A Trio of Tysabri Stories, Genzyme’s Big Deal with Osiris, A Peek Inside a Winning Hedge Fund, & More Life Sciences News

11/5/08

Last week brought an interesting mix of theory and practice about the impact of the current economic climate on life sciences.

—There was a flurry of news related to natalizumab (Tysabri), the multiple sclerosis and Crohn’s disease drug from Cambridge, MA-based Biogen Idec (NASDAQ: BIIB) and its Irish partner Elan. First, the drug was linked to the first U.S. case of PML, an often-deadly brain infection, since its reintroduction to the domestic market two years ago. Then came the news that prominent Democratic Party fundraiser Fred Baron, who received natalizumab after his family and high-profile friends lobbied Biogen and the FDA for access to the drug, died of the aggressive cancer his doctor thought the drug might combat. And yesterday Luke took a look at the somewhat circuitous route the drug took to market, and its roots in Seattle’s Fred Hutchinson Cancer Research Center.

—Watertown, MA-based EnVivo Pharmaceuticals, which is developing drugs for Alzheimer’s disease and schizophrenia, reportedly raised $65 million in a Series D venture round. All the money came from Boston-based Fidelity Biosciences, evidently, which also bought out all of other EnVivo’s investors, including BCM Technologies, Cogene Ventures, and NeuroVentures Capital.

—Ryan shared the predictions of hedge-fund managers and other members of the buy-side set about how the financial crisis will affect the life sciences industry. And Bob polled a slightly more diverse group—including representatives from venture capital and an industry exec—for their views on the current climate for Massachusetts biotech firms. Neither informal survey painted a particularly rosy picture.

—Despite the gloom and doom, Boston-based Alnara Pharmaceuticals was able to raise $20 million in a first round of financing led by Seattle-based Frazier Healthcare Ventures and Boston-based Third Rock Ventures and joined by Bessemer Venture Partners. Alnara is pursuing a unique set of biotech drugs that can be taken orally and can act strictly in the digestive tract, avoiding injections and potential side effects.

—Cambridge, MA-based Dyax (NASDAQ:DYAX) worked out a deal with investment fund Azimuth Opportunity to sell up to $50 million of its common stock to Azimuth over an 18-month period.

—Ryan chatted with Lauren Silverman, the managing director of the confusingly named (and Cambridge, MA-based) Novartis Option Fund. Silverman explained that the fund is really a general venture capital fund that happens to have a single limited partner—Swiss drug giant Novartis (NYSE:NVS—and that the startups in which it invests between $20 million and $25 million need not be “on strategy with Novartis.” Ryan rounds up the five startups that have benefited from this unusual fund to date.

—Luke provided a blow-by-blow analysis of the data on Vertex Pharmaceuticals’ hepatitis C drug, telaprevir, coming out of the American Association for the Study of Liver Disease annual meeting in San Francisco. Bottom line: the Cambridge, MA-based firm’s lead candidate is continuing to live up to high expectations.

—Ryan told the fascinating story of Boston’s RA Capital Management, a young hedge fund with a stellar record in life sciences investing. Of note: the fund’s lead portfolio manager, Peter Kolchinsky, took the post fresh out of a Harvard Ph.D. program.

—Cambridge, MA-based Biogen Idec (NASDAQ: BIIB) inked a deal with Genentech under which it will pay $31.5 million upfront to co-develop a next-generation antibody drug called GA101 that’s in Phase I/II trials as a cancer treatment.

—Genzyme (NASDAQ:GENZ) of Cambridge, MA, forged a deal worth potentially more than $1 billion with Columbia, MD-based Osiris Therapeutics (NASDAQ:OSIR) to develop and commercialize two adult stem cell treatments in a variety of diseases. Genzyme will pay $130 million up front and up to $1.25 billion in milestone payments to commercialize Prochymal and Chondrogen in markets outside the U.S. and Canada.

—Watertown, MA-based biotech firm Acusphere (NASDAQ:ACUS) forged a deal giving Frazer, PA-based Cephalon (NASDAQ:CEPH) an exclusive worldwide license on its injectable formulation of anti-inflammatory drug celecoxib, which is in preclinical development. Acusphere got a $5 million initial fee and $15 million in loans in return.

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