Biopharmaceutical News Week # 14 – 2016

 

 

 

Acquisitions /mergers/joint-ventures

 

Pfizer and Allergan have confirmed that have mutually agreed to terminate their proposed $160 billion merger indicating that the decision was driven by new rules from the US government. By moving its legal domicile from the US to Ireland, where Allergan is based, Pfizer would have been able to escape US taxes on $128 billion of profits stored overseas. Last Monday, the US Treasury Department issued new regulations which are limiting the benefits of “serial inverters”, companies that have acquired multiple US firms over a short period of time. Treasury Jacob J. Lew urged Congress to enact broader legislation on this issue and stated “Some companies are serial inverters. They acquire multiple US firms in stock-based transactions over a short period of time. This increases their size and reduces the negative tax consequences of a subsequent inversion. Today’s action takes away a significant amount of the tax benefits of these serial inversions. We are also taking action to curb the use of earnings-stripping, by focusing on transactions that generate large interest deductions by simply transferring debt between subsidiaries without financing new investment in the United States.” This directly affects Allergan, which has been enlarged by a series of deals culminating in a takeover of US-based Actavis last year. Pfizer has agreed to pay Allergan $150 million for reimbursement of expenses associated with the transaction, even though the original agreement said that the break-up fee could be up to $400 million.  The size of the breakup is small in comparison with the $1.6 billion AbbVie paid last year to Shire when that deal was terminated.

Shire (Dublin, Ireland) announced that the recent announcement of “tax inversion deals” would not affect its acquisition of Baxalta announced in January for $32 billion. As this is another case of an Irish firm acquiring a US company some had speculated that the deal may also be at risk, but Shire has insisted this is not the case.

One of the reason US companies are trying “tax inversion deals” (a corporate inversion is a transaction in which a US-based company changes its tax domicile by acquiring a company outside the US) with Irish based companies is because of their intend to escape the US, which has now the highest corporate income tax rate of the developed world, while Ireland has the lowest (see attached chart).

 

 

 

The failure of the Pfizer and Allergan merger has triggered vivid comments by various parties.  On a CNBC appearance Allergan CEO Brent Saunders said: "We followed the rules Congress had set, but, for rules to be changed is a bit un-American, but that's the situation we're in." White House Press Secretary Josh Earnest quickly hit back: "I think it is difficult to have a lot of patience for an American CEO trying to execute a complicated financial transaction to avoid paying taxes in America talking about what it means to be a good citizen of the United States," he said. Merck CEO Kenneth Frazier, also on CNBC, said the current tax structure hurts stateside companies by making them uncompetitive abroad, and called for a lower overall corporate tax rate and new measures that would allow companies to bring their overseas cash home tax-free. Last year Frazier already told Bloomberg that the Pfizer-Allergan deal "should be something that serves notice to our policy makers that good American companies feel no choice but to do things like tax inversions in order to remain competitive globally”. Meanwhile, some Irish lawmakers see the deal's collapse as a problem with their own tax code. The Sinn Fein party spokesman on jobs and enterprise, Peadar Toibin, said it exposed the Irish government's "bargain basement corporation tax strategy." And companies "moving" to the country for its tax benefits typically don't bring jobs or new tax revenue.  The IrishCentral also reported that the Irish Ministry for Finance said, "In relation to any transactions that may not involve real substance in terms of jobs and investment in the Irish economy, Ireland does not encourage such transactions."

 

Business

 

Antibody Drug Conjugate (ADC) technology basically links a monoclonal antibody with a ‘payload’ of a highly cytotoxic agent for release inside the targeted cell, the idea being that such targeted delivery will boost effectiveness of treatment while preventing healthy tissues from being harmed. Major players in the field have been Immunogen, Seattle Genetics and more recently Innate Pharma. Two new deals involving this technology were announced this week.

Regeneron Pharmaceutical and MedImmune enter a collaboration to develop (ADCs) to treat undisclosed cancer targets using MedImmune pyrrolobenzodiazepine-based (PBD) “warhead” and linker technology. Under the terms of the deal Regeneron will pay an undisclosed upfront payment, milestone fees and sales-based royalties. Regeneron will have exclusive rights to the PBD technology to develop ADCs against an unspecified number of cancer targets, but MedImmune will retain the option to develop and commercialize certain products created using PBD outside the US.

Oxford Biotherapeutics (Oxford, UK) licenses Nerviano Medical Sciences’ (Nerviano, Italy) antibody drug conjugate linker technology in order to expand its current portfolio of ADCs. Oxford Boitherapeutics will pay undisclosed access fees, development milestones and sales-based royalties.

 

Incyte (Wilmington, DEL, USA) amends its license agreement with Eli Lilly to acquire right to develop, and commercialize Jakafi or ruxolitinib, a JAK inhibitor, for the treatment of graft-versus-host disease (GVHD). In the meantime Incyte also amends its license agreement with Novartis granting it exclusive rights to commercialize ruxolitinib for GVHD outside the US. Incyte will make an upfront payment of $35M to Lilly and undisclosed milestones payments. Novartis will make undisclosed development and regulatory milestones to Incyte as well pay royalties on commercial sales ex-U.S.

 

Essex Bio (Hong Kong, China) enters a collaboration with Abpro (Walburn, MA, USA) to co-develop, monoclonal antibodies in immune-oncology and ophthalmology using Abpro’s DiversImmune platform technology. Under the terms of the deal Essex Bio will make a $3.5 million equity investment and undisclosed further payments.

 

Allergan enters into a collaboration with Heptares Therapeutics (London, UK) on the development of selective muscarinic receptor agonists to treat neurological and cognitive disorders. Under the terms of the deal Allergan will receive exclusive rights to a broad clinical and preclinical portfolio of M1, M4, and dual M1/M4 agonists—including two selective M1 agonists now in Phase I clinical development, HTL9936 and HTL18318 and will pay an upfront payment of $125 million, up to $665 million in milestones fees and up to $2.5 billion associated with achieving sales thresholds.

 

MedImmune, an AstraZeneca subsidiary enters a collaboration with VentiRx (Seattle, WA, USA) to assess the safety and efficacy of MedImmune’s durvalumab, a PD-L1 inhibitor, and VentiRx’s motolimod, a TLR8 cancer vaccine, along with chemotherapy as a treatment of advanced or recurrent ovarian cancer. The Ludwig Cancer Research (New York City, NY, USA) and the Cancer Research Institute will participate in the study. Financial terms were not disclosed.

 

Pfizer teams up with IBM to create a patient-centric monitoring system for Parkinson’s disease that uses sensors, mobile devices and machine learning to provide healthcare providers with real-time information about patient’s condition. The system will measure different health indicators such as motor function, cognition, sleep and daily activities including eating and dressing to show how well treatment is working. Financial terms of the deal were not disclosed.

 

Three months after Sanofi returned the rights of Afrezza, an inhaled insulin, to Mannkind Corporation, the latter indicated s that it would be selling the product itself using social media and patient advocacy groups and making “Afrezza the successful mealtime treatment for people with diabetes”

 

Approval of drugs, vaccines and diagnostics

 

The European Commission approves:

Novartis’ Revolade, or altrombopag, as a first-in-class therapy for children with chronic idiopathic thrombocytopenia purpura (ITP). Revolade, a thrombopoietin (TPO) receptor agonist that works by inducing stimulation and differentiation of megakaryocytes to increase platelet production, is already approved in more than 100 countries worldwide for the treatment of adults with IPP.

…..And Bristol-Myers Squibb’s Opdivo or nivolumab, as a treatment for advanced renal cell carcinoma (RCC) after prior therapy in adults.

 

The European Commission expands:

Boehringer Ingelheim’s Giotrif or afatinib, as a treatment of advanced squamous cell carcinoma of the lung, the largest sub-type of non-small cell lung cancer (20-30% of cases) which is associated with a poor prognosis. The drug was already approved for the treatment of non-small cell lung cancer.

….And the use of Bristol-Myers Squibb’s Opdivo, as a monotherapy for locally advanced or metastatic non-small cell lung cancer (NSCLC) after prior chemotherapy.

 

The US FDA approves:

Gilead’s Descovy, a fixed-dose combination of entrictabine and a tenofovir alafenamide (F/TAF), along with other antiretroviral therapies as a treatment for HIV patients which constitutes the "first new HIV treatment backbone approved in a decade". Descovy has shown high antiviral efficacy similar to and at a dose less than one-tenth that of Gilead’s Viread (tenofovir disoproxil fumarate, TDF).  Because TAF enters cells more efficiently than TDF it can be given at a much lower dose, and the drug has also shown an improvement in renal and bone safety in clinical trials in combination with other antiretroviral agents. Descovy is not indicated for use as pre-exposure prophylaxis to reduce the risk of sexually acquired HIV-1 in adults at high risk.

…And Celltrion and Pfizer’s Inflectar, a biosimilar version of Johnson & Johnson’s remicade as a treatment of six autoimmune diseases. Inflectra is the second US FDA approved biosimilar. 

 

The US FDA has released final guidance for the review of proprietary drug names in premarket applications in an effort to prevent medication errors. The guidance recommends including in submissions the proposed proprietary name, the name's intended pronunciation and derivation, therapeutic category, proposed labeling, and drug dispensing and delivery information.

 

Drugs at clinical stage

 

The European Medicines Agency grants:

Eiger Biopharmaceuticals’ (Palo Alto, CA, USA) ubenimex orphan status as a treatment for patients with pulmonary arterial hypertension. Ubenimex is an oral dual-inhibitor of aminopeptidase and leukotriene A4 hydrolase already approved in Japan as an adjunct to chemotherapy agents.

XBiotech’s (Austin, TX, USA) Xilonix fast-track status as a treatment of advanced colorectal cancer. The drug already holds the same status in the US. Xilonix is a human monoclonal antibody that binds to interleukin-1 alpha, which blocks the inflammation that supports tumor growth, spread and symptomatic effects of the cancer.

 

The Japan Pharmaceuticals and Medical Devices Agency has cleared SanBio’s (Mountain View, CA, USA) to conduct the first Phase 2 chronic traumatic brain injury clinical trial, to ever be conducted in Japan using a stem cell therapy. Stemra or SB623 has started a clinical trial in the US on chronic stroke patients who have not responded to conventional therapies in October 2015.

 

The US FDA Gastrointestinal Advisory Committee voted 17 to 0 to recommend accelerated approval of Intercept Pharmaceutical’s (New York City, NY, USA) obetilochic acid, as a monotherapy for patients with primary biliary cirrhosis.

 

The US FDA has placed GlaxoSmithKline and Ionis Pharmaceuticals’ (Carlsbad, CA, USA) IONIS-TTRrx Phase 3 clinical trial on hold and is waiting for both companies to provide answers about the protocol.  IONIS-TTRrx is an antisense drug that targets a specific sequence of RNA designed to reduce the production of transthyretin (TTR) amyloidosis, a rare inherited condition caused by the abnormal formation and aggregation of TTR amyloid deposits in various tissues and organs.

 

AstraZeneca and Eli Lilly advance AZD3293, or LY3314814, their early clinical candidate, to Phase 3 for the treatment of Alzheimer’s disease. AZD3293 (LY3314814), a BACE (beta secretase cleaving enzyme), is being co-developed and will be co-commercialized by Eli Lilly and AstraZeneca under their 2014 strategic alliance. BACE, an enzyme associated with the development of amyloid beta and inhibiting its action, is expected to prevent the formation of amyloid plaque and eventually slow the progression of Alzheimer’s disease. Previous BACE inhibitors had not demonstrated clinical efficacy in late phase clinical trials. The advancement of the drug into Phase 3 triggers a $100M milestone payment to AstraZeneca from Lilly.

 

Science and Technology

 

Using reprogrammed induced pluripotent stem (IPS) cells, scientists from the RIKEN Center for Development Biology (CDB) in Japan, in collaboration with the Tokyo University of Science and other Japanese scientific institutions, have successfully grown complex skin tissue-complete with hair follicles and sebaceous glands in their laboratories. They were then able to implant these three-dimensional tissues into living mice, and the tissues formed proper connections with other organ systems such as nerves and muscle fibers. This work opens a path to creating functional skin transplants for burn and other patients who require new skin. The study led by Takashi Tsuji was published in the April 1, Sciences Advances issue.

 

According to a World Health Organisation (WHO) report the number of people with diabetes has nearly quadrupled since 1980 with an estimated 422 million people living with the conditions. WHO released its first Global report on diabetes to coincide with World Health Day, which this year focuses on diabetes, and called for action to step up prevention and treatment of the disease, especially in poorer nations. The report linked diabetes and higher-than-optimal blood glucose to 3.7 million deaths each year, 43 percent of which occurred before the age of 70. Highlighting that the disease was “no longer a disease of predominantly rich nations”, WHO director-general, Dr Margaret Chan, said: “Unfortunately, in many settings the lack of effective policies to create supportive environments for healthy lifestyles and the lack of access to quality health care means that the prevention and treatment of diabetes, particularly for people of modest means, are not being pursued. When diabetes is uncontrolled, it has dire consequences for health and well-being.”

 

 

Medical Devices and Diagnosis News

 

US FDA approves Medtronic’s Micra Transcatheter Pacing System, as the first leadless pacemaker ever. The inch-long device is the smallest available and is implanted directly into the heart's right ventricle chamber. Traditional pacemakers require wired leads to connect the device to the heart. The device is introduced into the body via catheter rather than requiring surgical implantation and it adjusts and responds to an individual patient's heart rate and stimulates it accordingly. Pacemaker leads can be problematic for patients since they can malfunction or cause infection in the surrounding tissue, which requires surgical replacement.

 

Cost, Pricing and Market Access

 

According to a Reuters Report prices for four of the US nation’s top ten drugs increased more than 100% since 2011 and six others went up more than 50%.

 

Reimbursement by Japan’s Central Social Insurance Medical Council, known as Chuikyo, will start hurting many firms, as of April 1, with price cuts for widely prescribed drugs reaching as much as 50% for drugs with Japan annual sales of more than ¥150 billion and that had sharp sales gains.

 

Miscellaneous

 

Catalent, which saw its softgel production site in Beinheim (France) suspended by the French Agence de Sécurité du Médicament et des Produits de Santé (ANSM), has not yet resumed its activity at the site. In an unrelated action, US FDA has issued, a 483 form with an undisclosed number of observations following an inspection at Catalent’s softgel plant in St Petersburg (Florida, USA).

 

UK National Health Service bodies have issued the first national whistle-blowing policy to help standardize the way organisations should support staff to raise concerns. This policy is structured to ensure that staff are encouraged to speak up if they have any issues and that organisations have a clear route to follow to address any concerns and to tackle their new responsibilities to appoint their own Freedom to Speak Up Guardian, an independent and impartial source of advice to staff.

 

Bioevents

 

BIO Vision on April 13-14 in Lyon (France)

BIO Trinity on April 25-27 in London (UK)

Bio€quity Europe 2016 on May 10-11 in Copenhagen (Denmark)

Strategic Alliance Management Congress on May 16-18 in Philadelphia (USA)

China BIO Partnering Forum on May 18-19 in Suzhou (China)

BIO International Convention on June 6-9 in San Francisco (USA)

 

BIO Pharm America on September 13-15 in Boston (USA)

7th Innovation Days on October 3-4 in Paris (France)

BIO Europe on November 7-9 in Cologne (Germany)

BIO Latam on November 29-30 in San Juan (Puerto Rico)

Biofit 2016 on November 30-December 1 in Lille (France)

 

IMPORTANT NOTICE

 

This document has been prepared by btobioinnovation and is provided to you for information purposes only.  The information contained in this document has been obtained from sources that btobioinnovation believes are reliable but btobioinnovation does not warrant that it is accurate or complete. The views presented in this document are those of btobioinnovation’s editor at the time of writing and are subject to change.  btobioinnovation has no obligation to update its opinions or the information in this document.

 

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Author: Jean-Claude Muller, 穆卓Special Advisor at I&IR and Executive Editor at BtoBioInnovation, jcm@btobioinnovation.com

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