The IN VIVO Blog: HIV

Showing posts with label HIV. Show all posts

Friday, July 27, 2012

While Awaiting New CEO, AstraZeneca Already Busy On The Business Development Front

Every player in big pharma is facing a patent cliff to some extent, but while some are dealing with their losses through diversification or a targeted approach to deal-making activity, it is unclear what direction AstraZeneca, the pure-play pharma among the giants, will take now that Seroquel IR (quetiapine) is off-patent, to be followed soon enough by Crestor (rosuvastatin).

A good portion of this uncertainty stems from the vacancy in the chief executive’s office. CFO Simon Lowth has been serving as acting CEO since predecessor David Brennan stepped down June 1 under a plan announced during the Anglo/Swedish pharma’s first quarter earnings call in April. The second quarter review occurred July 26, but while the impacts of patent expiries to top-selling AstraZeneca products are becoming clear, with a new permanent CEO not selected yet, the company’s strategy going forward remains a source of much speculation.

AstraZeneca focused largely on recent launches and late-stage pipeline prospects during the call, while Brennan’s successor was not discussed and current executives did not offer much new in the way of corporate strategy for the near term. In talking up its pipeline, AstraZeneca said it has 90 candidates in clinical development, although it counts seven drugs in the approval and launch stage among that number – an instance of trying to have its cake and eat it too?

Still, an 83-candidate pipeline is nothing to sneeze at, although Wall Street generally does not enthuse about AstraZeneca’s internal R&D. Instead, citing Leerink Swann analyst Seamus Fernandez as an example, the call is for significant M&A to yield a new future for AstraZeneca. In his July 26 note reiterating a “market perform” rating for AstraZeneca’s shares despite an 18% year-over-year decline in revenues, Fernandez re-issued an earlier call for “aggressive” M&A activity.

“We continue to believe the most realistic path forward for AstraZeneca is a more aggressive M&A strategy … but if current trends continue, additional and likely substantial restructuring may be necessary to sustain profitability necessary to deliver on the company’s “balanced” capital allocation strategy,” he wrote.

On May 31, on the cusp of Brennan’s departure, Fernandez opined that an “increased reliance on international sales growth from Japan and the emerging markets” would not be sufficient to overcome a precipitous revenue decline in the U.S. Indeed, AstraZeneca reported emerging markets revenue growth of just 1% during the second quarter, the same growth as during the first quarter, but attributed the lackluster pace to supply-chain issues stemming from new IT snags at a manufacturing site in Sweden. But for those weak links, the chain would have produced 8% growth in emerging market sales during the quarter, AstraZeneca execs claimed.

Still, there has been a clamor for growth-by-acquisition. And in a year that has seen plenty of biopharma M&A already, AstraZeneca has contributed its share of deals.

It teamed up with Bristol-Myers Squibb earlier this month to buy Amylin Pharmaceuticals for a whopping $7 billion. While Bristol is the actual buyer, AstraZeneca will send Bristol $3.4 billion after the deal goes through, almost half the purchase price, and then the two pharmas will use Amylin’s Byetta (exenatide) and Bydureon (exenatide extended-release) to bolster their combined diabetes portfolio.

In fact, it seems only accurate to describe AstraZeneca’s business development approach as aggressive already, even if it let Bristol take the lead in the Amylin buyout. Just since April, AstraZeneca has participated in eight deals, highlighted by a $1.27 billion purchase of Ardea Biosciences centered around gout candidate lesinurad. During that period, the pharma also has signed partnerships and licensing agreements with Cellworks Group, Link Medicine, Axerion Therapeutics, Amgen and The Medicines Co.

During the July 26 call, Lowth and President, R&D, Martin Mackay indicated that those deals should be seen as part of an ongoing business development strategy the AstraZeneca will continue to pursue. While Mackay focused on open innovation and numerous R&D tie-ups with partners of all sizes, Lowth said the company is pleased with the three significant deals it has completed (Ardea, Amgen, Amylin) this year, adding “there’s a whole host business developments and collaborations going on across research and development.”

Whether a new, permanent CEO – be it Lowth, Mackay or someone from outside the organization – will bring a new direction is unknown, but it is fair to say that AstraZeneca already is pursuing an active and hectic business development course. – Joseph Haas

Now, here is our weekly look at other developments in the world of biopharma deal-making …

Merck/Chimerix and Merck/Yamasa: The marketer of billion-dollar HIV drug Isentress (raltegravir), Merck & Co., struck two July 24 deals to bolster its pipeline of compounds that fight the same virus. Merck paid $17.5 million upfront to privately held Chimerix for worldwide rights to the Phase I drug CMX157, a lipid-antiviral conjugate designed to deliver the antiviral compound tenofovir to cells in high concentrations with reduced systemic effects. Milestones could add $151 million to the deal’s value, and Merck would pay Chimerix royalties if the drug is approved. CMX157 also is thought to hold promise in treating hepatitis B virus. Research Triangle Park, N.C.-based Chimerix, which has raised $101 million from venture investors, expects to put the funds toward trials on CMX101, a broad-spectrum antiviral soon to enter a Phase III study for cytomegalovirus. Separately, Merck partnered with Japan’s Yamasa Corp. in a deal of undisclosed size that gives it global rights to EFdA (4-ethynyl-2-fluoro-2-deoxyadenosine), a nucleoside reverse transcriptase inhibitor that has shown efficacy against highly resistant strains of HIV. Merck also said it would begin a Phase IIb trial on one of its own HIV pipeline drugs, MK-1439. – Paul Bonanos

Boehringer Ingelheim/Funxional: Boehringer Ingelheim is expanding its respiratory drug pipeline with the acquisition of a novel oral small molecule anti-inflammatory drug developed by Funxional Therapeutics. The companies announced a deal July 23 in which BI will acquire Funxional’s lead candidate, FX125L, a potential first-in-class somatotaxin and back up compounds for an undisclosed amount. Respiratory disease is one of BI’s core therapeutic areas; the company markets the inhaled blockbuster Spiriva (tiotropium bromide) for chronic obstructive pulmonary disease and has several respiratory drugs in late-stage development, including tiotropium for asthma and nintedanib for idiopathic pulmonary fibrosis. The addition of FX125L will give BI a first-in-class asset in a novel pathway that acts through the type-2 somatotaxin receptor (sstr2). As an oral drug, the market opportunity for FX125L could be significant given that inhaled drugs dominate the respiratory landscape. But few details are known about the drug’s clinical safety and efficacy so far. Funxional’s CEO Geoff Race said that in addition to offering the best terms, BI also had the pedigree and track record in respiratory disease that Funxional’s investors were looking for. “It is not just the initial payment that is important. It is the probability of getting the product to market that is also important,” he said. “We were pleased to have a partner like BI who we felt had the financial resources as well as the technical resources to take this product to the market.” Since its somatotaxin portfolio was essentially Funxional’s only program, the deal provides an exit for the biotech’s backers Index Ventures, Novo AS and Ventech. But Funxional may not vanish; it’s already evaluating its other earlier-stage technologies. “We are thinking about which one goes into the pipe,” Race said.” “We will take a little bit of time to think about that and start research programs later in the year.” – Jessica Merrill

Roche/AREVA: Roche and AREVA Med, a French biopharma specializing in the development of radioactive isotopes for therapeutic use, announced on July 27 that they will collaborate on a novel alpha radio-immunotherapeutic platform to focus on high-unmet need cancers. No terms were disclosed. Together, they will assess the efficacy of combining Roche’s engineered antibodies with AREVA Med’s radionuclide, Lead-212, a compound that shows promise in treating some types of cancer. Alpha radiation consists of fast-moving, high-energy helium atoms which, because of their large size, are easily stopped by a light, relatively insubstantial barrier such as a few inches of air or a piece of paper. Therefore, alpha radiation travels only short distances in human tissue. This mean that its energy is absorbed in a smaller area for improved cell death with little damage to healthy tissue. By targeting cancer cells with highly specific antibodies combined with Lead-212, there is an opportunity to more precisely irradiate and kill cancerous cells. In 2011, AREVA Med acquired Macrocyclics, a leader in metal chelators, which also will participate in the collaboration with Roche. AREVA Med is associated with the National Cancer Institute (NCI), the University of Alabama at Birmingham (UAB) and the French National Institute of Health and Medical Research (Inserm). – Michael Goodman

Photo credit: (AZN's R&D location, Molndal, Sweden) Wikimedia Commons

Wednesday, November 30, 2011

"The Trenton Patient"

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

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

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

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

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

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

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

Friday, October 07, 2011

Deals Of The Week: PPD/Carlyle Group & Hellman & Friedman; Pfizer/Puma Biotechnology & More...

This past week may have seemed plain vanilla from a deal perspective, but, ironically, it was among the most topsy-turvy of all in a year that has been relentlessly volatile for the burgeoning field cancer immunotherapy.

On Oct. 3, the Nobel Assembly announced winners of the Nobel Prize for Medicine were three immunologists, including Ralph Steinman of The Rockefeller University, who had died of pancreatic cancer three days earlier and thus became one of only a very few scientists to receive the award posthumously. The recognition came for Steinman’s discovery of dendritic cells decades ago; his work has most recently laid the scientific foundation for the biotech Dendreon Corp. to break ground and then much later dash expectations with its controversial but first-in-kind cancer vaccine Provenge for advanced prostate cancer. Bruce Beutler and Jules Hoffmann were also winners of the prize, for their work on the innate immune system, and the work of all three scientists has had implications for industry.

The mood was therefore understandably bittersweet at Cancer Research Institute’s annual scientific meeting. The meeting began in New York on Oct. 3, coincidentally the same day as both Steinman’s death and the Nobel Prize in Medicine were announced; all three prize winners have been active in CRI and winners of CRI’s prestigious William B. Coley Award. Work in the field progresses, as the roster of world-class speakers attested to, and Mitch Gold, CEO of Dendreon, received the Oliver R. Grace Award for Distinguished Service in Advancing Cancer Research – a salve no doubt in light of the recent flubbing he has taken on Wall Street for botching the Provenge launch, at least initially.

Lost in the greater dramas, perhaps, were two small deals around cancer immunotherapies, one involving a barter exchange between Merck KGAA and Ono Pharmaceuticals around Stimuvax, now in Phase III for non-small-cell-lung cancer; in exchange for Japanese rights to the cancer vaccine, Ono is giving Merck KGAA worldwide rights, excluding Japan, Korea, and Taiwan, to its experimental treatment for multiple sclerosis. In addition, Pfizer out-licensed to AZ's Medimmune subsidiary rights to its fully human monoclonal antibody tremelimumab, which binds to the protein CTLA-4, expressed on the surface of activated T-cell lymphocytes. In all cases deal terms were not disclosed but DOTW speculates…

PPD/Carlyle Group & Hellman & Friedman: Since the summer, rumors have swirled that contract research organization Pharmaceutical Product Development Inc. was in play. This week, private equity firms The Carlyle Group and Hellman & Friedman struck a $3.9 billion deal to acquire PPD, taking it private in a leveraged buyout announced Monday, Oct. 3. Affiliates of the two firms will combine to put up nearly $1.8 billion of their own equity capital, although neither firm revealed whether they contributed equally. The firms arranged for the remaining $2.2 billion as debt funding from four lenders: Credit Suisse AG, J.P. Morgan Chase Bank N.A., Goldman Sachs Bank USA and UBS Loan Finance LLC. The deal will compensate PPD stakeholders with $33.25 per share. That’s a premium of nearly 30% over PPD’s closing price of $25.66 on Sept. 30. In July, after rumors first suggested PPD might explore a sale the Wilmington, N.C.-based company issued a statement confirming that it would conduct a strategic review of its options. At the time, however, executive chairman Fred Eshelman insisted that PPD remained committed to its long-term plan and had not considered combining with another CRO. The deal is subject to a 30-day “go-shop” window, and is subject to a $58 million breakup fee if PPD chooses a higher bid, or a $116 million fee if the parties walk away for some other reason. – Paul Bonanos
Merck KGaA/ Ono Pharmaceutical Co. Ltd: Why pay cash if you can barter asset rights instead? In a duo of agreements announced Oct. 4, Germany's Merck KGaA licensed worldwide rights outside of Japan, Korea and Taiwan to Ono Pharmaceutical 's Phase II MS candidate, ONO-4641, while granting Ono Japanese rights to its own Phase III cancer immunotherapy Stimuvax. This is the second barter-style deal that Ono has signed in recent weeks. It licensed Japanese rights to Bristol-Myer Squibb's Orencia (abatacept) on September 20, while BMS gained rights in additional territories to an Ono antibody, ONO-4538/BMS-936558.

The deals were described as two separate agreements, but linking them means that less cash changes hands: Merck owed Ono Yen 1.5 billion ($18.6 million) for the MS drug, but was able to knock a third of that by granting Ono the rights to Stimuvax, now in Phase III for non-small-cell lung cancer, for €5 million ($6.6 million). No further financial details were given, except that milestone payments would be made to Ono on Merck's progress with the MS drug. Merck Serono licensed exclusive worldwide rights to Stimuvax from the US biotech, Oncothyreon. And Merck Serono has also recently snapped up another MS therapy, PI-2301, from a US company going through liquidation, Peptimmune Inc., for what appears to be a bargain $1.5 million up front.—John Davis

Puma Biotechnology Inc./Pfizer Inc.: Entrepreneur Alan Auerbach may have found a replicable biotech business model in a tough financing environment, which relies on private placements and reverse mergers to shore up financing for development of new compounds. Auerbach, a former securities analyst, founded Cougar Biotechnology in 2003 to develop oncology drugs, took it public through a reverse merger in 2006, and sold it to Johnson & Johnson for nearly $1 billion in 2009. Along the way, the company raised several hundred millions of dollars from private placements with institutional investors, who earned handsome returns upon the J&J sale.

Now, he is taking a similar tack with another start up he founded, Puma Biotechnology Inc. On Oct. 5, Puma announced that it had in-licensed worldwide commercial rights from Pfizer to an investigational pan-HER inhibitor, neratinib, now in Phase II studies for Herceptin (trastuzumab)-resistant metastatic breast cancer patients. Almost simultaneously, it also announced completion of a reverse merger with a shell company, Innovative Acquisitions Inc., and a $55 million private placement, which attracted some veteran biotech investors, such as Orbimed Private Investments IV, Adage Capital Partners, H&Q Life Science Investors, and others.

Also, in July, a company with Auerbach on its board of directors, Radius Health Inc., followed a similar financing path after a key partner elected not to exercise its option on its lead compound, a treatment for osteoporosis. Radius raised $91 million from a private placement consisting of two-thirds equity and one-third debt and engineered a reverse merger with the shell company MPM Acquisition Corp. Neratinib is being studied in the neoadjuvant, adjuvant and metastatic settings in patients with HER2/ErbB2 positive breast cancer, the same indication targeted by Roche/Genentech's closely watched T-DM1, for which FDA issued a refuse-to-file letter in August 2010.—Wendy Diller

AstraZeneca PLC/MedImmune/Pfizer Inc: Neratinib wasn’t the only oncology compound Pfizer out-licensed this week. It also gave global development rights for the cancer immunotherapy tremelimumab to Medimmune, AstraZeneca’s oncology arm. Terms of the deal were not disclosed. Tremelimumab is a fully human monoclonal antibody, which binds to the protein CTLA-4, expressed on the surface of activated T lymphocytes. Pfizer is working to build its global oncology franchise, now a distant runner to some of its Big Pharma competitors. Its top oncology drugs are Sutent (sunitinib) and the newly launched targeted therapy Xalkori (crizotinib). But it has had difficulty expanding Sutent indications beyond advanced renal cell carcinoma and gastrointestinal stromal tumors.

The question, then, is why Pfizer would have out-licensed either drug. None of the companies involved in these deals was available for comment, but Pfizer appears to be taking a nuanced approach to building its oncology franchise and is focusing on targeted therapies. And Medimmune’s expertise is in biologics, which could fit well with tremelimumab. –Wendy Diller
Gilead Sciences Inc./ Boehringer Ingelheim: Gilead will license an indeterminate number of non-catalytic site integrase inhibitors (NCINIs) for HIV from Boehringer Ingelheim, including the lead compound BI-224436. Terms were not disclosed other than that Gilead will pay BI an upfront payment plus further payments based on the achievement of development, regulatory and commercial milestones, as well as royalties on future net sales for exclusive worldwide rights to the series.

These second-generation integrase inhibitors represent a new class of antiretrovirals that bind to a novel site distinct from the current catalytic site targeted by the current generation of integrase inhibitors including Merck’s Isentress (raltegravir) or Gilead’s own late-stage candidate elvitegravir. Klaus Dugi, SVP medicine at BI, said in a press release that BI would focus on development of other assets in their virology portfolio, in particular on hepatitis C. BI-224436, which has completed a PIa trial, may offer a superior resistance profile compared with the predecessor drugs by engaging a different site on the enzyme. –Mike Goodman

Friday, July 01, 2011

Deals of the Week Declares Its Independence

On a holiday weekend that celebrates a great nation’s vow to separate from its oppressive parent, we at Deals of the Week are pondering the benefits of going it alone versus being a piece of something bigger. For venture-backed startups on the brink of maturity, that used to mean a choice between an IPO and a sale. But with the former hard to achieve, creative thinking has led to innovative deal structures that deliver returns without following either of the two traditional routes. (We’ve been watching these new strategies emerge for some time.)

How do you sell and stay independent at the same time, bringing returns to your investors without sacrificing autonomy? Forma Therapeutics, for one, has found a seemingly new way, by turning a licensing deal into a potential payoff for its stakeholders. This week, it licensed a tumor metabolism program to Genentech, bringing in an unspecified amount of cash to fund its other oncology programs. The twist in the deal, however, is that Genentech also took an option to buy the program outright, in which case Forma’s VC backers, including Lilly Ventures, the Novartis Option Fund and Bio*One Capital, will receive a cash payment. The arrangement could therefore bring returns to the VCs without diluting their stakes in Forma, which will carry on with its other programs as a standalone operation.

In it's end goal, the deal echos the dividend paid out to Knopp Neuroscience’s shareholders last year when Biogen Idec licensed its Phase II amyotrophic lateral sclerosis drug – a payout without an exit. And while some firms such as Index Ventures and Atlas Venture explore novel asset-based financing structures that effectively match returns with drug candidates rather than whole companies, Forma and its backers have found yet another way to adjust for the changing VC climate.

Speaking of which, we hope Stateside readers find themselves in warm, clear evening weather to watch the fireworks this weekend. (Gosh, we wish there’d been a notable spinout this week, the better to jibe with our Founding Fathers’ document-signing party.) But even if Mother Nature rains on your parade, we hope you find cause for celebration with…

Sanofi/Weill Cornell: In a year marked by numerous tie-ups between pharmas and academic researchers, the latest company to strike a deal with a university is Sanofi, which seeks to develop tuberculosis therapies in conjunction with Weill Cornell Medical College, the New York City-based biotech research facility and medical college of Cornell University. The French pharma said it will supply 80,000 chemical compounds to the laboratory of Cornell researcher Dr. Carl Nathan, which has obtained funding separately from the Bill & Melinda Gates Foundation. Nathan’s lab will determine if any of Sanofi’s compounds has the potential to shorten the course of tuberculosis treatments, which currently range from six months to two years. Sanofi has already ventured onto university campuses twice previously in 2011, launching an interdisciplinary drug discovery deal with Stanford’s Bio-X Center and a diabetes deal with Columbia University Medical Center. The deals build on existing arrangements with Caltech, Harvard and MIT. - P.B.

AstraZeneca/PTC: South Plainfield, N.J.-based PTC Therapeutics struck a deal with Britain’s AstraZeneca to develop up to eight targets across different therapeutic areas using PTC’s GEMS (Gene Expression Modulation by Small molecules) technology platform, which identifies small molecules that modulate post-transcriptional control mechanisms. It yields orally available compounds that act by targeting processes that occur through the untranslated, regulatory regions of messenger RNA molecules. Under the terms of the arrangement, AstraZeneca will pay an undisclosed upfront as well as research funding. PTC will qualify for research, development, regulatory and commercial milestones. AstraZeneca will retain the global commercialization rights to any products that result from the collaboration, but PTC will be able to participate in the development of certain compounds. AstraZeneca will pay PTC tiered royalties on worldwide sales. – Lisa LaMotta

Valeant/Meda: Valeant Pharmaceuticals International and Sweden’s Meda this week announced the terms of a deal that the two companies agreed to in April. Under the agreement, Valeant will pay $76 million upfront for the U.S., Canadian, and Mexican rights to dermatitis cream Elidel (pimecrolimus) and cold sore treatment Xerese (acyclovir/hydrocortisone). Meda is also eligible for $130 million in milestones and royalties over the next 18 months. Valeant will pay further double-digit royalties totaling $120 million from 2013 to 2015 on Elidel and Xerese sales, as well as sales of Valeant’s oral antiviral drug Zovirax (acyclovir). Meda announced in April that it was buying the global rights to Elidel from Novartis for $420 million. That same day, Meda also announced a commitment in principle to sell the U.S., Canadian, and Mexican rights for Elidel to Valeant. The addition of Elidel and Xerese expand Valeant’s slowly growing dermatological franchise. The Canadian biotech re-acquired the U.S. and Canadian rights to cold sore treatment Zovirax in February. It also paid Allergan CA$500,000 ($519,000) upfront plus royalties for rights to the acne medication Aczone (dapsone) in Canada. - L.L.

Flamel/Digna: Spanish university spinout Digna Biotech revealed an agreement with French drug developer Flamel Technologies that entails joint development of three early-stage compounds. Flamel will apply its proprietary drug delivery techniques to Digna’s compounds, creating new drug candidates on which Digna will conduct studies. The two will share costs, although they didn’t discuss financial terms of the agreement; the companies eventually expect to partner the drugs with larger pharmas. The first drug, P144 (disitertide), is already in Phase II trials in a topical formulation for scleroderma but is considered a candidate for pulmonary fibrosis in an injectable form featuring Flamel’s nanogel technology. The same formulation of Digna’s P17 is thought to have potential in treating cirrhosis and in halting angiogenesis, with further implications in oncology. Lastly, an oral formulation of Digna’s methylthiadenosine is a candidate for multiple sclerosis, an area in which Flamel has experience, having developed a long-acting beta interferon in conjunction with Merck Serono that’s now in the clinic. Flamel’s partnering strategy also includes a joint development deal with French pharma Theralpha, under which it developed an injectable form of pain relief candidate THA-902. Funded by Spanish investors, Digna was spun out of the University of Navarra in Pamplona, Spain, in 2003. – John Davis and P.B.

Gilead/Tibotec: Two prominent HIV drug makers have agreed to a deal that will combine a marketed drug with a late-stage candidate. J&J-owned infectious disease specialist Tibotec Pharmaceuticals agreed to license Gilead Sciences’ Phase III therapy cobicistat in order to create a new pill combining the drug with protease inhibitor Prezista (darunavir), which Tibotec will formulate, manufacture and sell, pending approval. Gilead will retain rights to cobicistat, thought to boost levels of anti-HIV drugs in the bloodstream, as a standalone agent and as a combination therapy with other drugs. The two companies also revealed plans to combine Prezista with cobicistat and two other Gilead therapies, the already-approved Emtriva (emtricitabine) and the Phase I candidate GS 7340, although they’re still negotiating terms for that single-tablet therapy. The deal tightens the two companies’ relationship beyond an existing partnership forged in 2009 to combine Gilead’s Truvada (emtricitabine and tenofovir) with Tibotec’s Edurant (rilpivirine). - P.B.

Astellas/Royalty Pharma: It's been a while since we've sunk our teeth into a royalty monetization deal, but we do have a soft spot for these cash-money-now transactions. This week Astellas sold off the royalties from a portfolio of diabetes-drug-related IP to Royalty Pharma for $609 million. The patents, largely around DPP-IV inhibitors and held by a subsidiary called Prosidion that the Japanese pharma acquired when it bought OSI Pharma, turned out to be a solid investment. Prosidion acquired the IP in 2004 from Probiodrug for $35 million and since then the revenues from the likes of BMS's Onglyza and Merck's Januvia have rung the till to the tune of more than $200 million in revenue -- and will continue to generate income until they expire in the 2017-19 timeframe. While there's something to be said for a steady stream of cash, the bolus paid by Royalty Pharma can be put to use now, and will be reinvested in strategic initiatives, Astellas president and CEO Yoshihiko Hatanaka remarked in the statement announcing the transaction. The deal should be no surprise to readers of our sister publication PharmAsia News, which reported in January that Astellas was likely to dispose of its Prosidion assets; the unit's drug development candidates are also being considered for disposal. -- Chris Morrison

Thanks to Flickr user cliff1066 for the Founding Fathers in wax, reproduced under a Creative Commons license.

Monday, January 11, 2010

Notes from JPMorgan: Gilead's Combos

HIV powerhouse Gilead Sciences reminds us of a razor company. Just when you're getting used to a three-drug combination, here comes Mach Four. In Gilead's case, it's the "quad" pill, a combo of four Gilead drugs: Viread (tenofovir disoproxil fumarate) and Emtriva (emtricitabine) -- marketed as the fixed-dose combination Truvada -- plus the experimental integrase inhibitor elvitegravir and the booster GS9350. Gilead will start advanced trials for the quad this year, which investors here at JP Morgan focused on in the company's Monday morning session.

Gilead COO John Milligan cautioned that if the quad comes to market patients won't switch wholesale from Gilead's current three-in-one pill Atripla, which combines two Gilead drugs and Sustiva (efavirenz) from Bristol-Myers Squibb, the first ever fixed-dose HIV combo with products from two different companies. Gilead of course would prefer to be the sole provider of all the components, or as Milligan put it, "The economics of the 'quad' would flow to us."

In a packed interview room, Milligan did what he reasonably could to prime the pump, highlighting some of the drawbacks of Atripla. ("Less appropriate for women," for example, he said, and the Sustiva portion of it has worrisome central-nervous-system related side effects, especially among African-Americans.)

But Gilead has other fixed-dose partners on the horizon. It's working to combine Truvada (again) with J&J/Tibotec's rilpivirine (TMC 278), a non-nucleoside reverse transcriptase inhibitor. (Tibotec is running a Phase 3 trial.)

Beyond HIV, keep an eye on the company's hepatitis B partnership in Asia with GlaxoSmithKline. Last November the firms said Glaxo would get marketing rights for tenofovir to treat Hep B in China and that a deal for Japan was forthcoming. Prompted by a question from Raymond Schinazi, one of the Emory University researchers who discovered emtracitabine, Milligan said Monday that Gilead and Glaxo were in talks to combine the firms' drugs in Asia. A fixed-dose combination of two companies' products for HBV would be a first, as far as we can tell.

The companies also have adefovir dipivoxil (Gilead) and lamivudine, a.k.a. 3TC (Glaxo), so any combo would presumably come from that pool. When asked to elaborate, a Gilead spokeswoman noted the two companies' HBV portfolios but told the In Vivo Blog that Milligan "wasn't speaking of anything specific."

(Creative commons image courtesy of flickr user Julian Holtom.)

Monday, December 21, 2009

2009 Big Pharma DOTY Nominee: GSK, Pfizer Join Hands in HIV

It's time for the IN VIVO Blog's Second Annual Deal of the Year! competition. This year we're presenting awards in three categories--that's 300% more fake prizes than last year!--to highlight the most interesting and creative deal making solutions of the year. The categories are: Big Pharma Deal of the Year, M&A/Alliance Deal of the Year, and Exit/Financing Deal of the Year. We'll supply the nominations (roughly half a dozen in each category throughout December) and you, the voting public, will decide the winners (by voting early and often, commencing once we've announced all the nominees). Strap yourselves in, it's The Race for the Roger™.

It's not every day that Big Pharmas join forces in an important way. Sure, they might call on each other from time to time to help promote a drug, or to take on some late-stage development cost. But create a joint venture? Pool pipelines and marketing infrastructure? Never.

Not until this year, anyway. So our latest DOTY nominee is the HIV joint venture between Pfizer and GSK, announced in April, and later labeled ViiV.

Ok, so no award for the name. But award the notion: combining GSK's and Pfizer's marketed HIV portfolios and pipelines into a standalone with more clout than either part would have individually, helping reduce both sides' cost, and infusing accountability and productivity in a way that only a smaller outfit can. (Just ask GSK about small-is-better in R&D.) ViiV is run by relatively independent management which makes its own R&D decisions; it can pluck R&D programs from either parent if it likes, but it isn't obliged to.

So this isn't just about fencing off a non-core priority area for both sides (and one that, let's face it, can attract unwelcome controversy), but it's also about sharpening up and making more accountable the HIV scientists. At the same time, GSK wins a bunch of pipeline products from Pfizer (great, since Combivir's heading for genericization), and Pfizer benefits from GSK's commercial clout in the field (great again; just look at the flop that was Selzentry).

ViiV is expected to generate $2.4 billion in sales in its first year; not, then, an immediate threat to leader Gilead (FY '08 sales: $5 billion), but a nice cash cow for its parents--even more so if the whole lot eventually leaves home in a spin-off.

And that's not out of the question. No indeed--"I wouldn't rule it out," Martin Mackay, Pfizer's global R&D head (and on the JV board) told us earlier. And that admission--beyond the actual creation of the JV--warrants a Roger, surely. (Roger always called for disaggregation, remember?)

What's more, if this tie-up works, it might not be the last. "If there's another opportunity to do the same thing again with GSK, we'd do it," said Bill Ringo, SVP BD at Pfizer.

Negotiating the deal wasn't easy, we understand--especially the equity split which is 85%/15% in GSK's favor. But that this happened, and that it may be replicated, should matter to the rest of the industry. It starts to signal the start of more accountable, efficient, collaborative and customer-focused pharma. So vote.

image by flickrer Wolfsoul used under a creative commons license

Monday, November 02, 2009

Meet ViiV, Pfizer and GSK's HIV Venture

Ed Silverman at "The Pink Sheet" Daily is reporting that GSK and Pfizer will formally announce tomorrow some details about their new(ish) HIV joint venture. Like, for example, the new name. (Any similarity to your favorite games console or Intel processor is purely coincidental we're sure.)

Meet ViiV Healthcare (eventually that URL will probably work). We've previously written about the JV here on the blog (you can read another full, magazine-length piece here), and our take remains largely the same--of course who knows what they'll say tomorrow to throw us for a loop. But here's some of our previous analysis:

The GSK/Pfizer HIV joint venture is an interesting solution to [pharma's problems of scale and funding a competitive pipeline in niche areas]. The new company is relatively small (first year projected sales: $2.4 billion); it’s got its own managers; it makes its own R&D decisions. The research stays within the parent companies and the JV pays its expenses – but if the pipeline projects don’t work out, and the JV doesn’t like what GSK and Pfizer are producing, the JV can buy their research from wherever they want. “It puts pressure and accountability onto the scientists,” GSK’s chief strategy officer David Redfern told us, echoing a favorite theme of GSK’s R&D boss, Moncef Slaoui.

Stay tuned. Maybe ViiV is about to make its first deal? We'll keep you posted.

Friday, October 09, 2009

DotW: Noble Pursuits

It's Nobel week and the rewards and riches went to experts who've spent their careers ferreting out the secrets of telomeres (medicine), ribosomes (chemistry), and fiber optics (physics). And then there was Barack Obama, who took home the much vaunted--and in this case highly controversial Nobel for Peace. Who needs Chicago when you have the Swedes and Norwegians, eh?

When their blackberries started buzzing, Obama aides reportedly thought they'd been punk'd--it's not April 1, for the record. It ain't hard to see why. Obama is only the third sitting president to win the award and he hasn't been in office long enough to resolve the Middle East conflict, the war in Afghanistan, or the ongoing conflicts in Iraq. What's more, those rumors keep swirling about an invasion of Canada...OK, we're kidding, but it's hard to parse the logic behind the award. Perhaps they meant to give him the Peas Prize in honor of Michelle's bounteous organic White House garden.

Whatever the reasons, we wonder if the political capital of the Nobel will give Obama the domestic leverage to push through meaningful health care reform. Another noble pursuit, the public option, which was given up for dead after weeks of debate, showed new signs of life this week. In an effort to get to 60 (it sounds like some self-help title aimed at lowering cholesterol and increasing dietary fiber, doesn't it?), Senate Dems have unveiled a compromise. (And this doesn't include the trigger option Senator Snowe is mulling.)

The plan is simple: establish a strong national public option for insurance coverage but give individual states the right to opt out. Such a solution, in theory, assuages the more liberal members of Congress afraid of losing their, ahem, moral compass, while pacifying the more conservative denizens. How this proposal would actually be implemented is a mystery. (Hey, this is a free publication. You want real solutions, go read The RPM Report or "The Pink Sheet".)
But enough dithering. It's time to check our moral compass--wait, it's here somewhere. Hark, the arrow is pointing straight toward...

Novartis/Paratek: A clearer, if not necessarily easier, pathway to FDA approval for antibiotics may have spurred Novartis' Oct. 8 purchase of exclusive worldwide rights to Paratek Pharmaceuticals' Phase III broad-spectrum antibiotic PTK 0796. Specific financial terms of the deal weren't disclosed, but Paratek said it could earn up to $485 million during the life of the deal, including an upfront payment and potential milestones. The privately-held Boston biotech also would receive undisclosed royalties on sales if PTK 0796 reaches the market.

The companies tout the compound as a first-in-class aminomethylcycline--basically a next-generation tetracycline--with the potential to become the first broad-spectrum antibiotic given once daily by I.V. or as an oral tablet to treat infections caused by drug-resistant bacteria such as methicillin-resistant Staphylococcus aureus (MRSA) or multi-drug resistant Streptococcus pneumoniae. Currently being tested in a Phase III trial in complicated skin and skin structure infections (cSSSI), '0796 has demonstrated ability to work as a single agent against a number of infectious diseases. A second Phase III trial in community-acquired bacterial pneumonia (CABP) is planned, Paratek CEO Thomas Bigger told "The Pink Sheet" DAILY. Paratek will continue to participate in clinical study and manufacturing, while Novartis will take care of worldwide marketing.--Joseph Haas

Genentech/SurModics: Genentech inked a small deal--$3.5 million upfront and $200 million in donwstream milestones--with drug delivery specialist SurModics to develop a sustained release version of Lucentis this week. But don't let the small upfront fool you. Age-related macular degeneration remains a hot area of investment for VCs and biotechs in part due to the success of Lucentis. In 2008 it totaled $875 million in U.S. sales, and with the recent CMS decision it's unlikely Avastin will steal its market share anytime soon.

Despite Lucentis's effectiveness--it stops loss of vision in more than 90% of patients and restores some sight to about a third of that population--it's far from a perfect drug. The regular monthly injections are a burden to patients and physicians and costly to the healthcare system. New options to reduce the injection frequency would be a welcome step forward. News of the partnership sent SurModics' stock soaring nearly 20%, but there's plenty of competition to worry about. A number of companies are developing competing delivery or device solutions, including Neurotech Pharmaceutical, Buckeye Ocular, NeoVista, and Oraya Therapeutics.--Ellen Foster Licking

Arigene/Trimeris: South Korean medical equipment maker Arigene's acquisition of Trimeris marks the official end of a once high-flying biotech. Trimeris discovered the HIV fusion-inhibitor class of drugs and partnered its Fuzeon treatment with Roche back in 1999 for $10 million upfront. (The Swiss pharma has since paid out milestones totalling at least $24.75 million during the life of the deal.) But the two firms abandoned development of a follow-on fusion inhibitor, T-1249, in 2004, and a next-generation compound that offered the possibility of less-frequent dosing and a better safety profile didn't pan out either. Roche returned all rights to that program to Trimeris in 2007 in exchange for a nominal royalty on future sales.It's been tough going ever since. Enter Arigene, a South Korean firm that markets a line of medical instruments under the Ubiquitous Healthcare Systems label. Arigene is offering $3.60 a share in cash, a 40% percent bump over Trimeris's closing stock price on Oct. 1, to expand its operations into "the broader biotechnology industry."

GSK/Jiangsu Walvax Biotech: In its second vaccine-related collaboration with a Chinese company this year, GlaxoSmithKline announced Oct. 6 it's creating a joint venture with Jiangsu Walvax Biotech to develop and manufacture pediatric vaccines in China. The firms will build a new manufacturing facility for Priorix, Glaxo's three-in-one pediatric vaccine for mumps, measles and rubella, and they will develop vaccines beyond MMR. The deal also involves a technology transfer to let the JV make the vaccines locally, according to Glaxo. (FYI, Walvax is a recently created affiliate of China's second largest producer of the haemophilus influenzae type b (Hib) conjugate vaccine, Yunnan Walvax Biotech.) The two companies will invest a total of £41.2 million ($65.6 million) in the joint venture, with Glaxo initially providing more than half the money and owning a 65% stake in the JV. This is the second vaccine-related JV Glaxo has signed in recent months. In June, the Big Pharma inked a five-year deal with China's Shenzhen Neptunus to make seasonal, pre-pandemic and pandemic flu vaccines.--Joseph Haas

Our final deal of the week is actually a...

Ipsen/Spirogen: Partners since 2003 on a cancer compound, Ipsen this week gave worldwide rights back to Spirogen, which now takes the reins on future development and commercialization with help from a new financial backer. In the original deal, Ipsen gained rights to SJG-136, a DNA minor groove binder, and took a 20% stake in Spirogen. Six years later with the compound entering Phase 2 to test against ovarian cancer and blood-borne malignancies, Spirogen takes over, and Ipsen becomes eligible for commercial milestones and royalties. Spirogen will also tap private-equity firm Celtic Therapeutics Holdings, which invests in projects instead of companies, for up to $15 million to help development of the compound, now renamed SG-2000. "Up to..." can mean lots of things, of course, but the firms didn't say how much of it was guaranteed.--Alex Lash

(Image courtesy of flickrer niznoz used with permission through a creative commons license.)

Tuesday, May 26, 2009

GSK and Pfizer's HIV Joint Venture: Why It’s a Path Forward

Real innovation in dealmaking, like pharma R&D, is a rare commodity. As with R&D, dealmaking innovation often gets blocked by entrenched interests or misunderstanding or simple inertia. There are lots of reasons not to repeat the single most innovative and successful transaction of all time – Genentech/Roche – but none of them outweigh the spectacular opportunity that deal created.

We’re not going to say that the GlaxoSmithKline/Pfizer joint venture in HIV is, itself, comparable to Genentech/Roche. (See some short reports with some additional transaction details on the JV here and here and a more in-depth analysis here). But it could solve a set of knotty problems that by and large companies have, for whatever reason, failed to address.

First, earnings-pressured pharmas need help financing their pipelines. One option seems to be disappearing – getting investors to directly fund development (like the Lilly/TPG/Novaquest arrangement on a group of Alzheimer’s projects). Besides the market meltdown, which has taken cash away from speculative, illiquid investments, the parties’ goals were, in the dealmaker’s parlance, unaligned. Investors want to cherry pick the pieces of the pipeline they’d most like to fund, Pfizer EVP and chief strategy officer Bill Ringo told us the other day, almost as if they wanted to guarantee themselves a return (which, in the good old days, was something they could pretty much get just by investing in Pharma). The more risk they run, of course, the more upside they want (ideally, to be able to sell successes to the highest bidder) – which naturally limits the upside, and strategic value of the asset, for the pharma partner.

Here’s another problem. Most Big Pharmas want to be big and diverse enough to balance out the risks of development – but also want to be small enough to encourage biotech-ish entrepreneurialism. Various companies are trying to have their cake and eat it too by splitting into divisional enterprises (specialty pharma, or primary care, or oncology) with their own CEOs and CSOs and P&Ls. But we remain firmly Missourian about the whole idea. Will the commercial groups be able to buy research wherever they want – or remain saddled with what’s provided internally? Will research be able to sell its best fruits to the highest bidder in order to maximize their value? And for all their divisionality, how much of the corporate infrastructure – IT, manufacturing, finance – will these divisions have to absorb?

The GSK/Pfizer HIV joint venture is an interesting solution to both problems – the big/small paradox and the funding troubles. The new company is relatively small (first year projected sales: $2.4 billion); it’s got its own managers; it makes its own R&D decisions. The research stays within the parent companies and the JV pays its expenses – but if the pipeline projects don’t work out, and the JV doesn’t like what GSK and Pfizer are producing, the JV can buy their research from wherever they want. “It puts pressure and accountability onto the scientists,” GSK’s chief strategy officer David Redfern told us, echoing a favorite theme of GSK’s R&D boss, Moncef Slaoui.

Meanwhile, Pfizer doesn’t have to pay for a new worldwide commercial HIV organization on the basis of its underperforming HIV assets (maybe underperforming because it doesn’t have the commercial group it needs); GSK gets the near-term HIV pipeline it had otherwise failed to deliver. Far as we can see, no cash changes hands.

The biggest negotiating obstacle, apparently, was the equity split (right now, 85% GSK, 15% Pfizer) – but according to Redfern, once they’d abandoned the attempt to price the pipelines, and instead started to adjust ownership based on cash flows, “the heat went out of the valuation debate.”

And then there’s the optionality of the thing – one of its main advantages, believes Redfern. The JV could fund its business development with its own equity rather than dipping into cash. When the financial markets get friendlier, the whole thing could be spun off. And presuming success even close to what Gilead has achieved, the JV owners would get big stakes in a growth company that would theoretically trade at a significantly higher PE.

And that same equity would reward the JV’s employees in a way Pfizer and GSK stock simply can’t. Not to mention the fact that it’s a lot easier for an employee to see his personal contribution to growing a company 1/29th the size of Pfizer.

And one other aspect of optionality, notes Bill Ringo: if this works, “it provides us a model we can duplicate elsewhere.” He hasn’t apparently talked to GSK yet about repeating the idea in another therapeutic area, “but if there were another opportunity to do the same thing again with GSK, we’d do it.”

We recognize that plenty can go wrong with this deal. GSK’s firmly in the driver’s seat, with seven members of the nine-person board. And Pfizer could get tired of that. We also sense that Pfizer and GSK are not on the same page when it comes to R&D accountability (we think GSK is going to be tougher on its researchers than Pfizer will –rewarding more and firing more).

But whether it works or not, the drug industry should be paying close attention to this deal. Even more attention than to the big mergers. All of those are one-time events; it’s hard to see that they’ll be in any significant way transformational. Mostly, they’re stop-gap measures. (OK, we did argue the opposite way around about Pfizer/Wyeth – though most of the reader response was pretty skeptical).

But the GSK/Pfizer JV is repeatable. And scalable. It moves the industry in the direction it needs to go: smaller, customer-focused, financeable. And it gets our vote for the most innovative deal we’ve seen so far this year.

Image from flickr user joefutrelle used under a creative commons license.

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