Baxter goes back for second helpings with $565m Onconova deal

There is obviously something about Onconova Therapeutics that Baxter International likes. Yesterday the US haematology giant announced that it would be stumping up a $50m up-front fee and potential milestones of $515m to get European rights for rigosertib, a phase III multi-kinase treatment for myelodysplastic syndromes (MDS).

This is Baxter’s second set of dealings with Onconova after its decision in August to take a $50m equity stake. Baxter has recently made little secret of its desire to expand its business outside its key blood franchise, so scooping up the European rights to rigosertib looks to be a relatively low-risk way for the group to achieve this goal, especially given the equity stake.

Synergies

For Baxter rigosertib provides an ideal training-wheels product. MDS represents a good fit with the existing blood business, as it relates to myeloid stem cell disorders, which affect the ability of bone marrow to produce normal, red and white cells as well as platelets.

The inability of blood stem cells to mature means that these cells, called blasts, either die in the bone marrow or enter the blood. MDS is often seen as a precursor to full-blown leukaemia because the more blasts are present in the body the higher likelihood of developing leukaemia.

At present the only treatments for MDS are blood transfusions, bone marrow transplants and chemotherapy. An intravenous product, rigosertib is being developed for patients who have failed or relapsed on these treatments, and if approved would be the first product on the market. An oral version of the drug for first-line use is in phase II trials and it is also being studied in a combination phase II/III study for metastatic pancreatic cancer.

Rigosertib also gives Baxter a way of cashing in on big pharma’s increased interest in rare diseases. It has been granted orphan drug status on both sides of the Atlantic, meaning that if and when it is approved in Europe it should slot into the existing haematological sales force with little extra cost.

Not so solid route

As well as licensing in rigosertib, Baxter, whose existing oncology franchise consists of elderly alkylating agents and anti-emetic products, is dipping its own toes in to the development waters.

Earlier this month it announced that it had started a phase I 44-patient trial of its novel anti-microphage migration inhibitory factor (anti-MIF) monoclonal antibody, Anti-MIF MAb Program, in malignant solid tumours.

This is an unusual and much more risky second choice for Baxter given that the drug was originally licensed in 2003 from Cytokine PharmaScience and could be the only anti-MIF MAb in clinical development. Biogen abandoned its attempts to develop an anti-MIF MAb in 2000 even before it hit the clinic.

But even with what looks like a highly risky class that has yet to see a candidate make it past phase I, the lure of oncology is simple: it will be the biggest therapy area within pharma and is expected to see one of the highest future growth rates (see below).

According to EvaluatePharma, sales of oncology drugs are set to rise from $80.7bn in 2011 to $123.8bn by 2018, a compounded annual growth of 6% a year.

With $2.27bn in cash on its balance sheet and huge market opportunity out there Baxter’s latest deal in oncology is almost certainly not going to be its last.

Worldwide Rx and OTC drug sales by therapy area 
2011 2018 CAGR Total change
Main Categories  ($m) ($m) ($m)
     Blood 46,138 53,758 2% 7,620
     Cardiovascular 84,987 58,465 (5%) (26,521)
     Central nervous system 100,447 87,759 (2%) (12,688)
     Dermatology 14,045 17,099 3% 3,054
     Endocrine 44,307 69,269 7% 24,961
     Gastro-intestinal 30,120 33,830 2% 3,710
     Genito-urinary 27,107 26,795 (0%) (311)
     Musculoskeletal 54,759 68,975 3% 14,216
     Oncology &  Immunomodulators 80,707 123,802 6% 43,095
     Respiratory 48,410 47,116 (0%) (1,295)
     Sensory organs 14,447 21,155 6% 6,708
     Systemic anti-infectives 77,380 99,388 4% 22,009
     Various 14,748 22,687 6% 7,940
     Other Rx & OTC pharma 123,872 175,100 5% 51,227
     Total Sales 761,474 905,198 3% 143,724

To contact the writer of this story email Lisa Urquhart in London at lisau@epvantage.com

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