FDA is holding more advisory committees than ever and it’s hard for some not to get lost in the mix.
Take the May 19 Endocrinologic & Metabolic Drugs Advisory Committee meeting, for example. The committee was convened to review data from an outcomes trial that was more than a year old, with no overall safety signal, for a class of drugs that have been on the market for years.
Nevertheless, the panel meeting proved to be an important one, not only for the sponsor involved, Abbott Laboratories, but for drug developers in general.
To recall, the advisory committee was convened to review the results of the ACCORD-Lipid trial and how they relate to the approved indication for Abbott Laboratories’ Trilipix (fenofibric acid) for coadministration with a statin.
The results from the National Heart, Lung and Blood Institute-conducted ACCORD study were released in March 2010. The trial was the first major cardiovascular outcome trial to evaluate the combination of fenofibrate (Abbott’s Tricor) with a statin in a diabetic population and compare it to statin monotherapy.
After an average follow-up of 4.7 years, there were 291 (10.5%) major fatal or nonfatal cardiovascular events in the fenofibrate-simvastatin therapy study arm and 310 (11.3%) events in the simvastatin monotherapy study arm; the results were not statistically significant.
Not a great result for Abbott, to be sure, considering the company’s Trilipix/Tricor franchise generates over $1 bil. in US revenue. Panelist William Hiatt (University of Colorado Denver), a former chairman of the Cardio-Renal Advisory Committee, was blunt: “It’s a clearly negative trial.”
Abbott was clear upfront that the company had nothing to do with ACCORD. James Stolzenbach, Dyslipidemia Divisional VP, who handled the MC duties for the company during the sponsor presentation, made clear that Abbott was not seeking a new indication for Trilipix nor did the company conduct or have a role in conducting the ACCORD study; Stolzenbach “apologized in advance” to the committee if Abbott could not answer all the questions asked of them because the firm was not privy to the full dataset.
Stolzenbach’s comments underscored the fact that Abbott was a bystander for a critical regulatory re-review of one of its most important product franchises. In essence, the company was watching while one agency, FDA, was figuring out what to do with the results of a government-run study conducted by another agency, NIH.
The way the advisory committee review was set up and played out, it appeared clear that FDA has wanted Abbott to conduct another trial of a fibrate/statin combo for some time and the way to do it was take the question to panel in the absence of an overt safety signal that would trigger the agency’s authorities under the FDA Amendments Act.
In a memorandum dated April 25 from Division of Metabolism & Endocrinology Products Deputy Director Eric Colman to the committee, a key question—question 6—was originally proposed with five options for the committee to vote on and the committee could recommend more than one action:
a) allow continued marketing of Trilipix’s indication for coadministration with a statin without revision of the labeling;
b) withdraw approval of Trilipix’s indication for coadministration with a statin;
c) allow continued marketing of Trilipix’s indication for coadministration with a statin with revision of the labeling to incorporate the principal findings from ACCORD-Lipid;
d) Require the conduct of a clinical trial designed to test the hypothesis that, in high-risk men and women at LDL-C goal on a statin with residually high TG and low HDL-C, add-on therapy with Trilipix versus placebo significantly lowers the risk for MACE; and/or
e) other.
But in the draft questions to the advisory committee, question 6 was broken up into two parts, A and B. Question 6A asked the committee to vote first (“yes” or “no”) on whether FDA should require a new study as described above in d). Question 6B asked the committee to vote for only one option of the following: no change to the Trilipix indication, withdraw the indication for coadministration with a statin, or allow continued marketing of Trilipix with a revision of the labeling to include the principle findings from ACCORD.
The panel voted unanimously (13-0) that Abbott should conduct another clinical study. Specifically, the trial should study the hypothesis that in high-risk men and women at LDL-C goal on a statin with residually high triglyceride levels and low HDL-C, add-on therapy with Trilipix versus placebo significantly lowers the risk of major adverse cardiovascular events (MACE).
Now, it appears as though Abbott will have to conduct a large clinical study that, if positive, would show an outcome benefit for a more defined patient population than the broader FDA-approved indication the company already has.
We asked Cleveland Clinic cardiologist Steve Nissen, an occasional Cardio-Renal panelist, for his take on the ACCORD study. “These drugs have done amazingly well in the absence of any evidence of a health outcome benefit,” he said. “Trilipix was approved to ‘reduce triglycerides’ based upon the premise that high trigs are associated with pancreatitis. Only one problem – no one has ever demonstrated that lowering trigs with fenofibrate or fenofibric acid actually reduces the incidence of pancreatitis.”
Nevertheless, the Trilipix advisory committee review highlighted the lack of control Abbott had over the review of its product. That outcome could befall other sponsors as they are further removed from postmarket evaluations of their products.
Call it Bystander Syndrome.
Tuesday, May 24, 2011
Abbott Trilipix Demonstrates the Sponsor-As-Bystander
Monday, May 23, 2011
Deals Of The Week Presents Last Week's Deals
Not to go all eschatological on you, but this blogger owes the IVB readership a confession. Religious broadcaster Harold Camping's exhortations (and innumerable billboards and emails) announcing May 21, 2011 as the onset of the Rapture and the ensuing end-of-days offered this blogger an excuse to book out early to enjoy a last supper with friends and family. (At which there was much speculation about the soon-to-be revealed identities of the four horsemen.)
In the blogger's defense, the signs were all there. (And no, we aren't talking about cataclysmic earthquakes, the rise of either false prophets (Beck or Trump?) or the Mississippi River, or the sky-rocketing home prices in the Bay Area tied to LinkedIn's IPO.) How can you deny it's not the end of the world, when the Cleveland Indians are leading their division, Oprah's pulling the plug on her daily tv show, and reality stars like Jersey Shore's Snooki command speaking fees higher than Nobel prize winning writers?
Thus, in the hopes of cramming celebratory fun into the final hours of May 20 (we had until 11pm PT by dear Harold's calculations), DOTW seemed a wee bit, well, unnecessary.
In the face of Armageddon, who really cares about Shire's decision to diversify into regenerative medicine with its non earn-out purchase of Advanced BioHealing? (Dermagraft, after all, can't be used to treat the gnashing of teeth.) And, really, with the world absolutely ending on Oct. 21, it's not like Takeda needs Nycomed to bridge its 2012 Actos patent cliff. (Now if Nycomed sold an OTC product to repair the rending of hair, we might pay attention given its apocalyptic best-seller potential.)
Oh wait, it's Monday May 23-- and we're still here (and so is everyone else). Damn. That means we'll be writing this column until at least December 21, 2012, which REALLY, TRULY is the end of days. With apologies for our tardiness, it's time for another edition of...
Takeda/Nycomed: The Rapture may not have come to pass but Takeda/Nycomed did. On May 19, after a week of speculation and a press release warning journos not to get too hasty, Takeda announced its €9.6 billion ($13.6 billion) purchase of privately-held Nycomed. As IN VIVO Blog told you last week, the deal satisfies a number of strategic and financial imperatives for Japan's largest drugmaker, as it faces generic competition to best-selling diabetes drug Actos from 2012 and seeks to expand its footprint beyond Japan and the U.S. The deal doubles the Japanese firm's European sales, jump-starts its emerging markets presence and provide an immediate 30% revenue boost, increasing operating income by more than 40%, according to the company. Swiss-based Nycomed brings to Takeda not only the fruits of recently-launched chronic obstructive pulmonary disease drug Daxas, but also a more diversified product mix, including OTC and branded generics, regulatory expertise, and an entrepreneurial culture that Takeda President and CEO Yasuchika Hasegawa said he hoped could "vitalize" his firm. As such, the deal helps accelerate the 2011-2013 mid-range growth plan unveiled by Hasegawa earlier this month. The transaction – worth slightly more than initial reports suggested – values the Swiss-based Nycomed at about 3.4 times its 2010 revenues, excluding its U.S dermatology business, which is not part of the deal. The higher price tag means Takeda will take a ¥600-700 billion ($7.33 billion to $8.55 billion) loan to finance the deal, which is the largest yet in the Japanese firm's aggressive ongoing bid to expand its presence and pipeline through M&A. --Melanie Senior
Shire/Advanced BioHealing: Shire/Advanced BioHealing marks the return of the IPO as a stalking horse, a private M&A deal with NO earn-outs, and an ROI greater than 10x for certain investors. True venture like returns --it must be the end of days!! Just before its planned debut on the New York Stock Exchange, Advanced BioHealing instead agreed to a $750 million all cash offer from the specialty pharma Shire, which has a history of using acquisitions to jump quickly into new lines of business. With ABH, Shire dives into regenerative medicine, grabbing the commercial product Dermagraft, a patch that uses natural cells called fibroblasts to heal diabetic foot ulcers. (Dermagraft has a long and painful history, which you can read about in greater detail here.) The current deal builds on Shire's willingness to pay healthy premiums for companies that it sees as cornerstones to new lines of business. The most striking example is Shire's 2005 purchase of Transkaroytic Therapeutics for $1.6 billion, an acquisition that gave the pharma access to enzyme-replacement drugs for rare diseases and a technology platform for further growth. As part of Shire, ABH will be run as a semi-autonomous unit, with retention of top management one of the hoped for outcomes post-integration. The all-cash offer was a 25.6% premium to the amount ABH was expected to raise had it debuted at $15-a-share, the midpoint of its expected range. Since the IPO was reportedly oversubscribed and pricing was on the upswing, a public debut might have resulted in a larger return to investors -- eventually. Still, ABH's backers, which included Canaan Partners and Safeguard Scientific had to be more than satisfied with the terms-- and certainty of exit --offered by the Shire take-out. Canaan apparently reaped a 15x return on the deal, while Safeguard's ROI was a not too shabby 13x. -- Alex Lash and EL
Roche/Merck:The two current heavyweights in hepatitis C therapy got together May 17 with a plan to co-promote Merck’s newly approved protease inhibitor Victrelis , in what was widely viewed as an effort to squeeze upstart Vertex Pharmaceuticals out of the HCV market despite superior efficacy data for its protease inhibitor, Incivek. Boceprevir was approved by FDA on May 13; telaprevir's PDUFA date is today, May 23. Under the non-exclusive agreement, Roche reps will include boceprevir as part of their promotion to health care providers on the use of Pegasys in triple combination therapy for HCV. Pegasys, part of the current two-drug backbone of HCV therapy, commands about 80% of the peg-interferon market in HCV, far ahead of Merck’s competing product, PEG-Intron. Roche will not bundle boceprevir with Pegasys, however, and the deal does not preclude Merck from marketing its HCV drugs in a discounted bundle. (Nor does it preclude Roche from inking a deal with Vertex though analysts think that's unlikely.) The two peg-interferon products will continue to be marketed separately, both companies said, and Merck added that the collaboration will not affect the pharma’s economics for its new product. Merck and Roche, each of which has other HCV compounds in clinical development, also will test their compounds together in combination therapy trials.--Joseph Haas
Stryker/Orthovita: Yes, dear readers, a device deal, which means the rapture must be coming (even though Harold Camping's calculations this time around were off). In 2010 IN VIVO wondered if Orthovita, hit hard by scientific debate about the merits of vertebral compression fracture treatment and allegations of fraud, was giving up its grand dreams. Thanks to Stryker’s $316 million acquisition last week, its independent efforts at becoming the specialty spine player are over. But with a take-out price tag that included a 41% premium, did Orthovita's investors win? The deal allows Stryker to pair its existing hardware with Orthovita’s Vitoss bone graft and Cortoss bone filler. The former can be used along with Stryker’s spinal implants while the latter might serve as a hook to help sell Stryker’s new vertebral augmentation products, giving the med-tech giant another way to differentiate itself from Medtronic’s line of Kyphoplasty products, which use traditional bone cement polymethylmethacrylate (PMMA.)If Orthovita’s products live on, it's fair to say the company never recovered from a series of er, crushing (compressing?) blows. First, in 2009, New England Journal of Medicine published two studies suggesting vertebroplasty – the filling of fractured vertebra with cement (or Cortoss) – wasn’t an effective method of relieving pain from vertebral compression fractures. The studies were published just two months after the company received FDA approval for Cortoss. Then a Medicare fraud investigation by Department of Justice forced vertebral compression procedures to move from in-patient – where Orthovita’s Vitoss and other materials are currently used -- to outpatient settings. The shift caused problems with pricing and, analysts say, distracted Vitoss sales reps. In the end, economic pressures that have been a drag on the entire orthopedics sector also weighed heavily on Orthovita, which had high hopes that Cortoss sales would quickly ramp total sales to $300 million annually. -- Tom Salemi
ThermoFisher/Phadia: The European private equity firm, Cinven, is to exit ownership of the Swedish in vitro diagnostics company, Phadia, after four years by selling it to Thermo Fisher Scientific, reportedly more than trebling its investment in the process. US laboratory equipment manufacturer Thermo Fisher Scientific Inc. aims to strengthen its allergy and autoimmune disease diagnostics business by acquiring Phadia for a hefty €2.47 billion ($3.5 billion) in cash, announced May 19. (In case you are keeping track, Phadia was spun out of Pharmacia in 2004 when Pfizer acquired the parent company, and was acquired by Cinven in 2007 in a deal that valued the company at €1.285 billion.) Phadia markets complete blood test systems to support the clinical diagnosis and monitoring of allergy and autoimmune diseases and chalked up 2010 revenues totaling €367 million thanks to strong sales in Europe and emerging markets. Thermo Fisher is using a mixture of debt financing from Barclays Capital and cash to fund the Phadia acquisition, which is expected to complete in the fourth quarter, and be immediately accretive to Thermo Fisher's adjusted earnings per share. The deal completes a busy week for Thermo Fisher, which completed its $2.1 billion acquisition of Dionex on May 17 and one day later announced the $35 million purchase of UK player Sterilin.--John Davis
Image courtesy of flickrer WarmSleepy via a creative commons license.
Friday, May 20, 2011
Market Access: Pharma's Hot Potato?
Strangely enough, given that market access is nowadays probably the single most important determinant of near-term (and indeed any-term) commercial success for pharma, there weren't that many companies attending a recent event dedicated to this topic. Instead, it was mostly consultants -- gearing up one supposes to later suck hefty fees out of said absentee firms by relaying information on how to convince payers to reimburse their drugs. (Which is what market access is, in case you'd also missed it).
Then again, maybe it was understandable that many pharma stayed away: the messages aren't happy ones. The various overhauls of Europe's market access systems (that's to say, health technology assessment methods and processes) have already had "major consequences" on drug pricing, said Pierre-Phillippe Sagnier, VP Global Market Access at Bayer Schering Pharma.
Yet it remains unclear precisely what criterial those overhauling systems use to judge the value of new drugs. Thus, in Germany, Europe's largest and arguably most influential market, all new products are now subject to a compulsory cost-effectiveness exam after just six months on the market. Moreover, while this exam determines a drug's pricing fate, the marking system remains opaque.
That matters because many European countries look to Germany when making their own pricing decisions and drug-value judgments. Thus, a bad mark in Berlin could spell disaster for a product in Europe as a whole. (Tip: Germany's hot on relative cost-effectiveness, so you can mostly forget placebo-controlled trials.)
On the other hand, most European countries do nevertheless now have their own HTA systems, with their own particular methods and biases. That means each requires a bottom-up information feed from local execs and a degree of regional tailoring. Pharmas still aren't that comfy with the trend towards regional empowerment even at the marketing level; now it has to consider regional input during development to make sure it generates appropriate data.
Partly because of the complexities required to account for these regional difference and partly because big drug makers are resistant to change, pharma apparently have little idea how to fit the market access function into their traditional basket of activities. "Market access works across all functions; it's essentially an integrating function," commented Janice Haigh, Senior Director, Pricing & Market Access for Astellas Pharma Europe. She's trying to figure out market access for the Japanese firm, which has shifted from part of Operations to Marketing. She and other executives suggest that, at the moment, no-one's really managed to position market access right. Bayer has moved it about from development to commercial and is now trying to integrate the two. "It will take some time," says Sagnier.
There are some ideas trickling through, including better mechanisms to address the global vs. local disconnect that can arise in market access. Astellas, for instance, groups payers into five or six types, according to Haigh, which share similar priorities.
But there are also signs of a wait-and-see attitude that most pharma can ill afford. Regarding the the German system, for instance, where the first outcomes are expected in August 2011, "we're quite glad we are not launching anything in 2011/2012; we're happy to see how other drugs get on, " admitted Bayer's senior market access manager, Jens Lipinski.
Top management at several Big Pharma are talking big talk about market access. It's unclear, from this blogger's lunch chats during the above-mentioned meeting, that this world view has trickled down through the ranks.
In reality shifting the commercial mentality away from pushing drugs at doctors and towards building relationships with national and regional payers requires new skills. So too, does dreaming up risk-sharing deals and embracing integrated care contracts. It's tough stuff that will remain a hot potato no one department wants to own -- let alone a subject that can attract conference attendees.
image by flickrer Jess Gambacurta used under creative commons
Friday, May 13, 2011
Deals Of The Week: Hot Pursuit
Takeda is in hot pursuit of Swiss biopharma Nycomed – or maybe not. After the rumorville erupted Thursday May 12 about a possible $12 billion take-out of the private-equity owned Nycomed (which has been on the auction block for months if not years), Takeda tried to squelch the speculation.
In a 96-word statement posted on its website Friday May 13, Japan’s largest pharma noted, “The company would like to make clear that Takeda has not agreed to any such an agreement as suggested by certain news publications…there is nothing that needs to be announced at this point.”
It’s customary practice for companies not to comment on pending M&A rumors (that’s what the bankers are for). And who really wants to announce the biggest deal in their company history on Friday the 13th? That’s like asking for bad integration karma.
Still, Takeda’s action ain’t going to do much to stop the whispers. Various news outlets are simply using the statement to point out that the inevitable persons familiar with the matter say a deal is in its final stages “but might take time to conclude.”
Indeed, as we pointed out in this story from “The Pink Sheet” DAILY, one of the reasons the rumors have garnered so much traction – aside from the juicy valuation Takeda allegedly places on the company – is the logic of the tie-up. As the 15th biggest pharma worldwide, Takeda has been trying since its $8.8 billion take-out of Millennium Pharmaceuticals to become a significant multi-national player. That 2008 acquisition did more than expand the Japan co’s presence in oncology, a core therapeutic area. It also dramatically increased the company’s US footprint at a time when the its joint venture with Abbott was winding down, and bolstered Takeda’s senior executive team with the likes of Deborah Dunsire, Christoph Bianchi, and Nancy Simonian.
In the same vein, a Nycomed buy would significantly boost Takeda’s European footprint (one of Takeda’s long-stated goals), while also jump-starting its emerging markets strategy (another more recently stated goal). Like most Japanese pharma, Takeda has been behind its multinational counterparts when it comes to inking deals in various EMs. But with a single deal, the Japan drug maker could increase the percentage of sales revenues coming from this increasingly valuable part of the world. Almost 40% of Nycomed’s $4.5 billion revenues from 2010 came from emerging territories, and the company forecasts that share to increase to 60% by 2015.
It’s true that Nycomed’s therapeutic focus on respiratory diseases and inflammation doesn’t quite chime with Takeda’s areas of interest. But Nycomed’s expertise in GI seems like a natural fit; the company got its start in 1895 manufacturing and selling bismuth – the basic ingredient in Pepto-Bismol. The ability to leverage Nycomed’s strong existing OTC biz is also likely an allure; Nycomed demonstrated its prowess in this arena in 2009 when it scored Europe’s second centralized Rx to OTC switch for pantoprazole. (Coincidentally that’s the same year OTC versions of Takeda’s blockbuster PPI Prevacid hit the market.)
Certainly if Takeda wants to ramp up quickly in both Europe and EMs, there aren’t too many specialty cos that are affordable – and available for purchase. Let’s not forget that Nycomed’s ownership structure – PE firm Nordic Capital holds more than 40% with Credit Suisse’s DLJ Merchant Banking, Coller International Partners, and Avista also having stakes – means there’s increased pressure on the privately-held Nycomed to create some exit options. Thus, if the Takeda deal doesn’t materialize, it’s a fair bet another suitor for Nycomed will emerge.
Stay tuned to IN VIVO Blog as the chase for Nycomed evolves. Meantime there’s no need to delay the deal making gratification. Ever in pursuit of the week’s top deals, we bring you – signed, sealed, and delivered – another edition of ...
Alkermes/Elan Drug Technology: Nycomed isn’t the only European company that’s been looking for a buyer. In the week’s biggest confirmed deal, Alkermes announced it has snapped up Elan Corp’s Elan Drug Technology group in a cash and stock deal worth nearly $1 billion. The new company will be incorporated in Dublin but have a decidedly US look: Richard Pops, Alkermes’ current chairman and CEO will retain those job duties, while EDT’s CEO Shane Cook becomes president of the new entity. The acquisition could be a transformational event for Alkermes, which has spent the last few years trying to step out of the shadow of some big name partners (Eli Lilly, Amylin, Johnson & Johnson) and dodge the negative Exubera press that gave drug delivery a bad name. The transaction certainly deepens the drug delivery technology capabilities within Alkermes, but that’s not the story line executives are playing up. In an interview with “The Pink Sheet” DAILY, Pops was pretty clear that he didn’t want Alkermes tarred with that brush. Indeed, the biotech has spent the last several years trying to reinvent itself, emphasizing its CNS-focused product development expertise a la Vivitrol. In this case, the drug delivery expertise is a means to that end – and a pretty lucrative one. Technology from the newly combined EDT/Alkermes is embedded in more than two dozen commercial products, from Acorda’s Ampyra to J&J’s anti-pyschotics Invega Sustenna and Risperdal Consta to Eli Lilly/Amylin’s Bydureon. That means there are some nice royalties coming the new Alkermes’ way to support its drug development ambitions. As Pops told PSD, “it takes us immediately to a cash-flow positive company.” And it’s hard to argue with a balance sheet in the black.—Lisa LaMotta and EL
Shire/Heptares: The hope that new technologies can crack intractable targets continues to lure big pharma to the deal making table. But in the case of this week’s early stage R&D alliance, a tie-up between Shire and the GPCR-focused start-up Heptares, that allure wasn’t so strong that the pharma in question didn’t want to hedge its risk. Thus, Shire – not usually one to reach so far back in the value chain – has agreed to take an exclusive option on a novel adenosine A2A antagonist currently in preclinical development at Heptares for the treatment of the symptoms of Parkinson's disease. (It has the potential to treat other CNS diseases as well.) Of course, Shire already has significant business in the CNS area, with the ADHD therapy, Vyvanse (lisdexamfetamine), being its top-selling product. The financial terms of Heptares’option agreement with Shire weren’t disclosed, but include an upfront payment and, according to Heptares’ CEO Malcom Weir, significant downstream royalties. There’s also a separate payment owed if and when the option is exercised. This is the second big pharma alliance Heptares has inked in as many months; in April it announced a tie-up with Takeda worth £4.5million upfront (also CNS focused, though that particular target was not disclosed). Heptares also isn’t one to shy away from options. In 2009, eight months after the Swiss pharma’s Novartis Option Fund invested in the biotech’s $30 Series A, Novartis and Heptares announced an option-based alliance that requires the start-up to produce small molecules against a GPCR of the pharma’s choosing.–John Davis & EL
Allos/Mundipharma: Allos Therapeutics achieved a key strategic goal May 10, announcing a co-development and commercialization pact for Folotyn with the U.K.’s Mundipharma International Corporation Ltd. The deal is worth $50 million upfront to Allos, and the smaller firm gets to keep 100% of the US market. (Mundipharma has exclusive ex-US rights.) Folotyn, a folate analog metabolic inhibitor, was approved under accelerated review by FDA in 2009 for relapsed or refractory peripheral T-cell lymphoma and remains the only drug approved in the US for this indication. (Currently there are no approved drug therapies in Europe.) Still that hasn’t helped sales of the medicine, which are most diplomatically described as tepid. Folotyn’s US approval came with a requirement for four post-marketing trials, including studies that measure efficacy in previously undiagnosed PTCL patients and in combination with bexarotene in relapsed or refractory cutaneous T-cell lymphoma. Importantly, the deal requires Mundipharma to fund 40% of the costs of those trials. The cost-sharing would be split 50/50 if Folotyn garners a positive nod from the European Medicines Agency, an event that could happen in 2012. Allos also can earn commercial progress- and sales-based milestones totaling up to $310.5 million under the partnership, along with tiered double-digit royalties on sales occurring in Mundipharma’s licensed territories. Meanwhile, Allos’ monopoly in the U.S. may be short-lived, as Celgene Corp. has a June 17 PFUFA date for its application to add progressive or relapsed PTCL to the label of its HDAC inhibitor Istodax, which already is approved for second-line therapy in cutaneous T-cell lymphoma.—Joseph Haas
Pfizer/Zealand: We’re late to this break-up, which was apparently first tipped when Zealand pharma released its IPO prospectus back in 2010 and again in the biotech’s annual report, but it finally caught our eye yesterday. (Hey, the third time’s the charm.) As part of an announcement about its first quarter results, the Danish biotech said yesterday it had regained rights to danegaptide, a gap junction modifier with potential in atrial fibrillation, from former partner Pfizer. Pfizer got its mitts on the project as part of the Wyeth acquisition (Wyeth and Zealand originally teamed up in 2003) and has since made no bones about its desire to exit cardiovascular research. Specific terms of the give-back weren’t announced but Zealand now holds “all rights to and all clinical data generated with this compound,” the IV version of which has completed two Phase I studies. Zealand intends to take an oral version of the drug into Phase I and “together with a new large pharma partner we intend to prepare for the Phase IIa proof of principle study in 2012,” according to the company’s 2010 annual report. Pfizer’s decision to pull back on cardiovascular R&D reflects a broader industry trend away from an area that was once close to most pharmas’ hearts (sorry). Zealand’s search for a new partner will therefore see it knocking on fewer doors, though with a first-in-class compound with potential acute and chronic uses, it’s likely to get a look-see from the remaining cardiovascular stalwarts.—Chris Morrison
Where To Find Biosimilar User Fees In Alphabet Soup?
Industry is looking for a PDUFA, but could end up with a FDAAA as it searches for an acronym for the biosimilar user fee to join the lexicon of bureaucratic alphabet soup.
It is an important question, mainly because the series of letters likely will become the most-recognized method of referencing the program. (Of course, how the program might actually run is another important question, one explored in this week's edition of "The Pink Sheet.")
The Prescription Drug User Fee Act is the oldest user fee and PDUFA has long been accepted as a classic acronym.
The 2007 FDA Amendments Act elicited the opposite response. It was criticized shortly after passage for its awkward, A-filled acronym. One person at the time said FDAAA was among the worst acronyms in recorded history.
Many seemed to prefer an alternate title for the bill: the FDA Revitalization Act. It would have shortened to FDARA, a much more pronounceable acronym.
So where would the biosimilar user fee fit in the acronym vernacular? BUFA or BSUFA would continue the “UFA” naming concept.
Shorter acronyms are preferred and the user fee likely will not elicit its own legislation, so maybe the “A” should be dropped. That would leave BUF or BSUF, but both seem awkward-sounding.
Indeed, negotiators for the generic user fees that are expected to be created sometimes refer to that program as GDUF, but it's unclear if they are being serious.
Maybe the biosimilar user fee will require a break from tradition, just like the negotiating process FDA is employing to create the program, and employ no acronym. After all, biosimilars are similar, but not the same, as their reference products.
Patricia Knight, president of Knight Capital Consultants, and a former chief of staff for Sen. Orrin Hatch, R-Utah, one of the principal authors of the legislation, said crafting a title for it “was just horrible.”
“We could get through some of the hardest stuff, but we were stumped on the title,” Knight said May 4 during a conference on the future of biosimilars in the U.S.
“We were throwing out ideas and we decided to pay a tribute to the Drug Price Competition and Patent Term Restoration Act, so it would be parallel to the Biologics Price Competition and Innovation Act. Truth be known, that title was picked in a contest.”
Are you more creative than Congress? Take our poll below to vote for your favorite biosimilar user fee acronym or offer your own.
– Derrick Gingery
Photo by Flickr user woody1778a used under Creative Commons license.
Financings of the Fortnight Watches The Paper Tigers Float By
Whatever image Chinese-made drugs might conjure for you -- or in this case, whatever music they plant in your ear -- a lot of people want a piece. There were 34 Chinese health-care IPOs last year, as counted by Morgan Stanley, and there's been no slowdown in 2011. Indeed, Chinese drug maker Shanghai Pharmaceutical Holdings is listing shares in Hong Kong this month in an offering worth up to $2.2 billion, which could challenge to be the largest pharmaceutical IPO ever, according to our PharmAsia News colleagues. (Japan's Otsuka Holding, diversified well beyond biopharma, raised $2.4 billion last year.)
SPH is already listed in Shanghai, but with domestic exchanges in China reserved mainly for domestic investors, going public in Hong Kong allows it to tap more easily into foreign sources of cash. High-profile sources, too: according to SPH’s prospectus, Pfizer has already pledged to buy $50 million in shares, and Singapore's state investment firm Temasek Holdings is buying $300 million. Two others, Malaysian conglomerate Guoco Group and Bank of China Group Investment, will bring the total from "cornerstone" investors to $550 million. SPH is the largest distributor of Pfizer products in China, and products from multinationals will account for 60% of its distribution business this year, it said recently.
Despite its exposure to outside investors, Shanghai Pharma will remain majority-owned by the regional Shanghai government. Those ties don’t completely rule out competition. As this Wall Street Journal story explains, SPH and its rival Sinopharm Group have been scrambling to get in front of the same set of investors and stepping on each other's toes in the process. Sinopharm went public for a cool $1.1 billion in 2009; its recent issue was a $440 million secondary offering. Those are mind-boggling amounts of money, especially compared to the IPO market in the US where life science companies scratch and claw to raise $50 million. Apparently in some parts of the world, capitalists are plenty happy to lend a hand to health care socialism. Funny how the world works, eh? Don't forget your passport, you're flying first-class today with...
Array BioPharma: With Array, Deerfield Capital Management giveth, and it taketh back. Back in 2008, the cancer and inflammation therapeutics developer received an $80 million loan from Deerfield to support development of six projects through proof-of-concept studies. In return, Deerfield got six-year warrants to buy six million common shares at $7.54 apiece. In July 2009, the private equity firm committed another $40 million, bringing the loan total to $120 million, and exchanged the original warrants for new ones exercisable at a much cheaper price of $3.65. On May 2, Array announced it raised $30 million by selling more than 10,000 Series B convertible preferred shares to Deerfield, with the proceeds immediately going back to Deerfield to reduce the loan to $90 million. The parties also amended the credit facility to repay the rest of the outstanding principal and interest, with the rate staying at 7.5%. Array has agreed to apply to the loan 15% of any up-front or milestone payments it receives in deals through June 2016. It has also agreed to pay the remaining balance minus $20 million by June 2015, and the leftover debt up to $20 million by June 2016. Deerfield’s warrants will now expire on June 30, 2016 instead of April 2014. Since being founded in 1998, Array has brought in $507 million in R&D funding, up-front fees, and milestones. But despite partnerships with multiple Big Pharmas and top-tier biotechs, the company has not seen an uptick in its stock price (see here for some background). Shares closed at $2.89 on May 10, more than 25% lower than the $4.02 closing price on April 20, the day after it announced its Novartis MEK inhibitor alliance. -- Amanda Micklus
Delenex Therapeutics: Spun out of Swiss antibody fragment developer ESBATech in September 2009 when ESBATech was acquired by Alcon, Delenex has double-dipped on its Series A, opting for a second closing that more than doubles the round’s size, the company announced May 3. Six months after the first closing was announced, first-time investor Novo Ventures led the new CHF 16.7 million ($19.3 million) installment of funding, which tops off the Series A at CHF 30.2 million ($34.8 million). Existing backers, including SV Life Sciences, HBM BioCapital, HBM BioVentures, BioMedInvest and VI Partners, also followed on. The Zurich-based startup, which retained ESBATech's non-ophthalmology assets, aims to bring anti-tumor-necrosis-factor-alpha compound DLX105 to proof-of-concept in an unspecified dermatological indication. The company is seeking a partner to develop the same compound for osteoarthritis, and has other drug candidates in neuroscience and oncology. Delenex inherited an antibody fragment platform called PENTRA that produces molecules approximately one-sixth to one-third the size of a full-length immunoglobulin. -- Paul Bonanos
Naurex: The Evanston, Ill. biotech, which our colleagues recently profiled in the March issue of START-UP, said May 11 it has raised an $18 million Series A round of financing to fund Phase II trials of its lead compound GLYX-13, an NMDAR (N-methyl-D-aspartic acid receptor) modulator, for patients with treatment-resistant depression. In a Phase I trial there were no signs of schizophrenia-like side effects often associated with NMDAR modulators, a tricky class of drugs that have garnered notoriety for their recreational use, such as ketamine and PCP. Based on discoveries made at Northwestern University, GLYX-13 only partially activates NMDAR, increasing the likelihood it won’t cause unwanted side-effects. Adams Street Partners and Latterell Venture Partners led the Series A, but an interesting syndicate of corporate investors also participated, including Lundbeck, Shire, and Takeda Ventures, the Silicon Valley investment arm of the Japanese giant. Naurex is also working on second generation, orally administered preclinical NMDAR modulators that it also hopes to develop for depression and other CNS indications. Naurex was founded in 2000 as Nyxis Neurotherapeutics then renamed Naurex and recapitalized in 2007. -- Alex Lash
Fate Therapeutics: One of the few regenerative medicine companies to attract high-profile funding, Fate has now signed up its fourth strategic backer. Takeda Ventures, a busy group this fortnight, has taken an undisclosed stake in the San Diego firm, and we're guessing it's not for the surfing lessons, which Fate employees have been known to give visiting colleagues and partners. Fate is working on ways to endow adult cells with the pluripotency of their embryonic kin, then exploit the newly pluripotent cells into various differentiated cell types. Long-term, Fate wants to apply its stem-cell expertise to its own drug discovery, but nearer term, the company’s business model is more practical: the company wants to sell differentiated cells as biopharma discovery tools. In the fall of 2010, it signed up Becton, Dickinson as its distribution partner. Revenues from this service help offset the development costs of Fate’s first small-molecule candidate, FT1050, which is in early clinical trials to improve engraftment of hematopoietic stem cells in patients with blood-based malignancies receiving transplants. The Takeda investment was not part of a larger round; the firm's most recent funding was a $30 million Series B led by OVP Venture Partners that included three other corporate investors: Astellas Venture Management, Genzyme Ventures, and one undisclosed. -- A.L. Many thanks to Maureen Riordan and Dailing Jai for help with today's introduction. Photo courtesy of flickr user Kevin Dooley under a Creative Commons license.
Wednesday, May 11, 2011
AstraZeneca Polishes Up Brilinta As It Woos EU Payers
Still reeling from the FDA's knock-back to its blockbuster cardiovascular hopeful Brilinta, AstraZeneca is doing its utmost to push uptake in Europe. So on Monday the company issued a press release highlighting a health economics sub-study of PLATO – the 18,000-patient Phase III trial that underpinned EU approval in December– showing that even though Brilique (as ticagrelor is known in Europe) costs up to 20 times more than generic Plavix, it is actually, dear payers, more cost-effective…as a result of lower hospitalization costs.
The sub-study took patient data from PLATO and used it to work out event rates and thus ultimately a cost-per-quality adjusted life year (QALY) for the drug for one year, using Swedish health care costs. Since PLATO had shown a reduced rate of MI, stroke or death from vascular causes, without a significant increase in the rate of overall bleeding, relative to Plavix, the theoretical health care bill was lower. The study then used "necessary assumptions and external data sources" to extrapolate longer-term QALY data, according to a description in the International Society for Pharmacoeconomics and Outcomes Research's Value in Health journal.
The result: Brilinta's cost-per-QALY was in the €2,350-€5,700 range, making it look rather cheap against the backdrop of an informal €25,000-€38,000 cost-per-QALY threshold applied by watchdogs like NICE in England.
One of the professors behind the study described this result as "particularly impressive". Whether or not Europe's most important payers agree is still unclear. AZ concurrently announced that Scotland and Denmark had agreed to reimburse Brilique, but these tiny nations alone won't move the needle for the Big Pharma.
Decisions from Europe's biggest markets will. But France's health technology assessor has already requested further data, notably from AZ's response to FDA's complete response letter, delaying its decision (AZ withdrew its submission as a result, but plans to re-submit within months). Cost-effectiveness assessments in the UK and Germany are due to report later this year.
It's unlikely that this particular sub-study will sway NICE's decision. That agency often questions manufacturers' assumptions and models in their cost-effectiveness analyses; like many US payers, it's (probably rightly) skeptical of pharma-sponsored studies. Even the Scottish Medicines Consortium's approval document from April notes that "the manufacturer may have underestimated the potential uptake of this product" in its calculations of the impact of Brilique on the Scots' drug budget.
Meanwhile Germany has one of the highest generic usage rates in Europe and is notoriously harsh in its judgment of what constitutes innovation (and thus warrants a premium price). But it will at least appreciate that AstraZeneca bravely pitted Brilique head-to-head against the relevant competitor in its Phase III trials, rather than trying to get away with a placebo-controlled trial. Indeed, Germany now requires head-to-head trials with existing therapies before it will grant reimbursement at a premium relative to existing treatments.
As such, Gunnar Olssen, head of AZ's CV/GI iMed, reckons the company couldn't have done a lot more to prove Brilique's superiority, and thus its value to patients. "I don't believe in this case we should have done anything differently," he said. "The drug led to a statistically significant reduction in cardiovascular mortality."
At what price, that reduction, though? That's what the payers are asking.
NICE's Future is Assured, Says Departing Chairman Rawlins
"The future of the National Institute for Health and Clinical Excellence is assured," said its long-serving chairman, Professor Sir Michael Rawlins, speaking at the start of the institute's annual meeting on Tuesday 10 May in Birmingham, U.K.
Addressing a packed auditorium in the U.K.'s second-largest city, Rawlins pointed to the way the proposed Health and Social Care Bill will give NICE a new name – the National Institute for Health and Care Excellence – and will remove it from political interference by establishing it as a new non-departmental body.
The existing roles and responsibilities of NICE are however expected to remain unchanged, but the new NICE will take on additional responsibilities for generating advice about social care.
This year, NICE still expects to publish 39 technology appraisals (including drug appraisals), 21 clinical guidelines, 5 public health guidelines and 30 quality standards.
Rawlins accepted that treatment guidelines for specific disease conditions are now addressed by several appraisals, which is why the institute has just launched "NICE Pathways", its online resource that brings together all the relevant appraisals for each specific condition, producing a path of care.
Rawlins was not so forthcoming on one issue of particular interest to the pharmaceutical industry, however: value-based pricing. He claimed that NICE would play a critical role in developing such pricing for medicines in the U.K., but said the details of how this would work in practice have yet to be decided.
No surprise there, perhaps: after all, the British pharmaceutical industry appeared to be similarly in the dark about VBP at a March press conference. And although industry hasn't voiced strong opposition to VBP in principle (it would rather play a role in designing it), it does worry that VBP is incompatible with the wider set of proposed reforms in the U.K, which may lead to health care being commissioned by consortia of general practitioners. The worry: the likely volume of prescribing of a particular medicine, a vital component of deciding a price, cannot be estimated if each of the 400 or so consortia have different prescribing formularies.
But with the success of this wider set of health care reforms (known as the Health and Social Care Bill) looking increasingly uncertain, this particular worry may go away. The Bill's progress has been halted while politicians take stock of its implications, following concerns that it was being rushed into law without proper debate.
With the future shape of health care management in the U.K. in the balance, there's everything to play for for those (including NICE) involved in managing health care in the U.K. But Rawlins himself, while expressing his confidence in the agency's future role, is calling time: he will not put himself forward as a candidate for chairman of the new NICE next year, he told the audience in Birmingham. That makes this his last year, after leading the agency since its inception 12 years ago.
--by John Davis
Friday, May 06, 2011
Deals of the Week Cares Enough To Send The Very Best
Even if it's just a Hallmark holiday, Mother's Day is still special to Deals of the Week. We'll be spending some time this weekend contemplating the sacrifices our moms made for us, and honoring them for what they gave us.
But like Anna Jarvis, one of the holiday's founders, we're not so crazy about the way Mother's Day has become commercialized over the years. Just a few years after hatching a plan to memorialize her mother with a special day everyone could share, she became a vocal opponent of the holiday's industry, despising saccharine cards and similar trite gestures so much that she was once arrested for disturbing the peace while protesting a celebration. A lot can happen between the time an idea is conceived and the moment it turns into a billion-dollar juggernaut. A well-intentioned plan can go sour when big money's at stake -- a notion with which readers of this column are likely all too familiar.
Indeed, this week's "no-deals" show how four companies took interest in others' ideas, only to walk away as their projects marched toward commercialization. Meanwhile, one company that faced a hostile bidder has plenty of reasons to thank its new parent -- a relationship we'll explore in...
Teva/Cephalon: Teva's gentler, kinder – and more lucrative -- offer to buy Cephalon for $6.8 billion in cash may be viewed as the rescue of a biotech flagbearer from the hands of Valeant, a scruffy, R&D-hating, efficiency loving hostile bidder. Teva plans to use Cephalon to build out its specialty pharma branded business, now at $4.6 billion in annual sales, to $9 billion by 2015. To do so, it'll capitalize on Cephalon's R&D capabilities, pipeline, and currently marketed products. That's in stark contrast to Valeant, which had planned to discontinue Cephalon's pipeline programs. But Teva's and Valeant's approaches may not have been as far apart as executives' speeches would have listeners think. Valeant, which offered $5.7 billion for Cephalon, would almost certainly have come up in price. And Teva, like Valeant, is placing a heavy emphasis on cost synergies and cash flow from marketed products to make this deal work financially. Teva expects to attain about $500 million in cost savings a year by year three after the deal closes, executives said. The difference, perhaps, is where and how those cuts would be made. Valeant was ready to go in and axe much of Cephalon; Teva will more likely bundle the best from its own assets and the acquiree's before deciding what to jettison. Teva is currently engaged in patent spats concerning multiple sclerosis therapy Copaxone (glatiramer), while its robust generics business will confront headwinds as the number of large innovative drugs expected to go off patent falls off post 2012. Many of Cephalon's late-stage pipeline assets could start to contribute to the company's revenues by that time. - Wendy Diller
Allergan/Molecular Partners: Coinciding with the announcement of Phase I/II trial results for its VEGF-antagonist drug candidate at the Association for Research in Vision and Ophthalmology conference, Molecular Partners AG reached an agreement with Allergan Inc. to out-license the molecule for a $45 million upfront payment. Privately held Molecular Partners will be eligible to receive up to $375 million in development, regulatory and sales milestones under the deal announced May 4, and could earn tiered, double-digit royalties on sales of MP0112, a designed ankyrin repeat protein (DARPin) about to enter Phase IIb development. The two companies will collaborate during Phase IIb, after which Allergan will be responsible for all development and commercialization activities. With ‘0112 investigated in both wet age-related macular degeneration and diabetic macular edema, the partners hope to position the molecule as a best-in-class treatment for neovascular eye disease, with a dosing frequency advantage over current wet AMD standards Lucentis (ranibizumab) and Avastin (bevacizumab). Molecular Partners uses its designed repeat protein technology platform to develop small target-binding proteins that perform significant functions in cell signaling and kinase inhibition. Combining some of the benefits of antibodies and small molecules, the Swiss biotech says DARPins offer lower molecular weight and better affinity, stability and selectivity compared to traditional antibodies. –Joseph Haas
AstraZeneca/Targacept: AstraZeneca opted not to license Targacept’s selective alpha 7 neuronal nicotinic receptor modulator, TC-5619, a schizophrenia treatment. TC-5619 is considered by Targacept to be one of its most promising assets; it recently announced positive results in a mid-stage study in schizophrenia patients. Yet, the compound failed a Phase II proof-of-concept study in attention-deficit/hyperactivity disorder. The biotech has vowed to move forward with '5619 on its own; saying it has the cash to fund further trials by itself. This is not the first time the British pharma has decided not to work with the Winston-Salem, NC-based biotech. Two years ago Targacept announced that another NNR compound, AZD3480, was not going to be pursued in Alzheimer's disease or schizophrenia after two poor mid-stage (Phase IIb) results. In October, AstraZeneca dropped Targacept’s ADHD drug, AZD1446, when it failed to perform better than a placebo in a Phase II trial. Yet Targacept’s future relies largely on the success of AZD5214, a major depressive disorder treatment that is partnered with AstraZeneca and is currently in Phase III trials. -Lisa LaMotta
Pfizer/Rigel: Six years ago, Pfizer licensed a portfolio of preclinical spleen tyrosine kinase inhibitors from South San Francisco-based Rigel. Although the companies identified a promising lead candidate, R343 for allergic asthma, Pfizer has returned all rights to the drug program to Rigel, giving the company full control of the drug as it heads for Phase II trials. Pfizer had paid $10 million upfront and acquired $5 million of Rigel stock at a premium price when the agreement was announced in 2005, although analysts said milestone payments could have added $200 million to the deal's value. With the partnership unraveled, Rigel now says R343 is its most advanced clinical asset; the company did not say whether it would seek a new partner, but claimed it will design a Phase II trial later this year. Rigel said the decision came out of Pfizer's desire to exit the allergy and respiratory area completely. - P.B.
Sanofi-Aventis/Metabolex: Well-funded, privately-held Metabolex seemed to have scored a coup last June when Sanofi licensed its oral GPR119 receptor agonist, MBX-2982, for type 2 diabetes. But that deal, too, has come apart: In a regulatory filing, Sanofi said it would walk away from the agreement, reportedly after seeing the data from a Phase IIa trial. Full terms of the agreement were never released, but Metabolex will keep the upfront payment from a deal valued that could have been worth up to $375 million including milestones. The licensing was part of Sanofi's push to diversify beyond Lantus, the primary drug in its diabetes franchise. Metabolex, backed by a long list of investors including Alta Partners, Novo Ventures, Venrock Partners and Versant Ventures, hasn't yet said whether it will seek a new partner. - P.B.
Thursday, May 05, 2011
At Allicense, VCs Avoid The Creep
If Tuesday’s discussions at Deloitte Recap’s Allicense conference focused on how VCs are putting their money into new biotech companies, Wednesday’s sessions dealt largely with the challenges they face in getting their money out – and what they’re doing about it. Privately-held start-ups are continually struggling with structured buy-out deals that delay full liquidity. Those few companies that can go public must debate internally whether to partner their assets beforehand, a variable that may not be as validating as once thought. And some have even looked for liquidity through creative asset-based financing arrangements that provide returns without an M&A deal or a public listing.
As Cooley LLP life sciences partner Barbara Kosacz pointed out during an afternoon panel, the weighting of earn-out deals has shifted heavily toward milestone-based biobucks, a trend she doesn’t see turning around anytime soon. “It used to be the icing, not the cake,” she said, postulating that a $500 million upfront deal with a $100 million earn-out is largely a thing of the past. Now, she says, “we have creep” – a series of incremental shifts that have devalued upfronts and placed more weight on contingencies that may never materialize.
In tandem with the shift have come more complicating factors, as various panelists noted: retention of original management, earn-outs booked as liabilities, and diligence clauses that can lead to potential conflicts over whether the buyer did its best with its acquired assets. Former Calistoga Pharmaceuticals chief business officer Cliff Stocks, whose company sold to Gilead for an impressive $375 million upfront in February, even suggested that sales royalties could increasingly come into play as an earn-out component, with shell companies being set up to collect royalties and redistribute them to selling stakeholders. It'd be yet another way M&A deals will continue to take cues from licensing arrangements, as they have for some time.
Though the IPO market has been difficult for years, another afternoon session zeroed in on the companies that can get reach the public markets – and whether their partnerships have been a boon or a liability. Moderator Michael Brinkman explained that where partnerships were once seen as validation, more current prevailing wisdom is that a good asset is worth holding onto completely. Indeed, just two IPOs since the beginning of 2010 had significant partnerships – Ironwood's multiple geographic carve-outs for linaclotide and Zealand with Sanofi – with the remainder going solo. While the few companies with partnerships commanded slightly higher valuations, and most panelists agreed that a pharma partner’s diligence goes deeper than any retail investor's would, Anacor CEO David Perry pointed out that partnering can add risk too, in the event that the licenser changes its priorities.
As far as creative asset-based financings go, we’re no stranger to mouse antibody platform developer Ablexis’ one-of-a-kind Series A deal that looped in five pharma partners to provide its VC investors with eventual liquidity, obviating the need for an IPO or M&A deal to provide returns. That agreement, which featured an LLC structure to avoid double taxation of proceeds passed back to investors, took our Roger award for Exit/Financing Deal of the Year in 2010, and was discussed at length in a morning panel. Pfizer Venture Capital’s Barbara Dalton, who backed Ablexis alongside Third Rock Ventures in the $12 million round, affirmed that such arrangements aren’t for every company, and are best suited for “variations on a theme”-- companies that add value to known science. Does Pfizer still view it as a good deal? “I’m looking forward to more transactions like this one,” she said.
