The summer sun appears to finally be burning through the clouds over biotech companies seeking to raise capital. The industry started and finished July with a bang when it came to partnering and financing. Buoyed by positive clinical data for its investigational treatment for lupus, Human Genome Sciences (HGSI) announced a public offering of more than 23 million shares of its common stock at a price of $14 per share. The offering, which was expected to close on August 3, will net the company proceeds of about $310 million, making it one of the largest public biotech offerings this year. Other companies are following suit as their stock prices are lifted from a positive mood that has investors seeking to invest in the next undervalued biotech company.
Startup companies have also been busy raising money and striking partnerships with Big Pharma. Avila Therapeutics raised $30 million in a Series B equity financing to advance candidates in its pipeline into human clinical trials. New investor Novartis Option Fund led the round and included participation from all existing investors: Abingworth, Advent Venture Partners, Atlas Venture, and Polaris Venture Partners. The Waltham, Massachusetts-based company's platform technology is designed to create a broad set of covalent drug products that work by silencing disease-causing proteins. The platform has been demonstrated in two preclinical programs, one targeting hepatitis C virus protease and the other targeting Btk, an emerging target in autoimmune disease and certain cancers.
In conjunction with the equity investment, Avila entered into an option agreement with the Novartis Option Fund focused on Avila’s advancement of a novel covalent drug program from Avila’s research pipeline. The agreement includes upfront and potential milestones payments to Avila totaling more than $200 million plus royalties.
Boston, Massachusetts startup MSM Protein Technologies struck two deals during the week. MSM is a human antibody drug discovery company with expertise in targeting multi-spanning membrane proteins. The company has demonstrated that its proprietary platform technology has the ability to raise functional human antibodies against a number of G protein-coupled receptors or GPCRs and other membrane proteins. These play a crucial role in receiving chemical signals from other cells and activating certain cellular responses.
The company announced a drug-discovery collaboration with Merck (MRK
) Serono to create antibody based products targeted to G-protein coupled receptors and other possible targets in the cell membrane. MSM will provide its proprietary technology and expertise to display selected targets in their native form and work with Merck Serono’s scientists to apply these in various drug discovery platforms. Under the terms of the agreement, MSM will receive an upfront payment and is eligible to receive further payments on achievement of development and commercial milestones, as well as royalties on sales of potential products resulting from the collaboration.
MSM also entered into an exclusive partnership with Debiopharm Group, a Swiss-based global biopharmaceutical group of companies with a focus on the development of prescription drugs that target unmet medical needs. The partnership involves the development and commercialization of Debio 0929, an antibody targeting a G protein-coupled receptor, into a new oncology therapeutic drug. Under the terms of their agreement, the companies will work together to select antibodies against the GPCR. Upon completion of the discovery phase, MSM will grant Debiopharm a worldwide exclusive license for the development and commercialization of the antibody while retaining marketing rights for Russia, Ukraine, and several other countries in Eastern Europe and Asia. MSM will also be eligible to receive milestone payments as well as a share of royalties on net sales.
In a major partnering deal, Amgen (AMGN
) will partner with GlaxoSmithKline (GSK
) to commercialize denosumab in Europe for postmenopausal osteoporosis. Under the terms of the collaboration, the companies will share commercialization of denosumab for PMO in Europe, Australia, New Zealand, and Mexico. Amgen will retain full rights in the United States and Canada and for oncology indication in Europe, while GlaxoSmithKline will have commercialization rights for PMO and oncology indications in emerging markets.
Financial terms of the partnership include an initial payment and near-term commercial milestones to Amgen totaling $120 million, and ongoing royalties. In Europe, Amgen and GlaxoSmithKline will share profits after accounting for expenses associated with the partnership. In emerging markets, GlaxoSmithKline will be responsible for all commercialization expenses and purchase denosumab from Amgen to meet demand.
Two years ago in July 2007, Amgen granted Daiichi Sankyo exclusive rights to develop and commercialize denosumab in Japan in PMO and oncology with the potential for additional indications.
Amgen has a lot riding on denosumab, a fully human monoclonal antibody that is being investigated for its potential to prevent and treat a broad range of bone-disease conditions including osteoporosis, bone metastases and their consequences, cancer treatment-induced bone loss due to hormone ablative therapy, multiple myeloma, and bone erosions in rheumatoid arthritis. Amgen has submitted marketing applications for denosumab in the United States, European Union, Canada, Switzerland, and Australia.
In the world of mergers and acquisitions, Agilent Technologies (A
) agreed to acquire Varian (VAR
) for $1.5 billion in cash, a 35 percent premium to Varian shareholders. The acquisition of Varian, a leading worldwide supplier of scientific instrumentation and consumables, broadens Agilent's offerings in life sciences and expands Agilent’s product portfolio into atomic and molecular spectroscopy.
“This acquisition is a major step in Agilent’s transformation into a leading bio-analytical measurement company,” said Bill Sullivan, Agilent’s president and chief executive officer. “While we continue to be a world leader in electronic measurement, our biggest opportunities for future growth are in bio-analytical measurement.”
The transaction is expected to generate $75 million in annual cost synergies and achieve Agilent’s 20 percent return on invested capital target within four to five years.
Expansion into generics also continued apace with several deals struck in the final week of July. Specialty pharmaceutical company Valeant increased its presence in Mexico by buying Tecnofarma, a privately held Mexican generic company for about $33 million. Tecnofarma has eighty registered products that can be introduced into the branded generic market in Mexico and a number of manufacturing sites that will allow Valeant Latin America to reduce its dependence upon third party manufacturers.
Abbott Laboratories (ABT
) expanded its presence in India with the acquisition of the nutrition businesses of Wockhardt Limited, Carol Info Services Limited, and certain Wockhardt subsidiaries and group companies for about $130 million in cash.
Abbott's international nutrition business is an important growth driver for the company and has had particularly strong growth in China, Southeast Asia, and Latin America in recent years. Wockhardt, based in Mumbai, India, has a significant presence in India's pediatric and adult nutrition segments with infant formulas, weaning foods and adult protein supplements.
The most active pharma dealmaker of the week was France's biggest pharmaceutical company Sanofi-Aventis (SNY
) which is continuing its strategy outside growth opportunities through smaller acquisitions in targeted markets. Three of the company's last four acquisitions have been in emerging markets. Last week, Sanofi announced the acquisition of Shantha Biotechnics in a deal which values the Indian vaccine company at $784 million. Under the terms of the agreement, Sanofi’s vaccine unit will buy ShanH, which owns 80 percent of Shantha Biotechnics, from the Merieux Alliance. The purchase gives Sanofi a platform in India as well as access to Shantha’s pipeline of new products, including an experimental typhoid vaccine. Also last week, Sanofi strengthened its stake in generics with an agreement to buy Swiss generics maker Helvepharm.
Later in the week, Sanofi further diversified product portfolio with the announcement that it had signed a definitive agreement with Merck. Under the agreement Merck will sell its 50 percent interest in Merial, their animal health joint venture, to Sanofi for $4 billion in cash. Formed in 1997, Merial is a leading animal health company that is a 50-50 joint venture between Merck and sanofi-aventis.
In addition to the Merial agreement, Merck, sanofi-aventis, and Schering-Plough (SGP
) announced the signing of a call option agreement. Following the close of the Merck / Schering-Plough merger, sanofi-aventis will have an option to combine the Intervet / Schering-Plough Animal Health business with Merial to form an animal health joint venture that would be owned equally by the new Merck and sanofi-aventis.
Finally, struggling biotech TorreyPines Therapeutics (TPTX
) said it will merge with Raptor Pharmaceuticals. The merged company will carry the Raptor Pharmaceuticals and will be 95 percent owned by Raptor shareholders, but will have a Nasdaq-listing. Upon closing, TorreyPines will implement a reverse stock split to ensure compliance with Nasdaq listing requirements.
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