by Marie Daghlian
Since early June, there has been a marked increase in venture capital raised by medical device companies, with six companies announcing the completion of financing rounds. A total of $40.1 million was raised during the second week of June in three financings, and another $58 million was raised during the third week of June by three more medical device companies...
...Economic conditions continue to remain weak for raising capital outside of venture activity. Public companies have also been relying on private investors for funding and PIPEs continue to be the main vehicle for raising capital. Outside of a secondary or follow-on financing on the heels of a major announcement such as Dendreon's (NASDAQ:DNDN) $300-million issue after the release of positive data on its cancer vaccine Provenge, there has only been a trickle of secondary financings, and they have to be creative to get done. ImmunoGen (NASDAQ:IMGN) decided to take the creative route. Aiming to bolster its balance sheet, the Waltham, Massachusetts-based oncology company, announced a public offering of 5 million shares of its common stock at $7 each, a 10.5 percent discount to its closing price on June 17.
Generic pharmaceuticals were the focus of several deals of the week. Just like big pharmaceutical companies, generics players are looking to extend their global reach. Watson Pharmaceuticals (WPI) entered into a definitive agreement to acquire privately held Arrow Group for $1.75 billion in cash and stock. The combination of Watson and Arrow will result in a global pharmaceutical company with over $3 billion in revenue, commercial operations in over 20 countries, and a robust product portfolio and pipeline. Watson expects the transaction to close in the second half of 2009, and be accretive to cash earnings per share in 2010 before synergies. The acquisition extends Watson's reach into important markets in Brazil and Canada. The other plus for Watson is that Arrow has exclusive rights for several new generics including U.S. rights to an authorized version of Pfizer's (NYSE:PFE
) Lipitor which it will launch in 2011 and a generic version of Sepracor's (SEPR
) Xopenex asthma drug in 2012.
Many big pharmaceutical players are aggressively pushing into emerging markets. GlaxoSmithKline (NYSE:GSK
) announced a partnership with India's Dr. Reddy's Laboratories (NYSE:RDY
) to develop and market select products across emerging markets outside India. Under the terms of the agreement, which is effective immediately, GSK will gain access to Dr. Reddy’s portfolio and future pipeline of more than 100 branded pharmaceuticals in cardiovascular, diabetes, oncology, gastroenterology and pain management areas. The products will be manufactured by Dr. Reddy’s and will be licensed and supplied to GSK in various emerging markets such as Africa, the Middle East, Latin America, and Asia Pacific excluding India. Revenues will be reported by GSK and will be shared with Dr. Reddy’s as per agreed terms. In certain markets products will be co-marketed by Dr. Reddy’s and GSK.
Developing new therapies for Alzheimer's, although extremely difficult, could be potentially very lucrative. Extending what has already been a successful collaboration in diabetes and metabolic syndrome, Vitae Pharmaceuticals entered into a worldwide collaboration with Germany's Boehringer Ingelheim to research and develop beta-secretase [BACE] inhibitors for the treatment of Alzheimer’s disease. Current Alzheimer's therapies can improve a patient's condition but cannot slow disease progression. It is hoped that the inhibition of BACE—an enzyme involved in the formation of amyloid-beta plaques that accumulate in the brains of patients with Alzheimer’s disease—may potentially slow or even halt disease progression.
The companies will work jointly to identify and advance candidates for clinical development. Thereafter, Boehringer Ingelheim will lead development and commercialization of all products for Alzheimer’s disease to capitalize on its global marketing and sales expertise. Vitae will have the right to develop products independently for certain other indications. Boehringer Ingelheim will pay Vitae $42 million in upfront and near-term payments that include cash and an equity investment in Vitae, and research funding to support further discovery efforts. In addition, Vitae will be eligible to receive $200 million in pre-commercial milestone payments based on the achievement of clinical and regulatory goals, as well as further milestone payments based on potential additional compounds and other approved indications.
Drug discovery company Adimab inked two major research collaborations, with Merck (NYSE:MRK
) and Roche (OTCQX:RHHBY
), based on its novel yeast-based antibody discovery platform that can deliver human antibodies that bind to a given target very rapidly. Adimab will use platform to identify fully human antibodies against targets selected by Merck. The agreement grants Merck the right to commercialize antibodies generated from the collaboration as therapeutic products. In a separate deal, Adimab will use its proprietary yeast-based antibody discovery platform to identify fully human antibodies against a target selected by Roche. The agreement allows Roche the right to commercialize antibodies generated from the collaboration as therapeutic and diagnostic products.
Under the terms of the agreements, Adimab will receive various upfront payments, preclinical milestones, and licensing fees. In addition, Adimab is eligible to receive clinical development milestones, commercial milestones, and royalties on therapeutic and diagnostic product sales. Neither deal involves exclusivity which leaves New Hampshire based Adimab the freedom to do deals with other companies on the same targets if it wants to while receiving funding for research.
Finally, in this tough economic climate, Eden Bioscience (BATS:EDEN
) has decided to close its doors on June 29. The agricultural biotech company, which makes plant treatment products, notified the Nasdaq stock market of its intent to delist and deregister its stock from the exchange.
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Disclosure: No position