Friday, September 24, 2010

Another Fred Hassan "Masterpiece" Drug Deal? This Time, In Favor Of Anacor Pharma

As this morning's InVivo blog notes (H/T!), smallish Anacor Pharmaceuticals has restarted its efforts to go public, as of September 10, 2010 (see the refiled Anacor SEC Form S-1 registration statement here). And, to be crystal-clear, here -- as a preliminary matter -- I think Anacor is a fine company. [They likely saw a by-then desperate Fred Hassan a-comin' though, toward the end of 2008, and extracted a great deal from him, for their company. As is their right.]

Anacor's earlier attempt to go public was moth-balled by the Fall 2008 financial freeze-up, but in that earlier filing, Schering-Plough was scheduled to buy shares of Anacor (from Anacor stockholders) for $10 million (see the prospectus cover page of this the original 2008 Form S-1 registration statement): It recites that ". . .Schering-Plough. . . agreed to purchase in private placements $10 million in common stock at the initial public offering price. A portion of the stock being sold to Schering will be purchased from certain of our stockholders. . . ." [By the way, it is generally speaking no mean feat -- to navigate the SEC regulations to be able to purchase, in a private offering, the same class of securities that are being concurrently sold, to the public, in a registered offering -- as was contemplated by the 2008 Anacor S-1 filing's cover page. It can be done, but it is a very complicated, nuanced and convoluted process, to prove one has secured a regulatory exemption for such a transaction. But I digress.]

Back to the main story, here -- in Anacor's new SEC filing made September 10, 2010, on page 50, we read this:

. . . .In February 2007, [Anancor] entered into an exclusive license, development and commercialization agreement with Schering Corporation, or Schering, for the development and worldwide commercialization of AN2690. Pursuant to the agreement, Schering paid [Anancor] a $40.0 million non-refundable, non-creditable upfront fee and assumed sole responsibility for development and commercialization of AN2690. In addition, in accordance with the agreement, Schering invested $10.0 million in a preferred stock financing completed in December 2008. The agreement also obligated Schering to pay all of the remaining costs for development and commercialization of AN2690, including paying [Anacor] for [its] development-related activities to transition AN2690 to Schering. In November 2009, Schering merged with Merck & Co., Inc., or Merck, and in May 2010, [Anancor] entered into a mutual termination and release agreement with Merck. Under this agreement [Anancor] regained the exclusive worldwide rights to AN2690, Merck paid us [ANOTHER] $5.8 million and we released each other from any and all claims, liabilities or other types of obligations under the 2007 agreement. Merck did not retain any rights to this compound. . . .

In this new filing Schering-Plough/Merck is not listed as a selling stockholder, presumably because it has already agreed to some form of cancellation, or buy-back, of the shares, as a part of the most recent $5.8 million payment to Anacor. So (in part), Merck had to pay Anancor to take the Hassan-purchased shares off of its hands, and release it from a very pricey commitment to develop and commercialize the Anacor AN2690 product. Brilliant, Fred. Simply brilliant.

It would all be rather droll, if Hassan hadn't carted off perhaps $225 million for his almost completely-failed stewardship -- conducting this sort of nonsense, day after day, for six years -- and put over 30,000 good people out of work, in the process. Oh, and he also -- almost single-handedly -- ended the life of one of the oldest independent pharma players in America. Ni-i-i-i-i-ice.

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