Can Novel-Novel Combinations Work? Deals Of The Week Watches Merck Test The Waters

Merck & Co. Inc.’s Feb. 5 announcement that it is collaborating with three companies to test various combinations of its investigational oncology compound MK-3475 with their drugs highlights the extent to which the big pharma is committed to building a major presence in onco-immunotherapy. The company appears prepared to take aggressive steps to achieve its aims, even as it cuts back in other parts of its business.

The announcement also signals just how important combination drug trials are becoming to certain areas of cancer therapy development, and in particular the importance of “novel-novel” combination trials. Until recently, the industry rarely, if ever, undertook trials in which two investigational-stage drugs are put through clinical development together in the hopes that results will be stronger than either would have garnered alone. With the exception of some government sponsored projects, even combining two novel drugs made by the same company has been rare. Lack of scientific drivers and operational and legal hurdles have kept potential partners at bay.

Certainly science is shifting, and many oncology researchers believe early-stage collaborations are inevitable, given the direction of scientific innovation and the costly and time-consuming nature of clinical trials. Furthermore, FDA has shown greater willingness to consider novel-novel combinations in recent years, issuing a first draft guidance in December 2010, and, in June 2013, a final guidance, which clarifies its thinking on the potential regulatory path for approving two new drugs as a combination regimen.

Roche,  Cyclacel Pharmaceuticals Inc., and just maybe one or two others, are currently testing combinations of their own investigational drugs--developments are followed diligently by "The Pink Sheet"'s Shirley Haley and others on the team. But those initiatives pale in terms of scope with Merck’s willingness to work with Pfizer Inc., Incyte Corp., and Amgen Inc.   The drug involved is a high-profile litmus test for Merck: MK-3475, a PD-1-specific antibody, is currently in Phase III as a monotherapy for melanoma and is being studied in a total of 13 clinical trials involving more than 4,000 patients suffering from a variety of cancers.  The company announced in January that it is starting a rolling NDA for the drug, which it expects to complete in mid-2014.

Investigators will evaluate MK-3475's safety and efficacy when combined with Pfizer’s small molecule kinase inhibitor Inlyta (axitinib) in patients with renal cell carcinoma, and also with the investigational immuno-oncology drug PF-05082566 in multiple cancers. Inlyta already is on the market as a monotherapy for RCC, and ‘2566, which targets the human 4-1BB receptor, is in Phase I, according to Pfizer’s website.

In the second agreement, Merck will cooperate with Incyte on a randomized, double-blinded Phase I/II study of MK-3475 and Incyte’s investigational drug INCB24360, an immunotherapy that inhibits indoleamine 2, 3-dioxygenase (IDO) in patients with previously treated metastatic and recurrent non-small cell lung cancer. Finally, MK-3475 and Amgen’s investigational immunotherapy talimogene laherparepvec will be put to the test in a Phase Ib/II study in patients with previously untreated mid- to late-stage melanoma.

Merck already has signed a similar deal with GlaxoSmithKline PLC around combining MK-3475 with GSK’s Votrient (pazopanib) in advanced RCC, and it seems ready for more. “You can expect to see more of thse deals, both in terms of monotherapy and in combinations,” said Merck's VP, Clinical Oncology Research Eric Rubin on the day the company announced its triple play. As for the particular compounds chosen, he noted, these were areas of particular interest based on “our understanding of drug mechanisms and the potential of combination effects that will be synergistic in their efficacy.”

He would not discuss details of the data Merck looked at to select its partners, but said each case had “a strong rationale.” A  fair amount of literature has been published on IDO as a target and its involvement in immune regulation and in particular with melanoma, for example, he said. Nor would he discuss timing of read outs from any trials, all of which are expected to begin later this year.  The Incyte compound is currently in Phase II as a monotherapy for ovarian cancer and as a combination therapy with Bristol-Myers’ Squibb’s Yervoy (ipilimumab) for advanced melanoma.

Merck’s previous experience with a novel-novel combination trial involving its AKT (part of the phosphaltidylinositol-3 kinase pathway) inhibitor and AstraZeneca PLC’s MEK (mitogen-activated protein kinase) inhibitor also likely paved the way. That effort began in 2009 and was among the first, if not the first, examples of two big companies collaborating in such close fashion on such early-stage compounds.  The Merck drug was in Phase I trials at the time the deal was signed, while the AZ drug was in Phase II but had not yet reached proof of concept.  The timing inevitably led to concerns about sharing of proprietary data and intellectual property, as well as scientific uncertainties and questions about potential regulatory uncertainties down the road.

Merck isn’t saying much about how the new deals are managing the operations or funding of the trials, but Rubin noted that the earlier relationship with AZ has been positive and “a good way to learn how to do this.” Some of the learnings resulted in other trials, he said, including as one of four arms of the BATTLE-2 trial, which investigators will discuss at the American Association of Cancer Research meeting in April. That trial, now recruiting 450 patients with advanced non-small-cell-lung cancer, is expected to complete in 2017, according to Clinicaltrials.gov.

The structure of the 2009 deal was fairly simple, with Merck sponsoring the Phase I study and both companies splitting the costs.  A joint governance committee with shared decision making rights oversaw the program. IP arising from the collaboration is to be shared by the inventors, and most importantly, each company was to have freedom to study its compound alone or with other drugs as well.

Merck’s been active on other fronts in the deal space, and recently revamped its R&D unit's business development group, bringing in a new leader, Iain Dukes from Amgen. Other companies are also doing their share of wheeling and dealing, as is seen in the latest round of ...--Wendy Diller

 

Merck/ Ablynx: Merck  has turned again to Ablynx’s Nanobody technology platform to identify new product candidates, this time compounds directed at immune checkpoint modulators, currently a hot area of research following the success of  Yervoy.

Building on their initial research partnership started in October 2012 in neuroscience, Merck and Ablynx have now agreed a research collaboration and licensing agreement that will discover and develop several predefined Nanobodies that could become cancer immunotherapies. Nanobodies are based on single-domain antibody fragments, and have several beneficial features compared with conventional small-molecule or antibody-based therapies, including the possibility of being linked together in bi-specific or tri-specific constructs. Researchers believe combinations of immune checkpoint inhibitors could be important in the treatment of certain cancers.

Ablynx will receive an upfront of €20 million ($27 million) and up to €10.7 million in research funding during the three years of research covered by the new collaboration signed Feb. 3. The Ghent, Belgium-based biotech could also receive development, regulatory and commercial milestones on achieved sales thresholds for a number of products that could amount to a chunky €1.7 billion, plus tiered royalties. Merck will develop, manufacture and commercialize any products resulting from the collaboration. 

Ablynx has been active over the past six months in signing up Big Pharma companies for research collaborations and partnerships. In September 2013 it strengthened an existing collaboration with Merck Serono by setting up a dedicated discovery team for the German Big Pharma at Ablynx. In the same month, U.S company AbbVie licensed the anti-interleukin-6 Nanobody, ALX-0061, for global development.-- John Davis

Accelerating Medicines Partnership:  NIH Director Francis Collins outlined a broad public/private partnership Feb. 4 to speed up and increase the success rate of research into finding new biological pathways for therapeutic intervention. Called the Accelerating Medicines Partnership (AMP), the alliance will combine the efforts of NIH, FDA, 10 biopharma companies, and the non-profit community to transform the current discovery model for new drugs and diagnostics.
The five-year effort is funded with $230 million provided in approximately a 50/50 split between NIH and the pharmaceutical industry. It will focus first on characterizing effective biomarkers and distinguishing biological targets most likely to respond to new therapies in three areas: Alzheimer’s disease, type 2 diabetes and a pair of autoimmune disorders, rheumatoid arthritis and systemic lupus erythematosus.

AMP’s work will be considered “pre-competitive” – all parties have agreed to forego seeking any intellectual property rights on the group’s work, which will be disseminated for free usage by any and all medical researchers, public or private, affiliated or independent. “Competition will come later after the initial discovery phase where we, the AMP, collectively identify the most compelling targets and then the full competitive power of the pharmaceutical industry will kick in to develop the actual therapeutic molecules,” Collins said.

The companies participating in AMP are AbbVie, Biogen Idec, Bristol-Myers Squibb, GlaxoSmithKline, Johnson & Johnson, Eli Lilly, Merck, Pfizer., Sanofi and Takeda. Also taking part are PhRMA, the Foundation for the NIH and a set of disease advocacy groups focused on the four diseases chosen for initial focus. --Joseph Haas

Myriad/ Crescendo: Having watched Crescendo Bioscience gain a foothold in the market for inflammatory and autoimmune diagnostics market, Myriad Genetics is now moving to acquire the company – a right it obtained via a novel strategic investment agreement in 2011. That agreement included a $25 million loan – nondilutive financing that was to be repaid in years 4-6 – and a three-year option to acquire Crescendo at a multiple of revenues once those revenues hit an initial threshold and according to a formula gauging their rate of growth after that.

In November 2013, Myriad said Crescendo had met the terms for exercising the option. The purchase price – $270 million cash, less $25 million payback on the loan – was calibrated according to the pre-established revenue target. The press release announcing the acquisition noted that Crescendo’s sales for the most recent quarter were $10 million. Sales of Crescendo’s inaugural product, the Vectra DA protein-based diagnostic for measuring disease activity in RA patients, surged in 2013 owing to a confluence of factors: In May, Crescendo obtained CMS coverage, representing close to 40% of the RA population. It simultaneously expanded the Vectra sales force from 20 to 33.

Then in June, the company presented ten posters at the EULAR Annual Meeting, which further drove interest in ordering the test. The deal is in keeping with Myriad’s goal of diversification in therapy area (beyond oncology) and technology (protein versus DNA/RNA tests). (A more detailed analysis will be out shortly in Informa's monthly strategy publication, IN VIVO.) The announcement did little to deflect analyst concerns over Myriad’s immediate prospects, however. CMS recently reduced payments for its BRACAnalysis tests by almost half, and the company is facing new competition in BRCA testing following the US Supreme Court decision last June invalidating BRCA gene patents.  As Michael Yee of RBC Capital Markets said in a note following Myriad's February 4 earnings call, during which the Crescendo acquisition was discussed, “we think the stock remains a battle of Bulls/Bears this year until more visibility occurs.”--Mark Ratner

Valeant/ PreCision: When it comes to acquisitions, Valeant Pharmaceuticals investors have high expectations now that CEO J. Michael Pearson have vowed the company will become a top-five pharma by 2016 with business development the key avenue to meeting that goal. Valeant announced its first acquisition of the year Feb. 3, buying PreCision Dermatology Inc., a prescription and cosmetic dermatology firm. Valeant agreed to buy the privately-held dermatology company for $475 million in cash plus $25 million in milestones.

Relative to some of Valeant’s recent acquisitions like Medicis Pharmaceutical Corp. for $2.6 billion in 2012 and Bausch &  Lomb Inc. for $8.7 billion in 2013, the PreCision buyout is smaller and should be one that an experienced buyer like Valeant can quickly integrate into its operations. PreCision’s sales are expected to be approximately $130 million in 2014, according to Valeant. The company, based in Cumberland, R.I., employs about 175 people. It was established in December 2010 from a spinout of Onset Therapeutics, a subsidiary owned by Collegium Pharmaceutical Inc. PreCision’s initial investors were Essex Woodlands, Boston Milennia Partners, Frazier Healthcare and Westfield Capital Management.

The acquisition of Medicis catapulted Valeant into a leader position in dermatology, where it ranks second behind Galderma SA. The company added more dermatology businesses in 2013, including Obagi Medical Products Inc., the maker of aesthetic and prescription skin-care lines, which it bought for $418.4 million. In December, Valeant said it would buy Solta Medical Inc. for $237 million for its aesthetic devices, which are sold to dermatologists.--Jessica Merrill

Novo Nordisk/ Zosano: In the crowded market for diabetes drugs, methods of administration and delivery systems can be important differentiation factors. Novo Nordisk added a new delivery system to its experimental drug pipeline on Feb. 5, when it partnered with Fremont, Calif.-based Zosano Pharma Inc. to gain rights to its microneedle patch system. Novo Nordisk will attempt to create a transdermal delivery system for semaglutide, its Phase III glucagon-like peptide-1 analogue for type 2 diabetes.

Zosano received an up-front payment of undisclosed size to cement the deal. Novo Nordisk agreed to pay development, regulatory and commercial milestones worth up to $60 million for the first product jointly developed under the agreement, as well as royalties. The companies will also investigate other GLP-1 products, each of which could trigger an additional $55 million in milestone payments. The companies will collaborate on development during the preclinical product stage, but Novo Nordisk will cover further development costs and reimburse Zosano for other development and manufacturing costs.

Spun out of Alza Corp. in 2006, Zosano has raised more than $120 million from investors including New Enterprise Associates, ProQuest Investments, and Nomura Phase4 Ventures. It has previously tested its microneedle patches in products based on Eli Lilly’s Forteo (teriparatide) and Amgen’s Epogen (epoetin alfa).--Paul Bonanos



Hat tip to  James Moore, Certified Accountants for image

These Days, You Can't Spell Financings Of The Fortnight Without "I-P-O"

It turns out a lot of the words that contain the letters "IPO" are biomedical words:

Pluripotent. Liposomal. Adiposis. Gallipot.

And it turns out a lot of biomedical companies have IPO in them, too. Since we last met 14 days ago, dear reader, a stunning 13 biotechs have made their public debuts, although if not for Eleven Biotherapeutics, it would have been 12.

There are all kinds of ways to slice and dice this baker's dozen; one way is to look at first-day pops. Indeed, our colleagues at "The Pink Sheet" will soon have a detailed look at the crazy first-day run-up of RNAi developer Dicerna Therapeutics; the 207% gain was the biggest in biotech since Antigenics jumped 241% in February 2000, according to Renaissance Capital.  (More on Dicerna's IPO in the roundup below.)

But with the momentum that began in earnest last spring showing no signs of tapering off, we're curious about a different indicator: insider purchases. As soon as IPOs began to rebound from the financial crisis, insiders often did heavy lifting to get the deals off the ground.

But those levels began to decline in 2013, as Atlas Venture partner Bruce Booth noted on his blog last fall. He also noted that insider participation could signal a cooling of the market. Well, yes, but as we noted on this blog in early 2012, it's hard to draw conclusions about deal-by-deal participation. Is heavy insider presence a sign of desperation to get a deal done, or is it a sign of singular enthusiasm? With crossover investors already on the cap table and wanting more at IPO, and with some VCs playing more frequently on the public side of the fence, it can be hard to tell. What's more, SEC filings don't always divulge the true level of insider participation.
 
With all that, let's round up what this year's IPOs have revealed:

Here are the 13 IPOs the past two weeks, plus GlycoMimetics on January 9, and the percentage of insider participation noted in the regulatory filings:

Company Name	Insider Participation at IPO
Dicerna	57%
GlycoMimetics	29%
Celladon	25%
Eleven	24%
Trevena	23%
uniQure	22%
Genocea	21%
Egalet	20%
Auspex	12%
Cara	7%
Ultragenyx	0%
Acucela	0%
Revance	0%
Biocept	0%

That's an average of 16% raised from insiders, but with caveats: some of these numbers (highlighted green) are based on filings which note that insiders indicated an interest of purchasing a certain amount. At the time of this writing, it's not clear whether they actually pulled the trigger, but often those indications don't change much. Other caveat: The percentages don't factor in the green shoe. In other words, some of the numbers you see above will change as more information emerges.

For what it's worth, our own IPO data show insider participation in 2013 averaged 14%. 

It's hard to say what all this means. Two years ago, when insiders shouldered heavy IPO loads -- taking on more risk instead of getting to precious exits -- it was easier to wonder about the desperation of it all. But now, more early stage biopharma investors (Third Rock Ventures, Flagship Ventures, OrbiMed Advisors, 5am Ventures and so on) are squaring the circle, from fundraising to new investment to IPO and back again, and biotech's boom means those extra IPO shares, if you can afford them, could be a lucrative proposition. And as our START-UP colleagues noted last year, biotech VCs haven't been shy about holding... and holding... and holding their shares well past IPO.

Is it worth mentioning that you also can't spell "ripoff" without IPO? Or perhaps we should leave you with this lighter linguistic play: The only anagram of IPO is "poi." A select few find the ancient Hawaiian staple of taro root mush delicious, but other people just need some time to appreciate it. Hmm, sounds like a recipe for what we cook up every two weeks, except we call it...

Dicerna Pharmaceuticals: RNA interference specialist Dicerna more than tripled in its first day of trading, making it the largest post-IPO pop since 2000. Demand for the offering was almost unprecedented with over $1 billion in orders, thanks in part to the RNAi-validating $700 million deal between Alnylam Pharmaceuticals and Sanofi's Genzyme that stole the show at January’s JP Morgan Healthcare conference. But unlike many IPO candidates going into 2014, Dicerna can't count on near-term milestones to support the stock. It expects to start clinical trials for the treatment of primary hyperoxaluria in 2015, with proof-of-concept data due later that year. It also expects to advance DCR-M1711 for cancers driven by the MYC oncogene in the first half of 2014, with proof-of-concept data in 2015. The biotech originally targeted $60 million, but by increasing its price to $15 and shares sold to six million, it ended up raising $90 million. The overallotment could add another $13.5 million. Last July, Dicerna raised a $60 million Series C round at $7 a share with crossover investors RA Capital, Deerfield Management and Brookside Capital Partners, as well as VCs Domain Associates, Skyline Venture Partners, Abingworth Bioventure, SROne and Oxford Biosciences Partners. At market close on February 6, Dicerna’s share price had settled to $33.98, down from its first-day high of $46, but still more than double the IPO offer price.  – Stacy Lawrence

uniQure: The groundbreaking Dutch company gained the first regulatory approval for a gene therapy in the Western world, but it isn’t the first to go public. The company followed bluebird bio and, just by a few days, Celladon into the public markets with its February 4 listing on the Nasdaq, pricing 5.4 million shares at $17 apiece, above the anticipated range of $13 to $15. uniQure netted $81.9 million in the transaction, net of discounts and expenses; a greenshoe option could add $13.8 million more to the offering’s value. uniQure made history in November 2012, when EMA approved its Glybera (alipogene tiparvovec) to treat rare metabolic disease lipoprotein lipase deficiency. It’s part of a renaissance of interest in the field of gene therapy, once considered overly risky, and VCs have stepped up investment in new treatments in the field. After meeting with US regulators, uniQure plans to file an IND for Glybera by midyear. The company will also use its IPO proceeds to complete its Lexington, Mass. manufacturing facility and advance pipeline candidates including Phase I/II hemophilia treatment AMT-060. The company is planning a 2014 commercial launch of Glybera in Europe, in conjunction with regional partner Chiesi Farmaceutici. – Paul Bonanos

Lumos Pharma: Two years after paying $695 for a crowdsourced logo, Lumos has reeled in real cash: a $14 million Series A round led by Sante Ventures and New Enterprise Associates. The Austin, Texas firm is working on a small molecule therapeutic for the rare disease Creatine Transporter Deficiency (CTD), which is in preclinical studies. Lumos was among the first companies to gain support from the National Institutes of Health's "TRND" program, or Treatments for Rare and Neglected Diseases. As our sister publication START-UP noted in late 2011, CEO Rick Hawkins, a serial biotech entrepreneur, turned to TRND for help in what he called the worst disruption in the capital markets he'd seen in 35 years. CTD is an inborn error of metabolism that results in a profound lack of creatine in the brain. It's an x-linked disorder, which means boys are more affected than girls, with severe autism-spectrum symptoms such as language and speech delay, epilepsy and destructive behavior. Lumos is repurposing a drug -- what it calls a kinetically similar analog of creatine -- previously studied as a solid tumor treatment, and tested in knockout mice at the University of Cincinnati. Kevin Lalande, Managing Director of Sante Ventures, and NEA Partner Ed Mathers will join the Lumos board. – Alex Lash

NightstaRx: We admit we first thought about writing up NightstaRx to poke gentle fun at its name. (It apparently is pronounced "Nightstar," which makes for the first silent "X" in the English language.) But we would never be that shallow; the firm merits a write-up for other, more legitimate reasons. First, the company is the initial therapeutic investment from Syncona Partners, the new £200 million ($325 million) evergreen venture fund of the mighty Wellcome Trust, which has been rather slow to get cranking (it was first announced nearly two years ago). Once known as Project Sigma, Syncona aims to fund private biotechs and keep full ownership, at least for a while. It's for-profit and although fully funded by Wellcome, it's separate from the Trust's investment division, which has billions of pounds of private equity holdings. Now that Syncona is truly up and running, it should b be a significant source of early stage funding for European biotechs. Our second reason to highlight NightstaRx, a spinout from the University of Oxford, is that Syncona's £12 million ($20 million) will help move forward a gene therapy treatment for choroideremia, an inherited form of progressive blindness. It's the latest entry in a venture-backed field of ocular gene therapy companies, as The treatment uses a small modified virus, AAV.REP1, to deliver the correct version of the mutated gene that causes to cells in the retina of the eye. Six months after treatment with this therapy, the first six patients showed improvement in their vision in dim light and two of the six were able to read more lines on the eye chart, according to a January 16 paper in the British medical journal Lancet. The vector is currently in Phase I trials and follow-on tests are expected to begin in 2016. – Sten Stovall and Alex Lash

Best of the Rest (Highlights of Other Activity This Fortnight): Cancer MAb company Igenica announced a second closing of $14 million to its June 2012 Series C round, raising the total proceeds to $47 million…In another add-on, Sialix, which is focused on sialic acids to treat cancer and inflammatory-mediated diseases, tapped angel investors to supplement its August 2011 Series B financing with a $1.2 million tranche, bringing the round total to $4 million…Through a public offering, renal drug developer Keryx Biopharmaceuticals netted $108.2 million (including the overallotment)… Large FOPOs were also completed by other cancer-focused biotechs: Geron ($97.3 million) and Tesaro ($94.8 million)… While numerous initial public offerings were completed, there are still an abundance of filers in the wings, hoping to go public soon; among them is UK biotech Circassia, intending to float on the London Stock Exchange's Main Market, which, if successful, would be the first UK-market IPO since Clinigen Group’s £6.6 million flotation on AIM in October 2012 (UK biotech Egalet just completed its $50 million IPO, but on Nasdaq)… Canadian spec pharma Aptalis Holdings withdrew its December 2013 IPO filing on Nasdaq in favor of a $2.9 billion buy-out by Forest Laboratories… Through the sale of debt, Emergent BioSolutions raised $250 million to fund its acquisition of Cangene… Also through a debt offering, Fluidigm brought in $170 million to finance its takeover of DVS Sciences. – Maureen Riordan

Many thanqkxs to Mr. Thomas for the Scrabble photo via a Creative Commons license.

Deals Of The Week Looks at The Intersection Of Patient Empowerment, Generic Drugs, And Macaroni & Cheese

It’s a challenge to pick up an annual report or listen to a CEO present at a conference these days without reading or hearing something about “patients being at the center of everything we do.” But patient empowerment is a slippery concept. It means different things to different stakeholders.

To health insurers and policy mavens, it’s about providing consumers with information about health care delivery and payment options. To disease advocates, it’s about sparing no effort to make clinically meaningful, affordable therapies available to patients. To some investors, it’s about giving consumers a stake in the funding of medicines.

To drug companies, patient empowerment is all too often about educating consumers – via print and broadcast, online media and through the physicians they detail – about their proprietary drug and shielding them from information about competing drugs.

To explore the issue, “The Pink Sheet” recently talked with Harvard Medical School Professor Eric Campbell, a sociologist who heads the Mongan Institute for Health Policy at Massachusetts General Hospital. Among his research projects, Campbell and institute colleagues published an article in the Feb. 11, 2013 issue of JAMA Internal Medicine reporting on a survey that sheds an interesting light on patient empowerment.

The basic takeaway was that 37% of physicians surveyed (n=1,891) sometimes or often prescribed a brand-name drug at a patient’s request when a generic is available. Campbell commented, “[That] is a wasteful medical practice, and part of the reason that health care is so expensive.”

The survey turned up some interesting determinants of the surprisingly high cave-in rate. Forty-three percent of physicians in practice for more than 30 years acquiesced to patient demands for the brand drug, compared to 31% of physicians in practice 10 years or fewer. Fifty percent of internal medicine docs caved compared to specialties like pediatrics (17%), anesthesiology (20%), and general surgery (26%). And physicians in solo or two-person practices were significantly more disposed to cave to patient demands than those working in a hospital (46% versus 35%).

Not surprisingly, physician-industry relationships were positively associated with accommodating patient requests for brand-name drugs. In particular, physicians who received industry-provided food and/or beverages in their workplace or who got free drug samples were more likely to accede to patient demands. But the biggest predictor of the propensity to cave in was the frequency with which docs met with drug reps to stay up to date.

The survey leaves unanswered other questions, both about the physician-patient relationship and about how patients and physicians, as distinct groups, view generics versus branded drugs. For instance, wouldn’t drug companies and health care policy makers like to know whether patients, emboldened by information gleaned from social media and the Web, are requesting FDA-approved drugs with alternative mechanisms in place of the physician’s recommendation?

And wouldn’t all health care system stakeholders appreciate some hard data on patient views about generics? Do a majority see them as inferior to the brand? As less safe? Less prestigious? How well informed are patients about the concept of bioequivalence or about the clinical dossier required for approval of a generic drug? And the same goes for physicians – what are their views about generics?

Docs working in large, increasingly corporatized settings like hospitals or large physician groups seem to toe the line more when it comes to prescribing generics. As accountable care organizations gather steam, physicians will be economically incentivized to prescribe generics.

And other trends are at work that will nudge over-obliging physicians toward generics and away from brands. Formulary exclusion programs, such as have been instituted at pharmacy benefit managers like CVS Caremark Corp. and Express Scripts Inc., are targeting branded drugs in categories where there are generic alternatives. Caremark’s program, in its second year, has designated 70 drugs in its 2014 formulary as “not covered.” Express Scripts’ exclusion list, which began on Jan. 1 of this year, targets 48 drugs, including mega-brands like GlaxoSmithKline PLC’s Advair Diskus (fluticasone/salmeterol) and excludes more specialty products than Caremark.

The Sunshine Act, which went into effect in August 2013, prohibits drug industry value transfers to physicians. While it’s too early to say whether it’s casting an overall chill on industry interactions with physicians, some regional health systems like ThedaCare in Wisconsin are using the new law to ban drug rep visits and product samples even though neither are proscribed under the law. The trend over the past decade has been for larger academic centers to prohibit reps from leaving samples or, in some cases, from in-clinic visits altogether.

Meanwhile, the influx of generics in the wake of major brands going off-patent helped tamp down drug expenditures in 2012 from all sources of drug spending – public plans, private plans and out-of-pocket payments. The implementation of four-tier formularies, for instance among employer-sponsored plans, has helped constrain patient and physician use of brand-name drugs.

Campbell offered an insight into the poorly understood world of patient psychology as it pertains to evaluating and selecting a therapeutic option:

“I think people see generics and think of it like macaroni and cheese. If you buy generic macaroni and cheese at the grocery store, you know in advance that it won’t taste as good as the brand-name Kraft Macaroni & Cheese. You can see why some people might be reluctant to use generic drugs.” But then he hastens to point out a crucial difference: “In the drug world, they’ve actually proven that the generic macaroni and cheese is completely identical to the Kraft Macaroni & Cheese.” -- Mike Goodman

Meanwhile, here's a sampling of this week's choicest transactions, served piping hot:

Biogen Idec/UCB

Biogen Idec Inc. will be taking its multiple sclerosis portfolio into several Asian markets, along with its candidates for hemophilia A and B, under a commercialization pact signed with Belgium’s UCB SA on Jan. 30. Financial terms of the deal were not disclosed.

Under the agreement, UCB obtains the rights to commercialize six MS drugs in South Korea, Hong Kong, Malaysia, Thailand, Singapore and Taiwan, as well as Eloctate and Alprolix, Biogen’s investigational long-acting recombinant therapies for hemophilia A and B. In MS, the deal confers rights to fast-growing Tecfidera (dimethyl fumarate), blockbuster biologic therapies Avonex (interferon beta-1a) and Tysabri (natalizumab), Ampyra (dalfampridine), Plegridy (pegylated interferon-1a) and daclizumab. UCB also gets development and commercialization rights to all eight drugs in China.

During its year-end investor call Jan. 29, Biogen reported that Tecfidera had produced sales of $876 million worldwide in 2013; all but $12 million of that was realized in the U.S. The Weston, Mass.-based biotech expects Plegridy to obtain marketing approval this year in the U.S. and Europe, and Eloctate and Alprolix to obtain approval in the U.S., although it does not project meaningful revenues this year from the hemophilia drugs. --Joe Haas

Baxter/Xenetic Biosciences

Baxter International Inc. and the U.K.’s Xenetic Biosciences Inc. announced they were restructuring their 2005 collaboration to co-develop hemophilia drugs that could be administered less frequently than current therapies, perhaps once weekly. The expanded deal, announced Jan. 30, includes a $10 million equity investment by Baxter in its partner and also amends the terms of a licensing agreement, increasing the potential milestones payable to Xenetic to $100 million. The amended deal would increase sales royalties on any products reaching market, as well.

Xenetic CEO Scott Maguire said the company plans to use the money to advance its own pipeline assets, which include ErepoXen, a polysialylated formulation of erythropoietin for the treatment of anemia in pre-dialysis patients with chronic kidney disease, and OncoHist, a recombinant human histone H1.3 compound in development for refractory acute myeloid leukemia. The partnership with Baxter centers on using the biotech’s PolyXen technology platform to develop polysialylated blood-coagulation factors, including a reformulation of Factor VIII.

Baxter’s website notes the company has completed Phase I clinical trials of BAX 855, a longer-acting recombinant factor VIII protein for the treatment of hemophilia A based on the full-length ADVATE [Antihemophilic Factor (Recombinant), Plasma/Albumin-Free Method] molecule. ADVATE is approved in more than 50 countries for hemophilia A, most recently China. --JH

AstraZeneca/FOB Synthesis

AstraZeneca PLC is delving further into antibiotic research through an option licensing deal with drug discovery company FOB Synthesis Inc. The deal, announced Jan. 27, will provide AstraZeneca with access to two of FOB Synthesis’ preclinical carbapenem antibiotic programs, FSI-1671 and FSI-1686, to potentially be combined with a preclinical beta lactamase inhibitor from AstraZeneca’s pipeline. AstraZeneca will develop the compounds through Phase I and then have an option to acquire them outright. The terms of the deal were not disclosed.

Carbapenem antibiotics are a backbone treatment for Gram-negative bacterial infections, but have grown less effective against drug resistant bacteria. FOB’s novel carbapenem products have demonstrated strong activity against Gram-negative infections in preclinical models. Combining an antibiotic like carbapenem with a beta lactamase inhibitor has been shown to help break down bacteria’s resistance to the drugs.

The field is one AstraZeneca knows well. The company already has a novel beta lactamase inhibitor avibactam in Phase III development in combination with the antibiotic ceftazidime in collaboration with Forest Laboratories Inc. The two are studying the drug in five Phase III studies for Gram-negative infections.

While the market for antibiotics that address Gram-positive infections has seen several new entries in recent years and there are several more antibiotics in late-stage development, the market for antibiotics that address Gram-negative infections has been slower to develop while the need for new treatments has grown dire. At least one analyst, ISI Group’s Umer Raffat, puts the market opportunity for antibiotics that treat resistant Gram-negative infections at $2.5 billion.--Jess Merrill

Galectin/SBH

Galectin Therapeutics Inc. enjoyed a bump in its stock price during January, thanks in part to fellow fibrosis treatment developer Intercept Pharmaceuticals Inc.’s clinical success. On Jan. 27, Galectin teamed with cell-based assay developer SBH Sciences to form a joint venture that will investigate oral small-molecule galectin-3 inhibitors.

The two companies will share ownership of newly created, Georgia-based Galectin Sciences LLC. The company will develop a series of compounds SBH recently discovered that show potential in inhibiting galectin-3, one of several galectin proteins implicated in inflammatory diseases, organ scarring disorders and cancers. The collaborative venture will also attempt to discover new compounds using both companies’ expertise. Norcross, Ga.-based Galectin Therapeutics has two clinical compounds currently under development, but both are intravenous rather than oral.

Natick, Mass.-based SBH has provided contract research services to Galectin Therapeutics for more than a decade. Founded in 1997 to develop mammalian-derived recombinant cytokines, SBH now performs in vitro drug development and is a vendor of cytokine-measuring bioassays. Galectin Therapeutics was established in 2000, and was known as Pro-Pharmaceuticals Inc. until 2011. --Paul Bonanos

Actavis/Zhejiang Chiral Medicine Chemicals

Actavis PLC inked a deal with Zhejiang Chiral Medicine Chemicals Co., Ltd to divest its joint venture in China, Actavis Foshan China, the company announced Jan. 24. Terms of the deal were not disclosed. Weeks earlier Actavis CEO Paul Bisaro had said China was an "unfriendly environment" for biopharmaceuticals and that he would pull out of the country.

During the company’s Jan. 31 analyst day in New York, the company said it would continue operations in China with business partners, but it would focus on other emerging markets such as Russia, Brazil, Turkey and Southeast Asia. Global Operations President Bob Stewart told analysts that as the company focused more on supply chain rather than manufacturing, it took out a number of assets through sales and divestitures, and it would continue to do so. Along those lines, Actavis sold a facility in India, a JV in Russia, exited out of two facilities in China and divested operations in China.

“We will always make modifications based on portfolios,” Stewart said, adding, “the map continually evolves.”

"Actavis is focused on strengthening our investment in high-growth markets where our size and scale allow us to maintain a competitive presence with the leading companies in the market," said Actavis Pharma President Sigurdur Oli Olafsson.  "Our operations in Foshan were limited in scope and we believe that their value will be better capitalized on by Chiral, which will add manufacturing and marketing capabilities allowing them to expand their portfolio and strengthen their position in the Chinese market.”

CEO Paul Bisaro told analysts that the company has roughly $2 billion in cash and will look for strategic M&A that will focus on geographic expansion. --Tamra Sami

Deals Of The Week: New Academia/Industry Partnership Template In Eisai/JHU Collaboration?

As founder and president of a coalition working to enhance academic drug-discovery and collaborations between academia and industry, Barbara Slusher has a good idea of the advantages and pitfalls of such arrangements. She points to ongoing work between Japan’s Eisai and Johns Hopkins University, where she serves as director of neurotranslational drug discovery at the medical school’s Brain Science Institute, as a potentially more mutually rewarding template for academic/industry tie-ups.

In October 2011, Eisai signed a five-year drug-discovery alliance with JHU, initially slated to focus on central nervous system targets. Slusher, who heads up the Academic Drug Discovery Consortium (ADDC) in addition to her responsibilities at JHU, said the partners are about 18 months into a partnership currently focused on two targets, one undisclosed. The other is aimed at identifying drug-like molecules that inhibit xCT, a glutamate cysteine exchanger that Eisai believes could offer potential in combating inflammatory disease.

Barbara Slusher, JHU Brain Science Institute
and Academic Drug Discovery Consortium

Under this alliance, written to last the greater of five years or to the completion or termination of all related projects, the Brain Science Institute reviews target research throughout JHU’s roster of researchers and presents potentially novel and interesting targets for Eisai’s review. Eisai then selects the targets of greatest interest for the high-throughput screening collaboration.

The compound libraries generally available to academic researchers are not as large, diverse or drug-like as those found within a biopharmaceutical company’s library, developed through years of wide-ranging R&D work, Slusher said. Slusher came to JHU in 2010 after working in drug discovery at five biopharma companies, including Eisai, and set a goal of establishing collaborations offering greater potential for academic discovery work.

“One of the things that my team did when we first came to Hopkins was try to establish a relationship with a pharma company such that if any targets we identified were of interest to the company, we would develop a high-throughput screening assay, share that with the company, and they would screen using our assay and compound library,” she said.

“At the point that they find hits, they then transfer those back to my team here and we do all the drug discovery and chemistry to identify a compound to get to the clinic,” Slusher added. “At that point, Eisai has first rights to license that compound.”

“The exciting thing about this collaboration is that it is truly a win/win,” she continued. “From my perspective, academia is excellent at identifying new targets of therapeutic interest, but our screening ability is limited due to the size and quality of the compound libraries available. Our collaboration with Eisai gives us access to a real pharma library. From the Eisai side, the collaboration provides access to new targets and novel therapeutic approaches.”

Lynn Kramer, Eisai’s chief clinical officer and president of its Neuroscience and General Medicine Product Creation Unit (PCU), concurs, saying the JHU tie-up and a similar partnership with University College London, offer Eisai “a novel target identification program that incorporates early drug development.”

“For us, it expands the novelty of our programs and it’s designed to utilize the best skills from each of the two partners to facilitate drug development and pass the compounds back and forth between our strengths and their strengths,” he said. The Brain Science Institute is a little unique from an academic perspective in that it has a number of people who have a lot of drug-development experience in pharmacokinetics, medicinal chemistry, toxicology and animal models,” skills that increasingly are available in top academic medical centers as they try to move up the research value chain.

Lynn Kramer, Eisai

Slusher’s team sorts through the most-promising research from a consolidated team of about 550 researchers to find target prospects for Eisai. His company therefore has access to the most concentrated group of neuroscience researchers outside of Boston, but with a single point of contact and first rights to option programs, Kramer said. JHU advances the programs selected by Eisai as far as the IND-ready stage, with pre-arranged terms for licensing fees, milestones and royalties on those assets it takes in-house.

“Eisai has the ability at multiple stages to come in and acquire the project,” Slusher said. “Depending upon when they in-license, the value derived by the university varies. If Eisai in-licenses the drugs early in the process, Johns Hopkins derives less value than if they in-license late in the process. It’s correlative to the amount of effort we’ve put in.”

About 18 months into the collaboration, JHU has developed assays for the two targets, Eisai has conducted high-throughput screening and is now sending first hits back the university for the next stages of work. “We probably have a year or two of chemistry and drug discovery to do before leads will be identified as options for the company,” Slusher noted. “This whole process probably likely will take three to five years.”

Kramer would not specify Eisai’s internal goals for producing a first clinical candidate from the partnership, other than to say “our goal is in the not-too-distant future – by that I don’t mean in a year. This takes a while.”

In general, Kramer thinks further collaboration with academia will be beneficial for his company. ADDC, founded in 2012, intends to serve as a clearinghouse for both academia and industry on research taking place within U.S. and international drug research programs. It doesn’t do tech-transfer work itself, but aims to make it easier for academics and biopharmaceutical companies to work together.

“You see from our two associations that they’re very flexible,” Kramer said. “We have gotten away from a lot of the intellectual property issues that used to plague the industry, because we’re really interested in molecule IP, not target IP, which used to lead to years of back and forth and impaired academic development. By getting over that hurdle, I view the academic groups as our ‘bread-and-butter’ for novel targets. It’s very hard in the industry to develop a novel, previously unidentified target – it’s too expensive and takes too long.”

It wasn’t just the academic world that biopharma companies were dealing with this past week, though. Read on for …

Teva/NuPathe: Teva expects to launch the migraine patch Zecuity (sumatriptan iontrophoretic transdermal system) in the first half of 2014 after acquiring the developer, NuPathe. The two announced the acquisition plans Jan. 21, with Teva’s $3.65 per share offer, approximately $144 million upfront, trumping rival bidder Endo’s proposal of $3.15 per share. Teva, which needs near-term revenue generators, gains a new product to add to its specialty central nervous system portfolio. FDA already approved the drug in January 2013, but NuPathe held out on commercializing it in order to find a partner. The drug is the only patch approved for migraine. The Israeli pharma’s offer represents a significant 58% premium over the $2.30 NuPathe shares closed at on Dec. 13, the last business day before Endo announced its intentions to buy the company. But it doesn’t offer much financial reward for longer-term investors. NuPathe’s stock opened at $3.80 about a year ago, on Jan. 18, the day after Zecuity was approved by FDA. NuPathe investors could receive additional payments, however, of up to $3.15 per share based on the future sales performance of Zecuity. Investors will receive $2.15 per share if net sales of the product are at least $100 million in any four consecutive calendar quarters on or prior to the ninth anniversary launch date. Another $1.00 per share in cash is payable if sales are at least $300 million in any four calendar quarters over the same time period. - Jessica Merrill

Par Pharmaceuticals/JHP Pharmaceuticals: Par Pharmaceutical is looking to expand the types of generic drugs it can offer beyond the solid, oral-dose pills it has been producing for years. The Woodcliff Lakes, N.J.-based company announced Jan. 21 that is has entered into an agreement to acquire privately held JHP Pharmaceuticals for $490 million in cash, a 2.5x return on investment for JHP’s main investor, private equity firm Warburg Pincus. Par has arranged for $505 million in debt financing to cover the deal and related costs. JHP and all of its assets, including a sterile manufacturing facility in Rochester, MI, will become a wholly owned subsidiary once the deal closes later this quarter. JHP was launched in 2007 when it acquired biologics contract manufacturing assets acquired from King Pharmaceuticals (now part of Pfizer) for $92 million. JHP performs contract manufacturing services worldwide for pharma and biotech customers, producing sterile injectables that require liquid, lyophilized and suspension formulations. The King deal also included branded hospital and acute-care drugs that JHP distributes. The main appeal of JHP to Par is the 14 specialty injectables that it already has on the market, as well as 30 additional candidates it has in its pipeline. Par is looking to expand into high-barrier-to-entry injectable generics as some of the major players in that space falter due to manufacturing problems. - Lisa LaMotta

Biocon/Advaxis: India’s Biocon and New Jersey biotech Advaxis announced an exclusive licensing pact Jan. 22 for co-development and commercialization of ADXS-HPV, a novel cancer immunotherapy for treatment of human papillomavirus (HPV)-associated cervical cancer in women. The deal covers India and key Asian emerging markets and gives Biocon access to Advaxis’ innovative and proprietary technology for the development of other novel therapeutics. Advaxis recently completed Phase II clinical trials in patients with recurrent cervical cancer in India, and the immunotherapy also is being evaluated in three clinical trials for HPV-associated cancer like recurrent advanced cervical cancer, head and neck cancer, and anal cancer. A spokesperson for Advaxis said the company will receive double-digit royalties on all sales of its immunotherapy product. The biotech will have exclusive rights to supply ADXS-HPV to Biocon, and Biocon will be required to purchase its requirements of ADXS-HPV exclusively from Advaxis at the specified contract price, which may be adjusted periodically. In addition, Advaxis will be entitled to a “six-figure” milestone payment if net sales of ADXS-HPV for the contract year following the initiation of clinical trials in India exceed certain specified thresholds. - Vikas Dandekar

McKesson/Celesio: In a “No Deal” that has turned into a deal, 10 days after saying its proposed acquisition of German drug wholesaler Celesio had fallen through, U.S. drug wholesaler McKesson has reached agreements that will allow it to complete the purchase after all. McKesson launched its bid to greatly expand its global reach through Celesio in October 2013. However, on Jan. 13 it announced that the deal could not be completed due to its failure to acquire 75% of outstanding Celesio shares through a tender offer. Then, in a Jan. 23 release, McKesson said it had reached an agreement with Franz Haniel & Cie. GmbH to acquire its entire holding of Celesio shares at €23.50 per share and another agreement with an affiliate of Elliott Management to acquire Celesio convertible bonds, which will be enough to give McKesson more than 75% ownership of Celesio on a fully diluted basis. The transactions are expected to close within 10 business days. McKesson plans to launch a voluntary tender offer to purchase shares from the remaining minority shareholders shortly after the close of the other transactions. The company said it will consolidate the financial results of Celesio during its fiscal fourth quarter ending March 31, and McKesson’s earnings will reflect its proportionate share of Celesio’s earnings. It expects to realize annual synergies of between $275 million to $325 million four years after the close of the deal. - Scott Steinke



Photo credits: Johns Hopkins University, Eisai Co. Ltd.