Bayer shows big pharma that a conglomerate can do it too

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The unfashionable conglomerate Bayer is showing big pharma how to do it. The approval of Adempas by the FDA yesterday marks the fifth significant regulatory win for the company in as many years.

And with drug sales projected to grow 4% a year until 2018, the German group’s healthcare division is expanding faster than many of its pure-play big pharma peers; with consensus for 2018 sales sitting at $18.6bn, the company is on track to become a bigger player than the likes of Lilly and Amgen, EvaluatePharma data show. This week Bayer laid out its strategy to build on recent successes, with plans to push five more novel agents into phase III by 2015 (see table).

Achievable target

Bayer might be better known for its large contraceptive pill franchise and Aspirin – which remains one of its 10 biggest sellers – but new assets that have reached the market over the past few years mark the company out as a strong player elsewhere.

Adempas, which can now be sold in the US to treat chronic thromboembolic pulmonary hypertension (CTEPH) and pulmonary arterial hypertension, follows Xarelto, Eylea, Xofigo and Stivarga onto the market. The company recently raised its 2013 sales target for these five products from €1.0bn ($1.35bn) to €1.4bn, and reckons they have the potential to bring in €5.5bn in revenue at peak.

At an investor presentation in London this week, Bayer said it was striving to generate compounded annual growth of 7% from its pharma business between 2012 and 2015, driven by these new products. Based on consensus forecasts, the division is expected to grow by 6% a year, EvaluatePharma data show.

It is easy to see where the company’s confidence comes from; the blood thinner Xarelto and eye drug Eylea have performed better than both the company and analysts had expected – particularly Eylea – and have carved out leading positions in markets that were already occupied by incumbents (Vantage Point – As Eliquis limps on Xarelto dominates oral blood thinners, October 09, 2013).

The launches of oncology candidates Stivarga and Xofigo are fresher and both compete in crowded markets while Adempas, due to enter a PAH field that will shortly see generic competition and the likely entrance of another formidable competitor, will also be facing a steep hillclimb. But Bayer has shown that it can overcome these kinds of challenges, and touts important differentiations for the products. That 7% sales growth target should be achievable.

Broader can be better

A pipeline presentation also revealed some bold hopes – considering that three of the drugs highlighted have only been in phase I testing, a target for late-stage trials by 2015 looks ambitious.

One of the most advanced is copanlisib, or BAY 80-6946, a PI3K inhibitor that is being tested in a phase IIa non-Hodgkin’s lymphoma study, which should complete at the end of 2014. Andreas Busch, head of global drug discovery for Bayer, acknowledged that this class is crowded, but pointed to its broad mechanism of action and strong responses seen in follicular lymphoma. Gilead's success with idelalisib also must raise hopes of success (Gilead catches up to Pharmacyclics in hot leukaemia field, October 10, 2013).

In heart failure Bayer highlights two approaches. First there is finerenone or BAY 94-8862, a non-steroidal MR antagonist that it believes offers significant safety advantages over the MR antagonists spironolactone and eplerenone, which are underutilised due to toxicities. A phase IIb study should report in 2015.

An earlier agent, an sGC stimulator, represents a new approach that the company believes could reduce event rates in patients with worsening chronic heart failure, by improving haemodynamics via restoration of cardiac and vascular cGMP signalling. Phase I studies produced dramatic results, Dr Busch said.

In uterine fibroids, Bayer has completed phase I work on S-PRAnt, a progesterone receptor antagonist that appears to reduce bleeding. And finally the company highlights its HIF-PH inhibitor, BAY 85-3934, a class that has received much attention recently for its promise in anaemia (Therapeutic focus – Big pharma takes high-level interest in anaemia pills, August 28, 2013).

Bayer’s pipeline is of course much broader than these five projects; a phase III haemophilia agent is due to yield data early next year and is already attracting a fair amount of attention. But emboldened by recent successes, the company is pushing into hard-to-treat indications with novel agents.

It is very unlikely that all will succeed. But Bayer shows the pharma world that a conglomerate structure can work. With the company's shares boasting a 20% gain this year, and having touched a record high of €89.63 in August, investors clearly think so too.

Key new products for Bayer Sales WW ($m)
Product Pharmacology class Originator Markets 2014 2018 Status Indications
Xarelto Factor Xa inhibitor Bayer WW ex USA, Spain & India 1,353 2,667 Marketed SPAF; DVT; PE
Eylea VEGFr kinase inhibitor Regeneron Pharmaceuticals WW ex USA (co-promote with Regeneron) & Japan 737 1,572 Marketed AMD; Macular oedema; Retinal vein occlusion 
Xofigo Radiotherapy agent Algeta WW, USA (co-promote with Algeta) 183 1,050 Marketed Bone mets in prostate cancer 
Adempas Guanylate cyclase activator Bayer WW 148 669 Approved Pulmonary hypertension; CETPH
Stivarga VEGFr & Tie-2 kinase inhibitor Bayer WW, USA (co-promote with Onyx) 352 645 Marketed Colorectal cancer; GIST
BAY 94-9027 Factor VIII Bayer WW - 269 Phase III Haemophilia A
BAY 94-8862 Mineralocorticoid receptor antagonist Bayer WW - 4 Phase II Chronic heart failure; diabetic nephropathy
BAY 80-6946 Phosphatidylinositol 3-kinase (PI3K) inhibitor Bayer WW 2 Phase II NHL
BAY 1021189 Guanylate cyclase activator Bayer WW - - Phase II Worsening chronic heart failure
S-PRAnt Endometriosis agent Bayer WW - Phase I Uterine fibroids
BAY 85-3934 Hypoxia-inducible factor prolyl hydroxylase (HIF-PH) inhibitor Bayer WW - - Phase I Anaemia

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

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