Deals: No IPO for Organon - Pharmaceutical Executive

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Deals: No IPO for Organon
Akzo Nobel sells its pharma subsidiary to Schering-Plough. Plus, Jazz registers for an IPO, Eli Lilly acquires a sleep

Pharmaceutical Executive


Akzo Nobel's plans to spin off its Organon Biosciences unit through an initial public stock offering of $11.9 billion or so came to a halt as it was announced that instead the unit would be sold to Schering-Plough for $14.4 billion.

"Organon BioSciences will be an excellent fit with Schering-Plough strategically, scientifically, and financially," said Schering Plough CEO Fred Hassan in an analysts call. "It builds on our growing strength in primary care, giving us immediate access to central nervous system and women's healthcare products."

The acquisition enhances Schering-Plough's strength in human and animal biologic products, including the potential to develop human vaccines, and makes it a leading animal healthcare company. Organon brings top-line sales of nearly $5 billion—$3.4 billion on the pharma side and $1.5 billion on the animal health side.

In addition, Organon offers a pipeline that includes five products in Phase III:
  • Asenapine, for the treatment of schizophrenia and acute mania associated with bipolar disorder. The product was being codeveloped with Pfizer, which withdrew from the arrangement last November;
  • Sugammadex, for the reversal of neuromuscular blockade induced during surgical procedures;
  • NOMAC/E2, an oral contraceptive product containing nomegestrol acetate, a novel progesterone, and estriadiol, a natural estrogen;
  • ORG36286, a long-acting recombinant follicle-stimulating hormone for infertility; and
  • Esmirtazapine (ORG50081), for the treatment of insomnia and potentially for hot flashes in menopausal women.

Goldman Sachs & Co. acted as financial advisor to Schering-Plough, and Morgan Stanley acted as financial advisor to Akzo Nobel in the transaction.

Oxford BioMedica, a publicly traded British biotech with a specialty in gene therapies, will acquire the privately held Oxxon Therapeutics in a deal that is valued at about $30 million.

Oxford Biomedica has a range of immunotherapy and gene therapy products in development, targeting various cancers, Parkinson's disease, retinopathy, and spinal cord injury. Its lead candidate is TroVax, a therapeutic vaccine, which uses a pox virus vector to deliver a proprietary tumor associated antigen (5T4) to elicit the body's immune response against the tumor. The 5T4 antigen is found in many solid tumors and its presence is associated with poor prognosis. TroVax, which is in Phase III for renal cell cancer and in Phase II for several other cancers, is expected to be useful against a wide range of solid tumors.

The company also has developed LentiVector, a gene delivery vector based on lentiviruses.

Oxxon, an Oxford University spin-off, specializes in therapeutic vaccines. It brings to the table a therapeutic vaccine for melanoma, currently in Phase II. The product is especially significant for Oxford BioMedica because, unlike most other solid tumors, melanoma lacks 5T4 and cannot be a potential target for TroVax. Oxxon also has products in development for infectious diseases, including hepatitis B and HIV.

Oxxon's investors include the venture capital firms Quester, MVM Life Science Partners, and US-based East Hill Management.

Jazz Pharmaceuticals of Palo Alto, CA, has filed a registration statement with the Securities and Exchange Commission for an initial public stock offering worth up to $172.5 million.

Jazz is a specialty pharma company focused on neurology and psychiatry, which aims to improve existing products through reformulation and delivery technology. It has two marketed products, both acquired through the $80 million acquisition of Orphan Medical in June 2005:

  • Xyrem (sodium oxybate) for excessive daytime sleepiness and cataplexia in patients with narcolepsy (2006 sales, $29 million.)
  • Antizol (fomepizole), an antidote for ethylene glycol and methanol poisoning ($13 million).

The company's pipeline includes Luvox CR (fluvoxamine maleate extended release capsules), a selective serotonin reuptake inhibitor developed for obsessive compulsive disorder. The product, licensed from Solvay, is expected to launch in 2008.


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