Let's not for­get why bio­phar­ma megamerg­ers are such an aw­ful idea

End­points as­sess­es the big bio­phar­ma R&D sto­ries of the week, with a lit­tle added com­men­tary on what they mean for the in­dus­try.


A Bris­tol-My­ers Squibb takeover? Not a great idea

This week mur­murs about a pos­si­ble takeover of Bris­tol-My­ers Squibb turned in­to a shout af­ter Carl Ic­ahn re­port­ed­ly stepped up to buy in­to the big biotech. Af­ter a se­ries of painful set­backs on Op­di­vo, BMS has sud­den­ly trad­ed in its white hat for a black one as in­vestors switched al­le­giance to Mer­ck.

No doubt, part of the prob­lem at Bris­tol-My­ers was self in­flict­ed. The com­pa­ny be­came too am­bi­tious and set it­self up for a Phase III fall on lung can­cer. And in­vestors can be quite un­for­giv­ing these days.

But a takeover?

The ra­tio­nale here is that ad­di­tion­al con­sol­i­da­tion is need­ed in the bio­phar­ma world. But if there is a buy­out — par­tic­u­lar­ly if Pfiz­er should de­cide to do this — we all know the out­come. Thou­sands of jobs will be cut for no good rea­son. A fine R&D group with a his­to­ry of suc­cess and the prob­a­bil­i­ty of more good things to come will be de­stroyed. Two com­pa­nies that spent a com­bined $13 bil­lion on re­search would be­come one with $8 bil­lion. Maybe $8.5 bil­lion.

We know that megamerg­ers are a bad idea. They’ve hap­pened be­fore and they uni­ver­sal­ly de­stroy val­ue. Pfiz­er, quite ca­pa­ble at de­sign­ing and ex­e­cut­ing Phase III stud­ies, is hard­ly an in­no­v­a­tive com­pa­ny. Most Big Phar­mas aren’t. Bris­tol-My­ers, though, is in­no­v­a­tive. They can sur­vive the set­backs. A megamerg­er is an aw­ful idea. Let’s all hope the ru­mors don’t come true.

Scott Got­tlieb should be named FDA com­mis­sion­er, AS­AP

Af­ter so much talk and spec­u­la­tion about who will be named the next FDA com­mis­sion­er, I de­cid­ed to take a clos­er look at what Scott Got­tlieb is like­ly to do as the na­tion’s drug de­vel­op­ment czar — pro­vid­ed he gets the nom­i­na­tion.

What emerges from an ex­am­i­na­tion of the pub­lic record is a lead­ing can­di­date who’s big on ac­cel­er­at­ed path­ways for com­plex gener­ics and rare dis­eases and ready to re­or­ga­nize the agency’s re­view process to help speed ap­provals.

But while there are ways to take the ex­tra­or­di­nary record of achieve­ment in on­col­o­gy and du­pli­cate it in oth­er di­vi­sions, there won’t be a whole­sale dereg­u­la­tion that will make it pos­si­ble for any­one, just about any time, to get a fast ap­proval on an un­proven ther­a­py.

This is the kind of agen­da that the FDA and bio­phar­ma can get be­hind. In­tel­li­gent­ly re­set­ting the bar with a clear out­line of in­struc­tions for ac­cel­er­at­ed ap­provals — with the right kind of ex­per­tise in place to help that process — would be an ad­vance. It’s no easy task. And there is a like­ly risk that the FDA will be­come too ag­gres­sive in grant­i­ng quick OKs. But the over­all di­rec­tion is right for the agency and right for the in­dus­try.

Now let’s all hope that Got­tlieb gets the tap. Some of the al­ter­na­tives are tru­ly fright­en­ing.

Com­pared to 2016, M&A trends look strong this year

Eval­u­ate crunched the num­bers on M&A deals last year, not­ing a dis­tinct cool down from the boom. That’s not un­ex­pect­ed, but the near co­ma re­flect­ed in Q4 un­der­scored the un­cer­tain­ty over the elec­tion as well as tax re­form for Big Phar­ma.

We prob­a­bly won’t have long to wait be­fore tax re­form comes along. It’s one of Pres­i­dent Trump’s sig­na­ture is­sues. And af­ter that the pent up de­mands for ac­quir­ing as­sets are like­ly to play out in pre­dictable ways.

Val­u­a­tions are high in biotech. Big pre­mi­ums are the or­der of the day for the most promis­ing drugs in the pipeline. Deals are hap­pen­ing. And there’s still plen­ty of time to see some am­bi­tious ac­qui­si­tions in the wake of the Acte­lion deal.

We’re anx­ious­ly await­ing the next chap­ter in the Jack­ie Fouse sto­ry

One of the rea­sons why bio­phar­ma has be­come so much stronger in re­cent years is that the tal­ent pool in the US is wide and deep. Ex­ec­u­tives from the big com­pa­nies have been mi­grat­ing to biotech, in the ex­ec­u­tive suite as well as in fi­nance. And Jack­ie Fouse, once she com­pletes her de­par­ture plan from the pres­i­dent’s role at Cel­gene, won’t have any lack of of­fers as she con­sid­ers her next step.

An­oth­er big com­pa­ny job or a jump to biotech are both pos­si­ble for Fouse. Wher­ev­er she goes — and it will like­ly take some time — the cross-fer­til­iza­tion of fresh ideas and strong lead­er­ship ben­e­fits us all. Drug de­vel­op­ment is a dy­nam­ic busi­ness be­cause of the out­stand­ing peo­ple who are at­tract­ed to it and lead it. One per­son’s suc­cess is a boost to every­one. And that’s some­thing we should all cel­e­brate.

Brent Saunders [Getty Photos]

UP­DAT­ED: Ab­b­Vie seals $63B deal to buy a trou­bled Al­ler­gan — spelling out $1B in R&D cuts

Brent Saunders has found his way out of the current fix he’s in at Allergan $AGN. He’s selling the company to AbbVie for $63 billion in the latest example of the hot M&A market in biopharma.

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Top an­a­lyst finds a sil­ver lin­ing in Ab­b­Vie’s $63B Al­ler­gan buy­out — but there’s a catch

Af­ter get­ting beat up on all sides from mar­ket ob­servers who don’t much care for the lat­est mega-deal to ar­rive in bio­phar­ma, at least one promi­nent an­a­lyst now is start­ing to like what he sees in the num­bers for Ab­b­Vie/Al­ler­gan.

But it’s go­ing to take some en­cour­age­ment if Ab­b­Vie ex­ecs want it to last.

Ab­b­Vie’s mar­ket cap de­clined $20 bil­lion on Tues­day as the stock took at 17% hit dur­ing the day. And SVB Leerink’s Ge­of­frey Porges can see a dis­tinct out­line of an up­side af­ter re­view­ing the fun­da­men­tals of the deal.

While Ako­rn works to re­vive its for­tunes, the FDA hits it with an­oth­er warn­ing let­ter

Ako­rn just can’t dig it­self out of its hole.

The spe­cial­ty gener­ic drug­mak­er has re­ceived yet an­oth­er warn­ing let­ter from the FDA this year. With­out dis­clos­ing any specifics, the Lake For­est, Illi­nois-based drug­mak­er on Wednes­day said the US reg­u­la­tor had is­sued the let­ter, cit­ing an in­spec­tion of its Som­er­set, New Jer­sey man­u­fac­tur­ing fa­cil­i­ty in Ju­ly and Au­gust of 2018. The com­pa­ny’s shares $AKRX dipped about 1.7% to $4.65 be­fore the bell.

Af­ter rais­ing $158M, this up­start's founders have star back­ers and plans to break new ground in gene ther­a­py

Back in 2014, Stephanie Tagliatela opted to take an early exit out of her PhD program after working in Mark Bear’s lab at MIT, where she specialized in the synaptic connections between neuronal cells in the brain. She never finished that PhD, but she and fellow MIT student Kartik Ramamoorthi — who was on the founding team at Voyager — came away with some ideas for a gene therapy startup.

Today, fully 5 years later, she and Ramamoorthi are taking the wraps off of a $104 million mega-round designed to take the cumulative work of their preclinical formative stage for Encoded Therapeutics into human studies. They’ve now raised $158 million since starting out in Illumina’s incubator in the Bay Area, and they believe they are firmly on track to do something unique in gene therapy.

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Richard Gonzalez testifying in front of Senate Finance Committee, February 2019 [AP Images]

Ab­b­Vie's $63B buy­out spot­lights the re­turn of ma­jor M&A deals — de­spite the back­lash

Big time M&A is back. But for how long?

Over the past 18 months we’ve now seen three major buyouts announced: Takeda/Shire; Bristol-Myers/Celgene and now AbbVie/Allergan. And with this latest deal it’s increasingly clear that the sharp fall from grace suffered by high-profile players which have seen their share prices blasted has created an opening for the growth players in big pharma to up their game — in sharp contrast to the popular bolt-on deals that have been driving the growth strategy at Novartis, Merck, Roche and others.

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Novotech CEO Dr. John Moller

Novotech CRO Award­ed Frost & Sul­li­van Best Biotech CRO Asia-Pa­cif­ic 2019

Known in the in­dus­try as the Asia-Pa­cif­ic CRO, Novotech is now lead CRO ser­vices provider for the grow­ing num­ber of in­ter­na­tion­al biotechs se­lect­ing the re­gion for their stud­ies.

Re­flect­ing this Asia-Pa­cif­ic growth, Novotech staff num­bers are up 20% since De­cem­ber 2018 to 600 in-house clin­i­cal re­search peo­ple across a full range of ser­vices, across the re­gion.

Novotech’s ca­pa­bil­i­ties have been rec­og­nized by an­a­lysts like Frost & Sul­li­van, most re­cent­ly with the pres­ti­gious Asia-Pa­cif­ic CRO Biotech of the year award for best prac­tices in clin­i­cal re­search for biotechs for the fifth year. See oth­er awards here.

UP­DAT­ED: In sur­prise switch, Bris­tol-My­ers is sell­ing off block­buster Ote­zla, promis­ing to com­plete Cel­gene ac­qui­si­tion — just lat­er

Apart from revealing its checkpoint inhibitor Opdivo blew a big liver cancer study on Monday, Bristol-Myers Squibb said its plans to swallow Celgene will require the sale of blockbuster psoriasis treatment Otezla to keep the Federal Trade Commission (FTC) at bay.

The announcement — which has potentially delayed the completion of the takeover to early 2020 — irked investors, triggering the New York-based drugmaker’s shares to tumble Monday morning in premarket trading.

Celgene’s Otezla, approved in 2014 for psoriasis and psoriatic arthritis, is a rising star. It generated global sales of $1.6 billion last year, up from the nearly $1.3 billion in 2017. Apart from the partial overlap of Bristol-Myers injectable Orencia, the company’s rival oral TYK2 psoriasis drug is in late-stage development, after the firm posted encouraging mid-stage data on the drug, BMS-986165, last fall. With Monday’s decision, it appears Bristol-Myers is favoring its experimental drug, and discounting Otezla’s future.

The move blindsided some analysts. Credit Suisse’s Vamil Divan noted just days ago:

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Image: Chris Varma. Frontier

UP­DAT­ED: Chris Var­ma un­veils MP­M's lat­est start­up — eye­ing 'un­drug­gable' can­cer tar­gets and pow­ered by ma­chine learn­ing, $67M

Two years af­ter MPM Cap­i­tal en­list­ed Chris Var­ma on its busy on­col­o­gy team, the for­mer en­tre­pre­neur-in-res­i­dence is un­veil­ing his first ven­ture project out of his new stomp­ing grounds in the Bay Area: Fron­tier Med­i­cines.

For Var­ma, who’s al­so co-found­ed Blue­print Med­i­cines and built com­pa­nies at Third Rock and Flag­ship, this marks an­oth­er op­por­tu­ni­ty to ap­ply some cut­ting-edge sci­ence to “sev­er­al of the most im­por­tant and dif­fi­cult tar­gets in can­cer” — tar­gets that oth­ers have tried to tack­le with more clas­si­cal meth­ods and failed. The launch round comes in at $67 mil­lion, which should go some way in scaf­fold­ing a pre­clin­i­cal pipeline and push one or more as­sets in­to the clin­ic three years from now, he tells me.

The top 15 mega-deals in bio­phar­ma: Ab­b­Vie and Bris­tol-My­ers ac­qui­si­tions stir fresh de­bate over what's too big to buy

The debate over what’s too big to buy in biotech is back. A number of top analysts went right after AbbVie’s rationale for the Allergan deal today, just as Bristol-Myers Squibb stirred immediate debate over the worth and wisdom of acquiring Celgene.

To help provide some added context to this discussion, we asked DealForma chief Chris Dokomajilar to look over the past decade of major M&A in biopharma to decipher the top 15 plays.

The new numbers, unadjusted for inflation, harken back to the days of the Pfizer-Wyeth buyout and Merck’s decision to absorb Schering-Plough — both triggered in 2009. The heat over those acquisitions made the big pharma mega-deal highly unpopular for most everyone — except Pfizer — as industry leaders swore off almost all but the handy bolt-on acquisition.

Until recently.

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