Deals and financing over the Christmas period

News

While much of Europe and the Americas ground to a halt as 2010 ended, the pace of dealmaking and financing also slowed. However, it did not stop, and several interesting developments occurred during the festive season. 

While the year’s biggest financing action was completed in time for the holidays, smaller direct offerings and even a late IPO filing marked the festive period (Who were the cash call kings of 2010?, December 21, 2010). All was largely quiet on the deal front, the only M&A activity of note being Roche's acquisition of privately-held Marcadia Biotech, emphasising the Swiss group's commitment to the diabetes space that may have been waning in the wake of the setbacks to taspoglutide last year. 

Financing

December 23

Supernus Pharmaceuticals of Maryland is trying to squeeze through the IPO window with its proposed $100m offering. The amount is no small potatoes, which would rank it bigger than any 2010 IPO other than Ironwood Pharmaceuticals’ February offering and Pacific Biosciences’ October offer (Pacific beats the odds with IPO success, October 28, 2010).

However, with the average float price at 40% below its filed price in 2010, the likelihood that it achieves its target seems rather low (Aegerion takes a 'haircut' to prove MTP doubters wrong, October 25, 2010).

Another big financing deal was YM BioSciences’ public offering, raising $43.3m for the Ontario-based group.
YM’s offering will fund clinical development of its three clinical stage products: CYT387, a JAK1/JAK2 inhibitor in phase I/II myelofibrosis trials; nimotuzumab, a monocolonal antibody approved outside the US, EU and Japan in glioma and head and neck cancer, and is awaiting phase IIb/IIIa results in pancreatic cancer; and CYT997, a small-molecule treatment in phase II for glioblastoma.

Deals

29 December

Roche completed the only noteworthy piece of M&A business over the festive period, acquiring privately-held Marcadia Biotech for an undisclosed fee. Established in 2005 by two Eli Lilly veterans, Richard DiMarchi and August Watanabe, the company raised $15m in 2007 through a Series A round, funded by Frazier Healthcare Ventures, 5AM Ventures and Twilight Venture Partners.

Focused on developing novel therapeutics for metabolic disorders, Marcadia had already secured big pharma partners in Eli Lilly and Merck & Co, although Roche will now control development of Marcadia’s GLP-1 and GIP dual agonist program which has the potential to treat diabetes and obesity. Two candidates have been selected from this program, with MAR701 already undergoing phase I studies.

Although Marcadia’s purchase price, which should be revealed when Roche reports its full-year results in February, is likely to consist of a modest upfront fee with the full value only realised on reaching clinical and commercial milestones, the deal highlights the Swiss group’s commitment to the diabetes space, which some have questioned following the setbacks to taspoglutide last year.

As for the product partnering scene, it was as much about unwinding from collaborations as it was signing on the dotted line.

December 27

Ireland-based Elan announced it was taking total control of ELND005/AZD-103 from Canadian group Transition Therapeutics following a failed phase II trial of the beta-amyloid aggregation inhibitor (Elan and Transition undaunted by efficacy findings for Alzheimer's drug, August 10, 2010). The deal will be modified into a straight royalty arrangement from a cost and profit-sharing deal.

Of the deals that were made, the partnership between Shionogi and AnGes to develop the phase II MP40 for eczema and dermatitis is by far the latest stage, although terms were not disclosed.

Takeda and Johnson & Johnson signed some interesting pre-clinical collaborations. In the case of Takeda, its deal with Florida Hospital-Sanford Burnham Translational Research Institute for Metabolism and Diabetes intends to identify novel drug targets for obesity research, emphasising Takeda's commitment to the obesity space as it looks ahead to a possible FDA approval of Contrave later this month.

In the case of Johnson & Johnson, its Veridex subsidiary partnered with Massachusetts General Hospital for a programme to advance a sensitive diagnostic technology for identifying tumour cells in patient blood, a tool intended to be used both in drug discovery and adjusting treatment protocols for cancer patients.

Other notable events

Some shareholders in Xoma would certainly have enjoyed their Christmas break. The stock tripled in the week leading up to Christmas, reaching a six-month high of $7.16 on December 23 (share prices adjusted for a 1-for-15 reverse stock split in August, required to keep its Nasdaq listing).

The catalyst appeared to be a report by analysts at Summer Street Research, predicting positive phase II data for diabetes drug, XOMA 052, an IL-1-beta antibody in the same class as Novartis’ Ilaris (canakinumab) and another phase II candidate being developed by Eli Lilly.

The shares fell away just after Christmas but the rollercoaster continued today with a 27% surge to $6.72 on the back of a global deal with private French group Servier for XOMA 052, which included a $35m upfront fee. The phase II diabetes data is expected during the first quarter and positive data could spark further share price gains.

And finally, Advanced Life Sciences appears to be finally throwing in the towel 17 months after the FDA rejected its pneumonia antibiotic Restanza. The Illinois group’s announcement of a strategic review January 3 included news that it will delay paying $2.1m in debt until January 1, 2012 if it pays reserve interest on two loans.

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