Hostile Could Become the Name of the Biotech Game

by: The Burrill Report

By Marie Daghlian

This may become the year of the hostile takeover. First it was Astellas (OTCPK:ALPMF) going after Osi Pharmaceuticals (NASDAQ:OSIS). Now Sanofi-Aventis (NYSE:SNY) has gone hostile in its pursuit of Genzyme (GENZ) -- but it has yet to sweeten its offer. After Genzyme rejected its unsolicited $18.5 billion offer, the French pharmaceutical went hostile in early October but kept to its original offer—one that is likely to be rejected again.

Johnson and Johnson (NYSE:JNJ) sealed its $2.4 billion bid for Dutch vaccine maker Crucell with its management, but much to the chagrin of several major shareholders who expected a higher offer for the company. [See story.] J&J already owns close to 18 percent of the company.

Hungarian specialty pharmaceutical Richter acquired PregLem in a deal valued at $463 million and will set it up as its R&D arm for women’s reproductive health. Investors in the Swiss company will get $156 million upfront and up to $307 million based on certain specific development milestones. PregLem’s current executive team will continue to manage the company which will become a research and development center of an enlarged and growing women’s health business for the Richter Group, with a core focus on the development of early stage compounds.

PregLem currently has five products in clinical development and its lead product, PGL4001 Esmya, completed late stage clinical trials in June 2010 for the treatment of uterine myoma.

InterMune (NASDAQ:ITMN) sold worldwide development and commercialization rights to danoprevir to its development partner Roche (OTCQX:RHHBY) for $175 million in cash. The partners also ended their HCV research collaboration agreement entered into in 2005. InterMune will put all its resources into its lead product pirfenidone, its investigational treatment for idiopathic pulmonary fibrosis.

“After conducting a careful review of our strategy and financial position, we have decided to divest our rights to danoprevir to Roche, says Dan Welch, chairman and CEO of InterMune. “We are now in a very strong financial position that provides us with the resources and flexibility to maximize the value of pirfenidone, our largest and nearest-term value creation opportunity.”

Watson Pharmaceuticals (WPI) is expanding its presence in Brazil and Mexico with a $30 million investment in privately held Brazilian pharmaceutical company Moksha8. The generic pharma joined existing investors TPG Biotechnology and Montreux Equity Partners in a $61 million financing round. Watson also committed to invest an additional $20 million, contingent upon Moksha8 executing additional third-party product acquisitions over the next year.

In addition to its minority stake in Moksha8, the companies entered into a partnership where Watson will manufacture and supply select products to Moksha8, which will have exclusive rights to market, sell and distribute these products in Brazil and Mexico.
The companies have initially identified approximately one dozen product candidates, with the opportunity to expand the commercialization and marketing agreement to include additional products in the future. Watson will continue to own all marketing authorizations, and Moksha8 will be responsible for sales, marketing and commercialization expenses. Moksha8 also has partnership agreements with Roche, Pfizer, and BioCryst in Brazil and Mexico.

Convergence Pharmaceuticals officially launched having raised $35.4 million in series A financing from a syndicate of leading European and U.S. life science investors. The British company, focused on the development of novel and high value analgesic medicines, has acquired clinical assets from GlaxoSmithKline. Drugs in its pipeline target the major points of convergence in chronic pain signaling through modulation of specific ion-channels.

Deals for the Week Ending October 8, 2010:
Global Venture Financings
Company Location Amount Raised (USD M) Principal Focus
Pathwork Diagnostics Redwood City, CA 30.0 Diagnostics
IDEV Technologies Webster, TX 46.0 Medical devices
Clear Catheter Systems Bend, OR 1.6 Medical devices
Laureate Pharma Princeton, NJ 20.0 CRO/CMO
ModeRNA Therapeutics Cambridge, MA N/A Stem cells
Neuronex Morrisville, NC 1.5 Neurology
Symetis Lausanne, Switzerland 25.8 Medical devices
Convergence Pharmaceuticals Cambridge, United Kingdom 22.4 Pain
Moksha8 Sao Paulo, Brazil 61.0 Pharmaceuticals
Total Raised US 99.1
Total Raised Non-US 109.2
Grants and Contracts
Company Funding/Contracting Agency Amount Raised (USD M) Principal Focus
Cellecta National Cancer Institute 1.8 Sequencing
Stratatech DoD Armed Forces Institute of Regenerative Medicine 4.0 Wound care
Wright Medical Group Department of Defense 2.4 Orthopedics
Advanced Cell Diagnostics National Cancer Institute SBIR 3.0 Cancer
Altravax NIH NIAID SBIR 1.2 Vaccines
Maven Biotechnologies NIH NIAID 2.0 Imaging
Accuray Homeland Security SBIR 1.0 Radiosurgery
Profectus BioSciences NIH and NIAID 6.3 Vaccines
Sangart U.S. DoD Defense Medical Research and Development Program 1.1 Traumatic injury
Progenics Pharmaceuticals National Institutes of Health 4.1 Infectious disease
Core Dynamics USA (Israel) U.S. Army 2.0 Freeze-dried blood
Bexion Pharmaceuticals NCI Phase II SBIR 1.5 Nanovesicles
Banyan biomarkers Department of Defense 26.3 Brain injury diagnostics
Spacelabs Medical U.S. Department of Defense 13.5 Patient monitoring
GenVec SAIC Frederick for NIH 3.5 Vaccines
Asterand (United Kingdom) NCI 5-year valued at $24.3 million 5.4 Tissue specimens
Vical IPPOX Foundation 2.4 HIV Vaccines
InViragen NIH NIAID 7.8 Dengue vaccine
PharmaJet NIH NIAID 7.8 Drug delivery
Total Grants and Contracts 97.0
Company Ticker Amount
Raised (USD M)
Financing Type
Agennix (Germany) Xetra:AGX 105.6 PIPE
Cytomedix GTF 13.0 PIPE (RDO and CEFF)
BioTonix (Canada) TSX-V:BTX 1.0 PIPE
Cyclacel Pharmaceuticals CYCC 15.2 PIPE
DiaGenic (Norway) OSE:DIAG 12.0 PIPE
Spherix SPEX 5.3 PIPE
Imaging3 OTC:IMGG 1.0 PIPE
MedQuist MEDQ 85.0 Debt--Senior subordinated notes
Celgene CELG 1,250.0 Debt--Senior unsecured notes
MedQuist MEDQ 225.0 Senior credit facility
SciClone Pharmaceuticals SCLN 15.0 Debt facility
Non-US 118.6
Acquirer Target Deal Value
Johnson & Johnson Crucell (the Netherlands) 2,400.0 Vaccines
Gedeon Richter (Hungary) PregLem (Switzerland) 463.0 Women's health
Permira (United Kingdom) Creganna-Tactx Medical (Ireland) 306.0 Medical devices
InterMune Roche (Switzerland) 175.0 Infectious
MorphoSys (Germany) Sloning BioTechnology (Germany) 26.5 Synthetic biology
Meda (Sweden) Vivus 23.5 Genitourinary
Ligand Pharmaceuticals Venenum Biodesign 1.8 Combinatorial chemistry
Company/Licensee Company/Licenser Deal Value
AT&T eCardio Diagnostics N/A Mobile health collaboration
Janssen Pharmaceutica (J&J) Argenta Discovery (Galapagos-Belgium) 46.0 Cancer drug discovery agreement
Moksha8 (Brazil) Watson Pharmaceuticals N/A Generics license and collaboration
Dainippon Sumitomo Pharma (Japan) SanBio N/A Gene/cell therapy license option
Merck BioRelix N/A Antibacterials collaboration
Tasly Pharmaceutical (China) ProteoTech N/A Alzheimer's disease license and collaboration
Stemedica International AnC Bio Group (Korea) N/A Stem cells joint venture
IRX Therapeutics Immunovaccine (Canada) N/A Cancer immunotherapy collaboration
Dr Reddy's Laboratories (India) SoluBest (Israel) N/A Drug delivery collaboration
H. Lundbeck (Denmark) Kyowa Hakko Kirin (Japan) N/A Neurology drug license
Synthetic Genomics J. Craig Venter Institute N/A Synthetic vaccines joint venture
Novartis (Switzerland) Synthetic Genomics Vaccines N/A Flu vaccine collaboration
Novartis (Switzerland) Cepheid N/A Diagnostics collaboration
Takeda Pharmaceuticals (Japan) Envoy Therapeutics 7.5 Schizophrenia research alliance
Temasek Life Sciences Ventures (Singapore) Emergent BioSolutions N/A Influenza therapeutics joint venture

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