The acquisition of two small companies highlighted a quiet deal making week in the life sciences. Endo Pharmaceuticals agreed to acquire its partner Penwest Pharmaceuticals in a deal that looks promising for both companies. For Endo, the transaction provides access to Penwest’s royalty interest in pain drug Opana ER, a Penwest’s experimental pipeline, and its new delivery technology.

For Penwest’s major shareholders, Tang Capital Partners, Perceptive Advisors, and president and CEO Jennifer Good, who collectively own 38.6 percent of the company’s common stock, the deal represents a 19 percent premium to the stock’s closing price before the deal was announced. Endo will pay $168 million for Penwest, or $5 per share in cash [See story].

Emergent BioSolutions is acquiring Trubion Pharmaceuticals in a deal valued at up to $135.5 million. Emergent will pay $96.8 million, or $4.55 per share in cash and stock, upfront for the company and issue milestone-based Contingent Value Rights worth up to $38.7 million more. Milestones are based on mid- and late stage clinical trials of TRU-016 for the treatment of chronic lymphocytic leukemia and non-Hodgkin’s lymphoma, which is partnered with Abbott. The deal expands Emergent beyond its biodefense focus into cancer and autoimmunity. It is expected to close in the fourth quarter 2010.

Canadian biotech Alectos Therapeutics has entered into a research collaboration with Merck to identify and develop compounds that modulate O-GlcNAcase, an enzyme that is believed to be involved in the development of Alzheimer's disease and potentially other disorders.

Merck will have a worldwide, exclusive license to research, develop and commercialize compounds that modulate this target. The companies will collaborate on discovery and preclinical development after which Merck will be responsible for all further development and commercialization. Vancouver-based Alectos is eligible to receive up to $289 million in upfront, research, development and regulatory milestones and tiered royalty payments on sales of any products resulting from their collaboration.

While waiting for a hoped for regulatory approval of Afrezza inhaled insulin therapy, Mannkind has entered into a PIPE agreement with two investors for 36.4 million shares that will provide the company with more than $200 million in working capital. Mannkind will sell Seaside 88, a private investment limited partnership, 700,000 shares of common stock every two weeks over the course of a year for a total of up to 18.2 million shares at a per share purchase price that is an 8 percent discount to the volume weighted average trading price of MannKind common stock for the ten consecutive trading days immediately preceding each closing date. For any closing to take place, the volume weighted average trading price must be at least $6.50 per share. In a similar agreement, Mann Group, which is controlled by Mannkind’s CEO Alfred Mann, will buy 700,000 shares every two weeks over the course of a year for a total of up to 18.2 million shares at a minimum price of $7.15 per share. The sale to Mann will be to repay about $130 million in debt held by the group.


Deals for the Week Ending August 13, 2010