"The Pink Sheet" regularly covers business development and deal-making in the biopharmaceutical industry. Below is a roundup of some of the most noteworthy transactions that occurred between April 30-May 13. Deal Watch is supported by deal intelligence provided by Strategic Transactions.

Mylan/Renaissance

Mylan NV is bolstering its generic dermatology business with a deal that adds to the value of its previously-announced acquisition of Sweden's Meda AB, allowing the generics company to make up for its lost Perrigo Co. PLC opportunity.

The generics giant announced May 13 that it would be picking up the topical dermatology business from Renaissance Acquisition Holdings, a private holding of RoundTable Healthcare Partners, for $950m in cash plus another $50m in contingent payments. The deal is expected to close in the third quarter.

The deal gives Mylan a much larger presence in generic topical dermatology products – former acquisition target Perrigo has 50% of its generics portfolio in this space. The new portfolio includes more than two dozen topical products, as well as another 25 compounds in the pipeline. The deal also brings Mylan added infrastructure in the US and dermatology space along with a contract development and manufacturing organization. Mylan touted the 1,200 employees it would be integrating as well.

RoundTable will retain the sterile-focused part of the business and the associated manufacturing facilities.

While this acquisition will develop a space that Mylan has shown interest in for some time, the cost of the acquisition is a drop in the bucket. Mylan is among the many overly acquisitive companies that have often been criticized for racking up high debt levels as they pursue growth through M&A instead of organically. Yet, this acquisition will not add to the company's debt levels. Mylan has said that it will use cash on hand, as well as already established credit facilities, retaining its current debt-to-EBITDA ratio of 3.8 times.

The Renaissance portfolio had about $350m in sales in 2015, according to Mylan. Evercore ISI analyst Umer Raffat expects the deal will contribute about 19 cents per share to Mylan's 2016 earnings.

Mylan's last deal in the space – its $9.9bn purchase of Meda in February – was paid for with a combination of cash, debt and stock Also see "Mylan Finally Nabs Meda In Diversification Play" - Pink Sheet, 11 February, 2016.. Analysts and investors had been hoping that Mylan would do a "transformative" deal after its seven-month pursuit of Perrigo failed in 2015, when Mylan CEO Heather Bresch was highly criticized for the high price tag of the deal and its timing in a rocky market ([A#14151115002]).

Both Meda and the Renaissance portfolio add to Mylan's business in a way that the company has been pursuing for a long time. While Mylan would've gotten much more had its $26bn acquisition of Perrigo succeeded, this is one of the key areas that Mylan was hoping to gain through that deal, meaning Mylan gets it at a drastically discounted price and will have a much smaller, easier company to integrate.

Pfizer/Wave Life Sciences

Wave Life Sciences Ltd. entered into a collaboration agreement with Pfizer Inc. for the discovery and development of nucleic acid therapeutics addressing five metabolic disease targets, adding $40m in upfront cash to its balance sheet that will help the newly public biotechnology firm keep its in-house focus on rare, genetic neurological and neuromuscular diseases.

Cambridge, Mass.-based Wave will add Pfizer's initial payment from the deal announced May 5, which includes a $30m equity investment, to a $196m stockpile that the company amassed in 2015, including $102m from an initial public offering in November and $78m from two separate venture capital rounds [See Deal]. The cash will fund Wave's operations into 2019, during which time it plans to take two new drug candidates into the clinic each year while out-licensing or possibly spinning out non-core programs into separate companies.

Wave President and CEO Paul Bolno said the company decided to develop therapies for neurological and neuromuscular indications on its own, because those are diseases where nucleic acid therapeutics can effectively provide systemic delivery to muscles and because genomic research is revealing new targets for rare diseases in those two areas.

"It's a great time to go into neurological rare diseases where the targets are more well-known," Bolno said. "We see hepatic diseases as an incredibly crowded space, so we wanted a partner with strong capabilities and Pfizer represented that strength in the metabolic space."

The Pfizer transaction has Wave executing its drug-development strategy in line with a plan that the company revealed to investors in January. That's when Wave first revealed that it would submit two investigational new drug (IND) applications to FDA each year and seek partners or consider spinout options for discovery and development programs in eye, liver, skin and gastrointestinal diseases.

In addition to the upfront fee, Pfizer will pay Wave up to $871m in research, development and commercial milestone fees plus tiered royalties up to the low single digits. The milestone payment total will depend on how many of the collaboration's programs Pfizer opts to license.

Wave will take up to five programs through discovery and clinical candidate selection at which point Pfizer will have a chance to exclusively license each of the programs. Pfizer will then take over all development and commercialization activities.

Two targets of interest to Pfizer have been declared, but only one of the targets has been identified publicly: apolipoprotein C-III (ApoC-III), which is a program that Wave already is working on preclinically. The other three targets will be identified within the next 18 months. Antisense and RNA Interference (RNAi) pioneers Ionis Pharmaceuticals Inc., formerly known as Isis Pharmaceuticals, and Alnylam Pharmaceuticals Inc.each have lipid-lowering therapies targeting ApoC-III in late-stage development.

Ionis/Kastle

In its first collaboration, Kastle Therapeutics LLC acquired global development and commercial rights to Ionis' cholesterol-lowering medicine Kynamro (mipomersen) injection [See Deal].

Under the deal announced May 3, Ionis receives $15m up front, a $10m milestone payment in May 2019, and up to $70m in sales milestones. Starting next year, Ionis will get global sales royalties in the low-to-mid teens (Strategic Transactions estimates 13%-16%). Ionis also receives a 10% common equity position in Kastle's parent company (assumed to be key backer VC firm Flexpoint Ford).

Under a January 2008 deal, Sanofi's Genzyme Corp. obtained exclusive global rights to the drug but that agreement was terminated earlier this year. Genzyme will earn a 3% royalty on Kynamro sales and 3% of the cash payments Ionis receives from Kastle. Kynamro has FDA approval for homozygous familial hypercholesterolemia. Kastle was formed in July 2015 to acquire and develop drugs for high unmet needs.

Bristol-Myers Squibb/Sellas

Sellas Life Sciences Groupand Bristol-Myers Squibb Co. agreed May 2 to evaluate the combination of Sellas' galinpepimut-S with Bristol's Opdivo (nivolumab) in a Phase I ovarian cancer trial [See Deal]. Sellas recently initiated the trial at Memorial Sloan Kettering Cancer Center with ovarian cancer patients who are in at least their second remission. Galinpepimut-S is a Wilms tumor protein 1 (WT1) peptide vaccine in Phase II trials for mesothelioma, AML, myeloma and ovarian cancer (in addition to a preclinical study for brain tumor).

Opdivo, a PD-1 antagonist, is marketed for melanoma, non-small cell lung cancer and renal cancer; filed for approval for Hodgkin's lymphoma; and in a variety of preclinical through Phase II trials for additional cancers including head and neck, stomach, brain, liver, bladder and breast tumors, as well as leukemia and lymphoma.

Incyte/Ariad

In conjunction with its May 9 acquisition of the firm's European operations, Incyte Corp. licensed exclusive rights to Ariad Pharmaceuticals Inc.'s Iclusig (ponatinib). Incyte will develop and sell the leukemia treatment in the European Union and 22 other countries, including Switzerland, Norway, Turkey, Israel, and Russia.

In addition to rights in the approved diseases, Incyte is paying $135m in development and regulatory milestones for work on the drug in new oncology indications (plus potential payments for non-oncology indications), plus tiered royalties between 32%-50%. The company will also fund some of the ongoing clinical development with Iclusig in two of Ariad's trials through cost-sharing payments of up to $14m ($7m in each of 2016 and 2017).

The deal includes an option for a future acquirer of Ariad to re-purchase the licensed rights from Incyte in exchange for fees equivalent to Incyte's payments (up-fronts, milestones, and development costs) and 20%-25% royalties. Iclusig is a BCR-ABL inhibitor (with activity against the T315I mutation) approved in Europe and other countries for chronic myeloid leukemia and Philadelphia-positive (Ph+) acute lymphoblastic leukemia.

Ariad is divesting rights to it (and to its entire Ariad Pharmaceuticals (Luxembourg) SARL division) in order to more effectively focus on commercializing Iclusig in the US. The drug was approved in the US in 2012 and last year brought in $112.5m in global net sales.

Vifor Fresenius/Opko

Opko Health Inc. may have hit a setback for its vitamin D oral prohormone Rayaldee with an FDA complete response letter in March, but it has already gained an international marketing partner in Vifor Fresenius Medical Care Renal Pharma Ltd., a common company of Galencia and Fresenius Medical Care AG. The Swiss firm will sell the secondary hyperparathyroidism treatment in Europe, Canada, Mexico, Australia, South Korea and certain other international markets. It also holds an option to acquire US rights for treatment of dialysis patients.

Under the agreement, announced May 9, Opko will receive an upfront payment of $50m, plus up to an additional $52m in regulatory and launch milestones, and $180m in sales-based milestones. VFMCRP will also pay Opko tiered, double-digit royalties on sales, and if it exercises the option for rights to the US dialysis market, will pay additional commercial-based milestones as well as double-digit royalties.

The partners will also collaborate to develop and commercialize Rayaldee for treatment of secondary hyperparathyroidism in dialysis patients.

The Rayaldee CRL was prompted by issues at a third-party manufacturer and were not specific to Rayaldee manufacturing ([A#14160330002]). FDA accepted Opko's resubmission on April 22 and set a new user fee date of Oct. 22, 2016.

Alexa/Grupo Ferrer

Inhaled CNS drug biotech Alexza Pharmaceuticals Inc. looks set to be acquired by Spain’s Grupo Ferrer Internacional SA in an all-cash offer that includes contingent value rights. The Barcelona-based, privately held mid-sized European pharmaceutical company has sweetened its latest move to acquire cash-depleted Alexza, announced May 10, by granting contingent value rights (CVRs) as well as $0.90 in cash for all of Alexza’s shares.

It's an untidy turn of events for Mountain View, Calif.-based Alexza, which was founded by biotech pioneer and serial company entrepreneur Alejandro Zaffaroni, and is now being acquired by the ex-US licensee of its only marketed product, an inhaled formulation of the antipsychotic loxapine.

Ferrer might well be protecting its investment in Adasuve, but it is also acquiring an interesting research effort that could help extend its international ambitions that already include manufacturing and marketing pharmaceuticals, fine chemicals and generics in Europe, Latin America, Asia and the US.

In a May 10 statement, Ferrer CEO Jordi Ramentol expressed interest in continuing the development of Alexza’s pipeline of development products: “We firmly believe the Staccato technology will change the lives of patients with severe mental and neurological disorders. At the same time it will help health care professionals to improve their management in the increasingly digitalized and personalized health care context.”

The current move follows Ferrer’s signing of a non-binding letter of intent to acquire Alexza in February. But the US company continued to explore two options for its future viability, either a buyout by Ferrer or the finding of a new US commercialization partner for Adasuve, after Alexza reacquired the rights from Teva Pharmaceutical Industries Ltd. during 2015.

But with only around $7.8m in cash and equivalents at the end of 2015, no new US licensee, and Adasuve only bringing in revenue of $5m during 2015, Alexza was expecting crunch time for the business to come at the end of April ([A#14160329004]).

The share offer of $0.90 per share and one contingent value right per Alexza share entitles the holder to receive a pro rota share of up to four payment categories making the offer worth in aggregate up to a maximum amount of $35m if certain licensing and revenue milestones are met.

Ferrer’s cash offer is at a 210% premium to Alexza’s closing share price on Feb. 26, the last trading day before Ferrer’s non-binding letter of intent. [See Deal] The offer is also a 177% premium to the volume-weighted average trading price over the previous 30 days before Feb. 26, and a 67% premium to the closing price on May 9. The transaction is expected to close in the second quarter of this year.

The Medicines Co./Chiesi

The Medicines Co. is selling off three cardiovascular products to Italy's Chiesi Farmaceutici SPA, the firm announced May 9, in an effort to raise funds to pay for R&D as its top-seller Angiomax continues to decline.

Chiesi will pay a total of $792m for three already-marketed drugs, including the newly approved Kengreal (cangrelor). The other drugs included in the deal are the antihypertensive Cleviprex (clevidipine) and the rights to the injectable direct thrombin inhibitor Argatroban. The Italian drugmaker will pay $260m upfront, as well as $480m in sales-based milestones. Chiesi will also assume the payment of $50m in milestone payment obligations and $2m for product inventory. The deal is expected to close in the third quarter. [See Deal]

TMC's best-selling product Angiomax (bivalirudin) lost patent protection in July 2015, opening it up to generic competition. Due to the influx of low-cost generics, the drug only brought in $16.9m in sales during the first quarter, down from $100.7m in the year-earlier period. More than half of TMC's revenue stream has been lost through the patent expiry.

The company believes the sale of these "non-core" assets will allow it to control costs and fund pipeline development. TMC said the divestiture will allow it to save between $65m to $80m in R&D costs and SG&A expenses. The move is in line with a restructuring announced last November. In December, the company divested three hemostasis products to Mallinckrodt PLC for $175m up front and agreed to $235m in milestone payments. [See Deal]

Sanofi/Medivation?

Sanofi has made a subtle statement that it is staying with its efforts to acquire Medivation Inc., but is not at this time going to amend its offer. The French pharma announced May 13 it had filed a pre-merger notification under US Hart-Scott-Rodino antitrust requirements, with the offer of $52.50 per share, for an all-cash transaction valued at approximately $9.3 billion.

Medivation believes the offer is undervalued and has other interested bidders; there is speculation that Pfizer Inc. has moved into the lead.

Last week Sanofi had stated that if Medivation "engage[s] in good faith discussions with us and demonstrate[s] additional value, we could be in a position to revise our offer."

Deal Watch: Mylan Counts On A Renaissance For Expansion

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