Deals Shaping the Medical Industry (7/06)

The dealmaking column is a survey of recent transactions, including strategic alliances, mergers & acquisitions, and financings, in the life sciences industries. Deals are listed by the following industry sectors: in vitro diagnostics, pharmaceuticals, medical devices, and research/analytical instrumentation and reagents. All transactions are excerpted from Windhover's Strategic Transactions database, providing comprehensive transaction coverage from 1991 to the present.

In Vitro Diagnostics

Acquisitions

bioMerieux SA

Trinity Biotech PLC

For approximately €76.8mm ($60mm) (including assets, fees, and earn-outs), bioMerieux has sold its hemostasis product line to diagnostic testing company Trinity Biotech PLC . (May)

Along with a wide range of reagents that analyze blood clotting parameters, Trinity gets the MDA hemostasis and thrombosis analyzer, the MTX medium-volume automated hemostasis system, and the Thrombolyzer high-volume hemostasis system. The combination of products netted €45mm in sales for bioMerieux last year and placed the company fourth in the global hemostasis market. Trinity Biotech's hemostasis business includes the AMAX line of analyzers, and the AccuColor and Spectrolyse quantitative antithrombin activity tests.

Fujirebio Inc.

Fujirebio Diagnostics Inc.

CanAg Diagnostics AB

Fujirebio Diagnostics (tumor marker assays) is expanding its cancer testing business through the acquisition of Sweden's CanAg Diagnostics AB. (May)

CanAg develops and manufactures immunological reagents (monoclonal antibodies) against biochemical disease markers, and sells the reagents in test kits for various types of solid tumors. It primarily uses hybridoma, immunochemical, and molecular biology technologies in its development efforts. The company has about 27 employees and has been in business for 20 years. Among CanAg's marketed radioimmunoassays are the CA 125II biomarker for ovarian cancer; CA 15-3, a biomarker for the early detection of breast cancer; and CA 19-9 for pancreatic cancer.

Quest Diagnostics Inc.

Focus Diagnostics Inc.

Quest Diagnostics is acquiring Focus Diagnostics (infectious disease testing) for $185mm in cash. (May)

Focus provides testing services, real-time data solutions, and diagnostics for infectious and immunologic diseases. It recently launched in February its Coccidioides DxSelect ELISA total antibody screening test kit. The company also sells Histoplasma DxSelect ELISA test kits for human serum antibodies, HerpeSelect diagnostic for herpes simplex virus, and tests for Lyme disease, West Nile virus, SARS, and Epstein-Barr virus. Quest believes that the acquisition will provide it with an additional $65mm in yearly revenues.

Siemens AG

Siemens Medical Solutions

Bayer AG

Bayer HealthCare LLC

Bayer Diagnostics

Siemens AG has gained a competitive edge in the molecular diagnostics arena by agreeing to acquire Bayer Diagnostics for €4.2bn ($5.3bn). (Jun.)

The deal brings Siemens Medical Solutions --the diagnostic imaging and instruments arm of Siemens--a number of in vitro diagnostics for urinalysis, immunoassay, and chemistry testing in cardiovascular, hematological, renal, and infectious diseases, cancer, and diabetes. The company also gets nucleic acid tests, point-of-care tests (the companies partnered in 2004 in this area), imaging and laboratory diagnostics, blood cell diagnostics, laboratory automation, and information technology including hardware and equipment services. Siemens says the acquisition puts it in the number two position in immunodiagnostics, just behind Roche . Bayer Diagnostics, which employs over 5,000 people worldwide, reported sales of €1.4bn in 2005. Siemens has been attempting to grow as an integrated diagnostics company recently, particularly through its acquisition of Diagnostic Products Corp. earlier this year and the 2005 takeover of CTI Molecular Imaging. The present deal, expected to close at the beginning of next year and to be worth €3.6bn after taxes, allows Bayer to focus on its human and veterinary pharmaceuticals business--the company is aggressively pursuing a takeover of Schering AG to boost its specialty pharma products.

Joint Arrangements

AmeriPath Inc.

Specialty Laboratories Inc.

Applera Corp.

Celera Genomics Group

Celera Genomics licensed AmeriPath's Specialty Laboratories (clinical testing services) nonexclusive rights to cirrhosis markers that Specialty will choose from Celera's portfolio. (Jun.)

Celera receives an up-front payment once Specialty validates a test, and gets royalties on net sales of the product in the US. Celera has identified SNPs (single nucleotide polymorphisms) as markers by comparing the genetics of diseased individuals to those of healthy individuals, and finding associations between the genetic variations and disease. Specialty will further study the SNPs hoping to develop and market a genetic test that can identify a hepatitis C patient's risk for cirrhosis of the liver. There are currently no diagnostics available for assessing whether a patient with HCV will develop liver fibrosis and eventually cirrhosis.

Inverness Medical Innovations Inc.

TechLab Inc.

Inverness Medical Innovations (immunodiagnostics) has acquired 49% of TechLab (noninvasive intestinal diagnostics) by issuing 303,417 shares of its common stock worth about $8.8mm. (May)

Inverness gets the option to buy additional TechLab shares at a later date. It also receives exclusive worldwide rights to distribute the company's enteric disease diagnostics and any future tests. TechLab is developing diagnostics in the areas of intestinal inflammation, antibiotic-associated diarrhea, and parasitology. It has created ELISA and rapid assays to detect C. difficile toxins. The company has the only FDA-approved rapid membrane diagnostic that can distinguish between bacterial enteric infections and inflammatory bowel diseases by testing fecal lactoferrin. Inverness's Wampole division currently distributes TechLab's products in the US.

Nanogen Inc.

Oy Jurilab Ltd.

Finnish pharmacogenetics company Oy Jurilab has granted Nanogen (molecular diagnostics, laboratory products, and assay technologies) access to its group of predictive markers for Type II diabetes. (May)

The companies will jointly validate the markers, which are associated with both susceptibility to and protection from Type II diabetes, in certain groups outside of Finland including Ashkenazi Jews and populations in Catalonia, England, and Germany. Jurilab, founded out of the Finnish University of Kuopio, identifies markers by applying a method called Hierarchical Phenotype-Targeted Sequencing (HPTS) to genomic screens of an isolated Eastern Finnish group, a population that is twenty generations old and one of the most genetically homogenous available. Nanogen, which holds a 17% equity stake in Jurilab, will use the validated markers to design diagnostic tests. The companies will jointly pursue alliances with pharmaceutical firms to work on treatments targeting diabetes-causing genes. To date, Nanogen has developed diagnostics for cardiovascular and infectious diseases.

Financings

Clinical Data Inc.

Clinical Data Inc. (in vitro diagnostics, genetic testing services, and pharmacogenomics and molecular research) grossed $17mm by selling 1.04mm common shares at $16.34 each (a 6% discount to the market average) to institutional and other accredited investors. The backers also received warrants to buy an additional 519.9k shares for $19.45 apiece. (Jun.)

Pharmaceuticals

Acquisitions

7TM Pharma AS

CareX SA

7TM Pharma AS has purchased CareX SA, a French developer of small-molecule therapeutics for metabolic diseases such as obesity. Terms of the deal were not disclosed but 7TM says it issued some of its own shares to buy CareX. (May)

CareX is developing CB1 (cannabinoid) receptor antagonists for obesity. It is also studying sodium-dependent glucose co-transporter inhibitors for Type II diabetes. The company validates drug candidates using differential gene expression, x-ray crystallography, high-throughput screening, and medicinal chemistry. CareX's operations will be transferred to 7TM's Denmark facility. The deal is a good fit for 7TM, whose core focus is also in treatments for metabolic disorders. Its lead compound TM30338 has completed a positive Phase I/II trial in obesity and is slated to begin Phase IIa this year. Another obesity candidate, TM30339, is in preclinical studies. 7TM is also developing compounds for asthma and allergies under a deal with J&J's Ortho-McNeil, and cardiovascular therapeutics with Procter & Gamble.

Barr Pharmaceuticals Inc.

Pliva DD

Hoping to capitalize on the central and eastern European pharmaceutical markets, generic and brand drug maker Barr Pharmaceuticals will make a tender offer of $2.2bn in cash to acquire Croatian generic company Pliva DD . Pliva's supervisory board has endorsed the proposed acquisition. (Jun.)

Barr will make its offer in late 2006, pending approval by regulatory authorities in the US, Germany, and Croatia, and acceptance by more than 50% of Pliva's shareholders. Barr is offering HRK705 ($122) for each Pliva share, which is 12% higher than Icelandic generics company Actavis's HRK630 per share bid this past April. Pliva's shareholders are also eligible for a HRK12 per share dividend. The combined company, expected to have annual sales of $2.5bn, will have instant opportunities to launch existing and future drugs in the North American and European markets, and will concentrate on difficult-to-launch products incorporating Barr's oral solid dosage forms with Pliva's injectable, cream, and ointment delivery formulations. Pliva has had access to the US pharmaceutical market since 2002, when it bought generics company Sidmak Laboratories and branded pharma Odyssey Pharmaceuticals from Sobel. Pliva, which had 2005 sales of $1.2bn with a net income of $223.4mm, manufactures and markets generics for infectious disease--an area that is strengthened by the company's R&D in sulphonamide and macrolide chemistry--and does work in diuretics, nutraceuticals, active pharmaceutical ingredients, veterinary products and cytostatic drugs. The company has 21 ANDAs filed with the FDA and is developing 120 generic compounds. In addition, Pliva researches biosimilar products and has been working with Barr on G-CSF (granulocyte-colony stimulating factor), a biogeneric of Amgen's Neupogen for cancer. Barr will add Pliva's products to its own line of over 100 proprietary and generic drugs in women's health, cancer, and cardiovascular, infectious, and neurological diseases. Investment Banks/Advisors: Banc of America Securities LLC (Barr Pharmaceuticals Inc.)

Biogen Idec Inc.

Fumapharm AG

Biogen Idec has agreed to buy all the outstanding shares of Fumapharm AG (creates therapeutics from fumaric acid esters) for an undisclosed cash sum. (May)

Fumapharm's lead product Fumaderm is a psoriasis treatment is sold by Fumedica in Germany, where it generated 2005 sales of $13.2mm. Biogen says the manufacturing and sales activities of Fumaderm will continue as is. Fumapharm's other compound, BG12, is in Phase III for psoriasis and Phase II for multiple sclerosis. In October 2003, Biogen got exclusive rights to the second-generation oral fumarate worldwide, excluding Germany. The company will continue developing BG12, which has already demonstrated positive results in both the MS and psoriasis trials. Over the years, Biogen has focused on creating MS drugs; Avonex had 2005 sales of $1.5bn, while Tysabri was withdrawn from the market last year but recently was given the green light for a re-launch. The company also sells the psoriasis drug Amevive, which has not generated the sales Biogen had hoped due to competition from other psoriasis therapeutics such as Amgen's Enbrel, Centocor's Remicade, and Abbott's Humira.

Gilead Sciences Inc.

Degussa AG

Raylo Chemicals Inc.

Gilead Sciences will pay €115.2mm ($147.8mm) to acquire Raylo Chemicals, the API (active pharmaceutical ingredients) manufacturing arm of specialty chemicals company Degussa AG. Gilead will take over one of two manufacturing sites, with the Raylo name continuing on as an asset of Degussa. (Jun.)

The companies also entered into a seven-year supply agreement that calls for Degussa to manufacture and supply certain APIs for Gilead products; Gilead pays €177mm for this portion of the agreement. Raylo and Gilead have worked together for over 14 years, with Raylo providing large-scale custom manufacturing and drug intermediates. The acquisition provides Gilead with a more direct way to boost manufacturing for investigational products, new product launches, and clinical research programs. Gilead has products both on the market and in development for HIV/AIDS, fungal infections, hepatitis B and C, influenza, and CMV retinitis.

Johnson & Johnson

Pfizer Inc.

Pfizer Consumer Health Care Group

Johnson & Johnson has agreed to acquire Pfizer Consumer Health Care Group for $16.6bn in cash. (Jun.)

J&J also received the US OTC switch rights to the antihistamine Zyrtec when the patent expires. PCHG, which sells personal hygiene and over-the-counter health products, reported 2005 sales of $3.9bn. PCHG's products include Listerine mouthwash, Nicorette cessation treatments for smokers, Lubriderm cream for dry skin, Visine eye drops, Neosporin antibacterial ointment, Sudafed and Benadryl for cold and allergies, and Zantac for heartburn. The acquired brands will be sold in conjunction with J&J's other well-known OTC consumer products, such as Band-Aid, Tylenol, Reach oral products, and Clean & Clear, Aveeno, and Neutrogena lotions and cleansers. Analysts speculate Pfizer was offered over $15bn from GlaxoSmithKline and more than $14bn from Reckitt Benckiser for the consumer products business before it finalized the deal with J&J. Pfizer says it sold the unit to focus on its internal R&D and that it will use the proceeds to acquire new products and buy back up to $17bn of its outstanding common shares, including $7bn this year and the remainder next year.

Novartis AG

NeuTec Pharma PLC

In its fifth deal penned in about a week's time, Novartis has now agreed to acquire NeuTec Pharma (anti-infectives for the hospital market) for £10.50 ($19.53) in cash per NeuTec share, for a total of £303.7mm ($568mm). (Jun.)

NeuTec was formed in 1997 and went public in 2002, raising £10mm. The company is developing two infectious disease antibody fragments that are administered via IV twice each day: Mycograb is administered with antifungals for invasive Candida infections and Aurograb is used with antibacterials for Staphylococcus infections. The company has submitted for EU approval of Mycograb and US submission is anticipated for 2009; it plans to submit Aurograb for both EU and US approval in 2010. The drug candidates will help build Novartis' group of therapeutics for infectious diseases, including Cubicin (for which Novartis gained EU rights through its acquisition of Chiron) that is prescribed for complicated skin and soft-tissue infections due to Gram-positive bacteria; Phase II A60444, in development with Arrow Therapeutics for respiratory syncytial virus; and other compounds to treat hepatitis B and C under alliances with Idenix and Anadys. Investment Banks/Advisors: Lehman Brothers Inc. (Novartis AG); Hoare Govett Ltd. (NeuTec Pharma PLC)

TorreyPines Therapeutics Inc.

Axonyx Inc.

Combining complementary CNS programs, Axonyx (acquires and develops compounds for Alzheimer's disease) has agreed to reverse merge with TorreyPines Therapeutics (small-molecule treatments for neurological diseases), keeping the TorreyPines name and president and CEO Neil Kurtz. (Jun.)

Axonyx will issue its common stock to TorreyPines, resulting in TorreyPines owning 58% of the combined company. TorreyPines stockholders get warrants to buy additional shares at $1.04 each, which could bring ownership up to 62%. At the end of the first quarter of 2006, Axonyx had $27mm in cash on hand and TorreyPines had $54mm. The combined pipeline consists of mostly Alzheimer's disease (AD) candidates including Axonyx's three compounds for AD: Phase III phenserine (licensed to Daewoong for the South Korean market); Phase I Posiphen; and the preclinical bisnorcymserine. TorreyPines adds its preclinical AD compounds NGX292 and NGX555 and Phase I NGX267, plus two candidates, tezampanel (NGX424) and NGX426, for chronic pain (licensed from Eli Lilly). Through collaborations with Eisai, TorreyPines has funded AD discovery programs in gamma secretase modulators and genetic targets. Investment Banks/Advisors: Piper Jaffray & Co. (TorreyPines Therapeutics Inc.); Banc of America Securities LLC (Axonyx Inc.)

Joint Arrangements

A&G Pharmaceutical Inc.

Celltrion Inc.

A&G Pharmaceutical (cancer therapeutics and diagnostics) has licensed drug developer and manufacturer Celltrion exclusive rights to produce and market its anti-GP88 monoclonal antibody in Asia. (Jun.)

Celltrion is responsible for bioprocess development, scale-up, and cGMP manufacturing, and will also supply materials for toxicology studies and Phase I and II clinical trials. A&G gets milestones of up to $6.4mm, sales royalties on any future anti-GP88 cancer therapeutic, and retains rights outside the licensed territories. Celltrion will also make a $2mm equity investment in A&G. GP88 is a cancer biomarker, discovered by A&G's Dr. Ginette Serrero, that is found in 80% of all breast cancers, but not in healthy tissue. A&G's antibody neutralizes the function of GP88 and, as preclinical studies have shown, inhibits cancer cell growth and reduces the chance of breast cancer cells becoming hormone-resistant. Potential additional applications include prostate, ovarian, and other cancers.

Advanced Ocular Systems Ltd.

QLT Inc.

Ophthalmic drug and device company Advanced Ocular Systems (AOS; formerly Regenera) granted QLT (oncological, eye, skin, and urological diseases) an exclusive worldwide option to license technology for use in treating ophthalmic and inflammatory diseases. (May)

QLT is responsible for a $100k option fee, $3.5mm in clinical, regulatory, and IP-related milestones, sales royalties, and is in charge of all R&D work. The technology involves the use of the immunosuppressant drug rapamycin (also known as sirolimus and sold by Wyeth as Rapamune to prevent kidney transplant rejection). Studies have shown the compound to be effective in treating refractory uveitis and suppressing corneal neovascularization. QLT has recently been building its ophthalmic pipeline through partnering. This past April, it licensed a group of synthetic retinoids from Retinagenix for development in degenerative retinal diseases.

Affymax Inc.

Takeda Pharmaceutical Co. Ltd.

Takeda and Affymax are expanding the terms of a deal signed in February 2006 to give Takeda additional rights to Affymax's anemia candidate Hematide. (Jun.)

Under the original agreement, Takeda was granted exclusive rights to develop and sell the compound in Japan. New terms give Takeda exclusive worldwide rights, and in the US the partners will co-promote the drug. Both parties are responsible for US development costs (with the majority falling on Takeda), and outside of the US Takeda covers development and regulatory costs. Affymax gets $105mm up front, development and regulatory milestones of up to $280mm, and sales milestones of up to $150mm. It is also eligible for royalties, and is responsible for the manufacture and supply of the finished product to Takeda. Hematide is a synthetic peptide-derived erythropoiesis-stimulating agent that is used to promote red blood cell production in dialysis, pre-dialysis, and cancer chemo patients to prevent anemia.

Akorn Inc.

Fidia Farmaceutici SPA

Specialty pharmaceutical company Akorn Inc. and Fidia Farmaceutici SPA (develops hyaluronic acid treatments) will jointly develop four generic antiviral drug candidates. (May)

The agreement includes an ointment, a cream, and two tablet formulations. Fidia will manufacture all four candidates and clinically develop the two tablet formulations, while Akorn takes responsibility for the clinical development of the two topicals. Akorn pays development milestones and gains exclusive marketing rights in the US and Canada to all four generics, which will compete in the $1bn immunocompromised antiviral patient market. Active within orthopedics, trauma, rheumatology, and tissue repair, Fidia primarily makes oral, topical, and injectable products derived from hyaluronic acid. Akorn--mainly focused on ophthalmology diagnostics, therapeutics, and OTC products--also produces and distributes hospital products such as injectables for anesthesiology, antidote/ poison control, cardiology, nephrology, and rheumatology. This deal enables Akorn to penetrate the dermal and oral pharmaceutical markets.

Amylin Pharmaceuticals Inc.

Nastech Pharmaceutical Co. Inc.

Amylin (developing drugs for metabolic and cardiovascular diseases) and drug delivery company Nastech will develop an exenatide nasal spray for Type II diabetes that incorporates the latter's nasal delivery technology. (Jun.)

Amylin will head up development and regulatory activities and will reimburse Nastech for formulation work. Nastech will perform drug delivery activities and those related to the chemistry, manufacturing and controls requirements of the FDA. Amylin pays milestones of up to $89mm for development, regulatory, and commercialization achievements, as well as sales royalties that would increase as the product succeeds. Amylin has launched an injectable form of exenatide (Byetta), which is derived from the saliva of a Gila monster, under a 2002 agreement with Eli Lilly. The companies have recently found that the drug can lower blood glucose levels in Type II diabetics who had used a thiazolidinedione (with or without metformin) but did not show improvements with their blood sugar. Animal studies on the nasal formulation have been completed and Amylin and Nastech will now perform feasibility studies needed for clinical development.

Applera Corp.

Celera Genomics Group

Medarex Inc.

Celera Genomics and Medarex have allied to jointly identify and develop fully human monoclonal antibodies against targets chosen from Celera Genomics' cancer pipeline. (Jun.)

Celera's targets are the result of its proteomics program in which the company identified the over-expression of proteins located on the surface of tumor cells. Medarex will use its UltiMAb Human Antibody Development System to generate antibodies, which the two companies will jointly validate. Medarex and Celera will then select potential antibodies (for multiple cancer indications) that they will exclusively develop (in-house or with another partner) and commercialize independent of one another. Each company receives milestones and sales royalties from products developed by the other party. Medarex's UltiMAb system encompasses three technologies--its HuMAb-Mouse, Kirin Brewery's TC Mouse, and the combination KM-Mouse--that uses transgenic strains of mice to produce human antibodies.

Applera Corp.

Celera Genomics Group

Schering AG

Schering AG has purchased Celera Genomics' cathepsin S inhibitor small-molecule portfolio for treating auto-immune diseases. (Jun.)

Celera received $5mm up front in cash and could get another $360mm in total milestone payments upon successful development and commercialization of any resulting drugs. It will also receive sales royalties that could reach the low double-digits. Celera's lead cathepsin S inhibitor, orally administered CRA028129, is in Phase I for psoriasis. Inhibition of cathepsin S may reduce antigen presentation within certain cells. At the time of the agreement, Celera also sold one of its early-stage preclinical small-molecule programs to an unnamed venture capital investor for $250k up front in cash, up to $15mm in milestones, sales royalties, plus a 5% equity stake in a newly formed company that will carry out compound development.

Axxam SRL

Dompe Farmaceutici SPA

Dompe pharma SPA

Dompe pharma SPA, the R&D and manufacturing arm of Italian pharmaceutical company Dompe Farmaceutici SPA, and fellow Italian biotech Axxam will together discover and develop drugs that modulate G protein-coupled receptors (GPCRs). (May)

Dompe contributes its medicinal chemistry and preclinical/clinical development experience, while Axxam brings its expertise in assay development and high-throughput screening. Axxam's GeneTrawler platform contains a human gene expression database used to identify and validate new targets for drug development. The company also builds highly sensitive cell- or biochemical-based bioassays, and its drug screening platform, which is used for lead optimization and incorporates conventional or combinatorial chemistry, can screen 20k compounds per day. Axxam was spun out of Bayer's assay business in 2001.

Bayer AG

Bayer Pharmaceuticals Corp.

Pfizer Inc.

Bayer Pharmaceuticals licensed Pfizer exclusive global rights to DGAT-1 (diacylglycerol acyltransferase) inhibitors, a new class of compounds for controlling lipid metabolism. (Jun.)

Pfizer pays an up-front fee, milestones, and sales royalties. Included under the license is BAY744113, the lead DGAT-1 inhibitor, which is in Phase I clinical trials for treating obesity, Type II diabetes, and related conditions. The compounds are designed to modify how fats are processed in the body and prevent the accumulation of triglyceride, which can both reduce obesity and reduce insulin resistance.

BioCryst Pharmaceuticals Inc.

Green Cross Corp.

BioCryst Pharmaceuticals (enzyme blockers) licensed Green Cross Corp. rights to develop and market its peramivir influenza compound in South Korea. (Jun.)

BioCryst will receive an up-front fee, future milestone payments, double-digit sales royalties, and an equal share in profits. The company will supply the candidate (at a premium) and provide Green Cross with any preclinical and clinical data it has gathered, while Green Cross will share future clinical data with BioCryst for use in upcoming clinical trials in the US, Europe, Thailand, Vietnam, and Indonesia. Green Cross handles all costs associated with development, regulatory activities, and commercialization in the licensed territory. Peramivir is a neuraminidase inhibitor of influenza A and B, which, in preclinical studies, has demonstrated potential in treating H5N1 avian influenza. The neuraminidase enzyme is responsible for spreading the flu virus in host organisms.

Bioniche Life Sciences Inc.

Bioniche Pharma Group Ltd.

Edwards Lifesciences Corp.

Bioniche Pharma Group (injectable drugs) has bought Cystistat (hyaluronic acid), Rimso-50 (dimethyl sulfoxide), and Cryoserv (dimethyl sulfoxide). (May)

BPG purchased Cystistat from Bioniche Life Sciences--which sold BPG to a group of investors earlier this year for $Cdn15.2mm--for $Cdn10mm ($8.9mm), and purchased Cryoserv and Rimso-50 from Edwards Lifesciences for an undisclosed sum. Cystistat is sold for interstitial cystitis and glycosaminoglycan layer deficiencies of the bladder. Rimso-50 is given to patients in the US and Canada with interstitial cystitis. Cryoserv is used in stem-cell preservation and sold mainly in the US, although a small portion of its sales do come from Europe. BPG funded the acquisitions through investments made explicitly for the transactions by majority shareholder RoundTable Healthcare Partners and other minority investors.

Boehringer Ingelheim GMBH

XstalBio Ltd.

Hoping to improve formulation and delivery of biomolecules, XstalBio (drug delivery for proteins, peptides, nucleic acids, and vaccines) and Boehringer Ingelheim have agreed to jointly develop XstalBio's protein-coated microcrystals (PCMC) technology. (May)

The companies will scale up the platform so that it is GMP compliant. XstalBio gets manufacturing rights and will receive milestone payments from BI. The technology involves the coating and immobilization of biomolecules on the crystal core (made of an amino acid, sugar, or salt) of a PCMC. The PCMC particles can be delivered parenterally, transdermally, or via inhalation. The amount of the biomolecule on the crystal's surface can be adjusted allowing administration of both low- and high-potency compounds. PCMC technology is expected to broaden applications of drugs, improve their value, and expand their product life cycles. BI hopes to apply the PCMC delivery system to its own compounds. The company's most recent drug delivery alliances include Vectura for inhaled respiratory treatments; Inspire for an intranasal allergy candidate; and Novosom AG for siRNA delivery.

Cephalon Inc.

Takeda Pharmaceutical Co. Ltd.

Takeda Pharmaceuticals North America Inc.

Cephalon (treatments for cancer and CNS diseases) and the US subsidiary of Japanese Takeda Pharmaceutical, have agreed to co-promote Cephalon's excessive sleepiness medication Provigil (modafinil) in the US for three years. (Jun.)

Takeda gets sales royalties and has the option to renew the agreement annually at the end of the third year. Cephalon will develop, manufacture, and distribute Provigil. It also has the option to use Takeda's sales force to promote Nuvigil, Cephalon's single-isomer form of modafinil developed for excessive sleepiness, in the US following FDA approval (the FDA deemed the candidate approvable this May). Cephalon would pay Takeda royalties on Nuvigil sales if it exercised that option. Five hundred Takeda reps will promote Provigil to primary care doctors and other health care professionals, bringing the drug's total US sales force to 900. The companies will establish a joint committee to manage promotional activities. Cephalon hopes to benefit from Takeda's marketing experience to the primary care audience as well as its presence in the CNS market; Takeda will sell its own insomnia treatment Rozerem (ramelteon, approved in July 2005), along with Provigil. In the past year, Cephalon has settled patent litigation suits over Provigil with Barr, Mylan, Teva, and Ranbaxy; each of the companies now has nonexclusive rights to sell authorized generic versions of the drug in the US.

Chelsea Therapeutics Inc.

Sumitomo Chemical Co.

Dainippon Sumitomo Pharma Co. Ltd.

Chelsea Therapeutics International (developing pharmaceuticals for unmet medical needs) has licensed exclusive worldwide rights (with the exception of Japan, Korea, China, and Taiwan) to Dainippon Sumitomo Pharma's Dops (droxidopa or DL-threo-3,4-dihydroxyphenylserine), a norepinephrine-induced adrenergic neurofunction improving agent. (May)

Chelsea will pay a $100k license fee and $250k in Chelsea common shares up front; and up to $4mm in milestones (payable in either cash or equity at DSP's election), of which $2.5mm will be paid after an NDA is approved. DSP will receive mid-single-digit royalties; the royalty rate expires after the first eight years following the commercial sale in the US, Canada, and Mexico, and after the first 11 years in the UK, France, Italy, Germany, and Spain. DSP will supply (at a fixed price) droxidopa for Chelsea's clinical studies; Chelsea will buy the compound from DSP (at a cost-plus price) for commercial sales unless it can get the material at a lower cost that DSP chooses not to match. In that case, the royalty rate will increase by 1%. Chelsea hopes to file for orphan drug status later this year in the US and Europe and start clinical studies of the compound for neurogenic orthostatic hypotension in 2007. Dainippon will provide all clinical data and manufacturing processes. DSP already sells Dops in Japan, after gaining approval in 1989 for frozen gait or dizziness that can accompany Alzheimer's disease and to treat orthostatic hypotension, syncope, or dizziness associated with Shy-Drager syndrome and familial amyloidotic polyneuropathy. In 2000 DSP was granted additional approval to sell the drug in Japan for vertigo, dizziness, and weakness in hemodialysis patients with orthostatic hypotension.

CSL Ltd.

EvoGenix Ltd.

EvoGenix (antibody therapeutics) will use its technologies to develop antibodies from its own pipeline chosen by fellow Australian company CSL Ltd. (Jun.)

CSL will pay EvoGenix to perform the research, as well as development and regulatory milestones for each successful antibody. CSL has commercialization rights to any resulting therapeutics and must provide EvoGenix with sales royalties. The companies seek to create antibodies that are more effective than others on the market. EvoGenix has three antibody technologies--Superhumanisation for humanizing murine antibodies; EvoGene for optimizing the antibodies; and ADF toxin technology to improving the potency of antibodies and cause cell death. The company has compounds in development for osteoporosis, respiratory infections, and liver cancer.

CV Therapeutics Inc.

PTC Therapeutics Inc.

CV Therapeutics (developing small molecules for cardiovascular conditions) will use PTC Therapeutics' (drug candidates for genetic disorders, cancer, and infectious diseases) GEMS (Gene Expression Modulation by Small-Molecules) screening technology to discover small molecule oral drug candidates. CVT may choose up to five resulting candidates, including ones that may raise HDL cholesterol. (Jun.)

Over the three-and-a-half-year term, PTC gets $10mm up front--$2mm in cash and two 4.85% $4mm loans. One loan is forgivable if the deal goes full term, and the other converts into equity if PTC completes its IPO or a qualified private placement within the next two years. CVT has the option to enter an exclusive license arrangement for at least one of the resulting compounds it selects, for which it would pay sales royalties. If CVT chooses all five, and they all achieve commercial success, PTC might receive up to $335mm in developmental, regulatory, and commercial milestones. PTC has the option to equally fund the R&D for an increased level of royalties or co-promotion rights. Drug candidates identified with GEMS target the post-transcriptional processes that operate in untranslated regions of mRNA molecules.

Cytopia Ltd.

Novartis AG

Novartis and Australian biotech Cytopia have entered into an agreement involving Cytopia's discovery-stage JAK3 kinase inhibitors. Novartis will develop and commercialize orally active small molecules that target JAK3 to prevent transplant rejection and treat various autoimmune diseases including rheumatoid arthritis. (Jun.)

Cytopia gets $9.5mm (including an up-front and R&D funding) over three years, and could also receive development, regulatory, and sales milestones of up to $205mm if treatments for multiple indications are successfully commercialized. In addition, it gets sales royalties and retains the rights to co-promote resulting therapeutics in Australia and New Zealand. JAK3 is an enzyme that helps the immune system perform normally. In transplant patients, drugs are administered to suppress the immune system and prevent rejection, but these drugs also act on cells outside of the immune system and cause severe side effects. JAK3 kinase inhibitors prevent rejection and treat other autoimmune diseases, and since the kinase only occurs in cells of the immune system, there is a smaller chance for negative systemic side effects. Novartis is a big player in the $3bn transplant rejection market; its drug Sandimmune/Neoral (cyclosporine) prevents rejection in kidney, liver, and heart transplant patients.

DiscoveRx Corp.

General Electric Co.

GE Healthcare

Reagent and assay kits developer DiscoveRx has granted GE Healthcare worldwide exclusive distribution rights to its HitHunter cAMP enzyme fragment complementation (EFC) assays. GE also gets exclusive rights in Asia Pacific to DiscoveRx's kinase assays. (May)

The HitHunter cAMP assays are homogeneous, non-radioactive, cell-based assays used in GPCR screening applications. GPCRs are a class of membrane proteins that play a key role in cell signaling pathways and are important drug discovery targets. DiscoveRx's HitHunter antibody-based kinase assays use EFC chemiluminescent detection to assess hits, activity, potency, binding, and selectivity. The company also has various nonantibody-based kinase platforms. GE Healthcare will add the HitHunter platform to its existing screening technologies, which include many systems and software acquired from Amersham in 2003, when the companies merged.

EffRx Inc.

Merck & Co. Inc.

Merck & Co. Inc. has granted EffRx (improved delivery for metabolic, musculoskeletal and CNS disorder drugs) an exclusive worldwide license to patents covering the use of effervescent technology in the development of bisphosphonates. (May)

EffRx improves the delivery of already existing drugs (and plans to develop its own products in-house) by applying its effervescent technology to make compounds available as liquids. This serves to make medications easier to administer, more gentle on the digestive tract, and better tasting than alternative forms. The company will use its technology with Merck's bisphosphonate IP to develop treatments for osteoporosis. Studies have shown that bisphosphonates, such as risedronate (Actonel) and alendronate (Fosamax), increase bone mass by slowing bone resorption (bone loss) and preventing bone fractures.

Eisai Co. Ltd.

Nitto Denko Corp.

Nitto Denko (lamination, coating, and polymer technologies) will use its patch delivery technology in the joint development of a transdermal formulation of Eisai's Alzheimer's drug Aricept (donepezil HCl). (May)

Eisai believes the patch will provide ease of use for Aricept, which is presently available as a once-a-day tablet and orally disintegrating pill. The product, co-promoted with Pfizer, is sold in over 76 countries and had worldwide sales of $1.4bn in 2005. Nitto's patch technology focuses on safe and stable controlled-release delivery. The company got a boost to this business in 2003 with the purchase of Elan Transdermal Technologies (re-named Aveva Drug Delivery Systems).

Emergent BioSolutions Inc.

Sanofi-Aventis

Sanofi Pasteur

Emergent BioSolutions (infectious disease therapeutics and vaccines) has licensed Sanofi Pasteur (the vaccines division of Sanofi-Aventis) exclusive worldwide rights to proteins and IP related to the development of a vaccine for Neisseria meningitidis serogroup B bacterial infections. (Jun.)

Sanofi paid €3mm ($2.3mm) up front, will pay development service fees (including retroactive payments dating back to January 2006), development milestones, and sales royalties. Emergent and Sanofi will work on a collection of antigens that Emergent identified through its Signature-Tagged Metagenesis functional genomics and proteomics technology, and Emergent will handle development through Phase I. Sanofi picks up development at the beginning of Phase II trials and is responsible for regulatory filings and worldwide sales. Sanofi develops and markets vaccines for over 20 viral and bacterial diseases including whooping cough, mumps, measles, TB, hepatitis, and cholera.

Enhance Biotech Inc.

Mount Cook Biosciences Inc.

Enhance Biotech (acquires and develops compounds for chronic long-term conditions) has sold a group of opioid delta receptor candidates to Mount Cook Biosciences, a company created by the VC Paramount Biosciences. Enhance Biotech takes an equity stake in Mount Cook. (May)

Mount Cook will pay up to $1.8mm in cash, which includes an up-front payment of $312.7k for patents, intellectual property, regulatory filings, and clinical and preclinical data. The company pays the remainder when clinical and sales milestones are achieved, and is responsible for sales royalties. Mount Cook is issuing Enhance Biotech up to 487.5k common shares, half of which will be given up front and the other half when clinical milestones are reached. Enhance Biotech originally got the opioid delta modulators through its 2004 acquisition of Ardent Pharmaceuticals. The lead candidate from the group is DPI125, a combination delta/mu opioid agonist in Phase I for moderate-to-severe pain. Other compounds acquired include DPI221 for incontinence (Phase I) and the preclinical candidates DPI290 for Parkinson's disease, DPI289 for depression, DPI353 for cardiac ischemia, and a premature ejaculation treatment. Enhance is left with a pipeline that focuses on dermatological conditions such as eczema and psoriasis, and agents for periodontal disease and fertility.

Evotec AG

Roche

Building on previous collaborations together, Roche and Evotec AG (drug discovery services and small-molecule CNS compounds) have agreed to identify and develop inhibitors against a target involved in neurological and other diseases. (Jun.)

Evotec has already performed research on the chosen target. The companies will jointly develop the drug candidates through the completion of preclinical research, at which point Roche would have the exclusive right to continue clinical work and could pay Evotec €100mm ($126mm) or more in milestones plus sales royalties. If Roche opts not to move forward with development, Evotec gets exclusive rights to the compounds and makes payments to Roche. This is the third CNS alliance for the companies within the last two years: in 2004, Evotec licensed a set of Roche's preclinical NMDA receptor antagonists for Alzheimer's disease, Parkinson's, and neuropathic pain; and at the beginning of 2006, Evotec got two Phase I Alzheimer's disease candidates from Roche.

First Horizon Pharmaceutical Corp.

SkyePharma PLC

SkyePharma PLC (drug formulation technologies) has agreed to help First Horizon Pharmaceutical (specialty drugs) create a controlled-release formulation of the calcium channel blocker Sular (nisoldipine) for hypertension. (May)

First Horizon will provide $1mm up front, up to $9mm in milestones of which $4mm will be paid upon FDA approval (expected in 2008), and mid-single-digit sales royalties. SkyePharma will manufacture the product in its Lyon facility. First Horizon assumes all development expenses and will sell the drug through its 525-member specialty sales force. First Horizon says its cardiovascular sales reached $144.5mm last year. This is the second time the companies have paired up; in mid-2004 First Horizon licensed exclusive US rights to SkyePharma's fenofibrate, later named Triglide, for lipid disorders such as high cholesterol and triglyceride levels.

Galapagos NV

BioFocus PLC

GlaxoSmithKline PLC

Center of Excellence for External Drug Discovery

GlaxoSmithKline's Center of Excellence for External Drug Discovery (CEEDD) and Galapagos NV (genetic treatments for bone and joint diseases) have formed a multi-year drug discovery alliance to develop osteoarthritis medicines. (Jun.)

GSK will pay €4mm ($5.2mm) up front to access Galapagos's osteoarthritis program and discovery technology, plus up to €65mm in discovery, development, and regulatory milestones for each candidate (the goal is to develop two compounds). Galapagos gets up to double-digit sales royalties and a €3mm equity investment by GSK upon reaching a future milestone. Galapagos, through its BioFocus drug discovery business, is responsible for expanding its group of validated osteoarthritis targets (the company has identified eleven to date) in chondrocytes (human cartilage cells), compound screening, finding hits and leads, and identifying genes that both stimulate anabolic processes in cartilage repair and prevent breakdown in affected joints. The company will bring lead candidates through to Phase IIa trials, at which point GSK has the exclusive worldwide option to continue developing and eventually marketing the drugs. If GSK chooses not to exercise the option, Galapagos has the right to future development and commercialization. GSK does not currently sell any products for osteoarthritis, but is developing a Phase I cathepsin K inhibitor for the disease. GSK and Galapagos formed a drug discovery agreement at the beginning of 2005 around respiratory and inflammatory diseases.

Genelabs Technologies Inc.

Novartis AG

Novartis has licensed development and marketing rights to Genelabs Technologies' (hepatitis C virus (HCV) and lupus drugs) HCV non-nucleoside drug discovery program, including the preclinical candidates GL59728 and GL60667. (Jun.)

Novartis will pay $20mm over the two-year research period, including $12.5mm up front, up to $175mm in clinical, regulatory, and sales milestones, plus royalties. Genelabs is in charge of drug discovery efforts; Novartis handles development and marketing of resulting products. Genelabs has granted Novartis the option to provide research funding for an additional year and it will gain the right of first negotiation for the HCV NS5a drug discovery candidates (currently in lead optimization). The in-licensed program will complement Novartis' two HCV compounds, NMC283 (from Idenix Pharmaceuticals) and ANA975, for which Novartis plans New Molecular Entity filings in 2009. The deal with Novartis is Genelabs' second for HCV--it penned a $57.2mm deal in late 2004 with Gilead Sciences for NS5b polymerase nucleosides. Investment Banks/Advisors: Lazard LLC (Genelabs Technologies Inc.)

Human Genome Sciences Inc.

Novartis AG

Novartis has licensed exclusive worldwide rights to Human Genome Sciences' Albuferon (albumin-interferon alpha 2b), a Phase II candidate for chronic hepatitis C. The companies will co-promote Albuferon in the US, sharing commercialization costs in this territory; Novartis pays commercialization fees in all other areas. (Jun.)

HGS, which will equally share worldwide clinical development costs with Novartis and retain bulk manufacturing rights, will receive: $45mm up front, a $47.5mm milestone upon the first patient dosing in Phase III, up to $460mm in additional developmental and sales milestones, an equal split of US profits with Novartis, and royalties on non-US sales. Albuferon is a human interferon alpha that HGS has modified with its albumin fusion technology. Ongoing clinical trials have demonstrated Albuferon as a monotherapy to be well-tolerated and have strong antiviral activity, and in combination with the nucleoside analog ribavarin, to have a better safety and efficacy profile and a longer half-life than pegylated interferons, the current standard of care. The company believes the candidate will enable patients to have less frequent injections, maintain consistent plasma levels, and experience fewer side effects. Novartis plans to advance it to Phase III by the end of 2006. The addition of Albuferon strengthens the Novartis hepatitis C portfolio, which includes NMC283 (valopicitabine, a Phase II HCV RNA polymerase inhibitor in-licensed from Idenix); ANA975 (a Phase I toll-like receptor 7 prodrug from Anadys), and recently licensed compounds from Genelabs' HCV non-nucleoside discovery program.

Impax Laboratories Inc.

Intec Pharma Ltd.

Impax Laboratories (controlled-release generic drugs and branded CNS products) and Israeli drug delivery company Intec Pharma have agreed to develop a new oral formulation of an existing CNS compound. (Jun.)

Intec is in charge of developing, manufacturing, and supplying the drug candidate, which will incorporate the company's Accordion Pill gastric retention technology, while Impax is responsible for clinical development and marketing. The Accordion Pill is a polymer matrix (folded as an "accordion" into a standard-size capsule) that unfolds in the stomach and helps the active drug ingredient stay in the GI tract longer, allowing for controlled-release delivery and improving patient compliance, side effect profile, pharmacokinetics, safety, and efficacy. In preclinical studies and early-stage clinical trials, Intec demonstrated the technology's ability of controlled-release delivery for over six hours following a meal. Impax will add this compound to proprietary long-acting candidates in its pipeline for neurological diseases including Alzheimer's disease, attention deficit hyperactivity disorder, and depression.

Innate Pharma SA

Schering-Plough Corp.

Innate Pharma (cancer immunotherapeutics) has licensed exclusive rights from Schering-Plough to assets associated with the pharmacological use of toll-like receptors (TLRs) in the development of drugs that target the immune system. (Jun.)

Terms of the deal also include an option for Schering to obtain rights to Innate's TLR3 product candidates in non-European countries, as well as an option for Schering to obtain rights to Innate's TLR3 candidates in European territories. Toll-like receptors recognize pathogens and initiate a wide range of immune defense mechanisms to fight disease. Innate's first TLR project--IPH31XX--is in preclinical studies for TLR3-positive breast cancers. The company also recently announced a collaboration with the Institut de Cancerologie Gustave-Roussy, one of France's largest cancer centers, for advanced research and development.

Intercell AG

Novartis AG

Intercell (vaccines) has granted Novartis marketing and distribution rights to its Phase III second-generation IC51 vaccine for Japanese Encephalitis (JE) virus. The license covers the US, Europe, Asia, Latin America, and other countries. (Jun.)

IC51 received European orphan drug status just a few months ago; Novartis plans to submit the necessary paperwork for US approval later this year. The deal also gives Novartis first negotiation rights to other Intercell drug candidates. Novartis made a €30mm ($37.7mm) equity investment in Intercell, and provides up to €37mm in milestones dependent upon success with Phase III trials (expected to be completed in 2007) and European regulatory approvals (expected in 2008). Intercell leads the development and regulatory approval process for IC51, which it in-licensed from VaccGen International in 2003 when it was in Phase II. The company has already partnered with CSL to sell the JE vaccine in Australia and New Zealand, and with Biological E. Ltd. in Asia. JE disease is transmitted by mosquitoes that have been infected by animals (mostly pigs); it causes acute inflammation of the brain and spinal cord and is sometimes fatal. Intercell says the IC51 vaccine will be safer than Aventis's Je-Vax, the only US-approved vaccine made from the Nakayama strain of JE, formed in mouse brains, then combined with stabilizers and thimerosal before it is injected into humans.

Ista Pharmaceuticals Inc.

Senju Pharmaceutical Co. Ltd.

Japanese ophthalmic products company Senju Pharmaceutical licensed Ista Pharmaceuticals (develops and in-licenses compounds for eye disorders) exclusive North American rights to iganidipine and a re-formulated version of latanoprost, both under development for glaucoma and other ophthalmic diseases. (Jun.)

Ista is responsible for up to $8mm in up-front fees and development and regulatory milestones (most of this money is tied to milestones) for each compound, and will pay sales royalties. The company will develop the candidates and is in charge of manufacturing, regulatory filings, and marketing. Ista expects iganidipine, a calcium channel blocker, to start US Phase II trials in 2007; the compound may be effective in improving ocular blood flow, reducing intra-ocular pressure, and preventing visual field defects. Ista hopes to finish formulation and optimization studies of the prostaglandin latanoprost--the active ingredient in Pfizer's glaucoma drug Xalatan--next year. The two compounds would complement Ista's glaucoma medicine Istalol (timolol maleate), a drug that was originally developed by Senju and licensed to Ista by AcSentient in 2002. Through previous alliances, Ista also has rights to Senju's ocular inflammation drug Xibrom and two pipeline candidates: Phase III Caprogel (through AcSentient agreement) for ocular hemorrhage and Phase II ecabet sodium for dry eye syndrome.

Johnson & Johnson

Ortho-McNeil Inc.

Metabolex Inc.

Metabolex and Johnson & Johnson 's Ortho-McNeil division have agreed to develop compounds for various metabolic conditions, including Type II diabetes, obesity, and dyslipidemia. (Jun.)

Metabolex gets $40mm in equity and convertible notes, up to $508mm for development and sales milestones, and double-digit sales royalties of up to 21%. Ortho-McNeil has granted Metabolex exclusive rights to its PPAR-delta agonist program, including Phase Ib RWJ800025--which shows potential in treating Type II diabetes and dyslipidemia--and a preclinical cannabinoid receptor-1 inverse agonist program for obesity. The two companies will jointly screen metabolic disease targets Metabolex has already identified. Although it has granted Ortho-McNeil an exclusive worldwide license to all drug candidates covered under the deal, Metabolex keeps US co-promotion rights to the compounds, including the PPAR-gamma modulators/insulin sensitizers for Type II diabetes--metaglidasen (in Phase II/III trials) and MBX2044 (beginning a proof-of-concept study later this year). Metabolex will be in charge of ongoing Phase II/III studies of metaglidasen, assuming all development expenses up to the end of that phase; Ortho-McNeil will take over from that point, paying for all development and marketing costs. Metabolex will conduct Phase I studies of MBX2044, for which Ortho-McNeil will provide clinical, regulatory, and technical support.

Johnson & Johnson

Janssen Pharmaceutica NV

Tibotec Pharmaceuticals Ltd.

Vertex Pharmaceuticals Inc.

Johnson & Johnson's Tibotec Pharmaceuticals (focused on the development of anti-infective therapeutics) and Janssen Pharmaceutica NV divisions have signed on to develop and market Vertex Pharmaceuticals' VX950, an investigational oral hepatitis C virus (HCV) protease inhibitor. The exclusive agreement covers Europe, South America, the Middle East, Africa, and Australia. Vertex keeps exclusive marketing rights in North America. (Jun.)

Vertex gets $165mm up front; up to $380mm in development, approval, and launch milestones; reimbursement for 50% of drug development expenses; and tiered royalties averaging in the mid-20%-range. (Janssen will be accountable for third-party royalties in its licensed countries.) Vertex and Janssen will supply the drug in their own territories. Vertex will be responsible for the lead role in the global development of VX950. Tibotec will be in charge of developing and marketing VX950 for Janssen. Just last month Vertex began a worldwide Phase II study of VX950; the compound is already in Phase II in the US. Once the therapeutic is approved and launched, Tibotec and Vertex will fund a program to educate patients and physicians in the licensed territories on the prevention, diagnosis, and treatment of HCV. VX950 (initially called LY570310) was originally discovered under a 1997 deal between Vertex and Eli Lilly. That deal was ended in early 2003 after Lilly decided antivirals were a non-core area of R&D. Mitsibushi Pharma has since licensed development and marketing rights to VX950 in Japan and some Far East countries (under a mid-2004 deal), and expects to initiate clinical trials later this year.

Johnson & Johnson

Centocor Research & Development

ViaCell Inc.

The Stem Cell Internal Venture of Johnson & Johnson 's Centocor Research & Development has signed an agreement to evaluate the use of ViaCell's (stem-cell therapeutics) unrestricted somatic stem cells, which are derived from umbilical cord blood, to regenerate and repair cardiovascular tissue in preclinical studies. (Jun.)

The Biologics Delivery Systems Group of Cordis will use its Noga XP device to dose and deliver ViaCells's stem cells. ViaCell gets money up front, and will share expenses. SCIV has the first right of negotiation for an alliance with ViaCell to develop and market stem-cell therapeutics for cardiovascular conditions, including acute myocardial infarction and congestive heart failure. Pending successful preclinical data, the companies expect to file an IND next year. The Noga XP is a three-dimensional electromechanical catheter system that is used to map and navigate the damaged portion of a patient's heart within 1mm. The device, which was recently approved by the FDA, was developed and is manufactured by J&J's Biosense Webster. J&J's other alliances that use Noga for cardiovascular conditions include partners Genetix Pharmaceuticals and Vascular Genetics.

KaloBios Pharmaceuticals Inc.

Novartis AG

Genomics Inst. of the Novartis Research Foundation

KaloBios Pharmaceuticals (antibody engineering) has humanized an antibody to an undisclosed target for the Genomics Institute of the Novartis Research Foundation. The two have been collaborating since late 2005, and have now announced a second broader agreement for the development of antibodies. (May)

Novartis has paid research and success fees for the humaneered antibody and will provide additional milestones pending completion of clinical studies; KalosBios will also get royalties on resulting products. KaloBios's humaneering technology not only increases affinity and maintains specificity of the antibody, but also humanizes it during a period of weeks, rather than months. KaloBios used the technology to generate its two lead compounds--KB001 and KB002, the former for Pseudomonas lung infections (that accompany cystic fibrosis and patients on a ventilator) and the latter for rheumatoid arthritis and autoimmune diseases.

Mayne Pharma Ltd.

SuperGen Inc.

Mayne Pharma has acquired North American rights to SuperGen's (solid tumor and hematological cancer therapeutics) Nipent and SurfaceSafe cancer-related products. (Jun.)

Mayne will pay $14mm up front and an additional $20mm in sales milestones for all product rights, patents, registrations, trademarks, inventories, and supplier/customer contracts associated with the products. Nipent (pentostatin for injection) is marketed to treat hairy cell leukemia; it had sales in 2005 of about $15mm. SurfaceSafe is a two-step towelette system that is used to decontaminate surfaces where chemotherapeutics are mixed or administered; it had sales last year of about $100k. The companies are also working on the acquisition by Mayne of US rights to SuperGen's mitomycin cytotoxin, which is sold as a chemotherapy agent. The deal(s) are in line with Mayne's recently announced intentions to expand acquisitions of niche marketed or near-market therapeutics and strengthen its stance in the US oncology market.

MorphoSys AG

Schering-Plough Corp.

In a two-year license agreement, Schering-Plough will use MorphoSys's (antibodies) HuCAL Gold to develop antibodies. The deal may be extended for another three years. (May)

S-P will have access to MorphoSys's library, which the company will use at its Palo Alto, CA R&D site, home of the Schering-Plough Research Institute affiliate Schering-Plough Biopharma. S-P has the option to develop HuCAL-derived drug candidates for up to 10 disease targets. It will make an up-front payment and provide annual user fees. If the company exercises its option, MorphoSys will also receive R&D funding, license and developmental milestone payments, and royalties. This is the second time the two companies are teaming up; the first was in late 2001, when they agreed to jointly develop a minimum of five antibody therapeutics and some in vitro diagnostics over a three-year period.

Rib-X Pharmaceuticals Inc.

Wakunaga Pharmaceutical Co. Ltd.

Anti-infectives developer Rib-X Pharmaceuticals has licensed exclusive worldwide rights from Wakunaga Pharmaceutical (Japanese developer of herbal medicines) to develop and commercialize the quinolone antibiotic WQ3034. (Jun.)

Rib-X's license extends to all formulations and includes sublicensing rights. Wakunaga gets an up-front payment, development and commercialization milestones, and sales royalties. In Phase II trials, WQ3034 has demonstrated its safety and effectiveness against methicillin-resistant Staphylococcus aureus and penicillin-resistant Streptococcus pneumoniae, as well as strains that are resistant to fluoroquinolones, another broad-spectrum antibiotic.

Senju Pharmaceutical Co. Ltd.

Sirion Therapeutics Inc.

In its second deal this month, Japanese pharma company Senju Pharmaceutical is continuing to out-license ophthalmic compounds, this time giving newly founded Sirion Therapeutics (eye diseases) exclusive US rights to the Phase III corticosteroid difluprednate for the treatment of ocular inflammation such as severe uveitis. (Jun.)

Sirion gets development, regulatory, manufacturing, and marketing rights to difluprednate, which will be formulated as either an emulsion or suspension. The company plans to file an IND for the high-potency compound at the end of this year and start Phase III US studies in the beginning of 2007. Difluprednate has been sold in Japan by Mitsubishi Pharma under the name Myser since 1986 for the treatment of dermatological conditions. This is Sirion's first clinical candidate--the company was founded in December 2005 and is led by several former Bausch & Lomb executives.

Shire Pharmaceuticals Group PLC

Supernus Pharmaceuticals Inc.

United Therapeutics Corp.

Shire's drug delivery technology division Supernus Pharmaceuticals and United Therapeutics (develops drugs for cancer and cardiovascular and infectious diseases) will develop UT's UT15C, an oral prostacyclin analog. Supernus has licensed UT rights to use its EnSoTrol osmotic technology to formulate UT15C tablets for twice-daily administration for pulmonary arterial hypertension (PAD) and potentially other conditions. (Jun.)

UT has agreed to pay milestones and sales royalties. Commercial scale-up activities are in process. UT15C, the oral sustained-release form of treprostinil (the active ingredient in UT's Remodulin, which is already sold in subcutaneous and IV formulations for PAD), is in Phase III studies as both a monotherapy and combination therapeutic for PAD. Within the gastrointestinal tract, EnSoTrol encourages therapeutic solubilization through the uptake of fluid in the membrane coating the product.

VeroScience LLC

Wythe Therapeutics Inc.

VeroScience (therapeutics for cancer and metabolic, immunological, and reproductive disorders) licensed specialty pharma Wythe Therapeutics exclusive worldwide rights to manufacture, market, and distribute Cycloset for Type II diabetes. (Jun.)

VeroScience is finishing Phase IIIb trials of the compound, which is the first Type II diabetes treatment with a method of action that acts on the central nervous system to control metabolism. The drug is an oral form of bromocriptine mesylate that has demonstrated its ability to reduce body fat by improving hyperglycemia, glucose intolerance hyperlipidemia, and insulin resistance. The FDA has issued an approvable letter requiring a safety trial, which Vero is now conducting with funding from Wythe. Vero hopes to file another NDA early next year. Once approved, Wythe will seek a partner to help in the worldwide commercialization of Cycloset--initially focusing in the US and Canada--to general practitioners and specialists, including endocrinologists.

Financings

BioDelivery Sciences International Inc.

BioDelivery Sciences International (drug delivery technologies for acute indications) grossed $7mm with the sale of stock and warrants to Clinical Development Capital LLC (CDC). (May)

Under a July 2005 agreement, CDC had originally promised $7mm as a refundable cash deposit to support development of BioDelivery's Phase III transmucosal fentanyl for pain--BioDelivery was to return the money once its product got FDA approval. Now that arrangement is being replaced by the present equity funding; CDC is delivering another $4.2mm beyond the $2.8mm it had paid earlier in 2006, and for that aggregate $7mm, it receives 2mm BioDelivery common shares (which the companies are valuing at $3.50 each, a 41% premium to market), plus a warrant to buy 904k more shares at $3.

BioVex Group Inc.

BioVex Group (cancer and infectious disease treatments) hopes to raise up to $45mm with its initial public offering. (Jun.)

BioVex's OncoVEX oncolytic technology, which uses an engineered form of HSV to cause tumor cell death, is in Phase II US trials for melanoma and a Phase I/II UK trial for head and neck cancer. Another product candidate, the ImmunoVEX vaccine, is in preclinical studies for genital herpes; Phase I trials are expected to begin in the first half of 2007. The company plans to use the money from the IPO as follows: 75% for continued clinical development of OncoVEX; 5% for research and preclinical activities for other OncoVEX products; and 10% to bring ImmunoVEX through the end of Phase I. Investment Banks/Advisors: Janney Montgomery Scott Inc.; Stifel Nicolaus & Co. Inc.

BioXell SPA

BioXell SPA (urological, CNS, and anti-inflammatory drug development) grossed CHF57.8mm ($46mm) through an initial public offering of 1.3mm new ordinary shares at CHF44 apiece on the SWX Swiss Exchange. The company sold the stock at the low end of its initially set range of CHF44-48 per share. (Jun.)

BioXell, spun off from Roche in 2002, will put the money towards its pipeline, which is led by Phase II elocalcitol for treating the urological conditions benign prostatic hyperplasia, overactive bladder, chronic prostatitis, and interstitial cystitis. The company synthesized the compound, a vitamin D3 (VD3) analog, using its VD3 platform. Other pipeline candidates that have been developed using this technology include the preclinical agents BXL082 for osteoporosis and BXL083 for secondary hyperparathyroidism (in collaboration with ProStrakan Group PLC) and BXL476, a Phase I inflammatory bowel disease treatment in-licensed from Roche. BioXell, which had 2005 sales of €2.1mm ($2.5mm), is also working with Merck on the preclinical sepsis compound TREM1, preclinical MNAC13 for pain (licensed from Lay Line Genomics SPA ), and discovery-stage anti-inflammatory CXC chemokine receptor 3 antagonists under development with Zambon Group SPA. Investment Banks/Advisors: Pacific Growth Equities; Societe Generale Corporate & Investment Banking; Swissfirst Bank AG; Credit Suisse Group

ChemGenex Pharmaceuticals Ltd.

ChemGenex Pharmaceuticals (therapeutics for cancer, diabetes, obesity, and depression) raised $11.5mm (A$15mm) through a private placement of 34.9mm shares priced at $0.33 each (about market average) to existing shareholder Merck KGAA 's Merck Sante division and Charter Pacific as well as several institutional investors. Part of the money will support Phase II clinical development of its lead compound Ceflatonin for chronic myeloid leukemia and myelodysplastic syndrome. (May)

Investment Banks/Advisors: ABN AMRO Morgans

ConjuChem Inc.

ConjuChem (peptide therapeutics) grossed $14.18mm ($Cdn15.75mm) with a bought deal public financing of 7.5mm shares at $2.10 each. The money will support ongoing development of its compounds, including two that are based on the company's Drug Affinity Construct (DAC) and Preformed Conjugate-Drug Affinity Construct (PC-DAC) bioconjugation platforms that create drugs that are safer and last longer than other therapeutics. (May)

Investment Banks/Advisors: Sprott Securities Ltd.; Orion Securities Inc.

Cubist Pharmaceuticals Inc.

Anti-infectives developer Cubist Pharmaceuticals netted $339.1mm (including the overallotment) through a financing of 2.25% convertible subordinated notes due June 2013 that convert into common shares at $30.77. (Jun.)

The company will use some of the money to redeem $165mm in outstanding debt and the rest will support commercialization activities of its lead product, the antibiotic Cubicin. Investment Banks/Advisors: Goldman Sachs & Co.; Pacific Growth Equities; Merrill Lynch & Co. Inc.

Curalogic AS

Curalogic AS (allergy therapeutics) raised DKK215.6mm ($36.7mm) with an oversubscribed initial public offering of 2.875mm common shares (including the overallotment) priced at DKK75 each. Shares are now listed on the Copenhagen Stock Exchange. (Jun.)

The company will use the proceeds to bring drug candidates through clinical trials. Its lead is a Phase II oral ragweed immunotherapy; it also has potential treatments for grass and cat allergies in separate Phase II trials and one for dust mites in preclinical studies. Curalogic is using its allergen encapsulation technology to develop the first non-injection immunotherapies for marketing in the US and Europe. The goal is to provide treatments that avoid typical degradation in the stomach and are released instead in the small intestine where the active drug can take full effect. The company says that its platform could also be applicable to other allergies such as birch, mugwort, Japanese cedar, molds, peanuts, cockroaches, and dogs.

Emisphere Technologies Inc.

Emisphere Technologies (oral delivery of traditionally injectable drugs) netted $30.8mm from a follow-on public offering of 4mm common shares at $8.26 each. ThinkEquity Partners, WBB Securities, and UR Hambrecht & Co. acted as placement agents. (May)

Investment Banks/Advisors: WBB Securities LLC; ThinkEquity Partners LLC; WR Hambrecht & Co.

Generex Biotechnology Corp.

Oral drug delivery company Generex Biotechnology brought in $7mm ($Cdn7.7mm) with the sale of 34.15mm common shares priced at $2.05 each (a 7% premium) to Cranshire Capital, Rockmore Investment Master Fund, Iroquois Capital, and Smithfield Fiduciary. Each investor received an equal amount of shares. The company also issued five-year warrants to buy another 640k shares at $2.45. (Jun.)

Gentium SPA

Italian pharmaceutical company Gentium SPA (develops drugs from the DNA of natural sources) raised $22.1mm through the private placement to US and Italian institutional investors of 1.9mm American Depository Shares priced at $11.39 each. Investors also received warrants to purchase an additional 388,705 ADSs at $14.50 apiece. (Jun.)

Investment Banks/Advisors: Rodman & Renshaw Inc.; ThinkEquity Partners LLC; I-Bankers Securities Inc.

ImaRx Therapeutics Inc.

ImaRx Therapeutics (therapeutics for vascular disorders that can accompany blood clots) has filed for its initial public offering. The company hopes to bring in up to $75mm. (May)

ImaRx is developing several treatments for ischemic stroke: the recombinant pro-urokinase Prolyse, which has finished Phase III studies; preclinical Sonolysis bubbles and ultrasound; and Phase II Sonolysis combination therapy, including bubbles, ultrasound, and a thrombolytic. Its recombinant urokinase Open-Cath-R has completed Phase III studies, and Abbokinase (recently in-licensed from Abbott Laboratories) has received marketing approval for acute massive pulmonary embolism. Investment Banks/Advisors: Jefferies Group Inc.; CIBC World Markets Corp.; First Albany Capital Corp.

Glenmark Pharmaceuticals Ltd.

Glenmark Pharmaceuticals Inc.

Glenmark Pharmaceuticals Ltd. (developing drug candidates for dermatological, gynecological, and metabolic conditions) has signed a royalty deal with Paul Capital Partners (PCP) covering 16 therapeutics for dermatological conditions. (Jun.)

PCP has agreed to provide $27mm in milestones to fund the development over the next two years of the drug candidates aimed at the US market. In exchange it will get an undisclosed amount of royalties (varying depending upon the product) pending FDA approval of each compound. Glenmark will still be in charge of preclinical and clinical development and will manufacture the approved products; the Glenmark Pharmaceuticals Inc. division will file ANDAs and market the products. Glenmark India will provide the active pharmaceutical ingredient for some products. Glenmark has already begun clinical studies for two drug candidates and plans to begin ANDA filings before the end of this year. The company intends to launch the first therapeutic in 2007, and the remaining 15 over the next five years.

Ista Pharmaceuticals Inc.

Ista Pharmaceuticals (treatments for glaucoma, ocular inflammation, hemorrhage, dry eye, and diabetic retinopathy) netted $37mm by issuing five-year 8% senior subordinated convertible notes to accredited institutional investors. The notes can be converted into common shares at $7.75 each. (Jun.)

LAB International Inc.

LAB Research Inc.

LAB Research, a wholly owned subsidiary of inhaled drug developer LAB International, is taking over its parent's contract research business and has filed for its initial public offering on the Toronto Stock Exchange. (May)

LAB Research will use part of the proceeds to expand its operations in Canada, Denmark, and Hungary. The company focuses on early-stage development, with about 80% of its business coming from work in drug discovery research and preclinical studies. Its services in these areas include toxicological, pharmacological, bio-analytical, and efficacy testing. The company got a boost to its early-stage research business when it acquired the Danish CRO Scantox in 2005. In addition to preclinical work, LAB Research provides toxicological, carcinogenic, and ADME studies required for candidates about to enter Phase II or III trials, plus research in immunology, telemetry, ecotoxicity, and drug inhalation. The company has over 400 customers in the pharmaceutical, biotech, and agrochemical industries. Investment Banks/Advisors: Desjardins Securities Inc.; Versant Partners Inc.; Jennings Capital; Paradigm Capital Inc.; Orion Securities Inc.; Westwind Partners Inc.

Medicure Inc.

Medicure (cardiovascular therapeutics) has raised $25.6mm with the placement of 16mm common shares at $1.60 each (a 9% discount) to US and European institutional investors. Investors also received five-year warrants to buy an additional 4mm common shares at $2.10 apiece. The company will use the proceeds to continue development of Phase III MC1 to limit adverse cardiovascular events during coronary artery bypass graft surgery and Phase II MC4232 for diabetic patients with hypertension. Deutsche Bank Securities, Needham & Co., GMP Securities, and Versant Partners acted as placement agents. (May)

Investment Banks/Advisors: Versant Partners Inc.; Deutsche Bank AG; GMP Securities; Needham & Co. Inc.

Nuvo Research Inc.

Nuvo Research (transdermal drug delivery) raised $13.5mm ($Cdn15mm) in a bought deal financing of 37.5mm units priced at $0.36 each (a 10% discount) to lead investor Dundee Securities. Other participants were Versant, Clarus Securities, and Westwind Partners. Every unit consists of one common share and one-third of a three-year warrant. Each warrant can be used to buy a common share at $0.45. The company will use the proceeds for clinical development and commercialization of its osteoarthritis products Pennsaid and Pennsaid Plus and antifungal Penecure. (May)

Peplin Ltd.

Australia's Peplin (cancer therapeutics) grossed $A40mm ($30.26mm) through the sale of about 57.1mm shares priced at $A0.71 each to certain international institutional and existing investors led by MPM Capital. Buyers also received a total of 17.15mm four-year options. (May)

ProMetic Life Sciences Inc.

Drug purification company ProMetic Life Sciences raised $Cdn10.8mm ($9.7mm) through the private placement of 29.6mm subordinate voting shares to JP Morgan and Third Point LLC. The company sold the shares for $Cdn0.37 each, which was the market average at the time of the offering. (Jun.)

Sangamo BioSciences Inc.

Sangamo BioSciences (zinc finger DNA-binding proteins) netted $20.15mm through a follow-on public offering of 3.1mm common shares at $6.75 each. (Jun.)

Investment Banks/Advisors: Piper Jaffray & Co.

Sucampo Group

Sucampo Pharmaceuticals Inc.

Sucampo Pharmaceuticals (developing drugs for gastrointestinal, respiratory, vascular, and central nervous system diseases) is seeking to raise about $86.25mm in its initial public offering. (Jun.)

The company plans to use $20mm to develop Phase III Amitiza--partnered with Takeda--for irritable bowel syndrome with constipation, and to pursue additional indications; $20mm for its Phase II SPI8811 for treating NSAID-induced ulcers, portal hypertension, non-alcoholic fatty liver disease, and cystic fibrosis, and preclinical SPI017 for stroke, peripheral arterial and vascular disease, and Alzheimer's; and up to $25mm for sales and marketing activities and additional compound development. Sucampo is creating therapeutics derived from functional fatty acids in the body. Investment Banks/Advisors: Leerink Swann & Co.; Banc of America Securities LLC; Deutsche Bank AG

Trubion Pharmaceuticals Inc.

Trubion Pharmaceuticals (cancer and autoimmune disease therapeutics) has filed for its initial public offering, hoping to raise about $86.25mm. (Jun.)

The company, founded in 2002, uses its SMIP (Small Modular ImmunoPharmaceutical) drug assembly technology to develop single-chain polypeptide drug candidates. In collaboration with Wyeth, Trubion is developing TRU015, currently in Phase II trials, for rheumatoid arthritis and systemic lupus erythematosus. Wyeth gets global rights to resulting drugs and agreed, as part of that deal, to purchase in a separate private placement equity the amount equal to 20% of the shares sold in Trubion's IPO. Trubion also has TRU016, a CD37-targeting therapy, in preclinical studies to treat non-Hodgkin's lymphoma and chronic lymphocytic leukemia. Investment Banks/Advisors: Morgan Stanley & Co.; Pacific Growth Equities; Lazard LLC; Banc of America Securities LLC

Vivus Inc.

Vivus, a biotech focused on obesity and sexual health, netted $12mm through the private placement of 3.7mm common shares at $3.27, a 2% premium. New investor OrbiMed Advisors, which led the financing, was joined by returning backer Chilton Investment. (May)

XenoPort Inc.

XenoPort (transporter protein targets to improve effects of existing drugs) netted $72.1mm with the follow-on public offering of 4.5mm common shares at $17 each. (Jun.)

Investment Banks/Advisors: Morgan Stanley & Co.; Pacific Growth Equities; Deutsche Bank AG

Research/Analytical

Acquisitions

Applera Corp.

Applied Biosystems Group

Beckman Coulter Inc.

Agencourt Personal Genomics

Applera's Applied Biosystems Group is acquiring Beckman Coulter's Agencourt Personal Genomics subsidiary for $120mm in cash. (May)

APG was created in 2005 to accelerate a "sequencing by synthesis approach" to personal genome sequencing. Its next-generation genetic analysis technologies, such as parallel fluorescence sequencing, will complement Applied Biosystems' platforms that use sequencing, microarrays, and real-time PCR. Applied Biosystems hopes to commercialize APG's ligation technology that can potentially provide a cost-effective and highly accurate method for performing ultra-high-throughput sample preparation and analysis in a single platform.

General Electric Co.

GE Healthcare

Biacore International AB

General Electric's medical technologies division GE Healthcare has tendered a SEK3.2bn ($435mm) cash offer to acquire all outstanding shares of Swedish life sciences company Biacore, which is 41% owned by Pfizer. (Jun.)

GE has proposed SEK330 ($44.71)/share; a 25% premium to the market average and almost six times Biacore's 2005 revenues. Biacore's protein interaction analysis systems will complement the offerings of GE Healthcare's life sciences segment (also headquartered in Sweden). Biacore will benefit from GE's existing global sales and customer network within proteomics. Biacore's surface plasmon resonance (SPR) array technology and biosensor instruments are capable of rapidly monitoring protein interactions to generate kinetic, affinity, and selectivity of binding information. The SPR platform also offers broad usage applications within the in vitro diagnostics, research, and pharmaceutical industries in areas such as proteomics, hit validation, compound library screening, lead optimization, preclinical studies, biomarker discovery, antibody characterization, and pharmaceutical discovery and manufacturing. Biacore first commercialized its array-based system in October 2004 and last year purchased FlexChip technology (from bioanalytical tool company HTS Biosystems) to further enhance the SPR platform. Investment Banks/Advisors: UBS Securities LLC (GE Healthcare); Carnegie Bank AS (Biacore International AB)

Financings

Neogen Corp.

From a shelf registration filed in April, diagnostic test kit manufacturer Neogen has netted $12.24mm through the sale of 650k shares at $20 apiece, a 16% discount. Selling shareholders sold an additional 150k shares. Roth Capital Partners and Stonegate Securities were the placement agents. The company will use most of the proceeds to pay down debt. It has an animal safety division for veterinary medications, diagnostics, and vaccines; a food safety arm to monitor bacteria, toxins, and food allergens; and a life sciences subsidiary with a product line that includes ELISA test kits, substrates and liquid reagents, gene probes, and immunoassay test kits for use in various research applications. (Jun.)

Investment Banks/Advisors: Stonegate Securities; Roth Capital Partners

Supplies, Equipment & Devices

Acquisitions

American Medical Systems Holdings Inc.

Solarant Medical Inc.

American Medical Systems Holdings (pelvic medical devices) has agreed to acquire Solarant Medical (minimally invasive devices to treat stress urinary incontinence in women) for cash, including $1mm up front plus earn-outs of up to $6mm. (May)

Shareholders of Solarant Medical, which was established in 1997, will receive $2mm when the hospital CPT (current procedure terminology) code for reimbursement milestone is reached; $4mm for achieving the office CPT code goal; and the difference between $6mm and the amount of the hospital or office CPT milestone already paid. Solarant will also receive a revenue-based earn-out for the first three years of the company, post-merger. Employees from Solarant Medical will be replaced by those from AMSH.

American Medical Systems Holdings Inc.

Laserscope Inc.

American Medical Systems has acquired Laserscope (minimally invasive surgical devices and laser systems for obstructive benign prostatic hyperplasia) for $694mm, the equivalent of $31.00 in cash (a 28% premium) for each Laserscope common share. (Jun.)

The acquisition will strengthen AMS's BPH offerings, which include the TherMatrx device for non-obstructive BPH, with Laserscope's GreenLight laser system for obstructive BPH, which generally requires tissue removal to relieve pain. Laserscope markets its products for use in physicians' offices, outpatient surgical centers, and hospitals. Post-merger, Laserscope will be an indirect wholly owned subsidiary of AMS. AMS may divest Laserscope's aesthetics business since it is not a strategic fit for the company, whose primary focus is erectile dysfunction, BPH, incontinence, menorrhagia, prolapse, and other pelvic disorders. Investment Banks/Advisors: Piper Jaffray & Co.; Thomas Weisel Partners LLC (American Medical Systems Holdings Inc.); Goldman Sachs & Co. (Laserscope Inc.)

Encore Medical Corp.

Orthopedic device firm Encore Medical is merging with Grand Slam Acquisition, which was formed specifically for this deal by private equity firm Blackstone Capital Partners. Encore shareholders will get $6.55 (a 31% premium to market) in cash for each common share they own. According to industry analysts, the acquisition is valued at $870mm. (Jun.)

Senior management of Encore will keep their positions and get a stake in the merged entity, while other Encore employees holding stock options will receive the difference between their exercise prices and $6.55. Encore will become a private company and therefore will no longer trade on Nasdaq. Since November 2001, Encore has acquired four companies--Chattanooga Group, Empi, Osteoimplant Technology, and Compex Technologies. Encore offers surgical devices and technologies for the spine (Cyclone and VariGrip), hip (Keramos and Revelation), and {3DMatrix), knee (3DKnee, EPIK, Foundation, and MIKA), and shoulder (Reverse and Foundation).

Gambro AB

Hemapure AB

Gambro (vascular access for dialysis via short- and long-term catheters) has agreed to acquire Hemapure AB (dialysis products). (May)

Hemapure was established in 1988 to further work that was initially discovered at the University Hospital in Uppsala, Sweden. The company received the CE Mark for the Hemaport third-generation vascular access port in late 2001 and began marketing the device the next year. The needle-free transcutaneous titanium port is implanted in end-stage renal disease patients that require dialysis when AV-fistulas are not feasible. Hemapure's employees will stay on at Gambro.

Haemonetics Corp.

Arryx Inc.

Automated blood processing company Haemonetics has agreed to buy--for $26mm in cash--the remaining 81.3% of nanotechnology firm Arryx that it does not already own. (Jun.)

The parties have been collaborating since late 2004 when they began co-developing cell-sorting technologies for blood processing. (At that point, Haemonetics made a $5mm equity investment in Arryx for an 18.7% stake in the company.) Arryx's first product, the BioRyx 200 system, allows researchers to manipulate microscopic and nanoscopic objects using laser beams that form traps to move, rotate, join, or separate them under the microscope. The nanoseparation technology has allowed the companies to create separating platelets, white blood cells, and red blood cells, giving Haemonetics opportunities within other markets, such as therapeutics and diagnostics, that the combined company could potentially enter. Haemonetics claims this acquisition is different than others because it will not merely tack on and take over the company, but will completely combine all technologies and assets of both groups.

Integra LifeSciences Holdings Corp.

Miltex Inc.

Integra LifeSciences Holdings (devices for neurosurgery and neurotrauma, reconstructive surgery, general surgery, and soft tissue repair) has acquired medical instruments provider Miltex for $101mm in cash. (May)

Integra will own Miltex's manufacturing and distribution facilities in Pennsylvania and Germany. Miltex, which had 2005 revenues of $62mm, sells--in more than 65 countries--hand-held instruments for the surgical, dental, podiatric, and veterinary markets. The company's brand names include the Miltex surgical, veterinary, and podiatric lines and the Moyco, Union Broach, and Thompson dental products (from Miltex's 2001 acquisition of Moyco Technologies' dental supply business). Integra believes the newly acquired business will complement its own portfolio of hospital instruments, including ultrasonic surgical systems for tumor and other tissue removal, radiation therapy devices (through the 2005 Radionics acquisition), cranial stabilizers, hand-held spinal and neurosurgical instruments, and skin grafting instruments.

Philips NV

Intermagnetics General Corp.

Philips NV has signed a definitive agreement to acquire Intermagnetics (develops superconducting magnetics for MRI systems). It will pay $27.50 per share for the company (a 22% premium), for about $1.25bn (roughly four times the acquired's most recent four-quarter sales of $304mm). (Jun.)

Philips plans to strengthen its own magnetic resonance offerings through the integration of Intermagnetics' high-field superconducting magnets, MRI-compatible patient monitoring systems, and radiofrequency coils (RF coils). The Latham, NY headquarters of Intermagnetics will become the global headquarters for Philips' expanding magnetic resonance business, and will be headed by Intermagnetics' chairman and CEO Glenn Epstein. The companies have been partners since the late 1980s when Intermagnetics began supplying Philips with MRI magnets. The combined entity will compete in a market that generates estimated annual sales of $5bn; other players in the MRI industry include General Electric, Siemens, and Toshiba, all of whom have equipment supplied by Intermagnetics. (Analysts note, however, that half of all of Intermagnetics sales come from Philips despite the strong competition.)

Solos Endoscopy Inc.

Lifeline Biotechnologies Inc.

Device company Solos Endoscopy will pay $4mm in restricted shares to buy the early cancer detection product line from Lifeline Biotechnologies (diagnostics). Technologies, assets, and applications include the MetaScope, First Warning System, and OvaScope platforms. (Jun.)

MetaScope is on the market for the early detection of breast cancer and other abnormalities of the breast, while First Warning (early breast cancer detection) and OvaScope (early ovarian cancer detection) are still in development. Solos adds the products and technologies to its own offerings that include surgical instruments, endoscopic cameras, endoscopic and laparoscopic instruments, and digital imaging systems.

Joint Arrangements

Advanced BioHealing Inc.

Smith & Nephew PLC

Advanced BioHealing (regenerative medicine) has acquired assets and rights from Smith & Nephew to the Dermagraft and TransCyte advanced wound healing products, which are both currently approved for marketing in the US and certain other countries. (May)

ABH says the treatments will complement its development pipeline that includes a next-generation bioengineered wound therapy currently under IDE review by the FDA. DermaGraft is a cryopreserved permanent dermal replacement derived from human fibroblast and is approved to heal full-thickness diabetic foot ulcers. TransCyte is a temporary skin substitute for mid-dermal thermal burn wounds that do not require autografting.

Biocompatibles International PLC

SciClone Pharmaceuticals Inc.

Biocompatibles International PLC (drug/device combinations for cancer and cardiovascular diseases) licensed cancer and infectious disease company SciClone Pharmaceuticals exclusive rights to sell its DC Bead device in China for the minimally invasive treatment of malignant hypervascular tumors, including hepatocellular carcinoma (primary liver cancer). (Jun.)

In a three-year deal, Biocompatibles is responsible for manufacturing and supplying the product to SciClone, which will use a 115-rep sales force. The companies plan a regulatory filing in China some time this year. Three years after approval in China, the agreement can be renewed. The DC Bead, which is already approved in Europe, consists of polyvinyl alcohol hydrogel microspheres that contain the chemotherapeutic doxorubicin (Biocompatibles got the microsphere technology from a 2002 alliance with BioCure). The microspheres, administered via catheter in a procedure called trans-arterial chemo-embolization, prevent blood flow to the tumor while the drug is delivered to the tumor site in a controlled-release manner, allowing targeted delivery and reduced toxicity to healthy cells. SciClone believes the DC Bead will complement its HBV/HCV drug Zadaxin (thymalfasin) and other work it has done in liver disease, cancer, and intensive care in China, a country affected with the highest incidence of liver cancer worldwide.

BioD LLC

CeraPedics LLC

Tissue engineering company BioD and CeraPedics (next-generation bone graft substitutes) will develop orthopedic products that incorporate the former's stem cells with the latter's P-15 bone graft substitute technology. (Jun.)

Should feasibility studies be successful, the companies may opt to extend the deal into a long-term arrangement. BioD has developed a method for stem cell preservation and tissue banking from discarded newborn stem cells. CeraPedics' P-15 is a synthetic 15-amino acid peptide that mimics Type I collagen, which is responsible for cell binding and migration and ultimately leads to new bone formation. It has already demonstrated positive preclinical and early clinical results, and could offer a better alternative to allografts and synthetic materials.

Estech Inc.

Neoprobe Corp.

Estech (cardiovascular surgery tools) will distribute Neoprobe's (surgical and diagnostic products for cardio, neuro, and critical care indications) Quantix line of blood flow measurement devices in the US. (Jun.)

Quantix and Quantix/OR allow surgeons to obtain real-time readings of intraoperative blood flow volume during coronary artery bypass graft and carotid endarterectomy surgeries.

Iradimed Corp.

Tyco Healthcare Group

Mallinckrodt Imaging

Tyco Healthcare's Mallinckrodt division will sell, exclusively, IRadimed's MRidium non-magnetic continuous infusion pumps in the US, Canada, and Mexico. (May)

The first of its kind, MRidium can be used during MRI procedures, particularly for patients who need uninterrupted delivery of IV fluids. Traditional IV units are prohibited from MRI scans because the magnetic fields interfere with their proper function. MRidium has the CE mark and is certified for use with Phillips Medical Systems' and Siemens Medical Systems' MRI machines. Mallinckrodt sells products used with various types of imaging systems, including a full line of contrast agents and systems for delivering them, and radiopharmaceuticals.

Medline Industries Inc.

Misonix Inc.

Ultrasonic systems developer Misonix has chosen Medline Industries (medical products suppliers) to exclusively distribute its SonicOne wound debridement system in the US. (May)

As an alternative to traditional sharp-instrument wound debridement, SonicOne allows doctors to use an ultrasound-emitting wand to remove necrotic tissue and fibrin from a wound bed and salvage healthy tissue right below the wound. The process allows for the stimulation of cells to promote faster healing and the creation of a wound surface that is more receptive to future therapies. Medline adds SonicOne to its line of wound care products that includes Derma-Gel, Maxorb, Optifoam, and Exuderm dressings as well as antimicrobial ionic silver gels and dressings; the company has average annual sales of about $2bn.

Nihon Kohden Corp.

Zoll Medical Corp.

Nihon Kohden has agreed to exclusively distribute Zoll Medical's (automated resuscitation devices) AutoPulse non-invasive cardiac support pump in Japan once it receives approval. (May)

Over a five-year period Nihon Kohden's 650-strong sales force will sell the product to health care facilities, which have used automated CPR devices since the late 1980s. The company reports medical equipment sales of about $790mm each year. Zoll's product offerings include devices for cardiovascular pacing, defibrillation, and circulation, as well as for ventilation and IV products for use in cardiac arrest or trauma patients.

Financings

Advanced Medical Optics Inc.

Advanced Medical Optics (ophthalmic surgical devices; spin-off of Allergan) grossed $450mm through the placement of 20-year 3.25% convertible senior notes, under Rule 144A, to qualified institutional investors. The notes will be converted at the holder's option into cash and, in some cases, common shares at $59.61 apiece (or 16.78 shares per $1,000 principal amount of notes). The company will put the proceeds towards buying back some of its common stock and converting outstanding debt. (Jun.)

Alphatec Holdings Inc.

Medical device firm Alphatec Holdings netted $77.8mm with its initial public offering of 9.3mm common shares priced at $9 each. It originally hoped to bring in $149.5mm when it filed in February. (Jun.)

The company expects to use about half of the funding to obtain regulatory approval for some product candidates, for sales and marketing activities, R&D, and product or business acquisitions. Alphatec Holdings merged with Alphatec Spine (now a wholly owned subsidiary) in a March 2005 transaction led by HealthpointCapital. It is developing surgical products such as screws, spacers, and plates for use in spinal procedures. In September 2005, Alphatec acquired all the assets of Cortek, which specializes in allografts used in spinal fusions. Investment Banks/Advisors: RBC Capital Markets; Deutsche Bank AG; First Albany Capital Corp.

American Medical Systems Holdings Inc.

American Medical Systems Holdings (pelvic medical devices) has raised $325mm with the private placement of 30-year, 3.25% senior subordinated notes that convert into common shares at 51.53 shares per $1k in notes or about $19.41 per share. The company will use the proceeds to fund its recently announced $700mm acquisition of Laserscope. (Jun.)

Investment Banks/Advisors: Piper Jaffray & Co.; Thomas Weisel Partners LLC; KeyBanc Capital Markets

AngioDynamics Corp.

AngioDynamics (devices for use in minimally invasive procedures to diagnose and treat peripheral vascular disease) has netted $53.8mm from a follow-on public offering of 2.4mm common shares at $24.07 each. (May)

Investment Banks/Advisors: RBC Capital Markets; KeyBanc Capital Markets; Canaccord Capital Corp.; First Albany Capital Corp.

Artes Medical Inc.

Artes Medical (developing injectable aesthetic drugs for the dermatology and plastic surgery markets) has filed for its initial public offering, hoping to bring in up to $75mm. (May)

Artes Medical, which was established in 1999, will use the proceeds for hiring sales and marketing staff members to focus on the launch of ArteFill, its lead drug candidate under review by the FDA for the elimination of facial wrinkles (also known as smile lines or nasolabial folds). It will also use some funds to gear up its manufacturing capabilities, and perform additional clinical studies to show ArteFill's safety and efficacy. Earlier this year Artes brought in $50.7mm through its Series E venture round. Investment Banks/Advisors: Stifel Nicolaus & Co. Inc.; Lazard LLC; Cowen & Co. LLC

Endologix Inc.

Endologix has netted $18.8mm with the sale of 6.1mm common shares priced at $3.20 each, a 6% discount, to institutional investors. The company will use the proceeds to hire more employees for its sales force and broaden the US marketing of its Powerlink endoluminal stent graft for abdominal aortic aneurysms. Canaccord Adams acted as placement agent for the financing. (Jun.)

Investment Banks/Advisors: Canaccord Capital Corp.

MedicalCV Inc.

Citing poor market conditions, MedicalCV has postponed its follow-on public offering in which it hoped to raise about $30mm through the issuance of common shares. The company has developed the Atrilaze surgical ablation system for treating atrial fibrillation during open-heart surgery. (Jun.)

Investment Banks/Advisors: Craig-Hallum Inc.; Roth Capital Partners; CE Unterberg, Towbin

Mediscience Technology Corp.

Mediscience Technology (medical devices that detect cancer through fluorescence technology) filed for a follow-on public offering hoping to raise between $5mm-10mm. The money would support the company's Compact Photonic Explorer, an ingestible camera that performs in vivo imaging and detection of tumors and pre-cancerous tissue. The device is under development with Infotonics Technology Center. (Jun.)

MicroMed Cardiovascular Inc.

MicroMed Cardiovascular has raised $15.43mm with the private placement to institutional investors of 9.95mm common shares priced at $1.55 each. The backers also received 3.3mm warrants to buy common shares at the exercise price of $3. The company will use the proceeds to continue developing its DeBakey ventricular assist device, which already has CE Mark approval for advanced heart failure. Hunter World Markets acted as placement agent. (Jun.)

North American Scientific Inc.

Radiation therapeutics company North American Scientific raised $24mm through the private placement of 12.3mm common shares priced at $1.95 each (about market average). Investors--including lead backer Three Arch Partners, which invested $10mm--also received seven-year warrants for an additional 6.1mm common shares at $2.08 apiece. CIBC World Markets acted as the placement agent. (Jun.)

Investment Banks/Advisors: CIBC World Markets Corp.

NxStage Medical Inc.

NxStage Medical (portable dialysis machine for patients with end-stage renal disease or acute kidney failure) has netted $51.4mm with the follow-on public offering of 6.3mm common shares (including the overallotment) priced at $8.75 each. Selling shareholders also placed 113k common shares as part of the transaction. (Jun.)

Investment Banks/Advisors: Thomas Weisel Partners LLC; Merrill Lynch & Co. Inc.; JMP Securities LLC; JP Morgan Chase & Co.

Viking Systems Inc.

In its first major equity financing, Viking Systems (digital visualization systems used in minimally invasive surgical procedures) grossed $8mm by selling 8k Series B preferred shares at $1k each to accredited investors. The shares initially convert into common stock at $0.18 apiece. Investors also received warrants to buy another 22mm common shares for $0.35 each. (Jun.)

Volcano Corp.

Volcano Corp. (intravascular ultrasound devices) has netted $58.2mm with the initial public offering of 7.82mm common shares (including the overallotment) priced at $8 each. It had originally hoped to bring in up to $86.25mm. (Jun.)

The company, which was established in 2001, plans to use the majority of the proceeds to sell and market its products and to repay debt, and about $13mm for R&D activities, including product development, regulatory filings, and clinical trials. Volcano has created different types of imaging catheters to diagnose and treat cardiovascular disease. It has signed several cardiovascular diagnostic device deals with partners that include GE Healthcare, Paieon, and the Cleveland Clinic, and it has out-licensed its technology to Philips and Medtronic. Investment Banks/Advisors: Bear, Stearns & Co. Inc.; Piper Jaffray & Co.; JP Morgan Chase & Co.; Cowen & Co. LLC

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