Biotech's Busy Week of Handshakes and Financings

by: The Burrill Report
Some sweet deals and a bevy of venture financings marked a hectic week of presentations and networking at several conferences in San Francisco, including the annual JPMorgan Healthcare Conference. While many small biotech executives were buoyed by an upbeat mood compared to last year’s event, they are mindful that times are still tough, good deal terms are hard to get, and they must focus on those compounds in their pipeline that offer the most potential for near term revenue. Several executives also expressed cautious optimism that the capital markets will continue to grow more favorable, keeping the possibility of a successful IPO alive.
In the biggest deal of the week, Belgian biotech Galapagos (OTC:GLPGF) entered into a $580 million global multi-year strategic alliance with Swiss biopharmaceutical powerhouse Roche (OTCQX:RHHBY) to develop potential new therapies in chronic obstructive pulmonary disease, or COPD. Their agreement calls for Galapagos to apply its target discovery platform to discover novel COPD targets and assume the discovery and development of new small molecule candidate drugs against these targets.
Roche will have an exclusive option to license each small molecule program after either clinical candidate selection or completion of phase 1 clinical trials. Roche will also have an exclusive option to license the COPD targets for the discovery and development of antibodies against these targets. Roche will assume all further development if it exercises either option.
Under the terms of their alliance, Roche will pay Galapagos $8.7 million for research access. Galapagos is also eligible to receive discovery, development, regulatory and sales milestone payments that could potentially exceed $573 million, plus royalties upon commercialization of any products covered in the agreement. In a conference call, Galapagos chief executive Onno van de Stolpe said that the company was in a sweet spot for the pharma industry, providing solutions to their strategic plans going forward with regard to discovery research, and said there was a good chance they would enter another alliance this year.
According to the company, it now has deals with five of the top 10 big pharma companies. In October Galapagos expanded its partnership with Merck (NYSE:MRK) to develop treatments for hardening of the arteries, in a deal that could be potentially worth up to $600 million for the company.
South San Francisco, California-based biotech KaloBios Pharmaceuticals entered into a collaboration with Sanofi Pasteur, the vaccines division of Sanofi-aventis (NYSE:SNY), for the development and commercialization of KB001, an investigational new biologic for the treatment or prevention of Pseudomonas aeruginosa infections, a common cause of hospital acquired pneumonia. Sanofi Pasteur will be responsible for the development and commercialization of KB001 and initially focus on hospital acquired infections while KaloBios will focus on developing and commercializing KB001 for use in treating patients with cystic fibrosis and bronchiectasis, an obstructive lung disease aggravated by bacterial infections. KB001 is a ‘Humaneered’ antibody fragment which blocks the bacterium’s mechanism for evading human immune defenses. It avoids known mechanisms of antibiotic resistance and does not contribute to broad-spectrum resistance. The compound has completed two mid-stage clinical studies.
Under the terms of their agreement, Sanofi will pay KaloBios $35 million upfront, plus development, regulatory and commercial milestones for a potential further $255 million, as well as royalties on eventual product sales. Sanofi Pasteur also has the option to acquire commercial rights to KaloBios’ indications for KB001 outside the United States and co-promotion rights in the United States.
Life Technologies (NASDAQ:LIFE) is teaming up with SG Biofuels to advance the development of jatropha, a hardy shrub that produces seeds with high oil content, as a sustainable biofuel. The alliance will bring together SG Biofuels' Genetic Resource Center, which contains a diverse library of jatropha genetic material, with the advanced biotechnology and synthetic biology tools of Life Technologies.
The partnership will initially include sequencing the Jatropha curcas genome, allowing for the rapid introduction of new traits targeted toward increasing the yield of the oil-producing plant. Life Technologies will also become a strategic partner in SG Biofuels. The companies aim to produce high-quality biodiesel for less than $1 per gallon.
San Diego, California-based Tandem Diabetes Care has raised $52.3 million in a round of equity financing that began in May 2009, according to a regulatory filing. The company didn’t disclose their investors. Tandem is developing better ways to manage diabetes with wearable insulin pumps where patients can get insulin continuously throughout the day using a catheter, instead of giving themselves periodic injection. The aim is get the insulin quickly in order to remain active. According to their website they believe that “one size does not fit all” when it comes to pump therapy and they hope to offer consumers an array of product choices customized to their needs.
San Diego biopharmaceutical company VentiRx Pharmaceuticals completed a $25 million Series A extension led by MedImmune Ventures, with support from existing investors ARCH Venture Partners, Domain Associates and Frazier Healthcare Ventures. This financing, along with a $26.6 million Series A round that closed in March 2007, brings the total raised by the company to $51.6 million. VentiRx is focused on the development of novel Toll-Like Receptor 8 candidates for the treatment of cancer, respiratory and inflammatory diseases.
Finally, two companies, A.P. Pharma (APPA) and Columbia Laboratories (CBRX), regained compliance to continue listing on the Nasdaq while Seattle biotech Targeted Genetics, a developer of gene therapies, voluntarily delisted and deregistered their shares. The company plans to list on the Pink Sheets.

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