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: J.P. Morgan Redux--UPDATED

It's common wisdom that the J.P. Morgan conference is the sole reason many in our industry get their flu shots. (We point you to the CDC website for other, far more important stats on why that annual vaccine is important.) Not too surprisingly, deal-making flurry continued apace, as companies small and large sought to garner valuable positive press to balance out the increasingly negative economic news.

Even as Cephalon, BMS, and Wyeth announced new deals (see below), another theme this week was shareholder activism.

On Jan. 14, Deerfield Capital continued to press its case that NitroMed investors stand to lose out if the troubled specialty pharma merges with privately-held aptamer-focused Archemix. In an effort to woo investors, the firm sweetened its black-knight offer from $0.65-a-share to $0.75-a-share in a deal roughly valued at $34 million. The New York-based private equity firm objected to the reverse merger in December because existing NitroMed stockholders would be apportioned only 30 percent of the new entity despite contributing between $35 million and $40 million to a company with no late-stage clinical programs.

Meanwhile, the tussle between Avigen and its largest stockholder, Biotechnology Value Fund, continues to play out on the public stage. On Jan. 15, BVF offered to buy all of Avigen's outstanding stock for $1-a-share, a 35% premium over the biotech's closing price on Jan. 8, the day before BVF announced a plan to replace Avigen’s board with four “stockholder-focused nominees.” BVF, which has nearly a 30% stake in Avigen, wants the biotech to accept a merger offer from MediciNova, while Avigen management has said it plans to seek a new direction in 2009 after its stock price crashed following the failure last year of its lead candidate in multiple sclerosis spasticity.

The economic crisis is sure to force a number of biotechs to make the hard decisions execs at NitroMed, Archemix, and Avigen now face. That realization was an obvious undercurrent in the meeting halls and evening soirees this week, with many adopting a mantle of "been here before" bravado tempered with gallows humor. Being able to actually walk through the lobby of the Westin St. Francis with arms akimbo on Tuesday afternoon only added to the feeling that this year our industry is in a very different place than it was just 12 months ago.

Suffering from post J.P. Morgan letdown? (It's a real syndrome, though unlikely to make it into the 2012 edition of the DSM-V. Please resist the temptation to utter the phrase "let me give you my card" to your spouse. He or she won't appreciate it.) Instead, we're here to continue to pound the industry drum with another packed edition of ...


Wyeth/Santaris: Established as one of Big Pharma’s strongest players in biologics, Wyeth has lagged behind its competitors in the RNAi space. A strategic alliance announced Jan. 12 with Denmark’s Santaris Pharma brings Wyeth the opportunity to develop and commercialize microRNA and mRNA therapies in up to 10 targets. And Wyeth gets the opportunity at what looks like an economical price - $7 million up-front plus a $10 million equity investment to access Santaris's technology platform. Wyeth will also fund the research collaboration for three years – annual amounts haven’t yet been set according to Santaris CEO Soren Tulstrop– and will pay milestones up to $83 million apiece for each target, plus worldwide royalties on any products that reach the market. While not talking specifically about this deal during his JPM presentation Jan. 14, Geno Germano, president of Wyeth's U.S. and Pharmaceutical Business Units, noted that more than 60% of the company’s 2008 revenues derived from “non-traditional pharma sources,” such as biologics and vaccines. Such revenue is expected to increase to 75% of the Big Pharma's business by 2012, he said. One critical product: Xyntha, a Factor VIII plasma product approved for hemophilia A in the U.S. last February. Combined with the pharma’s existing hemophilia drugs, ReFacto and BeneFIX, Germano said the three products represent Wyeth’s next blockbuster franchise--Joseph Haas.

Novartis/HHS: At JPM, Germano also talked up Wyeth’s success with Prevnar, a conjugated pneumococcal vaccine and the industry’s first blockbuster vaccine, which brought in about $2.7 billion last year. While Wyeth is looking to broaden its vaccine franchise with a planned purchase of Crucell, giving it entrée to hepatitis A, hepatitis B and typhoid fever competition, it also has to keep an eye on Novartis, which flexed its muscles in the vaccine world this week. The Swiss pharma announced it had been awarded a $486 million grant from HHS to help fund a new pandemic flu vaccine manufacturing facility on Jan. 15. While acquisition of the Dutch Crucell, the sixth biggest vaccine company in the world, would make Wyeth more competitive in pursuing vaccine contracts with other countries, Novartis is already there and HHS’ help in funding the Holly Springs, N.C., facility should only add to its advantage. HHS will provide the money over eight years to support design, construction, validation and licensing of the facility, which will make cell-based vaccines. Under the agreement, Novartis will provide a pre-pandemic supply of vaccine and ensure capacity to manufacture 150 million doses within six months of the declaration of a wide-spread outbreak. HHS also gets the option to purchase additional flu vaccine over 17 years--Joseph Haas.

Cephalon/Ception: In what is emerging as an ever more common method of getting assets cheaper--if not on the cheap--Cephalon announced this week its $100 million down-payment for privately-held Ception, which was founded by a group of former GSK execs in 2004. The payment gives Cephalon the option to purchase all outstanding stock in Ception for $250 million should the start-up's Phase IIb/III anti-interleukin-5 antibody, reslizumab, make good in the clinic. Reslizumab is targeted as therapy for pediatric eosiniphilic esophagitis, a rare inflammatory disease that has seen a ten-fold increase in diagnoses over the past decade. The deal also gives Cephalon a potential biologics platform that it can bolt onto its existing infrastructure. This increased capability is one reason the down-payment for Ception is so generous. Large molecule platforms have been commanding far higher price tags, and with this deal, Cephalon has signaled its interest and capped the ultimate expense it might owe down the road. This is the second option-type arrangement Cephalon has entered into in recent months. Last November, Cephalon did its first option deal, paying UK biotech Immupharma $15 million for license rights to Lupuzor, a CD4 T-cell modulator in Phase IIb for lupus--Shirley Haley.

The Medicines Company/Targanta: Facing the strong possibility that its franchise antibiotic Angiomax will lose patent protection in 2010, The Medicines Company hewed to its strategy of acquiring late-stage assets – this time through the acquisition of Targanta Therapeutics for $42 million. It's the second major acquisition for MDCO in recent months. In December, the company announced a riskier move: the buy-out of Germany’s Curacyte Discovery, whose lead program is Phase I serine protease inhibitor CU-2010, a candidate to fill the antifibronolytic gap created when Bayer had to pull Trasylol from the market. For its $2-per-share offer, MDCO will get the IV antibiotic oritavancin, stalled in Phase III for complicated skin and skin structure infections after receiving a “complete response” letter from FDA requiring additional trials in early December. Cambridge, Mass.-based Targanta netted $53.5 million in an IPO in late 2007, and has more than $40 million in cash on its balance sheet. Still there's no denying the oritavancin delay--and the cost of an additional pivotal trial--was a significant blow for the biotech. Phase II trials reportedly cost Targanta $40,000 per patient, and a larger Phase III study to better demonstrate the drug’s efficacy in patients with MRSA would be even more costly. Noting the growing U.S. market for gram positive infection therapies, estimated at $1.1 billion in 2007, MDOC stepped in, offering shareholders potential regulatory and commercial milestones payments, which could reach roughly $4.55 per share, in addition to its up-front offer. Cowen and Company’s Ian Sanderson called MDCO's move “a savvy deal” in a Jan. 14 note. In addition to Targanta's cash, MDCO also picks up an experienced antibiotic development team.--Joseph Haas.

Bristol-Myers Squibb/ZymoGenetics: With disappointing sales from its surgical bleeding drug Recothrom (topical recombinant thrombin) - just $1.8 million during third-quarter 2008 – and November’s change at the top, as then-President Douglas Williams succeeded retiring CEO Bruce Carter, ZymoGenetics appears fortunate to have gotten $85 million up-front for its Phase Ib Peg-interferon lambda candidate in hepatitis C from Bristol. At the JPM conference, Bristol Chief Scientific Officer Elliott Sigal said the deal fits with that pharma's strategic focus on antivirals and offers the potential of adding a “special type of interferon” with improved tolerability and targeting to the current standard of care in HCV. Adding a little spice to the transaction, which Williams says should bring ZymoGenetics $200 million total this year, including a $20 million license fee, is that the two companies were engaged in a two-year patent-infringement lawsuit related to Bristol’s rheumatoid arthritis drug Orencia that only was resolved last October. Bristol paid ZymoGenetics $21 million to settle the dispute over two patents held by the latter firm. This latest tie-up greatly strengthens ZymoGenetics' cash position and continues Bristol’s “string of pearls” strategy as the pharma attempts to transform into a next-generation biopharma--Joseph Haas.

Novartis/Peptimmune: Novartis and privately-held Peptimmune agreed on a pair of technically separate deals Jan. 15, with the pharma optioning exclusive rights to PI-2301, a peptide copolymer in Phase Ib for multiple sclerosis, while the venture capital fund Novartis formed with MPM Capital made an undisclosed equity investment in Peptimmune. Back in 2007, the Novartis/MPM fund took a $10 million equity stake in Radius Health, while a separate deal optioned Radius’ Phase II osteoporosis drug, BA058, in what was the first sign of corporate venture's ability to do biz dev. Few terms of the Peptimmune deal have been disclosed, although the biotech says it could realize more than $500 million in development, regulatory and commercial milestones if Novartis options ‘2301. If Novartis does elect its option, it will take over global clinical development, manufacturing and marketing of the drug. Meanwhile, the in-house venture capital model looks to be thriving. Thanks to their big pocketed Pharma sugar daddies, these groups can afford to be a little more generous in the terms they set than traditional VC firms, many of whom are drip-feeding companies as they go out on the fund-raising circuit--Joseph Haas.

Medtronic/Ablation Frontiers: If you’re actually wondering whatever possessed Medtronic to pay $225 million for Ablation Frontiers we’d like to introduce the company’s CEO Keegan Harper, with an excerpt taken from our November profile on the atrial fibrillation company. "Today, more than ever, that is a formula for success in medtech because by shortening procedure times or simplifying a surgical procedure, you enable doctors to treat more patients and that is generally a winning combination." Bingo. Medtronic CEO Bill Hawkins said it himself during his company’s presentation at the J.P. Morgan conference this week: Ablation Frontiers' “very unique set of anatomically correct catheters” will “democratize the atrial fibrillation procedure” by shaving considerable time off of a procedure that takes six hours or more at other companies. The purchase, if approved, would complement Medtronic’s earlier acquisition of CryoCath Inc., giving Medtronic a broader offering of atrial fibrillation products in its battle with Boston Scientific Corp. and Johnson & Johnson Corp. for the hearts and minds of electrophysiologists everywhere. It’s this pursuit that’s turned atrial fibrillation—a one-time black hole for device investors—into one of the sector’s brightest lights--Tom Salemi.

Merrion/Novo Nordisk: Irish oral delivery specialist Merrion Pharmaceuticals has inked another deal with Danish diabetes powerhouse Novo Nordisk to work on an oral formulation of a Novo GLP-1 receptor agonist. A deal to develop oral insulin analogues was signed back in November 2008. The Friday Jan. 16 deal is worth up to $58 million in up-front and milestone payments associated with a theoretical first-product approval and sales hurdles, plus an undisclosed royalty. Novo will also buy 300k Merrion shares at €3 apiece. Though there’s not a lot of granularity in the deal terms it’s worth noting that they’re very similar to the November insulin deal. Also remarkably similar and to us, more amusing: Merrion CEO John Lynch’s photo accompanying the release. Today’s picture of Lynch involves a photographer apparently lying on the floor in order to take a photo of the CEO upwards through a pill-strewn glass table. November’s picture is the same, except the pills are strewn in a slightly different pattern, and Lynch is accompanied by Ireland’s Minister for Enterprise, Trade, and Employment, Mary Coughlan. Now before you all write in to point out that Lynch is wearing the same suit/tie combo and therefore the photos were probably taken on the same day, answer us this: where’s Coughlan? Why is the photo on the second release dated today? Why the different pill formation? Are the photos Photoshopped? Are they a metaphor for the state of Irish biotechnology—nay, for biotechnology the world over? Or is the photo-through-the-glass-table all the rage now? We’re no conspiracy theorists, but something is afoot on the Emerald Isle (and/or rotten in Denmark, we’re not sure where the photos were taken …)--Chris Morrison.

Abbott Laboratories/AMO: The ophthalmic industry has traditionally been in its own club, with specialty device and pharmaceutical companies exclusively selling products marketed to ophthalmologists. So the announcement on Jan. 12 that diversified giant Abbott Laboratories would acquire Advanced Medical Optics for nearly $3 billion in cash was as astonishing as the hefty premium Abbott ponied up. According to the terms of the deal, Abbott will pay $22 per share or a 149% premium to the ophthalmology company’s Jan. 9 closing price of $8.85. Despite the hefty price tag, Abbott is getting a business that many predict will continue to grow by double digits because of aging demographics and improved markgins on products like intraocular lenses. The predicted increased incidence of cataracts, age-related macular degeneration, presbyopia, and glaucoma mean this market could expand from $700 million globally today to $1 billion by 2020. Currently AMO holds the number one spot in refractive surgery, through its LASIK franchise, which accounts for one third of AMO’s overall business. It’s also the second player in cataract surgery, a recession-proof sector that treats the leading cause of blindness in the growing elderly population, and the number three player in eye care with a number of popular consumer brands. Indeed, it is this troublesome environment that caused AMO’s valuation to be depressed enough to make it a prime takeout target. At the November 2008 meeting of the American Academy of Ophthalmology in Atlanta, the talk was all about the deteriorating state of the refractive surgery market as consumers pulled-back on discretionary spending, especially high cost, elective surgical procedures like LASIK. As the S&P 500 fell, so did laser vision correction procedures. With a high debt load in a hard-hit market, AMO’s stock price had fallen from $24 in June 2008 to $10 by the end of December. But with the backing of Abbott, AMO will have the financial resources it needs to make sure it’s in a good position when the financial storm abates--Mary Stuart.

Deals of the Year Nominee: Novartis/Alcon

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.

The more legs you’ve got, the more stable you are when you’re standing still. But how do you get all those legs moving in synch?

Attitudes vary towards just how much diversification is worthwhile, but – with just a few holdouts -- drug companies agree that basing a business on novel small-molecule research is way too risky.

But as with multi-legged creatures, the problem with diversification is how managers good at (or at least familiar with) running one kind of business – R&D-intensive prescription drugs – do with another kind. Which is why the more conservative of the diversifiers aren’t actually getting out of the drug business per se – by going into branded generics or OTC medicine they’re still staying close, theoretically, to home. Take the most recent convert to diversification – Merck: its recent announcement that it would be going into follow-on biologics edges it toward a kind of generics but without the full-blown commitment to just-in-time product development and manufacturing and rock-bottom prices that the small-molecule end of that business requires.

Novartis, too, certainly recognizes the managerial challenge of diversification. Among the most aggressive of the industry’s diversifiers with extensive consumer and generics businesses, it moved this year even further afield through its play for Alcon (see our transaction summary here and a longer analysis here) – another nominee for deal of the year. Alcon’s largest and fastest growing business is in largely self-pay surgical products, which make up 45% of its total revenues. The consumer side of ophthalmology makes up another 15% -- the rest is specialty eye drugs.

Novartis is trying to minimize the problems of a pharmaceutical company managing a device business in part through the structure of its deal. Novartis is merely investing in the company (starting out with a 25% stake -- for $11 billion -- with a plan to increase it, sometime between 2010 and 2011, to 76%, for no more than an additional $28 billion). It theoretically won’t be managing Alcon any more than Alcon is managed by its current majority owner, Nestle. Instead -- once it owns a majority of Alcon’s shares -- it will be able to consolidate Alcon’s double-digit-growth-sales-and-earnings but without the executive headache of actually running the business. And with Alcon trading independently, investors should still be able to independently follow and profit from its progress, and with luck according it a bigger valuation than what it might receive hidden inside the much larger and slower-growing overall Novartis business.

The disadvantage: with Alcon as an independently trading company, Novartis can’t do the usual cost-cutting most acquisitions allow; nor will it be able to combine marketing efforts (e.g., between Novartis’ ophthalmic businesses in its Ciba Vision contact lens unit or its two eye drugs, in particular the macular degeneration drug Lucentis.

The closest recent comparator we know of to the Novartis/Alcon deal is what Bristol-Myers Squibb is trying to achieve in spinning off of its consumer nutritionals business, Mead Johnson (see our analysis, here). Bristol, too, wants to get the benefit of non-pharma growth without having to manage it. The company figured its pharma-oriented execs couldn’t pay quality attention to the much smaller and much different nutritionals unit; and that when they did pay attention to it, these earnest auslanders probably didn’t add significant value. Investors, too, ignored the group – Big Pharma analysts, hardly experts in the area, buried the Mead results in their spreadsheets.

By spinning off just 10-20% of Mead, Bristol opens up the company for investor examination, frees its own managers to focus 100% of their attention on the pharma business, and focuses Mead’s execs on the competition in nutritionals, rather than the competition for corporate resources. Meanwhile, Bristol still gets to consolidate Mead's top and bottom lines.

So far, quite similar. The big difference between the two deals is that Novartis is paying for its diversification (and had it waited six months, it could have saved 50% or so on its $11 billion down payment); Bristol wants to get paid (albeit the market meltdown will presumably lower the take it had hoped for).

And from an investor’s point of view, Novartis is therefore asking its shareholders to fund its attempt to do what investors might see as their job – buying stock. Since it’s leaving Alcon independent, Novartis can’t argue that its money will be adding much corporate value to the ophthalmic company. One could argue, on the other hand, that Novartis is limiting investor choices: because they could buy Alcon shares on their own, shouldn’t Novartis do something with their money that investors couldn’t (like buy pipeline)?

On the other hand, Bristol’s spinoff actually offers investors a new choice – if they prefer to unload pharma shares for stock in a nutritionals business, well, the menu of choices just got bigger (and theoretically Bristol wins either way). The real strategic equivalent: Novartis could spin off a minority of its generics business, Sandoz, which likewise has virtually no synergies with its parent and which might profit from some independence.

Or you could argue that Novartis is in fact offering investors a new set of choices. Those with a higher appetite for risk can put their money into Alcon; those who want the security of a big company, but now with a frisson of mid-size company excitement, can buy Novartis stock leavened with Alcon growth.

Image via Funny-Dog

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.)

And How Would You Like to Pay for That, Mr. Lechleiter?

Check please?

When Carl Icahn (whom we probably owe an apology since we thought a $70/share bid was a pipe dream) first announced that Imclone had a mystery bidder willing to fork over $10/share more than Erbitux partner BMS, he suggested that bid was subject to due diligence, but not financing.

Well, Lilly must have left its moneyclip in its other pants, because here comes the credit card. And it's too late to play credit card roulette.

Just how easy it will be for Lilly--or anyone for that matter--to tap the credit markets for a few billion dollars here or there remains to be seen. The newly passed-into-law $700 gagillion bailout hasn't exactly greased the lending wheels just yet.

Our comprehensive coverage of the deal is at Pink Sheet DAILY, where Jessica Merrill notes that Lilly "intends to finance the acquisition with a combination of cash and debt. The firm expects the debt portion to amount to $2 billion to $3 billion. With today's tight credit markets, funding deals has become far from a sure thing, but Lilly said it remains 'confident' about its ability to finance the transaction."

Lilly shareholders? Maybe not so much. True it was a particularly bleak day for the markets yesterday (with the exceptions of Imclone, Dendreon, and, probably, Campbell's Soup), but Lilly shares were taken to the woodshed, down nearly 3% on the day. (In comparison, Bristol-Myers was only down 1%, its own fall cushioned by the $1 billion cash it stands to gain from its own 17% stake in Imclone.)

If pharma's rock is the credit crisis, its hard place is the fact that it will likely need to keep spending a ton of cash to access the medicines it has failed to develop on its own. So how will Big Pharmas like Lilly reconcile the two competing realities? Maybe Uncle Sam will help.

Remember the hilariously titled American Jobs Creation Act that allowed companies to repatriate vast sums of cash at much friendlier tax rates? (Ostensibly this was to lead to job creation but in reality the cash flowed mostly unimpeded to shareholders via dividends and share buybacks.)

Pharma has already succeeded in restarting its stalled R&D tax credit, which was tucked into the bailout bill (now known by the gentler acronym TARP), perhaps it is also hard at work lobbying for another AJCA so it can bring home more cash to pay for the alliances and acquisitions it so badly needs to bolster its own R&D.

Meanwhile the debate about whether Lilly paid too much for Imclone will continue. Lilly has clearly signaled its intentions to be part of the upper echelon of oncology companies--along with just about every other Big Pharma--and what you think of Lilly's $70/share Imclone offer will probably boil down to the faith you have in Imclone's pipeline (and Lilly's ability to hang on to the next-generation EGFR inhibitor 11F8).

image from flickr user lennonisgod used under a creative commons license.

Deals of the Week: A Little Less Conversation, A Little More Action, Please

This week was one of those weeks where so much more seemed to happen than actually did. Yes there was the rumor that Pfizer was buying Bayer (we tend to agree with Derek Lowe's thoughts on that one, the deal is on the "Edge of Reality"), the Carl and Jim Show ("Return to Sender," covered extensively by our Pink friends) and King's hostile attempt to take over Alpharma ("Don't be Cruel," see yesterday's release here and our coverage of King's original offer here), and various other rants and rumors.

Execs across the industry have been "All Shook Up" in the most compelling actual news this week, with Christine Poon retiring from Johnson & Johnson in March 2009, Ellen Strahlman leaving Pfizer to become GSK's chief medical officer and GSK CEO-runner up Chris Viehbacher taking the top slot away from Gerard Le Fur at Sanofi.

Finally we thank the dealmakers below. They didn't step on our "Blue Suede Shoes" and so they have the honor of ...

GSK/Cellzome: GSK has entered into an option agreement with Anglo-German biotech Cellzome around seven kinase inhibitor programs in the area of inflammation, the companies said on Wednesday. Though the deal generated several hyperbolic wire story headlines the guaranteed payments (about $25 million in equity purchases and cash, split undisclosed) were rather more pedestrian. More importantly, the deal has some interesting features and further underscores the externalization of R&D at GSK under new chief Andrew Witty. Cellzome is essentially becoming GSK's center of excellence in kinase drug discovery, at least in the inflammation space, Cellzome CEO Tim Edwards told IN VIVO Blog yesterday. GSK has an option to license--at clinical proof of concept or earlier--drug candidates from Cellzome's kinases programs against four identified targets (which very likely comprise the biotech's previously announced programs against mTOR, Zap-70, PI3K delta and JAK3) and an additional three further targets. Edwards noted the deal does not include Cellzome's lead PI3K gamma program for which the company hopes to file an IND in 12-18 months. Until such time as GSK opts into a project, Cellzome is footing the R&D bill. However the biotech can earn milestone payments along the way that will cover those costs, and keeps rights to programs GSK declines. "We have day-to-day control," explains Edwards. "They're sponsoring us, as it were, and as we make achievements we bring in additional dollars." Cellzome has previously inked a handful of deals around its proteomics mapping platform and has outlicensed Alzheimer's programs to J&J, but this deal is its first around its Kinobeads technology. That platform allows the firm to screen for kinase inhibitors in a "physiological setting," which Edwards claims means they can identify very selective inhibitors of individual kinases. "In oncology you can hit four or five targets," without compromising the safety/efficacy profile of a kinase inhibitor. "But that isn't OK in inflammatory disease, and the solution is to have very selective inhibitors. It's amazing how you can change a molecule in a very small way and change its selectivity profile in a profound way," he says. Optioning nearly all its programs to one partner in its chosen (and crowded) field of kinase discovery does suggest that GSK is the private firm's only potential suitor, however, significantly limiting Cellzome investors' exit options (the company has raised at least €73 million since 2000 from a variety of VCs). "Today that may be the case," says Edwards. But perhaps not for long, he says. Cellzome aims to reconfigure its screening platform for other target classes and is also diversifying out of inflammatory disease into CNS and potentially other therapeutic spaces. And then there's the PI3K gamma program. For now, Edwards is keeping the details of that program under wraps.

Tripos/Pharsight: Drug discovery informatics player Tripos said this week it was acquiring clinical-software specialist Pharsight for about $57 million ($5.50/share). That price is a 29% premium to Pharsight's 30-day average. The combined company will now provide R&D software and services from discovery through to the market, says the release. Sorry to "Forrest Gump" you, but that's all we have to say about that.

Alfama/hemoCORM: Alfama and hemoCORM, two companies pursuing the use of carbon monoxide releasing molecules (CORMs) in a variety of chronic and acute diseases, merged this week. The terms were undisclosed. We profiled each of these companies back in 2004 (see here and here). Back then we wrote: "CO is produced naturally in the body as a result of the breakdown of heme oxygenase, an enzyme involved in the recycling of iron. But CO is more than simply a useless by-product. Recent research has shown that under physiological conditions, it is also important signaling molecule with vasodilatory, anti-inflammatory and anti-apoptotic properties." Both Alfama and hemoCORM are working on metal carbonyls, one of the first types of compound identified as a potential CO-carrier. hemoCORM's initial efforts are focused on ischemic perfusion injury, while Alfama is working primarily on treatments for inflammatory and auto-immune disease. Alfama chief Nuno Arantes-Oliveira will lead the combined group.

CV Therapeutics/Menarini: This week's late-breaker see's CV Therapeutics licensing European, CIS, and certain South and Central American rights (27 countries in all) to its recently approved ranolazide (Renaxa) to Italian pharma Menarini for $70 million in upfront payments plus a potential $315 million in milestone payments and investments linked to European label extensions and sales figures. The angina treatment has been marketed in the US by CVT since January 2006; currently the company aims to secure approval in a first-line angina setting.

Amgen/potential denosumab partner: Remember when we were all "Amgen might be looking for a denosumab partner, how much would you pay for it"? And you readers were all "sorry, IVB, I'd really like to take a stab at this, but I'm washing my hair, can I get back to you"? Well, it seems absent any solid advice from you guys, Amgen CEO Kevin Sharer is now saying that a US partnership around denosumab is unlikely (though things might be different overseas). "It is very hard for me to imagine what another company would bring to us," in North America, Dow Jones reports Sharer saying at the Morgan Stanley health care conference on Tuesday. Maybe Sharer needs to watch a little Sesame Street to get those imaginative juices flowing. Let us help out: a worldwide or US partner on denosumab would not only bring Amgen a significant upfront payment, primary care expertise, and drug reps, but also a big ol' hedge against the risk that the product will be delayed or even fail. Bonus Denosumab: The Pink Sheet DAILY points out today that doctors worried about denosumab getting adequate reimbursement are asking Amgen for assurances for financial protection in the event Medicare won't cover the full cost of the drug.

“Standstill” Agreements Limit Potential Buyout Deals

A month ago, everyone had the same question: which Big Pharma will be the next to buy-out a biotech partner. First, Roche/Genentech. Then Bristol/ImClone. Who would be next?

So far, the answer is: no one.

It turns out that there just aren’t all that many partnership out there where a buyout is in fact an option. We looked at 12 partnerships cited by analysts and other business media as potential partner-turns-into-prey stories, and it turns out that eight of them involve contracts that prohibit one partner from making an unsolicited offer for the other. (The complete list is published in “The Pink Sheet” this week.)

We got the idea thanks to a sharp-eyed reader of the IN VIVO Blog who responded to one of our posts on Byetta. In a discussion of the disconnect between what struck us as a relatively restrained safety alert by FDA and a hyperbolic panic among Amylin investors, we wondered why Lilly doesn’t just buy out its partner if it believes Byetta is safe.

It ain’t that simple.

As we should have known (since our reader helpfully pointed to the citation in our own database), the Lilly/Amylin agreement includes a comprehensive “standstill” provision that prohibits Lilly from trying to buy its partner.

Similar provisions are included in most of the other deals we looked at.

Most, but not all. It turns out Genzyme can buy out BioMarin any time it chooses, and Genentech is free to bid on either OSI or Biogen Idec—though somehow we don’t think that is a high priority for Genentech right now. And Biogen is free to buy its Tysabri partner Elan—presuming it doesn’t mind triggering the change-in-control provisions in Elan’s Alzheimer’s partnership with Wyeth. (And change-of-control provisions, of course, are a story unto themselves though that particular provision isn't one of the industry's most onerous.)

Nor are all standstill provisions created equal. Lilly is prohibited from buying Amylin for as long as the Byetta partnership lasts—and beyond (unless, of course, Amylin decides to negate the standstill). In other cases—like Bristol/Gilead and Wyeth/Progenics—there are expiration dates that come up soon (as in, during 2009). Other partnerships (J&J/Vertex, Wyeth/Elan) also have standstills that expire—but in those cases the dates are tantalizingly undisclosed.

So if you expected a flurry of Bristol/ImClone style deals to keep you entertained this fall, think again.

Thank goodness ImClone thinks it has another bidder. Its much more fun to watch companies running in place than it is to see them standing still.

PS. Click here for a free copy of all of our coverage of Roche/Genentech...

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: Kicking Off ASCO

This weekend marks the kick-off of that other highly anticipated biotech event: the big ASCO meeting in Chicago. Appropriately, this week's deal activity in biopharmaland involved several oncology-driven pacts, which we highlight below.

Elsewhere during a short week, the US lost to England 0-2 in a football soccer 'friendly' (the corner kick captured above was among several easily cleared by the English defense) which after a spirited first thirty minutes or so seemed like a foregone conclusion. A lot like if ASCO had released all the abstracts waaaay before the meeting. Wait, they did?

Nevermind, it's time for ...


Takeda/Alnylam: Those groggy from a long Memorial Day weekend woke up to Alnylam's latest non-exclusive technology deal, a $100 million up-front alliance with Takeda Pharmaceuticals in oncology and metabolic disease. Alnylam will also get $50 million in near-term technology transfer payments. Takeda once again illustrates its willingness to spend on new technologies--we took a closer look at the deal and Takeda's recent spate of business development activity, here--and Alnylam once again manages to pull down massive upfront payments for technology it can turn around and license again tomorrow. Takeda also gets first right of negotiation on Alnylam RNAi programs in Asia (excluding ALN-RSV01) should Alnylam look for a partner there. Alnylam gets a reciprocal first right of negotiation on any project Takeda decides to shop in the US and more importantly, gets opt-in rights for 50/50 co-dev/co-commercialization deals in the US on up to four Takeda programs of its choosing (exercisable all the way through the start of Phase III), plus the usual gajillion biobucks in development and commercial milestone payments.

BMS/Kosan: Not all observers were overwhelmed by the 230% premium BMS shelled out to acquire Kosan yesterday. After all, the biotech boasted a handful of clinical-stage compounds, including the Phase III Hsp90 inhibitor tanespimycin. As we argued here, however, Bristol probably didn't attach much value to Kosan's lead project--and we should note that Kosan itself had put partnering efforts for tanespimycin on the back burner while it looked for a deal for its Phase II epothilone program, not exactly a vote of confidence. The acquisition values Kosan at $190 million, net of its cash pile, not a bad result for a company trading at a valuation on par with the value of its liquid assets. BMS is more likely interested in Kosan's epothilone programs, which also have potential in neurodegenerative disease and were the subject of an insurance policy in the event the acquisition doesn't close. If the deal falls through BMS will license Kosan's epothilone programs and IP for $25 million upfront plus milestones and royalties. BMS has pioneered this class of drug, with its Ixempra franchise, approved last October for monotherapy and combination therapy in cancer settings.

OncoGenex/Sonus: After a seven month struggle to find strategic alternatives, Bothell, WA-based Sonus Pharmaceuticals announced it had found a solution: it would merge with the Canadian drug developer OncoGenex Technologies. The combined company will be called OncoGenex Pharmaceuticals and will be run by OncoGenex CEO Scott McCormack, with bases of operations in Vancouver and Bothell. The combined entity will have have three products in clinical trials, including Sonus’ only remaining clinical candidate SN-2310. Sonus’s share price had been in a tailspin since September 2007, when it became apparent that its lead candidate, the Phase III breast cancer drug Tocosol Paclitaxel, was associated with a greater number of side-effects than the existing breast cancer regimen it was supposed to improve upon. Partner Bayer Schering promptly cut ties with Sonus, and the biotech was forced to lay-off half of its workforce in the aftermath. But the company did have two valuable bargaining chips: its Nasdaq listing and a $29 million cash reserve. Those certainly captured OncoGenex’s interest. The Canadian company had hoped to go public last year, but axed those plans due to poor market conditions. And with just $4 million in cash to support its lead product, OGX-011, currently in Phase II clinical trials for refractory prostate cancer, OncoGenex certainly needed a cash infusion.

Boston Scientific/Cryocor: Well, we’ve been down this path before haven’t we? We go on to suggest that Boston Scientific won’t be acquiring any new companies and then—just to spite us—Boston Scientific goes ahead and makes a deal. So we’re not going to point to the closing of BSX’s acquisition of CyroCor Inc. as anything more significant than it is: a $17.6 million bet on the potentially large atrial fibrillation ablation market. To be sure, Boston Scientific’s recent weight loss efforts have garnered nearly as much attention as Oprah’s. Over the past year, it’s sold off divisions, products or sizable equity stakes related to aortic aneurysm, brain monitoring, cardiac, vascular, drug pump, and hearing loss businesses. But the acquisition of CryoCor pits it against others—including St. Jude Medical—in the atrial fibrillation market. Read more on the area here. A group of CryoCor shareholders were resisting the deal and threatening a law suit, but the deal closed officially this week. Boston Scientific had entered into a collaboration with CyroCor last year to work jointly on cryoablation products. Boston Scientific already had a cryo-therapy balloon catheter while Crycor had the means to deliver the freezing agent, nitrous oxide. Together, the product would ablate or kill tissue near the pulmonary vein, which is seen as a likely initiation site of the electrical misfires that bring on atrial fibrillation. In April, St. Jude paid $92 million to acquire publicly traded EP Medsystems Inc., maker of workstations used in atrial fibrillation procedures.

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