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.
I started doing this blog a little under 3 years ago. At that time, I mostly wanted to see what doing a blog was all about. I was curious if anyone would find anything I wrote interesting, and if so, if there were obvious topics that woud draw more interest than others. I don't know that I had any expectations for doing it a prolonged period of time. I don't know that I thought anyone would necessarily read it. To a large degree I was just writing for myself as a kind of experiment.
Well, here we are 3 years later and I still enjoy writing a bit most days. And it turns out that at least enough people choose to read some of the posts that I've now reached a point where I have more than 250,000 page views. I can't say I ever expected that would be possible. Certainly, there are many other blogs out there with hit rates and readership that are way higher -- 10-fold, 100-fold -- but I'm amazed to a degree that people bothered to look at that many pages. It would seem that at least some of the time there is content that is interesting to a persistent few. So I'm grateful to have that level of company -- and I guess I'll keep writing until I stop.
The 2013 EU Industrial Scoreboard is out! The scioreboard shows the top 50 pharma companies according to their R&D spend in 2013. The top 5 of these spend 1/3 of the 88.49 billion euro's spent by the top 50. Spending was up 4.3 billion euro's over the prior year.
Must be nice when you have $6B to spend anytime you want on a "bolt-on" acquisition. Novartis' CEO, Joe Jimenez says they have cash laying around for such an acquisition and they won't have to worry about compromising any potential dividends either. More cash than sense I guess. Apparently, the company is bugeting the $6B and is looking for "sweet spot" candidates that would fall in the $2B to $4B range. But in a pinch, the company says $10B shouldn't be a problem. We all should have such troubles.
Here's an interesting article from Luke Timmerman in today's Xconomy. In it, he discusses how Big Pharma has gone from most trusted to very much untrusted in the public's eyes -- in basically a generation. And, he offers Big Pharma some unsolicited advice with a 12 step plan that could earn them back into the public's good graces -- or so they could hope.
Actually, I don't really have an issue with companies striving toward many/most of the suggestions described in the article. In some cases, the suggestins were a bit too simplistic/banal, i.e make better drugs. This of course is true but it is not self-evident as to how one might get there. Regardless, some of the notions around cost-effectiveness data, greater transparency, better pricing models -- all have relevance and WILL be necessary steps in any industry recovery. You do have to admit you have a problem though as step one.
I was taken back a bit by the quotes/attitudes attributed to Thomas Stossel, translatinal medicine at Brigham & Women's and a staunch industry defender. He commented that the industry has to "fight back" harder at its critics -- since presumably the critics are just making all the bad stuff up or are exaggerating all the wrongs. As if no pharma companies ever introduced a Vioxx or Avandia, or sold off label, or bribed public officials, or withheld negative data. That's all a figment of our imagination I suppose.
My father was a nuclear engineer. It reminds me of the responses dished out by the nuclear industry when critics had something negative to say about safety, potential danger or nuclear waste disposal. Yes, some of these critics are kooks. But you still need to educate the majority of the public if you don't want the kooks to take over. Aggressively defending your policies without regard to any merits by the other side is shamefully short-sighted. This response is similar to the Catholic Bishops last week saying that the gay marriage lobby was outmarketing them and they just had to be more vehement in their defense of marriage to make it all go back in the closet like the good ole 50's. If only we could go back in time, that's the ticket!
Clearly if you want to earn back trust, you have to be trust worthy. That means partnering with critics to address things that can be changed for the mutual betterment of all. It means education. It means reassessing your failed policies and revising them with something that works and is sustainable. And you have to be vigilant that you keep the path.
Puerto Rico has been losing pharma manufacturing jobs/business over the past decade (falling from 160,000 to 75,000 jobs) as worldwide over capacity has developed. The overwhelming majority of these jobs supported smal molecule manufacturing. Faced with this decline, the goverment says it will pursue "opportunistically" more biological projects. According to government figures, biopharm manufacturing currently represents 25% of their GDP as most new and innovative products are biologics. Eli Lilly (insulin plant) and BMS both have expanding biologics manufacturing facilities on te island.
However, P.R. has recently raised its corporate tax rates, especially on companies who are offshoring there, and must be able to compete with governments like Ireland or Singapore who offer favorable deals to manufacturers. Plus utility costs have been creeping up in P.R. that negatively impact operating costs. So it remains to be seen how market/cost competitive P.R. can be to compete for business.
The local development group, PRIDCO, says that P.R> will be successful in their efforts as, "We provide a value proposition in terms of human capital, infrastructure, incentives and legal framework no other jurisdiction can provide." Business losses of late seem to contradict that so proof will come only when new business can be announced. See Biopharma-reporter.
The latest company to come into the Myriad Genetics legal cross hairs and be sued for infringement is LabCorp of Burlington, NC. Again, Myriad (and co-plaintiffs) assert that LabCorp is offering BRCA1 and BRCA2 testing in disregard for their patents.
Once again, Myriad is requesting a jury trial, a patent infringement judgment, a preliminary and permanent injunction, an accounting and damages, delivery for destruction of all infringing products, a finding of willful infringement, attorney's fees, enhanced damages and costs of suit. Is that all? Actually, that's pretty much the same list in all cases pending -- which now totals 6 companies. See Patent Docs.
Puma Biotechnology reporting its latest adaptive phase II trial data using Bayesian analysis caught my interest. It seems controversy has erupted from the fact tha Puma did not report its trial results using the usual PFS measures but focused more on use of Bayesian staistical analysis to predict their success in a phase III trial with patients of certain characteristics. In this analysis, they concluded they are more than 70% likely to better results clnical results using a drug cocktail and their drug neratinib versus the same cocktail and Herceptin (current standard). Then the controversy explosion ensued.
Ok. Puma has clearly use non-traditional statistical methods to assess ther trial data. Does that mean they ae wrong? Or are they possibly advancing the statistical treatment one can use for this type of assessment? Afterall, Puma is also using this method to establish which subsets of cancer patients, defined by specific biomarkers, are likely to respond most positively to their drug. Isn't that a goal in assessing cancer treatments now? Get the drug to the right patients who have the best chance of responding positvely and showing the drug actually works? Isn't that what biomarkers are all about?
I don't see the big problem here. The Puma drug is NOT geting approved on this basis. It is being moved on to phase III studies where their statistical model canbe further assessed for accuracy. What's wrong with that? There is data to support th3e position may work. Bayesian statistics are a legitimate field of statistical analysis. The science of the phase III study will speak for itself. The drugs will work as predicted or they won't. But there seems to me to be ample evidence to proceed and to then evaluate the drug based on the actual results in phase III. Again, this statistical treatment may turn out to be an advancement. Status quo is not necessarily best -- nor does it imply it can never be improved upon. See Fierce Biotech.
Genmab today announced that it has extended its development deal with Janssen for access to the former's DuoBody platform. Genmab will receive $2M upfront payments for up to 10 more programs. Additionally, it could net maximum milestone and licensing fees up to $219 M if all programs reached commercialization (yeah right). Any commercial products will also spawn royalties.
This new agreement essentially doubels the numbers of bi-specific antibodies that Janssen can choose to pursue. Janssen may have interests in applying these to cancer, autoimmune, infectious diseases and CNS diseases. Bi-specific antibodies dual targeting mechanism may improve both specificity and efficacy against disease targets. See FirstwordPharma.
Well, yes according to a updated report by Deloitte and Thomson Reuters. Their data analysis says that the 12 biggest spenders in R&D in pharma earned a modest 4.8% return on their investment. And that's down from last year's 7.2% and the previous year's 10.5%. As they say, the trend is going in the wrong direction.
What's worse? Well, I'll tell you. The report also claims that the costs of getting a new drug to market is up more than 18% over the same period. Right now, it doesn't look like improvement is on the immediate horizon. The average peak sales forecast has fallen from $816 M in 2010 to $466 M now, a 43% plummet.
The report further claims that drug developers are failing to reduce the cost of successful launches and in their rate of innovation. The report reiterates the advice that drug makers should reach to meet more "unmet medical needs", better preserve their R&D talent (instead of firing them all?), and taking advantage of the growing power of data analytics in decision making. Though the report also makes it clear that the top 5 companies have R&D returns greater than 7% while the bottom companies are producing a returns drag. The have's and have-not's if you will. See Fierce Biotech.
The Patent Doc blog reports that in its latest suit Myriad is alleging patent infringement against Invitrae this time for offering BRAC 1 & 2 genetic tests. Invitrae has responded with a suit asking for a declaratory judgment.
Patent Doc notes that Myriad has left several claims used in previous suits against genetic testing competitors out of this suit against Invitrae. The blog lists in exhausting detail all the various patents omitted and the claims that would have been previously cited from each.
The blog also notes that this curious omission may either reflect that Invitrae uses different methods in providing its genetic testing services or that Myriad may be changing its legal strategy in terms of what patent rights it asserts. Like its other suits, Myriad is asking the courts (in Utah) for a ruling of patent infringement, a preliminary and permanent injunction, an accounting and damages, delivery for destruction of all "products" that infringe any of the asserted claims, a finding of willful infringement, and a request for attorneys' fees, enhanced damages, and costs of suit.
Invitrae for its part filed a countersuit in California (like Quest and Counsyl before it) and seeks a declaratory judgment that its genetic diagnostic tests do not infringe any of Myriad's asserted patents and (or) that these patents are invalid. Invitae alleges that it "performs its sequencing using a very different approach" than the ways claimed in Myriad's asserted patents. In addition, like other defendants, Invitae invokes the Supreme Court (and Federal Circuit) decisions in AMP v. Myriad and the Supreme Court's Mayo v. Prometheus decision for its invalidity contentions.
"A vast portion of the landscape purportedly claimed by the Myriad Patents has been washed away in the wake of the Federal Circuit and Supreme Court’s decisions" in those cases, according to Invitae. Invitae also demands a jury trial, a declaration of non-infringement and invalidity and a finding that this is an exceptional case entitling Invitae to attorneys' fees and costs.
In summary, Myriad has now sued Ambry, Gene-to-Gene, Quest, GeneDx, and Invitae in Utah. Quest, Counsyl and Invitae have asked California courts for declaratory judgment.
In the Pipeline discussed an analysis of the "freshness index" from FirstWord Pharma. The freshness index is a measure of what percentage of a company's drug sales -- from say the last 5 years - is of total sales. In this analysis, sales of drugs introduced to the market after 2010 were measured as a percent of total sales. In theory, a higher freshness index means more sales are comping from new drugs and the company's future growth prospects are more rosy. It could also be taken to suggest a healthier new product pipeline (whether R&D or acquisition).
The rankings showed J&J (23.4%), Novartis (17.8%) and Novo (13.6%) were the top 3 ranked companies in this post 2010 ratings war. The bottom 3 included Sanofi (2.7%), GSK (2.3%) and Eli Lilly (0.8%) as the three trail dogs. Lilly in particular is really a hurting buckaroo. So it is clear that near term revenue contributions are much healthier at the top three companies than at the bottom three.
But I wonder if that is really the whole picture -- particularly for some of the companies in the middle. The index is skewed to just the past couple years for new products. Also, the index can be influenced by both positive new product growth and old product decline. I suppose if your oldest products were dying fast enough that could create an enhanced impression that your new products were better contributors than might be the case. But under either interpretation, Lilly looks bad. Might be more like the "staleness index" for them.
An FDA advisory committee gave BioMarin's drug Vimizim the thumb's up for the treatment of Morquio A syndrome. This has spurred analysts to suggest that the acquisition activity for BioMarin will heat up. A William Blair company analysts says the biotech will command at least a $93 per share premium offer. This is about 35% above its closing price near $70 yesterday. That would represent a purchase price for the company around $13 B. The highest price that as been talked about in biotech since Genzyme was purchased for $20 B by Sanofi.
Supposedly big pharma companies like Pfizer or GSK are interested. But this would represent a price-sales ratio of nearly 17x as compared to the 5x ratio that was present in the Genzyme deal. Roche CEO, Severin Schwan commented that he doesn't know where these biotech valuations are coming from. He indicated that his company was "scratching its head". A Wedbush Inc analysts concurred with Schwan saying that a lot of companies might like to buy BioMarin but that it was too expensive. BioMarin recently projected posting its first profit in 6 years. See Bloomberg.
Biocon is closing on heels of Roche in India with a competitor to the latter's Herceptin. Earlier this year, Roche declined to pursue a patent extension for Herceptin in India when the India government presented it with the liklihood that it would also have to grant a compulsory license. Roche chose to abandon the patent and not provide and info under a license to competition.
However, a scant two months later, Biocon seems on the verge of introducing its own version of the drug to the market (in collaboration with Mylan). It is approved to make the drug based on its appearance on the Drug Controller General of India list.
Roche has been dropping the price steadily over the past year -- first with a 15% decrease in the price in India. Then after partnering with the India company Emcure Pharma, the price is now about 67% of the former price in the market. Analysts and public health groups though expect the price to drop even further after Biocon's product is for sale.
"We welcome the competition that this approval may bring and expect that the price of the drug woudl significantly reduce as generic launch ushers in and substantially increases access to millions of women living with breast cancer," said Leena Menghaney of medicine sans frontieres (a patient advocacy group). See Economic Times.
Biotech lobbyists are happier this morning in PA following that State's Senate committee approving a bill that would call for strict limitations on substitution of biosimilars -- thus making it harder. The proposed Bill still has to go to the floor to gain passage but is one step closer. Amgen and BIO both hailed the development as one that "will instill confidence in the utilization of biosimilar products among patients, physicians, and pharmacists."
Governor Brown in California struck down a similarly worded bill in the past few months. So far, no other States have passed such legislation except North Dakota. The GPhA, Pennsylvania Pharmacists Association, and the National Association of Chain Drug Stores all oppose the measure. They believe limits on substitution will only drive up costs. See Pharmalot.
The LifeSciVC blog today published the findings of a recent study by Correlation Ventures that aimed to examine whether returns for VC investors over the past 10 years (2003-2012) were higher than those achieved by investors in public equity markets or not. Thankfully, VC investors DID realize returns in ths period that were on average 36% higher.
Hopefully, this is not surprising if we all believe in market efficiencies. If not, VCs didn't make out, why would anyone bear the extra risk to earn lessor returns? That would be the REAL story if it were the case. Fortunately, it is not. See link for details.
The latest report from Tufts (to no one's surprise) confirms that the biotech drug market continues to grow and is now dominating new drug development. The report spews forth a series of updated facts:
Biotech drugs accounted for only 7% of revenue from top 10 drugs in 2001 but represent 71% of te top 10 revenue in 2012
Biotech drugs in clinical trials grew 155% in 11 years from 355 trials in 2001 to 907 in 2012 and Big Pharma is involved in about 40% of those
Biotech research spending increased from $10.5 B in 2001 to a whopping $103 B in 2012 (that looks like total pharma R&D spending to me but that's what report said)
Biotech drug product sales grew 353% between 2001 and 2012 to reach $163 B
The study authors note that the concept that pharma companies develop small molecules is no longer true. Both new technological development enabling these bio drugs and he closing patent window on small molecules has contributed to this shift. See PharmaTimes.
According to EP Pharma, the number of drugs approved by FDA in 2013 should end near 34 which would be fewer than last year's high of 43. But, significantly, the 2013 crop is projected to be worth more in peak sales figures at 5 years --- $18.7 B for 2013 versus $16.4 B for the 2012 cohort.
This will be largely due to introduction of drugs like Biogen Idec's $2.9 B blockbuster Tecfidera for MS and the assumed approval of Gilead's oral hepatitis C drug, sofosbuvir, $3B projected peak. The two drugs will account for nearly 32% of the total revenue from the 2013 class if things go as projected.
"Barring any upsets this will make 2013 a year to remember in terms of future blockbuster sales," said Lisa Urquhart, EP Vantage editor. See Fierce Biotech.
Today, Shire (Ireland) agreed to acquire ViroPharma (Exton, PA) for the tidy sum of $4.2 B -- a 27% premium on the latters share price and a multiple of 58x EBITDA. Wow, you say. Indeed.
Shire made the buy to gain control of ViroPharma's approved drug Cinryze to augments its own Firazyr for the treatment of hereditary angioedema. It alos makes shire less dependent on its big bread winner, Vyvanse for ADHD. This was Shire's 3rd acquistion of the year and its largest to date. In general, the market seems to accept the underlying strategy of building Shire's rare disease portfolio that will now command more than $2 B in annual revenues.
“With Cinryze, we will add another growth engine to our portfolio,” Ornskov, Shire CEO, said on a conference call, adding that the acquisition will help create a rare-disease business with $2 billion in annual sales. “It’s a deal that fits with our strategy of increased focus on high-growth specialty markets, particularly rare diseases.”
This is the big deal the market had been waiting for,” Savvas Neophytou, an analyst at Panmure Gordon & Co., said in a note to investors today. The purchase is “clearly at an eye-watering multiple but strategically very sound.” See Bloomberg and Pharma Times.
Remember back when Sanofi was trying to buy Genzyme how long the negoitations dragged on? In large part this was due to a dispute as to how to value Genzyme's MS drug, Lemtrada, that was at the time wending its way through the regulaory path. The final settlement reached by Termeer and Viehbacher on the potential value of CVRs was described in this post (BRBB Feb 2011) and states their potential value at as much as $14 per share in cash ---- BUT this was largely based on the value that Lemtrada ultimately generated after approval and how close it came to its predicted peak sales value of $3.5 B.
Now, Fierce Biotech is reporting this monring that FDA (pre) review panels are indicating that the safety profile on the drug may be so shaky that it will be unapprovable in the US market. This doesn't bode well for the CVR having that much value -- and anyway in the intervening time to get to market both Novartis' Gilenya and Biogen Idec's Tecfidera have taken the lead with oral MS drugs. So don't count on the rest of your $14 anytime soon.
Lilly is committing up to $1.8 B to partner with Pfizer on the development of tanezumab for pain-relief. The deal was announced months ago but the particulars just emerged in Lilly's Q3 filing. This is another instance where Lilly is going after a really big therapeutic application (e.g. Alzheimers) that is fraught with risk but also offer a potential big reward. Of course it is in a potentially very large market with a big medical need.
This sharing of development and clinical trial costs is likely to emerge as another model whereby big pharma can layoff risk with one another. Yeah, they have to share the reward but the rewards are very BIG and help outweigh the sharing, and the risk is also high and the sharing cuts ameliorates the big costs of potential failure -- which aren't trivial or even unlikely. In for a penny, in for a pound. No guts. No glory really apply here. But failure doesn't help ones stock price at all -- and both Lilly and Pfizer have had their share of late stage blow ups in recent years. See Fierce Biotech.
GSK used a crowd-sourcing contest to try to identify new drug candidates for further study (translational work). They picked 8 winning projects from submitters in Canada, UK and US. Winning selections included efforts with antibiotics, malaria, metastatic cancers, Leishmaniasis, male fertility, regulation and iron-overload diseases.
Certainly, this is a novel approach for BIg Pharma to run an open competition of this sort. One of the big challenges is how to deal with the IP issues raised. In this case, some institutions decided (e.g. UCLA) decided not to participate as the IP terms were viewed to be outside their policies. GSK believe s the looser upfront definitions on IP help make the program work -- and they have tried to build in mechanisms whereby collabnorators can quit projects and walk away with some value to continue work on their own.
It remains to be seen whether GSK can turn any of these 8 projects into products/revenue, but they are encouraged enough so far to be already talkng about a second competition. The first did draw 142 entries, across 17 therapeutic areas and represented scientists from 70 institutons. So more than a few are certainly willing to play. We'll also have to see if any big IP blow ups happen on the back side of these projects but for now, all's quiet on that front. And efforts are being applied to making the 8 projects work. Maybe efforts like this will help keep GSK ranked number one as described in the previous post? See Fierce Biotech.
The ratings firm Morningstar recently raed the top 11 big pharma companies based on 3 major criteria: 1) strength of development pipeline, 2) current product lineup, and 3) patent loss picture. Based on these criteria, GSK was crowned the current winner of this ratings war. The complee list of company rankings follows:
GSK - with oncology and respiratory pipeline being key strengths
Bayer - new approvals, steady piepline and relatively benign patent expirations
Sanofi - improving pipeline and good management of their cliff. good existing business.
Novartis - projected good sales from pipeline expected
J&J - new product launches and next pipeline elements rate well
BMS - strong-late stage pipeline but patent losses could produce some drag
Merck - new R&D strategy getting benefit of doubt and immediate pipeline good
AbbVie - Humira still carries day. Some good pipeline potential.
Eli Lilly - still banking on pipeline projects, especially dulaglutide for diabetes
Pfizer - new launches drew good marks, patent losses have been devastating
AstraZeneca - heavy patent cliff expected, mediocre pipeline, long term negative growth projected
That's how the analysts see it now. This of course will likely change year by year as drugs come and go in the pipeline and the real impact of patent losses can be tallied. See Fierce Biotech.
Corporate structures and strategies for competition are cyclicle. It wasn't that long ago that analysts were touting the virtues of Big Pharma companies being diversifed into diagnostics, animal heath, OTC, etc as it supposedly made them more recession resistant when the phama business was down.
Now we are entering (again) a phase where analysts would like to see many Big Pharma companies get back to their "core businesses". Thus, we've had Pfizer spin off animal health and drug delivery and Abbott split its diagnostics and pharma (now AbbVie) businesses in recent years. To continue in that vein, Merck is talking about divesting its animal health and consumer businesses. Now we have Novartis talking about ridding itself of animal health (notice a theme), consumer business, and vaccines. All of this woudl be done to make a stronger pharma business -- or so the theory goes.
As Novartis mulled this over in public, it's stock responded with a 1.4% jump yesterday -- as did Pfizer's and Abbott's back when they were planning similar moves. This is the new black or is it orange. There is no doubt that a significant number of analysts ae in love with this type of straegy at the moment -- and they will be only too willing to tout it as a masterstroke and pump the stock.
But to me, it is just another cycle that we will go through befor we get to the next inevitable round of diversification. While I suppose that a company that did divest assets, woudl in theory have a chance to reinvent itself as it were --- that would require it to do something strategic with the proceeds of the sale besides line its own pockets and those of its investors in the immediate term. Otherwise, nothing fundamentally has changed and any bumps will be short-term. See Bloomberg.
Besides, if everyone follows suit can it be that novel or groundbreaking?
Gazyva (guh-ZY-vuh) rode through the FDA today with an early approval as Genentech's heir apparent to rituxan for the treatment of CLL in combination with chemotherapy. This was Genentech's (Roche) fifth new cancer drug approval in the past 3 years as the company remains on a roll. The new drug extended median survival time (to 23 months) and also had a low risk of worsening the disease (or death) in any treated patients -- which is known as the hazard ratio of the drug.
The drug did have its unpleasant side effects but not enough to slow down its "breakthrough" status at FDA and its approval landed several weeks ahead of schedule. An FDA spokesman hailed the drug as an important new tool in the fight against CLL and lauded the Breakthrough Therapy Designation Program for making it possible. The new drug will cost approximately $41,300 per course of treatment per patient. See Xconomy for more.
Novartis is latest company to side for naming biosimilars consistent with current standards for international non-proprietary names (INNs). This is consistent with the stance taken by other biosimilar backers GPhA and Hospira. It is counter to the position taken by other innovator drug companies and their lobbies -- PhRMA and BIO -- who want to see distinct names given to new biosimilar drugs. Novartis says this is confusing and will only go to slow down biosimilar adoption (the real agenda of innovators). Novartis cites the following negatives for breaking with INN convention:
Any change to the current naming convention would undermine consumer confidence in biosimilar products, as well as the system at large.
Inconsistencies in naming would lead to medication and prescription errors, putting patients at risk.
IPP names are designed to identify the active pharmaceutical agent, not to distinguish between individual products.
With robust drug safety systems in place, there is no need to resort to name changes to differentiate products
So the debate continues and we all await word from the FDA as to what path they would recommend and/or implement. See Total BioPharma.