As­traZeneca inks $8.4B pact with Mer­ck as cru­cial MYS­TIC study fails and shares plunge

As­traZeneca’s cru­cial com­bi­na­tion tri­al of dur­val­um­ab (Imfinzi) and treme­li­mum­ab has failed the pri­ma­ry end­point on pro­gres­sion-free sur­vival as a first-line ther­a­py for non-small cell lung can­cer. The shock waves from that news im­me­di­ate­ly ripped through its share price, eras­ing bil­lions in mar­ket val­ue and spurring some fevered spec­u­la­tion about the phar­ma gi­ant’s fu­ture. And with­in hours an­a­lysts start­ed to raise the prospect that the fall­out just might be bad enough to in­spire a new megamerg­er takeover at­tempt.

The news marks a ma­jor set­back for As­traZeneca $AZN. An­a­lysts have been wait­ing months for the re­sults, see­ing it as a crit­i­cal test of CEO Pas­cal So­ri­ot’s plan to turn things around at the phar­ma gi­ant af­ter five years at the helm. A suc­cess here could have vault­ed As­traZeneca in­to the front ranks of a fu­ri­ous as­sault on a multi­bil­lion-dol­lar mar­ket; fail­ure was deemed a dis­as­ter. The com­bo study of the PD-L1 and CT­LA-4 check­point drugs is con­sid­ered the most im­por­tant tri­al that the phar­ma gi­ant has been pur­su­ing, and its biggest stock cat­a­lyst of the year.

Sean Bo­hen, As­traZeneca

As­traZeneca’s shares cratered on the news, plung­ing 15% and wip­ing out more than $12 bil­lion in mar­ket cap. Mer­ck shares $MRK, mean­while, surged 4% in pre-mar­ket trad­ing as the prospect of a di­rect threat to its lead po­si­tion on lung can­cer re­ced­ed. And once again Bris­tol-My­ers Squibb was dam­aged, drop­ping 6% as in­vestors con­sid­ered the con­se­quences of fail­ure for a PD-(L)1 and CT­LA-4 sim­i­lar to its own matchup for Op­di­vo and Yer­voy in the CM-227 tri­al.

As­traZeneca sought to take the sting out of the tri­al fail­ure by si­mul­ta­ne­ous­ly an­nounc­ing a ma­jor new de­vel­op­ment and com­mer­cial­iza­tion part­ner­ship with Mer­ck for its promis­ing PARP Lyn­parza along with the ex­per­i­men­tal MEK drug selume­tinib.

Mer­ck $MRK agreed to pay a whop­ping $2.35 bil­lion in an up­front and op­tion fee to co-de­vel­op and mar­ket the two drugs, work­ing on monother­a­py stud­ies as well as com­bi­na­tions along­side their ri­val PD-(L)1 drugs Imfinzi and Keytru­da. Mer­ck will al­so pay up to $6.15 bil­lion in mile­stones, mak­ing this an $8.4 bil­lion deal — one of the largest of its kind.

But it wasn’t enough to soft­en the blow.

As­traZeneca first ac­knowl­edged the fail­ure of MYS­TIC in a down­load ear­ly Thurs­day of new clin­i­cal tri­al re­sults, then con­firmed it in a re­lease. There was more bad news.

“As a sec­ondary end­point, al­though not for­mal­ly test­ed,” the com­pa­ny adds, “Imfinzi monother­a­py would not have met a pre-spec­i­fied thresh­old of PFS ben­e­fit over SoC in this dis­ease set­ting.”

“We now have to wait for over­all sur­vival da­ta in the first half of 2018,” said So­ri­ot in a call with re­porters, adding that he was dis­ap­point­ed by the ini­tial re­sults. “This is the main end­point,” he added about OS, look­ing to keep hope alive.

As­traZeneca was 5th to mar­ket with a PD-(L)1 drug. Mer­ck and Bris­tol-My­ers Squibb were able to seize the lead in the megablock­buster can­cer mar­ket, so As­traZeneca re­cal­i­brat­ed its de­vel­op­ment plans to em­pha­size its com­bi­na­tion strat­e­gy.

So­ri­ot has re­peat­ed­ly flashed signs of the stress that has been build­ing over MYS­TIC. It’s ex­tra­or­di­nary for any Big Phar­ma to be in a po­si­tion like this, where one tri­al can play such a cru­cial role in de­ter­min­ing a com­pa­ny’s fate.

This morn­ing, though, So­ri­ot and R&D chief Sean Bo­hen de­fend­ed their de­sign of the MYS­TIC study, putting PFS in for the first take.

“If it had been suc­cess­ful every­one would have been thrilled,” Bo­hen said about MYS­TIC PFS da­ta. So­ri­ot al­so bat­ted back con­cerns about the po­ten­tial neg­a­tive im­pact of crossovers on the OS end­point, which sev­er­al an­a­lysts have raised as a po­ten­tial hur­dle on sur­vival rates.

“Peo­ple are com­ment­ing on the dan­ger of crossover,” the CEO told re­porters. “We have lim­it­ed crossover. The risk there is much low­er than in oth­er stud­ies.”

We may nev­er know, though, what role the da­ta played in the strange sto­ry about Te­va’s re­port­ed move to of­fer the CEO’s job to So­ri­ot. Over sev­er­al days As­traZeneca’s stock shed bil­lions in mar­ket cap as ru­mors float­ed about his pos­si­ble de­par­ture from As­traZeneca. So­ri­ot dis­pelled those ru­mors with an in­ter­nal memo un­der­scor­ing his in­ten­tion to stay and fight it out. Back when Pfiz­er was look­ing to buy the com­pa­ny, he pledged As­traZeneca will al­most dou­ble last year’s $23 bil­lion in rev­enue by 2023.

That goal, how­ev­er, looks like it’s re­ced­ing — at least to­day. In H1 As­traZeneca’s to­tal rev­enue de­clined 11% com­pared to the same pe­ri­od in 2016 as fran­chise rev­enue con­tin­ued to erode in the face of gener­ic com­pe­ti­tion. The com­pa­ny ex­pects a sin­gle-dig­it de­cline for the year in what has been pre­sent­ed as the bot­tom point for the num­bers.

So­ri­ot re­peat­ed­ly re­fused to di­rect­ly ad­dress the Te­va sto­ry to­day, but he pub­licly re­it­er­at­ed his in­ten­tion to stay fo­cused on his goals at the phar­ma gi­ant.

“I’m com­mit­ted to de­liv­er­ing on our strat­e­gy to re­turn­ing to growth,” he said. Not every­thing has worked out, he not­ed, but So­ri­ot in­sist­ed that the com­pa­ny had made “enor­mous progress.”

Pressed on Te­va, he added:

“I’m not a quit­ter. That is as far as I will go.”

Asked by Reuters’ Ben Hirschler about a share price that fell to £43 this morn­ing, com­pared to the £55 that Pfiz­er of­fered, the CEO said: “Over­all the pipeline is de­liv­er­ing…You have to give these things time,” says So­ri­ot. “There’s a lot more in our pipeline than MYS­TIC.”

As the dust set­tled lat­er in the day, new pre­dic­tions be­gan to cir­cu­late that the weak­ened share price could at­tract a new bid for the com­pa­ny. And As­traZeneca is in a much worse po­si­tion now to fight off an ac­qui­si­tion.


Im­age: Pas­cal So­ri­ot AP Im­ages

RWE chal­lenges for to­day's bio­phar­ma

The rapid development of technology — and the resulting avalanche of data — are catalysts for significant change in the biopharmaceutical industry. This translates into urgent pressures for today’s biopharma, including a need to quickly and affordably develop products with proven therapeutic efficacy and value. This urgency is expedited by the growth of value-based contracting, where access to reimbursement and profit depends on these abilities.

UP­DAT­ED: In a stun­ning turn­around, Bio­gen says that ad­u­canum­ab does work for Alzheimer's — but da­ta min­ing in­cites con­tro­ver­sy and ques­tions

Biogen has confounded the biotech world one more time.

In a stunning about-face, the company and its partners at Eisai say that a new analysis of a larger dataset on aducanumab has restored its faith in the drug as a game-changer for Alzheimer’s and, after talking it over with the FDA, they’ll now be filing for an approval of a drug that had been given up for dead.

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Acor­da's Ron Co­hen brings the ax back out as new drug sales on­ly trick­le in while cash cow is led to the slaugh­ter

With its new drug earning meager sums and its one-time cash cow reduced to a bony shadow of its former self, Acorda Therapeutics today is rolling out a new restructuring aimed at slashing the staff and cutting costs to get through the hard times ahead.

The biotech is chopping a quarter of its staff today, carving back R&D as well as SG&A expenses. And CEO Ron Cohen is cutting deep.

Under the new austerity budget, Acorda’s R&D expenses for the full year 2019 are expected to be $55 – $60 million, reduced from $70 – $80 million. SG&A expenses for the full year 2019 are expected to be $185 – $190 million, reduced from $200 – $210 million. R&D expenses for the full year 2020 are expected to be $20 – $25 million and SG&A
expenses for the full year 2020 are expected to be $160 – $165 million.

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As shares suf­fer from a lin­ger­ing slump, a bruised Alk­er­mes slash­es 160 jobs in R&D re­struc­tur­ing

With its share price in a deep slump after suffering through a regulatory debacle over their depression drug ALKS 5461, Alkermes CEO Richard Pops is taking the ax to its R&D organization in a restructuring aimed at cutting costs ahead of its next attempt at a rollout in a tough field.

Richard Pops, Endpoints via Youtube

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RAPT Ther­a­peu­tics re­turns to Wall Street to re­vive IPO bid

On May 24, FLX Bio, a small cancer and inflammation biotech with backing from GV, changed its name to RAPT Therapeutics and filed confidentially for an IPO. On July 5th, they filed to raise up to $86 million. On July 22, they announced the IPO with a $75 million goal.  And on August 1, they abruptly and without explanation called it all off.

Now, without explanation, they’re reviving the bid, filing again for a $75 million IPO, this time with a new bookrunner and a new drug candidate in the clinic. The terms will be the same: 5 million shares at $14-$16 per share. It would give them a diluted market value of $351 million.

EY vet set to re­place re­tir­ing Am­gen CFO Meline

Ahead of its third-quarter results next week, Amgen on Tuesday disclosed the planned retirement of David Meline, who has served as the company’s chief financial officer since 2014.

Meline will be replaced by Ernst & Young vet, Peter Griffith, as CFO come January 1, 2020 — but until then Griffith will serve as executive vice president, finance.

“Over the last 5 years at Amgen, Meline instituted many major changes that led to operational efficiencies and margin expansion while successfully returning cash to shareholders. Now that Amgen is on solid footing, it was a good time to step away,” Cowen’s Yaron Werber wrote in a note. “We do not anticipate any major changes to strategy or operations immediately due to this transition as Amgen is on solid footing.”

Eli Lil­ly’s USA, di­a­betes chief En­rique Con­ter­no is head­ing out af­ter 27 years, and he’s be­ing re­placed by a com­pa­ny in­sid­er

Close to 3 years after Eli Lilly CEO Dave Ricks added the title of president of the US operations to Enrique Conterno’s resume, which included his helmsmanship of the diabetes franchise, the Peruvian born exec is set to retire after a 27-year run at the pharma giant.

Lilly put out the news just as it was posting Q3 results, with a mix of upbeat and downbeat results in the latest set of numbers from Lilly.
Conterno — a grizzled, deeply experienced and sometimes gruff veteran of the pharma world — was a high-profile figure at Lilly, stepping up to expanded duties as the company was forced to deal with intense pricing pressure on the diabetes side of the business. He had replaced outgoing US president Alex Azar, who later popped up as head of Health and Human Services in the Trump administration.
As head of the diabetes unit, Conterno had to deal with an extraordinarily competitive field as payers demanded bigger discounts. Trulicity’s success helped generate new revenue for the company, but Q3’s miss on revenue had a lot to do with the need for discounting the drug ahead of Novo Nordisk’s rival therapy, Rybelsus, which was priced on the wholesale level at an almost identical rate.

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No­var­tis hands off $80M in cash to part­ner up with a top biotech play­er in the fi­bro­sis sec­tor

Never underestimate the power of a good showing at a scientific conference.
In a presentation late last year, the researchers at Pliant Therapeutics launched a series of discussions about the preclinical data they were pulling together around their work on their small-molecule integrin inhibitor aimed at transforming growth factor beta, or TGF-β, a key pathway involved in fibrosis.
And they got some serious attention for the work.
“We got interest from pharma partners and at the end Novartis basically made it,” says Pliant CEO Bernard Coulie.

Is there a recipe for M&A suc­cess? The best and worst buy­out deals in the past decade of­fer some keys to suc­cess — and fail­ure

It’s not easy achieving a solid win in M&A in this industry. But if you follow a few simple guidelines, you may be able to increase your odds of success.
Geoffrey Porges and the team at SVB Leerink went about the “notoriously difficult” task of scoring the biopharma buyout of 2009 to 2019. Sizing up current and expected revenue from the products that were gained, they came up with the 5 winners:
Merck/Schering Plough
Bristol/Medarex
Gilead/Pharmasset
Sanofi/Genzyme
AstraZeneca/Acerta
It says a lot about the field that it’s much easier sorting out the 5 worst deals, though there’s also a lot more competition for that title, notes Porges. As picked by the analysts:
J&J/Actelion
Merck/Cubist
Alexion/Synageva
AbbVie/Stemcentrx
Gilead/Kite

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