Teva Buys Ratiopharm: Biotech's Latest Deals and Financings

 |  Includes: ARUXF, BYERF, LLY, TEVA
by: The Burrill Report


The speculation over who would acquire Germany's second largest generics drugmaker has ended. Isreali generics powerhouse Teva Pharmaceuticals (NASDAQ:TEVA) will acquire privately held Ratiopharm for an enterprise value of nearly $5 billion (€3.625 billion). Ratiopharm is also the sixth largest generic drug company worldwide with a portfolio of more than 500 molecules covering all major therapeutic areas that are marketed in 26 countries. Ratiopharma also has several biosimilar products in late-stage development [see story].

Teva will now be the leading generic drugmaker in Europe, increasing its sales there to $5.2 billion on a pro-forma basis from $3.3 billion in 2009. In Germany, the second largest generic market in the world, it will be second to Novartis' (NYSE:NVS) Sandoz, and it will be able to expand in growing generic markets such as Spain, Italy, and France. Teva will fund the acquisition through a combination of cash on hand and lines of credit and expects it to close in the second half of 2010.

Eli Lilly (NYSE:LLY) entered into a worldwide license agreement for the rights to commercialize Australian biotech Acrux' (OTCPK:ARUXF) underarm testosterone solution, Axiron, currently under U.S. regulatory review, for the treatment of testosterone deficiency in men. It has been estimated that up to 39 percent of men over 45 years of age may have testosterone levels below the normal healthy range with about 10 percent of these men receiving treatment.

According to IMS data, global sales of testosterone therapies have grown to more than $1 billion per year, with sales of testosterone gels in the United States comprising $700 million. The deal is worth up to $335 million for Acrux, including $3 million for manufacturing rights and $87 million upon approval by the U.S. Food and Drug Administration, which is expected in 2011. Axiron is applied topically under the arm like deodorant.

Acrux specialized in administering drugs through the skin. The deal is possibly one of the largest licensing deals by an Australian biotech company, according to Acrux' CEO Richard Treagus. "It takes Acrux into a comprehensively different financial position," he says.

Prometheus Laboratories entered into a research collaboration and license agreement with Germany's Bayer Schering Pharma (OTC:BYERF) worth up to $160 million in upfront fees and milestones. The collaboration partners Prometheus' proprietary oncology diagnostic platform with Bayer's broad oncology pipeline in an effort to stratify patients to appropriate drug candidates and potentially accelerate the development of novel oncology therapeutic products. Prometheus is a specialty pharmaceutical and iagnostics company that is currently the only company in the IPO queue that has marketed products.

NGM Biopharmaceuticals closed the first tranche of a $51 million series B round of financing that included The Column Group, Tichenor Ventures, Prospect Venture Partners, Rho Ventures and other new and series A investors. South San Francisco-based NGM has created a drug discovery platform based on its insights into the effects of bariatric gastric bypass surgery and post-surgical resolution of type 2 diabetes and other metabolic disorders. The company's strategy is to focus on the roles of these previously unidentified or unexplored hormones, receptors, and factors in the systemic regulation of metabolism to generate a pipeline of new drug candidates to treat diabetes, obesity, muscle wasting and cardiovascular disease.

Boston biotech Rhythm Pharmaceuticals completed the first close on its series A equity financing of $21 million, which was led by MPM Capital and New Enterprise Associates. The funds will be used to develop peptide therapeutics previously licensed from French biopharma Ipsen to develop treatments for metabolic disorders. As part of the deal with Ipsen, Ipsen took a 17 percent stake in Rhythm. The company is preparing to begin a trial for an appetite-regulating treatment for diabetes and obesity in early 2011.

Finally, four companies filed to go public this week: immunotherapy company Neovacs in France, medtech company Elbit Medical Imaging in Israel, GenMark Diagnostics in the United States, and U.K. molecular diagnostics company Osmetech in the United States.

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