Pfiz­er to com­bine its off-patent drug unit with My­lan

Pfiz­er — My­lan’s man­u­fac­tur­ing part­ner for its flag­ship EpiPen — is com­bin­ing its off-patent drug busi­ness with the gener­ic drug­mak­er, in a hair­cut de­signed to fo­cus on the health­i­er parts of its busi­ness.

The trans­ac­tion is ex­pect­ed to come in the form of a stock deal in which My­lan $MYL share­hold­ers would own a lit­tle more than 40% of the new en­ti­ty and Pfiz­er $PFE share­hold­ers the re­main­der. Pfiz­er is al­so slat­ed to re­ceive about $12 bil­lion in pro­ceeds from a new sale of debt.

The busi­ness, called Up­john, is based in Shang­hai (to fo­cus on emerg­ing mar­kets), and in­cludes prod­ucts that once gen­er­at­ed block­buster sales such as the cho­les­terol drug Lip­i­tor, the erec­tile dys­func­tion drug Vi­a­gra and the painkiller Lyri­ca.

The US gener­ics in­dus­try has suf­fered in re­cent years due to pric­ing pres­sure and com­pe­ti­tion from man­u­fac­tur­ers based in low-and-mid­dle-in­come coun­tries such as In­dia. Gener­ic drug mak­ers have been con­sol­i­dat­ing in the hope that economies of scale will steady the ship and al­low them to in­vest fur­ther in­to biosim­i­lars, which bring rich­er prof­its ver­sus their gar­den va­ri­ety gener­ic med­i­cine coun­ter­parts.

Ken Cac­cia­tore Cowen

Last year, In­dia’s Au­robindo Phar­ma inked a deal to pur­chase parts of No­var­tis’ $NVS gener­ic med­i­cine busi­ness for up to $1 bil­lion. Te­va $TE­VA  — the world’s largest gener­ic mak­er — bought Al­ler­gan’s vast gener­ic busi­ness in a $40.5 bil­lion deal in 2015.

Will the deal fix My­lan’s woes? No, said Cowen’s Ken Cac­cia­tore in a note. For 2019, man­age­ment is an­tic­i­pat­ing ad­just­ed free cash flow to reach $1.9 bil­lion to $2.3 bil­lion — dra­mat­i­cal­ly low­er ver­sus 2018 — and es­sen­tial­ly the same as the 2015 lev­els, he point­ed out. 

“(W)e have long felt that stand­alone My­lan was ab­solute­ly bro­ken…this de­te­ri­o­ra­tion of ad­just­ed free cash flow over the last few years has been de­spite a tremen­dous in­vest­ment ($15B+) to­ward both com­pa­ny and prod­uct ac­qui­si­tions,” he wrote.

“(E)ven with the launch­es of Co­pax­one, Neu­las­ta, Ad­vair and oth­ers that should add $1B+ in 2019, these ap­provals are on­ly pro­vid­ing some re­lief, but are not al­ter­ing the sys­temic prob­lems in­her­ent with the gener­ic mod­el. Very rarely do we see such a sys­temic and wealth de­stroy­ing mess,” he added.

The com­bined en­ti­ty is ex­pect­ed to gen­er­ate pro for­ma rev­enue of $19 to $20 bil­lion next year, the com­pa­nies said.

The Up­john/My­lan guid­ance is ac­tu­al­ly mod­est­ly low­er than what Cac­cia­tore had first pre­dict­ed. “This on­ly adds con­vic­tion to our orig­i­nal the­sis that this merg­er will solve noth­ing, and that the pres­sure and neg­a­tive view of the com­bi­na­tion will like­ly on­ly in­crease in­to the even­tu­al close,” he wrote.

My­lan chief Heather Bresch is set to de­part to make room for Pfiz­er’s Michael Goet­tler, the cur­rent group pres­i­dent of Up­john, who will take over as the com­bined com­pa­ny’s CEO. Bresch in­vit­ed a storm of crit­i­cism in 2016 af­ter pric­ing a pair of EpiPen’s for more than $600, up from the from $100 in 2007, when My­lan ac­quired the prod­uct. Un­der siege, the com­pa­ny even­tu­al­ly start­ed sell­ing its own gener­ic ver­sion at a 50% dis­count.

How­ev­er, oth­er mem­bers of the se­nior My­lan team will al­so stick around. Chair­man Robert Coury, will serve as ex­ec­u­tive chair­man of the new com­pa­ny and Ra­jiv Ma­lik, cur­rent My­lan Pres­i­dent, will re­main as pres­i­dent of the com­bined en­ti­ty.

“Many are ar­gu­ing that this new en­ti­ty will find it­self bet­ter po­si­tioned than stand­alone My­lan. We are not sure that is the right ques­tion, and we are now even more un­sure whether that state­ment is even ac­cu­rate giv­en…that the se­nior My­lan man­age­ment still ap­pears that they are firm­ly in con­trol,” Cac­cia­tore said.

Al­bert Bourla

Pfiz­er, in re­cent months, has been try­ing to rein­vent it­self. Al­bert Bourla took over the reins of the com­pa­ny, af­ter his pre­de­ces­sor Ian Read spent some time away from M&A to fo­cus on the com­pa­ny’s in­ter­nal pipeline — af­ter some of his bets went sour (re­mem­ber Medi­va­tion?) and gener­ic com­pe­ti­tion took a bite out of the com­pa­ny’s once-biggest sell­ers. Bourla has since re­vert­ed to Pfiz­er’s ag­gres­sive deal-mak­ing roots to re­vive growth by sharp­en­ing fo­cus on can­cer, heart and rare dis­eases.

In late De­cem­ber, Pfiz­er an­nounced plans to cre­ate a con­sumer health pow­er­house with GSK $GSK in the form of a joint ven­ture, and then spin it out. In May, the com­pa­ny agreed to pay up to $810 mil­lion to buy pri­vate Swiss biotech­nol­o­gy com­pa­ny Ther­a­chon for its ex­per­i­men­tal ther­a­py to treat dwarfism. Last month, Pfiz­er agreed to shell out $11.4 bil­lion for on­col­o­gy com­pa­ny Ar­ray Bio­phar­ma.

“We do not as­sume that tak­ing this ac­tion now fore­tells the suc­cess of PFE’s new prod­ucts, but we al­so can­not dis­count that thought en­tire­ly. It is un­like­ly that this deal was a com­pet­i­tive sit­u­a­tion, since few com­pa­nies could have un­der­tak­en a sim­i­lar move, so it prob­a­bly could have been ex­e­cut­ed in 1-2 years just as eas­i­ly,” Cowen’s Steve Scala an­a­lysts wrote in a note.

“Whether PFE share­hold­ers wish to hold MYL stock is an­oth­er ques­tion, as they are un­like­ly to own PFE shares for Up­john. What ex­po­sure PFE Bio­phar­ma has to emerg­ing mar­kets is un­clear, but it clear­ly will no longer have an in­dus­try-lead­ing po­si­tion.”

The Wall Street Jour­nal and lat­er Reuters over the week­end first re­port­ed the deal.

So­cial im­age: Pfiz­er, AP Im­ages

Tesla and SpaceX founder Elon Musk gestures to the audience after being recognized by President Trump following the successful launch of a Falcon 9 rocket at the Kennedy Space Center. (via Getty Images)

Tes­la chief Elon Musk teams up with Covid-19 play­er Cure­Vac to build 'R­NA mi­cro­fac­to­ries'

Elon Musk has joined the global tech crusade now underway to revolutionize vaccine manufacturing — now aimed at delivering billions of doses of a new mRNA vaccine to fight Covid-19. And he’s cutting right to the front.

In a late-night tweet Wednesday, the Tesla chief announced:

Tesla, as a side project, is building RNA microfactories for CureVac & possibly others.

That’s not a lot to go on. But the tweet comes a year after Tesla’s German division in Grohmann and CureVac filed a patent on a “bioreactor for RNA in vitro transcription, a method for RNA in vitro transcription, a module for transcribing DNA into RNA and an automated apparatus for RNA manufacturing.” CureVac, in the meantime, has discussed a variety of plans to build microfactories that can speed up the whole process for a global supply chain.

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George Yancopoulos (Regeneron)

UP­DAT­ED: Re­gen­eron co-founder George Yan­copou­los of­fers a com­bat­ive de­fense of the po­lice at a high school com­mence­ment. It didn’t go well

Typically, the commencement speech at Yorktown Central School District in Westchester — like most high schools — is an opportunity to encourage students to face the future with confidence and hope. Regeneron president and co-founder George Yancopoulos, though, went a different route.

In a fiery speech, the outspoken billionaire defended the police against the “prejudice and bias against law enforcement” that has erupted around the country in street protests from coast to coast. And for many who attended the commencement, Yancopoulos struck the wrong note at the wrong time, especially when he combatively challenged someone for interrupting his speech with a honk for “another act of cowardness.”

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Elias Zerhouni (Photo by Vincent Isore/IP3/Getty Images)

Elias Zer­houni dis­cuss­es ‘am­a­teur hour’ in DC, the de­struc­tion of in­fec­tious dis­ease R&D and how we need to prep for the next time

Elias Zerhouni favors blunt talk, and in a recent discussion with NPR, the ex-Sanofi R&D and ex-NIH chief had some tough points to make regarding the pandemic response.

Rather than interpret them, I thought it would be best to provide snippets straight from the interview.

On the Trump administration response:

It was basically amateur hour. There is no central concept of operations for preparedness, for pandemics, period. This administration doesn’t want to or has no concept of what it takes to protect the American people and the world because it is codependent. You can’t close your borders and say, “OK, we’re going to be safe.” You’re not going to be able to do that in this world. So it’s a lack of vision, basically just a lack of understanding, of what it takes to protect the American people.

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Sec­ond death trig­gers hold on Astel­las' $3B gene ther­a­py biotech's lead pro­gram, rais­ing fresh con­cerns about AAV

Seven months after Astellas shelled out $3 billion to acquire the gene therapy player Audentes, the biotech company’s lead program has been put on hold following the death of 2 patients taking a high dose of their treatment. And there was another serious adverse event recorded in the study as well, with a total of 3 “older” patients in the study affected.

The incidents are derailing plans to file for a near-term approval, which had been expected right about now.

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An ex­pe­ri­enced biotech is stitched to­geth­er from transpa­cif­ic parts, with 265 staffers and a fo­cus on ‘new bi­ol­o­gy’

Over the past few years, different teams at a pair of US-based biotechs and in labs in Japan have labored to piece together a group of cancer drug programs, sharing a single corporate umbrella with research colleagues in Japan. But now their far-flung operations have been knit together into a single unit, creating a pipeline with 10 cancer drug development programs — going from early-stage right into Phase III — and a host of discovery projects managed by a collective staff of some 265 people.

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Pfiz­er shares surge on pos­i­tive im­pact of their mR­NA Covid-19 vac­cine — part­nered with BioN­Tech — in an ear­ly-stage study

Pfizer and their partners at the mRNA specialist BioNTech have published the first glimpse of biomarker data from an early-stage study spotlighting the “robust immunogenicity” triggered by their Covid-19 vaccine, which is one of the leaders in the race to vanquish the global pandemic.

Researchers selected 45 healthy volunteers 18-55 years of age for the study. They were randomized to receive 2 doses, separated by 21 days, of 10 µg, 30 µg, or 100 µg of BNT162b1, “a lipid nanoparticle-formulated, nucleoside-modified, mRNA vaccine that encodes trimerized SARS-CoV-2 spike glycoprotein RBD.” Their responses were compared against the effect of a natural, presumably protective defense offered by a regular infection.

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New stan­dard of care? FDA hands Pfiz­er, Mer­ck KGaA an OK for Baven­cio in blad­der can­cer

The breakthrough therapy designation Pfizer and Merck KGaA notched for Bavencio in bladder cancer has quickly paved way for a full approval.

The PD-L1 drug is now sanctioned as a first-line maintenance treatment for patients with locally advanced or metastatic urothelial carcinoma, applicable in cases where cancer hasn’t progressed after platinum-containing chemotherapy.

Petros Grivas, the principal investigator of the supporting Phase III JAVELIN Bladder 100, called the approval “one of the most significant advances in the treatment paradigm in this setting in 30 years.”

Covid-19 roundup: Vac­cines will need to beat place­bo by 50% to qual­i­fy for FDA OK; UK tri­al drops Kale­tra

The FDA will set the bar for approving a Covid-19 vaccine at 50% efficacy, the Wall Street Journal reported, meaning any successful candidate will have to reduce the risk of coronavirus disease by at least half compared to placebo.

That requirement is part of guidance that the agency is set to release later today, laying out detailed criteria for vaccine developers — some of whom are eyeing an OK by the end of the year, in line with expectations at Operation Warp Speed.

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Joseph Kim, Inovio CEO (Andrew Harnik, AP Images)

Pos­i­tive Covid-19 vac­cine da­ta? New mouse study? OWS in­clu­sion? Yep, but some­how, the usu­al tid­bits from In­ovio back­fire

You don’t go more than 40 years in biotech without ever getting a product to market unless you can learn the art of writing a promotional press release. And Inovio captures the prize in baiting the hook.

Tuesday morning Inovio, which has been struggling to get its Covid-19 vaccine lined up for mass manufacturing, put out a release that touched on virtually every hot button in pandemic PR.

There was, first and foremost, an interim snapshot of efficacy from their Phase I program for INO-4800.