I attended a webninar by Morgan Lewis on the case study Asahi (Japan) vs Actelion (Swiss), who accquired CoTherix in the US. Asahi had a licensing agreement with CoTherix for the development of Fasudil in the US for PAH. Actelion allegedly bought CoTherix to avoid competition for their $1.5B PAH drug, Tracleer and halted development of Fasudil. To cut a long story short, due to the weak termination clause in the agreement, CoTherix/ Actelion were unable to terminate the agreement and return Fasudil to Asahi. On top of that, strong diligence as well as 'too broad liability clauses' also protected Asahi. During the discovery process in the litigation, Actelion executives left discriminating handwritten notes.

Result? California Judge entered a $516.7 million judgment in favor of Asahi Kasei Pharma Corp. in the case Asahi Kasei Pharma Corp. v. Actelion Ltd. The total awarded to Asahi for its claims in this matter will exceed $607 million, consisting of this judgment and a $91 million International Chamber of Commerce (ICC) arbitration award that Actelion-subsidiary CoTherix, Inc. paid to Asahi in 2010. In addition, the $516 million state court judgment will now earn approximately $50 million a year in interest while Actelion appeals the decision.

It is worthwhile to be VERY diligent in drafting your License Agreements!

EvaluatePharma, a partner of ALSA published a commentary that 24 new drugs have been already been approved by the FDA in 2011 and we will likely beat the total number of drugs (26) approved in 2010 . PS: as of the date of this posting, there 2 additional approvals!

QUANTITY is not quite as important as QUALITY and we think that the quality of drugs approved this year could be the best in 15 years, addressing real unmet needs in melanoma, Hepatitis C, Lupus-- this is reflected in the forecasted combined peak 5th- year sales of $14.6 Billion

FDA approvals in 2011

1. Actemra (tocilizumab); Genentech; For the treatment of systemic juvenile idiopathic arthritis, Approved April 2011

2. Afinitor (everolimus); Novartis; For the treatment of advanced pancreatic neuroendocrine tumors, Approved May 2011

3. Arcapta (indacaterol maleate inhalation powder); Novartis; For the treatment of airflow obstruction resulting from chronic obstructive pulmonary disease, Approved July 2011

4. *Benlysta (belimumab); Human Genome Sciences; For the treatment of systemic lupus erythematosus, Approved March 2011

5. *Brilinta (ticagrelor); AstraZeneca; For the reduction of thrombotic events in patients with acute coronary syndrome, Approved July 2011

6. Daliresp (roflumilast); Forest Pharmaceuticals; For the treatment of chronic obstructive pulmonary disease, Approved February 2011

7. Dificid (fidaxomicin); Optimer Pharmaceuticals; For the treatment of Clostridium difficile-associated diarrhea, Approved May 2011

8. Edarbi (azilsartan medoxomil); Takeda; For the treatment of hypertension, Approved February 2011

9. Edurant (rilpivirine); Tibotec; For the treatment of HIV-1, Approved May 2011

10. Gralise (gabapentin); Abbott; For the treatment of postherpetic neuralgia, Approved February 2011

11. Horizant (gabapentin enacarbil); GlaxoSmithKline; For the treatment of restless legs syndrome, Approved April 2011

12. *Incivek (telaprevir); Vertex; For the treatment of genotype 1 chronic hepatitis C, Approved May 2011

13. laViv (azficel-T); Fibrocell Science; For the improvement of nasolabial fold wrinkles in adults, Approved June 2011

14. Lazanda (fentanyl citrate) nasal spray; Archimedes; For the management of breakthrough cancer pain, Approved June 2011

15. Makena (hydroxyprogesterone caproate injection); Hologic; For the prevention of risk of preterm birth, Approved February 2011

16. Nulojix (belatacept); Bristol-Myers Squibb; For the prevention of organ rejection following kidney transplant, Approved June 2011

17. Potiga (ezogabine); Valeant Pharmaceuticals; For the treatment of partial-onset seizures, Approved June 2011

18. Tradjenta (linagliptin); Boehringer Ingelheim; For the treatment of type II diabetes, Approved May 2011

19. Vandetanib (vandetanib); Astra Zeneca; For the treatment of thyroid cancer, Approved April 2011

20. Victrelis (boceprevir); Merck; For the treatment of chronic hepatitis C genotype 1, Approved May 2011

21. Viibryd (vilazodone hydrochloride); Clinical Data; For the treatment of major depressive disorder, Approved January 2011

22. *Xarelto (rivaroxaban); Bayer; For the prophylaxis of deep vein thrombosis during knee or hip replacement surgery, Approved July 2011

23. *Yervoy (ipilimumab); Bristol-Myers Squibb; For the treatment of metastatic melanoma, Approved March 2011

24. Zytiga (abiraterone acetate); Centocor Ortho Biotech; For the treatment of prostate cancer, Approved May 2011

*Touted as potential blockbusters

On the other side of the coin is John L. LaMattina's Aug 2011 article in Nature Reviews where he questions the impact of mergers on pharmaceutical R&amp productivity. In a nutshell, his hypothesis is more mergers, less companies and hence less drugs.

The heyday of new drug approvals by the US (FDA) were the 90s- with an average of 31 drugs per year between 1990 and 1999 compared with 24 per year between 2000 and 2009

The peak was 54 drugs approved in 1996.

Looks like all the ASCO talk is about drugs developed to target the molecular drivers of cancer growth, like Pfizer's crizotinib and Roche's vemurafenib.

Great potential - Crizotinib for lung cancer showed truly impressive results in patients whose tumors express an anaplastic lymphoma kinase (ALK) gene.

Downside - ALK is thought to be a driver in only 3 to 5 percent of the cancers.

Yet Pfizer appears non-fuzzed about the number of people that can benefit from its drug, but rather its 'personalised' efficacy.

So take note you who are intending to out-license - Pharma is going in a targeted direction for example requiring biomarker studies to better match experimental compounds with the right patients. Most promising late-stage cancer drugs are in some way targeting specific molecular drivers of tumors.

I think this will be the way things will go too - true benefit for patients, real benefit for insurers who will pay for the right therapy for the right patients, expedited review, premium pricing and probably orphan status and small sales forces / promotion for the drug.

Finally, perhaps we will worry less about the market than the efficacy-- but is this true only for highly prices onco drugs??

Trend: Pharma is terminating more Biotech deals

Apart from the obvious negative results either in efficacy or safety,

1) the conventional wisdom in drug development is that there is high value to fail fast then to fail at late, expensive stages
2) harder and harder to differentiate your product against the numerous and faster-to-market competitors
3) high costs of development, hence the unbearable high risks
4) pricing squeeze that will not allow eventual sales to bring about a ROI

Read on for more reasons...

- Pfizer and Rigel terminated an agreement for R343, an inhaled Syk inhibitor for allergic asthma.
- AZ did not exercise its option to license Targacept's TC-5619
- Sanofi withdrew from Metabolex
- GSK ended a $1 billion neurology deal with Targacept,
- Merck terminated Portola Pharmaceuticals Inc.'s CV drug betrixaban.
- Pharma's mass exodus from the RNAi space last year

Partnerships between pharma and biotech for development-stage drugs can begin any time from before screening for a molecule through Phase III development, but no matter when they start, a majority of the partnerships end in Phase II or Phase III.

According to Deloitte Recap LLC, between 1977 and the Q3 2010, 29 percent of partnered compounds were in Phase II at termination while 35 percent were in Phase III.

7 percent of partnerships dissolved after a marketing application had been filed for the drug either because regulatory agencies turned down the drug and additional clinical trials were needed or occasionally pharma simply had a change in heart.

- Abbott told Depomed Inc. that it didn't want to market Gralise (extended-release gabapentin) just weeks before the drug was approved by the FDA. Abbott received rights to the drug through its 2008 M&A of Solvay.

Pharma's reasons or excuses:

1)The most common reason for termination was reprioritization, but the 38 percent of deals that fall into that category may be misleading. "It's sometimes the terminating party being nice," Dokomajilar said. "It might be for an underlying reason, but they're not disclosing it."

2)33 percent of the deals were terminated because of a lack of efficacy or safety.

3)7 percent were due to a lack of diligence on the part of the party reponsible for conducting clinical development. Many contracts require companies to use a "commercially reasonable best effort" to advance a compound, but such vague language can increase the likelihood of cancelled partnerships. Dokomajilar contended that setting specific diligence milestones – for example getting through a certain phase by a certain time – is a clearer approach.

4)Another 7 percent were due to M&A activity. While occasionally a biotech may take back a drug because its partner was acquired, it's more often the case that the biotech gets acquired, causing the pharma to back out. "The new partner introduces different risk," Dokomajilar said.

5)Finally, 15 percent of terminations fall into an "other" category, which mostly covers buyouts of the agreement and lack of progress.

A Blessing in Disguise ?

Getting a compound back isn't the worst thing that can happen to a biotech. Of the 474 alliances in Recap's database that have been terminated, 55 percent of the drugs are still alive. And 42 percent of those have been re-partnered. So overall, a dumped drug has nearly a 1-in-4 chance of finding a new home.

-ICOS Corp. originally licensed Cialis (tadalafil) to GSK in 1991 , but the partnership was terminated in 1997 when Glaxo sought a new direction. A little more than a year later(1998), ICOS found a new partner – and eventual takeout buyer (2002) – in Eli Lilly.

- Exelixis Inc. regained rights to cabozantinib after it couldn't agree on the scope, breadth and pace of clinical development with partner BMS. Still, analysts have high hopes for the molecule being re-partnered after the company unveiled promising data in patients with prostate cancer.

- when Merck handed back rights to a midstage antibody program licensed from AVEO Pharmaceuticals Inc. – citing a shift in priorities – the biotech's stock shot up 23 percent.

- when Merck dumped Cortex Pharmaceuticals Inc.'s ampakine compounds for schizophrenia and depression. In both cases, investors were happy to have unencumbered rights and a new opportunity to re-partner a drug that Merck had already spent plenty of money advancing.

The key to being able to re-partner a drug is a clean break from the company licensing the product. Cancellation payments, a growing trend in deals, may seem like a good idea, but they often come with strings attached in the form of royalties due to the former licensee.
"Royalties owed to the licensee may cause a hit when trying to find a new partner," Dokomajilar said. "A best practice is to go for clean reversion" that "allows for a second shot on goal."

PS: Both Debiopharm's products including its blockbuster, oxaliplatin were picked up from Pharma's termination.

Picking Up the Pace

Since the beginning of the year, BioWorld Insight has tracked 13 terminated agreements between biotech and big pharma compared to eight terminations during the same period in 2010.

Dokomajilar attributed the increase to two things: volume and risk.

Pharma's appetite for licensing products has been large. Five years to 10 years ago, pharmas licensed in a lot of compounds at early stages. Dokomajilar said that's left the companies with a "large portfolio of unproven technologies."

Lately pharmas have licensed late-stage assets to fill their pipelines ahead of their patent cliffs.

For both types of deals, the moment of truth – Phase II and Phase III trials – are upon us. Some attrition is bound to happen, and an increase in deals will naturally lead to an increase in the number that fail.

Dokomajilar also thinks that pharma isn't waiting for bad news to end partnerships. With pharma in cost-cutting mode, "we're going to see more terminations and at earlier stages," he said. "It cost a lot of money to keep programs going, and there might be more value in terminating."

source- BioWorld

Anti-competition is an important article in your Licenses (I already start at the Term Sheet level). For those of you who have come to my courses, you know that I emphasise that this article is to be read in conjunction with definition of Compounds, Products, Warranties, License rights etc...

The whole point is that you do not want your partner to be directly competing with your product when your product still has a good life span. You get only a small fraction of the profits,usually in royalties (yes, it is fair, since your partner presumably has taken the risk and paid the lion's share of the development costs and likely came up with a regulatory, clinical and marketing strategy as well). Still-they have 'riden' on your asset and they should give it a decent run in the marketplace..and be sensitive to your business,right? When will your next product come along!?

An exception I do make is when the competing product has an indeniably superior efficacy or side-effect profile, then it would be unethical that your partner does not bring it out to benefit the patients - at the end of the day, our ultimate aim here is to progress therapeutics and to cure diseases.

Amylin Pharmaceuticals is in a legal battle with long-time Byetta partner Eli Lilly, who plans to promote a rival diabetes drug with Boehringer Ingelheim. There is no doubt that Amylin is still in business today, thanks to its Lilly partnership.

Amylin filed a lawsuit against Lilly, claiming its link-up with Boehringer is unlawful and breaches pacts covering Byetta (eventide) and its once-weekly version Bydureon. In January, Lilly signed a wide-ranging diabetes collaboration, one of the key elements being the oral dipeptidyl peptidase-4 inhibitor Tradjenta (linagliptin), which was approved in the USA earlier this month.

Amylin alleges that Lilly is engaging in "improper, unlawful and anticompetitive behaviour" as linagliptin will compete directly with the eventide products. Now a California court has issued a temporary restraining order (TRO) against Lilly, preventing it from proceeding with plans to use the same sales force to sell both exenatide and linagliptin.

Why do we, in pharma get into such situations? Why couldn't we have saved legal headaches and huge fees by :

1) Better communications and transparency at Alliance Management

2) Better top level (CEO) communications and relationships

3) Being attentive to the anti-competition clause and perhaps renegotiated it?

Again, Amylin and Lilly may have done all that and still decided to support the legal profession !