By Seth Yakatan
JNJ / Achillion Deal: Several angry common shareholders think this is a bad deal, however, Jason Kolbert who writes for Maxim, has some good and insightful comments as to why it is actually quite compelling. Please review his commentary on the recent deal between Achillion and Janssen Pharmaceutical’s, JNJ Division, where JNJ willl acquire rights to Achillion's HCV pipeline including a second generation protein inhibitor, a small molecule nucleotide inhibitor and sovaprevir, a selective inhibitor of HCV NS3 protease.
JNJ will pay Achillion $225 million for the purchase of 18.4 million of new shares at $12.25. Achillion also stands to gain up to $900 million in development, regulatory, and commercial milestones, plus tiered royalties ranging from the mid-teens to low-20s. JNJ pays the freight on R&D and commercialization. Jason concludes that it is highly likely that Achillion will realize milestones and eventually royalties. Investors should also note that the company now has a cash balance approaching $550M-$600M.
The near-term focus is on the nucleoside: ACHN-3422 which has been evaluated in a trial in HCV-naïve G1 patients in a dose-escalating (adaptive trial design) trial across 14 days of exposure at multiple doses. A total of 141 patients were evaluated (this includes 28 HCV patients who were also evaluated). The data for mono-therapy with ACHN-3422: 4.8 log reduction (t=14 days) with 50 mg and up to 700 mg QD dosing;m three of six patients were undetectable after 14 days (works rapidly). Additional log reductions of 4.2 to 4.8 from days 10-14 is differentiating and not typically seen in nucleosides. The company keeps its focus on SVRs, which are clearly achievable with this nucleoside. ACHN-3422 vs. Sovaldi: PKA differences make it hard to compare which drug is more potent. Sovaldi may be initially more potent, but it may not be at t=14 days. Triphosphate chemistry may cause a slight delay in reaching full potency vs. Sovaldi.
Regardless, the stage is set for Achillion to begin developing its own combinations of a protease inhibitor, nucleoside, and NS5A in 2015.
Recognizing a bubble and cheap money and still making strong deals is an art and a refined skill. Valeant ($VRX) CEO, J. Michael Pearson (who we have commented on numerous times), is very familiar with the pharma M&A space, after all, he's made scores of deals since taking up the post in 2008. And the way he sees it, with pickups happening left and right in the sector, some of pharma's recent acquisitions "are not going to work." There's a "bit of a bubble" going on in the industry, Pearson said Thursday, as quoted by Bloomberg. "In terms of prices being paid for acquisitions, some of them make sense and some of them don't make sense." It's a sentiment others have recently echoed, too, including GlaxoSmithKline ($GSK) chief Andrew Witty. Last week, the British pharma giant's helmsman told the Financial Times that ultralow interest rates--a.k.a. cheap money--was spurring companies to make "poor choices"' when it came to deal-making. "We're not going to get drawn into the idea that just because money is cheap we can do anything," he told the paper. But unlike Glaxo--which has stayed out of the M&A spotlight since inking a multi-billion-dollar asset swap with rival Novartis ($NVS) last spring--Valeant's still pushing full steam ahead when it comes to making buys. This year alone, it's snagged GI specialist Salix and the assets of bankrupt biotech Dendreon, and earlier this week reports said Egypt's Amoun--one of the country's largest drugmakers--could be next. Recall that Pearson takes NO SALARY and is incented only by the value of his stock and options.
Valeant, Pfizer, GlaxoSmithKline, Shire and Perrigo area all out there looking at deals. Pfizer is looking at big players, but maybe smaller, leaner and more R&D type shops might be better value. Keep up with this space with us.
Gene-Therapy companies are at it again and perhaps it is a good thing. Gene Therapy aims to cure numerous diseases by introducing new genes into the body instead of using traditional medicine. See just a few of the issues they aim to cure:
- Regenxbio Inc. - rare metabolic disease
- Voyager Therapeutics Inc, - hard-to-treat central nervous system conditions
- Dimension Therapeutics Inc. - treatment for a type of hemophilia
- UniQure BV - heart failure and other cardiac diseases
- GlaxoSmithKline Plc - adenosine deaminase severe combined immunodeficiency syndrome
In the WHEW! Category…..Vertex ($VRTX) CEO Jeff Leiden took home $45.8 million pay package last year as No. 40 among the highest-paid U.S. execs at publicly traded companies. Institutional Shareholder Services are suggesting that Shareholders should do something about it. ISS deemed Leiden's pay "excessive" and "not contingent upon rigorous performance conditions,"as the company said in a note to clients seen by Bloomberg. As ISS figures, Vertex is comparing itself unfairly with its Big Pharma peers, skewing its perspective and basing Leiden's salary on "non-rigorous" methods that shouldn't pass muster. The adviser is urging shareholders to cast a nonbinding vote of disapproval at Vertex' annual meeting on June 4, ISS told the news service.
If you thought that 3D Printing was just for hardware products, think again. Check out what the
National Institute of Health’s Heart Library and the life saving work it is able to augment. The library is part of the National Institutes of Health’s 3D Print Exchange -- an open, interactive website for researchers worldwide that offers tools, data and opportunity. This is an interesting read.
Editor's Note: Seth Yakatan is currently serving as Vice-President of Business Development for Invion, Ltd. (ASX:IVX). Seth has been professionally involved in the biotechnology industry for over 15 years through his work with Katan Associates.
Invion is a clinical-stage drug development company focused on the development of treatments for major market opportunities in inflammatory diseases including asthma, chronic bronchitis and lupus.
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