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Pharma deals for April 2012

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

Pharma deals for April 2012 In this regular review of deals we focus on transactions announced during April 2012. As usual for this series of articles we focus on those deals where financial terms are disclosed.

This month there were five deals with price tags of more than $1bn. And once again there was a mix of acquisitions, licensing and options deals. In terms of deal rationales, we saw extensions to existing collaborations, regional expansion, especially in generics, pipeline boosting into new therapy areas, termination or divestment of non-core assets.

The largest deal was the sale of Pfizer's infant nutrition business to Nestle for $11.85bn, exceeding the $9bn that analysts had been expecting. The animal health business, with revenues of $4.2bn, is lined up to be the next Pfizer division to be spun off or sold, with suitors vying to take it off Pfizer's hands ahead of a possible initial public offering.

According to Reuters, Novartis is reported to have made a $16bn offer, while Bayer is said to have offered Pfizer as much as $18bn.

However, perhaps the most transformational deal will be Watson Pharmaceuticals' acquisition of Actavis for $5.6bn upfront, plus a potential $330m in milestones to total $5.9bn.

Through this deal, Watson will gain additional leverage in the margin-focused generics market, plus provide a deeper presence in international markets, especially in the high growth emerging markets such as Eastern Europe and Russia. Other generics deals with regional focuses this month were Amgen's acquisition of Turkey's Mustafa Nevzat Pharma (MNP) for $700m and Valeant's acquisition of certain assets from Mexico's Atlantis Pharma for $71m.

Amgen, along with AstraZeneca (AZ) and GlaxoSmithKline (GSK), has been particularly active this month with a number of deals being announced or terminated. In buying MNP with its injectable generics portfolio, Amgen, like Watson, is looking to establish a foothold in the high growth CEE markets and Middle Eastern markets. The Turkish company had been for sale since last summer, following the failure of a partnership with Eli Lilly & Company.

The three other deals that Amgen inked were an acquisition, the unwinding of a marketing agreement and a collaboration. The acquisition of Kai Pharma for $315m will give Amgen access to Kai's lead product KAI-4169 for the treatment of secondary hyperparathyroidism (SHPT) in patients with chronic kidney disease (CKD) who are on dialysis.

Through this acquisition, Amgen will acquire worldwide rights, excluding Japan, to KAI-4169 (the Japanese rights were licensed to Ono in September last year for $13m plus unspecified milestones). The addition of the investigational drug will give Amgen a further boost to its CKD portfolio.

Pfizer and Amgen announced they are unwinding their US marketing agreement for Enbrel ahead of its planned expiration in October 2013. Pfizer is preparing to launch a competing product tofacitinib for rheumatoid arthritis later this year, and Enbrel's patent is due to expire at the end of 2013. However, Amgen claims it has a new patent protecting it from generic rivals for another 17 years. If this is the case, it will impact companies with biosimilar ambitions such as Merck which has teamed up with South Korea's Hanwha Chemical to develop an Enbrel version.

Amgen and AZ announced they will jointly develop and commercialise five monoclonal antibodies from Amgen's inflammation pipeline (AMG 139, AMG 157, AMG 181, AMG 557 and brodalumab (AMG 827)). AZ will make a $50m upfront payment and the companies will share both costs and profits. The collaboration will give Amgen the resources to progress its portfolio, as well as access to the strong respiratory, inflammation and asthma development expertise AZ's biologics arm (MedImmune). The deal excludes certain territories previously partnered by Amgen for brodalumab with Kyowa Hakko Kirin and AMG 557 with Takeda.

The other deals AZ is involved with are a collaboration and an acquisition, including a $80m four year deal with The Medicine's Company (TMC) to help sell Brilinta, AZ's oral antiplatelet drug. The collaboration is touted as the first stage of “a global collaboration for acute ischemic heart disease compounds”. Beginning in May, AZ will pay TMC $15m annually plus an additional $5m if performance thresholds are met.

AZ is also acquiring Ardea Biosciences whose lead product lesinurad (a URAT1 inhibitor) is in phase III for the chronic management of hyperuricaemia in patients with gout; a new therapy area for AZ. AZ has agreed to pay $1.26bn, a premium of 54 per cent based on the previous close. This demonstrates the trend towards higher bid premiums as the pressure to fill gaps in pipelines rises.

In this regard, Bloomberg have commented that buyers have been paying in excess of 71 per cent premium for companies valued at more than $500m, the highest level the analysts have seen since 2000. This is evidenced further by GSK's, as yet, unsuccessful bid for HGS for $2.6bn with a huge 81 per cent bid premium.

As well as pursuing an acquisition target, GSK has also been busy divesting and embarking on a new collaboration. This month GSK agreed to the divestment of its non-core OTC brands in “international” markets to Aspen Pharmacare Holdings for $262mn. This completes the divestment of these brands initially announced in February 2011 with total proceeds from the divestment of these products in the USA and Canada, Europe and international markets totalling £981m (with 2011 sales of £370m).

GSK also signed another strategic drug discovery alliance with FivePrime Therapeutics, including options to exclusively license selected targets in refractory asthma and COPD (their existing alliance centres on skeletal muscle disorders). FivePrime will receive up to $30m over the next four years in upfront fees, equity investment and research funding. They will then be eligible to receive up to $194m per drug candidate that GSK opts to license, in option fees and milestones plus tiered royalties, adding up to a potential payout $1.2bn for FivePrime.

It is always good to report happy endings and we have two such deals this month. Following AMAG's unsuccessful attempt to acquire Allos Therapeutics (for $184m), Spectrum have stepped in with an offer of $206m upfront plus contingent value rights (CVR) of 11 cents a share (~$12m) based on European approval for Folotyn (for lymphoma). This move seemed to stem some of the disappointment related to Spectrum's bladder cancer drug apaziquone failing two late stage studies.

In addition, following Biotie Therapies' decision last year not to complete its takeover of Newron Pharmaceuticals, Newron have now signed a collaboration and option agreement with Zambon for safinamide, which is in phase III as an add-on therapy to dopamine agonists and levodopa for Parkinson's sufferers. Zambon will make an investment of $26m in Newron (acquiring 9.1 per cent of the equity) for the completion of the development and preparation of the application for marketing approval in Europe and the US. Zambon also has an exclusive option, (for an undisclosed amount) which initially expired by the end of April (now extended to May 13, 2012), to a license for safinamide for all territories of the world, excluding those covered by the Meiji Holdings deal announced in January.

Finally, in another announcement with a 'feel good factor' Johnson & Johnson (J&J) and Bristol-Myers Squibb (BMS) have broadened their development pact on an interferon-free combination for hepatitis C, to include another one-two interferon-free combination targeted at the virus. This time they are combining J&J's TMC435 with BMS-986094 (formerly INX-189) in a drug-drug interaction study. BMS-986094 was acquired in BMS's $2.5bn acquisition of Inhibitex in February, and is a nucleotide polymerase NS5B inhibitor, like Gilead's 7977, which inspired the $10.8bn buyout of Pharmasset.

Licensor acquired / partner acquiror Deal type  Product / Technology Headline
$m
Pfizer / Nestle Divestment Pfizer Nutrition's infant food business 11,850
Actavis / Watson Pharmaceuticals Acquisition Generics company with revenue of $2.5bn and strong presence in CEE and Russia 5,927
Ardea Biosciences / AstraZenec Acquisition Lesinurad (a URAT1 inhibitor) for management of hyperuricaemia in patients with gout 1,260
FivePrime Therapeutics / GSK Collaboration Alliance with options to exclusively license selected targets in refractory asthma and COPD  1,191
Endocyte / Merck Collaboration Vintafolide (EC145) for platinum-resistant ovarian cancer 1,000
URL Pharma / Takeda Acquisition Colcrys (colchine) for treatment and prevention of gout flares 800
Mustafa Nevzat Pharma / Amgen Acquisition Turkish generics company with MEA and CEE presence 700
EUSA Pharma / Jazz Pharmaceuticals Acquisition ERW inaze for treatment for acute lymphoblastic  leukaemia  (ALL) 700
Amgen / AstraZeneca (a) Collaboration Monoclonal antibodiesfor treatment of multiple inflammatory indications 357
KAI Pharmaceuticals / Amgen (a) Acquisition KAI-4169 to treat secondary Hyperparathyroidism (SHPT) associated with chronic kidney disease (CKD) 315
GSK / Aspen Pharmacare (b) Divestment Non-core OTC brands in “international” markets 262
Epizyme / Celgene Corp (c) Option Histone methyl transferase (HMT) inhibitors to treat a range of leukaemia   250
Allos Therapeutics / Spectrum Pharmaceuticals Acquisition Folotyn (pralatrexate injection) for the treatment of relapsed or refractory peripheral T-cell lymphoma 206
Pervasis Therapeutics / Shire Acquisition Endothelial cell technology with Vascugel to improve haemodialysis for patients with ESRD 200
Eli Lilly / Vanda Pharmaceuticals Licence VLY-686 (NK-1R) antagonist as novel therapeutic in alcohol dependence or to treat CINV / PONV 100
AstraZeneca / The Medicines Company (d) Licence Brilinta, oral antiplatelet drug; first step in a “global collaboration for acute ischemic heart disease” 80
Atlantis Pharma / Valeant Pharmaceuticals Acquisition Acquisition of certain products from Mexican generics company 71
Forest Laboratories / Janssen Pharmaceutica (e) Royalty acquisition US and Canadian IP associated with Bystolic (nebivolol) for hypertension  50
S*BIO / Cell Therapeutics Acquisition

Asset purchase of pacritinib (oral JAK 2 inhibitor) for myelofibrosis (ODD in US and EU)

30
Newron Pharmaceuticals / Zambon (a) Investment /option

Safinamide; add-on therapy to dopamine agonists and levodopa for Parkinson's sufferers

26

All deals are global unless otherwise stated or noted below :
(a) Excluding existing deals for Japan
(b) “international” markets as defined as those outside US and Europe
(c) Epizyme retain ex-US rights for a defined programme
(d) US only
(e) US and Canada IP

Bridget Lacey
The Author
Bridget Lacey
is a consultant at Medius Associates
 

11th May 2012

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