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By Marie Daghlian

Early stage deals between pharma and biotech underscore pharma companies’ increasing reliance on biotech as a source of innovation. Both Roche (OTCQX:RHHBY) and Lilly (NYSE:LLY) have been stung by setbacks in their drug development programs in recent weeks, and both of them announced new alliances to develop novel therapeutics.

Roche will partner with Belgium biotech reMynd to develop novel therapeutics that could slow down neurodegeneration in Parkinson’s and Alzheimer’s. The initial focus will be on two of the company’s pre-clinical small molecule programs. The partners will form joint teams to take the programs forward after which Roche will be responsible for all clinical development and worldwide commercialization. reMynd will be eligible for over half a billion Euros ($637 million) in milestone payments, plus potential double-digit royalties on sales of any resulting products. The novelty of the reMynd’s drug candidates lies in the fact that they are considered disease modifying, unlike currently available drugs that only treat symptoms of the disease.
Lilly is partnering with Anacor Pharmaceuticals to take advantage of Anacor’s boron chemistry platform to create and develop new therapeutics for animal health, as both companies seek to fill significant unmet needs in new therapeutics for both companion and food animals. Anacor has already advanced six molecules into human clinical trials. “As a result of some of our work in human neglected diseases,” says Anacor CEO David Perry, “we identified the opportunity to address unmet medical needs in animals as well.”
Under the terms of their agreement, Anacor and Lilly will collaborate to discover products for a variety of animal health applications. Anacor will receive an upfront payment, research funding, and will also be eligible to receive milestone payments contingent on achieving development and regulatory hurdles as well as commercial royalties on sales. Financial details were not disclosed.
J&J’s (NYSE:JNJ) Ortho-McNeil-Janssen Pharmaceuticals signed a collaboration and license agreement with Anchor Therapeutics to develop G protein coupled receptor or GPCR-targeted therapeutics using Anchor’s proprietary technology. The technology allows the company to pursue targets that are intractable to current approaches and represents a new approach for modulating GPCR signal transduction. The approach could potentially transform the scope of GPCR therapeutics to treat a broader of serious diseases, including inflammatory and metabolic disorders.
The companies will work together to discover and optimize preclinical development candidates against GPCR targets in oncology and metabolic disorders, including Anchor’s program targeting gpr39, a GPCR involved in metabolic diseases, after which Ortho will assume responsibility for development and commercialization. Anchor will receive an undisclosed upfront payment and research support and could be eligible for development and regulatory milestone payments up to $480 million.
U.K pharmaceutical Shire (SHPGY) added a new drug candidate to its orphan drugs portfolio in a joint development and commercialization deal with Acceleron Pharma, potentially worth $498 million, for its lead drug ACE-031 in phase 2b development as a potential treatment for Duchenne muscular dystrophy, a fatal genetic disorder characterized by the progressive loss of muscle strength and function.
There are currently no available treatments for the condition that primarily affects boys and occurs in approximately 1 in every 3,500 male births. Duchenne is caused by genetic mutations that result in the absence of dystrophin, a protein necessary to maintain the structural integrity of muscle fibers. Few people with the disease survive past their twenties.
While most research in the field has taken a genetic approach, Cambridge, Massachusetts-based Acceleron’s drug candidates target the activin receptor type IIB pathway, a pathway that plays critical roles in regulating the growth of skeletal muscle, and work by encouraging muscle growth. Under the terms of their agreement, Shire will receive exclusive license to Acceleron’s ACE-031 and other novel molecules targeting the activin receptor type IIB pathway, in markets outside of North America. Acceleron is retaining all commercial rights in North America. The companies will work together to advance ACE-031 through clinical trials and each will commercialize the therapy in their respective markets.
Shile will pay Acceleron $45 million upfront, and potential development, regulatory, and sales milestone payments up to $165 million. Acceleron will also be eligible for an additional $288 million for other indications and molecules, and royalty payments on product sales. The companies will share development costs in North America and Europe, and Shire will be responsible for development costs in other markets.
Bristol-Myers Squibb (NYSE:BMY) decided to buy its hepatitis C drug development partner ZymoGenetics (ZGEN) for $885 million to gain full ownership of the promising PEG-interferon lambda. Bristol-Myers’ offer of $9.75 per share in cash represents an 84 percent premium to its closing price before the announcement, and values the company at $735 million excluding cash acquired with the purchase. Novo Nordisk (NYSE:NVO) agreed to sell its 26 percent stake in Seattle-based ZymoGenetics as part of the deal.
Analysts praised the deal, noting that gaining full ownership of the hepatitis C treatment, a potential blockbuster, fits Bristol-Myers' strategy of finding new therapeutics to replace revenue lost from drugs facing generic competition. ZymoGenetics’ pipeline and biologics also includes treatments for bone diseases, thrombosis, arthritis, melanoma, and multiple sclerosis, and one marketed drug.
Finally, St. Jude Medical (NYSE:STJ) , a global medical device company, is making a $60 million equity investment in medical device company CardioMEMS, giving it a 19 percent ownership stake, and has the exclusive option to acquire the company for an additional payment of $375 million during the period that extends through the completion of certain commercialization milestones.
Atlanta-based CardioMEMS has developed a wireless sensing and communication technology that can be placed, in a simple surgical procedure, directly in the pulmonary artery to assess cardiac performance via measurement of pulmonary artery pressure. The sensor transmits real-time hemodynamic data via an external monitor, enabling doctors to obtain critical information without the need for a cardiac catheterization. Patients can transmit the readings from their homes, and physicians can more effectively direct treatments to keep patients out of the hospital. The system has been supported by strong clinical evidence that was presented in May at the European Society of Cardiology Heart Failure Congress in Berlin.

Deals for the Week Ending September 10, 2010
Global Venture Financings
Company Location Amount Raised (USD M)) Principal Focus
Rhythm Boston, MA 40.0 Metabolic disease therapeutics
Sorbent Therapeutics Sunnyvale, CA 21.8 Renal; cardiovascular therapeutics
Good Start Genetics Boston, MA 18.0 Genetic tests
Amedica Salt Lake City, UT 15.0 Spine and joint implants
Zyngenia Gaithersburg, MD 15.0 Cancer; autoimmune therapeutics
Humacyte Durham 12.0 Medical devices
superDimension Minneapolis, MN 9.8 Medical devices
iPierian South San Francisco, CA 6.0 Gene/cell therapy
Stratos Genomics Seattle, WA 4.0 Sequencing
Biotectix Ann Arbor, MI 3.0 Medical devices
Cool Planet Biofuels Camarillo, CA 3.0 Biomass fractionators
Sequel Pharmaceuticals San Diego, CA 1.4 Specialty pharma
ImThera Medical San Diego, CA 1.3 Medical devices
Solazyme South San Francisco, CA N/A Renewable fuels
Protagen Dortmund, Germany 12.7 Protein analysis
Alethia BioTherapeutics Montreal, Quebec, Canada 9.3 Antibodies
Epitherapeutics Copenhagen, Denmark 7.7 Cancer therapeutics
Arcarios Rotterdam, the Netherlands 5.2 Autoimmune therapeutics
Microvisk Technologies Oxford, United Kingdom 3.8 Digital Health
Phagenesis Manchester, United Kingdom 3.1 Medical devices
Total Raised US 150.3
Total Raised Non-US 41.8
Grants and Contracts
Company Funding/Contracting Agency Amount Raised (USD M) Principal Focus
Grants
Addex Pharmaceuticals (Swiss) Michael J. Fox Foundation 0.9 Parkinson's disease therapeutics
Insilicos National Institutes of Health 1.2 Cardiovascular diagnostics
Contracts
Numerate DOE DTRA 6.8 Drug design
Mensanna Research BARDA 4.2 Radiation exposure diagnostics
Entegrion US Department of Defense 8.2 Tissue repair medical devices
Total Grants and Contracts 21.3
PUBLIC FINANCINGS
Company Ticker Amount
Raised (USD M)
Financing Type
EntreMed ENMD 5.1 PIPE-RDO
Competitive Technologies OTCQX:CTTC 1.6 PIPE
ALDA Pharmaceuticals (Canada) TSX-V:APH 0.3 PIPE
Medco Health Solutions MHS 1,000.0 Debt-senior notes
superDimension Private 15.0 Credit facility
Amedica Private 15.0 Debt facility
TOTAL PUBLIC FINANCINGS-US 1,036.7
NON-US 0.3
M&A
Acquirer Target Deal Value
(USD M)
Focus
Bristol-Myers Squibb ZymoGenetics 885.0 Biopharmaceuticals
3M Arizant 810.0 Tools/Technology
St Jude Medical CardioMEMS 435.0 Medical devices
Galapagos (Belgium) GlaxoSmithKline (NYSE:GSK) R&D center (UK) 17.8 Research facility
Cellectis (Frnace) Cyto Pulse Sciences 2.2 Tools/Technology
Huifeng Bio-Pharmaceutical Technology (China) Shangqiu Kexin Rutin Processing (China) 1.8 Traditional Chinese Medicines
Health Plexus PositiveID 1.0 Personal health records
Marshall Edwards Novogen N/A Cancer
Power3 Medical Products Rozetta-Cell Life Sciences N/A Diagnostics
Alliances
Company/Licensee Company/Licenser Deal Value
(USD M)
Focus
Roche (Switzerland) reMynd (Belgium) 637.0 Neurology collaboration
Shire (UK) Acceleron Pharma 498.0 Orphan muscle diseases license and collaboration
Ortho-McNeil-Janssen Pharmaceuticals (J&J) Anchor Therapeutics 480.0 Oncology and Mmetabolic license and collaboration
Ono Pharmaceutical (Japan) Onyx Pharmaceuticals 300.0 Cancer drug license
Transgene (Frnace) Jennerex 116.0 Cancer vaccine partnership
Santarus S2 Biosciences and VeroScience 5.0 Metabolic drugs license
Eli Lilly Anacor Pharmaceuticals N/A Animal therapeutics research collaboration
AstraZeneca (UK) Aurobindo Pharma (India) N/A Generics license and supply
GlaxoSmithKline (UK) Lonza (Switzerland) N/A Biologics manufacturing agreement
Novartis (Switzerland) Orasi Medical N/A CNS Biomarker partnership
Siemens Medical Solutions USA (Siemens-Germany) National Semiconductor N/A Ultrasound technology alliance
KWS SAAT (Germany) Dow AgroSciences N/A Crop trait technology license
Ariana Pharma (France) U.S. Food and Drug Administration N/A Personalized medicine collaboration
Horizon Discovery (UK) Institute of Cancer Research (UK) N/A Cancer drug targets collaboration
Source: Big Pharma Looks to Biotech for Innovation