Tuesday, October 09, 2007

Shire’s Clean-Out: Dynepo Next?

Hats off to Shire for cleaning out its cupboards and out-licensing $213 million worth of non-core drugs to Spain's newly-listed Almirall. The industry’s notoriously bad at passing unwanted assets down the food-chain, for reasons we know well—too much hassle, no glory, potential egg-on-face.

Egg-on-face isn’t an issue here: Almirall’s unlikely to turn peppermint oil Mintec, one of their eight prizes, into a blockbuster. Anyway, if anyone’s going to find a new use for an old drug, Shire is--this is the group that turned amphetamine salts marketed in Germany for obesity into a multi-billion dollar CNS franchise.

As for hassle: $213 million isn’t a bad bit of money for a company Shire’s size. That’s enough for, say, another couple of Juvistas. (Shire recently paid $75 million up front and made a $50 million equity investment in Renovo for scar treatment Juvista, around which it may build a new franchise, as we reported here.)

$213 million is also enough to plug a gap left by another non-core asset that may yet be the next to emerge from Shire: Dynepo.

Remember Dynepo? It's basically EPO, a follow-on biologic that Shire bought through its $1.57 billion acquisition of TKT in 2005. Dynepo was in fact the core focus of the deal--so much so that Shire had a back-up plan to license the product for $450 million in case the acquisition fell through.

Lucky for Shire it didn’t. Dynepo sells a miserable $2 million per quarter, a far cry from the estimated $150-200 million annual peak sales that Shire, and analysts, were forecasting. Meanwhile two other TKT drugs, Hunter Syndrome treatment Elaprase and Replagal for Fabry disease, are doing very nicely thank you—the $80 million or so combined second quarter 2007 sales of both products exceeded analyst expectations.

There’s a lesson somewhere here about the value of acquiring the restaurant over selecting from the licensing menu, if the industry needed one (which it doesn’t, it seems.) But what about Dynepo?

Its trouble is that it’s neither here nor there. Dynepo offers no advantages over existing EPO drugs—it’s just plain vanilla EPO, and the short-acting version at that. Shire has no hope of competing in the mainstream with the likes of Amgen or J&J. Yet Dynepo isn’t a full-on generic copy of EPO, either, like Sandoz’s recently-approved epoetin alfa.

The Sandoz drug may have some chance, one day, of being substituted in cost-conscious markets for the reference innovator drug, in this case J&J's Eprex (though admittedly, biosimilar substitution will be a long journey, as we reported in a previous blog post.) Not so for Dynepo.

Small wonder, then, that Shire’s management doesn’t want to invest in a new manufacturing plant for Dynepo, and admits the drug “is fighting for space” in the portfolio. We know that, unlike most pharmaceutical firms, Shire’s not allergic to selling. But will anyone buy?

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