partners, will definitely get to participate in regular Biogen Idec confabs. No word yet on whether Richard Mulligan--the other Icahn supporter--has also won a seat at the table. (All we know is someone is taking a Mulligan here.)

Elan investors certainly see the hope of an impending sale after a week that was rife with rumors. First BMS was interested in a minority stake and then they weren't. On Thursday, the Financial Times reported that Pfizer was sniffing around the biotech. It's not the first time the New York behemoth's name has been linked with Elan. Why, pray tell, would Pfizer, still embroiled by the integration of Wyeth, want to purchase the company? Maybe it likes the data associated with Elan's Phase III mAB for Alzheimer's disease, bapineuzimab. Thanks to the Wyeth purchase, it already owns a piece of the molecule anyway. If the data are stellar, why not take the risk and own it all? And if they aren't? We assume Pfizer will be on to its next acquisition target by then anyway.

Novavax may open its mind to taking advantage of the uptick in its share price by raising additional money. Investors have swarmed into the biotech, in part because of the company's novel technology to develop a vaccine for the H1N1 flu strain. An agreement with the National Institutes of Health to evaluate a potential vaccine, announced Friday, only added to the excitement.

See? The possibilities are endless when you just open your mind and read...

AstraZeneca/Merck: Does the tie-up announced Monday June 1 between AstraZeneca and Merck to test a combination of two early-stage oncology candidates represent a more enlightened approach to deal-making? It's too soon to tell given the limited nature of this first collaboration, which pairs Merck's MK-2206, an AKT inhibitor, with AZ's mitogen-activated protein kinase 1 blocker, AZD6244 (also known as ARRY-886) in a soon-to-commence Phase I safety and tolerability trial. MK-2206 is currently in Phase I trials as a monotherapy; AZ's '6244 in a bit further along, having completed several Phase II studies. Both represent the most advanced molecules in their respective classes.

The very fact that the tie-up happened at all is proof that the industry is taking an important step forward in how it thinks about building innovative pipelines (though we would have been more impressed if the firms' business development groups had come up with the concept). In what is sure to become one of the most repeated stories on the origin of a partnership, the pact has its roots in a security line in the Dublin airport back in 2007. Somewhere between removing their shoes and coats and placing their laptops on the X-Ray machine, the two scientists got to chatting about how sensible it would be to collaborate given the increasing importance of combination therapy in oncology. Eighteen months later the deal came to fruition, with the blessing of Merck's chief strategy guru Mervyn Turner and AZ's BD ace John Goddard.

The reason so few Big Pharma-Big Pharma development deals get done is that they're very tricky. Issues related to control, valuation, and overlap with other, non-partnered projects must be hammered out before two large companies can come together in even basic ways. Indeed one reason it may have taken so long to forge this seemingly simple pact is that both Merck and AZ are developing competing MEK and AKT inhibitors. With multiple targets in each pathway and the potential to be used to treat a number of different cancers, the possible variations on a deal (it is not as well known as Brahms's famous opus) were "overwhelming", said Merck's Turner.

As a result, the companies are starting slowly, taking a step-wise approach to collaboration that need not go beyond this Phase I program. According to Turner, "We decided, let's start with the easy part, work out how we'll do these experiments together in patients in Phase I, and if that succeeds, we'll go on to the next part," he says. If the eventual goal is some sort of fixed-dose combination, the companies will eventually have to jump in with two feet, perhaps partnering on multiple compounds or even entire pathways.--Christopher Morrison

GlaxoSmithKline/Concert Pharmaceuticals: This deal was heavy, man. Just weeks after announcing it had been granted patents by the USPTO, Concert Pharmaceuticals inked a deal with GlaxoSmithKline on June 2 to gain access to the biotech's deuterated technology. The biobucks were sky-high, but the upfront GlaxoSmithKline agreed to pay was quite down-to-earth: just $35 million, which included $16.7 million for equity that was priced at a similar level to shares Concert issued when raising its $37 million 2008 Series C. In exchange, the big drugmaker gets option rights to multiple Concert projects, including CTP-518, a deuterated version of Bristol Myers-Squibb's HIV protease inhibitor atazanavir that is scheduled to enter Phase I trials later in 2009.

Like most of GSK's previous option-deals, the Big Pharma can buy into a program at clinical proof-of-concept (generally post Phase IIa but in the case of '518 post Phase I). Concert will also create deuterated versions of three additional molecules for GSK, and hand those off after lead optimization. The deal's milestones total more than $1 billion and are heavily weighted to the three option candidates, says Concert's chief business officer Steve Bernitz. What's more, the majority of the payments are for clinical and regulatory accomplishment, as opposed to sales-based payments. Concert will get a double digit royalty on compounds from its pipeline and an undisclosed royalty on deuterium-containing molecules from GSK's pipeline.

Replacing hydrogen atoms with deuterium atoms (hydrogen atoms saddled with a neutron) may be the ultimate in life cycle management since it allows for the creation of new chemical entities that get around existing composition-of-matter IP. And it's a low risk approach to drug development, since "it does not change the physical characteristics of a drug," president and CEO Roger Tung, PhD, told IN VIVO Blog. Because deuterium forms stronger bonds with other atoms in comparison with hydrogen due to its greater mass, Tung believes deuterated versions of medicines are likely to be metabolized differently, an important fact that can potentially affect safety, tolerability--and potentially efficacy. While this has yet to be proven in the clinic, it could mean that certain "problem" drugs might be salvaged by the substitution of deuteriums for hydrogen.

Interestingly, given the importance of '518 to the deal, one might have assumed that Bristol Myers-Squibb was interested. Tung confirms that Concert talked to BMS prior to inking the pact with GSK, but it's unclear whether BMS was ever in the running for the compound. BMS's version of atazanavir, Reyataz, remains on patent and will likely still be protected by the time Concert's '518 hits the market.--Christopher Morrison

OrthoBiotech (Johnson & Johnson)/National Cancer Institute: Topping off a busy day Thursday in which the diversified drug maker touted its robust late stage pipeline, Johnson & Johnson's OrthoBiotech division announced a five-year cooperative research and development pact (otherwise known as a CRADA) with the National Cancer Institute. As NCI's involvement implies, the pact is focused on developing novel cellular immunotherapies as potential treatments for a variety of cancers including melanoma. Steven Rosenberg, who is chief of NCI's surgery branch, will help lead the research effort.

The deal is interesting on a number of levels. It continues to show J&J's commitment to doing deals with a wide variety of players, from consortia to academic collaborators to industry groups. As "The Pink Sheet" DAILY notes, this external focus mirrors an industry-wide trend. (Recall GSK's efforts to biotech itself and Lilly and Merck's FIPNet strategies.) J&J's worldwide chairman for pharmaceuticals Sheila McCoy echoed this sentiment in her comments at the drug maker's R&D confab, noting such deals "allow you to diversify. The trend is to look at consortia in certain areas... [There's] a lot of discussion about how to share capabilities." In January , J&J's Janssen unit announced a deal with Vanderbilt University; in March, Centocor signed a deal with the University of Michigan.

Diversity in terms of both molecules and therapeutic approaches is important, but so is curbing risk. And what could be more risky--the apparent success of Provenge notwithstanding--than cancer immunotherapy? NCI's Rosenberg is a pioneer in the field, working in recent years to develop technologies to alter a patient's T cells to express specific immunity against cancer cells. Despite the controversy surrounding the space, OrthoBiotech has also dabbled in cancer immunotherapy, developing an approach designed to stimulate a patient's immune system to recognize and attack cancer cells via the administration of tumor antigens and other materials. Now Rosenberg's lab will conduct a clinical trial in melanoma patients using OrthoBiotech's proprietary technology.

"This public-private partnership represents an extraordinary opportunity to bring together complementary and substantial expertise and resources from two groups with the common goal of advancing a highly promising new modality of therapy for patients with cancer," said Jay Siegel, chief biotechnology officer of J&J's Pharmaceuticals and Medical Devices and Diagnostics businesses.

Microsoft/Merck: Ever since Merck announced in October 2008 the closure of Rosetta Inpharmatics, a genomic-information software company it purchased in 2001 for $576 million, execs have speculated about the ultimate fate of the bio-IT group's assets. Speculation only increased in February after Stephen Friend, Rosetta's founder and one of the prime defenders of these kinds of tools, announced he was leaving Merck to found Sage, a new, not-for-profit, open-source initiative that will develop biological networks across tissues and organs that model disease. (For more see this March START-UP story and this April IN VIVO piece. )

Now we know. On June 1, Microsoft announced it was buying "certain assets"--code for some but not all of Rosetta's powerful software. According to genomeweb's BioInform, the deal centers around Rosetta's Resolver, Elucidator, and Syllego programs, although financial details of the deal were not disclosed.

Why are we covering it? Because the deal marks an important step forward in Microsoft's quest to play in the life sciences. And Microsoft is big enough and creative enough (notwithstanding the ludicrous decision to saddle its new search engine with the unfortunate acronym But It's Not Google) that it must be taken seriously. Microsoft plans to incorporate the genetic and genomic data-management software into Microsoft Amalga Life Sciences, which helps research organizations assemble data from disparate platforms that can be located internally or externally. Merck will remain a contributor as well. According to the WSJ, Merck will provide strategic input regarding the program's use and will become an Amalga customer.

AstraZeneca/Abbott: On June 4, AstraZeneca and Abbott announced a co-promotion agreement for their investigational Crestor/TriLipix compound, as well as their submission of a new drug application with the FDA for the product in mixed dyslipidemia (basically a combination of two or more lipid abnormalities including high LDL-cholesterol, high triglycerides and low HDL-cholesterol.)

The co-promotion extends the two drug makers' existing commercial relationship--the original deal was inked in 2006--ahead of an FDA decision on the combo product, which will be marketed as Certriad if approved. TriLipix, a delayed-release fenofibrate approved in December 2008, is Abbott's play to build on the success of the older fenofibrate brand TriCor.

As "The Pink Sheet" DAILY writes, Certriad is an important product for both Big Pharmas, but especially Abbott given that TriCor will face generic competition in just two years. As part of the agreement, AstraZeneca gains non-exclusive rights to sell TriLipix alongside Abbott in the U.S., excluding Puerto Rico. Abbott agreed to co-promote AstraZeneca's Crestor under similar terms last August.

The American Heart Association estimates that about 34 million people in the U.S. are affected by mixed dyslipidemia. But despite this huge opportunity, the drug will face an increasingly competitive market for similar fixed-dose combination CV products. For example, Daiichi Sankyo is developing a triple combination product combining its antihypertensive Azor with hydrochlorothiazide, and Merck and Schering-Plough have a combination of Zetia and Pfizer's Lipitor in development.

(Image courtesy flickrer mythic_moonlight, used with permission through a creative commons license.)

Deals of the Week: Don't Worry Be Happy

Because life needs an optimistic soundtrack. This week In Vivo Blog is adopting the "Don't Worry, Be Happy" motto made famous by Bobby McFerrin in the 80s on the sage advice of Christoph Westphal, CEO of GSK's Sirtris.

At MassBio's annual event on Dec. 9, Westphal urged audience members to think about the opportunities the current financial crisis has created. "I think many of you who are well-financed [also] are going to be able to build even stronger teams and do exciting things," Westphal said, according to "The Pink Sheet" DAILY. His other piece of wisdom? "I think the important things is to always be very well financed and to keep on a momentum path, so that the venture guys don't get nervous on you," he said.

Ah, sweet mystery of life. At last I know the secret of it all.

Sadly, Westphal's recipe for success came too late for folks at Emisphere, XTL, Panacos, and Elan, which all officially joined the ranks of IVB's "troubled biotechs" list this week. The fall-out for Elan was swift and particularly ugly. You can bet CEO Kelly Martin is having a hard time making "Happy Talk" these days. On Friday, the firm announced it was cutting 114 jobs and closing its Tokyo and New York offices, as it attempts to offset the slower growth of its lead drug Tysabri and strengthen its balance sheet. Whether or not the move goes far enough to appease increasingly angry shareholders remains to be seen. (On Thursday, Jack Schuler, former president of Abbott Labs and a 1% stakeholder in Elan, wrote a letter to its board expressing frustration at money wasted on private jets and an excessive number of company offices.) If it doesn't, Martin may have to change his tune to "You're not the boss of me now".

Certainly, Merck executives are clearly in "why worry now?" mode; after all there should be laughter after pain. Clearly their new initiative in follow-on biologics is going to be the answer to recent slower growth of Gardasil and the on-going fall-out from the Vytorin mess. Sadly, the same can't be said for Eli Lilly, which got caught flat-footed at its analyst day. When asked about Lilly's own potential interest in FOBs, CEO John Lechleiter clearly wasn't prepared for the question. “We’re very much considering it. It’s something we’re looking at,” he replied. GEEZ. IVB's response: De do do do, de da da da is all I want to say to you.

We bet next time Lechleiter get asked that question he won't be fooled again. If the news has got you singing the blues, we have the solution (and maybe even a lyric). It's that time again...



BMS/Exelixis: At Exelixis, it's love the one you’re with. Exelixis first began collaborating with Bristol back in 1999 – when the biotech was still basically a platform operation, using worm and insect models to define mechanisms for Bristol compounds. As the relationship deepened, Exelixis leaned heavily on Bristol to help it step up to a product development strategy – swapping, for example, targets and access to its biology platform for access to Bristol’s combinatorial chemistry and a later-stage cancer compound (see this 2002 In Vivo analysis for more). In the next deal, Exelixis paid back virtually the entire price of its X-Ceptor acquisition by selling Bristol a couple of X-Ceptor cardiovascular compounds. A year later it turned once again to Bristol to sign a more elaborate oncology agreement on some early-stage assets. So it was only natural that when GlaxoSmithKline turned down its option on a small collection of Exelixis cancer compounds, including the Phase III XL184 – presumably because of a mechanistic overlap with another Exelixis compound GSK had already optioned – the biotech would turn back to its most important partner. And their long relationship no doubt accounted for Scangos’ confidence, as he implied to IN VIVO at the time, that he’d be able to partner the product before year-end. In the current confidence-less market, Big Pharma partnerships are again becoming key – but ultimately informationless -- imprimaturs for the value of small company technology. The news of the Bristol deal (in return for rights to XL184 and the Phase I XL281, Bristol will pay $195 million upfront; $45 million guaranteed next year and fund most of the development expenses for XL184, all for XL281) prompted investors to return almost exactly the same amount of share value that the GSK “no thank you” had prompted them to subtract two months before. The equivalence is surprising: since the inception of their relationship in 2002, GSK has spent a total of $260 million with Exelixis (including an $85 million loan). The latest Bristol deal alone will put a guaranteed $240 million into Exelixis’s bank account (roughly $2 a share in cash – though since the stock was up only $1.22 on the day, you could actually argue that investors see the deal as value destroying). Or to put it another way: Exelixis got paid twice – first by GSK; and now by Bristol. Good deal. Kind of odd investors don’t get that.

Valeant/Dow Pharma: Valeant executives are likely crooning "I've got you under my skin" this week, after acquiring privately-held Dow Pharma, a Petaluma-based derm company founded in 1977, for $285 million in cash, plus another $200 million in milestones. Ever since Valeant scored a $125 million up-front payment from GSK earlier this summer for its late-stage epilepsy drug retigabine, the company has been buying up dermatology-focused companies in a valiant effort to solidify its standing as major derm spec pharma player. In mid-September the company paid $95 million for Coria Laboratories, a division of the privately held spec pharma DFB Pharmaceuticals, to gain its marketed acne products and the CeraVe skin care line. In November it spent another $12 million on DermaTech, which sells a number of over-the-counter products for sunburn, warts, and dry, itchy skin. This latest deal--at roughly 4.5 times Dow's annual revenues--shows the amount of money companies are willing to shell out for revenue-generating entities. (It also shows just how bad things are out there--it used to be that kind of multiple--while not small--wouldn't have raised many eyebrows. Not in this climate.) In addition to an approved topical drug for mild-to-moderate acne called Acanya, Dow also has a healthy service business providing topical formulations to other pharmaceutical companies. In 2008 that side of Dow's business generated $25 million in revenue, helping to offset the company's internal R&D burn. In addition to Acanya, Valeant gains five development-stage dermatology products and a revenue stream from previously out-licensed products that runs about $20 million annually. Valeant clearly believes that by morphing into a derm player it might have more success, particularly given the safety-first regulatory climate and penny-pinching payers. Topical products are less likely to raise red flags at the FDA because they are not absorbed systemically and private-pay line of cosmetics avoids the reimbursers (though the recession might make the out-of-pocket market significantly less attractive). Dow's venture backers clearly aren't complaining: Essex Woodlands, Galen Partners, and Skyline Ventures, which invested $36.5 million in the company in 2005, are more than in the clear given Valeant's proposed purchase price.

Novartis Option Fund/Ascent: Employees at tiny Cambridge, MA-based Ascent, which was in stealth mode until last month, are likely rocking out to U2's "It's a beautiful day." The company announced that Novartis, together with its option fund, had signed a deal to develop drug candidates against a specific GPCR target. The aggreement includes an undisclosed upfront fee and potential milestones totaling over $200 million, as well as royalties. It's also some validation for the biotech's nascent so-called Pepducin technology. GPCRs are one of the biopharma industry's favorite targets when it comes to developing new therapeutics (according to some sources, 40 - 50% of all marketed drugs target this protein class). Problem is that many of the seven-membrane-domain proteins have proven undruggable--at least with traditional medicinal chemistry approaches. Enter Ascent, which has a nifty technology that allows it to generate short lipopeptide molecules capable of acting as highly specific GPCR inhibitors. To date the company has generated 15 such GPCR inhibitors--at least in vitro--and CEO Rick Jones claims its scientists haven't yet found a receptor they couldn't antagonize (or didn't like). The biotech, which announced a $19 million Series A in November with backing from Novartis Option Fund, Healthcare Ventures, and TVM Capital, plans to identify one suitable IND candidate by mid-2009, probably in inflammation or oncology. As we wrote here, Novartis Option Fund is one of two option funds recently launched by Novartis. Both buy equity in companies and simultaneously secure options on other products, adding a business development spin to the funds' more traditional venture functions.




Unilever/Phytopharm: Unilever, retailer of Dove soap and Pond's cold cream, sang a modified version of "I'm Gonna Wash That Man Right Out Of My Hair'' this week, when it announced it was washing its hands of Hoodia, a functional food extract for weight management developed by Phytopharm. All the orignal patents and rights will revert to the UK-based Phytopharm; in addition, Unilever has granted the company a "non-exclusive, perpetual, irrevocable, worldwide, royalty-free licence, with the right to sub-license, to any Unilever patents, intellectual property rights and know-how connected with the Hoodia programme" according to a press-release. Whew, I'm sure that makes Phytopharm's board feel much better. Phytopharm's chairman Alistair Taylor announced the news in true British fashion--with a stiff upper lip--and did his best to spin the "disappointing" news positively: "We are pleased to have agreed [on] termination terms with Unilever which enable us to take the product forward with another partner. Phytopharm continues to believe strongly that there are alternative product formats and applications for the commercialisation of Hoodia." Maybe, but this isn't the first time a partner has given the extract back to Phytopharm. According to FDC-Windhover's Strategic Transactions database, Phytopharm first licensed Hoodia from South Africa's Council for Scientific and Industrial Research in 1997, then offered Pfizer worldwide development and marketing rights to the compound in 1998. Following the closure of its nutraceuticals group, Pfizer returned its rights to Phytopharm in July 2003.

AZ/Infinity: Infinity execs are channeling their inner Soup Dragons--or maybe they prefer the Stones' rendition?--this week. Yes, readers, they are free to do what they want with their HSP90 inhibitor program, thanks to the pocket full of cash (not kryptonite) they recently received from Purdue Pharma and its affiliate Mundipharma. As we reported in "The Pink Sheet" DAILY, Infinity will pay AZ nothing upfront to get back full control of its Phase III injectable, IPI-504, as well as its Phase I oral compound, IPI-493. As part of the break-up, AZ will pay its development obligations for another six months; if Infinity manages to launch a product, it will owe AZ a single-digit royalty. Although some have speculated that AZ saw something it didn't like in the ongoing HSP90 trials, there's no indication currently of increased clinical or regulatory risk associated with program, which includes a Phase III study in refractory gastro-intestinal stromal tumors and earlier stage studies in other indications. Instead, the break-up appears to be a case of an evolutionary incompatibility, marking the definitive end of a deal Infinity had originally signed with MedImmune, then an independent company. AZ certainly wasn't gettin' sentimental over the terms it inherited-- in particular, the 50/50 profit split MedImmune accepted because it lacked small-molecule and oncology expertise. Moreover, AZ didn't feel it particularly needed Infinity's expertise given it's world-leading oncology franchise primarily focused on small molecule drugs. It's not unreasonable to assume the two companies were in discussions to renegotiate the terms of the partnership--the current financial crisis has made such discussions commonplace. But Infinity's deal with Purdue in late November gave it the freedom to change the nature of any on-going talks. Thanks to Purdue and Mundipharma largesse--they agreed to fund virtually all of Infinity's R&D through at least 2013 and bought $45 million worth of equity at a 100% premium in return for ex-US rights to Infinity's pipeline (the exception being the HSP90 program)--Infinity can afford to re-acquire the program, gaining full rights to a relatively late-stage asset. Indeed, given the generous terms Exelixis got from Bristol on another Big Pharma-rejected Phase III cancer program -- see note above -- Infinity execs are undoubtedly practicing an up-tempo version of "Hey Big Spender".

(Photo courtesy of flickr user jovike through a creative commons license.)

Shocker! Infinity Regains HSP90 From AZ

How a pocketful of cash can change a biotech's negotiating fortunes.

According to a report in today's Pink Sheet Daily, Infinity Pharmaceuticals is announcing that it’s re-acquired from AstraZeneca the rights to its lead clinical program. Infinity will pay nothing upfront to get back full control of its Phase III injectable heat shock-90 inhibitor, IPI-504, as well as its Phase I oral compound, IPI-493.

As part of the break-up, AZ will fund its development obligations for another six months and, if Infinity manages to launch a product, will pay AZ a single-digit royalty.

Although we were not able to speak with AstraZeneca before press time, there’s no indication that it gave back the program because it's in trouble.

Certainly Infinity doesn't think so. A Phase III program in refractory gastro-intestinal stromal tumors trial is ongoing. Meantime, Infinity is expanding its Phase II two-arm lung-cancer trial, and just initiated a Phase I combination trial with Taxotere in an undisclosed indication. The company plans more trials to start in 2009.

Instead, the split appears to be a case of evolutionary incompatibility, marking the definitive end of a deal Infinity had originally signed in August 2006 with MedImmune, then an independent company.

The two companies had been nicely matched – MedImmune had no small-molecule capabilities and a single failed oncology program; Infinity had little money to prosecute its aggressive development program. In a deal for both of Infinity's lead programs -- its then-preclinical hedgehog cell-signaling pathway inhibitor and its then Phase I HSP-90 program (see the deal's evolution in our Strategic Transactions database), the companies agreed to a 50/50 expense-and-profit sharing partnership.

MedImmune paid $70 million upfront, with the potential for another $430 million in late-stage clinical development and sales milestones. (For more analysis of that transaction and other similar early-stage deals, see “The $100 Million IND".)

The deal worked well enough: although MedImmune had the rights and responsibilities for late-stage development, it stepped aside to allow Infinity, which had greater expertise in oncology, to run the Phase III GIST trial (Infinity CSO Julian Adams had invented and done significant clinical work on Millennium’s Velcade).

But the deal began to come apart once AstraZeneca acquired MedImmune. (Start here for our exhaustive coverage of that April 2007 transaction).

AZ probably didn’t feel it needed Infinity’s expertise. It knew little about large molecules--the reason it wanted to buy MedImmune--but plenty about small molecules. And it had a world-leading oncology franchise. It also had a competing hedgehog program – because of which, according to change-of-control terms in the original MedImmune/Infinity deal contract, AZ had to return hedgehog rights to Infinity.

AZ also probably didn’t like the terms it had inherited with the Infinity deal – in particular, the 50/50 profit split MedImmune accepted because it lacked small-molecule and oncology expertise.

With Infinity’s cash position worsening through 2008, it’s reasonable to assume that the two companies discussed a deal to reduce both Infinity’s 50% expense obligations as well as its 50% potential profit share – renegotiations now common in the industry (in September, for example, Zymogenetics renegotiated its atacicept agreement with Merck Serono so the struggling biotech could unload most of its funding obligations).

But if such a renegotiation was on the table, it undoubtedly fell off on November 20, when Infinity announced a huge deal with the privately owned, independent but affiliated spec pharmas Purdue and Mundipharma (click here for our Pink Sheet Daily story, our IN VIVO Blog report here and our Strategic Transactions report here). In return for ex-US rights to most of its pipeline--HSP-90 explicitly excluded-–the two companies and their owners provided Infinity virtually all of its R&D funding through at least 2013, along with the potential for more, and bought $45 million worth of equity (at a 100% premium).

In effect, Infinity solved its funding problem for the next five years or so – and at the same time created the possibility for a US-based commercial operation of its own.

It could thus afford to re-acquire HSP-90, gaining full rights to a relatively late-stage program – as well as the flexibility of raising extra cash by out-licensing ex-US rights. Meanwhile, AZ is able to advertise its willingness to help even a former partner – according to Infinity, AZ rushed ahead the negotiations to allow an early termination to the deal on good terms.

Bridegroom's Friend by Flickr user Andrei Shevelov used under a creative commons license.

Wacky World of Generics: Pulmicort Edition

Blockbuster generic entries are starting to look an awful lot like high stakes poker games. If you like risky bets, high stakes, bluffs and misdirections, it's all here. The one big difference: the game usually ends with both players splitting the pot in the form of a settlement, rather than continuing until one player goes bust.

Consider the latest blockbuster generic settlement involving the asthma therapy budesonide (Pulmicort). If ever there was a wild round of Texas hold ‘em, this was it. (In case you missed the drama, “The Pink Sheet” covered it all: here and here.)

First, the players. AstraZeneca, markets Pulmicort Respules, which brings in almost $1 billion in the US each year. Teva, the first to file for approval of a generic version of the product, challenging AZ’s patent on the use of budesonide for asthma that run until 2019.

Teva filed its ANDA in 2005. AZ, naturally, sued to enforce its patents, and almost as naturally, filed a citizen petition urging FDA not to approve the generic without issue a guidance explaining bioquivalence standards for locally acting oral inhalations like budesonide. And so the game began.

The real action only started a couple weeks ago, when FDA rejected AZ’s petition and approved Teva’s generic application.

Once upon a time, no generic company would risk launching until the underlying patent case was resolved. In theory, at least, an “at-risk” launch exposes the generic firm to treble damages, meaning it could have to pay back three times whatever it earns from the launch. Those days are over, thanks to consolidation giving generic companies more resources to at least contemplate facing a large damages award—and, more importantly, an increasing sense that innovator companies would much rather settle than press on to a verdict.

In other words, generics have learned to call the innovator’s bluff.

That, at least, is what Teva did: announcing November 17 that it was shipping the generic. That should not have come as a surprise, since Teva pioneered in using an “at risk” launch strategy with products like Neurontin and Protonix.

Rather than fold, AZ raised the stakes. It announced its own plans to launch an “authorized” generic via an agreement with Par. That too has become standard practice among innovators—though it’s a bit like dealing a third player in halfway through the hand. AZ also filed for a preliminary injunction to halt Teva’s launch.

And AZ got the injunction.

Here’s where things get really interesting. Thanks to the ever evolving series of precedents governing generic launches, Teva’s “at risk” launch was riskier than usual, since, in theory at least, it triggered the company’s exclusivity period for the generic. Those 180 days are precious, basically representing the entire value of challenging a patent. So, in addition to the threat of damages if it lost the patent case, Teva faced the potential of watching its opportunity to profit from a victory slip away, day by day, while litigation continued.

Assuming, of course, that Teva wasn’t bluffing. If Teva really truly launched the generic—shipped it all the way to pharmacies and into the marketplace, the exclusivity clock started ticking. If, on the other hand, Teva announced the launch, took orders, even collected money from potential buyers—but didn’t ship product out of its control—then the clock didn’t start ticking. Teva, naturally, wasn’t about to shed any light on exactly what it did or did not do; would you show your hole cards to an opponent in the middle of the hand?

So the two players stared each other down for a week and then settled. The terms: Teva will launch its generic under license to AZ in December 2009, and pay an undisclosed royalty back to AZ. There will be no other authorized generic allowed. Its liability from the at-risk launch is waived, and product already shipped stays in distribution. (Aha! Teva wasn’t bluffing the launch, apparently.)

Here’s where the poker analogy breaks down. It looks to us like both sides won.

Teva gets six months of generic exclusivity essentially guaranteed. Yes, it has to wait an extra year to cash in, but that is an easy trade to make. Yes, it has to pay a royalty back to AZ, but with a truly exclusive position, that shouldn’t be too big a deal.

For AZ, the settlement buys an extra year of exclusivity for Pulmicort—and removes the uncertainty posed by Teva’s pending challenge. True, AZ faces generic competition long before its use patent on Pulmicort expires, and will end up with only nine years of life on the brand. But the basic budesonide patent has already expired, and pharma companies have not had much success in defending brands protected only by secondary patents. So nine years of exclusivity on Pulmicort isn’t a bad outcome for the company—and it is one more year than AZ had two weeks ago.

Okay, Par lost the opportunity to share in the Pulmicort launch, but it was playing with house money anyway.

Nope. The only ones who can claim to be losers here are the people who buy Pulmicort and think they should be able to get a generic alternative before the end of next year. But they aren’t even players in this game.

While You Were Watching Football

You didn't miss anything this weekend. Really, nothing happened, we looked. Oh, but the Eagles destroyed the St. Louis Rams 38-3 and the Phils took the weekend set against the Mets at Shea two games to one. But to dig up anything interesting in the biopharma universe, we had to wait til this morning. So here you go ... while you were driving to work:

• BMS and AstraZeneca released positive data from a study of their DPP-4 inhibitor saxagliptin (Onglyza) at the European Association for the Study of Diabetes meeting in Rome this morning. The companies said that the drug, which was submitted to FDA over the summer, "produced significant reductions across all key measures of glucose control studied."
• Also at EADS, Novo Nordisk said that its liraglutide human GLP-1 analog plus metformin and rosiglitazone led to improved blood glucose lowering, weight loss, blood pressure reduction and improvement in beta cell functioning. For more news out of this diabetes meeting, click here.
  
• Velcade was approved in the EU for combination with melphalan and prednisone for the treatment of patients with previously untreated multiple myeloma (MM) who are not eligible for high-dose chemotherapy with bone marrow transplant.
• Finally, a mini Press Release of (Last) Week: for the PR rep who is sending us pitches to cover the release of "Don't Mess With the Zohan" on DVD, this is for you.

photo of Lincoln Financial field, scene of yesterday's carnage, by flickr user MattP33, used under a creative commons license.

Deals of the Week: The Song Remains the Same

Are you having a case of deja vu? We don't blame you. The main headlines this week echoed those of last week and the weeks prior.

Vytoringate reared its ugly head again. This time Congress is requesting that Internet site CafePharma reveal the identities of contributors who anonymously discussed the controversial ENHANCE trial for the Merck/ Schering Plough cholesterol drug on its message boards. Meantime, more firms announced job cuts this week; among them the drug delivery firms Nektar and Nastech, which both lost partners in high-profile divorces last year.

And here's a shocker: another pharmaceutical company has been accused of anti-competitive practices. No, we aren't talking about Bristol-Myers Squibb, which took some heat last year for its botched negotiations with Apotex over the blood thinner Plavix. Nor are we referring to GlaxoSmithKline, AstraZeneca, or Sanofi-Aventis, whose offices were raided last month by European Commission officials as part of a broad probe into possible industry efforts to delay the arrival of generic medicines. This time the industry bad guy is Cephalon, which apparently spent $200 million to delay generic versions of its blockbuster anti-drowsiness pill Provigil. (You can read the details of the FTC's suit here.)

You see? The song remains the same. Thank god, it's time for deals of the week.

AstraZeneca/ Albireo Pharma: If you feel like AZ's spin-out of its GI assets into Albireo is old news, you're right. We broke news of the rumored event back in November. On Thursday came more specifics about the new Swedish biotech, which is named after a double star in the Cygnus constellation, and has raised $27 million out of a planned $40 million Series A. The new venture inherited several early stage assets and one clinical stage compound from AZ, which maintains a significant minority stake in the company. (For an in-depth discussion of GI R&D strategies, see this story in the November IN VIVO). In their write-up of the deal, our good friends over at the WSJ Health Blog and Fierce Biotech noted that this is an example of pharma's "dis-integration," the industry's need to shed some of its weighty infrastructure, particularly in R&D. Hmmm, that ought to sound familiar to loyal Windhover readers too. (Check here and here and here for more.)

Sanofi-Aventis/Dyax: Another week, another tie-up between an antibody player and a pharma company interested in building its biologics capabilities. This week the honor goes to Dyax and Sanofi, which inked a deal Tuesday worth up to $500 million in up-front and milestone paytments. (Under the terms, Dyax could get as much as $25 million this year.) The agreement gives Sanofi exclusive rights to Dyax's DX-2240, a preclinical monoclonal antibody and cancer therapy that inhibits tumor progression via the Tie-1 receptor. In addition, Sanofi also has non-exclusive rights to use the biotech's phage display technology to discover and develop additional compounds. In addition to illustrating the continuing desire of big pharma to play in the biologics sandbox, the deal also reflects pharma's increased interest in the industry's new blockbusters, specialty products.

Newron/Hunter-Fleming: When we last checked in with Hunter-Fleming, we were quizzing them about VC reluctance to fund early-stage Alzheimer's R&D. And this week we can see the result of a tough fundraising environment for the biotech. H-F was looking to raise about GBP 7 million to finish off proof of concept studies for its lead AD treatment, HF0220, a naturally occurring human steroid that drives production of prostaglandins key for cellular protection and repair. The going back then, in September 2007, was tough. And on Monday the company was acquired by Newron for €8 million (minus net debt) in stock, plus a further potential €17 million in "success-based milestones."

AZ Makes Its Move in GI

Back in November we broke the news that AstraZeneca may be spinning out its gastrointestinal R&D. (Those news outlets that only read the Swedish papers caught up on the news this week.)

Well we can report now that the Big Pharma has made its move, though it's not the move that some reports were salivating after. In fact, it's quite modest in scope compared to most rumors, even if it is a strategic leap for AstraZeneca.

AZ has teamed with Nomura Phase4 Ventures to create a new Swedish biotech, Albireo, around one clinical and an undisclosed number of preclinical GI assets from AZ. David Chiswell, a founder of Cambridge Antibody Technology and a man who knows his way around the European biotech scene, is the firm's executive chairman.

AZ is hanging onto a significant minority interest in the newco, which has raised $27 million out of a planned total $40 million Series A from Nomura, TVM Capital, and Scottish Widows Investment Partnership. AZ retains its GERD franchise (namely the blockbuster Nexium) and reflux R&D.

As we said at the time: AZ is simply too big to manage the internal research it’s got – let alone depend on the notion that it can afford big bets on areas unlikely to generate big advances in medical care. (For an in-depth discussion of GI R&D strategies, see this story in the November IN VIVO).

It isn't the first pharma to spin off its GI assets--Movetis took a handful of Johnson & Johnson projects when it spun out backed by €49 million from Sofinnova et al. back in early 2007. But this is the first such move in any therapeutic area from AZ--a taste of what's to come?

image from flickr user red5standingby used under a creative commons license

While You Were Settling

Well, it was an interesting weekend: the writers' strike may have been settled, Obama swept (and won a Grammy), and there was an unusual amount of blood spilled around the NHL (Lets Go Flyers!). But what happened in your world?

• First up: AstraZeneca is considering sale of some GI research projects, according to a Swedish newspaper (via Reuters). Perhaps Dagens Industri reads IN VIVO: we reported this news back in November!


• The NYT reviews the options for those of you who want to do a little personal genome spelunking. In other consumer genomics news, deCODE announced on Sunday the launch of a genomic test to identify individuals with a higher risk of prostate cancer.
  
• Newron announced early Monday that it was buying the private CNS-focused biotech Hunter-Fleming, for €8 million in stock plus a potential €17 million in earnouts (also in shares).


• “Generally I am very brave…only today I happen to have a headache.”
  
• Sorry, but we have to be firm on this one: Atonement should not have won best film at the BAFTAs last night (we loved the book, but...). And riddle us this: how does it lose in the 'best British film' category yet win 'best film'?

photo by Flickr user Here in Van Nuys used under a Creative Commons license