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Pharma deals for June 2012

In this regular review of deals we focus on transactions announced during June 2012

Pharma deals for June 2012

This month's review contains a mixed bag of deals covering several therapeutic areas, technologies and molecule modalities, including gene therapy. As usual the focus is on those deals with disclosed financial terms.

Bristol Myers Squibb and AstraZeneca  join forces
Bristol-Myers Squibb (BMS) finally clinched its long-rumoured Amylin acquisition, paying $5.3bn plus $1.7bn in contractual obligations to Eli Lilly. This deal enhances its diabetes franchise with two glucagon-like-peptide-1 receptor agonists, Byetta and its long acting stable-mate Bydureon, as well the leptin analogue Metreleptin - currently under review by the US Food and Drug Adminsitration (FDA) - and Symlin (amylin).

This was another example of biotech muscle flexing with Amylin previously rejecting BMS's earlier takeover offer, reported to have been $3.5bn (highlighted in last month's Deal Watch).

A wise move since the resulting auction elicited competition from several large pharma companies.

This was no simple deal, however, and within 24 hours AstraZeneca (AZ) entered the frame strengthening its long-standing diabetes partnership with BMS. AZ will pay BMS $3.4bn and is likely to exercise its right to pay a further $135m representing half the total transaction cost, to ensure equal governance rights over the joint venture.

Will this type of tripartite arrangement, which allows companies increased flexibility, increase in popularity in the coming months, as has been the case with delayed options and contingent value rights? Only time will tell.

In a further attempt to revive its ailing pipeline, AZ turned to another established partner in June - Rigel. The companies currently have an alliance to develop the phase III oral SYK inhibitor fostamatinib for the treatment of rheumatoid arthritis. The latest deal involves a preclinical asset R256, an inhaled JAK inhibitor targeting asthma.

In this heavily back-ended worldwide licence, AZ has agreed an upfront payment of $1m plus $8.25m in milestones that Rigel could secure within one year. Total milestone fees could reach $100m in addition to potential sales royalties. AZ will be responsible for clinical development.

CNS and anti-infectives deals
Upsher-Smith took the acquisition route to replenish its pipeline, in this case by acquiring its long-term partner Proximagen.

The deal consolidates the companies' common interests in epilepsy, and the icing on the cake was no doubt the welcome news in June, 2012, that the FDA has approved Arena's 5-HT1C agonist lorcaserin for weight loss. Proximagen's phase II compound PRX00933 has the same mechanism-of-action.

Proximagen will receive an upfront payment of $347m and a further $206m by way of CVRs linked to the success of PRX00933 and rheumatoid arthritis therapy VAP-1. CVRs are increasingly being used to bridge differences between buyers and sellers in biotech transactions and were similarly used by Sanofi during the Genzyme takeover.

Despite decades of disappointment, the potential commercial prize offered by an Alzheimer's disease (AD) therapy is proving to be an irresistible draw for large pharma as exemplified by Roche's (Genentech) announcement of a second deal with AC Immune.

This is an exclusive worldwide licence agreement and research collaboration based on AC Immune's anti-Tau antibody programme.  AC Immune will receive an undisclosed upfront payment, milestone payments totalling more than $418m and sales royalties. Genentech will have responsibility for preclinical and clinical development, manufacturing and commercialisation.

This deal comes only weeks after the US National Institutes of Health (NIH) selected crenezumab the phase II anti-amyloid beta antibody (partnered in 2006) for a pioneering $100m study to test its ability to delay or prevent AD in asymptomatic members of a genetically disposed Colombian family. Early intervention is now thought to be critical to success and may blight the trial prospects of two similar drugs, Eli Lilly's solenezumab and bapineuzamab from Pfizer, Johnson & Johnson and Elan.

Newron Pharmaceuticals shows further signs of moving on from Merck Serono's decision in 2011 to return the rights to safinamide, which in turn prompted Biotie to abandon its planned $63m takeover bid.  Following a collaboration and option agreement deal with Zambon concerning the Parkinson's disease treatment, Newron has agreed to acquire Karolinska spin-off NeuroNova. This was an all-share transaction valuing NeuroNova at $20m. NeuroNova shareholders will receive newly issued Newron shares representing a 33 per cent holding.

At closing Newron will receive cash commitments of up to €16m (approximately $20m) from NeuroNova's primary investors HealthCap and Invest AB.  This will fully fund pivotal clinical trials for sNN0031, a platelet-derived growth factor BB in Parkinson's, and sNN029, a vascular endothelial growth factor in amyotrophic lateral sclerosis.

In the anti-infectives space Savira Pharmaceuticals, a spin-off of the European Molecular Biology Laboratory, announced a partnership with Roche to develop small molecule polymerase inhibitors for the treatment of seasonal and pandemic influenza virus infections.

Under the terms of the collaboration and licence agreement, Roche will be granted an exclusive worldwide licence to Savira's cap-snatching inhibitors that target viral replication and, hence, may prevent viral resistance. In return, Savira will receive upfront payments, research and development support, milestone payments that could total $297.9m, and sales royalties.

Nabriva Therapeutics and Forest Laboratories announced a collaborative partnership whereby Forest will fund and help develop Nabriva's novel class pleuromutilin BC-3781 for the treatment of serious skin infections and bacterial pneumonia caused by MRSA and other drug resistant bacteria.  Nabriva will receive an upfront of $25m, while Forest has exclusive rights to acquire Nabriva within a 12 month period.

BC-3781 has microbiological activity against a wide range of Gram-positive as well as certain Gram-negative pathogens.  Importantly it exhibits no cross-resistance with other antibiotic classes and has a low propensity for inducing resistance. 

Merck & Co buys and sells
Merck & Co's collaboration with Ambrx gives the US pharma company access to site-specific protein conjugation chemistry technology.  Combining this expertise with Merck's antibody capabilities and small molecule expertise, the companies plan to efficiently deliver compounds to their site of action minimising systemic side-effect liability - the so called "smart bomb" approach.  Antibody drug conjugates are currently hot news in oncology but could potentially be applied to a wider array of chronic ailments.

As part of the deal, Merck gains worldwide rights to develop and commercialise biotherapeutic drug conjugates directed towards a number of pre-specified targets. Ambrx will receive an upfront payment of $15m and is eligible to receive milestone payments totalling up to $288m as well as net sales royalties.

On less familiar ground, Merck out-licensed the investigational PARP inhibitor MK-4827 (niraparib) to Tesaro Pharma. The drug is well tolerated, has shown early promise in brain cancer and may have utility in a variety of solid tumours and haematological malignancies.

Tesaro received exclusive, worldwide rights to patents and non-exclusive rights to Merck know-how as well as a back-up compound MK-2512.  The deal involved an upfront payment of $7m, development and regulatory milestone payments of up to $57m for the first indication, $29.5m for each successive indication, and up to $87.5m in one-time sales milestones based on the achievement of annual sales objectives.

Stiefel (GSK), Valeant and Biogen Idec continue unabated on the acquisition trail
Following the deal with Welichem Biotech reported in last month's Deal Watch, Stiefel announced an exclusive worldwide agreement with Basilea Pharmaceutica for Toctino a once-daily oral retinoid for eczema refractory to topical corticosteroids.  Toctino is commercially available in 14 countries, approved in an additional 15, and currently in phase III studies for US filing.  In 2011, worldwide sales were £22m (€27.9m).

Basilea will receive an initial upfront cash payment of $225m and is eligible to receive milestone payments of up to $77m upon FDA approval, and double-digit success payments on US net sales 3 years after approval.  Under the agreement, Stiefel will assume responsibility for the further development, manufacturing, commercialisation, and worldwide distribution.

This deal allows Basilea to support the regulatory filing on the antibiotic ceftobiprole for the treatment of pneumonia and to complete its phase III study for the antifungal isavuconazole (partnered with Astellas).

Valeant's deal this month was the acquisition of the specialty oral health company OraPharma for an upfront payment of $312m and up to $114m in milestone contingency payments.

Biogen Idec entered into its second deal this year with Isis Pharma - this time an exclusive, worldwide option and collaboration agreement to develop and commercialise a novel antisense drug for the treatment of neuromuscular disease myotonic dystrophy type 1, the most common form of muscular dystrophy in adults.

Isis will receive a $12m upfront fee, and will be eligible for $259m in clinical and regulatory milestones, plus a double-digit percentage commercial royalty.  Isis will be responsible for development costs through mid-stage clinical trials at which point Biogen will pick up the responsibility if it exercises its option to license the drug.

Overall, as noted in previous Deal Watch articles, platform deals remain popular amongst the large pharma companies and especially in the arena of novel drug discovery. However, one of the potential downsides of teaming up with a pharma company for a drug discovery alliance is the chance it might reprioritise its pipeline and drop the collaboration.

This was the case with the co-development relationship between ThromboGenics and BioInvent and their licensee, Roche.  Following Roche's decision to reprioritise its resources, ThromboGenics and BioInvent have regained the rights to preclinical stage antibody TB-403, which the companies will progress themselves for certain cancer and non-cancer indications, including ophthalmology. It may be that the companies' own further investment in this drug candidate may enable them to bring in another licensing partner at a future stage of development.


Licensor acquired / partner acquiror Deal type  Product / Technology Headline
$m
Amylin / BMS / AstraZenenca Acquisition Diabetes portfolio 7,000
Proximagen / Upsher-Smith Acquisition CNS, obesity, inflammation, oncology portfolio 553
OraPharma / Valeant Acquisition Oral health company 426
AC Immune / Roche (Genentech) Licence Anti-Tau antibodies for Alzheimer's Disease and other neurodegenerative diseases (platform) 418
Basilea/ Stiefel Labs (GSK)* Acquisition Toctino (alitretinoin), oral retinoid for severe chronic hand eczema 302
Ambrx / Merck & Co Collaboration Site-specific protein conjugation chemistry technology 300
Savira pharmaceuticals GmbH / Roche Collaboration and licence agreement Cap-snatching inhibitor programme (platform) 298
Isis Pharma / Biogen Idec Option and collaboration Antisense drug for genetic neuromuscular disease myotonic dystrophy type 1 (platform) 271
Merck & Co / Tesaro Inc Licence MK-4827 (niraparib) and MK-2512 for solid tumours and haematological malignancies (P1) 181
Genmab / Novartis Development DuoBody technology platform for bispecific antibodies 177
Rigel / AstraZeneca Licence R256, an inhalable JAK inhibitor for asthma (preclinical) 100
Tomar / Impax Collaboration Generic topical prescription drug products 46
Xanodyne / Depomed Acquisition Zipsor - NSAID for mild to moderate acute pain (launched) 26
Nabriva Therapeutics / Forest Labs Development collaboration and option to acquire BC-3781 for severe, drug resistant Gram positive infections (P2) 25
Chatham Therapeutics / Baxter Collaboration Nanoparticle technology for gene therapy for haemophilia B 25
Newron  / NeuroNova Acquisition Neurodegeneration - sNN0031a platelet-derived growth factor BB for PD, sNN029 a vascular endothelial growth factor for ALS (P1/2) 20
Bavarian Nordic / NIAID (NIH) Contract Vaccine components and technologies to accelerate the immune response 18
Trudeau Institute NIH Award Age related decline in immune functionality 9
BioInvent / Thrombogenics / Roche Termination Anti-cancer agent TB-403

All deals are worldwide unless otherwise noted – see below:
*  Commercially available in 14 countries, approved in an additional 15 countries, P3 in US

Margaret BeerThe Author
Margaret Beer is a recent addition to the Medius team following her departure from Merck & Co where she was responsible for the oversight and strategic direction of Merck's licensing and partnering operation in Europe.

She has a proven track record in drug discovery & development and deal facilitation within the pharmaceutical industry with over 25 years wide-ranging research and commercial experience in various senior positions at Merck & Co following several years within the NHS

13th July 2012

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