Takeda's pipeline may require a helping hand

Analysis

The failure of Takeda and Amgen’s motesanib (AMG 706) in a phase III trial for non-small cell lung cancer is disappointing on two levels. Firstly as yet another late-stage defeat in developing new drugs for the notoriously difficult to treat disease, but also as the latest setback to Takeda’s pipeline which continues to struggle.

Even though expectations for motesanib were relatively modest, the product was still viewed as Takeda’s most valuable pipeline candidate, an insight into the dearth of promising agents in the company’s pipeline. While internal candidates struggle, recent FDA approval for a follow-on hypertension agent aside, recent licensing activity has brought in products of questionable value, such as Orexigen’s Contrave and Amag’s Feraheme (see tables below). With over $9bn in the bank and little M&A activity since acquiring Millennium Pharmaceuticals for $8.8bn in 2008, it may be time for Takeda to get the cheque book out again.

Disappointing

Takeda licensed motesanib from Amgen in February 2008 for $100m upfront - the Japanese company is shouldering 60% of the R&D costs and will ultimately share the profits with the US biotech, should the product reach the market. The product had its first major setback soon after when enrolment in the lung cancer trial was suspended in November 2008 due to high mortality rates in patients with the squamous form of the disease.

The trial, known as MONET1, resumed in February 2009 only in patients with non-squamous lung cancer, ultimately recruiting 1,090 patients. Results released yesterday showed no improvement in overall survival while serious adverse events were higher in patients receiving motesanib.

The companies will naturally be assessing the implications for further development of the drug, phase II trials have also been conducted in breast, gastro-intestinal stromal tumours and thyroid cancer, but the omens do not look good.

Thin pipeline

Consensus analyst forecasts from EvaluatePharma had predicted motesanib sales by 2016 of $233m, valuing the product at almost $550m.

The table below shows the late-stage products in Takeda’s pipeline currently attracting value from analysts. Behind motesanib comes Hematide, another product with reduced commercial opportunity and still questionable chances of gaining regulatory approval.

Takeda's Pipeline Valuation
Status Product Therapeutic Subcategory WW sales in 2016 ($m) Today's NPV ($m) NPV as % of Market Capitalisation
Marketed Nesina Anti-diabetics  1,987  4,158  11%
Filed R113675 (Reminyl) Nootropics  -  293  1%
Liovel Anti-diabetics  307  262  1%
Feraheme Anti-anaemics  -  -
TAK-536 Angiotensin II antagonists  112  211  1%
Phase III AMG 706 Anti-angiogenics  233  544  1%
Hematide Anti-anaemics  279  396  1%
Lu AA21004 Anti-depressants  115  262  1%
ATL-962 Anti-obesity agents  89  163  0%
MLN0002 Gastro-intestinal anti-inflammatories  69  153  0%
Contrave Anti-obesity agents  176  143  0%
TAK-085 Anti-hyperlipidaemics  66  115  0%
SGN-35 Anti-neoplastic MAbs  11  24  0%

Nesina (alogliptin), Takeda’s anti-diabetic DPP-IV inhibitor, which is only approved in Japan. It is included here because the vast majority of the product’s value is based on the assumption it will eventually gain US and European approval, having previously suffered rejection in both regions with demands for long-term safety trials.

Questionable licensing

The table below shows the clinical stage products that Takeda has in-licensed since the start of 2009, spending $366m so far in upfront fees in just over two years.

Probably the most exciting of these candidates is Pfizer’s oral RA therapy CP-690550 (tofacitinib), which has attracted much interest, although analysts have yet to assign any value to the product. The deal with Pfizer is a natural extension of Takeda’s ongoing deal to sell Enbrel in Japan, one of Takeda’s biggest-selling products.

Takeda's clinical stage product licensing deals since 2009
Deal Year Product Deal Partner/ Product Source Pharmacological Class Status on Deal Current Status Rights Lead Indications Upfront Fee ($m) Deal Value ($m)
2011 Lurasidone Dainippon Sumitomo Pharma 5-HT2A (serotonin) & D2 antagonist Phase III Phase III Europe ex. UK Schizophrenia (Phase III)  120 300
CP-690550 Pfizer Janus kinase-3 (JAK-3) inhibitor Phase III Phase III Japan co-promote Arthritis, rheumatoid [Phase III]; Psoriasis [Phase III]  -  -
2010 Feraheme AMAG Pharmaceuticals Iron supplement Phase III Filed Worldwide ex. USA Anaemia in chronic renal failure (dialysis & non-dialysis) [Filed]  60  280
R113675 Johnson & Johnson Acetylcholinesterase inhibitor Filed Filed Japan co-promote Alzheimer's disease [Filed]  -  -
Contrave Orexigen Therapeutics Noradrenaline & dopamine reuptake inhibitor & opioid antagonist Filed Phase III North America Obesity [Phase III]  50  1,050
2009 TAK-816 Novartis Hib vaccine Phase I Phase I Japan Hib prophylaxis [Phase I]  1  1
AC137-164594 Amylin Pharmaceuticals Leptin & amylin receptor agonist Phase II Phase II Worldwide Obesity [Phase II]  75  1,075
SGN-35 Seattle Genetics Anti-CD30 MAb-auristatin E conjugate Phase II Phase III Worldwide ex. North America Lymphoma [Phase III]  60  90
Total 366 2,796

As for Takeda’s M&A activity, the massive $8.8bn purchase of Millennium contrasts starkly against some much lower key deals in the last few years, as the table below shows.

Indeed, if there is one thing that might make Takeda wary about making another Millennium-sized M&A splash, it is the risk of over-paying for a prized asset. Millennium’s pipeline has not advanced much since the deal, while the value of the marketed products acquired, Velcade and Integrilin, currently amount to around $5.2bn, suggesting Millennium’s shareholders did rather better out of the deal than Takeda’s.

Takeda's M&A deals since 2005
Deal Year Target Company or Business Unit Deal Value ($m)
2009 IDM Pharma  67
2008 Millennium Pharmaceuticals  8,800
2008 TAP Pharmaceutical Products  -
2007 Paradigm Therapeutics  -
2005 Syrrx  196
Total 9,063
All data sourced to EvaluatePharma

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