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

A New Fron­tier: The In­ner Ear

What happens when a successful biotech venture capitalist is unexpectedly diagnosed with a chronic, life-disrupting vertigo disorder? Innovation in neurotology.

That venture capitalist was Jay Lichter, Ph.D., and after learning there was no FDA-approved drug treatment for his condition, Ménière’s disease, he decided to create a company to bring drug development to neurotology. Otonomy was founded in 2008 and is dedicated to finding new drug treatments for the hugely underserved community living with balance and hearing disorders. Helping patients like Jay has been the driving force behind Otonomy, a company heading into a transformative 2020 with three clinical trial readouts: Phase 3 in Ménière’s disease, Phase 2 in tinnitus, and Phase 1/2 in hearing loss. These catalysts, together with others in the field, highlight the emerging opportunity in neurotology.
Otonomy is leading the way in neurotology
Neurotology, or the treatment of inner ear neurological disorders, is a large and untapped market for drug developers: one in eight individuals in the U.S. have moderate-to-severe hearing loss, tinnitus or vertigo disorders such as Ménière’s disease.1 With no FDA-approved drug treatments available for these conditions, the burden on patients—including social anxiety, lower quality of life, reduced work productivity, and higher rates of depression—can be significant.2, 3, 4

Patrik Jonsson, the president of Lilly Bio-Medicines

Who knew? Der­mi­ra’s board kept watch as its stock price tracked Eli Lil­ly’s se­cret bid­ding on a $1.1B buy­out

In just 8 days, from December 6 to December 14, the stock jumped from $7.88 to $12.70 — just under the initial $13 bid. There was no hard news about the company that would explain a rise like that tracking closely to the bid offer, raising the obvious question of whether insider info has leaked out to traders.

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Ab­b­Vie do­nates $1M+ of the HIV drug that Chi­na is now rec­om­mend­ing for coro­n­avirus treat­ment

AbbVie is donating more than $1 million worth of an HIV drug to help combat the fast-spreading coronavirus outbreak in China, the company announced on Friday.

China’s National Health Commission has suggested Aluvia, a pill containing lopinavir and ritonavir, as one of two possible treatments for the symptoms of the virus currently known as 2019-nCoV in the absence of effective antiviral medications. The other part is nebulized alpha-interferon.

UP­DAT­ED: Ab­b­Vie and Al­ler­gan di­vesti­tures are in, and an old As­traZeneca drug comes home

When AbbVie announced their $63-billion Allergan acquisition last year, executives acknowledged the two companies would have to divest some drugs to satisfy regulators. The two main assets in discussion have now been sold off – and one of them is coming home.

AstraZeneca will acquire brazikumab, Allergan’s late-stage IL-23 candidate for Crohn’s disease and ulcerative colitis. The drug was originally developed by AstraZeneca’s defunct subsidiary MedImmune, in collaboration with Amgen. Allergan licensed it for $250 million upfront and $1.27 billion in milestones.

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As­traZeneca makes case for use of blood thin­ner Bril­in­ta in stroke pa­tients

AstraZeneca’s extravagant projections for its clot fighter Brilinta may have fizzled in the face of underwhelming trial data — but a new pivotal study is set to expand its use substantially.

On Monday, the British drugmaker said the drug, when taken in conjunction with aspirin, induced a statistically significant reduction in the risk of the primary composite endpoint of stroke and death, compared to aspirin alone, in 11,000 patients that have suffered minor acute ischaemic stroke or a high-risk transient ischemic attack (TIA).

Samantha Truex (file photo)

Bruce Booth and Saman­tha Truex's lat­est ven­ture aims just above Hu­mi­ra

In 2000, about a year after the first trial data on Humira came out, a Japanese team identified a new gene that appeared to prevent GI cancer in mice: gasdermin, they called it, after the particular proteins it expressed.

Over the next decade-and-a-half, researchers found five more genes in the same family – often identified as gasdermin A, B, C, D, E and F – and yet their purpose baffled scientists. Mutations in appeared to make mice bald (alopecia), but deleting it had no effect. Mutations in F and A were linked to deafness. Mutant E caused human cells to self-destruct.

“The exact biological function of these proteins remained unknown for more than 15 years,” three of the field’s top researchers wrote in a  Nature review in November.

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FDA’s golodirsen CRL: Sarep­ta’s Duchenne drugs are dan­ger­ous to pa­tients, of­fer­ing on­ly a small ben­e­fit. And where's that con­fir­ma­to­ry tri­al?

Back last summer, Sarepta CEO Doug Ingram told Duchenne MD families and investors that the FDA’s shock rejection of their second Duchenne MD drug golodirsen was due to some concerns regulators raised about the risk of infection and the possibility of kidney toxicity. But when pressed to release the letter for all to see, he declined, according to a report from BioPharmaDive, saying that kind of move “might not look like we’re being as respectful as we’d like to be.”

He went on to assure everyone that he hadn’t misrepresented the CRL.

But Ingram’s public remarks didn’t include everything in the letter, which — following the FDA’s surprise about-face and unexplained approval — has now been posted on the FDA’s website and broadly circulated on Twitter early Wednesday.

The CRL raises plenty of fresh questions about why the FDA abruptly decided to reverse itself and hand out an OK for a drug a senior regulator at the FDA believed — 5 months ago, when he wrote the letter — is dangerous to patients. It also puts the spotlight back on Sarepta $SRPT, which failed to launch a confirmatory study of eteplirsen, which was only approved after a heated internal controversy at the FDA. Ellis Unger, director of CDER’s Office of Drug Evaluation I, notes that study could have clarified quite a lot about the benefit and risks associated with their drugs — which can cost as much as a million dollars per patient per year, depending on weight.

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Aymeric Le Chatelier, Ipsen

A $1B-plus drug stum­bles in­to an­oth­er big PhI­II set­back — this time flunk­ing fu­til­i­ty test — as FDA hold re­mains in ef­fect for Ipsen

David Meek

At the time Ipsen stepped up last year with more than a billion dollars in cash to buy Clementia and a late-stage program for a rare bone disease that afflicts children, then CEO David Meek was confident that he had put the French biotech on a short path to a mid-2020 launch.

Instead of prepping a launch, though, the company was hit with a hold on the FDA’s concerns that a therapy designed to prevent overgrowth of bone for cases of fibrodysplasia ossificans progressiva might actually stunt children’s growth. So they ordered a halt to any treatments for kids 14 and under. Meek left soon after to run a startup in Boston. And today the Paris-based biotech is grappling with the independent monitoring committee’s decision that their Phase III had failed a futility test.

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Roche's check­point play­er Tecen­triq flops in an­oth­er blad­der can­cer sub­set

Just weeks after Merck’s star checkpoint inhibitor Keytruda secured FDA approval for a subset of bladder cancer patients, Swiss competitor Roche’s Tecentriq has failed in a pivotal bladder cancer study.

The 809-patient trial — IMvigor010 — tested the PD-L1 drug in patients with muscle-invasive urothelial cancer (MIUC) who had undergone surgery, and were at high risk for recurrence.

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