2016 Annual Report: State of the Bio Industry
The outlook remains bright due to a favorable regulatory arena, support for biopharma-friendly legislation and development incentives, expanding scientific opportunities in key therapeutic areas such as immuno-oncology, and big pharma’s continued push to obtain innovation.
2016 has been full of ups and downs for the world of bio. For example, a large amount of biotechnology company stocks took a beating during January, with biotech valuations taking a huge hit throughout the volatile first quarter. FDA in April approved just the second biosimilar to reach the U.S. marketplace, and the regulatory agency additionally has approved a variety of promising and innovative bio medicines throughout the first half of the year. The presence of a rare kind of E. coli infection, a superbug that is resistant to many antibiotics, became the first known case of its kind in the United States. And as this magazine was going to press, several prime-time players were in the rumor mill to attempt to acquire the biopharma company Medivation after Sanofi’s $9.3 billion offer was turned down.
BIOTECH/BIOPHARMA BIG DEALS IN 2016
French drugmaker Sanofi went public in late April with its offer to buy the San Francisco-based biopharmaceutical company Medivation for $52.50 per share. The proposed purchase price represented a premium of more than 50 percent to Medivation’s two-month volume weighted average price (VWAP) before the takeover rumors.
Medivation possesses one marketed prostate cancer therapy, Xtandi, which generated almost $2 billion in 2015 sales and could top $5 billion in peak annual sales. Medivation also has two oncology assets in clinical trials. Meanwhile, Sanofi has a significant presence in prostate cancer as well as a strong heritage in oncology. But despite Sanofi’s established tradition in selling chemotherapy drugs, the company has not been very successful at developing new-generation cancer medicines, note industry insiders.
Sanofi first reached out to Medivation about a deal toward the end of March, and another phone call was made about a week later to Medivation’s CEO. Sanofi proceeded to make its $52.50-per-share offer in mid-April in the form of a letter to Medivation’s lead executive, David Hung. After Sanofi went public with its offer in late April, the Medivation board quickly rejected it. Sanofi responded by issuing a letter threatening a hostile takeover. At the end of May, Sanofi was preparing to name candidates it would put forward to replace the entire Medivation board.
Medivation has declined to engage in acquisition talks with Sanofi until the $52.50 per share cash offer is raised, according to sources. Sanofi reportedly is willing to increase its bid only after Medivation joins the negotiation process.
In the meantime, a range of other suitors have reportedly jumped into the ring to try to acquire Medivation, including AstraZeneca, Pfizer, and Amgen. Medivation’s stock price came in at $60.46 on May 31st.
Shire, Baxalta merge in $32 billion deal
Initially announced in January, the boards of Shire and Baxalta gave their approval of the transaction in late May and it closed on June 3. Shire agreed to pay $45.57 in cash and stock for each Baxalta share, for a total of $32 billion. Baxalta initially rebuffed Shire’s offer during the summer of 2015, saying that it “significantly undervalued” the company. Shire’s first proposal was an all-stock deal valued at $30 billion when the companies revealed their discussions during August.
Bannockburn, Ill.-based Baxalta will benefit from a lower tax rate as Shire is based in Dublin, Ireland. When the deal was announced in January, Baxalta had been a stand-alone business for only about six months. Baxter had spun off the drug manufacturer in July to streamline its operations with a concentration on specialty medicines. The medical supplies company Baxter still owned more than 19 percent of Baxalta and remained the largest shareholder until the Shire transaction was completed.
The business combination creates the leading global biotech company in rare diseases and other highly specialized conditions. The new entity is projected to deliver double-digit top-line growth with more than $20 billion in yearly revenue by 2020. Shire-Baxalta represents the No. 1 platform in rare diseases, which is expected to produce 65% of the company’s total annual revenue. The combined business consists of multiple, durable billion-dollar franchises, each with best-in-class products. The robust portfolio includes more than 30 recent and planned product launches with $5 billion sales potential by 2020.
AbbVie lands Stemcentrx for $5.8 billion
Global biopharma company AbbVie in late April acquired Stemcentrx and its lead late-stage asset rovalpituzumab tesirine. Rova-T is undergoing registrational trials for small cell lung cancer (SCLC). The novel biomarker-specific therapy is derived from cancer stem cells and targets delta-like protein 3 (DLL3) that is expressed in 80-plus percent of SCLC patient tumors and is not evident in healthy tissue. Registrational trials for third-line SCLC are expected to complete enrollment by year-end 2016. Rova-T is under investigation as a third-line treatment in SCLC. There is no currently approved therapy for SCLC. Rova-T has been submitted to the FDA for breakthrough therapy designation.
“Rova-T is the first predictive biomarker-based therapy associated with drug efficacy in small cell lung cancer, and that is a big deal for this difficult disease,” noted Charles Rudin, M.D., Ph.D., chief, thoracic oncology service for Memorial Sloan Kettering Cancer Center.
In addition to Rova-T, Stemcentrx has four novel compounds in clinical studies across several solid tumor indications including triple-negative breast cancer, ovarian cancer, and non-small cell lung cancer. Stemcentrx has additional preclinical compounds making progress toward clinical studies during 2016 and a proprietary technology platform that leverages stem cell biology to identify and screen potential targets against live tumor tissue to more predictably advance discovery and development of new assets.
Pfizer purchases Anacor for $5.2 billion
Pfizer had plenty of cash to spend after its $160 billion merger with Allergan was called off in early April after a U.S. tax rule change was announced to curb deals in which companies move overseas to save on taxes. In mid-May, the pharma giant agreed to buy Anacor Pharmaceuticals for a total transaction value, net of cash, of $5.2 billion.
Anacor is a biopharma company concentrated on discovering, developing and commercializing novel small-molecule therapeutics derived from its boron chemistry platform. The company’s first approved product, Kerydin (tavaborole) topical solution 5%, is an oxaborole antifungal that was FDA-approved in July 2014 for treating toenail onychomycosis. The more lucrative sales generator from Anacor is expected to be crisaborole, an eczema drug anticipated to gain FDA approval in early 2017 (for more details, see “Eczema market set to take off in 2017” and “Projected blockbuster bio products with potential launches in 2016”).
Jazz acquires Celator for $1.5 billion
On the last day of May, Jazz Pharmaceuticals announced a definitive agreement to purchase Celator Pharmaceuticals for $30.25 per share in cash. The transaction between the two biopharma companies adds Vyxeos, an investigational product in development as a treatment for acute myeloid leukemia (AML), to Jazz’s broadened hematology/oncology portfolio.
U.S. regulatory submission for Vyxeos is on track to occur by the end of third-quarter 2016. Vyxeos is the first product candidate to show a statistically significant improvement in overall survival in patients with high-risk (secondary) AML. U.S. FDA breakthrough therapy designation has been granted for Vyxeos. The FDA and European Commission have granted orphan drug designation for Vyxeos as a treatment for AML. The drug has additionally been given FDA fast track designation for treating elderly patients with secondary AML. The innovative product candidate is based on the Celator CombiPlex platform.
Vyxeos Liposome for Injection, additionally known as CPX-351, is a nano-scale liposomal co-formulation of cytarabine and daunorubicin at a synergistic 5:1 molar ratio. The new medicine represents a novel approach to developing drug combinations in which molar ratios of two drugs with synergistic anti-tumor activity are encapsulated in a nanoscale liposome in order to maintain the desired ratio following administration.
PROMISING RECENT NEW DRUG APPROVALS
First new drug for PBC in nearly 20 years
Biopharma company Intercept Pharmaceuticals in late May received FDA approval for Ocaliva (obeticholic acid). Ocaliva was granted marketing clearance for the treatment of primary biliary cholangitis (PBC), previously known as primary biliary cirrhosis, in combination with ursodeoxycholic acid (UDCA) in adults with an inadequate response to UDCA or as monotherapy in adults unable to tolerate UDCA. The drug is an agonist of the farnesoid X receptor (FXR), a nuclear receptor expressed in the liver and intestine and a key regulator of bile acid, inflammatory, fibrotic and metabolic pathways.
Obeticholic acid is additionally being studied for potential indications across a variety other chronic liver diseases, including nonalcoholic steatohepatitis (NASH), primary sclerosing cholangitis (PSC), and biliary atresia. Intercept is conducting a Phase III research trial designed to study the effect of the investigational drug obeticholic acid on the overall health and quality of life of patients with nonalcoholic steatohepatitis and evidence of liver fibrosis.
Industry analysts say Ocaliva will become a blockbuster medicine if approved for nonalcoholic steatohepatitis. While PBC is fairly rare, NASH is found in about 2.5 percent of the U.S. population and there are no marketed medicines for the liver condition.
Industry analysts say the PBC and NASH indications could result in annual peak sales of nearly $3 billion.
Companies that have been recently rumored to be interested in acquiring Intercept include Gilead Sciences, AstraZeneca, Shire and GlaxoSmithKline.
First once-monthly, self-administered treatment for MS
Additionally in late May, AbbVie and Biogen gained U.S. marketing approval of once-monthly Zinbryta (daclizumab) for multiple sclerosis. The approval of the new once-monthly, self-administered, subcutaneous treatment for relapsing forms of multiple sclerosis (RMS) is supported by the largest and longest head-to-head Phase III study conducted in multiple sclerosis.
“Zinbryta is the first once-monthly, self-administered treatment in MS, and it demonstrated superior efficacy over a widely used interferon,” commented Alfred Sandrock, M.D., Ph.D., executive VP and chief medical officer at Biogen. “Clinical data showed Zinbryta significantly reduced relapses and brain lesions for up to three years compared to Avonex (interferon beta-1a) intramuscular injection, and has a positive benefit-risk profile with monthly patient monitoring.”
The humanized IgG1 monoclonal antibody selectively binds to the high-affinity interleukin-2 (IL-2) receptor subunit (CD25). CD25 is expressed at high levels on T-cells that become activated in people with multiple sclerosis.
Zinbryta labeling includes a boxed warning for the risk of hepatic injury, including autoimmune hepatitis, and other immune-mediated disorders. Due to the boxed warning and presence of oral medicines such as Novartis’ Gilenya and Biogen’s Tecfidera and its every-two-weeks MS treatment Plegridy, peak annual sales for Zinbryta are presently in the $500 million range.
First oral treatment and precision medicine for Fabry disease
The rare and orphan diseases biotech company Amicus Therapeutics gained EU approval at the end of May for Galafold (migalastat). Galafold was cleared for marketing as a first-line therapy for long-term treatment of adults and adolescents aged 16 years and older with a confirmed diagnosis of Fabry disease (alpha-galactosidase A deficiency) and who have an amenable mutation.
Galafold represents the first oral treatment and the first precision medicine for Fabry disease. The first-in-class chaperone therapy was cleared for marketing in the EU as a monotherapy for Fabry disease in patients with amenable mutations. The drug acts by stabilizing the body’s own dysfunctional enzyme, so it can clear the accumulation of disease substrate in patients who have amenable mutations. The product’s broad label includes 269 Fabry-causing mutations that represent 35 percent to 50 percent of all patients with Fabry disease.
Arrival of the PD-L1 inhibitors
Tecentriq (atezolizumab) became the first PD-L1 inhibitor to gain FDA approval in May 2016. The Genentech drug also represents the first FDA-approved treatment for people with a specific type of bladder cancer in 30-plus years. Accelerated approval was granted to Tecentriq for treating people with locally advanced or metastatic urothelial carcinoma who have disease progression during or following platinum-based chemotherapy, or whose disease has worsened within 12 months of receiving platinum-based chemotherapy before surgery or after surgery.
Targeting the PD-L1 pathway, Tecentriq is the newest checkpoint inhibitor in a broader class to reach the market. The checkpoint signaling pathway involves the programmed death 1 (PD-1) receptor and its ligands (PD-L1/2). These immuno-oncology drugs target the PD-1/PD-L1 pathway, proteins found on the body’s immune cells and some cancer cells. By blocking these interactions, these medicines may help the body’s immune system combat cancer cells, which use the PD-1/PD-L1 mechanism to escape detection by the immune system. Blocking PD-1/PD-L1 makes tumors visible to deadly T cells.
A handful of PD-1 inhibitors have received FDA marketing clearance during the past couple of years. These approvals include Bristol-Myers Squibb’s Opdivo (nivolumab) for lung and skin cancer and Merck & Co.’s Keytruda (pembrolizumab) for skin cancer. These drugs have gone head-to-head in the marketplace, with both medicines commanding an annual price tag in the $150,000 range per patient. Tecentriq is also priced at about $12,500 per month.
Despite the significant progress of immuno-oncology in the field of cancer treatment, checkpoint inhibitors may not work in as many patients as initially hoped, succeeding in patients whose immune systems already appear ready for a boost.