Bayer’s weak 2017 highlighted, once again, how desperately the group needs new blood in its pipeline. While the German group maintains that with 50 projects in clinical development there is no problem, executives appear to recognise the urgency for more deals similar to last year’s tie-up with Loxo.
Dieter Weinand, president of the German group’s pharma business, admits that the need is particularly pressing. He told EP Vantage yesterday that, post-Monsanto, pharma bolt-ons and licensing deals would be more realistic than big acquisitions – a view apparently at odds with the stance of Bayer’s chief executive, Werner Baumann, who insisted that the monster Monsanto purchase had not come at the expense of other divisions.
Mr Baumann told the group’s 2017 earnings press conference yesterday that the Loxo deal was proof that Bayer’s other units were not being neglected. But this is a licensing agreement rather than an outright takeover, perhaps suggesting that Bayer’s buying firepower has diminished (Loxo’s Bayer deal falls short of bullish expectations, November 14, 2017).
Bayer has not ruled out buying Loxo in full at some point in the future, but Mr Weinand said that the German company was currently focused on launching Loxo's lead asset larotrectinib and the follow-on project LOXO-195.
Still, Mr Weinand played up his company's ability to compete for the Loxo assets in a tough bidding process, which he revealed to EP Vantage had included Novartis.
“At the time we were not truly aware who the other players were, but it was the usual, Novartis and [other] big players, yet we were able to get that deal,” he said after yesterday's press conference. “I think we got a very reasonable deal financially,” he insisted, despite what he called a feeding frenzy over small companies.
Loxo and larotrectinib are clearly important for Bayer’s future – the project was one of the few pharma candidates to get a look in during an earnings presentation dominated by the Monsanto deal.
The company, which faces loss of exclusivity for its best seller, Xarelto, in 2024, has still not put a number on larotrectinib’s peak sales, although a figure of around $850m has been mooted by others.
It might take a while for it to become apparent whether Bayer overpaid for larotrectinib – the German group plans to complete a rolling US NDA in the coming weeks and hopes to be able to launch by the end of the year. But even if it gets the go-ahead there are factors that could hinder initial uptake.
As larotrectinib is a tumour-agnostic drug that will be indicated for patients with Trk mutations, the routine use of Trk testing will be key to its success. Bayer hopes to get Trk onto commercial testing panels, at which point the cost of testing would come down from around $600 currently to “one tenth of that,” Mr Weinand said.
The size of the Trk niche will also be key. It is thought that to occur in 0.5-1% of cancers in which it is prevalent, though Mr Weinand says this might be an underestimate. “With Alk mutations there was a similar estimate, but once routine testing started that went up to more than 5%. We will have to see once routine testing starts what the ultimate prevalence really is.”
But larotrectinib cannot fill the Xarelto-shaped hole alone, and Bayer’s internal pipeline looks sparse, particularly since last year's failure of anetumab ravtansine in mesothelioma – the group had previously said the project was one of its future stars (Bayer looks beyond Xarelto and Eylea, February 22, 2017).
Mr Weinand insisted that anetumab was not dead, describing mesothelioma as a “minor indication” and pointing to an ongoing basket trial in various cancers. Still, 2022 sellside consensus for the project now sits at just $3m, down from $380m last April.
Mr Weinand listed several other projects that he believes have promise, although sellside expectations are not high. Notably, damoctocog alfa pegol is a factor VIII replacement therapy that might have a tough time making an impression on a changing haemophilia A market.
|Beyond larotrectinib – Bayer's highlighted assets|
|Project||Indication(s)||Status||2022e sales ($m)|
|Aliqopa (copanlisib)||Non-Hodgkin lymphoma||Approved Sep 2017||434|
|Damoctocog alfa pegol||Haemophilia A||Filed||362|
|Vilaprisan||Uterine fibroids, endometriosis||Phase III||187|
|Molidustat||Anaemia in chronic kidney disease||Phase III||55|
|Anetumab ravtansine||Solid tumours||Phase I||3|
Deals are seemingly the only way out for Bayer, which will be looking in oncology, cardiology, women’s healthcare, ophthalmology and haematology, according to Mr Weinand.
And a lacklustre pipeline is not the only issue – Bayer is also trying to resolve an FDA warning letter over manufacturing practices at its Leverkusen facility, which has hit the supply of older drugs like Adalat and Levitra. The company said yesterday that the interruption would reduce adjusted earnings by around €300m ($365m).
Mr Weinand said the group was working closely with the FDA, and hopes to settle the warning letter by the end of the year. But this could prove a distraction to what must be the priority for Bayer’s long-term future in pharma: finding promising new R&D projects.