Deals Of The Week: CATT Fight

Well, the cat (er catt) is out of the bag – and, n,o we aren’t talking about Kate Middleton’s decision to wear a long-sleeved ivory confection with flower appliqué details when she tied the Windsor knot.

While fashionistas, pundits, and the British nation had their eyes trained on Westminister Abbey, the biopharma industry was focused on the release of data comparing the utility of the high priced Lucentis versus the much cheaper Avastin to treat wet age-related macular degeneration. And as everyone now knows, the data from the 1200-patients trial sponsored by NIH suggest that in this particular setting, there seems to be little reason—based on overall outcomes—to spend thousands of dollars on Lucentis when Avastin works just as well for a fraction of a cost.

Dr. Phillip Rosenfeld, an ophthalmologist at the University of Miami Miller School of Medicine, was particularly blunt in his assessment in a NEJM editorial that accompanied the data’s publication: "Healthcare providers and payers worldwide will now have to justify the cost of using ranibizumab [Lucentis]," he said.

That’s not to say Genentech and Novartis aren’t channeling their inner Churchill (or perhaps, more appropriately, their inner John Paul Jones). Already the companies are highlighting potential unanswered safety questions, including discrepancies in dosing and a slight increase in the incidence of non-specific serious adverse events, mostly hospitalizations. Expect the drug companies to play up whether the controlled conditions of the NIH trial can adequately be replicated in a real world setting too.

Given we are talking about people’s sight, those questions may provide a persuasive argument for docs and patients wary of not using the formulation that has FDA’s stamp of approval. Provided payers play along, of course.

And that's why Medicare’s decision is so critical. Avastin vs. Lucentis has become the poster child for the comparative effectiveness debate; thus, you can bet industry will be watching closely to see whether or not CMS initiates a coverage review that would limit Lucentis’ use. Such a decision would certainly give private payers more license to limit the medicine as a first-line treatment option.

The ripples of CATT will almost certainly be felt outside the walls of Novartis and Roche/Genentech as well. Ophthalmology – particular treating diseases that blind—has become an area of interest for big pharma because of the unmet medical need for new therapies. Because back of the eye diseases are treated by a highly trained and technically savvy group of specialists, the sector has long been a favorite of the venture community as well.

What does this mean for new AMD drugs coming down the pike like the complement inhibitors developed by Optherion or the anti-PDGF inhibitor developed by Opthotech? Given such medicines work by a different mechanism of action than the anti-VEGF inihibitors Lucentis and Avastin, their value proposition is still a little bit easier to explain. But whether potential partners will bite without superiority data is another question.

Certainly the CATT data seem to make life much tougher for Bayer and Regeneron, who now face some thorny questions about their VEGF Trap-Eye medicine, aflibercept. Phase III data released last fall showed the drug to be non-inferior to Lucentis, with fewer doses required. But with data from CATT suggesting drugs like Lucentis and Avastin can be given at less frequent intervals, a dosing advantage alone seems unlikely to be enough to ensure Regeneron and Bayer coverage and commercial uptake of their medicine – especially when data showing a much cheaper alternative can do the job.

Whether you think the CATT results are the cat’s meow or worth nothing more than a cat call, it’s time for another edition of deals of the week…

Johnson & Johnson/Synthes: The deal garnering the lion’s share of the PR this week is Johnson & Johnson’s $21.3 billion tie-up of orthopedic trauma device maker Synthes, announced April 27. Under the terms of the deal, J&J will pay $181.75 per share for Synthes in cash and stock, an 8.5% premium over Synthes’ stock price close on April 26 and a 21.7% premium over its close on April 14, when rumors about a possible tie-up first surfaced. It’s the largest deal in J&J’s history, coming half a decade after the diversified giant passed on upping its $25 billion bid for Guidant. Strategically the Synthes buy-out makes a lot of sense: it gives J&J the pole position in orthopedics boosting sector revenues from around $5.6 billion to more than $9 billion, and deepens its expertise in trauma fixation devices, an arena less prone to payer oversight and the vagaries of a slowing economy. (Fixing the damage arising from a major accident ain’t exactly elective.) At the time of the Guidant bidding war, analysts noted J&J’s interest in that company and the size of the deal said a lot about the health care company’s view on the relative merits of investing in med-tech versus pharma. Given the Synthes acquisition, the question of J&J’s dedication to Rx is sure to resurface, though the early approval of Zytiga may help the balance.

One interesting wrinkle is whether this big orthopedic deal could presage additional dealmaking in CV, since within J&J there’s historically been a school of thought linking opportunities in these two markets. As rumors about the possible J&J/Synthes tie-up coalesced, speculation ran the gamut. Thanks to the precipitous drop in market share of its drug-eluting stent biz, some predicted J&J would exit CV altogether, selling off its Cordis business; others said 'no,way,' opining this will spur J&J to re-up in CV, perhaps via acquiring percutaneous valve-leader Edwards Life Sciences.

Because J&J is paying for Synthes mostly in stock -- just 35% of the payment is cash -- the health care firm has plenty of ammunition for additional deal making. Given J&J's hefty balance sheet, its use of stock to ink the deal took some by surprise since it creates additional unwelcome earnings pressure. Even though the deal bolsters the struggling DePuy subsidiary, which like the consumer division, has seen major setbacks due to recalls, some claim J&J is simply putting a Band Aid (pun definitely intended) on its problems. Critics argue the company’s manufacturing problems are significant and that integrating Synthes will detract from the hard work required to fix a broken system. —The EBI Device team

Kadmon/Nano Terra: Sam Waksal’s Kadmon is at it again. After its deal-making bonanza last fall – recall the firm acquired Three Rivers and set up a strategic partnership with Valeant—Kadmon is teaming up with privately-held Nano Terra, a nanotech accelerator developing technologies with applications from biopharma to more industrial settings. Terms of the tie up weren’t disclosed but they do provide Kadmon with an exclusive license to three novel, clinical stage assets and access to Nano Terra’s proprietary Pharcomer Technology drug discovery platform. (FYI, the product candidates and the Pharcomer technology were originally developed by another private biotech, Surface Logix, and only recently acquired by Nano Terra, though no formal announcement about that deal appears to have been made.) Perhaps the most interesting asset for Kadmon is Slx-2119, a selective Rho-associated coiled-coiled kinase 2 (ROCK2) inhibitor that impacts cell shape and cell migration and may play a role in diseases as diverse as diabetes, cancer, and spinal cord injury. As part of the recent alliance, the assets and technology will be transferred to a new joint venture owned by Kadmon and Nano Terra called NT Life Sciences.—EFL

Sequella/Maxwell Biotech Venture Fund: Anti-infectives developer Sequella of Bethesda, Md., signed an unusual deal that gives Maxwell, a venture fund that specializes in Russian investments, rights to tuberculosis treatment SQ109 in Russia and the Commonwealth of Independent States, which includes Armenia, Kazakhstan, and Ukraine. Maxwell is taking an undisclosed equity stake in Sequella, but the parties do not consider the transaction a round of funding. Sequella could receive up to $50 million from Maxwell, the first tranche being an upfront payment and near-term milestones that the companies declined to disclose. Run by former Pfizer discovery executive and incubator chief Alex Polinsky, Maxwell has responsibility for development and approval of SQ109 in its licensed areas. Sequella has completed three Phase 1 studies of SQ109 in the U.S. and is currently running Phase 2 efficacy studies in TB patients in Africa. It is also testing the compound as a treatment for Helicobacter pylori infections and fungal infections. Sequella officials told the IN VIVO Blog that the company has not raised traditional rounds of venture capital, instead leaning on individual investors and hedge funds to supplement government grants. -- Alex Lash

Eli Lilly/Medtronic: While drug companies routinely team up with device makers to find better ways to deliver drugs, the April 26 deal between Eli Lilly and Medtronic, to research and develop a new treatment for Parkinson's disease is notable for two reasons. For starters, the collaboration involves two very early stage technologies. But the alliance also facilitates Lilly's move into a new area of CNS that heretofore hasn’t been a primary focus. If all goes according to plan, the alliance will result in a combination of Lilly's modified form of glial cell-derived neurotrophic factor (GDNF) and Medtronic's implantable drug infusion system. Because the large protein growth factor can't get past the blood brain barrier, and, on its own, isn't targeted, the Medtronic device would deliver it directly to the dopamine-producing neurons that degenerate as Parkinson’s disease advances. The companies aren't disclosing much about the terms of their alliance, except to note that it is a 50-50 split in both costs and revenues and spans clinical development, regulatory and ultimately commercial stages. The aim is to produce a combination product that can be submitted jointly for regulatory approval. The partners don't have a fixed time line for getting their therapy through development, but expect to move it into the clinical within five years, said Ros Smith, a senior research director of regenerative biology at Lilly.While the modified GDNF is most advanced, Lilly also has several compounds in pre-clinical development for Parkinson's disease. Medtronic, for its part, doesn't currently sell a device that delivers drugs directly to the brain, although it markets a deep brain neurostimulation technology for treating Parkinson's disease and sells implantable pumps and catheters for delivery to the spinal cord.--Wendy Diller

Image courtesy of flickrer privatenobby used with permission through a creative commons license.

Preparing for the CATT Study: Will Makena Controversy Have an Impact?

The first public presentation of data from the National Eye Institute’s head-to-head study of Lucentis vs. Avastin in macular degeneration will take place this weekend. The Comparison of Age-Related Macular Degeneration Treatments Trial (CATT) is sure to go down as an early landmark in the era of comparative effectiveness research—though exactly how it will be remembered is less clear.

We have written extensively about the unusual situation Genentech faces with the CATT trial—basically a government run study designed to prove that one Genentech product (Avastin) is just as good as another (Lucentis) at a vastly lower cost. The study was initiated and designed completely without Genentech’s help, prompted by outrage among providers who had been using Avastin off-label for AMD who experienced sticker shock when Lucentis was launched at a price of about $1,500 per dose, compared to $50 for the unapproved, microdose of Avastin.

It took a very long time to get the study off the ground, thanks in part to a series of administrative hurdles posed by the unusual circumstance of conducting a study in the Medicare population without the support of a willing sponsor. The planning for the trial began in 2005, but it didn’t really get going until 2008.

Now, at least, it is wrapping up—and in a juicy irony the study results will be reported right on the heels of a completely different controversy over an attempt by a sponsor to sell a product at $1,500 a dose to providers comfortably using an unapproved alternative that costs about $50 a dose. That, after all, describes the situation with KV Pharmaceuticals’ pre-term labor drug Makena.

The situations aren’t perfect parallels of course. KV launched Makena earlier this year, becoming the latest sponsor to pursue a strategy of obtaining FDA approval for a widely used unapproved medicine, in this case, the pharmacy-compounded ingredient 17P. Makena received an Orphan Drug designation, the only exclusivity KV can count on since the active ingredient is long off-patent. The application itself was an abbreviated one, referencing clinical studies conducted by the National Institutes of Health demonstrating a benefit in delaying pre-term labor in high risk women. (Though the NIH study wasn’t enough for a full approval; Makena received an accelerated approval with the sponsor committing to demonstrating a clinical benefit in the health of newborns.)

Lucentis feels very different. The active ingredient is a modified version of the monoclonal antibody known as Avastin, optimized (Genentech says) for use in the eye. Avastin itself is high science, the quintessential biotech breakthrough, an angiogensis inhibitor whose benefits were demonstrated at high cost and high risk by Genentech.

But the controversy around the two therapies is essentially the same: providers reacted to a de facto 3,000% price increase by complaining to anyone who would listen. Congress took note and pushed federal agencies to respond.

The nature of those responses has been very different. For ophthalmologists, use of Avastin is now common practice, especially for uninsured patients or in any circumstance where securing reimbursement for Lucentis may be in doubt. And the CATT study is supposed to help preserve the status quo by demonstrating non-inferiority between the two treatments.

For Makena, the key response came from FDA, which announced March 30 that it would not clamp down on compounders who continue to make 17P. (You can read more in “The Pink Sheet,” here.)

That simple action, coupled with CMS’ same day “reminder” to state Medicaid directors that they can continue to pay for compounded 17P if they choose, dramatically changes the commercial picture for KV, and the company reacted by slashing its price. The rest of the story has yet to be written, but we suspect KV will ultimately drive compounders out of the market and that will be that.

But the considerable attention generated by Makena should mean that the CATT study will garner even more interest than it already commands.

The question is, exactly what will that interest lead to?

That is where another connection to Makena comes into play: the question of how safe it is to use unapproved alternatives to an FDA approved therapy. Roche/Genentech has stressed that issue as a key concern with off-label use of Avastin all along, and the company sponsored a review of Medicare claims data that suggests there are indeed more adverse outcomes associated with that use than with Lucentis.

And recent comments by Center for Drug Evaluation & Research Director Janet Woodcock about the Makena controversy may shed light on how FDA views the issue.

Woodcock spoke at the Food & Drug Law Institute annual meeting in early April, less than a week after FDA issued the public statement on compounding and Makena.

It was therefore inevitable that she would be asked about the issue. Inevitable, and also a bit unfair. The controversy over Makena is clearly a political issue, with Ohio Democratic Senator Sherrod Brown spearheading an all out campaign for federal agencies to do something to address what he (and plenty of provider groups) felt was an outrageously high price for the drug. So FDA’s announcement that it would not clamp down on compounding of Makena clearly began at a level much higher than the CDER director.

Moreover, any drug regulator is bound to feel strongly that an FDA-approved product is safer than a pharmacy compounded product. Woodcock, who has devoted considerable energy to upgrading quality control in (regulated) pharmaceutical manufacturing, probably has stronger feelings on that score than most.

But it is Woodcock’s job to defend agency policy, and defend it she did.

She began by stressing the importance of placing the issue in the context of conflicting societal pressures. In the case of Makena, Woodcock suggested, the agency’s decision aimed to find that balance. In its March 30 public statement, FDA stressed the “unique” circumstances surrounding Makena, underscored the importance of assuring sterility in the injectable product, and noted that FDA may revisit its enforcement discretion at any time.

“We want a lot of things as Americans,” Woodcock noted. “We want orphan incentives. We definitely want people to study drugs in pregnant women, which they don’t do. We want affordable drugs. We want high quality parentals that are not contaminated with bacteria and killing people.”

“Sometimes all these wants conflict with each other. The question is, with all these different societal desires, how do we define a balance amongst them?”

Moderator Daniel Kracov (Arnold & Porter) suggested that the issue is whether it is appropriate for FDA to “play that role” of arbitrating among those competing desires.

Woodcock responded by stressing the limits on FDA’s ability to regulate compounding—not just questions about the scope of its authority, but practical limitations on its resources.

“In general, our enforcement policy on compounding has been that we are taking a risk-based approach and we are going after compounders that are having contaminated drugs.” She cited a recent outbreak of septic meningitis associated with total parenteral nutrition compounded by a pharmacy in Alabama. (Coincidentally, FDA issued a safety alert tied to that outbreak on March 30, the same day it announced its Makena policy.)

In addition to focusing on cases of contamination, “we will also go after serious health fraud,” like if a pharmacy is offering some substance as a replacement for insulin. “We have the risk-based approach down from that, but those are the primary objectives right now in compounding, because we have many many tasks that we have to enforce against.”

Panelist Nancy Buc (who recently retired as a partner at Buc & Beardsley) pressed Woodcock, noting that her own priority lists highlights injectable products as a priority. “One of the things that Makena brings us is GMPs and presumably sterility. Are you going to inspect the people who are compounding more than one dose for sterility?”

“I would ask you are we going to inspect people who are compounding drugs that are injected directly into the epidural space, or into the cerebral spinal fluid,” Woodcock responded.

“There are many concerns here. There are many, many compounded drugs that are intravenous. That poses a higher risk than the intramuscular injection” that is used for Makena and 17P compounds. “If you start talking about risk, I think there is a hierarchy. The greatest concern to me would be drugs injected into the eye, or into the central nervous system. Next would be drugs that are injected intravenously…then would be drugs that are injected intramuscularly.”

That’s right: drugs injected into the eye are the highest risk in the CDER directors view.

Was the CATT study already on her mind? Not really. “I wasn't thinking of Avastin in particular,” Woodcock told us when we contacted her about her remarks.

In fact, “I believe the division of Avastin vials is considered repackaging not compounding.”

“However,” Woodcock stressed, “I believe injection in or near the CNS is one of the highest risk situations for sterility problems.”

When weighing the impact of the CATT study findings, it seems safe to say that whatever impact they have, it won’t result in FDA issuing a statement saying it has no problems with widespread off-label use of Avastin.

DOTW's 12 Deals Of Christmas

On the first day of Christmas, IN VIVO gives to you an earn-out in a pear tree
On the second day of Christmas, IN VIVO gives to you two consumer deals
On the third day of Christmas, IN VIVO gives to you regional alliances
On the fourth day of Christmas, IN VIVO gives to you hostile deals now friendly
On the fifth day of Christmas, IN VIVO gives to you ON-CO-LO-GY
On the sixth day of Christmas, IN VIVO gives to you biotech spin-offs
On the seventh day of Christmas, IN VIVO gives to you biobucks a plenty
On the eighth day of Christmas, IN VIVO gives to you eight pharma partners
On the ninth day of Christmas, IN VIVO gives to you platform biologics
On the tenth day of Christmas, IN VIVO gives to you billion dollar skin care
On the eleventh day of Christmas, IN VIVO gives to you a new eye care unit

On the twelfth day of Christmas, IN VIVO...needs a break. Please read (instead)...

MedImmune/Evotec: Big pharma’s love affair with primary care is on the wane, making cardiovascular deals as rare as partridges in pear trees. But it’s a different story for metabolic disease, where drug makers see large opportunity in growing waistlines. Think Merck’s take-out of SmartCells or Sanofi’s spate of alliances to build itself into an end-to-end solutions provider. Now comes news that AstraZeneca's biologics group MedImmune is aligning with Evotec in a broad R&D deal centering on regeneration of insulin-producing beta cells. As with most early stage alliances, the deal is heavy on the back-end payments, with the German biotech due €5 million upfront and up to €254 million in milestones down the road. But should Evotec deliver the goods, it would prove a nifty return on the biotech's acquisition of DeveloGen, a deal completed less than three months ago for up to €14 million in cash and stock, plus potential earn-outs. It's DeveloGen's metabolic target discovery platform that MedImmune is tapping into, and it adds a third alliance to the subsidiary's portfolio. Meanwhile, MedImmune and parent AstraZeneca are looking to fill a hole in their pipeline. -- Alex Lash

Reckitt Benckiser/Para Pharmaceuticals: Reckitt Benckiser Group pushed further into the consumer health business and India on Dec. 14 when the household cleaning products maker announced its £460 million ($727.3 million) acquisition of India’s Para Pharmaceuticals from private equity group Actis and minority shareholders. The acquisition, which is 31 times Para’s EBITDA, gives Reckitt access to one of India’s most popula cold-and flu-remedies, D’Cold. Still that’s a steep price to pay to boost exposure in an emerging market, where Reckitt already sells Dettol, Durex and Disprin. (At that price, IN VIVO blog thinks Para should throw in at least two turtle doves.) The company’s consumer healthcare unit now accounts for one-quarter of sales and will become increasingly more important since its household cleaning division faces pressure from competition like Procter & Gamble.—Lisa LaMotta

GlaxoSmithKline/Maxinutrition: As part of its pre-Christmas shopping spree, Glaxo says no to French Hens, but yes to muscle shakes, acquiring U.K. sports nutrition firm Maxinutrition Group Holdings for £162 million. The deal diversifies Glaxo’s Nutritional Healthcare business, adding the smaller player’s line of protein-rich body building, weight management, and endurance products onto the big drug maker’s carbohydrate business Lucozade and Horlicks (also known internally as a @calcium micronutrients business"). GSK's Nutritional Healthcare sales were already on a tear climbing 12% to $408.6 million for the third quarter of 2010. But with this new triumvirate, the pharma sees a recipe for growth. It can leverage the selling power of Horlicks while tapping into the sports nutrition business, a sector still growing strong in established markets that, globally, could be worth nearly $5 billion. – Dan Schiff

Ramius/Cypress: It took four calling birds, but Cypress Bioscience finally got a buyout offer from Ramius that was music to its ears. On Dec. 15, the San Diego biotech announced it had accepted a $255 million takeover offer from Ramius. The deal values Cypress at $6.50 per share, 63% more than Ramius’ $4-per-share offer in July. When Ramius launched its pursuit, it ripped Cypress management in an open letter, blasting the company’s decision to license a schizophrenia drug from Israel’s BioLineRx and declaring its 2008 acquisition of diagnostics company Proprius a failure. Since then, Ramius has incrementally increased its offer, including a $6.00 per share deal that Cypress’s board rejected. The parties finally agreed on the $6.50-a-share price, and agreed to extend the tender offer in order to complete the deal. Cypress garners most of its revenue from fibromyalgia drug Savella (milnacipran), and completed small-money deals in August to acquire rights to an autism drug from Marina Biotech and a smoking cessation product from Alexza Pharmaceuticals.—Paul Bonanos

Sanofi-Aventis/Merck Serono: ON-CO-LO-GY! In the drug world, viable cancer drugs are definitely as valuable as five golden rings. But as the recent U.S. regulatory decision around Avastin in metastatic breast cancer shows, incremental efficacy against an unmet medical need ain’t enough any more. Some companies are trying to overcome wily tumor cells by combining targeted therapies that work via different mechanisms into a single agent. And as the Dec. 17 alliance between Sanofi-Aventis and Merck Serono shows, they are willing to forge ties with competitors (excuse me, external parties) if that’s what it takes. According to the deal’s terms, Sanofi contributes two novel small molecule kinase inhibitors (both incidentally inlicensed from Exelixis in 2009): a PI3 kinase/ mTOR inhibitor SAR245409, and a class I PI3K inhibitor, SAR245408. Merck Serono, meanwhile, supplies its MEK inhibitor, MSC1936369B. (All three molecules are currently being studied in independent Phase I trials.) Here’s how the sharing works: Sanofi will conduct trials combining Merck’s MEK with its PI3K/mTOR inhibitor, while Merck will study the other PI3K blocker in combination with its medicine, and both drug companies will fund their own studies. Beyond breathy prose about “personalizing and stratifying cancer care” and maximizing the portfolio, details about the collaboration were vague, meaning what happens after Phase I, and importantly how the financials will be sorted, remain mysteries. Structurally – and therapeutically – the deal is almost an exact duplicate of the 2009 tie-up between Merck & Co. Inc. and AstraZeneca. (No word if an overly long airport security queue also played a role in this most recent alliance, however.) -- EFL

Xention/Provesica: Rather than divide its focus between two largely unrelated programs, UK-based Xention and its investors have elected to divide and conquer, spinning out the biotech's overactive bladder program into a new, separate company called Provesica. Two of Xention’s stakeholders, Forbion Capital Partners and Seroba Kernal, have supplied not six geese-a-laying but something much more important: cold hard cash to the tune of £4 million ($6.2 million). Beyond setting up an independent Provesica, the money will support Phase II trials of its lead compound, a vanilloid TRP (transient receptor potential) receptor antagonist, which affects the detrusor muscle in the bladder. Xention, which recently raised £8 million in Series D funding, will continue to advance its atrial fibrillation program, aimed at developing inhibitors to selectively block ion channels in the heart’s atria but not its ventricles. In conjunction with the spin-off, Xention has restructured, with holding company Xention Pharma Ltd. operating an R&D subsidiary.—PB

GlaxoSmithKline/Impax: GlaxoSmithKline, which now faces generic competition for its only Parkinson’s disease drug, Requip, swam back into that space Dec. 16, inking a co-development and commercialization deal with Impax Pharmaceuticals for the smaller firm’s lead program, IPX066. (Seven swans were apparently optional.) GSK will pay $11.5 million upfront along with up to $175 million in potential milestones and tiered, double-digit royalties on sales of IPX066, an extended-release combination of levodopa and carbidopa now in Phase III, in exchange for worldwide rights outside the U.S. and Taiwan. Impax, the CNS-focused, branded drugs division of generic player Impax Laboratories, will continue to make and supply the medicine to GSK. Impax completed a Phase III trial (APEX-PD) in early-stage Parkinson’s earlier this year with strong results and expects data from a second Phase III study (ADVANCE-PD) in patients with advanced Parkinson’s in the second quarter of next year. An NDA filing could come as soon as end of 2011.—Joseph Haas

Adimab/Lilly, Adimab/Genentech, Adimab/HGSI: On the eighth day of Christmas Adimab dispensed with the 8 maids-a-milking (and drug development too) and focused on the cream of the crop: its platform. At a time when most biotechs can’t monetize their platforms through discovery stage deals, privately-held, yeast-based antibody discovery biotech Adimab (alongside DOTY nominee Ablexis) remains the rare bird. Adimab watchers shouldn’t be surprised the company has inked more deals – three of them actually, with the likes of Lilly, Genentech and Human Genome Sciences. Nor do these recent deals stray far from the company’s previous single-target antibody discovery alliances, which emphasize non-exclusivity around a target and pay the biotech undisclosed financials that include an upfront, plus milestones and royalty payments. Why is Adimab the belle of the antibody discovery ball? “Our technology platform is not only faster than conventional antibody technology but it yields more relevant therapeutic leads with a higher probability of success,” CEO Tillman Gerngross, PhD, told us for a piece we did earlier this week in “The Pink Sheet” DAILY. The upshot of all Adimab’s dealmaking is that the cash-flow positive biotech (it announced two milestone payments to go along with the three deals this week) is restructuring to an LLC to return cash to shareholders in a tax-efficient way. – Chris Morrison

Mitsubishi Tanabe/Anaphore: At least one lady (if not nine) is surely dancing on the news of Mitsubishi’s R&D tie-up with Anaphore, a San Diego-based biotech developing trimeric proteins called Atrimers. Anaphore’s CEO Katherine Bowdish tells sister publication “The Pink Sheet” DAILY, “this first partnership does a great job of validating our technology platform.” It’s certainly a nice first and Mitsubishi’s willingness to contribute research funding is a decided plus, but Anaphore isn’t going to win any DOTY nominations based on the deal terms – a $5 million upfront, $110 million in milestones, and tiered royalties on sales of any products resulting from the option-style collaboration, which could be expanded to up to three targets. Still the tie-up, focused in auto-immune disease, is a reminder that drug makers remain interested in accessing novel technologies, especially if said platforms can create medicines against intractable drug targets or are inaccessible because of preexisting IP. Anaphore is especially interested in creating novel proteins that bind receptors in the so-called TNF super-family. The biotech’s most advanced candidate, the still preclinical ATX3105, antagonizes the interleukin-23 receptor, which plays a role in autoimmune disorders. -- Shirley Haley & EFL

Galderma/Q-Med: Lords a leaping! Leading Swiss dermatology company Galderma’s $967 million bid for medical implant manufacturer Q-Med will roughly double the acquirer’s sales and substantially increase its presence in aesthetic dermatology, a sub-segment of dermatology that is growing worldwide. Galderma, a joint venture of Nestle and L’Oreal, sells prescription and non-prescription dermatology products worldwide and is the largest manufacturer of topical dermatology therapies in the U.S. Q-Med makes dermal fillers including Restylane, which competes against Allergan’s successful Botox. The deal is non-traditional in that it offers different terms for the majority shareholder, Lyftet, which owns 47.5% of Q-Med, and the remaining shareholders. Bengt Agerup, Lyftet’s CEO, has already agreed to accept an irrevocable offer of 58.94 SEK in upfront cash, with up to 16.02 SEK in additional payments if certain development and business milestones are met. The remaining Q-Med shareholders would receive a flat cash payment of 75 SEK per share. Q-Med investors will have between Jan. 4, 2011 and Jan. 25, 2011 to tender their shares.—Wendy Diller

Novartis/Alcon: On Dec. 15, Novartis AG finally acquired the remaining 23% of eye care company Alcon Inc. that the Swiss-pharma giant didn’t already own. Alas, the announcement, which requires Novartis to pay independent shareholders the same average share price it doled out to Nestle, came without much fanfare. (In what was surely an oversight given the months it took to finalize the transaction, there were no pipers piping or drummers drumming.) The deal, which is a stock swap, will cost Novartis another $12.9 billion, driving the total price of the Alcon acquisition to $51.6 billion. In dollar terms, that rivals the mega-mergers of Pfizer/ Wyeth, Merck/Schering and Roche/Genentech. Is an ophtho company worth that much? The beauty of a deal is always in the eye of its beholder, but this particular therapeutic sector is enjoying a renaissance. Ophthalmologists are a technically savvy bunch, so having a strong device presence will likely help Novartis leverage its existing ophthalmics medicine business, which along with consumer-focused CIBA Vision and Alcon will be folded into a new eye care unit run by Alcon CEO Kevin Buehler. – Lisa LaMotta & EFL

DotW: Hard Truths

The feverish networking associated with BIO is but a distant memory this week as biopharma’s deal makers got back to work forging alliances or acquisitions that will provide the necessary substrate for future growth.

That this growth won’t come easily is a given. And the week’s news flow only reinforced the notion, illustrating hard truths about the commercial and regulatory complexities at work in the biopharma industry.

Who among us got bitten by reality? For starters, Takeda’s decision to cut nearly 1600 jobs illustrates the problem many Japanese pharma will be facing as their primary care drugs go generic in the coming years. Investors meanwhile pummelled NicOx, after an FDA advisory committee gave its osteoarthritis medicine naproxinod a thumb’s down. The company is pushing ahead as it awaits an official regulatory decision (the drug’s PDUFA date is July 24). Still it’s hard to believe a partner for the medicine will come anytime soon.

And Merck's quietly announced decision to call off development of MK-2578, its follow-on to Amgen’s erythropoietin stimulating agent Aranesp, showcases how difficult it can be to predict the potential market of a biosimilar. The ESA market has been under considerable pressure for some time as regulators have raised safety concerns about the products, first in the oncology setting, and now more recently in end stage renal disease. (See the May issue of The RPM Report for a Q&A with FDA’s Center for Drug Evaluation and Research Bob Temple for more on the subject.)

It’s a sure bet use of ESAs will go down, not only because of the emerging cardiovascular risks, but also because of the shift toward capitated care in end-stage renal disease that kicks in early next year. Under the new bundling guidelines, there’s pressure on physicians to use ESAs more judiciously, bolstering patients’ anemia via other mechanisms including intravenous iron use. With the commercial viability of ESAs a question, Merck must have run the numbers and determined the amount it would recoup from an Aranesp follow-on (which is expected to be priced at a slight discount to the innovator ESAs but still expensive) didn’t justify the expensive clinical trials it would have to conduct to demonstrate the medicine’s safety.

That big pharmas are wising up to such commercial hurdles ever earlier is a good thing; better to kill a product before you’ve sunk hundreds of millions of dollars into the expensive Phase III. That’s probably cold comfort to the Merck Bioventures group, which has ambitious launch goals for a spate of follow-on products by 2015.

As you contemplate other hard truths (a widening oil spill, the Greek debt crisis, the odds of Great Britain’s coalition government succeeding, the Cavs loss to that Boston team), take a brief respite into transactions land. (Reality may still bite the hand that feeds, but DotW is on its best behavior--for once.) It’s time for another edition of…

Genentech/Evotec: Evotec signed a broad multi-year discovery deal this week with Genentech to identify novel small molecule therapeutics. Further important details, including the financials as well as the therapeutic focus of the alliance, were lacking. Given Genentech’s focus on oncology, and increasingly Alzheimer’s disease and other CNS diseases, presumably Evotec’s technology will be used to develop small molecules in these arenas. Despite the dearth of specifics, the alliance is worth noting for a couple of reasons. First, Evotec’s business model seems to run counter to the collective belief that a biotech’s value is driven not by its technology but from the products derived from its platform. Indeed, as Evotec’s recent deals suggest—in addition to Genentech its signed discovery alliances with Vifor Pharma, Cubist Pharmaceuticals, Active Biotech, and Biogen Idec—management is clearly betting there is more near-term value to be gained from discovering drugs for other companies than in investing in its own pipeline. Second, how the deal proceeds will provide a window into dealmaking at Genentech, which only recently brought on a new head of business development, James Sabry, and continues to forge alliances independent of its Swiss parent. It’s interesting to note that Roche proper is well known to Evotec. The two companies have been collaborating in CNS since 2006, and Evotec is now conducting Phase II trials of EVT101 for treatment resistant depression, with Roche picking up the development costs.—Ellen Foster Licking

Abbott/Zydus Cadila: Abbott’s deal this week with India’s Zydus Cadila is a gift of DotW’s favoring buzz words, including branded generics, established products (a more diplomatic term for generic products), and emerging markets. The news is proof yet again that many big pharmas are following the lead of Sanofi-Aventis and GlaxoSmithKline, which have been the most aggressive in building a commercial presence in “pharmergent” economies such as Brazil, Russia, India and China via branded generics. As part of the recently announced alliance, Abbott will sell 24 Zydus drugs for pain, cancer, cardiovascular disease, respiratory ailments and neurological disorders in 15 emerging markets. Many, though not all, of the licensed drugs will be in complementary therapeutic areas to Abbott's existing branded generics portfolio, which came to the diversified health care giant via its Solvay and Knoll acquisitions. Specific financial terms of the deal were not disclosed, but should the collaboration be a success, Abbott has the option to license more than 40 additional products. In conjunction with the deal, Abbott also announced the creation of a stand-alone established products division with $5 billion in current pharmaceutical sales. The business unit will be led by Michael Warmuth, the former head of Abbott’s diagnostics division. Two years ago, Pfizer set up a similar stand-alone unit as a strategy to cope with flagging US drug sales, especially come 2011 when its cholesterol-lowering medicine Lipitor goes off patent. And that group was also a force at the dealmaking table this week, strengthening its ongoing collaboration with India-based Strides Arcolab (announced earlier this year) via the signing of two licensing and supply agreements. In part one, Strides has agreed to license and supply 38 generic oncology meds to Pfizer in various markets, including the EU, Canada, and Australia. Part two gives Pfizer access to niche sterile injectables for the US market.—Jessica Merrill and EFL

Pfizer/Ergonex: It’s not all about extending the life cycle of established products at Pfizer these days. This week the biggest big pharma’s specialty care business unit inked a deal with Ergonex Pharma for the biotech’s Phase II product terguride, which is in development as a treatment for pulmonary arterial hypertension (PAH). The agreement gives Pfizer world-wide rights (excluding Japan) to the product; in exchange Pfizer will support the ongoing mid-stage clinical trial, taking full control of the compound at the study’s completion. While Pfizer isn’t sharing specific financial details, it will pay Ergonex undisclosed milestones and sales royalties. Terguride, which has an orphan drug designation in the US and the EU, is an oral antagonist antagonist of the 5-HT2B and 5-HT2A serotonin receptors, shutting down signals triggering fibrosis and the narrowing of pulmonary arterial walls that over time results in PAH. The medicine is already approved in Japan for the treatment of hyperprolactinemia.—EFL

Genzyme/Tianjin International Joint Academy of Biotechnology and Medicine (TJAB): Another week, another biopharma looks to ink a discovery deal in China. This week it’s Genzyme’s turn to trumpet a strategic partnership with TJAB, which has an impressive list of co-founders, including China’s Ministry of Science and Technology, its Ministry of Commerce, its Ministry of Health, and the State Food and Drug Administration (China’s equivalent of the US FDA). The partnership was apparently celebrated with the requisite pomp and circumstance, including an official signing ceremony attended by top Chinese officials and senior R&D types from Genzyme. This isn’t the first time Genzyme has traveled east to ink a collaboration. Back in 2007 the biotech signed a deal with Sunway Biotech to develop and commercialize Genzyme’s most advanced gene therapy candidate, Ad2/HIF-1a, which is being tested as a treatment for various forms of peripheral arterial disease. The big biotech is also in the process of building a $100 million R&D center in Beijing, with construction scheduled for completion in 2011. In a small way, the agreement offers the beleaguered Cambridge-based Genzyme an opportunity to shift the news cycle away from the forthcoming annual shareholder meeting and Termeer’s ability to withstand pressures from activist shareholder Carl Icahn who is pushing for his removal.--EFL