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DEALS

Losing Biobucks as Pharma Reshuffles its Deck

Returning of rights becomes an unintended consequence of partners restructuring their R&D; budgets.

MARIE DAGHLIAN

The Burrill Report


Three biotech companies regained rights to their programs this week as top pharmaceutical firms sharpened their R&D efforts to focus on core areas they feel offer the best chance of commercial success.

While Pfizer CEO Ian Read told investors he would be cutting as much as $1.4 billion in R&D spending this year [see story], Rigel Pharmaceuticals announced that it would be regaining rights to its R343 program in allergic asthma because Pfizer had decided to exit its research and development in the allergy and respiratory therapeutic area.

The molecule was part of a 2005 licensing deal and equity investment that gave Pfizer access to Rigel’s portfolio of inhaled small molecule syk inhibitors. One year later, Pfizer identified R343 as the lead product candidate for intrapulmonary delivery in the potential treatment of allergic asthma and paid Rigel a $5 million milestone payment.

The compound recently completed several early stage trials that Rigel is evaluating. It expects to design a mid-stage trial with R343 later this year. “It is rare in our business that one has the opportunity to develop an asset which is both promising and on which the research and development has been as well done as the package that Pfizer is transferring to us,” says James Gower, chairman and CEO of Rigel. “R343 will now become Rigel's most advanced in-house project.”

Pfizer was not the only Big Pharma reshuffling its deck. AstraZeneca decided not to exercise its option to license Targacept's experimental drug TC-5619, a highly selective alpha7 neuronal nicotinic receptor modulator, being developed to treat symptoms of schizophrenia and returned full rights to Targacept. AstraZeneca had paid $30 million in 2007 when the deal was struck, and if it had exercised the option it would have committed up to $212 million more based on milestones.

Targacept recently completed two mid-stage clinical trials of TC-5619, one in patients with schizophrenia and one in adults with attention deficit hyperactivity disorder. It is currently being evaluated as a potential treatment in Alzheimer's disease.

Targacept CEO J. Donald deBethizy had already expressed his company’s plan to go it alone in schizophrenia if AstraZeneca opted out. “Our clinical results indicate the unique potential of TC-5619 to treat negative and cognitive symptoms of schizophrenia, a critical need not met by currently available treatments, and we are unwavering in our enthusiasm for the compound,” he said. Burrill & Company, publisher of The Burrill Report, is an investor in Targacept.

The companies renewed their commitment on Targacept’s TC-521, in late stage development as an adjunct treatment for major depression. In March, GlaxoSmithKline ended a potential billion-dollar drug discovery research collaboration with the biotech in neurology and pain.

Sanofi-Aventis walked away from a short-lived collaboration with Metabolex, returning rights to MBX-2982, a selective orally-active GPR119 agonist in mid-stage development to treat type 2 diabetes. Metabolex received an upfront payment at deal signing and was eligible for up to $375 million in milestone payments. Sanofi decided to take a one-time charge to terminate the agreement without giving a reason for its decision. It did say in a regulatory filing that it had seen data from a recently completed trial before making its decision. That trial did not have a negative outcome for safety or efficacy, according to Metabolex.

So far this year, Big Pharma has returned seven programs to its biotech partners as it has struggled to find new ways to deal with its lagging R&D productivity. The trend is likely to continue as companies seek to deal with the loss of revenue from patent expirations. Risk-sharing through option-based and back-end loaded deals is the order of the day. That means a bio-buck today is not what it was yesterday.




DEALS FOR THE WEEK ENDING MAY 6, 2011
Global Venture Financings
Company Location Amount Raised (USD M) Principal Activity
BioAmber Minneapolis, MN 45.0 Renewable chemicals
Crown Bioscience Santa Clara, CA 28.8 CRO
Cobalt Technologies Mountain View, CA 20.0 Renewable chemicals
Hadron Systems Princeton, NJ 5.0 Neutron therapy
Phthisis Charlottesville, NC 0.2 Diagnostics
Nanostim Milpitas, CA N/A Pacemakers
NeuroVigil San Diego, CA N/A Neurosensors
Flexible Stenting Solutions Eatontown, NJ N/A Medical devices
ProFibrix Leiden, the Netherlands 22.0 Wound care
Delenex Therapeutics Schlieren, Switzerland 19.3 Antibody fragments
OrSense  Nes Ziona, Israel 18.0 Medical devices
Selvita Krakow, Poland 5.5 Drug discovery 
BeiGene Beijing, China N/A Cancer therapeutics
Total Raised US 99.0
Total Raised Non-US 64.8
Grants and Contracts
Company Funding Agency Amount Raised (USD M) Principal Activity
Grants
Geron California Institute for Regenerative Medicine 25.0 Stem cells
Opsona (Ireland) EU 7th Framework Programme  8.5 Organ rejection
Cellana USDA 5.5 Animal feed from algae
Spring Bank Pharmaceuticals NIH NIAID RO1 grant over 5 years 3.9 Hepatitis B
Immunetics NIH NIAID 3-year Phase II SBIR 2.4 Chagas disease 
Adeona Pharmaceuticals NIH NINDS  1.6 Multiple sclerosis
MDxHealth (Belgium) Eurotrans-Bio 1.1 Bladder cancer Dx
Biovista EU 7th Framework Programme p-medicine project 0.5 Personalized medicine
Contracts
Emergent BioSolutions CDC contract expansion 101.0 Anthrax vaccine
SeraCare Life Sciences NIH NHLBI year 2 of 5-year  3.5 Biorepository services
Total Grants and Contracts 153.0
Public Financings
Company Ticker Amount
Raised (USD M)
Financing Type
Shenzhen Edan Instruments (China) SHE:300206 146.0 IPO
InspireMD (Israel) OTC:NSPR 9.7 PIPE
Marshall Edwards MSHL 4.0 PIPE
Response Genetics RGDX 2.3 PIPE--RDO
Graymark Healthcare GRMH 3.0 PIPE
Alexza Pharmaceuticals ALXA 16.1 PIPE
Bacterin International BONE 1.9 PIPE
Theravance THRX 6.7 PIPE--GSK buys shares
GenSpera OTC:GNSZ 2.2 PIPE
Keryx Biopharmaceuticals KERX 33.0 Follow on
Silence Therapeutics (United Kingdom) AIM:SLN 9.2 Placing
Elekta (Sweden) Pink:EKTAY 200.0 Debt
Total Public Financings-US 69.2
Total Public Financings-Non-US 364.9
M&A 
Acquirer Target Deal Value
(USD M)
Focus
Teva Pharmaceuticals (Israel) Cephalon 6,800.0 Biopharmaceuticals
INC Research Kendle International 232.0 CRO
Techne  Tocris (United Kingdom) 124.0 Tools/Technology
Akorn Advanced Vision Research 26.0 OTC ophthalmic
Isconova (Sweden) Nordic Vaccine (Denmark) 0.6 Vaccine delivery
PerkinElmer Geospiza N/A Tools/Technology
Alliances 
Company/Licenser Company/Licensee Deal Value
(USD M)
Focus
Molecular Partners (Switzerland) Allergan 420.0 Ophthalmic license
Wilex (Germany) Prometheus Laboratories 145.0 Oncology license
ARCA biopharma Novartis (Switzerland) 17.5 Technology license
Dyadic Sanofi Pasteur (France) N/A Vaccine collaboration
Icagen Yale University School of Medicine and Pfizer N/A Pain drug collaboration
Molecular Templates Alnylam Pharmaceuticals N/A RNAi delivery collaboration
Solazyme Bunge N/A Renewable oils production agreement
Sichuan University West China School of Stomatology (China) C3 Jian N/A Clinical research partnership
Yale School of Medicine Debiopharm (Switzerland) N/A Inflammation drug license
University of Miami InVivo Therapeutics N/A Orthopedic collaboration
King's College London (United Kingdom) Sigma-Aldrich N/A Diagnostics license


May 06, 2011
http://www.burrillreport.com/article-losing_biobucks_as_pharma_reshuffles_its_deck.html

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