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Daclizumab might be a mouthful, but it’s worth learning to say fast. That’s the opinion of attorneys from Cooley Godward’s life science transactional group, who recently represented Protein Design Labs Inc. in a multimillion-dollar deal with F. Hoffmann-La Roche Ltd. to co-develop the drug as an asthma treatment. The arrangement yields $17.5 million up front and $187.5 million in payments down the line, says Marya Postner, a partner in Cooley’s Palo Alto office. PDL will share in decision making and costs of clinical trials with the pharmaceutical giant. The company will market the drug in the United States, while Switzerland-based Roche will sell the drug outside the United States and pay royalties to PDL. “It’s a matter of sharing risk,” Postner said. “And Roche has experience in markets worldwide.” This deal shows the once-small Fremont startup is now “playing with the big boys,” Postner said. Years ago, PDL sold the rights to daclizumab to Roche, but last October, it bought back most of those rights so it could develop the drug as an asthma therapy, said Cooley associate Shane Albright. Roche continues to market and sell the drug for its current approved use — as an immune-suppressing agent for patients undergoing organ transplants. Cooley’s experience working with Roche’s in-house counsel helped expedite the complicated deal, the lawyers said. Especially difficult was considering the possibility that PDL might one day choose to purchase back rights to the drug for use in the transplant area. “We needed to make the deal work seamlessly under both scenarios,” Postner said. Postner said one reason that Cooley got this work was because PDL’s senior VP and CFO, Glen Sato, had been a client of hers and partner Barbara Kosacz when he worked for South San Francisco drug developer Exelixis Inc. Marie-Anne Hogarth OPTING OUT Having more biotech clients than nearly any other law firm can have its downside, as Cooley Godward lawyers learned recently when they backed away from Exelixis’ expected annexation of X-Ceptor Therapeutics Inc. The two drug firms are both Cooley clients, and attorneys with the firm say that the potential conflict of interest — as well as the uncomfortable position of sitting on both sides of a tense negotiating table — made it an easy decision to step away from the deal, estimated at $23 million. “Sometimes you have to play hardball in these things, and I didn’t want to do that with such an important client,” said Thomas Coll, a partner in Cooley’s San Diego office. Coll used to represent X-Ceptor, which develops small molecules that regulate nuclear hormone receptors. The technology is expected to become increasingly important in developing drugs to target and treat metabolic and cardiovascular diseases. Suzanne Sawochka Hooper, a Cooley partner in Palo Alto who represents cancer drug maker Exelixis, said backing off the deal was the obvious choice for her firm. So Kenneth Ebanks, a partner with Covington & Burling‘s San Francisco office, stepped in for Exelixis, and Douglas Rein, a Gray Cary ware & freidenrich partner in San Diego, represented X-Ceptor. Both lawyers said the deal was more difficult for San Diego-based X-Ceptor, a venture-funded firm that had to split proceeds among a disparate group of shareholders, including the biotech firm Ligand Pharmaceuticals Inc., which has funded the venture but backed out of a deal to acquire it last year. “It was a more dynamic, unconventional sort of thing. Not everyone was in lock step,” said Rein. As a startup, X-Ceptor did not have to deal with many customer-related issues, but Rein said there were intense negotiations over intellectual property, especially since Ligand, like X-Ceptor — and now Exelixis — develops small-molecule drugs. It was a different story for Exelixis lawyer Ebanks. “We were presented with a deal that was already wrapped up,” he said. The acquisition, which was announced Sept. 28, is expected to close later this year, with Exelixis issuing about 2.5 million shares of common stock and paying $2.9 million to X-Ceptor shareholders. — Justin Scheck

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