Nominees have been announced for Allicense Breakthrough Deal Awards

Print 06 March 2015
Peter Winter / BioWorld

Thomson Reuters analysts have disclosed 10 deals – five biopharma licensing and five M&A deals concluded in 2014 – as candidates for the Breakthrough Alliance Awards, with voting now open and the winner to be announced at this year's Allicense meeting in San Francisco.

It was a difficult task to select the final five M&A candidate deals, said Vinay Singh, senior deals analyst at Thomson Reuters Recap, because 2014 turned out to be a prolific year for dealmaking, with 412 M&A transactions announced – a 25 percent increase in volume over the previous year. Deal value was $277 billion, of which $215 billion was in the form of public target takeouts. That total included five megamergers of more than $10 billion in value.

The selection committee used several criteria to pare down the original list and only considered deals that had an announced total value greater than $175 million. In the end, the final five nominees were drawn from a pool of 45 therapeutic M&A deals. "The reviewers were looking for creatively structured deals that uniquely positioned the partners in new or an intriguing therapeutic space," noted Singh.

M&A NOMINEES

The largest dollar size acquisition to be chosen was Dublin-based Actavis plc's takeover of Irvine, Calif.-based Allergan Inc. for approximately $66 billion to create one of the top 10 global pharmaceutical companies by sales revenue, with a strong balance sheet, growing product portfolios and commercial reach.

Allergan's portfolio, which includes the blockbuster Botox (onabotulinumtoxinA) franchise, will double the revenues of Actavis' North American specialty brands business, giving the combined company three franchises – ophthalmology, neurosciences and medical aesthetics/dermatology – each with annual revenues in excess of $3 billion on a pro forma basis beginning in the 2015 calendar year. (See BioWorld Today, Nov. 18, 2014.)

"This was a fascinating deal," noted Chris Ehrlich, managing director, Locust Walk Partners. "Actavis had very little R&D of their own and so the transaction was a very good example of the buy vs. build model in the specialty pharma space."

A deal in the infectious diseases space was the second largest deal to be chosen. Johnson & Johnson's acquisition of Alios Biopharma Inc. for $1.75 billion in cash gave the big pharma access to a pipeline including a phase II oral nucleoside analogue, AL-8176, in respiratory syncytial virus and a uridine nucleotide analogue, AL-335, for hepatitis C virus, and AL-516, a purine nucleotide analogue in preclinical studies going into phase I trials this year. (See BioWorld Today, Oct. 1, 2014.)

From a venture perspective, the deal gave a significant return to its corporate venture backers. According to Jonathan Norris, managing director, healthcare practice, at Silicon Valley Bank, Alios had received $73 million in venture funding from a corporate VC syndicate and so the investors received a more than 20x up-front multiple for their investment.

Roche AG's Genentech unit's purchase of Seragon Pharmaceuticals Inc. for a total deal value of $1.725 billion also impressed the selectors. Genentech gained access to that company's portfolio of oral selective estrogen receptor degraders (SERDs), designed to treat hormone receptor-positive breast cancer. It paid $725 million in cash, with supporting contingent milestone-based payments of up to $1 billion. Seragon's lead product candidate, ARN-810, is in a phase I trial in patients with ER-positive metastatic breast cancer. Seragon has a second SERD candidate that has potential in ER-positive breast cancer as well as ER-positive endometrial and ovarian cancers.

Seragon's SERDs are designed both to block estradiol action at the estrogen receptor and to clear the estrogen receptor from the cell altogether. SERDs are believed to change the shape of the estrogen receptor in a manner that targets it for elimination by the cell, with applications not only in hormone receptor-positive breast cancer but potentially other cancers driven by the estrogen receptor. (See BioWorld Today, July 3, 2014.)

The Teva Pharmaceutical Industries Ltd. deal to boost its migraine franchise through its acquisition of Labrys Biologics Inc. for $200 million up front and up to $625 million in pre-launch milestone payments put it in the final five. The single-compound company's once-monthly injectable migraine prevention drug, LBR-101, could capture $2 billion to $3 billion in sales, according to Teva estimates, adding a lucrative new dimension to its growing portfolio of pain treatments.

Labrys has been developing LBR-101, a fully humanized monoclonal antibody that binds to calcitonin gene-related peptide for prevention of both chronic and episodic migraine, a market with as many as 10 million potential customers. Just 18 months old, the San Mateo, Calif.-based company was born with a phase II-ready asset in hand and a $31 million series A in the bank. (See BioWorld Today, June 4, 2014.)

Rounding out the M&A candidate list was a deal accelerated by a company's impending pricing of an IPO. In the end, Civitas Therapeutics Inc. decided in favor of an acquisition by Acorda Therapeutics Inc. for $525 million in cash.

With the purchase of Civitas, of Chelsea, Mass., Acorda gained global rights to phase III-ready CVT-301, an inhaled formulation of levodopa designed to treat debilitating motor fluctuations, known as "off" episodes, associated with Parkinson's disease.

The drug could represent a peak U.S. sales opportunity of more than $500 million, and officials at Acorda, of Ardsley, N.Y., said a potentially bigger prize is the underlying Arcus pulmonary delivery technology, which originated in the lab of scientist and serial entrepreneur Robert Langer of the Massachusetts Institute of Technology, who sits on the Civitas board.

Acorda has the marketed products Ampyra (dalfampridine) to improve walking in patients with in multiple sclerosis, Zanaflex (tizanidine hydrochloride) to manage spasticity and Qutenza (capsaicin) to manage postherpetic nerve pain, plus a half dozen candidates in a range of neurological and related conditions. (See BioWorld Today, Aug. 28, 2014.)

LICENSING DEAL NOMINEES

Getting to the final list of licensing and joint ventures (JVs) deal nominees had as its starting point transactions greater than disclosed values of $100 million. Like the large number of M&A deals, the Thomson Reuters Recap dataset recorded 739 license/JV deals, representing an aggregate deal value of just over $36 billion "biodollars" in 2014, said Laura Vitez, principal deals analyst, Thomson Reuters Recap. Drawing on expert opinion, a pool of 83 licensing/JV deals were examined involving deal sizes ranging from $100 million to $4.3 billion.

In order of deal size the following five candidates were selected:

The $1.5 billion total deal size of Abbvie Inc. and Google-backed California Life Sciences LLC, better known as Calico, will see the companies collaborate on the discovery of new therapies for age-related diseases, including neurodegeneration and cancer, through phase IIa and beyond. The celebrity life sciences start-up, led by former Genentech executives, including Art Levinson, will establish a research and development facility in the San Francisco Bay Area.

Calico will carry out R&D work for the first five years of the collaboration, with Abbvie providing support and an equal share of program costs under terms of the agreement and also maintaining an option to manage late-stage development and commercial activities in the collaboration. (See BioWorld Today, Sept. 5, 2014.)

The rise in interest in gene therapy saw Tarrytown, N.Y.-based Regeneron Inc. forge an ophthalmology deal with gene therapy specialist Avalanche Biotechnologies Inc. that secures a time-limited right to first negotiations to phase II-stage AVA-101, targeting vascular endothelial growth factor for wet age-related macular degeneration.

In addition to an up-front payment Regeneron will pay up to $640 million in development and regulatory milestone rewards for Avalanche, of Menlo Park, Calif., in an agreement that covers as many as eight therapeutic targets, with Regeneron keeping worldwide rights to each that is advanced into the clinic. (SeeBioWorld Today, May 6, 2014.)

"This is a good deal as it serves to protect and extend Regeneron's Eylea franchise, with a promising disrupting technology," said Silicon Valley Bank's Norris.

In May 2014, Takeda Pharmaceutical Co. Ltd. took an option to develop and commercialize MGD010, a preclinical asset developed in-house by Macrogenics Inc. that uses its Dual-Affinity Re-Targeting, or DART, technology to simultaneously engage the B-cell surface proteins CD32B and CD79B, targeting autoimmune diseases.

Macrogenics will receive $15 million up front and conduct product development activities through a pre-defined phase Ia study of MGD010. At that point, the Rockville, Md.-based biotech is set to receive a combined $18 million from an early development milestone and exercise fee if Takeda opts for an exclusive worldwide license and assumes responsibility for further development and commercialization.

The deal involves another $468.5 million in potential clinical, regulatory and commercialization milestones to Macrogenics, as well as double-digit royalties on global net sales and the option to co-promote MGD010 with Takeda in the U.S. Macrogenics also secured an option to fund a portion of phase III development in exchange for a North American profit share. (See BioWorld Today, June 4, 2014.)

Another deal involving gene therapy made the five nominees, namely Spark Therapeutics Inc.'s deal that brought $20 million from Pfizer Inc. with the potential for as much as $260 million in milestone payments, as the two firms will work on new therapies against hemophilia B. (See BioWorld Today, Dec. 9, 2014.)

Under the terms, Philadelphia-based Spark, which is using bioengineered adeno-associated virus (AAV) vectors for the potential treatment of the blood-clotting disorder, will conduct phase I/II studies in the development program known as SPK-FIX, intended to deliver a high-activity factor IX gene to patients.

Pfizer, of New York, will take over at the pivotal study stage, and also will handle regulatory approvals and commercialization. Spark stands to collect double-digit royalties on global sales. The pharma company sells factor IX Benefix, the standard-of-care therapy in hemophilia B.

Although founded just more than two years ago, South San Francisco-based Myokardia Inc. made the final cut for its potential $200 million collaboration with Sanofi SA. The deal covers three discovery-stage assets: two from the company's work in hypertrophic cardiomyopathy (HCM) and the other in dilated cardiomyopathy (DCM). Together, the indications comprise the most common forms of heart muscle disease. HCM and DCM are types of heritable heart diseases caused by mutations in the genes of the proteins that are primarily responsible for the contraction of the heart muscle. HCM, which results in abnormal thickening of the left ventricle, is the leading cause of sudden cardiac death in young adults. DCM, which results in thinning of the heart muscle and weakened output, is the leading genetic illness leading to heart transplantation.

Sanofi's potential $200 million contribution to advance the HCM and DCM work comes in the form of equity investments, milestone payments and research and development fees through 2018, with $45 million already delivered to privately held Myokardia in the form of an up-front licensing fee and an initial equity investment.

Myokardia will lead research and worldwide development activities through early human efficacy studies and continue to direct global development and U.S. commercial activities for the two HCM programs, where it retained product rights. Sanofi will lead global development and commercial activities for DCM, where it obtained worldwide rights, and ex-U.S. regulatory and commercial activities to the two HCM programs, where it holds ex-U.S. rights. (See BioWorld Today, Sept. 18, 2014.)

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