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.
Unless you have been under a rock the past few days, you could hardly miss all the activity in the biotech and pharma world involving buy outs, mergers, joint ventures, and divetitures or near misses of all kinds. The world has gone deal making mad the past few days. You need a score card and an active Twitter feed just to keep up. Since I was barred from making any posts by evil cyberattackers who prevented my access to Typepad -- I will try to recap some of the highlights here with a few minor comments:
Where do we even begin? Well first over the weekend it was revealed that Pfizer supposedly offered AstraZeneca $101 B to merge. Commentators have noted that Pfizer could buy some small countries with that price. AstraZeneca was deemed to be uninterested and talks have puportedly cooled to nothingness. Nevertheless, I found it surprising that Pfizer would make such an offer given their comments on the disruptiveness of megamergers in the several year wake of the Wyeth deal. They had supposedly taken "the pledge" to forgo such nonsense in the future. However, from a pure business standpoint both Pfizer and AZ could use a jolt with relatively weak pipeline and big losses of revenue due to patent expirations of key products. Pfizer apparently has more money than sense in this regard, and has a need to spend those bucks outside the US (lest they get hit with repatriation costs) so were willing to try something BIG. As the saying goes, "if you are going to eat sh*t, take a BIG bite." AZ may have saved Pfizer from itself.
Then our friends at Novartis really gave us a late Easter present with all their activities yesterday. Where to begin? Novartis of course acquired GSK's oncology assets and also secured a position of first to refuse for products that are in the pipeline. This was generally well perceived as positivies for both Pfizer and GSK. Novartis cemented its oncology portfolio and GSK dumped an oncology portfolio that had it in 14th place so was mainly a distraction on balance. That part of the deal was worth up to $16 B. GSK says it will give back $4 B to its shareholders (yeah me!).
On the flip side, GSK bought all of Novartis' vaccine assets except for its flu products. Again, this builds on GSK's stronger position in vaccines and whose to say wether they may not also nab the flu assets when those are sold off by Novartis through a separate process. Novartis for its part will exit a vaccine segment where it was not able to compete in the first tier with the likes of Sanofi, Merck and GSK. So this looks like the proverbial win-win for both companies.
GSK and Novartis also decided to enter a joint venture together with their consumer OTC lines. The combined entity has more than $10 B in sales. Novartis will have a 36.5% share of this business compared to the 63.5% for GSK. The board seats will be split 4:7 respectively. Finally, Novartis also sold off its animal health business to Eli Lilly for $5.4 B. This is another case of addition by subtraction for Novartis.
Last on the big news parade, was Valeant's hostile offer to buy Allergan for $45 B. Valeant's CEO has pledged to make this company a top 5 pharma by 2016 -- a task that would require that Valeant get up to $150 B in market cap. An acquisition of Allergan ($40 B cap) will go a long way toward this if Valeant can pull it off. So far Allergan seems less than enthused. The deal would give the combined entity a strong position in opthamology, dermatology, anesthetics, dental and emerging markets. Plus it can be partially funded by $2.7 B in annual cost cutting (dreaded synergies), 80% of which can be achieved in only 6 months according to Valeant sources. This will be another coup for Michael Pearson if he can pull it off.
Ooooh! I was so close to making some posts on all the buy out, merger, and divestiture activity that was the biotech and pharma market yesterday! So close, yet so far as I was denied access to my blogging platform due to nefarious sources that were attacking the Typepad site and making my access impossible. The horrors. Fie! On those villains who temporarily shut down the free exchange of news and ideas. Likewise, three huzzahs for th ebrave men and women of typepad who battled against the evil cyborgs to restore order to the blogging universe and make this post possible again.
Thomas Reuters analysts just projected the next round of drugs that they feel should be watched a the new blockbusters on the block in the coming year. The list has some sure things and perhaps some surprises. In order of liklihood and sales:
Gilead's hepatitis C drug Sovaldi - a concensus pick I believe.
GSK and Theravance's COPD drug Anora Ellipta.
Gilead again with idelalisib versus B cell leukemias and lymphomas. Gotta get stock.
Eli Lilly has two. Shocking enough I think given the recent past. GLP-1 drug, dulaglutide for diabetes and Cyranza for stomach cancer.
Mannkind's Afrezza, inhaled insulin. This one has been struck down twice at FDA so may be wishful thinking despite recent panel recommendation. It will be challenging to sell I think.
According to latest IMS report, drug spending rose slightly by 1% last year after taking a dip in 2012. This was largely attributed in a drop in lost sales from patent expiries from $29 B in 2012 to "only" $19 B in 2013, and to introduction of 36 new medications last year -- some with big price tags -- especially treatments for cancer and hepatitis C. There were also 17 Orphan drugs launched in 2013-- a new record for a year -- and this likely constitutes the beginning of a trend that will continue. See PharmaTimes.
The High Court in London revoked two patents of Roche's mAb, Herceptin, potentially clearing a path for the introduction of a biosimilar version in the EU. Hospira (and its partner Celltrion) are expected to be the most immediae beneficiaries of the decision. Roche says nothing is imminent, but just look at wha happened earlier this year in India where both Biocon and Mylan rushed Herceptin versions to the market after a similar court ruling there.
Hospira and Celltrion already have a track record of getting a biosimilar version of Remicade approved in the EU last year. In addition to the Biocon and Mylan introductions of Herceptin copies in India, Celltrion also has introduced its version of Herceptin in South Korea.
In my view the flood gates are opening, and it is clear that biosimilars will be successfully introduced throughout the world -- and who knows? Maybe someday, there will even be biosimilars introduced in the good ol' USA. See Biopharm-reporter.
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.