Two Potential Mega Biotech Deals Fuel Industry Hopes

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 |  Includes: AMGN, CLDX, CRA, CRGN, CYTK, EXEL, HRTX, SNY
by: The Burrill Report

By MARIE DAGHLIAN

There seems to be light at the end of the biotech-financing tunnel. Strong partnering activity continued last week, making up for slowed activity in the venture capital and public markets during the last week of the month. Coming on the heels of the 2009 BIO International Convention where the major theme was surviving the economic crisis, and just ahead of the American Society of Clinical Oncology’s Annual ’09 Meeting, two potential billion-dollar deals during the past week revved up the market.
In the first major deal, biotech powerhouse Amgen (NASDAQ:AMGN) announced it exercised its option to obtain an exclusive worldwide license (excluding Japan) to Cytokinetics' (NASDAQ:CYTK) cardiac contractility program that includes CK-1827452, a novel cardiac myosin activator being developed to treat heart failure. The experimental drug showed promising results in recently completed mid-stage clinical trials. Under the terms of the companies' 2008 collaboration and option agreement, Amgen will pay the South San Francisco-based company an exercise fee of $50 million and has assumed responsibility for development and commercialization of CK-1827452 and related compounds. The deal has a potential value of $970 million to Cytokinetics in developmental and regulatory milestones and royalties.
Exelixis (NASDAQ:EXEL), another South San Francisco, California-based biotech, continued to turn its pipeline of cancer compounds into gold. Fresh from its December collaboration with Bristol-Myers Squibb (NYSE:BMY) for XL184, Exelixis and Sanofi-Aventis (NYSE:SNY) announced a global license agreement for two compounds—XL147 and XL765—and a broad collaboration for the discovery of inhibitors of phosphoinositide-3 kinase (PI3K) for the treatment of cancer.
The PI3 kinases play a key role in cell signaling pathways and isoforms of PI3K have been implicated in various cancers, and also cardiovascular, neurodegenerative, and immune-inflammatory diseases. Activation of the PI3K pathway is a frequent event in human tumors, promoting cell proliferation, survival and resistance to chemotherapy and radiotherapy. Under the discovery collaboration, Exelixis and Sanofi-Aventis will combine efforts in establishing several pre-clinical PI3K programs and jointly share responsibility for research and preclinical activities related to isoform-selective inhibitors of PI3K. Sanofi-Aventis will have sole responsibility for all subsequent clinical, regulatory, commercial and manufacturing activities of any products arising from the collaboration.
Sanofi-Aventis will pay Exelixis $140 million upfront for a worldwide exclusive license to XL147 and XL765, which are currently in phase 1 and phase 1b/2 clinical trials, and assume all development and commercialization activities. Exelixis will also receive guaranteed research funding of $21 million over a three year period. Exelixis is also eligible to receive development, regulatory and commercial milestones of over $1 billion, as well as royalties on sales of any products commercialized under the license or collaboration.
The PI3K pathway is hot with many biotech and pharma companies working in oncology. The deal highlights the importance of partnering for Sanofi, and is the third significant oncology deal in the past two months, following its structured acquisition of privately-held BiPar Sciences in April, which was valued at up to $500 million, and its purchase of oral fludarabine from Antisoma for $65 million in May.
Celldex Therapeutics (NASDAQ:CLDX) entered into a definitive agreement to acquire CuraGen (CRGN) a few days before the ASCO meeting where CuraGen will present data on phase 2 trials of three of its experimental cancer drugs. The acquisition will add CuraGen's 11 fully owned, human antibodies to Celldex' immunotherapy platform. Celldex' focus is on the use of tumor-specific targets and human monoclonal antibodies to precisely deliver therapeutic agents through their novel targeted immunization approach. Its own lead candidate CDX-110, partnered with Pfizer (NYSE:PFE), is currently undergoing evaluation in a phase 2 clinical trial in newly diagnosed glioblastoma multiforme. The transaction will be a stock-for-stock transfer which values CuraGen at $94.5 million.
But the news wasn’t as good for everyone. Most small biotech companies are still struggling to remain viable, with almost half of the 330 publicly traded biotech companies operating with less than a year of cash. During the past week, Celera (NASDAQ:CRA), founded by the venerable J. Craig Venter, and a pioneer in the mapping of the human genome, announced it was closing its remaining operations in Rockland, Maryland, laying off 20 of the remaining 25 people who worked there, and moving to its home base in Alameda, California. The closing means that Celera is moving out of discovery work to focus on development.
San Diego's Metabasis Therapeutics continued to reduce its workforce, laying off 45 employees, and remaining in business with a skeletal staff of seven who will remain to evaluate strategic alternatives. The company has a pipeline of treatments targeting metabolic diseases such as diabetes and hyperlipidemia.
Redwood City, California-based A.P. Pharma (APPA), a specialty pharmaceutical company that develops products using a proprietary polymer-based drug delivery technology, also implemented a reduction of 34 percent of its workforce to preserve enough cash to allow the company to continue advancing its lead program, APF530, towards regulatory approval and commercialization. The company filed an application with the U.S. Food and Drug Adminstration earlier this month to begin marketing the drug.

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