Making a splash

Kadmon Pharmaceuticals, a new player in the biopharmaceutical landscape, is making deals

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NEW YORK—Looking to make a quick splash in the biopharmaceutical sector, Kadmon Pharmaceuticals is making waves with its acquisition of Warrendale, Pa.-based Three Rivers Pharmaceuticals for more than $100 million.

Kadmon Pharmaceuticals is a privately held, New York City-based biopharmaceutical company founded earlier this year by former ImClone founder Samuel D. Waksal, CEO of the new company, which explores new understandings in molecular biology to develop therapies that target the metabolomic or signaling pathways associated with disease.

With this acquisition, Three Rivers is expected to serve as the commercial and operational cornerstone for Kadmon. Additional terms of the acquisition have not been released.

"Kadmon is building a new paradigm for bringing pioneering medicines to market more rapidly and cost effectively," Waksal says in a statement. "This includes the simultaneous execution of a dual strategy, combining an operating commercial business with novel compounds at various stages of clinical development."

Three Rivers currently markets several products for the growing hepatitis C market, including Infergen (Consensus Interferon), Ribasphere (ribavirin, USP) and RibaPak (ribavirin), as well as Amphotec (Amphotericin B Cholesteryl Sulfate) for the treatment of invasive aspergillosis and anastrazole for the treatment of certain cancers.

Kadmon expects to maintain Three Rivers' Warrendale headquarters, along with its manufacturing, distribution, commercial and administrative operations.

The acquisition is a key move for Kadmon, and Waksal points out that breakthroughs could be on the horizon for hepatitis treatment.

"The hep C market is going to undergo a real sea change next year," he says.

Three Rivers has a proprietary form of the drug ribavirin that requires two pills a day, instead of the standard six to eight. Even with new drugs coming, ribavirin will remain a mainstay of treatment.

"With Three Rivers as a cornerstone, Kadmon will play an important role in the evolution of this global market," he adds. "Further, this acquisition provides us with a strong commercial platform from which to expand our pipeline of novel therapies in oncology, infectious diseases and immunology."

As Three Rivers Pharmaceuticals CEO Donald Kerrish points out, in just 10 years, the company has grown into an integrated specialty pharmaceuticals business with a significant share of the HCV market.

Kerrish notes that the acquisition agreement represents a validation of their accomplishments and an exciting new chapter for the company and for its employees.

The acquisition of Three Rivers Pharmaceuticals by Kadmon Pharmaceuticals was financed through debt and equity capital.

The Three Rivers acquisition isn't the first for Kadmon as its founder looks to make a comeback.

David M. F. Pitts, a spokesman for Kadmon, told the New York Times that the firm acquired a company with antiviral technology called Flux Therapeutics co-founded by a Princeton professor, Thomas E. Shenk. Kadmon also bought a company called PhytoCeutica, which has a cancer drug derived from traditional Chinese medicine.

Pitts also points out that Kadmon had raised more than $200 million in debt and equity, with a Japanese financial company, SBI Holdings, as the largest investor.

On the heels of its acquisition of Three Rivers, Kadmon took the wraps off a pair of strategic agreements with Valeant Pharmaceuticals for the development and commercialization of taribavirin and the commercial marketing of ribavirin in the treatment of viral diseases, including hepatitis C virus.

Under the terms of the first agreement, Valeant grants Kadmon an exclusive, worldwide license to taribavirin, excluding the territory of Japan. Kadmon is paying $5 million initially, with other payments possible later, to Valeant, which has been testing the drug in clinical trials, according to the person close the transaction. In a separate agreement, Valeant will pay $7.5 million for rights to sell Kadmon's ribavirin in Eastern Europe.

Waksal says the deal is another step in Kadmon's efforts to build upon its commercial platform in hepatitis C through expanded global distribution and the addition of complementary products.

"Our agreements with Valeant achieve milestones for both of these objectives," he says.  "Taribavirin completes our ribavirin franchise and will ensure its future sustainability and growth. We have also expanded our global distribution network for ribavirin into markets in which Valeant is a leading provider."

J. Michael Pearson, CEO of Valeant, says his company was pleased to find a strong partner for a compound that has potential to help patients in need of improved treatment.

"While participating in product development in the overall hepatitis C market no longer fits within our corporate development strategy, ribavirin should be a significant product for our branded generics portfolio in Central Europe," he adds.

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