Apple Tree inks $305M drug deal for new portfolio game plan

The venture players at Apple Tree Partners have in-licensed a late-stage opioid addiction therapy from Titan Pharmaceuticals in a $305 million deal that's short on upfront cash and long on a new strategy to build up a portfolio of life sciences companies with the help of a pair of industry veterans.

Committing a little more than $15 million in a down payment, Apple Tree is gaining the U.S. and Canadian rights to Probuphine, Titan's implant designed to eke out a steady dose of buprenorphine for addicts over a six-month period. Titan also agreed to pay $50 million on an approval of the NDA, which was accepted by the FDA in October, plus $130 million in sales milestones, $35 million in regulatory milestones for related indications, with $75 million budgeted for commercialization and development work.

The deal is being inked by Braeburn Pharmaceuticals, which is being slipped under the umbrella of Apple Tree Consolidated, a holding company which is using all of the proceeds of Apple Tree's latest venture fund to build up a collection of companies that will develop and market biotech and med device companies. Rose Crane, former company group chair OTC, specialty and nutritionals at Johnson & Johnson ($JNJ), and president, primary care at Bristol-Myers Squibb ($BMY), and Garry Neil, M.D., former group president pharmaceutical R&D at Johnson & Johnson--as well as the inspiration behind the recently launched TransCelerate, a noncompetitive industry collaboration that has gained widespread attention--will manage Braeburn.

Titan, a small biotech company with an $83 million market cap ($TTNP) and stock price of $1.11 at the close on Friday, was clearly in a weak position to negotiate a deal. A $15 million upfront for an NDA-stage drug is lunch money in the biopharma industry. So Apple Tree clearly had little competition at the bargaining table. If it gets an approval, it will also have no easy task in building sales for Probuphine. But after touting its success building other biotechs like Aileron Therapeutics, Gloucester Pharmaceuticals (acquired by Celgene), HeartWare International and Tokai Pharmaceuticals, the partners at Apple Tree clearly believe they are on to something with real potential.

"The leadership team of Braeburn Pharmaceuticals combines the entrepreneurial success of Apple Tree Partners with a proven track record in pharmaceutical development and commercialization," Crane said in a statement. "We are excited by the Probuphine opportunity and look forward to working with the Titan team to drive the successful commercial launch following FDA approval."

- here's the press release

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