Key Events & Trends

www.PharmaMedtechBI.com january 2016 VOL. 34 / NO. 1

INSIDE

Biopharma Business Models TG Therapeutics Builds A Business Model For Today BY Michael Goodman

medtech ip Navigating Patent Minefields In Emerging Asian Medtech Markets KEY EVENTS & BY Gabriela Coman

Drug Pricing France Seeks Stronger Cost-Effectiveness Tools To Lower Drug Prices By Melanie Senior

Medtech Regulation Uncertain Reg Climate Could Turn Medtech TRENDS Investors Off Europe By Ashley Yeo

Biopharma dealmaking 2015’s Top Biopharma Dealmakers By Amanda Micklus 2016 BY IN VIVO’S & ▼ ONLINE access BIOPHARMA, MEDTECH AND PharmaMedtechBI.com/ DIAGNOSTICS TEAMS publications/in-vivo

January 2016 Value-Based Medtech Rides The 14 Money-Go-Round Into 2016 Ashley Yeo KEY EVENTS & The M&A bonanza for companies in the medtech sector continued into 2015 and there is no end in sight in 2016 as manufacturers seek to augment and fine-tune portfolios to meet the new demands of payers and providers. Longer term, there are signs of a change in the top global medtech rankings. TRENDS Pharma’s Love Affair With Dealmaking: & 2016 22 No End In Sight Peter Charlish We review the key developments, decisions, and deals of 2015 and discuss how they’ll shape the The pace of pharma dealmaking continued unabated in 2015, biopharma, diagnostic and medtech industries climaxing with Pfizer’s agreed $160 billion merger with Allergan. in the year to come. Conditions are right for this situation to persist, at least for the foreseeable future. # Of Drugs 14

12 22 Diagnostics In 2015: Past Trends

10 28 Coalesce, New Roads Open Mark Ratner 8 The introduction of Apple’s ResearchKit is our top story of 6 the year. Mobile apps and the increasing ability to take

4 measurements of vital signs, gather information on habits and collect other phenotypic measures is rapidly changing 2 5995 6198 6416 6994 7360 7406 7737 9217 9605 9737 9713 10452 10479 11307 12300 13718 thinking about clinical trials design. 0 Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Total Pharma R&D Pipeline Size By Year, 2001–2016 TG Therapeutics Builds A Business 32 Model For Today Michael Goodman 28 The speed with which TG Therapeutics burst on the scene, along with the impressive potency and safety of its novel $167m $46.5m Nateral HTG Molecular combinations of cancer drugs, has perhaps blinded observers TOP IPOs JULY MAY to the unique business model that has carried it this far. OF 2015 $108.7m $43m Invitae Curetis Navigating Patent Minefields In LISTING COMPANIES FEBRUARY NOVEMBER 40 Emerging Asian Medtech Markets AND PROCEEDS Gabriela Coman $107m $18m To be successful in Emerging Asian Markets, medical device Biocartis OpGen companies need superior product and patent protection for APRIL MAY both the device and related methods of use, bearing in mind the ease with which devices can be copied by competitors. Top Diagnostics IPOs Of 2015

4 2015’s Top Biopharma Dealmakers Hanmi partners again in diabetes with Big Pharma; Amanda Micklus $915m this time J&J 8 Around The Industry $1560m Sanofi enters cancer immunotherapy deal with BioNTech 08 France Seeks Stronger Cost-Effectiveness Tools $1720m Sanofi gets rights to Lexicon's oral diabetes To Lower Drug Prices project sotagliflozin Melanie Senior $1890m Heptares to help Pfizer deliver GPCRs 11 Uncertain Reg Climate Could Turn Medtech Sanofi pays €400m up front for rights to Hanmi's Investors Off Europe $4235m Quantum Project in diabetes Ashley Yeo ONLINE ONLY: 12 IN VIVO’s 2015 Deals Of The Year: Top Alliances in November 2015 The Winners Are… 12 44 On The Move Significant recent job changes in pharma, medtech and diagnostics IN VIVO 2015 48 Dealmaking Deals Of Deals Shaping The Medical Industry, Decemberr 2015 The YEAR 48 60 Executive Summaries

EXCLUSIVE ONLINE-ONLY

■ Deals In Depth An overview of biopharma, device and diagnostics You Asked...We Delivered! dealmaking, November 2015 Relevant and exclusive online-only content at your fingertips 24/7 Amanda Micklus Access your subscription by visiting: ■ Emergings PharmaMedtechBI.com/publications/in-vivo and log in. START-UP Previews Don’t have an online user account? Quickly and easily Start-Ups Across Health Care: create one by clicking on the “Create your account” link Profiles of Alcresta Pharmaceuticals, Gordian Surgical, at the top of the page. International Biomedical Devices, NaviGate Cardiac Structures, ObsEva and SweetBio Contact [email protected] or call: (888) 670-8900 or +1 (908) 748-1221 for additonal information.

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The top pharmaceutical firms and leaders in medical devices, diagnostics, finance and consulting already do.

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598 to request a complimentary 600 529 539 449 411 demonstration, visit: 400 288 310 193 209 200 159 151 164 93 118 105 www.PharmaMedtechBI.com/STLP 6 12 0 Rx Device Rx Device Rx Device Rx Device Rx Device Rx Device September October November December January February BIOPHARMACEUTICALDEALMAKING 2015’s BIOPHARMA TOP DEALMAKERS Immunotherapy was prominent in some of the biggest alliances of 2015, with oncology once again being the most partnered therapeutic area, and the largest focus of companies raising venture funding or going public. The year also featured the biggest M&A in biopharma history in Pfizer’s $160 billion takeover of Allergan, motivated by corporate tax reduction. In addition, there was major consolidation within health services industries including PBMs.

We focus here on the dealmakers, showing which companies dominated the landscape in terms of deal volume and value, as well as the therapeutic categories that grabbed the most attention. By Amanda Micklus Exhibit 1 2015’s Top Five Most Active Pharmaceutical In-Licensers Listed below each company are its top deals by potential deal value ($m)* Includes deals by parent companies and their subsidiaries

Johnson & Johnson 2015 deal volume: 18 | 2014 deal volume: 15 | % Change: 20% Date Licenser Subject Of License Potential Deal Value Hanmi Phase I HM12525A, a long-acting glucagon-like peptide-1 (GLP-1)/glucagon November 915 Pharmaceutical (GCG) analog Ionis January Up to three antisense therapeutics for autoimmune disorders of the GI tract 835 Pharmaceuticals MVA-BN (Modified Vaccinia Ankara - Bavarian Nordic) technology to develop a December Bavarian Nordic 171 heterologous prime-boost vaccine for HPV AstraZeneca 2015 deal volume: 16 | 2014 deal volume: 6 | % Change: 167% Date Licenser Subject Of License Potential Deal Value Phase II NKG2A inhibitor IPH2201 as monotherapy or combination with AZ/ April Innate Pharma 1,275 MedImmune’s MEDI4736 (durvalumab) Inovio August Phase I/II cancer immunotherapy INO3112 728 Pharmaceuticals Allergan (formerly February Branded respiratory drug portfolio 700 Actavis) Sanofi 2015 deal volume: 15 | 2014 deal volume: 9 | % Change: 67% Date Licenser Subject Of License Potential Deal Value Quantum Project: Phase II efpeglenatide, a long-acting glucagon-like peptide-1 Hanmi November (GLP-1) receptor agonist for Type II diabetes and obesity; a Phase I weekly insulin 4,235 Pharmaceutical (HM12470); and a preclinical GLP-1/insulin combination Regeneron Phase I PD-1 inhibitor and preclinical programs, potentially targeting LAG3, GITR, July 2,740 Pharmaceuticals and PD-L1 Lexicon November Phase III sotagliflozin (LX4211) for Type I and II diabetes 1,720 Pharmaceuticals

4 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com BIOPHARMACEUTICALDEALMAKING

Roche 2015 deal volume: 14 | 2014 deal volume: 7 | % Change: 100% Date Licenser Subject Of License Potential Deal Value SQZ CellSqueeze technology to modify B-cells and trigger an immune-mounted December 500 Biotechnologies cascade to treat several types of cancer Pieris December Anticalin programs against an undisclosed cancer target 416 Pharmaceuticals October Arvinas PROTAC (proteolysis-targeting chimera) drug candidates 300

Novartis 2015 deal volume: 12 | 2014 deal volume: 7 | % Change: 71% Date Licenser Subject Of License Potential Deal Value Rights to the Phase II CD20 antagonist ofatumumab in the autoimmune disease August GlaxoSmithKline 1,034 field including multiple sclerosis

March Aduro Biotech Preclinical cyclic dinucleotide (CDN) program 750

Preclinical anti-transforming growth factor-beta (TGFb) antibody XOMA089 for October Xoma 517 cancer

*Potential Deal Value is the sum of up-front fees plus pre-commercialization money. SOURCE: Strategic Transactions

Exhibit 2 Top Ten Biopharma Acquisitions Of 2015

Potential Deal Date Acquirer Acquired Primary Asset(s) Gained Through Deal Value ($M)* Botox (onabotulinumtoxinA), Restasis (cyclosporine); other specialty November Pfizer Allergan 160,000 products Medical, dental, disability, life, and accident insurance offerings and July Anthem Cigna 48,267 related products and health services Allergan Allergan PLC’s generic business, excluding OTC eye care; puts Teva in July Teva 40,500 Generics top three position in over 40 international generic market

July Aetna Humana Creates the fourth-largest PBM 34,775

Hematological cancer drug Imbruvica (ibrutinib), a Bruton’s tyrosine March AbbVie Pharmacyclics 19,859 kinase (BTK) inhibitor

October Walgreens Boots Rite Aid Third-largest US retail drugstore 17,200

February Pfizer Hospira Acute care and oncology injectables, and biosimilars 17,119

PBM, including retail pharmacy network management, mail service March OptumRx Catamaran pharmacy, pharmacy claims management, and specialty pharmacy 12,793 services

May CVS Omnicare Pharmacy services to US long-term care and assisted living facilities 11,795

GI drugs, including Xifaxan (rifamixin) for hepatic encephalopathy February Valeant Salix 11,115 and travelers’ diarrhea *Includes the up-front fee plus potential earn-out payments. SOURCE: Strategic Transactions

Exhibit 3 2015’s Top Dealmakers: Cancer, Neurology And Infectious Disease*

Cancer 201

Neurology 74

Infectious & Viral Diseases 54

Metabolic Disorders 51

Gastrointestinal 47 Immune Disorders 41 Respiratory 34 Musculoskeletal & Connective Tissue Disorders 28 Cardiovascular 26 Dermatology 25 Ophthalmic 22 Inﬂammation 21

Blood & Coagulation Disorders 16

Gynecological, Urological 12

Hepatic 8

Dental & Oral Products 4

Renal System 4

Wound Healing 3

Otolaryngology 2

Poison (Antidote) 1

*Alliances with multiple therapeutic categories were counted more than once, in each of their respective categories. SOURCE: Strategic Transactions

6 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com BIOPHARMACEUTICALDEALMAKING

Exhibit 4 2015’s Top Money Grabbers: Cancer, Neurology and Infectious Disease IPO And Venture Financing Transaction Volume By Company Therapeutic Area Of Focus*

Cancer 112 Neurology, Nervous System 84 Infectious & Viral Diseases 57

Metabolic Disorders 50 Cardiovascular 45 Musculoskeletal & Connective Tissue Disorders 41 Immune Disorders 30

Respiratory, Pulmonary 28 Non-Speciﬁc 27

Ophthalmic 24

Inﬂammation 23

Dermatology 19

Gastrointestinal 17 Blood & Coagulation Disorders & Products 16

Gynecological, Urological 11

Renal System 11

Hepatic 8 Wound Healing & Tissue Repair 7

Dental & Oral Products 2 Otolaryngology 2

*Financing deals were counted more than once if the company was involved in more than one therapeutic area.. SOURCE: Strategic Transactions

Drug Pricing

France Seeks Stronger Cost-Effectiveness Tools To Lower Drug Prices

France’s drugs assessment agency wants simpler, stronger rules to evaluate the cost-effec- national insurance fund for salaried workers tiveness of new drugs. But changes to the country’s complex reimbursement system may be (CNAMTS). This document, commissioned too slow to address immediate budget concerns, making pan-European bulk buying appear by health minister Marisol Touraine early in a more likely near-term solution. 2015 and officially received in mid-December, critically assesses the criteria and methods In the light of the “colossal budgetary C treatment Sovaldi (sofosbuvir) in 2014, HAS currently used to value medicines, includ- impact” of new medicines, France’s drug is talking more freely about cost, and about ing the role of the CEESP. It has much to say assessment and reimbursement agency, QALYs, that standard currency of health ben- about the system’s shortcomings, including the Haute Autorité de Santé, is seeking to efit. Indeed, the enormously wide variation a lack of coordination and understanding simplify, strengthen and clarify its evaluation in cost per QALYs calculated by HAS’ health between the various decision-making bodies. methods, including those used to determine economics division to date was cited by HAS It duly proposes a more prominent role for cost-effectiveness. The goals: a tighter link as a key reason for its solicited changes. “The cost-effectiveness analyses; clear, published between cost-effectiveness and price, and [costs per QALY] go from less than €10,000 to reports using accessible language; and more robust tools to measure the cost of more than €200,000,” states an October 2015 tighter integration of the CEESP with the innovation – without resorting to the kind release calling for the re-think. clinical/medical evaluation commission. It of UK-style rationing that can lead to certain If a threshold isn’t on the books, “more also calls for more systematic measurement new therapies being denied reimbursement. explicit advice” from HAS to the pricing au- Indeed, although the latest version of thority, which negotiates with drug manufac- of the budgetary impact of new medicines. France’s Social Security and Finance Bill, cur- turers, is, according to Rumeau-Pichon. She The Polton report also proposes some rently making its way through parliament, wants price negotiations aimed specifically more fundamental shifts to the structure of mandates shaving €1.6 billion ($1.7 billion) at lowering a product’s incremental cost- France’s underlying clinical evaluation pro- off the drugs bill, France still isn’t ready to effectiveness ratio. cess and reimbursement rules, however. And adopt a cost per quality-adjusted life-year In other words, HAS wants to sharpen the that’s no wonder, says a source from within (QALY) threshold like the National Institute claws of its health economics arm (known HAS, because the whole lot is inextricably of Health and Care Excellence (NICE) in the as the Commission Evaluation Economique linked. “If you start to change the assessment UK. “That’s not realistic for France on the et de Santé Publique, CEESP). But it wants to criteria, you are forced to look at reimburse- short term,” says Catherine Rumeau-Pichon, do so without moving away from France’s ment rates,” explains the source. France’s assistant director at HAS. She cites the need negotiation-focused approach to drug pric- current drug evaluation system involves two to take into account other factors such as ing. Rumeau-Pichon refers to this as a “price- scales: one to determine absolute medical unmet need and population size. Unsaid is maker” approach: France’s system feeds clini- benefit (whether a drug or procedure will be the fact that a threshold remains politically cal and cost analyses into subsequent price reimbursed or not) and another additional unacceptable in this socialist country. And negotiations with pharma, whereas the UK, medical benefit (which determines the rate HAS, though nominally independent, has a in contrast, takes a manufacturer’s requested of reimbursement: 15%, 30% or 65%). (See government-appointed board and can only price to calculate a cost per QALY, thus estab- sidebar, “France’s Drug Reimbursement System.”) propose system changes; it can’t implement lishing what will or won’t be reimbursed. This Neither addresses price. HAS has for years them without legislative backing. “price-taker” approach can, and often does, been seeking to merge these scales into a What’s more, health technology assess- lead to the UK’s refusal to reimburse certain single, simpler index that strongly empha- ment of any kind is relatively new in France: products. (See “Calls For NICE Reforms Intensify sizes comparative effectiveness (the index the country has only been carrying out After Early Enzalutamide Use Rejected” — “The thérapeutique relatif, ITR). (See “Europe’s Future cost-effectiveness analyses of individual Pink Sheet” DAILY, June 12, 2015.) (See Exhibit 1.) HTA Landscape: More Converged And Cost Con- drugs and devices since 2013. Before that, So how does HAS propose to improve scious” — “The Pink Sheet,” January 14, 2013.) HAS looked almost exclusively at their clinical “price-making,” without brandishing the big Acknowledging this (and the fact that the and medical benefit. The agency still doesn’t stick of reimbursement refusal (at least for ITR was considered overly rigid and formu- touch drug pricing – that is negotiated innovative drugs; me-toos or those deemed laic), Polton proposes a relative therapeutic with drug companies by a separate body, of insufficient medical benefit may already value score to replace the current additional the Comité Economique des Produits de be denied reimbursement)? medical benefit measure, with fewer, more Santé (CEPS). But, especially since the eco- It’s not yet clear. But some answers may clearly defined scoring categories. It also nomic shock waves incurred by the arrival of lie within an extensive report by economist puts forward a single reimbursement rate Gilead Sciences Inc.’s revolutionary hepatitis Dominque Polton, a director at the French (suggested at 60%) and eventually an end

8 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com AROUNDTHEINDUSTRY

Exhibit 1 Price-Makers And Price-Takers: France, Germany And UK Compared

Cost-Effectiveness These feed into France Medical Added Medical Analysis* price negotiations “Price Maker” Benefit Score Benefit Score (no specific with CEPS threshold/score)

After one year on market, added-beneﬁt This score feeds into price negotiations Germany score determined (based on performance with GkV (association of sick funds), “Price Maker” versus given comparator) with input though relationship is tenuous from HTA body IQWiG

NICE evaluates drug based NICE may re-appraise UK Manufacturer on given price. Issues Yes/No or amend decision if “Price Taker” sets price decision on reimbursement manufacturer offers by NHS based on cost-per- discounted price QALY threshold (£20-30,000)

* For specific products SOURCE: IN VIVO research to all reimbursement for products showing nomics committee) Jean-Luc Harousseau in for that drug – the proposal came too late to limited medical benefit. Such a set-up would September 2015 unexpectedly announced his allow implementation, according to a source be “more coherent, simpler and more in line resignation, more than a year before his term close to the discussions. “But that the sugges- with other countries’ practices,” Polton was was due to end. He cited personal reasons. tion was even made shows that things are reported as saying. Sources suggest a poor relationship with the moving,” the source continues. Health minister Touraine is expected health minister may have also contributed: Belgium and the Netherlands have already to announce “within weeks” any measures Touraine was allegedly dissatisfied with the agreed to pilot joint-pricing talks for rare dis- that may be implemented as a result of this analyses and material HAS provides to CEPS eases drugs starting in 2016, boosting each report. Moving to a single reimbursement for pricing discussions – which would explain small nation’s negotiating position. (See “Eu- rate doesn’t look likely, though, not least due why she commissioned the report. Whatever ropean Notebook: Drug Pricing Collaborations; to the public outcry that may result from de- Harousseau’s true reasons for quitting, ques- Biosimilar Switching; Scientific Advice” — “The reimbursing certain older products. “We’re tions remain about HAS’ authority, resources Pink Sheet,” April 27, 2015.) “The wind is blow- not going to fundamentally change the sys- and methodological expertise in the face of ing in the direction” of more European-level tem,” insists Rumeau-Pichon. She does foresee continued, pressing questions around public price negotiation, concurs Rumeau-Pichon, more performance-based pricing deals, health – not least how to pay for it. though she’s quick to add that national-level though, and (as signaled in the report) more reimbursement and pricing systems compli- rigorous demands on drug firms, including cate matters. In an impactful October 2015 More Inter-National Drug sensitivity analyses using a wider range of Forbes article examining drug pricing, Jack Purchasing In Europe pre-specified prices. This is still subject to dis- Scannell, an associate at the Innogen Institute cussion, however. And the report doesn’t deal In the meantime, inter-national drug purchas- and associate fellow at the Oxford, UK-based directly with what is arguably the heart of the ing may prove the more effective and imme- Centre for the Advancement of Sustainable matter: how the pricing authority CEPS uses diate, if rather blunter, method for lowering Medical Innovation (CASMI), writes, similarly, the clinical- and cost-effectiveness analyses prices in some continental European nations. that “European countries should buy as a block supplied to it in negotiations with industry. When Sovaldi hit the European markets, it … and run competitive tenders to find the In short, nothing is likely to happen fast. was health minister Touraine who sought cheapest supplier for pan-European demand.” Not least since HAS is facing its own existential out inter-national collaboration to get the Scannell stamped his suggestion with a crisis: its president (and head of the health eco- best price. That teamwork didn’t materialize label of “hopeful implausibility.” But as more

©2016 Informa Business Intelligence, Inc., an Informa company | IN VIVO: The Business & Medicine Report | January 2016 | 9 AROUNDTHEINDUSTRY targeted, innovative therapies reach the market, and absent the political will to say France’s Drug Reimbursement System “no,” bulk buying may prove the least complex solution. Indeed, “organizing buying power is the only way to come to any kind of negotiat- Stage One: Technical Assessment By HAS’ Evaluation Committee ing position,” declares Ad Schuurman, head of This is a two-step process. The first involves determining a drug’s Medical Benefit (Service international affairs at the Netherlands’ health Médical Rendu, SMR), based on: technology assessment and reimbursement efficacy/safety agency. “Without it, it will be ‘take it or leave • alternatives available it’ for patients and health care systems,” he • disease severity says. A further tailwind for bulk buying: the • treatment type (curative, preventative) Netherlands will hold the EU presidency dur- • public health impact ing the first six months of 2016. • France negotiated one of Europe’s lowest There are five levels of SMR, major, important, moderate, weak and insufficient. These prices for Sovaldi in 2014, without the help determine the rate of reimbursement (100%, 65%, 30%, 15% or 0% [“insufficient” SMR]). of any neighbors. But it did so by invoking a The second step of the technical assessment is determining a drug’s added medical special additional tax on sales of companies benefit relative to existing, comparable products (ASMR). selling HCV drugs, ushered into legislation at the last minute. Conjuring up a tax for each There are five ASMR levels, ranging from ‘major innovation” to ‘no improvement.” new expensive medicine is hardly a long- term solution to funding innovation. Drugs showing no improvement must be priced lower than comparators. The others Nor, deplores Les Entreprises du Médica- may be priced higher, though only those in the top three categories (ASMR I-III) may be ment (LEEM), France’s drug industry associa- priced in line with other European countries. tion, is hitting drug costs for over half of the €3 billion health care budget cuts outlined in the Cost-effectiveness evaluations are carried out only on drugs showing an ASMR of I-III, new finance bill. The association, currently likely to lead to annual costs of €20 million or more or which are likely to significantly negotiating its next three-year umbrella impact care delivery. contract with CEPS, is instead calling for fundamental structural reforms to the country’s Stage Two: Pricing Negotiations With The CEPS Committee health system, and for a broader focus on the This is separate from the HAS evaluation committee, and includes representatives from downstream cost-savings that proper use of mandatory and voluntary sickness funds, government ministries and industry. medication can allow. It’s a familiar refrain from the drug industry everywhere. But while These negotiations are opaque and it is unclear how HAS analyses (including cost- drug prices remain in the hot seat, it’s falling effectiveness) are taken into account and whether/how this links to price. on deaf ears. LEEM wasn’t willing to comment on the Re-assessment of reimbursement eligibility occurs every five years or when significant suggested drug valuation and reimburse- new information becomes available. ment changes prior to the official release of Polton’s report. A#2016800014 A#2016800015 Melanie Senior

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Medtech Regulation

tients. “That’s a variable that you can control Uncertain Reg Climate Could Turn only up to a point,” he said. Medtech Investors Off Europe For instance, in a preclinical set-up, companies can engage the best clinicians and top A long period of waiting and many thousands of hours of debate are due to be brought to a engineers to secure the necessary trial results. close sometime in late spring 2016, when the EU’s new medtech legislation is adopted. Make But in a live market situation, that cannot that should be adopted, for the course of this twin set of regulations – the Medical Devices happen as a matter of course. “More preclini- Regulation (MDR) and the In Vitro Diagnostics Regulation (IVDR) – has been less than smooth cal data can be provided by companies, but since the Commission launched the proposals way back in fall 2012. that does not reproduce what goes on out in the field,” Bernasconi pointed out. “We have EU stakeholders are now winding out of the medtech side. And if we want a system in always said that the right balance needs to “Trilogues,” a series of meetings in fall 2015 Europe that is respected and trusted, and not be struck between preclinical evidence re- that were essentially for the Parliament and open to criticism from concerned patients quirements and well-organized, followed-up the Council to agree on two final, amended who are anxious about the quality of device post-market surveillance.” texts. The Parliament has concerned and assessments, then it is time for us to develop It’s a dilemma for companies that are not angered industry in equal measure, insisting something new.” sure of what level of evidence to supply. “But on additional regulatory “scrutiny” of high-risk Industry is willing to pay the cost, to ac- I see too much focus right now on preclini- devices (a job hitherto done exclusively by cept the increased complexity, and to accept cal evidence, and people are wrong on that,” the Notified Bodies).I t has also argued that that it might take more time to develop an Bernasconi asserted. “They are expecting to all single-use devices should be seen as de appropriate system, said Bernasconi, but he get a 100% total and full picture from this, but facto reusable. Some of its ideas have been stressed: “It has to have value.” they won’t get it.” implausibly extreme. As Bernasconi spoke, on December 3, the Industry is committed to training physi- A lot is at stake, as the new twin texts will scheduled program of five Trilogues, each cians, said the Eucomed chief executive, but be the cornerstones of the EU’s medtech taking a large theme or a number of smaller there is only so much training that it can do. legislation for the next 10 to 15 years. The ones, was drawing to a close. However, it was The pharma sector has randomized con- need to balance patient safety with efficient looking increasingly unlikely that the Luxem- trolled trials, and “we’re not actually saying no market access for innovative products is felt bourg Council presidency (July–December to them, but we are asking seriously, ‘Just how keenly by medtech industry representa- 2015) would complete the task of finalizing do you implement them for devices?’ In some tives in Europe, and none more so than by the texts – although not for the lack of ambi- cases, it’s just impossible,” he said. MedTech Europe (an alliance of Eucomed tion. So the baton was passed on January 1, Evaluating the clinical evidence of IVDs is a and the European Diagnostics Manufacturers 2016, to the Netherlands to continue the task different matter and poses another problem. Association [EDMA]) chief executive Serge under its six-month rotating EU presidency. “How do you judge an IVD?” asked Bernasconi. Bernasconi. For the past three or more years There was criticism that the Trilogues were “It’s not a drug or a device. It rarely comes into he has been hopeful that a sense of balance conducted behind closed doors, and keeping contact with the patient – some self-tests will prevail, but when IN VIVO spoke to him at updated on the course of the debates was apart – so the safety aspects must also be the 2015 European MedTech Forum meeting in fairly impossible. The series may have kept considered differently.” Moreover, doing tests Brussels, Belgium, last month, his mood was to schedule, but Bernasconi bemoaned the at different times of the day might produce one of frustration. fact that there had been an absence of agree- different results. “The Trilogues are not moving as quickly ment on any of the key issues, like the clinical The EU medtech industry is not opposed as we would like, or in the way we want,” said evidence requirements, additional scrutiny to health technology assessment (HTA), but Bernasconi. Medtech companies need to process, and regulation of the reuse of single- there is a lack of awareness as to how to prepare and anticipate the changes ahead, use devices. “They seemed to keep putting evaluate a device, said Bernasconi. The drug but they have little idea of what to expect, or the same themes back on the table,” he said. evaluation system cannot simply be dropped when. “The lack of clarity created is not viewed The whole issue of what clinical evidence on top of devices. And the value of a device favorably by companies and VCs that want to will be required remains under discussion. needs to be considered over, say, five years, invest in Europe, and they have a tendency to The processes in place for the pharma indus- to get the full impact of that value. At present, start looking at other regions,” he said. try are often invoked by those seeking to back too many of them are expected to show value Bernasconi continued: “They want predict- up the notion that all health care products more or less immediately, that is, within a year. ability and we can’t give them that. It’s time (medtech and pharma) should have to sup- This shows a lack of vision on the part of we moved to a conclusion, but the thing ply similarly high levels of evidence. Devices the providers and payers. Industry can take we’ve highlighted for many years is that these need good and solid preclinical information, the initiative by setting up a dialogue with dossiers are complex. Industry supports the Bernasconi agreed, but people often forget national health system procurement depart- need for change, both on the IVD and the that devices have users as well as end pa- ments. Reimbursement and procurement

©2016 Informa Business Intelligence, Inc., an Informa company | IN VIVO: The Business & Medicine Report | January 2016 | 11 AROUNDTHEINDUSTRY are national issues in Europe, although DG on average three years quicker than in the device companies in Europe, he observed. Sanco/DG Santé (the directorate general US,” said Bernasconi. The question is “Are we interested in creat- dealing with food safety and other regulatory Indeed, the EU has not had any signifi- ing – keeping and sustaining – a European issues) is getting more involved, Bernasconi cant problems, aside from the infamous PIP medical device industry? If we are, how do said, adding that the EU could at least play an breast implant case, but that was fraud and we help start-ups and SMEs go through the alignment and coordination role in this area. deception on the part of the manufacturer, first five to 10 years of their lives?” The “scrutiny” debate has proved even which effectively side-stepped its regula- An overly challenging pre- and post- more controversial. Bernasconi recognizes tory duties. Moreover, the appeal of the EU market system with an expensive and lengthy that there is a political will in certain EU circles system, regardless of whether it needs to pathway is not the answer, and start-ups advertise with us and take to introduce extra layers of regulatory scrutiny be overhauled, is not diminished. “A lot of would run a high risk of failing or would have for high-risk devices, but thinks these efforts countries around the world are interested to go in with larger companies at an earlier your business to the next level. are pointless. “Sadly, it will not bring any in- in implementing the EU regulatory model” stage. The wider industry gets a lot of innova- creased safety for patients,” he said. Bernasconi stated. tion from start-ups. “That is the basic model Better were the Commission’s actions in fall The US FDA, for its part, has recognized that of this industry, and we need to be sure that 2013 when it issued two texts, one a regulation it went a bit too far in its regulatory demands, these additional regulatory complexities do and the other a recommendation, that were and of late there have been strong efforts by not dry up that flow. There is a real risk of that,” aimed at elevating the standards for Notified the US agency to simplify the system and Bernasconi said. Bodies. Bernasconi says it is crucial that the speed up device approvals. This has to be good But in this new environment, industry Notified Bodies do a good job, and in the fu- for all US stakeholders. “In Europe, on the other has to help itself, too. It must be able to ture they will probably take on the added extra hand, we seem intent on going in the opposite demonstrate the economic contribution and element of clinical evaluations. Most of them direction, at the risk of making the EU less at- value that its products represent. The sector (currently numbering some 62 and expected tractive than it once was,” said Bernasconi. has moved on from the times when it was to fall to 40 or even fewer over time) will have The risks of going too far are now closer purely technology driven. “Show the added to acquire that additional expertise. to reality. “We must be very careful that we value,” Bernasconi advises manufacturers. “Strong controls on NBs would obvi- don’t turn the EU system into some sort of The industry has in fact started to do this ate the need for the scrutiny process,” said dinosaur that nobody can work with any- over the past five years or so, but it needs be Bernasconi. But at the same time industry more,” Bernasconi said. The danger is there, systematic. “It’s expensive and complex for is expecting some sort of show of strength and it could have a very negative impact on industry, but it needs to be done,” he stressed. from the Parliament, so MEPs can claim that the innovation cycle in Europe. There would For the MedTech Europe chief execu- they have “put safety mechanisms” in place. be the real prospect of cardio, neuro and tive, the major preoccupation is the lack of This is not good for the EU industry nor ortho innovators leaving the EU to develop forward motion on the new EU regulatory indeed any element of the health care chain. their technologies in areas that have lower systems for devices and diagnostics. “It keeps The EU time-to-market for devices might regulatory barriers. China, for instance, is everything hanging in the air, and it’s not lengthen. And the reason for implementing doing more R&D. “The country is becoming good for the development of the industry, these new checks and controls is built on a truly competitive as a research pole,” said said Bernasconi, adding: “Let’s get it going false premise. “A check shows there are not Bernasconi, adding a warning: “Do not un- and get into the nitty-gritty of these issues.” more device problems in the EU than in the derestimate them.” A#2016800007 US, and that products get to the EU market There are very few mature, job-creating Ashley Yeo

We nominated 18 deals in three categories, 2015 Deals Of The YEAR and readers cast their votes. you won’t believe the Top Alliance: Top M&A: Top Financing: Celgene IN I/O Pfizer/Allergan iron horse 35% OF THE VOTERS CHOSE 44% OF THE VOTERS CHOSE 52% OF THE VOTERS CHOSE transformation Celgene, which struck deals Pfizer and Allergan’s $160 Iron Horse Therapeutics’ with Medimmune, Nurix and Juno billion merger, the biggest deal in $10 million Series A round. It was far Contact our sales executive to learn about our various advertising opportunities available to you! Therapeutics in 2015 to establish health care history. Runner-up Teva’s from the biggest financing of the itself as the leader in the red hot $40 billion acquisition of Allergan’s year, but this seventh launch from Christopher Keeling immuno-oncology field. Sanofi and generic business came in second GlaxoSmithKline and Avalon Ven- +44 203 377 3183 AstraZeneca’s asset swap was a dis- with 29% of the vote. ture’s build-to-buy machine was the [email protected] tant second with 17% of the vote. runaway winner in this category. Customer Care: +1 888-670-8900 (USA)

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PharmaMedtechBI.com ©2016 Informa Business Intelligence, Inc., an Informa company | IN VIVO: The Business & Medicine Report | January 2016 | 13 medtech Value-Based Medtech Rides The Money-Go-Round Into 2016 The M&A bonanza for companies in the medtech sector continued into 2015 and there is no end in sight in 2016 as manufacturers seek to augment and fine-tune portfolios to meet the new demands of payers and providers. Longer term, there are signs of a change in the top global medtech rankings. BY Ashley Yeo

he technology-driven medical device industry: that’s so 2014. The 2016 medtech executive has other things on his/her mind, and they all come under the general job title of “value-based health care delivery chain partner.” Titles are not as simple as they once were, and ■ Medtechs are facing low levels of growth in the established markets for the next while no one yet wears that precise title on his/her lapel badge (come three to five years, and aside from M&A, to that, lapels are not what they once were), medtech companies in the only way to win new market share is the 2010s know they are playing in a totally different arena and are by playing to the new rules that place a part of an industry in transformation. premium on understanding stakeholders’ This has happened due to the convergence of several factors related to provider/payer cost needs. Tsavings, rising demand for care, a relentless push for quality in patient outcomes, dwindling interest from venture capitalists, a tougher reimbursement environment and the waning at- ■ M&A among medtechs in the $340 billion traction of working in primary and secondary care as it is currently structured. And chiefly, the to $350 billion global market in 2015 is slowing down of medtech market growth: Europe is expected to see medtech market CAGR up on 2014 levels, in terms of the sheer amount of mega-deals ($1 billion+) of a lowly 2% to 3% in the period 2015–2020, and the US, 3% to 4%. It’s a sobering outlook. completed during the year. Those values are projected in a Boston Consulting Group report on transforming business models. It is yet to be released (scheduled, fall 2016), but IN VIVO was granted early access to ■ Cardiovascular, patient monitoring and its findings, which showed that companies are adapting to the new pressures on them and IVD deals (including IVD labs) made up their markets. (See “Medtechs Told: Change Commercial Models Or Be Left Behind” — IN VIVO, the lion’s share of M&A deals, and global December 2015.) But although the changes are starting to happen, progress is slow. In 2016, number-two Medtronic had an even companies will have to be a lot more serious about: pricing and reimbursement pressures, busier year – in terms of deal numbers – meeting the demand from decision-makers for better-value products, and the fact that than in its flagship year in 2014. these decision-makers per se are increasingly less the clinician, and increasingly more the ■ The industry’s job appears harder and its economic decision-maker. operating costs higher than ever, with Chiefly, they must be able to demonstrate the economic contribution and value that 2016 expected to continue throwing their products represent. Visionaries and health economics and outcomes research (HEOR) new regulatory, reimbursement, market specialists may have foreseen such developments many years ago, but the sector has now, access and technology challenges at definitively, moved on from the time when it was purely technology driven. MedTech Europe what remains the single most innovative chief executive Serge Bernasconi, a veteran of senior US and EU corporate roles at Johnson industry in terms of patent filings. & Johnson, Medtronic and Schering-Plough, believes modern-era manufacturers will ignore the current trends at their peril. Executive Summary >> 60 Speaking to IN VIVO during the European association’s annual meeting in Brussels, last

14 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com medtech

December, he said that innovators must adopt sustainable, affordable and efficient “show the added value. It’s an expensive and delivery make it worth studying in an inter- complex task for industry, but it needs to be national context. done, and in a systematic way.” NHS England in 2015 gradually began You have been warned. introducing five new care models (NCMs; The evolving US payer and provider sys- It’s expensive integrated primary and acute care systems, tem already expects manufacturers with enhanced health in care homes, multispe- new medtech products coming onto the and complex, cialty community care urgent and emergen- market to pre-think the system value of cy care, and acute care collaborations) that their innovations. The US-centric – some but innovators essentially represent a complete redesign say, excessive – 30-day hospital readmission of it whole health and care systems in a bid penalty pressure is also prompting compa- must show the to break down the barriers between the nies to think differently about how to get component parts of care delivery. Providers their higher-value solutions into the system. added value.” are signing up to “vanguard” sites for the In 2015, St. Jude Medical Inc. offered a new models to effect the change. Eventu- good example of adapting the approach – Serge Bernasconi, ally, it is foreseen that theses NCMs will lead to evolving needs, with data from its heart to fewer trips to the hospital, shorter stay failure treatment trial (CHAMPION) showing Chief Executive, lengths, local access to services and care that hemodynamic monitoring with the St. closer to home. Jude remote CardioMEMs system can reduce MedTech Europe The concept is at its earliest stages still, readmissions by up to 50%.(See “St. Jude’s and it is happening moreover alongside CardioMEMS Showing Results In HF” — IN other initiatives to make medtech savings VIVO, December 2015.) HF is on course to be have to take on some element of risk with (the Lord Carter Review), faster availability of a $60 billion burden in the US by 2030, and providers. Delegates at AdvaMed’s annual innovative medtech and pharma products is already costing $31 billion annually, ac- meeting in fall 2015 heard examples of how (the AAR – Accelerated Access Review), re- cording to the American Heart Association, medtech CEOs are beginning to engage gionally devolved health care budgets and, almost half of which is ascribed to the costs with providers and payers in order to do eventually, a single budget for health and for the more than one million associated business in new ways. Similarly, companies social care. The effects on medtech providers hospitalizations. are trying new methods of bringing value will be direct, immediate and lasting. Elsewhere, US Integrated Delivery Net- into the equation, and this is transforming Longer term, it is foreseen that more works (IDNs) – inpatient and outpatient the way they operate. medtech companies will move into the pro- networks that offer a continuum of care – This was the take of EY executives, speak- vider space, following the examples already are changing the complexion of US health ing to IN VIVO in the fall after the release of being seen for some long-term conditions care business practice, and manufacturers their company’s latest Pulse of the Industry like CHF and diabetes. Progressive models that want to keep their stake in the system report. (See “No End In Sight For M&A As are also to be observed at companies such need to undergo a change management Medtechs Adapt To The “New Normal”” — IN as Fresenius Medical Care AG, which has process and to ensure they know how to VIVO, November 2015.) But medtech execu- been buying up urgent care and other work with IDNs. tives don’t find it easy to break out of the provider-like services; Stryker Corp., with its Senior principles at IMS, speaking to IN unit-price-economics mind-set. In many penetration of the reprocessing space via its VIVO in mid-2015, stressed that industry cases, medtech firms are still trying to define Ascent Healthcare Solutions Inc. purchase needs to be mindful that, five to 10 years their new role in the transforming industry. (a way of addressing the costs by prioritizing out, as IDNs and payers consolidate, this will Because they are struggling with this, pa- device reprocessing); and Medtronic PLC, become an all-or-nothing game. So com- tience will be needed on their part. which ramped up its position in heart failure panies must start getting it right as of now. The whole ecosystem approach applies with the acquisition of disease management It is a question of delivering quality in an not just to medtech, however. It is thought and patient-monitoring firm Cardiocom outcomes-based environment, and industry that providers do not yet really have an ap- some two years ago, putting it firmly in the can lead in this “or be dragged.” (See “Pharmas preciation of the arrangements they need remote provider space. Urged To Take Committed Steps Along The IDN to set up, or how to value them. But many Pathway” — IN VIVO, December 2015.) are moving to untried yet compelling new Cardio Dominates Top Leadership is an increasingly important models of care. M&A In 2015 quality for medtechs to aspire to, and one The budget-pressured UK, with its Bev- If partnering with providers and payers is real example of what it means to lead is when eridge model of tax-funded universal care a relatively recent phenomenon, the tradi- manufacturers embrace lower-cost models (free at the point of delivery), is one of tional form of collaboration for medtechs that contribute to broad improvements in these. The UK is in the second tier of global – industry M&A and dealmaking – is still outcomes and population management. medtech markets by size, but the health taking place at very high levels in 2015, (see And even commodity companies will care system’s transparency and its efforts to Exhibit 1.) and according to the consensus,

©2016 Informa Business Intelligence, Inc., an Informa company | IN VIVO: The Business & Medicine Report | January 2016 | 15 medtech levels will be maintained into 2016. 2015, but if one field did stand out, it was Two of the major M&A episodes of 2015 cardiovascular (although it was run close by had their roots in 2014. One, Becton Dick- activity in the patient monitoring/IVDs field). inson & Co.’s $12.6 billion cash and stock The cardio deals included: acquisition of 100% of CareFusion Corp. • Johnson & Johnson’s $1.994 billion deal to was announced in October 2014, but was Relatively cheap sell its interventional cardiology business, completed on March 17, 2015. The combina- Cordis, to Cardinal Health Inc., whose tion produced a global leader in medication access to capital in strategy is to offer high-value, commod- management and patient safety solutions itized products in a cost-efficient way; that made combined sales of $10.3 billion the credit markets, St. Jude Medical’s acquisition of the in BD’s fiscal year ended September 30, • outstanding shares in ventricular-assist 2015. This included CareFusion sales as of the ability of M&A device maker Thoratec Corp., effective April 1, 2015. as of fourth-quarter 2015, for $3.3 billion BD chairman, CEO and president Vincent transactions to take in cash. St. Jude has historically tended Forlenza said in a major interview with IN to eschew large acquisitions (the 2005 VIVO that the merger was not merely a costs out of the purchase of Advanced Neuromodula- narrow tactical sales volume transaction, tion Systems Inc. aside). The rationale of but a strategic “solutions play” that meets system, and the bringing the two heart failure therapy the evolving needs of stakeholders. For BD, leaders together was to secure a unique the deal is also an opportunity to employ resulting enhanced offering for physicians and patients across a whole pharmacy-to-patient approach in the heart failure continuum; the medication management business, and cash flow and cash a basis from which to step up its focus on • Greatbatch Inc.’s purchase of privately China and target the emerging markets and generation means owned Lake Region Medical Holdings new geographies with its broader range of Inc.(formerly Accellent Inc.), in a deal medication management and infection con- mega- and sub-$1 valued at about $1.73 billion to create a trol solutions. (See “Becton Dickinson Adds A 9,000-employee outsourcing company Bigger Jewel To Its String Of Pearls” — IN VIVO, billion deals are still that services the cardiac, vascular, ortho- September 2015.) pedics and advanced surgical markets The time of old business models has looking attractive. in the US, Latin America, Europe and the passed, as BD observed that both the Asia-Pacific regions. The rationale here is that drug and device makers are increas- industry and the post-Affordable Care Act thopedic firms Stryker and Smith & Nephew ingly looking to outsource manufacturing US government have changed. BD’s rea- PLC. It is increasingly difficult to list 20 truly in the rapidly consolidating health care soning was that it could play a much more major ortho companies that are publicly industry; and enhanced role by moving from being a quoted and/or disclose sales values, and that company with a narrow product focus to task may become even harder after 2016 • Italian cardiovascular company Sorin one with a solutions-oriented mentality. The now that we have learned that the US firm is Group SPA and US neuromodulation deal also gave the combined concern more circling the UK company once more. In 2014, specialist Cyberonics merging, with effect product breadth, which is a useful tool in its Stryker’s $4.9 billion ortho sales were half from October 19, to form a new entity, work with IDNs and providers. those of market leader DePuy Synthes, and LivaNova PLC, a group with enhanced The world’s largest pure-play medtech in 2015 it has fallen behind Zimmer Biomet critical mass and thus better chances of company, Medtronic (with which BD set up Holdings Inc. The $3.3 billion (in 2014) S&N winning tender-driven hospital contracts. a diabetes partnership in 2015) kept up a group is the largest “independent” ortho Combined, these two mid-caps have pro- healthy pace of M&A in 2015. (See Exhibit 2.) remaining, and it represents the quickest forma sales of around $1.3 billion. In 2014, its 2015 Covidien PLC mega-deal route for Stryker to continue to accelerate Many wonder when M&A activity will slow – which was just as much about getting the top line and challenge market leadership down, as it must at some point. But that may product diversification (i.e., more 510ks vs. during this sustained period of low-level not be for a while yet. The mega-deals trend PMAs) as tax inversion and other aspects organic growth. continued into 2015, with Pfizer Inc. offer- – elevated it to number two (all medtech There were 17 $1 billion+ deals (excluding ing $17 billion for Hospira Inc.’s injectable branches) in the global ranking, behind the deals announced in 2014 but completed drugs, infusion technologies and biosimilars Johnson & Johnson. But for how long will in 2015 – BD/CareFusion and the $3.3 bil- business, and Danaher Corp. taking over J&J lead the pack, observers wonder? lion merger of top 20 ortho players Wright Pall Corp.in a $13.8 billion deal. These were J&J’s 2015 sale of Cordis Corp. was flagged Medical Technology Inc., of the US, with the leading mega-deals of 2015. The full list in IN VIVO’s 2014 medtech review. The 2016 Tornier NV, of the Netherlands. A single is below. major names to watch must include the or- theme in major M&A was hard to identify in The consensus is that there is more major

16 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com medtech

Exhibit 1 Medtech Mega-Deals In 2015

Buyer Target Business Acquired Deal Value Announced

Infusion pumps as part of Feb. 5 Pfizer (US) Hospira (US) $17bn biosimilars, pharma package (completed Sept. 3)

Danaher (US) Pall (US) Filtration tech $13.8bn May 13

Dentsply (US) Sirona Dental Systems (US) Dental systems $13.3bn stock swap Sept. 15

St. Jude Medical (US) Thoratec (US) Cardiology heart assist devices $3.4bn July 22

IVD/patient monitoring/ Excelsior Union (China) Mindray Medical (China) $3.3bn Nov. 4 imaging

Mallinckrodt (US) Ikaria (US) Neonatal critical care $2.3bn March 5

June 17 Hill-Rom (US) Welch Allyn (US) Diagnostics/patient monitoring $2.05bn (completed Sept. 8)

Cardinal Health (US) Cordis (J&J) Cardiology and endovascular $1.944bn March 2

$1.73bn ($478m cash, Cardio/vascular and other $1bn debt & 5.1m Greatbatch (US) Lake Region Medical (US) Aug. 28 segment outsourcing shares and options issued)

American Medical Systems’ $1.6bn up front and March 2 Boston Scientific (US) Endo Health Solutions Urology maximum $50m (completed Aug. 4) urology portfolio (US) milestone

Bio-reference Laboratories OPKO Health (US) Diagnostic labs $1.47bn June 4 (US)

Immunotherapy via Mallinckrodt (US) Therakos (US) $1.3bn Aug. 10 extracorporeal photopheresis

Cinven (UK) Labco (France) Diagnostic labs €1.2bn/$1.3bn May 29

Foundation Medicine (US), Roche (Switzerland) Molecular diagnostics Up to $1.18bn Jan. 12 majority stake

Panasonic Healthcare Bayer’s diabetes care Diabetes management €1.02bn/$1.15bn June 10 (Japan) business

Aug. 6 Medical image handling IBM (US) Merge Healthcare (US) $1bn (completed and processing October13)

Polypore International’s Membranes for medical $1bn 3M (US) Feb. 23 separations media (US) devices, life sciences

SOURCE: IN VIVO Research

Exhibit 2 well put it at the head of of the global Top Of The Top Lines – Medtronic’s M&A Path To Global Leadership medtech sales ranking. Other Factors In The Business Medtech Mix Target Acquired Deal Value Announced If Medtronic’s approach is typical of the Cardiology – wider medtech sector’s mood (if not neces- $408m plus $50m Twelve Inc. (US) transcatheter mitral Aug. 24, 2015 sarily its ability to follow suit), the industry milestones valve replacement has reached an inflexion point, where medtechs have realized that there is virtue Medina Medical Neurology – $150m plus in expanding product portfolios, engaging Aug. 31, 2015 Inc. (US) embolization device milestones in M&A and investing in R&D to drive growth. Medtech has in fact increased its R&D Aptus Endosystems Cardiac surgery $110m June 19, 2015 spend for five straight years, and in 2014– Inc. (US) 2015 it returned less cash to shareholders CardioInsight via dividends and share buybacks than in Cardiac rhythm Technologies Inc. $93m June 19, 2015 previous years. This is taken as a sign that management (US) greater priority is being placed on investing in innovation, widely seen as crucial for Patient monitoring Aircraft Medical Ltd. medtech’s growth prospects. On the other –handheld video Undisclosed Nov. 18, 2015 (UK) hand, breakthrough innovations arise only laryngoscope rarely, and growth via incremental inno- Diabeter Diabetes care vation in the value- and evidence-based Undisclosed April 2, 2015 (the Netherlands) provider environment of 2015–2016 is more difficult to achieve than it was a mere decade ago. Sophono Inc. (US) Hearing aids Undisclosed March 26, 2015 In 2014, the global medtech market nudged up by just 2% to $342 billion, says Advanced EY’s 2015 Pulse report. Two percent to 5% Neuromodulation Undisclosed Feb. 23, 2015 Uro-Solutions (US) growth is expected in both of the years 2015 and 2016. This is far away from the SOURCE: IN VIVO Research golden era of double-digit sales, but those with an eye on the trend and a finger on the M&A to come. Relatively cheap access to deal are still being worked on, and only a industry’s pulse are adjusting their business capital in the credit markets, the ability of single quarter of sales were consolidated models and market approach strategies to M&A transactions to take costs out of the in Medtronic’s latest annual figures. Mean- ensure they are playing a role in steering the system, and the resulting enhanced cash while, the group has not rested on its laurels. market of the future. flow and cash generation means mega- and In fact, in 2015 it disclosed no fewer than Alongside a healthy M&A market – with sub-$1 billion deals are still looking attrac- eight M&A transactions, of varying size and more mega-deals in 2015 than in 2014 tive. EY’s view is that the M&A lever is likely in different market segments. It was the – there have been high numbers of IPOs to be pulled a few more times, and that the most prolific of the major players. (27 completed, with eight still pending at industry will continue to see large-scale All the while J&J makes the headlines for December 23, against 36 in 2014). But con- M&A, all the while there are opportunities for asset disposals – the 2015 sale of Cordis cern is shared around the globe at the low more Biomet-Zimmers and BD-CareFusions. (flagged in IN VIVO’s 2014 medtech review) levels of – and trend in – VC financing (i.e., followed its 2014 sale of the major IVDs becoming later-stage) of medtech start-ups. Medtronic Makes Its company Ortho-Clinical Diagnostics Inc.– if Medtech is not a priority investment arena Intentions clear current trends continue, it cannot be long right now, it seems, attracting only 5.9% of Whereas long-time global medtech market before Medtronic (sales in FY 2015, $20.3 all US venture dollars in 2014. leader Johnson & Johnson selectively adjusts billion) overtakes J&J’s medtech top line (FY AdvaMed chairman Vincent Forlenza its medtech assets in a disciplined portfolio 2014, $27.5 billion) (also BD’s chairman, CEO and president) has management approach that is designed to In fact, the sales gap has reduced to $7.2 observed that first-time funding for medtech streamline the business, reduce costs and billion in Medtronic’s FY 2015, from $11.5 start-ups dropped by almost 75% over the focus on the most promising opportunities billion in the previous year, and Medtronic period 2007–2013, and industry is concerned that drive growth, the contender for global gained over $3 billion worth of sales, that there is not enough seed corn to fund market leadership, Medtronic, is selectively whereas J&J lost just under $3 billion in the small medtech companies that are often growing its top line in a more aggressive way. sales. Medtronic has already overtaken GE the source of innovation and/or M&A. The Covidien adjustments from the 2014 Healthcare, and sales in its FY 2016 could MedTech Europe’s Bernasconi is of the

18 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com medtech

same mind. Start-ups provide the wider are being replaced by the two regulations thoughtful, measured and committed in- industry with a lot of innovation, and stake- are 17, 22 and 25 years old, respectively, and vestment. Reimbursement strategies – in the holders have a duty to do what they can to were in need of updating to keep pace with US and elsewhere – will no longer succeed ensure that the new – and to-come – regu- the technology evolution. Many see the without strong, evidence-based messages latory complexities do not dry up the flow chief benefit of the EU regulatory overhaul about why the product should be adopted. of innovation. as better and equal standards of file assess- Also essential are messages that show that ment across Europe by the Notified Bodies, the product is cost-effective (i.e., offers value Pitfalls And Opportunities which are seen widely as the weak link in EU for money) and affordable. In 2016 regulation, even though the top tier operate New Technology Themes That How companies adjust to the new demands, under the highest standards globally, partici- Affect Medtech Business Models threats and opportunities in a constantly pate in voluntary assessments and sign up to evolving sector is what separates the suc- codes of conduct. Many EU Notified Bodies Threat: With high-tech players like Micro- cessful and pragmatic from the rest. In 2016, have disappeared already and more are sure soft, Apple and Google getting more and there will be both threats and opportunities to follow as the 2014 headline figure of 82 more news coverage and becoming more arising from changing regulatory codes in NBs wanes to some 60 at present, maybe serious about medical devices, established the US and other market access hurdles. settles at or below 40 when the process medtechs look at their disruptive threat with (See sidebar, “Things Are Looking Up On The has ended and the MDR and IVDR are both a wary eye. Elsewhere, uncertainty over what US regulatory/Policy Front.”) The top talking implemented, by 2019 and 2021 (not yet level of app needs what level of regulation is points are listed below. confirmed), respectively. a murky cloud over the sector as it continues to grow exponentially. New Medtech Regulations – New Models Of Care And IVDR and MDR – in Europe Evidence Generation Opportunity: But in reality, medtech has always evolved over the decades by adjust- Threat: Regulatory uncertainty is one of the Threat: Health care systems have long ing its business model to key emerging key concerns for the industry in 2016 – in talked up the need to put quality and out- technologies (KETs), and consumer IT con- the EU and the US. The EU is finally bring- comes on an equal footing with affordability, nectivity – digitalization, apps, medical/ ing many years of work to close in first-half but now as manufacturers are finding out, clinical wearables, sensors – is just the most 2016, when it settles on two new regulations this is no longer merely non-binding guid- recent of them. The medical devices sec- (the Medical Devices Regulation – MDR, and ance. The UK, for instance, is grappling with tor has always worked with IT, but all that the In Vitro Diagnostics Regulation – IVDR) delivery model change (see above), and happens in IT has a huge influence on the that will govern safety issues regarding the manufacturers are impatient to hear how industry. MedTech Europe’s Bernasconi de- placing on the market of medical devices they are expected to change their own ap- scribes the opportunity before the industry and IVDs. (See “IVD Companies Brace For EU proaches. Manufacturers cannot let the case as “really exciting,” and manufacturers need Regulatory Changes” — IN VIVO, October for product adoption rest merely with the to look at technologies being developed 2015.) But as they stand, they are restrictive technological aspects, but need to ensure by the high techs and assess how they (including extra scrutiny of high-risk files), that evidence-based arguments succeed by should collaborate with these firms, bring potentially inappropriately tough (sense- keeping in mind national policies, priorities, the technologies into medtech and move less and inappropriate clinical evidence targets, disease patterns, staffing shortages the industry forward. Two related major requirements), and dangerously out of and capacity constraints. In the US, IDN net- opportunities in this field for 2016 are the kilter with current patient safety standards works are having a major influence on the leveraging of connectivity to help bring pa- (the European Parliament’s drive to liberal- prescribing patterns of physicians. Not being tients out of the expensive hospital setting ize the reprocessing of single-use devices). in the IDNs system is simply not an option for and bring them into the home setting, and Moreover, the uncertainty surrounding the manufacturers, bearing in mind the Centers how industry can use the opportunities that new legislation – which is seriously behind for Medicare and Medicaid Services’ drive, are arising from the “big data” revolution. schedule – is making VCs ever more hesitant via multiple payment models, to move from about investing in start-up EU technologies, fee-for-service to fee-for-quality. New Technologies Coming Into Use prompting fears that the local R&D base will Opportunity: The new game for medtechs Opportunity: Medtech’s success with shrink and the flow of innovation may slow is all about delivering quality in an out- payers and providers may no longer as a result. The cost of compliance with the comes-based environment, and it need not be technology driven, but technology new regulations will not be without fallout be viewed negatively. In the case of the US improvements will always continue to in the company ranks: for IVDs, the cost has IDNs, manufacturers cannot ignore their extend and improve the quality of life. been put at an additional €2 billion over the influence and importance, and are advised For an indication of the industry’s con- next five years. For these reasons, MedTech to start slowly with their engagement and tinued breadth of inventiveness, look no Europe sees this theme as the biggest item understand what stakeholders want to further than Cleveland Clinic’s annual on the EU’s medtech agenda in 2016. As a achieve. The reality is that companies must list of Top Ten Techs. In an industry rich in risk factor, none surpasses it at present. tailor the value proposition to help the innovation, its medtech solutions lists are Opportunity: The three EU directives that IDNs achieve their goals – requiring a very always a good indication of the state of

Things Are Looking Up On The US Regulatory/Policy Front

oing in to 2016, it’s hard not to characterize the US products that would allow time for data to be collected to regulatory and policy environment as positive for the support long-term cost-effectiveness arguments. Govern- Gmedical device industry. ment officials say they are willing to be creative, but point There is a consensus that the FDA premarket review pro- to a lack of resources as one impediment. (See “Breakthrough cess in 2015 has become, on average, more efficient and Reimbursement Proposals Percolate From FDA, Industry” — “The more transparent that it was five to 10 years ago. And poli- Gray Sheet,” October 8, 2015.) cymakers, if anything, are focused on furthering that trend. The most active focus of reforms in 2016 will be focused Device provisions passed by the US House of Representa- on some of the next-generation edges of the medtech space, tives in the 21st Century Cures in July, including a “break- in particular: combination products, molecular diagnostics through” device pathway, are almost wholly focused on and digital health. getting products or product modifications to market faster. Both industry and FDA have reached the conclusion that (See “Cures’ Bill Passes, As More Budget, Safety Debates Wait In current regulatory pathways do not work well for products The Wings” — “The Gray Sheet,” July10, that include both a device and a drug 2015.) The US Senate will be the place (or biologic), and it appears increas- to watch in 2016 to see if some or all of ingly likely that a new combination- the reforms will carry through to law. product pathway will be debated in It is by no means a sure thing that 2016 and passed in 2017 as part of a Cures-like bill will be enacted, espe- user-fee reforms. (See ”2016 Will Be A cially due to the unpredictable nature FDA has settled Big Year For Combo Product Reform, FDA of Congress during a presidential Says” — “The Gray Sheet,” December election year, but events so far make into an approach 29, 2015.) clear that the device industry has the On diagnostics, FDA is getting set ear of important power-players in for digital and in 2016 to issue its final policy to Washington, DC. That is even more start actively regulating laboratory- evident from the industry’s recent mhealth that puts developed tests (those that are made partial success in its long struggle and performed as a clinical diagnostic against the medical device excise more focus on apps service in the same lab) similar to how tax, which was enacted under the the agency regulates in vitro diagnos- comprehensive health care reform and high-risk tic test kits. Laboratories remain op- bill in 2010. In year-end legislation, a posed to the plan, while IVD kit makers two-year suspension of the tax was en- digital tools. welcome a policy that will establish acted. (See ”Two-Year Ban On Device Tax a more level regulatory playing field Approved In Tax-Extenders Bill” — “The for all diagnostics. One ultimate pos- Gray Sheet,” December 16, 2015.) Although this falls short of sible outcome: Congress could establish a completely new the sector’s ultimate goal of full repeal, it’s an achievement regulatory paradigm for all diagnostics in the US, leveraging for President Obama to have signed any measure that cuts proposals that have already been circulated by clinical and into the funding for his signature health care policy and it industry collaborators. might be the first step towards repeal. Meanwhile, FDA has settled into what it feels is the right For industry lobbyists, one of the main targets in 2016 approach for digital and mobile health products, trying to be will be improving the reimbursement environment for in- hands off for a large swathe of consumer-focused products novative devices. Many companies argue that while the that make limited clinical claims, while putting more focus on FDA process is smoother, big-ticket devices are trying to the apps and other digital tools with higher risks. The agency enter the market without a clear path to payment. FDA and has approved several interesting digital health tools in 2015, the Centers for Medicare & Medicaid Services have in recent including apps that link to and analyze continuous glucose years become more and more collaborative in efforts, officials monitors and a gaming system to support physical therapy. say, to help streamline the path from approval to reimburse- But there is still a fear by powerful mobile health stakeholders ment. Efforts so far have focused on a very limited subset of that FDA will ultimately constrain the field. That leaves the devices, and companies are discussions with the agencies, prospect for near-term reforms wide open. and with Congress, about establishing a more automatic, A#2016800011 but temporary, path to reimbursement for certain types of By David Filmore

20 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com medtech

R&D. Its 2016 list unusually errs away from of, say, additive manufacturing – 3-D printed market approaches across the medtech new medtech solutions, but still shows a biomedical products that could be manufac- value chain, and decision-makers are focus- medtech R&D base with the sharpest of tured near the point-of-care solutions? Will ing more sharply on products that are part cutting edges: catheter-delivered neuro- these be confined to niche usage, or does of the value-based health care approach. vascular stent retrievers to remove blood the technology offer a plausible option for This will be the challenging environment clots in stroke victims; frictionless remote the wider health care system? for modern medtech in 2016. monitoring of glucose levels via a skin- IV An Industry In top biosensor that measures insulin and A#2016800006 Transformation In 2016 reports the results to both the diabetic comments: Email the author: [email protected] patient and the doctor; protein biomarker The industry and the climate it works in analysis cancer screening, for real-time in- have changed. The squeeze on the medtech industry still comes from all sides – patients, formation on cancer presence that allows payers and providers – and revenues and for greater accuracy and earlier detection; RELATED READING margins remain under pressure, even and safer and cheaper “brain-machine “Medtechs Told: Change Commercial Models though the wider economic crisis years that interfaces” that take forward advances in Or Be Left Behind” — IN VIVO, December 2015 followed the collapse of Lehman Brothers [A#2015800195] neural signal research and bring the pros- are in the past. “St. Jude’s CardioMEMS Showing Results In HF” — pect of brain-powered prosthetics nearer. IN VIVO, December 2015 [A#2015800181] But the costs of doing business, of regula- Elsewhere, Forbes says that next-genera- “Pharmas Urged To Take Committed Steps Along tory requirements and of market access gen- The IDN Pathway” — IN VIVO, December 2015 tion wearables will become a $6 billion mar- erally have probably never been higher for [A#2015800179] ket in 2016, and the technologies will evolve medtechs, and the outlook is set to remain “No End In Sight For M&A As Medtechs Adapt To from primarily monitoring to providing challenging, with developed markets show- The ‘New Normal’” — IN VIVO, November 2015 [A#2015800177] therapeutic support, and as a result health ing only low- to mid-single digit growth care and consumer technology companies “Becton Dickinson Adds A Bigger Jewel To Its in the coming years while manufacturers String Of Pearls” — IN VIVO, September 2015 will be on the hunt for strategic acquisitions also embrace the challenges posed by fast- [A#2015800123] of early-stage wearables companies. A 2015 evolving digital health care. “IVD Companies Brace For EU Regulatory Changes” survey done by IMS found that almost half of At the same time the industry is expected — IN VIVO, October 2015 [A#2015800147] consumers polled said they would consider to play a full part in transforming health care Access these articles at our online store using wearables in the near future. Crucially, by introducing medtech innovations and www.PharmaMedtechBI.com the question is how to pay for the benefits championing innovative, partnership-based

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©2016 Informa Business Intelligence, Inc., an Informa company | IN VIVO: The Business & Medicine Report | January 2016 | 21 Biopharmaceuticals Pharma’s Love Affair With Dealmaking: No End In Sight The pace of pharma dealmaking continued unabated in 2015, climaxing with Pfizer’s agreed $160 billion merger with Allergan. Conditions are right for this situation to persist, at least for the foreseeable future.

BY Peter Charlish

ust as in previous years (probably, in fact, for as long as anyone can remem- ber), the pharmaceutical sector in 2015 was characterized by a relentless sequence of corporate deals. Surveys have shown that, more so than in most other industries, the major factors driving this level of activity are the need to acquire know-how, and expand product offerings. Overall, deals worth ■ Growing shareholder expectations, $652 billion were recorded in the pharmaceutical sector in 2015, accord- historically low interest rates and a new ing to Informa's Strategic Transactions. One of the most memorable deals generation of company executives with came at the beginning of April, when troubled Valeant Pharmaceuticals a financial services background are International Inc. acquired Raleigh, NC-based Salix Pharmaceuticals Ltd. for $15.8 billion, continuing to drive dealmaking in the beating its rival Endo International PLC for the prize and setting the tone for the whole pharmaceutical sector. J year in terms of deal value. In May, Teva Pharmaceutical Industries Ltd. expanded its CNS ■ This constant stream of M&A activity has franchise with the $3.5 billion purchase of Auspex Pharmaceuticals Inc., which is develop- led to an exodus of executives from big ing a product for the treatment of conditions characterized by involuntary movements, pharmas to biotechs. including Huntington’s disease, Tourette syndrome and tardive dyskinesia. Later in the year Teva agreed to purchase Allergan PLC’s generics business for $40.5 billion. At one point ■ Pricing continues to be a thorny issue, Teva had also considered acquiring Mylan NV, but withdrew from that deal following the with more big-ticket launches and even Allergan transaction. Meanwhile, Mylan found itself severely out of pocket after the failure the prices of generics creeping up, al- of its bid for Perrigo Co. PLC, which had it succeeded would have been one of the biggest though to some extent this may be offset by the appearance of the first biosimilars hostile takeovers in recent years. in the US. Other notable deals during the year were Endo’s acquisition of Par Pharmaceutical Hold- ings Inc. for $8.05 billion and Amgen Inc.’s planned acquisition of Dutch biotechnology ■ Drug pipelines are full and last year also company Dezima Pharma BV. In July Baxter International Inc. spun out its biopharmaceu- saw a steady flow of innovative new ticals business Baxter BioSciences in a transaction valued at $17.1 billion, only for Shire PLC, products, notably in the oncology and which itself has been identified as a possible acquisition target, to make a $30 billion bid for orphan disease areas. the new company, now known as Baxalta Inc. (the deal finally closed in January 2016 with a consideration of $32 billion). At the very end of the year, AstraZeneca PLC announced the acquisition of a 55% stake in the Danish biotechnology company Acerta Pharma BV, thus completing “its transformation in oncology.” But the award for the most audaciously acquisitive company must surely go to Pfizer Inc. Early in the year it bought hospital products specialist Hospira Inc. for $17 billion, giving it access not only to Hospira’s generic injectable products and manufacturing capabilities but Executive Summary >> 60 also to its biosimilars portfolio. The deal did nothing, however, to address Pfizer’s underlying

22 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com Biopharmaceuticals tax issues, which the abortive attempt to away at least for the time being, the current LLC did a similar thing in 2013, for example, acquire AstraZeneca a year earlier had left level of M&A activity is likely to continue when it raised the price of the anthelmintic unresolved. Pfizer has a large cash reserve for the foreseeable future. A recent survey albendazole from around $6 per day to outside the US, which it is reluctant to re- by McKinsey, for example, found that 86% almost $120 per day. Valeant too has come patriate because of the high rate of tax it of respondents in the health care sector under fire from Congress and the media in would attract. thought that the number of M&A deals in recent months for raising prices for the car- There were few surprises therefore when the next 12 months would be at least as high diovascular drugs Nitropress (sodium nitro- in November Pfizer announced an agreed as in the previous 12 months. Look for more prusside) and Isuprel (isoproterenol) by 212% $160 billion merger with Allergan, the third about the McKinsey survey in an upcoming and 525%, respectively, after purchasing biggest corporate deal ever and by far the issue of IN VIVO. the rights to the products from Marathon biggest in the health care sector. Pfizer de- One notable offshoot of this constant Pharmaceuticals LLC. (See “PhRMA Takes nied that the deal was being done simply stream of M&A activity and other bubble- Aim At Valeant In Defense Of Drug Pricing as a means of lowering its effective tax rate driven market factors: the exodus of execu- By ‘Innovative’ Firms” — “The Pink Sheet,” and, to be fair, the US authorities had acted tives from big pharmas. By our count, close October 26, 2015.) And an article in JAMA Der- in 2014 to make such “tax inversion” deals to 20 execs have abandoned their posts matology last November highlighted how far less attractive. Nevertheless, the deal will for biotech gigs in the past year or so. (See two products sold by Valeant for treating be executed as a merger in which Dublin, Exhibit 1.) cancer-related skin conditions had increased Ireland-domiciled Allergan will become the The reasons behind this trend – if it is a in price by around 1,700% over the previous parent company, although the combined trend – of sweeping execs away from big six years: the drugstore price of Targretin group will be called Pfizer. Pfizer has indicat- pharma job security, pay and perks into (bexarotene) gel, indicated for the treatment ed that the deal would lead to its having an tiny biotechs are readily apparent. The of cutaneous manifestations of cutaneous effective tax rate in 2017 onwards of about huge influx of fresh capital into biotech T-cell lymphoma, rose to $30,320 in 2015, 17% to 18%, in contrast to its current 25%. reflects increased confidence in biomedi- compared with $1,687 in 2009, whereas the Of course, there are other business rea- cal advances leading to new products, and price of Carac (fluorouracil) cream, used for sons for the merger. It will give Pfizer the it has bolstered prospects for building a the treatment of multiple actinic or solar critical mass it needs to separate its estab- biotech for the long haul generally needed keratoses, was $2,865 last summer, com- lished and innovative products businesses, to discover and develop commercializable pared with $159 in 2009. Valeant pointed something that it has been working toward assets. Significant scientific advances can be out that the retail prices cited in the study for some years (see “Pfizer/Allergan: Breaking leveraged most dynamically in smaller com- rarely represent the prices that patients and Up Is Hard To Do (Unless There’s A New Tax panies and the capital base has expanded insurers actually pay, and that alternative Law)” — “The Pink Sheet,” November 30, with ample resources to support innovation. generic products are available. 2015), whereas Allergan will get direct ac- There are cultural and personal drivers To be sure, most of these are old drugs cess to some 70 geographic markets where as well. As Jeremy Levin, PhD, the former that have long since gone off patent. In the it currently has no presence, plus another president and CEO of Teva, now CEO of Ovid past, the loss of patent protection on a drug 30 where it presently operates through dis- Therapeutics, pointed out in July’s START-UP, molecule has usually opened the door to tributors. But these reasons haven’t stopped talented leaders see limits to their ability to generic competition, thus effectively reining politicians from both sides of the political make an impact in large corporate settings in prices. But, as those present at a hearing divide from condemning the deal. and long for a more dynamic environment. convened by the House Democratic Steer- The tax advantage of acquiring or merg- (See “Big Pharma’s Executive Brain Drain Ben- ing and Policy Committee at the end of the ing with a company in a relatively low-tax efits Biotech” — START-UP, June 2015.) year heard, the dynamics of the generics jurisdiction is not the only factor driving industry are changing, with widespread biopharma M&A activity. Other dynamics The Pricing Has To Be Right consolidation and some manufacturers at play include historically low borrowing Drug pricing is another issue that seems to almost as big as traditional “big pharma” rates, making such deals more affordable, hit the headlines every year, and 2015 was companies. The result has been less compe- together with apprehension that interest no exception. For weeks, the saga of Martin tition for some older medicines, and some rates will have to rise sooner or later (we Shkreli and Turing Pharmaceuticals AG companies gaining a virtual monopoly in have already seen the Federal Reserve lift US dominated trade and popular media outlets. their particular area. Inevitably, this has led rates by 0.25 percentage points in Decem- Turing, a biotech that focuses on unmet to prices creeping up. ber); broad expertise in M&A transactions, medical needs, acquired US commercial For new drugs, nearly all of the increase as many financial services personnel with rights to toxoplasmosis drug Daraprim in medical spending is due to the rising cost M&A experience moved out of the banking (pyrimethamine), and promptly increased of specialty drugs. Of course, manufacturers sector into industry following the financial the price from $13.50 to $750 per dose (an in the US are able to set their own prices crisis; and growing shareholder expectations increase of 5,456%). which, as a result, tend to increase over that can more easily be met via an acquisi- Turing was not the first company to raise time. This is true either when one considers tion than by organic growth. the price of a drug above what many regard individual products or drug prices in general. As none of these drivers is likely to go as reasonable: Amedra Pharmaceuticals In response, payers are forced to manage

Exhibit 1 their formularies more aggressively. Many Pharma Execs On The Move To Biotech providers, a number of whom, under provisions of the 2010 Affordable Care Act, are paid by results, are forced to determine the Executive and New Biotech Former Pharma Position most cost-effective treatment pathways. The challenge here for pharma: set price points Detlev Biniszkiewicz, PhD, VP, Oncology Strategy, AstraZeneca that payers can tolerate. (See “The Shrinking President & CEO, Surface Oncology Value Of Best-In-Class And First-In-Class Drugs” Tony Coles, Co-founder and CEO, Yumanity CEO, Onyx Pharmaceuticals — IN VIVO, July 2015.) Therapeutics Both the White House and a Congressio- nal committee are currently looking at the Ron Cooper, President & CEO, President, Europe, Bristol-Myers Squibb issue of drug pricing. But laws won’t change Albireo AB fast, if they change at all. Hence a handful of organizations and companies are stepping Vlad Coric, PhD, Neuro-Oncology Indication Lead, in to try to make choice of therapy easier, by Biohaven Pharmaceutical Holding Co. Immuno-Oncology, Bristol-Myers Squibb providing transparent, comparative infor- Jose-Carlos Gutiérrez-Ramos, CEO, SVP, Global Head of BioTherapeutics mation about the efficacy, drawbacks and Synlogic Research, Pfizer costs of a range of treatment options. (See ”Scoring Value: New Tools Challenge Pharma’s Annalisa Jenkins, CEO, SVP, Head of Global Research and US Pricing Bonanza” — IN VIVO, October 2015.) Dimension Therapeutics Development, Merck Serono New pricing models are emerging. Some payers are negotiating performance-related Jeremy Levin, CEO, CEO, Teva Pharmaceuticals risk-sharing contracts with drug manu- Ovid Therapeutics facturers. Under such arrangements, drug Arthur Levinson, PhD, CEO, CEO, Genentech prices are related to the achievement of Calico Life Sciences LLC pre-agreed outcomes. In addition, contracts may include guarantees that drug use will Neil McDonnell, PhD, CEO, SVP, CV & Metabolic Diseases, Takeda be restricted to certain groups of patients, Metacrine Inc. Pharmaceuticals USA while in return payers may offer preferred formulary status to specific products. Briggs Morrison, CEO, EVP, Global Medicines Development & Outcomes-based contracts for drugs have Syndax Pharmaceuticals CMO, AstraZeneca been rare in the US, but some companies have been quite aggressive in pursuing Paolo Paoletti, CEO, President, GSK Oncology them. Amgen, for instance, achieved pre- Kesios Therapeutics ferred status for its PCSK9 inhibitor Repatha Roger Pomerantz, CEO, Worldwide Head, Licensing & Acquisitions, on two payer formularies in 2015: Harvard Seres Therapeutics SVP, Merck & Co. Pilgrim and CVS Health Corp. (See ”Amgen’s Repatha Pricing Deal With Harvard Pilgrim Anna Protopapas, CEO, President, Millennium–Takeda Oncology, Hinges On Results, Utilization” — “The Pink Mersana Therapeutics EVP, Global Business Development, Sheet” DAILY, November 9, 2015 and “Amgen’s Takeda Pharmaceuticals Repatha Gets Big Formulary Win With CVS Health” — “The Pink Sheet” DAILY, November Jill Schiaparelli, CEO, Chief Marketing Officer, 23, 2015.) Another product that has been President & CEO, Intelemed AxoGen mooted as appropriate for such an agree- Chris Viehbacher, Managing Partner, CEO, Sanofi ment is Novartis AG’s heart failure treatment Gurnet Point Capital; Chairman, Boston Entresto (sacubitrol plus valsartan), although Pharmaceuticals to date none has been announced. In general, experience with such contracts has James Ward-Lilley, CEO, Vectura Group VP, Respiratory, Inflammation & been relatively limited, not least because Autoimmunity, AstraZeneca there has been lack of agreement over how to measure effectiveness and who precisely Charles Wilson, Co-founder & CEO, VP, Global Head, Strategic Alliances, should measure it. Unum Therapeutics Novartis Another stumbling block has been the fact that Medicaid, one of the largest pay- SOURCES: Strategic Transactions; Company reports ers in the US, uses a different payment

24 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com Biopharmaceuticals

Exhibit 2 Total Pharma R&D Pipeline Size By Year, 2001–2016

# Of Drugs 14

2 5995 6198 6416 6994 7360 7406 7737 9217 9605 9737 9713 10452 10479 11307 12300 13718

0 Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

SOURCE: Citeline model than most commercial payers, one lawsuit alleging that Sandoz had violated Zarxio finally reached the US market at that is not amenable to these risk-sharing the requirements for disclosure and nego- the beginning of September 2015, at a 15% arrangements. However, there are signs of tiation procedures – the so-called patent discount from the price of Neupogen. The change on the way: the Centers for Medicare dance – contained in the Biologics Price FDA has stressed that, although its biologi- and Medicaid Services is reported to be in Competition and Innovation Act (BPCIA), cal properties are highly similar to those of discussions with manufacturers about how the law that created the regulatory pathway Neupogen, the two products are not such arrangements could be reconciled with for biosimilars. interchangeable, and pharmacists are not Medicaid’s payment system. After a number of court hearings and permitted to substitute Zarxio if a physician considerable legal wrangling between the prescribes Neupogen. Biosimilars Dam Is Breached parties, the US Court of Appeals for the Zarxio’s legal struggles aside, the future for If the price of generic versions of conven- Federal Circuit finally ruled in July that, as biosimilars in the US is not assured, accord- tional small-molecule drugs is creeping BPCIA requires biosimilar companies to give ing to FDA Center for Drug Evaluation and up, there is better news for payers in the the manufacturer of the originator biologic Research (CDER) director Janet Woodcock. biologics area. Following the approval of 180 days’ notice of their intention to mar- Speaking in November, she said that when the first US biosimilar product, Sandoz Inc.’s ket the copy, Sandoz should wait 180 days generic small-molecule drugs first appeared Zarxio (filgrastim-sndz), in March, a stream from the date of approval before launching they were treated with some suspicion, and of biosimilar approvals is expected, many of Zarxio. The court also ruled against Sandoz their uptake by clinicians was slow, and the them via the new 351(k) regulatory route. by stating that the 180 days’ notice can only situation with biosimilars is likely to be very Prices of biosimilars are expected to be be given once approval has been granted. similar. In Europe, where biosimilars have between 20% and 35% lower than those of However, the case didn’t all go Amgen’s way: been on the market rather longer than in originator products. the court additionally ruled that engaging the US, uptake has also been slow and varies Zarxio is a biosimilar version of Amgen’s in the patent dance was not mandatory, a from country to country. human granulocyte colony-stimulating ruling with potentially far-reaching implica- Nevertheless, the dam has now been factor Neupogen, and its journey onto the tions. (See “Biosimilar Sponsors Can Avoid Pat- breached, and the FDA is currently consid- US market has not been an easy one. Even ent Dance, But Innovators Win Extra Exclusiv- ering approval applications for a number before Zarxio was approved, Amgen filed a ity” — “The Pink Sheet” DAILY, July 21, 2015.) of other biosimilars. They include Amgen’s

ABP-501, a biosimilar of AbbVie Inc.’s Humira and continues a 16-year upward trend. an impact on R&D activities, according to a (adalimumab); Sandoz’s pegfilgrastim, a bio- (See Exhibit 2.) recent analysis by professional services firm similar of Amgen’s Neulasta; and Sandoz’s So it appears that pipeline expansion is Deloitte. The situation is exacerbated by the GP-2015, a biosimilar of Amgen’s Enbrel continuing and even accelerating – along, slow trend toward personalized medicine, (etanercept). presumably, with the inevitable concomi- which has led to a fall in peak sales forecasts tant increase in R&D spending. for new products. The net result is that R&D The Pipeline Picture Or maybe not. Concerns by companies returns among major life science companies It was another stellar year for pharma pipe- about their ability to achieve high prices for are at their lowest for five years, Deloitte says. lines. According to our colleagues at Citeline, new products, as discussed earlier, together Despite these warnings, however, the the total number of drugs in development with the ever-increasing cost of bringing level of innovation by the pharma industry stands at 13,718. That’s up 11.5% from 2014, products to market, are starting to have continues to be high: the FDA approved

Exhibit 3 High-Value IO Alliances (>$500m), 2015

Date Deal Potential Value

Novartis Institute for BioMedical Research acquires extra-US rights to Aduro Biotech’s March 2015 preclinical cyclic dinucleotides, which stimulate the Stimulator of Interferon Genes (STING) $750m pathway and thus inhibit tumor cell growth.

Roche obtains exclusive license to Curadev Pharma’s preclinical indoleamine 2,3-dioxygenase April 2015 (IDO1) and tryptophan 2,3-dioxygenase (TDO) immune checkpoint inhibitors, which may be $555m used as either monotherapies or in combination with a Roche oncology drug.

AstraZeneca/MedImmune licenses exclusive global rights to develop and sell a cancer April 2015 therapy combining AstraZeneca’s MEDI-4736 with Innate Pharma’s IPH2201. AZ also gets $1.2bn access to IPH2201 as a monotherapy and combination treatment in other undisclosed areas.

Celgene and Juno Therapeutics enter a 10-year alliance with an initial focus on T-cell June 2015 receptor- and chimeric antigen receptor T-cell (CART)-based treatments for cancer and $1.1bn autoimmune diseases.

Regeneron Pharmaceuticals and Sanofi enter a drug development deal focusing on PD-1 July 2015 and other immuno-oncology antibodies over a period of five years (with the possibility of a $2.7bn three-year extension).

Celgene and Nurix collaborate exclusively on the development of small-molecule therapies Sept. 2015 targeting the ubiquitin proteasome system. Potential applications include for cancer, $555m inflammation, immunology and immuno-oncology.

Jiangsu Hengrui Medicine grants Incyte exclusive global (except mainland China, Hong Kong, Sept. 2015 Macau and Taiwan) development and commercialization rights to its preclinical anti-PD-1 $615m Mab, SHR-1210.

Alpine Immune Sciences grants Kite Pharma exclusive global rights to its transmembrane immunomodulatory protein (TIP) technology and two associated cancer immunotherapy Oct. 2015 $535m programs, which Kite will further develop into chimeric antigen receptor (CAR) and T-cell receptor (TCR) drug candidates.

Bristol-Myers Squibb acquires exclusive global rights to develop and sell Five Prime Therapeutics’ Phase I colony stimulating factor 1 receptor inhibitor antibody FPA-008 Oct. 2015 $1.7bn for immuno-oncology indications. The agreement covers all modifications, derivatives, fragments or variants of anti-CSFR1 antibodies, and replaces a deal signed in March 2014.

Roche partners with SQZ Biotechnologies to modify B-cells and trigger an immune-mounted Dec. 2015 $500m cascade to treat several types of cancer.

SOURCE: Strategic Transactions

26 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com Biopharmaceuticals

45 new molecular entities and new thera- as in 2015, and a number of new biosimilars A#2016800020 peutic biological products in 2015, slightly will reach the market. Other innovative new 2015 Standout Approvals more than in the previous year and one of products expected to be launched in the US the highest totals ever. (See “Big Pharma’s in the coming weeks and months include: Alexion Pharmaceuticals Winning Formula: Many Approvals, Narrow Eli Lilly & Co.’s Portrazza (necitumumab), Kanuma (sebelipase alfa), the first Markets” — “The Pink Sheet,” January 4, 2016 for the treatment of advanced squamous treatment for patients with lysosomal and sidebar, “2015 Standout Approvals.”) non-small cell lung cancer; Cangene Corp.’s acid lipase deficiency. Anthrasil anthrax immune globulin, for the Boehringer Ingelheim Oncology Still Attracts treatment of inhalational anthrax; Exelixis Praxbind (idarucizumab), the first drug Most Investment Inc.’s Cotellic (cobimetinib), for the treatment available in the US for use in patients For investors, oncology is still the most at- of certain types of melanoma; and United who are taking the company’s antico- tractive target. In 2015, the number of initial Therapeutics Corp.’ Unituxin (dinutuximab), agulant Pradaxa (dabigatran) during public offerings and private financings for for the treatment of neuroblastoma. emergency situations when there is cancer-focused biopharmas was 33% more Drug pricing issues will continue to tax a need to reverse Pradaxa’s effects – than the next biggest area, neurology. (See minds, as part of the wider problem of how Praxbind’s availability may actually “2015’s Top Biopharma Dealmakers”, this issue.) to control spending on health care. Expect boost sales of Pradaxa. Those two areas also topped alliances in to see more innovations in the way pharma- 2015. The year saw a high level of collabora- ceuticals and other advanced treatments are Takeda Pharmaceuticals tive deals forged in oncology, and particularly paid for. And with the US presidential elec- Ninlaro (ixazomib), the first oral pro- in immuno-oncology. (See Exhibit 3.) Two in tion process gaining momentum, expect teasome inhibitor for the treatment of particular stand out, for their monetary value the whole issue of health care to get a lot multiple myeloma to compete with J&J/ apart from anything else. In June, Celgene more political. Genmab’s. Darzalex (daratumumab), as Corp. and Juno Therapeutics Inc. announced A#2016800020 IV well as established therapies. a 10-year collaboration to advance potentially comments: Email the author: [email protected] Bristol-Myers Squibb/AbbVie groundbreaking immunotherapies for pa- Empliciti (elotuzumab), the first im- tients with cancer and autoimmune diseases. munostimulatory antibody approved Celgene made an initial payment of roughly for multiple myeloma. $1 billion, which includes the purchase of around 9.1 million shares of Juno stock, with GlaxoSmithKline PLC the option to increase its stake over time. RELATED READING Nucal a (mepolizumab), the first The deal gave Celgene the option to be the “Pfizer/Allergan: Breaking Up Is Hard To Do anti-interleukin-5 treatment in the (Unless There’s A New Tax Law)” — “The Pink US for adults and adolescents with commercialization partner for Juno’s oncol- Sheet,” November 30, 2015 [A#00151130016] severe asthma with an eosinophilic ogy and cell therapy autoimmune product “Big Pharma’s Executive Brain Drain Benefits candidates, including Juno’s CD19 and CD22 Biotech” — START-UP, June 2015 [A#2015900119] phenotype. directed CAR-T product candidates. “PhRMA Takes Aim At Valeant In Defense Of Drug Johnson & Johnson The following month, Sanofi and Regen- Pricing By ‘Innovative’ Firms” — “The Pink Sheet,” October 26, 2015 [A#00151026020] Yondelis (trabedectin), for the treat- eron Pharmaceuticals Inc. entered into a “The Shrinking Value Of Best-In-Class And First-In- ment of sarcoma – the product had global collaboration to discover, develop Class Drugs” — IN VIVO, July 2015 [A#2015800112] already been approved in multiple and commercialize new treatments in the “Scoring Value: New Tools Challenge Pharma’s other markets. field of immuno-oncology. As part of the US Pricing Bonanza” — IN VIVO, October 2015 agreement, the two companies will jointly [A#2015800158] Alkermes develop a programmed cell death protein “Amgen’s Repatha Pricing Deal With Harvard Aristada (aripiprazole lauroxil), the Pilgrim Hinges On Results, Utilization” — “The Pink first atypical antipsychotic with once- 1 inhibitor that is currently in Phase I and Sheet” DAILY, November 9, 2015 [A#14151109003] monthly and six-week dosing options. plan to initiate clinical trials in 2016 with “Amgen’s Repatha Gets Big Formulary Win With further new therapeutic candidates. That CVS Health” — “The Pink Sheet” DAILY, November Vertex Pharmaceutical deal included a $640 million initial payment 23, 2015 [A#14151123003] New cystic fibrosis drug Orkambi from Sanofi and an investment of $1 billion “Biosimilar Sponsors Can Avoid Patent Dance, But (lumacaftor/ivacaftor), another very Innovators Win Extra Exclusivity” — “The Pink (25% Regeneron, 75% Sanofi) for discovery Sheet” DAILY, July 21, 2015 [A#14150721006] expensive product whose price was through proof-of-concept development “Big Pharma’s Winning Formula: Many Approvals, set at $259,000 per patient per year. (usually a Phase IIa study) of monotherapy Narrow Markets” — “The Pink Sheet,” January 4, Astellas and novel combinations of immuno-oncol- 2016 [A#00160104016] Cresemba (isavuconazonium sulfate), ogy antibody candidates. “2015’s Top Biopharma Dealmakers” — IN VIVO, January 2016 [A#2016800009] for the treatment of two rare but seri- And What Of 2016? ous infections, invasive aspergillosis Access these articles at our online store and invasive mucormycosis. As noted, the level of dealmaking is ex- www.PharmaMedtechBI.com pected to continue at at least the same level

©2016 Informa Business Intelligence, Inc., an Informa company | IN VIVO: The Business & Medicine Report | January 2016 | 27 DIAGNOSTICS Diagnostics In 2015: Past Trends Coalesce, New Roads Open The introduction of Apple’s ResearchKit is our top story of the year. Mobile apps and the increasing ability to take measurements of vital signs, gather information on habits and collect other phenotypic measures is rapidly changing thinking about clinical trials design.

BY Mark Ratner

any of the fundamental trends and issues we’ve spotted in the past several years – the degree of leverage the diagnostics industry can gain from the integration of companion diagnostics into pharma’s development plan- ■ The introduction of Apple’s ResearchKit is our top story of the year. It heralds the ning, the regulation of laboratory-developed tests, and the ascendance of mobile apps and the influ- infiltration of next-generation genome sequencing on just ence of digital health and analytics. about every level of drug/diagnostics development, for example – coalecsed in 2015, much as they had started to ■ The ability to take measurements of vital do last year when we titled our year-in-review piece “More of the Same.” (See “Diagnostics In signs, gather information on habits and 2014:M More Of The Same” — IN VIVO, January 2015.) This past year may be thought of as one collect other phenotypic measures is of acceptance, or consolidation of thought. These matters are now well-trod turf. But much rapidly changing thinking about clinical new territory was also claimed during the year, most notably in the areas of digital health, trials design. data acquisition and analytics. ■ Roche, the market leader in molecular Call it the ascendance of the app, and no story carries more weight than the introduction diagnostics, was highly visible on the of Apple’s ResearchKit, announced in March and made available to developers a month later. dealmaking front in 2015. Its most promi- The ResearchKit is an open-source software framework that allows researchers and devel- nent transaction came early: in January, it opers to create apps to gather patient data for studies more frequently and accurately. It’s invested more than $1.16 billion in tumor being used by leading academic institutions to study and diagnose major diseases includ- profiling services organization Founda- ing Stanford University School of Medicine (heart health), the Icahn School of Medicine tion Medicine. (asthma), Duke University (autism), Johns Hopkins University (epilepsy), Yale School of Medicine (cardiomyopathies), Massachusetts General Hospital (diabetes) and Oregon ■ Roche’s deals attest to two trends height- Health & Science University (melanoma). The ability to take measurements of vital signs, ened in 2015: multiple firms making large bets on liquid biopsy, and increased gather information on habits and collect other phenotypic measures is rapidly changing interest in infectious disease diagnostics. thinking about clinical trials design. Major pharmas are already using apps to monitor patients’ progress in trials: Roche, for example, is giving participants in a Phase I trial in Parkinson’s disease a smartphone loaded with an app that will test them in a variety of daily activities and measure hand tremor. (Sage Networks pioneered this concept with its Parkinson mPower app, one of the first ResearchKit offerings; Sage also had a large hand in another app, “Share the Journey,” which tracks fatigue, mood, cognitive changes, sleep disturbance and reduction in exercise in breast Executive Summary >> 60 cancer patients.) Medidata Solutions Inc. has linked the ResearchKit with its cloud-based

28 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com DIAGNOSTICS

Exhibit 1 Selected Diagnostics Acquisitions Of 2015

Acquirer Company Acquired Up-front Deal Value Month

Opko Bio-Reference Laboratories $1.6bn June

Neogenomics GE Healthcare’s Clarient $277m plus stock Oct.

Roche Molecular Diagnostics GeneWEAVE $190m Aug.

Alere US Diagnostics $60m July

$37.1m through a True Health Health Diagnostics Laboratory Sept. bankruptcy auction

Cancer Genetics Response Genetics $7m plus stock Aug.

OpGen AdvanDx $2.43m July

SOURCE: Strategic Transactions

clinical research analysis capabilities. Doz- Service For Carrier Screening After Work With opment of circulating cell-free DNA tests ens of clinical trials are already using apps FDA” — “The Gray Sheet,” October 21, 2015.) in colorectal, lung and other cancer types. to monitor participants in trials. Roche, the market leader in molecular It also acquired CAPP Medical, which uses That said, the infusion of the high-tech diagnostics, was highly visible on the deal- next-generation sequencing to detect, iso- mind-set into the tightly regulated health making front in 2015. Its most prominent late and quantify circulating tumor DNA in care industry can potentially cause prob- transaction came early: in January, it took the blood with clinical potential in cancer drug lems, as when the Federal Trade Commission majority stake in Foundation Medicine Inc. selection and tumor monitoring, in 2015, challenged several marketers for decep- and also established a five-year R&D collabo- as well as another next-gen sequencing tively claiming their mobile apps could ration in which the companies will advance specialist, Kapa Biosystems Inc. Also, Roche detect symptoms of melanoma, even in its multiple programs. In all, Roche is investing Molecular Diagnostics paid $190 million up early stages. In one case, a final order barred more than $1.16 billion in the tumor profil- front for private microbiology diagnostics Health Discovery Corp. from making such ing services organization, including $74 mil- company GeneWEAVE BioSciences Inc. claims. (See “Industry Roundup: FDA Investiga- lion for programs focused on cancer immu- That deal brings Roche technology for rapid- tion Prompts Criminal Charges Against Supple- notherapy testing, circulating tumor DNA ly detecting multi-drug resistant organisms ment Marketer” — “The Tan Sheet,” April 20, (liquid biopsy), continuous blood-based in clinical samples and analyzing antibiotic 2015.) “It stresses me to think that you have monitoring and companion diagnostics. At susceptibility or resistance, presumably with hundreds of thousands of developers trying least for now, the deal with Roche is cen- an eye to developing companion diagnos- to build research apps, who’ve never gone tered in Roche’s pharma division, raising the tics for use with its portfolio of antibiotics. through human subjects training and don’t question of whether Foundation Medicine Roche’s deals attest to two trends know what an institutional review board is,” could become captive to Roche’s internal heightened in 2015: multiple firms making says John Wilbanks, PhD, chief commons drug development interests. (See “Which large bets on liquid biopsy, and increased officer at Sage Networks. Path Forward For Foundation Medicine?” — interest in infectious disease diagnostics. On the other hand, 2015 marked the IN VIVO, June 2015.) The Roche/Foundation (See Exhibit 1.) return of 23andme Inc. to the health care Medicine deal and a much smaller one ($2 A slew of liquid biopsy-related announce- market, validating the ability of industry and million up front) between T2 Biosystems ments ushered in the year. (See “Liquid Biopsy regulators to work together to protect con- Inc. and Canon US Life Sciences Inc. to News: Qiagen CE Mark, Foundation-Roche sumers. On October 21, it launched a new develop a Lyme disease diagnostic were the Deal And More” — “The Gray Sheet,” January Personal Genome Service, focused on carrier only alliances with designated up-front deal 26, 2015.) On January 12, Qiagen NV gained screening tests – roughly two years after the values – a departure from 2014. a CE mark for a companion diagnostic that company was forced off the health care mar- The following month, Roche bought analyzes circulating tumor DNA in blood, to ket by the US Food and Drug Administration. Signature Diagnostics AG, which has be used in patients with non-small cell lung (See “23andMe Launches Personal Genome biobanks that provide the basis for devel- cancer to identify which of them could ben-

©2016 Informa Business Intelligence, Inc., an Informa company | IN VIVO: The Business & Medicine Report | January 2016 | 29 DIAGNOSTICS efit from treatment with AstraZeneca PLC’s EGFR mutation-targeting Iressa (gefitinib) – the result of a collaboration that began in 2009 with DxS, which Qiagen acquired later $167m $46.5m that year and renamed Qiagen Manchester. Nateral HTG Molecular Biocept Laboratories Inc. also launched an JULY MAY EGFR mutation test on January 12 using its TOP IPOs liquid biopsy platform. A day later, Thermo Top IPOs Of 2015 Fisher Scientific Inc. announced a deal for Company/OFP roceeds2015 the right to distribute Cynvenio Biosystems Inc.’s liquid biopsy platform. Then on Janu- Natera/$167 million (July) ary 15, Sequenom Inc. told investors at the Invitae/$108.7 million (February) $108.7m $43m JP Morgan Health Care Conference of its plans Biocartis/$107 million (April) Invitae Curetis to launch a liquid biopsy test. HLISTINGTG Molecular/$46.5 COMPANIES million (May) FEBRUARY NOVEMBER Investors responded to these devel- Curetis/$43AND PROCEEDS million (November) opments. Biocept netted $9.4 million in OpGen/$18 million (May) a follow-on offering in February, as did Trovagene Inc., which raised $21.4 million, followed by a $37.6 million offering $107m $18m six months later. Privately held Guardant Biocartis OpGen Health Inc. raised $50 million in a Series C APRIL MAY round in February to expand the availability of its blood-based cancer test. Next-gen sequencer HTG Molecular Diagnostics Inc. went public in May 2015, partly on the SOURCE: Strategic Transactions strength of claims that its platform is com- health care-related infections in hospitals, of its tests. A week later, WSJ reported that patible with detecton of cell-free circulating using next-gen sequencing. It is the first Theranos’ key distribution partner, Wal- nucleic acids. offering derived from a 2014 collabora- green’s, had called a halt to any expansion Genomic Health Inc. also announced in tion combining the companies’ respective plans. Safeway pulled the plug on a deal May its plans to shift R&D efforts toward a liq- strengths in microbiology and sequenc- in early November, according to WSJ. Just uid biopsy platform. Then in June, Laboratory ing. (See “bioMérieux, Illumina to Develop before that, FDA confirmed it had cited the Corp. of America Holdings got into the game Sequencing Products for Hospitals” — “The company for selling its Nanotainer blood via a deal with Sysmex Corp.’s molecular Gray Sheet,” November 18, 2014.) specimen device without 510(k) clearance, diagnostics unit, Sysmex Inostics GMBH, to And then there was the turmoil around and for quality system violations. create tests for clinical trials of cancer drugs Theranos Inc., our one-off story for 2015. A#2016800019 IV using Sysmex’s liquid biopsy platform. After years of rumors and questions about comments: Email the editor: [email protected] Roche/GeneWEAVE, OpGen Inc.’s IPO and the substance of its claims to be able to subsequent purchase of AdvanDx Inc. and multiplex dozens of lab tests at low cost progress made by competitors Accelerate using only a few drops of blood, and with RELATED READING Diagnostics Inc., which is developing a the company insistently cloaked in secrecy, “Diagnostics In 2014: More Of The Same” — IN VIVO January 2015 [A#2015800014] fluorescent in situ hybridization-based sys- IN VIVO embarked on a story right before “Industry Roundup: FDA Investigation Prompts tem, and Biofire Diagnostics LLC, the US FDA cleared its herpes simplex test in July. Criminal Charges Against Supplement Mar- molecular diagnostics affiliate of bioMer- Our best sources’ comments, all on back- keter” — “The Tan Sheet,” April 20, 2015 ieux SA using PCR amplification, all helped ground, ranged from “They have been really [A#05150420013] bring the development of infectious disease “23andMe Launches Personal Genome Service For impressive with their stealth approach.” to Carrier Screening After Work With FDA” — “The diagnostics into greater relief. Roche is also “For now, we have not seen any financials Gray Sheet,” October 21, 2015 [A#01151026011] developing targeted antibiotics, suggesting for Theranos. So all they are doing for now “Which Path Forward For Foundation Medicine?” a possible use for the GeneWEAVE system as is spoiling the market price of tests.” One — IN VIVO, June 2015 [A#2015800100] an eventual “rule-in” companion diagnostic VC had come away from meetings with “Liquid Biopsy News: Qiagen CE Mark, Foundation- Roche Deal And More” — “The Gray Sheet,” Janu- test for its drugs. But the others are pure Theranos a few years back “unimpressed.” ary 26, 2015 [A#01150119008] plays, competing with the likes of Cepheid, The story didn’t run, however, as Theranos “bioMérieux, Illumina to Develop Sequencing Prod- Nanosphere Inc. and Genmark Diagnostics backed off an interview and partners we ucts for Hospitals” — “The Gray Sheet,” November Inc. In December, bioMerieux and Illumina contacted went silent. Then in October, The 18, 2014 [A#01141124006]] announced the launch of a service for the Wall Street Journal accused the company of Access these articles at our online store epidemiological monitoring and control of not using its own technology to run most www.PharmaMedtechBI.com

30 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com DIAGNOSTICS

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TG Therapeutics Builds A Business Model For Today The speed with which TG Therapeutics burst on the scene, along with the impressive potency and safety of its novel combinations of cancer drugs, has perhaps blinded observers to the unique business model that has carried it this far.

BY Michael Goodman

ancer specialist TG Therapeutics Inc. has recently shown positive mid-stage data for its assets, both ■ TG has devised a business model alone and in combination, in patients with advanced that is designed to confer multiple benefits across its value chain. It B-cell cancers. The speed with which it burst on the also points the way for small-cap scene, combined with the potency and safety of its cancer companies in the age of drugs,C has perhaps blinded observers to the unique business model immuno-oncology: start with that has carried it this far. proprietary combinations of vali- The main element in the model is TG’s dedication from the start dated mechanisms, layering on to proprietary combinations of its own drugs. TG understood that riskier assets over time. owning its pipeline would satisfy several key challenges facing bio- ■ TG’s programs – in oncology and pharmas in the age of combination therapy. in the soon-to-be-christened It would allow the company to control the design and conduct autoimmune franchise – are of complex trials involving combinations or sequencing of two or largely based on a B-cell deplet- more drugs. It would obviate the need to negotiate involved IP ing backbone combo. If its un- and logistical arrangements with big pharma. TG would be able to precedented safety profile fades keep the lion’s share of revenue should its drugs reach market, and in Phase III trials, the company could be at risk. it would give TG sole discretion over pricing. That last benefit addresses the pressure that companies, increasingly cancer companies, ■ Two pivotal trials give TG a good come under to price their drugs responsibly. Moreover, it flies in the head start, but it will need to face of current wisdom that says combinations of cancer drugs are stay ahead of the pack, continuing to license in superior assets necessarily expensive. and assembling them in novel Other elements of TG’s model – the avoidance of R&D partnerships combinations. and an unprecedented emphasis on the safety of its assets – solve other challenges that small, young companies face. For instance, that combinations of drugs are not only more expensive, but also necessarily more toxic. Or the market wisdom that says that tie-ups with big pharma are validating, value-adding events. TG Therapeutics was spun out from France-based LFB Biotech- nologies SAS in 2010. In April 2011 it took an option from LFB to license rights to ublituximab, a next-generation, glycoengineered, chimeric CD20 antibody. In late 2011, TG reverse merged with Manhattan Pharmaceuticals, and soon after raised $25 million in a private placement and exercised its option to ublituximab (TG-1101). CEO Michael Weiss, former CEO of Keryx Pharmaceuticals, lost no time in licensing in other assets to combine with ublituximab. Executive Summary >> 60 In August 2012, TG paid an undisclosed up-front to Swiss-based

32 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com Biopharma Business Models

Rhizen Pharmaceuticals SA to develop its result from combining targeted therapies preclinical PI3K delta inhibitor to Phase II, or immunotherapies, the 2013 study of the after which it exercised an option for full combination of Bristol-Myers Squibb Co.’s global rights to the compound, now known Yervoy and Roche’s Zelboraf (ipilumumab as TG-1202. It struck again in June 2014, is- Rather than partner and vemurafinib) being a case in point. suing 125,000 of its common shares as an one’s way to what CEO (See “Yervoy/Zelboraf Combo Trial Fails, But up-front for a global license to an IRAK4 Sequential Study Continues” — “The Pink inhibitor program from Ligand Pharmaceu- Michael Weiss calls Sheet” DAILY, April 4, 2013.) And sometimes ticals Inc. And in March 2015, it licensed in a “magical” combinations, combinations, for reasons of biology or trial PD-L1 and a glucocorticoid-induced tumor design issues, fail to deliver the expected necrosis factor receptor (GITR) antibody TG would focus on additive or synergistic benefits. (See “Cancer from Checkpoint Therapeutics Inc., a sub- licensing in superior Trials & Tribulations: Combinations Are Easier sidiary company of Fortress Biotech Inc., for Said Than Done” — Pharmaceutical Approv- $500,000 up front. The checkpoint inhibitors oncology assets als Monthly, August 2014.) originated in the lab of Wayne Marasco, MD, with complementary TG thinks it has a better idea. Rather than PhD, of the Dana-Farber Cancer Institute. partner one’s way to what CEO Michael TG’s assets are distinguished by their mechanisms at relatively Weiss calls “magical” combinations, TG would efficacy and safety profiles and by their low cost. focus on licensing in superior oncology as- complementary mechanisms that allow sets with complementary mechanisms at them to be used in various combinations. relatively low cost. The combination of 1101 and 1202, which The vision required the ability to identify TG refers to as 1303, is the backbone for fur- it has played a role in cancer, interest in the and evaluate the desired drugs. Ublituximab ther combinations in hematologic cancers strategy has been reawakened by deepening was easy. CD20 antibodies had been in hu- and, soon, in autoimmune diseases. knowledge of drug resistance mechanisms, mans for several decades, and their role in 1303 is currently in the Phase III UNITY- tumor immune surveillance, and how the depleting B cells was well established. “We CLL trial, under SPA agreement with FDA, tumor microenvironment determines the had close to perfect information,” says Weiss. where patients are randomized into four way that tumor cells behave and respond to The leap here lay in understanding that 1101 arms (1101, 1202, 1303 and standard-of- cytotoxic or targeted agents. Where before, was a glycoengineered antibody (meaning care) to demonstrate the contribution of cancer drug combinations were largely a its sugar molecules had been manipulated each agent to the 1303 combination and to matter of trial and error, they can now be to improve the antibody’s ability to bind to demonstrate progression-free survival (PFS) pursued on a more rational basis. immune effector cells) engineered with low over Roche’s Gazyva (obinutuzumab) and But a greater stimulant to combination fucose content, which binds to a unique chlorambucil, a standard treatment for ad- therapy has been the recent emergence epitope on the CD20 antigen. That made it vanced chronic lymphocytic leukemia (CLL). of checkpoint inhibitors and other immu- more potent with respect to antibody-de- The 1303 backbone figures in another notherapies. Pharma has primarily pursued pendent cell-mediated cytotoxicity (ADCC). trial, this one at the University of Pennsylva- partnerships to access assets – immuno- And understanding what the superior po- nia’s Abramson Cancer Center, the Phase I/II oncology or targeted agents – to test with tency could mean for drug combinations, triplet of 1101, 1202 and Merck & Co. Inc.’s its internal immuno-oncology candidates. and for patients. PD-1 inhibitor Keytruda (pembrolizumab) Some of the more notable have been Celgene The 1303 backbone consists of superior in patients with relapsed or refractory CLL. Corp.’s partnership with Juno Therapeutics versions of biologically validated agents, Moreover, 1303 will likely serve as a back- Inc. and Pfizer Inc.’s with Merck KGAA. each with a history of use in humans. Ben bone in TG’s first foray into autoimmune The preferred route to oncology combi- Bonifant, partner at consultancy Triangle disease; the company plans to start a Phase nations has been via partnerships or short- Insights, points out that TG’s strategy of I/II trial in multiple sclerosis in 2016. lived clinical collaborations, less so through starting with established mechanisms, and TG’s lead program is the Phase III GENU- acquisitions. (See ”In Buzz Of 2015 Pharma building on that with incrementally riskier INE trial of 1101 plus ibrutinib in patients Dealmaking, Immuno-Oncology Is Queen assets, avoids the potential pitfall of going with previously treated, high-risk, chronic Bee” — IN VIVO, September 2015.) Though few before FDA with two novel mechanisms and CLL. The trial is targeting the end of 2016 dispute the benefits of combining cancer layering the risk. to analyze the overall response endpoint; drugs, institutions as varied as the American Gilead Sciences Inc., through its 2011 if positive, the company will file for acceler- Society of Clinical Oncology (ASCO) and the acquisition of Calistoga Pharmaceuticals ated approval under SPA. Memorial Sloan-Kettering Cancer Center Inc., had shown that hitting PI3K delta was have highlighted the potential of combi- a mechanism for regressing tumors. TG put The Era Of The Combination nation therapy to accelerate the unsus- 1202 through rigorous testing at Duke Uni- Combination therapy has been a mainstay in tainable cost of cancer treatments. Others versity in serum derived from CLL patients, HIV and HCV for several decades. Although have decried the severe toxicities that can and verified that it was equal in potency to

Gilead’s Zydelig (idelalisib). The preclinical has an antibody that engages the target, credentials, it relies on a few internal experts testing also suggested that it would be less and doesn’t expect surprises in off-target and others in its network, as well as its toxic than Zydelig, with a longer half-life toxicities. GITR, on the other hand, has not internal database of past combinations, to that would allow QD dosing, a competitive been biologically validated as a target. (See guide it in rational combos and sequencing, advantage in the class. Exhibit 1.) particularly with immuno-oncology assets. When searching for a PI3K delta inhibi- Weiss takes a common sense approach For example: TG had reported preliminary tor, Weiss says that he passed over some to assembling drug combinations. He feels Phase I/II results from its ongoing dose es- candidates that were more potent than the that some mechanisms – like CD20 and PI3K calation study of 1101 plus 1202 (TG-1303) one he chose. “My rule is that you need to delta – present obvious combo potential in heavily pre-treated CLL patients. “There have a threshold of low nanomolar potency and don’t require overthinking. “You don’t were almost no CLL/SLL [small lymphocytic but the lowest is not necessarily the best.” need an advanced degree in molecular biol- lymphoma] patients that were not stable or Potency is one part of the equation. Exten- ogy to think maybe we should try 1101 or better through two months,” says Weiss. The sive toxicity data for 1202 persuaded him to 1202 with ibrutinib or with a PD-1.” combo was safe with neutropenia being license the drug. TG is a small company of about 35 em- the only grade 3/4 adverse event greater The more recent licenses, to the IRAK4 ployees. It relies on vendors and academia than 5%. inhibitor and to the checkpoints, introduced for research and manufacturing support, His team concluded that there is no rea- some target risk into the portfolio. These as- not so much on CROs as it considers clinical son to start the PD-1 inhibitor (in the Phase sets were also licensed at an earlier stage, the trial design and execution a core capability. I/II trial at University of Pennsylvania) at IRAK4 before toxicity data were available. But Sometimes combination possibilities that day one. Patients are getting high doses of research published by Nimbus Therapeutics aren’t so obvious come to it through its re- CD20; they’re just getting up to high doses suggests that IRAK4 is a therapeutic target search partners. Research it commissioned of PI3K delta; the PD-1 is not needed until for diseases driven by aberrant oncogenic at Columbia University Medical Center the third month. “We think we’ve reduced MYD88 signaling, and plays a role in B-cell yielded an oral presentation at ASH 2015, the the tumor burden in all patients by 50% to lymphoma and in autoimmune diseases – annual meeting of the American Hematol- 70% by the time we start them on an agent TG’s sweet spot. Weiss sees a place for it as ogy Society, describing impressive synergies that will engage T cells, with the potential an add-on perhaps to 1303 in the autoim- in the combination of PI3K delta inhibitor for cytokine storm and so forth,” says Weiss. mune space. TGR-1202 and Amgen Inc.’s proteasome The idea is to introduce the PD-1 into a The PD-L1 and GITR assets are antibod- inhibitor carfilzomib in treating aggressive lower tumor burden environment and give ies. PD-L1 is a validated target. Although lymphomas and, potentially, solid tumors. it the best chance of working with the least none have been approved yet, several have Gilead’s Zydelig and Takeda Pharmaceutical amount of toxicity. advanced to late-stage trials. (See “Roche’s Co. Ltd.’s Velcade, which were also in the mix TG is confident that 1101 and 1202 will re- Atezolizumab Filing In Sight, With Pivotal Lung of possible combinations, did not demon- main the backbone for further combinations Cancer Data In Hand” — “The Pink Sheet” strate the same level of synergy. in both cancer and autoimmune disease. DAILY, August 17, 2015.) TG is confident it And though TG downplays its science IRAK4 could be an add-on in cancer, but

Exhibit 1 Summary Of TG Therapeutics Portfolio By Level Of Validation

Licenser, Stage at Toxicity Therapeutic Area Asset Date License Target Risk Data Application CD20 antibody B-cell cancers, LFB, March 2012 PI/II Low Yes (TG-1101) autoimmune Rhizen, August 2012 PI3K delta B-cell cancers, (Sept. 2014 exercise Preclinical Low Yes (TGR-1202) autoimmune option for global rights)

IRAK4 Ligand, June 2014 Preclinical High No Autoimmune

Checkpoint PD-L1 Moderate No Therapeutics, March Preclinical Blood cancers GITR High No 2015

SOURCES: Strategic Transactions; TG Therapeutics; Word Control

34 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com Biopharma Business Models

Exhibit 2 Comparative AE Event Profile For PI3K Inhibitors (N=66) TGR-1202 IDELALISIB Duvelisib Idelalisib Label All Studies OFATUMUMAB (ASCO ‘15)3 (CLL & NHL)1 (ASCO 2015)4 (ASCO ’15)2 (n=173) (n=18) (n=256) (n=137) All Grades (>Gr 3) All Grades (>Gr 3) All Grades (>Gr 3) All Grades (>Gr 3)

Diarrhea/ Colitis 49% (20%) 78% (22%) 36% (10%) 26% (1%)*

Pneumonia 17% (13%) N/A 24% (16%) 7% (4%)

ALT Elevations N/A N/A 43% (11%) 2% (2%)

AST Elevations N/A N/A 34% (7%) 4% (2%)

ALT/AST Elevations 35% (13%) 28% (17%) N/A 3% (2%)

Discontinuations 31% 33% 12% 4% due to AE

* No instances of colitis observed. Notes: 1) Aggregated from Idelalisib product label; 2) Jones et al, ASCO 2015; 3) Patel et al, ASCO 2015; 4) Aggregated from Burris et al, Lunning at al, Fowler et al, ASCO 2015. SOURCE: TGTX ASCO 2015 Analyst and Investor Event

Weiss thinks it will find its utility combined partnerships could be negatively affecting said, “We see it as a complicated matrix of with 1303 in certain autoimmune diseases the way the market values TG Therapeutics. what we’re interested in achieving in terms where it makes sense to add inhibition of But he also maintains that the smartest in- of these combinations, and trying to identify the IL-1 pathway to the basic mechanism of vestors recognize that deals can be dilutive a partner that may share our long-term vi- B-cell depletion. Same with the checkpoint and not confirming of value. sion just did not make it interesting for us to assets: once they’ve cleared early-stage test- Weiss thinks the biotech industry is in a explore opportunities on that side.” ing, and the anti-GITR antibody has been cycle where there is a naïve and transient Cancer is TG’s core business; autoimmune is validated, the likely plan will be to layer them investor base not always up to making its a complementary revenue stream. TG has the onto 1303 in hematologic cancers. That’s own assessments. In fact, he believes that cash and it has the confidence to go it alone another potentially “magical” combination. tapping Wall Street is invariably less dilutive with respect to the cancer business. Because than doing a big partnership early on. He of the higher cost of building an autoimmune Avoiding Foreign feels fortunate in having strong investors franchise, Weiss will be more welcoming to big Entanglements behind him who can fund the company pharma partners at an earlier stage. The second element in TG’s business model, at reasonable valuations. TG currently has In the US, Weiss is comfortable with the avoidance of R&D partnerships, while about $115 million in cash and equivalents building out a cancer sales force as TG ap- not unique, sets up an unprecedented and little debt. It prefers to raise capital proaches the market. He’ll make a decision dynamic in tandem with TG’s proprietary through periodic small financings. about whether to do so in Europe, or to combination strategy. But Weiss’ aversion to R&D partnerships take a partner; but he’s fine with setting up Weiss takes exception to the view of and premature commercial deals goes be- a commercial organization in Europe if need many investors and sell-side analysts who yond the financial dimension. He believes be. Japan, ROW – he’s open to any kind of see marquee partnerships with big pharma they are a headache to negotiate and man- partnership that makes sense. as a validating event for a young biotech. age, and can often, especially when part- While not keen on partnering, Weiss and He thinks that many young companies, es- nering over a combination regimen, lead his team have been busy on the licensing pecially those backed by VCs, do deals too to sub-optimal trial protocols. At a recent front, bringing in quality assets for relatively early and in some cases destroy future value earnings call, talking about TG’s resistance low up-fronts consisting of cash or equity, for shareholders. He concedes that avoiding to partnerships in the cancer business, Weiss and modest downstream payments.

Exhibit 3 patients – particularly older, frailer ones – to AEs Observed In Single Agent TGR-1202 Dose Escalation Study continue longer on treatment. And they’ll be more combinable with other drugs. (N=66) Weiss is confident that superior safety will influence payers, particularly when toxicity All Grades Gr. 3/4 ends up costing them in hospitalization AE and expensive interventions. He recognizes that in the most lethal cancers, particularly N % N % when efficacy is especially strong, or in second- and third-line settings, that safety can Nausea 27 41 0 0 sometimes take a back seat. But he’s counting on oncologists and patients to demand Diarrhea 21 32 1 2 TG’s regimens. He points out that a lot of PhDs have recently come into the industry. “The industry Fatigue 21 32 2 3 was more diverse 10 years ago,” he says, “with more MDs and people with good scientific Headache 15 23 0 0 backgrounds but also good common sense.” Scientists tend to be focused on efficacy. Vomiting 15 23 0 0 They deal with rats and Petrie dishes, and are typically not used to interacting with Cough 14 21 0 0 patients. Weiss speculates that this might make some scientist-executives and even Decreased investors less sensitive to risk/benefit con- 11 17 0 0 Appetite siderations that physicians and patients care about. Rash 11 17 3 5 The safety profile of 1202, TG’s PI3K delta inhibitor, especially with respect to discon- Constipation 9 14 1 2 tinuations from hepatic toxicity and colitis, is particularly striking compared with its peers, AbbVie Inc.’s duvelisib and Gilead’s Hypokalemia 9 14 3 5 idelalisib. (See Exhibit 2.) In January 2013, TG initiated a single- Anemia 8 12 5 8 agent dose escalation trial of 1202 in patients with relapsed/refractory hematologic Dizziness 8 12 0 5 tumors. Preliminary data from this study were presented at the June 2015 ASCO Dyspnea 8 12 3 11 meeting. Grade 3/4 adverse events in 66 patients were highest for neutropenia (11%) and anemia (8%); all other AEs were 0% or Neutropenia 8 12 7 0 single digits less than or equal to 5%. TG updated these data in a poster at Pyrexia 8 12 0 0 ASH 2015: in 75 subjects with a variety of relapsed/refractory B-cell malignancies, no Abdominal Pain 7 11 0 0 grade 3 or greater adverse events were seen in more than 10% of patients. “Incidence Notes: Limited Gr. 3/4 events and no significant dose or time dependent trends in AEs observed with 31 of hepatic toxicity and colitis appear sig- patients on study 6+ months; 3 patients (< 5%) have discontinued due to an adverse event, none of which nificantly less than that reported with other for hepatic toxicity, colitis, or pneumonitis. agents in this class,” said Owen O’Conner MD, SOURCE: TGTX ASCO 2015 Abstract #7069 PhD, of Columbia University Medical Center.

Kicking The Tires On TG’s Model It’s The Safety, Stupid! profile to differentiate them in the CLL and The test of a new business model is (1) Although 1101 and 1202 have proven to non-Hodgkin’s lymphoma (NHL) landscape. whether it presents a new way to generate be as potent or more so than drugs of the Not only will they be easier on cancer pa- returns, and (2) whether it attracts imitators. same class, TG is counting on their safety tients, the company hopes that they’ll allow It’s too early to answer the first question, and

36 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com Biopharma Business Models

Exhibit 4 each indication, especially HCV, and in that Safety Profile Of TG-1303 In CLL And iNHL Patients way are similar to TG’s combinations. How- ever, Gilead has not internalized combina- Related AE’s Occurring in ≥ 5% of Patients (n = 55) tion therapy to the extent that TG has; it does not appear to be, for instance, a committed All Grades Gr. 3/4 feature of its inflammatory or cardiovascular AE franchises. Also, Gilead has shown itself quite N % N % open to R&D alliances, particularly discovery collaborations. Infusion Related TG was founded on a vision of wholly 16 29 1 2 Reaction owned combinations – doublet, triplet and quad – for serious cancers. It found that the Neutropenia 15 27 13 24 best way to pursue that vision was on its own without a pharma partner. And it has Nausea 15 27 - - taken a novel approach to how it calibrates the balance in its drugs between efficacy and safety. No single element in its model Diarrhea 11 20 1 2 is unprecedented. But working together, particularly in the age of combination Fatigue 10 18 - - treatments, they enable and reinforce one another in a unique way. Vomiting 6 11 - - The model is certainly vulnerable to imitators. At a Merrill Lynch conference in Abd. Pain/ 4 7 - - September 2015, Incyte Corp. emphasized Discomfort its growing stable of proprietary assets – PD- 1, PD-L1, IDO1, FGFR and BRD inhibitors, PI3K Muscle Cramping 4 7 - - delta and JAK1, and preclinical candidates GITR, OX40, TIM-3 and LAG-3. Chief Scientific Anemia 3 5 - - Officer Reid Huber, PhD, spoke of the company’s intention to test novel combinations Bruising 3 5 - - of its drugs. Of course, Incyte’s therapeutic focus will be considerably broader than TG’s, Hoarseness 3 5 - - ranging over the hematologic and solid tumor landscape. But TG is also exposed to direct competi- Thrombocytopenia 3 5 - - tion to its specific drug combinations and the indications they target. The combo of Note: 3 patients (~5%) have come off study due to an adverse event, none related to hepatic toxicity Gilead’s Zydelig plus rituximab has been or colitis. approved in the US for relapsed CLL pa- SOURCE: TGTX presentation at ICML conference, June 2015 tients; it has shown the following adverse events greater than or equal to grade 3: the answer to the second is a decisive Yes. use of cytotoxic drugs in its combinations. neutropenia (37%), increased lymphocyte It should be noted that there have been It is more focused on matching comple- count (18%) and lymphopenia (9%). Seri- biotech companies in the past that have mentary mechanisms. Concentrating on a ous adverse events occurred in 49% of incorporated at least one of the elements specific class of cancers has allowed it to patients: pneumonia (17%), pyrexia (9%) of TG’s model, albeit with significant differ- develop a backbone regimen that works and sepsis (8%). ences. Ben Bonifant cites Celator Pharma- across B-cell malignancies (and potentially Weiss sees the triplets of Zydelig plus ceuticals Inc., a 13-year-old biotech based autoimmune diseases) yet is benign enough bendamustine plus Rituxan and of Imbruvica on developing synergistic ratios of chemo- to permit further add-ons. Also, unlike TG, plus bendamustine plus Rituxan in advanced therapeutic drugs delivered in a proprietary Celator is open to partnerships, research CLL – both have reported Phase III results – nanoscale vehicle. The company’s lead collaborations and out-licensing deals. as the primary competition for Imbruvica product, a combination regimen for acute Gilead is renowned for developing best- plus TG-1101 in relapsed/refractory patients, myeloid leukemia (AML), is in a pivotal trial. in-class proprietary combinations for HCV especially in the community setting. He adds, TG isn’t interested in pursuing a wide va- and HIV. Moreover, the company’s combina- “TG-1303 will compete in both frontline and riety of tumors, and it’s been cautious in its tion regimens work across the subtypes in relapsed/refractory settings.”

Zydelig alone is quite toxic and carries combining 1303 with a checkpoint inhibi- company being acquired. he’s not interested a black box warning for “fatal and serious tor. so as long as TG stays adept, continues in a dismantling acquisition, where a suitor toxicities” including hepatic, colitis, pneu- to keep ahead of the pack by initiating new is drawn just by the pi3K drug or the cd20 monitis and intestinal perforation. trials and by licensing in complementary in autoimmune disease, and carves those The safety profi le of TG-1303, from a June assets that are safe and potent, the model out and shuts down the company. But he 2015 presentation of data from its ongo- stands a good chance of holding up. would consider an attractive off er by an ing phase i/ii trial in 55 heavily pretreated For now, Weiss is not emphasizing solid acquirer who “believed in what we’re doing” patients appears in exhibit 3. tumors; in fact, the deal with checkpoint and could accelerate it and create a faster, Bonifant says that TG-1303, should it reach Therapeutics stipulates that TG can apply the bigger platform. “We would work within that the market, is open to fast followers with assets to hematologic cancers, while check- structure, and hopefully be able to continue an already approved component; all they point Therapeutics reserves their use in solid to do what we’re trying to accomplish.” need do is quickly demonstrate the effi cacy tumors. however, the company is already A#2016800005 IV of their product with another approved exploring the utility of pi3K in solid tumors COMMENTS: Email the editor: [email protected] product. or with one of TG’s components. in a phase i trial of 1202 as single agent or And oncologists have the option of put- in combination with nab-paclitaxel/gem- ting together a similar combination with citabine or with FoLFoX. components they select. TG’s next act – building an autoimmune RELATED READING TG’s protection – ip covering its novel disease franchise – is already in motion. As “ In Buzz Of 2015 Pharma Dealmaking, Immuno- combinations is not available to it – is the management disclosed in its third-quarter Oncology Is Queen Bee” — IN VIVO, September superior safety of its combinations. That, and 2015 earnings call, it will follow the lead 2015 [A#2015800129] the signifi cant head start it has with two of Roche, which recently showed impres- “Yervoy/Zelboraf Combo Trial Fails, But Sequential phase iii trials running and a registration trial sive results in late-stage trials of its cd20 Study Continues” — “The Pink Sheet” DAILY, April 4, 2013 [A#14130404001] of 1303 in nhL patients on deck, allowing antibody ocrelizumab in both primary “ Cancer Trials & Tribulations: Combinations Are it the time to test add-on improvements progressive and relapsing forms of multiple Easier Said Than Done” — Pharmaceutical Ap- to 1303. its checkpoints, for instance, will sclerosis. TG will do a phase i/ii trial in 2016 provals Monthly, August 2014 [A#06140701012] The Perfect Way to likely enter the clinic in 2016, making TG the and will likely initiate a phase iii trial in 1h17. “ Roche’s Atezolizumab Filing In Sight, With Pivotal fi rst company to bring a proprietary triplet one sequencing option it’s considering is Lung Cancer Data In Hand” — “The Pink Sheet” including 1303 plus a pd-L1 into the clinic. starting patients on iV cd20 and continuing DAILY, August 17, 2015 [A#14150817003] in fact, the triplet phase i/ii trial of 1303 them on oral pi3K therapy, maybe adding an ACCESS THESE ARTICLES AT OUR ONLINE STORE Start Your Day! plus pembrolizumab at the university of oral iRAK4 inhibitor to the mix. www.PharmaMedtechBI.com pennsylvania will provide an early read on As for the long game, Weiss is open to the For over 40 years we’ve been there to help start your day by arming you with the expert, in-depth medical device and diagnostics industry information you need to get ahead of the competition, including: Let’s get • Insight into FDA regulatory policies and procedures • Intelligence on device pipelines, clinical trials, and Social changing market dynamics • Authoritative reimbursement We are tweeting, chatting, liking and policies, and so much more sharing the latest industry news and insights from our global team of editors and analysts, join us! Start your free trial today!

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©2016 informa Business intelligence, inc., an informa company | IN VIVO: The Business & Medicine RepoRT | January 2016 | 39 MEDTECH IP Navigating Patent Minefields In Emerging Asian Medtech Markets Success in the Emerging Asian Markets (EAMs) requires medical device companies to ensure superior product and patent protection for both their products and related methods of use, given the ease with which devices can be copied by competitors.

by Gabriela ComaN

n China, India, Indonesia, Korea, Malaysia, the Philippines, Tai- wan, Thailand, Mongolia, Pakistan, Sri Lanka and Vietnam – the ■ EAM patents applicants need to countries that can be grouped together as the Emerging Asian be aware of current and future Markets (EAMs) – securing patent protection is critical. business development objectives, Once in possession of a patent, a medical device company market specifics and how local will be able to create legal barriers to entry for competing devices competitors could design around I the patented devices of the com- by preventing others from copying, selling or manufacturing the pany. patented device. It will also be able to license the patented device to generate revenues. ■ Filing in multiple countries can Furthermore, the value of the medical device company can be en- be prohibitively expensive, but hanced via the equity and asset building associated with the patent, mechanisms to control fees and costs include international applica- which in turn may attract further investment. tion/PCT applications, or concepts Five Factors To Forestall Failure such as the newly launched ASEAN Patent Examination Cooperation But early in the pathway leading to an EAM launch of a medical de- program. vice, there are five factors that a company needs to consider or act on, centering around: ■ All EAM countries observe a “first- to-file” rule in granting patents, which, in cases where two different Core Technology Assessments And Tailoring Patent Portfolios entities apply for a patent, it is the To Individual EAMs first one to file an application that Medical device companies interested in not-fully-developed patent will obtain the patent if the inven- markets, such as the EAMs, should develop a product patent portfo- tion is patentable. The US adopted lio that is tailored to the needs of each respective emerging market. this law in 2013. The first stage for the medical device company is to assess the core ■ What is patentable and what is not technology and file patent applications that are designed to provide can be something of a minefield, the broadest possible coverage of the core technology. with different EAMs applying dif- The company must consider: its current and future business de- ferent criteria to patentable matter, velopment objectives; the ways that local competitors could design so the regulations of each country around its patented devices; the specific needs of the markets tar- require careful scrutiny. geted – the Chinese vascular or ultrasound scan market or the Indian orthopedic market, say – and the way the patented technology could affect them; and whether to file national, regional or PCT (patent cooperation treaty) applications. Executive Summary >> 60 Broad patent coverage, when and where applicable, should be

40 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com MEDTECH IP

directed to the entire medical device, it sub- Patents may be obtainable, however, for sur- Patent Act. components, methods of manufacturing, gical, therapeutic or diagnostic instruments China adopts a dual approach in de- methods of use and treatment, therapeutic or apparatus. In addition, the manufacture termining whether an invention could be uses and any other aspects of the invention. of prostheses or artificial limbs, and taking considered inventive and thus patentable: For example, for sophisticated medical de- measurements of the human body, may be “prominent substantive features” and “notable vices like blood glucose monitoring systems, patentable. progress.” Article 22 (3) of the Patent Law of claims directed to user interface, software, the People’s Republic of China prescribes power-management system and IC chips, Korea/Thailand that “inventiveness means that, as compared among others, may also be filed separately In Korea, methods of treating with the technology existing before the to protect fully the scope of the claimed humans are not patentable. date of filing, the invention has prominent invention. However, methods of treat- substantive features and represents notable ing non-human animals are progress, and that the utility model has sub- Patentable Matter May Be Different patentable, as are methods stantive features and represents progress.” In The EAMs Compared With The US/ which are non-therapeutic, such as cosmetic Under China’s Guidelines on Examination of Europe applications. In Thailand, methods of medical Patents, “prominent substantive features” refer Medical devices are protected and patent- treatment are not patentable subject matter. to “non-obviousness” and the examiner must able in EAM counties and the US. Methods of In contrast, in the US, surgical techniques conduct tests to establish the proximate prior surgery and medical treatment methods may and methods of medical treatment, as well art and the distinctive features of the inven- be protected and patentable in the US and as methods of diagnosis or treatment, are tion and the technology issue to be solved, Australia, but they are typically not protected patentable subject matter. For example, an and must make a judgment on whether the in Europe or in EAM counties such as China, instrument that cuts bone in a retrograde invention seeking to be protected has obvi- India or Thailand. manner to form a bone tunnel or socket may ousness to those skilled in the art. In most countries, methods that include a be patentable in both the US and in the EAMs. “Notable progress” may be shown in surgical step on a human or animal body are A method of arthroscopic surgery to form a the form of the “effect” of the invention or not patentable, even if the effect of surgery bone tunnel or socket using a retrograde cut- “the useful technological effective result.” is not therapeutic. Claim terms such as “non- ter instrument may be patentable in the US The Guidelines on Examination of Patents medical” or “diagnostic” could be used to but not in most EAM countries, where meth- interpret the useful “effect” as: an invention make a claim acceptable (provided that the ods of medical treatment are unpatentable. that has a better effect than the prior art, claim could be reasonably interpreted to be an invention that has a technical solution directed to a non-medical method without Patent Standards And Systems Are involving a totally different concept but that producing a therapeutic effect). Different In EAM Countries has a similar effective result to the prior art, EAM countries apply various patent standards and an invention that represents a new trend China when assessing whether a medical device of technological development. In China, neither methods invention is patentable. These standards In Korea, the criterion applied is whether it of medical treatment nor are different from those applied in the US, would be difficult for a person skilled in the diagnostic methods are pat- that is, novelty and non-obviousness. Under art to arrive at the claimed invention. entable subject matter. How- Chapter 35 of the USC (United States Code) All EAM countries observe a “first-to-file” ever, devices and apparatus in §§102, 103, it states that an invention must rule in granting patents, a rule that was for implementing these methods of diagnosis be novel and non-obvious to be patentable. adopted in the US in 2013. Under “first to or medical treatment, including substances The requirement of novelty means that file,” when two different entities apply for a and compositions for use in such methods, the invention (medical device or method) patent, the first one to file an application will are patentable subject matter. For claims of must be new, that is, not previously known obtain the patent if the invention is patent- treatment of diseases, these could be written or used by others. The requirement of non- able. The US move to a “first-to-file” rule was in the form of pharmaceutical or use claims obviousness means that the invention must a change from its prior “first-to-invent” rule. such as “method for preparing a pharmaceu- not be an obvious variation or combination US patent law adopted this major change tical.” Also, the scope of the claims must be of subject matter previously known to those to harmonize its patent process with that of commensurate with the working examples of ordinary skill in the art. the European Patent Office (EPO) and those provided in the specification. In India, the patentability requirements for of other foreign countries. In an effort to ease an invention are: novelty (the medical device the transition from the “first-to-invent” to the India must be new), non-obviousness (the medical “first-to-file” system, US patent law provides Similarly, in India, methods device has to involve an inventive step), and a one-year grace period, meaning that the of surgical treatment of industrial applicability (the medical device inventor (or the person who directly obtained the human or animal body can be made or used in industry). Apart the information from the inventor) has the (by surgery or therapy) or from satisfying these criteria, the invention right to publish his/her invention within a methods of diagnosis are not should also not fall under the category of year of filing the application without losing patentable subject matter. non-patentable subject matter of the Indian patent rights.

In contrast, no EAM countries observe tries such as Cambodia and Myanmar), a a grace period. Most countries of the EAM patent application must be filed with the group – and in Europe – apply an absolute national patent office of the specific country novelty standard, meaning that any public to secure patent protection in that country. disclosure of invention before the filing of a Direct national filing avoids the costs associ- patent application will render the invention All EAM countries ated with the intermediate steps of filing via unpatentable. If the invention has become the PCT or a regional patent office prior to publicly available in any way prior to the filing observe a “first-to-file” filing nationally. of the application, the application will be re- rule in granting patents, ASEAN (the Association of Southeast Asian jected. “Publicly available” is typically defined Nations) Patent Examination Cooperation as including: selling the invention; publishing a rule that was adopted (also known as ASPEC) has been recently the invention in a printed publication, such in the US in 2013. Under launched as a regional patent cooperation as a specialist brochure or magazine; giving program for sharing patent searches and a lecture about the invention; or presenting “first to file,” when two examination results. ASPEC resembles a it to an investor without a non-disclosure different entities apply regional network of patent prosecution agreement. The invention may be made highways (PPHs) in the sense that each of “publicly available” by anyone, including the for a patent, the first one the nine IP offices in the ASEAN countries inventor(s) or any independent third party. to file an application will accepts a patent application for expedited Thus, if an inventor releases – before the filing obtain the patent if the examination and search. In this manner, the of a patent application – a surgical brochure results of search and examination from one describing a medical device, the inventor will invention is patentable. country are used to expedite progress in the be barred from obtaining patent protection The US move to a “first- other countries. for the medical device in the EAM countries, whereas in the US, the inventor has one year to-file” rule was a change Enforcement Of Patent Rights In EAM from the release of the surgical brochure to from its prior “first-to- Countries May Be Limited file a patent application. As noted, what may be patentable in the Best mode requirement is not a prerequi- invent” rule. US may not be patentable in EAM countries site to patentability in Taiwan and Korea. In and, even if patented, enforcement of the Thailand and India, the patent specification patented subject matter varies greatly. For must include the best method for perform- Various fees are associated with securing example, methods of medical treatment are ing the invention known to the applicant. a patent. These fees include filing fees, fees considered to fall outside the scope of patent In China, the specification must sufficiently for prosecuting the application, issue and protection in most countries including South describe details about the “preferred embodi- maintenance fees, once the application has Korea and European countries. ments” or “optimized embodiments” but no matured into a patent, and attorney fees, Although EAM countries have been oath from the applicant is required. among others. Depending on the country gradually revising their patent laws to ren- Opposition proceedings are not available or region, these fees may vary widely and der patents more valuable, medical device in Taiwan (but relevant prior art may be may be spread unevenly over the course of companies are not well-positioned when submitted for consideration) and China (but filing and prosecuting an application, and it comes to patent litigation and enforcing patent invalidation may be available after maintenance of the patent. patent rights. grant of the patent). India, Thailand and One method of controlling these costs is For example, while the courts in India (the Korea provide opposition proceedings. India, the filing of an international application or a District Court or a High Court) have gradually for example, allows for pre-grant opposition PCT application. The international application changed their understanding of complex any time before publication and post-grant does not mature into a single international patent infringement and validity issues, India before expiration of a one-year period from patent; however, it provides the company still ranked as last in the Global Intellectual the publication of the grant of the patent. with the opportunity to delay making a final Property Center Index of 2014 (conducted by decision on whether to file a national ap- the US Chamber of Commerce), due mainly Filing Costs Are Different For National, plication in member countries – for up to 30 to its weak IP protection and enforcement. Regional And PCT Applications months in most countries. During this period A#2016800008 IV A patent is only enforceable in the jurisdic- of time, the company applying for the pat- tion in which it is granted. If a medical de- ent can: assess whether the medical device Gabriela Coman (ComanG@dicksteinshapiro. vice company seeks worldwide protection is commercially viable, raise funds, explore com) is Counsel in Dickstein Shapiro LLC’s In- of a medical device, it must file a patent in potential markets and decide whether to tellectual Property Practice, where she focuses each individual country worldwide. Filing enter the national/regional phase. primarily on intellectual property for the medi- in multiple countries, however, can be pro- For the over 100 countries that are not cal, biotechnology, pharmaceuticals, chemical, hibitively expensive. members of the PCT (including Asian coun- semiconductors and design patents fields.

42 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com MEDTECH IP

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ALTSTIEL, Larry, MD, PhD DOBSCHA, Francis X. KANTAK, Seema, PhD To: vTv Therapeutics Inc., To: Delphinus Medical Technologies To: Symic Biomedical Inc., CMO (December) Inc., VP, Quality & Reg. Affairs CSO (December) From: Provectra Biotherapeutics, CEO (December) From: Nektar Therapeutics Inc., Phone: 336-841-0300 From: NOMOS Corp., Dir., VP, Research & Preclinical Dev. Quality & Reg. Affairs Phone: 415-805-9005 Phone: 734-233-3088 ANDERSON, Keith, PhD To: ProNAi Therapeutics Inc., SVP, KATZER, Charles Technical Ops. (December) DUNTON, Alan W., MD To: Innocoll AG, Head, From: Seragon Pharmaceuticals Inc., To: Purdue Pharma LP, Mfg. & Tech. Ops. (December) VP, Manufacturing SVP, R&D (November) From: Auxilium Pharmaceuticals Inc., Phone: 604-558-6536 From: Danerius LLC, Founder SVP, Tech. Ops. Phone: 203-588-8000 Phone: +353 90 648 6834 BAKEWELL, John K. To: Exact Sciences Corp., FAIR, Brett LABINGER, Barry CFO (January) To: Aclaris Therapeutics Inc., SVP, To: Biothera Pharmaceutical Inc., From: Lantheus Holdings Inc., CFO Commercial Ops. (December) CEO (December) Phone: 608-284-5700 From: Aqua Pharmaceuticals LLC, From: Emergent BioSolutions Inc., VP, Bus. Dev. EVP, Pres., Biosciences Phone: 484-324-7933 Phone: 651-675-0300 BARRISH, Joel, PD To: Achillion Pharmaceuticals Inc., EVP, CSO (January) GORMALLY, John J. LAPPALAINEN, Jaakko, MD, PhD From: Bristol-Myers Squibb Co., To: Akers Biosciences Inc., To: Marinus Pharmaceuticals Inc., VP, Head, Discovery Chemistry CEO (November) VP, Clinical Dev. (December) Phone: 203-624-7000 From: Becton Dickinson & Co., VP, From: Premier Research, US Region Bus. Leader, Prenatal Exec. Dir., Drug Dev. Services Phone: 856-848-8698 Phone: 484-801-4670 BHUYAN, Prakash, MD, PhD To: Inovio Pharmaceuticals Inc., VP, Clinical Dev. (January) HANSON, Jason D. LIU, Hui, PhD From: Pfizer Vaccine Research, To: NuVasive Inc., EVP, Strategy, To: Merus BV, CBO (December) Senior Dir. Corp. Dev. & General Counsel From: Novartis Oncology, Global Head, Phone: 267-440-4200 (December) Bus. Dev. & Licensing From: GE Healthcare, Corp. VP, Phone: +31 30 253 88 00 Chief Risk Officer CASCIARO, Gregory D. Phone: 800-475-9131 To: Cardiac Dimensions Inc., MARKWOOD, Jeffrey Pres. & CEO (December) To: Signostics Ltd., CFO (December) From: AccessClosure Inc., Pres. & CEO HENN, Timothy From: SonoSite Inc., Senior Dir., Phone: 425-605-5900 To: CardioDx Inc., CFO (December) Corp. Planning & Finance From: Crescendo Biosciences Inc., CFO Phone: +61 874240600 Phone: 650-475-2788 COLLARD, Craig A. To: Veloxis Pharmaceuticals AS, MCCALLUM, Stewart, MD Pres. & CEO (December) HOLDENER, Ed To: Recro Pharma Inc., From: Cornerstone Therapeutics Inc., To: Novimmune SA, CMO (December) Chmn. & CEO Chmn. & CEO (December) From: GlaxoSmithKline PLC, Clin. Dir., Phone: +45 70 33 33 00 From: Roche, CMO Academic & Sirtuin, Phone: +41 22 839 71 41 Discovery Performance Phone: 484-395-2470 CREECH, Timothy To: Heat Biologics Inc., HOROBIN, Joanna CFO (December) To: Idera Pharmaceuticals Inc., From: Salix Pharmaceuticals Inc., SVP, CMO (November) Acting CFO From: Verastem Inc., CMO Phone: 919-240-7133 Phone: 617-679-5500

44 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com New At The Helm ONTHEMOVE

MCCARTHY, William SKWIERCZYNSKI, Raymond D., PhD To: Ignyta Inc., CBO (December) To: CoLucid Pharmaceuticals Inc., From: Foundation Medicine Inc., Head, Pharmaceutical Ops. VP, Corp. & Bus. Dev. (December) Phone: 858-255-5959 Tony Coles, Director From: Takeda Pharmaceuticals, Senior CRISPR Therapeutics Dir., Pharma Technology R&D Lab Phone: 919-649-6184 MILLER, Lisa A. To: Metabolon Inc., VP, General Mgr., Precision Medicine (December) SUTTON, Will From: Prometheus Laboratories Inc., To: Minnetronix Inc., VP, Engineering Pres. & CEO & Technology (November) Phone: 919-572-1711 From: Hansen Medical Inc., COO Phone: 651-917-4060 MILLER, Neil, PhD To: Auspherix Ltd., CSO (December) TOMASELLO, Shawn From: GlaxoSmithKline PLC, Senior Francis Dobscha, VP Qual. & Reg. Affairs To: Kite Pharma Inc., Chief Dir., Head, Chemistry DMPK & Delphinus Medical Technologies Commercial Officer (December) External Discovery, Singapore From: Pharmacyclics Inc., Phone: +44 1438 906755 Chief Commercial Officer Phone: 310-824-9999 MOESTA, Peter F., PhD To: Therapeutic Proteins International TWYMAN, Mark LLC, CEO (November) To: Novavax Inc., VP, Mktg. (December) From: Bristol-Myers Squibb Co., From: Lensar Inc., VP, Mktg. VP, Biologics Dev. & Ops. Phone: 240-268-2000 Phone: 312-620-1500 VAN DER GRAFF, Piet, PharmD Allan Dunton, SVP, R&D MOHS, Richard, PhD To: Certara, VP, Quantitative Systems Purdue Pharma To: AgeneBio Inc., VP, Pharmacology (December) Clincal Dev. (December) From: Leiden Academic Center for From: Eli Lilly Research Laboratories, Drug Research, Dir. VP, Neuroscience Early Phone: 609-716-7900 Childhood Dev. Phone: 410-685-3000 VICKERS, Steven To: Chiasma Inc., VP, Sales (January) MOWEN, Kerri, PhD From: Onyx Pharmaceuticals Inc., Senior To: Padlock Therapeutics, National Sales Dir., Hematology Dir., Biology (January) Phone: 866-637-9703 From: The Scripps Research Institute, John Gormally, CEO Associate Professor Akers Biosciences WILSON, Alain Phone: 978-381-9601 To: Antibe Therapeutics Inc., CFO (December) PADMANABHAN, Raj From: Management Consultant To: Paratek Pharmaceuticals Inc., Phone: 416-473-4095 VP, Information Technology (December) YINGLING, Jonathan, PhD From: Cubist Pharmaceuticals Inc., Senior Dir., IT Architecture, To: Bind Therapeutics Inc., Quality & Processes CSO (December) Phone: 617-275-0040 From: Bristol-Myers Squibb Co., VP, Oncology Discovery & Lisa Miller, VP, Precision Medicine Translational Research Metabolon Phone: 617-491-3400

Directors BONNEY, Michael DHINGRA, Kapil LEWIS, Alan J. To: Alnylam Pharmaceuticals Inc., To: Five Prime Therapeutics Inc., To: Assembly Biosciences Inc. Chairman (January) Director (December) (December) Phone: 617-551-8200 Phone: 415-365-5800 Phone: 646-706-5208

BUTLER, John P. GARNIER, Jean-Pierre, PhD PYOTT, David To: Keryx Biopharmaceuticals Inc., To: Alzheon Inc., Chairman (December) To: Alnylam Pharmaceuticals Inc., Director (December) Phone: 857-214-7242 Director (January) Phone: 212-531-5965 Phone: 617-551-8200 GUJRATHI, Sheila CHABURSKY, Borys To: Five Prime Therapeutics Inc., VEJVODA, Josef To: Acerus Pharmaceuticals Corp., Director (December) To: Acerus Pharmaceuticals Corp., Director (December) Phone: 415-365-5800 Director (December) Phone: 416-679-0771 Phone: 416-679-0771 ISLAM, Khalid, PhD COLES, Tony, MD To: Fennec Pharmaceuticals Inc., YAARI, Aharon To: CRISPR Therapeutics, Chairman (December) To: MediWound Ltd., Director Director (December) Phone: 919-636-4530 (December) Phone: 617-580-9212 Phone: +972 8 9324010 LANGER, Dennis H., MD To: enGene Inc., Director (December) Phone: 514-332-4888

PROMOTIONS Resignations

HACKSELL, Uli VAN DEN BOOM, Dirk CARRAZANA, Enrique, MD To: Cerecor Inc. To: Sequenom Inc. From: Acorda Therapeutics Inc., CMO New Title: Chmn., Pres. & CEO (January) New Title: Pres. & CEO (December) (January) Previous Title: Chmn. Previous Title: Interim Pres. & CEO Phone: 914-347-4300 Phone: 410-522-8707 Phone: 858-202-9000 MINTCHEV, Martin, PhD ROUSSEAU, Michael T. WHITE, Ted From: M Pharmaceutical Inc., To: St. Jude Medical Inc. To: Aqua Pharmaceuticals LLC CSO (December) New Title: Pres. & CEO (January) New Title: Pres. & General Mgr. Phone: 604-428-0511 Previous Title: COO (January) Phone: 651-756-2000 Previous Title: COO Phone: 610-644-7000 OLIVA, Christina, MD SUNDSTROM, Lisa From: Nordic Nanovector ASA, To: Sanuwave Health Inc. WILSON, Angela CMO (January) New Title: CFO (December) To: NantKwest Inc. Phone: +47 22 18 33 01 Previous Title: Interim CFO New Title: CFO (November) Phone: 770-419-7525 Previous Title: VP, Finance SHKRELI, Martin Phone: 858-633-0300 From: Turing Pharmaceuticals AG, CEO TILES, Ron (December) To: Turing Pharmaceuticals AG Phone: 646-356-5577 New Title: Chmn. & Interim CEO (December) Previous Title: Chmn. Phone: 646-356-5577

46 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com ONTHEMOVE

1995 2015

E M A

Marking The 20th Anniversary Of The European Medicines Agency

We commemorate the 20th anniversary with this special report that discusses the EMA’s achievements, its shortcomings, and the future of EMA and EU pharmaceutical regulation. www.PharmaMedtechBI.com/EMA20th

©2016 Informa Business Intelligence, Inc., an Informa company | IN VIVO: The Business & Medicine Report | January 2016 | 47 dealmaking This issue’s Dealmaking covers deals made: December 2015 Derived from Strategic Transactions, Informa’s premium source for tracking life sciences deal activity, the Dealmaking column is a survey of recent health care transactions listed by relevant industry segment – In Vitro Diagnostics, Medical Devices, Pharmaceuticals, and Research, Analytical Equipment and Supplies – and then categorized by type – Acquisition, Alliance, or Financing.

In Vitro Diagnostics Pharmaceuticals Celgene, Inception IBD form collaboration involving ulcerative colitis and Crohn’s Alliances Mergers & Acquisitions Chong Kun to sell Neovacs’ IFN-alpha kinoid AEterna Zentaris gets some US rights to AstraZeneca pays $2.5bn, plus earn-outs, for vaccine in South Korea Armune’s Apifiny prostate cancer test majority stake in Acerta Pharma CKD gets rights to sell S1’s Lorexys in AstraZeneca buys Takeda’s respiratory Financings South Korea business for $575mm Nanosphere nets $9.1mm via RDO Takeda partners with Cour for celiac disease Sanofi and Boehringer enter discussions to immune therapy T2 Biosystems nets $32mm through public swap key businesses; Boehringer would pay offering €4.7bn cash XL-protein applies technology to Easton targets Cytos, Kuros merge to form leader in tissue repair and orthobiologics Gilead gets filgotinib rights from Galapagos; Medical Devices deal value could top $2bn Horizon Pharma acquires Crealta for $510mm Mergers & Acquisitions Galena sells Zuplenz US rights to Midatech SK Capital buys IBA Molecular from CapVest CooperSurgical buys Research Instruments Zymeworks and GSK enter into collaboration for $51mm Ligand buys antibody discovery firm OMT for antibodies for $178mm CryoLife pays $130mm in cash and stock for Lilly is Halozyme’s latest Enhanze partner heart valve maker On-X Life Technologies Alliances Intrexon partners ActoBiotics platform with Getinge acquires Stericool for undisclosed sum Mitsubishi Tanabe gets rights to Akebia’s Janssen in metabolic disorders vadadustat for CKD-related anemia Medical Developments buys Avita’s Ligand licenses three Captisol-enabled respiratory business Amgen, Merck ally in combination trials programs to Rodes Arsia, Biogen partner in subcutaneous Alliances Mallinckrodt buys three of The Medicine’s hemophilia therapies Co.’s hemostasis products for $175mm plus Acelity acquires the SNaP negative wound Aegensys, Bellicum ally in CART therapies milestones pressure therapy system from Spiracur Biovista pens COSS deal with Astellas Xoma partners XMetA antibody program BSN Medical, Ortopedicos Futuro form JVs in with Novo Nordisk Columbia and Ecuador EUSA Pharma gets exclusive tivozanib rights from Aveo in Europe and other select Roche teams with Pieris in immuno- GSK signs medication adherence countries oncology collaboration with Propeller Health Bavarian Nordic, Janssen ally in HPV vaccines Roche signs autologous cell therapy deal Medtronic, Samsung ally again, this time in with SQZ neuro Bayer, CRISPR form gene editing JV to cure blood disorders, blindness, and congenital Boehringer and MD Anderson collaborate in Toshiba America Medical, Ziehm Imaging to heart disease pancreatic cancer offer imaging solutions to US customers Innovus chooses Bio Task to sell its products Proximagen partners VAP-1 inhibitor with Financings in Malaysia Roche CryoLife secures credit facility to fund BioAtla, Pfizer partner in cancer antibody Financings acquisition of On-X Life therapies Aeolus raises $6.7mm in PIPE HART enters into $15mm common stock Viiv acquires Bristol’s early- and late-stage purchase agreement HIV candidates AEterna Zentaris nets $15.4mm through public offering NeuroMetrix raises $13.8mm in preferred Neon, Bristol test NEOPV01/Opdivo stock private placement combination AntriaBio gets initial $2mm of possible $15mm private placement SeaSpine enters $30mm credit facility Chong Kun Dang to sell Cardiome’s Brinavess agreement with Wells Fargo in South Korea BioPharmX raises $5.9mm in PIPE

48 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com DEALMAKING

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In Vitro Diagnostics Instruments Ltd. (RI), a privately held UK-based firm specializing in systems and devices for the in vitro Latest preferred share sale nets $53mm for Alliances fertilization and assisted reproductive technologies CTI BioPharma (ART) markets. The deal is valued at $51mm, or three /In Vitro Diagnostics times RI’s trailing 12-month revenues of $17mm. (Dec.) Erytech closes €25.4mm private placement AEterna Zentaris Inc. The deal significantly enhances CooperSurgical’s ICON PLC raises $350mm in senior notes Armune BioScience Inc. own IVF offerings. RI’s micromanipulation products include the RI Witness ART management system, Kite Pharma nets $273mm through public Armune BioScience Inc. granted AEterna Zentaris Inc. which uses radiofrequency identification to track offering rights to sell its Apifiny prostate cancer diagnostic to des- and record patient sample data. The company also ignated medical professionals in the US. For those tests provides consumables (pipettes, handling systems, Merrimack nets $168mm through private that it markets, AEterna gets sales commissions. (Dec.) sedimentation chambers); lab thermometers and debt sale Apifiny is the only cancer-specific non-PSA blood test pH monitors; products for intracytoplasmic mor- phologically selected sperm injection; tools for PGD Northwest Biotherapeutics nets $11.7mm for prostate cancer. It tests for autoantibodies produced by the immune system in response to cancer, provid- (preimplantation genetics diagnosis) biopsy; and in RDO ing physicians with an avenue for earlier detection laser-assisted hatching. Danish biotech Nuevolution completes and treatment planning. AEterna is looking forward CryoLife Inc. to promoting Apifiny as an way to get its sales force SEK250mm IPO On-X Life Technologies Inc. trained and exposed to the oncology market ahead of Orgenesis sells equity/debt to meet terms of FDA approval for the company’s Phase II prostate cancer In a move that gives it access to the $220mm me- MaSTherCell purchase compound Zoptrex (zoptarelin). The company also sees chanical heart valve market, CryoLife Inc. is paying an opportunity for Apifiny to qualify as a companion $130mm – $91mm in cash and $39mm in stock Aspire Capital commits to buy $10mm in diagnostic for Zoptrex. (3.7mm shares) – to acquire closely held On-X Life Ritter equity Technologies Inc. (Dec.) Financings To finance the acquisition, CryoLife received a com- Sunesis nets $24mm through public sales of /In Vitro Diagnostics mitment from Capital One, Fifth Third Bank, and common and preferred stock Citizens Bank for a five-year senior secured facility, Teva nets $7.24bn in concurrent public Nanosphere Inc. consisting of a $75mm term loan and a $20mm revolving credit facility. On-X is a leading provider of offerings Molecular diagnostics firm Nanosphere Inc. netted $9.1mm through the registered direct offering of artificial heart valve replacement and repair products. Viralytics closes A$28mm oversubscribed 21.3mm common shares at $0.47 each (a 43% dis- The On-X aortic heart valve is the only mechanical PIPE count) to accredited investors. The company also is- valve that is FDA approved and clinically proven to sued five-year warrants to buy another 21.3mm shares be safer with less anticoagulation. The product is exercisable at $0.70 each. Rodman & Renshaw (a unit comprised of pure pyrolytic carbon (as opposed to of HC Wainwright) was the placement agent. (Dec.) silicon carbide), making it the longest lasting heart Research, Analytical valve replacement on the market. The On-X aortic and Equipment & Supplies Investment Banks/Advisors: HC Wainwright & Co.; mitral prosthetic valves have been safely implanted Joseph Gunnar & Co.; LifeSci Capital LLC; Rodman & in about 200k patients throughout the world. On-X Mergers & Acquisitions Renshaw Capital Group Inc. is also developing the Chord-X mitral chord repair device. In 2014, the company generated $33mm in T2 Biosystems Inc. ADDvise signs letter of intent to acquire revenue. CryoLife will sell the devices with On-X’s LabRum for deal valued at up to $5.3mm T2 Biosystems Inc. netted $32mm through the public sale existing sales team and its own US cardiac surgery of 3.5mm shares at $9.75. The company is developing in sales force. On-X’s mechanical heart valve business Honeywell acquires research chemicals vitro diagnostics for hemostasis and infectious diseases is complementary to CryoLife’s existing tissue valve business from Sigma-Aldrich utilizing its T2 Magnetic Resonance platform (T2MR). (Dec.) business. Investment Banks/Advisors: Canaccord Investment Banks/Advisors: Canaccord Genuity Inc.; Cantor Genuity Inc. (CryoLife Inc.); Piper Jaffray & Co. (On-X Fitzgerald & Co.; Goldman Sachs & Co.; Leerink Partners LLC Life Technologies Inc.) Getinge AB Stericool Medical Devices Getinge AB’s Infection Control business acquired Stericool, a seven-year-old private firm developing Mergers & Acquisitions low-temperature sterilization systems. (Dec.) /Medical Devices Stericool’s products incorporate hydrogen peroxide cold plasma technology, which provides the highest Cooper Cos. Inc. sterilization efficacy without any toxic byproducts CooperSurgical Inc. and prevents any damage to medical equipment. Research Instruments Ltd. The use of low-temperature sterilization is an ideal CooperSurgical Inc., the women’s health device alternative for the minimally invasive surgery market division of Cooper Cos. Inc., acquired Research because surgical devices are extremely sensitive

to the high temperatures and pressure of steam tion network and be the exclusive promotion partner angiographic and CT imaging. Ziehm’s mobile C-arm sterilization. For 2015, Stericool’s sales are expected for the No-Varix products. In the last six months, BSN technology offers flexibility, efficiency, and advanced to hit $2.3mm. Just recently, the Infection Control has acquired three firms focused on the compression safety features, which will allow Toshiba to provide business licensed exclusive worldwide distribution garment market – Wright Therapy Products, Farrow- the right imaging and treatment for their patients. rights to TSO3 Inc.’s Sterizone low-temperature ster- Wrap, and JoViPak. ilization system. GlaxoSmithKline PLC Financings Medical Developments Propeller Health /Medical Devices International Ltd. Propeller Health agreed to nonexclusively develop Avita Medical Ltd. and manufacture for GlaxoSmithKline PLC a custom CryoLife Inc. Medical Developments International Ltd. (MDI) is sensor for GSK’s Ellipta dry powder inhaler to be used To finance its acquisition of private heart valve firm paying $2.64mm – $2.2mm cash and either 125k MDI in asthma and COPD studies. (Dec.) On-X Life Technologies Inc., CryoLife Inc. received a shares escrowed for six months or $440k cash – for GSK has the option to negotiate exclusive com- commitment from Capital One, Fifth Third Bank, and Avita Medical Ltd.’s respiratory device business. (Dec.) mercialization rights to the sensor for its marketed Citizens Bank for a five-year senior secured facility, consisting of a $75mm term loan and a $20mm revolving MDI gains Avita’s Funhaler easy-to-use small volume respiratory drugs administered by Ellipta. Propeller spacer for pediatric asthma, and Breath-A-Tech inhaler already has a partnership with Boehringer Ingelheim credit facility. (Dec.) for pediatric and adult asthma and COPD. Both are GMBH to develop a custom sensor for its Respimat in- Harvard Apparatus Regenerative haler. Propeller provides an FDA cleared digital health sold throughout Australia. The use of spacers with Technology Inc. a puffer delivers more medication directly into the platform for chronic respiratory disease. In conjunc- lungs, thus making medicine more effective and tion with the collaboration, the data collected will be Harvard Apparatus Regenerative Technology Inc. en- reducing side effects. MDI’s respiratory portfolio wirelessly transmitted to GSK. The company is backed tered into a two-and-a-half-year $15mm common stock includes space chambers which fit all asthma and by Safeguard Scientifics, the California HealthCare purchase agreement with Aspire Capital Fund LLC. The COPD medication devices, plus masks and peak flow Foundation, the Social & Capital Partnership, and company has completed an initial sale of 500k shares meters for asthma management. Avita chose to divest Walgreens, which have invested over $23mm to at $2. Proceeds will be used to fund research, develop- the respiratory assets to focus on its regenerative date. Propeller’s platform is currently used in over 35 ment, and commercialization activities. HART recently medicine/wound care business. commercial programs in the US and is compatible received promising results on its Gen2 implants. (Dec.) with the majority of inhalers. The device has received Alliances FDA 510(k) Class II clearance. NeuroMetrix Inc. /Medical Devices Medtronic PLC NeuroMetrix Inc. grossed $13.8mm in a preferred stock private placement of 13.8k Series C convertible Samsung Electronics Co. Ltd. preferred shares at $1,000. (Dec.) Acelity LP Inc. Samsung Electronics America Inc. Spiracur Inc. Medtronic PLC and Samsung Electronics America Investment Banks/Advisors: Rodman & Renshaw Acelity LP Inc. enhanced its advanced wound therapy Inc. are partnering to develop digital health devices Capital Group Inc. offerings through the purchase of Spiracur Inc.’s SNaP to help neuromodulation patients and their health SeaSpine Holdings Corp. disposable negative pressure wound therapy (NPWT) care providers. (Dec.) system. (Dec.) SeaSpine Holdings Corp. (surgical devices for spinal Neuromodulation therapy involves the targeted disorders) secured a $30mm credit facility with Wells SNaP is indicated for use in the post-acute setting, delivery of electrical pulses and pharmaceuticals Fargo Capital Finance. The loan has a term of three providing patients a discreet, non-powered device to specific CNS sites. Medtronic’s neuromodulation years with the option to be extended an additional to treat hard-to-heal wounds. The system consists business – part of its restorative therapies group, year. The facility bears a floating annual rate based on of small canister that both stores fluids (exudate) which accounts for $6.8bn, or about a third of the monthly average borrowings, ranging from 1.25% to removed from the wound and generates negative company’s annual sales – makes neurostimulation 1.75% for base rate loans and LIBOR + 2.25% to LIBOR pressure or suction, and also includes a hydrocol- devices and implantable drug delivery systems. The + 2.75% for LIBOR loans. Proceeds will support prod- loid dressing applied over an interface layer to form deal leverages Medtronic’s expertise in this field uct launches, expansion of SeaSpine’s orthobiologics a flexible seal around the wound. Acelity adds SNaP with Samsung’s proficiency in consumer electronics, manufacturing, and potential future acquisitions. (Dec.) to its NPWT products sold by the company’s Kinetic digital media, and information technologies. The col- Concepts Inc. (KCI) division, including the VAC line laboration’s goal is to develop Android-based tools and SensaTRAC technology. capable of wirelessly receiving/delivering real-time health data from Medtronic devices to improve Pharmaceuticals BSN Medical GMBH patient and physician interactions. The partnership Ortopedicos Futuro aims to provide patients suffering from chronic pain, Mergers & Acquisitions Ortopedicos Futuro Columbia SAS movement disorders, incontinence, and other condi- /Pharmaceuticals Ortopedicos Futuro SA tions with access to mobile technologies so they can transmit data (via smartphones, wearables, or tablets) BSN Medical GMBH and Ortopedicos Futuro cre- AstraZeneca PLC to their physician to better manage therapy regimens ated a joint venture to sell compression garments in Acerta Pharma BV Columbia, Ecuador, and neighboring markets. (Dec.) and track and monitor symptoms. In June 2015, the companies signed a similar partnership in diabetes. AstraZeneca PLC is further strengthening its blood BSN will contribute products from its vascular care cancer assets by acquiring a 55% stake in three- portfolio, which includes the JOBST line of compres- Toshiba Corp. year-old private biopharma Acerta Pharma BV. Total sion garments and bandages for various venous and Toshiba America Medical Systems Inc. consideration for the initial stake is $4bn, with $2.5bn lymphatic diseases and conditions such as varicose Ziehm Imaging Inc. payable up front and the remainder within the next veins, deep vein thrombosis, chronic venous insuffi- Toshiba America Medical Systems Inc. and Ziehm three years. (Dec.) ciency, venous ulcers, peripheral edema, and lymph- Imaging Inc. are teaming up to provide each other’s edema. Ortopedicos Futuro is providing its No-Varix Acerta’s key asset is acalabrutinib (ACP196), an oral mobile C-arms for interventional and surgical cardio- compression garments and customer access through Bruton’s tyrosine kinase (Btk) inhibitor in Phase III its 23 stores throughout Columbia and Ecuador. In vascular imaging in the US. (Dec.) trials for chronic lymphocytic leukemia and Phase II Columbia, the JV will operate as Ortopedicos Futuro Mobile C-arms are used in interventional and surgical for other blood cancers and solid tumors. Regulatory Columbia SAS and in Ecuador as Ortopedicos Futuro imaging. Ziehm will offer Toshiba’s Infinix line, which submissions are expected during the second half of SA; they will include Ortopedicos Futuro’s current offers clear and fast vascular and cardiac imaging 2016; the further $1.5bn payment from AZ is due operations in both countries. Through the agreement, for use in complex procedures. Toshiba’s products upon receipt of regulatory approval for any indication BSN will have access to Ortopedicos Futuro’s distribu- also have applications in neurology and combined in the US or at the end of 2018, whichever comes first.

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AZ also holds an option to acquire the remaining 45% If completed, Boehringer would pay Sanofi €4.7bn Crealta’s key product, Krystexxa (pegloticase), is the of Acerta for an additional payment of $3bn (net of ($5.16bn) in cash. Currently the eighth largest in the only FDA-approved treatment for chronic refractory certain costs, incurred payments, and future adjusting world (with estimated 2015 revenues of €1.6bn), gout, a type of arthritis caused by excess uric acid in terms.) Acalabrutinib is a next-generation Btk inhibi- BI’s CHC offerings include lead products Buscopan the blood. Crealta got the drug through its $120.4mm tor, making it a promising therapy for patients who (antispasmodic); the laxative Dulcolax; Pharmaton, late-2013 acquisition of Savient Pharmaceuticals are intolerant to first-generation options (including a multivitamin; cough treatments Mucosolvan and following a court-approved auction. Horizon will AbbVie/J&J’s Imbruvica (ibrutinib)) due to negative Bisolvon; and cold therapy Mucoangin/Lysopaine. sell Krystexxa using its seasoned sales force having side effects. It is also demonstrating positive results The brands are all highly complementary to Sanofi’s expertise in rheumatology and orphan diseases. when used in combination with immunotherapies existing CHC products such as the allergy treatments The drug will fit nicely into Horizon’s portfolio which such as PD-1/PD-L1 inhibitors. (AZ’s MedImmune Allegra and Nasacort; digestive aids Maalox, Essentiale, includes Rayos (prednisone) for inflammatory con- unit developed the PD-L1 inhibitor durvalumab and Enterogermina; and the pain killers Doliprane, ditions including arthritis and the osteoarthritis (MEDI476), which Celgene licensed rights to earlier No-Spa, and Dorflex. Pro forma, Sanofi could see drug Pennsaid (diclofenac). Crealta has one other this year.) The investment in Acerta comes at a busy sales of €5.1bn, with a strongly enhanced presence product, Migerot (ergotamine tartrate and caffeine time for AZ; a day prior, the Big Pharma announced in Germany and Japan, where the Big Pharma’s CHC suppositories), which is sold for treating migraines. that it will pay $575mm for a portfolio of respiratory exposure is limited. Boehringer Animal Health could Investment Banks/Advisors: Jefferies & Co. Inc. (Ho- medicines from Takeda, and last month, it bought see pro forma revenues of €3.8bn (up from €1.13bn in rizon Pharma PLC) hyperkalemia drug developer ZS Pharma for $2.7bn. 2014) through the addition of Merial’s offerings in pet IBA Molecular Inc. Investment Banks/Advisors: Goldman Sachs & Co.; care, farm animal health, and veterinary public health. Jefferies & Co. Inc. (Acerta Pharma BV) SK Capital Partners entered into a definitive agreement Cytos Biotechnology AG to acquire IBA Molecular from CapVest Partners LP. AstraZeneca PLC Kuros Biosurgery AG The acquisition is expected to close by the end of Q1 Takeda Pharmaceutical Co. Ltd. 2016. The company was jointly owned by SK Capital Public Swiss firm Cytos Biotechnology Ltd. and closely and Ion Beam Applications SA. (Dec.) AstraZeneca PLC paid $575mm for Takeda Pharmaceu- held Kuros Biosurgery AG are merging to create tical Co. Ltd.’s respiratory drug business. The transaction leading biosciences company in the tissue repair and IBA Molecular develops, manufactures and distributes includes the transfer of 200 employees to AZ. (Dec.) regeneration space. (Dec.) radiopharmaceutical products and services for molecular imaging in Europe and Asia. The company has Takeda divested the unit so that it can continue to Each Kuros share will convert into 27 newly issued a pipeline of diagnostic and therapeutic tracers for allocate more resources toward its four core areas of Cytos shares, and existing options and conversion personalized medicine. IBA also provides educational, gastroenterology, oncology, CNS, and cardiovascu- rights for Kuros shares will be rolled over into com- technical and marketing support. In August 2015 IBA lar/metabolic. AZ, on the other hand, is building in parable rights for Cytos shares. Post-transaction, Cytos sold its US operations to Illinois Health & Science, a respiratory, having also bought Almirall’s respiratory and Kuros will have 20%/80% ownership, respectively, non-profit health care system. operations (including the marketed COPD drug Eklira in the combined firm, which will operate as Kuros (aclidinium) plus preclinical-Phase III candidates) in Biosciences AG. Kuros’s current top executives will Ligand Pharmaceuticals Inc. 2014 and Pearl Therapeutics, which had the Phase retain their roles, and the board will be led by Cytos’ Open Monoclonal Technology Inc. III COPD program PT003 (formoterol and glycopyr- chairmen and have representation from both firms. Ligand Pharmaceuticals Inc. bought private antibody rolate), in 2013. In addition, earlier this year AZ got Kuros has two biomaterial platforms – one based on discovery company Open Monoclonal Technology US and Canadian rights to Actavis’ (now Allergan’s) fibrin sealants, and the other based on a proprietary Inc. (OMT; mAb platform using transgenic rats and branded respiratory drugs. AZ’s respiratory sales – synthetic technology that mimics fibrin. Leading its mice) for $178mm in cash and stock. (Dec.) driven by Symbicort (budesonide and formoterol) pipeline is KUR023, a biomaterial designed to seal and Pulmicort (budesonide) – are only projected to the dura following brain and spinal surgery. Next in Ligand will pay approximately $92.6mm in cash and grow at a 0.8% CAGR from 2014-2024 (from $5.1bn line is the orthobiologic candidate KUR111, which issue $85.4mm million in Ligand common stock to $5.5bn) according to Datamonitor, and the com- has completed Phase IIb for bone fractures. Its third (about 780k shares). OMT was founded in 2008 by pany’s recent deals could potentially improve that program, KUR113, is also an orthobiologic that’s Roland Buelow, PhD, its current CEO, who will stay growth. The current transaction includes Daxas/Dali- completed Phase II. Kuros recently closed a $20mm on after the acquisition as VP, Antibody Technologies. The company’s OmniAb platform involves the genetic resp (roflumilast), a PDE4 inhibitor for COPD; Alvesco financing to support CE mark approval for KUR023 engineering of animals for the generation of naturally (ciclesonide), an inhaled corticosteroid for asthma; and move KUR111 into US Phase III trials. Cytos brings optimized monospecific, bispecific, and polyspecific Omnaris (ciclesonide) for allergic rhinitis; regional and to the table preclinical CYT003, which was created us- human therapeutic antibodies and includes three local products; and preclinical candidates. Regarding ing the firm’s bacteriophage Q beta-derived virus-like transgenic rodent models: OmniRat (mAb technol- Daxas, AZ already held the North American license particle (VLP) technology. A few months ago Cytos ogy based on rats including a complete immune from Actavis, which had rights to the product via licensed Checkmate Pharmaceuticals exclusive system to produce antibodies with human idiotypes), a 2009 deal between Forest (acquired by Actavis) rights to the VLP vaccine technology and CYT003 and Nycomed (owned by Takeda and called Takeda OmniMouse (transgenic mice that complement Om- in exchange for $90mm in development milestones niRat and expand epitope coverage), and OmniFlic Pharmaceuticals International GMBH). The present and double-digit royalties. Checkmake will study the agreement now gives AZ full ownership of Daxas, and, (a fixed light chain designed for the development candidate for cancer. Under a January 2015 tie-up, of bispecific fully human antibodies). OMT says all as a result, the company is no longer responsible for OnCore Biopharma (now part of Arbutus Biopharma) royalty payments in the US. Sales for Daxas (excluding antibodies generated through these platforms have has exclusive rights to the VLP platform in a deal high affinity, specificity, expression, solubility, and those for AZ in the US), Alvesco, and Omnaris totaled worth up to $402mm in development milestones $198mm for FYE March 2015. stability, thereby providing partners with more rapid and $120mm in sales milestones, plus double-digit discovery capabilities. OMT has 16 OmniAb alliances Boehringer Ingelheim GMBH royalties. OnCore can explore the technology in six with Big Pharmas such as Amgen, J&J (Janssen), Sanofi potential infectious diseases including hepatitis B and Pfizer; first-tier biotech Celgene; and various but excluding influenza. These deals will remain in other biopharma companies including Genmab, Sanofi and Boehringer Ingelheim GMBH entered place once the merger closes. Cytos had been study- WuXi, and most recently Seattle Genetics, which into exclusive discussions surrounding the swap of ing CYT003 in Phase IIb clinical trials for asthma but just last month gained rights to the platform for key businesses that could make Sanofi the number those studies were terminated in April 2014 because development of oncology antibody-drug conjugates. one consumer health care (CHC) firm in the world and it didn’t meet a primary endpoint. Along with the OmniAb technology suite, Ligand is help Boehringer become the second largest animal also getting these 16 fully funded partnerships and health company globally. (Dec.) Horizon Pharma PLC antibody-specific licenses; these alliances have been The partners are contemplating an exclusive busi- Crealta Pharmaceuticals LLC structured similarly to Ligand’s licenses for its Captisol ness swap in which Sanofi would hand over its Horizon Pharma PLC is paying $510mm in cash for drug formulation technology with a combination animal health business Merial to BI in exchange for two-year-old specialty pharmaco Crealta Pharma- of up-front license payments, annual technology BI’s CHC business (excluding the firm’s China unit). ceuticals LLC. (Dec.) access fees, development and commercialization

52 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com DEALMAKING

milestones, and royalties (typically in the low- to mid- an up-front payment, up to $100mm in develop- oncology area) earlier this year. Under the current single digits). Ligand anticipates OMT’s licensing deals ment, regulatory, launch, and sales milestones, plus deal, Aveo could see a total of up to $400.5mm, plus could generate over 30 clinical candidates in the next royalties. Biogen sells two hemophilia drugs, Eloctate tiered royalties ranging from the low-double-digits 10 years. Ligand also predicts three antibodies from and Alprolix, both infusions. The development of to the mid-twenties. (A percentage of all milestones the OMT platform will be in Phase I by the end of 2017, subcutaneous therapeutics will allow hemophilia and royalties will go to Kyowa.) EUSA pays $2.5mm and expects as many as 15 antibodies could enter the patients to better adhere to their treatments, which in R&D money up front, with an additional $20mm clinic (or potentially be more advanced) by 2020. The are currently dosed via IV. in R&D funding due if the company decides to use transaction is projected to add 5% to Ligand’s 2016 Aveo’s Phase III data relating to third-line RCC. (After revenue (which is forecasted between $113-117mm, Astellas Pharma Inc. its rejection, the FDA told Aveo earlier this year that including $6mm in sales from the OMT business) and Agensys Inc. it could investigate the project’s use for third-line 7-10% to its annual revenue over the next decade, Bellicum Pharmaceuticals Inc. RCC based on a new trial design.) Aveo may also plus potential royalties from existing deals. Astellas Pharma Inc.’s Agensys Inc. subsidiary licensed receive $2mm in research funding if EUSA chooses Bellicum Pharmaceuticals Inc. worldwide rights to to run a Phase I combination study of tivozanib Alliances use its technology to develop and commercialize cell with a checkpoint inhibitor. A variety of regulatory /Pharmaceuticals therapies, including chimeric antigen receptor T-cell milestones are also possible. EUSA could pay $4mm (CART), for tumors expressing the prostate stem cell upon EMA marketing approval; $2mm per country antigen (PSCA). (Dec.) upon reimbursement approval in each of France, Akebia Therapeutics Inc. Germany, Italy, Spain, and the UK; and $2mm each Mitsubishi Chemical Holdings Corp. Agensys receives an up-front fee, clinical and sales for marketing approval in three out of five specific Mitsubishi Tanabe Pharma Corp. milestones, and single-digit sales royalties. Astellas or countries (Argentina, Australia, Brazil, S. Africa, and Agensys keeps an option to commercialize in Japan Venezuela). Aveo is also eligible for $2mm if EUSA files Akebia Therapeutics Inc. granted Mitsubishi Tanabe any PSCA-targeting drug developed with Bellicum’s Pharma Corp. exclusive rights to develop and sell for EMA marketing approval in each of up to three CART cell technology. Upon exercise, Bellicum would additional indications and $5mm each per indication vadadustat (formerly AKB6548) for anemia related to get an option fee and royalties, and the milestones chronic kidney disease (CKD) in Japan, Taiwan, South when marketing approval comes through for up to due to Agensys would be reduced. The PSCA antigen three more indications, plus up to $335mm in sales Korea, Singapore, Malaysia, India, Indonesia, East Timor, is expressed in various cancer types including pros- Mongolia, the Philippines, Vietnam, Laos, Cambodia, milestones. EUSA funds all regulatory and commer- tate, pancreatic, bladder, esophageal, and gastric. Bel- cialization activities; the company’s initial plan is to Thailand, Brunei, Myanmar, Nepal, Sri Lanka, Bangla- licum will use the licensed IP to continue developing desh, Bhutan, Maldives, Palau, and Tonga. (Dec.) file for marketing authorization approval with the its preclinical pancreatic cancer candidate BPX601. EMA as first-line treatment for advanced RCC during Mitsubishi Tanabe pays $40mm up front, $60mm in The candidate was created using the company’s the first quarter of 2016. funding related to a global Phase III program, and up GoCAR-T technology in which an MC (MyD88/CD40) to $250mm in development and sales milestones, molecular switch enables pharmacologic control Bavarian Nordic AS plus tiered royalties from the low teens up to 20%. over the activation, proliferation, and persistence of Johnson & Johnson Phase II vadadustat is a once-daily oral hypoxia-in- the GoCAR-T cells in a patient. Bellicum plans to move Janssen Pharmaceuticals Inc. ducible factor prolyl hydroxylase inhibitor that raises BPX601 into the clinic in H1 2016. Bavarian Nordic AS licensed Janssen Pharmaceuti- hemoglobin levels and improves iron mobilization in cals Inc. exclusive rights to use its MVA-BN (Modified CKD patients with anemia. The compound originated Astellas Pharma Inc. Biovista Inc. Vaccinia Ankara - Bavarian Nordic) technology to de- at Procter & Gamble, but was handed off to spin-out velop a heterologous prime-boost vaccine for human Akebia when P&G dismantled its pharma business in Biovista Inc. will use its Clinical Outcome Search Space papillomavirus. (Dec.) the mid-2000s. (COSS) technology to identify new indications for some undisclosed Astellas Pharma Inc. compounds. (Dec.) Janssen will use MVA-BN in conjunction with its own Amgen Inc. AdVac to create a vaccine that can target all cancers Merck & Co. Inc. Terms of the deal weren’t disclosed. The COSS sys- induced by HPV. Janssen will fund and perform all tematic discovery platform identifies correlations clinical development, registration, distribution, and Amgen Inc. and Merck & Co. Inc. are teaming up between drugs, targets, pathways, adverse events, to conduct a Phase Ib/III safety and efficacy trial of commercialization activities worldwide. Bavarian and diseases. The information can be used to make Nordic is responsible for all manufacturing related Amgen’s CD19 antagonist Blincyto (blinatumomab) informed decisions about a drug’s development, in combination with Merck’s PD-1 receptor antagonist to MVA-BN. Bavarian Nordic receives $9mm up front, thus help improve the chances of its success. Biovista up to an additional $162mm in development and Keytruda (pembrolizumab) in patients with diffuse has similar agreements with Pfizer (November 2010) large B-cell lymphoma (DLBCL). (Dec.) commercial milestones, and tiered single-digit sales and Novartis (April 2011). Both those deals involved royalties. Prime-boost vaccines have a stronger and Amgen sells Blincyto for acute lymphocytic leukemia, up-front money and milestones. longer-lasting immune response due to increased and is currently studying the therapy in Phase II for antibodies and T-cell responses. The parties seek to B-cell lymphoma. Keytruda is sold as a treatment for Aveo Pharmaceuticals Inc. EUSA Pharma create vaccines that can treat HPV-related cancers melanoma and non-small cell lung cancer, but is also and not just prevent them. The deal builds on an in various stages of development for many other Aveo Pharmaceuticals Inc. (also known as Aveo October 2014 tie-up under which Bavarian Nordic cancers. The firms also agreed to perform a Phase I/II Oncology/B-/) granted EUSA Pharma exclusive licensed Janssen’s Crucell Holland BV subsidiary trial of Amgen’s colony-stimulating factor 1 receptor rights to develop, manufacture, and sell its Phase exclusive worldwide rights to its MVA-BN Filovirus antagonist AMG820 with Keytruda in patients with II VEGF inhibitor tivozanib for renal cell carcinoma vaccine candidate for the Zaire and Sudan strains of select advanced solid tumors, including non-small and potentially other indications in Europe, Latin Ebola and the related condition Marburg disease. That cell lung, colorectal, and pancreatic cancers. AMG820 America (excluding Mexico), Africa, Australasia, and collaboration has resulted in a Phase III Ebola vaccine is currently in Phase I for unspecified solid tumors. New Zealand. (The deal excludes Russia, Ukraine, and candidate combining MVA-BN with AdVac. the CIS, where Pharmstandard holds rights under a Arsia Therapeutics Inc. deal signed earlier this year, and also excludes non- Bayer AG Biogen Inc. cancerous diseases and conditions of the eye.) (Dec.) Bayer HealthCare Pharmaceuticals AG Bayer-CRISPR JV Arsia Therapeutics Inc. and Biogen Inc. are teaming Aveo got tivozanib from Kirin Brewery (now Kyowa up to develop subcutaneously administered he- Hakko Kirin) in 2007, and in 2011 Aveo granted As- CRISPR Therapeutics mophilia treatments as an alternative to the current tellas global rights. Following the FDA’s rejection for Bayer HealthCare Pharmaceuticals AG and CRISPR intravenous therapies. (Dec.) regulatory approval of the compound, Astellas pulled Therapeutics formed a 50/50 joint venture tasked Biogen will have access to Arsia’s patented formula- out of the deal in 2014 and all rights returned to with finding cures for blood disorders (including he- tion technology, which can create high-concentra- Aveo. Ophthotech has since taken rights to develop mophilia), blindness, and congenital heart disease. The tion, low-viscosity subcutaneous dose formulations it for all non-oncology ophthalmic indications (in Bayer LifeScience Center (BLSC), a new R&D innovation of protein and antibody drugs. In return, Arsia gets late 2014), and Pharmstandard got its license (in the unit at Bayer, help set up the JV, which will focus on

©2016 Informa Business Intelligence, Inc., an Informa company | IN VIVO: The Business & Medicine Report | January 2016 | 53 DEALMAKING creating delivery systems for systemic administration Bio Task SND BHD and commercialization rights, with each eligible for of CRISPR-Cas9 technology. (Dec.) Innovus Pharmaceuticals Inc. milestones and royalties. The Big Pharma also gets an exclusive option to license BioAlta’s CAB project that Bayer will provide the JV with $300mm in R&D Innovus Pharmaceuticals Inc. granted Bio Task SND targets the protein CTLA-4, an immune checkpoint funding over five years, and will also take a minority BHD exclusive rights to sell five of its sexual health products in Malaysia. Bio Task made an up-front pay- that hampers the body’s ability to detect cancer. Un- stake in CRISPR for $35mm. BLSC’s Axel Bouchon, der the agreement, BioAtla stands to receive as much PhD, will lead the JV as interim CEO while CRISPR’s ment and is responsible for an agreed-upon transfer price and up to $34mm in sales milestones. (Dec.) as $1bn in up-front, regulatory, and sales milestones, Rodger Novak, MD, will be interim chairman. The plus tiered marginal sales royalties reaching double new entity will be headquartered in London, but Bio Task, which was previously mainly in the diagnos- digits. The deal further strengthens Pfizer’s pipeline also have operations in Cambridge, Massachusetts. tics business and didn’t appear to have any pharma in immune-oncology, a hot area of focus over the last CRISPR is contributing its CRISPR-Cas9 gene editing or OTC products in its portfolio, will now detail the couple years. In November 2014, the firm licensed systems, while Bayer will pitch in protein engineering following products to the 850 gynecologist offices from Merck a PDL-1 antagonist, avelumab, which is that its sales force visits: Zestra, to increase arousal capabilities (potentially glycoengineering and high- currently in Phase III trials. and sexual desire in women; EjectDelay for premature throughput mammalian expression technologies ejaculation; Sensum+ for increasing penile sensitivity; Bristol-Myers Squibb Co. gained in the 2008 acquisition of Direvo) and disease Vesele for increasing sexual and cognitive health; and GlaxoSmithKline PLC know-how. The Big Pharma may get exclusive rights Zestra Glide, a high viscosity water-based lubricant. ViiV Healthcare to both CRISPR Therapeutics’ and the JV’s CRISPR-Cas9 The alliance marks the eleventh commercial partner- technology and IP to develop in blood disorders, ship for Innovus, which now benefits from deals for GlaxoSmithKline PLC’s Viiv Healthcare acquired early- and late-stage HIV candidates from Bristol-Myers blindness, and congenital heart diseases. In return, its products in 61 countries worldwide. Squibb Co. (Dec.) CRISPR has the potential to receive exclusive rights to BioAtla LLC The deal is structured in two parts. Viiv will acquire Bayer’s protein engineering products to use in CRISPR Pfizer Inc. drug candidates, and access to Bayer expertise and the late-stage assets for $317mm up front, $518mm knowledge to apply in the same three diseases. Out- BioAtla LLC and Pfizer Inc. are teaming up to cross- in development and regulatory (first commercial sale) license each other’s antibody assets. (Dec.) side of these indications, CRISPR will have an exclusive milestones, $750mm in sales milestones for each drug, license to CRISPR-Cas9 discoveries for human use, and Pfizer is contributing antibody drug conjugates and tiered royalties. In this transaction, Viiv gets Phase III fostemsavir (BMS663068), an HIV attachment inhibitor/ Bayer for non-human use, including agricultural. (In (ADCs), which include a payload and a delivery sys- GP120env antagonist that has a 62% likelihood of ap- the past, Bayer CropScience has worked with another tem that allows the payload to attach to a cell. BioAtla is handing over conditionally active biologic (CAB) proval according to BioMedTracker, 1% above average gene editing company, Precision BioSciences on antibodies, which can be activated in the presence due to Phase IIb results in treatment-experienced HIV-1 agricultural applications.) Bayer and CRISPR also have of antigens based on the physiological conditions of patients that showed fewer adverse events compared exclusive access to future technology and IP that the the microenvironment. The parties seek to develop with BMS’s marketed product Reyataz (atazanavir) plus JV develops. Bayer is CRISPR’s second major partner; CAB-ADCs that can more safely deliver cancer drugs ritonavir. A regulatory filing is expected in 2018 (the the biotech also recently teamed up with Vertex in to the diseased cell and not healthy tissue, offering candidate has breakthrough therapy designation). Viiv a $2.6bn gene editing deal focused on cystic fibrosis improved treatments for patients with a variety of also received the maturation inhibitors BMS955176 and sickle cell disease. cancer types. BioAtla and Pfizer will split development (Phase IIb, for treatment-naive and treatment-

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54 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com DEALMAKING experienced patients) and BMS986173. In the of recent onset atrial fibrillation to sinus rhythm in Cour Pharmaceutical Development second transaction, Viiv pays $33mm up front, up adults. Cardiome has several licensing agreements Co. Inc. to $587mm in development and regulatory (first for the product including a pact with Eddingpharm Takeda Pharmaceutical Co. Ltd. commercial sale) milestones, $700mm in sales International for marketing in the Asian countries of Takeda Pharmaceutical Co. Ltd. and Cour Pharma- milestones for each product, and tiered royalties China, Taiwan, and Macau. Brinavess is sold in 32 coun- ceutical Development Co. Inc. partnered to develop for discovery and preclinical programs including tries worldwide. Chong Kun recently partnered with treatments for celiac disease and other gastrointestinal BMS986197, a biologic that inhibits maturation, Neovacs SA to market a lupus and dermatomyositis integrase, and capsid. Viiv will offer jobs to 20 BMS conditions based on Cour’s immune-based technol- therapy, and S1 Biopharma for Lorexys (bupropion ogy. (Dec.) drug discovery scientists. Viiv is responsible for and trazodone), a Phase IIb candidate for hypoactive managing and resourcing the programs, while sexual desire disorder in women. The companies will focus on nanotechnologies using BMS will provide R&D support, paid for by Viiv. Viiv Cour’s Tolerizing Immune Modifying nanoParticle is a joint venture that is majority owned by GSK Celgene Corp. (TIMP) platform, which consists of a polymer and and minority owned by Pfizer and Shionogi. It Inception IBD Inc. antigenic proteins which are encapsulated and already markets 12 HIV products, and may pursue Celgene Corp. is partnering with Inception IBD Inc. delivered intravenously. Takeda and Cour will con- combinations with the newly acquired candidates. and has the option to acquire the one-year-old firm centrate on TIMP compounds for celiac disease, in Earlier this year, Viiv and Janssen agreed to develop at the end of the collaboration. (Dec.) hopes of developing a therapy that will allow patients a combination of the former’s integrase inhibitor to ingest gluten while controlling gluten-reactive Tivicay (dolutegravir) and latter’s non-nucleoside Celgene will provide Inception IBD with up to $40mm T-cells. Cour gets money up front plus milestones. reverse transcriptase inhibitor Edurant (rilpivirine). in cash, which the start-up will use to move its small- If Takeda exercises an option to license the celiac (Tivicay and BMS663068 could be one of the po- molecule ulcerative colitis and Crohn’s disease can- compound after Phase IIa, it will pay royalties. (Takeda tential new combinations, according to GSK.) BMS didates from the discovery-stage through preclinical has an additional option to license up to three more didn’t completely exit the HIV market via the deal studies. Inception IBD, which concurrently raised TIMP compounds, which would result in additional with Viiv. While it ended virology drug discovery $14.1mm in Series A financing from Versant Ventures, development, regulatory, and sales milestones, plus two years ago, BMS still retains ownership of the Fonds de solidarité FTQ, and Inserm Transfert Initia- royalties.) The deal could strengthen Takeda’s GI pipe- launched medicines Reyataz, Evotaz, Sustiva, and tive, identifies compounds using its translational line which includes Phase III Entyvio (vedolizumab) for Atripla. Overall, the company is making a push platform and genomic targets identified from analyz- ulcerative colitis and Crohn’s disease, and TAK114, in toward more specialty drugs, including in the areas ing tissue of IBD patients. These competencies can Phase II for ulcerative colitis. of immuno-oncology and fibrosis, and lessening help the firm focus on the key disease factors such Easton Pharmaceutical Co. Ltd. focus on primary care. as dysfunction of the epithelial barrier. Inception IBD is one of six firms incubated by Inception Sciences XL-protein GMBH Bristol-Myers Squibb Co. Inc. since 2011. XL-protein GMBH and Easton Pharmaceutical Co. Neon Therapeutics Ltd. are partnering to develop long-acting biophar- Neon Therapeutics and Bristol-Myers Squibb Chong Kun Dang Pharmaceutical Corp. maceuticals for ophthalmic and potential other Co. agreed to test a combination of the former’s Neovacs SA indications. (Dec.) personalized neoantigen vaccine NEOPV01 and Neovacs SA licensed Chong Kun Dang Pharmaceu- XL-protein will use its PASylation technology, which latter’s Opdivo (nivolimumab). (Dec.) tical Corp. exclusive rights to market in South Korea can extend a compound’s half-life, on a target provide In Phase Ib the partners will review the safety, toler- the interferon-alpha kinoid vaccine for lupus and by Easton. XL-protein will conduct early preclinical ability, and preliminary efficacy of the combination dermatomyositis. (Dec.) studies. Easton will take over further development in melanoma, smoking-associated non-small cell Neovacs will receive €1mm ($1.1mm) up-front, pos- and manufacturing and gets exclusive rights to lung cancer, and bladder cancer. They will also test sibly another €4mm in pre-sales milestones, plus market any resulting drugs in its home territory of neoantigen-specific immune responses in periph- royalties. Neovacs will supply Chong Kun with the China. It also has executive options to license world- eral blood and tumor tissues, and measure PD-L1 finished product and receive a margin within the wide rights and rights for additional indications. XL- expression. Neon is responsible for conducting transfer price. The IFN-alpha kinoid is currently in protein receives an up-front payment; preclinical and the trial at multiple US sites starting in 2016. The Phase IIb. Chong Kun expects to begin the registra- clinical development, regulatory, and commercial biotech’s NEOPV01 contains neoantigens – which milestones; and tiered, mid-to-mid-high single digit tion process in South Korea by the end of 2017, with are expressed on tumors or cells infected with an sales royalties. Half-life extension results in a reduction a launch anticipated in early 2018. Neovacs chose oncolytic virus – taken directly from the patient. in dosing frequency and lower drug costs. Chong Kun as a partner because of its strength in Neoantigen vaccines target the patient’s individual marketing immune suppressive treatments and its immunogenic mutations within the tumor’s DNA. Galapagos NV established partnership with doctors treating lupus NEOPV01 is in preclinical studies for melanoma, Gilead Sciences Inc. patients. glioblastoma, smoking-associated non-small cell A few months after losing a major partner for the proj- lung cancer, and bladder cancer. Neon recently Chong Kun Dang Pharmaceutical Corp. ect, Galapagos NV has penned a new deal for its Phase licensed technology related to the neoantigen S1 Biopharma Inc. II rheumatoid arthritis and Crohn’s disease compound vaccines from Massachusetts General Hospital, filgotinib, granting Gilead Sciences Inc. global rights Dana-Farber Cancer Institute, and the Broad S1 Biopharma Inc. granted Chong Kun Dang Phar- to develop, manufacture, and sell the therapy. (Dec.) Institute. Bristol’s antibody Opdivo (nivolimumab), maceutical Corp. (CKD) rights to commercialize Abbott licensed rights to the JAK1 inhibitor back in a PD-1, PD-L1, and PD-L2 inhibitor, is approved for its sexual dysfunction therapy Lorexys (bupropion/ 2012, and its spin-off AbbVie took over the deal in melanoma, non-small cell lung cancer, and, most trazodone) in South Korea, once approved. (Dec.) 2013. However, earlier this year AbbVie made the recently, renal cell cancer, and is in Phase I-III trials CKD is responsible for up-front and milestone decision to instead focus on its own similar in-house for multiple solid and hematological cancers. payments, plus royalties. It also gets right of first candidate and returned all rights to Galapagos. (Gala- Cardiome Pharma Corp. refusal for future sales agreements related to ad- pagos could have seen up to $1bn in milestones from Chong Kun Dang Pharmaceutical Corp. ditional indications. S1 completed Phase IIa trials that deal, in addition to money that had already been with Lorexys in women with hypoactive sexual shelled out by Abbott.) Gilead now pays $725mm up Cardiome Pharma Corp. licensed Chong Kun Dang desire disorder, and is preparing the therapy for front ($300mm in cash and a $425mm equity invest- Pharmaceutical Corp. exclusive rights to market its Phase IIb. It is an oral non-hormone treatment that ment, purchasing 6.7mm Galapagos shares (a 15% intravenous Brinavess (vernakalant) for atrial fibrillation works by restoring normal levels of the neurotrans- stake) at $63.42, a 15% premium) and committed to in South Korea. (Dec.) mitters dopamine, serotonin, and norepinephrine up to $1.35bn in milestones, plus royalties starting Chong Kun is responsible for obtaining regulatory to regulate sexual inhibition and excitation. CKD at 20%. The companies will jointly conduct trials, approval and commercializing the drug in its home looks forward to the international exposure it gains beginning with Phase III studies in RA, which will be territory of South Korea, where a launch is anticipated through the deal as it plans future global marketing co-funded 20% by Galapagos; Gilead is responsible for 2017. Brinavess is indicated for rapid conversion collaborations for Lorexys. for manufacturing, as well as global marketing and

©2016 Informa Business Intelligence, Inc., an Informa company | IN VIVO: The Business & Medicine Report | January 2016 | 55 DEALMAKING sales activities. Galapagos holds onto an option to matrix – to help with dispersion and absorption of Mallinckrodt PLC co-promote in the UK, Germany, France, Italy, Spain, subcutaneously delivered drugs that may previously The Medicines Co. Belgium, the Netherlands, and Luxembourg. If it ex- have only been deliverable intravenously. Lilly joins Mallinckrodt PLC paid $175mm in cash to buy three ercises the option, profits in those territories will be a growing pool of large firms that are using Enhanze of The Medicine’s Co.’s hemostasis brands. Up to an split equally. (If it co-promotes in Belgium, the Nether- in their development programs, including Roche, additional $235mm in milestones are payable in the lands, or Luxembourg, Galapagos books those sales.) AbbVie, Janssen, Baxalta, and Pfizer. (Just last month, future. (Dec.) Filgotinib is added to Gilead’s pipeline of earlier-stage Halozyme received a $1mm milestone when Pfizer The deal includes Recothrom, a recombinant topical rheumatology and inflammation projects, including dosed the first patient in a Phase I trial of an Enhanze- compounds for Crohn’s (Phase II), ulcerative colitis thrombin marketed in the US and internationally formulated version of rivipansel for sickle cell anemia.) (Phase II/III), and RA (Phase I). for minor bleeding; PreveLeak, a flexible surgical Intrexon Corp. sealant indicated for use in vascular reconstruction Galena Biopharma Inc. Johnson & Johnson procedures and marketed in the US and Europe; Midatech Pharma PLC Janssen Pharmaceutica NV and Raplixa, a powder fibrin sealant made from To focus efforts on its cancer immunotherapy develop- human plasma-derived fibrinogen and thrombin ment pipeline, Galena BioPharma Inc. has sold off its Intrexon Corp. is partnering with Janssen Pharma- and approved as an adjunct hemostatic for mild-to- US rights to the anti-emetic Zuplenz (ondansetron) to ceutica NV to discover and develop therapies for Type moderate bleeding. Mallinckrodt will sell the prod- Midatech Pharma PLC. (Dec.) II diabetes, obesity, and other metabolic conditions ucts through its Specialty Brands Segment, and says associated with energy dysregulation. (Dec.) that the acquisition enhances its hospital portfolio, Galena originally licensed US rights to the therapy which already includes INOmax (inhaled nitric oxide from MonoSolRx in 2014. Midatech now pays Galena Intrexon will use its ActoBiotics platform, which for hypoxic respiratory failure; gained through the a total of up to $29.75mm ($3.75mm up front and provides in situ expression and secretion of biothera- company’s acquisition earlier this year of Ikaria) and $26mm in sales milestones); Galena agreed to give peutic proteins and peptides to the gastrointestinal the Therakos line of extracorporeal photophoresis $900k of the up-front to MonoSolRx, along with tract via food-grade microbes. The technology offers systems. Mallinckrodt plans to promote Recothrom 20% of any milestone payments it receives. Zuplenz a unique oral delivery system for biological effectors alongside its Ofirmev (acetaminophen) for post- is an oral ondansetron film product for nausea and ideally suited to target various characteristics of surgical pain. vomiting related to chemotherapy, radiotherapy, and Type II diabetes and improve efficacy in maintain- surgery. It was approved by the FDA in 2010 and uses ing long-term glycemic control. Just four months Novo Nordisk AS MonoSol Rx’s PharmFilm oral soluble film technology. ago, Intrexon teamed up with Synthetic Biologics to Xoma Corp. The therapy dissolves on the tongue in less than 30 create ActoBiotics-generated compounds for phenyl- Xoma Corp. licensed Novo Nordisk AS exclusive seconds, making it an ideal option for patients who ketonuria. Intrexon gained the platform through its worldwide rights to develop and commercialize its have trouble swallowing pills due to extreme nausea February 2015 acquisition of ActoGeniX NV. XMetA fully human allosteric monoclonal antibod- or oral irritation. The deal completes Galena’s mission ies. (Dec.) to offload its commercial operations and focus solely Ligand Pharmaceuticals Inc. Xoma gets $5mm up front plus up to $290mm in on development activities. Last month, it sold Sentynl Rodes Inc. Therapeutics US rights to its Abstral sublingual fen- development, regulatory, and commercial mile- tanyl tablets; those rights originally came to Galena Ligand Pharmaceuticals Inc. licensed Rodes Inc. stones, and mid-single-digit to high-single-digit from Orexo in 2013. exclusive global rights to three Captisol-enabled sales royalties (Strategic Transactions estimates 4-9%). programs, two in the neurology field and one in the Xoma keeps commercial rights for rare disease GlaxoSmithKline PLC respiratory area. (Dec.) indications such as endocrine disorders, but Novo Zymeworks Inc. Nordisk has an option to license those rights and, Gained though its 2011 acquisition of CyDex Pharma- Zymeworks Inc. and GlaxoSmithKline PLC will partner if exercised, it would make additional payments. ceuticals, Ligand’s Captisol technology is a chemically Created using Xoma’s ModulX technology, XMetA on the R&D and commercialization of monoclonal and modified cyclodextrin derivative, engineered for safe bi-specific antibody therapeutics. (Dec.) high-affinity antibodies are designed to selectively administration; when linked to an IV or topical drug, modulate/up-regulate the insulin receptor and have The two companies will work to further develop it provides improved solubility, stability, and bio- glucoregulatory activity. In preclinical studies they Zymeworks’ Effector Function Enhancement & Control availability of the active pharmaceutical ingredients. reduced hypoglycemia and weight gain. Because Technology platform (EFFECT) through testing of Rodes, which is picking up all development and XMetA antibodies bind the insulin receptor at a differ- engineered Fc domains tailored to induce specific commercialization costs, will apply the Captisol plat- ent site than insulin, they don’t significantly interfere antibody-mediated immune responses. After the form to fosphenytoin, meloxicam, and budesonide/ with insulin binding. Xoma chose Novo Nordisk as a collaboration has ended, both companies will have azelastine. Captisol-enabled (CE) fosphenytoin is a partner because it’s a leader in diabetes treatments. the right to develop and commercialize the antibody Phase III intravenous (IV) and intramuscular (IM) an- candidates. Specifically, GSK will be allowed to de- Pieris Pharmaceuticals Inc. ticonvulsant for epilepsy. Pfizer’s Cerebyx is currently velop a minimum of four candidates across multiple Roche sold in this same indication, but requires refrigeration; disease areas and Zymeworks will receive preclinical, Rodes’ CE version could be dispensed in vials, syringes, In its second immuno-oncology deal within days, clinical, and commercial milestones of $110mm per Roche received worldwide rights to Pieris Pharmaceu- and pre-mixed bags. Meloxicam is an IV and IM Phase product plus tiered royalties on sales. The deal com- ticals Inc.’s Anticalin programs against an undisclosed I-ready compound for post-surgical, trauma, and bines Zymeworks’ antibody engineering expertise cancer target. The agreement may be expanded to cancer pain used after administration of IV/IM NSAIDS with GSK’s drug discovery capabilities. multiple targets. (Dec.) and in place of opioids. Mobic, currently marketed Halozyme Therapeutics Inc. by Boehringer Ingelheim for arthritis pain, is only Roche also recently teamed up with start-up SQZ to Eli Lilly & Co. available in an oral formulation. CE budesonide/ use the latter’s CellSqueeze technology to engineer B-cells so that they induce the immune system Eli Lilly & Co. is the latest firm to license rights to use azelastine is an intranasal formulation of a fixed- to attack cancer. In the current agreement, Roche Halozyme Therapeutics Inc.’s Enhanze drug delivery dose corticosteroid/antihistamine combination for pays $6.4mm up front and up to $409.3mm in other platform in the development of its drug projects. (Dec.) allergic rhinitis, intended to improve compliance in various fees including R&D funding plus develop- once-daily and twice-daily dosing. The compound The specific compounds were not disclosed, but the ment, regulatory, and sales milestones (Pieris says deal includes up to five targets. Lilly paid $25mm is in a Canadian Phase II proof-of-concept study and the majority of the payments are for development up front and committed to $160mm in develop- Rodes is preparing it for Phase I in the US. For each of milestones). In addition, it is responsible for mid- ment, regulatory, and sales milestones per target, the three programs, Rodes could pay Ligand devel- single-digit-to-low-double-digit royalties (Strategic plus mid-single-digit royalties. Enhanze is based opment and commercial milestones, revenue from Transactions assumes 5-29%). Pieris is in charge of on a patented recombinant human hyaluronidase Captisol sales, and royalties of 8-11% on future net discovery, characterization, and optimization of the enzyme (rHuPH20) that temporarily breaks down sales. This deal creates a pipeline for Rodes, which is Anticalins, and then the partners will review differ- hyaluronan – a key component of the extracellular aiming to establish a specialty pharmaceutical model. ent drug formats through preclinical studies. The

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Big Pharma takes over IND-enabling tests, clinical in various indications including IBS and inflamma- visers. Proceeds will be used to support marketing trials, and marketing. Anticalins are lipocalin (protein) tory pain; it’s unclear which disease the partners will programs for the company’s Violet molecular iodine derivatives that Pieris has engineered so that they now target. Proximagen acquired the VAP-1 assets supplement, to facilitate clinical trials for the topical have high specificity and affinity for multiple targets. from Biovitrum (now Swedish Orphan Biovitrum) in acne treatment BPX01, and to advance additional pipe- Anticalins also have the potential to be delivered via 2009. The success of Proximagen’s VAP-1 inhibitors, line candidates. Back in June BioPharmX completed its different formulations. While not specified, it’s pos- particularly how well their revenues do, will influence IPO, raising $9.3mm. (Dec.) sible that Roche and Pieris will develop a bi-specific approximately 57.5% of the undisclosed amount of therapeutic. Pieris is independently working on such earn-outs to which Proximagen is entitled as part of Investment Banks/Advisors: CRT Capital Group LLC an Anticalin that simultaneously targets HER2 and the Upsher-Smith Laboratories acquisition in 2012. CTI BioPharma Corp. CD137. Pieris already has several collaborations with Biotie has also been trying its luck with the anti-VAP-1 larger pharmacos including Daiichi, Allergan, Takeda, small molecule BTT1023 and the BTT1023 antibody, CTI BioPharma Inc. (blood cancer therapies) netted and Sanofi, but the biotech says the deal with Roche both in the inflammatory area, but Biotie has lost $53mm through the sale of 55k Series N-2 preferred is the first it’s done in the immuno-oncology area. partners for each candidate. Roche turned down an shares at $1k apiece; the shares convert to common at Allergan and Sanofi’s agreements focus on ophthal- option to license BTT1023 and Seikagaku had Asian $1.10. (CTI’s average was $1.18 at the time of the deal.) mology and infectious disease, respectively, while the rights to BTT1023 but returned the program because BVF Partners agreed to purchase 30k of the shares, and others involve undisclosed targets. it no longer fit the company’s business strategy. Other gets two board appointments. (Dec.) potential competitors in the VAP-1 area include Astel- Investment Banks/Advisors: Ladenburg Thalmann & Roche las, BI/Pharmaxis, and R-Tech Ueno. SQZ Biotechnologies Co. Co. Inc.; Piper Jaffray & Co.; Roth Capital Partners Roche partnered with SQZ Biotechnologies Co. to Financings Erytech Pharma SA modify B-cells and trigger an immune-mounted cas- /Pharmaceuticals Erytech Pharma SA (developing tumor starvation cade to treat several types of cancer. (Dec.) therapies for leukemia and other cancers) raised SQZ is entitled to over $500mm, which includes Aeolus Pharmaceuticals Inc. €25.4mm ($27.6mm) through the private sale (to US an up-front payment plus clinical, regulatory, and Aeolus Pharmaceuticals Inc. raised $6.7mm in a and European institutional investors) of 940k ordinary sales milestones tied to multiple products in various private placement from investors including BVF shares at €27 (a 5% discount). Proceeds will fund devel- indications. The company would also receive sales Partners Corp. BVF will purchase $4.5mm in preferred opment of ERY-ASP (GRASPA) for acute lymphoblastic royalties. Using its CellSqueeze technology, in which units consisting of 4,500 Series C convertible preferred leukemia and non-Hodgkin lymphoma, and will also the cell membrane’s pores are temporarily opened shares, convertible into 20.5mm common shares and go towards earlier pipeline projects and technology up as they pass through a microfluidic chip, SQZ warrants for another 20.5mm common shares. Other enhancements. (Dec.) can engineer a patient’s own B-cells by inserting a investors will purchase a total of 10.2mm common tumor-associated protein. This activates killer T-cells ICON PLC shares at $0.22 per share (a 19% discount) along so that they can launch an immune system attack with 5-year warrants for another 10.2mm common ICON PLC raised $350mm in a redeemable senior against the cancer. SQZ, which completed a $5mm shares exercisable at $0.22. Proceeds will be used for note private placement. The notes bear interest at Series A financing earlier this year, holds exclusive the development of AEOL10150 for the pulmonary 3.64% and are due in 2020 with interest payable rights to CellSqueeze from MIT (the company is a effects of acute radiation syndrome; human clinical semi-annually beginning in June 2016. The proceeds 2013 MIT spin-off). The current alliance is Roche’s trials of AEL10150 in idiopathic pulmonary fibrosis and are expected to be used to refinance the company’s first engineered cell therapy deal. Other Big Pharmas radiation oncology; to complete preclinical develop- existing debt. (Dec.) and top biotechs including Novartis and Celgene are ment of AEOL20415 for infectious diseases; and for working with an alternative autologous cell therapy AEOL11114B for Parkinson’s. (Dec.) Kite Pharma Inc. called CART in the immunotherapy field, while Pfizer and Servier are collaborating with Cellectis on the Investment Banks/Advisors: Laidlaw & Co. Kite Pharma Inc. (cancer immunotherapies) netted biotech’s off-the-shelf CART candidates. $273mm through the public sale of 4.2mm common AEterna Zentaris Inc. shares (including the overallotment) at $69. (Dec.) University of Texas MD Anderson Cancer Center AEterna Zentaris Inc. (oncology, endrocrinology, and Investment Banks/Advisors: Citigroup Inc.; Cowen & women’s health) netted $15.4mm through the public Co. LLC; Jefferies & Co. Inc.; RBC Capital Markets; Stifel Boehringer Ingelheim GMBH sale of 3mm shares at $5.55. Investors also received Nicolaus & Co. Inc. Boehringer Ingelheim GMBH (BI) and MD Anderson five-year warrants to purchase 2.3mm shares at $7.10 Cancer Center entered into a collaboration for pancre- (including full exercise of 231k warrants from the Merrimack Pharmaceuticals Inc. atic ductal adenocarcinoma products. (Dec.) over-allotment). The offering closed days after AEterna Merrimack Pharmaceuticals Inc. (cancer drug discov- The partnership combines MD Anderson’s preclinical announced that it licensed rights to sell Armune ery) sold $175mm of its senior secured notes due 2022, concept validation and clinical testing capabilities BioScience’s non-PSA blood test Apifiny for prostate for net proceeds of $168mm. (Dec.) with BI’s innovative medicines for novel targets. The cancer to certain medical professionals in the US. (Dec.) Investment Banks/Advisors: Morgan Stanley & Co. collaboration will be used to identify new therapeutic Investment Banks/Advisors: HC Wainwright & Co.; concepts and biomarkers and to develop break- Maxim Group LLC Northwest Biotherapeutics Inc. through therapy medicines. Boehringer currently has BI853520 in Phase I for pancreatic cancer and AntriaBio Inc. Northwest Biotherapeutics Inc. (cancer immunother- BI836845 in Phase II trials. apies) netted $11.7mm through the registered direct AntriaBio Inc. (extended-release therapies for diabe- sale (to health care-focused institutional investors) Upsher-Smith Laboratories Inc. tes) closed the first tranche of a planned $15mm pri- of 3.5mm common shares at $3.60, a 15% discount. Proximagen Ltd. vate placement. The company raised $2mm through Buyers also received five-year warrants to purchase Roche the sale of 1.03mm Series A preferred shares at $1.95 (a 1.75mm shares at $4.50. HC Wainwright was the place- 27% premium) to company management and board ment agent. (Dec.) Roche received exclusive worldwide development members and accredited investors. Each Series A share and commercialization rights to Proximagen Ltd.’s converts into one common share. Funds will support Investment Banks/Advisors: HC Wainwright & Co. Phase II vascular adhesion protein 1 (VAP-1) inhibitor ongoing Phase I trials of lead candidate AB101, a once- PRX167700 for inflammatory disease. (Dec.) weekly basal insulin for Types 1 and II diabetes. (Dec.) Nuevolution AS Proximagen gets an up-front payment, develop- Nuevolution AS (small-molecule drug screening) ment, regulatory, and sales milestones, plus tiered BioPharmX Corp. completed an initial public offering in Sweden and royalties. The companies will jointly conduct Phase BioPharmX Corp. raised $5.9mm in a common stock Denmark of 14.2mm shares (including the overal- II trials, and Roche may be responsible for late-stage private placement of 4.1mm shares at $1.43 (a 17.2% lotment) at SEK 17.50, resulting in gross proceeds of development. Proximagen has tested PRX167700 premium) from investment vehicles of Franklin Ad- SEK250mm ($29.7mm), up-sized from the original

58 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com DEALMAKING

editorial office 52 Vanderbilt Avenue • 11th floor, SEK225mm amount. The company has applied to trade Viralytics Ltd. New York, NY 10017 its shares on Nasdaq’s First North Premier exchange, www.PharmaMedtechBI.com Viralytics Ltd. (cancer immunotherapies) raised which does not have the same legal status as a regu- A$28mm ($20.3mm) through the private sale of customer service [email protected] lated marketplace. The offering could potentially be 46mm shares at A$0.22 (a 6% discount) to new and the largest on this exchange so far this year. (Dec.) existing investors including OrbiMed (which becomes Investment Banks/Advisors: Avanza Bank AB a substantial shareholder), Biotechnology Value Fund, managing editor and BVF Partners affiliates. Roth Capital Partners was Nancy Dvorin Orgenesis Inc. the placement agent. Proceeds will support the company’s clinical development activities, including a trial health care editor To meet obligations per terms of its March 2015 ac- Ashley Yeo collaboration announced in November investigating quisition of MaSTherCell, Orgenesis Inc. (cell therapies the combination of Viralytics’ Cavatak with Merck’s senior editor and regenerative medicine) raised $10mm in a financ- Keytruda (pembrolizumab) for late-stage bladder Peter Charlish ing of equity and debt. In the equity portion, Orgenesis cancer and lung cancer patients. (Dec.) senior editor, data sold accredited investors 8.23mm common shares at John Hodgson $0.52 each (a 58% premium) for gross proceeds of Investment Banks/Advisors: Roth Capital Partners

editorial staff $4.28mm. It also issued three-year warrants to buy the Jessica Merrill same number of shares at the same price. The com- Sten Stovall pany also secured $5mm in debt with two accredited Research, Analytical Amanda Micklus, Principal Analyst investors. The credit facility terminates on the earlier to Equipment & Supplies occur of November 30, 2016 or when Orgenesis raises contributing editors Deborah Erickson, Regina Paleski in excess of $10mm in an equity investment. As part Mergers & Acquisitions Mark Ratner, Marc Wortman of the debt financing, the firm issued warrants to buy /Research, Analytical Equipment & up to 2.36mm common shares exercisable at $0.53, Supplies research manager plus up to 4.72mm in potential three-year drawdown Steven Muntner warrants. Orgenesis also announced that since June 2015 it has sold $950k in convertible notes. (Dec.) ADDvise Group AB deals analysts LabRum Holding AB Beth Detuzzi, Deanna Kamienski Ritter Pharmaceuticals Inc. Maureen Riordan ADDvise Group AB signed a letter of intent to acquire Ritter Pharmaceuticals Inc. (developing therapies LabRum Holding AB for $4mm (SEK34.5mm) up front plus a potential earn-out of $1.3mm (SEK11.5mm). design supervisor for gastrointestinal diseases) sold Aspire Capital Fund Gayle Rembold Furbert $1mm in equity, consisting of 500k common shares (Dec.) at $2.00 each (a 4% discount). Aspire also committed senior designer The up-front will be paid through a combination of to purchase another $9mm in shares over a 30-month Janet Haniak cash, new ADDvise Series B shares, and debt, and period, during which Ritter controls the timing and the acquisition is expected to close by early 2016. designers amount. (Dec.) Proforma sales and EBITDA for LabRum (October 2014 Jean Marie Smith, Paul Wilkinson - September 2015) are SEK224.3mm and SEK14.7mm, Sunesis Pharmaceuticals Inc. respectively. LabRum is one of Sweden’s largest advertising Sunesis Pharmaceuticals Inc. (blood and solid cancer lab furniture, safety, ventilation and lab equipment Christopher Keeling therapies) netted $24mm through concurrent public companies. The acquisition will result in financial corporate sales offerings. The company sold 9.56mm common shares synergies including a higher expected growth rate John Lucas, Elissa Langer at $0.84 and 20.2k Series B preferred shares at $840 and will create the largest lab supplier within the Nor- Alicia McNiven (each share converts into 1k common). Proceeds dic countries. Investment Banks/Advisors: Mangold Fondkommission AB (ADDvise Group AB) technology operations manager will go towards upcoming clinical development and Chris Trudeau regulatory activities. (Dec.) Honeywell International Inc. vp, e-strategy & development Sigma-Aldrich Corp. Adam Gordon Teva Pharmaceutical Industries Ltd. Honeywell International Inc. acquired the research managing director Teva Pharmaceuticals Industries Ltd. priced concur- chemicals business from Sigma-Aldrich Corp. for an Phil Jarvis rent public offerings of ADSs and convertible preferred undisclosed sum. The acquired business will be folded shares netting $7.24bn including full exercise of the into Honeywell’s Fine Chemicals business and will over-allotment (equal amounts raised in each offer- retain its core leadership team. (Dec.) ing). The ADS offering consisted of 59.4mm ADSs at The acquisition includes the Fluka-branded solvents In Vivo: The Business & Medicine Report [ISSN 2160-9861] $62.50 (including 5.4mm ADSs through exercise of the and inorganic chemistry portfolio along with Sigma- is published monthly, except for the combined July/August over-allotment option) and the convertible preferred Aldrich solvents and the European Economic Area issue, by Informa Business Intelligence, Inc., 52 Vanderbilt offering consisted of 3.7mm shares (including full Avenue, 11th floor, New York, NY 10017. Tel: 888-670-8900(US); chemistry portfolio. The Hydranal and Chromasolv exercise of the 337.5k over-allotment). The convertible brands are also included. The combined business +1-908-547-2200 (outside US); Fax: 646-666-9878. preferred shares will face a mandatory conversion on will reach a broader customer base, expanding into Subscriptions cost $2,630 (online and print) per year. Office 12/15/2018 into between 13 1/3 and 16 ADSs. These titration products, high-purity solvents, reagents, and of publication, The Sheridan Group, 66 Peter Parley Row, shares will pay a 7% dividend payable quarterly starting specialty inorganic chemicals. Berlin, CT 06037. Postmaster: Send address changes to on March 15, 2016 on the liquidation preference of Informa Business Intelligence, 52 Vanderbilt Avenue, 11th floor, $1,000 per share. The proceeds are being used to fund New York, NY 10017. Teva’s already announced acquisition of Allergan’s © 2016 by Informa Business Intelligence, Inc., an Informa company. generic business (previously Actavis) and for it’s Rimsa acquisition. (Dec.) All rights reserved. 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Summary of article from page 14 Value-Based Medtech Rides The Money-Go-Round Into 2016 BY Ashley Yeo The year 2015 was one of low market growth stakeholders’ needs. M&A among medtechs its operating costs higher – than ever, with of just 2% for the wider medtech industry, in the $340 billion to $350 billion global mar- 2016 expected to continue throwing new and companies are facing continued low ket in 2015 is up on 2014 levels, in terms of regulatory, reimbursement, market access levels of growth in the established markets the sheer amount of mega-deals ($1 billion+) and technology challenges at what remains for the next three to five years. M&A aside, completed during the year. Cardiovascular, the single most innovative industry in terms the best way to win new market share now patient monitoring and IVD deals (including of the number of patents filed annually. is by playing to the new payer and provider IVD labs) made up the lion’s share of M&A rules that place a premium on understanding deals. The industry’s job appears harder – and

Summary of article from page 22 Pharma’s Love Affair With Dealmaking:No End In Sight BY Peter Charlish The pace of pharma dealmaking continued of company executives with a financial to some extent this may be offset by the unabated in 2015, climaxing with Pfizer’s services background are continuing to drive appearance of the first biosimilars in the US. agreed $160 billion merger with Allergan. dealmaking. Pricing continues to be a thorny Drug pipelines are full and last year also saw a Growing shareholder expectations, histori- issue, with more big-ticket launches and even steady flow of innovative new products, nota- cally low interest rates, and a new generation the prices of generics creeping up, although bly in the oncology and orphan disease areas.

Summary of article from page 28 Diagnostics In 2015: Past Trends Coalesce, New Roads Open BY Mark Ratner The introduction of Apple’s ResearchKit is design. On the dealmaking front, Roche, the deals attest to two trends heightened in 2015: our top story of the year. Mobile apps and market leader in molecular diagnostics, was multiple firms making large bets on liquid the increasing ability to take measurements highly visible. Its most prominent transac- biopsy, and increased interest in infectious of vital signs, gather information on habits tion came early: in January, it invested more disease diagnostics. and collect other phenotypic measures is than $1.16 billion in tumor profiling services rapidly changing thinking about clinical trials organization Foundation Medicine. Roche’s Summary of article from page 32 TG Therapeutics Builds A Business Model For Today By Michael Goodman The speed with which TG Therapeutics burst to confer multiple benefits across its value oncology and in the soon-to-be-christened on the scene, along with the potency and chain. It also points the way for small-cap autoimmune franchise – are largely based safety of its novel combinations of cancer cancer companies in the age of immuno- on a B-cell depleting backbone combo. If its drugs, has perhaps blinded observers to oncology: start with proprietary combina- unprecedented safety profile fades in Phase the unique business model that has carried tions of validated mechanisms, layering on III trials, the company could be at risk. it this far. Its business model is designed riskier assets over time. TG’s programs – in Summary of article from page 40 Navigating Patent Minefields In Emerging Asian Medtech Markets By Gabriela Coman To succeed in Emerging Asian Markets (EAMs), ent applications for each country in which they if the invention is patentable. The US adopted patent applicants need to be aware of current wish to protect their investment and invention. this law in 2013. What is patentable and what and future business development objectives, All EAM countries observe a “first-to-file” rule in is not can be something of a minefield, with market specifics and how local competitors granting patents, which, in cases where two different EAMs applying different criteria to could design around their patented devices. different entities apply for a patent, the first patentable matter, so the regulations of each Medtech companies must submit separate pat- one to file an application will obtain the patent country require very careful scrutiny.

60 | January 2016 | IN VIVO: The Business & Medicine Report | www.PharmaMedtechBI.com