Achillion vs. Actelion More Biotech M&A’s to Come

Last week’s announcement by Swiss drug maker, Roche Holding AG, that it was buying biotech firm InterMune, Inc. for $8.3 billlion sparked speculation by industry watchers about who would be the biotechs that might be involved in the next round of M&As. InterMune makes a drug, Esbriet (pirefnidone) that treats a lung condition, idiopathic pulmonary fibrosis. Esbriet is approved in Canada and Europe. The drug has the potential to become a blockbuster seller. InterMune’s product would join Roche’s Pulmozyme and Xolair to build up its lung drug portfolio.

A number of names popped up such as Achillion Pharamaceuticals, Actelion, Puma Biotechnology, Intercept Pharmaceuticals, and others. Maybe people heard Achillian but were attracted to similar sounding Actelion.

  • Achillion Pharamaceuticals makes Phase II hepatitis C virus (:HCV) candidate, ACH-3102.
  • Puma Biotechnology is developing its Phase III breast cancer candidate neratinib, PB272.
  • Intercept Pharmaceuticals makes its phase II nonalcoholic steatohepatitis drug, obeticholic acid, OCA.
  • Actelion Pharmaceuticals makes a cancer drug to treat a rare form of non-Hodgekin’s lymphoma.

Some in the big pharma side are still holding out hopes of buying a biotech that can make their next blockbuster. So which will it be? Achillion? Actelion? Others? To be sure, we will need wait and see.

ThermoFisher Aims to Get FDA OK for its Ion Torrent PGM

By Paula Myers

At this year’s CHI Molecular Medicine Tri-Conference at the Moscone Convention Center, San Francisco, February 11th, there were over 3000 attendees and more than 200 exhibitors. I visited some of the many booths on the exhibit floor. One of those was the ThermoFisher booth. I spoke with Zhen Mahoney,Sr. Clinical Sales Specialist/Pharma Business. Mahoney talked about the acquisition of Life Technology and how it affects ThermoFisher.  Thermo will have to absorb Life’s 9,000 employees. Thermo currently has 40,000 employees. Mahoney pointed out that Life has a broad product portfolio. Ion Torrent, which Life acquired in 2010, is located at Oyster Point near South San Francisco. The rest of company is located at Carlsbad, California, near San Diego, including the Invitrogen and Gibco brands. These groups are staying intact, according to Mahoney.

She also pointed out that the company submitted an application for 510K marketing clearance to the FDA for its Ion PGM system for use as a diagnostics medical device. They are hoping for a 3 to 4 month approval timeframe. By comparison, the Illumina MiSeq took about 9 months to get FDA 510K approval because it was the first of its kind. The Illumina MiSeq received a relatively fast approval because the company worked closely with FDA reviewers so that they can understand its technology. The MiSeq platform serves as a template to the FDA for follow-on platforms from Illumina and other desktop sequencer vendors. Mahoney said that the next revision for their Ion Torrent electronic P-2 Chip is coming later in 2014. It will have 660 million wells.

Some of the other firms that I visited included: Guardant Health, Diagenode, and Epitomics. I focused on companies involved in epigenetics. Guardant Health is a two-year-old service company for individuals. In February, they released GUARDANT360, the first pan-cancer blood test that provides doctors with real-time genetic information to help them prescribe the right treatments for their cancer patients.

  Diagenode is a company originally from Belgium and sells Japanese made disruptor shearing machines such as the Bioruptor Pico for DNA, chromatin, and RNA shearing. Epitomics, located in Burlingame, California, offers custom antibody services for use in epigenetics research. Li Fang, Project Manager of Custom Antibody Services at Epitomics, said that Abcam is buying the company. Abcam is a supplier of antibodies,proteins, kits and reagents.

New Biotech VC Investing Model Emerging

It appears that a new biotech investing model is emerging and may play out through 2013.

On October 9, 2012, I attended the BIOInvestor Forum at the Palace Hotel in San Francisco. At the Plenary Session “It Takes A Village: The New Pharma-VC Model for Biotech Investing,” moderator Alan Eisenberg said, “Thirty-nine percent of VCs reported decreased HealthCare investment in the past three years.”  This sector has continually underperformed.  In addition, there were only 16 early round financings.

Will Biotechs Play a Kind of VC “Hunger Games”  to  Survive?

One panelist believes that 2013 will be like the “Hunger Games.”  “Companies need to change how things are done to survive,” said De Rubertis. According to Brian McVeigh, Vice President of Worldwide Business Development Transactions and Investment Management, at GSK Pharma, “This is a relationship business.  Relationships with academics are also important.

Location, Location, Location

The other piece is geographic.”   Francesco De Rubertis, Partner, at Index Ventures said, “Returns have to be good enough for investors to get back in.”  Index Ventures’ strategy is to invest in early-stage, single-asset companies in Europe, U.S. and Israel.  Recently, there have been a number of high-profile funding collaborations between pharma companies and traditional VC funds such as GSK and JNJ with Index Ventures, Sanofi and Third Rock (Warp Drive), and Eli Lilly and TVM Capital.  The strategy is that by combining their resources and expertise, these firms hope to source and develop drugs that are winners.

Maria Bartiromo and J.P. Morgan’s Jamie Dimon On Business in 2012 at SF Healthcare Meeting

On Monday January 9, 2012, I attended the J.P.Morgan Healthcare Conference luncheon at the Westin St. Francis Hotel in San Francisco.  During the luncheon, Maria Bartiromo, journalist and news anchor at CNBC, interviewed Jamie Dimon, Chairman, President and CEO of J.P. Morgan Chase about a number of issues facing his company, the U.S. economy and Europe in 2012.

I compiled a list of some of the answers to questions from Bartiromo and Dimon’s answers to those questions.  Bartiromo asked Dimon about the financial health of J.P. Morgan Chase.  The stock is lower, but the company is better with record earnings, Dimon said.  When asked about the U.S. economy, Dimon’s answer was that the U.S. economy is in a mild recovery.  He sees small business in better shape.  He does not see a huge formation of small businesses, however.  It is not access to capital that is the problem, but demand for their products.  There are also IPO backlogs.

He said that early indicators for the recovery include: housing improving and near bottom and shadow inventory is getting better.  He also believes that more people working, the better it is for the economy.  He is not nervous about the capital markets.  However, he did say that geo-politics is always the wild card.   When asked about the European debt crisis, he said that it has to be fixed for the health of the world.  He said that “countries have to be responsible.  They need to change their fiscal policies.”  J.P. Morgan has cut back exposure, but still is investing in Europe.

Bartiromo also asked Dimon about the “Basel Stress Test”.  He said he is in favor of a good  stress test.  Dimon said that J.P. Morgan will be fine with worst case scenario.  He added that J.P. Morgan never lost money in a quarter after the greatest stress test, which was the “Financial Crisis” in 2008.  He wants fairness around the world for derivatives.   He also commented on the Fed’s “Volcker Rule.”  “The Feds do not want us to take any risks,” Dimon said.  He wishes that people “writing these government rules were business people.” However, he is not opposed completely to regulation.

When asked about ObamaCare, he said he wants healthcare for everyone, but he believes that “ObamaCare just added to the mess.”  Bartiromo asked him about Fannie and Freddie.  He said they should have a hybrid or eliminate them.

When a member of the audience said he should run for President, there were huge laughs.  However, he said he has no plans to do so.

Biotech Event Hosts Partnering “Speed Dating”

There were around 1,100 attendees at this year’s Biotech Showcase 2011, which was held at the Parc 55 Wyndham Hotel in San Francisco and ran from January 10th to the 12th.  Some of the attendees came from the nearby J.P. Morgan Healthcare Conference being held at the same time.  During this event, around 195 public and private companies came to give presentations and seek partnering deals or funding from investors.  In the area of partnering, there was a designated room with numbered tables that companies seeking funding could give their pitch to interested investors.  It reminded me a bit of speed dating.

The event began with a panel briefing on the Regenerative Medicine annual state of the industry report.  There was also a lunch plenary in which a panel discussed the future of Personalized Medicine and how it will effect private and small-cap life science firms.

I sat in on some of the company presentations.  The companies were given only 15 minutes to describe their products or technology.  Neil Campbell, President and CEO, at SuperNova Diagnostics spoke about the company’s AmpCrystals technology, which is based on a proprietary chemical-nanotechnology. AmpCrystals are capable of being triggered on-demand to produce visible long-lasting fluorescence.  Campbell went on to say that AmpCrystals improve immunoassay performance and can be applied to DNA testing (detection and quantitation of DNA).  SuperNova offers low-cost simple testing lab performance.  Campbell said that most of its customers are strategic.  He also said that they are looking for partners.

Another presentation I sat in on was given by David Levison, Founder of cardiovascular genomic diagnostics company, CardioDx, Inc., Levison said “we really need cardio-diagnostics.”  Their two tests include Corus CAD and Corus SCA.  The Corus CAD test costs $1,195.  It indicates the likelihood of the patient having obstructive coronary artery disease.  The process involves the doctor drawing blood from the patient using their test and then sending the sample to CardioDx where it is analyzed and the doctor receives the results in one day.  The company has seen strong doctor adoption and re-order rates.  The average doctor orders over 10 tests.  Levison said that they did not expect them to order over 10 so they are very pleased about that.  He also said that one third of the tests are being paid for today by doctors.

2010 BIO Investor Forum in San Francisco

On October 5th and 6th 2010, the BIO Investor Forum was held in San Francisco at the Palace Hotel.  There were around 700 attendees at this year’s event with over 140 companies presenting and more than 2000 one-on-one partnering meetings.

On day one, the topic of the opening plenary luncheon on Tuesday was “A Look Back at 2010: State of the Industry & the Art of Deal Making.”   John Craighead, Managing Director, Investor Relations & Business Development at BIO, began the presentation with an overview of the “State of the Industry.”  He said that there are 150 fewer biotech companies and 131 companies only have a year of cash left.  Biotech’s are closing fewer deals. There has been a lack of public IPO’s and a shift to deals instead.  He also said that it is an extremely competitive landscape right now.

Craighead closed his presentation with some take home messages.  He said there are 25 percent fewer U.S. public companies since three years ago.  However, the remaining companies have more cash and are stronger.  Finally, the 2010 IPO window is uncertain.

Following Craighead’s presentation, “The Art of Deal Making,” panelists discussed details of Celgene’s acquisition of Gloucester Pharmaceuticals.  George Golumbeski, Sr. VP of Business Development at Celgene said this would be the first in a series of acquisitions for the company.  Celgene’s deal with Gloucester included $340 million cash up front and $300 million in future regulatory milestone payments.  The main reason behind the acquisition of Gloucester was its only product, ISTODAX (a treatment for both cutaneous T-cell lymphoma and peripheral T-cell lymphoma), which received FDA approval in November 2009.

BIO Investor Forum, Day 2, “Alternative Financing”

On day two, the BIO Investor Forum business roundtable discussed, “Alternative Financing: Got Cash? Building the Balance Sheet through Innovative Financing Options.”

Moderator Jon McGarity, Executive VP at Campbell Alliance said that because money is hard to get, a number of small and mid-stage biotech companies are turning to alternative financing such as ATMs (At-the-market offerings) and PIPEs (Private Investment in Public Equity) among others.

According to panelist Brian Culley, CEO at Adventrx, the company almost went out of business, but managed to get money at the last minute through alternative financing.

Panelist Michael Margolis, Managing Director at Healthcare Investment Banking, when asked by McGarity if there has been an increase in alternative financing, Margolis responded that he has seen subtle changes.

Panelist Evan Myrianthopoulos, Sr. VP & CFO at Soligenix, Inc., said that the company has survived through PIPEs over the years.  He also said that it is good to have existing investors as well with alternative funding.

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