Biotech Notebook: Glaxo, Wyeth, Spectrum

Another foreign drugmaker is paying big money for a U.S. biotech firm.

U.K.-based GlaxoSmithKline (GSK Quote) said Tuesday it's buying Sirtris Pharmaceuticals (SIRT Quote) for $720 million, or $22.50 a share. That's an eye-popping 84% premium to Sirtris' Tuesday closing stock price of $12.23.

This deal fits a couple of ongoing themes in the health-care sector. First, Glaxo is in the Big Pharma House of Pain -- generic-drug competition and the Avandia diabetes drug debacle have put the kibosh on sales and earnings growth. This has forced Glaxo to spend money to restock the pipeline.

Second, Glaxo can afford to open its wallet wide because the weak dollar makes for relatively cheap U.S. assets. Think of Glaxo as a British tourist coming over here to do some serious Christmas shopping -- wouldn't you if everything was 50% off?

So, put the Glaxo-Sirtris deal in the same hopper as other recent biotech M&A activity -- Takeda-Millennium Pharmaceuticals (MLNM Quote) or AstraZeneca (AZN Quote)-MedImmune.

What makes the Sirtris deal a bit different -- and surprising -- from those others is that Glaxo is paying up for a company whose drug(s) are in the early stages of clinical trials. SIRT-501, Sirtris' lead diabetes drug, is still in phase I studies.

Clearly, Glaxo decided that it needed to make a big bet on an emerging technology. Sirtris is developing drugs that activate sirtuins, a class of enzymes believed to play a role in the aging process. The move is comparable to what Merck (MRK Quote) did in 2006 when it acquired tiny Sirna Therapeutics to become a player in the burgeoning RNAi field.

Merck, by the way, paid $1.1 billion, for Sirna, so perhaps Glaxo is getting a bargain for Sirtris?

So is there another sirtuin company out there for the taking? Yes, Elixir Pharmaceuticals, but unfortunately, it's still privately held. The company did file a registration statement for an initial public offering last September. The market has been lousy for biotech IPOs, but perhaps the valuation being placed on Sirtris will help Elixir go public.

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I've been cautiously optimistic about the chances for Food and Drug Administration approval of Relistor, the bowel drug from Progenics (PGNX Quote) and Wyeth (WYE Quote). On Wyeth's first-quarter conference call Tuesday, management sounded very confident about the April 30 FDA approval decision date for Relistor as a treatment for opioid-induced constipation.

Wyeth's bullish stance on Relistor helped move Progenics shares sharply higher Tuesday. The stock closed up 21% at $8.22.

Addressing an analyst question on Relistor (also known as methylnaltrexone), Wyeth's President of Global Pharma Joe Mahady said, "Our confidence on the opioid induced constipation is from our interactions with both FDA and the European authorities where we are moving in every way on a path that is indicative of acceptance and approval. Can we be shocked at the end, that's always a possibility, but we see nothing in either review that is indicative of anything that is going anywhere but straight through an approval. We're highly confident of where we stand there."

Now, I will caution that lately Big Pharma companies have not had the best track record getting drugs approved by the FDA, at least on the first go-around. But Mahady certainly sounds confident, so let's hope that's based on real dialogue with regulators.

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Spectrum Pharmaceuticals (SPPI Quote) -- one of my "biotech dogs" -- released disappointing clinical data Tuesday on its drug ozarelix, a treatment for benign prostatic hyperplasia (BPH), otherwise known as an enlarged prostate.

The negative ozarelix data came from a phase IIb study conducted in the U.S. What we wanted to see was comparable results from the previous ozarelix study conducted in Eastern Europe. The important data point is something called the IPSS score, which basically measures the frequency, strength and quality of urination. The old ozarelix study produced an IPSS score or improvement of 8 points, and it was hoped that the U.S. study would come close to reproducing that score.