News on trends and issues in the biopharm and pharmaceutical industry. Commentary on current events,clinical pipelines, facility expansions, competition, technology, legal and economic matters. M&A and licensing activity across the globe.
I am a Director of Research and Devopment for a leading supplier to biopharmaceutical producers. The views expressed are mine. I do not speak for any company or corporation.
Supposedly both Novartis and Shire may be leading candidates to buy Belgium-based eye company ThromboGenics. Morgan Stanley is said to be leading the way in discussions towards this end. Also rumored to be on the fringes are Valeant Pharmaceuticals, Regeneron Pharmaceuticals, and Allergan. Needless to say, ThromboGenics price has gone up 17% today on the news. None of the possible suitors mentioned above had any comments on this report.
ThromboGenics best selling drug is Jetrea, and Novartis currently has marketing rights for it outside the US. The drug also complements another Novartis eye drug, Lucentis. Analysts consider Novartis the front runner in this rumored chase -- but again it is only a rumor at this juncture -- and may not be everything that meets the eye. See Bloomberg report.
According to a story in Fierce Pharma, France may approve a measure to allow substitution with biosimilars. If this is enacted, then France will become the first European nation to allow this. Needless to say, Big Pharma players like Sanofi, Roche and Amgen are not in support and have turned on their lobbying efforts to block the move.
This measure could (according to sources) could save France between $690 M and $1.4 B in drug costs. This will be very interesting to watch as I have contended that Governments concerned with rising health care costs will be highly motivated to ensure biosimilars succeed in the market. This, despite any pushback from innovator drug companies that claim that the very complex nature of biologics make them extremely hard to duplicate -- and therefore should not be substituted like a small molecule generic might.
I still think biosimilars are coming and there won't be much than can be done to block them from their appointed rounds.
It's now official. Novartis will shut down the remaining portion of its RNAi program. For the most part, this had been done back in 2010 when Novartis failed to re-up its co-development effort with then partner Alnylam. Now, Novartis says the problems with formulation and delivery of RNAi therapies coupled with few targets to work with -- make the program non-feasible.
Twenty-six Novartis employees will be affected by the shut down. The comapny says it is trying to relocae as many as possible within its exisiting restructured business. Novartis' decision to call it quits in RNAi follows the lead of Roche and Merck. Conversely, Sanofi signed a new $700 M deal with Alnylam last year. Eventually we'll see if any of this pans out for RNAi therapeutics -- but even if it does the opportunity cost may have been too high for any of the three major exiting companies to care. See Fierce Biotech.
I thought this was an interesting piece in Xconomy on Igenica's plans to move strongly in the ADC space. Apparently the compnay is populated with many former Genentech management and scientists -- you could do a lot worse.
Currently their lead candidate is IGN523 (a non-ADC) targeting the treatment of AML, but the company is investing a lot of effort in developing ADCs. In doing so it exploits its novel drug discovery platform called sTAG. Using it, Igenica discovered the surface antigen CD98 that is prevalent on many types of cancer cells -- and can be a used as a trigger to apoptosis pathways. AML is a particularly rich target with CD98 present on over 90% of AML cells. Igenica developed the necessary monoclonals using its iTAb generating platform.
Finally, Igenica has also invented its own linker technology in orde to generate ADCs and not be dependent on companies like Immunogen or Seattle Genetics for licenses to their linkers. They call their anitbody-drug conjugate platform SNAP. The main goal of SNAP is to control the numbers of toxin attached to each antibody to improve product consistency and effectiveness of the delivered drug. The Igenica antibody-drug linkages is dependent on chemistry of a bifunctional linker, and not on engineered antibodies that others use.
If the Igenica clinical trial with AML is successful, the company plans to make further inroads to non-small cell lung cancer as its next therapeutic foray.
Takeda has licensed a biodegradable polymer and a linker platform from Mersana to further move forward its ADC program aimed at various cancers. The program will mainly complement Takeda's Millenium Pharmaceuticals (MP) development pipeline.
The so-called Fleximer ADC Technology platform from Mersana will allow MP to take its antibodies and conjugae to Mersana cytotoxic drugs. The platform is customizable and offers users advantages like increased drug loads per antibody, use with antibody fragments, and the ability to deliver anti-tubulin agents. The advantages derive from the biodegrable polymers used and to the customizable linker chemistries available.
The linkers can be customized to do things like control rate of drug release, mechanism of release, localization of drug release, delivery of multiple agents, improving biodistribution, altering pharmacokinetics and changing half-life.
Takeda announced earlier this week another deal with Trianni's mouse monoclonal antibody discovery platform and this will be complementary with the Mersana technology. Mersana is set to receive milestones and royalties from the deal as drugs are commercialized. See Biopharma-Reporter.
Express Scripts says drugs for conditions like rheumatoid arthritis, MS, cancer and in particular hepatitis C are pushing costs to unsustainable levels. The so-called specialty drugs account for about 1% of US prescriptions but accounted for 27.7% of the pharma spend in 2013. Hepatitis drugs have been singled out (Gilead's Solvaldi is new) as a 12 week course costs $84,000. Plus, hepatiis C drugs apply to a large patient population.
The Express Scripts analysis says drugs like Sovaldi will drive specialty prices by 63% over 2014-2016 period. Analysts project that Solvaldi could rack up $10 B in revenues in 2014 alone. Express Scripts says that the US will spend 1800% more on hepatitis C drugs in 2016 than now --- an unprecedented hike.
Express Scripts chief medical officer, Steve Miller, said that "never before has a drug been priced so high to treat a patient population this large, and the resulting costs will be unsustainable for our country" (cue Star Spangled Banner). Gilead for its part says the drug's extraordinary cure rate is worth it and saves money to healthcare overall.
I think Gilead has its point but the sticker shock of the new drugs is a big issue. Express Scripts isn't the only one making noise. WHO also said today that it thought hepatitis C pricing was out of hand and other emerging governments have voiced complaints as well --- particularly with regard to low income patient access issues. This is not the type of issue that will go away quietly. See the PharmaTimes and Bloomberg.
Sun Pharmaceutical Industries plans to purchase Ranbaxy Lboratories from Daiichi Sankyo Ltd for $3.2 B in stock plus taking on $800 M in Ranbaxy debt as announced yesterday. The combined Sun and Ranbaxy will become the fifth biggest specialty generics company in the world and the largest pharmaceutical company in India.
Further, Sun "sources" say they plan to stop using the Ranbaxy trade name in the US. Ranbaxy of course has run afoul of the FDA over the past year and has four current plants tat the FDA will not allow to import drugs to the US. Sun says that its job one is to work on those Ranbaxy quality issues -- issues that Daiichi was never able to resolve. Sun's VP of Finance says that "Overall Ranbaxy brand has value. We will find ways of using it and preserving it." Mostly this will be done in countries outside the US. See The Economic Times here and here.
Fierce Pharma reports that Bayer has successfully taken its case to India's high court to block Natco from exporting Bayer's Nexavar to countries outside India. If you remember, Natco was granted a compulsory license in India to make Nexavar for that country's impoverished populace. Natco promptly took the sales price in India down from Bayer's previous $5500 per month (much too expensive for most in India) to only $170 per month. Then another competitor, Cipla, offered its version for only $130 per month.
From Western drug makers' perspective, it is bad enough that compulsory licenses are being awarded and other patents invalidated, without local companies then taking the technology to support an export business. This victory, though how permanent, for the moment established that India's new drug access policies are at least going to be directed internally only and are NOT for export. But the court did allow that Natco could seek an export license from India's Drug Controlling Authority and set a hearing date for that in August. So this ruling may only be a temporary reprieve for Bayer and the rest of the West.
Western lobbyists (US Chamber of Commerce) have asked the the US to tag India as a Priority Foreign Country. A designation that is reserved for the most egregious IP offenders, and one that can lead to US trade sanctions.
Bruce Booth on LifeSciVC published a piece today that discusses where the new drugs are coming from. Highlighted in this analysis are 10 drug programs outlined in a recent Goldman Sachs report that are expected to have the highest near term commercial impact, and another 20 drugs that are considered to have high potential but are in earlier stages of clinical development. Booth points out that 76.7% of the 30 new drugs were either acquired by the current owners by in-licensing, or acquisition of either a Big Company or a smaller Biotech. That means only 7 were produced in-house. And of the top 10, 9 were acquired outside. Yes, 9 of 10.
This is just further indication that Big pharma companies that are unhappy with their current pipelines, have the money to still keep the engines chugging by acquiring the assets they need to keep putting out product. Although, we'll need to keep close watch to see how sustainable this model really is over time. It does seem clear though that while the money holds out, it is feasible to cherry pick the best candidates out there and still have something attractive at the end of the day to launch into the market.
BMS agreed to a deal with Five Prime on the latter's discovery platform that could be worth up to $350 M with milestones. The deal calls for BMS to pay $20 M upfront, $9.5 M in R&D funding, and to also buy $21 M worth of Five Prime's stock. BMS will in turn get new targets for its immuno-oncology program that it can couple with its other development programs like that for PD-1 pathway.
Immuno-oncology is an increasingly hot area as companies vie to find more pathways that can be disrupted to stop cancers from progressing. Five Prime is considered to have one of the better discovery platforms in this arena. Now the race is on in immuno-oncology with other competitors like Novartis (recent deals for CoStim Pharmaceuticals), Tesaro/AnaPhysBio, AstraZeneca, Merck (also PD-1), and Roche (PD-L1). Five Prime also has a collaboration with GSK for FP-1039, a FGF ligand trap. See Fierce Biotech and Xconomy.
Gilead's hepatitis C drug, Solvaldi, sales have really taken off. Analysts are predicting megablockbuster status -- with high predictions of as much as $8 B in annual sales by as early as this year. To say this product has hit a homerun is a vast understatement. Certainly, it looks like real vindication for Gilead's management to have bought Pharmasset at such a steep premium.
Success intensifies competition of course -- and there are other major competitors in the hepatitis C race. These include Roche, Merck and Idenix among others. Roche may be more guilty of sour grapes than anything. They had a previous stake with Pharmasset but gave up too early perhaps. Merck also put in a claim for up to 10% of Solvaldi's future sales but Gilead has countered with a suit. We'll have to see how that proceeds on its merits.
The biggest potential wrench likely comes from Idenix. It has filed suits for patent infringement against Gilead in France, Germany and the UK based on some of its IP that just issued in Europe for use of nucleoside drugs. It has two more suits pending in the US since December 2013. Gilead for its part has remained mostly silent other than saying it believes the suits to be baseless.
Again, the merits will play out in court. And we may be in for some juicy cross licensing or other settlement talks to allow parties with solid interests to share in the spoils with some sort of equitable formula. With $8-$9 B (Lipitor type sales!) at stake, there will be plenty of will to see this play out in court by those looking in at the Gilead singing cash registers. See Fierce Biotech.
Remember when KV introduced its FDA approved version of hydroxyprogesterone caproate, Makena, and then promptly drew nearly everyone's ire by jacking price from $20-30 per dose to $1500? Then under pressure dropped price to about $595? Then tried to get FDA (which it should have done) to stop compounders from making the cheaper product still? Not only did the FDA refuse, but KV was subsequently rebuffed by the courts and entered bankruptcy.
Well, the worm is slowly turning it appears. The FDA has cited its first compounder, Village Fertility Pharmacy of Waltham, MA, for making faulty batches of Makena. KV is benefitting from this and the increased oversight and regulation compounders are receiving on the tail end of last year's meningitis fiasco. Plus, KV can now tell physicians (who are potentially liable) to use the approved medication instead of compounders elixirs. And everyone seems more comfortable with a $595 price than previously for the improved quality/safety profile of the product.
This likely could have happened years ago with the egregious "price gouge" introduction, but certainly was also helped by the compounder scandal. KV may actually emerge OK. See Fierce Biotech.
This is becoming a bit monotonous lately but another drug plant in India has been put on FDA's banned list or "red list" forbidding it from sending imports to the US until cleared for quality. This time we have a Sun Pharmaceuticals plant making generic cephalosporin antibiotics. In the very recent past, Ranbaxy has had ALL 4 of its Indian plants cited and two more plants have been hit under Wockhardt's ownership. In all, there are 33 manufacturing plants in India on FDAs watch list.
But to add a little more perspective, there are 31 plants from China on the List. And, even Germany has 8 plants that are listed. But keep in mind that India is the second largest supplier of over the counter and prescription drugs to the US, falling right behind Canada. So, this isn't a trivial issue. FDA Commissioner Margaret Hamburg visited India last month partially in response to this issue. The FDA says it plans to add more inspectors to India and to tighten rules on how they regulate the generic industry. This is all to restore confidence by US consumers. See Bloomberg and inPharma Technologist.
This is from a post on the Patent Docs blog today. It further explains and comments on the Myriad decision that denied the company a preliminary injunction that would prevent Ambry from offering BRCA testing. As the blog explains, there are 4 elements to be met to obtain a preliminary injunction. These are:
Myriad would have to establish a liklihood of success on the merits of its patent claims
Myriad would be irreparably harmed financially without an injunction
The balance of hardship's is in Myriads favor
The public interest would not be harmed in issuing the injunction
So how did Myriad do versus these standards? Buzzzzzzzzz! Myriad could only convince the court that standard number two above would apply. Nada on the other three. In particular, the Court stated that Myriad was unlikely to prevail on the merits. Ouch! The Court basically said that Myriad's patents and behaviour in enforcing them were a detriment to the advancement of the field. That can't be good.
One biotech IP attorney shrewdly commented, "Since when does a patentee lose the right to assert her patent just because she acts like a jerk." Well, in a nutshell, since Myriad started arguing its case(s) before the courts. Many times honey does get you more than vinegar.
A Utah Court failed to uphold a motion by Myriad Genetics that would have stopped its rival Ambry Genetics from offering a diagnostic test for the BRCA1 and BRCA2 genes. Myriad had claimed that Ambry was infringing some of its patents in offering the test. The court denied this preliminary injunction so Ambry is free to test while this case is further settled. Myriad is still pursuing a trial to bring this issue to closure. In the meantime, Myriad's stock fell 12% on the news. I don't think this ends Myriads case by any means but it suggests the facts at issue might not be as big a slam dunk as the company often tries to portray. See Reuters or Bloomberg.
The new sales figures are here. The new sales figures are here.
FirstWord Pharma published its top 50 selling drugs in the world for 2013, and AbbVie's Humira topped the list with more than $10 B in sales. The global figure for the top 50 in aggregate was more than $187 B. The top 10 drugs alone all topped $5 B and in aggregate accounted for more than 41% of the total.
Once again, the list demonstrates the rise of biologics as key elements of the top selling drugs. In addition to Humira -- we have the following top biologics and their list ranking in the top 10:
These 7 drugs account for more than $57.3 B in sales or nearly 31% of the world total. If that doesn't demonstrate the growing dominance of biologics then nothing does. See FirstWord Pharma for the whole list.
EvaluatePharma has just released its compilation of the number of new drug approvals by FDA over the period 2008-2013. The results show that GSK was the clear winner as judged by number of approvals. The top and bottom of the list are below (with number of approvals):
GSK - 20
Novartis - 13
J&J - 9
Bayer - 7
Bottom dwellers include:
Lilly - 2
AZ - 2
Not so good eh? Another way of looking at success (and one investors likely care about more) is to calculate sales expected from these approvals. When looked at in that fashion, GSKs total expected sales by 2018 are less than other compeitors as follows:
J&J - $13.1 B
Pfizer - $12.0 B
GSK - $11.7 B
Pfizers impressive total projects off only 6 new drugs -- so quality can still overwhelm quantity. Sanofi had a similar 6 approvals as Pfizer byt projects to only $2.3 B in sales -- or an almost $10 B difference! See Fierce Biotech.
Fierce Biotech today published the top 15 sites in the US for biotech venture capital in 2013. This according to figures from the National Venture Capital Association (NVCA) as compiled by Thomas Reuters. The findings are not terribly surprising in terms of the rankings -- except it might be a mild surprise that San Francisco outspent Boston/Cambridge on the VC front last year. Otherwise, the rankings look to make sense. Here is the summary below in terms of place, dollars and numbers of deals. The total dollars for the US was $4.5 B.
San Francisco - $1.15 B - 84 deals
Boston/Cambridge - $933.6 M - 84 deals
San Diego - $387.0 M - 36 deals
Washington DC - $319.6 M - 10 deals
Oakland, CA - $261.6 M - 20 deals
Seattle - $238.1 M - 13 deals
New York City - $135.1 M - 9 deals
Philadelphia - $133.4 M - 17 deals
Northern NJ - $131.8 M - 7 deals
Raleigh-Durham, NC - $118.4 M - 17 deals
One could argue that SF and Oakland should be combined which would change the number one slot to $1.41 B and 104 deals providing further separation from Boston. Although, I'm also not sure why NYC, Northern Jersey and Philadelphia aren't either one entity or perhaps two but not three.
Now for a few factoids. In the Pipeline notes this morning that San Francisco and Boston with their combined total of $2.08 B is greater than Europe's $1.9 B total VC investment for last year. Los Angeles, which ranked number 14 on the list, was only 1% of the total cash spent by US VC in 2013. And, I can't help but note that Denver's $51.8 M spent on VC, ranking it at number 12 in the US, falls well short of the $96 M the Denver Broncos have set aside for one, Peyton Manning. Although as the joke goes, maybe he had a better year.
Fierce Pharma just published its annual list of the top 10 drug companies by revenue -- though the list is compiled by using ALL of a given company's revenue and not just the portion derived from drug sales. In that respect, it is not completely "pure" when some of the bigger firms with multiple divisions like J&J or Pfizer are included. Though it must be said most of these companies have at least some revenue from other divisions. Without further comment, here's the 2013 list:
J&J - $71.3 B, 2012 - $67.2 B, Rank 2012 - 1
Novartis - $57.9 B, 2012 - $56.7 B, Rank 2012 - 3
Roche - $52.8 B, 2012 - $47.8 B, Rank 2012 - 4
Pfizer - $51.6 B, 2012 - $59.0 B, Rank 2012 - 2
Sanofi - $45.0 B, 2012 - $47.8 B, Rank 2012 - 6
GSK - $44.1 B, 2012 - $39.9 B, Rank 2012 - 7
Merck - $44.0 B, 2012 - $47.2 B, Rank 2012 - 5
Bayer - $26.0 B, 2012 - $24.3 B, Rank 2012 - 10
AZ - $25.7 B, 2012 - $27.9 B, Rank 2012 - 9
Lilly - $23.1 B, 2012 - $22.6 B, Rank 2012 - 11
There you have it. The ranking's are roughly the same as 2012 except Abbvie fell out after the company split (was 8th in 2012) and Lilly elevated a slot. You can also see that Pfizer and Merck lost ground in the rankings largely due to revenue losses from patent expirations of top drugs. Pfizer, Sanofi, Merck and AZ also suffered overall declines in revenue in 2013 although in some cases their ranking was unaffected by the decline.
Will Seattle Genetics' ADC drug, Adcetris, become a blockbuster (sales > $1B annually) over the next several years? Yes, say some analysts. But, in order to do so, it most certainly will have to be approved for additional indications for which it is currently being tested in clinical trials. As it stands, the drug achieved sales of $269 M for the last sales year.
In addition to successes so far with Adcetris, SeaGen is adding to its own drug pipeline -- with 7 new molecules -- and has also started working with a new platform that employs a novel cytotoxic agent called pyrrolobenzodiazepine (PBD) dimer. The latter has been included in a new program aimed at CD33 (SGN-CD33A). The program also employs a new linker and a site specific conjugation technology. SeaGen hopes to parlay that into more technology agreements with the likes of Pfizer, AbbVie, Genentech, GSK, etc.
More deals equals more upfronts, milestones and royalties to keep fueling SeaGen growth. See Biopharma-reporter.
A new McKinsey report, written about in Fierce Biotech and In the Pipeline, is stirring the pot once more regarding pharma so-called mega-mergers by stating that these have worked to create shareholder value. Derek Lowe, in particular, questions this in his blog citing the disruption to R&D pipelines/their productivity, internal politics jockeying for position, downsizing, and plain drama in people's lives. He further cites John LaMattina's support for this view as a key exec who lived through Pfizer's acquisition of Wyeth. He also pulls out the argument that we'll never know what might have been produced by the separae entitites -- an opportunity cost as it were. I see this latter argument as more speculative and less compelling. It might have been worse too.
For their part, McKinsey says shareholder value was created as evidenced by higher EBITDA, higher ROIC and increasing economic profit -- two years post-merger. The analysis was done on 17 deals larger than $10 B. McKinsey suggested that these should be divided into two camps as well -- deals that were consolidations and deals that were aimed at growth creation. Not surprising to me, consolidations kicked off way higher economic profits two years -- post merger. C'mon though. It is only TWO YEARS. This is the pharma industry where normal investment horizons are 15 years or more. The consolidated deals largely paid off due to accelerated revenue (for some), reduction in COGS, reduced overhead (i.e. we fired staff), R&D consolidation and rationalization (i.e. we fired staff). In other words, the dreaded S-word kicked in, synergies, which meant we cut programs and staff to pay for the merger. It did pay in this time span though, with a 60% growth in economic profit.
On the flip side, the so-called growth oriented mergers actually caused a 3% decrease in economic profits over the two year window. They didn't have enough people to fire. But they did increase trading multiples by nearly 60% for the acquirer, or 20% relative to top 20 peers. The market rewarded the promise in these deals. Maybe the promise will deliver and maybe it won't -- but from my perspective this cohort is more interesting to watch over an expanded time frame more conducive to the actual operation of the pharma business. The consolidations actually caused a 5% drop in multiples. Whereas their excess returns were positive over a 3 year period they were ALL negative by year 5. That suggests to me that these may NOT be judged successful over a more appropriate time span. Growth platform deals are 100% positive (TRS = total shareholder return) over that same 5 year span.
So despite the headlines, I think the jury is still out. I don't think a pharma company's "success" is judged over two years.
It's official (sort of), Teva is on the public's short list of companies that are likely to be acquired. Rumors to this effect have driven the laggard stock up by more than 10% in the past few days. This comes on the heels of its rival Actavis buying up Forest Labs and amongst murmuring that Valeant is in the market to buy more assets on its way to a hoped for $150 B market capitalization. This is heady stuff.
For now, all we can really say about Teva is that it has a new turnaround CEO, it's talked about cost cutting to boost profitability, and obviously there are those in the investment and analyst community who are looking for it to be sold. So will it? See Fierce Pharma.
Helen Thomas, WSJ, today wrote about possible dangers coming if Big Pharma is going to cluster all its R&D spend around fairly few diseases. In doing so, she opines that they may have just traded developmental risk for marketing and thrid party payer risk.
Can everyone chase the same lead candidates? And do we need 33% of the R&D spend on inflammation and oncology applications that are only estimated to account for about 17% of te revenue in the market? On the surface that looks risky. Hep C and diabetes might also be two disease areas which have disproportionate activity given the size of the pie.
Yes, success breeds imitators but there's a limit as to how many can share. Too many sheep following the same path will likely result in some meeting the wolf's jaws along the way. See Fierce Biotech.
BioMarin has set the price for its newly approved drug Vimizim, a treatment for Moquito A syndrome, at $380,000 per year. At that price, it expects to garner about $500 M in annual sales and the drug clocks in with the 3rd highest overall drug price.
Orphan drugs, typically for very small patient populations, hold all the top spots for highest priced drugs. The top 5 are listed below:
All of these drugs achieve sales between $500 M and $2 B annually which helps make the orphan drug area attractive now to biopharmaceutical companies. Not surprisngly, it also makes the companies themselves attractive targets for acquisition rumors as all 4 above have been prominently mentioned by various analysts and industry pundits. See Fierce Pharma.
Now that Actavis has hit the mark with its acquisition of Forest Labs, analysts have turned their attention to others in the generic space to see how they might respond. That means Mylan, Teva and Valeant come under more scrutiny -- and are subject to rumor.
Valeant in particular has a stated goal to grow from its current, roughly $49 B value, to a top 5 spot at $150 B or more in the next few years. It is known that Valeant has had Actavis in its sights in the recent past. Now, it might just wait for the Actavis-Forest deal to complete and then go after Actavis in its new bigger and better form? That's one scenorio. See Bloomberg.
Other analysts have a different scenario in mind. They say that Teva would make a much better target for Valeant's affection. Teva, at $39 B itself, would effectively double Valeant's size if it were to be acquired. Teva's biggest investor, Soros Fund Management, recently upped its holdings in the firm by 5.7 M shares at a cost $373 M. Teva hasn't been a particularly good performer in the past several years -- is Soros looking for a payout from a purchase of the company versus organic growth? That's a possibility isn't it? See Fierce Pharma.