Each week, "The Pink Sheet" presents commentary on some of the week's most interesting business deals, contributed by the editors of the IN VIVO blog. Visit the blog at ¹ http://invivoblog.blogspot.com/ .

Pfizer's $68 billion cash-and-stock acquisition of Wyeth - and the ensuing debate over what the new mega-pharma should be called - overshadowed most of the rest of the deals signed during the week of Jan. 26. But Roche's revised, yet equally hostile, bid for the portion of Genentech it does not already own did not do badly in the size ranks either. The new offer price of $42 billion represents a $2 billion haircut on the original bid. Roche, meanwhile, was making very sure it did not become prey while out on the hunt. Its two majority shareholders, families descended from Roche founder Fritz Hoffman-La Roche, announced they would extend the pooling arrangement whereby they control more than 50 percent of the firm's voting shares. The agreement, which was due to expire this year, was extended for an undisclosed period, meaning not even Novartis, which owns roughly one-third of Roche, can take over the company. Meanwhile, deal-making among big and medium-sized fish in smaller ponds continued, with, most unusually, a hostile bid from Japan's Astellas for CV Therapeutics. In the private sphere, Helsinn enhances its pipeline with the purchase of Sapphire Therapeutics, and the twisting and turning narrative involving Deerfield, NitroMed, Archemix and JHP apparently is resolved.

Astellas/CV Therapeutics: Already partnered on the myocardial perfusion imaging agent Lexiscan , the two companies had been talking behind the scenes for more than a year about partnering in some manner on CVT's growing angina drug, Ranexa . Then, on Jan. 27, the Japanese pharma went against its country's traditional business practice of seeking consensus and publicly revealed its $1 billion bid to buy CVT for $16 a share (² Also see "Astellas Looks To Increase U.S. Presence With Bid For CV Therapeutics" - Pink Sheet, 27 January, 2009.). Astellas' public letter to the CVT board noted Astellas first offered to buy the Palo Alto, Calif., biotech last November, but was rejected. The letter asserts that Astellas has the U.S. presence and sales infrastructure to help Ranexa, which posted $30.3 million in U.S. sales during third-quarter 2008, reach its market potential and asked that the two firms "work together ... to reach a mutually beneficial transaction." CVT issued a statement Jan. 28 acknowledging that it had declined Astellas' previous offer, but adding that its board would "again review developments in the context of the company's strategic plans and the long-term interests of its stockholders." To be sure, that "context" will mean seeking a higher price for CVT. While Astellas' offer represented a 41 percent premium over CVT's share price at close of trading on Jan. 26, and a 69 percent premium over the previous 60-day average, the biotech's shares jumped to a high of $16.68 on Jan. 27 and remained in the $15 range as the week progressed. Cowen & Company analyst Eric Schmidt predicted that Astellas would land CVT eventually, but at a share price ranging between the high teens and low 20s.

GSK/NeuroSearch: GlaxoSmithKline and NeuroSearch, which have been drug-development partners since well before the merger that created the current GSK entity, extend their five-year drug-discovery collaboration led by Phase IIb depression and ADHD candidate GSK372475. Denmark-based NeuroSearch gets an undisclosed upfront payment to continue the alliance, which now includes an expanded portfolio of novel compounds. NeuroSearch says it could realize more than $1.2 billion in milestones under the deal, along with double-digit royalties on any products that reach market. While Glaxo Wellcome collaborated with NeuroSearch in the 1990s on potassium-channel central nervous system compounds and anti-depressants, the companies' more recent work has centered on triple monoamine reuptake inhibitors GSK in-licensed in 2002. The NeuroSearch work was moved into GSK's Center of Excellence for External Drug Discovery after that initiative was launched in 2005. CEEDD programs like this one enable GSK to expand its pipeline while shifting more responsibility and risk onto its partners. NeuroSearch performs discovery and research of the GSK-partnered programs through proof-of-concept. NeuroSearch previously has said this model suits its purposes since it gets to control the speed of the programs (³ Also see "GSK's Risk-Sharing Deals to Compete with In-House R&D" - In Vivo, 1 March, 2006.). At proof-of-concept, GSK takes over development and commercialization of each compound. For each drug that reaches market, NeuroSearch is eligible for a pre-marketing milestone of about $140 million. The company says it has attained $108 million so far in milestones, which generally begin with the start of Phase I study, for '372475, the product closest to market. GSK expects data from two Phase IIb studies on the compound and to make a Phase III go/no go decision during the first half of this year. During 2009-2010, NeuroSearch says it will earn about $90 million in upfront payments and milestones from the partnership. While the collaboration mainly will focus on joint development of candidates advanced during the previous five years, NeuroSearch says, the expanded deal also includes five preclinical compounds along with several qualified lead compounds that will move into preclinical development by mid-year. The deal also gives NeuroSearch a share-put option to sell up to $25.6 million of its stock to GSK at market price in four equal tranches through November 2010.

Deerfield/NitroMed: After raising its offer a second time, Deerfield Management's "black knight" bid to acquire NitroMed, and forestall what it saw as dilutive transactions with Archemix and JHP Pharmaceuticals, appears to have succeeded. On Jan. 27, NitroMed announced it has entered into a merger agreement with Deerfield - which owns 12 percent of its stock - after the investor increased its offer to $0.80 a share. However, the agreement includes a "go shop" provision enabling NitroMed to seek a better offer through Feb. 26. NitroMed said it will actively solicit offers during that period. If a better offer does not materialize, the merger is expected to close in April. With Deerfield having raised its December offer of $.50 a share to $0.65 earlier in January, the question remains whether this deal amounts to an exit for Deerfield, especially with NitroMed's poor-selling BiDil , a heart-failure drug for black patients, still in the fold. BiDil sales totaled just $7.8 million for the first half of 2008. Deerfield made its initial bid after NitroMed announced two deals last fall, one to sell BiDil to JHP for roughly $26 million, and the other to reverse-merge with private aptamer-focused biotech Archemix. The agreement with Deerfield required NitroMed to terminate the JHP and Archemix deals, resulting in termination fees totaling $2.4 million. The reverse merger would have brought about $60 million in cash - post sale of BiDil - and a NASDAQ listing to Archemix, which had abandoned plans for an IPO early in 2008. Deerfield clearly was unhappy with the merger terms, which gave NitroMed shareholders only a 30 percent stake in a highly illiquid company. Managing Partner James Flynn said a review of other biotechs with Phase III assets showed many of them were valued lower than the theoretical $100 million value the reverse-merger would create for Archemix (⁴ Also see "Deerfield To NitroMed: Not So Fast, Not So Cheap" - Pink Sheet, 4 December, 2008.). Archemix, meanwhile, is pursuing business as usual as a still private enterprise, focusing on advancing its lead aptamer, ARC1779, through Phase IIb clinical trials. Despite losing out on NitroMed's cash, the company says it has sufficient money to support operations through the end of 2010, thanks in part to a large R&D deal inked with GSK late in 2008.

Ipsen/Novartis: In a deal that may reflect increasing sales and marketing clout for regional players - or just the efforts of one big pharma to reduce its overhead in one strategic market - Novartis increased its anti-hypertension drug co-promotion work with Ipsen on Jan. 28. Paris-based Ipsen has promoted Diovan (valsartan), the world's top-selling hypertension therapy, in France since 2003. It markets valsartan as Nisis in Europe, and Nisisco , a combination drug that includes hydrochlorothiazide. Novartis recently announced worldwide sales totaling $5.7 billion for Diovan in 2008, although it didn't break out revenues for Nisisco (also called Diovan HCT ). The newly expanded agreement calls for Ipsen to sell Exforge , another anti-hypertensive combining valsartan with Pfizer's amlodipine, in France. Novartis reported 2008 worldwide sales of $406 million for Exforge, which gained FDA approval in 2007. With Ipsen well entrenched in France's primary-care market, this deal appears to position Novartis to grow its hypertension franchise further through Exforge.

Helsinn/Sapphire: Switzerland's Helsinn apparently picked up privately owned cancer supportive care group Sapphire Therapeutics for an undisclosed bargain. The deal adds three clinical candidates to Helsinn's pipeline: Phase II anamorelin, an oral first-in-class cancer cachexia treatment, an intravenous compound for post-operative ileus, also in Phase II, plus a Phase I oral drug for opioid-induced bowel dysfunction. It also provides the group with "a direct presence in the major pharmaceutical markets of the world," CEO Riccardo Braglia said. Reflecting the sorry state of many private biotechs, there were no other interested buyers. Moreover, Sapphire's VC investors likely were eager to exit from a group that already had re-invented itself once. Bridgewater, N.J.-based Sapphire was launched in 2000 as Rejuvenon, with a focus on anti-aging therapies and $12 million in private financing. By 2004, it had changed its therapeutic focus to small-molecule cancer and metabolic drugs, and raised more than $37 million in a Series B financing led by SV Life Sciences.

- Joseph Haas (j.haas@elsevier.com), Ellen Foster Licking (e.licking@elsevier.com), and Melanie Senior (m.senior@elsevier.com)

Deals Of The Week: Astellas/CVT, GSK/NeuroSearch, Deerfield/NitroMed ...

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