Snippet roundup: drug spending growth shrinks but M&A holds up in medtech
Welcome to your weekly roundup of EP Vantage’s snippets – short takes on smaller news items.
This week, December 4 to 8, 2017, we had thoughts on the following: Stryker noses out growth with Entellus buy; Edwards confirms suspected CardiAQ delay; in the spotlight, US drug spending growth slows; Edwards hopes a Harpoon will heal its heart problems; Livanova looks for sleep apnoea stimulation with Imthera buy; Novo’s Ozempic nod sets up Lilly battle; Ra might need to think about price war with Alexion; non-inferiority might not be enough for Sanofi’s Toujeo; Akili’s computer game demands attention; Repatha’s 15% advantage good enough for the FDA.
These snippets were previously published daily via twitter.
Stryker noses out growth with Entellus buy
December 8, 2017
Stryker has had a quiet 2017 on the M&A front, at least compared with its riotous 2016, but the year has not closed without it making a foray into a new area. Entellus Medical, which Stryker has bought for $24 per share cash or around $662m in total, develops and sells devices for ear, nose and throat procedures. Entellus is expected to grow fast, with sales forecast to increase by 18% annually out to 2022, EvaluateMedTech data show. This is partly due to an acquisition of its own. Entellus bought Spirox in the summer and sales of Spirox’s only product, the Latera absorbable nasal implant, hit $3.1m in the third quarter of 2017, handily outpacing analysts’ estimates, which hovered around the $1.7m mark. Another of Entellus’s products, the postoperative nasal dressing Xerogel, is projected to grow at 38% year-on-year to 2020. Entellus’s sales are minute compared with Stryker’s, and the deal is expected to be dilutive to Stryker’s 2018 adjusted net earnings per diluted share by approximately four cents, though the company says it will be accretive thereafter.
Edwards confirms suspected CardiAQ delay
December 8, 2017
Yesterday’s investor day finally confirmed that European approval of Edwards Lifesciences’ mitral valve replacement device CardiAQ has been delayed. CardiAQ was initially slated for CE mark in 2018, but clinical trial halts and a redesign have now pushed this back to 2020 at the earliest. Edwards said yesterday that one of several devices – CardiAQ, a mitral version of its established aortic valve Sapien, or its mitral and tricuspid repair therapies Pascal and Forma – would hit Europe in 2020, so it is anyone’s guess whether CardiAQ will actually be approved in that period. Fortunately for Edwards, its $100m acquisition of Harpoon Medical, also announced yesterday, gives it the prospect of a near-term CE mark; the Harpoon system, which is intended for repair rather than replacement of the mitral valve, is expected to get European approval by the end of this year.
Source: Company Presentation
US drug spending growth slows
December 7, 2017
The numbers are in – the pressure of payers and politics pushed US drug spending growth in 2016 to the slowest rate since the patent cliff years of 2011-2012. This will provide the sector with a powerful argument against drug price controls, even as prices themselves rose at one of the fastest rates in years in 2016 – after all, payers seem to be keeping costs in line through utilisation management and targeted price concessions. Moreover, the data could allow biopharma to direct attention elsewhere, as the 1.3% cost growth in 2016 was well below that of the US as a whole, hospital or physician spending, which grew 4.3%, 4.7% and 5.4% respectively. Nonetheless, with the memories of 2015 still sharp, when the launch of new hepatitis C agents pushed spending up by nearly 9%, it does not seem likely that payers or policymakers will let up. After all, a return to 20-year annual spending growth rate trend of 8% per year could begin to stretch budgets to the breaking point. The sector seems to be sensitive to that – the drug consumer price index has been negative in four out of 10 months in 2017
Edwards hopes a Harpoon will heal its heart problems
December 7, 2017
After putting a ring on Harpoon Medical back in 2015 in the form of an up-front investment, Edwards Lifesciences yesterday sealed the union with a $100m payment to acquire the heart repair company. Today, Edwards announced a $1bn share buyback programme. The timing of the two is interesting; the first says more about Edwards’ desire to expand into mitral valves following setbacks in its own internal attempts. The second looks like an admission that following large scale consolidation in the medtech industry there are few targets left for companies to go after and, as such, share buybacks offer the easiest way to keep driving the bottom line. With its small deal for Harpoon, Edwards will get Harpoon’s innovative technology which allows repair of mitral valve regurgitation. The product is not yet commercially available, and Edwards appears to have made its move before receiving a CE mark, an event that could have bumped up the price. The deal also includes a further $150m earnout over 10 years.
Livanova looks for sleep apnoea stimulation with Imthera buy
December 6, 2017
After Livanova’s recent refocus, the company has wasted no time in bolstering its neuromodulation business with the purchase of Imthera Medical. The deal will give Livanova an investigational neurostimulator for obstructive sleep apnoea, called aura6000, to add to its US-approved SenTiva device for drug-resistant epilepsy. Like the gold standard, continuous positive airway pressure (CPAP), aura6000 aims to keep patients’ airways open – the former does this with air delivered using a mask, while Imthera’s device involves stimulating muscles in the tongue via the hypoglossal nerve. Imthera makes much of the fact that the device frees patients from CPAP masks, but aura6000 involves a procedure to implant the battery-powered stimulator, albeit a minimally invasive one. The device, if it succeeds in the ongoing THN3 trial, could eventually go up against Nyxoah’s Genio, whose Blast OSA study is due to read out next year. Meanwhile, the recently approved Remede system from Respicardia only has the go-ahead for the less common central sleep apnoea indication. The Livanova deal – worth $78m up front and up to $225m in total – represents a decent return for Imthera investors, who have put just $20m into the private company since 2008, according to EvaluateMedtech.
Novo’s Ozempic nod sets up Lilly battle
December 6, 2017
Sales forecasts for Novo Nordisk’s once-weekly injectable GLP-1 agonist semaglutide have breached the $3bn barrier, according to 2022 EvaluatePharma sellside consensus. And with US approval in hand Novo can now focus on taking market share from Lilly’s rival once-weekly drug Trulicity. The label for sema – now trademarked Ozempic – falls short of stating a cardiovascular benefit, but does incorporate positive data from the Sustain 6 outcomes trial. This raises the question of whether Novo will need to carry out a similar, but larger study next year as previously planned. The Danish group’s chief science officer, Mads Krogsgaard Thomsen, seemed reluctant to commit to this on a conference call today, but said the company would give more details soon. Novo already has two large phase III trials set to start next year in obesity – an indication that is becoming increasingly important as diabetes pricing pressure continues. For now, Novo is confident that Ozempic will help it grow the overall GLP-1 diabetes market but its chief executive, Lars Fruergaard Jørgensen, admitted that some cannibalisation of its older daily product, Victoza, would be inevitable. Ozempic’s list price will be similar to the leading GLP-1s, he added, with a “competitive” co-pay of around $25.
Ra might need to think about price war with Alexion
December 5, 2017
Perhaps Ra Pharma will be able to compete on price with its Soliris rival RA101495, as besting the only marketed paroxysmal nocturnal haemoglobinuria (PNH) agent on efficacy is looking unlikely. Massachusetts-based Ra reported that its agent, like Soliris a complement factor C5 inhibitor, significantly reduced levels of lactate dehydrogenase, a biomarker of PNH, at 12 weeks in PNH patients who had never taken Soliris. This phase II trial also showed a near-complete reduction of complement activity. The reduction of lactate dehydrogenase, to 1.5 times the upper limit of normal, does not look like it will be able to match the activity of the Soliris follow-on ALXN1210, on which many patients achieved normal levels of lactate dehydrogenase. Alexion has put ALXN1210 into pivotal trials, suggesting that it could be launched before Ra’s project. The Leerink analyst Geoffrey Porges also noted that the daily subcutaneous injection of RA101495 could make it less attractive to patients than the fortnightly maintenance infusion of Soliris or even less frequent dosing for ALXN1210. Soliris’s main weakness is, of course, its $600,000 a year price tag, which offers an opportunity to Ra should its candidate continue to succeed in the clinic and with regulators.
Non-inferiority might not be enough for Sanofi’s Toujeo
December 4, 2017
Sanofi’s latest long-acting insulin, Toujeo, has struggled to live up to expectations – but the company will hope for a turnaround after the drug performed similarly to Novo Nordisk’s rival, Tresiba, in a head-to-head study in type 2 diabetes. Sanofi has a battle to shift patients onto Toujeo from its older insulin, Lantus, especially given the threat from Lilly’s Lantus biosimilar Basaglar. And proving non-inferiority to Tresiba might not be enough to give Toujeo an edge in an increasingly competitive and cost-conscious diabetes market. Both products have faced questions from payers on whether an apparently modest benefit on hypoglycaemia is worth a premium price. Sanofi will report full data from the head-to-head Bright study next year, but Novo is already one step ahead, with a decision on a hypoglycaemia label claim for Tresiba due in early 2018. Still, unlike some other type 2 diabetes medications, including those from the GLP1 agonist and SGLT2 inhibitor class, neither Toujeo nor Tresiba has shown a benefit on cardiovascular outcomes.
Akili’s computer game demands attention
December 4, 2017
The US appears to have taken a step towards permitting the first prescription computer game. Its developers, Akili and Akili’s founder and affiliate, Puretech, call AKL-T01 a “digital medicine” that uses “adaptive algorithms to deliver the presentation of stimuli that engage targeted neural systems in the prefrontal cortex … through a creative and immersive action video game experience”. It is intended to treat ADHD, and remarkably data from its pivotal trials appear to show that it actually does. The Stars-ADHD trial (NCT02674633) randomised 348 ADHD patients aged 8-12 to either AKL-T01 or another game that also runs on a tablet and uses Akili’s Project: EVO technology. Patients that played AKL-T01 showed a statistically significant improvement on measures of sustained attention and the ability to focus, the primary endpoint, compared with no improvement in the control group (p=0.006). The game is on course for submission to the FDA in the first half of next year, but even if it is approved it is not clear how the game would be received – after all, computer games are more often spoken of as a cause rather than a cure of ADHD. Reimbursement might also be hard to secure.
Repatha’s 15% advantage good enough for the FDA
December 4, 2017
Amgen avoided the worst-case scenario when Repatha received the US FDA’s approval to begin marketing on data showing that it prevents heart attacks and strokes, but the PCSK9-blocking antibody still has much work ahead. Convincing payers that the modest 15% reduction in cardiovascular events achieved by Repatha plus statins over statins alone is worth the money will be a continuing difficulty, even as Amgen has offered discounts based on outcomes to increase uptake. Upcoming data points could hinder or help Repatha with payers. Sanofi and Regeneron’s rival product Praluent could show a differing benefit, better or worse, in its upcoming Odyssey Outcomes trial readout, and follow-up data from Repatha’s Fourier outcomes trial could show a growing benefit over statins alone. For now, however, Amgen has to be relieved that Repatha is the only PCSK9 that can be marketed on the basis of preventing cardiovascular complications, which gives the California group a chance to build an advantage.