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COMPETITION FAILS TO REIN IN CANCER DRUG PRICES Competition has lowered costs in the US of medicines for chronic conditions, it’s done very little for anticancer drugs (p5) EXPERT VIEW STOCKWATCH R&D collaborations can be a fruitful way forward, enabling companies to pool existing knowledge or combine specialties (p20) Third week for first quarter earnings season was different again, with big pharma restoring some honor to the life sciences sector (p21) Scrip 13 May 2016 No. 3802 s cripintell ig e n c e .c om Ian Read, CEO of Pfizer Pfizer Split, Once Decided, Could Happen Quickly, CEO Says JESSICA MERRILL jessica [email protected] P fizer Inc. could complete a business breakup in about one year if the company decides to move forward with a split, CEO Ian Read said during the company’s first quarter sales and earnings call May 3. “If we made a decision to split in the fourth quarter, we believe that the transaction could be completed by the end of 2017,” Read said. The potential breakup of Pfizer was a hot topic during the quarterly call after the company abandoned plans to merge with Allergan PLC in April. After the failed merger, Pfizer said it would move the timeline for deciding on a split back to the original timeline, the fourth quarter of 2016. The company had delayed the decision, which it has been promising investors it would make for years, until 2018 when it announced the merger with Allergan. “The delay caused by Allergan was just the structural work that needed to be done to incorporate them in,” Read said. “That going away put it back on our original timeline.” The first quarter conference call marked the first public comments Read has made outside of a Wall Street Journal op-ed since Pfizer’s effort to buy Allergan and move to Ireland for the corporate tax advantages Pharma intelligence | informa was thwarted by the US Treasury. Investors were eager to hear more about Read’s thoughts on a potential breakup, M&A and Pfizer’s solo growth prospects. The CEO appeared to put at least one question to rest – whether or not Pfizer would pursue another inversion deal with a company like AstraZeneca PLC or GlaxoSmithKline PLC. The answer is not now. Given the steps taken by the US Treasury and the current political climate, Read said, “We do not see any potential for a transaction involving inversions in the near term.” “While the outcome was disappointing, we always viewed the potential Allergan transaction not as a new strategy but as a way to accelerate our existing strategy, which remains unchanged,” he added. Part of that strategy involves further M&A, although Read revealed little in terms of specifics about what kind of assets the company might be shopping for. However, he insisted Pfizer doesn’t need to complete deals to position either side of the business for a breakup. Both businesses are strong enough to stand alone, he insisted. “We will look for assets that we think will add value to shareholders, that will meet our returns,” Read noted, adding there is a bias in favor of assets that bolster the innovative side of the business given recent deal activity on the Established Products side. The company completed the acquisition of Hospira Inc. in September 2015, a substantial boost to Established Products. A STRONG FIRST QUARTER The addition of Hospira helped drive Pfizer’s Established Products sales up 17% to $5.97bn in the first quarter. The legacy Hospira business added $1.2bn to the group’s CONTINUED ON PAGE 7 IN THIS ISSUE Two once-promising biotechs are trading in penny stock territory and seeking shelter of Chapter 11 bankruptcy Both parties intend to challenge different aspects of the original trial 4 Kastle will give Ionis a 10% stake in the newly founded, Chicago-based biotech company from the editor 7 15 COVER / Pfizer Split, Once Decided, Could Happen Quickly, CEO Says [email protected] 3 Merck Faces Class Action In $250m Discrimination Case The great earnings circus is all but over for another quarter. We’ve watched Gilead Sciences’ sky-rocketing parabola reach its inevitable vertex as competition and price discounting took its toll on sales of its phenomenally successful (and phenomenally beneficial) hepatitis C drugs Harvoni and Sovaldi. The latest developments in the lawsuit with Merck &Co (see page 4) served to take a bit more sheen off the wonder drugs. Speaking of vertices, we’ve watched Vertex Pharmaceuticals disappoint with sales of its hotly tipped newer cystic fibrosis drug Orkambi flat-lining quarter on quarter amid a higher discontinuation rate than had been seen in trials. Recent rejections of Orkambi by NICE and the Scottish Medicines Consortium merely rubbed salt into Vertex’s wounds. Over in the traditional big pharma camp, still smarting from its epic bid to buy a non-US firm and carry out a tax inversion, Pfizer had the small consolation of reporting a strong first quarter. Now all eyes will be on if and how it carries out a business break-up (see cover story), and whether that will prompt knockon transactions affecting other industry players. Enjoy this week’s issue. 4 Gilead Makes Headway With Merck ‘Unclean Hands’ Argument 5 Competition Fails To Rein In Cancer Drug Prices 6 Regeneron Revives NGF Inhibitor With Phase II/III Data; Safety Issue Remains 7 Ionis Sells Kynamro To Kastle After Regaining Rights From Genzyme 8 More Troubles For Martin Shkreli – That Guy Drug Makers Despise 9 R&D Bites 10 HR+/HER2- Breast Cancer Market Set To Triple 11 Making Medicare Like Medicaid: High Anxiety For Drug Makers 12 Shire-Baxalta Deal: A Year In The Making 14 Amgen’s Harper Says Repatha Is Priced Right 15 Biotech Bankruptcies: BIND and NephroGenex Weigh Options 16 Business Bulletin 17 Biogen Backs Out Of Hemophilia, But Who Benefits? exclusive online content Novartis’ Oncology Chief On Sharpening Its Competitive Advantage http://bit.ly/1rsRgo2 Bruno Strigini talks about refining the pharma major’s oncology strategy and its pipeline potential. Affibody CEO Describes Three-Year Growth Plan http://bit.ly/1ZwwMWj Sten Stovall chats with David Bejker about development progress for the company’s novel class of antibody mimetics 2 | Scrip intelligence | 13 May 2016 18 Panel: Broaden Opioids Risk Plans, Require Prescriber Training 19 Ten Years On, Access To Biosimilars Still Patchy in EU 20 Expert View: R&D Collaborations: A Legal Route Map 21 Stockwatch: Big Pharma Strikes Back In Earnings War 22 Pipeline Watch 23 Appointments @ s cri pn e w s /s cri pi nte l l i genc e /s cri pi nte l l i g en ce /s cri pi nte l l i genc e © Informa UK Ltd 2016 HEADLINE NEWS Merck Faces Class Action In $250m Discrimination Case MANDY JACKSON [email protected] U S District Court Judge Michael Shipp in New Jersey issued a written opinion on April 27 that granted conditional class action status for Kelli Smith’s 2013 lawsuit, which was amended in January 2014 to add four plaintiffs. Both sides’ attorneys must now negotiate the wording of a notice by May 27 that will give thousands of current and former female sales representatives about 60 days to opt in as a member of the class that’s suing Merck for alleged systemic discrimination against women. “We remain confident that this case lacks merit – this is a procedural step that is typical in the early stages of lawsuits of this kind, and it does not mean any employees have been treated unfairly,” Merck said in a statement after Judge Shipp issued his decision. “The company will continue to vigorously defend itself and remains fully committed to providing equal employment opportunities for all employees. Merck has a strong antidiscrimination policy that prohibits discrimination on the basis of characteristics, such as gender, pregnancy, race, age, disability and sexual orientation.” Smith and her co-plaintiffs are suing Merck for 12 different causes of action: pay, promotion and pregnancy discrimination in violation of Title VII of the Civil Rights Act of 1964; retaliation and constructive discharge (an employee’s resignation in response to a hostile workplace) under Title VII; violations of the Family Medical Leave Act, Fair Labor Standards Act of 1938 as amended by the EPA of 1963, and the New Jersey Family Leave Act; and pay, promotion and pregnancy discrimination as well as retaliation under the New Jersey Law Against Discrimination (NJLAD). TIERED PAY SYSTEM AT HEART OF LAWSUIT Much of the amended lawsuit stems from alleged discrimination against women under a compensation system that assigned sales representatives to three different tiers at different wage rates. The plaintiffs claim that Merck systematically assigns women to lower tiers than similarly experienced men regardless of employees’ sales performance, especially if female sales reps go on maternity leave. “If gender discrimination flows from expectations of what women are capable of, that’s typically heightened when women go through pregnancy and maternity leave,” said attorney Deborah Marcuse of Feinstein Doyle Payne & Kravec LLC in Pittsburgh, Pennsylvania – one of the lawyers representing the plaintiffs in Smith v. Merck. Marcuse’s co-counsel David Sanford of Sanford Heisler LLP in Washington, D.C. represented women who successfully sued Novartis AG for discrimination and won a $170m settlement in 2010. Marcuse and Sanford also are co-counsels in a lawsuit filed on behalf of female sales representatives employed by Forest Laboratories Inc., now part of Allergan PLC by way of Forest’s acquisition by Allergan predecessor Actavis. The opt-in period in the Forest case has closed and about 350 women have joined the class action. Discovery work to support certification of the class is ongoing. Specific to the Merck case, Smith, for instance, said that she scripintelligence.com came back from maternity leave after the new tiered pay system was implemented in March 2011 and was automatically assigned to the lowest tier while a less-qualified male colleague was elevated to the second tier with a significant salary boost. Smith and other women said male managers specifically pointed out that they were demoted or denied raises and promotions because they had been pregnant and taken maternity leave. “The information submitted by Plaintiffs shows that sales representatives had similar responsibilities; that named plaintiffs were paid less than some allegedly similarly situated males; and that compensation decisions, although based in part on input from some direct managers, were finalized by a central, common office,” Judge Shipp wrote. His memorandum opinion also cites a report that showed, “on average, between 2011 and 2015, female sales representatives in the S1 and S2 tiers earned 1.4% less per year than male representatives in those tiers.” Merck argued that the plaintiffs’ evidence and testimony did not show a companywide violation of the EPA, but Judge Shipp said the women made an appropriate case for conditional certification of a class action, because they were able to present “a modest factual showing that a nexus exists between the manner in which Defendant’s alleged policy affected them and the manner in which it affected other employees.” JUDGE FAVORS MERCK ON OTHER PLAINTIFF REQUESTS The judge denied the plaintiffs’ request for tolling, otherwise known as an extension of the statute of limitations for claims against Merck, which the women asked for because of the pharma company’s alleged efforts to delay the litigation process. Equitable tolling was not granted for the class, but the judge may consider tolling for individual plaintiffs. “Women could say they didn’t know about the lawsuit or they didn’t opt in before, because they were afraid of retaliation,” Marcuse said. However, Judge Shipp also denied a request for a corrective action regarding a Merck non-disclosure policy that, according to the women, kept other female sales representatives from joining the lawsuit out of fear of losing their jobs. Merck argued that the policy only relates to government investigations and litigation related to the company’s products, and the judge agreed. “We are hopeful that women will hear that and come forward,” Marcuse said. In its defense, Merck said in a statement provided to Scrip that it has multiple avenues for dealing with discrimination complaints and works to make the company a hospitable environment for women, so much so that Merck has been recognized repeatedly by Working Mother magazine and the CLICK Read full story at: National Association for Female Executives http://bit.ly/1WizErD (NAFE). 13 May 2016 | Scrip intelligence | 3 HEADLINE NEWS Gilead Makes Headway With Merck ‘Unclean Hands’ Argument DONNA YOUNG [email protected] 4 | Scrip intelligence | 13 May 2016 Shutterstock: eelnosiva A federal judge found Gilead Sciences Inc.’s “unclean hands” argument alleging one of Merck & Co. Inc.’s patent attorneys had acted in bad faith by initially not telling the truth during a hearing reasonable enough to reopen a case in which the two firms have been fighting over whether the former company infringed on the latter’s hepatitis C virus (HCV) patents. Judge Beth Labson Freeman of the US District Court for the Northern District of California gave both sides a new opportunity to submit further evidence in the lawsuit, in which Merck asserted its California rival’s HCV drugs Sovaldi (sofosbuvir) and Harvoni (ledipasvir-sofosbuvir) infringed on the New Jersey company’s patents, ‘499 and ‘712. In March, a jury sided with Merck and awarded the company $200m, although that amount was much lower than the 10% of Sovaldi and Harvoni revenues the firm sought. But after that ruling, Gilead asserted that Merck’s patent attorney, Phil Durette, had lied during the hearing when he said he wasn’t on a confidential conference call with Pharmasset Inc. – later acquired by Gilead – where its investigational compound PSI-6130, the predecessor to Sovaldi, was discussed. Notes, however, revealed Durette had indeed been on the call – something he later acknowledged. The judge’s concurrence with Gilead was an “unexpected boost” for the company, said Leerink analyst Geoffrey Porges. The judge’s comments in response to evidence and testimony suggest she increasingly feels inclined to consider this aspect of the case in Gilead’s favor, potentially revoking Merck’s patents, Porges said. But Jefferies analyst Brian Abrahams said that while the judge’s willingness to consider more arguments is a sign she is carefully considering the evidence in her decision, he insisted the court is not leaning toward Gilead. Considering most of the events happened over 15 years ago, Abrahams said he didn’t view it as unreasonable Durette’s story had changed during the trial. And given Durette acted “ethically” when drafting the Merck patents – recusing himself and not amending the pending applications until the chemical structure was made public by Pharmasset – Abrahams contended it’s unclear, even if true, whether the allegations would persuasively meet the high legal standard needed to establish “unclean hands.” Gilead also is arguing that Merck had waived the right to enforce its ‘499 and ‘712 patents because it failed to either license Pharmasset’s HCV candidates or acquire the company. Both parties already have indicated they intend to challenge different aspects of the original trial, Leerink’s Porges pointed out. Gilead had expressed optimism the appeals process would be more favorable to it, with panels of sophisticated judges – rather than less experienced lay juries – more likely to side with it about the complex technical details and procedural issues underlying the case, he said. And Merck has signaled its intention to appeal the jury’s calculations underlying the $200m judgment, Porges said. Abrahams pointed out the judge has severed the decision on the ongoing royalty until after the appeal, although he noted the parties were working with an arbitrator in the meantime to determine an acceptable royalty rate. The judge is expected to only intervene if a resolution cannot be met, Abrahams noted. Should Merck, which won approval earlier this year of its latest HCV drug Zepatier (elbasvir and grazoprevir), ultimately prevail during the appeals process, Porges noted there are several remaining issues to be addressed, including supplemental damages on sales of Sovaldi and sofosbuvir-related products from the beginning of 2016 to the end of the trial; royalty obligation on future sales of the drugs and the sales base on which to apply them; and interest on the retroactive damages. As a result – barring an agreement between the two sides, which would likely draw down Merck’s current settlement – Porges said he expected the legal battle to continue for at least a few more years. Shares of Gilead closed at $89 on May 2, up 79 cents, after gaining as much as 1.4% earlier in the day, while Merck’s stock ended the day at $55.30, up 46 cents. © Informa UK Ltd 2016 HEADLINE NEWS Competition Fails To Rein In Cancer Drug Prices DONNA YOUNG [email protected] W hile competition has helped drive down the costs in the US of medicines for chronic conditions, like hepatitis C virus (HCV), it’s done very little in recent years to do the same for the newer anticancer drugs, whose prices have not only started out high, but have kept on rising, according to a new analysis. Indeed, the costs of cancer medicines increased about 5.2% above inflation each year from 2007 to 2013 – leaping another 10% per month if the therapy won a supplemental indication from the FDA. But, researchers reported in the May 2 issue of the public policy journal Health Affairs, average monthly costs of new anticancer products fell only about 2% when a direct competitor entered the US market. Even though many of the newer cancer medicines can offer substantial health benefits to some patients, the trends in their rising costs may worry policy makers, given the large market for oral chemotherapy, with the price increases showing no sign of abating, said Caroline Bennette, an acting assistant professor of pharmacy and an AHRQ Patient Centered Outcomes Research K12 Scholar in the Pharmaceutical Outcomes Research and Policy Program at the University of Washington, and her co-authors. The high prices of prescription drugs have been at the center of numerous fiery debates in Washington and most recently were the subject of hearings held by the Senate Aging Committee and the House Oversight and Government Reform Committee, although those panels mostly have focused on companies like Turing Pharmaceuticals Inc. and Valeant Pharmaceuticals International Inc., which have been criticized for buying up old sole-source medicines and significantly hiking their prices. The Democratic ranking member of the Senate Finance Committee, Ron Wyden (OR), and Chuck Grassley (R-IO), a member of the panel, also have kept the heat on makers of HCV drugs – specifically, Gilead Sciences Inc. But before the prices of HCV medicines and companies like Turing and Valeant grabbed the attention, the costs of cancer drugs were much of the focus on scripintelligence.com Capitol Hill and remain in the bulls-eyes of some lawmakers. Policy makers seeking to take action to bring down the costs of anticancer drugs should consider implementing policies that not only affect the prices at launch but also later, the authors of the Health Affairs analysis said. They contended that if the supplemental indication offers a larger clinical benefit for patients than the original approved use, it may be reasonable to pay a higher price for the drug, but if not, the higher prices across the board for the drug “are not justified.” Because cancer patients often are treated with multiple lines of therapy until all options are exhausted, the choice of one drug does not necessarily preclude the concurrent or subsequent demand for other similar drugs. “Drugs can therefore have whatever prices the market will bear, which can be extraordinarily high when an insured person faces a life-threatening illness,” they said, noting that current regulations largely prevent Medicare and many health plans that fall under state regulatory authority from categorizing cancer medicines with related chemical structures and indications as interchangeable, which further limits competitive pressure in the oncology treatment market. Therefore, they said, “competition is unlikely to meaningfully rein in the escalating costs of oral anticancer drugs in the near future.” Drugs can have whatever prices the market will bear, which can be high when an insured person faces a lifethreatening illness INDICATION-SPECIFIC REIMBURSEMENT SYSTEM Potential policies to address the rising costs of oncology medicines could seek to link reimbursement rates or coverage mandates with a metric of comparative clinical value or benefit, which would “ensure patients’ access to effective therapies, while leaving insurers some leverage in negotiations with manufacturers,” the Health Affairs analysis authors said. First, they said, clinical benefit or value of new cancer treatments must be defined in a standardized and transparent manner – a process organizations like the American Society of Clinical Oncology and Memorial Sloan Kettering Cancer Center have already been hard at work on, with their value framework and DrugAbacus price calculator tool, respectively. The authors argued that policies to link coverage to the value of cancer treatments would need to be linked, in turn, to an indication-specific reimbursement system – either at the patient or population level, given the tremendous range in value of a cancer treatment across indications. They noted that pharmacy benefit managers like Express Scripts Holding Co. and others already have pursued such pay-forperformance strategies in reimbursing cancer medicines, although those efforts are still in their infancy. “We believe this area warrants additional study and attention,” the authors said. In a separate study published in the same issue of Health Affairs, researchers at the London School of Economics and Political Science found a wide variation in how cancer patients in the different countries benefited from their medicines – with the US spending more than any of the other eight nations in the analysis, yet witnessing one of the smallest improvements in cancer-related mortality. While net returns from cancer treatment remain positive under most circumstances, the authors found that the US obtained a lower return per drug dollar spent on individual patients than on those in Australia, Canada, France, Germany, Italy, Japan, Sweden or the UK. 13 May 2016 | Scrip intelligence | 5 HEADLINE NEWS Regeneron Revives NGF Inhibitor With Phase II/III Data; Safety Issue Remains MANDY JACKSON [email protected] T arrytown, New York-based Regeneron’s stock initially increased, fell, then rose again on May 2 after it said pain scores were essentially cut in half for patients treated with the NGFtargeting monoclonal antibody, but the rate of neuro-musculoskeletal adverse events was nearly three times as high as in the placebo group – 17% versus 6%. Severe joint risks shut down clinical trials for NGF inhibitors in the past, including fasinumab, so the higher rate of those side effects wasn’t unexpected, but analysts noted that longer term confirmatory trials are needed to confirm that safety risks don’t outweigh efficacy. Regeneron’s share price increased by about $3 when the stock market opened, but fell almost $7 below the company’s $376.71 per share closing price on April 29 before closing almost $8 higher, up 2.1%, at $384.52 on May 2. The stock’s flirtation with the prior trading day’s value reflected general uncertainty about whether or not fasinumab could be a meaningful contributor to Regeneron’s bottom line given the therapeutic candidate’s significant efficacy yet troubling safety. The company will report more details from the Phase II/III clinical trial after a 20-week off-treatment period concludes. The preliminary results reflect only initial safety findings and the study’s primary endpoint of pain relief at 16 weeks – after patients received four once-monthly subcutaneous injections. Regeneron said fasinumab-treated patients achieved gains in physical function, a secondary endpoint, but didn’t offer any specifics. The study enrolled 421 adults with moderate-to-severe osteoarthritis of the hip or knee who do not have adequate pain relief from or cannot tolerate acetaminophen plus at least one oral non-steroidal anti-inflammatory drug (NSAID) and an opioid. Patients were randomized into five different cohorts testing 1mg, 3mg, 6mg and 9mg of fasinumab versus placebo dosed once-monthly. “There is a real need for new, non-opioid pain therapies that can provide relief to patients without the toxicity and potential for abuse of currently available opioid treatments,” Regeneron chief scientific officer and president of Regeneron Laboratories George Yancopoulos said in a statement. Yancopoulos noted that the company previously studied an intravenous version of fasinumab and the Phase II/III clinical trial was the first to evaluate subcutaneous injections of the biologic, which the company already has moved forward into a large Phase III program. SIGNIFICANT RESULTS COME WITH SOME RISK Pain, stiffness and physical function were assessed in the Phase II/III trial via the Western Ontario and McMaster Universities Osteoarthritis Index (WOMAC) and other measures. WOMAC pain subscale scores were assessed at baseline and week 16. The average pain score at baseline was 6.3; the 16-week averages are detailed in the table below. “Although patients in the highest dose cohort (9mg) experienced the greatest improvement in pain, subjects in the lowest cohort (1mg) had the second greatest reduction in pain. While additional studies will be required to identify the optimum dose, the relative efficacy of 6 | Scrip intelligence | 13 May 2016 the lower doses are a potential positive, as these cohorts experienced fewer instances of neuro-musculoskeletal AEs,” Leerink analyst Geoffrey Porges wrote in a May 2 research note. Overall incidence of serious, severe and other adverse events was similar across all of the fasinumab and placebo arms. The neuro-musculoskeletal side effects experience by 17% of patients across all four fasinumab arms and 6% of people in the placebo group included ar- Phase II/III Fasinumab WOMAC Pain Subscale Results PLACEBO (N=83) 1MG FASI- 3MG FASI- 6MG FASI- 9MG FASINUMAB NUMAB NUMAB NUMAB (N=85) (N=84) (N=85) (N=84) Baseline pain score 6.43 6.33 6.35 6.10 6.53 Week 16 change from baseline –2.25 –3.35 –3.33 –3.03 –3.65 0.0025 0.0029 0.0304 0.0001 P-value thralgia, paresthesia, hypoesthesia and peripheral edema. At baseline and during the clinical trial, Regeneron used imaging and analysis of joints to identify subchondral insufficiency fractures (SIF), osteonecrosis (ON) and rapidly progressive osteoarthritis (RPOA). The company excluded about 2% of participants at baseline based on existing SIF or ON. There were no cases of ON during the trial, but there was one case of SIF in the placebo arm of the study, and six cases of RPOA among fasinumab-treated patients – two in the 3mg arm and four in the 9mg group. Regeneron also reported “a minor increase” in bone-specific alkaline phosphatase, which is a marker of osteoblast activity, but no increases in liver ALT and AST enzymes. Sagient Research increased its likelihood of US FDA approval for fasinumab by 9% to 54% – 2% above average for pain drugs in similar stages of development – based on the statistically significant and consistent WOMAC scores recorded in the study and based on a positive FDA advisory committee opinion on the anti-NGF class in 2012. “Although the consistent, statistically significant effect sizes in each of the four treatment groups are small compared to placebo, the literature shows that placebo has a considerable effect on pain relief in osteoarthritis clinical trials. Also, the lack of evidence of a dose-dependent effect on the WOMAC score may be due to the limited dose range tested here,” Sagient said in a May 2 BioMedTracker report. “The safety data suggest possible increased risks of SIF and RPOA associated with fasinumab use. These risks, however, CLICK are not unexpected given the regulatory history of this experimental drug class.” Read full story at: http://bit.ly/1T0n4HQ © Informa UK Ltd 2016 HEADLINE NEWS CONTINUED FROM COVER Read appeared to put at sales, while sales of the standalone Global Established Pharmaceutical (GEP) business declined 7% to $4.77bn. The company said it is on track to achieve more cost savings from the combination than originally targeted, $1bn versus $800m by 2018. Hospira also gives Pfizer a potential nearterm growth opportunity, Inflectra (infliximab-dyyb), the first biosimilar version of Johnson & Johnson’s Remicade (infliximab). The biosimilar was approved by FDA April 5 as only the second biosimilar ever cleared by the agency. Pfizer said it is preparing to launch Inflectra in the US in 2016, though the timing remains uncertain given issues around intellectual property. Read reaffirmed statements previously made by the company that the earliest the drug could launch is June 30, the day after a patent covering a method of using infliximab to treat Crohn’s disease expires. least one question to rest – whether or not Pfizer would pursue another inversion deal with a company like AstraZeneca PLC or GlaxoSmithKline PLC. The answer is not now The Innovative Products business, which includes Global Innovative Pharmaceuticals (GIP) and Vaccines, Oncology and Consumer Healthcare (VOC) also turned in a strong first quarter performance, with sales up 23% to $7.03bn, driven by growth in GIP, Vaccines and Oncology. Sales in oncology jumped 90% to $1bn, powered by the strong launch of Ibrance (palbociclib), which generated $429m in the first quarter and is on track to become a blockbuster in its first full year on the market. The first-in-class CDK4/CDK6 inhibitor launched a year ago for the treatment of certain breast cancer and was one of the most successful drug launches in 2015. Consolidated revenues increased 20% to $13bn, and net income increased 27% to $3.02bn, helped by the addition of Hospira, a few extra selling days in the quarter and a positive currency effect. Excluding the impact of foreign exchange and legacy Hospira operations, Pfizer’s revenues grew by 15%, the firm reported. The strong sales and earnings performance outpaced analyst consensus estimates, and led Pfizer to raise its 2016 sales and earnings guidance slightly. The strong performance was just what investors were hoping to see after the Allergan roller coaster ride they just got off of. Pfizer’s stock grew 3% on the news to close May at $33.74. Ionis Sells Kynamro To Kastle After Regaining Rights From Genzyme MANDY JACKSON [email protected] K scripintelligence.com in 2013, but the drug’s competitor Juxtapid (lomitapide) from Aegerion Pharmaceuticals Inc. has struggled to market its oral therapy since its approval in late 2012. Aegerion cut its work force by 25% in February due to expected declines in Juxtapid sales, bringing its head count to 230 employees worldwide. Shutterstock: SergeyP astle will give Ionis a 10% stake in the newly-founded, Chicago-based biotech company and it will pay Ionis (formerly Isis Pharmaceuticals) $15m up front plus another $10m in three years and up to $70m in sales milestone fees. Ionis will earn royalties in the low to mid-teens beginning in 2017. Sanofi Genzyme is entitled to a 3% royalty on Kynamro sales and 3% of the fees that Ionis earns from Kastle, which was formed in 2015 to buy, develop and commercialize medicines for unmet medical needs. Kastle President Bryan Stuart noted in a joint statement from the company and Ionis that Kynamro is an ideal first acquisition for Kastle, given its use in a rare disease. The nascent biotech firm is backed by the private equity firm Flexpoint Ford, which manages $2.3bn in healthcare and finance investments. Kastle intends to pursue new indications and approvals for Kynamro around the world. Sanofi never reported quarterly sales for Kynamro, which was approved to treat HoFH Global Juxtapid sales totaled $213m in 2015 versus $158.4m in 2014, but Aegerion expects its total product sales to reach only $160m to $190m in 2016, including $120m to $140m from Juxtapid and $40m to $50m from Myalept (metreleptin) for generalized lipodystrophy. Both Kynamro and Juxtapid are facing competition in the HoFH market from the two PCSK9 inhibitors approved in 2015 to treat high LDL cholesterol in people who can’t tolerate statins or who can’t get to recommended cholesterol levels on statins alone, including HoFH and heterozygous familial hypercholesterolemia (HeFH). The new monoclonal antibodies are Amgen Inc.’s Repatha (evolocumab) and Praluent (alirocumab) from Regeneron Pharmaceuticals Inc. and Sanofi – another reason why Genzyme’s parent company was not keen to hang on to its interest in Ionis’s Kynamro. However, even after stealing HoFH market share from Kynamro and Juxtapid, the PCSK9 inhibitors also have struggled to generate substantial sales given payers’ resistance to cover the costs of the new, pricey biologics without cardiovascular outcomes data. And with the last of the brand-name statins poised to lose ground to generics, Kynamro, Juxtapid and the PCSK9 inhibitors have a new wave of competition coming soon. 13 May 2016 | Scrip intelligence | 7 HEADLINE NEWS More Troubles For Martin Shkreli – That Guy Drug Makers Despise DONNA YOUNG [email protected] M 8 | Scrip intelligence | 13 May 2016 ticed by members of the House Committee on Oversight and Government Reform. Shkreli also quickly became the most despised person in the biopharmaceutical industry, with the big trade groups distancing themselves from him and executives like Merck & Co. Inc. CEO Kenneth Frazier calling the now-former Turning Pharmaceuticals Inc. CEO a “hedge-fund manager masquerading as a pharma company” and an “aberration.” OversightandReform, Flickr artin Shkreli – that guy drug makers want nothing to do with – may be facing more criminal securities fraud charges, which would be stacked on top of the seven counts the former hedgefund-manager-turned-pharmaceuticalfirm-CEO was hit with this past December. At a brief May 3 hearing, prosecutors told a federal judge that if the government issues a superseding indictment with additional charges, it would come sometime over the next month – at least by Shkreli’s next court appearance on June 6, which could then turn into another arraignment. New York lawyer Benjamin Brafman, Shkreli’s attorney, however, insisted the standing indictment “will not change in any way” that would affect the former drug company CEO “in a negative fashion” – declaring it had been a “good day” at the court “before a judge that understands the complexity of preparing this case.” Brafman said the charges against Shkreli were “very defensible.” No trial date has been set for Shkreli’s case, but it could come in January 2017. Shkreli was arrested and indicted this past December on charges he defrauded investors of his former hedge funds, MSMB Capital Management and MSMB Healthcare, and misappropriated more than $11m in assets from Retrophin Inc. – a publicly traded firm he founded and then ultimately was fired from. Shkreli, who was released from jail on $5m bond on Dec. 17, 2015 – the same day he was arrested – faces a potential maximum of 20 years in prison if convicted for the seven counts against him. He and his alleged coconspirator, Evan Greebel, who initially was retained as an outside lawyer for Retrophin, have been accused of constructing what prosecutors called a “Ponzi-like scheme,” under which Shkreli used money from MSMB Healthcare to pay off debts from a series of bad trades he’d made under MSMB Capital. Officials said Shkreli also had dipped into MSMB Healthcare’s cash to use for “seed” money to start Retrophin and lied to investors about how both funds were doing. Prosecutors said Shkreli used Retrophin as his “personal piggybank” to pay back the Martin Shkreli shareholders at both funds and perpetrated the fraudulent activities in a number of ways, including backdating documents. Four months before Shkreli was charged, Retrophin had filed a lawsuit against him, alleging, among other things, that he defrauded the company. THE DARAPRIM SAGA Shkreli’s criminal charges are unrelated to what initially made him infamous – the 5,000%+ jacked-up price for Daraprim (pyrimethamine), the only FDA-approved drug to treat toxoplasmosis, a parasitic infection often seen in HIV-infected patients, pregnant women and children, which can cause serious complications in people with weakened immune systems. Daraprim’s price hike caught the attention of former Secretary of State and presidential candidate Hillary Clinton, who when first learning about Shkreli’s action, declared in a tweet she’d bring him and other price gouging drug makers down. That simple Sept. 21, 2015 tweet was attributed to causing a panic on Wall Street – knocking off $132bn in biotech investment. Other presidential candidates also piled on and threatened to take aim at Shkreli. Capitol Hill also wasted no time in making him a target – issuing a subpoena for Shkreli to appear at a hearing on drug prices, which he eventually did in February, although he invoked his Fifth Amendment rights under the US Constitution to dodge questions, but his eye rolls and smirks didn’t go unno- IMPAX LAWSUIT Shkreli maneuvered the deal under which Turing bought Daraprim last year for $55m from Impax Laboratories Inc., which is now suing the firm for more than $20m – claiming breach of contract. Under the deal, Turing had agreed to provide, and certify as accurate, pricing data for its Daraprim sales activities to Impax by the 25th of each month to ensure it could report the information to the federal government under its obligations to the Medicaid program, the latter firm contended in its complaint, which was filed with the US District Court for the Southern District of New York. It said Turing also pledged to assume liability for all Medicaid rebate liability directly arising out of or in connection with the company’s use, marketing or sales of Daraprim and to reimburse Impax for the rebate liability within 30 days of receiving an invoice from the firm. In addition, Turing agreed to use best efforts not to do any act that would endanger, destroy or similarly affect the value of the goodwill pertaining to Impax’s trademarks or national drug code and not to use the corporate names in any manner that was inconsistent with their usage by the previous owner that would otherwise violate the law. But Turing breached all three of those agreements, Impax asserted. It said it was given no warning Turing planned to hike the price of Daraprim to $750 per pill. “The price increase caused medical costs to skyrocket for many patients using the drug, and generated substantial negative attention from the press and the government,” Impax argued. © Informa UK Ltd 2016 R&D BITES Clovis Pulls Plug On Rociletinib On Expected FDA Rejection After the markets closed on May 5, Clovis Oncology Inc. fessed up to what Wall Street already anticipated as the inevitable: rociletinib was roadkill – mowed down by the FDA, although the tread marks looked suspiciously like those belonging to AstraZeneca PLC’s competing lung cancer drug Tagrisso (osimertinib). In its quarterly earnings call, Clovis disclosed it was notified by the FDA to expect a complete response letter instead of the accelerated approval the firm was eyeing to gain by its June 28 Prescription Drug User Fee Act (PDUFA) action date for rociletinib as a treatment for patients with epidermal growth factor receptor (EGFR) mutation-positive metastatic non-small-cell lung cancer who previously have been treated with and EGFR-targeted therapy and have the EGFR T790M mutation. With rociletinib placed on life support, Clovis decided to also pull the plug in Europe – withdrawing its marketing authorization application. Clovis president and CEO Patrick Mahaffy said the Colorado-based biotech also has terminated enrollment in all ongoing company-sponsored rociletinib studies – including TIGER-3, whose data the firm had pegged its hopes on for confirming the drug’s efficacy for its US application. The study, however, wasn’t due to report data until the second half of 2018. Generic Crestor Marks The End Of An Era Allergan PLC’s generic version of AstraZeneca PLC’s blockbuster statin Crestor (rosuvastatin) is likely to need only a few weeks on the US market to surpass total sales of the PCSK9 inhibitors to date. FDA approved the ANDA for rosuvastatin calcium on April 29, marking the first generic approval of the last statin to lose patent protection. Allergan – the successor firm to Watson Laboratories Inc. (the formal ANDA holder) and Actavis – confirmed the launch, which it notes will be scripintelligence.com Merck Is Finding PD-L1 Testing Is Helping Keytruda Merck & Co. Inc. is heartened by market data showing about 70% of lung cancer patients who test positive for the PD-L1 biomarker are placed on Keytruda therapy, which could turn into an advantage as the PD-1 inhibitors move into the first-line setting. Keytruda’s lung cancer approval came with a requirement for PD-L1 expression testing, which was a hurdle that Bristol-Myers Squibb Co.’s Opdivo (nivolumab) didn’t have. Merck thinks that increased PD-L1 testing in the lung cancer setting will position its drug advantageously upon obtaining a hoped-for approval in first-line non-small cell lung cancer, where the biomarker is expected to play a larger role. Keytruda is in line to add the first line indication about three months ahead of Opdivo. During the first quarter of 2016, Keytruda (pembrolizumab) yielded global sales of $249m, with most of that revenue continuing to derive from the PD-1 inhibitor’s first indication, in melanoma. That, along with what analysts called a solid launch of the firm’s hepatitis C combination Zepatier (grazoprevir/ elbasvir) at $50m, was a main highlight from a basically flat sales quarter for the New Jersey pharma. Merck posted total worldwide sales of $9.3bn during the quarter, down 1% year-over-year. the largest generic launch in 2016, on May 2. Under a 2013 patent settlement with AstraZeneca, Allergan is allowed to launch 67 days ahead of the date that Crestor’s patent loses pediatric exclusivity, July 8. In exchange for the early launch, Allergan must pay a fee to AstraZeneca of 39% of net sales of the generic during the early market period. Indian Avastin Versions Head For Debut A subject expert committee (SEC), which advises the Indian regulator on trialrelated permissions as part of a layered approval process, has recommended for marketing authorization bevacizumab versions of Intas Pharmaceuticals Ltd. and Hetero Drugs Ltd. The Intas product has been cleared in metastatic or recurrent non-small cell lung cancer other than predominantly squamous cell histology while the Hetero approval is in the indication of metastatic colorectal cancer. Both Indian firms had presented the results of Phase III clinical studies of bevacizumab (test versus reference drug) in their respective indications. In both cases, the SEC (oncology and haematology), at a meeting on April 7, observed that the efficacy was “similar” between the test arm and the reference arm. Discount Prompts NICE Turnaround on Sanofi’s Praluent Sanofi has managed to persuade NICE, the health technology appraisal institute for England and Wales, to recommend its PCSK9 inhibitor, Praluent (alirocumab), by offering a confidential discount on the drug’s list price. This means that it will after all compete against Amgen Inc.’s rival PCSK9 inhibitor, Repatha (evolocumab) in the anticholesterol market. Back in February, NICE declined to recommend Praluent, claiming it was too expensive and that Sanofi had failed to provide robust information on important cardiovascular outcomes. It looked as though Amgen might come out on top as NICE had reversed its initial draft no for Repatha on the back of a confidential discount. Provided that Sanofi offers the agreed discount, NICE has now agreed to recommend Praluent as well. 13 May 2016 | Scrip intelligence | 9 HEADLINE NEWS HR+/HER2- Breast Cancer Market Set To Triple SUKAINA VIRJI [email protected] T he hormone receptor-positive (HR+)/ human epidermal growth factor receptor 2-negative (HER2-) breast cancer market was worth $3.4bn across the US, Japan, and five major EU markets (France, Germany, Italy, Spain, and the UK) in 2015, according to new Datamonitor Healthcare estimates. This figure is forecast to steadily increase, reaching a peak of $10.7bn in 2022 before falling back down to $9.6bn in 2024. Despite the drop off in the last two years of the forecast, the market is projected to increase at a compound annual growth rate (CAGR) of 12% over 2015–24. The growth of the HR+/HER2- breast cancer market will largely be due to the rapid uptake of the cyclin-dependent kinase 4 and 6 (CDK4/6) inhibitor Ibrance (palbociclib; Pfizer Inc.) and the approval of several late-phase pipeline candidates. Datamonitor Healthcare predicts that 10 new therapies will launch for the indication over the course of the forecast period. This group of products will feature several different mechanisms of action, indicating a potentially segmented treatment space in the future, Datamonitor Healthcare analyst Zachary McLellan told Scrip. GENERIC/BIOSIMILAR ENTRY Beginning in 2023, the entry of cheaper generic and biosimilar drugs will offset the sales generated by branded therapies and decrease the overall revenue of the HR+/ HER2- market. Datamonitor Healthcare believes uptake of cheaper generic and biosimilar products will result in the HR+/HER2– breast cancer market decreasing by 9% from 2022–24 as a result. Afinitor (everolimus; No- vartis AG), Avastin (bevacizumab; Genentech/ Roche/Chugai), Faslodex, Halaven (eribulin mesylate; Eisai Co. Ltd.), Ibrance, and Ixempra (ixabepilone; R-Pharm/Otsuka Pharmaceutical Co. Ltd.) are all predicted to face generic or biosimilar competition in at least one market over the course of the forecast period. UPTAKE OF CDK4/6 INHIBITORS TO DRIVE GROWTH CDK4/6 inhibitors will see strong uptake and will drive the growth of the HR+/HER2breast cancer market due to their strong efficacy in relation to the current standardof-care hormonal therapies, according to McLellan. Ibrance has demonstrated its ability to significantly improve upon the progression-free survival of standard treatments. “It’s likely that pipeline CDK4/6 inhibitors abemaciclib (Eli Lilly & Co.) and ribociclib (Novartis/Otsuka) will also display similar benefits in their ongoing late-phase trials, allowing the class to become an integral tool in the treatment of the disease,” believes McLellan. Ibrance, abemaciclib and ribociclib are forecast to account for 72% of overall market sales for branded therapies in 2022. Of the CDK4/6 inhibitors, Ibrance is expected to have the greatest commercial potential, and will reach estimated peak sales of $4.8bn across the US, Japan, and five major EU markets. CLICK Read full story at: http://bit.ly/1T0StgM Figure 1: PI3K approval timeline in HR+/HER2- breast cancer Q1 2019: taselisib US approval Q2 2017: buparlisib US approval 2015 2016 2017 Q3 2017: buparlisib Japan and EU approval 2018 2019 Q2 2019: taselisib EU approval 10 | Scrip intelligence | 13 May 2016 Q3 2020: alpelisib Japan and US approval 2020 2021 Q1 2020: alpelisib US approval 2022 2023 2024 Acadia Expects Broad Nuplazid Reimbursement; Pricing Soon While Acadia Pharmaceuticals Inc. disappointed investors and analysts during a May 2 conference call by not disclosing the price of the firm’s newly approved Parkinson’s disease psychosis (PDP) drug Nuplazid (pimavanserin), the company insisted the medicine, nonetheless, is likely to be covered by the “vast majority” of payers. Analysts, however, anticipated Acadia to reveal Nuplazid’s price as soon as May 5, when the firm holds its quarterly earnings call – taking a cue from the biotech’s president and CEO, Stephen Davis, who said the company would divulge the amount “shortly.” Acadia announced the FDA had approved Nuplazid on April 29 after the markets closed. It’s the first and only medicine approved in the US to treat hallucinations and delusions associated with PDP. He explained that PDP generally occurs in the more advanced stages of Parkinson’s, when patients already are contending with significant motor function issues, such as loss of balance, rigidity, tremor and difficulty walking. Left untreated, PDP will typically increase to more severe and more frequent psychosis – increasing the risk for hospitalization and nursing home placement, with the latter often ending up being permanent for those patients, Davis pointed out. Serge Stankovic, Acadia’s head of research and development, said the company received a “very clear” label for Nuplazid, which “describes well” the benefits and risks of the drug and provides doctors the information needed to appropriately and successfully prescribe the medicine. [email protected] CLICK Q1 2022: taselisib Japan approval Read full story at: http://bit.ly/1TyRgtm © Informa UK Ltd 2016 HEADLINE NEWS Making Medicare Like Medicaid: High Anxiety For Drug Makers DONNA YOUNG [email protected] W Shutterstock: Planar hile it doesn’t look like it could happen any time soon, if Congress and the White House ever got together and imposed Medicaid-like pricing policies on the Medicare program, drug makers would feel the burn. Indeed, such a move would translate into an average earnings per share (EPS) impact of about -15% for biopharmaceutical companies, with some firms even losing much more, said Bernstein analyst Tim Anderson. While there’s no active proposal on the table for Medicare to adopt Medicaid-like pricing, given the US election year uncertainties and the current increased focus on drug pricing, Anderson insisted such a scenario represented the “most viable, tangible and feasible action the government could take to rein in drug spending.” Medicare is the only federal healthcare program in which the government doesn’t intervene on drug pricing, Anderson pointed out. If fact, the Medicare Part D prescription drug program is expressly forbidden under a 2003 law to negotiate prices – the so-called non-interference clause in the Medicare Prescription Drug, Improvement and Modernization Act (MMA). When the Part D program was implemented in 2006, the federal government became the single largest purchaser of drugs in the US, which raised the specter that at some scripintelligence.com point, it could potentially exercise its purchasing power to curb healthcare spending. Medicare Part D spending on prescription medicines in 2015 was about $90bn – accounting for about 20% of total US drug sales, Anderson noted. The idea of removing the non-interference clause and allowing the Centers for Medicare & Medicaid Services (CMS) to negotiate drug prices for Part D as a way to lower the government’s healthcare expenditures has been kicked around on Capitol Hill since the MMA was enacted. But setting up a framework to negotiate prices for Medicare would be complex, Anderson said. His solution: Make Medicare like Medicaid, which doesn’t rely on negotiating. Under Medicaid, biopharmaceutical firms must pay rebates of a minimum of 23% of the average manufacturer selling prices (AMP) or the difference between the “best price” it offers any commercial customer and AMP. In addition, the prices of drugs covered under Medicaid are only allowed to rise at the rate of inflation, with companies being charged a penalty for any increases above the consumer price index, Anderson explained. So Medicaid gets substantially better net pricing than Medicare Part D, he said. In fact, Anderson pointed out that an analysis of 2012 data released last year by the Health and Human Services Office of Inspector General (OIG) found the average drug discount for Medicare Part D was around 15%, versus 47% for Medicaid. “This is a significant delta,” Anderson declared. With the help of the OIG’s data, Anderson and his Bernstein colleagues took a look at what would happen for nine companies they cover – AstraZeneca PLC, Bristol-Myers Squibb Co., Eli Lilly & Co., GlaxoSmithKline PLC, Merck & Co. Inc., Novartis AG, Pfizer Inc., Roche Holding AG and Sanofi SA – if Congress changed the law and mirrored Medicare’s drug spending policies on Medicaid’s. Assuming the new rebate level on Medicare drugs at 47%, the impact to 2016 EPS av- erages about -15%, the analysis found. BMS would have the most to lose, with a -31% impact to its 2016 estimated EPS, followed by Lilly with -27%, while Pfizer would have the least, with -7%. NOT JUST ELECTION-YEAR POLITICS While a heated and polarized presidential race has again brought unfavorable scrutiny to the drug industry – “common ground for both parties to score easy points with voters” – actions by other stakeholders suggest the possibility of a shifting landscape, although perhaps slowly, Anderson said. He pointed to the CMS proposal in March to launch a new experiment testing whether alternative payment designs may lead to reducing Medicare Part B expenditures, while preserving and potentially even enhancing beneficiaries’ quality of care. The Independent Payment Advisory Board – a commission, which has yet to convene, created under the Affordable Care Act that is supposed to analyze the drivers of excessive and unnecessary Medicare cost growth and make recommendations to Congress on policies to curb spending – also could spring into action, causing a stir in the market, Anderson said. He also noted that groups like the Institute for Clinical and Economic Review and the “newly minted” Campaign for Sustainable Rx Pricing, with WalMart, the AARP and various health plans, have been formed to “keep the spotlight shining on drug pricing.” Anderson also pointed out that a cadre of Democrats, including presidential candidate Sen. Bernie Sanders (I-VT), is pushing to have the patent “busted” on Medivation Inc.’s and Astellas Pharma Inc.’s prostate cancer drug Xtandi (enzalutamide), so that cheaper generics are allowed to enter the US market. While concerns over substantial changes to the US drug pricing environment, at least in the near-to-intermediate term, are likely overblown, “gradual change could more reasonably occur,” Anderson said. 13 May 2016 | Scrip intelligence | 11 HEADLINE NEWS Shire-Baxalta Deal: JULY 2015 Baxalta Is Born Baxter International spinout company, Baxalta Inc., went public in summer 2015. Immediately Shire initiated first talks of a buyout, offering a stock-swap that valued its target at roughly $30bn. Baxalta quickly rejected the offer. TOTAL PHARMA PRODUCT SALES IN 2015 SHIRE & BAXALTA’S TOP SELLING DRUGS Shire Baxalta • • • • Vyvanse for ADHD and BED Lialda for ulcerative colitis Cinryze for HAE Elaprase for Hunter syndrome • • • • Advate for hemophilia A Feiba for hemophila A & B HyQvia for immuno-deficiencies Gammagard for immuno-deficiencies and multifocal motor neuropath SHIRE BAXALTA $6.1bn $6.1bn (pro forma pharma sales) AUG 2015 Shire Strikes Again Shire made another play for newly formed Baxalta with a $34bn all stock offer, however the acquisition seemed unlikely to sway Baxalta investors. Shire’s Close Price (£) Baxalta’s Close Price ($) 60 50 40 30 SEPT 2015 4-Apr 21-Mar 7-Mar 22-Feb 8-Feb 25-Jan 11-Jan 28-Dec 14-Dec 30-Nov 16-Nov 2-Nov 19-Oct 5-Oct 21-Sep 8-Sep 24-Aug 10-Aug 27-Jul 13-Jul 1-Jul 20 Shire Loses Faith? Speculation emerged that Shire was looking into other potential targets, including Ariad Pharmaceuticals, Actelion Pharmaceuticals and Radius Health. Taking financial strategy out of it – putting two complementary portfolios together doesn't necessarily lead to a stronger company – Paul Heugh, CEO strategy implementation consultancy Skarbek Associates 12 | Scrip intelligence | 13 May 2016 © Informa UK Ltd 2016 HEADLINE NEWS A Year In The Making OCT 2015 Creating Rare Disease Leader During Shire's 3Q earnings call the Baxalta quest remained the primary topic of discussion, with Shire claiming that Baxalta shareholders were becoming more favorable to the deal. Shire CEO Flemming Ornskov said while some investors and analysts did not see the value of a merger the deal would offer synergies in tax, revenues and cost of goods. We will create the leading global rare disease biotech company…with the potential to deliver sales of $20bn by 2020 – Shire CEO Flemming Ornskov NOV 2015 Shire Buys Dyax Shire acquired hereditary angioedema (HAE) drug developer, Dyax Corp., for $37.30 in cash per Dyax share, valuing the US biotech at around $5.9bn upfront. The deal made some analysts question whether Shire had lost interest in courting Baxalta. SHIRE PIPELINE DRUG NAME DISEASE INDICATION Apricitabine Infectious disease HIV / AIDS III Cinryze (IV) Autoimmune/ immunology Antibody Mediated Rejection III Cinryze (SQ) Autoimmune/ immunology HAE III Cyramza JAN 2016 Oncology Liver Cancer CURRENT PHASE Oncology ONLINE HTTP://BIT.LY/1XAG2FQ Bladder Cancer III III shareholders receive $18.00 in cash and 0.1482 Shire ADS per Baxalta share: a total deal value of $32bn. However Wall Street had its doubts and concerns centered on the long-term viability of Baxalta's hemophilia franchise and whether the total benefits warrant the price being paid. DRUG NAME DISEASE INDICATION BAX 817 Hematology Hemophilia A and B CURRENT PHASE III Biosimilar Adalimumab (Momenta) Autoimmune/ immunology Psoriasis III Biosimilar Adalimumab (Momenta) Autoimmune/ immunology Rheumatoid Arthritis III Biosimilar Etanercept (Coherus) MAY 2016 PIPELINE Deal Is On Finally Shire and Baxalta confirmed a merger that would see Baxalta Cyramza BAXALTA PIPELINE APR 2016 SEE THE FULL Autoimmune/ immunology Rheumatoid Arthritis US Treasury Update Biosimilar Etanercept (Coherus) Autoimmune/ immunology Psoriasis SEE THE FULL PIPELINE ONLINE HTTP://BIT.LY/1XAG2FQ III III Shire reassured investors that changes made by the US Treasury, which derailed Pfizer Inc.'s mega-merger with Allergan, will not affect Shire's agreement with Baxalta. Final Vote Will Decide... Baxalta shareholders are due to vote on the merger with Shire on May 27. scripintelligence.com 13 May 2016 | Scrip intelligence | 13 HEADLINE NEWS Amgen’s Harper Says Repatha Is Priced Right LISA LAMOTTA [email protected] “I f you look back even five, seven years ago, what kept me up at night was, ‘Can we innovate and make stuff that really matters at a rate that could possibly keep a company like Amgen afloat?’ Now, I don’t worry about that,” said Harper in an interview. “Now, I worry about the fact that real innovation – that over time is cost-effective to our system and beneficial to society – can’t be paid for because of this affordability issue. Now that keeps me up at night wondering how we are going to deal with this.” Harper should know better than most people just how much drug pricing can affect development and impact market dynamics. “We were the first big threat after [Gilead Sciences Inc.’s hepatitis C drug] Sovaldi,” said Harper, speaking of the company’s recently introduced PCSK9 inhibitor Repatha (evolocumab). “The reaction has been, ‘Let’s put in place [all these roadblocks,] because these were such a threat from an affordability perspective.’’ ‘I look at Repatha and I don’t think we’re capable of making a better medicine than this as an industry’ The R&D chief contends that Repatha is actually cost-effective and affordable when you look at the benefit of the cholesterol-lowering drug and the actual cost that patients have to pay. Yet, that’s a hard number to nail down – typically, drugs have a price the manufacturer charges, a price payers are willing to accept, what the insurance companies actually pay and ultimately, what a patient pays out of pocket. The wholesale acquisition cost (WAC) of the drug is $542.31 for one 140 mg single-use prefilled syringe, or $14,100 annually, for administration every two weeks. Amgen’s Repatha (along with the competing PCSK9 inhibitor from Sanofi and Regeneron Pharmaceuticals Inc.) 14 | Scrip intelligence | 13 May 2016 Sean Harper was approved by FDA in the summer of 2015 for the treatment of adults with heterozygous familial hypercholesterolemia (HeFH), homozygous familial hypercholseterolemia (HoFH), or clinical atherosclerotic cardiovascular disease, who require additional lowering of lowdensity lipoprotein cholesterol (LDL-C) beyond statins. Even as a second-line treatment for high LDL-C, the PCSK9 inhibitors were poised to reach a market of millions of patients who can’t tolerate statins due to musculoskeletal side effects or who are on statins and still can’t achieve recommended cholesterol levels. But with low-cost generic statins saturating the market, until Amgen and its competitors report cardiovascular outcomes data later this year to show payers that the drugs prevent heart attacks and strokes, adding a lot of healthcare value, the reach of PCSK9 inhibitors will be limited. Repatha had only $16m in sales in the first quarter. Amgen and Repatha have been on the front lines of the pricing war that began after the high price of Sovaldi (sofosbuvir) brought the issue into mainstream conversations. Over the last few years, payers have been cracking down on high drug prices and using the competitive market to strike deals with companies. Payers have been making headlines for their choice to cover either Repatha or Sanofi and Regeneron’s Praluent (alirocumab), or both, in their formularies. The resounding line from the industry has been that innovation costs money, with many executives pointing to the high cost of R&D, and that drugs like Sovaldi provide a lot of value as functional cures for millions of people. “We’re facing an aging demographic around the world, and on one hand, that makes our mission very compelling, but on the other hand that provides a terrible burden. We’re in this terrible conundrum right now where people say that the biggest threat to society is Alzheimer’s disease, but then they say they can’t afford a drug that would slow down the disease. If you look at Sovaldi, it’s cost effective, but people don’t want to pay for it,” said Harper, who believes that both Sovaldi and the PCSK9 inhibitors are priced right based on the amount of innovation that went into them. “Ultimately, our society has to sort this out. None of these drugs would be at a price point that society can’t justify from a holistic benefit perspective,” he added. “Unfortunately, there are many drugs on the market today that don’t reach that standard, and it’s not just the Turing and Valeant examples. Those are egregious. What I’m troubled by is the drugs that meet that standard, which is very hard to meet, and you run into this affordability thing and people just don’t want to pay for it.” Turing Pharmaceuticals and Valeant Pharmaceuticals International Inc. have been chastised by Congress and many others for buying older drugs and ratcheting up their prices by astounding amounts. However, Harper insists that PCSK9 inhibitors are worth the price. He tried to point out the benefits of the drugs, pointing to their relatively clean safety profile, that they are only given to patients who absolutely need them and have exhausted other options, and they help treat one of the leading causes of death in the US. “I look at Repatha and I don’t think we’re capable of making a better medicine than this as an industry,” added Harper. © Informa UK Ltd 2016 HEADLINE NEWS Biotech Bankruptcies: BIND and NephroGenex Weigh Options LISA LAMOTTA [email protected] Chapter 11 allows companies to pay down debt and look for potential buyers IN A BIND Less than a month after announcing it would lay off 38% of its workforce, BIND has been forced into bankruptcy proceedings as one of its lenders came calling. The company said that Hercules Technology III, LP demanded that the biotech repay a $15m loan on an accelerated timeline. The company insists it has more cash and assets than the loan amount and that it’s current on its regularly scheduled payments. BIND had $36.9m at the end of 2015, according to its filings with the US Securities and Exchange Commission. Chapter 11 proceedings are different than Chapter 7 proceedings, which allow a company to slowly unwind its assets as it sells things off. Chapter 11, meanwhile, allows companies to pay down debt and look for potential buyers, while lenders jockey for the best position to allow payoff. “The protections afforded by Chapter 11 provide for an orderly process and additional time that enables us to pursue the strategic and financial alternatives that are in process. The filing minimizes the impact from the recent demand by our lender,” said BIND CEO Andrew Hirsch in a statement. As per its early-April announcement, BIND has been looking into raising further capital, finding a partner, selling assets or selling the company – those efforts continue under bankruptcy protection. The decision comes on the heels of its latest failure of a recent clinical trial, which showed its lead compound had little to no activity in scripintelligence.com Shutterstock: pogonici I f news out of two small biotechs is any indication, the winds of change are in the air for the sector, indicating times of plenty are over. Two once-promising biotechs are now trading in penny stock territory and seeking the shelter of Chapter 11 bankruptcy as they explore their options. Both Bind Therapeutics Inc. and NephroGenex Inc. announced May 2 that they each were filing for Chapter 11 in the United States Bankruptcy Court for the District of Delaware. Both companies once had healthy stock prices on the Nasdaq and promising drugs in their pipelines, but drug failures and an inability to access capital has dramatically changed their circumstances. The last two years have been marked by a high influx of capital into the biotech sector and a record number of IPOs in the space with unusually high capital raises. There has been criticism of sector investors for putting their money in companies that have yet to prove out their business models. cervical cancer, as well as head and neck cancer. BIND’s only other compound in the clinic is under a collaboration with AstraZeneca PLC that the big pharma opted into in late-June 2014. The partners are developing an Accurin based on barasertib, a selective inhibitor of the Aurora B kinase, which is expressed abnormally in many cancers. The biotech also has a license agreement with Pfizer Inc. Yet, milestones from collaborations are not significant enough to sustain the company. BIND debuted on the Nasdaq in 2015 at $15 per share. The stock now trades at about 40 cents. THE PRICE OF FAILURE After pausing the development of its lead drug candidate earlier this year, the kidney disease drug developer is moving into Chapter 11 with the hopes of selling off all of its assets. NephroGenex has retained investment banking firm Cassel Salpeter & Co., LLC to help with the sale. The biotech debuted on the Nasdaq in 2014 at a stock price of $13 per share. It now trades under 20 cents per share. The company had $11.5m in cash at the end of the year. The plummeting stock price and subsequent bankruptcy filing came after NephroGenex was unable to pay for clinical trials of its lead compound Pyridorin (pyridoxamine dihycrochloride). The drug was in Phase III testing for diabetic nephropathy and had garnered a special protocol assessment, as well as Fast Track designation from FDA. Yet, NephroGenex hasn’t had much luck tapping the public markets for cash. After two failed attempts to raise money, the biotech raised about $7m in a stock offering in mid-2015, but only had enough cash to get it through the early part of 2016. There is some speculation that investors are more interested in diabetic nephropathy treatments that are in the clinic from AbbVie and Johnson & Johnson. 13 May 2016 | Scrip intelligence | 15 BUSINESS BULLETIN Biotech VC Funding Rises Public company valuations continue to slide as stock market investors shift priorities, but private biotechnology firms are attracting near record-breaking levels of venture capital with one pretty important caveat: More money is being invested in fewer US companies, especially at the earliest stages of business formation. The $1.81bn in venture capital invested in US biotech firms during the first quarter of 2016 was the sixth highest quarterly total ever, but with 118 companies raising VC cash, it was far from the highest number of deals in any given quarter, according to the MoneyTree Report from the National Venture Capital Association (NVCA) and PricewaterhouseCoopers based on Thomson Reuters data that goes back to 1995. Brandicourt Not Ready To Raise Medivation Bid Following “extensive conversations” with Medivation Inc.’s “top shareholders,” Sanofi’s CEO Olivier Brandicourt believes there is “overwhelming support” for the transaction. Brandicourt is now ramping up the tone of his public communications to Medivation in a bid to get president and CEO David Hung to the table. An acquisition of Medivation is a “priority for Sanofi,” Brandicourt added. “If you are not prepared to engage with us, we have no choice but to go directly to your shareholders.” If the Medivation board continues to refuse to engage with Sanofi, “then we intend to commence a process to remove and replace members of the board.” Sanofi made a non-binding proposal to acquire San Franciscobased Medivation Inc. for $52.50 per share, an all-cash transaction valued at $9.3bn, on April 15. Golden Week For Daiichi An arbitration tribunal in Singapore is now said to have asked the Singh brothers, Malvinder and Shivinder, and cer16 | Scrip intelligence | 13 May 2016 Bayer Wary Of Future Competition In Renal Anemia Market Bayer AG’s decision, revealed last week, to search for licensees for its Phase II HIF-PH inhibitor molidustat because of the “competitive environment” of the anemia associated with chronic kidney disease market, suggests two things. First, the two US biotech companies, FibroGen Inc. and Akebia Therapeutics Inc., and their hypoxia-inducible factor prolyl hydroxylase (HIF-PH) inhibitors already in Phase III, must have impressed the hardnosed R&D executives at Bayer. And second, the high cost of developing new drugs for this indication, combined with the expected launch of cheap biosimilar versions of epoetin/erythropoietin over coming years, may have given even a big pharma company like Bayer pause for thought. Three Phase II studies of molidustat have been completed and top-line results have been positive, but that wasn’t enough for Bayer to immediately move its HIF-PH inhibitor into Phase III studies. As the company’s CEO Marijn Dekkers said during an analysts’ briefing on its first-quarter results: “Given the competitive environment, the Phase III program will require large outcome studies and against this background, we are currently evaluating options, including a potential licensing of molidustat.” tain group firms to cough up damages of around INR25.62bn ($385m) in the case. Daiichi Sankyo initiated arbitration proceedings in Singapore in 2013 against the former shareholders of Ranbaxy Laboratories, over alleged misrepresentation of critical information concerning the US Department of Justice (DoJ) and FDA investigations against Ranbaxy at the time of the 2008 takeover by the Japanese company. Daiichi was then said to have sought compensation for losses arising from the settlement that Ranbaxy reached with the US regulators. In May 2013, Ranbaxy agreed to pay $500m towards settlement of the investigation by the DOJ concerning data integrity and manufacturing processes at its Paonta Sahib and Dewas sites in India. Hopes Mount On Sun’s ‘Game Changer’ Psoriasis Asset The results have raised hopes of significant upsides in the US for India’s top ranked company, which has initiated market preparatory efforts in anticipation of a potential launch. Sun said that two pivotal Phase III clinical trials evaluating the efficacy and safety of its investigational IL-23p19 inhibitor antibody tildrakizumab (MK-3222) in patients with moderate-to-severe plaque psoriasis had met their primary endpoints for both evaluated doses. Sun had previously acquired worldwide rights to tildrakizumab from Merck & Co. Scrip affiliate Sagient Research’s BioMedTracker has placed the likelihood of tildrakizumab’s approval at 67%. Intellia Launch Shows CRISPR Still Excites While Others Struggle Intellia Therapeutics Inc. sold more shares in its initial public offering than originally expected and the CRISPR/ Cas9 specialist did so at the top of its proposed price range, proving that investors remain excited about gene editing, but have less enthusiasm for other early-stage therapeutics firms. Both Intellia and its CRISPR/Cas9 peer Editas Medicine Inc. were trading above their IPO prices as of May 6, as were five other biotech companies that went public in 2016. © Informa UK Ltd 2016 HEADLINE NEWS Biogen Backs Out Of Hemophilia, But Who Benefits? LISA LAMOTTA [email protected], SUKAINA VIRJI [email protected] B scripintelligence.com players including Bayer AG, Novo Nordisk AS and Baxalta Inc., with a couple therapies made by the likes of Pfizer Inc. and CSL Behring. This means that there were virtually no buyers for Biogen’s hemophilia franchise, since all of these companies already have competing products on the market or in late-stages. Shutterstock: RomanenkoAlexey iogen CEO George Scangos said in a conference call accompanying the announcement that the time was right to spin off the hemophilia franchise, insisting the move will make both companies stronger. “The business has matured, it’s profitable, it’s growing, it can stand on its own, it has a pipeline,” he claimed. It would have been “premature,” he added, to make the move six or 12 months ago, which is why this outcome had not been considered any earlier. Premature is likely an accurate description of the hemophilia business, even now. Eloctate and Alprolix, the hemophilia A and hemophilia B treatments, respectively, that the new business will be based around have only been on the market for a short time. Both drugs were approved by FDA in 2014 and have been on the market for about a year. The two compounds generated combined revenues of $562m in 2015, about 5% of Biogen’s total sales. Analysts project the two drugs will reach sales of $1.4bn combined by 2020. While Datamonitor analysts believe that Biogen is strongly positioned with its two currently marketed therapies to take over a large share of the hemophilia market as it grows from $10.5bn in 2014 to $12.9bn in 2023, these two drugs are not enough to sustain a business in a rapidly changing market. The growth that Datamonitor projects is from patients switching from on-demand treatments to preventative therapies. Currently, the market is dominated by infusions that are given either as-needed or taken daily, creating an enormous therapeutic burden for patients. Yet, advances in the space, including Eloctate and Alprolix, mean that patients only need infusions once or twice per week. While this is expected to expand the patient population, changes in the science are happening rapidly – gene therapies could enter the space as early as 2020 and could mean patients only get an infusion once or twice per year, dramatically changing the treatment landscape. It will take significant investment for the yet-unnamed spin-out to keep up with these advancements. The hemophilia market is dominated by a small number of The big three players in the space, as well as a handful of biotechs, all already have follow-on long-acting therapies and gene therapies well into clinical development. Biogen insists the new company will have pipeline of its own, and will bring longer acting therapies using the XTEN technology into clinical development in the first half of 2017, as well as work on the development of bispecific antibodies and hemophilia-related gene therapy programs – none of which are in the clinic and all of which are well behind competitors. RIGHT TIME? Scangos’ comments may seem positive, but they really reflect Biogen’s need to focus squarely on its neurology franchise. It certainly was the right time, but not necessarily for its still young hemophilia business. Biogen has been stumbling for several months now as shares dropped, key management exited and cuts were made to staff. The big biotech has seen plenty of trouble in its current portfolio of marketed products. First quarter earnings were disappointing at best, particularly in its market-leading multiple sclerosis franchise. Tecifidera continued to struggle, posting $946m worldwide versus analysts’ expectations of $961m. Despite already being a blockbuster, the drug has floundered since reports of a rare brain disease leading to patient deaths. Sales of the company’s interferons, Avonex and Plegridy, lagged worldwide, bringing in $546m and $106m, respectively. Biogen blames the slowdown on patients switching over to oral MS therapies. Beyond the issues in its marketed portfolio, the company’s pipeline is one of the riskiest in the business – albeit one that would be highly lucrative, should it pan out. Biogen is currently conducting latestage trials in Alzheimer’s disease, spinal muscular atrophy, primary progressive MS, indolent non-Hodgkin’s lymphoma and diffuse large B-cell lymphoma. Spinning out the hemophilia portfolio will leave Biogen to focus its resources solely on these programs. “We know now that the transaction will make Biogen more focused, less diversified, more profitable, but slower growing and more leveraged. We find it hard to understand how it increases or improves their strategic flexibility. All that being said, we believe current investors in the stock will be happy with this outcome, but whether they still find the remaining company attractive after the spin-off remains to be seen,” Leerink Swann analyst Geoffrey Porges wrote in a same-day note. Porges also pointed out that between 2016-2020, Biogen will be losing 7% to 10% of its incoming revenue (from the hemophilia drugs) and will not be providing investors with alternative growth opportunities. Scangos said as much during the company’s first quarter earnings call, noting that it’s unlikely to focus on M&A in the coming year. The company had $6.8bn in cash and equivalents at the end of the first quarter. Without a sale of the hemophilia franchise, Biogen doesn’t have the cash to conduct significant transactions that could de-risk its pipeline. CLICK Read full story at: http://bit.ly/1rJULqd 13 May 2016 | Scrip intelligence | 17 HEADLINE NEWS Panel: Broaden Opioids Risk Plans, Require Prescriber Training DONNA YOUNG [email protected] I n the midst of a nationwide epidemic of prescription opioid misuse, abuse and addiction in the US, a panel of 30 FDA advisers on May 4 unanimously demanded significant changes to the current risk evaluation and mitigation strategy (REMS) plans that govern the use of those products in the marketplace. A major change the FDA panelists insisted on is broadening the current classwide REMS, which covers extended-release and long-acting opioids, to also include immediate-release (IR) forms of the products – reconciling what several of the expert advisers said was a mistake made four years earlier when those drugs were excluded in the plans. They said the black-box warning on the labeling of the IR opioids, which was imposed in March – part of the FDA’s “action plan” to address the explosion in recent years of misuse, abuse, addiction, overdose and death among Americans – didn’t go far enough to alert prescribers and patients about the dangers of the products. According to the Centers for Disease Control & Prevention (CDC), overdoses involving opioids, including heroin, killed 28,000 people in 2014. The advisers also called for mandatory training for prescribers of opioids – declaring the voluntary continuing education just isn’t cutting it. “I don’t think a voluntary effort is going to reach providers who are causing harm with opiates,” said panelist James Floyd, an assistant professor of medicine at the University of Washington in Seattle. “It ought to be mandatory.” But panelist Steven Krasnow, chief of oncology at the VA Medical Center in Washington and an associate professor of medicine at Georgetown University, cautioned the length of prescriber education program should be “restricted to make it palatable.” Several of the 30 panelists at a joint meeting of the FDA’s Drug Safety and Risk Management and the Anesthetic and Analgesic Drug Products Advisory Commit- 18 | Scrip intelligence | 13 May 2016 tees also said the required prescriber education programs should focus broadly on pain management and not just on opioids prescribing and use. The current ER/LA REMS, which was imposed on manufacturers in July 2012 – with regulators taking more than three years to mull it over and finalize the program before instituting it – is a “manual on how to prescribe opioids when it should be a manual or blueprint on how to treat pain,” insisted panelist Mary Ellen McCann, an associate professor of anesthesia at Harvard University. ‘I don’t think a voluntary effort is going to reach providers who are causing harm with opiates’ Others on the joint committee said education for patients should be revamped to focus on alternative methods of pain control. “We need to be teaching people to use these drugs sparingly,” added panelist Jeanmarie Perrone, a professor of emergency medicine and director of medical toxicology at the University of Pennsylvania in Philadelphia, who also argued the metrics to judge the use of the products, like patient satisfaction or pain scores, should be eliminated. Prescriber education programs also should have no connection to pharmaceutical makers, Perrone contended. At the meeting, where the committee heard from companies like Purdue Pharma Inc., Johnson & Johnson subsidiary Janssen Research and Development and Pernix Therapeutics Holdings Inc., along with more than 20 public speakers, the panelists also said the FDA’s assessment methods of the ER/LA REMS were flawed, so they could not adequately judge whether the classwide plan was meeting its stated goals of reducing inappropriate prescribing, misuse and abuse of the drugs or assured safe use. Most agreed, however, the ER/LA opioids REMS was not unduly burdensome on prescribers, pharmacies or patients and that the requirement of the plans had not impeded access to the medicines. Floyd also suggested that patients prescribed opioids for long-term use or in high doses should be required to be included in a registry so the use of those products can be tracked. Several on the joint committee complained there was not enough communication and collaboration among government agencies, like the FDA, the CDC, the Drug Enforcement Administration, the National Institute of Drug Abuse, the Veterans Affairs and the Substance Abuse and Mental Health Services Administration, and state and local authorities and medical groups. Panelist Alan Kaye, chair of anesthesia at Louisiana State University in New Orleans, suggested there needed to be a “drug czar” to coordinate the efforts among those agencies and groups. While some on the joint committee raised concerns about the REMS and required prescriber education potentially impeding patient access to opioids, “a far greater concern right now is it’s clear our society is flooded with these medications,” declared panelist Paul Stander, a clinical associate professor of medicine at the University of Arizona in Phoenix. Analogous to the problem of guns in the US – which has the world’s highest rate of gun-related deaths – “We have more of these opioids in circulation in this country and we have more opioids deaths,” Stander said, acknowledging he’d used a politically charged example to make his point. Nonetheless, he said, “It’s not that different.” “The focus should be on reducing the amount of opioids out there,” Stander argued. He insisted it should be emphasized that opioid use should be a “small part” of chronic pain management – “and the last resort.” © Informa UK Ltd 2016 HEADLINE NEWS Ten Years On, Access To Biosimilars Still Patchy in EU IAN SCHOFIELD [email protected] A pril saw the 10th anniversary of the first biosimilar approval in Europe –Sandoz International GMBH’s Omnitrope (somatropin) – which was launched in 2006. But a decade on, even with 20 biosimilar products now available and many more to come as big biological drugs lose their patent protection, there are still significant barriers to biosimilar penetration and wide variations in patient access across the EU that need to be addressed. Now that the EU regulatory system for biosimilars is pretty much firmly established, attention is increasingly turning to questions such as why biosimilar drugs are doing so well in some markets but not others, where the barriers lie, and what to do about them. The whole of the first day of the Medicines for Europe biosimilars conference on April 2829 was given over to issues like lack of physician awareness, an unwillingness to prescribe biosimilars, uncertainty over extrapolation of indications, and patient mistrust of changes to their therapy. The conference brought together representatives of generics and originator companies, regulators and payers to look at possible solutions such as incentives and education for doctors, better communication, listening to patient concerns, biosimilar prescribing quotas, tendering, and discounts. One broad conclusion was drawn: only collaborative action involving all key stakeholders would enable the biosimilars market to fulfil its potential. At a press briefing before the conference, Jacek Glinka, president of Medicines for Europe (formerly the European Generic and biosimilar Medicines Association, or EGA), said there were three key challenges to commercialization of biosimilars. One was awareness: many stakeholders such as patients, doctors and payers still had doubts or misperceptions of issues like interchangeability, safety, and extrapolation of indications. Another was incentives – without a proper incentive system, he said, biosimilar uptake was very slow. But the biosimilars industry didn’t have the clout to incentivize doctors and patients on its own. “If it is just up to the industry to create the uptake I think we are too weak ourselves to create proper access for these products. It has to be supported by scripintelligence.com a system of incentives for patients and physicians to really prescribe these products.” Thirdly, he said, sustainable pricing and reimbursement systems were needed to give biosimilar firms the opportunity to invest more and to bring more and more products to the market and build more experience in Europe. Carol Lynch, global head of biopharmaceuticals at Sandoz, said incentives were crucial but more needed to be done. “If you look at other EU countries, incentives alone aren’t enough – you can put prescription targets in place with incentives, but often education is also required. You can’t rely solely on industry to provide this education – NICE [the National Institute for Health and Care Excellence] could take part, regulators could engage in education, and payers have done this in some countries,” she said. Another key factor, said Klaus Martin, chief scientific officer of Polpharma Biologics, was guidance on interchangeability of biosimilars. Position papers on interchangeability are increasingly being adopted in the EU, in countries like the Netherlands, Germany, Poland and Finland, he said. These show that biosimilars “can be a clinically equivalent alternative to biologics on the market and that by increasing access to these drugs we can benefit from savings in hospital savings and improve access.” Medicines for Europe is now gathering data to identify the most sustainable biosimilar policy elements across markets, Martin continued, adding that there was a need for more national position statements on interchangeability “as they appear major enablers to biosimilar uptake in the countries where they already exist and they need to be expanded to other countries.” Misinformation by those opposed to expansion of the biosimilars market has often been raised as a further barrier to biosimilar usage. Asked whether this was still a problem, Glinka said: “Very much so. If we don’t have the infrastructure to somehow counter this communication and perception, then we need support from regulators and public authorities and key opinion leaders to speak up about it and build awareness.” Medicines for Europe director general Adrian van den Hoven said the association was monitoring this kind of misinformation. “We systematically develop information to counter it publicly, and we also distribute this widely to show why this type of information is inaccurate. Usually the way the scientific information is structured is designed to be misleading, so we constantly react to this and will continue to do so. We are not exclusively relying on the authorities but are taking it into our own hands and fighting back.” THE MARKET Outlining the state of the EU market for biosimilars, Per Troein of IMS Health, which produced a report on the impact of biosimilar competition last December at the request of the European Commission, noted that overall only about 12% of originator biologics were so far exposed to biosimilar competition and that biosimilar human growth hormone still had low market value, while EPOs and G-CSF were doing better. Uptake of biosimilar infliximab was “fairly slow” in the five major EU countries, although the situation was different in the Nordic countries, which have “almost totally switched” to biosimilar infliximab. Part of the reason, Troein said, was that countries like Norway and Denmark had “strong national champions and a national process for endorsing biosimilars, anchored in discussions with doctors, with the savings going to the treating department of the hospital.” COUNTRY EXPERIENCES Speakers from the Nordic and other EU countries presented their own experiences in terms of increasing biosimilar usage and making the most of the savings gained on healthcare budgets. Denmark, for example, is taking a proactive approach, with centralized processes for promoting biosimilar use among doctors. Benedicte Lunddahl of the Danish medicines agency said a list of reference drugs and their biosimilar versions had been established for doctors, and a multi-stakeholder group had been set up to discuss the “information gaps” and allow patients’ concerns and misunderstandings about biosimilars to be discussed. 13 May 2016 | Scrip intelligence | 19 EXPERT VIEW R&D Collaborations: A Legal Route Map CHARLOTTE TILLETT, ASTRID ARNOLD O n Feb. 1, amid heartrending press pictures of babies born with the small heads characteristic of microcephaly, WHO Director General Margaret Chan declared the Zika virus an international public health emergency. As part of its urgent response, the WHO called for action to expedite the development of vaccines and, by the beginning Charlotte Tillett of April, 18 companies and organizations were reported to be working on a vaccine, including Sanofi, Bharat Biotech International Ltd., the US National Institutes of Health and Manchester University. In projects of this kind, where speed is of the essence, R&D collaborations can be a fruitful way forward, enabling companies to pool existing knowledge in a particular area or combine different specialties. In the search for a Zika vaccine, Immunovaccine Inc. is reported to be working together with Leidos, whilst Inovio Pharmaceuticals Inc. is collaborating with GeneOne Life Science Inc.. Notable pharma collaborations in other areas include ViiV Healthcare , a joint venture between Pfizer Inc., GlaxoSmithKline PLC and Shionogi & Co. Ltd. specializing in combatting AIDS. The nature and complexity of such arrangements varies considerably, but, whatever the size, careful consideration of the structure of the parties’ collaboration, how the results are to be exploited and each party’s stake in the intellectual property (IPR) arising are important factors in ensuring success and in avoiding disputes at a later date. This article highlights some key issues. SHARING OWNERSHIP OF THE RESULTS A joint R&D project may be restricted to the R&D work itself or it may go further and involve joint exploitation of the results, for example through manufacturing and marketing new products or processes. It may take the form of a collaboration agreement or a joint venture company. In all cases, however, the parties are likely to expect ownership of the IPR in the results to reflect their contributions and will be looking for a solution which allows them the flexibility to develop and exploit future variations to the technology as well. Where a joint venture company is used the parties may wish the IPR to be owned by the company so that their interest in the IPR is through their shareholdings. In other cases joint ownership may, superficially, look like a good solution, but this is rarely advisable. Unless they agree otherwise, joint owners are subject to legal rules about exploitation and licensing that differ from country to country, so that an agreement regulating the parties’ respective ability to exploit, license, assign and mortgage their shares will be necessary anyway. In practice it is often preferable for one party to own the rights and license the other. The license terms will reflect the fact that the relationship between licensor and licensee is more equal than in a typical 20 | Scrip intelligence | 13 May 2016 license. Among the key points here will be who should decide when to take action against infringers; this is important because an infringement claim always involves a risk that validity will be challenged, so threatening both parties’ investment. Termination provisions are also a sensitive issue – the licensee will require the situations in which the license can be terminated to be very clearly defined. The parties will also need to agree what will happen if one party wishes to exit. PROVIDING ACCESS TO THE BACKGROUND TECHNOLOGY The technology contributed by each party at the outset is the starting point for the project. Each party will need a license to use the other’s background technology. Where a joint venture company is used, the background technology may be licensed into the company. The parameters of the background technology must be very carefully drawn to avoid later disputes about what is included in the results. A further contentious issue is often the extent of the warranties to be given in relation to the background technology. If it turns out that use of this technology in the project will infringe third party rights or is not valid, this may significantly impact the commercial value of the results. However, the parties may be reluctant to give robust warranties in crowded areas of technology or in relation to the uncertain area of patent validity. GOOD HOUSEKEEPING – PROTECTING THE RIGHTS TO THE RESULTS In pharmaceutical/biotech projects, commercial funding often depends on patents being available. The patent will be invalid if results are published (including by presentation at conferences) before the application has been submitted. Where universities are involved it is particularly important to ensure that all academics and PhD students are fully aware of the importance of this issue. It is also important to ensure that the IPR generated in the project is properly vested in the parties or the joint venture company as appropriate. Specific assignments of IPR should be taken from consultants and independent contractors. The different national rules on ownership of employee inventions must also be taken into account, and if employees are seconded to the project, assignments will need to be taken from their employers. KEEPING IT CONFIDENTIAL Keeping the details of the project confidential will usually be essential not only to avoid copycats but also because some aspects of the technology, for example know-how, do not qualify for specific IPR protection and can only be protected by keeping them secret. A particularly sensitive area is the functionality of software – although the software code itself is protected by copyright, work-arounds are often easy to achieve. The functionality of software is not CLICK protected by copyright and in Read full story at: many cases it will also not be http://bit.ly/1UQ9bRk possible to patent it. © Informa UK Ltd 2016 S T O C K WAT C H Big Pharma Strikes Back In Earnings War ANDY SMITH A scripintelligence.com “unremarkable” and their sales as “weak.” Although Merck marginally raised its full-year sales and EPS guidance, the analysts from Cowen pointed out that this was only due to “less negative foreign exchange.” I was more interested in the progress of Merck’s recently launched HCV antiviral combination Zepatier (elbasvir/grazoprevir) and its I/O antibody Keytruda (pembrolizumab). Like BMS’ Opdivo, Keytruda beat analysts’ consensus estimates with sales in the first quarter of $249m, suggesting that for the moment, there are only Shutterstock: Peshkova fter a phony first week for first-quarter earnings season, the second week was one of missed estimates and reduced guidance at big biotech companies. Last week – the third week – was different again, with big pharmaceutical companies restoring some honor to the life sciences sector. Pfizer Inc.’s closely watched earnings announcement did not disappoint. With sales and earnings that beat analysts’ consensus estimates by 8% and 22%, respectively, Pfizer contrasted the slew of disappointing earnings announcements from big biotech companies during the previous week. Pfizer even did what few companies have done so far this earnings season in raising its full-year 2016 sales and earnings guidance. The analysts from JP Morgan attributed this revision to “operational and currency tailwinds.” The analysts from Citigroup described Pfizer’s results as “a strong quarter” although qualified their report with the observations that the results were “flattered by foreign exchange and the material financial contribution of extra selling days.” Having gotten over the shock of Pfizer’s positive earnings report, the attention of analysts then turned to the decision on whether to split the company into innovative and established drugs companies towards the end of 2016. As investment bankers vying for a slice of the fees associated with the split plus whatever acquisitions are needed to make the two companies more rounded investment propositions focus on this opportunity, critiques of Pfizer will likely evaporate. Pfizer’s strong results ensured that its shares finished the week up over 2% in contrast to the NASDAQ Biotech Index, which finished the week down 4.8%. Pfizer’s well-received earnings report was not a one-off, although the consensus sales and earnings estimates beat by Bristol-Myers Squibb Co. (BMS) seemed to be lost in the previous week’s gloom, perhaps because the analysts from Jefferies noted that the earnings beat was driven by other income. The $704m in sales of recently launched immuno-oncology (I/O) antibody Opdivo (nivolumab) against a consensus estimate of $617m was, however, very positive and tends to disprove the CEOs of GlaxoSmithKline PLC (GSK) and Novartis AG, who have repeatedly bemoaned the death of the blockbuster pharmaceutical product. The CEOs of GSK and Novartis are probably mourning the death of their own blockbuster pharmaceuticals rather than the extinction of the species since GSK’s recent sales and earnings beat – which was termed “robust” by the analysts at Citigroup – was driven by its Consumer Healthcare division. While GSK’s first-quarter results were not as good as those of Pfizer and BMS, they were by no means the worst so far reported in the big pharma space. Sanofi missed analysts’ consensus estimates of sales by 2% but beat on earnings per share (EPS) by delaying its operational expense. Unlike companies that report in the US dollar and have benefitted from its weakness, Sanofi (which reports in euros) left its 2016 EPS guidance unchanged. Similarly Merck & Co. Inc. reported a 2% miss of consensus sales estimates, but a 5% beat of EPS estimates which, like Sanofi, was driven by lower operational expense. The analysts from Citigroup described Merck’s results as winners amongst the big pharma I/O players. In HCV, the picture was more mixed, with Zepatier sales of $50m being $10m behind the estimates of the analysts from Jefferies, but $30m ahead of the analysts from Cowen who (like me) had low expectations from the launch. The first-quarter results for all the big pharma companies that have recently launched HCV antiviral combinations are now in. While Gilead Sciences Inc. remains by far the market share leader at about 90%, with three companies competing on price, only HCV patients were the winners. Like many big pharma companies reporting this earnings season, Eli Lilly & Co. announced results that appeared superficially to be fine. Lilly’s results were described by the analysts from Jefferies as “unremarkable” and beat consensus sales estimates but missed on earnings largely due to higher operational expense. Like other companies reporting in US dollars, Lilly raised its full-year 2016 guidance on a tax benefit and foreign exchange not being as bad as was expected at the start of the year. The return to mediocrity for earnings reports after the stock market carnage of the previous week might not have been a cause for relief had it not been punctuated by the more positive first-quarter results from Pfizer and BMS. However, even mediocrity would be aspired to by investors in generics and specialty pharma companies, whose cumulative pressures and outlooks make them appear at best the phantom menace of life sciences and, at worst, a business model facing extinction. The Magna Biopharma Income fund holdings include Pfizer, BMS and Gilead. 13 May 2016 | Scrip intelligence | 21 P I P E L I N E WAT C H Scrip’s weekly Pipeline Watch tabulates the most recently reported late-stage clinical trial and regulatory developments from the more than 10,000 drug candidates currently under active research worldwide. CLICK Visit scrip intelligence.com for the entire pipeline with added commentary. Late-stage clinical developments for the week 29 April - 5 May 2016 LEAD COMPANY PARTNER COMPANY DRUG INDICATION MARKET REGULATORY APPROVAL Acadia Pharmaceuticals – Nuplazid (pimavanserin) Parkinson’s disease US Ferring BV – Nocdurna (desmopressin) nocturia EU Flamel Technologies SA – Akovaz (ephedrine sulfate) hypotension/shock US Orexigen Therapeutics Inc. Kwang Dong Pharmaceu- Contrave (naloxone and tical Co. Ltd. bupropion) obesity South Korea SUPPLEMENTAL REGULATORY APPROVAL Eisai Co. Ltd. – Fycompa (perampanel) oral suspension epilepsy US Teva Pharmaceutical Industries Ltd. – ProAir RespiClick (albuterol sulfate) pediatric asthma US Eisai – Halaven (eribulin) advanced liposarcoma EU Eli Lilly & Co. – olaratumab advanced soft-tissue sarcoma US Axsome Therapeutics Inc. – AXS-02 (disodium zoledronate) pain with knee osteoarthritis US – Sialanar (glycopyrronium br) persistent drooling EU Enzepi (pancrealipase) pancreatic insufficiency EU Avycaz (ceftazidime plus avibactam) intra-abdominal and urinary tract infections, nosocomial pneumonia EU Ono Pharmaceutical Ongentys (opicapone) Parkinson’s disease EU Johnson & Johnson Odefsey (emtricitabine, rilpivirine, tenofovir alafenamide) AIDS/HIV EU Imbruvica(ibrutinib) untreated chronic lymphocytic leukemia EU Gazyva (obinutuzumab) follicular lymphoma EU Zinforo (ceftaroline fosamil) skin and soft-tissue infections, communityacquired pneumonia EU Hyqvia (immunoglobulin, hyaluronidase) primary and certain secondary immunodeficiencies EU AbbVie Inc. Zinbryta (daclizumab) relapsing multiple sclerosis EU Novartis AG – Afinitor (everolimus) lung or GI neuroendocrine tumors EU Novo Nordisk AS – Victoza (liraglutide) type 2 diabetes monotherapy EU Roche – Avastin (bevacizumab) advanced non-small cell lung cancer EU – Vyvanse(lisdexamfetamine) eating disorders Australia Narcan (naloxone) nasal spray opioid addiction Canada olaratumab advanced soft tissue sarcoma FAST-TRACK STATUS CHMP NEGATIVE OPINION Proveca Ltd. CHMP POSITIVE OPINION ON FIRST APPROVAL Allergan Inc. AstraZeneca PLC Bial-Portela & CA SA Gilead Sciences Inc. – Allergan Inc. CHMP POSITIVE OPINION ON SUPPLEMENTAL APPROVAL Janssen-Cilag International AbbVie Inc. Roche AstraZeneca PLC – Allergan Inc. Baxalta Inc. Biogen – REGULATORY FILING Shire PLC Adapt Pharma Ltd. Opiant Pharmaceuticals PRIORITY REVIEW Eli Lilly & Co. – US Source: Sagient Research’s BioMedTracker 22 | Scrip intelligence | 13 May 2016 © Informa UK Ltd 2016 APPOINTMENTS Laboratoris Sanifit S.L. has appointed Keith R. Leonard, former president and CEO of Kythera Biopharmaceuticals, to its board of directors. Leonard brings over 20 years of industry experience to the Spanish company, which focuses on treatments for calcification disorders. Prior to co-founding Kythera Biopharma in 2005, Leonard held various positions at Amgen Inc., including senior vice president and general manager of Amgen Europe. He currently serves on the board of several other companies, and is the executive chair of UNITY Biotechnology and Sienna Biopharmaceuticals. Epizyme, Inc. has appointed Matthew Ros chief operating officer (COO). Ros joins the clinical-stage biopharma company from Sanofi, where he was most recently COO/ global head of the oncology business unit, overseeing its solid tumour and hematology franchise. Prior to this, he worked within Genzyme’s rare disease business, where he led its second-largest franchise, Pompe Disease, as vice president and franchise head. He has also previously served on the board of trustees at CancerCARE. The global specialty pharma company Endo International PLC has appointed Doug- Scrip las S. Ingram and Todd B. Sisitsky to its board of directors. Ingram brings 20 years of biotech and pharma experience to the business, and is currently the CEO of Chase Pharmaceuticals Corporation. He was previously president of Allergan, Inc., a role which he left last March. Sisitsky is the managing partner of TPC Capital and a member of the TPB executive committee, co-leading the firm’s investment activities in the healthcare services and pharma/medical device sectors. Albany Molecular Research Inc. (AMRI) has appointed Louis Yu senior vice president of quality and compliance, a newly created position within the company. Lu joins AMRI, a global contract research and manufacturing organisation, from Perrigo Company PLC, where he was executive vice president, global quality and compliance. Prior to that, he was vice president of quality for CV Therapeutics (now a division of Gilead Sciences), and has also held a number of senior leadership roles at Forest Laboratories, Solvay Pharmaceuticals and Par Pharmaceutical. OPKO Health Inc. has appointed Douglass Laidlawvice president of medical affairs. Laidlawvice brings more than 15 years’ experience in strategic planning, development and execution of medical education initiatives for various companies including Relypsa, Keryx, Sanofi, Genzyme, Neurocine Biosciences, Serono and Organon. Prior to OPKO, Laidlawvice was executive director medical affairs at Relypsa and Sanofi’s national director, medical science liaisons, medical affairs. Synthetic Biologics, Inc. has appointed Isaac J. Bright, M.D. vice president of corporate development. Bright brings over 15 years’ of transactional and operational experience to the clinical stage company, which focuses on developing therapeutics to protect the gut microbiome. Prior to joining Synthetic Biologics, Bright was a partner at US private equity investment practice Merieux Development, before which he was vice president, corporate development and diagnostics at QuantaLife, Inc. Specialty pharma company, Pernix Therapeutics Holdings, Inc., has appointed John Sedor chair of the board and interim CEO after the resignation of its former president, CEO and chair, Doug Drysdale. Sedor, who is currently a director at Pernix, will act as CEO until Drysdale’s successor is appointed, after which he will continue in his role as chair of the board. ELEANOR MALONE @SCRIPELEANOR IAN SCHOFIELD @SCRIPIANS JOHN DAVIS @JOHN023DAVIS [email protected] [email protected] [email protected] ALEXANDRA SHIMMINGS @SCRIPALEXS ASHLEY YEO @ASHLEYPYEO SARAH WEIR @SCRIPSARAH [email protected] [email protected] [email protected] SUKAINA.VIRJI @SCRIPSUKI LISA LAMOTTA @BIOWRITERCHIK [email protected] [email protected] All stock images in this publication courtesy of www.shutterstock.com unless otherwise stated. ANJU.GHANGURDE @SCRIPANJUG LUCIE ELLIS @SCRIPLUCIE [email protected] [email protected] DONNA YOUNG @SCRIPDONNADC LUBNA AHMED @SCRIPLUBNA [email protected] [email protected] MANDY JACKSON @SCRIPMANDY PAUL WILKINSON @PAUL__WILKINSON [email protected] [email protected] JOANNE SHORTHOUSE @SCRIPJO JOHN HODGSON @SCRIPJOHN [email protected] [email protected] FRANCESCA BRUCE @SCRIPFRANCESCA MIKE WARD @SCRIPMIKEWARD [email protected] [email protected] STEN STOVALL @STENSTOVALL PETER CHARLISH @PETERCHARLISH [email protected] [email protected] scripintelligence.com Customer Services Tel: +44 (0)20 7017 5540 or (US) Toll Free: 1 800 997 3892 Email: [email protected] To subscribe, visit scripintelligence.com To advertise, contact [email protected] Scrip is published by Informa UK Limited. ©Informa UK Ltd 2016: All rights reserved. ISSN 0143 7690. 13 May 2016 | Scrip intelligence | 23 Maximize Your Reimbursement Potential The balance of power behind the prescribing decision is changing: payers are ever more in charge. That means that insight into how payers make decisions – how they evaluate drugs, one against another – will be crucial to any successful drug launch. RxScorecard objectively, authoritatively, and systematically assesses marketed and pipeline drugs in a therapeutic indication from the payer’s point of view. Developed by senior medical and pharmacy leaders from major payers and pharmacy benefit managers, RxScorecard delivers practical and powerful insight into your drug’s reimbursement potential and how you can maximize it. Transparent, objective, and grounded in payer data, RxScorecard helps you refine your development path, future-proof your market access strategy, and achieve payer acceptance. Discover RxScorecard today. Visit https://goo.gl/i0AM2U to review the selection of RxScorecards today. 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