12:00 AM
 | 
Aug 04, 2008
 |  BioCentury  |  Finance

Ebb & Flow

Lilly’s project finance

Eli Lilly (NYSE:LLY) pulled a play from the biotech book when it did a deal with hedge fund TPG-Axon and Quintiles’ NovaQuest unit for $300 million in funding to conduct trials of its two lead candidates for Alzheimer’s disease (AD), gamma secretase inhibitor LY450139 and an unnamed antibody against beta amyloid.

The candidates were already in trials at Quintiles and the CRO expects to conduct a total of three Phase III trials for the two compounds, NovaQuest SVP Tom Perkins told Ebb & Flow. TPG-Axon and NovaQuest are eligible for milestone payments and mid- to high single-digit royalties.

After the deal was announced last week, Lilly reported interim Phase II data for LY2062430 at the International Conference on Alzheimer’s Disease meeting in Chicago. Treated patients had increased levels of four beta amyloid variants in the blood and cerebrospinal fluid (CSF), which the pharma said suggested the agent is helping to dissolve amyloid plaques(see B14).

The international Phase III IDENTITY trial of LY450139 began in April. The unnamed antibody is in Phase II. Lilly said the deal will allow it to focus resources on advancing additional molecules in its pipeline.

NovaQuest, which gets a fee, was established by TPG-Axon and Quintiles in 2006 (see BioCentury, May 22, 2006). According to Perkins, NovaQuest works with partners to identify opportunities and typically does due diligence on a deal. TPG-Axon then contributes a portion of an investment, usually a majority, while Quintiles picks up the remainder.

Quintiles has invested a total of $2.4 billion in co-promotion and co-development deals. Its largest deal to date also was with Lilly, a $400 million deal in 2002.

The CRO provided $110 million in milestone-based payments leading up to the approval of Cymbalta duloxetine, with the remainder going to help launch the anti-depressant by providing a 550-person U.S. sales force to promote the drug for five years after launch (see BioCentury, July 22, 2002).

Quintiles received 8.25% royalties on Cymbalta revenue for the first five years, plus another 3% for the following three years. Last year, Cymbalta had $1.8 billion in U.S. sales.

Unmasked value

Acambis (LSE:ACM) gained 69.5p (60%) on Monday to 185.5p after partner sanofi-aventis (Euronext:SAN; NYSE:SNY) said the prior Friday that it will acquire the U.K. vaccine company for 190p per share, or about £276 million ($553 million) in cash. The price is a 64% premium to the stock’s close prior to the announcement, imputing a value to the biotech’s pipeline that asset managers apparently have ignored.

Acambis has three mid- to late-stage programs, all partnered with the pharma’s sanofi pasteur vaccines division: ChimeriVax-JE vaccine against Japanese encephalitis (JE), which has completed Phase III testing; ChimeriVax-Dengue vaccine, which is expected to start Phase III testing this year; and ChimeriVax-West Nile vaccine, which is in Phase II testing.

The bid places more value on Acambis’ pipeline than U.K. investors. All but $13.3 million of the company’s $338.2 million market cap prior to the offer can be accounted for by anticipated revenues from a recent CDC contract for Acambis’ ACAM2000 smallpox vaccine - estimated at $240 million over 10 years - and a recent £43.4 million ($84.9 million) placing.

Indeed, Acambis shares have been on...

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