Licensing deals have become an important strategy for big pharma companies looking to fill their development pipelines, a strategy that also provides a lifeline to biotech companies as it gives them much-needed cash to keep their business alive. This is often structured as a technology access fee, providing cash up-front, followed by milestone payments to mark successes and royalties on sales if the product ultimately makes it onto the market.
Although many of the figures quoted for total deal value amount to a fantasy world of ‘biotech dollars’ with headline figures couched in ‘if’ and ‘might’, the deals are one way in which the biotech company keeps afloat. Of course, the amounts quoted also reflect the risk: those products that are in the early stages of development for rare indications will attract less money than late-stage compounds in potentially big markets.
Few biotechs have revenue coming in from product sales, so their survival relies on successive rounds of financing from the venture capital community, who increasingly now see their exit route as a trade sale to big pharma, rather than a market flotation. And wholesale acquisition of the biotech is another common occurrence, giving the pharma company access not just to a single compound or project, but the biotech’s entire technology. While the biotech then will cease to exist as a separate entity, at least the future of the technology should be secured in the slightly longer term.
RNA technology is one area where pharma companies have been jostling for access to biotech know-how, and although Roche has now announced it is getting out of the field, several further deals have been signed over the past year. Sanofi-aventis, for example, has entered into a strategic alliance with Regulus Therapeutics to discover, develop and commercialise microRNA therapeutics. MicroRNAs are small non-coding RNAs that regulate gene expression, and the collaboration will look at fibrosis in the first instance. Ultimately, it could be worth as much as US$750m to Regulus, which was set up in 2007 and is jointly owned by Alnylam and Isis.
Another RNAi deal involves Pfizer and MDRNA, which changed its name to Marina Biotech after the deal was done following the acquisition of Cequent Pharmaceuticals. The aim is to formulate oligonucleotides from Pfizer in di-alkylated amino acid packages that are constructed for RNAi, and also to design and synthesise potential RNAi drugs that act at targets specified by Pfizer.
Cancer is a very fertile area for licensing deals, with huge numbers of biotechs working on novel strategies for treating cancer. Ascenta Therapeutics, for example, has licensed several compounds to Sanofi-aventis. The compounds include two p53-HDM2 inhibitors, which it is hoped will restore the apoptosis process in tumour cells. The biotech in turn had licensed from the University of Michigan, which will also benefit. Although full details have not been disclosed, it could be worth almost $400m.
Meanwhile, sanofi-aventis has set up an alliance with the Belfer Institute of Applied Cancer Science at Boston’s Dana Farber Cancer Institute. This covers the cancer target identification and validation platform at Belfer, plus its translational medicine capabilities. The French company will also have the option to develop, manufacture and commercialise compounds that come out of the collaboration, all in exchange for a $33m up-front payment.
Licensing deals also sometimes work in the opposite direction. Early trials on Merck KGaA’s monoclonal antibody DI-B4 are now being carried out by Cancer Research UK. The antibody binds to the CD19 protein on B-cells, and may recruit immune system cells to attack the tumour. If the early trials succeed, the German company will have the right to advance it through later trials, with further payments due to CRUK; if it decides not to go ahead, CRUK will seek alternatives through its development arm, Cancer Research Technology. This is the fourth such deal the two organisations have done; CRUK is also working with several other companies in a similar way, including Astex, AstraZeneca and GlaxoSmithKline.
diabetes leads
Another big market that has received a lot of biotech attention and where novel treatments are much needed is diabetes. Sanofi-aventis has licensed the GPR 119 agonist MBC-2982 from Metabolex in a deal worth up to $375m. This compound has a dual mode of action, working on both insulin and glucagon-like peptide-1, and is currently in Phase II. Another deal for Metabolex involves Johnson & Johnson, which has acquired the rights to several compounds that are currently in preclinical development for a potential $330m plus royalties.
Another diabetes deal came with an agreement between Boehringer Ingelheim and the US company Neurocrine. This is looking at small molecule GPR119 agonists in Type II diabetes, which are designed to increase insulin production, and includes a $10m up-front fee plus royalties and milestones.
In the rheumatoid arthritis field, Gilead Sciences, meanwhile, is moving into a new area, away from its core field of HIV, by acquiring the privately owned CGI Pharmaceuticals and its pipeline of small molecule kinase inhibitors for up to $120m. The Yale University spin-out’s lead compound is a spleen tyrosine kinase (Syk) inhibitor that could have potential in inflammatory diseases such as rheumatoid arthritis.
Another Syk inhibitor, fostamatinib, is the subject of a deal between AstraZeneca and Rigel. The oral compound is currently in late stage trials, and if it succeeds Rigel could be looking at as much as $1.25bn, including a $100m upfront payment.
respiratory diseases
Another important therapeutic area research-wise is respiratory disease. Here, Johnson & Johnson has licensed two advanced small molecule preclinical programmes in asthma and COPD from Sweden’s Orexo, plus another for an undisclosed indication. The initial deal is for three years and Orexo’s research will be funded to the tune of up to $21.5m, $10m of it upfront. It could ultimately be worth more than $550m plus royalties.
J&J has also made an acquisition in the respiratory area, with the purchase of the privately held UK company RespiVert, which has a pipeline of inhaled therapies for pulmonary diseases. Its two lead compounds are narrow spectrum kinase inhibitors that are now moving into clinical development for moderate to severe asthma, COPD and cystic fibrosis. The company was founded by ex-GSK scientists and Imperial College academics, with venture capital backing. Terms of the acquisition were not disclosed.
Meanwhile, in the metabolic field, French company Ipsen has licensed peptide therapeutics targeting obesity, metabolic diseases and gastrointestinal disorders to US biotech Rhythm Pharmaceuticals. Its ghrelin agonists are designed to treat post-operative ileus, diabetic gastroparesis, and melanocyte stimulating hormone agonists targeted at the melanocortin-4 receptor. This backwards licensing deal – the pharma company licensing out to a biotech – will give Ipsen up to $80m in milestones and royalties, and it will also acquire a 17% stake in Rhythm.
Lundbeck, which is already a big player in the Parkinson’s market with its monoamine oxidase inhibitor rasagiline, has signed a deal in the area with Japan’s Kyowa Hakko Kirin for an adenosine A2a antagonist that is in early development. It will also gain the rights to other back-up compounds. While the terms of the deal were not disclosed, it does involve an upfront payment on top of milestones and royalties. The Danish company is also working in the CNS area, this time on antibody therapeutics, with its compatriot Genmab, which will make human antibodies to three CNS targets in return for b7.5m as an upfront payment, plus milestones and royalties if successful.
An adenosine A2a antagonist for Parkinson’s is also the focus of a deal between Belgium’s UCB and Swiss biotech Synosia Therapeutics. The biotech acquired rights to this compound, SYN-115, from Roche in 2007, and it is now in Phase II. A second potential Parkinson’s treatment, SYN-118, again in Phase II, is also included in the deal. This 4-hydroxyphenyl pyruvate dioxygenase inhibitor is already on the market via Swedish Orphan to treat hereditary tyrosinaemia. The deal included a $20m equity investment, as well as milestone and royalty payments of up to $725m.
Pain remains an important therapeutic area for research, and Bristol-Myers Squibb signed a deal with Allergan over AGN-209323, a small molecule that is in Phase II trials for neuropathic pain. BMS gains the rights in all indications except those involving local delivery to the eye, at a cost of $40m up front plus milestones and royalties. The deal has a positive knock-on effect for another company – Allergan discovered it in collaboration with France’s ExonHit Therapeutics, which will received 10% of the cash.
Abbott signed a deal with Reata in most territories outside the US for bardoxolone, which has had positive results in Phase II trials in chronic kidney disease. This first-in-class antioxidant inflammation modulator increases estimated glomerular filtration rate, and the late stage and large potential market are reflected in the price: $450m upfront and near-term, plus additional milestone and royalty payments.
More unusual therapeutic areas also seeing deals done. Novartis, for example, is now working with GenVac of the US to develop drugs for hearing loss and balance disorders. The technology is gene-based: preclinical results show that using GenVac’s adenovector technology to deliver the atonal gene might be able to restore both hearing and balance. As well as a $5m upfront payment, the Swiss giant has bought $2m of GenVac shares; if successful the deal will be worth at least $200m plus royalties.
In the orphan field, GSK has entered into a deal with Amicus concerning a treatment for Fabry disease. The two companies will co-fund the development of miglastat, a treatment currently in Phase III trials in the inherited condition, lysosomal storage disorder. They also plan to look at its potential in combination with enzyme replacement therapy. This had been partnered with Shire, but that deal was terminated a year earlier.
GSK has said it plans to increase its focus on orphan diseases, and other deals include one with two Italian organisations, Fondazione San Raffele and Fondazione Telethon, over a gene therapy treatment in ADA combined immune deficiency, which is so rare that it affects just 350 children globally.
enzyme replacement
Lilly has made a first move into the field of enzyme replacement therapy via an acquisition. It is buying Alnara Pharma, which has a late-stage treatment for cystic fibrosis (CF). The drug, lipromatase, is a non-porcine pancreatic enzyme replacement therapy (PERT) that is currently being reviewed by the FDA for exocrine pancreatic insufficiency in CF patients. About 90% of all CF patients receive some form of PERT, which improves their ability to absorb nutrients and has a positive effect on bowel-related symptoms caused by the absence of the enzyme. The new treatment should cut the number of pills patients have to take, and remove the potential for pig-derived viruses to cause infection.
In the antiviral arena, Novartis has acquired the rights to Debiopharm’s alisporivir, a cyclophilin inhibitor that is in Phase II to treat hepatitis C. Although details of the financing have not been revealed, there was an upfront payment as well as milestone payments and royalties should it succeed. The compound is an oligopeptide that is related to the drug cyclosporin, but it does not have its immunosuppressant effects.
Another antiviral rights acquisition was made by Roche, which paid Intermune $175m in cash for danoprevir. The drug is in Phase II, and had already been the subject of a collaboration between the companies. They are continuing to explore ways in which they can continue their four-year relationship in the HCV field.
Shire, meanwhile, has acquired the non-US rights to Acceleron Pharma’s potential treatment for Duchenne muscular dystrophy, which is currently in Phase IIa. The upfront payment is $45m and, with milestones, this may rise to as much as $165m.
A bigger acquisition by Shire is in the gastrointestinal field, where it has bought Movetis. The Belgian company already has one product on the market – the constipation treatment prucalopride, which targets impaired gut motility. Already approved for laxative-resistant constipation in women, prucalopride is now being looked at in other indications, including chronic constipation in men and children, post-operative ileus and constipation induced by opioid treatment.
r&d at AstraZeneca in Boston, US
- Companies:
- Gilead Sciences
- Ipsen
- GlaxoSmithKline
- Eli Lilly
- Boehringer Ingelheim
- Allergan
- Johnson and Johnson
- Pfizer
- Sanofi
- UCB
- Abbott Laboratories
- Cancer Research UK
- Rigel Pharmaceuticals
- ExonHit Therapeutics
- AstraZeneca
- Shire Pharmaceuticals
- Ascenta Therapeutics
- Regulus Therapeutics
- Roche Group
- Bristol-Myers Squibb
- Marina Biotech
- Movetis
- Genmab
- Lundbeck
- Synosia Therapeutics
- Amicus Therapeutics
- Merck Electronics KGaA
- Novartis
