Novartis looks earlier as biotech gets too expensive
- Novartis said during a first quarter earnings call Tuesday morning that it continues to look for bolt-on deals in the $2 billion to $5 billion range, but that it has set its sights on earlier-stage companies.
- "We're having a hard time finding value-generating acquisitions, even in that range," said CEO Joe Jimenez on the call, "just because prices have moved up quite a bit and we're holding quite a disciplined financial hurdle to overcome to make even a move at a $5 billion level. So what you've seen us do is move upstream a bit."
- The company still hasn't found a buyer for its beleaguered eyecare division Alcon, which it announced in January it was hoping to divest. "That review is underway," said Jimenez. "Were we to spin this business off to our shareholders; from a shareholder standpoint you'd own a chunk of Novartis, you'd own a chunk of Alcon, and presumably that would be a very nice couple of assets to own."
Novartis had a challenging first quarter, with net sales remaining largely flat at $11 billion or just 2% growth, as sales in Cosentyx (secukinumab), Entresto (sacubitril/valsartan) and Gilenya (fingolimod) helped offset generic erosion of cancer dynamo Gleevec. While pharma division sales were in line with consensus estimates at $7.69 billion, the company took a $200 million hit when it had to write off heart drug serelaxin due to disappointing clinical results.
Yet, all attention has turned to its breakout immuno-oncology pipeline, particularly in CAR-T.
The company expects its closely watched CAR-T therapy, which is currently undergoing review in the U.S., to "be big business in oncology," said Jimenez during his comments on the call. Novartis confirmed the results from the Phase 2 JULIET study will be presented at a medical meeting in mid-June.
"Remember that our first indication [for CTL019] is pediatric and young adults with acute lymphoblastic leukemia. This is quite a small patient population. You should expect a relatively slow ramp," said Jimenez. Even for larger patient populations like the relapsed and refractory diffuse B-cell lymphoma (DLBCL) market — which Novartis expects to pursue in 2018 — the launch of the CAR-T therapy is projected to be slow. Head of Oncology Bruno Strigini explained that these drugs would have to be given in transplant centers, which could limit a more rapid ramp up.
While Novartis has been a relatively late entrant to the PD-1 market with PDR001, it is moving forward with five studies, including a Phase 3 in melanoma, a Phase 2 in neuroendocrine tumors and a Phase 1b in hepatocellular carcinoma. Phase 1 trials are also planned in non-small cell lung cancer and colorectal cancer. Fifteen second generation I/O candidates are in early studies, with readouts planned for the back half of 2017.
- Novartis Earnings release
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