Roche Dominates the Deal Flow

August 30, 2010
Marie Daghlian

While the rest of Europe was on holiday, Roche was busy in the office, acquiring California diagnostics startup BioImagene for $100 million, and striking a discovery and development deal with Aileron Therapeutics that could be worth upwards of $1 billion.

This article published with permission from The Burrill Report.

Roche was busy striking deals in the last days of summer, a time when much of Europe goes on holiday. The Swiss biopharma’s Ventana Medical Systems is acquiring California-based diagnostics startup BioImagene for $100 million.

BioImagene specializes in tissue-based diagnostics and research. The company’s digital pathology workflow and analysis technology enables image capture, information management, image analysis and virtual sharing of patients' tissue samples on glass slides. Burrill & Company, the publisher of The Burrill Report, is an investor in BioImagene.

The acquisition is another step in Roche’s commitment to personalized medicine and follows a July partnership deal with IBM to develop new genome sequencing technology. The purchase of BioImagene strengthens Roche’s presence in tissue-based cancer diagnostics and research, complementing Ventana’s digital pathology product offerings.

"As part of the personalized healthcare approach, pathologists are increasingly involved in generating information with high impact on treatment decisions," says Daniel O'Day, COO Roche Diagnostics. "The increasing complexity of new tests and technologies creates tremendous need for more sophisticated tools for tissue analysis and diagnosis. BioImagene products will complement and strengthen our current offering in image analysis and information management."

Roche also entered into a drug discovery and development collaboration with Aileron Therapeutics that could be worth as much as $1.1 billion to the Cambridge, Massachusetts startup [See Roche Bets Big on Aileron].

Roche will use Aileron’s peptide stabilization technology to develop a new class of drugs called stapled peptide therapeutics against up to five undisclosed targets selected from Roche’s key therapeutic areas, which include oncology, virology, inflammation, metabolism and CNS.

Aileron will receive at least $25 million in technology access fees and R&D support and is eligible for up to $1.1 billion in payments upon the achievement of discovery, development, regulatory and commercialization milestones, if drug candidates are developed against all five targets. Aileron will have substantial responsibility in collaboration with Roche to develop drug candidates against the selected targets up to clinical development.

Cypress Bioscience announced two separate deals as it tries to fend off a $160 million buyout offer from its Ramius Value and Opportunity Advisors, one of its largest shareholders. Cypress hopes to strengthen its CNS pipeline by paying $750,000 upfront to Marina Biotech for patent rights and technology related to a novel, intranasal formulation of carbetocin, a potential treatment for the core symptoms of autism.

Marina Biotech will also be eligible for up to $27 million based on achievement of certain late-stage clinical and regulatory milestones, including approval in the United States. Cypress will also fund all continuing development activities and pay single-digit royalties to Marina based on commercial sales.

In the second deal, Cypress acquired the worldwide license to Alexza Pharmaceuticals’ Staccato nicotine technology, an electronic multi-dose delivery system designed to help people stop smoking. The deal is part of Alexza’s strategy to advance its Staccato-based product candidates into development through self-funding and collaborations. The company is currently advancing a product to treat insomnia into phase 2 clinical development.

Under the terms of the deal, Alexza will get an upfront payment of $5 million. Following the completion of certain preclinical and clinical milestones relating to the Staccato nicotine technology, Cypress will pay Alexza an additional technology transfer payment of $1 million. Alexza will retain a carried interest of 10 percent in the net proceeds of any sale or license by Cypress of the Staccato nicotine assets and the carried interest will be subject to put and call rights in certain circumstances.

In other market moving news:Biotech slips as capital markets weaken

Biotech holds firm in wild week on capital markets It was a wild week on the capital markets as the Dow Jones Industrial Average closed below 10,000 on Thursday only to rebound on Friday. Investors surprisingly were not fazed by a revenue warning from technology bellwether Intel and a downbeat economic assessment by Federal Reserve Chairman Ben Bernanke.

The economy grew at a much slower pace this spring than previously estimated, according to the U.S. Commerce Department, mostly due to the largest surge in imports in 26 years and a slowdown in companies' restocking of goods. The nation's GDP grew at a 1.6 percent annual rate in the April-to-June period down from an initial estimate of 2.4 percent last month and much slower than the first quarter's 3.7 percent pace.

The Dow Jones Industrial Average closed the week down 0.61 percent and the Nasdaq Composite Index closed down 1.2 percent. The Burrill Biotech Select Index only dropped 0.4 percent for the week, bolstered by a strong performance from Amgen with shares up 3.6 percent. Celgene shares fell 3.3 percent on news that the company could face a patent challenge to its lead cancer drug Revlimid.

The Burrill Genomics Index closed the week up almost 6 percent thanks to an 8.3 percent pop in the shares of Human Genome Sciences on news that its lupus drug will get a priority review from the U.S. Food and Drug Administration, potentially clearing the way for its approval by mid-December. If approved, Benlysta would be the first new drug in more than 50 years for systemic lupus.Copyright 2010 Burrill & Company. For more life sciences news and information, visit www.burrillreport.com.