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AbbVie, Jazz enter cancer team-ups; Novavax flu vaccine beats Sanofi's in trial

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AbbVie, Jazz enter cancer team-ups; Novavax flu vaccine beats Sanofi's in trial

Top news

* AbbVie Inc. said it partnered with privately held Tizona Therapeutics Inc. to develop drugs that target CD39 — an enzyme that helps the tumor cells better evade the body's immune system — including potential cancer therapy TTX-030. Under the deal, North Chicago, Ill.-based AbbVie will pay Tizona $105 million up front for the exclusive option to license its CD39 program, including TTX-030.

Jazz Pharmaceuticals PLC is collaborating with privately held Codiak Biosciences Inc. to develop up to five classes of cancer therapies using Codiak's exosomes-based technology. Under the deal, Dublin-based Jazz Pharmaceuticals will pay Codiak $56 million up front plus up to $200 million in milestones for each of five targets, as well as additional payments of preclinical development milestones of up to $20 million along with royalties on future net sales.

* Novavax Inc. said its vaccine NanoFlu "elicited vigorous immune responses" to four influenza virus strains in a mid-stage trial. The phase 2 study, which evaluated various formulations of NanoFlu against Sanofi's Fluzone High-Dose in 1,375 healthy adults aged 65 years and older, showed that Novavax's vaccine was significantly better than Sanofi's at preventing influenza virus strains from binding with red blood cells.

On the policy front

* A coalition of 17 Democratic attorneys general, led by California Attorney General Xavier Becerra, took the first step in launching an appeal to overturn the decision by a federal judge in Texas who ruled in late 2018 that the entire Affordable Care Act was unconstitutional. The coalition filed a notice of appeal yesterday with the U.S. Court of Appeals for the Fifth Circuit in New Orleans.

On Dec. 14, 2018, Judge Reed O'Connor of the U.S. District Court for the Northern District of Texas ruled that when congressional Republicans zeroed out the ACA's tax penalty for the individual mandate last year under tax reform, it rendered the remainder of the 2010 healthcare law unconstitutional. A number of legal experts — conservative and liberal — have said they do not think the Fifth Circuit will side with O'Connor and doubted the Supreme Court would hear the case.

* On Gov. Janet Mills' first day in office, the Democrat signed Executive Order Number 1, which orders the Maine Department of Health and Human Services to "swiftly and efficiently" begin implementing the state's long-delayed Medicaid expansion initiative — a plan that former Republican Gov. Paul LePage spent nearly all of 2018 blocking from going into effect. The executive order requires the Maine DHHS to adopt the rules of the expansion act by Feb. 1 and requests the earliest possible approval from the Centers for Medicare and Medicaid Services.

M&A and capital markets

* Bristol-Myers Squibb Co.'s $74 billion cash-and-stock acquisition of Celgene Corp. brings together two companies looking to compete in a crowded cancer market by joining forces. For Bristol-Myers, the deal will be 12 times larger than any acquisition the New York pharmaceutical giant has made in the last decade, according to data from S&P Global Market Intelligence.

The companies enter the deal with their own shortcomings, however, as Bristol-Myers' cancer drug Opdivo faces stiff competition — namely from Merck & Co. Inc.'s Keytruda — and biosimilar entry in 2029, while Celgene's blood cancer treatment Revlimid, which represents a significant portion of the company's revenue, is expected to see generic competition in 2022.

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Meanwhile, Moody's and S&P Global Ratings placed the ratings of Bristol-Myers under review for downgrade in response to the acquisition. The rating agencies said their decision to place the ratings under review is based on higher financial leverage as a result of the acquisition.

* Ohr Pharmaceutical Inc. agreed to merge with NeuBase Therapeutics Inc., a privately held developer of genetic disease treatments. The combined company will focus on developing therapies for severe and untreatable diseases caused by genetic mutations using NeuBase's peptide-nucleic acid antisense oligonucleotide technology.

* Takeda Pharmaceutical Co. Ltd. said the Royal Court of Jersey approved its $62 billion acquisition of Irish drugmaker Shire PLC. The Japanese drugmaker, which finally managed to claim Shire in its fifth takeover attempt in May 2018, said the acquisition is expected to close Jan. 8.

* Verily Life Sciences LLC, the life sciences division of Google LLC parent Alphabet Inc., raised $1 billion in funds in an investment round led by Silver Lake Partners. Verily said the capital raised will support growth in key strategic areas, including investments in strategic partnerships, global business development opportunities and potential acquisitions.

Operational activity

* U.S. District Judge Vince Chhabria in San Francisco granted Monsanto Co.'s plea to split into two an upcoming trial involving the Bayer AG unit's weedkiller Roundup — an order that would prevent lawyers of plaintiff Edwin Hardeman from introducing evidence that Monsanto allegedly tried to influence regulators and exploit public opinion, Reuters reported. Chhabria is handling hundreds of lawsuits, including Hardeman's, which allege that Roundup causes a type of blood cancer.

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* Avalon GloboCare Corp. and its unit Avactis Biosciences Inc. entered into a joint venture and exclusive license agreement with Arbele Ltd. to co-develop certain cancer therapies. Under the deal, Avalon will gain access to Arbele's transposon-based chimeric antigen receptor and CAR-Natural Killer, cellular therapies. CAR-T cell therapy involves taking a person's own immune cells and modifying them to fight cancer cells when infused back into the body.

* Johnson & Johnson and Veracyte Inc. formed a collaboration, valued at $50 million, to develop and commercialize diagnostic tests to detect lung cancer at an early stage. The agreement will advance Veracyte's two lung cancer programs: the first noninvasive nasal swab test for early lung cancer detection and the commercialization of its Percepta classifier based on the company's ribonucleic acid sequencing platform, which will be launched in the first half of the year.

* Kaken Pharmaceutical Co. Ltd. entered an agreement to develop and commercialize Corbus Pharmaceuticals Holdings Inc.'s treatment for two rare and serious autoimmune diseases in Japan. Tokyo's Kaken Pharmaceutical paid Corbus $27 million up front for an exclusive license to commercialize and market lenabasum in Japan for systemic sclerosis and dermatomyositis.

* Merck & Co. and Cocrystal Pharma Inc. entered into an exclusive license and collaboration agreement to discover and develop certain proprietary antiviral agents for influenza A and B.

Our features

Junshi CEO discusses Chinese pricing plans for Keytruda competitor: CEO Li Ning said the company will price its melanoma therapy Tuo Yi at roughly one-third of the price Merck set for Keytruda in China, on an annual basis.

Other features

* Reuters has a feature about how Clinton Gartin and his son and fellow investment banker Christopher Gartin advised on both sides of Bristol-Myers' $74 billion acquisition of Celgene — a rare occurrence in the profession.

* Bloomberg News writes about how drugmakers are caught between Washington and Wall Street as the companies try to increase the prices of their therapies.

The day ahead

Early morning futures indicators pointed to a higher opening for the U.S. market.

In Asia, the Hang Seng rose 2.24% to 25,626.03, while the Nikkei 225 was down 2.26% to 19,561.96.

In Europe, around midday, the FTSE 100 increased 1.40% to 6,786.47, and the Euronext 100 was up 1.25% to 908.69.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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