Deals Of The Week: PPD/Carlyle Group & Hellman & Friedman; Pfizer/Puma Biotechnology & More...

This past week may have seemed plain vanilla from a deal perspective, but, ironically, it was among the most topsy-turvy of all in a year that has been relentlessly volatile for the burgeoning field cancer immunotherapy.

On Oct. 3, the Nobel Assembly announced winners of the Nobel Prize for Medicine were three immunologists, including Ralph Steinman of The Rockefeller University, who had died of pancreatic cancer three days earlier and thus became one of only a very few scientists to receive the award posthumously. The recognition came for Steinman’s discovery of dendritic cells decades ago; his work has most recently laid the scientific foundation for the biotech Dendreon Corp. to break ground and then much later dash expectations with its controversial but first-in-kind cancer vaccine Provenge for advanced prostate cancer. Bruce Beutler and Jules Hoffmann were also winners of the prize, for their work on the innate immune system, and the work of all three scientists has had implications for industry.

The mood was therefore understandably bittersweet at Cancer Research Institute’s annual scientific meeting. The meeting began in New York on Oct. 3, coincidentally the same day as both Steinman’s death and the Nobel Prize in Medicine were announced; all three prize winners have been active in CRI and winners of CRI’s prestigious William B. Coley Award. Work in the field progresses, as the roster of world-class speakers attested to, and Mitch Gold, CEO of Dendreon, received the Oliver R. Grace Award for Distinguished Service in Advancing Cancer Research – a salve no doubt in light of the recent flubbing he has taken on Wall Street for botching the Provenge launch, at least initially.

Lost in the greater dramas, perhaps, were two small deals around cancer immunotherapies, one involving a barter exchange between Merck KGAA and Ono Pharmaceuticals around Stimuvax, now in Phase III for non-small-cell-lung cancer; in exchange for Japanese rights to the cancer vaccine, Ono is giving Merck KGAA worldwide rights, excluding Japan, Korea, and Taiwan, to its experimental treatment for multiple sclerosis. In addition, Pfizer out-licensed to AZ's Medimmune subsidiary rights to its fully human monoclonal antibody tremelimumab, which binds to the protein CTLA-4, expressed on the surface of activated T-cell lymphocytes. In all cases deal terms were not disclosed but DOTW speculates…

PPD/Carlyle Group & Hellman & Friedman: Since the summer, rumors have swirled that contract research organization Pharmaceutical Product Development Inc. was in play. This week, private equity firms The Carlyle Group and Hellman & Friedman struck a $3.9 billion deal to acquire PPD, taking it private in a leveraged buyout announced Monday, Oct. 3. Affiliates of the two firms will combine to put up nearly $1.8 billion of their own equity capital, although neither firm revealed whether they contributed equally. The firms arranged for the remaining $2.2 billion as debt funding from four lenders: Credit Suisse AG, J.P. Morgan Chase Bank N.A., Goldman Sachs Bank USA and UBS Loan Finance LLC. The deal will compensate PPD stakeholders with $33.25 per share. That’s a premium of nearly 30% over PPD’s closing price of $25.66 on Sept. 30. In July, after rumors first suggested PPD might explore a sale the Wilmington, N.C.-based company issued a statement confirming that it would conduct a strategic review of its options. At the time, however, executive chairman Fred Eshelman insisted that PPD remained committed to its long-term plan and had not considered combining with another CRO. The deal is subject to a 30-day “go-shop” window, and is subject to a $58 million breakup fee if PPD chooses a higher bid, or a $116 million fee if the parties walk away for some other reason. – Paul Bonanos
Merck KGaA/ Ono Pharmaceutical Co. Ltd: Why pay cash if you can barter asset rights instead? In a duo of agreements announced Oct. 4, Germany's Merck KGaA licensed worldwide rights outside of Japan, Korea and Taiwan to Ono Pharmaceutical 's Phase II MS candidate, ONO-4641, while granting Ono Japanese rights to its own Phase III cancer immunotherapy Stimuvax. This is the second barter-style deal that Ono has signed in recent weeks. It licensed Japanese rights to Bristol-Myer Squibb's Orencia (abatacept) on September 20, while BMS gained rights in additional territories to an Ono antibody, ONO-4538/BMS-936558.

The deals were described as two separate agreements, but linking them means that less cash changes hands: Merck owed Ono Yen 1.5 billion ($18.6 million) for the MS drug, but was able to knock a third of that by granting Ono the rights to Stimuvax, now in Phase III for non-small-cell lung cancer, for €5 million ($6.6 million). No further financial details were given, except that milestone payments would be made to Ono on Merck's progress with the MS drug. Merck Serono licensed exclusive worldwide rights to Stimuvax from the US biotech, Oncothyreon. And Merck Serono has also recently snapped up another MS therapy, PI-2301, from a US company going through liquidation, Peptimmune Inc., for what appears to be a bargain $1.5 million up front.—John Davis

Puma Biotechnology Inc./Pfizer Inc.: Entrepreneur Alan Auerbach may have found a replicable biotech business model in a tough financing environment, which relies on private placements and reverse mergers to shore up financing for development of new compounds. Auerbach, a former securities analyst, founded Cougar Biotechnology in 2003 to develop oncology drugs, took it public through a reverse merger in 2006, and sold it to Johnson & Johnson for nearly $1 billion in 2009. Along the way, the company raised several hundred millions of dollars from private placements with institutional investors, who earned handsome returns upon the J&J sale.

Now, he is taking a similar tack with another start up he founded, Puma Biotechnology Inc. On Oct. 5, Puma announced that it had in-licensed worldwide commercial rights from Pfizer to an investigational pan-HER inhibitor, neratinib, now in Phase II studies for Herceptin (trastuzumab)-resistant metastatic breast cancer patients. Almost simultaneously, it also announced completion of a reverse merger with a shell company, Innovative Acquisitions Inc., and a $55 million private placement, which attracted some veteran biotech investors, such as Orbimed Private Investments IV, Adage Capital Partners, H&Q Life Science Investors, and others.

Also, in July, a company with Auerbach on its board of directors, Radius Health Inc., followed a similar financing path after a key partner elected not to exercise its option on its lead compound, a treatment for osteoporosis. Radius raised $91 million from a private placement consisting of two-thirds equity and one-third debt and engineered a reverse merger with the shell company MPM Acquisition Corp. Neratinib is being studied in the neoadjuvant, adjuvant and metastatic settings in patients with HER2/ErbB2 positive breast cancer, the same indication targeted by Roche/Genentech's closely watched T-DM1, for which FDA issued a refuse-to-file letter in August 2010.—Wendy Diller

AstraZeneca PLC/MedImmune/Pfizer Inc: Neratinib wasn’t the only oncology compound Pfizer out-licensed this week. It also gave global development rights for the cancer immunotherapy tremelimumab to Medimmune, AstraZeneca’s oncology arm. Terms of the deal were not disclosed. Tremelimumab is a fully human monoclonal antibody, which binds to the protein CTLA-4, expressed on the surface of activated T lymphocytes. Pfizer is working to build its global oncology franchise, now a distant runner to some of its Big Pharma competitors. Its top oncology drugs are Sutent (sunitinib) and the newly launched targeted therapy Xalkori (crizotinib). But it has had difficulty expanding Sutent indications beyond advanced renal cell carcinoma and gastrointestinal stromal tumors.

The question, then, is why Pfizer would have out-licensed either drug. None of the companies involved in these deals was available for comment, but Pfizer appears to be taking a nuanced approach to building its oncology franchise and is focusing on targeted therapies. And Medimmune’s expertise is in biologics, which could fit well with tremelimumab. –Wendy Diller
Gilead Sciences Inc./ Boehringer Ingelheim: Gilead will license an indeterminate number of non-catalytic site integrase inhibitors (NCINIs) for HIV from Boehringer Ingelheim, including the lead compound BI-224436. Terms were not disclosed other than that Gilead will pay BI an upfront payment plus further payments based on the achievement of development, regulatory and commercial milestones, as well as royalties on future net sales for exclusive worldwide rights to the series.

These second-generation integrase inhibitors represent a new class of antiretrovirals that bind to a novel site distinct from the current catalytic site targeted by the current generation of integrase inhibitors including Merck’s Isentress (raltegravir) or Gilead’s own late-stage candidate elvitegravir. Klaus Dugi, SVP medicine at BI, said in a press release that BI would focus on development of other assets in their virology portfolio, in particular on hepatitis C. BI-224436, which has completed a PIa trial, may offer a superior resistance profile compared with the predecessor drugs by engaging a different site on the enzyme. –Mike Goodman

No Glass Ceilings: Medtech Women Gather at Unique Industry Meet-Up

MedtechWOMEN co-founders Amy Belt and Deborah Kilpatrick

Something new happened in the medical device world two weeksago. It wasn't a new technology or a big research discovery, nor was it a breakthroughtreatment for heart disease, cancer or diabetes, though it could possibly leadto one of these.  

What happened was an unprecedented medical technologyconference, featuring exclusively women speakers, panelists and attendees. Thesold-out Medtech Vision conference in Menlo Park, Calif. on September 15 and 16brought together more than 200 business executives, entrepreneurs, investors, physicians,inventors, providers, patient advocates, policymakers and regulators and generatedan energy that attendees claimed – and I will vouch -- was not just palpablebut electrifying.  

The idea was hatched a year ago when Covidien Ventures directorAmy Belt got fed up with the typical medtech meeting scene. "I was lookingup from the audience and realized that there were no women on the podium – again.I was frustrated not to see women on the podium, as well as on boards andexecutive teams, because I know the women experts are out there and I wanted tohear from them," Belt said. So she pulled together a like-minded group andset about, with major support from Covidien, Abbott Laboratories and law firm Fish &Richardson, to create something new.  

The invitation that landed in my inbox July 27 came from anew organization called MedtechWOMEN andpromoted the conference as "the first ever to highlight women on the forefrontof medical innovation." Intrigued, I anticipated speeches about glassceilings and male dominated C-suites. Boy, was I wrong. Instead, thepresentations and panel discussions proved true to the meeting's agenda: toidentify solutions to today's big challenges in medtech: a jittery venturecapital community, shifting models of care delivery and reimbursement, increasingregulatory demands, and laser-like attention to healthcare outcomes and costs.

Speakersset right to the task with pointed advice. On an investor panel, VersantVentures managing director Beckie Robertson advised against entrepreneurs workingon small projects. "The opportunity for a win-win is in meeting a hugeunmet need and getting out before commercialization," she said. Johnson& Johnson worldwide VP of new business development Susan Morano agreed,highlighting spectacular exits in the last two years for companies thatgenuinely responded to unmet needs. 

Among big populations with unmet needs are women themselves,noted Lynn Westphal, director of women's health at Stanford University.Westphal named several common diseases and treatments that are inadequatelystudied in women, explaining that females often display symptoms and respond totherapy differently than males. Imagine the opportunities, she suggested,awaiting companies that break the mold and extensively enroll women in largetrials for cardiovascular, cancer, diabetes and other diseases. 

Interventionalists and surgeons had their say, too. Surgicaloncologist Shyamali Singhal explained that for new technology to be adopted,"it has to be faster, easier, and more doable than what I'm doing now insurgery." And the designers of those new technologies need to interactmore with physician users, said Bonnie Weiner, a cardiovascular researcher,clinician and former president of the Society for Cardiovascular Angiographyand Interventions. "Nobody ever asks us how we're going to use the device.Come to the cath lab and follow us around!" 

On a reimbursement panel, speakers agreed that the days of"build it and they will come" are over, and the way forward is toimprove health outcomes or procedure workflow. "We look for clinicallymeaningful improvement in outcomes" backed by high-quality evidence, saidBetsy Thompson, chief medical officer for the San Francisco regional office ofthe Centers for Medicare & Medicaid Services. Advancing patient safety isalso a good bet, she said: "If a new product improves safety but noteffectiveness, we would probably cover it." 

Liesl Cooper, VP of global healthcare economics, policy and reimbursementat Covidien, pointed out that with patients paying more for their care,industry also needs to think more about how to educate them. "We're notused to that," she said. "Shame on the medtech industry for nottouting better outcomes such as a 24-hour stay compared to a six-day stay!"

So what difference did it make that the people talking were allwomen? Amy Belt put it this way in her opening speech: "Leadership doesn'thave to wear a navy blue blazer. Women represent 51% of the population, 58% ofthe population over 65, spend two out of three healthcare dollars, are half ofthe graduating classes of physicians today and over 90% of all the registerednurses. Why would it make sense for women notto be significantly represented in leadership positions where key decisions aremade about the delivery of care and investment in innovation when theyrepresent half the population, control the healthcare dollar and provide themajority of healthcare services?"

Beyond Belt's introduction, though, the conference was notabout advancing women, but about advancing medical technology and healthcare. MedtechWOMENfounder Deborah Kilpatrick, a senior VP at diagnostics firm CardioDx, waspleased it went that way. Women's place in the industry "was just not whatwe were there to discuss," Kilpatrick said. 

Nevertheless, the thousand-watt energy at Medtech Vision wasa departure from the standard atmospherics of industry conferences. Itreflected, I think, the pride of 200 women medtech leaders seeing themselvesassembled in one place, listening closely to each other, making newconnections, and realizing – unexpectedly, inspiringly – that solving the challengesahead may suddenly have gotten a little bit easier. -- Mary Houghton

Insulin Pricing: Let The Battles Begin

In the same week that Novo Nordisk filed its latest-generation insulins, ultra-long-acting Degludec and the DegludecPlus combo, in Europe and the US, the drug makers says it won't be seeking the highest price it feels its new offerings could command.

"We could probably justify a higher price premium [for Degludec] than in reality we can ask for," acknowledged EVP & CSO Mads Krogsgaard Thomsen in a Sept. 28 phone call. He alluded to a host of health economic outcomes research the Danish group has carried out on its new products from Phase II onwards, but admitted that "the financial crisis and the focus on short-term financial optimization rather than long-term societal costs" means Novo won't push its luck.

You bet it won't. Even without the financial crisis, insulin pricing is becoming a hot issue as governments and payers try to cut down on the costs of a disease that's spreading fast. Never mind that insulin's value-proposition is still significantly better than that of many cancer drugs. Never mind the argument about long-term cost-savings from effectively controlling diabetes. The bottom line is that older insulins are cheaper, and not that much less effective, at least according to this BMJ Open article published Sept. 22 . That piece went on to declare that the U.K. NHS could have saved over £600 million between 2000 and 2009 if it had prescribed human instead of analog insulins. (The Germans reached a similar conclusion years before).

Now as with any analysis, the BMJ study wasn't perfect. Many would dispute the size and value of analogs' advantages over the human version. But by underscoring the high overall cost of insulin treatment, it comes to a conclusion that "should scare the daylights out of the major insulin companies," according to Diabetic Investor publisher David Kliff.

Indeed, NICE, the cost-watchdog for England and Wales, was quick to jump on the bandwagon, issuing a release Sept. 26 to remind the world that it recommends using human insulin treatment as first-line, and that had those guidelines been followed, those millions would have been saved.

If some payers aren't even convinced about the relative value of so-called 'modern' insulins (now 15 years old) and still recommend versions first introduced in the 1980s, what hope for the positively futuristic Degludec, a next-next-next generation version of this hormone first discovered in 1921?

Novo management itself hinted in this IN VIVO feature from 2007 that Degludec may represent the last innovation round in injectable insulin -- in other words, we're reaching the point where it can't get any better. The remaining challenges are education, adherence, convenience, delivery -- which, along with lack of new products, explains Sanofi's integrated service strategy.

Still, Degludec is better, Novo argues. But the company will have to work hard to prove it. A decrease in night-time hypoglycemic events may not be enough to convince all, though flexible dosing ("at any time of day, on any day"), a Lantus-beating half-life and a nice device will help.

Novo's remarks on pricing arguably represent its opening hand in payer-negotiations that will occur against a backdrop of already-raging pricing battles in the ranks of less-innovative insulins. Lilly in particular is attempting to squeeze whatever it can from a dwindling, market-trailing franchise that lacks new products: when Novo (prematurely, as it turned out) withdrew its human insulins in the UK in 2010, Lilly lowered the price of its human insulins to secure Novo's patients.

Meanwhile, Lantus goes off patent in 2015, after which time biosimilars (including one from Lilly) could start to pull down the price not just of Lantus, but of other basal insulins including Novo's own Levemir (though admittedly, biosimilar insulin isn't the most attractive target for large-molecule copycats).

In sum, we're not surprised Novo's saying it won't be greedy. The question is, will it get anything at all? And as regards the BMJ paper: "I expect there will be a reaction from leading diabetologists," predicted Thomsen.

In other words, keeping watching this space. There will be more to come.

image by flickrer james.gordon6108 used under creative commons

at the fair

Matt's sister and her family were in town this weekend for her high school reunion. They live in NY now, and the kids had never been to a real (big) fair. So on Sunday, we went and I think they had a great time. The Dixie Classic Fair is so good, and any other fair I've ever been to (which are just dinky county fairs) don't even compare. AND Jonah go to see the train that brings the fair to town, which according to his Real Trains For Kids video is the last carnival train in America. 

Jonah got spoiled ROTTEN this weekend having family in town, and Grandaddy was definitely the main culprit. Jonah loves him some Grandaddy (but not as much as Granny, of course. Ahem.).

It was way hotter than it was supposed to be and Jonah got sun burnt. Yep, Mother of the Year award right here. I felt so bad, but it's already faded a lot, so I think it looked worse than it was. Still, sun burn in October? I didn't even think about it!

Waiting on the pig races to start.

Uncle Andrew thought this was hilarious and was definitely the highlight of his day. Man, those things really run for the Oreos. This big guy blew them all away!

Then it was off to the big kid rides, so Grant, Abby, and Will could have some fun.

Jonah had SO MUCH fun. I think our Tweetsie and Day Out with Thomas trips made him eager to ride. He rode four rides, and loved every single one! For a kid who cries when the Crock Pot is out on the counter, that's pretty huge.

Deep fried butter, deep fried Twinkies, deep fried bacon etc and so and so forth. Only in the South, Folks.

It was a really fun day. And as much as I'd love to write more about it, I just found a surprise stash of Hershey Kisses in my pantry. I love it when my In-Laws come and leave behind their chocolate. They know me well. I'm truly loved.

Here are our fair posts from 2009 and 2010 if you want to see them. Jonah has changed so much!

slices of life, vol. 4

Because I want to remember these days...

Jonah adds an extra "en" in the progressive tense when he uses it. Examples: "Mommy cookening?" or "Car honkening!" etc. The other day he had a particularly bad bloody nose. We were having a hard time getting him to cooperate in tilting his head/pinching the bridge etc. When we were almost done, he said, in a sad crying voice, "All done boogerning!"

We went to the fair yesterday. When we were doing bath and bandages and Jonah would start being uncooperative, we would say, "It's okay, Buddy. We gotta hurry and get all clean so we can go to the fair." So this morning, as soon as I put him on the dressing change table and sat him up to take off his wet towels, he said to his Grandaddy and me, "Let's go, Guys. (Jumbled, incoherent words) go to fair!"

Any time Jonah feels an emotion that makes him whiny (fussy, grumpy, tired, mad, frustrated etc), he says, "I cared!" (I'm scared.)

Any time ANYONE coughs or sneezes around Jonah, he says, "Okay, Mommy?" or "Okay, Aunt Kim?" and so on.

Jonah wants to be just like his Daddy. If Matt is sitting in the floor playing with him, he usually gets a pillow to go behind his back up against the coffee table. Then, Jonah immediately goes and gets a pillow to put behind himself too. Matt wears a Wake Forest hat most all the time. Jonah insists on wearing Daddy's other hat (a Braves hat). Up until today, both have been Daddy's hats and Jonah would say he was wearing "Daddy hat." Today, all of a sudden, Jonah made it very clear that the Braves hat now belongs to him. He said, "Take it hat" when we were about to leave for Community Dinner, and Matt said, "You wanna wear Daddy's hat?" Jonah put his hand on Matt's head/hat and said, "Daddy hat." Then patted his own head with the Braves hat, and said "Jonah hat." Well then.

Jonah is trying to learn how to do a knock-knock joke.
Jonah: Knock Knock.
Other Person: Who's there?
Jonah: Jonah Lillams (Williams)

But it applies to other people too.
Jonah: Knock Knock
Other Person: Who's there?
Jonah: Granny Lillams/Kim Lillams etc.

Apparently Lillams is always the punchline.

Sorry, I Still Don’t Get It

Pfizer launched its first TV campaign for Exubera this past week in an attempt to breathe a little life into the stalled inhaled insulin brand. And with just $4 million in quarterly sales after 18 months on the market, Exubera needs all the help it can get.

But will the “Now I Get It” campaign be enough to put Exubera on a faster track? As we pointed out in an IN VIVO article in May, Exubera has some pretty major marketing hurdles: 1) it’s not clear that inhaled insulin is any more effective than the injectable stuff; and 2) there’s that pesky long-term pulmonary safety signal.

But perhaps the biggest hurdle is the size of the inhalation device. As big as a can of tennis balls, it’s not exactly something you’d like to whip out at a restaurant. Pfizer tries to dispel that notion in the commercial: a man is shown holding and closing the device while having a meal with a friend—but in such a way as to disguise the actual size of the thing.

The size problem isn’t new: as reported by The RPM Report, during FDA’s 2005 advisory committee review of Exubera, one panelist noted that despite the increase in “metrosexuals carrying purses,” the inconvenience of carrying the device may actually prevent patients from complying with their treatment regimen. Embarrassment also may be a factor: as the Pharma Marketing Blog points out, the inhaler looks like a large bong.

It’s also interesting to note that the commercial doesn’t ever discuss the convenience factor of inhaled insulin—in fact, the word “needle” is never uttered. But maybe that’s because for the majority of patients, inhaled insulin can’t replace injections. Instead, Pfizer sells Exubera as a treatment to help control blood sugar levels.

Inhaled insulin should be an easier sell, and with a number of other inhaled insulin products coming down the pike (all with smaller inhalation devices), Pfizer is running out of time. It’s a slick commercial, but it’s doubtful that the introduction of DTC ads for Exubera will help Pfizer overcome device envy.

But hey, don’t take our word for it: judge for yourself. To see a clip of the broadcast ad, click here, and tell us what you think.

my first 5K!

I had so much fun at my 5K today! Well, maybe not so much fun when I was actually running it, but felt GREAT afterwards. I ran it in a little over 35 minutes, which was an 11:19 mile. And that is really good for me. I never stopped running, which was my own personal goal, so overall, I feel really happy about it.

And over $10,000 was raised for the Second Harvest Food Bank! Hooray!

Before-run potty break.

The Fun Run!

Getting Ready!

There was this...

And then, all of a sudden, the gun sounded.

And we were off.

And then we finished.

And it was awesome!