This week brought a pair of deals in which two western big pharmas, Sanofi/Genzyme Corp. and AstraZeneca PLC, partnered with two US-based biopharmas to launch their drugs in Asia. The deals signal the willingness of biopharmas to partner with major western companies with deep presence and experience in Asia as a viable route into China and other emerging markets. But they will need to partner with a local company down the road, if only for commercial, because they won't get far without one.
The drugs – Ironwood Pharmaceuticals Inc.’s linaclotide, approved by FDA for constipation-predominant irritable bowel syndrome; and Alnylam Pharmaceuticals Inc.’s ALN-TTR2, in Phase II for transthyretin-mediated amyloidosis – are as different as an Irish Wolfhound and a Miniature Pinscher (your blogger spent last Saturday at the American Kennel Club’s “Meet The Breeds” event in NYC).
Ironwood’s drug will soon enter a Phase III trial in China, while Alnylam’s is still in Phase II. The regulatory review process in China is notoriously long, and Ironwood is predicting a potential launch in 2016 or 2017. Moreover while linaclotide addresses a population of 1.5%-5%, Alnylam’s drug targets an ultra-orphan indication whose patient population is a fraction of 1%. Linaclotide will be detailed primarily to general practitioners; ALN-TTR2 will most likely target hematologists and specialists including geneticists and cardiologists.
The deals beg two questions:
· Why did both biopharmas partner with a Western company rather than a local Asian company?
· What are the prospects for orphan drugs in China?
For instance, why did Ironwood, which partnered linaclotide with local partners in Europe (Almirall SA) and in Japan (Astellas Pharma Inc.), both well developed markets, choose to go with a Western partner in China, a tantalizing commercial opportunity, to be sure, but also the least developed, most challenging market of all? Probably because there's currently a scarcity of Chinese pharma companies with the capability to sell these drugs.
Our colleagues at “Pharm Asia News” expect both companies will pull in a local partner down the road. Indeed, Ironwood told “The Pink Sheet” DAILY in August that it feels comfortable proceeding with the regulatory process on its own, but that it still needs the “right partner to help advance creation of the markets in those territories.”
It appears that partner is AstraZeneca. Apart from its long history in gastrointestinal disorders, AZ has been leading its peers in emerging markets growth – nearly half its sales and marketing teams are based there – and ranks second in prescription drug sales in China according to IMS. But can AZ sell linaclotide on its own, or will it have to partner with a local Chinese company?
Alnylam’s drug – the mini-pin – is the more interesting gambit. (For details, see description below)
Again, all eyes are on China, where the orphan market is at best embryonic. The infrastructure to identify patients that can be treated with ALN-TTR2 is lacking, the specialists aren’t available to treat them across China’s vast geographies, and insurers won’t pay the prices for ultra-rare diseases that we’ve seen in the U.S. and Europe.
Except in Shanghai. Shanghai has become the first Chinese market to provide limited reimbursement to treat some rare diseases. In late 2011, Shanghai began covering treatment for four pediatric diseases – all of them addressed by Genzyme’s lysosomal storage disease franchise. The city also designated three hospitals to specialize in rare disease medicine. The cap for reimbursement for the four disorders is RMB 100,000 per child per school year, or approximately $16,000 USD.
Experts are uncertain about the prospects for wider orphan drug reimbursement in China, but most agree that the orphan market has big, long-term potential, and in anticipation western pharma companies have been building orphan drug R&D infrastructure. Genzyme unveiled a $100 million R&D center in Beijing in 2009 with a focus on rare diseases.
Near term, the facts are sobering: Chinese medical students generally receive no systematic training in rare medical conditions. The rate of misdiagnosis of rare diseases in China is roughly 50%. 75% of treatments are not standardized. In some cases, patients have to wait 30 years to get treatment. If Shanghai is currently the only near-term opportunity, then the question Sanofi/Genzyme must be asking is: How long will it take to develop a more widespread medical and reimbursement infrastructure in China for orphan diseases?
And the question you must be asking, Dear Reader, is: What are the Deals of the Week?
Pfizer/NextWave: Pfizer Inc. said Oct. 22 it is exercising its option to buy privately held NextWave Pharmaceuticals Inc. The acquisition, expected to close in the fourth quarter, will give Pfizer the recently approved ADHD drug Quillivant XR (methylphenidate hydrochloride). Pfizer entered into the merger option in the second quarter with a $20 million payment and chose to follow through after NextWave’s liquid ADHD drug received FDA approval. Pfizer will pay $255 million upon deal close and NextWave shareholders could receive another $425 million based on undisclosed sales milestones. Pfizer called the transaction “consistent with its current bolt-on strategy.” Quillivant XR, approved in the U.S. on Sept. 27, is a liquid formulation of generically available oral tablets like Concerta and Ritalin and is meant to make it easier for children to take the drug. The technology used in the drug was licensed from Tris Pharma Inc. in August 2010. The drug uses Tris’ OralXR+ technology to allow for the extended release of the liquid formulation; the companies are also working on an extended-release chewable tablet for which they expect to submit an NDA in 2013.--Lisa LaMotta
Genzyme/Alnylam: The Sanofi rare disease group, Genzyme, is teaming up with RNA-interference pioneer Alnylam in an agreement announced Oct. 22 to co-develop and commercialize RNAi therapeutics for transthyretin-mediated amyloidosis (ATTR) disorders in Japan and Asia-Pacific. Alnylam gets $22.5 million upfront, up to $50 million in milestones, and mid-teen to mid-twenty percent royalties on product sales. The tie-up centers on ALN-TTR02, a Phase II RNAi therapeutic discovered and developed by Alnylam, along with ALN-TTRsc, a preclinical subcutaneous formulation of the same candidate. Genzyme will oversee and fund further development of the two products in Japan and other Asian markets, with Alnylam retaining rest-of-world responsibilities and rights. The Cambridge, Mass.-based firm hopes to benefit from Genzyme’s regulatory and commercial experience with rare-disease therapies in Asia while launching the product on its own in the U.S. and Europe as its commercial beachhead. Japan is projected to be one of the major market opportunities for TTR02. Genzyme, which gains rights to the TTR program in all of Asia-Pacific, including Korea, Taiwan, China, India, Australia and New Zealand, has been consulting with key opinion leaders in other Asian countries besides Japan to develop a sense of where ATTR disorders are most prevalent to determine where to seek regulatory approval, said Andre Turenne, VP and head of strategy and business development at Genzyme. Limiting this partnership to Asian rights was Alnylam’s decision, he added, but it makes business sense for Genzyme as well. “We think it’s a good opportunity to leverage the expertise and the infrastructure we already have established and in place in this region,” he said.--Joseph Haas
Domain Therapeutics/Ono Pharmaceutical Co. Ltd:G-protein coupled receptor (GPCR) research from the 1960s and 1980s won the day with the 2012 Nobel Prize for Chemistry committee, but more up-to-date GPCR research is the target of a new collaboration. French firm Domain Therapeutics, a GPCR specialist, said Oct. 23 it would collaborate with Japan's Ono Pharmaceutical on GPCR research in an undisclosed therapeutic area. Domain will receive an upfront payment, research funding and success-based milestones, as well as royalties on product sales arising from the collaboration. The GPCRs to be studied will be selected by Ono, and further scientific and financial details were not disclosed. Ono is keen on drug discovery alliances. Recently it has partnered with Galapagos NV subsidiary BioFocus DPI in Sept. 2012, Scil Proteins GMBH in May 2012 and Receptos Inc. in Dec. 2011.
GPCRs are targeted by more than 40% of the drugs currently on the market, but the therapeutic potential of this receptor family is still believed to be under-exploited. Domain has a proprietary drug discovery platform and screening assays that target high-potential GPCRs, with its internal research programs focused on Alzheimer's disease, depression, Parkinson's disease and schizophrenia. In Jan. 2011, Domain attracted Merck Serono SA as a research partner; and in July 2012 it raised €2 million from new and existing investors in a Series B round to accelerate its transition from contract research organization to a research discovery company that collaborates and enters into strategic alliances with pharmaceutical companies.--John Davis
Abbott/Seattle Genetics: Less than a week after safety concerns killed development of a key pipeline asset, Abbott Laboratories said Oct. 23 it would expand an oncology collaboration with Seattle Genetics Inc. Abbott will pay Seattle Genetics $25 million upfront plus $220 million in milestones for each of the compounds developed with the biotech’s antibody-drug conjugate technology. Seattle Genetics also is eligible to receive mid-to-high single digit royalties on any drugs that result from the collaboration. Abbott is responsible for R&D, manufacturing, and commercialization of products under the expanded collaboration. Seattle Genetics will receive annual maintenance fees and research support payments. The original deal was struck in March 2011 when Abbott paid $8 million upfront and agreed to pay $200 million in milestones for antibodies developed using the ADC technology against a single oncology target. The news comes right on the heels of a major blow to Abbott’s pipeline. Abbott partner Reata Pharmaceuticals announced on Oct. 18 it would discontinue Phase III testing of bardoxolone in chronic kidney disease patients and type 2 diabetes due to safety concerns. The first-in-class antioxidant inflammation modulator, which activates the Nrf2 gene, was being tested for its ability to slow progression or reverse the course of CKD. The drug was meant to be a major growth driver for AbbVie, the new pharmaceutical company that will spin out from Abbott on Jan. 1, 2013.--Lisa LaMotta
AstraZeneca/Ironwood: Ironwood Pharmaceuticals Inc. and AstraZeneca announced Oct. 23 they would team up to bring Ironwood’s irritable bowel syndrome drug linaclotide to China. AstraZeneca, the number two pharma in China, agreed to pay Ironwood $25 million upfront, and the companies will share profits and losses from the sale of linaclotide. AstraZeneca will carry 55% of the profits and losses until a certain specified milestone is achieved. The arrangement then shifts to a 50/50 split. Ironwood could also earn $125 million in commercial milestone payments. Linaclotide is Ironwood’s first commercial product and was approved by FDA in August 2012. Though Ironwood has signed a partner for the Chinese market, a potential launch of the drug is still years off, likely not until 2016 or 2017, given that a Phase III trial is yet to start. Ironwood has also partnered with Forest Laboratories in the U.S., with Almirall SA in Europe, and with Astellas Pharma Inc. in Japan and other Pacific Rim markets. The company has said it would look for more partners in other emerging markets. An important element of the AstraZeneca deal is that Ironwood will also market AstraZeneca’s Nexium (esomeprazole) for gastroesophageal reflux disease, providing an entrée into doctor’s offices in the U.S. The two simultaneously announced a co-marketing agreement for Nexium through which Ironwood’s 160 sales reps will sell Nexium in the U.S. Ironwood won’t be reimbursed for sales, however, and thus, the addition of Nexium to its sales reps’ bags won’t pad the company’s revenues.--Jessica Merrill