Welcome to your weekly roundup of EP Vantage’s snippets – short takes on smaller news items.
This week, June 11-15, 2018, we had thoughts on the following: adcom vote brings BTG’s Elevair down to earth; Sirtex spends $12m to gain $200m; Keytruda nudges ahead of Opdivo in haematology and cervical cancer; Mylan joins Hikma with double Advair generic rejection; takeout thesis remains intact as Sage farms out non-core territory; folfirinox nixes Targovax vaccine; Crispr careers along its rocky path; Fresenius sees future reward in natural graft; a Stryker-Boston combo could take on Medtronic; Translate Bio gets Sanofi Pasteur’s imprimatur.
These snippets were previously published daily via twitter.
Adcom vote brings BTG’s Elevair down to earth
15 June, 2018
At the beginning of this month analysts from Jefferies wrote that BTG reckoned its lung implant Elevair had a 50:50 chance of success at its FDA panel meeting. In the event even that lukewarm optimism was misplaced. The adcom yesterday recommended against approval of Elevair, the small twists of wire designed to be placed in COPD patients’ lungs to restore contractility, voting in favour of its safety but not its effectiveness. Expectations for Elevair, previously called PneumRx Coil, had been high, with BTG originally guiding to sales potential of more than $250m a year. Enthusiasm has dimmed substantially, though, given the £150m ($210m) writedown of the asset in April, and EvaluateMedTech consensus forecasts for the device do not see it hitting the $250m mark by 2024. Even so, the news came as a disappointment to shareholders, with BTG’s stock down 5% so far today. BTG bought Elevair’s developer, Pneumrx, in 2014 for $230m up-front; that deal is doubtless the source of some regret for management.
Sirtex spends $12m to gain $200m
15 June, 2018
A month ago Sirtex’s management said it wanted to stick with Varian’s US$1.2bn takeover offer, which it had accepted in January, rather than ditching the imaging company for the US$1.4bn counteroffer made by the Chinese asset manager CDH Investments. No longer. Sirtex is to go where the money is, and has recommended that shareholders vote for a slightly different version of CDH’s offer: the price is unchanged, but now CDH Investments will jointly acquire Sirtex with its partner, China Grand Pharmaceutical and Healthcare Holdings. Sirtex is to pay Varian a break fee of Aus$16m (US$12.1m), peanuts compared with the extra $200m it will get via the larger bid. The company’s Sir-Spheres technology, approved for liver metastases from colorectal cancer, is the biggest-selling radioembolisation microsphere product, but will be overtaken by BTG’s Theraspheres in 2020, according to sellside forecasts compiled by EvaluateMedTech. Sirtex’s shares closed up 5% today at Aus$31 apiece; CDH’s bid is Aus$33.60 per share.
Keytruda nudges ahead of Opdivo in haematology and cervical cancer
14 June, 2018
US approval for Merck & Co’s Keytruda in primary mediastinal large B-cell lymphoma (PMBCL) marks an unusual first: apart from classical Hodgkin’s lymphoma anti-PD-(L)1 therapy is thought not to be particularly effective in haematological malignancies. In classical Hodgkin’s lymphoma Keytruda as well as Bristol-Myers Squibb’s rival, Opdivo, already have the US FDA’s blessing – in fourth and third-line use respectively – but yesterday’s nod for third-line PMBCL marks the first for an anti-PD-(L)1 drug. A day earlier the US regulator had waved Keytruda through in cervical cancer, marking another anti-PD-(L)1 first. The PMBCL accelerated green light was backed by Keynote-170, a trial showing 45% overall remission among 53 subjects, while the cervical cancer nod, in second-line disease, came on the basis of 77 PD-L1-positive subjects enrolled into cohort E of Keynote-158, 14.3% of whom responded to active treatment.
Mylan joins Hikma with double Advair generic rejection
14 June, 2018
For a company struggling with innovation and shareholder returns Glaxosmithkline has had a scarcely believable amount of luck maintaining its biggest franchise, Advair. Mylan, one of three groups attempting to mount a US generic challenge to this respiratory drug, yesterday revealed that the FDA was planning to knock its filing back with a second complete response letter, this one due on June 27 and coming after Mylan's response to the first CRL, received in March 2017. This eliminates 2018’s only remaining possible US Advair challenger. Hopes had rested on Mylan after the FDA upheld a May 2017 CRL for Hikma/Vectura’s version three months ago, requesting a clinical trial. The best promise Mylan could offer the market was that deficiencies in its response to the first CRL were “minor”, and that thanks to priority designation approval could still come within 90 days of its response to the latest knockback. This is obviously great news for Glaxo, though by this point the battles are all about damage limitation: even without generic competition Advair sales are set to fall 20-25% this year to around $3bn.
Takeout thesis remains intact as Sage farms out non-core territory
14 June, 2018
The licensing deal Sage struck yesterday is financially impressive, but it might leave some of the group’s most bullish investors wondering how much longer they have to wait for their dream takeout scenario to come about. Still, as the tie-up involves Far East markets it probably leaves the takeover thesis intact – the US is all important – even if the group’s $7.9bn valuation is becoming increasingly hard to justify on a fundamentals basis. Shionogi is handing across $90m, an impressive up-front amount for this geographical territory, for rights to SAGE-217, Sage’s lead asset, for acute depression. Probably more important for the bulls is this week’s designation of one of SAGE-217’s ongoing studies as pivotal, meaning that US registrational data could come this year alongside the start of a new phase III trial. Farming out rights in the non-core markets of Japan, Taiwan and South Korea to Shionogi could be seen as a smart move: the Japanese group already has a CNS presence through marketing rights to Lilly’s antidepressant Cymbalta and Shire’s ADHD drug Intuniv.
Folfirinox nixes Targovax vaccine
13 June, 2018
Sometimes you fall behind because you stumble; sometimes it’s because another runner suddenly pulls ahead. Targovax has pivoted away from its anti-Ras pancreatic cancer vaccine, TG01, realising that data on Folfirinox presented at Asco surely mean that the chemo regimen will become the new standard of care. Targovax cannot afford to run the five-year clinical trial that would be needed to prove TG01’s competitiveness – and there is a chance the vaccine would not meet the efficacy bar anyway. Consequently it has canned a planned phase II trial of TG01 in combination with gemcitabine and capecitabine, which used to be the chemo combo to beat. At Asco, however, Folfirinox – folinic acid, fluorouracil, irinotecan and oxaliplatin – yielded overall survival 19 months longer than gemcitabine. Targovax is considering its options for TG01, but investors seem to have concluded that the agent has little hope of matching the new standard, and the group’s stock sank 20% yesterday. There is a small upside in that it has another phase II asset, the oncolytic virus Oncos-102, on which it can spend the money it will save by calling off the TG01 trial; the company says it will expand Oncos-102’s ongoing mesothelioma study. There is a larger question here, though: given the Folfirinox data, what hope is there for other projects in late-stage development for pancreatic cancer?
Crispr careers along its rocky path
12 June, 2018
Last month clinical trial delays, this month another safety scare. When will the news turn positive around Crispr gene editing? The answer is some time from now and, if two papers published in Nature Medicine this week are anything to go by, possibly never – though none of the authors came close to such a drastic conclusion. Still, Crispr stocks collectively lost $665m in market value on Monday as investors fretted about the technology’s potential to trigger tumour growth. Cancer is certainly up there in the list of potential risks that this cutting-edge gene-editing technique carries, and it goes without saying that researchers, commercial companies and regulators are laser-focused on this concern. But before clinical data emerge the unwanted consequences of Crispr are almost impossible to define, and this is unlikely to happen quickly. It remains unclear exactly why the US FDA slapped a hold on Editas and Vertex’s IND a few weeks ago, but the action shows that regulators are taking things very slowly. Still, the rebound in the three listed Crispr companies today shows that investors at least are not put off so easily. Should regulators eventually allow trials to start across a range of diseases, confidence in these efforts will get another boost. But the ride will certainly be bumpy.
Fresenius sees future reward in natural graft
12 June, 2018
A dialysis company backing a product to help patients continue dialysis with minimal interruption is a no-brainer. Fresenius Medical Care thinks so too, if its $150m equity investment in the private group Humacyte is anything to go by. Fresenius is placing its multimillion-dollar bet on Humacyte’s Humacyl bioengineered blood vessels, which are intended to improve on the traditional synthetic grafts used to protect the veins and arteries of patients with end-stage renal disease undergoing frequent haemodialysis. Currently in phase III, the Humacyl grafts have so far shown potential to become part of the body’s living tissue, as well as lasting longer and having fewer of the complications associated with traditional grafts. Phase III trials in patients not eligible for fistula placement are due to read out in September. Fresenius’s investment gives it a 19% stake in Humacyte – a relatively low-risk bet ahead of the phase III results and a handy deterrent to other companies who might want to acquire Humacyte if the pivotal trials are successful. In return, Humacyte will have an experienced partner to help it get through the FDA approval process, which can be trickier for new technologies, and the chance of Humacyl being sold in Fresenius’s global network of 3,790 clinics, which currently serve over 300,000 patients. If Humacyl is the success Fresenius is hoping for, another no-brainer would be eventually taking out its new partner.
Humacyl bioengineered blood vessel. Courtesy of Humacyte.
A Stryker-Boston combo could take on Medtronic
12 June, 2018
So far neither Stryker nor Boston Scientific has confirmed reports that the former has made a bid to buy the latter, much less that such a deal might actually happen. But if it did, the group would become the second-largest pure-play medtech by market capitalisation, with a value of around $110bn to Medtronic’s $118bn. Judged on sales of medical devices it would be in third place; Johnson & Johnson is currently forecast to take second place out to 2024, according to EvaluateMedTech’s consensus data. But analysts’ forecasts do not yet take account of the significant divestment J&J made last week, that of its advanced sterilisation business which it sold to Fortive for $2.7bn, so in fact the Stryker-Boston combo might end up in second place by sales, too. Moreover, Medtronic and Stryker-Boston could find themselves competing pretty directly: both would be significant players in cardiology, orthopaedics, neurology and surgery. Boston has had a hard line to walk over the past decade or so thanks to the aftereffects of its merger with Guidant, and is only now emerging from the doldrums. Now might well be a good time for Stryker to strike.
Translate Bio gets Sanofi Pasteur’s imprimatur
11 June, 2018
For a company headed to the stock exchange a generous, though backend-loaded, licensing deal with a much larger group could come as a welcome validation of its technology. Translate Bio will hope that that is how potential investors will interpret its tie-up with Sanofi Pasteur, anyway. Sanofi Pasteur has paid Translate $45m up front in a deal that will see the two companies jointly develop mRNA vaccines against up to five undisclosed pathogens. Sanofi Pasteur will pay for the research and will receive exclusive worldwide sales rights; if the vaccines work Translate is in line for up to $805m in milestone payments and option exercise fees, plus tiered royalties. Having last raised venture cash in January 2017 Translate has filed for a $115m IPO on Nasdaq, but until this goes ahead it will doubtless use Sanofi’s $45m to develop its lead candidate, MRT5005. The cystic fibrosis mRNA therapeutic is in a 32-patient phase I/II trial that will not conclude until 2021.