Biotech Busy with Bevy of Small Deals

by: The Burrill Report

The global economy seems to be on the road to recovery, although it is a jobless recovery so far, according to economic indicators. Although there were no major deals during the past week, biotech companies kept busy with a bevy of smaller licensing agreements, drug discovery collaborations, and M&A activity. And Facet Biotech (FACT) responded to partner Biogen Idec’s (NASDAQ:BIIB) $355 million hostile takeover bid with a strongly worded rejection.

Venture financing was slow but raising capital in the public markets continued apace with several small private placements. Certainly many biotech companies feel that times are getting better. During the past month, there’s been an uptick in shelf registrations for public offerings of common stock. Six biotech companies: Immunomedics (NASDAQ:IMMU), Keryx Biopharmaceuticals (NASDAQ:KERX), Molecular Insight Pharma (MIPI), Cadence Pharmaceuticals (CADX), Orexigen Therapeutics (NASDAQ:OREX), and InterMune (NASDAQ:ITMN) have filed with the U.S. Securities and Exchange Commission to sell up to $900 million worth of their common shares on the open market.
Among the most interesting deals of the week was the partnership agreement between Amylin Pharmaceuticals (AMLN) and India’s largest biotech company Biocon to develop and commercialize a novel peptide hybrid to treat diabetes. While the terms of the collaboration were not disclosed, the companies said that they will share development costs. Amylin will use its technology to develop a peptide hybrid molecule that combines the pharmacological effects of two peptide hormones into a single molecular entity. Biocon will use its expertise in recombinant microbial expression to manufacture the compound and help move it through preclinical and clinical development. The deal could be very fruitful for both companies as the incidence of diabetes continues to grow worldwide, especially in both India and the United States.
In the largest announced M&A transaction of the week, Abbot (NYSE:ABT) expanded its vascular portfolio with an agreement to acquire privately held Evalve, a leading developer of devices for minimally invasive repair of cardiac mitral valves. Abbott will gain a presence in the growing area of non-surgical treatment for structural heart disease, in which physicians use catheter-based devices to repair or replace basic structural components of the heart such as mitral and aortic valves. Under the terms of the agreement Abbott will acquire the 90 percent of outstanding equity of Evalve that it does not already own for an upfront payment of $320 million in cash, plus an additional $90 million payment if certain regulatory milestones are met. The transaction is expected to close by the end of the year. Menlo Park, California-based Evalve was founded in 1999 by The Foundry and Fred St. Goar.
According to a recent filing with the U.S. Securities and Exchange Commission, Ironwood Pharmaceuticals has taken in another round of financing, raising $25 million from a group of unnamed investors. With this round, the Cambridge, Massachusetts-based company has raised more than $315 million in total equity financing since its inception in 1999. In May, Ironwood signed a European licensing deal worth $140 million with Spain’s Laboratorios Almirall for its lead compound linaclotide for the treatment of irritable bowl syndrome, gaining $40 million upfront. Ironwood is currently conducting late-stage clinical trials for linaclotide, one of them through its partnership with Forest Laboratories (NYSE:FRX) for IBS patients with constipation.
Ironwood was formerly known as Microbia, changing its name in April of 2008. The company operates a subsidiary, named Microbia, which develops bioprocesses to produce specialty chemicals for both internal use and strategic partners.
arGEN-X BV, a Dutch biopharmaceutical company focused on the discovery and development of human antibodies using its proprietary SIMPLE Antibody platform, closed its first Series A equity financing round, raising $13.6 million from a syndicate of leading life science investors co-led by Forbion Capital Partners and Life Sciences Partners, both based in the Netherlands.
arGEN-X was formed last year by three former executives of Belgium-based Ablynx to develop a novel antibody platform based on conventional antibody structures found in camels and llamas. The platform yields monoclonal antibodies that combine an unparalleled functional diversity against human disease targets with best in class human germline homology.
Even as the economy is slowly recovering, many small biotechs are doing all they can to stay afloat until conditions improve. Seattle-based gene therapy company Targeted Genetics (TGEN), which has been running on empty for the last few months, struck a last minute deal to sell its most valuable assets to Genzyme (GENZ) for $7 million in cash, with $3.5 million upfront and the rest upon completion of the asset transfer. Genzyme will get manufacturing technologies and other adeno-associated viral vector technology, consisting primarily of patents, know-how and manufacturing-related equipment. Genzyme also received a license to use certain technology and materials necessary for manufacturing the viral vectors.
Targeted Genetics will work with Genzyme to transfer the acquired technology and assist in its implementation which is expected to be completed by the end of the year. Targeted Genetics is also eligible to receive revenue from Genzyme if the IP is sublicensed and will receive royalties in the event of commercial sales of products containing AAV vectors covered by the acquired IP.
Targeted Genetics isn’t giving up everything. As part of the deal, Genzyme is licensing back to Targeted Genetics the viral vector manufacturing and technology for use in specified product programs in Targeted Genetics' current pipeline, for which Genzyme will receive royalties on any commercialized products. Its treatment for a rare form of blindness known as Leber’s congenital Amaurosis has shown significant promise in a clinical trial currently being conducted at University College London.
Targeted Genetics estimates that the cash infusion from the asset sale will give the company enough cash to continue operations through 2010. The company has done all it can to extend its cash horizon and has reduced its workforce by 80 percent since November 2008 to a core of 15 employees.
Finally, Repros Therapeutics (NASDAQ:RPRX) of The Woodlands, Texas, has bought more time to pursue strategic options by selling 1.5 million shares at a big discount to a single institutional investor for $1 million in proceeds. San Diego’s Metabasis Therapeutics (MBRX-OLD) is appealing a recently received final warning from the Nasdaq Stock Market that it has not regained compliance with its market listing requirements. South San Francisco-based Hana Biosciences (HNAB) will be delisted on September 15. The company is not planning to appeal.

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