How could you make a Bris­tol-My­ers takeover work with­out shred­ding a $5B R&D di­vi­sion?

Carl Ic­ahn

When Carl Ic­ahn bought in­to Al­ler­gan last May, the com­bat­ive ac­tivist in­vestor im­me­di­ate­ly put out a state­ment that put him square­ly in the Brent Saun­ders fan club. Al­ler­gan $AGN CEO Saun­ders had made mon­ey for Ic­ahn be­fore, when the ac­tivist helped bring him in­to For­est Labs as he was push­ing that com­pa­ny to make some big changes. And Ic­ahn felt that he would con­tin­ue to make mon­ey at Al­ler­gan.

The un­writ­ten mes­sage: Ic­ahn wasn’t set­ting up an­oth­er Big Squeeze, push­ing Al­ler­gan in­to an M&A deal Saun­ders wasn’t look­ing for.

But when Ic­ahn stepped up for a bite of Bris­tol-My­ers Squibb’s $BMY eq­ui­ty, ac­cord­ing to a re­port in the Wall Street Jour­nal, the im­me­di­ate as­sump­tion was that he was an­gling for one of his clas­sic in­vest­ment gam­bits, prepar­ing to push a stressed bio­phar­ma com­pa­ny to­ward an M&A deal.

And Saun­ders didn’t ex­act­ly try to douse that thought.

Brent Saun­ders, CEO Al­ler­gan

“Carl is a very smart, thought­ful in­vestor. I have to be­lieve that he looks at Bris­tol-My­ers and the in­dus­try and he’s say­ing, ‘Great com­pa­ny, great pipeline and an in­dus­try that should po­ten­tial­ly con­sol­i­date.’ So that’s a for­mu­la that Carl tends to like,” Saun­ders told Bloomberg. And he al­so told the news ser­vice that every­body is prob­a­bly look­ing at Bris­tol-My­ers now, even if it’s just for a few min­utes of wist­ful think­ing.

Bris­tol-My­ers has had a steady drum­beat of bad news that has ham­mered away at its stock price and rep­u­ta­tion as a leader in the check­point field. As ex­pec­ta­tions on Op­di­vo have shrunk against Mer­ck’s bull­ish ad­vances with Keytru­da, Bris­tol’s mar­ket cap has suf­fered bad­ly. So what would have been all but un­think­able a year ago is now the one thing that is on every big play­er’s mind.

What fol­lows is a short list of big out­fits that would have the cash to pull off a pre­mi­um deal for a com­pa­ny with a mar­ket cap of $92 bil­lion. And you’ll find Pfiz­er at the top of just about every­one’s list.

Pfiz­er CEO Ian Read is the on­ly Big Phar­ma chief to show a re­al in­ter­est in a megamerg­er — though his play for As­traZeneca and Al­ler­gan was based on a tax in­ver­sion. Trump’s prospec­tive tax re­form plans, though, may per­suade Read that the time is ripe to go af­ter a com­pa­ny like Bris­tol-My­ers. And while Pfiz­er paid a record $850 mil­lion to part­ner with Mer­ck KGaA on a check­point, the phar­ma gi­ant wouldn’t mind vault­ing in­to a lead­er­ship role.

You can ex­pect plen­ty of lay­offs and tur­moil if any­thing like that goes ahead. Pfiz­er spent close to $8 bil­lion on R&D last year, com­pared to Bris­tol-My­ers’ $5 bil­lion. A tie-up would leave Pfiz­er look­ing to chop bil­lions of dol­lars in re­search spend­ing. But Bris­tol-My­ers R&D has been laud­ed over the years, with a rep that’s much bet­ter than Pfiz­er’s. So who’s to say where the ax might fall.

Read is one of the few Big Phar­ma CEOs who be­lieve that a megamerg­er can work, so long as you carve out all the du­pli­ca­tions.

“If you be­lieve you can re­or­ga­nize your re­search in­to pro­duc­tive small­er units, there is a log­ic to con­sol­i­da­tion of the in­dus­try by tak­ing out du­plica­tive ex­pens­es,” Read told re­porters re­cent­ly.

The prospect of any takeover would like­ly get Bris­tol-My­ers’ best and bright­est in the R&D op­er­a­tion pol­ish­ing up re­sumes and hunt­ing down job leads.

“You would have to think that the BMS sci­en­tists re­al­ized that they’ll be on the chop­ping block should this oc­cur,” John LaMat­ti­na, the for­mer R&D chief at Pfiz­er, tells me. “CVs are un­doubt­ed­ly be­ing up­dat­ed. Chances are that the sci­en­tists are spec­u­lat­ing more about a po­ten­tial ac­qui­si­tion than new sci­en­tif­ic pub­li­ca­tions.”

No­var­tis — an­oth­er mar­ket leader in R&D — al­so has cash and in­vest­ments it can con­vert to pay­ing off a deal like that. It al­so goes for high ef­fi­cien­cy, with no stone left un­turned in search for syn­er­gy. And Gilead has rou­tine­ly been list­ed as the Big Biotech in most need of a dra­mat­ic makeover. Gilead would be the one com­pa­ny most like­ly look­ing to keep much of the re­search group that Bris­tol has built. They all make the Bloomberg list.

Saun­ders may be think­ing about a Bris­tol-My­ers takeover, but com­ing up with that kind of cash af­ter com­mit­ting to a batch of bolt-ons would be no sim­ple mat­ter.

Alice Shaw, Lung Cancer Foundation of America

Top ALK ex­pert and can­cer drug re­searcher Al­ice Shaw bids adieu to acad­e­mia, hel­lo to No­var­tis

Jay Bradner has recruited a marquee oncology drug researcher into the ranks of the Novartis Institutes for BioMedical Research. Alice Shaw is jumping from prestigious posts intertwined through Mass General, Harvard and Dana-Farber to take the lead of NIBR’s translational clinical oncology group.

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Hal Barron, GSK's president of R&D and CSO, speaks to Endpoints News founder and editor John Carroll in London at Endpoints' #UKBIO19 summit on October 8, 2019

[Video] Cel­e­brat­ing tri­al fail­ures, chang­ing the cul­ture and al­ly­ing with Cal­i­for­nia dream­ers: R&D chief Hal Bar­ron talks about a new era at GSK

Last week I had a chance to sit down with Hal Barron at Endpoints’ #UKBIO19 summit to discuss his views on R&D at GSK, a topic that has been central to his life since he took the top research post close to 2 years ago. During the conversation, Barron talked about changing the culture at GSK, a move that involves several new approaches — one of which involves celebrating their setbacks as they shift resources to the most promising programs in the pipeline. Barron also discussed his new alliances in the Bay Area — including his collaboration pact with Lyell, which we covered here — frankly assesses the pluses and minuses of the UK drug development scene, and talks about his plans for making GSK a much more effective drug developer.

This is one discussion you won’t want to miss. Insider and Enterprise subscribers can log-in to watch the video.

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Med­ical an­i­ma­tion: Mak­ing it eas­i­er for the site and the pa­tient to un­der­stand

Medical animation has in recent years become an increasingly important tool for conveying niche information to a varied audience, particularly to those audiences without expertise in the specialist area. Science programmes today, for example, have moved from the piece-to-camera of the university professor explaining how a complex disease mechanism works, to actually showing the viewer first-hand what it might look like to shrink ourselves down to the size of an ant’s foot, and travel inside the human body to witness these processes in action. Effectively communicating a complex disease pathophysiology, or the novel mechanism of action of a new drug, can be complex. This is especially difficult when the audience domain knowledge is limited or non-existent. Medical animation can help with this communication challenge in several ways.
Improved accessibility to visualisation
Visualisation is a core component of our ability to understand a concept. Ask 10 people to visualise an apple, and each will come up with a slightly different image, some apples smaller than others, some more round, some with bites taken. Acceptable, you say, we can move on to the next part of the story. Now ask 10 people to visualise how HIV’s capsid protein gets arranged into the hexamers and pentamers that form the viral capsid that holds HIV’s genetic material. This request may pose a challenge even to someone with some virology knowledge, and it is that inability to effectively visualise what is going on that holds us back from fully understanding the rest of the story. So how does medical animation help us to overcome this visualisation challenge?

Flu Virus (Source: CDC)

FDA ex­pands Xofluza ap­proval as Roche strug­gles to catch loom­ing flu mar­ket

As a potentially powerful flu season looms, so does a big test for Roche and its new flu drug, Xofluza. The Swiss giant just got a small boost in advance of that test as the FDA expanded Xofluza’s indication to include patients at high risk of developing flu-related complications.

Xofluza (baloxavir marboxil) was approved last October in the US, the first landmark flu drug approval in 20 years and a much-needed green light for a company that had watched its leading flu drug Tamiflu get eaten alive by generics. Like its predecessor, the pill offered a reduction in flu symptoms but not a cure.

Mi­rati preps its first look at their KRAS G12C con­tender, and they have to clear a high bar for suc­cess

If you’re a big KRAS G12C fan, mark your calendars for October 28 at 4:20 pm EDT.

That’s when Mirati $MRTX will unveil its first peek at the early clinical data available on MRTX849 in presentations at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics in Boston.

Mirati has been experiencing the full effect of a rival’s initial success at targeting the G12C pocket found on KRAS, offering the biotech some support on the concept they’re after — and biotech fans a race to the top. Amgen made a big splash with its first positive snapshot on lung cancer, but deflated sky-high expectations as it proved harder to find similar benefits in other types of cancers.

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The FDA will hus­tle up an ex­pe­dit­ed re­view for As­traZeneca’s next shot at a block­buster can­cer drug fran­chise

AstraZeneca paid a hefty price to partner with Daiichi Sankyo on their experimental antibody drug conjugate for HER2 positive breast cancer. And they’ve been rewarded with a fast ride through the FDA, with a straight shot at creating another blockbuster oncology franchise.

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Sean Parker, AP

Sean Park­er helps cre­ate a CRISPRed cell ther­a­py 2.0 play — and he’s got a high-pro­file set of lead­ers on the team

You can rack up one more high-profile debut effort in the wave of activity forming around cell therapy 2.0. It’s another appealing Bay Area group that’s attracted some of the top hands in the business to a multi-year effort to create a breakthrough. And they have $85 million in hand to make that first big step to the clinic.

Today it’s Ken Drazan and the team at South San Francisco-based ArsenalBio that are coming from behind the curtain for a public bow, backed by billionaire Sean Parker and a collection of investors that includes Beth Seidenberg’s new venture investment operation based in LA.
Drazan — a J&J Innovation vet with a long record of entrepreneurial endeavors — exited the stage in 2018 when his last mission ended as he stepped aside as president of Grail. It wasn’t long, though, before he was helping out with a business plan for ArsenalBio that revolved around the work of a large group of interconnected scientists supported by the Parker Institute for Cancer Immunology.

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CSL ac­cus­es ri­val Pharm­ing of par­tic­i­pat­ing in a scheme to rip off IP on HAE while re­cruit­ing se­nior R&D staffer

Pharming has landed in the middle of a legal donnybrook after recruiting a senior executive from a rival R&D team at CSL. The Australian pharma giant slapped Pharming with a lawsuit alleging that the Dutch biotech’s new employee, Joseph Chiao, looted a large cache of proprietary documents as he hit the exit. And they want it all back.
Federal Judge Juan Sanchez in the Eastern District Pennsylvania court issued an injunction on Tuesday prohibiting Chiao from doing any work on HAE or primary immune deficiency in his new job and demanding that he return any material from CSL that he may have in his possession. And he wants Pharming to tell its employees not to ask for any information on the forbidden topics.
For its part, Pharming fired off an indignant response this morning denying any involvement in extracting any kind of IP from CSL, adding that it’s cooperating in the internal probe that CSL has underway.

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Eli Lil­ly’s first PhI­II show­down for their $1.6B can­cer drug just flopped — what now?

When Eli Lilly plunked down $1.6 billion in cash to acquire Armo Biosciences a little more than a year ago, the stars seemed aligned in its favor. The jewel in the crown they were buying was pegilodecakin, which had cleared the proof-of-concept stage and was already in a Phase III trial for pancreatic cancer.

And that study just failed.

Lilly reported this morning that their cancer drug flopped on overall survival when added to FOLFOX (folinic acid, 5-FU, oxaliplatin), compared to FOLFOX alone among patients suffering from advanced pancreatic cancer.

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