As hep C rev­enue dis­in­te­grates, pres­sure keeps grow­ing on Gilead to do deals

Gilead CEO John Mil­li­gan

Gilead’s hep C busi­ness is get­ting shred­ded by grow­ing com­pe­ti­tion and dis­count prices. Next year the com­pa­ny ex­pects to see its $14.8 bil­lion in 2016 hep C rev­enue melt down to $7.5 bil­lion to $9 bil­lion. And the rapid dis­in­te­gra­tion is build­ing pres­sure on the big biotech to fi­nal­ly get down to busi­ness and use its con­sid­er­able fi­nan­cial re­serves for some M&A and ma­jor deal­mak­ing.

Of course, that’s been said be­fore. An­a­lysts have been urg­ing Gilead to get am­bi­tious on the busi­ness de­vel­op­ment side of things for the past two years. 2017, though, may prove to be a year that Gilead’s path to whip­ping up some ex­cite­ment for its fu­ture lies al­most sole­ly in new ac­qui­si­tions.

CEO John Mil­li­gan, though, in­sists he isn’t go­ing to rush out and grab some­thing.

“We feel very good about our cash flow for the fu­ture,” he told an­a­lysts in Tues­day evening’s call with an­a­lysts. “I think it’s still for us a de­sire and a need to have a right strate­gic fit for the com­pa­ny. That is the dri­ver for why and when we do any merg­ers or ac­qui­si­tions or part­ner­ships, much more so than the need for cash flow, be­cause we feel very com­fort­able about where we are.”

But, asked Mark Schoenebaum, can you grow the com­pa­ny now with­out an ac­qui­si­tion?

“We are fac­ing some head­winds in 2018 and be­yond on oth­er patent ex­piries we’ll have, in­clud­ing the U.S. patent for TDF. We’ll al­so have patents on Letairis and the fol­low­ing year Ranexa. So that puts some down­ward pres­sure on that non-HCV rev­enue base and so that makes it chal­leng­ing for us to grow with­out some sort of ac­qui­si­tion in those ar­eas.”

Gilead CFO Robin Wash­ing­ton added:

“I think we’ve been fair­ly thought­ful par­tic­u­lar­ly deal­ing with the rat­ing agen­cies and in think­ing about debt lev­els that we feel very com­fort­able that we can sup­port ac­qui­si­tions and in­crease our debt to EBIT­DA. Most im­por­tant­ly be­cause giv­en our cash flows, which we ex­pect to con­tin­ue for a very long time, we can eas­i­ly de­liv­er over time with our ex­ist­ing ther­a­peu­tic area fran­chis­es. And this is to­tal­ly ex­clu­sive of any po­ten­tial tax changes, or par­tic­u­lar­ly if there were repa­tri­a­tion. That would make all that even sim­pler. So we feel com­fort­able that from an as­set stand­point that we could sup­port any type of ac­qui­si­tion that we’d need to do to sup­port Gilead’s growth.”

But don’t look for any dra­mat­ic move like a com­pa­ny split.

Mil­li­gan:

“We’re not con­sid­er­ing split­ting up the com­pa­ny,” he said in re­ply to the sug­ges­tion. “And while it looks good in the world of Wall Street from a mul­ti­ples per­spec­tive, I think it’s an eco­nom­i­cal­ly and fi­nan­cial­ly a bad idea for the com­pa­ny. So we are com­mit­ted to grow­ing the com­pa­ny. We’re com­mit­ted to our field of NASH. We’re com­mit­ted to grow­ing that HIV field. And we are go­ing to con­tin­ue to ac­cel­er­ate our pipeline through ac­qui­si­tions and what­not over the course of the year.

Fangliang Zhang, AP Images

Leg­end fetch­es $424 mil­lion, emerges as biggest win­ner yet in pan­dem­ic IPO boom

Amid a flurry of splashy pandemic IPOs, a J&J-partnered Chinese biotech has emerged with one of the largest public raises in biotech history.

Legend Biotech, the Nanjing-based CAR-T developer, has raised $424 million on NASDAQ. The biotech had originally filed for a still-hefty $350 million, based on a range of $18-$20, but managed to fetch $23 per share, allowing them to well-eclipse the massive raises from companies like Allogene, Juno, Galapagos, though they’ll still fall a few dollars short of Moderna’s record-setting $600 million raise from 2018.

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As it hap­pened: A bid­ding war for an an­tibi­ot­ic mak­er in a mar­ket that has rav­aged its peers

In a bewildering twist to the long-suffering market for antibiotics — there has actually been a bidding war for an antibiotic company: Tetraphase.

It all started back in March, when the maker of Xerava (an FDA approved therapy for complicated intra-abdominal infections) said it had received an offer from AcelRx for an all-stock deal valued at $14.4 million.

The offer was well-timed. Xerava was approved in 2018, four years after Tetraphase posted its first batch of pivotal trial data, and sales were nowhere near where they needed to be in order for the company to keep its head above water.

President Donald Trump (left) and Moncef Slaoui, head of Operation Warp Speed (Alex Brandon, AP Images)

UP­DAT­ED: White House names fi­nal­ists for Op­er­a­tion Warp Speed — with 5 ex­pect­ed names and one no­table omis­sion

A month after word first broke of the Trump Administration’s plan to rapidly accelerate the development and production of a Covid-19 vaccine, the White House has selected the five vaccine candidates they consider most likely to succeed, The New York Times reported.

Most of the names in the plan, known as Operation Warp Speed, will come as little surprise to those who have watched the last four months of vaccine developments: Moderna, which was the first vaccine to reach humans and is now the furthest along of any US effort; J&J, which has not gone into trials but received around $500 million in funding from BARDA earlier this year; the joint AstraZeneca-Oxford venture which was granted $1.2 billion from BARDA two weeks ago; Pfizer, which has been working with the mRNA biotech BioNTech; and Merck, which just entered the race and expects to put their two vaccine candidates into humans later this year.

Drug man­u­fac­tur­ing gi­ant Lon­za taps Roche/phar­ma ‘rein­ven­tion’ vet as its new CEO

Lonza chairman Albert Baehny took his time headhunting a new CEO for the company, making it absolutely clear he wanted a Big Pharma or biotech CEO with a good long track record in the business for the top spot. In the end, he went with the gold standard, turning to Roche’s ranks to recruit Pierre-Alain Ruffieux for the job.

Ruffieux, a member of the pharma leadership team at Roche, spent close to 5 years at the company. But like a small army of manufacturing execs, he gained much of his experience at the other Big Pharma in Basel, remaining at Novartis for 12 years before expanding his horizons.

Covid-19 roundup: Ab­b­Vie jumps in­to Covid-19 an­ti­body hunt; As­traZeneca shoots for 2B dos­es of Ox­ford vac­cine — with $750M from CEPI, Gavi

Another Big Pharma is entering the Covid-19 antibody hunt.

AbbVie has announced a collaboration with the Netherlands’ Utrecht University and Erasmus Medical Center and the Chinese-Dutch biotech Harbour Biomed to develop a neutralizing antibody that can treat Covid-19. The antibody, called 47D11, was discovered by AbbVie’s three partners, and AbbVie will support early preclinical work, while preparing for later preclinical and clinical development. Researchers described the antibody in Nature Communications last month.

Mer­ck wins a third FDA nod for an­tibi­ot­ic; Mereo tack­les TIG­IT with $70M raise in hand

Merck — one of the last big pharma bastions in the beleaguered field of antibiotic drug development — on Friday said the FDA had signed off on using its combination drug, Recarbrio, with hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia. The drug could come handy for use in hospitalized patients who are afflicted with Covid-19, who carry a higher risk of contracting secondary bacterial infections. Once SARS-CoV-2, the virus behind Covid-19, infects the airways, it engages the immune system, giving other pathogens free rein to pillage and plunder as they please — the issue is particularly pertinent in patients on ventilators, which in any case are breeding grounds for infectious bacteria.

RA Cap­i­tal, Hill­house join $310M rush to back Ever­est's climb to com­mer­cial heights in Chi­na

Money has never been an issue for Everest Medicines. With an essentially open tab from their founders at C-Bridge Capital, the biotech has gone two and a half years racking up drug after drug, bringing in top exec after top exec, and issuing clinical update after update.

But now other investors want in — and they’re betting big.

Everest is closing its Series C at $310 million. The first $50 million comes from the Jiashan National Economic and Technological Development Zone; the remaining C-2 tranche was led by Janchor Partners, with RA Capital Management and Hillhouse Capital as co-leaders. Decheng Capital, GT Fund, Janus Henderson Investors, Rock Springs Capital, Octagon Investments all joined.

GSK presents case to ex­pand use of its lu­pus drug in pa­tients with kid­ney dis­ease, but the field is evolv­ing. How long will the mo­nop­oly last?

In 2011, GlaxoSmithKline’s Benlysta became the first biologic to win approval for lupus patients. Nine years on, the British drugmaker has unveiled detailed positive results from a study testing the drug in lupus patients with associated kidney disease — a post-marketing requirement from the initial FDA approval.

Lupus is a drug developer’s nightmare. In the last six decades, there has been just one FDA approval (Benlysta), with the field resembling a graveyard in recent years with a string of failures including UCB and Biogen’s late-stage flop, as well as defeats in Xencor and Sanofi’s programs. One of the main reasons the success has eluded researchers is because lupus, akin to cancer, is not just one disease — it really is a disease of many diseases, noted Al Roy, executive director of Lupus Clinical Investigators Network, an initiative of New York-based Lupus Research Alliance that claims it is the world’s leading private funder of lupus research, in an interview.

Is a pow­er­house Mer­ck team prepar­ing to leap past Roche — and leave Gilead and Bris­tol My­ers be­hind — in the race to TIG­IT dom­i­na­tion?

Roche caused quite a stir at ASCO with its first look at some positive — but not so impressive — data for their combination of Tecentriq with their anti-TIGIT drug tiragolumab. But some analysts believe that Merck is positioned to make a bid — soon — for the lead in the race to a second-wave combo immuno-oncology approach with its own ambitious early-stage program tied to a dominant Keytruda.

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