Astra finds no fit for rare diseases in latest big pharma spin-out

Astrazeneca gave birth to the latest big pharma baby today, unveiling a relatively well-stocked biotech focused on inflammation and autoimmune conditions. Called Viela Bio, the new company boasts three clinical-stage assets and is Astra’s third spin-out of the past decade.

For all the talk of wanting to make the most of potentially valuable assets gathering dust on shelves, big pharma is not a hugely prolific out-licensor. Still, setting up new companies around research projects is far from simple, and one that some seem unwilling to attempt. A trawl of EvaluatePharma reveals that European big pharma groups are the most enthusiastic parents, though Pfizer is an exception in the US (see table below).

In fact, with five under its belt, the US pharma giant is almost as prolific as Merck KGaA, although as this analysis shows the German group seems to have cooled to this strategy in recent years. Perhaps lack of notable progress by its progeny was discouraging, though presumably the potential for financial gain is not the only motivation for these huge corporations.

The take-outs of the likes of Movetis, Actimis and Novexel no doubt made some proud parents. But the rates of success, in terms of takeouts or R&D progress, among the offspring below is not so startling. This perhaps is why the likes of Merck & Co and Bristol-Myers Squibb have not been persuaded to jump-start this spin-off activity.

Birthing innovation: notable biotech spin-outs from big pharma
Parent Child Spin-out date Details
The European efforts
Astrazeneca Entasis Therapeutics 2015 Massachusetts-based, focused on anti-bacterials. 
  Albireo Pharma 2008 Massachusetts-based, focused on liver and GI diseases; now Nasdaq-listed.
Sanofi Impact Biomedicines 2016 California-based, focused on myeloproliferative neoplasms & other cancers.
  Novexel (spun from Aventis) 2004 France-based, focused on antibiotics and antifungals. Bought by Astrazeneca for $505m in 2010.
  Proskelia (spun from Aventis) 2002 France-based, focusedon bone diseases. Bought by Prostrakan for $170m in 2004.
Glaxosmithkline Nerre Therapeutics 2012 UK-based, focused on neurokinin receptor antagonists.
  Autifony Therapeutics 2011 UK-based, focused on hearing loss, tinnitus & other CNS disorders.
  Convergence Pharmaceuticals 2010 UK-based, focused on chronic pain. Bought by Biogen Idec for $200m up front in 2015.
Merck KGaA Tocopherx 2013 Massachusetts-based, focused on infertility.
  Prexton Therapeutics 2012 Netherlands-based, focused on neurodegenerative diseases.
  Asceneuron 2012 Switzerland-based, focused on tau protein-related pathologies.
  Poxel 2009 France-based, focused on metabolic diseases. Now listed on Euronext Paris.
  Tioga Pharmaceuticals 2005 California-based, focused on pruritus.
  Nitec Pharma 2004 Switzerland-based, focused on inflammation and pain. Bought by Horizon Pharma in 2010 in all share   deal. 
Novartis Mereo BioPharma 2015 UK-based, focused on rare diseases. Now listed in London.
  Mipharm 2008 Italy-based, mixed focus.
  Nabriva Therapeutics 2006 Ireland-based, focused on antibiotics. Now listed on Nasdaq. 
  Speedel  1998 Switzerland-based, focused on hypertension. Bought by Novartis for $880m in 2008.
Bayer AiCuris 2006 Germany-based, focused on antivirals and antibacterials.
  Actimis Pharmaceuticals 2004 California-based, focused on respiratory & inflammatory disorders. Bought by Boehringer Ingelheim $515m in 2008.
Roche Basilea Pharmaceutica 2000 Switzerland-based, focused on bacterial infections, fungal infections and cancer. Now listed on Swiss stock exchange. 
  The Cytonet Group 2000 Germany-based, focused on liver diseases. Bought by Promethera Biosciences in 2016 in all-share deal. 
  Novuspharma 1999 Italy-based, focused on   oncology. Bought by Cell Therapeutics for $196m in 2004.
The US efforts
Pfizer Springworks Therapeutics 2017 Maryland-based, focused on oncology, genetic & neurological indications.
  Ixchelsis 2011 UK-based, focused on premature ejaculation.
  Raqualia Pharma 2008 Japan-based, focused on pain and GI. Now listed on Jasdaq. 
  Esperion Therapeutics 2008 Michigan-based, focused on heart disease. Now listed on Nasdaq. 
  Nerviano Medical Sciences 2004 Italy-based, focused on cancer.
Eli Lilly BioCritica 2011 Indiana-based, focused on critical care; assumed bankrupt. 
  Muroplex Therapeutics 2006 Indiana-based, focused on immunomodulatory compounds; assumed bankrupt. 
Johnson & Johnson Prep Biopharm 2015 UK-based, focused on upper respiratory tract infections.
  Orapharma 2010 Pennsylvania-based, based on oral healthcare products. Bought by Water Street in 2010, then Valeant for $312m up front, in 2012.
  Movetis 2006 Belgium-based, focused on GI diseases. Bought by Shire for $537m in 2010.
Note: Only includes R&D-stage companies focused on human therapeutics; medtech excluded. Source: EvaluatePharma.

Company formation is certainly not a strategic priority for big pharma, so perhaps it is surprising that so many of these transactions actually get off the ground.

In the first instance, cheerleaders must be found for the assets deemed non-core – both internally and among external investors – a process that must take serious time and resources. Returns on these investments like Movetis, which was bought just four years after spinning out from J&J, are the exception rather than the rule.

Astrazeneca, meanwhile, has made a name for itself with its externalisation strategy, though these company spin-outs must represent the least visible way of monetising its peripheral assets.

Viela is taking six compounds from Astra’s Medimmune unit, and though the company states that inflammation and autoimmunity fall outside its core areas the firm is keeping hold of a lupus asset, anifrolumab.  

The three clinical assets that Viela will push forward are all being studied in rare conditions. And while Astra denies that Viela is a rare disease company per se, it is notable that many big pharma groups seem to be struggling to find a way to make niche projects work within structures that will always operate on a bigger-is-better mentality.

Of course others in the industry have embraced the rare disease revolution much more enthusiastically, and it will be interesting to see how Viela fares independently. Perhaps finding an unmet need for on-the-shelf assets is a more viable way forward for big pharma, at least while investors remain in love with orphans.

To contact the writer of this story email Amy Brown in London at AmyB@epvantage.com or follow @ByAmyBrown on Twitter

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