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Biotechnology, Health and Business in Canada, the United States and Worldwide

Tag Archives: Merck

Monday Deal Review: September 30, 2013

  Welcome to your Monday Biotech Deal Review for September 30, 2013! There has been a lot of activity in the M&A and finanicngs space the last week.  Hit the break for the full rundown of the weeks’s major biotech news!

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Monday Deal Review: December 17, 2012

Welcome to your Monday Biotech Deal Review for December 17, 2012.  This week saw the completion of a number of previously announced acquisitions, as well as the announcement of new ones. The latter group includes Gilead’s acquisition of YM Biosciences and Helix’s sale of Rivex to Pharmascience. See the details on these major transactions, as well as the past week’s other biotech news, by clicking through.

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Monday Biotech Deal Review: September 12, 2011

Welcome to your Monday Biotech Deal Review for September 12, 2011.  We hope everyone had a restful labo(u)r day long weekend, both north and south of the border.  This week’s biotech deal review is a double feature owing to last week’s holiday.  There has been a lot of activity in the past two weeks, including the announcement of a friendly takeover bid of Afexa by Valeant (Afexa is already the target of a hostile bid by Paladin).  Read on to learn more.  Read more of this post

Q3 Canadian Healthcare Review – Weakness Continues BUT Some Bright Spots

Data in the Q3 2010 Canadian Healthcare Review from the Equicom Group (co-authored by James Smith, Vice President Healthcare at Equicom and myself) shows a continuation of the weakness in biotech financing which we have seen in 2009 and 2010.

Bounceback From the Financial Crisis May Have Masked 2009 Weakness

While the level of funding seen during 2009 was a concern, the problem may have been partially hidden by the many large share price increases from lows they hit as a result of the financial crisis in late 2008. The level of funding in 2010 is lower and the impact of lower funding is now being seen in share price performance. Lower cash resources have resulted in lower activity levels and survival concerns, which has probably been a factor in the 40% or greater share price drop in the first 9 months of 2010 for 31 of 105 healthcare companies in the share price performance assessment. The bright spot is that investors can still make money in the sector, as 13 companies had their share prices increase by greater than 40% in that same period.

Protox and Oncolytics Start Q4 With a Bang

The $35 million dollar financing by Protox announced in September did not count in the Q3 total because the financing was not closed by September 30. The first $10 million tranche of that financing and the recent $25 million dollar bought deal financing by Oncolytics Biotech are a good start for Q4.

Pending Regulatory News May Build Buzz

There are also some upcoming events which could help create a little momentum in the sector. While Cardiome has had a delay in a U.S. Phase 3 study of its iv vernakalant (already approved in the E.U.), the start of Phase 3 trials of the oral version by its partner Merck would be a good boost. Theratechnologies is still waiting for the FDA decision on tesamorelin after the unanimous recommendation from an advisory committee. Bioniche’s parter Endo is expected to both release results from the first Phase 3 study of Urocidin™ and also start the second Phase 3 trial.

Evolution at Valeant and Angiotech

Two large companies continue to evolve. Valeant is slowly exiting from the NCE business and going back to its specialty pharma roots as it gives back clinical programs which were acquired by the prior Biovail management. Angiotech has announced a major debt restructuring which will cut its ongoing financing costs but will also result in major dilution for current common shareholders.

More to Come on Profitable Canadian Healthcare Companies

My focus as a biotech analyst over the years has been the development stage companies. The Canadian healthcare sector also includes numerous companies which are not only profitable but also do monthly distributions to shareholders. I will take a look at these companies in a future post.

Monday Biotech Deal Review: August 16, 2010

Another decent week for Canada’s biotech companies, with about $30 million of securities sold and more deals launched. Big headlines this week for Alectos’ Alzheimer’s collaboration with Merck, which gets a US$289 million number but declines to split out the up-front payment or other details of the fee structure. Also, eHealth Ontario is spending significant money again, this time awarding a $46.5 million contract to a CGI subsidiary for work on a chronic disease management system. Finally, Biovail sold some CRO assets in a deal that passed under the radar until their Q2 report. 

And, to make sure an important thank-you doesn’t fly under the radar, I’d like to include an above-the-fold thanks this week to Keldeagh Lindsay, the Ogilvy Renault student who has been doing a great job helping out with the Monday Biotech Deal Review all summer. And now,

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Monday Biotech Deal Review: July 12, 2010

This week saw several interesting deals, including an $85+ million exit for Sentinelle, some “bio-bucks” made good for Cipher, a licensing deal for Amorfix’s vCJD technology, a $10 million malaria deal for BC-based Artepharm and a new name (Medwell Capital) to go along with BioMS’ new business model. Read more of this post

Monday Biotech Deal Review: June 14, 2010

This week saw a series of transactions bringing Patient Home Monitoring to the TSXV with an accompanying private placement and a shiny new SEDA from (who else) Yorkville; ConjuChem is (pending court approval) on its way out of CCAA with some cash on hand; and the struggle between Northstar and its ex-CEO continues in the dramatic form of a directors circular. Check out these developments plus a full crop of other Canadian deal activity after the jump…

Patent Cliff Will Not Save Biotech: Abbott Buys Indian Generics Company Piramal Healthcare

I often hear how the upcoming loss of patent protection for current blockbusters creates an insatiable demand at pharma companies for new pipeline products from biotechs. Here’s an example from 2007. Here’s one from last week. This is not true. Upcoming loss of patent protection creates a insatiable demand for revenue, but new products are not the only source of new revenue.

Abbott’s $3.7 billion deal for a unit of India’s Piramal Healthcare last week is a perfect case in point. This deal, which follows Abbott’s license of a slew of products from Zydus Cadila, will feed the company’s new “established products division.” Abbott’s purchase of Solvay in February also built its emerging markets revenue, which now accounts for over 20% of the company’s business.

Abbott is far from alone: Sanofi is the biggest generics manufacturer in Latin America, Pfizer also has an established products division, Novartis is diversifying into eyecare and has long sold generics, Merck is into follow-on biologics and GSK tapped South Africa’s Aspen Pharma for emerging markets growth through branded generics. These alternatives look even better as payors worldwide are setting more demanding standards for reimbursement, the placebo effect is mysteriously strong, and personalized medicine makes clinical trials even more expensive.

My bottom line? Emerging markets and generics opportunities create plenty of growth, thank you very much, with a far lower risk profile than most product in-licenses or biotech acquisitions (even the option deals). As big pharma gets more comfortable with “established products” and biosimilars, biotechs are going to have to demonstrate even higher value. Plenty of companies are being built and funded with that in mind; but anyone counting on pharma’s desperation will be disappointed.

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Biotech Trends Update — IP Constituencies: India’s Courts Nix Drug Patents while India Courts Innovation

world_map_2002This blog has been tracking increasing innovative activity in India and China as part of our Biotech Trends series, the idea being that as innovative activity increases, the host countries will take a kinder view of property rights.

The trend toward innovation in India is undeniable — as the WSJ’s Venture Capital Blog noted recently, India even has its own version of  Y Combinator, an incubator/early-stage fund.  India also has many notable successes in pharma and biotech innovation, including Jubilant and Glenmark.

Yet, as Ronald Cass notes in a WSJ editorial, the groundswell of Indian innovation hasn’t yet worked its way up through the legal system.  Citing a Delhi High Court decision that allowed generic copies of Merck’s cancer drug Nexavar, Cass infers that India does not “want drug innovation.”

I disagree.  India does want drug innovation.  Like everyone else, India wants lucrative knowledge economy jobs.  But even with a broad desire for policy change, turning a judicial ship is a slow process in a common law jurisdiction. 

My bottom line: It will likely take time, and may take facts more sympathetic than Merck’s, to break with precedent and habit and to develop a more innovation-friendly jurisprudence in India.  Make no mistake, though, that’s the direction India is heading.  Patience, but not complacence, is the order of the day.

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Monday Biotech Deal Review: February 22, 2010

There was a lot of follow-up among Canadian biotech deals this week: letters of intent turning into definitive agreements, merged companies turning to consolidation, bids launched on schedule and wrapped up; as well as an average crop of new M&Eh and securities.  Start things off with an interesting (cross-border!) twist to the SIFT/SR&ED deals we’ve seen after the jump…

Monday Biotech Deal Review: February 8, 2010

This week’s Canadian biotech deals feature a new private placement, two medical device acquisitions, a truly dedicated CEO, some HIV funding from Merck. Seeking redemption?   Read more of this post

Canadian Announcement on Merck–Schering-Plough Transaction Closing

Merck closed its merger with Schering-Plough yesterday, following regulatory clearance in China and Mexico.  They held press events yesterday and today, and this morning they appear to have released country-specific announcments.

Here’s the blurb on Canadian operations:

“Canada is an integral part of the company’s expanded global presence. Merck will now market over 530 pharmaceutical, consumer and animal health products, employ over 1800 people, generate over $1.2 billion in pharmaceutical sales and invest over $121 million in research and development in Canada. Merck operations in Canada include research, manufacturing, and sales.”

The Merck Canada website is still being updated.

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Trends Update — Personalized Medicine: Merck Strategy Head Skeptical

As I’ve been following personalized medicine on this blog, I have become almost convinced that recent advances in genomics technology put us at the brink of an era of personalized diagnosis and treatment.  Not everyone agrees.

Chris Morrison, reporting from the Pharmaceutical Strategic Alliances meeting, quotes Merv Turner (the head of strategy at Merck) as follows:

“‘You can reduce cardiovascular mortality by 50%’ by using statins, he said. ‘That means 50% cardiovascular disease is unsatisfied. Is that 50 different small diseases or one large one? Personalized medicine is like soccer in the US: it’s the game of the future and always will be.'” (emphasis added)

Maybe I’m missing some context here, but I think the answer to Turner’s question (50 different small diseases or one large one) is “we don’t know.”  It is an interesting question and I think it would be prudent to find out the answer.  Preferably before we try treating the 48th disease with a drug developed for the 35th.

Monday Deal Review: August 3, 2009

B&W_BigNickelHopefully, the Deal Review will be a longer list as the newly-launched Ontario Emerging Technologies Fund starts deploying some capital, but for this week, the Canadian deal front was pretty quiet.   A few developments, like the JLL-Patheon pathos and the milestone for Cardiome from Merck, were noted at the time in our Twitter stream @crossborderbio, and aside from that there are only a few deals, and a bit of bad news, to check out  after the jump…

UPDATED Merial in Canada: Sanofi-Aventis to Buy Merck Out for $4 Billion, May (Re)Combine with Intervet Post-Merger

The New York Times’ DealBook blog reports that regulatory concerns about Merck’s purchase of Schering-Plough, presumably Schering’s Intervet animal health subsidiary, required Merck to divest its stake in Merial — its animal health JV with sanofi-aventis.  Sanofi is kindly obliging, for $4 billion.

Interestingly (given DealBook’s reporting that the JV divestiture is antitrust-driven), Merck, sanofi and Schering also entered into  a call option agreement (pdf), giving sanofi-aventis the option to combine Intervet with Merial following the Merck-Schering merger to form a new animal health joint venture with post-merger Merck.

The blurb on Merial Canada, which has what appears to be a small presence in Baie D’urfé Québec, is available for your viewing pleasure after the jump…

Xenon In, Neuromed Out: Merck Nets Zero Canadian Collaborations This Week

Revolving_Door_SignYesterday, Merck signed a deal with Vancouver-based Xenon Pharmaceuticals.  Merck will fund the R&D and in return gets an option on the output — small molecule cardiovascular drugs (if at first you don’t succeed…).  Xenon describes the deal as generating

option exercise fees, research, development and regulatory milestone payments of up to US$94.5million for the first target and up to US$89.5 million for each subsequent target selected for drug discovery.

While noting that the milestones, for biobucks, “aren’t sky-high,” the In Vivo Blog described the deal as “a big step forward for Xenon.”

No sooner was the Xenon press release out, though, than Neuromed (also based in Vancouver) announced that Merck was pulling out of their 3-year collaboration looking for NCE’s targeting N-type calcium channels.  According to Dr. Christopher Gallen, President & CEO of Neuromed:

“[t]he molecules generated in our collaboration, while effective in disease models, did not demonstrate the profile needed to enter the next phase of testing, including human clinical trials.”

Neuromed is still working on its lead drug candidate — an XR formulation EXALGO™ (hydromorphone HCl) — and a development program for oral drug candidates to block T-type calcium channels for pain, epilepsy and hypertension indications.

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Novel Deal Structures Becoming More Common

Outside the BoxAt the RIC/OCETA talk I participated in last month, one of the trends in deal-making that I mentioned was novel structures.  At the time, examples included option deals and new ways to split rights and territories. 

More recently, we’ve seen GSK and Pfizer form a joint venture to develop HIV treatments, and two more interesting ideas came up this week:

  1. Index Ventures, a VC firm, is forming a joint venture with Amunix Inc., a biotech company.  The idea is, according to the WSJ Venture Capital Dispatch blog, to focus entirely on drug development, not research, and advance three candidates quickly through Phase I proof-of-concept.
  2. AstraZeneca and Merck are teaming up for what FierceBiotech calls an “unusual, early-stage clinical program” where each company is contributing an experimental cancer drug candidate that, in combination, should attack complementary pathways.  From the joint press release:

    Under the terms of the agreement, AstraZeneca and Merck will work together to evaluate co-administration of the compounds in a Phase I clinical trial for the treatment of solid cancer tumors. All development costs will be shared jointly. Following the Phase I trial, the companies will consider opportunities for further clinical development.

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Monday Deal Review: May 25, 2009

bignickel1This week’s deal review has a couple of new placements, a couple of new plants, a very interesting claim asserted in Boston, and many, many updates on deals we have previously covered.  Check out the full review after the jump…

Cardiome Licenses Vernakalant (Oral) to Merck

Merck & Co., Inc. and Cardiome Pharma Corp. announced a collaboration and license agreement that provides Merck with exclusive global rights to the oral formulation of vernakalant for the maintenance of normal heart rhythm in patients with atrial fibrillation.

Here’s the deal:

  • US$60 million upfront
  • up to US$200 million in development and approval milestones
  • up to US$100 million for approval and subsequent indication milestones
  • tiered royalty payments
  • and up to US$340 million in sales threshold milestone payments
  • Cardiome retains a U.S. co-promotion right
  • Merck will be responsible for all future costs associated with the development, manufacturing and commercialization
  • Merck has granted Cardiome a secured, interest-bearing credit facility of up to US$100 million that Cardiome may access in tranches over several years commencing in 2010.

Cardiome and Astellas Pharma U.S., Inc. have a deal for vernakalant (IV) in the United States, Canada and Mexico; and this deal provides a Merck affiliate, Merck Sharp & Dohme (Switzerland) GmbH, with exclusive rights to the IV formulation outside of the United States, Canada and Mexico.

Effectiveness is subject to the HSR clearance, as well as other customary closing conditions.

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Trends in 2009: Shifting IP Constituencies as Innovator Pharma Buys Generics and Asia Turns to Innovation

Growing industrial and geopolitical realignment of economic interests has the potential to re-define intellectual property constituencies in 2009.

1.  Industrial realignment: the entry of innovator pharma companies into the generics business.

This year has already seen Merck get into follow-on biologics by buying Insimed and Pfizer build its generics business with its Aurobindo deal.  As traditional innovator pharma companies become more invested in follow-on biologics and small molecule generics, they will have a greater (self-)interest in a functioning subsequent entry pathway. 

Watch how this is playing out in the follow-on biologics arena as two competing FOB bills make their way through Congress.  Right now, the 12-year exclusivity period in the Eshoo-Barton FOB bill and the 5-year exclusivity period in Waxman’s FOB bill are duking it out, and we’re already seeing increased industry flexibility.  Innovator pharma has historically insisted on a 14-year exclusivity period to accompany follow-on biologics legislation, but BIO has already indicated some willingness to support Eshoo-Barton, as has PhRMA

Dani’s the expert, but my layman’s guess is that we get a FOB pathway this time around, and that the exclusivity number lands somewhere in the 8-10 year range.  This is consistent with a Teva-promoted analysis and it’s easy to see that it covers the arithmetic middle ground.

2.  Geopolitical realignment: increasing innovative activity in Asia, which has historically focused more on generics.

In China, a recent deal between Lotus Pharmaceuticals, Inc. (OTCBB: LTUS) and Beijing Yipuan Bio-Medical Technology Co., Ltd. (“Yipuan”) to acquire the drug Yipubishan points to China’s interest in promoting innovation.  Yipubishan, which is used to treat the symptoms of gastric ulcers and hemorrhages of the upper digestive tract, was partly funded through the use of grants from the Innovation Fund for Small – Medium Technology Based Firms of the Ministry of Science and Technology of the PRC.  Yipubishan became the first prescription drug of its kind developed in China to be included in the National Torch Project, which recognizes and promotes commercialization of high-tech discoveries and encourages companies to use high technology.  The Torch Project is one of a series of PRC Science and Technology initiatives.

In India, Wockhardt’s pioneering efforts in biotechnology are among many signs of increasing innovative activity, and have attracted interest from Pfizer and Sanofi.  Wockhardt has set up a global-scale biopharmaceuticals manufacturing powerhouse, the Wockhardt Biotech Park, in Aurangabad, India. This state-of-the-art complex comprises six dedicated, manufacturing facilities, and is designed according to US FDA and EMEA standards. It will also house new biotechnology products that are currently in various stages of development. The complex has the capacity to cater to 10-15% of global demand for major biopharmaceuticals.

India and China are in the 3rd quintile of countries in the 2009 IPRI Report, with India ranking 46/115 and China ranking 68/115 but they are steadily increasing their innovative activity. 

Within a short span, I would expect them to rank more like Israel, which has a world-class innovative industry as well as a strong generics industry (Teva), or Taiwan, which recently announced an initiative to boost cleantech and biotech.  Both Israel and Taiwan are ranked 29/115 in the 2009 IPRI Report. 

Merck and Schering-Plough in Canada

Following this morning’s announcement of Merck’s offer for Schering-Plough (0.5767 share of Merck and $10.50 in cash for each Schering-Plough share = $23.61 a share, a 34% premium, with Merck shareholders owning 68% of the combined company), we thought we’d take a look at the respective Canadian operations.  See what we turned up after the jump…

Wednesday Brain Dump: February 25, 2009

The question this week: a shot in the arm or a kick in the teeth?

A shot in the arm for:

  • Fewer shots in the arm! (har) 
    • British Columbia is the first jurisdiction in North America to offer a children’s vaccine called Infanrix-hexa™, which contains six immunizations in one, resulting in three fewer needles in the overall B.C. infant vaccine schedule, and
    • With the discovery of a constant region of flu virus protein hemagglutinin, a universal flu vaccine may be possible (no more yearly shots);
  • The Naval Surface Warfare Center in White Oak, a suburb of Washington, where the FDA is spending $1.15 billion to consolidate its offices and labs and to anchor a new biotech hub;
  • Pine Island, near Rochester, Minnesota, which could soon be the home to a new biotech research, development and manufacturing park with the help of up to $900 million in funding reportedly pledged by Steve Burrill.  Funding announcements also from Maryland and Pittsburgh;
  • Sustainable agriculture, when the White House announced its nominee for second-in-command at USDA: Kathleen Merrigan of Tufts University, who had been a top choice of the Cornucopia Institute to run USDA’s National Organic Program;
  • The National Science Foundation, from the stimulus (a $3 billion boost) and the budget (a 6.7% increase, to $6.49 billion);
  • Multiple Sclerosis, with Merck, Novartis, Teva, Biogen Idec and Sanofi Aventis all planning to release new oral therapeutics between now and 2012;
  • Conflict of interest disclosure, with a new editorial in PLoS Medicine;
  • Deterrence, with the arrest of four animal-rights extremists;
  • Organ failure biomarkers,
    • with the discovery of liver toxicity-associated MicroRNAs, and
    • with the injection by Pfizer Canada of $1 million to the PROOF Centre to fund research into vital organ failure biomarkers; and
  • Aliens.

A kick in the teeth for:

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Trends in 2009: Facing the Challenges of Introducing Biosimilars or Follow-on Biologics in the North American Market

The so-called biotechnology drugs or biologics (large, complex protein molecules derived from living cells, usually by use of recombinant DNA technology) are among the fastest-growing class of pharmaceuticals. Within the next two years, some market forecasts predict that biopharmaceuticals will amount to more than 50% of newly approved medicines. In addition to a growing market share, a substantial number of major biotechnology-based drugs will come off patent and enable the development of new biologics. The race by pharmaceutical companies to get into biologics, or further support their existing biologics capacities in order to start developing biosimilars or follow-on biologics (FOBs), is illustrated by the rapid pace of recent deals in this sector. The latest of these deals is the acquisition of Insmed by Merck, which was announced last Thursday; however I believe this deal was more about expanding state-of-the-art manufacturing facilities rather than acquiring extremely valuable FOBs.

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It Might Rain M&A at Merck Too

Following actual deals and expressions of interest by most of his peers, Merck’s CEO said he wouldn’t rule out a large transaction.

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