This month’s analysis of deals with financial terms disclosed suggests that although there is still a steady flow of company acquisitions, we also see a trend back to some more conventional licensing deals for clinical stage products.
After the summer months, deal activity does seem to be back in full swing. During October, we have seen significant activity amongst the large pharma in accessing both small molecule drugs and biologics, specifically antibody-based therapeutics. Near the close of the month, Bayer Healthcare announced the acquisition of US-based nutritional supplement company Schiff Nutrition International for $1.2bn at a share price premium of approximately 48 per cent. Schiff is a leading supplier of vitamins, nutritional supplements and nutrition bars in the US and other territories, and this acquisition enhances Bayer’s presence in the buoyant US market for over-the-counter (OTC) and nutritional products.
Several regional deals have also been announced this month with rights carved up by territory. Option arrangements still feature, ranging from the option to co-promote that we often see to perhaps the less common option to acquire.
Large pharma deals – A mix of small molecules and antibodies
Heading the deal table is the $945m licence between Astellas Pharma and Janssen for the exclusive rights outside Japan to ASP015K, an oral janus kinase (JAK) inhibitor that is undergoing phase II studies for rheumatoid arthritis and psoriasis. In addition to an upfront payment of $65m, Janssen could pay regulatory and commercial milestones of up to $880m plus double digit royalties on net product sales.
It was a particularly busy month for Merck & Co, Takeda and AstraZeneca among the big pharma companies. Merck announced three deals with significant financials during the month. Early in the month was the development and commercialisation agreement with Ablynx for the discovery of Nanobody therapeutics against a voltage gated ion channel target. This deal also included an option to develop and commercialise a Nanobody to a second target. For exclusive global rights to the Nanobodies developed under this collaboration, Merck will pay Ablynx an upfront of $8m and nearly $3m in research funding. Ablynx could also receive up to $578m in further research, regulatory and commercial milestone payments based on the progress of multiple therapeutic candidates, in addition to tiered royalties on sales of products derived from the collaboration.
In the middle of the month, Merck announced two further deals. One with German-based AiCuris, which was spun-out of Bayer several years ago, is an exclusive $572m deal plus royalties to letermovir, a phase IIb stage antiviral against human cytomegalovirus (CMV) and related assets. Letermovir has orphan drug status in the EU and the US, where it has also been granted fast track designation.
In addition to letermovir, this deal gives Merck rights to an additional back-up CMV drug candidate, and other phase I CMV assets that have a different mechanism of action. The $142m upfront payment representing approximately 25 per cent of the consideration is certainly attractive for AiCuris and probably reflects the fact that this drug is for an orphan indication.
Merck’s deal with Theravance gives the large pharma firm access to Theravance’s expertise in the design of novel molecules directed towards certain cardiovascular targets. In return for granting Merck a global exclusive licence to its cardiovascular drug candidates, Theravance will receive $153m in R&D funding and milestone payments, including a $5m upfront payment and royalties on sales of any products evolving from the collaboration.
Takeda’s two deals this month were the acquisition of US-based LigoCyte Pharmaceuticals for $60m upfront with further payments downstream based on progress and a three-year drug discovery collaboration with Advinus in inflammation, CNS, and metabolic diseases. The LigoCyte acquisition is part of the expansion of Takeda’s recently formed Vaccine Business Division. LigoCyte has a number of vaccine products in development, including its lead candidate, which is in phase I/II vaccine to prevent norovirus gastroenteritis, commonly known as winter vomiting disease.
AstraZeneca bolsters gastrointestinal business
AZ signed two deals in the gastrointestinal (GI) medical area this month. The company’s $273m licensing deal with Ardelyx brings rights to a phase II compound called RDX5791 for the treatment of complications associated with end-stage renal disease and chronic kidney disease and constipation-predominant irritable bowel syndrome (IBS-C). This deal included a $35m upfront payment and tiered, double-digit royalties on sales. RDX5791 is an orally administered inhibitor of NHE3, a protein essential in the absorption of sodium in the intestines. In keeping with the trend seen with many other biotech deals, Ardelyx has an option to co-promote the product in the US.
In its second GI transaction of the month, AZ signed a co-development and commercialisation deal to access Ironwood’s linaclotide for China. Linaclotide was approved by the FDA in August for IBS-C. In May, Ironwood filed a clinical trial application with the Chinese SFDA for a phase III trial in IBS-C. Under the terms of this collaboration, AZ will pay Ironwood an upfront $25m and will share the net profits and losses associated with linaclotide in China, with AZ’s share starting at 55 per cent and then moving to a 50/50 split once certain specified milestone is met. In addition, Ironwood could receive a further $125m in milestones if certain sales targets for linaclotide are met.
As a further dimension to their relationship, the companies also announced a co-promotion agreement in the US for AZ’s Nexium (esomeprazole magnesium) for gastroesophageal reflux disease (GERD). Many patients with IBS-C also suffer from GERD so this co-promotion arrangement allows Ironwood’s sales force of approximately 160 to promote two therapies to gastroenterologists.
Established products – new formulations
Pfizer’s acquisition of NextWave Pharmaceuticals bolsters its established products business unit bringing Quillivant XR (methylphenidate hydrochloride), which recently secured FDA approval for attention deficit/hyperactivity disorder (ADHD). The extended-release oral suspension is the first once-daily liquid medication approved in the US for ADHD, and was developed by NextWave in collaboration with Tris Pharma, its technology and manufacturing partner. Quillivant XR is based on Tris’ OralXR+ particulate-based drug delivery technology. The path to this acquisition started during Q2 2012 when Pfizer entered into an option agreement with NextWave for a fee of $20m to acquire the company.
Another deal focused on a novel formulation of an established drug is that between Veloxis Pharmaceuticals and Chiesi for the commercialisation and distribution of LCP-Tacro, an immunosuppressant for kidney transplantation that is in phase III. LCP-Tacro is a novel formulation of tacrolimus based on Veloxis’ MeltDose technology, which enhances the bioavailability of compounds with low water solubility. In keeping with Chiesi’s marketing capabilities, the licence is for certain countries, including Europe, Turkey and CIS countries. In addition to the upfront and potential milestones of up to $48m, Veloxis will supply product to Chiesi for sale in the territories at a transfer price at a pre-agreed double-digit percentage of the product’s sales price.
And as the month closes…
Nearing the close of this month, we noted two deals that stood out. The first is the revised deal between ViiV Healthcare (the speciality HIV company formed by GSK and Pfizer in 2009) and Shionogi. Under the new agreement, ViiV Healthcare will acquire the exclusive global rights to the assets in the Shionogi-ViiV Healthcare joint venture. These assets include dolutegravir, a phase III stage integrase inhibitor against HIV, and other early stage integrase inhibitor compounds. In return, Shionogi will receive a royalty on net sales of the integrase inhibitor portfolio averaging in the high teens and will also take a 10 per cent stake in ViiV Healthcare. This is a good example of large pharmas pooling resources and working together for the benefit of patients.
The other deal of note is between Oxford BioTherapeutics and Menarini. This is a collaboration to develop five of Oxford BioTherapeutics’ antibody and antibody-drug conjugate (ADC) programmes for undisclosed cancer indications. Whilst Oxford BioTherapeutics will be responsible for the discovery activities, Menarini will lead on the manufacture and clinical development of each programme. Once clinical proof of concept is achieved, the biotech will develop and commercialise the products in North America and Japan, and Menarini will develop and commercialise the products in Europe, CIS, Asia and Latin America. Whilst no financial terms have been disclosed, a quotation from Menarini states that the company foresees an investment of about $1bn in the five cancer programmes. Whatever the actual financials of the arrangement are in terms of upfront, R&D funding, milestones and royalties etc, this is clearly an attractive transaction for Oxford BioTherapeutics.
| Licensor acquired / partner acquiror | Deal type | Product / Technology | Headline $m |
|---|---|---|---|
| Schiff Nutrition International/ Bayer | Acquisition | Vitamins, nutritional supplements | 1,200 |
| *Astellas / Janssen | Licence | ASP015K for RA, psoriasis (phase II) | 945 |
| Evotec / Bayer | 5 yr discovery, collaboration & licence | Three drug candidates for endometriosis | 761 |
| NextWave Pharmaceuticals / Pfizer | Acquisition | ADHD and related CNS disorders (lead product FDA approved) | 680 |
| Amdipharm / Cinven | Acquisition | Portfolio of off-patent “legacy products” | 590 |
| Ablynx / Merck & Co | Collaboration, licence & option | Nanobodies against ion channel target | 587 |
| AiCuris / Merck & Co | Licence | Letermovir (phase IIb) and antiviral portfolio for CMV | 572 |
| Ardelyx / AstraZeneca | Licence | RDX5791 for end stage renal and chronic kidney disease and IBS-C (phase II) | 273 |
| Seattle Genetics / Abbott | Expansion of existing collaboration | Auristatin-based ADC technology | 245+ |
| Theravance / Merck & Co | Collaboration & licence | Therapeutics against a hypertension / heart failure target | 153 |
| **Ironwood / AstraZeneca | Co-develop & co-commercialise (profit/ loss share) | Linaclotide, IBS with constipation (FDA approved) | 150 |
| Covagen / Mitsubishi | Collaboration & licence | Tanabe Fynomer-antibody platform for bispecific proteins (FynomAbs) | 145+ |
| Presidio / BioCryst | Acquisition | Hepatitis C portfolio (lead product phase I/II) | 101 |
| Advinus / Takeda | 3 yr discovery, collaboration & licence | Drug discovery in inflammation, CNS, and metabolic diseases | 90+ |
| ‡Theravance / Alfa Wasserman | Development, commercialisation & option | Velusetrag for gastroparesis (phase IIa) | 64 |
| LigoCyte /Takeda | Acquisition | VLP-based vaccines for GI & respiratory infections (lead product phase I/II) | 60 |
| ‡‡Ethical Oncology Science / Servier | Collaboration & licence | E-3810, novel kinase inhibitor for breast cancer (phase I/II) | 58 |
| †Veloxis Pharmaceuticals / Chiesi Farmaceutici | Licence | LCP-Tacro (tacrolimus) immunosuppressant for kidney transplantation (phase III) | 48 |
| VentiRx Pharmaceuticals / Celgene | Collaboration & option to acquire | VTX-2337, small molecule cancer immunotherapy (phase I/II) | 35 |
| OctoPlus / Dr Reddy’s | Acquisition | Drug delivery / formulation technologies | 34 |
| ††QRxPharma / Paladin Labs | Licence | MoxDuo IR, fixed dose morphine and oxycodone for pain (NDA filed) | 25 |
All deals are worldwide unless otherwise noted – see below:
* worldwide excluding JP
** China
‡ EU, Russia, China, Mexico and certain other countries
‡‡ worldwide excluding US, Japan, China
† Europe, Turkey and CIS countries
†† Canada
IBS-C = constipation-predominant irritable bowel syndrome
VLP = virus-like particle
The Author
Jill Ogden has over 25 years’ commercial and R&D experience in the biopharmaceuticals and healthcare industries and provides biologics and drug delivery expertise for Medius Associates. She has led and been involved in a wide range of product and technology deals and corporate transactions.