Dave Stack, Pacira BioSciences CEO

Flex­ion heads to the dis­count aisle for a $450M+ merg­er with Paci­ra

Once rid­ing high with its non-opi­oid drug for knee pain, Flex­ion was at the cen­ter of the M&A ru­mor mill for a 10-fig­ure buy­out. Years lat­er, that shine has worn off — and now Flex­ion will hand over the keys in a sig­nif­i­cant­ly small­er ac­qui­si­tion.

Paci­ra Bio­Sciences will ac­quire Flex­ion for $8.50 per share in a deal val­ued at $450 mil­lion, a steep dis­count for a biotech that once com­mand­ed at­ten­tion from the likes of drug gi­ant Sanofi, the com­pa­nies said Mon­day.

The ac­qui­si­tion would val­ue Flex­ion at around $650 mil­lion as Paci­ra plans to is­sue an $8 con­tin­gent val­ue right with the buy­out that would vest in tranch­es at a set of five mile­stones out­lined in the deal, most­ly tied to fu­ture sales of lead prod­uct Zil­ret­ta, Paci­ra said. Those mile­stones in­clude:

  • $1 per share if to­tal cal­en­dar year net sales of Zil­ret­ta hit $250 mil­lion
  • $2 per share if Zil­ret­ta sales hit $375 mil­lion
  • $3 per share if Zil­ret­ta sales hit $500 mil­lion
  • $1 per share if can­di­date FX201 gets an FDA ap­proval
  • $1 per share if can­di­date FX301 gets an FDA ap­proval.

The CVR ex­pires on Dec. 31, 2030, the com­pa­nies said, and the ac­qui­si­tion is ex­pect­ed to close in Q4.

Rid­ing a wave of in­ter­est af­ter its ini­tial ap­proval for Zil­ret­ta, an in­ject­ed cor­ti­cos­teroid sus­pen­sion for knee os­teoarthri­tis, back in 2017, Flex­ion was once grist for M&A ru­mors, even re­port­ed­ly work­ing to­geth­er with Sanofi on a buy­out worth more than $1 bil­lion. But as time passed — and Zil­ret­ta sales flagged — the com­pa­ny’s once-lofty val­u­a­tion came back down to Earth.

Even still, Paci­ra, the mak­er of prod­ucts like bupi­va­caine in­jec­tion Ex­par­el for post-sur­gi­cal pain, saw enough val­ue in Flex­ion’s pipeline to ink a deal, look­ing for a worth­while com­ple­ment to its own prod­uct base. Here’s how Paci­ra CEO Dave Stack ex­plained his com­pa­ny’s ra­tio­nale:

This ac­qui­si­tion is a ma­jor mile­stone in our strat­e­gy to build a ro­bust of­fer­ing of nov­el, non-opi­oid treat­ments to im­prove pa­tient care along the neur­al pain path­way while si­mul­ta­ne­ous­ly pro­vid­ing us with a com­ple­men­tary com­mer­cial as­set in Zil­ret­ta for the treat­ment of OA knee pain. We be­lieve the Flex­ion port­fo­lio fur­ther so­lid­i­fies Paci­ra as a leader in opi­oid-spar­ing pain man­age­ment as we con­tin­ue to re­de­fine the role of opi­oids as a last re­sort res­cue med­ica­tion. Im­por­tant­ly, this ac­qui­si­tion cre­ates di­ver­si­fi­ca­tion and growth to our topline while pro­vid­ing what we would ex­pect to be mean­ing­ful syn­er­gies that should re­sult in sub­stan­tial near- and long-term ac­cre­tion to our cash flows and earn­ings.

Zil­ret­ta, for its part, cleared just $28.2 mil­lion in Q2 of this year — a 15% growth clip from the same time pe­ri­od last year, but still a far cry from the num­bers out­lined in the CVR. But Flex­ion does have a Phase III tri­al for Zil­ret­ta in shoul­der os­teoarthri­tis com­ing up and thinks it has some room to work across oth­er ther­a­peu­tic ar­eas. Mean­while, FX201, a gene ther­a­py for knee os­teoarthri­tis, and FX301, a top­i­cal fu­napi­de for­mu­la­tion, are cur­rent­ly cy­cling through Phase I.

Paci­ra man­age­ment is plan­ning to host a call with an­a­lysts at 8:30 am ET. This sto­ry will be up­dat­ed.

Biotech and Big Phar­ma: A blue­print for a suc­cess­ful part­ner­ship

Strategic partnerships have long been an important contributor to how drugs are discovered and developed. For decades, big pharma companies have been forming alliances with biotech innovators to increase R&D productivity, expand geographical reach and better manage late-stage commercialization costs.

Noël Brown, Managing Director and Head of Biotechnology Investment Banking, and Greg Wiederrecht, Ph.D., Managing Director in the Global Healthcare Investment Banking Group at RBC Capital Markets, are no strangers to the importance of these tie-ups. Noël has over 20 years of investment banking experience in the industry. Before moving to the banking world in 2015, Greg was the Vice President and Head of External Scientific Affairs (ESA) at Merck, where he was responsible for the scientific assessment of strategic partnership opportunities worldwide.

Peter Nell, Mammoth Biosciences CBO

UP­DAT­ED: Jen­nifer Doud­na spin­out inks a Mam­moth CRISPR deal with Ver­tex worth near­ly $700M

When a company gets its start in gene editing pioneer Jennifer Doudna’s lab, it’s bound to make headlines. But three years in, the fanfare still hasn’t died down for Mammoth Biosciences. Now, the Brisbane, CA-based company is cheering on its first major R&D pact.

Mammoth unveiled a nearly $700 million deal with Vertex on Tuesday morning, good for the development of in vivo gene therapies for two mystery diseases. The stars of the show are Mammoth’s ultra-small CRISPR systems, including two Cas enzymes licensed from Doudna’s lab over the past couple years, Cas14 and Casɸ.

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Credit: Shutterstock

How Chi­na turned the ta­bles on bio­phar­ma's glob­al deal­mak­ing

Fenlai Tan still gets chills thinking about the darkest day of his life.

Three out of eight lung cancer patients who received a tyrosine kinase inhibitor developed by his company, Betta Pharma, died in the span of a month. Tan, the chief medical officer, was summoned to Peking Union Medical College Hospital, where the head of the clinical trial department told him that the trial investigators would be conducting an autopsy to see if the patients had died of the disease — they were all very sick by the time they enrolled — or of interstitial lung disease, a deadly side effect tied to the TKI class that’s been reported in Japan.

No­var­tis' sec­ond at­tempt to repli­cate a stun­ning can­cer re­sult falls flat

Novartis’ hopes of turning one of the most surprising trial data points of the last decade into a lung cancer drug has taken another setback.

The Swiss pharma announced Monday that its IL-1 inhibitor canakinumab did not significantly extend the lives or slow the disease progression of patients with previously untreated locally advanced or metastatic non-small cell lung cancer when compared to standard of-care alone.

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Vas Narasimhan, Novartis CEO (Simon Dawson/Bloomberg via Getty Images)

With San­doz con­tin­u­ing to drag on No­var­tis, Vas Narasimhan says he may fi­nal­ly be ready for a sale or spin­off

After years of rehab work aimed at getting Sandoz in fighting trim to compete in a market overshadowed by declining prices, CEO Vas Narasimhan took a big step toward possibly selling or spinning off the giant generic drug player.

The pharma giant flagged plans to launch a strategic review of the business in its Q3 update, noting that “options range from retaining the business to separation.”

Analysts have been poking and prodding Novartis execs for years now as Narasimhan attempted to remodel a business that has been a drag on its performance during most of his reign in the CEO suite. The former R&D chief has made it well known that he’s devoted to the innovative meds side of the business, where they see the greatest potential for growth.

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Peter Greenleaf, Aurinia CEO

Af­ter pass­ing on Ac­celeron, Bris­tol My­ers eyes bolt-on ac­qui­si­tion of au­toim­mune spe­cial­ist — re­port

Bristol Myers Squibb is looking to beef up its autoimmune portfolio by scooping up Aurinia Pharmaceuticals, Bloomberg reported.

The recent overtures to Aurinia, relayed by anonymous insiders, came just as Bristol Myers turned down buyout talks with partners at Acceleron — which Merck ultimately struck a deal to acquire for $11.5 billion. Bristol Myers has reportedly decided to cash out on its minority stake, likely bagging $1.3 billion in the process, while keeping the royalty deals on two of Acceleron’s blood disorder drugs.

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An­gion's or­gan dam­age drug strikes out again, this time in high-risk kid­ney trans­plant pa­tients

After flopping a test in Covid-19 earlier this year, Angion’s lead organ damage drug has now hit the skids again in kidney transplant patients.

Angion and partner Vifor Pharma’s ANG-3777 failed to beat out placebo in terms of improving eGFR, a measure of kidney function, in patients who had received a deceased donor kidney transplant and were at high risk of developing what is known as delayed graft function, according to Phase III results released Tuesday.

(Photo courtesy Pfizer)

FDA's vac­cine ad­comm votes al­most unan­i­mous­ly in fa­vor of Pfiz­er's Covid-19 vac­cine for younger chil­dren

The FDA’s Vaccines and Related Biological Products Advisory Committee on Tuesday voted 17-0, with one panelist abstaining, that the benefits of the Pfizer-BioNTech Covid-19 vaccine outweigh the risks for children between the ages of five and 12.

The vote will likely trigger a process that could allow the shots to begin rolling out as early as next week.

The vaccine, which is one-third of the adult Pfizer dose, proved to be about 90% effective in a placebo-controlled trial in which about 1,500 kids in this age range received the vaccine, and only about 12% of those receiving the vaccine had any adverse event. All serious adverse events in the trial were unrelated to the vaccine.

Stéphane Bancel, Moderna CEO (Steven Ferdman/Getty Images)

Mod­er­na chips in fur­ther on African vac­cine sup­ply — but ad­vo­cates are call­ing for even more

In a sign of its growing commitment to the continent, Moderna will supply up to 110 million doses of its Covid-19 vaccine to the African Union, the company announced Tuesday. And CEO Stéphane Bancel said it’s just the first step.

“We believe our vaccine can play an important role in addressing the needs of low-income countries given its combination of high Phase 3 efficacy against COVID-19, strong durability in the real-world evidence, and superior storage and handling conditions. We recognize that access to COVID-19 vaccines continues to be a challenge in many parts of the world and we remain committed to helping to protect as many people as possible around the globe,” Bancel said in a statement.