The Friday Five – The week in pharma

A blot on Merck & Co.'s copybook?

Merck & Co. has done a good job of appeasing investors over the past 18 months, during which the company's share price has risen some 30 percent.

Much of this success has been driven by Merck's emergence as a leading player in immuno-oncology. This, in turn, has coincided with a broader re-shaping in the company's strategy, driven by a more streamlined therapeutic focus and something of a renaissance for its R&D division.

Merck's acquisition of Cubist – announced this week – is designed to enhance its position in the acute anti-infective market, one of the company's specified areas of focus. While the deal provides opportunity to generate synergies, however, spectacularly unfortunate timing on the part of Merck saw some investor goodwill swept away.

Just hours after announcing the deal, a US court ruling invalidated a handful of patents on Cubist's flagship antibiotic product Cubicin, significantly increasing the likelihood of a full generic launch in 2016 (versus consensus expectations of a 'partial' generic launch in 2018) (ViewPoints: Buyer's blues for Merck & Co. as Cubist loses patent case)

Merck management insists the deal still makes financial sense, although a handful of analysts have estimated that Cubist now looks to have cost between $2 billion and $3 billion too much; with one suggesting the acquisition could now be value destructive. Investors do not appear to share management's view, sending Merck's stock price down 5 percent over the course of two days.

PD-1 inhibitors continue to demonstrate breadth of activity

Abstracts released last month had previewed the movement of the PD-1 inhibitors into haematological malignancies, and this transition was formerly confirmed at the beginning of the week at the annual meeting of the American Society of Hematology (ASH).

Both Bristol-Myers Squibb's Opdivo and Merck & Co.'s Keytruda delivered compelling Phase I activity in heavily pre-treated Hodgkin's lymphoma patients, demonstrating overall response rates (ORR)of 87 percent and 66 percent, respectively.

Those presenting the data at ASH and analysts summarising their thoughts on the meeting warned against drawing conclusions about the comparative efficacy profiles of Opdivo and Keytruda based on such a small number of heterogeneous patients. Instead, while many will be looking for differences between the two drugs, it is a notable mechanistic similarity across the PD-1 class that looks poised to shape development and uptake in haematological cancers. The 9p24 chromosomal mutation – which elevates PD-L1 and PD-L2 expression on cancer cells – is frequent only in Hodgkin's lymphoma but, crucially, not in many other blood cancers. This offers a possible explanation as to why the PD-1 inhibitors have not been effective in other indications such as multiple myeloma where Opdivo generated zero responses in 27 patients.

See also

Merck & Co.'s PD-1 inhibitor Keytruda shows promise in advanced triple-negative breast cancer and ViewPoints: Initial results for immuno-oncology agents in TNBC offer reason for optimism

FirstWord Lists: Brief look at compelling themes from this year's ASH meeting

Celgene showcases partnering capabilities

Failure of the PD-1 inhibitors as monotherapy to demonstrate efficacy in multiple myeloma is a positive development for Celgene, which dominates this market via its Revlimid franchise. Indeed, Bernstein analyst Geoffrey Porges argued that the company had "dodged a bullet" in the form of greater PD-1 efficacy.

Data presented for other myeloma therapies – including Amgen's Kyprolis and the pipeline-stage anti-CD38 products – was focused on combination use with Revlimid, reinforcing the view that Celgene will continue to dominate this market.

Equally impressive, however, was the raft of clinical data presented for drugs being developed by companies with which Celgene is collaborating, including Agios and Acceleron.

Thus, while the Revlimid franchise did not dominate ASH as it has done in years gone by, Celgene continues to play a key role in proceedings across the haematological cancer market.

High flying Bluebird

Bluebird Bio was the big winner this week in terms of share price performance; its stock is up 110 percent over the past five days.

Data presented at ASH demonstrated that four patients with the rare condition beta-thalassaemia major given the company's experimental gene therapy LentiGlobin BB305 treatment benefited from sufficient haemoglobin production to reduce or eliminate the need for transfusion support. Bluebird CEO Nick Leschly labelled the data as "outstanding". The first two patients in the study have been transfusion free for 3 and 5 months (ViewPoints: Success of bluebird bio's gene therapy highlights question of how to price a one-time Orphan treatment)

In a note to clients, JP Morgan analyst Cory Kasimov wrote "we’re running out of "Old School" references that do justice to the excitement being generated by the company's cutting edge gene therapy, LentiGlobin". Kasimov added "in our view, the continued consistency of the data—despite being in only 5 patients—not only bodes very well for the product's outlook in B-Thal but also has us increasingly excited about the prospects in sickle cell disease (SCD), a substantially larger opportunity". The company is expected to release its first clinical outcomes data in SCD patients in the first half of next year.

Kasimov raised his price target for Bluebird from $53 to $103 as a result of the ASH data, which coupled with the stock's momentum this week has continued the renaissance for gene therapy companies. Pfizer also threw itself into the gene therapy mix by announcing a collaboration with the start-up company Spark Therapeutics.

Bluebird's performance also exemplified the sheer quality of data on display at this year's ASH meeting; the company appears to be a particular favourite with investors as it ticks another of the 'must have' ASH boxes – a chimaeric antigen receptor T-cell (CART) therapy which could enter the clinic next year. Novartis presented positive data for its CART therapy CTL019 at ASH, while specialist players Juno and Bellicum have priced IPOs while exiting the meeting and are set to raise $175 million and $115 million, respectively. Kite Pharmaceuticals used ASH as a platform to announce a secondary offering worth $150 million.

The cherry on the cake for Bluebird is that it is developing its CART product with everyone's favourite collaborator, Celgene.

A biosimilar first in the US

The FDA has announced that its oncologic drugs advisory committee (ODAC) is to convene in early January to discuss Novartis' biosimilar version of Amgen's Neupogen (filgrastim). Thus Novartis' product – which is being developed by its Sandoz division – is now the first biosimilar filing to be accepted by the FDA via the 351(k) pathway and will become the first to be assessed by an advisory committee under the regulatory pathway established for biosimilars in 2010.

See Novartis' biosimilar shows similar efficacy, safety to Amgen's Neupogen

The ODAC meeting will provide more clarity on proceedings, although there is a strong consensus that the FDA will proceed with caution and deal with applications on a case-by-case basis for some time. Assessment of biosimilar filgrastim via advisory committee effectively confirms this, as it does also that the FDA will not allow legal wrangling – underway between Novartis and Amgen regarding Neupogen IP – to delay its regulatory procedures.

Analysts at Sanford C. Bernstein recently noted that it is fairly reasonable to expect FDA approval of biosimilars to begin in 2015, presumably with Novartis' product at the top of the list. Although biosimilars are unlikely to become a standard part of the treatment landscape for the next decade, argues Bernstein analyst Ronny Gal, 2015 thus represents another year where we could witness some key developments in this market.

See also 2014 in review – Biosimilars: steady, if unspectacular, progress

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