Deals of the Week: Stada/Grunenthal, Stada/Spirig, Shire/Sangamo

While 2012 promises to be a lucrative for generic drug companies, they now face their own reverse patent cliff. Some, therefore, are looking to diversify into branded products.

[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.]

With workhorse blockbusters like Lipitor (atorvastatin), Zyprexa (olanzapine) and Plavix (clopidogrel) losing patent protection within six months of one another, generic drug utilization is reaching a record – and that puts the generic drug industry teetering at the brink of its own reverse patent cliff. Impax Laboratories Inc.’s diversification efforts haven’t been as high profile as those of its larger generic competitors, but the company’s brand side did get a boost from a deal with AstraZeneca PLC, announced Feb 1.

Impax bought U.S. commercial rights to AstraZeneca’s migraine medication Zomig (zolmitriptan), both the tablet and nasal spray formulations, for $130 million, plus tiered royalties on sales. Impax has said for some time that it wants to “transform into a specialty pharma” with a focus on central nervous system therapies, but it generates most of its sales from generics. The only brand sales come from a co-promotion agreement with Pfizer Inc. for Lyrica (pregabalin; a relationship stemming from a 2008 patent infringement settlement between Impax Pharmaceuticals and Wyeth) [See Deal].

The in-licensing deal with AstraZeneca looks to be smart for Impax. Zomig will keep the firm’s contract sales force occupied once the Lyrica co-promote expires in June while the company awaits word from FDA on an NDA for IPX066, an extended-release formulation of carbidopa-levodopa for Parkinson’s disease. Impax submitted the NDA for IPX066 in December. The sales team is made up of 64 reps, but the company plans to add 20 more to support Zomig. Eventually, Impax would like to have 120 to 130 reps if IPX066 is approved. Outside the U.S., the drug is partnered with GlaxoSmithKline PLC[See Deal].

Zomig hasn’t been detailed by AstraZeneca for “several years,” Impax said, so it has an opportunity to jumpstart sales. U.S. sales were $163 million for the 12 months ended Sept. 30. About 40% of prescriptions come from neurologists, the physicians Impax wants to target with IPX066. But Impax will have to act fast. The patent expiration for Zomig tablets is in May 2013, although the nasal spray has patent protection out to 2021.

Two other deals this week, both by Germany’s Stada Arzneimittel AG, further highlight the generic industry’s scramble to diversify.

Stada/Grünenthal and Spirig

Beleaguered German generics firm Stada enhanced its presence in central and Eastern Europe and in the Middle East by acquiring marketed brand products from Grünenthal GMBH and a generic business from Switzerland’s Spirig Pharma AG. The acquisitions come as the company is facing unprecedented pricing pressure in its home market.

In the larger of the two deals, Stada paid Grünenthal €312 million for rights to a portfolio of more than a dozen branded products in Europe and the Middle East, mainly in pain management. The portfolio includes drugs like Tramal (tramadol), Zaldiar (tramadol plus paracetamol) and Transtec (buprenorphine patch). The deal also includes Grünenthal's newest drug, the dual-action analgesic Palexia (tapentadol), which currently is being launched in European markets and is licensed to Johnson & Johnson for marketing in the U.S.

The smaller deal saw Stada buying Spirig’s generic business in Switzerland for CHF 97 million ($106 million). Stada said the acquisitions will strengthen its presence in the CEE region, where its sales are growing more rapidly than in Western Europe. In the first nine months of 2011, Stada's sales in Western Europe increased 2% to reach €868.4 million, whereas sales in Eastern Europe grew by 23% to €333.3 million.

The Grünenthal acquisition also will open up new strategic distribution channels for products from its current portfolio, which in the future also can be marketed as branded products, the company said.

Shire/Sangamo

In a move to add to the pipeline for its growing Human Genetic Therapies division, Shire PLC said on Feb. 1 that it is paying Sangamo BioSciences Inc. $13 million upfront in a licensing agreement to develop therapies for hemophilia and other monogenic diseases using the California biotech’s zinc finger DNA-binding protein (ZFP) technology platform.

In exchange, Shire obtains worldwide rights to ZFP compounds that will target four genes – the blood-clotting Factors VII, VIII, IX and X – in an effort to produce new therapies for hemophilia A and B. Shire also gets the right to designate three additional gene targets – ZFPs, which can be engineered to recognize any specific DNA sequence within a gene and are thought to offer targeting potential in other therapeutic areas of interest to Shire, including hematology and lysosomal storage disorders.

Under the alliance, Sangamo will handle all preclinical work up to filing of INDs with the FDA and Clinical Trial Applications with the EMA. Shire will reimburse Sangamo for research-related costs and also pay regulatory, development and commercial milestones, as well as sales royalties.

Platform technology licensing deals are not new to Sangamo, which most recently licensed its ZFP nuclease technology to Pfizer, to help the pharma genetically alter Chinese hamster ovary cell lines to enhance the efficacy of protein and antibody therapeutics in 2008 [See Deal]. Our sister publication Start-Up wrote about the latest DNA editing technologies in the January 2012 edition (Also see "The Power Of TAL: Genome Editing Techniques’ Coming Of Age" - Scrip, 24 Jan, 2012.).

Covance/BioPontis

Contract research organization Covance Inc. will provide drug development support for investment firm BioPontis Alliance, a three-year old firm focused on early translational research and science sourced through partnerships with academia. Those services will include discovery, preclinical, bioanalytical, chemistry manufacturing and controls, clinical, central laboratory and commercial support.

BioPontis is in the midst of raising $50 million from investors eager to bring academic innovation to pharmaceutical companies. It is tapping universities to evaluate thousands of compounds with plans to whittle them down to dozens and take them from preclinical development to Phase I, then seeking industry partners for the most promising choices (Also see "BioPontis Aims To Bridge "Valley Of Death" " - Scrip, 1 Feb, 2011.).

Merck KGAA/Threshold Pharmaceuticals

Only weeks before a potentially value-boosting Phase II trial in pancreatic cancer patients is expected to read out, Merck KGAA has nabbed worldwide rights to Threshold Pharmaceuticals Inc.’s TH-302, a small molecule drug candidate also in Phase III for soft tissue sarcoma. TH-302 is thought to be active in hypoxic, or low-oxygen environments that are typical of tumors.

Threshold will receive $25 million upfront, with the potential of a $20 million near-term milestone if the pancreatic trial results are positive. In all, the small company could see $280 million in pre-commercial milestone payments and an additional $245 million in milestones and tiered double-digit royalties based on sales of the drug.

The companies will jointly develop TH-302, largely sharing the workload evenly with Merck picking up 70% of the costs, but Threshold will continue to lead the compound’s development in the soft-tissue indication in the U.S. Threshold retained a U.S. 50/50 co-promotion option.

Takeda/Durect

Bad news is snowballing for Durect Corp. On the heels of a failed Phase III study of its post-operative pain drug Posidur, Takeda Pharmaceutical Co. Ltd. has backed out of a co-development and commercialization deal for the drug in Europe and other territories. Takeda said Jan. 30 it would return rights to Posidur, which it gained through its acquisition of Takeda Nycomed AS last year (Also see "With Nycomed, Takeda Satifies Both Strategic And Financial Objectives" - In Vivo, 1 Jun, 2011.).

Posidur is a long-acting depot formulation of bupivicaine made with Durect’s patented SABER technology, designed to provide up to three days of pain relief post-surgery. However, the drug failed to show statistically significant benefits on pain intensity and use of opioid analgesics compared to placebo in the Phase III study BESST. Nycomed paid $14 million upfront for rights to the drug in a 2006 collaboration [See Deal].

Meanwhile, Durect says it will focus on developing the drug in the U.S., where the company is partnered with Hospira Inc.[See Deal]. A pre-NDA meeting with FDA to determine a path forward is expected later this year, but it looks like Durect will have a hard case to make.