Ever since Biogen launched the multiple sclerosis drug Tecfidera it has faced questions about its ability to retain exclusive hold over this business, and a low-key Alkermes asset, ALKS 8700, had recently emerged as an important potential challenger.
But yesterday Biogen eliminated this threat simply by licensing ALKS 8700 from Alkermes. This made perfect sense for Biogen, but the mystery is why Alkermes has relinquished the project – which at least one analyst had thought could take $1bn of annual sales away from Tecfidera – for virtually no payment up front.
True, Alkermes does stand to receive $200m in milestones, the most significant of which, $150m, relates to US approval of ALKS 8700 before the end of 2021. And perhaps the biggest attraction is the mid-teen royalty that it will receive on Biogen’s sales should the multiple sclerosis project make it to market.
But for a phase III asset the $28m signing fee looks paltry. Indeed, the groups do not even refer to this as an up-front payment, instead describing it as Biogen’s contribution to R&D expenses incurred so far this year.
How they are related
ALKS 8700, a monomethyl fumarate prodrug, had been seen as important because of its similarity to Tecfidera, which contains dimethyl fumarate as its active ingredient; both are metabolised to monomethyl fumarate in the body.
The Alkermes asset had sailed under investors’ radar because it was to be filed in 2018 under the US abbreviated 505(b)2 pathway, based on already existing bioequivalence data. Tecfidera sales are expected to exceed $4bn this year, but ALKS 8700 as a me-too version could hardly have been expected to make more than a small dent in the Biogen blockbuster.
However, a potential game-changer existed in the form of Evolve-MS-2, a head-to-head gastrointestinal safety trial against Tecfidera due to yield initial data early next year. Evercore ISI’s Umer Raffat recently highlighted this trial, calling ALKS 8700 a “sleeper” that investors seemed largely to be ignoring.
And positive hints had already emerged: Alkermes management had stressed ALKS 8700’s tolerability, especially the low number of gastrointestinal discontinuations, raising hopes that it could actually beat Tecfidera. This was backed up by data from a phase III safety study, released at the Ectrims meeting last month.
|Phase III studies of ALKS 8700|
|Evolve-MS-1||935-pt safety trial||NCT02634307||0.5% GI discontinuations, vs 4% on Tecfidera label|
|Evolve-MS-2||420-pt GI safety trial vs Tecfidera||NCT03093324||Data on first 100 pts due early 2018|
For Biogen, therefore, it made sense both to neutralise a potentially better competitor and to secure its Tecfidera franchise, whose patents have long been seen as shaky.
Biogen has already had to hand over $1.25bn to Forward Pharma in an apparent acknowledgment that the Danish company was first to file patents on dimethyl fumarate (Court victory benefits Biogen and its Tecfidera rival alike, 22 March 2017).
Thanks to this Tecfidera has theoretically been secured until 2027/28, though the sellside largely expects earlier challenges, and sales look set to start falling off after 2018. ALKS 8700, meanwhile, has US composition-of-matter patents expiring in 2033, meaning that it will now play an important lifecycle management role.
Why then did Alkermes let ALKS 8700 go so cheaply? Most likely the company realised that it did not have sufficient firepower to take on Biogen on its own turf; it might also have had doubts about its ability to defend its own patents versus Tecfidera’s – there is some suggestion of an overlap – and a protracted IP dispute could have been a distraction.
Presumably it shopped the asset around but found no buyer more willing than Biogen. One reason: the multiple sclerosis market is becoming highly competitive, not least because of Roche’s Ocrevus, and EvaluatePharma’s archived forecasts reveal 2020 revenue consensus for Tecfidera of $4.2bn, down from $6.8bn back in May 2015.
Interestingly, an SEC filing reveals that Biogen can reduce its royalty rate if ALKS 8700 fails to show a sufficient safety advantage over Tecfidera in Evolve-MS-2. For now, however, the company will be happy just to have secured the franchise.