Biotech M&A? No­var­tis chief Jimenez says he’s stick­ing to the un­der-$1B aisle for now

No­var­tis nev­er did say just what kind of deal it put to­geth­er in buy­ing Ziar­co late last year. But Bloomberg had al­ready re­port­ed that the com­pa­ny was scout­ing for a deal, with cash and con­sid­er­able mile­stones prob­a­bly tot­ting up to around the $1 bil­lion mark.

Joe Jimenez

In Big Phar­ma land, that’s the kind of mod­est biotech ac­qui­si­tion deal you can com­plete with­out sweat­ing the de­tails about cash in. And right now, No­var­tis ex­ecs are us­ing it as a mark­er for the kind of buy­outs that make sense right now, stay­ing fo­cused on small 1 or 2 drug deals.

In yes­ter­day’s Q2 run­down for an­a­lysts, No­var­tis CEO Joe Jimenez made it crys­tal clear that the mar­ket for mid-sized bolt-ons looks aw­ful from a buy­ers’ per­spec­tive. It’s a fa­mil­iar mantra dur­ing a year in which sig­nif­i­cant M&A deals have large­ly failed to ma­te­ri­al­ize — with Acte­lion as the ex­cep­tion prov­ing the rule — and it speaks di­rect­ly to what like­ly lies ahead in H2.

From the call, here is what Jimenez had to say:

In terms of M&A, we are still very fo­cused on our strat­e­gy of bolt-on ac­qui­si­tions any­where from $2 bil­lion to $5 bil­lion would be our sweet spot. I have said pre­vi­ous­ly that val­u­a­tions are such that it’s very dif­fi­cult to find ac­qui­si­tions that are in that range that would add val­ue for No­var­tis share­hold­ers. So what’s hap­pened is we have moved up­stream in terms of ear­li­er stage as­sets. So you saw us buy Ziar­co is one ex­am­ple for atopic der­mati­tis and a few oth­ers over the last six months. So we are still fo­cused on the bolt-on strat­e­gy that will strength­en ei­ther on­col­o­gy or the phar­ma­ceu­ti­cal busi­ness or dif­fer­en­ti­at­ed gener­ics busi­ness. And that’s where we are go­ing to in­vest. But we are not go­ing to in­vest in a place where we can’t see a clear path to adding a tremen­dous amount of val­ue from No­var­tis share­hold­ers. And if you look at the ex­ist­ing what you would de­scribe as bolt-ons or even big­ger than a bolt-on at the ten­der to $15 bil­lion range, we just don’t see it yet from a val­u­a­tion stand­point.

That’s the Swiss view, shared by crosstown Basel ri­val Roche. And you’ll find oth­er Big 10 phar­mas play­ing the same sort of mil­lion-dol­lar ante game.

Sanofi, which needs a trans­for­ma­tion­al deal more than any of its ri­vals, helped un­der­score the low-cost strat­e­gy just days ago with its $750 mil­lion deal to add Pro­tein Sci­ences’ Flublock for its vac­cines group.

Ask any of them, and you’re like­ly to hear that biotech val­u­a­tions just don’t make sense. Any­thing that looks ripe from a pipeline per­spec­tive is like­ly go­ing to fetch an in­flat­ed price. Just ask Pfiz­er, which paid $14 bil­lion for Medi­va­tion and is still try­ing to ex­plain it to an­a­lysts.

On an­oth­er note, No­var­tis ex­ecs al­so used the Q2 re­view to dis­cuss pric­ing strate­gies for CTL019, the pi­o­neer­ing CAR-T that ap­pears head­ed to an his­toric FDA ap­proval. These per­son­al­ized meds are made from pa­tients’ cells and won’t come cheap. One an­a­lyst asked if the phar­ma gi­ant was look­ing at a pay-for-per­for­mance ap­proach. No­var­tis On­col­o­gy chief Bruno St­rig­i­ni replied:

So we are look­ing at a num­ber of op­tions, in­clud­ing health eco­nom­ic mod­els and al­so out­comes mod­els that con­sid­er the sig­nif­i­cant val­ue CTL019 brings to pa­tients, its sci­en­tif­ic in­no­va­tion and the high cost of man­u­fac­tur­ing. We will dis­close the price at the time of launch of the prod­uct. In terms of Ac­cess, our team has start­ed to pro­vide ap­pro­pri­ate in­for­ma­tion to pay­er de­scrib­ing the pa­tient pop­u­la­tion un­met needs, lim­it­ed treat­ment op­tions for el­i­gi­ble pa­tients and man­u­fac­tur­ing process.

Norbert Bischofberger. Kronos

Backed by some of the biggest names in biotech, Nor­bert Bischof­berg­er gets his megaround for plat­form tech out of MIT

A little over a year ago when I reported on Norbert Bischofberger’s jump from the CSO job at giant Gilead to a tiny upstart called Kronos, I noted that with his connections in biotech finance, that $18 million launch round he was starting off with could just as easily have been $100 million or more.

With his first anniversary now behind him, Bischofberger has that mega-round in the bank.

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Francesco De Rubertis

Medicxi is rolling out its biggest fund ever to back Eu­rope's top 'sci­en­tists with strange ideas'

Francesco De Rubertis built Medicxi to be the kind of biotech venture player he would have liked to have known back when he was a full time scientist.

“When I was a scientist 20 years ago I would have loved Medicxi,’ the co-founder tells me. It’s the kind of place run by and for investigators, what the Medicxi partner calls “scientists with strange ideas — a platform for the drug hunter and scientific entrepreneur. That’s what I wanted when I was a scientist.”

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Af­ter a decade, Vi­iV CSO John Pot­tage says it's time to step down — and he's hand­ing the job to long­time col­league Kim Smith

ViiV Healthcare has always been something unique in the global drug industry.

Owned by GlaxoSmithKline and Pfizer — with GSK in the lead as majority owner — it was created 10 years ago in a time of deep turmoil for the field as something independent of the pharma giants, but with access to lots of infrastructural support on demand. While R&D at the mother ship inside GSK was souring, a razor-focused ViiV provided a rare bright spot, challenging Gilead on a lucrative front in delivering new combinations that require fewer therapies with a more easily tolerated regimen.

They kept a massive number of people alive who would otherwise have been facing a death sentence. And they made money.

And throughout, John Pottage has been the chief scientific and chief medical officer.

Until now.

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Chas­ing Roche's ag­ing block­buster fran­chise, Am­gen/Al­ler­gan roll out Avastin, Her­ceptin knock­offs at dis­count

Let the long battle for biosimilars in the cancer space begin.

Amgen has launched its Avastin and Herceptin copycats — licensed from the predecessors of Allergan — almost two years after the FDA had stamped its approval on Mvasi (bevacizumab-awwb) and three months after the Kanjinti OK (trastuzumab-anns). While the biotech had been fielding biosimilars in Europe, this marks their first foray in the US — and the first oncology biosimilars in the country.

Seer adds ex-FDA chief Mark Mc­Clel­lan to the board; Her­cules Cap­i­tal makes it of­fi­cial for new CEO Scott Bluestein

→ On the same day it announced a $17.5 million Series C, life sciences and health data company Seer unveiled that it had lured former FDA commissioner and ex-CMS administrator Mark McClellan on to its board. “Mark’s deep understanding of the health care ecosystem and visionary insights on policy reform will be crucial in informing our thinking as we work to bring our liquid biopsy and life sciences products to market,” said Seer chief and founder Omid Farokhzad in a statement.

Daniel O'Day

No­var­tis hands off 3 pre­clin­i­cal pro­grams to the an­tivi­ral R&D mas­ters at Gilead

Gilead CEO Daniel O’Day’s new task hunting up a CSO for the company isn’t stopping the industry’s dominant antiviral player from doing pipeline deals.

The big biotech today snapped up 3 preclinical antiviral programs from pharma giant Novartis, with drugs promising to treat human rhinovirus, influenza and herpes viruses. We don’t know what the upfront is, but the back end has $291 million in milestones baked in.

Vas Narasimhan, AP Images

On a hot streak, No­var­tis ex­ecs run the odds on their two most im­por­tant PhI­II read­outs. Which is 0.01% more like­ly to suc­ceed?

Novartis CEO Vas Narasimhan is living in the sweet spot right now.

The numbers are running a bit better than expected, the pipeline — which he assembled as development chief — is performing and the stock popped more than 4% on Thursday as the executive team ran through their assessment of Q2 performance.

Year-to-date the stock is up 28%, so the investors will be beaming. Anyone looking for chinks in their armor — and there are plenty giving it a shot — right now focus on payer acceptance of their $2.1 million gene therapy Zolgensma, where it’s early days. And CAR-T continues to underperform, but Novartis doesn’t appear to be suffering from it.

So what could go wrong?

Actually, not much. But Tim Anderson at Wolfe pressed Narasimhan and his development chief John Tsai to pick which of two looming Phase III readouts with blockbuster implication had the better odds of success.

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On a glob­al romp, Boehringer BD team picks up its third R&D al­liance for Ju­ly — this time fo­cused on IPF with $50M up­front

Boehringer Ingelheim’s BD team is on a global deal spree. The German pharma company just wrapped its third deal in 3 weeks, going back to Korea for its latest pipeline pact — this time focused on idiopathic pulmonary fibrosis.

They’re handing over $50 million to get their hands on BBT-877, an ATX inhibitor from Korea’s Bridge Biotherapeutics that was on display at a science conference in Dallas recently. There’s not a whole lot of data to evaluate the prospects here.

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Servi­er scoots out of an­oth­er col­lab­o­ra­tion with Macro­Gen­ics, writ­ing off their $40M

Servier is walking out on a partnership with MacroGenics $MGNX — for the second time.

After the market closed on Wednesday MacroGenics put out word that Servier is severing a deal — inked close to 7 years ago — to collaborate on the development of flotetuzumab and other Dual-Affinity Re-Targeting (DART) drugs in its pipeline.

MacroGenics CEO Scott Koenig shrugged off the departure of Servier, which paid $20 million to kick off the alliance and $20 million to option flotetuzumab — putting a heavily back-ended $1 billion-plus in additional biobuck money on the table for the anti-CD123/CD3 bispecific and its companion therapies.