Pharma deals during June 2013

Following last month's Deal Watch report, which noted nine M&A deals, this month saw a similar level of activity with seven M&A deals, but maybe unsurprisingly, none reached the $8bn-plus values seen in May.

Top of the table is the patent settlement between Pfizer/ Takeda and Teva/ Sun Pharmaceutical for the launch of generic versions of Protonix (the proton pump inhibitor, pantoprazole) in 2007 ahead of its US patent expiration in January 2011. Nycomed had originally developed the drug, which it had licensed to Wyeth. Between them Teva and Sun Pharma will pay $2.15bn in damages (Teva $1.6bn and Sun Pharma $550m); Pfizer receives 64 per cent of the proceeds and Takeda the balance.

Oncology
Oncology remains a hot spot for deals with several being concluded during this month. First up was Johnson & Johnson's (J&J) acquisition of Aragon Pharmaceuticals in the field of hormonal driven cancers, where J&J is paying $650m upfront with a further $350m in contingent milestone driven payments. A key target of this acquisition is the lead compound ARN 509, a second generation androgen signalling receptor inhibitor which is currently in phase II clinical trials for prostate cancer. Interestingly, J&J is not getting the entire company pipeline however, as Aragon is spinning out the selective oestrogen receptor degrader platform into a new company, Seragon Pharmaceuticals. J&J has no rights to this spun out technology. 

Although Roche has not been making as many deal headlines lately, Genentech entered into a research collaboration and licensing agreement with Immunocore for the discovery and development of multiple novel cancer targets using Immunocore's ImmTAC platform. Under the agreement, Immunocore will recieve between $10 and $20m in initiation fees per programme, with in excess of $300m in development and commercial milestones for each target programme.

Clearly the appetite for antibody conjugates remains undiminished with several more deals being closed this month. Pfizer and CytomX closed a strategic collaboration under which Pfizer gains access to selected probody drug conjugates. The companies will work together on preclinical research with Pfizer taking the development forward thereafter. The early stage payments (upfront fees, research and preclinical milestones) amount to approximately $25m, with $610m contingent payments and royalties tiered reaching double digits on future sales.  

With a similar headline value, Bayer gained worldwide rights to several oncology targets under Seattle Genetics auristatin-based antibody drug conjugate technology. Bayer is making upfront and option exercise payments of up to $20m, with a further $500m on reaching certain milestones plus royalties.

June proved a very busy month for MorphoSys, with the company closing two major deals, firstly with GSK (announced June 3) and then with Celgene (announced June 26).  The GSK deal covers the development and commercialisation of MOR103, a HuCAL-derived antibody against GM-CSF, which has competed its phase I/II development in mild to moderate rheumatoid arthritis. The upfront payment is €22.5m ($30m) with additional further payments of up to €423m ($550m) with tiered double digit royalties. 

The Celgene deal is for MOR202 and is a co-development, co-promotion arrangement under which MorphoSys will receive tiered double digit royalties for sales in territories outside the European co-promotion region. MOR202 is a fully human MAb targeting CD38 in patients with multiple myeloma and certain leukaemias. It is currently in phaseI/IIa for relapsed / refractory myeloma. Development costs will be shared, with MorphoSys contributing one third and Celgene two thirds. The upfront fee is €70.8m ($92m) with a further €46.2m ($60m) investment in new shares in MorphoSys.

Women's health
In previous DW issues we have noted the number of deals recently appearing in women's health and June is no exception. Bayer closed its acquisition of Conceptus, securing access to Essure, a non-surgical method of birth control, which extends Bayer's franchise in contraception.  

Medicines360, a non-profit pharmaceutical company, which aims to make birth control more cost effective and accessible, formed a partnership with Actavis to make its LNG20 Intrauterine Device (IUD) available at a low cost in the US. Medicines360 retains the right to make the IUD available in family planning clinics that serve low income women. This device, which delivers levonorgestrol, is in phase III development and could be launched by 2014.  Actavis gains the rights to market, sell and distribute the LNG20 IUD in the private sector commercial markets in the US and Canada with a payment of approximately $50m and additional milestone payments of up to nearly $125m plus royalties.

Respiratory acquisitions
Continuing its run of deal activities, AstraZeneca (AZ) built on its respiratory interests with the acquisition of Pearl Therapeutics at a headline value of $1.15bn. This deal brings the lead product PT003, a fixed dose combination of formoteral fumarate and glycopyrrolate. Currently in phase III clinical development for COPD, this combination of a long acting beta-2 agonist (LABA) and a long acting muscarinic antagonist (LAMA) is expected to become an important new class of treatment. The deal also brings the option to add a corticosteroid (triple fixed dose combination), which may be accelerated into phase II. AZ paid an initial $560m for Pearl's shares and a deferred $450m and $140m due for development/regulatory and commercial milestones respectively.

Still in the respiratory space, Teva acquired the privately owned drug delivery company MicroDose Therapeutx for an initial $40m with further payments of up to $125m. The deal brings to Teva a multi dose dry powder nebuliser technology and MDT-637, a low dose, small molecule, fusion inhibitor for the treatment of respiratory syncytial virus (RSV).

Regional trends - focus on China
In these Deal Watch articles, we often comment on the trend towards regional deals and this month sees several which closed for China. First up with a headline value of $39.5m was the deal between Taiwan Liposome and SciClone. Under this agreement the Taiwan Liposome Company granted SciClone a licence for exclusive rights in China, Hong Kong and Macau to promote, market, distribute and sell ProFlow for peripheral arterial disease and other indications.

In a similar arrangement, and with a headline value of $30m, BioLineRx granted CTTQ exclusive rights to develop, manufacture and commercialise BL-8030 in China and Hong Kong. The deal includes high single digit royalties on future sales and BioLineRx retains the rights for the rest of the world.

Elan - where next?
To wrap up the month's news and update on the Elan saga, at the company's EGM on June 17 shareholders approved the share repurchase programme but elected not to close the various deals on offer as noted in a previous Deal Watch, ie the Theravance, AOP Orphan and the Speranza ELND005 transactions. The hostile bid made by Royalty Pharma has therefore lapsed and Elan has now initiated a formal sale process. So we watch this space with eager anticipation of the next events.

See a table listing all the major pharma mergers, acquisitions and collaborations agreed during June 2013