Vantage Snippets are short summaries of breaking news stories.

Alkermes sinks again on official US rejection

The writing had been on the wall for Alkermes’ depression project ALKS 5461 since a negative US advisory committee vote in November. But the FDA’s official rejection, just after the markets closed on Friday, still sent the company’s stock down as much as 4% this morning. Perhaps the reality is sinking in for investors: even Alkermes appears to have given up on ALKS 5461, though a phase IIIb trial is continuing. Stifel analysts noted that it was unclear whether the FDA had signed off on this study, and the company said an upcoming meeting with the US regulator would determine whether the project had a future. Meanwhile, the group’s schizophrenia candidate ALKS 3831 might get the go-ahead, but its commercial prospects look dim after pivotal data showed that it led to weight gain, a side effect it was designed to avoid. This means that, apart from an early immuno-oncology asset, Alkermes’ main hopes still lie with its marketed products, the alcohol and opioid addiction therapy Vivitrol and the antipsychotic Aristada. However, sales of the former are slowing, and it is unclear whether the product’s revenues will hit sellside consensus of $610m by 2024.

Alkermes' assets
        Annual sales ($m)
Product Status Indication Pharma class 2017 2024e
Vivitrol Marketed Opioid/alcohol addition Opioid antagonist 269 610
Aristada Marketed Schizophrenia 5-HT1A, dopamine D2 partial agonist & 5-HT2 antagonist 94 459
ALKS 3831 Phase III Schizophrenia 5-HT2, mu opioid, dopamine D1 & D2 antagonist - 381
ALKS 8700/ BIIB098* Filed Multiple sclerosis Nrf2 pathway activator - 252
ALKS 5461 Rejected Depression Mu opioid partial agonist & kappa & mu opioid antagonist - 194
ALKS 4230 Phase I Solid tumours IL-2 fusion protein - -
Total 363 1,897
*Partnered with Biogen, Alkermes to receive mid-teens percentage royalty. Source: EvaluatePharma.

Europe regulator does Roche a favour

Not long ago the EU regulator was putting developers of immunotherapy combinations to task, wanting to see that a combo’s efficacy was better than either of its standalone components before issuing approval. But its stance seems to have softened, as illustrated by today’s recommendation to approve Roche’s Tecentriq plus Avastin and chemo in first-line lung cancer. The decision seems strange in light of updated results of the pivotal Impower-150 trial, as cited on the drug’s US label: the median overall survival numbers are virtually identical for the approved combo as for Tecentriq and chemo alone. Last July the EMA had knocked back Bristol-Myers Squibb’s filing for Opdivo plus Yervoy in renal cancer, citing an unclear contribution of Yervoy, but later went on to approve the combo all the same. When the EMA adopts today’s positive Tecentriq opinion it will give Roche a second present: the EU indication will be broader than on the US label, which specifies that patients must have no EGFR or Alk genomic aberrations. EU EGFR or Alk mutants must only have failed targeted therapy, meaning that they could theoretically get Roche's combo while still harbouring a secondary mutation.

Updated Impower-150 (NCT02366143) results
  Arm B Arm C Arm A
  (Tecentriq + Avastin + carbo/tax chemo) (Avastin + carbo/tax chemo) (Tecentriq + carbo/tax chemo)
Intent-to-treat wild-type population n=359 n=337 n=349
Median OS 19.2 months 14.7 months 19.4 months*
Stats for B vs C HR 0.78, p=0.016**
Stats for A vs C HR 0.84, p=0.204
Median PFS 8.5 months 7.0 months 6.7 months
Stats for B vs C HR 0.71, p=0.0002
Stats for A vs C HR 0.94, p=0.5219
Source: Tecentriq's US label; *previously reported as 17.9 months; **0.0174 threshold at interim analysis.

US government formalises rebate ban proposal, but challenges await

Anybody expecting drug rebates in the Medicare programme to disappear at the beginning of 2020 might find themselves disappointed. The Centers for Medicare and Medicaid Services (CMS) yesterday published a proposed rule banning rebates from drugmakers to pharmacy benefit managers (PBMs) co-ordinating prescriptions for enrollees in Medicare part D plans. Still, the proposal looks likely to face a legal challenge from PBMs and insurers that could delay it past the proposed January 1, 2020 start date. And a long legal challenge could make the measures redundant by the time they come into force, as payment models are changing: PBMs have largely been absorbed into larger health insurers that are evolving their drug reimbursement contracts into “value-based” deals that seek to base payments on medical outcomes. Rebates have been permitted under the “safe harbour” provisions of anti-kickback laws, but now the CMS is proposing that safe harbour be withdrawn for rebate arrangements except for those given to beneficiaries at the point of sale. The CMS says it believes that the ban would also apply to commercial health plans.

Mylan makes for a piece of the shrinking Advair pie

D-Day has finally come for Glaxosmithkline with US approval of Mylan’s generic version of Advair. The UK company has been preparing for this for some time – indeed, it is fortunate to have escaped copycats for this long. But the rewards for generics developers now look less attractive than before. Glaxo has been aggressively discounting Advair and seeking to lock in contracts with Medicare Part D plans, worth 40% of the market, the Evercore ISI analyst Umer Raffat noted. He estimated that Mylan’s Wixela Inhub could bring in $250m in 2019, based on it gaining a majority share of the non-Part D segment and being priced at a 25% discount to Advair. At least Mylan has crossed the finish line; Novartis and Hikma have been delayed, and their versions do not look likely to hit the market until 2020. Teva already has an approved product, but this is not directly substitutable and has struggled to gain traction. In the absence of generic competition US Advair sales have already more than halved since 2013, and in 2018 were expected to have fallen 30% year on year. More guidance might be available when Glaxo reports results next week.

US generic versions of Advair
Company Status Note
Teva Airduo Respiclick approved Jan 2017 Not substitutable
Mylan Wixela Inhub approved Jan 2019 Substitutable
Hikma/Vectura CRL May 2017; upheld in Mar 2018 New study requested, Hikma to respond in 2019
Sandoz (Novartis) CRL Feb 2018 Aiming to refile in 2019 as per Q4 results call
Source: company releases.

Yet another medtech unit falls to private equity

The acquisition of Thermo Fisher Scientific’s anatomical pathology business by PHC Holdings is the sixth multibillion-dollar purchase of a medtech company or business unit by a private equity-backed entity in the past three years. PHC, which is owned by the Japanese conglomerates Mitsui and Panasonic and the private equity group KKR, paid $1.1bn in cash for the unit, which makes products including microscope slides and laboratory instruments. PHC is also the owner of Ascensia, having bought the diabetes care unit of Bayer in 2015 for $1.2bn. There is solid strategic rationale for Thermo Fisher to sell the anatomical pathology business: this is one of the few areas in which the company lacks scale, competing in the market with Roche, Danaher and Agilent’s Dako business. The unit is also relatively slow-growing, with EvaluateMedTech’s consensus forecasting growth of 3% annually to 2024, versus 6% for the group overall. Thermo Fisher yesterday said its fourth-quarter revenues had risen 8%.

Top 10 private equity medtech purchases, 2015-19
Announced Acquirer Target Value ($bn) M&A focus
Jun 2018 Platinum Equity Lifescan subsidiary of Johnson & Johnson 2.1 Diabetes care
Jun 2015 Panasonic Healthcare Holdings, now PHC Diabetes care business of Bayer, now Ascensia 1.2 Diabetes care
Oct 2018 Astorg  Nemera 1.2 Drug delivery
Jan 2019 PHC Anatomical pathology business of Thermo Fisher 1.1 In vitro diagnostics
Apr 2018 Altaris Capital Partners Analogic 1.1 Diagnostic imaging
Apr 2018 Veritas Capital Value-based care division of GE Healthcare 1.1 Diagnostic imaging; healthcare IT
Source: EvaluateMedTech; company communications.

The Mist clears for Eyenovia

A phase III hit for Eyenovia’s MicroStat, a combination of phenylephrine and tropicamide in development as a pupil dilator for people taking an eye exam, has pushed the tiny group’s shares up 25%. In the 64-patient Mist-1 trial, 94% of eyes receiving MicroStat achieved at least 6mm pupil dilation 35 minutes after administration, compared with 78% for tropicamide alone – tropicamide is the standard eye dilator currently used by ophthalmologists – and 1.6% for phenylephrine alone. What investors seem to have taken from the data is an affirmation of the utility of Eyenovia’s Opteject delivery platform, which is designed to squirt precise, tiny doses into patients’ eyes. It is also used in the company’s other pipeline projects, MicroTears, MicroProst and MicroPine. A second phase III study, Mist-2, should report top-line results shortly, and since this compares MicroStat with placebo eyewash it also seems likely to succeed. An NDA filing for the drug could come in around a year’s time, and should approval follow Eyenovia has a target market of 80 million in-office eye tests each year in the US, plus four million mydriasis processes performed in the ocular surgery setting.

Eyenovia's pipeline
    Annual sales ($m)  
Product Status 2018e 2020e 2022e 2024e Indication
MicroTears Over-the-counter registration expected H1 19 - 3 21 50 Dry eye
MicroStat Phase III Mist-1 hit
Phase III Mist-2 data Q1 19
- 5 18 31 Pharmacologic mydriasis (pupil dilation)
MicroProst Phase III to start Q1 19 - - 23 118 Glaucoma
MicroPine Phase III to start H1 19 - - - 24 Myopia progression
Source: EvaluatePharma; company website.

Healthineers sinks on Atellica letdown

Atellica, the in vitro diagnostic system to which Siemens Healthineers pinned many of its hopes for success as a listed company, has come up lacking. Reporting its fiscal first-quarter results today, the German group said revenues from its diagnostics business came in at €964m ($1.1bn), up 3% on a constant currency basis, but the profitability of the unit was hit hard by the longer than expected installation times for the 370-odd Atellica machines the firm sold in the quarter. Consequently sales of the blood and urine tests run on the machines – far more profitable than the machines themselves – have been delayed. Profits for this unit slumped 24% on the same period in 2018, at €76m. The diagnostics unit posted a profit margin of 8.1%; for comparison, Healthineers’ core imaging business has a profit margin of 20%. According to Berenberg analysts, Healthineers intends to sell up to 2,500 Atellica systems in fiscal 2019, so it is off to a slow start. The group said it would “sharpen its focus” on this business to drive up profits, and has one catalyst to look forward to: Atellica is expected to gain approval in China in 2019. Healthineers’ shares are down 3% so far today.

Siemens Healthineers' Atellica system

Exosomes start to deliver deals

Some biotech investors had probably never heard of exosomes until Codiak’s chief executive, Doug Williams, made his pitch at the JP Morgan conference two weeks ago. But the area has been gaining traction, and Jazz’s $56m up-front payment to Codiak is its biggest endorsement to date. Roche and Boehringer Ingelheim have also bought into rival technologies, which broadly seek to use exosomes as delivery vehicles for proteins, small molecules, RNA and other therapeutics. Naturally occurring exosomes are vesicles that bud off from many mammalian cells and are subsequently internalised by other cells, along with their cargo, hence their role in cell-cell communication. This gives rise to their potential as a new class of delivery vehicles for therapeutics, and Codiak seems to be furthest advanced here, boasting of being able to internalise various molecules via protein tags, and of targeting exosomes to specific cells using external markers. As a nascent technology this carries numerous problems, including accurately coding for and delivering the target therapeutic, not to mention questions around intellectual property and manufacturing at scale. While there are three listed players – Capricor, Puretech and Reneuron – no company is close to entering the clinic yet.

The key exosome players (all early preclinical)
Company Type Technology source Selected deals Lead focus in exosomes
Capricor Therapeutics Nasdaq-listed* Cedars-Sinai Medical Center 2016 funding: $4.2m from NIH, $2.4m from US DoD CAP-2003, cardiosphere-derived cells to generate exosomes
Puretech London-listed James Graham Brown Cancer Center & University of Louisville Jul 2018: Roche Milk exosomes for oral bioavailability of macromolecules, incl antisense oligos, and complex small molecules
Reneuron London-listed   Jan 2019: undisclosed US biopharma company Permanent stem cell line to produce exosomes at scale
Codiak Biosciences Private, US University of Gothenburg Jan 2019: Jazz, $56m up front; $92m raised in private cash Exosomes with internal/external targeting, delivering Sting agonist or IL-12
Evox Therapeutics Private, UK Oxford University Dec 2017: Boehringer Ingelheim for mRNA delivery Protein-replacement exosomes for Niemann-Pick & DMD
Stem Cell Medicine  Private, Israeli Tel Aviv University   Mesenchymal stem cell derived vesicles for autism
Aruna Biomedical Private, US   Raised $5.3m last Sep AB126, neural exosomes that cross BBB to treat stroke
Ciloa  Private, French     Delivering membrane proteins
Molecuvax** Private, US   Subsidiary appears inactive Cancer clinical trial planned in 2016
Tavec Pharmaceuticals Private, US Johns Hopkins University Company appears inactive miRNA delivery to cancer cells
Notes: *reversed into Nile Therapeutics in 2013; **subsidiary of Therapeutic Solutions International.
Source: Vantage analysis.

Zimmer and Medtronic advance in robotic surgery

A year or so ago Zimmer Biomet’s president for the EMEA region, Katarzyna Mazur-Hofsäss, told Vantage that the group would develop its robotic surgery platform, Rosa, then used for neurosurgical and spinal procedures, for use in arthroplasty (Zimmer Biomet sees a tricky European future, February 26, 2018). It has done so in double-quick time, with the Rosa Knee system gaining US clearance on Friday for use in knee-replacement surgery. Rosa is made by the French company Medtech, which J&J controls, having taken a 59% stake in it in 2016. The robotic surgery segment might be ready for a wider shake-up: Medtronic said today that it had treated the first US patients with its Mazor X Stealth Edition, a robotic platform for spine surgery. Meanwhile, Johnson & Johnson is rumoured to be interested in buying Auris Health for a figure of around $2bn. J&J already has a robotic surgery joint venture, Verb Surgical, with Alphabet's Verily division, but seemed cool on this during its earnings call last week, suggesting that news on Verb would not emerge until next year.

Alexion’s son of Soliris looks similar again

Alexion’s Soliris successor Ultomiris looks – at best – only as good as the company’s older product in its second indication, atypical haemolytic uremic syndrome. The group will likely have to rely on price and convenience again as it attempts to shift patients from Soliris, given every two weeks, to Ultomiris, which is injected every eight weeks. The primary endpoint of the open-label trial of Ultomiris in atypical haemolytic uremic syndrome was complete thrombotic microangiopathy (TMA) response, where the drug appeared to perform slightly worse than Soliris did in its most comparable trials, in adults with signs of TMA at baseline. Other endpoints differed slightly, making it difficult to produce a direct comparison, but on the face of it the data suggest that Ultomiris is no better than Soliris in terms of efficacy. Alexion faces a similar issue with Ultomiris in its approved indication, paroxysmal nocturnal haemoglobinuria, where the newer project has shown non-inferiority, but not superiority, to Soliris. Perhaps it is no wonder that Alexion has chosen to be aggressive on Ultomiris’s price.   

Ultomiris vs Soliris: atypical haemolytic uremic syndrome data at 26 weeks
  Ultomiris Soliris
    Study C08-002A/B Study C10-004
Complete TMA response 54% 65% 56%
Normalisation in platelet count 84% - -
Normalisation in lactate dehydrogenase  77% - -
Hematologic normalisation* - 76% 88%
*Defined as normalisation of both platelet count and lactic dehydrogenase.
Source: company press release, Soliris label.
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