Scoring winners and losers in Japan pharma M&A bout

Japan's biggest pharma players have been roaming the world in recent years in a restless search for new acquisitions. They've been looking for deals to put an extra oomph into their earnings. Now The Wall Street Journal is reviewing the biggest buyers and seeing who scored the juiciest gains, and who harvested bitter losses. Astellas Pharma, which acquired OSI Pharmaceuticals in 2010, comes out on top. Story

Idenix gets good news on hep C trial, but can't compete with Gilead

Idenix put out the news this morning that the FDA had lifted a partial hold on its hepatitis C drug IDX184--and then watched its share price slide.

In a sign of just how volatile the whole hepatitis C arena has become after back-to-back blockbuster buyouts, the key focus today is on Gilead's ($GILD) surprise acknowledgement that its new hep C favorite scored promising numbers for the genotype 1 patient population. Indenix ($IDIX) and Achillion ($ACHN)--the other biotech most frequently mentioned as a likely takeover target--suffered from the comparison.

"After review of the interim safety and antiviral activity results from the IDX184 phase IIb clinical trial, the FDA removed the partial clinical hold and has allowed us to continue enrollment of this study," says Idenix CEO Ron Renaud. "Importantly, this allows us to expand the phase IIb program and evaluate IDX184 in interferon-free combination regimens with other direct-acting antivirals. We are working toward beginning all-oral combination trials as quickly as possible."

Expanded trial, all oral, interferon-free--all good things in the hepatitis C world. As MarketWatch noted a couple of days ago, investors have been bidding up shares of Idenix and Achillion in the hope that they can profit from some other premium buyout. William Blair analyst Katherine Xu told the wire service that any Idenix buyout would likely be put on hold until after that pesky partial hold was lifted. But for a few hours anyway, Idenix's good news can't compete with promising data from Gilead.

- read the press release
- get the story from MarketWatch

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AstraZeneca's R&D chief in China lays out $100M strategy

One of the hottest trends in the global R&D business in recent years has been Big Pharma's huge investment in China. Among all the emerging countries, China's massive, fast-growing economy has been a magnet for drug developers determined to tap a whole new market. Steve Yang, AstraZeneca's vice president and head of R&D for Asia and emerging markets, sat down with McKinsey recently to map out the company's research strategy.

The big lesson Yang offers is that AstraZeneca ($AZN) doesn't want to simply replicate the work that it does in the U.S. and Europe. By taking what they know about biomarkers and patient selection, its investigators want to craft a new approach that targets specific disease challenges--such as high rates of gastric and liver cancers--and builds on its tech skills. And to maximize efficiency the company wants to pursue a significant amount of R&D outsourcing as AstraZeneca forges fresh research ties with academic groups as well as biotech companies.

AstraZeneca laid out plans for its $100 million effort back in 2006. And Yang notes that while AstraZeneca has made advances, this is a journey that will take years before anyone sees tangible evidence of new product development.

"We have made great progress and built a solid foundation," says Yang. "But if you use as a measure the time needed to develop a new drug, we still have a long way to go. It takes 10 to 15 years to take an idea all the way from a scientist's hypothesis to products on the market."

As AstraZeneca cuts back on R&D in the West, with another 2,200 research jobs put on the chopping block this week as its profits slide, Yang might want to hurry it up.

- here's the full Q&A with McKinsey

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Gilead shares surge as hep C drug scores a cure for big patient population

Gilead Sciences ($GILD) received its first bonus from the monster $10.8 billion deal to acquire Pharmasset ($VRUS) after CSO Norbert Bischofberger told analysts yesterday evening that PSI-7977 combined with ribavirin cured a group of genotype 1 hepatitis C patients after four weeks of therapy. The analysts already knew that the same treatment had performed well for genotypes 2 and 3, and promising data on the more-common genotype 1 pool added some significant luster to one of the most closely watched programs underway in the industry.

During its quarterly earnings call, Bischofberger told analysts that there were no detectable signs of the hepatitis C virus in patients after they had been taking the oral treatment for close to a month. The data supports Gilead's belief that 7977 is on a fast track to an approval that can swiftly gain blockbuster returns as it races against a bevy of rivals anxious to get to the market with an all-oral regimen that can eliminate the injections now needed to treat patients.

"It looks like Gilead will race ahead and continue to lead because its drug 7977 continues to support potential 100 percent cure rates," RBC Capital Markets' Michael Yee tells Bloomberg. "The data disclosed in genotype 1, an important population for which there was no good data yet, continues to show they can support a multibillion-dollar drug franchise with 7977."

Gilead's shares popped about 5% in overnight trading as word of the data began to spread. Hopes for an all-oral hepatitis C drug have inspired a string of deals in the field. Soon after Gilead acquired Pharmasset, Bristol-Myers Squibb ($BMY) stepped up with a $2.5 billion deal to buy Inhibitex ($INHX), giving it a horse in the big race to the FDA.

- here's the story from Bloomberg
- here's the report from TheStreet

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Threshold, Merck KGaA strike $525M licensing deal for promising cancer drug

The dealmakers at South San Francisco-based Threshold Pharmaceuticals ($THLD) have crafted a $525 million licensing pact with Merck KGaA covering its late-stage cancer drug TH-302. Threshold snagged a $25 million upfront, a promise of $35 million in near-term paydays and a $20 million reward if upcoming pancreatic cancer data come in positive. And the biotech holds on to co-promotion rights in the United States.

In its release, Threshold outlined a total of $280 million in regulatory and development milestones and $245 million in milestones based on sales.

"The addition of TH-302 to our pipeline provides an important opportunity in several different tumor types to expand our oncology development program," said Susan Jane Herbert, who's in charge of business development and strategy at Merck Serono. "Given the fact that pancreatic cancer is a very difficult to treat indication, successful Phase II results could represent important upside for our company."

Threshold is all about TH-302. The biotech has 8 clinical trials underway involving the treatment.

In addition to the Phase II pancreatic cancer study, Threshold is pushing ahead on a late-stage program for soft tissue sarcoma. The treatment is designed to be activated when it comes in contact with the low oxygen levels found in tumor tissue, zeroing in on its target with a therapeutic payload that can be delivered in combination with other treatments.

- here's the release from Threshold
- read the story from Dow Jones

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U.S. funding drop threatens San Diego life sciences industry

The life sciences job juggernaut in metro San Diego expanded through the ongoing economic downturn and will produce another 6,000 jobs through 2014, according to a new report. But a big drop in government science funding and a continued decline in venture funding could threaten future growth.

Ominously, grants from the National Institutes of Health to greater-San Diego companies and research operations dropped by half in just the last two years, according to The San Diego Union-Tribune article highlighting the report, from $1.6 billion in 2009 to about $835 million in fiscal 2011. The big reason: Stimulus spending peaked in 2009.

Initially, the extra federal spending helped offset a continued drop in venture spending and private investment, according to the report compiled by Hendershot Economics and commissioned by regional trade group Biocom, as cited by the article. And the venture funding decline for regional biotech and medical device companies points to an uncertain future. Those companies in San Diego County alone nailed down $343 million in venture dollars during the first three quarters of 2011, according to the story, but that's the lowest so far since the recession landed more than four years ago. (The region attracted $530 million in venture money during the same period in 2008.)

All of this begs the question: Will San Diego be able to keep growing life sciences jobs as investment funding dries up? Jobs typically ramp up a few years after initial investment, so the more telling data will be over the coming months and years, to see if the funding decline will undo job growth fueled by higher levels of private, and government funding just a few years ago.

So how does the Biocom-commissioned report quantify the jobs growth? It sees San Diego, Orange, Riverside and Imperial counties forming a hub of about 3,500 biotech or life sciences companies that employ almost 100,000 people, or nearly 150,000 if you count peripheral job growth. The report concludes that the region's biopharmaceutical, research and lab services, biofuels, medical devices and life sciences trade sectors will all add jobs, or generate related positions in accounting, insurance and other peripheral industries, in the next 24 months. (But biotech will lose about 150 workers.)

- here's the story

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Is Lilly betting the farm on its high-stakes Alzheimer's gamble?

Now that the patent cliff has arrived right on time for Eli Lilly ($LLY), the big question this year is whether or not its massive gamble on the Alzheimer's drug solanezumab will pay off. That's Reuters' theme as it delves into the murky science involved in trying to treat the memory-wasting ailment. And even the most optimistic projections can't hide the fact that Lilly may be betting the farm on a drug that faces incredibly long odds.

What are the stakes here? JP Morgan analyst Chris Schott has noted that without a late-stage win for solanezumab, Lilly will not be able to "meaningfully offset the loss of its core franchises to generic entry." Even marginal gains for patients would deliver a drug franchise worth billions a year. His odds for success: Low.

While rivals have gone all out on the M&A side, Lilly CEO John Lechleiter (photo) has maintained an unwavering faith in the company's R&D division, vowing that Lilly scientists will deliver the new products needed to grow the company. And as Lilly repeatedly failed to deliver on the blockbuster side of the business, the importance of solanezumab has grown accordingly.

The big problem, say the experts, is that there is an imperfect understanding of what causes the disease and how to treat it. Lilly and a Pfizer/J&J partnership, which is pursuing its own dreams with bapineuzumab, think they have the inside track.

"I personally think the chances are almost zero," Duke's Dr. P. Murali Doraiswamy, an Alzheimer's expert, tells Reuters. The trouble, he adds, is that investigators are testing drugs on people who already show symptoms of the disease.  

Investors, meanwhile, are left with an upcoming release this year that will either pour cold water on yet another Lilly hopeful or ignite a rally that could transform the company's share price. That's a big gamble. And the outcome is likely to either continue to spur an exodus out of neuroscience, or to spark a revival for a flagging field.

- here's the Reuters story

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AB soars on promising survival data from Phase II tumor study

Shares of Paris-based AB Science shot up yesterday after the drug developer reported strong efficacy results from a midstage study of its experimental drug for gastrointestinal tumors. The treatment, masitinib, not only outperformed Sutent, it also appeared to be better tolerated.

Investigators in the trial divvied up 44 Gleevec-resistant, advanced-stage patients in the study between the experimental drug arm and a Sutent group. "After 18 months, 79% of patients treated with masitinib were still alive," AB reports, "versus 20% for patients treated with Sutent. After 2 years, 53% of patients treated with masitinib were still alive," versus none of the patients in the Sutent arm.

That news triggered a 46% spike in AB's share price.

Longer life in the study was also tied to fewer side effects. Nausea, diarrhea and asthenia were the most common related adverse events. For most biotechs, this kind of proof-of-concept data would inspire a licensing pact. But AB's CEO insists that the French biotech can get through the clinic alone.

"At this time we don't need a partner," CEO Alain Moussy tells Bloomberg. "We've been able to execute a large clinical program by ourselves. It's tough, but we are doing it." He declined to comment on any current or future talks with potential marketing partners.

"Masitinib differs from Sutent by its selectivity profile," says Dr. Olivier Hermine, who heads AB's scientific committee. "Unlike Sutent, which targets a broad spectrum of protein kinases, masitinib is very selective, which brings better tolerability. Furthermore, in addition to killing cells that make up the tumors, masitinib has a complementary mode of action that may also kill cancer stem cells and trigger an immune response, which may further enhance its efficacy. These promising results in second line treatment of GIST, which correlate with the encouraging results previously reported in the first line treatment of GIST, tend to confirm that masitinib has an original mechanism of action that may translate into improved survival."

- read the press release
- here's the report from Bloomberg

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