Snippet roundup: Cyclacel’s data dredge and Bristol’s activist investor
Welcome to your weekly roundup of EP Vantage’s snippets – short takes on smaller news items.
This week, February 20-24, 2017, we had thoughts on the following: Cyclacel dredges its way out; Bristol fails to contain investor disquiet; analgesic causes pain for Trevena; Sarepta’s voucher sale confirms the peak is past; Insulet looks to Horizon, but Medtronic already there; Torax follows medtech script perfectly with takeout by J&J.
These snippets were previously published daily via twitter.
Cyclacel dredges its way out
February 23, 2017
When you find yourself several metres beneath the bottom of the lake it might be time to stop dredging. The Seamless study of Cyclacel’s acute myeloid leukaemia project sapacitabine failed a futility analysis in late 2014, and it was vanishingly unlikely that sifting the data would yield anything useful. So it has proved, with the company admitting that no improvement in overall survival was seen with alternating cycles of sapacitabine and decitabine versus continuous decitabine. Seemingly undeterred, Cyclacel stated that an improvement in OS was seen in a subgroup of patients with low baseline peripheral white blood cell count, with the Seamless trial investigator saying that additional analysis of subgroups was warranted. The group’s investors are not keen on waiting for more subgroup studies: shares closed down 25% on Thursday. This means that any investors still holding Cyclacel shares having bought at the split-adjusted IPO price of $672 have lost 99.4% of their money 13 years later.
Bristol fails to contain investor disquiet
February 22, 2017
Just when Bristol-Myers Squibb thought it had neutralised one threat, another emerges. Yesterday’s non-executive appointments, temporarily increasing its board from 11 to 14 directors, and $2bn stock buyback came after discussions with Jana Partners, an activist investor that had taken a position in the struggling company. However, on the same day a much more notorious activist – Carl Icahn – was reported to have bought a Bristol stake. Judging by Mr Icahn’s dealings with companies like Amylin and Imclone, his presence on the investor register tends to preface management upheaval and/or a trade sale to release shareholder value, and sure enough Bristol spiked 2% on the news yesterday. It is easy to see Bristol as undervalued: its stock is hugely dependent on Opdivo, which is down but by no means out after a stumble in first-line lung cancer that could still be down to luck of study design (For Bristol Opdivo gives and it takes away, February 15, 2017). The company’s lack of a poison pill makes it takeover-friendly, but for a company like Pfizer to pull the trigger would require bullish views on Opdivo, the pipeline, and the US political approach to cost cutting. None of these bets is easy to make.
Analgesic causes pain for Trevena
February 21, 2017
Oliceridine is good, but not good enough. Trevena’s intravenous opioid met its primary endpoints in two phase III trials, beating placebo on analgesic effect in patients with moderate to severe acute pain following bunionectomy or abdominoplasty. And the two higher doses – three were tested in each trial – gave comparable pain reduction to morphine. But investors had expected more: early data had suggested that oliceridine might be able to do all this with a better side-effect profile than morphine, and here it disappointed: side-effects were, like efficacy, comparable to morphine. Trevena intends to submit for approval once results from a third trial come in, and might well get it thanks to the hit on the primaries coupled with oliceridine’s breakthrough status. But there is little case to be made for doctors to favour the drug over morphine, and its limited market potential forced Trevena’s shares down 40% yesterday.
Sarepta’s voucher sale confirms the peak is past
February 21, 2017
Estimates of up to $350m for Sarepta’s priority review voucher, awarded on approval of Exondys 51, have been proved vastly overblown. The $125m sale price, paid by Gilead, marks the lowest for one of these tickets to regulatory rapidity in two years. Optimists were ignoring clear signs that the price tag of these vouchers was set to decline: Gilead is thought to have paid around $200m for Paxvax’s last year, while their scarcity value has presumably been dented by the extension of the paediatric programme, meaning the FDA can issue more in the coming months. The sale also confirms Gilead as an enthusiastic purchaser. The antiviral giant has now spent $450m bagging these coupons, seemingly seeing more value here than in the M&A targets it is under so much pressure to acquire.
Insulet looks to Horizon, but Medtronic already there
February 20, 2017
Shares in Insulet opened 4% higher today after positive data from the first feasibility study of its hybrid closed-loop glucose delivery system, a step on the way to a true artificial pancreas. In the 24-patient study of adults with type 1 diabetes the Omnipod Horizon, which uses a proprietary algorithm to measure glucose levels constantly and deliver insulin, showed significant reductions from baseline in the time patients spent in a hypoglycaemic state. Nearly 70% of patients remained within the target blood glucose range during the 36-hour trial, and more importantly 90% of patients stayed within a safe range overnight. Despite good data for Horizon, Insulet is lagging others in the field. A readout from Cellnovo’s 240-patient trial is expected this year, and Medtronic’s Minimed 670G was approved in 2016. Insulet is not forecast to launch its Horizon product before 2019, so it will have a lot of catching up to do.
Torax follows medtech script perfectly with takeout by J&J
February 20, 2017
Form company, check. Raise money, check. Get product approval, check. Get bought, check. The private company Torax Medical on Friday said it had realised the medtech dream with a signed takeover agreement from Johnson & Johnson’s Ethicon division. The takeout from the US pharma giant’s surgery arm comes after the usual validation of Torax’s business model in the form of approvals for its lead products. The Linx oesophegal reflux management system for GERD was approved in 2012, while the Fenix Continence Restoration system got the nod from regulators in 2016. Both products rely on interlinked titanium beads with magnetic cores to help keep the oesophagus or anus closed stopping either acid reflux or faecal incontinence. Ethicon’s chief reason for the takeout, which did not have disclosed terms, is the lure of a safe and effective minimally invasive alternative to current surgical procedures. For Torax, whose last $25m series E funding round was led by J&J Innovation, this was the culmination of a successful working relationship with a group capable of accelerating its sales.