Over the last year Novartis has been building a rep as something of a penny pincher among the pharma giants. It’s extended its restless search for new efficiencies into R&D, carving out pockets of investigators as it centralizes its work in the big hubs. And it’s also adopted a grow-your-own approach to some of the therapeutics it wants to have.
Case in point: PD-1.
In a review of its late-stage pipeline with Leerink’s Seamus Fernandez, company execs highlighted the pharma giant’s PDR001, one of a number of checkpoints aimed at the PD-(L)1 axis in cancer drug development. Unlike Merck, Bristol-Myers Squibb, Roche, Pfizer and AstraZeneca, though, Novartis isn’t so much boasting about its standalone potential as it is just bringing along a checkpoint of its own for the future combos that it plans to offer.
Now PDR001 is in Phase III with Mekinist and Tafinlar, the two cancer drugs it swapped for with GlaxoSmithKline. And execs highlighted its partnership with Aduro $ADRO on ADU-S100 — part of its collaboration on STING pathway activator compounds — as an example of the kind of development program it can get excited about.
So what else is going on at Novartis?
After a quiet period of review, Novartis is clearly pumped about its leading CAR-T work. As Leerink notes, Novartis has a clear lead for now in its drive to win a landmark OK for CTL019 in pediatric acute lymphoblastic leukemia, with a near-term focus on diffuse large B-cell lymphoma and chronic lymphocytic leukemia. Past that, as we wrote about earlier in the week, CTL119 is showing strong potential as a next-gen candidate in the CAR-T field.
Evidently we’re just weeks away from getting Phase III data on RTH258, an anti-VEGF for age-related macular degeneration. This is a tough field, though, so mere statistical significance will not be enough to make this one a major new blockbuster for Novartis. The company is looking at doses every eight weeks and twelve weeks, and believes it needs to get at least 40% of patients into the more convenient twelve-week doses to make a success of the drug.
A few weeks ago Novartis CEO Joe Jimenez outlined a very careful set of rules on any new acquisitions, specifically drawing the line at $5 billion on most any new buy. With Tesaro $TSRO back in the news with a potential auction, Novartis made it clear that it would like a PARP, IDO and BTK drug, but “valuations were too high to justify a major deal in the (PARP) space.”
Tesaro, with its newly approved PARP, has a market valuation of $8 billion. Incyte $INCY, a leader in IDO, tips the scales at $26 billion. And that gives you some idea of what Novartis means about valuations right now.
Like a lot of the pharma majors, Novartis is paying rapt attention to the debate over drug pricing in the US. And there’s a way they want to see this play out. First, focus on:
(1) systemic inefficiencies built around Pharmacy Benefit Managers (PBMs) and payers; and (2) the need for creative pricing strategies within Medicare and Medicaid, specifically interest in outcome-based pricing, which could be facilitated by a waiver to the Medicaid best price regulations. Overall, mgmt. appeared hopeful that the administration would include solutions to these issues in its upcoming proposal and believes that drug re-importation is unlikely to become a reality in the near future.
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