While You Were at AHA

Well, the big prasugrel v clopidogrel showdown went down pretty much how observers expected it would: Lilly's prasugrel has the edge in efficacy--cutting heart attacks by 24% over Bristol/Sanofi's Plavix--but comes with an increased risk of bleeding. The press release is here. The WSJ covers the news here. We'll probably have more on this later.

• In other AHA news, Integrilin: a little jab'll do ya. Probably not great news for Schering-Plough, which, unsurprisingly, did not fund the study that suggested angioplasty patients do just as well with a significantly smaller dose of the drug.


• The New York Times chronicles Pfizer's fight to protect its Lipitor franchise from incursion by generic simvastatin. As the Financial Times pointed out last week, AstraZeneca has its own simvastatin-induced challenges with its blockbuster statin Crestor.


• GSK's gepirone antidepressant received a non-approvable letter from FDA. This is the third time FDA rejected gepirone, previously under development at Akzo Nobel (Organon), so not exactly a shocker.


• A study in Nature published on Sunday describes a new lung cancer target. Mutations in NKX2-1, which controls the activity of alveoli, may be responsible for up to 12% of lung cancers, according to researchers led by Matthew Meyerson of the Dana-Farber Cancer Institute and the Broad Institute. Reuters has the story.


• The Boston Globe looks at MIT professor Lenny Guarente's dormant relationship with Elixir Pharmaceuticals, the about-to-go-public company he founded in 1999, and his potential relationship with Elixir competitor Sirtris Pharmaceuticals.

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Deals of the Week! Inaugural Edition

We at IN VIVO Blog recognize that it's practically impossible to keep up with the deal flow in biopharma, let alone remember the specifics. (Hey, it's hard for us and we do this for a living.) So we've decided to start posting a weekly column highlighting interesting and potentially important deals that you may have missed as you ponder weightier questions such as: To buy or not to buy Biogen Idec? Look for this every Friday. Aspire to be a part of it. Dare to dream.

• BMS/Pharmacopeia (10/15): BMS is at it again. Pharma's champion externalizer has out-licensed its selective androgen receptor modulator (SARM) program, to New Jersey-based Pharmacopeia. The deal is further proof that BMS believes in monetizing programs that don't fit its therapeutic focus in oncology and immunology. Unlike past deals with AstraZeneca for dapagliflozen and saxagliptin and Pfizer for apixaban, where there was big money on the table, the dollar amount for this deal was zero. Pharmacopeia bartered up to three years of its medicinal chemical expertise applied to one BMS discovery program in exchange for the rights to the SARM--a savvy move by the biotech and perhaps a first (let us know otherwise). BMS retains a right of first negotiation. Here's a link to the Pharmacopeia webcast announcement. Note: we are not calendar challenged--but we liked this deal and since Deals of the Week! didn't exist last week, we figured we'd include it here.
  
• Lilly/MacroGenics (10/18): Two anti-diabetes antibody deals of note: Lilly continues to solidify its stance in both the diabetes and biologics market with this deal for MacroGenics' late stage anti-CD3 antibody, teplizumab. Though the ultimate deal value could go north of $1 billion, it's back-end loaded; it cost Lilly just $41 million to get exclusive rights to the drug. The Baltimore Sun has the news. Bonus: GSK/Tolerx (10/23): GSK inked this deal with MacroGenics' competitor Tolerx just days later for the biotech's anti-CD3 mAB otelixizumab. For biologics-poor GSK, this deal looks like another toe-dip in the large molecule waters. Last December, the pharma bought next-generation antibody player Domantis and inked an expensive deal with Genmab for rights to its late-stage Humax-CD20 antibody.
  
• Janssen/Galapagos (10/24): Another back-ended loaded deal--the upfront was just 15 million euros though the deal value could eventually reach one billion euros. This time Janssen Pharmaceutica, a division of J&J, brokered a deal with Belgian-based Galapagos for small-molecule drugs to treat rheumatoid arthritis. Here's the link to Fierce Biotech's coverage.
  
• Inverness/Alere (10/24): Point-of-care diagnostic player Inverness has acquisition frenzy. On Wednesday the company announced it was buying another company, Alere Medical for $302 million. This move illustrates Inverness' continuiing diversification beyond cardiovascular diagnostics. You see, Alere isn't the typical acquisition fodder of a Dx company. The Nevada-outfit is really a device play with a nifty remote-monitoring system for patients with chronic diseases such as congestive heart failure.
  
• Wright Medical Group/Metasurg (10/22): Wright is paying $2.5 million upfront plus potential earn-outs based on sales for Metasurg's BIO-ARCH subtalar implant, which is used in surgical treatment of flatfoot deformity. This small bone deal is, well, small, but we flag it up as part of a trend: small bone is an unconsolidated, underserved segment of orthopedics that is beginning to show signs of life, consolidation-wise. Don't be caught flat-footed, readers. (Sorry.)

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For IPO and M&A Exits, One Hand Washes the Other

At VC meetings like Atlas’s St. Tropez shindig (about which you can read more here and here), the heroes are the guys who have most recently sold their companies for big bucks. In St. Tropez, that guy was John Mendlein, of Adnexus.

Scientist/Lawyer Mendlein had followed the now well-worn path of filing for an IPO while simultaneously pursuing the opportunity that ultimately led him to embrace Bristol-Myers Squibb’s $415 million-plus marriage proposal.

No real difficulty to that decision—an IPO at maybe $200-250 million pre-money; an acquisition for twice that amount.

We’re told there was plenty of appetite for the IPO—Mendlein had done what every biotech CEO should do, but doesn’t, in spending plenty of time telling the Adnexus story to the usual crew of IPO buyers (for more, see here and, more in-depthly, here), giving them the reverse valuation argument they like (here’s terminal value X and why you, Mr. Investor, should be willing to pay NPV value of Y at our IPO).

But since there was such interest in the IPO, shouldn’t Mendlein’s choice between going public and selling out have been a little bit more difficult: given the possibility of that kind of purchase price, shouldn’t investors competing for those shares – not just with each other, but with Pharma -- have been willing to pay a higher price at the IPO?

At the Atlas meeting, your blogger showed a slide (available in this presentation) indicating the gap between how IPO buyers value private companies and how Big Pharma does, thus defining the arbitrage opportunity for investors. But according to an investor panel at the meeting, there is a fundamental-as-gravity law that dictates the minimum size of that gap, underpinned by at least four basic facts.

First, Big Pharma has a much lower cost of capital than any investment fund—practically a zero cost of capital given their cash flow and virtually unleveraged balance sheet, noted one investor. Second, any biotech will need its investors to pony up additional cash to get the job done—which means, uggh, dilution. Third, drug companies can recoup cost synergies because they can fire redundant workers; investors can’t because, theoretically, the only workers in the company are those necessary to get the job done. And finally, drug companies can sign CDAs with biotechs they’re interested in acquiring, collecting a ton of crucial investment information unavailable to fund managers.

We can’t find much wrong with the first three reasons, though we’d contend that pharma’s cost of capital is rising as it sends more of its cash back to investors in the form of share repurchases and dividends. But yes, it’s still lots lower.

But the biggest issue is the information asymmetry between a strategic buyer and a financial one. And that, we’d contend, is often less significant than it appears. Certain acquisitions are simply predictable—like Adnexus’s--based on the obvious needs of the buyers (very little large-molecule discovery) and the advantages of the seller (large-molecule discovery; the ability to move into desirable IP space with improved fast-follower products).

We won’t speculate here on who we think might be equally likely purchases…

…OK, yes we will. Maybe Ablynx, which just filed for an IPO on Eurolist—one of the usual messages signaling a for-sale sign. And its deal with Boehringer Ingelheim, which has plenty of bioprocessing but precious little discovery certainly offers an idea of who might be in on the auction (GlaxoSmithKline also has a stake in the company, via its VC arm SR One, and might want to pin its biologics hopes on more than simply the Domantis platform). And then on the public side, ImClone, which has a couple of underutilized manufacturing plants, a pipeline beyond Erbitux, for which natural acquirer Bristol is paying 39% royalties. The fact that Jeremy Levin just jumped from his senior biz dev job at Novartis to an even more senior and more-than-biz-dev job at Bristol indicates at least to us that Bristol, already one of the more innovative strategic thinkers in the industry, might be thinking more aggressively about its large-molecule options.

Granted we could easily be wrong on both of these – but the logic is reasonable and more importantly based on completely public information.

And similarly we’re willing to stand out on a limb and say what we think won’t happen – again based on public info. We stand in as much awe of Carl Icahn’s money-making ability as anyone, but we just don’t see how Biogen Idec—in which he took a stake earlier this year, sending the stock price spiraling upwards—can be affordably acquired at anything like the price it’s trading at. We’ve heard the rumor that it’s engaged Goldman Sachs to investigate “strategic alternatives,” but since any acquirer would have to share Rituxan with Genentech and since Elan has a change-in-control right to buy Tysabri, it’s not likely a drug company looking for biologics would long consider Biogen, particularly at a likely takeover price of $30 billion.

So…yes, there should be a difference between IPO valuations and average acquisition prices of private biotechs (or more generally, between what investors might see as the intrinsic value of biotech shares and their strategic value to buyers). But the difference has been shrinking: IPO pre-money market caps are up this year because investors are finally understanding the arbitrage opportunity. That’s good news for biotechs—because as IPO valuations increase, M&A prices – the competition for IPOs – creep up, too, giving more headroom for IPO prices, which pushes up M&A prices….

Vive la difference!

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Chomp! Wyeth Snaps Up Haptogen

The names are different but the premise seems the same: a struggling big pharma snaps up a promising biologics player to add bite to its large molecule divsion. Less than two weeks after BMS announced its buy-out of next-generation protein player Adnexus, Wyeth broadcast its decision to buy the Scottish biotech Haptogen.

This is the twelfth acquisition by either a big pharma or big biotech in the biologics space since September 1 2006 according to Windhover's Strategic Transactions Database. Does IN VIVO blog see a trend? Hint: Do fish swim?

It's no secret that pharmas have lately had a tough go getting drugs approved. The FDA has approved just 10 new molecular entities through September, representing a 17% drop year-over-year and matching a 10-year nadir, according to a report today by Jim Kumpel, an analyst with Friedman Billings Ramsey. (Kudos to Pharmalot for its posting.)

Desperate to get access to new therapeutic modalities, cash-rish pharmas have spent the last several years trawling for biologics players. Recall these recent deals: Roche's acquisitions of GlycArt Biotechnology and THP; Merck's take-outs of GlycoFi, Abmaxis, and Sirna; GSK's purchase of Domantis; and AZ's $15.6 billion stunner for MedImmune. (Yeah, we're still talking about that deal. If you haven't read our take, click here and here. FYI, there will be even more in the October IN VIVO.)

It's not hard to see why a company like MedImmune would make a pharma salivate--the company's pipeline was full; and they had soup-to-nuts capabilities--from discovery through marketing--in biologics. But why the interest in Adnexus or Haptogen--companies with interesting platforms but no late stage products?

It's easy: Access. Most companies just launching large molecules programs are shut out of the most desirable targets because licenses to them--at least through "gold standard" antibody providers such as Medarex and Genmab--have already been given away.

“If you want to develop a product to one of those really important targets—say the CD-20 antibody—you’re blacked out,” notes Donald Drakeman, former CEO of Medarex and now with the VC firm Advent Ventures.

Better, it seems, to spend some dough and acquire new platform technologies that provide freedom to operate—for example, GlycoFi’s yeast engineering capabilities or Adnexus’s protein program--than engage in licensing deals that may blow up when a next-generation player gets acquired by a competitor.

The Wyeth/Haptogen deal fits nicely in this paradigm. Wyeth, though comparatively biologics-rich thanks to its acquisition of Genetics Institute about a decade ago and its focus on large molecule Alzheimer's Disease therapies, has had it's own share of pipeline troubles.

According to Cavan Redmond, EVP and general manager of Wyeth's biopharmaceuticals division, the pharma has been on the look-out for "technology driven companies that help us take it [biologics] up a notch, so that we can customize antibodies even more than in the past."

That was certainly the thinking behind the pharma's 2006 deal with Trubion, which included a $40 million up-front payment for access to the biotech's CD-20 therapy for rheumatoid arthritis, Tru-15.

Seems like the same philosophy applies to Haptogen. The Scottish biotech promises it can generate antibodies against targets normally too small to elicit an immune response. In addition, the company has developed novel drug discovery techniques based on the shark immune system. (And you thought it was just a great shark picture. Ha!)

Haptogen's shark platform "has a lot of potential to generate smaller therapuetic proteins that can be taken as oral drugs," Steven Projan, VP and head of biological technologies at Wyeth, told BioWorld Today (subscription required).

Wyeth and Haptogen didn't disclose deal terms, but its doubtful there was big money on the table. Wyeth, after all, is notoriously frugal in the business development department. And, in the biologics space, the pharma tends to pursue one-off opportunities, where it can leverage its own biologics infrastructure to lower the total cost of the deal.

There's no sign that pharma's biologics feeding frenzy will abate anytime soon. Who's next? The IN VIVO Blog's crystal ball is cloudy, so it's hard to say for certain. But companies worthy of keeping an eye on include: Ablynx, which makes camelid antibodies; Biolex, which recently registered for its IPO, and uses the plant Lemna to manufacture its proteins; and Xencor, which produces souped-up antibodies using its proprietary protein engineering platform.

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Smaller Big Pharma and the Hybrid Future

Two R&D Heads are better than one

[Updated below.] Today's final panel at PSA featured the heads of R&D at two of the industry's smaller Big Pharma, Tom Koestler, PhD, EVP and president of Schering Plough Research Institute and Elliott Sigal, MD, PhD, EVP, CSO, and president of R&D at Bristol-Myers Squibb Co.

Sigal suggested the industry's challenges in R&D would be best met by a best-of-both-worlds solution: "Some people in large pharma say, 'I want to be a biotech company', but that's not necessarily a good idea. You need to pick the best of pharma and the best of biotech and move on to a next-generation model," he said. Big biotech, like Amgen and Genentech, similarly need to adopt small-molecule strategies to thrive in the longer term, he noted.

BMS has employed this very strategy, embracing biotech risk hedging strategies in its blockbuster deals with Pfizer and AstraZeneca this year (we wrote about those deals here and here). Tom Koestler noted that Schering-Plough has maintained a handful of joint venture agreements to spread risk--notably that company's cardiovascular partnership with Merck, an asthma and COPD deal with Novartis, and its large-molecule JV with Johnson & Johnson (think Remicade).

So what's it take to embrace this hybrid model? A realization that complete vertical integration is not only not necessary, but perhaps detrimental. Co-development and co-commercialization deals, targeted approaches to geography and customers, streamlining manufacturing, and innovative sales and marketing approaches are all part of the model, according to Sigal. If you've got enough opportunities, why not de-risk the portfolio in high risk or expensive areas like metabolic disease?

"We need a new business model, an evolving business model, and R&D needs to evolve in that direction," Sigal said. "You're never too big that you can't benefit from a good collaboration."

UPDATE: For a look at the WSJ Health Blog's coverage of Koestler and Sigal's talks, click here.

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IPOs: Just Another Facet of the M&A Auction

It's pretty much official now: filing an S-1 is just another part of an M&A auction.

BMS' acquisition of Adnexus, like Merck's recent acquisition of NovaCardia, demonstrates that Big Pharma, when nudged a bit by the prospect of a target hitting the public markets, is prepared to pounce.

We won't get into the details of the $415 million (plus earnouts) BMS/Adnexus deal right here--plenty of other blogs have covered the deal well (see the WSJ Health Blog or Pharmalot). Plus we're going to cover the Big Pharma biologics (and next-generation biologics) land grab in depth in the next issue of IN VIVO. And on top of all that, we're going to have Bristol's CSO and president of R&D Elliott Sigal, MD, PhD, up on stage at this week's Pharmaceutical Strategic Alliances shindig, and we'll surely get into the deal then.

But lets take a peak into the near future (tomorrow's PSA talk from Roger Longman) and look at both flavors of biotech exit; acquisitions and IPOs.

In 2007, M&A continues to climb in both total value and number of deals, while IPOs seem to have reversed a downward trend both in terms of valuations and pre-money step ups.

So which companies in the IPO queue are teeing up M&A exits simultaneously? Adnexus and Bristol's previously struck $240mm deal made BMS the biotech's logical acquirer--BMS' lack of a large molecule discovery engine greased the skids a bit for sure. Who else is angling for a public exit that could provide pharma with a similarly lacking discovery platform?

Maybe Archemix, the aptamer play without any significant Big Pharma ties could fill that kind of hole. And while Ablynx has yet to file for an IPO, its recent broad strategic alliance with Boehringer Ingelheim both gives it the pharmaceutical validations prerequisite for public investors and sets BI up as a logical acquirer should the biotech go that route.

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While You Were Dominating the Competition

If you were too busy playing in the Wimbledon semis and finals this weekend (or maybe just watching) to keep up with the news, IN VIVO Blog is here to help.

• Inhibition! Some news out of the International Society on Thrombosis and Haemostasis in Geneva this weekend. First up, Bayer's rivaroxaban was significantly more effective than Sanofi-aventis' Lovenox in preventing blood clots after knee surgery, Reuters reports. Rivaroxaban, a Factor Xa inhibitor, is being developed with Johnson & Johnson. Another Factor Xa inibhitor, Pfizer and BMS' apixiban (which is approximately a year behind rivaroxaban in development), also posted solid results, in a mid-stage trial. Reuters has the story.
  
• Indecision! UK's National Institute for Clinical Excellence (NICE) has changed its mind, and now considers Eli Lilly's Alimta cost-effective in treating mesothelioma in certain patients.


• Interference!! Roche and Alnylam announced this morning a broad alliance in RNAi therapeutics, worth up to $1 billion. Alnylam gets $331 million up-front in cash and equity payments. We hope you're not all RNAi'd out cause there'll be more on this later ...

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A June Wedding for Bristol/Sanofi?

Something tells me that talk of a potential acquisition of Bristol-Myers Squibb by Sanofi Aventis will heat up again in exactly one month.

The on again/off again speculation about a merger of the Plavix partners is decidedly off at the moment. And yes, yes, I know that my fellow IN VIVO bloggers think that Bristol's deals with AstraZeneca and Pfizer will make a Sanofi bid economically dumb. But two events coming up in mid-June could spur some desperate action.

For Richer, For Poorer

On June 15, BMS expects to be officially released from the terms of a deferred prosecution agreement it signed two years ago. The DPA has been the sword of Damocles hanging over Bristol, making it essentially untouchable for would-be-suitors—especially once Bristol ran into further trouble with its spectacularly misguided attempt to settle patent litigation over Plavix.

Bristol has now agreed to settle charges arising from that debacle—and says it has been assured that the deferred prosecution agreement will be released on schedule as long as it stays out of trouble between now and June 15. (That seems easy enough, but given Bristol’s history, its probably best not to count the chickens just yet…)

And, since “interim” CEO Jim Cornelius pulled off a Dick Cheney style CEO search—ending with himself as the new CEO—there is no reason to assume that Bristol is committed to independence for the long run.

But the real impetus for renewed speculation will probably come two days before June 15, when Sanofi Aventis’ much touted obesity therapy rimonabant goes up before an FDA advisory committee.

Sanofi insists the meeting is a good news event for the troubled application. Maybe. But given the company’s misreadings of FDA so far, Sanofi’s optimism probably shouldn’t inspire too much confidence. I think Kate Rawson has it right in the May issue of The RPM Report: Sanofi will be lucky if the drug gets even a strong minority support from the committee.

This does not seem to be a good time to take a big drug before an FDA advisory panel. Especially one with a safety signal. Perhaps most especially one with a safety signal (in this case depression) that dovetails with a major focus of congressional scrutiny. Did you see what happened to Arcoxia?

If rimonabant suffers a similar setback before the committee, Sanofi will be under even more pressure to make another move. So expect the merger speculation to heat up just before summer arrives.

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Bristol & Isis: Stop Making Sense

Bristol-Myers Squibb must have missed the memo about the obsolescence of antisense therapies in light of RNA interference advances. The pharma is paying Isis Pharmaceuticals--a prolific and formidable conjuror of IP and drug candidates--$15 million upfront for exclusive rights to the biotech's PCSK9 antisense research program for prevention and treatment of hypercholesterolemia.

Bristol will pay all the bills associated with the discovery, development and commercialization deal, which will focus on Isis' second-generation PCSK9 inhibitors and backup compounds. Isis will also get at least $9 million in research funding over the next three years, up to $168 million in development and regulatory milestones, and high-single-digit to low-double-digit milestones on sales of any drugs. Solid figures for a realtively new discovery program that barely warrants a mention in Isis' own corporate materials.

Did Bristol pay over the odds for such an early stage program? Not necessarily: the deal's financials are roughly in line with its last pre-clinical deal in the space, a more traditional small molecule adventure with Exelixis back in 2005. This time the target (longwindedly, proprotein convertase subtilisin kexin 9) is a protease that helps to regulate levels of LDL cholesterol. Too much PCSK9, too much LDL cholesterol (just why is still undetermined).

And PCSK9 has proven impossible to modulate using small molecules or protein therapeutics, which is why it has drawn attention in the nucleic acid therapy crowd, namely Alnylam Pharmaceuticals and partner UT Southwestern. The RNAi company considers PCSK9 the most intriguing cardiovascular target out there, and aims to file an IND for an injectible PCSK9 inhibitor this year. If Bristol felt the same way about the target, they didn't have many options.

But wait, you say. Statins are cheap, orally available, and generally work well at lowering LDL cholesterol. All true--but Alnylam is targeting the several hundred thousand patients (out of the millions on statin therapy) whose LDL remains out of control despite statin therapy.

Going after a smaller, unsatisfied segment of a massive market like the statins with a specialty therapy may pay off handsomely for biotechs like Alnylam. It will be interesting to see whether Bristol (which has signed two excellent, risk-hedging, biotechy out-licensing deals this year with AstraZeneca and Pfizer) can further embrace the biotech ethos and do the same.

If so it may also take a close look at Isis' apolipoprotein B-100 inhibitor, ISIS 301012, a compound we picked as one of our top-10 licensable cardiovascular projects a few months ago. That Phase II candidate, also being tested as an LDL lowerer against a traditionally undruggable target, ought to land a much more lucrative deal than PCSK9, Isis CEO Stanley Crooke told Reuters today.

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Bristol as Biotech

Bristol-Myers Squibb is acting more and more like a biotech, and from various points of view.

First and most obviously, it's focusing on specialist medicines while hedging its bets in the far more expensive and risky world of primary care. The strategy turned out brilliantly for it, first in its 2004 deal with Merck on muraglitizar (the drug failed--but Bristol had bought a $100 million insurance policy from Merck, which nicely repaid at least some of its costs); and then in its more recent deal with AstraZeneca, sending two primary-care diabetes drugs to the UK company in return for, potentially, a much bigger pot of cash. Now, with its Pfizer deal, it's going one step further--selling rights to a primary-care product for a potential $1 billion.

In the second place, it's doing what biotechs like to do: take products to proof of concept and, now that proof-of-concept brings such enormous values from product-desperate licensees, sell them, unlocking cash and value that would otherwise be trapped for years. It's a strategy of disaggregation biotechs get--and pharma, by and large, doesn't. In effect, Bristol, like biotechs, are recognizing that it can't handle -- almost no one can -- the astonishing complexity and gambles that now define true vertical integration in the drug industry (among them: the different development, regulatory, manufacturing, marketing and reimbursement challenges, and risk profiles, of large and small molecules and primary-care and specialty businesses).

Third, Bristol seems to be saying that one of the things it does best is discovery and early stage development (not primary-care marketing and sales) -- an astonishing thought for anyone who knew the R&D impoverishment of Bristol in the 1990s, before it hired the late James Palmer, one of the unsung heroes of Bristol's R&D revival. In fact, part of the Pfizer deal brings Bristol development rights to a Pfizer discovery program with potential in diabetes and obesity -- but for which Pfizer will probably take on the lion's share of commercialization: Bristol looks largely to be applying development expertise (expertise evidenced in the earlier Merck and AZ deals).

But in one way, Bristol's program is very unlike a venture-directed biotech: the company is making itself rather difficult to acquire. When Jim Cornelius was named interim CEO, and given Bristol's generics disaster with Apotex and Plavix, most people saw his job as cleaning up the company for a sale. Instead--now that he's been named real, not just interim, CEO--he seems to be trying to clean up the company for continued independent life. With its major primary care products now in the hands of partners, it will be difficult for anyone (perhaps except its partners AZ and Pfizer) to afford a bid--particularly Sanofi-Aventis, its partner on Plavix and Avapro. In short, while biotechs and their investors like to keep their exit options open, Bristol seems to be aiming for a long life as a new kind of biotech.

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Bristol Continues Late-Stage Asset Sale

Bristol-Myers Squibb continued selling off pieces of its late-stage pipeline this morning with a monster deal with Pfizer worth up to $1 billion in upfront payments and milestones.

The move demonstrate's Bristol's biotech-like strategy of monetizing its assets prior to commercialization. Deals like this allow the Big Pharma to hedge its development bets while at the same time, perhaps, providing takeover insurance against the overtures of its most likely acquirer, Sanofi-aventis, its commercialization partner on the blockbuster Plavix.

Pfizer gets a piece of Bristol's Phase III anticoagulant apixaban, in exchange for $250 million upfront cash and up to $750 million in development and regulatory milestones. The companies will share profits and commercialization expenses equally and Pfizer will fund 60% of any development costs from January 1, 2007 onward. Apixaban is being studied in prevention of venous thromboembolism and prevention of stroke associated with atrial fibrillation.

Separately the companies said they would also work together in metabolic disease, in a deal centered on a Pfizer discovery program with potential in diabetes and obesity. There, BMS is paying Pfizer $50 million and the companies will split profits/losses and all expenses 60/40--with Pfizer picking up the lion's share of the tab and rewards.

Pfizer clearly hopes to fill the void left by the failure of torcetrapib, its HDL-raising compound that was yanked from Phase III trials last year. Bristol on the other hand is slimming down, placing its commercial emphasis in specialist marketing and partnering off its late-stage assets in a company-wide hedging process. Until today it's biggest move was partnering 50% of its most advanced diabetes programs to AstraZeneca, in a deal worth up to $750 million in pre-commercial milestones. Bristol also moved today to solidify James Cornelius' position as CEO, who has been the company's interim chief since last year.

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