Welcome to your weekly roundup of EP Vantage’s snippets – short takes on smaller news items.
This week, October 23 to 27, 2017, we had thoughts on the following: Amgen puts another CETP out of its misery; Stryker buys Vexim without waiting for US approval; How much is aducanumab worth? At least $8bn, Biogen reckons; Alcon delay puts dampener on Novartis; Soliris sitting pretty with complementary new indication; Smith & Nephew acquires, but divestments could follow; Global Blood drops IPF programme.
These snippets were previously published daily via twitter.
Amgen puts another CETP out of its misery
October 26, 2017
If the once-promising CETP drug class lives on, it might only be in a rather restricted group of heart disease patients with a very specific mutation. Amgen became the last big biopharma group to cancel work on a drug in the HDL-raising class when it announced plans to seek a partner for AMG 899, following the lead of Merck & Co, which recently terminated its work with anacetrapib after disappointing results in the Reveal trial. Although big pharma groups obviously believe that it is unlikely for a CETP inhibitor to succeed commercially, it is not out of the realm of possibility that a partner could emerge for AMG 899 – Roche licensed its project, dalcetrapib, to the Canadian group Dalcor Pharmaceuticals, which has been researching its use in a genetic subtype, patients with an AA polymorphism at the rs1967309 location in the ADCY9 gene. Amgen will write off the $300m it paid for AMG 899’s originator, Dezima Pharma, in 2015, which at the time was seen as a cheap bet on the CETP sector. The project had spent recent months in limbo after Amgen put development on hold, saying it was awaiting the outcome of trials of rival agents.
Stryker buys Vexim without waiting for US approval
October 25, 2017
That Stryker has acquired a company that makes a spinal implant is not likely to raise eyebrows; that it did so before the implant gained US market clearance makes the deal a more unusual move. Vexim’s SpineJack, a product sold in Europe since 2010 for the treatment of vertebral fractures, is in a study that could allow for a 510(k) clearance filing next year. Stryker is clearly confident of success: yesterday it bought 50.7% of the French company’s share capital and 50.3% of the voting rights, paying €20 ($24) per share, plus €3.91 apiece for 170,745 listed warrants. Today Stryker’s French subsidiary will file an all-cash tender offer for all Vexim shares and warrants it does not already own, at the same prices. The deal values Vexim at around €183m – not bad considering sales of SpineJack are only forecast to reach $61m in 2022, according to EvaluateMedTech’s sellside consensus.
Glaxo hints that its future lies in consumer health
October 25, 2017
Glaxosmithkline is not averse to bulking up its consumer offering – but its top priority is improving its pharma business, chief executive Emma Walmsley said today. However, at least part of the decision is out of Glaxo’s hands: the UK group would be happy to increase its stake in its consumer joint venture with Novartis, according to Ms Walmsley, but it is up to Novartis whether or not it exercises its option to sell in March 2018. And Novartis’s chief exec, Joe Jimenez, hinted yesterday that the Swiss company might hang on to its 36.5% stake. “With the press of a button we can turn that asset into cash,” he said during the company’s third-quarter earnings call. “But in the meantime, while the margin increases and the top line grows, this is a good investment.” Meanwhile, Ms Walmsley would not be drawn on whether Glaxo was interested in acquiring Pfizer or Merck KGaA’s consumer units, only saying that she would “look at these assets carefully”. She also declined to say whether Glaxo might sacrifice its dividend to make the Pfizer purchase – and a lack of confidence around the group’s future dividend likely contributed to a 5% fall in Glaxo’s share price today.
How much is aducanumab worth? At least $8bn, Biogen reckons
October 25, 2017
If there were doubts about Biogen’s commitment to aducanumab, its highly risky beta amyloid-targeting Alzheimer’s disease project, this week’s dual deal restructuring should dispel them. On Tuesday a tie-up with Eisai was changed, with Biogen gaining an increased share of aducanumab’s economics – specifically an extra 5% in the US and 18.5% in the EU, plus a reduction in milestone payments – in return for a reduced Japan profit split (20% instead of 50%) and what Leerink assumes to be an extra $300m of R&D commitment. Biogen yesterday followed this up by renegotiating its deal with aducanumab’s originator, Neurimmune, cutting the royalty rate it will owe the Swiss entity by 15%, and potentially a further 5%, for up to $200m up front. Since it is known that the original rate was in the low to mid teens, the price Biogen stands to pay implies a saving of up to $8bn – so aducanumab must be worth more than $8bn for the economics to pay off. Aducanumab’s two phase III trials will not read out until late 2019/early 2020, so it will be some time before investors find out whether it was worth it.
Alcon delay puts dampener on Novartis
October 24, 2017
Novartis investors awaiting the separation of its Alcon eye care unit will have to wait a little longer: until the first half of 2019 to be precise. The division’s turnaround continues, with third-quarter sales up 7% at constant exchange rates year on year, and Novartis appears to have narrowed down the options to either a spin out or IPO. But Alcon needs to show “multiple quarters” of top and bottom-line growth before a separation can take place, the group’s outgoing chief executive Joe Jimenez said during Novartis’s third-quarter call. “We want the business to come to the market from a position of strength,” he added. The Swiss company’s stock was down 3% today, which Leerink analysts partly put down to the timing and “lack of absolute clarity” on the Alcon split. Meanwhile, Alcon has regained Novartis’s over-the-counter ophthalmic products including the Systane dry eye drop brand – these became part of the main group in early 2016, but continued to be largely managed by Alcon, according to Mr Jimenez. The OTC products sell around $700m per year; the chief exec did not give margin details, but said they should “substantially improve the profit profile of the Alcon business”.
Soliris sitting pretty with complementary new indication
October 24, 2017
With growth in Soliris’s approved indications set to slow, Alexion needed the FDA to give the go-ahead to its cash cow in myasthenia gravis (MG) – and, in spite of mixed phase III data, the agency has obliged. The approval, in refractory generalised MG patients who are anti-acetylcholine receptor (AchR) antibody-positive, will give Alexion access to 5-10% of the total MG population or up to 2,500 US patients, Leerink analysts estimate. EvaluatePharma sellside consensus forecasts MG sales of $687m in 2022, 16% of Soliris’s total revenues of $4.3bn that year, while Leerink is more bullish, putting 2022 MG sales at $1.2bn and total revenues at $5.3bn. It will be interesting to see how Alexion prices Soliris in the new indication; at up to $600,000 per patient per year in the US, Soliris is one of the most expensive drugs available. The latest approval had been widely expected by analysts after a European green light in August, but investors sent Alexion’s shares up 6% in premarket trading today, possibly pleasantly surprised by its broad US label. Soliris is sitting pretty in the complement inhibitor sector with its rivals several years behind, including Alexion’s follow-on project, ALXN1210, which is dosed less frequently.
Smith & Nephew acquires, but divestments could follow
October 23, 2017
With an activist investor rumoured to be pushing for divestments to increase its appeal as a takeover target, Smith & Nephew has in fact gone in the opposite direction. S&N has paid $125m cash up front for Rotation Medical, a Minnesota-based company that has developed a shoulder implant that induces growth of new tendon-like tissue to help repair rotator cuff injuries. The implant has 510(k) clearance in the US and an application for European approval is being prepared; it will be sold by S&N’s sports medicine reps as well as Rotation Medical’s own sales force, and up to $85m in sales-related milestone payments could follow over the next five years. The acquisition is the first S&N has announced for two years, and comes as the activist fund Elliott Management, which is thought to have a 2-3% stake in S&N, is reported to be agitating for divestments. Of course, the timing of the Rotation Medical deal is surely coincidental, rather than S&N seeking deliberately to defy Elliott’s alleged agenda, and divestments might yet occur.
Global Blood drops IPF programme
October 23, 2017
Global Blood Therapeutics at least deserves credit for killing a marginal-looking programme fairly early. True, its decision to cancel work in idiopathic pulmonary fibrosis (IPF) after less-than-promising phase I and II data puts more pressure on GBT440 to hit endpoints in its phase III trial in sickle cell disease. But in IPF GBT440, now called voxelotor, would have needed to match or exceed the efficacy of Roche’s Esbriet and Boehringer Ingelheim’s Ofev in slowing the decline of lung function. GBT’s executive team has decided that the improvements in oxygen saturation shown in two of the three early trials were not sufficient to show that GBT440 would be able to do that. If it is successful in sickle cell disease, GBT440 looks like it will be going up against less well-established players, with perhaps Novartis and Pfizer getting to market slightly earlier. Investors had been hoping for some success with IPF, though – GBT shares fell 2% in early trading today.