Deal Watch: Allergan Diversifies With Deals For Migraine Therapies, Ophthalmologic Device

AMAG adds to its commercial and technological capabilities with a buyout of Cord Blood Registry. Meanwhile, ramifications of the GSK/Novartis asset swap from March continue, with GSK divesting a pair of vaccines to Pfizer, while Novartis acquires Australian biotech Spinifex.

“The Pink Sheet” regularly reports on noteworthy deal-making news around the biopharmaceutical sector. Below is a round-up of key deals that occurred between June 20 and July 10.

Allergan/Merck & Allergan/Oculeve

Allergan PLC has seized an opportunity to reach the market with oral calcitonin gene-related peptide (CGRP) receptor antagonists for the treatment and prevention of migraine through a licensing deal with Merck & Co. Inc., one of two deals the firm closed in recent weeks.

Several rivals are in a race to bring the first CGRP-targeted drugs to market for migraine, but Teva Pharmaceutical Industries Ltd., Eli Lilly & Co., Amgen Inc. and Alder BioPharmaceuticals Inc. are all developing injectable monoclonal antibodies, not oral agents.

Allergan, already a top player in migraine with Botox, agreed to pay $250 million up front to Merck in a deal announced July 7 in exchange for worldwide rights to two small-molecule CGRP receptor antagonists in early- to mid-stage clinical development. Merck also will be eligible to receive development and commercial milestone payments and tiered double-digit royalties on sales of the drugs (Also see "Allergan Moves Into Busy CGRP Class By Buying Merck’s Oral Drugs" - Pink Sheet, 7 Jul, 2015.).

The deal includes two CGRP antagonists: MK-1602 in development for the acute treatment of migraine and MK-8031 in development for the prevention of migraine. Merck has finished a Phase II study of MK-1602 and Allergan said it expects to begin a Phase III study in 2016. MK-8031 is earlier in development, with a Phase II study expected to begin in 2016, according to Allergan.

CGRP is considered a well-validated target for the treatment of migraine and drugs targeting the receptor or ligand have long been considered a potential alternative to triptans. But one of the issues with small molecules has been liver toxicity, particularly when considering long-term use for migraine prevention, a significant commercial opportunity.

Drug manufacturers have hoped to avoid the safety risk with the development of the newer monoclonal antibodies after Merck halted development of an oral CGRP agonist, telcagepant, in 2011 due to liver toxicity issues. Merck ended the program after releasing positive Phase III efficacy data due to liver issues. It also halted development of a more potent follow-up, MK-3207 (Also see "Merck Gets A Headache: Unexpectedly Halts Development Of Migraine Drug" - Pink Sheet, 10 Sep, 2009.).

But Allergan said the drugs it in-licensed, MK-1602 and MK-8031, belong to a different chemical series than telcagepant and have not shown evidence of liver toxicity in clinical studies.

Nonetheless, it is unclear why Merck doesn’t want to develop the drugs itself if the commercial prospects are so bright. Evercore ISI analyst Umer Raffat said in a same-day note that the two migraine programs represent a $2 billion-plus commercial opportunity – if they “work,” which he said remains a question.

On July 6, Allergan announced a deal to acquire the medical device company Oculeve Inc., which is developing treatments for dry eye disease, for $125 million upfront plus milestones [See Deal]. Oculeve’s lead asset OD-01 is a nasal neurostimulation device that increases tear production in patients with dry eye disease. Allergan said it plans to conduct two pivotal trials prior to FDA submission, expected in 2016.

Allergan has been snatching up new assets since the merger with Actavis closed, including a $2.1 billion deal in June to buy Kythera Biopharmaceuticals Inc. to get its hands on a newly approved injectable Kybella (deoxycholic acid) for contouring submental fullness, better known as double chin (Also see "Allergan To Buy Kythera, Beat Kybella Peak Forecasts, Saunders Says" - Pink Sheet, 17 Jun, 2015.).

AMAG/Cord Blood Registry

AMAG Pharmaceuticals Inc. is furthering its transition from a single-product company to a specialty firm with a new focus in maternal health adding marketing opportunities for Makena through its $700 million acquisition of Cord Blood Registry Inc., which follows its $675 million purchase of Lumara Health Inc.last September. The central asset of the CBR buyout, announced June 29 and approved by each company’s board, seems to be the opportunity to increase leads for Makena.

During a same-day investor call, AMAG execs detailed how CBR’s commercial expertise and new media approaches will help it to grow the market for Makena (hydroprogesterone caproate injection) [See Deal].

The purchase price for CBR is warranted by the California biotech’s market-leading position in preserving umbilical cord blood and tissue stem cell units, AMAG CEO William Heiden said during an investor call (Also see "AMAG Spends $700 Million To Better Sell Makena" - Pink Sheet, 29 Jun, 2015.). CBR’s inventory represents more than half of all privately stored cord units in the U.S. The company generated pro forma revenue of $126 million in 2014, and AMAG expects 2015 revenue to be level or higher. It also says the deal will result in an estimated $15 million in cost synergies.

While Heiden pointed out how CBR can add to his firm’s maternal health portfolio while offering a stable, high-margin revenue base, the complementary commercial capabilities the buyout provides seem to have driven the deal.

“This acquisition also adds a whole new consumer-oriented marketing expertise, today focused on pregnant moms and their families, but with potential greater value across our current and future product portfolio,” he said. “From a strategic and commercial perspective, CBR is a natural fit with AMAG and adds unique and complementary capabilities and [an] even larger maternal health sales effort [that] will provide greater reach and frequency on obstetricians supporting Makena and CBR. And CBR’s consumer-driven marketing capabilities offer an effective and cost-efficient way to reach pregnant women.”

CBR will operate as a subsidiary of AMAG. Heiden said the plan is that CBR’s 47-member commercial team will join AMAG’s 75 sales professionals. He presented data showing that the presence of a CBR sales representative resulted in 10% greater sales growth in a territory, whereas growth was about 1% in areas without a rep. The hope is that expanding the physician-directed sales effort for the combined portfolio will take advantage of a “broader set of outstanding relationships” to the benefit of the entire enterprise, the exec added.

Celgene/Juno

Celgene Corp. and Juno Therapeutics Inc. entered into a major 10-year alliance that sees both partners benefiting from the other’s immunotherapy expertise, with an initial focus on T-cell receptor (TCR)- and chimeric antigen receptor T-cell(CART)-based treatments for cancer and autoimmune diseases [See Deal].

Juno gets about $1 billion up front, an amount comprised of a $150.2 million cash payment and the purchase by Celgene of 9.1 million Juno shares at $93 apiece (a 78% premium). Celgene now holds a 10% stake in Juno, an amount that may be increased to up to 30% over the term of the deal through additional equity purchases (Also see "The Bang For Celgene’s Buck: Looking Inside The Record-Setting Juno Deal" - Pink Sheet, 13 Jul, 2015.).

For the first facet of the partnership, Celgene gains an option to sell any of Juno’s cancer and autoimmune cell therapy candidates, including those directed at CD19 (specifically included is JCAR015, in Phase I for leukemia and non-Hodgkin’s lymphoma) and CD22; the only exclusion applies to projects targeting the B-cell maturation antigen (BCMA), which Celgene is developing under a prior deal with bluebird bio Inc.

If Celgene exercises the options on CD19 and CD22, it will pay Juno a $100mm exercise fee. The companies will co-develop Juno’s programs, with Juno focusing on R&D activities in North America and retaining commercialization rights there while Celgene carries out R&D in the rest of the world, handing over mid-teens royalties for CD19 and CD22 projects, and high-single to mid-teens royalties on all others.

Lastly, pertaining to Juno’s pipeline, Celgene may select two other programs (aside from CD19 and CD22) to co-promote; the additional candidates would be subject to a global profit-sharing agreement, with worldwide expenses and profits (excluding China) shared equally. (Celgene may choose a third program, if certain additional obligations are met.)

In return for all of the above, Juno gets an option to co-develop and co-promote certain of Celgene’s T-cell projects. If the option is exercised, the companies would share costs (70% Celgene/30% Juno), with Celgene leading global development and commercialization and Juno keeping a co-promote option for the U.S. and EU. Celgene also gets the right to nominate a member to Juno’s board of directors, and concurrently entered into a standstill agreement, and agreed to lock-up provisions on its share ownership.

Pfizer/GlaxoSmithKline

GlaxoSmithKline PLC announced June 22 the sale of two of its meningitis vaccines, Nimenrix and Mencevax, to Pfizer Inc. for £82 million ($130 million), or just over two times their combined annual sales of around £34 million ($54 million). The divestiture was required by EU and other competition authorities in order for the product swap between GSK and Novartis AG to go ahead [See Deal].

In their asset swap completed March 2, GSK sold its established portfolio of cancer products to Novartis while acquiring the Swiss company’s vaccine products, excluding its flu vaccines (Also see "Swapping Assets Now Down To Execution For GSK And Novartis" - Pink Sheet, 2 Mar, 2015.).

The sale of Nimenrix and Mencevax to Pfizer now also requires approval by EU and other competition regulators. Pfizer has its own meningitis B vaccine, Trumenba, like GSK, which is approved in the U.S. but not yet in the U.K.

The two new products are not approved in the U.S. Nimenrix is a single-dose vaccine against meningococcal serogroups A, C, W-135 and Y that protects against Neisseria meningitidis, which launched three years ago and is indicated for all age groups above one year of age. Mencevax hits the same serogroups but is used to control outbreaks and for travelers going to areas with endemic disease (Also see "GSK Plans U.K.-Wide Bexsero Vaccination Campaign, Sells Other Meningitis Vaccines To Pfizer" - Pink Sheet, 22 Jun, 2015.).

Novartis/Spinifex

Novartis acquired private Australian biotech Spinifex Pharmaceuticals Pty. Ltd. (neurology) for $200 million up front on June 29, approximately a 300% step-up for its investors, which have put $69 million into the company.

Spinifex also is entitled to clinical development and regulatory earn-outs (reportedly up to $500 million) [See Deal]. The acquisition adds a potential first-in-class drug, Spinifex’s angiotensin II Type II (AT2) antagonist EMA401, to Novartis’ neuroscience pipeline, which includes candidates against other targets in various diseases, including a beta-amyloid inhibitor for Alzheimer’s and sphingosine-1-phosphate modulators in secondary-progressive multiple sclerosis and chronic inflammatory demyelinating polyradiculoneuropathy.

Spinifex is Novartis’ largest neurology acquisition ever; in the past year the pharma has been consumed with closing its asset swap with GSK, including buying GSK’s cancer business, and has been divesting various operations to allow the GSK transactions to take place. Spinifex was founded in 2005 as a University of Queenslandspin-off, and last year it opened a U.S. office.

The biotech’s key candidate EMA401 is in Phase II for chronic neuropathic pain including post-herpetic neuralgia. Spinifex believes that targeting AT2 will not result in the typical side effects experienced with other pain drugs. Novartis plans to test the compound also in painful diabetic neuropathy.

Biogen/Applied Genetic Technologies

Biogen Inc. obtained worldwide rights July 2 to commercialize Applied Genetic Technologies Corp.’s Phase I X-linked retinoschisis (XLRS) gene therapy program and preclinical candidate for X-linked retinitis pigmentosa (XLRP). The big biotech also gets the option to license discovery-stage programs – two for ophthalmic indications and one non-ophthalmic condition [See Deal].

Biogen will hand over $94 million in cash up front, make a $30 million equity investment in AGTC (paying $20.63 per share; a 25% premium), and help with R&D expenses following the first-in-human study for XLRS and IND-enabling studies for XLRP. AGTC could receive $472.5 million in milestones for the XLRS and XLRP compounds plus royalties in the high-single-digits to mid-teens.

For the optioned early-stage programs, Biogen may pay up to $592.5 million in milestones, plus royalties in the mid-single digits to low teens. AGTC also has an option to share development costs and profits following results of initial clinical trials, along with the option to co-promote the second product that receives FDA approval. The company will lead clinical development of XLRS through product approval and of XLRP once first-in-human studies are completed.

The agreement also calls for Biogen to receive an exclusive license to use AGTC’s technology platform to manufacture adeno-associated virus (AAV) vectors for up to six genes – three to be selected by AGTC – in return for milestones and royalties.

Pierre Fabre/Affimed

An impressive early performance by Affimed NV’s independent subsidiary AbCheck has induced Pierre Fabre Group to turn an initial collaboration into a strategic research pact in human antibody discovery and optimization. The expanded alliance, announced June 17, promises to make Affimed’s wholly-owned but independent unit profitable and thus able to develop new platforms to generate human antibodies, including its newest, which uses antibodies derived from rabbits (Also see "Pierre Fabre Cashes The AbCheck: Antibody Deal Expands After Initial Success" - Pink Sheet, 29 Jun, 2015.).

Pierre Fabre and AbCheck entered an initial collaboration in April 2014, under which AbCheck used its AbSieve discovery platform, which combines the biotech’s proprietary phage- and yeast-display technologies to deliver antibodies against an undisclosed oncology target provided by Pierre Fabre.

The expanded collaboration will use AbSieve along with AbCheck’s AbAccel platform – a proprietary algorithm for affinity maturation and optimization – to deliver antibodies against two or more targets provided by Pierre Fabre per year over an initial period of three years, which can be extended to up to five years. The French group will get full rights to all antibodies selected in exchange for discovery fees and milestone payments to AbCheck. The duo declined to give financial details or identify the targets.

Affimed views the deal as a key evolutionary point for its antibody-screening platform subsidiary. Some 50% of the biotech’s activities currently are done for its parent and the other half for outside pharma clients. The new alliance puts things on a much broader footing and makes AbCheck profitable – meaning Affimed doesn’t need to subsidize it.

Pierre Fabre, which focuses on oncology, dermatology, central nervous system and consumer health care, for its part hopes to leverage the antibody capabilities for developing biologics in the fields of dermatology and CNS.

AbCheck recently introduced a new platform that generates human antibodies based on antibodies originally derived from rabbits, enabling accelerated humanization of rabbit antibodies. AbCheck says that together with its partner Distributed Bio Inc., of San Francisco, it has developed a general approach that allows humanization of rabbit-derived antibodies and enables mass humanization of entire rabbit immune repertoires.

But this rabbit approach to generating antibodies wouldn’t be pursued immediately by Pierre Fabre; it would “rather watch and wait a bit longer” to see what’s happening in that space.

AstraZeneca/Eolas

Eolas Therapeutics Inc. partnered its Eolas Orexin-1 Receptor Antagonist (EORA) addiction therapeutics program with AstraZeneca PLC in a deal announced June 30 [See Deal]. AstraZeneca gets global rights to EORA candidates, including lead compound EORA101, in exchange for up to $145 million in upfront cash and clinical and regulatory milestones, plus royalties.

EORA candidates address addiction by targeting the neuropeptides orexin-a and orexin-b, which activate the orexin-1 and orexin-2 receptors. Blocking orexin-1 has been proven to stop addiction to nicotine, cocaine, opiates and alcohol (and prevent relapse). EORA101 is in preclinical studies for smoking cessation, with an IND submission expected later this year.

Eolas is developing the EORA program under a Blueprint Neurotherapeutics (BPN) grant, which funds projects from preclinical studies through Phase I, from the NIH. AstraZeneca counts addiction as an area of focus in the company’s Neuroscience iMed business unit.

AstraZeneca/Tillotts Pharma

AstraZeneca followed up its collaboration with Eolas by announcing the sale of ex-U.S. manufacturing and commercial rights to gastrointestinal drug Entocort (budesonide) to Switzerland’s Tillotts Pharma AG on July 9. The U.S. rights to the drug will remain with AstraZeneca.

Under the deal, Tillotts, a unit of Japan’s Zeria Pharmaceutical Co. Ltd., will pay $215 million up front for two formulations of the locally acting glucocorticosteroid, which is approved in more than 40 countries to treat Crohn’s disease and, in some of those markets, ulcerative colitis. The announcement makes no mention of any potential earn-outs to AstraZeneca.

Sorrento/NantBioScience

Patrick Soon-Shiong’s amalgamation of biotechs under the NantWorks LLC name signed a third partnership with San Diego’s Sorrento Therapeutics Inc. on July 9, this time jointly committing $100 million to a venture that will focus on developing first-in-class small-molecule cancer drugs that inhibit the proto-oncogene c-Myc and master metabolism regulator HIF-1 alpha. The JV will be owned and funded 40% by Sorrento and 60% by NantBioScience, part of the NantWorks family of companies.

Sorrento and NantWorks first joined forces in December 2014 to create the JV now known as Nantibody LLC, which will develop immuno-oncology monoclonal antibodies for cancer, with initial targets including anti-PD-1, anti-PDL-1, anti-CTLA4, additional immune checkpoint antibodies, antibody-drug conjugates and bispecific antibodies [See Deal].

This past March, they signed an agreement under which NantWorks’ subsidiary NantCell LLC gets an exclusive license to certain of Sorrento’s antibodies (including mAbs against the checkpoint inhibitors PD-1 and PD-L1, all discovered using Sorrento’s G-MAB library) and Chimeric Antigen Receptor Tumor attacking Neukoplasts (CAR-TNK) programs [See Deal].

Novo Nordisk/Zosano (No Deal)

With Novo Nordisk AS re-prioritizing its areas of development focus, the Danish diabetes specialty firm exited a partnership it had signed only one year before with U.S. biotech Zosano Pharma Corp. to develop transdermally delivered glucagon-like peptide-1 (GLP-1) analogues. Zosano said July 6 that it was told Novo decided to terminate the collaboration for strategic reasons, despite continued progress that had been made since the deal’s signing in January 2014 [See Deal].

Zosano had received an undisclosed upfront payment for use of its microneedle patch system to deliver Novo-discovered GLP-1 compounds, and was in line for up to $60 million in development, regulatory and sales milestones on the first product taken to market under the partnership (Also see "Can “Novel-Novel” Drug Development Work? Deals Of The Week Considers Merck’s New Play" - Pink Sheet, 10 Feb, 2014.). The Fremont, Calif.-based firm also could have earned up to $55 million per product on any additional products resulting from the collaboration, as well as sales royalties. Novo also was covering Zosano’s R&D expenses under the deal.