Biologics at forefront

Perhaps one of the most striking aspects of the deals covered here is how many have a biological focus. Of the 20 featured, 11 are for biological entities or for biological drug discovery and related technologies. Seven are based on antibodies and related technologies, with three of these concentrating on monoclonal antibody (MAb) drug conjugates. According to IMS, the worldwide biologics market is estimated to be worth $120bn. Within this sector, Datamonitor forecasts that global sales of antibody-based therapeutics could reach $58bn by 2014.

The significant shift towards biological drug deals is perhaps a reflection of how the pharmaceutical industry in general is adapting and refocusing its pipelines in this area.  Indeed, the combined Roche-Genentech now has a clinical pipeline more than 60 per cent of which is composed of biological drugs. In order to bolster their biologics capabilities, last year Pfizer acquired Wyeth, Bristol-Myers Squibb (BMS) acquired Medarex, and Merck acquired Schering-Plough and, most recently, UK-based biologics manufacturer, Avecia. Lilly has stated that nearly half of its phase II and III pipeline is biologics-based, while a review of GlaxoSmithKline's clinical pipeline suggests that about 25 per cent is made up of biologics.

It is important to note that pharmaceutical companies are not just concentrating on proprietary biologics. Novartis/Sandoz is already a major player in biosimilars while, last year, Merck acquired Insmed's portfolio of follow-on biologics for $130m in cash. In addition, Pfizer is reported to be hunting for partners and/or acquisitions in this area.

As part of its continued move to enhance its pipeline in biologics, BMS recently announced a potential $1bn deal with Alder Biopharmaceuticals for ALD518, a phase II stage humanised MAb targeting Interleukin-6 (IL-6). ALD518 has a novel anti-inflammatory mechanism and is being developed for the treatment of rheumatoid arthritis, as well as for cancer and cancer supportive care. Under the terms of the deal, Alder has granted exclusive worldwide rights to BMS to develop and commercialise ALD518 for all potential non-oncology indications. BMS will pay an attractive upfront cash payment of $85m and fund all autoimmune development costs for ALD518. The development- and regulatory-based milestones payable by BMS could be up to $764m across a range of therapeutic indications. In addition, BMS will pay potential sales-based milestones, which could exceed $200m, as well as royalties on net product sales.     

Alder has also granted BMS an option to co-develop and commercialise ALD518 for oncology indications outside the US. In a further element of the deal, Alder has an option to require BMS to make an equity investment of up to $20m in an initial public offering (IPO). 

It is interesting to note the division of rights to ALD518 by indication. While retaining rights to ALD518 for oncology indications in the US allows Alder to maximise returns in this area in the long term, licensing by indication can sometimes prove challenging, as testified by the disputes over the years between Amgen and Johnson & Johnson's subsidiary, Ortho Biotech, on the marketing boundaries of erythropoietin.  

The top 20 deals with reported revenues during the period November - December 2009 

Rights and options
The theme of retaining rights and/or options to co-develop and co-promote is apparent in a number of the other biologics deals featured in this article. Seattle Genetics and Takeda Pharmaceutical Company, through its subsidiary Millennium, have announced that they will co-develop and commercialise brentuximab vedotin (SGN-35), an antibody-drug conjugate for the treatment of Hodgkin lymphoma (HL) and systemic anaplastic large cell lymphoma (ALCL). Currently undergoing a pivotal phase II trial, brentuximab vedotin has orphan drug designation from the US Food and Drug Administration (FDA) and the European Medicines Agency (EMA) for both HL and ALCL and has received Fast Track designation by the FDA for HL.

Takeda is paying $60m upfront for exclusive rights to brentuximab vedotin in all countries excluding the US and Canada, where Seattle Genetics retains the rights. The companies will jointly fund worldwide development costs on a 50:50 basis, while Takeda will be solely responsible for development costs in Japan. In return for rights outside the US and Canada, Seattle Genetics will also receive progress- and sales-related milestones of more than $230m potentially, as well as tiered double-digit royalties on net sales.

Last year was a difficult year for ZymoGenetics in which it had to restructure and reduce its workforce, most recently halting its immunology programmes. The company is now focusing on its sole marketed product, Recothrom Thrombin, a treatment for surgical bleeding. In order to do this, recently ZymoGenetics had to restructure its co-promotion, licence and collaboration agreement with Bayer so that it could regain full promotion rights in the US and ex-US rights except for Canada, where Bayer will continue to market and sell the product.

As part of the refocusing, some of ZymoGenetics' immunology assets have been licensed to Novo Nordisk. These are a pre-IND stage anti-IL21 monoclonal antibody (IL-21 MAb) and broad intellectual property rights covering this product and the development of other IL-21 antibodies. Novo Nordisk already had rights to these assets outside North America and now holds the global rights.     

Under the agreement, Novo Nordisk will pay ZymoGenetics $24m upfront and potential development-related milestones of up to $157.5m, including $1.5m on Investigational New Drug (IND) filing and $8.5m at the start of phase I studies on the IL-21 MAb, plus royalties on net sales. ZymoGenetics also has the option to fund a portion of phase III clinical development costs in exchange for an increased royalty rate on US sales and US co-promotion rights. If ZymoGenetics exercises the option, it would pay a fixed fee of $10m together with 15 per cent of the costs of phase III clinical trials, and royalties on US sales would increase from single to double digits. Such an approach enables ZymoGenetics to keep its options open so that it can generate more value from its licensed assets at a later date, should its cash position improve.

New Chemical Entities
Another agreement that merits comment is that concluded between Phenomix and Chiesi for development and commercialisation rights to dutogliptin (PHX 1149) in Europe, Brazil, Turkey, Northern Africa, Russia and the Commonwealth of Independent States (CIS). Dutogliptin is a DPP4 inhibitor undergoing phase III studies for type 2 diabetes. With some significant unmet need and a rapidly growing market, the type 2 diabetes arena is highly competitive, featuring many major players that have their own in-house products.

Review of the major products in this segment shows that there are several major brands already; Januvia (sitagliptin) from Merck, Galvus (vildagliptin) from Novartis, plus Alogliptin from Takeda, which is preregistration. Most of these companies have a long heritage in this market segment. A further new entrant is the recently launched Onglyza (saxagliptin) from BMS, AstraZeneca and Otsuka. 

Being potentially sixth to market, as dutogliptin may be, is always a challenge, but placing a deal on a regional basis is a sound approach as there are significant benefits to partnering with companies that can bring local expertise to the commercialisation.  However, now that Takeda has been asked to provide additional cardiovascular safety data to the FDA, which in turn has led the company to elect to delay its Marketing Authorisation Application (MAA) filings with the EMA to allow for inclusion of additional data, the risk is not inconsiderable. 

Chiesi has extended its field of operations by a range of acquisitions and organic growth, mostly around its key respiratory therapeutic area. More recently, however, it has been building its business through a range of partnering deals in the cardiometabolic field, as demonstrated by it gaining European distribution rights to Aggrastat (a glycoprotein IIb/IIIa antagonist) from Iroko. Some mid-cap companies are starting to move into new areas (for example Cephalon moving outside CNS), but the cardiometabolic area is perceived as both high risk and highly competitive. With this deal carrying a headline value of $191m, it will be interesting to see what Chiesi acquires next.

The Author
Jill Ogden is biologics business development and licensing expert at Medius Associates
Article compiled from various sources, including FierceBiotech, Datamonitor Pharmaceuticals & Healthcare Digest and company websites.

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