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Deal Watch January 2016

Shire, Roche, Sanofi, BMS and Merck & Co are among those featured in this month's roundup of M&A and other pharma deal activity

Deal Watch

Shire welcomed in the New Year by announcing the agreement to move ahead with its acquisition of Baxalta. First mooted in August 2015 with an initial $30bn (£19.5bn) takeover bid, Shire eventually paid $32bn as $18 in cash plus 0.1482 shares for each Baxalta share (implying a $47.50 value). The deal brings a reduction in tax rate for Baxalta from 23.5% to 16-17% and creates the biggest rare disease pharma company. Only days before this, Baxalta had announced the investment of $175m upfront in a strategic collaboration with Symphogen taking the company into the ever popular field of oncology (headline deal value $1.6bn). This deal brings an option to six checkpoint targets which can be exercised at the end of phase I clinical development.

Option rights proved to be a key feature this month particularly at the top end of our Deal Watch table with Sanofi/Warp Drive Bio, Quartet/Merck and Roche/C4 all including option rights.

Instead of being a quiet month, several companies followed the trend noted in the biblical story of Noah's Ark with the animals going in “two by two”; Roche, Sanofi, BMS and Merck & Co all closed two deals each which appeared in our top 20 by headline value.

Sanofi committed to a deal spend of up to $1.2bn with Warp Drive Bio and Innate in oncology. Building on its original investment made in January 2012 as part of Warp Drive's start up, Sanofi has not taken up the option to acquire the company but is now using Warp's SMART and genome mining platforms for the discovery of oncology therapeutics and antibiotics targeting Gram negative bacteria. The current allocation of a potential $750m covers three defined oncology programmes and the option rights are now on the other foot with Warp having an option to take the lead in development and step up to co-commercialise oncology products in the USA.

The second deal closed by Sanofi was with Innate Pharma to create new bispecific antibodies, which aim to kill tumour cells through the activation of NKp46. With a headline value of $436m the deal includes development and commercial milestones plus royalties.

It was a big news month for Sanofi, also in the news for terminating its licensing deal with MannKind for Afrezza (inhaled insulin). The original deal was a worldwide exclusive licence for the commercialisation of Afrezza in diabetes, with expected peak sales in the range of $0.6bn to $1.0bn (the first nine months of sales in 2015 were $5.4m). Under the terms of the deal MannKind had received $150m upfront, $775m milestones and a 35% share of global profits and losses, with Sanofi taking 65% and assuming all of the losses in the early days. MannKind's shares dropped up to 40% on the news. But, notwithstanding this set back, MannKind then announced a deal with newly formed Receptor Life Sciences for inhaled pain and inflammatory disorders. With a headline value of $102.25m, Receptor will be undertaking manufacture and commercialisation.

The next set of double deals was from Merck & Co. with Quartet and subsequently with Complix. Quartet has a potential first-in-class pipeline of small molecules, which modulate the tretrahydrobiopterin (BH4) pathway. Focusing on development for chronic pain, Quartet will receive a $20m fee (representing the upfront and milestones) to cover development through to phase IIa. Merck has retained the option to purchase the company and the package includes $575m in milestone payments.

With a lower headline value of $280m and going for another option arrangement, Merck & Co. entered a drug discovery collaboration with Complix. Under the terms of the agreement Complix will use its Alphabody platform to deliver cell-penetrating alphbodies against two intracellular cancer targets.

After a double feature in last month's deal watch with SQZ Biotech and Pieris, Roche completed a triple deal haul this month. First up was the $750m headline deal with C4 Therapeutics for access to its Degronomid technology. The deal covers a predefined preclinical phase at which point Roche can exercise its option to further preclinical and other development. Next, with a headline value of $535m, Roche closed the acquisition of Tensha Therapeutics paying $115m as an upfront payment. Tensha has developed an epigenetic technology that disrupts bromodomain and extra terminal domain (BET) proteins in order to develop potential treatments for cancer. TEN-010, the lead, is a small molecule BET inhibitor that is in two phase Ib oncology studies. Last up, with a headline value of $619m, is Roche's option deal with Catalent/Redwood. This research collaboration is based on non-exclusive access by Roche to the SMARTag platform for which Roche paid a $1m upfront fee. In addition Roche has an option to take commercial licences to specific targets.

The final company to do the double this month was BMS, which finalised agreements with Dual and Oncodesign with headline values of $255m and $83m, respectively. Dual Therapeutics' small-molecule modulators are designed to simultaneously block multiple cancer-promoting pathways. BMS has secured exclusive, worldwide rights to develop and commercialise Dual's small-molecule compounds. The deal package comprises an undisclosed upfront payment and development costs, with development and regulatory milestones. Staying with oncology, BMS has entered a collaboration with Oncodesign for the development and commercialisation of novel macrocyclin compounds. Oncodesign will receive a $3m upfront and will undertake to lead optimisation work with BMS taking over the preclinical. Each target could accrue $80m in milestone payments.

Continuing to build on its interests in pharma, Nestlé put in place a $1.9bn headline deal with Seres Therapeutics. Nestlé has been granted commercial rights (outside the USA and Canada) to a range of products focusing on Clostridium difficile infections (CDI) including SER 109 and SER 262 as well as SER 287 and SER 301. Nestlé has paid $120m upfront and will cover some development costs including one third of late stage development costs. It is expected that $30m of payments will fall in 2016 relating to the phase Ib studies for SER 262 and a late stage study for SER 109 in CDI.

So all in all a buoyant start to 2016, with absolutely no sign of the option going out of fashion just yet!

Licensor/Acquired Acquiror/Partner

Deal Type


Hline $m

Baxalta/ Shire
Acquisition company
Product portfolio covering rare diseases in haematology, immunology, oncology; cash and stock deal at 37.5% share price premium
Seres Therapeutics/ Nestle Health Science
Rights to market* products including SER 262 (p1 for Clostridium difficile), 287, 301 and 109 (SER 109 has breakthrough therapy designation); includes $120m  upfront
Symphogen/ Baxalta
6 checkpoint targets with an option exercisable at the end of p1; $175m upfront
Warp Drive / Sanofi
Extension of existing discovery agreement
SMART and genome mining platforms to discover oncology therapeutics and antibiotics; Warp has option to co-commercialise in the US
C4 Therapeutics/ Roche
Collaboration to develop targeted protein degradation drugs using C4's Degronomid technology; Roche has option to further development rights
Catalent|Redwood Bioscience/ Roche
Research collaboration
Non-exclusive access to Redwood's SMARTag platform with an option to commercial licences to defined targets; includes $1m upfront fee 
Quartet/ Merck & Co
Novel small molecules modulating tertrahydrobiopterin (BH4) pathway - first in class for chronic pain in p2; $20m as upfront and future milestone payment;  includes option to acquire the company
Tensha Therapeutics/ Roche
Acquisition company
Epigenetic technology that disrupts bromodomain and extra terminal domain (BET) proteins with potential in cancer; lead product TEN-010 is small molecule BET inhibitor in 2 p1b trials; includes $115m upfront
Rodin/ Biogen
Multi-year neuronal epigenetics research collaboration; includes option to acquire the company
Innate Pharma/ Sanofi
Collaboration to develop 2 bispecific NK cell engagers 
Ellipse Technologies/ NuVasive
Acquisition company
Medtech company focused on procedural solutions for complex skeletal deformity; $380m upfront cash plus a potential $30m milestone
Biotie Oy/ Acorda
Acquisition company
CNS portfolio includes tozadenant for Parkinson's in p2b 
Complix/ Merck & Co
Drug discovery collaboration to develop Cell-Penetrating Alphabodies (CPABs) for the treatment of cancer  
Arena / Boehringer Ingelheim
Joint research collaboration
Development of treatments for psychiatric diseases and other indications targeting an undisclosed orphan G protein–coupled receptor (GPCR) 
Dual Therapeutics/ BMS
Global exclusive licence 
Small molecule modulators designed to simultaneously block multiple cancer pathways
Mylan/ Momenta
Co-development, co-commercialisation 
Exclusive global collaboration with Momenta for 6 biosimilars including a biosimilar version of Orencia (abatacept) 
Athersys/ Healios
Development and commercialisation of cell therapy treatments including MultiStem for the treatment of ischaemic stroke**
Sucampo/ Cancer Prevention Pharmaceuticals
Option to license, collaboration
Option to exclusive license to commercialise CPP-1X/sulindac combination product in N. America; p3 for the treatment of familial adenomatous polyposis (FAP)
Abzena/(Partner nd)
Novel site specific ThioBridge antibody drug conjugate (ADC) linker technology
MannKind/ Receptor Life Sciences
Licence, collaboration
Multiple inhaled therapeutic products for conditions such as chronic pain, neurologic and inflammatory disorders; clinical development collaboration with Receptor responsible for development costs
Anterios/ Allergan
Acquisition company
Platform delivery technology enabling local, targeted delivery of neurotoxins without injections; includes ANT-1207, a topical formulation of botulinum toxin type A; $90m upfront 
Oncodesign/ BMS
To discover and develop novel macrocyclic compounds for cancer treatment based on Oncodesign's platform of small macrocycles, Nanocyclix; $3m upfront plus $80m per target

*outside the US/CA
** in Japan
*** includes milestones and royalties

19th February 2016

19th February 2016

From: Sales



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