News flow last week was dominated by hints as to what is coming up at the prestigious JP Morgan annual healthcare conference which starts today.
Elsewhere, a US court is questioning the Valeant Pharmaceuticals and Pershing Square settlement with Allergan; and Novartis has bagged another Breakthrough therapy designation for its Kisqali. Two licensing deals also attracted attention, that of AstraZeneca with ANI Pharmaceutical, and Takeda Pharmaceutical buying rights to early-stage neurodegenerative disease compounds from Denali Therapeutics.
JP Morgan preview – clues on CAR-T uptake and oncology timings
The annual JP Morgan healthcare conference is traditionally a hotbed of deal-making, and some companies are getting in on the action early – witness BioNTech’s mammoth $270 million series A round, which reportedly values the German group at up to $3 billion, noted EP Vantage, the editorial arm of the Evaluate group.
But innovation is still biopharma's bread and butter, and attendees at this week’s meeting in San Francisco will be listening for hints about the prospects for some of the most exciting developments in recent years: CAR-T therapy and immuno-oncology.
A key question about CAR-T is whether it can live up to the hype, something that is unclear so far with disappointing – but early – uptake figures for Gilead Sciences Yescarta, the second CAR-T therapy to be approved after Novartis’ Kymriah.
As of mid-December, only five lymphoma patients had reportedly received Yescarta in the commercial setting amid problems with getting the therapy paid for. Any clues from Gilead and Novartis about their CAR-T launches will no doubt be seized upon, and will also affect others in the space, especially as many CAR-T players saw their stock rocket in 2017. The biggest riser was Nanjing Legend's parent company, Genscript, which has risen sevenfold over 12 months, helped by Nanjing's surprise ASCO win (Asco – Mystery Chinese group gives Bluebird a run for its money, June 5, 2017).
While CAR-T is flavor of the month, immuno-oncology is still a huge topic, and attendees would welcome any clarity around the timings of key readouts in this space, says EP Vantage.
Several trials are due to report in the first-line lung cancer battleground in the first half of 2018: Bristol-Myers Squibb’s Checkmate-227 study of Opdivo and Yervoy, Merck & Keynote-042 trial of Keytruda monotherapy in PD-L1-positive patients; and Roche’s Impower-130, 131 and 132 of various Tecentriq/chemo chemo combos, which the Swiss group will hope can build on its recent win in Impower-150.
Meanwhile, AstraZeneca has a chance to salvage something from the Mystic trial with overall survival data, which could be presented at ASCO.
Will Court force Valeant, Ackman to disgorge $2 billion of insider trading profits?
Valeant and Pershing Square's Bill Ackman announced they settled the Allergan insider trading case for $290 million. A court is now questioning whether the settlement was "reasonable and fair."
Blogger “Shock Exchange” on Seeking Alpha said understands the claimants originally sued for $2 billion. The lawsuit has been around for a while. In early December Judge David Carter denied a request denied a by Valeant and Ackman to throw out the allegations by Allergan shareholders. This implied a court hearing could take place as early as this month. “Anything can happen and court and I assumed neither Valeant or Ackman wanted to face an uncertain outcome. This also gave the AGN shareholders tremendous leverage, or so I assumed,” he said.
The fact that Valeant and Ackman sought to settle could be indicative of the shareholders' leverage. The fact that the case was settled for only $290 million (about 15 cents on the dollar) was shocking to me. Others saw it as a masterstroke by Ackman and Valeant.
If we are truly a nation of laws then insider trading should not be allowed. The court is now questioning whether the settlement was "reasonable and fair." Shock Exchanges’ interpretation of the court's reticence is that a $290 million payment could potentially be considered unfair compared to (1) the $2 billion in profits from the Allergan trades and (2) the $2 billion in damages shareholders claimed the Allergan trades caused. I believe a potential outcome is that a court could force Valeant and Ackman to disgorge their profits in addition to any settlement with shareholders.
The blogger believes the Allegan insider trading case could have some tail risk. If Valeant and Pershing are required to disgorge profits from their Allergan trades it could sink both stocks. Both stocks remain a sell.
Novartis shores up its CDK program with a breakthrough
Swiss pharma giant Novartis announced that the US Food and Drug Administration has granted its CDK4/6 inhibitor ribociclib (branded Kisqali) breakthrough therapy designation for treatment of advanced hormone receptor-positive in premenopausal women..
Looking forward, Dr Zach Harman on the Seeking Alpha blog said MONALEESA-7 was a good look into how the CDK inhibitors are rapidly expanding their reach in the treatment of breast cancer. As such, he expects we are going to see a lot of activity in this space in 2018, with the first impact of this activity being an application for approval sometime in the next few months. Somewhere around 7% of all breast cancer diagnoses occur in women under the age of 40, and these patients represent an important need.
Therefore, it seems likely that Novartis will be able to translate this announcement into a key differentiator among a field of generally similar drugs in 2018, he opines.
AstraZeneca sells US rights to four non-core drugs
Continuing efforts to focus R&D, Anglo-Swedish drugmaker AstraZeneca closed out the year with yet another non-core asset sale that hands ANI Pharmaceuticals the US rights and New Drug Applications to four drugs.
According to BioPharma Drive, AstraZeneca set quite the bullish goal a few years back, estimating it would hit at least $45 billion in revenue by 2023. That goal has become even more ambitious of late, as the company's R&D efforts have failed to deliver the anticipated commercial returns. Declining revenue from flagship franchises like Crestor (rosuvastatin calcium) and Symbicort (budesonide and formoterol), while expected, have hurt the company's bottom lines. Over the first nine months of 2017, the British drugmaker recorded product sales of $14.7 billion, an 8% decline from the same period in 2016.
Weaker sales have pushed AstraZeneca to divert most of its attention to new drug launches - particularly ones in the oncology setting. Since May, the company has received FDA approvals for its PD-L1 inhibitor Imfinzi (durvalumab), blood cancer drug Calquence (acalabrutinib) and PARP inhibitor Lynparza (olaparib).
While Atacand (candesartan cilexetil), Atacand HCT (candesartan cilexetil-hydrochlorothiazide), Arimidex (anastrozole) and Casodex (bicalutamide) are by no means AstraZeneca's biggest sellers, the British drugmaker does retain ex-US rights to the drugs per deal terms with ANI. That's important, given that Casodex and Arimidex each made more than $150 million outside the USA during the first three quarters of 2017.
ANI, meanwhile, is still happy to take in US sales from the drugs; "This acquisition complements our brand and generic strategies and further expands and diversifies our commercial portfolio," Pryzbyl said in the December 29 statement. He also said his company, which functions as a contract manufacturer as well, has the ability to manufacture and package the four products at its containment facility in Baudette.
Denali Therapeutics: An IPO trap or something more?
Commenting on its licensing collaboration with Japan’s Takeda, Dr Zach Hartman on Seeking Alpha said that Denali Therapeutics presents “one of the most jaw-dropping cash positions I've yet encountered in such an early-stage pharma company.”
The company is aiming huge in neurodegenerative disorders, and they may just have enough runway to actualize development. The risk of trial failure remains ever-present, as it goes with neurodegenerative drug development. This could leave shareholders holding the bag.
Currently, Denali's most advanced agent is an inhibitor of the leucine-rich repeat kinase 2 (LRRK2), DL201. A second LRRK2 inhibitor, DNL151, is being investigated outside the USA. Not long after acquiring the drug from Roche, Denali initiated a Phase I trial for DL201 in June 2017 for the treatment of Parkinson's disease.
Takeda entered the fray with a deal valued at upwards of $1 billion to co-develop an entire neurodegenerative disease platform for Alzheimer's disease.
In this arrangement, Takeda fronted $40 million and purchased another $110 million of stock at $26.10 per share, bolstering Denali's coffers even further and providing almost two more years of cash runway. In return, Takeda gains the right to option any one of three drugs currently under development as part of the partnership, with DNLI incurring the costs and study leading up to an IND submission.
Denali is eligible for up to another $1 billion in regulatory and sales milestones, although this would require Takeda to exercise their options on all three of the drugs in development.
It is clear that DNLI presents something worth paying attention to. They got a big pharma to open their pocketbooks at a very early stage. They executed a successful initial fund raise. They have the cash. They have a pipeline. But will they get a marketable drug? That's the ten-billion-dollar question. Dr Hartman’s advice to investors at this point would be to keep a close watch on DNLI, but he would stay my hand at this time from buying. There is plenty of time to see whether there's any hope for the Phase I trials.
However, he can't fault the people who are interested in getting in as close to the ground floor as possible. But there's always the possibility that we'll see the company seem to languish as trial results are anticipated. Caveat emptor, as always, but Denali is clearly no fly-by-night show, he concludes.