Ever since CEO Chris Veihbacher took the helm of France’s largest pharmaceutical company in September 2008, he has actively looked outside the company for ways to stem the impending loss of over one third of its revenue from patent expirations. A Burrill Report analysis shows that he has spent $17 billion to expand and diversify the company, including more than $9 billion in acquisitions ranging from small biotechs to companies focused on generic drugs, animal health, and emerging markets. Now, reports say he’s ready to eclipse that in a single deal.
Bloomberg reported that Sanofi-Aventis is planning a major acquisition of a U.S. company that could be around $20 billion. Shares of several potential targets, among them Genzyme, Allergan, and Biogen Idec, rose 6 to 8 percent as shares of Sanofi slumped 3 percent in the United States.
During the closing days of June, Sanofi-Aventis acquired venture-backed San Diego biotech TargeGen in a highly structured deal that could reach $560 million. TargeGen is developing small molecule kinase inhibitors for the treatment of hematological cancers and other blood disorders. TargeGen’s investors include Forward Ventures, Enterprise Partners Venture Capital, Chicago Growth Partners, VantagePoint Venture Partners, and BB Biotech Ventures.
Under the terms of the agreement, TargeGen will get $75 million when the transaction is completed. Milestones payments that could reach $560 million will be made based on the development of TargeGen’s lead product TG 101248. The transaction is expected to close before the end of the third quarter of 2010.
TG 101348, a potential first-in-class compound, is a potent oral JAK-2 inhibitor being developed for the treatment of patients with myeloproliferative diseases including myelofibrosis and has completed an early stage trial in patients with myelofibrosis.
Celgene’s $2.9 billion acquisition cash and stock acquisition of Abraxis Bioscience was the biggest deal of the week, expanding its oncology focus beyond blood cancers into solid tumors. Under the terms of the merger agreement, each share of Abraxis BioScience common stock will be converted into the right to receive an upfront payment of $58.00 in cash and 0.2617 shares of Celgene common stock. The upfront payment values Abraxis BioScience at approximately $2.9 billion, net of cash. Each share will also receive one tradeable Contingent Value Right, which entitles its holder to receive payments for future regulatory milestones and commercial royalties that could boost Abraxis’ payday by another $650 million. The transaction is expected to close in the fourth quarter.
Celgene’s leading products Revlimid and Thalomid, for the treatment of multiple myeloma, currently account for more than 80 percent of its revenue. With the acquisition of Abraxis, the company will get a proven treatment for solid tumors—Abraxane, approved in 40 countries for the treatment of metastatic breast cancer. It is currently in late stage trials as a treatment for non-small cell lung cancer and pancreatic cancer.
Although sales of Abraxane were only $315 million in 2009, Celgene believes it can grow the franchise to $1 billion in annual revenue.
The Abraxis BioScience deal accelerates Celgene’s strategy of becoming a global leader in oncology. It follows Celgene’s $340 cash upfront, $300 development milestone-dependent acquisition of Gloucester Pharmaceuticals, which netted the lymphoma drug Istodax, and an April collaboration and licensing option deal with Agios Pharmaceuticals to develop drugs using Agios cancer metabolism research platform that netted Agios $130 million upfront. [See “Staying Ahead of the Game” http://www.burrillreport.com/article-2558.html]
Eli Lilly is acquiring Alnara Pharmaceuticals, a venture-backed developer of protein therapeutics for the treatment of metabolic diseases. Cambridge, Massachusetts-based Alnara’s pancreatic enzyme replacement therapy, liprotamase, is currently under U.S. Food and Drug Administration review for the treatment of exocrine pancreatic insufficiency, a disorder often associated with cystic fibrosis where digestion and absorption of fat, protein and carbohydrates is impaired. Financial terms of the acquisition were not disclosed.
All eyes will be on treatments for obesity with three drugs, from Vivus, Orexigen, and Arena, awaiting approval from the U.S. Food and Drug Administration. [See Orexigen story] Arena Pharmaceuticals is the first one to strike a marketing deal ahead of approval. The company signed a potential $1.37 billion agreement with Japanese pharma Eisai to market lorcaserin for obesity and weight management in the United States following a marketing decision by the FDA, which is expected to occur by October 22. The drug, a first in class selective serotonin 2C receptor agonist, is intended for obese patients as well as overweight patients who have at least one weight-related co-morbid condition, and will go before a review panel on September 16.
While Eisai will have exclusive U.S. rights to commercialize lorcaserin, Arena will keep control of manufacturing and sell product to Eisai for marketing and distribution.
Under the terms of the agreement, Arena will get $50 million upfront and up to $90 million upon regulatory approval and the delivery of product supply for launch. Arena will sell lorcaserin to Eisai starting at 31.5 percent of Eisai's annual net product sales, which will increase on a tiered basis to as high as 36.5 percent on annual net product sales exceeding $750 million. Arena is also eligible to receive $1.16 billion in one-time purchase price adjustment payments based on annual sales levels of lorcaserin and another $70 million in regulatory and development milestone payments.
Arena is preparing ahead to commercialize quickly when lorcaserin is approved. Eisai already has a 500-strong U.S. sales force that markets Aciphex for chronic heartburn, a market that overlaps with obesity. And Arena’s manufacturing plant in Switzerland has the capacity to make 1 billion tablets of lorcaserin per year.
| Global Venture Financings | |||
| Company | Location | Amount Raised ($M) | Principal Focus |
| BIND Biosciences | Cambridge, MA | $12.40 | Nanotechnology |
| Zacharon Pharmaceuticals | San Diego, CA | $0.50 | Metabolic disease drugs |
| Lantos Technologies | Cambridge, MA | $1.50 | Medical devices |
| AqueSys | Irvine, CA | $35.00 | Medical devices |
| Dicerna Pharmaceuticals | Watertown, MA | $5.00 | RNAi therapeutics |
| Vicept Therapeutics | Malvern, PA | $16.00 | Dermatology |
| Calistoga Pharmaceuticals | Seattle, WA | $40.00 | Cancer therapeutics |
| Raydiance | Petaluma, CA | $1.25 | Medical devices |
| Medify | Seattle, WA | $1.30 | Online consumer tools |
| Advanced Cancer Therapeutics | Louisville, KY | $10.00 | Cancer therapeutics |
| Zymeworks | Vancouver, BC, Canada | $3.20 | Antibodies |
| TOTAL RAISED US | $122.95 | ||
| TOTAL RAISED NON-US | $3.20 | ||
| Grants | |||
| Company | Funding/Contracting Agency |
Amount ($M) | Principal Focus |
| Athersys | Ohio Third Frontier | $1.00 | Gene/cell therapy |
| Sirnaomics | NCI SBIR and NIAID SBIR | n/a | RNAi therapetuics |
| Oxford BioMedica (United Kingdom) | UK Motor Neurone Disease Association | $0.34 | Neurology--ALS |
| Sangamo BioSciences | Michael J Fox Foundation | $0.90 | Parkinson's disease |
| Total Grants | $2.24 | ||
| PUBLIC FINANCINGS | |||
| Company | Ticker |
Amount Raised $M |
Financing Type |
| EpiCept | EPCT | $6.20 | PIPE |
| Rexahn Pharmaceuticals | RNN | $10.00 | PIPE |
| NeoStem | NBS | $5.00 | PIPE--RDO |
| StemCells | STEM | $6.00 | PIPE |
| Bacterin International | OTC:KKTZ | $7.51 | PIPE |
| Sunesis Pharmaceuticals | SNSS | $8.50 | PIPE |
| WaferGen Biosystems | OTC:WGBS | $7.00 | PIPE |
| Ipsogen (France) | Euronext:ALIPS | $2.40 | PIPE |
| Prana Biotechnology (Australia) | PRAN | $1.00 | PIPE |
| Response Biomedical (Canada) | TSX:RBM | $7.70 | PIPE |
| DiaMedica (Canada) | TSX-V:DMA | $2.26 | PIPE |
| Corcept Therapeutics | CORT | $15.00 | Follow on |
| Advanced Life Sciences | OTC:ADLS | $3.00 | Follow on |
| Accusphere | ACUS | $10.00 | Debt |
| Avaxia Biologics | Private | $0.38 | Massachusetts Life Sciences Center loan |
| Cadence Pharmaceuticals | CADX | $20.00 | Loan facility |
| Jazz Pharmaceuticals | JAZZ | $50.00 | Term loan and credit facility |
| AmStem | OTC:AMST | $1.00 | Bridge financing loan |
| Durect Corporation | DRRX | $50.00 | CEFF |
| Ondine Biopharma (Canada) | TSX:OBP | $0.50 | Short-term loan |
| China Agritech (China) | CAGC | $10.00 | Warrant exercise |
| Galapagos (Belgium) | GLPG.BR | $0.43 | Warrant exercise |
| TOTAL PUBLIC FINANCINGS-US | $199.59 | ||
| NON-US | $24.29 | ||
| M&A | |||
| Acquirer | Target |
Deal Value in $M |
Focus |
| Celgene | Abraxis Bioscience | $2,900.00 | Oncology |
| Sanofi-Aventis (France) | TargeGen | $560.00 | Hematology |
| Shire (United Kingdom) | Lexington Technology Park | $165.00 | Facilities expansion |
| Crawford Healthcare Partners (UK) | ULURU; Strakan International | $5.10 | Dermatology |
| Euthymics Bioscience | DOV Pharmaceuticals | $2.00 | Neurology |
| RoundTable Healthcare Partners | Aqua Pharmaceuticals | n/a | Dermatology |
| Arrhythmia Research Technology | RMDDx (Canada) | n/a | Medtech |
| DiaMedica (Canada) | Sanomune Canada) | n/a | Neurology |
| Eli Lilly | Alnara Pharmaceuticals | n/a | Metabolic |
| Alliances | |||
| Company/Licensee | Company/Licenser | Deal Value in $M |
Focus |
| Eisai (Japan) | Arena Pharmaceuticals | $1,300.00 | Obesity drug marketing license |
| GlaxoSmithKline (United Kingdom) | Genmab (Denmark) | $136.00 | Oncology/ autoimmune license restructuring |
| Eli Lilly | Marcadia Biotech | n/a | Diabetes therapeutic license |
| Forma Therapeutics | Emerald BioStructures | n/a | Cancer research partnership |
| MorphoSys (Germany) | Xencor | n/a | Cancer license |
| Ortho-McNeil-Janssen Pharmaceuticals (J&J) | Koch Institute for Integrative Cancer Research at MIT | n/a | Cancer research collaboration |
| Aeterna Zentaris (Canada) | Almac Diagnostics (Ireland) | n/a | Companion Diagnostics |
| Oncothyreon | Immunovaccine (Canada) | n/a | Cancer vaccines collaboration |
| DSM (Netherlands) | Roquette Freres (France) | n/a | Renewable chemicals joint venture |
| Shell (Netherlands) | Amyris | n/a | Renewable fuels agreement |
| Novartis (Switzerland) | OctoPlus (Netherlands) | n/a | Drug delivery agreement |
| DuPont | Ecolab | n/a | Industrial/Ag collaboration |
| Shrink Nanotechnologies | Lydall | n/a | Diagnostics R&D agreement |
| Roche (Switzerland) | IBM | n/a | Genomics collaboration |
| Roche (Switzerland) | X-Chem | n/a | Drug discovery license and collaboration |
| Deinove (France) | VTT Technical Research (Finland) | n/a | Industrial/Ag partnership |