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Pharma deals during January 2015

Deal Watch: Major pharma collaborations, acquisitions and agreements in the past month

deal watch image mergers acquisitions pharma

Following the bumper deal and acquisition fest of 2015 where the top 20 pharma acquisitions alone reached almost $300bn, 2015 kicks off to a buoyant start with no less than five deals with headline values of $1bn or more. 

Reflecting the other trends from 2014, the top 20 includes eight acquisitions (assets and companies) and six deals in the oncology space. CNS (notably pain) and GI also feature heavily and the total headline value for the top 20 January deals reaches an impressive $16.6bn.

Top of the table was the all cash acquisition of NPS Pharmaceuticals by Shire for a total of $5.2bn just one year on from its acquisition of ViroPharma. Rumours of this deal had previously circulated in 2014 but were overshadowed while the debate around the Shire/AbbVie deal was in play. With the break-up fee of $1.6bn in the coffers, it was evident that Shire would seek to rekindle its business and certainly the company lost no time in closing this deal. Paying $46 per share (a 51% share price premium), this deals brings Gattex (teduglutide) used in the long-term treatment of adults with short bowel syndrome into the Shire portfolio and also increases its rapidly expanding rare disease drug portfolio. Interestingly, the offer was made by Shire ahead of the decision by the FDA on Natpara for hyperparathyroidism.

deal watch table 

Another key trend was the continuing deluge of immuno-oncology deals (a notable 36 of the 85 oncology related deals we reviewed in 2014 were specifically in the immuno-oncology space) and the collaboration deal between Kite and Amgen continues this; with a headline value of $1.11bn this deal has an interesting two way cash flow. Focused around the development and commercialisation of Kite's autologous cell therapy (eACT) platform, under the agreement Kite receives $60m upfront with R&D funding and up to $525m in milestones. In return, Amgen is contributing cancer targets and can receive up to $525m in milestones per Kite programme. Unfortunately no further financial information was disclosed as it would have been interesting to know who is funding the R&D work given the quid pro quo milestone payments. 

In the same field but an asset acquisition, Cardio3 BioSciences bought the oncology division of Celdara Medical for a headline of $180m in a mix of cash, stock and royalties. A sum of $10m was paid upfront ($4m in equity) with a further $50m in milestones for CM-CS1, plus $21m per pipeline product and a back ended $80m if sales exceed $1bn. The lead candidate CM-CS1 is phase 1 ready and the acquisition brings access to 2 CAR T-cell programmes in preclinical development plus the allogeneic T-cell platform allowing the production of CAR T-cell therapy. Although billed as an acquisition this deal carries the characteristics of a licence with the usual milestones and royalties (in the range 5-8%).

Still in the oncology space, Vancouver based Zymeworks will collaborate with Celgene on the research and development of multiple bi-specific antibodies based on its proprietary Azymetric platform. Celgene will have the option to advance the resulting bi-specific candidates through clinical development and subsequent commercialisation. The deal brings Zymeworks an upfront payment and equity investment from Celgene (financial details not disclosed). The balance of the deal totals $164m per therapeutic candidate with royalties on worldwide net sales. 

Staying with immuno-oncology, an acquisition in the making is the stalking horse bid of $400m cash from Valeant to acquire the rights to Dendreon's Provenge (sipuleucel-T) which are available following Dendreon's filing for bankruptcy under Chapter 11 (November 2014). If Valeant is unsuccessful at auction, then as a stalking horse Valeant is entitled to a break-up fee and reimbursement of expenses.

Asset swaps and divestments were a strong feature during 2014 and J&J has followed suit with the divestment to Depomed of the US rights to its Nucynta franchise (tapentadol for moderate to severe pain) for $1.05bn. Originally licensed from Grunenthal, Janssen has retained the rights in other markets such as Canada, Japan and other non-US territories. 

January proved to be a very busy month for J&J with the company involved in four of the top 20 deals. So the $1.05bn coming into the bank account from the Nucynta divestment has been quickly spent! A $35m payment went in an upfront to Isis as part of its $835m headline deal for a collaboration to discover and develop antisense drugs in autoimmune disorders in the GI tract. The deal includes options to license drugs arising from the various programmes. A further $509m was allocated to the exclusive worldwide licence with AC Immune for ACI-35 anti-Tau vaccines in Alzheimer's disease (upfront not disclosed).

Lastly in the table of top 20 deals is the deal with Vedanata which carries a headline value of $241m. Staying with the GI/autoimmune focus, this collaboration is to develop VE202, a microbiome which has shown efficacy in preclinical studies. As not all of the upfront payments were disclosed, we cannot determine if all of the incoming $1.05bn has been spent.

Another major pharma keeping the PR department busy was Roche which was involved in 3 of the top 20 table deals. First up was the acquisition of a majority interest in Foundation Medicine for a total of $1.18bn. This deal included a $780m tender plus $250m equity investment and $150m in funding. Marking a strong interest in the data/genomic analysis field this confirms the determination of companies to develop personalised healthcare, particularly in oncology, one of Roche's key therapeutic areas. The very next day, news broke on the deal between Meiji Seika and Fedora with Roche under which Roche secured worldwide rights to OP0595 for severe Enterobaceriaceae infections; the headline value was $750m (no breakdown of payments given). 

A few days later, the acquisition of the French company, Trophos was announced which brings Olesoxime an orphan drug in phase II clinical development for spinal muscular atrophy; plus TRO 40303 in phase I for cardiac injury. The deal has a headline value of $545m and an upfront of €120m in cash and contingent payments of €350m. Although not making the cut for our table, Genentech (Roche) closed a deal with 23andMe (the Google backed DNA screening test company) to use whole genome sequencing data to identify therapeutic targets in Parkinson's disease. The deal included an upfront payment of $10m with $50m in milestones. 

Following the ocular lens deal between Google [x] and Novartis (July 2014, no financial terms disclosed) and the investment in Calico, it is clear that Google is building on its interests in healthcare. 

In a similar vein, other off the top 20 table deal activity of note was the announcement by AstraZeneca of four academic collaborations (Wellcome Trust, Innovative Genomics Institute, Thermo Fisher Scientific and Broad Institute/Whitehead Institute) involving CRISPR (cluster regularly interspaced palindromic repeats) technology, a pioneering genome editing technique across its drug discovery platform. This enables changes in specific genes in a faster and more precise manner.  

The number of high value acquisitions overall remains up with eight of our top 20 containing an equity component. In particular, it is good to also be able to report on a deal where one of the DW team has played a role; Roger Davies advised Auden McKenzie on the sale of the company to Actavis. Valued at $458m, this cash deal gives Actavis access to some 175 products but excludes any real estate. This deal was of significance to Actavis as it gives the company the number 1 position for generics in the UK.

See a table listing all the major pharma mergers, acquisitions and collaborations agreed during January 2014

Article by
Sharon Finch

Sharon Finch, the founder of Medius Associates, has extensive business development experience working both in industry and for over 20 years with Medius. Sharon works primarily on partner searches and transactions.

She is the editor of the Business Development and Licensing Journal and is the course director for the MSc in Pharmaceutical Business Development & Licensing run by the University of Manchester.

11th February 2015

Article by
Sharon Finch

Sharon Finch, the founder of Medius Associates, has extensive business development experience working both in industry and for over 20 years with Medius. Sharon works primarily on partner searches and transactions.

She is the editor of the Business Development and Licensing Journal and is the course director for the MSc in Pharmaceutical Business Development & Licensing run by the University of Manchester.

11th February 2015

From: Research, Sales

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