While You Were Staying Put

It's always sunny in ... London?

Lets kick off the weekend wrap-up by highlighting a trio of stories from The Times about incoming GlaxoSmithKline CEO Andrew Witty. The paper calls Witty a "survivor" and notes that he'll need all of those Bear Grylls skills in the tough year ahead. It also points out that Witty might be immune to the many charms of Philadelphia and will be running the show from west London. We guess he opts for fish 'n' chips over Philly cheesesteak, Lord's over Citizen's Bank Park, Twickenham over The Linc. (That said, GSK's dual-HQ model remains.) Interesting sure, but we don't know why it took them three articles to establish all this.

In other news ...

• Has Idenix's refocusing on its early stage virology pipeline begun to pay off? At least one analyst thinks so.


• The Financial Times rounds up some analyst comment suggesting that despite an incredible week for drug stocks like GSK and AstraZeneca, pharmaceuticals, long a haven for investors in tough economic times, may no longer be able to satisfy investors looking for a defensive stance.


• Researchers at the University of Minnesota have grown a functioning rat heart in the laboratory. Reuters, via WSJ.


• The Boston Globe writes that Boston Scientific Corp. execs insist the company is on the verge of rebounding from two years of post-Guidant woe.


• Drug development is hard. Drug discovery, dealmaking, getting a drug approved, growing rat hearts in some tricked-out ehrlenmeyer flask: all tough, worthy jobs. But they all pale in comparison to catching a swordfish with your bare hands. Have a good week, and try to keep it in perspective, people.

Read More

Deals of the Week: Beyond Biogen

Most of the chatter over the past few days has been about you-know-who and the deal that wasn't. Or the Novartis pink slips. Or the letter written to Schering-Plough and Merck by a couple of Michigan congressmen. But plenty of ink dried elsewhere this week, and we know that you know that we know that you've grown to expect Deals of the Week to talk about deals, not so much the deals that didn't happen, the layoffs, or the House Committee on Energy and Commerce. And damnit, we're not going to let you down.

• Eisai/MGI Pharma: We wrote a bit about this acquisition on Monday, and look for more in the January issue of IN VIVO. The short of it is this: the price tag, at $3.9 billion, suggests more than a little competition for the oncology/acute care specialist, and following on the heels of Celgene's $2.9 billion acquisition of Pharmion only a few weeks ago, reinforces our view that consolidation in the specialty pharma space will continue. And although the deal is by far the largest acqisition of a non-Japanese company by a Japanese pharma, perhaps it is not predictive of a wave of similar deals. Eisai boasts more of a US base, and we're told therefore, more of a dealmaking culture than its compatriots.



• Boston Scientific/Avista Capital Partners: Consider this the other shoe. Boston Scientific officials promised during their round of conference presentations last month that they’d be announcing the sale of its fluid management and venous access business sometime this month, and they did just that. The Natick, Mass. company agreed to sell the business to private equity firm Avista Capital Partners, $425 million in cash. This sale is be the last significant piece of their wholesale restructuring that would cut costs by $500 million and trim its headcount by 12% to 13%, and it’s a nicely matching bookend to last month’s sale of its cardiac and vascular divisions to the Getinge Group for $750 million. Analysts covering the company say the restructuring should help Boston Scientific go forward with its cardiovascular and cardiac rhythm management businesses. The cash also could come in handy to pay the $1.15 million Boston Scientific will pay to Advanced Bionics Corp. for its pain management program, a result of the nasty break up between the neurostim company and its one-time acquirer. Read more in the upcoming IN VIVO magazine.
  


• GSK/Oncomed: GSK's external development CEEDD and Oncomed inked a strategic alliance to discover and develop up to four antibody therapeutics against cancer stem cells, emerging oncology targets discussed in depth in this 2006 START-UP feature. The potential biobucks deal value is enormous, but the upfront payment, which is a mix of licensing fees and an equity stake, is undisclosed. Oncomed will handle development through clinical proof-of-concept, at which GSK has an option to license the MAb. The most advanced candidate, OMP-21M18, should enter the clinic next year. Bonus GSK: The pharma also teamed up with Belgian biotech Galapagos this week, paying €3.5 million in technology access fees plus milestones and 'double-digit' royalties to tap Galapagos' natural product discovery platform in the anti-infectives space.
  


• Shire/Alba: Prolific dealmaker Shire strikes again, landing ex-US, ex-Japan rights to Alba Therapeutics' AT-1001, an inhibitor of barrier dysfunction in GI disorders. The peptide is in Phase II for Celiac disease and Shire will have a look-see at Crohn's disease and other potential indications as well. Alba scored solid terms: $25 million in up-front payments plus milestones and royalties. In other Shire news, in the understated press release "Board Changes," the company said CEO Matt Emmens is stepping down, er, up, to the chairman's role, replacing retiring chairman James Cavanaugh. CFO Angus Russell will succeed Emmens next June. Somehow we doubt this is Emmens' last deal in the drivers' seat.

Read More

REVA's a Keeper

Perhaps the most interesting part of Reva Medical Inc.'s announcement that it raised $42 million isn't who joined the company as an investor. Rather it's who has remained an investor--Boston Scientific.

The struggling company has been busy divesting itself of most of its portfolio--up to 100 public and private companies--as part of its restructuring. (See the upcoming issue of IN VIVO magazine for a small report on Boston Scientific's weight loss program.)

New CFO Sam Leon told investors at one conference that the company's portfolio looked more like a venture capital firm's portfolio than a business development important so it's shedding those investment that aren't in line with its core focus and "building a wall" around those that are.

It appears that REVA hasn't been kicked off the Natick, Mass. compound. No reason to wonder why, the company is working a bioresorbable stent, and Boston Scientific has the exclusive option for global distribution for both the corornary and periperal products.

Think Boston Scientific would be interested in one of those? Yeah, IN VIVO Blog thinks so too.

Read More

In Our Face

Take THAT, IN VIVO Blog.

Boston Scientific Corp., in an obvious thumbing of the nose to our suggestion that it wouldn’t be acquiring new companies any time soon, did just that.
The Natick, Mass. company reached an agreement to buy Remon Medical Technologies Inc., a privately held and venture-backed company based in Caesarea, Israel.

(We know. This is Karl Rove, not Jim Tobin.)

The acquisition shouldn't be seen as a sign that Boston Scientific is out shopping again. The company inherited a business agreement between Remon and Guidant Corp. established in 2004, long before Boston Scientific acquired the latter for $27 billion last year. Boston Scientific presumably is still busy fixing Guidant and identifying potential business to divest.

Boston Scientific clearly is excited at the potential of remote monitoring. CEO Jim Tobin singled out the former Guidant’s Latitude monitoring system in past speeches. Fred Colen, executive vice president of operations and technology, CRM and Chief Technology officer, said in a statement, “This acquisition reflects our commitment to being a leader in the CRM market through the introduction of innovative products and services for the benefit of physicians and their patients."

Read a lot more about Remon and other remote monitoring companies here. To sum up, the company has a platform to develop miniature devices capable of using ultrasound for a multitude of reasons from monitoring to drug delivery to tissue stimulation.

We may have more on the acquisition in the next START-UP. For now, here’s a quick Q&A with CEO Hezi Himelfarb and Terry McGuire, general partner at Polaris Venture Partners, one of Remon’s earlier investors. (Terms weren't disclosed, btw, but McGuire seemed very happy with the outcome.)

IN VIVO Blog: So who approached whom about merging?
McGuire: We already had relationship with Guidant that was going on a couple of years. And that turned out to be a prosperous relationship in the sense that we really developed some important technology that Boston Scientific recognized would continue to be important. And through the [Guidant] acquisition we got to know Boston Scientific even better and the time seemed right to talk about merging the companies.

IVB: Were there other opportunities for an exit? Did CardioMEMS failed IPO make a sale more appealing?
McGuire: CardioMEMS has a very different business model. CardioMEMS never entered into our relationship in any way. This acquisition was based on a relationship that had been evolving over two years. It’s what I would describe is a perfect baton pass. Here is this really innovative company and Boston Scientific saw what they could do with this. It was based on a long-term relationship. It really wasn’t based on the fact CardioMEMS did XYZ. Remon had a very strong balance sheet. It wasn’t like we needed to do anything.

IVB: Were there other options for Remon?
Himelfarb: We’ve been actually working on evaluating other [partnership] opportunities with other companies and there was a lot of interest in our technology because our technology is actually the only one today that provides real intrabody communication in a totally wireless manner …But eventually you can do such a deal with one company and luckily Boston Scientific was the one.

IVB: Where do you fit into BSX?
Himelfarb: Right now we are continuing exactly as we were. We continue to be in our facility which is located in Israel with the same employees, same management team. Everything actually remains the same. Then, probably again after a short-period of training and education we will find out what are the objectives. For now we are staying the same as before the acquisition.

IVB: Any changes within the next 12 months?
Himelfarb: I believe after they learn more about our technology they may do some changes in the focus of the company

Read More

BSX's Big Bite

Medical device VCs have been waiting patiently for Boston Scientific to fully digest the $27 billion combo meal that was Guidant, so it could resume investing and acquiring their portfolio companies at a meaningful pace. Unfortunately for those investors (and those investors' LPs), they will likely need to wait even longer than they’d anticipated.

The Natick, Mass-based medical giant made a few significant announcements this week that will surely gum up the works. First, it said it was bidding adieu to CFO Larry Best, who managed the company’s corporate venturing program. Best is retiring to become a “private investor” (which will create another interesting storyline to follow). He’ll be replaced by Sam R. Leno, the outgoing finance chief at orthopedics leader Zimmer Holdings.

A day later COO Paul LaViolette told the crowd at the Morgan Stanley Health Care Conference that BSCI is undertaking an extensive “efficiency improvement program,” and is considering selling off some of its non-core businesses.

The Wall Street Journal first reported on the comments, and WSJ.com’s Health Blog correctly identifies stents and implantable defibrillator businesses as the most likely core businesses that won't be for sale. The $10.8 billion acquisition of Biomet by a syndicate of private equity investors shows there will be some interested buyers. No doubt, hedge funds and well heeled VCs will also be browsing the Boston Scientific store.

The implementation of the "efficienty improvement program" (or perhaps EIP for short) plus the potential sale of spare parts suggests that Boston Scientific's absorption of Guidant might not be going as smoothly as indicated by CEO Jim Tobin. But the company clearly has a plan to build on its sizable cardiovascular business. It's just that plans take time, so VCs hoping to see a step up in BSX's investing and buying will just have to wait.

Read More