Financings of the Fortnight Covets Thy Neighbor's Bubble

The B-word is back, and it rhymes with "trouble." With 21 US IPOs in April alone, no wonder the barbarians are lined up at the gates, clamoring to get a piece.

There have been 31 initial filings this month, the most active month since 40 companies filed in August 2007, according to IPO watchers Renaissance Capital. Exciting, no? So how many of these newly minted or wannabe public companies are in our little corner of the world? Two IPOs, Tranzyme and Sagent Pharmaceuticals, and no new filings.

Let that sink in for a moment. It's Bubble 2.0, or 3.0, or 6.0, with little old ladies in Pasadena trying to grab a piece of Facebook on private secondary markets, and not a single biotech firm filed papers this month.

Now, there might be some moral high ground in keeping one's distance from ye olde irrational exuberance. A bubble is generally a bad thing, leading to Pets.com and far too much exposure of Angelo Mozilo's tanning-bed face. No wonder the other side is protesting too much. See how hard this tech VC argues that the current mania is anything but a bubble?

But to those on the bio side of the fence, the lush green grass of Mark Zuckerberg's backyard looks awfully tempting. At BayBio last week, when talk on a mid-stage funding panel got around to building strong biotech companies, Pfizer business-development executive Jim McLoughlin cautioned other panelists to think long-term and not create a bubble. (As if they could.) Versant Ventures managing director Camille Samuels jumped in: "Hey, I'll take a bubble!"

She said it with a laugh, but consider the VC's alternative these days: Waiting for guys like McLoughlin (and the committees behind them) to decide they like your portfolio firm's Phase II asset enough to offer a modest up-front payment and earn-outs or milestones.

European investment firm LSP Life Science Partners isn't waiting around for the private equity exit ramp to materialize. Not only is it launching a public-equity fund, it has floated the fund, dubbed LSP Life Sciences Fund, on Euronext Amsterdam.

The firm claims a 150% return on public investments, which it began making in 2008 on behalf of Dutch pension fund administrator APG Investments. Its new dedicated fund, for which it raised £30 to £35 million privately, follows in the footsteps of life-science VCs like Abingworth, MPM Capital, and OrbiMed Advisors who have begun straddling the fence in recent years. On the private side, LSP's fifty or so holdings have included Jerini, KuDOS, U3 Pharma and Movetis. The first three sold privately, while Movetis listed in late 2009 before Shire gobbled it up a few months later. Our "Pink Sheet" colleagues will have more on LSP soon, so we don't want to, ahem, burst their bubble. Instead, let's pop the cork on another bottle of...

Synta Pharmaceuticals: On April 15, cancer and inflammation drug discovery company Synta Pharmaceuticals raised $35.2 million in a registered direct offering, the second-highest grossing PIPE this year behind Arena Pharmaceuticals. Synta sold 7.2 million shares at $4.89, a 6% discount to the ten-day average. Company insiders bought about 22% with institutional investors scooping up the rest. After several ups and downs in its ten-year history, Synta is The Little Discovery Engine That Could, dusting itself off after each disappointment. And there have been several. The Shionogi BioResearch spin-off raised more than $200 million in venture financing before a failed IPO attempt in 2005. Less than two years later, and after another $40 million cash infusion, the company finally went public, selling shares at $10 a pop. Soon thereafter it secured its first Big Pharma partner when GSK acquired US co-promote rights to the biotech’s elesclomol, an apoptosis-inducing candidate that disrupts cancer cell energy metabolism. But Synta got a shock in March 2009 when Phase III trials in metastatic melanoma showed more deaths in the elescomol arm than with the standard-of-care arm, and the trial was shut down. GSK returned rights, but not before forking over $130 million. After the elesclomol failure, Synta has pinned its hopes on its lead compound the Hsp90 inhibitor ganetespib, which is unpartnered.* For the April 15 RD offering, Synta issued no warrants and did not use an underwriter. -- Amanda Micklus

Silence Therapeutics: The shingle Silence hung out to advertise a placement of 275 million shares, with hopes of grossing up to £5.5 million, is a sign of the times for the RNA interference crowd. Silence is the latest RNAi firm to find itself in financial or strategic difficulties, and if shareholders don't approve the new stock sale, announced April 25, the company says it will run out of cash by the end of the third quarter. Whether or not that transpires, Silence says it is shutting down its California office, a legacy from its December 2009 merger with Intradigm, and looking to replace CEO Phil Haworth. When Silence and Intradigm tied the knot, the firms hoped their combination would speed the development of delivery systems, a major obstacle in turning fragile short interfering RNAs into viable therapeutics that reach their intended targets. Investors such as Alta Partners and Frazier Healthcare also backed the merged entity with a £15 million financing priced at 23 pence a share. If that sounds bad, please note that the new placement is priced at 2 pence a share. No, that's not a typo. Momentum in RNAi has been on the wane for the past two years, then came big red flags last fall when two major partners of Alnylam Pharmaceuticals delivered bad news. First Novartis, a 13% owner of the biotech, passed on an expensive option to expand its collaboration, then Roche said it was dropping all RNAi-related work. More dark skies earlier this year came when delivery firm Tekmira Pharmaceuticals brought a lawsuit against Alnylam; and RXi, undergoing a management overhaul, bought a struggling company for its late-stage breast-cancer treatment and shifted its focus away from RNAi. To top it all off, Merck & Co.'s $1.1 billion purchase in 2006 of Sirna Therapeutics, once Alnylam's rival, has yielded nothing that Merck is willing to discuss publicly. Meanwhile, Silence is offering shareholders a chance to buy up to £1 million in shares before the placement. Those who participate in full will only be diluted 45% by the placement; otherwise dilution will be about 54%, the company said in its notice to shareholders. -- Alex Lash

Bluebird bio: When a VC at last week's Bay bio meeting was asked about the next big thing, he pointedly said it wouldn't be RNAi, which was reminiscent of gene therapy. (He didn't mean it as a compliment.) Bluebird bio begs to differ, having just raised a $30 million C round from new investor ARCH Venture Partners and others to pursue its gene therapy technology, called LentiPak, to treat rare diseases such as childhood cerebral adrenoleukodystrophy (CCALD) and beta-thalassemia/sickle-cell anemia. Formerly known as Genetix Pharmaceuticals, Bluebird aims to get lead program Lenti-D into a registrational Phase II/III trial for CCALD later this year. The firm says its technology, using lentiviruses instead of retroviruses as the viral vector, should provide better safety than the now-infamous gene trials of the previous decades. The LentiPak technology works this way: A patient's hematopoetic stem cells are extracted, exposed to a viral vector, then re-inserted into the patient, reconstituting his or her bone marrow. In addition to ARCH, the Series C is backed by returning investors Third Rock Ventures, TVM Capital, Forbion Capital Partners and Easton Capital Investment Group. Genzyme Ventures, which co-led last year's Series B, is not involved because of the ongoing merger with Sanofi-Aventis, Bluebird CEO Pat Leschly told "The Pink Sheet" DAILY. -- Joe Haas and A.L.

Circassia Holdings: Yes, Virginia, there are refreshing wellsprings of early-stage capital out there, and Circassia is fortunate to be in deep with one of them. The UK allergy vaccine developer said April 19 it has raised £60 million ($98 million), the second largest European venture round this year and one of the largest ever. It was led with a £15 million tranched commitment from Imperial Innovations Group, the tech transfer and investment arm of Imperial College, London, where Circassia's T-cell vaccine platform ToleroMune was developed. Imperial Innovations has exclusive rights to IP coming from the college, as well as access to technology from three other top UK schools. It recently said it has commitments from shareholders to contribute another £140 million ($220 million), nearly three times what the group has invested in start-ups. It's also one of the rare investment funds to go public itself, having raised £26 million in a 2006 listing on the AIM exchange. (Perhaps an inspiration for LSP?) Imperial has been a backer of Circassia since its founding in 2006, and the majority of the funds raised in this round will go towards financing phase III development programs for Circassia's cat and ragweed allergy therapies. Circassia also aims to use the funds to complete phase II testing of the company's house dust mite and grass allergy T-cell vaccines, and will advance the development programs for three additional allergy therapies and its psoriasis treatment, PAP-1, a selective Kv1.3 inhibitor, recently acquired from Airmid Inc. -- Faraz Kermani

Photo courtesy of flickrer Beige Alert under a Creative Commons license.

Melanie Senior contributed to this week's introduction.

*Due to an editing error a previous version of this column stated incorrectly that Synta's ganetespib compound was partnered. We regret the error.

No Room for RNAi in Roche's Operational Excellence Plans

Tucked inside Roche's months-awaited announcement today containing details on its restructuring program (and the loss of 4,800 jobs, mostly in the US and mostly in pharma) is a nugget that will make RNAi-watchers gulp. Three years on from its landmark deal with Alnylam in the field of RNA interference, Roche is shutting down all of the discovery for which it paid so dearly.

That deal with Alnylam included $331 million in up-front payments and -- in addition to non-exclusive rights to Alnylam's IP in four therapeutic areas -- bought Alnylam's European research site in Kulmbach, Germany. Roche now says it will shutter Kulmbach and all its other RNAi work:

Following a comprehensive portfolio review, Roche will discontinue certain activities in research and early development. These include RNA interference research in Kulmbach, Germany, and in Nutley, New Jersey, and Madison, Wisconsin, in the US. In addition, plans also include reorganising certain internal functions to free up resources for upcoming phase II studies of new molecular entities. Approximately 600 positions will be affected.

Adding to Roche's woes, the 5% stake it took in Alnylam in 2007 -- at $21.50 per share (a 40% premium at the time) -- was subject to a three-year lockup and is now way under water. If there's RNA interference activity in Roche's future, it's hard to divine where. Roche CEO Severin Schwan was clear on a call this morning with investors: "We plan to exit ... our siRNA efforts," he said. Nobody pressed him further during the Q&A. Case closed.

The news comes on the heels of Novartis' decision in late September to not exercise an option that would have given it Roche-like access to Alnylam's platform for the relatively low sum of $100 million. Novartis remains committed to RNAi drug development, the companies noted at the time, and is pursuing RNAi therapies against what it calls its "full and final" list of 31 targets. But the Novartis news prompted Alnylam's own restructuring. The RNAi pioneer said it was laying off 25-30% of its workforce.

So where do these Swiss stances leave Alnylam -- not to mention other RNAi hopefuls including Roche's other partner Tekmira? Alnylam was ready with a response, expressing disappointment and surprise at Roche's decision. At the very least, these moves suggest that signing new blockbuster deals will be difficult. But it has never been clearer that Alnylam will no longer live or die based on its ability to sign monster non-exclusive platform deals: it's now a drug developer. The real risk is that Roche's decision, and to some extent Novartis', reflect a broader belief in a bleak clinical future for RNAi therapeutics. With human proof-of-concept data not too far away, we won't necessarily have to wait long for a glimpse.

Meanwhile, Alnylam's market cap languishes below $500 million, and the company announced earlier this month that its still-impressive cash pile was $372 million. That's historically low value ascribed to the company's IP, dealmaking potential, future milestones and royalties, and clinical pipeline.

The field of RNAi needs a win, and badly. Merck, the other big pharma to take a big leap into the space with its $1.1 billion acquisition of Sirna back in 2006, says astonishingly little about its therapeutic progress there (and siRNAs are absent from its pipeline chart). Now and then a rumor that someone's going to pony up money to buy the UK's Silence Therapeutics bubbles to the surface, and just as surely recedes again. RXi is committed to delivering for its investors a deal by the end of 2010. Time is running out on that promise. The next generation RNAi play Dicerna has demonstrated that it can pull in investors, but it has yet to enter the clinic with its dicer-substrate molecules.

RNAi may not succeed as a therapeutic modality. More likely, it just needs time to mature, to solve its delivery problems, to gain traction in the clinic. Whether or not any Big Pharma or investors are willing to wait for that remains to be seen.

Deals of the Week Meets "The Outlier"

This statement may amuse you, coming on the heels of Abbott's mind-boggling $450 million up-front payment to license ex-US rights to Reata's bardoxolone in chronic kidney disease: in 2010, alliance upfronts are declining.

Reata's upfront haul is surely a giant among men (more on the deal below). But a look at all alliances signed by the industry's larger companies (big pharma, big biotech, large Japanese and European co's, and spec pharmas) over the past four years show that not only are alliance upfronts decreasing, but fewer deals are being signed overall (approximately 20% fewer).

We presented the chart below at this week's Pharmaceutical Strategic Alliances meeting in NYC, as part of a dealmaking overview. The data (which are through August 2010) suggest that at least in terms of deals where financials were disclosed, pharma is becoming more cost-conscious. This isn't really a surprise -- we're seeing more option-alliances and earn-out heavy acquisitions than ever before, and payments on the front end are bound to suffer.

But Reata's impressive terms around bardoxolone again show that there will always be assets that cause a stir, and a bidding war, and a blogger to exclaim 'holy crap that's a lot of money!' Reata retains sole possession of bardoxolone's US rights and will fund its Phase III development itself. Even so, this cash should allow it plenty of breathing room to get through NDA filing and -- if all goes well -- toward a US launch.



Abbott/Reata: Upfront payments on licensing deals have trended downward lately, but Abbott Laboratories is headed full-steam in the opposite direction. Abbott made an enormous $450 million upfront commitment to Reata Pharmaceuticals’ Phase II renal disease candidate bardoxolone methyl. It's the largest upfront ever for a Phase II product, especially given the deal is only for ex-US rights. (It also doesn't include rights in certain Asian countries that Reata has already partnered away.) Milestone payments could add $350 million to the deal, plus Reata gets royalties on sales in Abbott’s territories. Bardoxolone, an antioxidant inflammation inhibitor, has shown promise as a potential disease-modifying drug that can reverse the effects of chronic kidney disease; Reata is preparing to present Phase IIb data at the American Society of Nephrology conference in November. A Phase III trial in the coming months will further study bardoxolone's effect on glomerular filtration rate, the amount of filtered fluid passing through the kidney per unit of time. Abbott also took a minority equity stake in Reata, whose backers include Cardinal Investment's CPMG, Novo A/S, and Texas firms Ojai Goliad and StarTech Ventures. Abbott already markets Zemplar, a hyperparathyroidism treatment for renal patients, in 24 countries. As Abbott tries to move itself away from its dependence on the TNF-alpha drug Humira, it's been opening its checkbook, especially for early and mid-stage assets. Recall late in 2009, it spent $170 million to acquire PanGenetics' Phase I NGF inhibitor; in March the big pharma paid a 61% premium to purchase Facet Biotech, a PDL Biotech spin-off, developing the Phase II multiple sclerosis drug daclizumab; this past June the company spent $75 million to in-license Neurocrine Biosciences' Phase IIb gonadotropin-releasing hormone (GnRH) antagonists for women's and men's health. And don't forget the purchase of Piramal's health care solutions biz for $2.12 billion upfront and another $1.6 billion over the course of four years to establish a significant beachhead in India.--Paul Bonanos

GlaxoSmithKline/Dendreon:It may be a happy problem for a young company launching its first product to have: Demand for the new prostate cancer therapeutic vaccine Provenge is likely to exceed supply, and the company that makes the drug, Dendreon, has limited production capacity. Dendreon is a small biotech, after all, and its ability to ramp up and manage the supply of Provenge has been a serious concern for patients and investors since the vaccine launched in May. In response, the Seattle-based biotech has turned to a big pharma, GlaxoSmithKline. According to a Securities & Exchange Commission report filed on Sept. 21, the companies signed a development and supply agreement September 15, in which GSK will supply the antigen used to make Provenge to Dendreon. (Okay, so technically this is a deal of last week.)The first supplies are slated for delivery in August 2011. Sales of Provenge, which Dendreon launched last spring, were $5.2 million in July and $2.45 million in June.--Wendy Diller

Warner Chilcott/Novartis: Warner Chilcott took full control of the U.S. sales and marketing of Novartis’ overactive bladder drug Enablex (darifenacin) in a $400 million deal announced Friday September 24. The Irish specialty pharma already had a co-promotion agreement with Novartis for the drug, but scrapped that alliance and replaced it with the new one. Warner Chilcott had obtained some rights to Enablex through its $3.1 billion acquisition of Procter & Gamble’s prescription drug business in August 2009; P&G had shared promotion of Enablex with Novartis since 2005. Recall Novartis acquired the drug from Pfizer in 2003. In 2009, Enablex sales in the U.S. were $190 million, of which Warner Chilcott was entitled to a share; it also incurred advertising, promotion and selling costs for the drug. Under the new agreement, Warner Chilcott will take full responsibility for sales and marketing of Enablex in the U.S., and will assume control of its manufacturing within three years. A milestone payment could add $20 million more to the new deal as well.--PB

Novartis/Alnylam: In our “no deal” of the week, Alnylam announced Sept. 23 that Novartis has selected a “full and final list” of 31 targets for which it will seek to develop RNAi drugs based on Alnylam intellectual property. That decision brings an end to a five-year partnership in which the two companies worked together to identify and advance RNAi therapeutics for a range of undisclosed indications. Concurrently, Novartis also declined to exercise an adoption license for Alnylam’s RNAi technology platform, which would have brought the biotech an additional $100 million. According to Alnylam CEO John Maraganore during a Sept. 24 investor call, Novartis determined that the 31 programs it will undertake at the Novartis Institutes for Biomedical Research will keep it plenty busy for next several years. To date, the five-year collaboration has brought Alnylam about $125 million in proceeds, both in the form of research funding and equity investments – Novartis currently holds a 13.4% ownership stake in the biotech. The partnership also funded about 25 full-time equivalents annually, Maraganore said. With the partnership’s expiration Oct. 12, Alnylam plans to reduce its workforce by 25% to 30%, he said, enabling the company to position itself for “continued growth, success and focus on the highest value activities.”—Joseph Haas

Deals of the Week in a Parallel Dimension

It's ADA season, and this week didn't disappoint with diabetes deals coming out of the woodwork. But if FOTF can go a little off-piste, permit your favorite deals roundup to stray as well , straight into uncharted regulatory and reimbursement territory. (We promise to get to the juiciest deals eventually.)

This week FDA and CMS agreed to routinely share data in what could serve as a first step toward parallel reviews by FDA and CMS for marketing approval and medicare coverage. We're already seeing reimbursement milestones popping up in deal terms, and we can imagine that a parallel review by the massive government insurer would only mean they'd be even more common.

To be sure this isn't a new discussion, as our colleagues from "The Gray Sheet" wrote this week. But there may be more substance to this new effort, under which the agencies are "seriously exploring the ability to start, at a manufacturer's request, a Medicare national coverage determination process" while a medical device is under FDA review. That remark, from FDA center for devices and radiological health director Jeff Shuren, was made before a device-oriented audience, but he clarified that the memorandum of understanding between FDA and CMS will apply "FDA-wide."

Hmmm. Who will be the first to channel his/her inner Ray Stantz and order FDA and CMS to "cease any and all supernatural activity and return forthwith to your place of origin?"

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Before we get to the deals this week please allow us a moment to say GOOOOOOOOAAAAALLLLLLL!

Oh and yes, we did the movie thing last week, but it's hard to resist this one. We had the same reaction as Derek Lowe to the idea of Lilly launching a statin in 2010 -- surely someone threw us in a DeLorean, cranked up the Huey Lewis, scored some Lybian plutonium and sped up to 88 miles per hour, because we all went Back to the Future this week.

Never mind that Biff guy, it's time for ...


Sanofi/Regulus: Sanofi-Aventis made its first foray into the emerging microRNA field by forging a collaborative development agreement with Regulus Therapeutics, a startup co-owned by publicly traded Alnylam Pharmaceuticals and Isis Pharmaceuticals. For an upfront payment of $25 million and an equity investment of $10 million, Sanofi received options to license four Regulus compounds, beginning with a co-development agreement targeting fibrosis. If all milestones are reached on all four, Sanofi could pay Regulus more than $750 million; Sanofi also has a $50 million option to expand the partnership into a broader alliance that to us recalls the first broad RNAi deal between Alnylam and Novartis. MicroRNAs regulate gene expression by binding to target messenger RNA transcripts and developers hope that disruption by a single microRNA can interfere with disease pathways. Nearly all microRNA-based therapies have yet to reach the clinic. Regulus, which has programs in oncology, cardiovascular and metabolic diseases, also has two separate partnerships with GlaxoSmithKline. One gives GSK four options in Regulus’s immunological and inflammatory disease portfolio, and the other pertains to a specific hepatitis C treatment. The deals collectively are a sign of Big Pharma’s renewed interest in innovative early-stage technologies.--Paul Bonanos

Valeant/Biovail: While complementary lines of business played an important role, it was probably Biovail’s advantageous tax setup that led larger specialty pharma Valeant to merge with it in a deal announced June 21. Canada (and hockey?) will be a major focus for the newco – to be named Valeant Pharmaceuticals International but based in Biovail’s hometown of Mississauga, Ontario, rather than Valeant’s current home of Aliso Viejo, Calif. The new Valeant’s four main business areas will be specialty central nervous system (comprising Biovail’s CNS franchise and Valeant’s neurology business), dermatology, Canada, and branded generics/emerging markets. Valeant CEO J. Michael Pearson, who will run the new company, said each firm currently has a roughly $100 million business in Canada, and both are experiencing a better than 20% growth rate. Asked to estimate what the new company’s effective tax rate would be, Biovail CEO Bill Wells, who will be chairman of the new company, said Biovail currently pays in the 5 percent to 8 percent range. The combined company’s rate will be somewhat above that but far below Valeant’s tax rate of 36 percent, he said. Biovail has done its manufacturing in Canada, generating excess net operating losses. Now, those NOLs will help shelter Valeant’s considerable income in Canada. The new company also will retain Biovail’s principal subsidiary in Barbados, where intellectual property is developed, funded and managed, taking advantage of that country’s very low tax rates. The merged company also should realize $175 million in cost synergies in 2011 before tax savings are even factored in, derived partly from combining commercial operations in Canada, which will detail both specialty and primary care products.—Joseph Haas

J&J/Metabolex: Metabolex's first deal this week sees Johnson & Johnson taking time out from their OTC recall issues to boost its diabetes pipeline. In addition to licensing a type 1 diabetes vaccine from Swedish biotech Diamyd (see below), J&J's Ortho-McNeil-Janssen unit snapped up worldwide rights to several undisclosed first-in-class preclinical drug programs for type 2 diabetes from Metabolex. The deal is the companies' second, following on a 2006 alliance around two Metabolex PPAR-gamma programs, which are now both in Phase II development. In the current deal, Metabolex gets an undisclosed up-front payment and the typical assortment of development, regulatory and sales milestones plus royalties. If the stars align, the biotech could see up to $330 million.--CM

J&J/Diamyd: The same day OMJ inked its deal with Metabolex it also signed up Sweden's Diamyd, paying $45 million up-front for that company's Phase III type-1 diabetes vaccine. The vaccine could slow or halt the disease by protecting insulin producing pancreatic cells. Development and commercial milestones on the deal total $580 million, and Diamyd is eligible for tiered royalties on potential sales. The companies are sharing the costs of the vaccine's ongoing EU Phase III trial, and J&J can take over development if it chooses based on the results of that study. J&J's strategy is clearly one designed to leverage its presence in diabetes devices -- it does not market any diabetes drugs, yet, but its two deals this week augment an internally and externally sourced suite of compounds the roots of which goes back at least ten years to a research deal with Mitsubishi-Tanabe in 2000. --CM

Sanofi-Aventis/Metabolex: Sanofi-Aventis may not be making big news at this year's 70th Scientific Sessions of the American Diabetes Association but that doesn’t mean it isn’t creating its own buzz—and no vuvuzelas required. On June 25, the company announced its third deal since March 31 in the diabetes space, becoming the second pharma to ink a deal this week with Metabolex. The global licensing agreement is for the biotech’s Phase II, oral GPR119 receptor agonist, MBX-2982, for the treatment of type 2 diabetes. Specific deal terms of the Sanofi partnership weren’t disclosed but biobucks could total $375 million. It’s no secret that Sanofi has grand ambitions to become one of the leading players in diabetes but to do that, the company will need to diversify beyond its juggernaut Lantus. As Sanofi bolsters its pipeline, the focus has been on novelty and diversification—the March alliance with Agamatrix gives the French firm a foot in the blood glucose monitoring space; the tie-up with privately-held CureDM gives Sanofi a potentially first-in-class compound in the islet cell regeneration space. Agonists of GPR119 represent a first-in-class oral treatment for type 2 diabetes that simultaneously increase insulin secretion while stimulating the release of GLP-1 from the intestines. (They are also an au courant target as evidenced by last week’s deal between Neurocrine and Boerhinger Ingelheim.) —Ellen Foster Licking

Gilead/CGI: Finding a use for some of the $4.6 billion of cash it has on hand and also seeking some diversification beyond the antiviral space, Gilead Sciences June 25 announced that it would buy privately held CGI Pharmaceuticals for up to $120 million in cash. Gilead said the majority of the payment would be an upfront purchase price with the remainder paid out in clinical development milestones but did not break down the exact amounts. CGI, formerly known as Cellular Genomics, has nothing in the clinic but is doing discovery and development in three platform areas, of which Gilead seems most intrigued by its spleen tyrosine kinase inhibitor (Syk) program, which includes a lead preclinical compound with potential to treat rheumatoid arthritis. Under the deal, CGI would continue operating as a fully-owned Gilead subsidiary at its current headquarters in Branford, Conn. Gilead Chief Scientific Officer Norbert Bischofberger cited CGI’s scientific expertise as “a strategic fit with Gilead’s existing research organization” and said Gilead will work to move CGI programs into clinical development. Standard & Poor’s analyst Steve Silver called the transaction a “modestly priced opportunity to broaden Gilead’s long-term pipeline.” GCI's backers are probably seeing about a 2x multiple on the deal, should those milestones materialize; the company had not raised money since a 2004 Series C led by Lilly Bioventures that brought in $34.9 million.—JH


Bristol-Myers Squibb/Exelixis: Exelixis revealed June 21 that Bristol is walking away from its late-stage partnership on the biotech's lead compound XL184, a multikinase inhibitor in Phase III trials for medullary thyroid cancer (MTC). GlaxoSmithKline had an option on '184 but passed in late 2008, soon after which Bristol swooped in with a lucrative deal, $240 million in upfront and near-term milestones. With Bristol's decision, the question becomes whether Exelixis can find another home for the drug. It insisted the data were sound, and officials on both sides of the no-deal talked vaguely about portfolio conflicts and pipeline reviews. Two investigators working on XL184 trials told "The Pink Sheet" they knew of no clinical problems serious enough to merit BMS's decision, but some analysts were skeptical that Bristol would give up rights, given what it has already spent, on a drug with serious potential. Fresh from layoffs of nearly 30% of staff, Exelixis said it will push on with XL184 and start a Phase III trial in glioblastoma by the end of 2010 and file an NDA for MTC in the second half of 2011. The firms' partnership on XL281 remains intact. -- Emily Hayes

Image courtesy of flickrer TheAlieness GiselaGiardino23.