Inviragen buyout lifts Takeda vaccines strategy

Takeda is not on quite the M&A tear it was in 2012, with today’s buyout of privately held Inviragen the first of the year. The takeout is a well-targeted one by Japan’s biggest drugmaker, however, as it represents a boost to a vaccines division that is quietly becoming pivotal in its growth strategy.

The transaction brings on board a mid-stage dengue fever vaccine and a hand, foot and mouth disease treatment that has completed phase I trials; both diseases impose a significant burden on developing countries (Therapeutic focus – Sinovac leads China’s hand, foot and mouth disease race, March 15, 2013). The $35m paid to Inviragen’s investors up front represents a decent exit, more than doubling the first venture capital round after just four years of development.

Vaccines and emerging markets

In making opportunistic buys in the vaccine field, Takeda is moving away from its traditional strengths in gastrointestinal and endocrine medicine. On the other hand, this is a move in sync with its emerging markets play, something that could come in handy now that $4bn-a-year Actos has lost market exclusivity (EP Vantage Interview - Nycomed the answer to Takeda's woes, September 13, 2012).

The Japanese group has made no bones about hopes of growing in Latin America and as well as building its global vaccines business, and Inviragen’s most advanced product would seem to be in a sweet spot that addresses both strategies (BIO 2013 – Takeda’s small building blocks to recovery, April 23, 2013).

For example, Central and South America, Southeast Asia, India and Africa have high incidence of dengue fever; serious outbreaks of hand, foot and mouth disease (HFMD) have taken place in China, Japan, Singapore and Vietnam, with nearly 178,000 cases having been reported already in 2013 in China, according to the World Health Organization.

Takeda’s five acquisitions last year included LigoCyte Pharmaceuticals, a deal that brought with it monovalent and bivalent norovirus vaccines in phase II (EP Vantage interview – LigoCyte buy boosts Takeda’s vaccine business, October 8, 2012).

Its pace of mid-sized deals – last year’s largest was $800m to buy URL Pharma, which gave it a marketed drug in Colcrys – has slowed this year, but it has promised to keep the deal-making going to drive growth. Committing $35m now and up to $215m in development and commercial milestones is roughly in keeping with the size of deals Takeda has been cutting lately in the wake of the monster $13bn deal that snared Nycomed.

Exit stage left

Inviragen’s investors – Charter Life Sciences, Venture Investors, Bio*One Capital and Phillip Private Equity – have earned a quick exit by today’s standards, just four years after a $15m series A round.

The founders and investors – and now Takeda – probably owe a debt of gratitude to American taxpayers, as National Institutes of Health grants provided more than a fifth of the group’s funding since its founding in 2006. Indeed, of the $1m needed to open its doors in 2006, more than $800,000 was provided from a pair of NIH grants, compared with the $130,000 that came from seed investors.

The group advanced its four-strain recombinant dengue vaccine, DENVax, into phase II following a Colombia-based phase I trial that found it to be safe and well tolerated, and showed it to stimulate an immune response in adults naive to the viral, mosquito-borne illness.

The HFMD vaccine targeting enterovirus 71, INV21, has generated similar phase I data. Also in the pipeline are preclinical projects in chikungunya, plague, Japanese encephalitis and avian influenza, and other bioengineered vaccines.

It might have taken Takeda five months before it could execute its first major deal of 2013, but it has been a shrewd one. Filling its pipeline remains a necessity, and if 2012 is any indication the deals will start appearing as the year wears on.

To contact the writer of this story email Jonathan Gardner in London at JonathanG@EPVantage.com or follow @JonEPVantage on Twitter

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