Big Deals - Pharmaceutical Executive

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Big Deals
Many say licensing is the new R&D. The third quarter of 2007 featured some pricey cherry-picking. Will the unions bear fruit? We've rounded up the interesting ones to watch.


Pharmaceutical Executive


"This is not the first deal Novartis has made with a biotech company with a technology platform," says Wijma. "Already in an early [preclinical] stage, Novartis gets the option on a large portion of the pipeline of antibodies of MorphoSys. Novartis signed the same type of deal with Austrian vaccine company Intercell. Worth several hundreds of millions, the deal gave Novartis exclusive access to Intercell's technology platform in the development of vaccines against infectious and bacterial diseases."

Equity was not a component in the current agreement with MorphoSys, partly because Novartis is already MorphoSys' most important shareholder, with a stake of 6.8 percent.

"Interestingly enough, the second major shareholder is AstraZeneca," says Wijma. "AstraZeneca bought CAT in 2006. CAT was one of the most important competitors of MorphoSys and has comparable technology."

Monoclonal antibodies are the fastest-growing segment in the market. "In the last few years, several large deals and acquisitions have been made in the antibody field," says Wijma. "To date, 20 monoclonal antibody products developed by other companies are approved by FDA for use as therapeutic products in the United States. Worldwide antibody sales passed $14 billion in 2005 and $19 billion in 2006."


At A Glance
Moroney said MorphoSys wants to remain autonomous. And while the subject of acquisition came up in the deal negotiations, Novartis respected the smaller company's position. "They were perfectly happy to leave us as an independent company," said Moroney.

Wijma, however, is not so sure. "Novartis already has a stake in MorphoSys and now will get an option to a large part of the company's pipeline in development. I would not be surprised if this is the prelude to an acquisition of the company by Novartis. The same is applicable with Novartis and Intercell." –MARYLYN DONAHUE

One of the most surprising licensing deals of 2007 came from Canada, as analysts were startled to hear that Eli Lilly had been given exclusive worldwide rights to BioMS Medical's investigational treatment for secondary progressive multiple sclerosis.

The drug, MBP8298, was secured for $87 million up front and milestones estimated at $410 million if the drug is approved, with royalties if and when it reaches the market. Lilly will codevelop, manufacture, and market the treatment.

"I've been looking at BioMS for a long time, but the company hasn't garnered much attention in Canada or the United States in the past," explained financial analyst Maher Yaghi of Desjardins Securities. "The mechanism of action that the company is pursuing has been very much criticized in the past, and people think it was too much on the edge of clinical predictability."


At A Glance
According to BioMS, the MOA of MBP8298 "is the induction or restoration of immunological tolerance with respect to ongoing immune attack" at the molecular site of attack that is dominant in MS patients with HLA haplotypes DR-2 or DR-4 (roughly two-thirds to three-quarters of all MS patients). A doctor injects high doses of antigen intravenously twice a year. The drug reeducates the immune system not to attack the nerves in the brain and the spinal column. It allows the immune system to stay intact and fight bacteria in a normal manner.

"When you look at the MS population as a whole, you see that nearly 40 to 45 percent of patients have the early form, and roughly an equal amount have secondary progressive," said Kevin Giese, president and CEO of BioMS. "The drugs on the market are out there for early stage, and hardly any are for secondary progressive. We are grasping a huge unmet need."


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