No major scandals. No breathtaking breakthroughs. In 2006, there just wasn't much beyond the ordinary that distinguished the industry, which ground along at a steady pace dotted by a few thrilling success stories, as well as the inevitable clinical disappointments.

In terms of biotech market-cap values, not much changed; public offerings brought in a little more this year than last, whereas other financings of public firms came in somewhat lower than 2005. (See chart this page.) Venture funding was up slightly from 2005, and overall funding from all sources was about the same, at slightly more than $20 billion.

Two big names, Amgen Inc. and Genentech Inc., saw their shares weaken a little this year, despite progress by both firms. Early in 2006, Amgen started Phase III trials with the cancer compound and potential blockbuster denosumab it gained in the $2.2 billion buyout of Abgenix Inc.

Denosumab, an antibody against RANK ligand, is targeting skeletal-related events in prostate cancer, breast cancer and solid tumors, and might be useful for preventing osteoporosis, multiple myeloma and rheumatoid arthritis.

Later in the year, Amgen chalked up even bigger news with the FDA's approval of Vectibix (panitumumab) for colorectal cancer. Vectibix, another boon from the Abgenix buyout, is going up against Erbitux (cetuximab), the monoclonal antibody from ImClone Systems Inc. and Bristol-Myers Squibb Co.

The holdback, if such a term is appropriate, for Amgen was its big-time hikes in spending on research and development and manufacturing spending, disclosed as the year began, but full-year product sales remained strong, rising 14 percent overall and helping the firm to 11 percent more net income despite higher R&D outlays.

Like Amgen, Genentech can hardly be judged by the same standards as smaller-cap firms. The industry's premier company, Genentech had a pretty good year, capping 2006 with satisfying news from Phase III trials with Avastin (bevacizumab) in renal cell carcinoma.

An interim analysis showed Avastin in combination with interferon alfa-2a therapy in patients with first-line metastatic disease met the primary analysis endpoint by significantly improving progression-free survival compared to interferon alone. Thus, RCC (the most common form of kidney cancer) became the fourth oncology indication for which Avastin, approved for colorectal cancer, has yielded better survival or progression-free survival in a large Phase III study in front-line patients.

As an indication, RCC is plenty hot. The potential $455 million, late-year deal that Idera Pharmaceuticals Inc. signed with Merck & Co. Inc. included Idera's Phase II Toll-like receptor 9 agonist IMO-2055 for RCC. The deal provided Merck with exclusive worldwide rights to agonists for TLR7, TLR8 and TLR9 for use as adjuvants in vaccines for cancer, infectious disease and Alzheimer's.

In November Genentech made known its plan to take over Tanox Inc. for $20 per share, or $919 million - about $650 million net of cash, a 47 percent premium over the previous trading day's closing price for Tanox.

Expected to close in the first quarter, the deal would erase royalties due Tanox on the asthma drug Xolair (omalizumab), and would put Genentech in line for a revenue stream from Novartis AG, which has been paying Tanox as part of the companies' three-way deal for the product. Already Genentech markets Lucentis (ranibizumab) for the wet form of age-related macular degeneration, so the pipeline is nicely supplemented by Tanox's preclinical TNX-234 for the dry form of AMD.

Another bigger-cap name to make eyebrow-raising news in 2006: Gilead Sciences Inc., which told the world of its plan to snatch promising mid-cap Myogen Inc. for about $2.5 billion. That takeover would add not only the Phase III star ambrisentan for pulmonary arterial hypertension to Gilead's pipeline, but the possibly gold-plated darusentan for resistant high blood pressure. Gilead agreed to pay $52.50 for each of Myogen's outstanding shares, a 50 percent premium over the closing price on the trading day before the deal was made public.

For the three months ending Sept. 30, Gilead found itself facing a loss related to another acquisition (of Corus Pharma Inc., disclosed in August), but still beat consensus estimates with unadjusted earnings of 64 cents per share. The company recorded a $52.2 million net loss, which included the Corus-related, $355.6 million charge. Excluding that impact, net income totaled $303.4 million, up from $179.2 million in last year's corresponding quarter, a 68 percent jump.

Amgen/Abgenix, Gilead/Myogen and Genentech/Tanox weren't the only big biotech-to-biotech takeover deals. Genzyme Inc. gobbled AnorMED Inc. after winning a bidding war with Millennium Pharmaceuticals Inc., which wisely backed out of the competition, in the view of analyst Christopher Raymond with Robert Baird & Co.

Genzyme took over AnorMED for $13.50 per outstanding share, or about $580 million, shortly after Millennium refused to go higher than its $12-per-share offer. Genzyme earlier had offered $8.55. Millennium not only dodged a bullet by leaving the table, but walked away with $19.5 million, the agreed-upon breakup fee. (See BioWorld Financial Watch, Oct. 23, 2006.)

A bit smaller but significant: Illumina Inc.'s $600 million stock swap to seize Solexa Inc. That added Solexa's Genome Analysis System, which combines clonal single-molecule array technology with Reversible Terminator chemistry.

The system can put sequence data together at an expected scale of more than 1 billion bases per run, and resequence individual human genomes for less than $100,000 per sample. Shipping of the 1G system started in the second quarter. Solexa's stockholders got shares of Illumina valued at $14 per Solexa share, a 44 percent premium to the previous trading day's closing price. The Solexa grab recalls Illumina's buyout of CyVera Corp. early last year, which provided Illumina, which makes tests that find gene variations, an entry into the diagnostics field.

If any company had a strong 2006, it was Illumina, whose shares hovered around $40 late last week. Compare that price to the 52-week low of $13.75.

This month, Illumina chalked up a heavyweight pharma customer in GlaxoSmithKline plc, which is buying 1,000 HumanHap550 BeadChips in what the company characterized as a "multimillion dollar" deal. GSK, which recently broadened an existing pact with Illumina for genotyping, also will use Illumina's Fast-Track Genotyping Service to process about 4,000 disease samples.

Another company doing well in 2006 - so much that it became the subject of buyout speculation - was New River Pharmaceuticals Inc., which in October enjoyed two stock jolts as a result of favorable word from the FDA regarding the firm's product for attention deficit hyperactivity disorder, NRP104, and disclosure in an SEC filing of details regarding the deal with partner Shire Pharmaceuticals Group plc. New River's shares leapt more than 70 percent, and late last week rested at about $54, more than twice the 52-week low of $21.32.

In an approvable letter (a second letter followed last week), regulators gave their nod to once-daily NRP104 capsules for children ages 6 to 12, based on data from the 52-patient Phase II trial and the 290-patient Phase III trial, and New River aims to launch the drug in the second quarter. Some feared the FDA would demand more work, as the agency did with Sparlon (modafinil), Cephalon Inc.'s new formulation of the sleep drug Provigil. (At one point, Sparlon for ADHD put the jitters to New River and Shire, but no longer: Cephalon decided during the summer to drop the compound rather than keep doing trials.

According to an 8-K filing, New River stands likely to get at least 25 percent of profits the first 24 months NRP104 is on the market, and at least 50 percent afterward - and the shares would go even higher if annual sales pass $32 million in 2007, $61 million in 2008, $95 million in 2009 and $125 million in 2010. The share, for example, would hit 66 percent in 2009.

The arrangement, while mightily favorable to New River, put Shire in a difficult position regarding what analyst Swayampakula Ramakanth with First Albany Capital predicted will be Shire's "future flagship product," NRP104, due to compete with such stimulants as Ritalin (methylphenidate), from Novartis AG, and Concerta (a different formulation of methylphenidate), from Johnson & Johnson.

Shire has three choices. It can accept a 34 percent profit share on the drug, which the pharma firm clearly would not prefer. It can hand NRP104 back to New River, but that's risky, since a generic form of Shire's Adderall XR (the top-selling ADHD drug in the U.S.) is due on the market in the spring of 2009, and Shire needs a follow-on product.

The third option is to buy all rights to NRP104 from New River - or buy the company itself. As of last week, none of those scenarios had happened, but Shire doesn't have long to decide. The citizens' petition filed with the FDA against generic Adderall XR probably will fail, as most do. Shire in November also sued Andrx Corp. (and the company that bought Andrx the same month for $1.9 billion, Watson Pharmaceuticals Inc.), alleging patent infringement related to the abbreviated new drug application filed for generic Adderall XR.

For NRP104, there's one glitch. The government classifies Ritalin and Concerta in the same category as cocaine and morphine: Schedule II, one of five slots established by the Controlled Substance Act of 1970. Schedule II also includes Adderall XR, and that's where the FDA's abuse experts recommend putting NRP104.

New River and Shire had hoped that by binding dextroamphetamine (also an ingredient in Adderall XR) to lysine, thus making it inactive until converted in the body, they could win a more lenient classification for the resulting new chemical entity, lisdexamfetamine dimesylate. No luck.

The Drug Enforcement Agency typically goes along with the FDA's guidance, noted Krish Krishnan, chief financial officer and chief operating officer for New River. Company officials first will try to bring the FDA around to a different way of thinking, he told BioWorld Financial Watch, "but not at the cost of delaying the launch."