Burrill Report: Biotech Innovation Gets the Cash

By Marie Daghlian, The Burrill Report

If the past week is any indication, big pharma is showing that it is willing to pay for biotech innovation. On the receiving end this week, Alder Biopharmaceuticals stands to reap more than $1 billion from collaboration with Bristol-Myers Squibb for the development and commercialization of ALD518, a novel biologic that has completed phase 2a development for the treatment of rheumatoid arthritis. Bothell, Washington-based Alder is granting Bristol-Myers Squibb worldwide exclusive rights to develop and commercialize ALD518 for all potential indications except cancer, for which Alder will retain rights and grant Bristol-Myers Squibb an option to co-develop and commercialize outside the United States. In return, Bristol-Myers Squibb will pay Alder an upfront cash payment of $85 million, potential development-based and regulatory-based milestone payments of up to $764 million across a range of indications, and potential sales-based milestones that may exceed $200 million and royalties on net sales. Alder also has an option to require Bristol-Myers Squibb to make an equity investment of up to $20 million in Alder during an initial public offering.
In another antibody deal, Sanofi-Aventis expanded its global collaboration with Regeneron Pharmaceuticals to discover, develop, and commercialize fully-human therapeutic monoclonal antibodies. The expanded partnership adds five years and at least $800 million to the existing deal. Under the revised partnership agreement Sanofi-aventis will increase its annual funding commitment from $100 million to $160 million beginning in 2010, and the research funding will now extend through 2017. The companies aim to advance an average of four to five antibodies into clinical development each year. In addition to its VelocImmune technology, Regeneron will contribute to the collaboration its next generation technologies related to antibody generation. Sanofi-aventis also has an option to extend the discovery program for up to an additional three years for further antibody development and preclinical activities.
Abbott Laboratories said it will pay Dutch biotech PanGenetics $190 million for the global rights to PG110, its fully humanized antibody to Nerve Growth Factor, expanding the company’s pain care portfolio and leveraging its expertise in biologics. PG110 is currently being studied in a phase 1 clinical trial in patients with osteoarthritis. If the trial is successful, Abbott anticipates evaluating the compound in a number of other pain states, including chronic lower back pain, cancer pain and diabetic neuropathic pain. PanGenetics will get an upfront cash payment of $170 million plus additional milestone payments, for a total of up to $190 million.
Japanese pharmaceutical powerhouse Astellas has entered into an agreement with privately-held Ironwood Pharmaceuticals to gain exclusive rights to develop and commercialize Ironwood’s investigational compound linaclotide in Japan, Indonesia, Korea, the Philippines, Taiwan, and Thailand. Linaclotide is currently in phase 3 clinical development in the United States for the treatment of irritable bowel syndrome with constipation and chronic constipation. Astellas will pay Ironwood $75 million in upfront and pre-commercial milestones, including a $30 million licensing fee, as well as escalating royalties on linaclotide sales. Astellas will lead clinical development in Japan and be responsible for all activities and expenses relating to clinical development, regulatory approval, and commercialization in the above mentioned territory.

“This collaboration continues Ironwood’s strategy to form partnerships to develop and commercialize linaclotide in the top three pharmaceutical markets: the U.S., Europe, and Japan, while enabling Ironwood to retain potentially fifty percent of the long-term global value of linaclotide in those key regions, should linaclotide meet our sales expectations,” said Peter Hecht, Ironwood’s chief executive officer. Ironwood is located in Cambridge, Massachusetts. 

Besides dealmaking, several biotech companies closed significant venture rounds during the week. Emeryville, California based Tethys Bioscience closed a $25 million series D round of financing led by aeris CAPITAL, with participation by new investor Wasatch Advisors, and current investors MDV-Mohr Davidow Ventures, Kleiner Perkins Caulfield & Byers, and Intel Capital. Proceeds from the financing will be used to expand commercialization of the Tethys’ proprietary PreDx Diabetes Risk Score product, a simple-to-administer blood test to help clinicians identify those patients at highest risk of developing type 2 diabetes within the next five years.
Massachusetts biotech BioVex raised $30 million co-led by Morningside Venture, Ventech and MVM Life Science Partners who were joined by other new investors including Sectoral Asset Management and Ysios Capital Partners. This capital, along with $40 million raised in March, will primarily be used to complete the ongoing phase 3 pivotal study of OncoVEX (GM-CSF) for the treatment of recurrent and metastatic melanoma and to fund pre-commercialization activities. OncoVEX(GM-CSF) is a first-in-class oncolytic, or cancer-destroying virus, that works by replicating and spreading within solid tumors while leaving healthy cells unaffected, thereby causing cancer cell death and stimulating the immune system to destroy un-injected metastatic deposits.
Cellerix, a product-focused biopharmaceutical company based in Madrid, Sapin, which develops innovative medicines based on cell therapy, announced the successful first closing of its financing round, raising $40.4 million. This round was led by YSIOS Capital Partners, Life Science Partners, and Ventech, with participation by Grupo Genetrix and two of Cellerix’ current investors, Roche Venture Fund and Novartis Venture Fund. Cellerix will use the funding to complete clinical development of its lead product Ontaril and preparation for its market launch in the second half of 2011.
Finally, Trius Therapeutics joined the IPO queue, filing to raise up to $86.3 million. The infectious disease company announced positive phase 2 data for lead candidate torezolid to treat complicated skin and skin structure infection this summer and is planning two phase 3 trials of the second-generation oxazolidinone that inhibits bacterial protein biosynthesis to treat serious Gram-positive bacterial infections. Trius has rights to the compound outside Korea from Dong-A Pharmaceutical. Since its inception in 2004, Trius has raised $51.3 million in venture capital and $8.5 million in NIAID and SBIR grants. At Sept. 30, it had a nine-month operating loss of $15.4 million and $7 million in cash. Investors include Sofinnova Venture Partners, InterWest Partners, Versant Ventures,  Prism Venture Partners, and Kleiner, Perkins, Caufield & Byers. Credit Suisse, Piper Jaffray, Canaccord, and JMP Securities are underwriters of the offering.

Related post: Ironwood Receives $75M from Astellas for IBS Drug

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