Deals Of The Week: GPC/Agennix, Romark/Chugai, Lilly/NeuroSearch ...

Each week, "The Pink Sheet" presents commentary on some of the week's most interesting business deals, contributed by the editors of the IN VIVO blog. Visit the blog at ¹ http://invivoblog.blogspot.com/ .

GPC Biotech/Agennix: This week GPC Biotech - on its knees since prostate cancer candidate satraplatin got knocked down at FDA in late 2007 - announced plans to merge with a cash-strapped U.S. counterpart, Agennix. GPC brings money, some people and clinical development experience, Agennix brings a Phase III cancer compound, talactoferrin. dievini Hopp BioTech holding, the investment company of German billionaire Dietmar Hopp (co-founder of the multinational business software company SAP AG), provides the new entity with a crucial cash infusion of €15 million ($19 million) (² (Also see "Economy Makes Health Reform An Imperative, Center for American Progress Says" - Pink Sheet, 19 Feb, 2009.)). Thanks to the satraplatin debacle, it's long been expected that GPC would ink some kind of deal. But this might not be the kind of sale GPC had in mind. It's essentially a reverse merger: GPC Biotech will be tipped into a new, as yet unnamed company, which also will hold all of Agennix's shares, plus the €15 million cash contribution. GPC's shareholders will own 39.3 percent of the new group, Agennix's will hold 48 percent, with the Hopp cash representing 12.7 percent. As one of GPC's largest shareholders, Hopp is calling the shots. That's one reason the new company will be listed on the Frankfurt Stock Exchange, not NASDAQ. Top priority for the new firm? Developing Agennix's talactoferrin, a recombinant version of human lactoferrin that is delivered orally. Phase II studies of the drug showed compelling results in NSCLC, according to Agennix. By bolting talactoferrin onto GPC's own products, which include a Phase I kinase inhibitor and satraplatin, the aim is to create a viable pipeline that can be advanced by GPC's business development team. Thankfully, the company has enough cash to last until mid-2010.

Romark/Chugai: Details were decidedly lacking for the tie-up between privately held Romark Laboratories and Chugai for the Japan-centered development and commercialization of Romark's Phase II hepatitis C compound, nitazoxanide. As part of the deal, Romark gets an undisclosed upfront payment from Chugai, and stands to receive additional (undisclosed) monies based on certain clinical and regulatory milestones. According to a press release, Romark also will receive undisclosed profits from product sales in Japan through a supply agreement, as well as royalties. "Chugai is an excellent partner for us in Japan. They bring substantial expertise in the development and marketing of treatments for chronic hepatitis C, exemplified by their experience with Pegasys and Copegus ," said Romark Chairman Jean-Francois Rossignol. Japan, of course, is a notoriously difficult market to break into. Current wisdom is that effective commercialization of drugs in that country is often best left to Japanese pharmas that better understand the unique regulatory and sales hurdles of the home market. (It's one of the reasons for Affymax's 2006 deal with Takeda for Hematide or Amgen's 2008 monster deal - also with Takeda - involving 13 products.) Moreover, such deals provide U.S. or European-based companies with important non-dilutive funding, while doing little to diminish the partnering potential deal for a product in the rest of the world. Back in 2004, Vertex licensed Mitsubishi Japan-only rights to telaprevir, receiving $33 million for an HCV candidate then in Phase I. Could Chugai, part of Roche's hub-and-spoke model, be paying as dearly for nitazoxanide? On the one hand, the drug, from a new class of broad-spectrum antiviral drugs known as thiazolides, largely has been de-risked in terms of its side effects, a sticking point that has buried many a promising HCV drug in the past. Romark already markets the compound as an anti-diarrheal called Alinia. But it's also true that nitazoxanide has a storied past. Romark first licensed the compound to UniMed Pharma back in 1995 in a deal worth about $1 million. Three years later, it repurchased rights to the product after UniMed abandoned development.

Lilly/NeuroSearch: Should NeuroSearch be called the little engine that could or the little engine that couldn't? Earlier this month, the Danish firm stopped work on its experimental medicine ABT-894 after a Phase II trial blow-up. Either way, NeuroSearch keeps doing deals. Maybe its collaboration with Lilly on new CNS therapeutics announced Feb. 17 will be the one that scores big. The company's expanded collaboration with GlaxoSmithKline, announced late January, also is in the running for that honor. And like the GSK deal, the tie-up with Lilly is one in which NeuroSearch's rewards are primarily all on the come. The three-year drug discovery and development deal calls for NeuroSearch to investigate a defined number of ion channel modulators as potential CNS treatments - specific details concerning the targets were, of course, undisclosed. NeuroSearch gets $5 million upfront for its efforts, plus up to $8 million more in funding and research fees. Lilly also has agreed to take a $17 million equity stake in the company. NeuroSearch will bear the brunt of the responsebility and cost for the early work, with Lilly obtaining "various options to exercise license rights to individual compounds." Should it exercise the option to a compound, Lilly would be responsible for the remaining development and commerciallization costs associated with the molecule and pay NeuroSearch milestone payments per product of up to $320 million plus royalties, covered by the agreement and related intellectual property.

Shire/UCB: Shire is to acquire worldwide rights (ex-U.S., Canada and Barbados) from UCB to Equasym IR and Equasym XL for treating attention deficit hyperactivity disorder. The deal hasn't exactly made a dent in the $1.2 billion cash that Shire generated last year - it will pay €55 million ($70.5 million) in cash, just over three times the products' 2008 net sales, plus undisclosed milestones for meeting certain predefined sales targets. So it's a tiny deal, but also a tidy one: UCB divests drugs (and 20 sales personnel) in markets that aren't core, furthering its focus on "bringing new innovative medicines to people living with severe neurological conditions," according to Troy Cox, President CNS operations for UCB. (And indeed, the Equasym drugs - immediate-release and extended-release methylphenidate hydrochloride - aren't innovative, and ADHD doesn't really classify as a severe neurological condition.) That said, UCB is hanging on to the U.S. market, where the drug is sold as Metadate CD and competes with Ritalin . But for Shire, the products fit right in. The group already is a leader in the U.S. ADHD market, with sales of almost $1.5 billion last year. Equasym also provides a bridge into Europe, where Shire currently doesn't sell any ADHD drugs, helping prepare for the planned 2011 European launch of long-acting Vyvanse . (Vyvanse, recently approved in the U.S., is where Shire hopes to transfer most of its Adderall XR patients ahead of generics in April.) And although most Equasym sales currently are in Europe, buying worldwide ex-U.S. rights provides Shire with a cheap, established treatment that may be more suited to some developing markets. That helps, albeit in a small way, further another of Shire's goals: to quadruple the share of sales it generates from rest-of-world to 25 percent by 2015.

-Ellen Foster Licking ([email protected]) and Melanie Senior ([email protected])