AusBiotech 2012 special feature: Big deals

The deals have continued to flow over the past 12 months, with several Australian biotechs scoring major licensing and development deals with global partners. The top gong goes to Adelaide-based Bionomics for its landmark contract with Ironwood Pharmaceuticals for anti-anxiety compound BNC210, which could be worth up to US$345 million ($330.6m).

Under the terms of the deal, which included a $3 million upfront payment, Ironwood will lead up development, clinical trials and commercialisation of the compound. Bionomics is using the proceeds to help fund development of other promising compounds in its pipeline, including anti-tumour candidate BNC105.

Melbourne’s Immuron scored a coup in its efforts to expand the commercial reach of Travelan, its over-the-counter preventative treatment for travellers’ diarrhoea. Canada’s Paladin Labs agreed to a distribution deal worth up to C$115.5 million ($112m) , giving it exclusive rights to the product in Canada, Latin America and sub-Saharan Africa.

Immuron also started testing its over-the-counter influenza preventative treatment candidate against the swine flu strain, and filed an IND application in the US for a prospective treatment for liver disease including nonalcoholic steatohepatitis.

Meanwhile, Universal Biosensors has been raking in $1.5 million milestone payments from its deal with Siemens Healthcare to develop technology for a range of handheld coagulation testing tools. The company has to date received $6 million from the deal, with four milestones yet to come.

Tasmania’s Marinova secured a long-term supply deal in May granting US-based Stemtech International the exclusive rights to use one of Marinova’s proprietary marine plant extracts in a nutritional supplement. The SE2 supplement uses natural ingredients including Marinova’s extract to promote the release, circulation and migration of adult stem cells to tissues and organs.

Western Australia’s pSivida is starting to attract attention for Tethadur, a sustained-release drug delivery technology for use in back-of-the-eye diseases. In July, pSivida signed a technology evaluation deal for the product with a major biopharmaceutical company covering the technology – its first commercial deal for a product based on BioSilicon, pSivida’s second technology platform. The company has also recently secured FDA approval for phase III trials using another of its implants to treat posterior uveitis.

On the other side of the licensing coin, Specialised Therapeutics Australia arranged to license a new therapy for the colostrum difficile bacteria – a common gastric infection in hospitals and aged care facilities – from US-based Optimer Pharmaceuticals. Sienna Cancer Diagnostics also licensed IP from major shareholder Geron Corporation to help develop a test to detect a protein found in cancer cells.

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Growing

Expansion was the order of the day for some players. South Australian CRO CPR Pharma Services opened a new laboratory in Singapore, which it plans to use as a springboard to expand into more of Asia and into Europe. CPR Pharma, which was established three years ago, aims to become a $15 million company in the next three.

Sydney's Sirtex Systems allocated $4 million to triple the US manufacturing capacity for its SIR-Spheres Microspheres, which are designed to deliver a targeted dose of radiation to fight liver cancer.

SIR-Spheres have been performing well lately, with dose sales up 23 per cent in FY12, but the company is making an aggressive push to capture more than the roughly one per cent share of the addressable market for liver cancer treatments it currently holds.

Biota commenced an expansion of its local facilities, to allow it to fulfil its US$231 million ($221.4 million) contract from the US Office of Biomedical Advanced Research & Development Authority to work towards FDA approval for influenza antiviral laninamivir – a single dose, long-acting neuraminidase inhibitor – which is already available in Japan under the brand name Inavir.

Another Victorian biotech eyeing new markets for an established product is Genetic Technologies. The company recently applied for and received CE Mark approval for BREVAGen, its DNA-based breast cancer risk assessment tool, and secured the certification required for a launch in all 50 US states.

Australian biotechnology companies are also involved in some exciting R&D projects with the potential to deliver game-changing results. Queensland's Coridon, for example, has started development of a next-generation vaccine for human papillomavirus (HPV). While there are existing HPV vaccines on the market, this one would have an edge – it would also provide treatment for already infected women.

The company is also making progress with development of its experimental DNA vaccine against herpes, edging ever closer to the human trial stage. Its progress with the project has prompted largest shareholder Allied Healthcare to increase its stake to 44.4 per cent with a $1 million additional investment.

Melbourne’s BioDiem is meanwhile pulling out all the stops to take its Live Attenuated Influenza Vaccine (LAIV) technology to the next level. The company has formed partnerships with RMIT and France’s VIVALIS to adapt the platform for uses beyond influenza vaccines, with the latter project seeking to develop a brand new viral vector.

The company has also recently licensed a vaccine technology for hepatitis B and D from the University of Canberra, and one for dengue fever from the ANU.

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Setbacks

It hasn't all been good news for Australian biotechs this year. Sydney’s QRxPharma was recently dealt a surprise setback when the US FDA temporarily knocked back its NDA for dual-opioid pain formulation MoxDuoIR. The agency requested additional information that the morphine-oxycodone mixture is safer or more effective than using the two opioids in combination.

A recent meeting with the agency has left QRxPharma confident it can use existing clinical data to satisfy the FDA. This will let QRxPharma avoid conducting a new trial, which could have delayed the application process by up to 18 months instead of the six month delay now expected.

Sydney's Bioxyne was left facing the prospect of scaling back its ambitions for immunotherapeutic HI 164 OV, after encountering mixed results in a trial in COPD (chronic obstructive pulmonary disease). The preliminary results showed no clinical benefit across the study group as a whole, but did demonstrate a statistically significant benefit in patients younger than 65.

Bioxyne, which was created in April from the merger of Hunter Immunology and Probiomics, has launched a hunt for potential licensees for the product and may position it as a treatment for younger patients. But the under-65 cohort represents only 27 per cent of COPD sufferers.

The ASX Life Sciences index could be in for some changes over the coming months with mergers, a delisting and a spin-off all on the cards. Shareholders in Queensland's Alchemia will convene in October to vote on whether to spin off its oncology subsidiary, Audeo Oncology, into a separate Nasdaq-listed company.

If the demerger goes ahead, Audeo will gain full ownership of the Hy-ACT chemotherapy drug delivery program and drug candidate HA-irenocetan, in development as a prospective bowel cancer treatment. Alchemia will retain its existing business manufacturing and distributing anti-coagulant product generic fondaparinux.

Biota has agreed to a deal to merge with US biopharma Nabi Pharmaceuticals, withdrawing from the ASX in favour of a Nasdaq listing in the process. But the merger proposal has met with shareholder resistance both at home as well as overseas, with Nabi's major shareholder seeking support to block the deal. Biota investors will themselves vote on the merger proposal in September.

NSW Cardiac catheter designer CathRx has revealed it is likely to withdraw from the ASX, as it prepares the business for an eventual sale. The company expects to seek shareholder approval to delist after conducting a significant capital raising, because it expects that remaining a public company with low liquidity and market capitalisation would make negotiating a sale more difficult.

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Elsewhere on the ASX, NSW’s Cochlear could be in for a rebound. The hearing aid manufacturer had a difficult FY12 due to costs associated with the recall of its Nucleus Cl500 implants. Recall costs for the year totalled $101.3 million, dragging profit down 68 per cent to $56.8 million.

But the good news is the recall is all but behind Cochlear: it has fulfilled its regulatory obligations associated with the process and newly reported failure rates have been falling every month since Q1 2011. This progress could provide the impetus to finally get Cochlear shares back to pre-recall levels.

Pharmaxis has also been gaining ground, now that its cystic fibrosis treatment, Bronchitol has launched in Europe and is nearing approval in the United States, with it expected to go on sale there in the second quarter of 2013, assuming all goes to plan. The company’s share price still hasn’t recovered from its precipitous drop in May 2011, which has led some analysts to speculate it is currently considerably undervalued.

So it’s been a year of ups and downs, although substantially more of the former compared to the latter. As more deals are being made and more products are maturing, the foundations are being laid for an even better 2013.