Snippet roundup: strategic mis-steps for Pfizer and Sage

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Welcome to your weekly roundup of EP Vantage’s snippets – short takes on smaller news items.

This week, February 13-17, 2017, we had thoughts on the following: Pfizer’s Xeljanz Oral Strategy backfires; Sage slips up on M&A talk; Strict label makes Siliq an also-ran; Integra spends $1bn to hit $2bn; Sage has a second depression asset to take forward; markets wise up to Axovant’s Lewy body data spin.

These snippets were previously published daily via twitter.

Pfizer’s Xeljanz Oral Strategy backfires

February 17, 2017

It is always risky for a company to test its product against the current standard of care, but sometimes there is no other choice. And for Pfizer, this gamble didn’t pay off – its Jak inhibitor Xeljanz has failed to beat Abbvie’s Humira in a head-to-head study in rheumatoid arthritis. Xeljanz plus methotrexate did show non-inferiority to Humira plus methotrexate, but Xeljanz monotherapy could not even achieve this. The primary endpoint of the Oral Strategy trial was the number of patients achieving an ACR50 response at six months. Xeljanz has been approved in RA since 2012, but has struggled to compete even before the latest data were announced, and Pfizer has failed to expand it into other indications such as psoriasis. The product looks set to be overtaken by Lilly and Incyte’s rival Jak inhibitor Olumiant – which has bested Humira in a head-to-head study. This week Olumiant became the first Jak inhibitor to be approved in the EU for RA, and is awaiting an FDA decision in April.

Sage slips up on M&A talk

February 17, 2017

Sage Therapeutics has been forced to backtrack on comments made by its chief executive that fuelled takeover speculation and sent its share price up 9% yesterday. In an interview with Bloomberg, Jeff Jonas said the group was “on the top of everyone’s M&A list” and was “hearing a great deal from a lot of companies”, especially since it reported positive results earlier this week with its oral depression candidate Sage-217 (see below). He added that the company hoped to remain independent, but this did not seem to temper investor enthusiasm, and Sage had to put out a statement after hours clarifying that it was not in M&A discussions. Its stock was down 5% in premarket trading this morning. Any potential buyers might want to wait for data from a more rigorous trial of Sage-217, which has so far only shown a benefit in a tiny open-label study. The company also has an injectable candidate, Sage-547, which is in phase III in epilepsy and post-partum depression.

Strict label makes Siliq an also-ran

February 16, 2017

Valeant has finally got FDA approval for its IL-17-targeting antibody brodalumab – now trademarked Siliq – in psoriasis. But a black box warning and restricted prescribing programme mean the product “appears to be dead in the water”, according to Mizuho analysts. Siliq has long been dogged by reports of suicidal ideation and behaviour; the label stresses that no definitive link has been established, but details an onerous risk evaluation and mitigation strategy that puts Siliq at a disadvantage to already approved anti-IL-17 agents. Notably, Novartis’s Cosentyx and Lilly’s Taltz have warnings about serious infections, but nothing about psychiatric risk. Valeant has not yet disclosed the Siliq's cost, but it will be interesting to see if the company decides to price it at a discount to other psoriasis biologicals, Evercore ISI analysts noted. But even this might not be enough to help Siliq capture market share, and it looks set to become a drug of last resort.

Integra spends $1bn to hit $2bn

February 16, 2017

The neurosurgery business of Codman & Shurtleff, part of J&J’s DePuy/Synthes unit, has been bought by Integra Lifesciences for $1.1bn, and the cash-and-debt deal could catapult Integra towards its revenue goals. Codman & Shurtleff sells devices for use during neurosurgery procedures, which made up around 43% of the unit’s sales in 2015, according to analysts from Oppenheimer. It also makes products for advanced hydrocephalus, which made up around 33% of the unit’s sales in 2015, and critical care products, which accounted for 19% of 2015 sales. Codman’s neurovascular and drug-delivery businesses are not included in the deal; the devices Integra has bought generated around $370m in 2016 sales. Integra has a long-term target of making $2bn in revenue with a 30% adjusted Ebitda margin, and while it will not reach these goals immediately – its sales were $999m last year, so adding Codman will only bring it to around $1.4bn – Codman’s underlying margin is 31%, versus 23.5% for Integra in 2016, so it is at least on its way.

Sage has a second depression asset to take forward

February 14, 2017

The readout might have come from a tiny, 13-patient trial, but for Sage Therapeutics it marked a second neuroscience asset to take forward into clinical trials. The success of Sage-217 in demonstrating a benefit in major depressive disorder sent the group’s stock up 12% yesterday, two months after Sage said its more advanced asset Sage-547 – both are Gaba A receptor modulators – could be filed for postpartum depression on the strength of phase II data alone, resulting in launch as early as in 2019. Sage-217, which has a longer patent life than Sage-547, is also being studied in postpartum depression as well as Parkinson’s disease, though for now major depressive disorder looks like its most promising use, with a potent effect on the Hamilton rating scale for depression seen after just one dose, and maintained throughout the 15-day treatment period in an open-label study. The next stage is to conduct a phase II trial in a more rigorous, placebo-controlled setting. Of course, CNS studies often see a high placebo effect, so the real indicator of efficacy will come from placebo-adjusted data, but for now Sage’s $2.2bn market cap shows that investors are willing to take a chance.

Markets wise up to Axovant’s Lewy body data spin

February 14, 2017

Until now Axovant’s investment case has revolved around the Alzheimer’s disease project intepirdine, but yesterday the group tried to give the market something else to look forward to. It said nelotanserin, a 5-HT2A inverse agonist licensed by its holding company, Roivant, from Arena Pharmaceuticals, performed well enough in a tiny study in Lewy body dementia to warrant starting phase III in the second half of this year. However, the ongoing trial actually aims to treat visual hallucinations associated with Lewy body dementia, and secondary outcome measures dealing with hallucination frequency and severity were missed. Nelotanserin apparently hit the primary endpoint, improving motor symptoms of Parkinson’s disease versus placebo, but Axovant would not even say whether this related to the intent-to-treat population of 11 patients in this interim analysis. The most advanced project with this mechanism of action, Acadia’s Nuplazid, was recently approved for Parkinson’s disease psychosis, where, after study amendments, it showed an effect on positive symptoms but not motor function. Axovant stock initially rose yesterday, before reality prompted a 6% fall at market close. It seems that nelotanserin warrants a level of scepticism similar to intepirdine.

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