Prescribed Reading: Pharma marked by restructuring and failures
A weekly guide to the goings-on in the biopharma industry.
Biopharma is a complex, rapidly evolving industry that is highly regulated and closely watched — and that means there is constant news. Here's a closer look at the clinical trials, M&A, cool science and regulations that are driving the industry this week.
In case you missed it
- J&J furthers partnership with Bavarian Nordic
- Vertex dominates cystic fibrosis
- Amgen focusing on migraine potential
Editor's Note: Prescribed Reading will look a little different this week due to the news centered around earnings announcements. We will be back to our normal format next week.
Mergers & analysis
Oh, what a week it has been! Pharma earnings kicked into high gear with several reorganization announcements, some big deals, major trial blow ups and even som surprise beats.
The failure of AstraZeneca's MYSTIC trial was arguably the biggest news for the industry in a while, and the ripples could be felt all over the place. Now that investors know the result of the lung cancer trial, it lends some credence to those bizarre rumors that AstraZeneca CEO Pascal Soriot was thinking about jumping ship to beleaguered (understatement) Teva Pharmaceuticals. The circus isn't looking so bad right now.
The MYSTIC results also mean that AstraZeneca is once again a takeout target — although buyers such as Pfizer might not be that interested anymore. It also highlights all of the selling off the company has been doing in recent months and raises the question, 'what's left to buy?'
In hopes of padding the blow from MYSTIC, AstraZeneca announced an $8.5 billion oncology deal with rival Merck & Co. It is not difficult to imagine that this deal was contingent on the failure of MYSTIC; to be a fly on the wall of those negotiations.
As one of the larger deals we've seen this year, it provides AstraZeneca with some near-term cash and, more importantly, props up its PARP inhibitor Lynparza (olaparib) — a definite bright spot in its oncology portfolio now that Imfinzi (durvalumab) is fizzling.
Tesaro went out and inked its own deal for its PARP inhibitor Zejula (niraparib), getting $100 million up front from Takeda Pharmaceuticals for the rights to commercialize the drug in several geographies outside the U.S. While the shine has come off PD-1/L1s, PARP inhibitors are becoming increasingly valuable. Maybe all that chatter about Tesaro and Clovis Oncology as takeout targets will start to come to fruition.
While the MYSTIC miss was a nightmare scenario for AstraZeneca, it wasn't so great for other PD-1/L1 developers, either. Bristol-Myers Squibb faced an onslaught of questions during its earnings call this week asking the company to justify its own PD-1/CTLA4 combination trials. While CEO Giovanni Caforio and Chief Scientific Officer Thomas Lynch laid out some strong arguments, it was hard to leave the call feeling convinced that we won't see more failures for this class in the near future.
Those drugmakers who weren't answering questions about MYSTIC were dropping their own bombs. GlaxoSmithKline's new CEO Emma Walmsley held nothing back when shredding the British pharma's pipeline. GSK will now shift investments to four key areas: respiratory, HIV, oncology and inflammation.
Everything else must go! The company is hoping to monetize what assets it can, cutting more than 30 preclinical and clinical programs, including its rare disease portfolio. This also includes its gene therapy, a historically significant drug, but one that has done little in the way of sales. While rare disease drug development has been particularly hot in recent years (Check out BioPharma Dive's recent Spotlight on the topic), it's unlikely that some company will pick up the whole portfolio in this current deal climate.
Lilly also took the ax to its pipeline, choosing to focus more on its oncology assets. Yet, that meant stripping out seven oncology assets it already has in the pipeline in an effort to be more competitive in the space. Lilly will also be looking to sell these off or partner them.
GSK and Lilly aren't the only companies doing some restructuring this week. Japanese pharma Astellas announced earlier this week that it is shuttering its Agensys research unit in California. Astellas picked up the biotech for $375 million upfront about a decade ago to make it the center of its antibody discovery and development. Now, the Japanese company is shifting away from the once-hot technology of antibody-drug conjugates (ADCs) to usher in new cancer technologies — namely, immuno-oncology.
Meanwhile, Endo Pharmaceuticals shuttered a manufacturing facility in Alabama, chopping 875 jobs from its staff, as it tried to right-size its organization to fit the current demand. All of this comes as pricing pressures continue for generic drugmakers and the Food and Drug Administration pushed the company to pull its opioid painkiller from the market.
Biogen's new CEO Michel Vounatsos also talked change this week; or rather, back to basics. The company is shifting resources back to its base neuroscience franchise, something it moved away from for several years under previous CEO George Scangos. Vounatsos emphasized that Biogen has a lot of cash and is ready to spend it. Biogen has finally realized that its pipeline, while ambitious, is incredibly risky, and the company needs some more down-to-earth assets if its going to continue growing and become the leader it hopes to be.
On the other hand, Gilead still has $36.6 billion in cash ... and is not doing anything with it.
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