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Hundreds of pharma–biotech deals have been announced during 2008 and many of these probably began at biopartnering conferences. Susan Aldridge examines some of this year's big buyouts and mergers.
The Biopartnering Europe (BPE) conference always marks the start of autumn for me. It's a place where small biotech companies make their pitches (so you get to hear about some great new science) while Big Pharma gives presentations on trends in the business and what they're looking for. BPE is also a kind of dating agency — an opportunity to network and set up a meeting with someone you might possibly do business with.
Journalists are not part of what goes on behind closed doors at these events, but I'd love to know how many of the hundreds of pharma–biotech deals, big and small, that have been announced in 2008 began at a meeting such as BPE. These conferences are expensive and take people away from the bench and boardroom, but they could be a worthwhile investment for small biotechs looking for the lifeline that a deal with Big Pharma often represents. There are also advantages for Big Pharma as a biotech deal helps fill the pipeline and can extend the global coverage of both companies.
There are people who analyse deals, and those whose business it is to spot trends and movements. I'm not one of them, but I love listening to these people talk about the biotech business; where it's going and what the most significant deals of the year are. Here are a few that caught my eye during 2008.
By the middle of 2008, several one billion-dollar deals had already been made since the start of the year.
In April, GlaxoSmithKline (GSK) went for the acquisition of Sirtris Pharmaceuticals (MA, USA), which is only 4 years old. Sirtris is working on an intriguing new class of enzymes called the sirtuins that appear to play a role in the ageing process. Sirtris are trying to mimic some of the health benefits of calorie restriction by activating the sirtuins with small molecule drugs. It has mainly focused on type 2 diabetes, although the approach is applicable to other areas. The deal gives GSK's drug discovery business several new compounds for metabolic disease, neurology, immunology and inflammation to work on.
Also in April, Roche acquired the small biotech Piramed (UK). Formed in 2003, Piramed has developed new oncology drugs that are small molecules targeting two different forms of PI3-kinase, an enzyme central to a pathway known to be important in disease progression in cancer and also in the regulation of certain immune-based diseases.
In June, Bristol-Myers Squibb (BMS) acquired Kosan Biosciences (CA, USA), adding to its pipeline cancer drugs that belong to two new classes known as epithiolones and heat shock protein (Hsp)90 inhibitors. The epithiolones are described as microtubule stabilizers, which have potential applications in various cancers as well as neurodegenerative disease. In the Hsp90 programme, BMS now has a Phase III compound.
Vaccine companies are increasingly attractive targets for Big Pharma. In July, the leading French pharmaceutical company sanofi aventis bought Acambis (UK). The two had already been working together to develop vaccines for Japanese encephalitis, West Nile virus and dengue fever — all emerging diseases where no adequate protection is currently available. Acambis was a good candidate for takeover, as the company won a 10-year contract with the US government for supply of the smallpox vaccine and is also working on vaccines for Clostridium difficile, flu and genital herpes.
The significant deals are not all about Big Pharma acquiring small biotechs. There is also consolidation going on between the biotechs themselves. In September, BTG (UK) acquired Protherics (UK), creating the UK's biggest biotech to date and one that is likely to enter the FTSE 250. Protherics has a potential blockbuster in Cytofab, a treatment for sepsis, although clinical trial data on this will not be available until 2010.
Commenting on the year's activities, Bill Kridel, Managing Director and founder of Ferghana Partners (NY, USA), a leading life sciences investment group, says: "A major theme in 2008 has been franchise build-up. People are looking to do better in their existing franchises, filling in the gaps, whether they be geographical or in their pipeline. All of the large deals are of this nature."
He cites the acquisition in late 2007 of Adnexus Therapeutics (MA, USA) by BMS, which gives the bigger company access to new biologics, applicable to a range of therapeutic areas. Adnexus has been developing a new class of drugs called Adnectins, of which the lead compound is Angiocept, an anti-angiogenesis agent currently in early phase clinical trials. The adnectins are based upon the widely distributed human protein fibronectin that exists outside cells and is involved in various targeted protein–protein interactions. The adnectins can be seen as an alternative approach to antibodies when it comes to targeted therapeutics.
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Kridel also mentions the deal between Novartis and MorphoSys (Germany), whose HuCAL technology is applied to the generation of human antibodies for research, diagnosticsand therapy. The 10-year deal, signed late last year, gives MorphSys the option of participating in selected Novartis discovery and development programmes, with Novartis funding these joint efforts. Morphosys has just exercised the first of these options for developing a therapeutic antibody against a promising target.
Meanwhile, Takeda (Japan) signed a deal with the RNAi company Alnylam Pharmaceuticals (MA, USA) in May. RNAi is an emerging biotech approach involving the 'silencing' of genes involved in disease. Under the agreement, Takeda will have the first option to develop and sell Alnylam's RNAi therapeutics in Asia, marking the globalization of the new technology, while Alnylam will develop and sell in the US any RNAi therapeutics that Takeda discovers. Takeda has been exceptionally busy in 2008. They also did a deal with leading biotech Amgen which gives it rights to develop 13 of the molecules in Amgen's pipeline including motesanib, a promising anti-angiogenesis small molecule for cancer therapy.
In May, Takeda also took over Millennium Pharmaceuticals (MA, USA), one of the world's leading biopharmaceutical companies, which was founded in 1993 and is famous for the discovery of VELCADE (bortezomib), the first effective treatment for multiple myeloma.
Deals are not always about innovation as generics, including biogenerics, are now an important sector of the market. Israel-based Teva, the world's biggest generics company, consolidated its position in 2008 by purchasing Barr Pharmaceuticals (NJ, USA). Back in January, Teva also announced it would buy CoGeneSys (IN, USA), a biogenerics company.
Looking back, Kridel says the level of activity in 2008 has been similar to that in 2007. For 2009, there will be "more of the same". In particular, we should look out for deals by Japanese and Indian companies, such as Dr Reddy's (India) and Wockhardt (founded in India, but now based in the UK). "This is the way of the future," Kridel predicts.
At the time of writing this, Roche is attempting to buy an even bigger share in Genentech (CA, USA), the world's leading biotech company, but it's not yet clear how much it will have to pay. Much depends on the outcome of new clinical trials for Roche's Avastin, which may lead to the drug being more widely applicable in the treatment of colon cancer, a development that could add billions of dollars in sales. There is also further activity from Eli Lilly, which has bought ImClone (NY, USA).
How the current global turmoil in the financial markets affects the progression of these and other ongoing deals remains to be seen, but it is likely that building and consolidation between pharma and biotech will continue at a brisk pace throughout 2009. Watch this space!
1. Fierce Biotech, "2008's Billion-dollar deals (H1)" (July, 2008). www.fiercebiotech.com