Friday Five - The pharma week in review (27 June 2019)

AbbVie's facelift

If AbbVie's proposed $63-billion dollar acquisition of Allergan is concession that it remains over reliant on Humira, it also highlights that having a drug which generates around $20 billion a year can be a nice 'problem' to have. Profits generated by Humira before loss of US marketing exclusivity occurs in 2023 will effectively pay for the deal, AbbVie CEO Rick Gonzalez outlined.

Whether investing these funds in Allergan is the best strategy open to AbbVie is another matter, though Gonzalez did a good job in laying out rationale for the deal.

Analysis - ViewPoints: AbbVie/Allergan - a deal built on Botox and inevitability 

Though Allergan, and in particular its large medical aesthetics business, does not appear a natural fit with AbbVie, acquiring durable revenues at this cost was too good an opportunity to turn down, he argued. Had AbbVie sought out a number of smaller deals, it would have been exposed to binary risks tied to the outcome of clinical studies, said Gonzalez.

Initially disappointed shareholders may come to tolerate the deal if AbbVie can ring more revenue out of Botox and other Allergan brands. They may even learn to like it if Gonzalez comes good on his promise to channel increased post-M&A profits back into R&D to improve AbbVie's pipeline and drive growth beyond Humira's US patent expiry.

More analysis - ViewPoints: AbbVie bets big on Botox's staying power

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Can Merck & Co. swerve the need for Botox?

Over at Merck & Co. the focus late last week - at the company's first R&D investor day for five years - was on how to avoid the pitfalls of becoming over-reliant on revenues from a single product. For AbbVie's Humira, read Merck's Keytruda - which is currently modelled to contribute a majority of the company's sales growth over the next decade.

Merck, of course, does not face near-term market exclusivity issues like AbbVie does. Onus is therefore on a long-term succession plan, which, if implemented effectively, could spare the company from requiring drastic action; such as a large, potentially disruptive, acquisition; at some point in the future.

Analysis - ViewPoints: Merck & Co.'s CEO succession plan also looks for an heir to King Keytruda

A number of recently announced, smaller deals suggest this strategy is gaining momentum, though there was a lack of definitive pipeline updates at last week's event to show that Merck's reliance on Keytruda will diminish anytime soon. If anything, it will increase, with confidence high that the PD-1 inhibitor will become a cornerstone therapy in more tumour types (such as prostate and breast cancer) and potentially move into earlier-stage disease settings.

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An Otezla auction

It would seem that the US Federal Trade Commission has increased its scrutiny of potential anti-competitive behaviour resulting from M&A deals, specifically in relation to pharmaceutical products that are yet to reach the market.

This presumably explains why Roche's acquisition of Spark Therapeutics has been delayed and has prompted Bristol-Myers Squibb's decision to divest Celgene's oral psoriasis therapy Otezla, in order to push through its proposed $74-billion acquisition of the biotech.

Bristol-Myers Squibb is developing its own oral psoriasis agent; a Tyk2 inhibitor currently known as BMS-986165. Phase II studies showed that three quarters of patients who took the drug achieved a 75% or greater reduction in disease severity. If similar levels of skin clearance are demonstrated in Phase III studies, BMS-986165 would likely become the market's preferred oral therapy over Otezla.

Management is betting big on the future versus the present and will hope to bank up to $10 billion as a result.  

See - ViewPoints: FTC forces Bristol-Myers Squibb to bet extra big on TYK2  and ViewPoints: A buyer's guide to Otezla

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Another NASH crash   

Investors hoping that 2019 would be a breakthrough year for non- alcoholic steatohepatitis (NASH) must be disappointed. The latest setback in the field occurred this week with Conatus Pharmaceuticals confirming that its investigational drug emricasan failed to meet the primary endpoint of a Phase IIb study in NASH cirrhosis. The company, which had partnered with Novartis to develop emricasan, said it would evaluate strategic options with a view to implementing a restructuring programme.

Analysis - ViewPoints: Conatus, Novartis mourn the latest NASH programme death

Turning the focus back to AbbVie's acquisition of Allergan, the former's CEO Rick Gonzalez told analysts this week that "we're not betting on the pipeline," which includes the heavy investment that Allergan has made in NASH. AbbVie confirmed that it has not currently modelled any revenues for NASH assets in Allergan's pipeline.

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A big win for AstraZeneca in small-cell lung cancer?

Roche's Tecentriq may soon lose its status as the only immunotherapy approved for small-cell lung cancer; AstraZeneca announced on Thursday that the combination of its PD-L1 inhibitor Imfinzi with chemotherapy significantly improved overall survival versus chemotherapy alone in previously untreated patients.

Full data from the CASPIAN study will be presented at a future medical meeting. The trial is also investigating the combination of Imfinzi with AstraZeneca's CTLA4 inhibitor tremelimumab; though there is no indication this arm met its primary endpoint at the interim analysis.

Aside from melanoma, where Bristol-Myers Squibb's pairing of Opdivo and Yervoy is approved as a first-line therapy, PD-(L)1 and CTLA4 combinations have failed to deliver the clinical successes once expected of them. CASPIAN could ultimately provide more evidence that this combination is particularly ineffective in lung cancers.

Merck & Co.'s Keynote-604 study evaluating Keytruda in first-line SCLC is expected to read out at the end of the year.

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