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The Burrill Report submits: Pfizer (PFE) said it was halting a trial of its experimental drug tanezumab to treat chronic low back pain and diabetic peripheral neuropathy at the request of the U.S. Food and Drug Administration. Investigation of the compound continues in some areas of high unmet medical need, including cancer pain, the pharmaceutical company said. The FDA's request follows reports of adverse events in osteoarthritis patients taking tanezumab, and the agency's concerns regarding the potential for such events in other patient populations in which the compound is being studied. Pfizer said it will continue to work with the FDA to reach a common understanding about the appropriate scope of continued clinical investigation of tanezumab. A U.S. Food and Drug Administration panel is advising the agency to revoke Roche's (RHHBY.PK) right to market Avastin as a treatment for metastatic breast cancer after additional trial data convinced it that the biologic's risks might outweigh its benefits. The recommendation could put a $1 billion dent in Avastin's global sales some reports say, slicing as much as a sixth off Roche's $6 billion take from the drug in 2009 and opening up fears that European regulators may also revisit their approval of the drug's use in treating advanced breast cancer. Complete Story »

The Burrill Report submits: By Michael Fitzhugh Mannkind (MNKD) says it has resubmitted a once-rejected new drug application to the U.S. Food and Drug Administration for its inhaled insulin-and-inhaler combination, Afrezza, securing a promise of agency action on the drug by the end of 2010.Complete Story »

The Burrill Report submits: by Marie DaghlianEver since CEO Chris Veihbacher took the helm of France’s largest pharmaceutical company in September 2008, he has actively looked outside Sanofi-Aventis (SNY) for ways to stem the impending loss of over one third of its revenue from patent expirations. A Burrill Report analysis shows that he has spent $17 billion to expand and diversify the company, including more than $9 billion in acquisitions ranging from small biotechs to companies focused on generic drugs, animal health, and emerging markets. Now, reports say he’s ready to eclipse that in a single deal. Complete Story »

The Burrill Report submits: By Marie DaghlianThere is never enough of a good thing and certainly this week, several life science companies ranging from Big Pharma to industrial biotech seemed to feel that one deal was not enough. Big pharma players Sanofi-Aventis (SNY) and J&J’s (JNJ) Ortho-McNeil-Janssen Pharmaceuticals, biotech company Metabolex, and renewable fuels and chemicals developer Amyris (AMRS) each struck two or more agreements to strengthen their positions. Sanofi-Aventis entered into a global strategic alliance to discover, develop, and commercialize microRNA therapeutics. The alliance is the largest microRNA partnership to date, worth potentially $750 million to Regulus, including $25 million upfront, $10 million in a future equity investment, and annual research support for three years with the option to extend the partnership for two additional years. The companies will collaborate on up to four microRNA targets, including Regulus’ lead fibrosis program targeting microRNA-21. Sanofi will also have a three-year option for a broader technology alliance which will be worth an additional $50 million to Regulus if exercised. Regulus is equally owned by Alnylam Pharmaceuticals (ALNY) and Isis Pharmaceuticals (ISIS), which formed the company in 2007. [See story.] “MicroRNAs are believed to be extremely important in human development and physiology,” says Marc Cluzel, Executive Vice-President of R&D at Sanofi. “Together with Regulus we will develop therapeutics which could potentially open a new paradigm in the treatment of major diseases and could offer an attractive new therapeutic approach for patients.” Sanofi also inked a global licensing and development deal with privately-held Metabolex potentially worth $375 million to research, develop, and commercialize small molecules that modulate the G-protein coupled receptor 119, a receptor in the gut and pancreas that interacts with bioactive lipids to stimulate glucose-dependent incretin and insulin secretion. Agonists of GPR119 represent a first-in-class oral treatment for type 2 diabetes that function through a unique dual mechanism of action that may offer improved glucose homeostasis over existing diabetes therapies, with the potential for weight loss and improved islet health. They have been the basis of several recent deals including a deal struck a week earlier between Boehringer Ingelheim and Neurocrine Biosciences (NBIX) to discover new GPR119 agonists. The Sanofi-Metabolex agreement includes MBX-2982, a potent selective orally active GPR119 agonist discovered by Metabolex that, along with a candidate from GSK, is at the head of a class of candidates in earlier stage development. MBX-2982 is currently in a multi-national 28-day phase 2 clinical study in patients with type 2 diabetes. As part of their agreement, Metabolex will receive an upfront payment and will be eligible to receive development, regulatory, and specified commercial milestones that total as much as $375 million. Metabolex is also eligible to receive royalties on worldwide sales of marketed products. A few days before striking the deal with Sanofi, Metabolix partnered its pre-clinical type 2 diabetes programs with Ortho-McNeil-Janssen Pharmaceuticals for an upfront payment and up to $330 million in development, regulatory, and commercial milestones. The global development and exclusive license agreement with Ortho-McNeil-Janssen will further develop and discover the compounds for the treatment of type 2 diabetes and other disorders. Metabolex is also eligible to receive royalties on worldwide sales of marketed products. Ortho-McNeil-Janssen Pharmaceuticals also struck a deal with Swedish biotech Diamyd Medical to develop and commercialize its type 1 diabetes therapy for an upfront fee of $45 million and potential milestones of $580 million, as well as tiered royalties on future sales. The companies will equally share costs for the development of Diamyd’s GAD65 antigen-based therapy for the treatment and prevention of type 1 diabetes and associated conditions, until results from the ongoing EU phase 3 study, expected in the first half of 2011. At that time, Ortho-McNeil-Janssen will have the right to fully assume responsibility for the development program upon reviewing the results. Diamyd has kept exclusive rights for commercialization in the Nordic countries and retains the rights to the therapeutic use of the GAD65 gene and derivatives, fragments and variants of the GAD65 protein. Emeryville, California-based Amyris aimed to beef up its position ahead of its IPO with the addition of six agreements. Amyris uses the tools of synthetic biology to engineer microbes, primarily years, to serve as living factories to convert plant-based sugars into renewable fuels and chemicals. The company largest deal is with French oil company Total that included a $133.2 million investment in its series D financing. Their strategic partnership will develop new products and build biological pathways to produce and commercialize renewable fuels and chemicals. Other agreements include a joint venture with Brazilian ethanol producer Cosan (CZZ) to produce and commercialize cane-based renewable chemicals; a multi-year collaboration with Proctor and Gamble (PG) and Amyris to use its renewable chemical Biofene in certain specialty chemical applications within P&G’s products; a deal with Italian chemical company M&G to use Biofene in its plastics production and to explore the combined use of their technologies; a partnering deal with French renewable cosmetic ingredients producer Soliance for its renewable chemicals in cosmetic ingredients; and an undisclosed deal with Shell Western Trading & Supply, a subsidiary of Royal Dutch Shell (RDS.A) that is active in crude oil and products trading in South America. Two large M&A deals also made the headlines. In a deal valued at $3.2 billion, Canadian specialty pharma Biovail (BVF) will reverse merge with Valeant Pharmaceuticals International (VRX), with the new company retaining the Valeant name. Valeant stockholders will receive a one-time special cash dividend of $16.77 per share immediately prior to closing of the merger and 1.7809 shares of Biovail common stock upon closing of the merger in exchange for each share of Valeant common stock they own. The transaction is expected to be completed by the end of the year at which time the combined company is expected to pay shareholders a one-time additional $1-a-share dividend. At that time, Biovail stockholders will own approximately 50.5 percent and Valeant stockholders will own approximately 49.5 percent of the shares of the combined company on a fully diluted basis. The combined company will have a significantly expanded presence in North America and operations in eight other countries, working across four growth platforms: specialty central nervous system therapeutics, dermatology, Canada and emerging markets/branded generics. J. Michael Pearson, currently chairman and CEO of Valeant, will serve as the new Valeant’s CEO, and Bill Wells, currently CEO of Biovail, will be the non-executive Chairman. The new Valeant will retain Biovail’s corporate structure and related financial efficiencies, and expects to generate at least $175 million in annual cost synergies in the second year. It will be headquartered in Mississauga, Ontario and will remain a Canadian domiciled corporation, listed on both the Toronto and New York Stock Exchanges. The location of the combined company’s U.S. headquarters will be determined after the close of the transaction. The deal caps a long campaign by Biovail to beef up its CNS treatments, one of Valeant’s strengths with its drugs for epilepsy, Parkinson’s disease, and migrains. In 2009 Biovail bought the rights to GSK’s antidepressant Wellbutrin, and in February it acquired the rights to commercialize Alexza’s treatment for schizophrenic or bipolar agitation. Finally, German industrial and ag chemicals producer BASF will acquire specialty chemicals company Cognis Holding Luxembourg in a deal valued at $3.8 billion. Cognis is a worldwide supplier of innovative solutions and products based on renewable raw materials for the health and nutrition market, as well as the cosmetics, detergents and cleaners industries. The company is controlled by Permira Funds, GS Capital Partners and SV Life Sciences. The transaction is expected to close in November.Complete Story »

The Burrill Report submits: By Michael FitzhughJohnson & Johnson (JNJ) subsidiary Ortho-McNeil-Janssen has tied up new diabetes drug development deals with Diamyd and Metabolex worth a potential $1 billion combined, adding therapies for both Type 1 and Type 2 diabetes to its pipeline. Complete Story »

The Burrill Report submits: By Michael Fitzhugh A Food and Drug Administration panel has unanimously backed the safety and effectiveness of Novartis' (NVS) multiple sclerosis treatment fingolimod. The panel voted 25-0 in support of fingolimod's “substantial evidence of effectiveness” in treating patients with relapsing remitting multiple sclerosis. That makes it likely the drug will be the first oral MS treatment to gain FDA approval, beating Merck (MRK), Sanofi (SNY) and Teva (TEVA) - all of which are developing their own oral MS drugs - to the punch.Complete Story »

The Burrill Report submits: By Marie Daghlian Life sciences dealmaking and financing heated up during the second week of June. Spanish healthcare company Grifols (GIFLF.PK) signed an agreement to acquire Talecris Biotherapeutics (TLCR) for a combination of cash and newly-issued Grifols non-voting shares for an aggregate value of approximately $3.4 billion ($4 billion including net debt). Grifols is a leading global provider of plasma protein therapeutics while Talecris is a major provider of plasma products in the United States. The combination will create an international company with complementary geographic footprints and products, and increased manufacturing scale. Under the terms of their agreement, Grifols will acquire all of the common stock of Talecris for $19 in cash and 0.641 newly-issued non-voting Grifols' shares for each Talecris share, representing an implied price of $26.16 per Talecris share. That represents a premium of 53 percent to the average closing price of Talecris common stock over the last 30 days. The total implied offer value for Talecris is $3.4 billion (euro 2.8 billion) and the resulting transaction value, including net debt, is approximately $4 billion (euro 3.3 billion). The deal could mean a windfall for private equity firm Cerebrus as it moves to stem losses from its other investments. Cerebrus, along with Amersand Ventures, bought Talecris in 2004, turned the company profitable, and sold some of its shares in an IPO in October 2009. According to Reuters Breakingviews, Cerebrus could make as much as a twentyfold return on its investment. Forest Laboratories (FRX) entered into a license agreement with North Carolina-based TransTech Pharma for the development and commercialization of TransTech’s functionally liver-selective glucokinase activators, a novel class of glucose-lowering small molecules for the treatment of diabetes. Under the terms of their license agreement, Forest will pay TransTech Pharma an upfront fee of $50 million. TransTech Pharma is also eligible to receive up to $1.1 billion in upfront and milestone payments for the successful development and commercialization of the glucokinase activator compounds. The portfolio licensed by Forest consists of a lead compound, TTP399, which has completed phase 1 studies and other compounds in early stage and pre-clinical stages of development. The relatively large upfront payment for an early stage compound indicates a growing interest in new treatments for diabetes, a growing worldwide problem. GlaxoSmithKline (GSK) acquired Laboratorios Phoenix, a leading branded generics drugmaker in Argentina, a deal that extends GSK’s pharmaceutical portfolio in Latin America. Phoenix has a broad based portfolio covering the cardiology, gastroenterology, neuroscience, metabolic, urology and analgesic therapy areas. Besides the extensive pipeline, GSK gains development capability in Argentina. Norwegian biotech OptiNose turned to private equity instead of venture capitalists for its latest round of cash. Avista Capital Partners invested $48.5 million to advance OptiNose’s nasal drug delivery technology into late stage trials. The innovative technology enables administration of drugs deep in the nasal cavity, enabling the treatment of both local and systemic disease. In conjunction with the investment, OptiNose is reincorporating in the United States and moving its headquarters from Oslo, Norway to Yardley, Pennsylvania. Madison, Wisconsin-based Virent Energy Systems closed a $46.4 million third round of funding in which Shell and Cargill deepened their commitment to Virent’s breakthrough technology platform that converts plant sugars into sustainable advanced fuels for car, truck, train, and air transportation. This new round of funding will advance Virents efforts to scale its unique process, a patented catalytic biorefinery platform, to commercial production volumes. FINANCINGS FOR THE WEEK ENDING JUNE 11, 2010Complete Story »

The Burrill Report submits: By Michael FitzhughCovidien (COV), a global medical equipment and pharmaceuticals company, is moving to bolster its growing vascular intervention business by acquiring the medical device maker ev3 (EVVV) for $2.6 billion. The acquisition is likely to play a key part in helping Covidien achieve the 9 percent to 12 percent 2010 net sales growth it expects to post in its medical devices segment, as compared to 2009. It expects sales in its pharmaceuticals and medical supplies units to be flat. Once part of Tyco HealthCare, Dublin, Ireland-based Covidien has made a string of acquisitions during the past few years, including the California-based companies, VNUS Medical and Bacchus Vascular, which have since become the core of its growing vascular business. The acquisition of ev3 expands Covidien's offerings with products focused on identifying and treating peripheral vascular disease, including, in particular, lower extremity arterial disease and neurovascular disease. Covidien sees the potential for “good double digit growth” in the non-heart-related vascular treatment area, says Joe Almeida, president of Covidien's Medical Devices. He made the remark to investors at the Bank of America Merrill Lynch Healthcare Conference in May. The deal will “enable Covidien to significantly expand its presence in the vascular market and is in line with our strategy of becoming a leading partner with vascular surgeons, neurosurgeons, interventional cardiologists and interventional radiologists,” says Richard Meelia, Covidien's president and CEO. Covidien will pay $22.50 per share for all of ev3's outstanding shares, representing a 19 percent premium on ev3's pre-announcement share price. The boards of both companies have unanimously approved the transaction, which is expected to close by July 31.Complete Story »

The Burrill Report submits: The U.S. Food and Drug Administration is investigating reports of complications with dozens of recalled children's medications made by Johnson & Johnson (JNJ), including 30 deaths, but so far no direct link has been found, according to a Congressional staff report, Reuters reported. “At this time, FDA is not aware of any child being harmed by taking one of the recalled products,” according to the report. “FDA is still investigating some of these adverse events to determine if the events were related to a child taking one of the recalled medicines.” A Congressional hearing May 27 looked into manufacturing problems at a J&J facility that led to contamination of Children’s Tylenol and other drugs. Stem Cell Therapeutics said its therapy for patients with acute ischemic stroke failed in a mid-stage clinical trial. While NTx-265 was well tolerated, there was no statistical difference in the changes observed in patients receiving its treatment and those given a placebo. “The profile and magnitude of the placebo response is extremely surprising and merits further examination” says Alan Moore, CEO and President of Stem Cell Therapeutics. “We are currently conducting a validation review process of the full trial.” NTx-265 is a sequential administration of human chorionic gandotropin followed by erythropoietin. GTx (GTXI) said top lines results from a late-stage trial of toremifene 20 mg, a selective estrogen receptor modulator, for the prevention of prostate cancer in men with high grade prostatic intraepithelial neoplasia failed to demonstrate a statistically significant difference compared to a placebo. The incidence of prostate cancer was lower in men receiving toremifene and showed a 10.2 percent relative risk reduction at three years. In the study, there were no clinically significant differences in the adverse event safety profile between men treated with toremifene 20 mg and men receiving placebo. InterMune (ITMN) will cut about 60 employees or 40 percent of its workforce following its failure to win U.S. Food and Drug Administration approval for its idiopathic pulmonary fibrosis drug pirfenidone. The cut are being made mostly in the commercial and discovery research areas, the company said in a regulatory filing. When completed, the company expects to have about 85 employees. The cuts are expected to save about $12 million a year. The FDA wants an additional clinical trial to support the efficacy of pirfenidone in IPF patients. Teva Pharmaceutical Industries (TEVA) said it will stop producing the sedative propofol, Reuters reported. The decision following an FDA warning letter in December over lapses at the company’s plant in Irvine, California. The U.S. Food and Drug Administration warned of a possible increased risk of fractures of the hip, wrist, and spine in people with high doses or long-term use of a class of medications called proton pump inhibitors. The product labeling will be changed to describe this possible increased risk. Proton pump inhibitors, available by prescription and over-the-counter, work by reducing the amount of acid in the stomach. Prescription proton pump inhibitors include esomeprazole (Nexium), dexlansoprazole (Dexilant), omeprazole (Prilosec, Zegerid), lansoprazole (Prevacid), pantoprazole (Protonix), and rabeprazole (Aciphex). Prescription proton pump inhibitors are used to treat conditions such as gastroesophageal reflux disease or GERD, stomach and small intestine ulcers, and inflammation of the esophagus. Over-the-counter versions, used for the treatment of frequent heartburn, include omeprazole (Prilosec OTC, Zegerid OTC) and lansoprazole (Prevacid 24HR). The U.S. Food and Drug Administration warned about potential rare occurrences of severe liver injury in patients taking the weight-loss medication orlistat, marketed as Xenical and Alli. The FDA has approved a revised label for the prescription drug Xenical. The agency is working with the manufacturer of Alli on label revisions to reflect this rare occurrence. Both Xenical and Alli are medications that contain the same active ingredient, orlistat. Xenical, available only by prescription, contains 120 milligrams of orlistat. Alli, sold over-the-counter without a prescription, contains 60 mg of orlistat. An estimated 40 million people worldwide have taken either Xenical or Alli. Though rare, the agency has identified 13 cases of severe liver injury, 12 of which were reports from outside the United States.Complete Story »

The Burrill Report submits: By Marie DaghlianMay ended with a slew of venture-backed companies receiving fresh capital to move development of their products. Medtronic (MDT) made the biggest investment, putting $70 million into Israeli medical device company BioControl Medical. It was an unusual type of investment because the company’s previous investors opted for a direct investment with an option to acquire the company rather than a typical financing round.Complete Story »