What partnering hopes for the industry's biggest unpartnered R&D assets?

Analysis

As upfront fees for clinical stage assets appear to be on the slide, EP Vantage takes a look at what this might mean for some of the most valuable pipeline assets yet to find a commercial partner (First half 2010 sees a return to more conventional deal values, July 28, 2010).

Based on EvaluatePharma’s NPV Analyzer, the table below shows the ten biggest R&D candidates whose high valuation is massively dependent not only on clinical and regulatory success but also on finding a suitable big pharma partner. Top of the list is Clinical Data’s high-risk but potentially high-value antidepressant, vilazodone, while the appearance of Vivus and Orexigen’s obesity candidates comes as no surprise. Intriguingly, however, three recent IPO companies in the US – Anthera Pharmaceuticals, AVEO Pharmaceuticals and Alimera Sciences – all feature, an insight perhaps into how they hope to attract partnering interest by taking a plunge into the public pool.

The bulk of the in-market sales, and therefore royalties, for the products in the table below are expected to come from as yet unconfirmed partners.

Biggest unpartnered pipeline assets - ranked on NPV Potential Revenues in 2016
Rank Product Company Pharmacological Class Status Launch Today's NPV ($m) Company Market Cap - 5 Aug ($m) In-market sales ($m) Royalties ($m)
1 Vilazodone Clinical Data SSRI & 5-HT1A (serotonin) partial agonist Filed 2010 3,346 425 2,084 826
2 Varespladib (A-002) Anthera Pharmaceuticals Secretory phospholipase A2 (sPLA2) inhibitor Phase III 2013 2,726 126 1,213 147
3 Qnexa VIVUS Adrenoreceptor agonist & anti-convulsant Filed 2011 1,785 427 1,304 427
4 Tivozanib AVEO Pharmaceuticals VEGF antagonist Phase III 2012 1,643 242 413 106
5 Afrezza MannKind Insulin Filed 2011 1,559 783 223 215
6 Contrave Orexigen Therapeutics Noradrenaline & dopamine reuptake inhibitor & opioid antagonist Filed 2011 1,459 243 979 358
7 Ofirmev Cadence Pharmaceuticals Non-narcotic analgesic Filed 2010 1,096 393 567 -
8 Bavituximab Peregrine Pharmaceuticals Anti-PS MAb Phase II 2014 1,022 89 263 -
9 Iluvien Alimera Sciences Corticosteroid Filed 2011 996 240 466 43
10 Zymafos ZIOPHARM Oncology Alkylating agent Phase II 2013 991 196 276 53

Vilazodone in tough market

Clinical Data licensed vilazodone from Merck KGaA in 2004 when the drug, an SSRI antidepressant in the same class as Eli Lilly’s Prozac and GlaxoSmithKline’s Seroxat, was in phase II trials.

The company filed its NDA in March and under a standard review the drug has been given a PDUFA date of January 21, 2011. Some, admittedly bullish analysts, have pencilled in sales by a partner of $2.1bn by 2016, resulting in royalties to Clinical Data of $826m, an estimated rate of 40%.

This high royalty rate suggests a partner is only likely to sign up once FDA approval has been granted and just as importantly the drug’s label and any associated REMS have also been signed off. The drug will be entering a hugely competitive and widely genericised overall antidepressant market, which has been in decline for some years now. Carving out a niche will require a strong and smart partner.

Approval first, partner later

This theme of partners waiting in the wings until regulatory approval is in the bag understandably applies to a few other candidates in the table above.

Two of the three obesity drugs currently being reviewed by the FDA, Vivus’ Qnexa and Orexigen’s Contrave, feature towards the top of the list, albeit Qnexa’s forecasts and valuation is derived from before the advisory committee rejection last month.

Indeed the third candidate, Arena’s loracaserin, with an NPV of $1.74bn, would also have appeared until its recent deal with Eisai.

Here’s the latest instalment on the obesity drug race - Orexigen steps up pace in obesity race, July 30, 2010.

Likewise, given the massive regulatory and commercial risk assigned to Mannkind’s inhaled insulin product, Afrezza, potential partners are expected to stay on the sidelines until approval has been granted (MannKind hoping for Afrezza approval early 2011, May 17, 2010).

Validation of IPO strategy?

Anthera went public in March, its shares opening at around $7 and have held up reasonably well since, currently trading at $5.73.

Like Clinical Data, Anthera’s lead candidate, varespladib (A-002), was licensed from a bigger partner, in this case from Eli Lilly and Shionogi in 2006, who had both previously given up on developing the compound, hardly a vote of confidence in the drug’s clinical and commercial potential.

Nevertheless, Anthera is pressing on with the product and recently started a 6,500 patient phase III trial in high risk acute coronary syndrome. Given the drug’s chequered developmental history, it would be a surprise if a licensing deal was struck before at least headline data has reported from this trial.

AVEO also entered the public arena in March and its shares have largely mirrored Anthera’s, debuting at $9 and currently trading at $7.70.

Yet again its lead candidate, tivozanib, was in-licensed, this time from Kirin in 2007. A VEGF antagonist, encouraging phase II data in advanced kidney cancer was presented at the Asco conference in June, while a phase III trial, initiated in February, remains on track.

Meanwhile Alimera, which listed a month later in April, has had a slightly tougher ride, its shares losing 30%, from $11 at opening to $7.70 today. Its lead product, Iluvien, is a corticosteroid to treat diabetic macular oedema.

Filed in both the US and Europe, the FDA is expected to issue its verdict on Iluvien during the fourth quarter. As a potential new treatment for a largely unmet medical need, a specialist partner could help maximise the drug’s commercial reach.

As such, it will be interesting to see how these IPO companies fare with their partnering aspirations, given that aside from raising cash, a key driver for going public is the increased licensing or M&A attention you hope to attract.

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