Biotech's Slow Week Gets Stirred by a Few Smaller Deals

by: The Burrill Report

By Marie Daghlian

The acquisition of two small companies highlighted a quiet deal making week in the life sciences. Endo Pharmaceuticals (NASDAQ:ENDP) agreed to acquire its partner Penwest Pharmaceuticals (PPCO) in a deal that looks promising for both companies. For Endo, the transaction provides access to Penwest’s royalty interest in pain drug Opana ER, a Penwest’s experimental pipeline, and its new delivery technology.

For Penwest’s major shareholders, Tang Capital Partners, Perceptive Advisors, and president and CEO Jennifer Good, who collectively own 38.6 percent of the company’s common stock, the deal represents a 19 percent premium to the stock’s closing price before the deal was announced. Endo will pay $168 million for Penwest, or $5 per share in cash [see story].

Emergent BioSolutions (NYSE:EBS) is acquiring Trubion Pharmaceuticals (TRBN) in a deal valued at up to $135.5 million. Emergent will pay $96.8 million, or $4.55 per share in cash and stock, upfront for the company and issue milestone-based Contingent Value Rights worth up to $38.7 million more. Milestones are based on mid- and late stage clinical trials of TRU-016 for the treatment of chronic lymphocytic leukemia and non-Hodgkin’s lymphoma, which is partnered with Abbott (NYSE:ABT). The deal expands Emergent beyond its biodefense focus into cancer and autoimmunity. It is expected to close in the fourth quarter 2010.

Canadian biotech Alectos Therapeutics has entered into a research collaboration with Merck (NYSE:MRK) to identify and develop compounds that modulate O-GlcNAcase, an enzyme that is believed to be involved in the development of Alzheimer's disease and potentially other disorders.

Merck will have a worldwide, exclusive license to research, develop and commercialize compounds that modulate this target. The companies will collaborate on discovery and preclinical development after which Merck will be responsible for all further development and commercialization. Vancouver-based Alectos is eligible to receive up to $289 million in upfront, research, development and regulatory milestones and tiered royalty payments on sales of any products resulting from their collaboration.

While waiting for a hoped for regulatory approval of Afrezza inhaled insulin therapy, Mannkind (NASDAQ:MNKD) has entered into a PIPE agreement with two investors for 36.4 million shares that will provide the company with more than $200 million in working capital. Mannkind will sell Seaside 88, a private investment limited partnership, 700,000 shares of common stock every two weeks over the course of a year for a total of up to 18.2 million shares at a per share purchase price that is an 8 percent discount to the volume weighted average trading price of MannKind common stock for the ten consecutive trading days immediately preceding each closing date. For any closing to take place, the volume weighted average trading price must be at least $6.50 per share. In a similar agreement, Mann Group, which is controlled by Mannkind’s CEO Alfred Mann, will buy 700,000 shares every two weeks over the course of a year for a total of up to 18.2 million shares at a minimum price of $7.15 per share. The sale to Mann will be to repay about $130 million in debt held by the group.

Deals for the Week Ending August 13, 2010

Company Location Amount Raised (USD M))
Principal Focus
Solazyme South San Francisco, CA 52.0 Algal biofuels and chemicals
TetraLogic Pharmaceuticals Malvern, PA 32.0 Cancer Therapeutics
Dicerna Pharmaceuticals Watertown, MA 25.0 RNAi Therapeutics
CeNeRx BioPharma Research Triangle Park, NC 13.0 CNS Therapeutics
Nuon Therapeutics San Mateo, CA 10.0 Autoimmune Therapeutics
Boston Heart Lab Framingham, MA 10.0 Medical Devices
Syndax Pharmaceuticals Waltham, MA 6.0 Cancer Therapeutics
MedNetworks Newton, MA 5.0 Digital Health
Pathway Therapeutics San Francisco, CA 4.5 PI3K Therapeutics
Swift Biosciences Ann Arbor, MI 3.0 Tools/Technology
TransEngen Norwalk, CT 2.5 Healthcare IT
Axion BioSystems Atlanta, GA 2.1 Tools/Technology
Mercator Therapeutics Wellesley, MA 2.0 Cancer Therapeutics
Zeo Newton, MA 1.5 Digital Health
Nephera Misgav, Israel 2.9 Medical Devices
Grants and Contracts
Funding/Contracting Agency
Amount Raised (USD M)
Principal Focus
Orphagen Pharmaceuticals National Cancer Institute SBIR N/A Cancer Therapeutics
MabVax Therapetuics National Cancer Institute SBIR 1.1 Cancer vaccines
Horizon Discovery (United Kingdom) PREDICT Consortium 0.4 Cancer Biomarkers
Reaction Biology National Cancer Institute 1.2 Drug Discovery
Crosslink U.S. Army Medical Research and Materiel Command Contract 5.3 Biocompatible polymers
Total Grants and Contracts 8.0
Raised (USD M)

Financing Type
Bradmer Pharmaceuticals (Canada) TSX:BMR 0.5 PIPE
Helix BioPharma (Canada) TSX:HBP 10.8 PIPE
SQI Diagnostics (Canada) TSX-V:SQD 5.7 PIPE
Sareum Holdings (United Kingdom) LSE:SAR 0.3 PIPE
Wilex (Germany) Xetra:WL6 13.2 PIPE
Bacterin International BIHI.OB 1.7 PIPE
Catalyst Pharmaceutical Partners CPRX 1.5 PIPE
MannKind MNKD 237.0 PIPE
Raptor Pharmaceutical RPTP 15.0 PIPE
Aeolus Pharmaceuticals OTC:AOLS 1.0 PIPE
Warner Chilcott (Ireland) WCRX 750.0 Debt
Elan (Ireland) ELN 200.0 Debt
Johnson & Johnson [JNJ]] 1,100.0 Debt
Integra LifeSciences [IART 150.0 Senior secured term loan
Integra LifeSciences IART 450.0 Senior secured credit facility
Henry Schein HSIC 400.0 Private placement credit facility
NON-US 980.5
Deal Value

Endo Pharmaceuticals Penwest Pharmaceutical 168.0 Drug delivery
Emergent BioSolutions Trubion Pharmaceuticals 135.5 Autoimmune; inflammatory
US WorldMeds Solstice Neurosciences 35.7 Specialty pharma
Sparton Delphi Medical 8.0 Medical devices
Tonghua Huachen Herbal Planting (BioPharm Asia) Tonghua Tianbao Wood Frog Cultivation Limited (China) 4.0 Chinese herbal medicines
NuEarth AB Technology (Belgium) N/A Green chemicals
Topcon (Japan) OptiMedica N/A Ophthalmic
Noven Pharmaceuticals Shire (United Kingdom) N/A Neurology
OriGene Technologies Blue Heron Biotechnology N/A Synthetic genes
Company/Licensee Company/Licenser Deal Value
Vibalogics (Germany) Advaxis N/A Vaccine Collaboration
VigiCell (France) NoAb BioDiscoveries (Canada) N/A Drug Discovery Collaboration
Scabcell (United Kingdom) Cancer Research Technology (United Kingdom) N/A Cancer License
Jiangsu Lianhuan Pharma (China) Dong Ying Pharmaceuticals (Sinobiopharma-China) N/A Cardiovascular Partnership
Merck Alectos Therapeutics (Canada) 289.0 Alzheimer's Collaboration
PregLem (Switzerland) Merck Serono (Germany) N/A Post-Surgery Treatment License
NextWave Pharmaceuticals Tris Pharma N/A CNS Collaboration
Allozyne Sigma-Aldrich N/A Chemistry Technology License
Qiagen (Germany) Biosearch Technologies N/A Diagnostics Cross License
Emergent BioSolutions Temasek Life Science Ventures (Singapore) N/A Pandemic Vaccine Joint Venture
Lallemand Ethanol Technology Xylogenics N/A Engineered Yeast Partnership