PHARMA DEALS DURING JUNE 2014 

(Part 1 out of 3)
by Sharon Finch

Deal values hotting up…

Acquisitions lead the way and topping the table at $42.9 bn was the acquisition of Covidien (based in Dublin) by Medtronic. Already a major contender in medical devices, this deal – the largest in the medical device field – means the combined company is a serious competitor to the market leader, J&J. An interesting aspect of the deal is the base of the company being in Ireland, offering a clear tax benefit. This was a key feature in the previous month's bid by Pfizer to acquire AstraZeneca (AZ) to take advantage of the lower tax rate in the UK compared to that in the US.

It was a busy month for Medtronic as the company also announced the signature of a memorandum of understanding with Sanofi to enter into a global strategic alliance in diabetes.

It is intended to base the alliance on an open innovation model with Sanofi bringing its extensive insulin portfolio and Medtronic contributing its insulin pumps and glucose monitoring expertise. No financial terms have been disclosed.

Next in the top headlines was the $3.9 bn acquisition of Idenix by Merck & Co representing $24.50 per share in cash and a 239 per cent premium over the share price on the Friday before the announcement. The juggernaut that is the hepatitis C deal machine rolls on with this deal keeping the cost-of-entry price tag up. The Merck & Co acquisition brings three oral hepatitis C compounds which are in clinical development and offers the promise of a triple therapy which could prove effective in all genotypes. Merck has its own products in development and this deal marks a long term investment and determination in this field. The table below shows the rather expensive range of deals closed in this intensely competitive field over the last few years. The acquisitions are not without risk as BMS found when, seven months after paying $2.5bn, it had to discontinue development of Inhibitex product INX-189 in phase II because of safety issues.  

Major hepatitis C deals

Licensor acquired / licensee acquirer	Product	Status at Deal/ Date	Deal type	Headline ($m)
Idenix/ Merck & Co	Samtasvir (NS5A inhibitor) + other HCV therapies	Phase II June 2014	Acquisition (announced), 239% premium	3,900
Pharmasset/ Gilead	Solvadi / PSI-7977	Phase III Nov 2011	Acquisition, 89% premium	10,800
Inhibitex/ BMS	INX-189 / BMS 986094	Phase II Jan 2012	Acquisition, 163% premium	2,500
Alios BioPharma/ Vertex	ALS-2200/ALS-2158 (HCV polymerase inhibitors)	Preclinical June 2012	Global licence	1,525 (60 upfront)
Enanta/ Novartis	EDP-239 (NS5A inhibitor)	Preclinical Feb 2012	Exclusive global licence, US co-promotion	440

Key to any deal price tag of course is the product valuation. Idenix' negotiation position will have been helped no end by the price and recent US sales of Gilead's Sovaldi (sofosbuvir); the US price is $84,000 (for a 12 week course) with sales of $2.27 bn in the first quarter of this year. It was inevitable that such a high price would attract attention from the regulators; although the UK price is lower than that in the US (the UK list price is £35,983 for a 12 week course), NICE is now questioning Gilead's data, stating that evidence is lacking in some sub groups and indicating that there are uncertainties in the evidence base. So the jury is out until October 2014 when a decision is expected.

Although not commanding quite such a high headline, this  month  OraSure granted AbbVie exclusive promotion rights to its OraQuick HCV test in the US for $75 m. This deal shows Sanofi is clearly not alone in taking a broad approach to franchise management!

A Midsummer Night's Dream

Now formally off the table and staying unrequited was the acquisition bid made by Pfizer for AZ, the failure of which was attributed by Pfizer's CFO on the sole issue of price. 

Clearly not deterred by this, AZ has moved on to build on its respiratory franchise by in-licensing Synairgen's inhaled beta interferon SNG001. This product is in development as an immuno-modulatory therapy for viral respiratory tract infections in patients with severe asthma.

The deal carries a headline value of $232.25 m which includes a $7.25 m upfront fee. Seeing some success from its partnering, AZ also marked the start of a clinical trial with the antisense drug ISIS-ARRx, in patients with metastatic castrate-resistant prostate cancer, by paying its partner Isis Pharmaceuticals a $15m milestone.

Staying in the hostile M&A arena, Allergan declined Valeant's second takeover bid, so this story still rumbles on but Valeant is not yet giving up. The company announced that an exchange offer for Allergan's common stock would go ahead taking its May 30 proposal directly to the shareholders; so watch this space.

Fuente: PMLiVE

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