Business and Science for BD & others
#60, JUNE 2011
Drama in deal making for a lung cancer diagnostic
It is rare to even see the dollar amount of a diagnostic deal. Here the deal terms are disclosed because of a drama of competition and alleged bad behavior.
Med BioGene was apparently negotiating with Signal Genetics for Med BioGene’s prognostic LungExpress Dx, with an exclusivity agreement expiring February 4th.
On February 12th, Signal Genetics filed a lawsuit against Med BioGene. The suit alleges that, on February 9th, just a few days after the exclusivity period with Signal ended -- and just one day after Med BioGene had assured Signal that their transaction was a “done deal” – Med BioGene advised Signal that Med BioGene had approved a transaction with an unnamed party, which turned out to be Precision Therapeutics.
On Feb 24th, Signal added more details, alleging that Med BioGene used the false promise of granting a license to Signal to induce Signal to provide Med BioGene with confidential information, which Med BioGene then gave to Precision Therapeutics. After Med BioGene agreed not to negotiate with any other party, Med BioGene surreptitiously negotiated with Precision Therapeutics and advised Precision Therapeutics that Signal was working with a specific marketing company to commercialize the technology. Allegedly, Precision Therapeutics then contacted Signal’s marketer to say that Precision Therapeutics -- and not Signal -- was about to acquire Med BioGene’s technology, and ask the marketer to commercialize the technology with Precision Therapeutics.
On March 3rd, Med BioGene announced the deal with Precision Therapeutics.
Then on March 22nd, Signal Genetics made what it called a superior offer for the diagnostic, with $2.3M in upfront and an additional $1.2M in subsequent milestone payments. The Signal offer would also cover transaction expenses and the payment of any break-up fees, totaling up to an additional $350,000. Signal stated that the offer was almost $1.3M more than the offer by Precision and had a royalty rate 0.5% higher than Precision’s.
On March 28th, Med BioGene announced it had accepted an improved offer from Precision Therapeutics. Precision would pay Med BioGene $2.3 million in license fees and research reimbursement within 120 days of closing the deal, half of which is credited against future royalties that may be owed to Med BioGene by Precision. In addition, Med BioGene is eligible to receive up to $1.0 million in milestone payments, all of which are credited against future royalties. Precision is responsible for all future costs associated with the development and commercialization of LungExpress Dx. Precision also upped the royalty rate it would pay Med BioGene by half a percent to match Signal’s offer. Med BioGene agreed to pay $375,000 “break fee” plus legal expenses to Precision if the deal is terminated due to the Signal suit.
Presumably, the unhappy Signal Genetics will get compensated in an out-of-court settlement. I wonder if when there is a settlement, there will be a shareholder lawsuit complaining that the Signal deal would have been better for shareholders.
http://www.genomeweb.com/dxpgx/med-biogene-accepts-amended-offer-precision-therapeutics http://www.reuters.com/article/2011/02/25/idUS18430+25-Feb-2011+BW20110225 http://www.freshnews.com/news/451265/signal-genetics-announces-med-biogene-charged-breach-business-agreement-bad-faith-and-v
ASCO take-aways: longer survival and longer treatment
Improved survival was reported for:
Supreme Court says Bayh-Dole does not mean inventions are automatically owned by the university
In Stanford v. Roche, a researcher assigned his IP rights to Stanford as an employee, but in working with Cetus on PCR, he again signed 100% of his rights to work with Cetus to Cetus (acquired by Roche). The US government and Stanford argued that the Bayh-Dole Act meant that federal funding meant the universities automatically own the rights to employee inventions. But the Supreme Court said, no, the inventor owns the rights first. This case had BIO jumping to defend Bayh-Dole as a great act with huge benefits, but the ramifications of the court decision are probably only greater vigilance by universities for capturing IP of their employees in employment and licensing agreements.
Real benefits from NIH (and biotech and pharma)
Francis Collins spoke to a US Senate committee of the tremendous change in health that has come from investing in life science research. Although I would not restrict the credit to the NIH, I think it is worth remembering some of these changes.
“Due in large measure to NIH research, our nation has gained about one year of longevity every six years since 1990. A child born today can look forward to an average lifespan of nearly 78 years – nearly three decades longer than a baby born in 1900. And not only are people living longer, but their quality of life is improving: in the last 25 years, the proportion of older people with chronic disabilities has dropped by almost one-third.
…. the U.S. death rate for coronary disease is 60 percent lower—and for stroke, more than 70 percent lower—than three generations ago. ….Over the 15-year period from 1992 to 2007, cancer death rates dropped 13.5 percent for women and 21.2 percent for men. According to an American Cancer Society report released in July 2010, the continued drop in overall mortality rates over the last 20 years has saved more than three-quarters of a million lives.”
Check out my post on “leave pieces”
See you at the next meeting?
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