Friday Five - the pharma week in review (29 Feb 2019)

Big Pharma goes to Washington

What is the collective noun for a group of Big Pharma CEOs?

In the meantime, seven were lined up this week in Washington to testify about drug prices before the US Senate Finance Committee.

The image of CEOs and senior executives from AbbVie, AstraZeneca, Bristol-Myers Squibb, Johnson & Johnson, Merck & Co., Pfizer and Sanofi sitting together in a row before the committee - at times forced on the defensive when questioned, among other things, about drug price increases and strategies to lengthen patent exclusivity for profitable products - was a dramatic one.

The initial outcome of these discussions was less so, however, with industry reiterating its well-established argument that pharmacy benefit managers (PBMs) and insurers are equally, if not more so, to blame for US patients not having access to cheaper drugs.

The system in place is no longer fit for purpose, they argue.

Our analysis - ViewPoints: Pharma gets what it needs from Senate hearing

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Sarepta keeps the gene therapy momentum going

2019 could be a critical year for gene therapies and how the market for these potential one-time and curative therapies evolves. All eyes are on Novartis' Zolgensma, which is currently awaiting approval from the FDA for spinal muscular atrophy (SMA), and the Swiss company's pricing strategy once it reaches the market. This week ICER delivered its initial verdict on Zolgensma's cost effectiveness.

Elsewhere, Sarepta Therapeutics announced promising data (albeit from just three patients) for a second gene therapy it is developing, which could be used to treat Duchenne muscular dystrophy (DMD). Sarepta also announced an option to acquire Myonexus Therapeutics, which has co-developed the gene therapy, currently known as MYO-101.

Analysis - ViewPoints: Sarepta muscles into a new indication

Having presented a similarly promising, but small dataset for another gene therapy for DMD last year, the value of Sarepta's platform technology is underappreciated despite validation across two programmes, wrote analysts at Baird in a note to investors. Furthermore, the role of the Nationwide Children's Hospital - where the construct for Sarepta's two gene therapies and Novartis' Zolgensma was developed - cannot be underestimated. Last year, Sarepta hired Louise Rodino-Klapac from Nationwide to head up its gene therapy programme. She also founded Myonexus.

As one key opinion leader told FirstWord in response to the data Sarepta presented last year, "it's hard to say whether it's promising or not, but the way to judge it is that the people at Nationwide Children's are really good. They basically solved the problem of treating SMA. They have the 'know how,' the experience and the technology to be able to do it."

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Roche's gene therapy strategy sparks into life

Roche too has now entered the gene therapy game, having this week announced a deal to acquire Spark Therapeutics for $4.3 billion.

Spark can boast prior approval of its first gene therapy Luxturna - a one-time treatment indicated for confirmed biallelic RPE66 mutation-associated retinal dystrophy - two years ago, though Roche's strategic intentions appear to be somewhat sharpened on the opportunity for gene therapy in haemophilia, where it is currently building a presence through its biologic therapy Hemlibra.

Spark has a gene therapy product in development for haemophilia A, which is soon expected to move into a pivotal-stage study. It may not be the first-to-market, BioMarin Pharmaceutical - another often rumoured takeover candidate - looks likely to get their first, but safety will be critical in determining how these treatments are used, providing scope for differentiation, argue analysts.

Analysis - ViewPoints: Roche pivots into gene therapy and ViewPoints: Spark deal raises the stakes for BioMarin

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Not everyone's buying into the Bristol-Myers Celgene masterplan  

The pharma year started with a bang, courtesy of Bristol-Myers Squibb announcing that it plans to acquire Celgene for $74 billion. This will create a new industry leader in oncology, management teams at both companies boasted.

Enthusiasm for the deal is not unequivocal, however, and dissent among some of Bristol-Myers Squibb's leading shareholders threatens to turn the next few months into a slog for the lawyers. This week the investment firm Wellington Management - which owns 8 percent of Bristol-Myers Squibb stock - described the proposed acquisition of Celgene as too risky and expensive, suggesting that other options to create value for shareholders "could be more attractive." Activist investor Starboard Value also criticised the deal, calling it "poorly conceived and ill-advised."

Later on Thursday, activist investor Starboard Value, which recently nominated five directors to sit on Bristol-Myers Squibb's board, said that the purchase of Celgene is "poorly conceived and ill-advised." Shareholders are scheduled to vote on the deal in April. If it falls through Bristol-Myers Squibb would have to pay Celgene a $2.2 billion break-up fee.

Celgene was a favourite of biotech investors for many years, largely as a result of the success of its Revlimid franchise in multiple myeloma and a myriad of partnership deals with companies for exciting early-stage assets utilising new technologies and approaches to drug development.

Management has struggled, however, to translate this promise into tangible diversification of Celgene's portfolio; an increasingly urgent priority with Revlimid facing patent expiration in the next few years. This in turn has fuelled speculation that Bristol-Myers Squibb's strategy is at least partially defensive as it looks to reduce the likelihood of becoming a hostile takeover target.

This remains a possibility due to Opdivo losing its leadership of the PD-1 inhibitor market but remaining a sizeable growth driver product for any company looking to materially boost its position in the immuno-oncology market, argue analysts. 

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FirstWord from the frontlines

This week we snap-polled oncologists to assess the potential impact of data from Merck & Co.'s Keynote-426 study on treatment practice for first-line renal cell carcinoma. Feedback from 60 prescribers contrasts somewhat with the view of a leading key opinion leader, who told FirstWord this week a notable opportunity for Bristol-Myers Squibb's Opdivo and Yervoy combination remains in this setting.

Data continues to accumulate for the NGF inhibitor class, potentially clearing a regulatory path for a new class of pain medications, which developers and analysts have suggested could be worth billions of dollars. However, a leading expert told FirstWord this week there are numerous challenges ahead.

And what of Intercept Pharmaceuticals' recent data in NASH; the first positive Phase III study in this indication. Investor reaction has been muted with some notable caveats withstanding until full results are presented later this year. Directionally, however, feedback from 205 gastroenterologists and endocrinologists we snap-polled this week suggests there is a potentially sizeable opportunity for Intercept's Ocaliva in NASH, assuming it passes regulatory muster.

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