The top 15 spenders in the glob­al drug R&D busi­ness: 2017


The top 15 spenders in the glob­al drug R&D busi­ness: 2017


You usu­al­ly don’t see much an­nu­al fluc­tu­a­tion in the over­all R&D bud­gets of the top 15 com­pa­nies. The trend over the last few years has been to keep the lid on spend­ing, par­tic­u­lar­ly among the gi­ants in Big Phar­ma. Com­pa­nies didn’t cut much over­all, but there was plen­ty of re­align­ment go­ing on as the in­dus­try re­fo­cused pipelines and con­tin­ued a mi­gra­tion to the big hubs.

This past year, though, it was clear that a few com­pa­nies want­ed to turn up the heat in drug de­vel­op­ment, and this kind of fu­el costs re­al mon­ey for com­pa­nies that tra­di­tion­al­ly fo­cus heav­i­ly on late-stage block­buster drug re­search.

The top five in the busi­ness saw their col­lec­tive spend­ing jump by more than $5 bil­lion, from 2015 to 2016, based on the an­nu­al num­bers filed large­ly — though not en­tire­ly — with the SEC and gath­ered by End­points News. Two of those com­pa­nies, Roche and the new num­ber 2, a hard charg­ing Mer­ck, ac­count­ed for the li­on’s share of the in­crease. (To be sure, some one­time non-R&D spend­ing, such as Mer­ck’s patent set­tle­ment with Bris­tol-My­ers on Keytru­da, fig­ured in. But so did bread and but­ter spend­ing.)

Gilead al­so saw a sig­nif­i­cant in­crease in re­search costs, with Eli Lil­ly — now off course fol­low­ing two bad set­backs for solanezum­ab and baric­i­tinib — and the ever ag­gres­sive Cel­gene join­ing the ac­tion as they pressed the ac­cel­er­a­tor on new drug pro­grams.

Cu­ri­ous­ly, the added spend­ing co­in­cid­ed with a bad drop in new drug ap­provals in 2016. But they don’t cor­re­late, and we’ve al­ready seen that turn­around un­der way as reg­u­la­tors get busy with a brand new year — and soon a brand new FDA com­mis­sion­er.

Para­dox­i­cal­ly, one of the rea­sons why some of these R&D bud­gets have been ris­ing is that de­vel­op­ment has been pick­ing up speed. That’s abun­dant­ly clear now in the can­cer field, where suc­cess with im­muno-on­col­o­gy has trig­gered a land rush men­tal­i­ty, with top play­ers stak­ing out as much ter­ri­to­ry as fast as pos­si­ble. Any­thing left on the ta­ble won’t stay there for long, and first mover ad­van­tage can be crit­i­cal. So in­vest now, reap your re­wards lat­er.

In the process, treat­ing new on­col­o­gy cas­es is grad­u­al­ly be­ing rev­o­lu­tion­ized. And that’s not PR talk.

R&D re­or­ga­ni­za­tion, once aimed at mas­sive cost cut­ting sev­er­al years ago at places like Mer­ck, Glax­o­SmithK­line, Pfiz­er and As­traZeneca, is still with us. But the form and sub­stance has changed. Now these com­pa­nies, along with a pres­sured No­var­tis and a bot­tom-line fo­cused Am­gen, have been look­ing to win­kle out cost sav­ings wher­ev­er they can be found. But many are al­so in­vest­ing heav­i­ly in new R&D cen­ters in San Fran­cis­co and Boston/Cam­bridge.

Mean­while, some of the top play­ers, like Sanofi, in­creas­ing­ly ap­pear to be stuck. Their in-house or­ga­ni­za­tions have been large­ly un­pro­duc­tive. Their part­ner­ships are re­spon­si­ble for turn­ing out the key new ap­provals.

We’ve seen some M&A deals, of course, but not an abun­dance of ac­qui­si­tions from the big 10. Roche doesn’t feel it needs to. Mer­ck hasn’t been buy­ing much. As­traZeneca — which is in­creas­ing­ly cash re­strict­ed — has been sell­ing off its dis­ap­point­ments, gin­ning some cash flow in the process.

The M&A stand­outs have been Pfiz­er (of course) and J&J, which care­ful­ly stepped up to buy Acte­lion’s port­fo­lio for $30 bil­lion. Ab­b­Vie is get­ting a rep for over­spend­ing on its deals.

Mean­while Sanofi prac­ti­cal­ly has to do a deal to prove it knows how af­ter let­ting Medi­va­tion and Acte­lion slip through its fin­gers, and not just to high­er bids. And Gilead is be­ing or­dered to get in­to gear by an­a­lysts who have been kept wait­ing too long.

We’re still wait­ing for the big one.

And that re­mains the key here. Per­haps af­ter tax re­form, if that hap­pens, we’ll see some of those over­seas bil­lions put to use in buy­outs. But it’s a long time com­ing.


1. Roche

$RHH­BY
2016: $11.41 bil­lion (11.53 bil­lion CHF to­tal: 10.15 bil­lion CHF for phar­ma, the rest di­ag­nos­tics)
2015: $9.2 bil­lion (9.3 bil­lion CHF to­tal:  8.1 bil­lion CHF for phar­ma, the rest for di­ag­nos­tics)
Rev­enue: 50.5 bil­lion CHF
R&D as a per­cent­age of rev­enue: 22%
Mar­ket: $RHH­BY
R&D chief: Michael D. Var­ney, gRED; John Reed, pRED

A block­buster bud­get de­liv­ers in Phase III

Give Roche cred­it where it’s due. The but­toned-down Swiss gi­ant ac­quired Genen­tech and didn’t man­age to kill the cre­ative chem­istry, a rare event in this busi­ness. And as a re­sult, Roche has main­tained a rep­u­ta­tion for in-house in­no­va­tion that has al­lowed its ex­ec­u­tive crew to re­main large­ly ex­empt from pres­sure to join the ex­pen­sive M&A game — at least for now.

Michael D. Var­ney

Roche is a con­sis­tent play­er at the top of the list of R&D big spenders, shelling out con­sid­er­able cash for two groups — Basel-based pRED and Genen­tech’s gRED in Cal­i­for­nia — and still buys the oc­ca­sion­al ther­a­py for its pipeline. Just look at the re­cent deal it com­plet­ed with Bris­tol-My­ers Squibb, bag­ging the an­ti-myo­statin Ad­nectin in de­vel­op­ment for Duchenne mus­cu­lar dy­s­tro­phy with $170 mil­lion up­front plus $205 mil­lion in mile­stones.

The big em­pha­sis in the late-stage pipeline has been on block­busters. And that has paid off with a re­cent ap­proval for Ocre­vus, a new mul­ti­ple scle­ro­sis drug look­ing to dis­rupt that mar­ket, fol­low­ing the big score last year on Tecen­triq, the first of the PD-L1 can­cer check­points.

Suc­cess for new can­cer drugs opens the door to a mul­ti­tude of com­bi­na­tion stud­ies, which Roche has en­gaged in ea­ger­ly when it comes to its big check­point con­tender. In ad­di­tion, the gi­ant scored an­oth­er re­cent win for its can­cer fran­chise, re­port­ing that a key Phase III tri­al adding Per­je­ta to Her­ceptin and chemother­a­py out­per­formed the two old­er stan­dards alone in re­duc­ing the risk of death or re­lapse for ear­ly-stage breast can­cer pa­tients af­ter surgery.

John Reed

An­a­lysts crowed that the clin­i­cal vic­to­ry sig­nals a ma­jor ad­vance for Roche, like­ly adding bil­lions to its megablock­buster on­col­o­gy fran­chise.

Its new drugs are al­so beat­ing a path for­ward in the clin­ic, as we saw when Ale­cen­sa beat out Xalko­ri in ALK-pos­i­tive non-small cell lung can­cer.

Roche has high hopes for emi­cizum­ab (ACE910) for he­mo­phil­ia, but in­ves­ti­ga­tors con­tin­ue to raise fresh ques­tions about its safe­ty fol­low­ing the death of one pa­tient and a slate of se­ri­ous ad­verse events in the piv­otal Phase III. And it’s brought gan­tenerum­ab back from the dead for its Alzheimer’s Phase III pipeline, which al­so in­cludes the new­ly added fol­low up late-stage study for crenezum­ab.

2. Mer­ck

2016: $10.1 bil­lion
2015: $6.7 bil­lion
Rev­enue: $39.8 bil­lion
Mar­ket: $MRK
R&D as a per­cent­age of rev­enue: 25%
R&D chief: Roger Perl­mut­ter

Of­fer­ing a les­son in not screw­ing up the big one

Mer­ck gets the prize for mov­ing up the most on the R&D bud­get list in 2016, though it won’t care for be­ing laud­ed in the high roller cat­e­go­ry, in­flat­ed some­what by some steep costs re­lat­ed to its Keytru­da patent set­tle­ment. A phar­ma gi­ant which trig­gered a mas­sive re­struc­tur­ing in 2013 — a time when the com­pa­ny seemed prac­ti­cal­ly snake bit in drug de­vel­op­ment — R&D is clear­ly back in vogue as Mer­ck com­pletes one of the biggest turn­arounds of the past decade un­der Roger Perl­mut­ter.

Perl­mut­ter trig­gered an­oth­er, much small­er, re­or­ga­ni­za­tion in 2016, shut­ter­ing some fa­cil­i­ties as he con­tin­ued a push in­to the two big US hubs in Cam­bridge/Boston and the Bay Area. And if there was an in­dus­try award for not screw­ing up a big op­por­tu­ni­ty, Perl­mut­ter would have won it hand­i­ly.

Keytru­da

Keytru­da was on track to the big leagues when he ar­rived at Mer­ck, but it paled in the shad­ows of Bris­tol-My­ers Squibb’s Op­di­vo. Now those days are over.

Perl­mut­ter fo­cused im­me­di­ate­ly on mak­ing Keytru­da a star. And af­ter win­ning a pi­o­neer­ing ap­proval, Mer­ck is fol­low­ing up with dozens of stud­ies on Keytru­da com­bos. The stun­ner last year, though, was Mer­ck’s move to the front on lung can­cer, cut­ting ahead of a floun­der­ing Bris­tol-My­ers Squibb.

The com­pa­ny turned heads once again, for ex­am­ple, with plans to com­bine Keytru­da with In­cyte’s IDO1 in­hibitor epaca­do­stat in lung can­cer and sev­er­al oth­er on­col­o­gy in­di­ca­tions. And the phar­ma gi­ant has 10 Phase III tri­als un­der­way now.

Mer­ck and Pfiz­er moved their SGLT2 di­a­betes drug hope­ful er­tugliflozin in­to the hands of reg­u­la­tors on both sides of the At­lantic, though they’re com­ing in­to a crowd­ed field. Armed with pos­i­tive piv­otal da­ta, Mer­ck and Pfiz­er are up for three PDU­FA dates in De­cem­ber 2017: Monother­a­py, a com­bo with best­selling di­a­betes drug Janu­via and an­oth­er com­bi­na­tion with long­time di­a­betes stan­dard met­formin. The same trio of ap­pli­ca­tions is al­so now un­der re­view in Eu­rope.

Eli Lil­ly’s Jar­diance is well out in front with pos­i­tive car­dio da­ta to back it up, but Mer­ck and Pfiz­er do things by the full mea­sure when they take on a late-stage drug. Their ri­val car­dio out­comes re­sults for er­tugliflozin are slat­ed to ar­rive in 2019.

Roger M. Perl­mut­ter

Mer­ck has had some big set­backs in the last year, most no­tably the fail­ure of its BACE drug verube­ce­s­tat in its first late-stage as­sault on mild to mod­er­ate Alzheimer’s. That drug re­mains in Phase III for pro­dro­mal pa­tients.

The com­pa­ny has al­so stuck with its huge Phase III for anace­trapib, the last of the CETPs, which most an­a­lysts of­fer vir­tu­al­ly no chance of suc­cess. And then there’s the Phase III for veri­ciguat, an­oth­er heart drug that just was put in­to Phase III last fall, even though it had failed Phase II. V920 is in the pipeline for Ebo­la, a left­over from the last big pan­dem­ic to spur glob­al fears of a break­out.

Mer­ck doesn’t do a lot of deals, but Perl­mut­ter clear­ly en­joys gam­bling on a few se­lect com­pa­nies and tech­nolo­gies each year. Case in point: The $95 mil­lion up­front for Is­rael’s cCAM, which might have had an in­ter­est­ing twist on im­munother­a­py. The lead drug, though, failed in Phase I, and Mer­ck is mov­ing on.

That’s a low-cost ex­per­i­ment in Mer­ck’s world. If you’re try­ing to change med­i­cine, you have to take some gam­bles every now and then. Some may even­tu­al­ly pay off.

 

3. No­var­tis

2016: $8.93 bil­lion
2015: $9.08 bil­lion
Sales: $48.5 bil­lion
R&D as a % of rev­enue: 18%
Mar­ket: $NVS
R&D ex­ecs: Chief Med­ical Of­fi­cer Vas Narasimhan and NI­BR chief Jay Brad­ner

De­spite the ex­o­dus, a new team push­es ahead on a big late-stage pipeline

No­var­tis start­ed 2017 with some ma­jor ac­com­plish­ments to re­port. Its CDK 4/6 drug LEE011 (ri­bo­ci­clib) just hit the mar­ket with an ap­proval for breast can­cer, armed with im­pres­sive da­ta and a shot at $2.5 bil­lion in an­nu­al rev­enue. Cosen­tyx, an ear­ly ar­rival for the new wave of pso­ri­a­sis drugs, al­so is prov­ing to be a dis­ease mod­i­fi­er for a sig­nif­i­cant mi­nor­i­ty of pa­tients. And Zyka­dia (cer­i­tinib) re­cent­ly nabbed a pri­or­i­ty re­view for ALK-pos­i­tive non-small cell lung can­cer as well as break­through sta­tus for lung can­cer pa­tients with brain metas­tases.

Vas­ant Narasimhan

To un­der­score its com­mit­ment to a pi­o­neer­ing CAR-T role, No­var­tis al­so added CTL019 to its list of prospec­tive block­busters, just ahead of fil­ing for its first ap­proval. CTL019 will be filed for pe­di­atric ALL some­time in the very near fu­ture, with piv­otal tri­al da­ta wait­ing in Q2. An­oth­er fil­ing for DL­B­CL is com­ing up in the sec­ond half of the year – with a ma­jor read­out from the close­ly watched JULI­ET study — and No­var­tis is step­ping up its game by bull­ish­ly as­sert­ing its $1 bil­lion-plus an­nu­al sales po­ten­tial.

These are ma­jor ac­com­plish­ments for any phar­ma gi­ant. The fact that they all oc­curred in an 8-week stretch un­der­scores that its top-3 R&D bud­get has paid off with some big wins. No­var­tis has gen­er­al­ly been num­ber 2 on this list over the years, but slipped be­hind Mer­ck for the first time in 2016.

No­var­tis has con­tin­ued to be plagued by its short­com­ing in the car­dio-meta­bol­ic field. En­tresto has been a per­sis­tent lag­gard on the sales side, un­der­scor­ing its fail­ure to live up to the com­pa­ny’s own hype. Pay­ers in this field are hard to per­suade, and No­var­tis is hav­ing the same kind of trou­ble that Am­gen, Re­gen­eron and Sanofi have all ex­pe­ri­enced with PC­SK9 ri­vals.

To add to the bleak re­sults here, No­var­tis was al­so re­cent­ly forced to con­cede that sere­lax­in, which it had stub­born­ly kept on its list of prospec­tive block­busters even af­ter the FDA and EMA turned it down, failed to de­liv­er car­dio ben­e­fits for pa­tients. That drug is on life sup­port — for now.

No­var­tis, though, isn’t plan­ning to walk away from the core dis­ease fo­cus. The phar­ma gi­ant un­der­scored that again just months ago, when it inked a $1.65 bil­lion pact with Io­n­is for a world­wide op­tion and col­lab­o­ra­tion pact on AKCEA-APO(a)-LRx and AKCEA-APOC­I­II-LRx — han­dled by Io­n­is’ sub­sidiary Akcea.

The Jan­u­ary deal in­cludes $75 mil­lion up­front, $100 mil­lion in eq­ui­ty at $61.30 a share and $50 mil­lion more for stock in 18 months. And an­oth­er $300 mil­lion is up for grabs if No­var­tis agrees to take the li­cense op­tions.

Jay Brad­ner

Over the past year No­var­tis has al­so been ex­e­cut­ing a makeover at the top of the R&D group. Mark Fish­man stepped down as head of NI­BR in late 2015 — yes, that re­al­ly was a re­tire­ment — mak­ing way for Har­vard Med­ical School’s Jay Brad­ner. And then in ear­ly 2016 Vas Narasimhan took over as glob­al head of de­vel­op­ment and chief med­ical of­fi­cer.

Lat­er in 2016, they ex­e­cut­ed a broad rang­ing re­vamp of No­var­tis’ glob­al R&D op­er­a­tions, an­oth­er ex­am­ple of No­var­tis’ per­sis­tence in hunt­ing down ef­fi­cien­cies — and cut­ting staff — wher­ev­er they can be found. Top line rev­enue has dipped at No­var­tis, and that trend has trig­gered tec­ton­ic fi­nan­cial forces that can crush ca­reers in a heart beat. In a more con­tro­ver­sial ex­am­ple of the com­pa­ny’s use of the ax, No­var­tis de­cid­ed to elim­i­nate its cell and gene ther­a­py unit, cut­ting 120 jobs last sum­mer, just as it was fin­ish­ing up its lead CAR-T ef­fort.

That move pushed the unit’s chief, Us­man “Oz” Azam, out of the com­pa­ny and on to start­up Tmu­ni­ty. And his de­par­ture was just one in an ex­o­dus of ex­ecs who were ei­ther shoved out or left vol­un­tar­i­ly from an or­ga­ni­za­tion that clear­ly shuns the sta­tus quo.

4. Pfiz­er

2016: $7.9 bil­lion
2015: $7.7 bil­lion
Sales: $52.8 bil­lion
As a per­cent­age of rev­enue: 15%
Mar­ket: $PFE
R&D chief: Mikael Dol­sten

The phar­ma gi­ant wheels and deals its way to a late-stage pipeline

Back in 2010, when Ian Read took over as CEO of this phar­ma gi­ant, he had a com­pa­ny with lit­tle in-house in­no­va­tion to bank on. But he did have a big bud­get. And by sheer per­sis­tence in wield­ing the check­book he’s built a pipeline through a long string of deals — and he’s quick to flag that there are no plans to stop any­time soon.

Read spent a record $850 mil­lion up­front to buy in­to Mer­ck KGaA’s check­point pro­gram for avelum­ab, which de­liv­ered its first ap­proval this year for an im­por­tant can­cer port­fo­lio. There’s new work un­der­way ad­vanc­ing Cel­lec­tis’ UCART19, an off-the-shelf CAR-T ther­a­py with big plans for over­tak­ing the pi­o­neers now look­ing at their first ap­provals. The phar­ma gi­ant ac­quired a lead­ing role for it­self de­vel­op­ing SPK-9001, an im­por­tant gene ther­a­py for he­mo­phil­ia B in-li­censed from Spark Ther­a­peu­tics. Pfiz­er bought out Medi­va­tion for $14 bil­lion, and wound up with a late-stage PARP in­hibitor, ta­la­zoparib.

Mikael Dol­sten

Less than a year ago the phar­ma gi­ant bought Ana­cor for $5.2 bil­lion, and then picked up the ap­proval for crisabo­role for eczema, hop­ing to build a new block­buster. And Pfiz­er and its part­ners at Eli Lil­ly are mov­ing clos­er to the end for the big late-stage pro­gram for their an­ti-NGF pain med tanezum­ab, though there are still plen­ty of ques­tions about where that drug may be head­ed.

Er­tugliflozin is in Phase III for di­a­betes, part­nered with Mer­ck. And riv­ipansel was in-li­censed from Gly­coMimet­ics in 2011, which is cur­rent­ly en­rolling pa­tients in a big Phase III for sick­le cell dis­ease.

Add to that a slate of biosim­i­lars picked up in the Hos­pi­ra ac­qui­si­tion, and you can see how the BD team at Pfiz­er has been re­spon­si­ble for ma­neu­ver­ing this com­pa­ny to where it is to­day in late-stage re­search.

Like a lot of Big Phar­ma op­er­a­tions, Pfiz­er isn’t par­tic­u­lar­ly good at un­der­stand­ing how to fos­ter new drugs from scratch. But it’s more than ca­pa­ble at ex­e­cut­ing am­bi­tious and com­plex late-stage de­vel­op­ment pro­grams. In this busi­ness, that’s what it takes for phar­ma to be suc­cess­ful — so long as you know which deals to strike.

For Pfiz­er, that hasn’t al­ways been easy. The com­pa­ny struck a big deal — $295 mil­lion up­front — to part­ner with Op­ko on a long act­ing growth hor­mone. But the Phase III end­ed in fail­ure last De­cem­ber, even though Op­ko seized on some “out­liers” in the study to try and spin it as some­thing else.

Pfiz­er went through one of the biggest R&D re­or­ga­ni­za­tions in the book, but its R&D bud­get has been steadi­ly climb­ing north over the last few years. Giv­en the com­pa­ny’s po­si­tion on push­ing for new buy­outs big and small, though, a new re­vamp may not be far away.

Pfiz­er is known for the ruth­less use of the axe when it comes to find­ing cost syn­er­gies af­ter a deal. The com­pa­ny nev­er en­tire­ly puts it away.

5. J&J

2016: $9.1 bil­lion ($7 bil­lion for phar­ma­ceu­ti­cals)
2015: $9.05 bil­lion ($6.8 bil­lion for phar­ma­ceu­ti­cals)
Rev­enue: 13%
R&D as a % of Rev­enue: $71.9 bil­lion
Mar­ket: $JNJ
R&D chief: Paul Stof­fels

Think­ing glob­al­ly but stay­ing fo­cused on Phase III

J&J is unique on this list. It’s a Big Phar­ma gi­ant and a con­glom­er­ate, with roots deep in med­ical de­vices and con­sumer items. This time around, I’m rank­ing them by their R&D spend­ing specif­i­cal­ly for phar­ma. And they are still huge.

J&J has been mak­ing a game ef­fort to prove that a phar­ma gi­ant can be in­no­v­a­tive and for­ward think­ing. It’s glob­al deal­mak­ing arm has been part­ner­ing up with dozens of small play­ers around the globe each half, look­ing to be in on the next wave of ground­break­ing drugs while lend­ing a hand to the star­tups it likes.

Paul Stof­fels

That’s an im­por­tant role to play, but it’s gen­er­al­ly all years away from piv­otal work. It’s J&J’s late-stage pipeline which un­der­scores that it’s the big pacts for the big drugs that are be­ing tapped as near-term block­busters that claim the ma­jor­i­ty of the at­ten­tion at the top of the R&D group.

At the end of March, J&J came up with an­oth­er round of sup­port­ive Phase III da­ta for guselkum­ab, which looks like a late, though promis­ing, ar­rival in the most re­cent wave of new drugs for pso­ri­a­sis. Darza­lex part­ner Gen­mab has been talk­ing up that drug’s mega­mar­ket po­ten­tial. J&J it­self is cau­tious about throw­ing peak sales fore­casts around, but has said that both guselkum­ab and sirukum­ab are both like­ly block­busters.

Sirukum­ab, though, post­ed mixed da­ta against Hu­mi­ra in treat­ing rheuma­toid arthri­tis, and the field is in­tense­ly com­pet­i­tive.

We’re still ea­ger­ly wait­ing for piv­otal da­ta on es­ke­t­a­mine, a new for­mu­la­tion of the horse tran­quil­iz­er ke­t­a­mine, for de­pres­sion. And apa­lu­tamide, the old ARN-509, will soon demon­strate if J&J’s ap­petite for bil­lion-dol­lar deals can still de­liv­er can­cer block­busters.

If any­thing, J&J’s late-stage pipeline at Janssen is light. But the phar­ma gi­ant can af­ford to buy what it can’t de­vel­op for it­self. So when J&J de­cid­ed to buy Acte­lion, giv­ing Sanofi room to screw up their end of the ne­go­ti­a­tions, the com­pa­ny was wait­ing with a $30 bil­lion pack­age for their PAH fran­chise. That deal in­clud­ed let­ting the Acte­lion team spin out in­to a new biotech with a promis­ing pipeline of its own and a longterm part­ner­ing com­mit­ment.

6. As­traZeneca

2016: $5.9 bil­lion
2015: $6.0 bil­lion
Rev­enue: $19.6 bil­lion
R&D as a % of rev­enue: 30%
Mar­ket: $AZN
Chief Med­ical Of­fi­cer: Sean Bo­hen

One step for­ward, two steps back

You can’t de­ny that As­traZeneca has had a few big suc­cess­es over the past year. Lyn­parza just de­liv­ered some con­vinc­ing Phase III PARP da­ta that keeps it a big con­tender in the class. Tagris­so, sped through the clin­ic in a mas­ter­ful two-year pro­gram, came up with promis­ing lung can­cer da­ta for pa­tients with an EGFR T790M mu­ta­tion late last year. And it ar­rived as a ri­val from Clo­vis was self de­struc­t­ing.

It’s al­so had some im­por­tant, though less spec­tac­u­lar, suc­cess­es. That would in­clude the long-de­layed FDA ap­proval of Qtern, a pair­ing of the com­pa­ny’s saxagliptin and da­pagliflozin, to help out a flag­ging di­a­betes group.

But this year all eyes are on a com­bi­na­tion of dur­val­um­ab and treme­li­mum­ab to de­ter­mine what kind of near-term im­pact that the com­pa­ny can make on the check­point class in on­col­o­gy. With Pfiz­er/Mer­ck KGaA’s fourth check­point now through the reg­u­la­to­ry gate, dur­val­um­ab would ap­pear to be in line for the fifth spot in that race, well be­hind lead­ers like Mer­ck, Bris­tol-My­ers Squibb and Roche, which have been slic­ing and dic­ing this grow­ing mar­ket.

Sean Bo­hen

Suc­cess is not a giv­en. An­a­lysts have been in­creas­ing­ly skep­ti­cal that a CT­LA-4 like treme­li­mum­ab can re­tain con­trol of a com­bo fran­chise due to its tox­i­c­i­ty. Oth­er, bet­ter, com­bos could blow that up. And it re­mains a frag­ile cat­a­lyst.

As­traZeneca al­so has the BTK in­hibitor acal­abru­ti­nib – ac­quired through the $4 bil­lion Ac­er­ta buy-in — in the late-stage pipeline, which fig­ures as one of the top 10 or­phans in the in­dus­try pipeline. And ben­ral­izum­ab re­mains a top prospect in asth­ma.

But even the drugs that As­traZeneca CEO Pas­cal So­ri­ot likes to high­light in Phase III can wind up in in­aus­pi­cious arrange­ments. Du­ak­lir, for ex­am­ple, was re­cent­ly out­li­censed to a strug­gling Cir­cas­sia.

Its fail­ures, mean­while, have been stack­ing up with omi­nous reg­u­lar­i­ty. Last year we learned about con­clu­sive da­ta that means Bril­in­ta will nev­er be the big drug that So­ri­ot count­ed on. Selume­tinib flopped, again, in Phase III with fast shrink­ing prospects. As­traZeneca bailed out of bro­dalum­ab, af­ter Am­gen split in a heart­beat af­ter learn­ing about the drug’s ties to sui­ci­dal think­ing. Valeant picked it up in a bar­gain base­ment sale, where As­traZeneca’s dis­ap­point­ments have a habit of land­ing.

ZS-9 proved to be enor­mous­ly frus­trat­ing as well. Pur­chased for $2.7 bil­lion, the drug was a slap shot away from an ap­proval. But man­u­fac­tur­ing foul ups have now end­ed in its sec­ond CRL, cre­at­ing a lengthy de­lay while a ri­val gath­ers force and mar­ket share.

Against this back­drop, As­traZeneca an­nounced plans to win­kle out $1 bil­lion in R&D costs, lead­ing to a se­ries of small re­treats. It’s tiny re­main­ing ef­fort in neu­ro­sciences, for ex­am­ple, was shut­tered.

As­traZeneca’s rev­enue mean­while is be­ing chewed up by gener­ics, leav­ing it slip­ping fur­ther be­hind the am­bi­tious num­bers the com­pa­ny has float­ed to in­vestors. With As­traZeneca, every big ad­vance seems fol­lowed by two re­ver­sals.

It’s re­al­ly not a pret­ty pic­ture.

 

7. Sanofi

2016: $5.42 bil­lion (5.17 bil­lion eu­ros)
2015: $5.33 bil­lion (5.08 bil­lion eu­ros)
Sales: $35.4 bil­lion (33.8 bil­lion eu­ros)
R&D as a per­cent­age of rev­enue: 15.3%
Mar­ket: $SNY
R&D chief: Elias Zer­houni

Thanks to its part­ners, Sanofi sur­vives an in-house drought

Sanofi’s in-house R&D group has been a re­li­able non­per­former for years now. Sad­dled with a large­ly un­pro­duc­tive French re­search group, the com­pa­ny re­lies on Re­gen­eron and its oth­er biotech col­lab­o­ra­tors for much of the in­no­va­tion it needs for new ther­a­pies. Elias Zer­houni has ex­plained to me be­fore that the com­pa­ny’s best prospects lie out­side of its in­ter­nal re­search house, and its per­for­mance would val­i­date the strat­e­gy.

Elias Zer­houni

So it’s no great sur­prise that when CEO Olivi­er Brandi­court high­light­ed the com­pa­ny’s top prospects, he fo­cused on col­lab­o­ra­tions. At the top of the list: Dupilum­ab, ad­vanced by Re­gen­eron with con­sid­er­able late-stage sup­port from Sanofi, was ap­proved as Dupix­ent and promis­es to be a game chang­er in treat­ing eczema. An­oth­er Phase III is un­der­way for nasal polyp­sis, as the part­ners prep for ex­pand­ing the la­bel.

An­oth­er part­nered drug of theirs, sar­ilum­ab, has been held up by an FDA re­jec­tion based on a man­u­fac­tur­ing sna­fu. But while Sanofi and Re­gen­eron were wait­ing, their big ri­val in the clin­ic – baric­i­tinib from Eli Lil­ly and In­cyte – blew up at the fin­ish line. The FDA is now de­mand­ing more da­ta on baric­i­tinib, which could well leave it far be­hind the com­pe­ti­tion by the time Lil­ly turns this one around.

A late-stage ef­fort is un­der­way at Sanofi for so­tagliflozin, an SGLT-1 and SGLT-2 in­hibitor for di­a­betes, which was the fo­cus of a bil­lion dol­lar deal with Lex­i­con Ther­a­peu­tics.

Olivi­er Brandi­court

Then there’s the an­ti-CD38 drug isat­ux­imab, in a piv­otal study for mul­ti­ple myelo­ma. In late 2015 J&J’s Darza­lex (dara­tu­mum­ab) – li­censed from Gen­mab — be­came the first an­ti-CD38 ap­proved for mul­ti­ple myelo­ma. Sanofi is look­ing to en­ter the fray, along­side MOR202 from Mor­phosys, while J&J has been study­ing sub­cu­ta­neous ad­min­is­tra­tion of their star myelo­ma drug in prepa­ra­tion for the com­ing show­down.

Sanofi’s Brandi­court has been try­ing to help the late-stage pipeline with a big buy­out, but it made un­suc­cess­ful ef­forts to ac­quire Acte­lion – a se­ri­ous em­bar­rass­ment af­ter its tar­get spurned Sanofi for J&J – and Medi­va­tion. And a ru­mored ac­qui­si­tion deal for Flex­ion – a much small­er tar­get – has yet to pan out.

Don’t un­der­es­ti­mate what Sanofi brings to the ta­ble. Zer­houni’s crew know how to do Phase III, and the M&A bum­bling can be tagged on ex­ecs out­side of R&D. But CEO Brandi­court has to deal with a flag­ging di­a­betes fran­chise, with a whole lot to prove about po­si­tion­ing the phar­ma gi­ant for the fu­ture.

8. Eli Lil­ly

2016: $5.24 bil­lion
2015: $4.8 bil­lion
Rev­enue: $21.2 bil­lion
R&D as a % of rev­enue: 25%
Mar­ket: $LLY
R&D chief: Jan Lund­berg

Two bad R&D prat­falls re­mind us of a trou­bled past

What are you go­ing to do with a phar­ma gi­ant like Eli Lil­ly?

Un­til last fall, you could say that Eli Lil­ly was fi­nal­ly mak­ing its long promised come­back. New block­buster drugs like Taltz were ap­proved. The com­pa­ny – ever ready to see progress in every new thing – de­clared it was on the mend, able to con­sis­tent­ly push rev­enue up now af­ter years of see­ing gener­ics chop up its fran­chise ther­a­pies. What it didn’t say was that an­nu­al in­crease has more to do with the way it bumps its ex­ist­ing drugs’ prices — not new drug rev­enue.

David Ricks

Lil­ly, which en­dured a years-long clin­i­cal drought ahead of the turn­around, is in dan­ger of re­gain­ing its rep as a re­li­ably con­sis­tent dis­ap­point­ment. No­tably, solanezum­ab failed its third straight clin­i­cal test, an unim­pres­sive drug that seems like it will not make a ma­jor dif­fer­ence for pa­tients. And then new CEO Dave Ricks had a bit­ter set­back in re­cent days when the FDA re­ject­ed baric­i­tinib, its big 2017 drug hope­ful.

That rev­enue had been all but baked in at Lil­ly, which will now have to go back and get more safe­ty da­ta in the clin­ic. Lil­ly, not known for trans­paren­cy, has left a lot of de­tails on that score in the dark.

Lil­ly start­ed this year with long­time helms­man John Lech­leit­er tran­si­tion­ing to chair­man for a re­strict­ed stint on the way out to re­tire­ment. And Ricks start­ed out look­ing to trim costs, ax­ing 200 staffers spread broad­ly across the or­ga­ni­za­tion. He fol­lowed up with an $850 mil­lion re­fur­bish­ing plan for the In­di­anapo­lis-based op­er­a­tions.

Jan Lund­berg

Such rel­a­tive­ly mi­nor cost-cut­ting moves are noth­ing new in Big Phar­ma, and Lil­ly has re­sist­ed any pres­sure to fol­low most of the big play­ers in com­plete­ly re­or­ga­niz­ing R&D. Com­pared to its peers and rev­enue, Lil­ly spends much, much more on re­search. And it’s had to con­tin­ue that in or­der to re­vamp what had been one of the in­dus­try’s worst pipelines.

A cou­ple of years ago Lech­leit­er promised in­vestors that he would de­liv­er sev­er­al new drug ap­provals each year for an in­def­i­nite span. Now, though, that’s been re­placed by a pledge to get 20 drugs ap­proved in the 10-year stretch lead­ing through 2023. Lil­ly, though, can’t af­ford an­oth­er Phase III prat­fall like the one it has just ex­pe­ri­enced with baric­i­tinib.

That’s not a good spot to be in.

9. Gilead Sci­ences

2016: $5.1 bil­lion
2015: $3 bil­lion
Rev­enue: $29.9B
R&D as a per­cent­age of rev­enue: 17%
Mar­ket: $GILD
R&D chief: Nor­bert Bischof­berg­er

Can any­one stop the pain?

Gilead man­aged to push its way in­to the top 10 this year, but in­vestors are un­like­ly to be hap­py about what their $5.1 bil­lion bought.

Gilead did man­age to whip up some ex­cite­ment re­cent­ly on im­pres­sive mid-stage da­ta for its new HIV drug bicte­gravir that re­mind­ed some an­a­lysts of the com­pa­ny’s glo­ry days. A few years ago, Gilead drew rave re­views for its rapid march on a hep C cock­tail that rev­o­lu­tion­ized the field. And the bicte­gravir pro­gram – hus­tled straight in­to Phase III ahead of the Phase II read­out — could be put in the same camp of rapid suc­cess­es.

In an­oth­er dis­play of what its R&D group is ca­pa­ble of, Gilead turned around an im­pres­sive snap­shot on Phase I NASH da­ta for a new drug ob­tained from Nim­bus for $600 mil­lion in quick cash.

Now, though, Gilead’s suc­cess in hep C is melt­ing away as pa­tient num­bers and prices shrink and com­pe­ti­tion grows. And while it con­tin­ues to play a dom­i­nant role in HIV, the key car­ry away from 2016 was a record of de­feats and set­backs that con­tin­ues to haunt the one-time star.

In No­vem­ber mo­melo­tinib, ac­quired in its $510 mil­lion buy­out of YM Bio­Sciences, per­formed poor­ly in its Phase III pro­gram for myelofi­bro­sis. Its NASH drug GS-4997 sparked con­sid­er­able skep­ti­cism from an­a­lysts. Gilead re­cent­ly wrote off sim­tuzum­ab, along with the late-stage drug GS-5745 for ul­cer­a­tive col­i­tis and Crohn’s. And it’s top car­dio prospect — ele­clazine (GS-6615) — failed a late-stage study as well.

All of this hap­pened in a year in which Gilead sig­nif­i­cant­ly in­creased the amount it’s spend­ing on R&D.

To top it all off, late last year Gilead lost a big court fight to Mer­ck af­ter a ju­ry lev­eled a knock­out, $2.54 bil­lion punch against Gilead for vi­o­lat­ing its hep C drug patents.

CEO John Mil­li­gan has waf­fled on the deal front, but seems de­ter­mined now to de­liv­er an ac­qui­si­tion, or ac­qui­si­tions, with its hoard of cash that can be­gin to as­sure an­a­lysts the com­pa­ny is se­ri­ous­ly try­ing to mount a come­back.

Some­thing big needs to hap­pen soon.

10. Bris­tol-My­ers Squibb

2016: $4.94 bil­lion
2015: $5.92 bil­lion
Rev­enue: $19.4 bil­lion
R&D as per­cent­age of rev­enue: 25%
R&D chief: Fran­cis Cuss, re­placed by Thomas Lynch
Mar­ket: $BMY

“Squan­der­ing what was oth­er­wise an ex­tra­or­di­nary and en­vi­able mar­ket po­si­tion”

How do you take a top-ranked biotech gi­ant that’s seem­ing­ly on the verge of to­tal­ly dom­i­nat­ing the biggest new drug field of the decade and then se­ri­ous­ly dam­age that rep in a mat­ter of a few short months?

You’d have to have a se­ri­ous heart-to-heart with the ex­ecs at Bris­tol-My­ers to find that out. Their check­point Op­di­vo was all set to romp and stomp in lung can­cer when a tri­al set­back threw up a road­block. Then the com­pa­ny had to an­nounce that there would be no ear­ly fil­ing for a com­bi­na­tion of Op­di­vo and Yer­voy, throw­ing the com­pe­ti­tion – again – to Mer­ck, which had just filed for front­line use with a com­bi­na­tion of Keytru­da and chemo.

The mar­ket tem­pest that fol­lowed even briefly took As­traZeneca down a notch, rais­ing some fresh con­cerns about its com­bo prospects with dur­val­um­ab and treme­li­mum­ab.

A bru­tal­ly di­rect Ja­mi Ru­bin put it all in per­spec­tive:

“So lis­ten, if I take a step back and look at what has hap­pened to Bris­tol-My­ers in the past year, you’ve gone from hav­ing the best on­col­o­gy I-O fran­chise in the in­dus­try with a sig­nif­i­cant lead over your com­peti­tors to now hand­ing that lead over to Mer­ck and, in my view, squan­der­ing what was oth­er­wise an ex­tra­or­di­nary and en­vi­able mar­ket po­si­tion with now ques­tion marks over your po­si­tion in lung.”

Not what you want to hear in your an­nu­al wrap up call with an­a­lysts.

CEO Caforio coun­tered with the com­pa­ny’s plans to stay fo­cused on I/O, plus: “liri [lir­ilum­ab], LAG-3, GITR, CFS1R, IDO in on­col­o­gy; and out­side of on­col­o­gy a num­ber of promis­ing pro­grams like CD28, TYK2, pos­si­bly BTK, two pro­grams in fi­bro­sis that we be­lieve have po­ten­tial to be re­al­ly im­por­tant for us.”

It’s not enough, which is why Bris­tol-My­ers has be­come Carl Ic­ahn’s lat­est ac­tivist project. Heads had to role, and Fran­cis Cuss was stand­ing at the front of the line. Cuss is now out, and Thomas Lynch is in.

Giv­en time, Bris­tol-My­ers could well get its mo­jo back. The com­pa­ny has earned re­spect for one of the most con­sis­tent­ly in­no­v­a­tive, fast-paced R&D or­ga­ni­za­tions on the plan­et. That can’t just go up in flames overnight.

But mo­jo is not a com­mod­i­ty Bris­tol has much of right now.

11. Glax­o­SmithK­line

2016: $4.5 bil­lion (3.62 bil­lion ster­ling)
2015: $4.4 bil­lion (3.56 bil­lion ster­ling)
Rev­enue: $27.9 bil­lion
R&D as a per­cent of rev­enue: 16%
R&D chief: Patrick Val­lance
Mar­ket: $GSK

Still can’t get any re­spect for new drugs

To be sure, Glax­o­SmithK­line has had suc­cess in R&D to boast about. But it’s kept a very low pro­file in the area of new drug de­vel­op­ment for years now.

Shin­grix was filed last fall, giv­ing GSK a clean shot at a new vac­cine OK that could pave the way to $1 bil­lion in sales. A closed tripled for COPD — ICS flu­ti­ca­s­one furoate, LAMA ume­cli­dini­um and LA­BA vi­lanterol — has been hand­ed over to reg­u­la­tors. And GSK’s ma­jor­i­ty-owned Vi­iV scored an­oth­er big suc­cess re­cent­ly with its two-drug com­bo of Tivicay (do­lute­gravir) tied to J&J’s rilpivirine com­pared with the re­sults from the three- and four-drug cock­tails it hopes to re­place.

If you didn’t hear much about it, that is be­cause the an­a­lysts ran off to ooh and aah about Gilead’s ri­val Phase II da­ta. Some­times GSK just can’t catch a break.

In­stead of spe­cif­ic block­buster con­tenders, though, GSK prefers to talk about the “20 to 30” sig­nif­i­cant tri­al read­outs due over the next two years. Any­thing ex­cit­ing there? A break­through prospect? Maybe. But it fo­cus­es more on a se­ries of in­cre­men­tal gains sought in HIV, res­pi­ra­to­ry, and ane­mia — fit­ting for a care­ful phar­ma crew.

This is the year, though, that gener­ic Ad­vair should re­al­ly start eat­ing in­to rev­enue. To get some re­spect, new GSK CEO Em­ma Walm­s­ley will have to see if she can gar­ner some ex­cite­ment for a drug with megablock­buster po­ten­tial. We’ve been wait­ing.

We’re still wait­ing.

12. Cel­gene

2016: $4.47 bil­lion
2015: $3.7 bil­lion
Rev­enue: $11.2 bil­lion
R&D as a per­cent­age of rev­enue: 40%
R&D chief: Ru­pert Vessey
Mar­ket: $CELG

The BD team sets the in­dus­try pace for a long-run­ning deal spree

Cel­gene’s R&D costs spiked $772 mil­lion last year, leav­ing it just a step away from top 10 sta­tus and hit­ting a top-15 high of 40% of rev­enue. But you won’t hear a lot of in­vestors com­plain­ing about the num­bers.

This lat­est surge was due large­ly to their $892.9 mil­lion of R&D as­set ac­qui­si­tion ex­pense as­so­ci­at­ed with the buy­outs of En­gMab, Acety­lon, and Triphase as well as a spike in spend­ing on their ear­ly- to mid-stage prod­uct pipeline.

While grow­ing the Revlim­id flag­ship fran­chise, Cel­gene pushed Po­m­a­lyst and Ote­zla in­to block­buster sta­tus last year. The big biotech start­ed the year with 11 piv­otal stud­ies un­der­way, with 10 more slat­ed for launch. One of those will be for BB2121, a BC­MA col­lab­o­ra­tion with blue­bird bio. And 8 stud­ies are be­ing plot­ted in com­bi­na­tions with dur­val­um­ab. It’s tied to Juno’s late-stage ef­fort on JCAR017, the new lead now that the dis­as­trous — and lethal — JCAR015 has been of­fi­cial­ly laid to rest.

The NDA is in on enasi­denib, or AG-221, with the FDA pro­vid­ing a pri­or­i­ty re­view. Two Phase II­Is are un­der­way on lus­pa­ter­cept, part­nered with Ac­celeron. Two Phase II­Is are pro­ceed­ing for CC-486 Phase III stud­ies, known as the QUAZAR stud­ies, in high­er-risk MDS and first-line AML main­te­nance. But mid-stage da­ta for dem­cizum­ab, part­nered with On­coMed, proved to be a flop.

And then there’s the in­flam­ma­tion pipeline.

Ozan­i­mod, ac­quired in the $7.2 bil­lion Re­cep­tos buy­out, is poised for an NDA fil­ing now that it cleared top-line Phase III hur­dles in Feb­ru­ary.

Cel­gene showed that it still has plen­ty of in­ter­est in ear­ly-stage work, buy­ing Delinia and its fledg­ling pre­clin­i­cal ef­forts on au­toim­mune dis­ease for $300 mil­lion up­front. It paid $55 mil­lion for the op­tion to buy Anokion, an­oth­er au­toim­mune up­start.

Neu­rode­gen­er­a­tion is a sub­ject of long­stand­ing in­ter­est to Ex­ec­u­tive Chair­man Bob Hug­in, and Cel­gene took a small but sig­nif­i­cant step in that di­rec­tion last year, part­ner­ing with Evotec.

Late last year the Big Biotech com­plet­ed a deal to buy Boston-based Acety­lon for an un­spec­i­fied sum (Cel­gene paid $100 mil­lion to ac­quire the op­tion) with an eye on world­wide rights to Acety­lon’s se­lec­tive HDAC6 in­hibitor pro­grams and in­tel­lec­tu­al prop­er­ty in on­col­o­gy, neu­rode­gen­er­a­tion, and au­toim­mune dis­ease, in­clud­ing its lead drug can­di­dates citari­no­s­tat (ACY-241) and ri­col­i­no­s­tat (ACY-1215).

And it’s been track­ing pos­i­tive da­ta for its Crohn’s drug mon­gersen (GED-0301).

Cel­gene isn’t done do­ing these deals. Right now, li­cens­ing and M&A is writ­ten in­to its DNA. And it’s on the verge of demon­strat­ing just how suc­cess­ful that kind of track record can be.

 

13. Ab­b­Vie

2016: $4.36 bil­lion
2015: $4.28 bil­lion
Rev­enue: $25.6 bil­lion
R&D as a per­cent­age of rev­enue: 17%
R&D chief: Michael Sev­eri­no
Mar­ket: $AB­BV

Look­ing be­yond Hu­mi­ra, in search of new block­busters to fund the fu­ture

Ab­b­Vie $AB­BV is in one of the most per­ilous po­si­tions a bio­phar­ma com­pa­ny can be in. And the on­ly way off the ledge can be found through the pipeline.

The com­pa­ny was spun out with Hu­mi­ra al­ready well es­tab­lished and pay­ing the bills. Last year that flag­ship ther­a­py pro­vid­ed $16 bil­lion — 62% per­cent of its rev­enue — as the mon­ey tree con­tin­ues to pro­vide. But we al­ready have a line­up of biosim­i­lars — in­clud­ing an FDA-ap­proved ri­val from Am­gen — wait­ing to shred that mar­ket, which Ab­b­Vie in­sists it can hold back for years to come.

One slip, though, and the wolves will be right on top of it. So to keep the howl­ing mob back, Ab­b­Vie has be­come one of the most gen­er­ous deal­mak­ers in the top 15, hunt­ing down new block­busters — though it has a heart of steel when it comes to pick­ing what stays, and what goes.

Ab­b­Vie is fol­low­ing up on its hep C com­bos with new and bet­ter ther­a­pies. Stel­lar new Phase III da­ta on its com­bo with Enan­ta proved that progress. But it seems as if every­one is mak­ing progress in the field, which has seen rev­enue de­cline as com­pe­ti­tion built for a shrink­ing group of pa­tients still seek­ing a cure.

The com­pa­ny has big hopes for its JAK1 rheuma­toid arthri­tis drug ABT-494, now the star in its late-stage im­munol­o­gy pipeline. The com­pa­ny was so con­vinced by what it’s seen ex­ecs backed away from a ma­jor pact with Gala­pa­gos on fil­go­tinib – swift­ly picked up by Gilead, which has its own pipeline woes to con­sid­er.

And there’s more. There are la­bel ex­pan­sion tri­als in the works for Im­bru­vi­ca and Ven­clex­ta. The IL-23 con­tender risankizum­ab (AB­BV-066; for­mer­ly BI 655066) — part­nered in a ma­jor deal with Boehringer In­gel­heim — is in a big Phase III pso­ri­a­sis pro­gram, with fol­lowups com­ing in pso­ri­at­ic arthri­tis and Crohn’s dis­ease. Its PARP drug veli­parib, count­ed as a top 10 or­phan drug by Eval­u­atePhar­ma but now blight­ed by a Phase II flop, is in Phase III. And new drug ap­pli­ca­tions are ap­proach­ing for elagolix, part­nered with Neu­ro­crine, on en­dometrio­sis and uter­ine fi­broids.

That’s quite a late-stage list, for any of these com­pa­nies.

Right now, Ab­b­Vie holds the prize for pay­ing top dol­lar for a ques­tion­able as­set in 2016.

Their $5.8 bil­lion cash pay­out for Stem­cen­trx – with an­oth­er $4 bil­lion in mile­stones – looked far too rich to many an­a­lysts look­ing over the deal. With mon­ey like that on the ta­ble, ex­pec­ta­tions were run­ning high when in­ves­ti­ga­tors made their big re­veal at AS­CO. The pre­lim­i­nary da­ta for small cell lung can­cer showed a one-month sur­vival ad­van­tage over his­tor­i­cal trends, caus­ing more than a few an­a­lysts to do a dou­ble take on the drug and the deal.

Ab­b­Vie, though, al­so has no prob­lem walk­ing away from part­ner­ships, and not just when it comes to Gala­pa­gos. The hit list in­cludes Abl­ynx’s Phase III-ready drug vo­bar­il­izum­ab, af­ter Ab­b­Vie shrugged off its $175 mil­lion up­front buy-in.

Back in the fall of 2014, a rest­less Ab­b­Vie stepped in with a $275 mil­lion up­front pay­ment to part­ner with In­fin­i­ty Phar­ma­ceu­ti­cals on du­velis­ib, its oral PI3k-delta/gam­ma in­hibitor for blood can­cers. But af­ter du­velis­ib failed to im­press the phar­ma com­pa­ny – or any­one else – in a mid-stage study, Ab­b­Vie de­part­ed from their part­ner­ship and In­fin­i­ty had to ax 100 staffers to con­serve cash be­fore hand­ing the drug over to Ve­rastem in a give­away.

Halozyme, mean­while, felt the heat af­ter the com­pa­ny an­nounced that Ab­b­Vie opt­ed to drop one of their part­nered pro­grams us­ing their plat­form tech with a tu­mor necro­sis fac­tor al­pha tar­get.

For all the mon­ey that has gone up in smoke, Ab­b­Vie is still a play­er to be reck­oned with. It had to do a con­sid­er­able amount of wheel­ing and deal­ing to get to this spot, but as long as the Hu­mi­ra gold­mine con­tin­ues to pro­duce the yel­low stuff, you can ex­pect the deals to keep com­ing.

14. Am­gen

$AMGN
2016: $3.84 bil­lion
2015: $4 bil­lion
Rev­enue: $23 bil­lion
R&D as a % of rev­enue: 17%
R&D chief: Sean Harp­er

Every am­bi­tious new move comes with a ‘but’ clause

For a com­pa­ny drag­ging to­ward the bot­tom of the top 15, Am­gen of­ten finds it­self in the thick of the ac­tion. And with every new move, there al­ways seems to be a new sen­tence right around the last graph that starts with ‘but.”

Am­gen and its ex-US part­ner No­var­tis are key play­ers in the race to get a first ap­proval for a CGRP drug with the late-stage erenum­ab. But there are plen­ty of com­peti­tors, in­clud­ing Eli Lil­ly, Alder and Te­va.

Am­gen has helped shore up ex­pec­ta­tions for its os­teo­poro­sis drug ro­mosozum­ab, re­leas­ing up­dat­ed Phase III da­ta that un­der­score its straight shot at a mar­ket­ing ap­proval. But the big biotech, which is part­nered on this pro­gram with UCB, may have to con­cede a big piece of this com­pet­i­tive mar­ket af­ter spelling out its fail­ure on a key sec­ondary end­point. And Ra­dius Health has a ri­val in de­vel­op­ment as well.

Biosim­i­lars play a big role in the pipeline, and Am­gen won the first FDA ap­proval for a Hu­mi­ra knock­off, while de­fend­ing its own home turf. But there are plen­ty of oth­ers scram­bling in as well, and Ab­b­Vie will not let go of its IP with­out the longest le­gal war it can man­age to fight.

Parsabiv (etel­cal­ce­tide), reg­u­lar­ly fet­ed as a top ef­fort, was ap­proved for sec­ondary hy­per­parathy­roidism a cou­ple of months ago. But it like­ly won’t hit block­buster sta­tus.

We’ve been wait­ing for more than a year for a ma­jor and much an­tic­i­pat­ed ac­qui­si­tion from Am­gen — but so far that has not ma­te­ri­al­ized. The Big Biotech’s last M&A deal hit in late 2015, when it picked up Dez­i­ma, a CETP ac­qui­si­tion with a $300 mil­lion up­front that land­ed just ahead of an­oth­er late-stage CETP fi­as­co at Eli Lil­ly.

But that’s not a ma­jor buy­out.

That last big one was for Onyx, a $10 bil­lion ac­qui­si­tion. Am­gen got Kypro­lis out of the Onyx deal. But it was re­cent­ly hand­ed a set­back when its Phase III for front­line mul­ti­ple myelo­ma flopped.

In their quar­ter­ly meet­ing with an­a­lysts in Feb­ru­ary, Am­gen CEO Bob Brad­way said his $40 bil­lion cache of cash gives him the flex­i­bil­i­ty to take a hard look at a va­ri­ety of ac­qui­si­tions this year, big and small.

Tick, tock. Tick, tock.

What the com­pa­ny hasn’t stint­ed on over the last year are new li­cens­ing pacts.

Am­gen has tied the knot with Ger­many’s Im­mat­ics, pay­ing $30 mil­lion up­front and of­fer­ing hun­dreds of mil­lions more in pos­si­ble mile­stones for the de­vel­op­ment of bis­pe­cif­ic T cell-en­gag­ing ther­a­peu­tics for a range of can­cers. The gene ther­a­py ex­perts at Italy’s San Raf­faele Hos­pi­tal and Sci­en­tif­ic In­sti­tute (Os­pedale San Raf­faele, OSR) and its spin­out Genen­ta Sci­ences are col­lab­o­rat­ing with Am­gen on new tu­mor pro­grams.

In two sep­a­rate pacts with Ar­row­head, Am­gen gained the world­wide rights to ARC-LPA as well as an op­tion on a sec­ond, undis­closed car­dio pro­gram.

Am­gen has joined the im­munother­a­py part­ner­ing fren­zy. The Big Phar­ma is sign­ing up with the lit­tle biotech Ad­vax­is, col­lab­o­rat­ing on its tech­nol­o­gy us­ing bio­engi­neered bac­te­ria to re­cruit a T cell at­tack on can­cer. Am­gen $AMGN paid $65 mil­lion up­front to get the deal kick­start­ed, with $25 mil­lion re­served for an eq­ui­ty stake in the com­pa­ny.

The PC­SK9 wars with Re­gen­eron and Sanofi, which led those two com­pa­nies to fire a pre­emp­tive warn­ing shot over their megablock­buster con­tender Dupix­ent, led to a stun­ning le­gal win for Am­gen. But a de­ci­sion to force their ri­val off the mar­ket has been stayed and the de­ci­sion is on ap­peal. These things take time to play out.

Am­gen, though, has nev­er man­aged to eke out much rev­enue from their would-be block­buster. Even af­ter com­ing up with pos­i­tive car­dio da­ta, an­a­lysts were left unim­pressed with the re­sults and pay­ers ev­i­dent­ly will wait for more than a sim­ple guar­an­tee — such as no heart at­tacks or your mon­ey back — be­fore cov­er­ing this drug.

One rea­son why the com­pa­ny tends to reg­is­ter among the bot­tom tier of com­pa­nies on this list is that CEO Robert Brad­way nev­er leaves a stone un­turned in search of ad­di­tion­al econ­o­miz­ing. So re­cent­ly Am­gen dis­patched 100 jobs to its op­er­a­tions in the two big hubs of Boston/Cam­bridge and San Fran­cis­co. And that fol­lowed a thor­ough re­vamp that saw the phar­ma op­er­a­tion shut­ter its R&D fa­cil­i­ty in Seat­tle fol­lowed up with the de­ci­sion to shut­ter and sell off the Onyx cam­pus ac­quired in that buy­out.

 

15. Take­da

2016: $3.09 bil­lion
2015: $3.5 bil­lion
Rev­enue: $16.1 bil­lion
R&D as a % of rev­enue: 19%
R&D chief: Andy Plump

Turn­ing an an­cient Japan­ese com­pa­ny in­to a mod­ern bio­phar­ma starts with an “R&D trans­for­ma­tion”

(Take­da fin­ish­es their fis­cal year at the end of March. These fig­ures are from last spring, the most re­cent­ly avail­able gath­er­ing of the an­nu­al num­bers.)

As a Japan­ese phar­ma com­pa­ny with more than two cen­turies of his­to­ry be­hind it, Take­da is of­ten over­looked in the greater bio­phar­ma land of big play­ers. But that would be a mis­take. This com­pa­ny is be­ing giv­en elec­tric shock ther­a­py by CEO Christophe Web­ber and R&D chief Andy Plump. Win or lose, they are de­ter­mined to turn their R&D or­ga­ni­za­tion up­side down and see what they can shake out of it.

Over the past year we’ve seen this com­pa­ny en­gi­neer a top-to-bot­tom re­vamp, re­struc­tur­ing and con­cen­trat­ing R&D in the US and Japan. It’s been out­sourc­ing de­vel­op­ment to the big CRO PRA, a process which was re­cent­ly ex­tend­ed to their Japan­ese op­er­a­tions. Take­da struck a deal to buy Ari­ad for $5.2 bil­lion in Jan­u­ary. And it’s con­cen­trat­ed on 3 key ar­eas: on­col­o­gy, gas­troen­terol­o­gy (GI) and cen­tral ner­vous sys­tem (CNS), plus vac­cines.

Christophe We­ber, pres­i­dent and chief ex­ec­u­tive of­fi­cer of Take­da Phar­ma­ceu­ti­cal Co., speaks dur­ing the 18th Nikkei Glob­al Man­age­ment Fo­rum in Tokyo, Japan, on Tues­day, Nov. 8, 2016. The two-day an­nu­al fo­rum runs un­til Nov. 9. Pho­tog­ra­ph­er: To­mo­hi­ro Ohsu­mi/Bloomberg via Get­ty Im­ages

“R&D trans­for­ma­tion” has be­come a mantra in Take­da’s quar­ter­ly sit-downs with the an­a­lysts. Last Feb­ru­ary We­ber told an­a­lysts that the com­pa­ny had struck 50 new part­ner­ships in the pre­vi­ous 18 months.

“And over the last two months on­ly,” added Plump, “we put to­geth­er eight very sig­nif­i­cant col­lab­o­ra­tions or part­ner­ships, in­clud­ing one with Ex­elix­is (in a $145 mil­lion deal), for de­vel­op­ment of cabozan­ti­nib in Japan. So I would say that, in terms of dri­ving our R&D strat­e­gy, in terms of re­build­ing our pipeline, which you rec­og­nize is a long-term ef­fort that we’re very com­mit­ted to, we’ve made very sub­stan­tial progress.”

Right now, Take­da ex­ecs seem game to try new things. That made for good tim­ing for Je­re­my Levin, the CEO for Ovid, who struck a part­ner­ship deal to de­vel­op a new ther­a­py un­der a joint steer­ing com­mit­tee, with Take­da tak­ing an eq­ui­ty stake as they de­sign up­com­ing stud­ies, start­ing with Phase Ia/IIb tri­als to cov­er three rare neu­ro­log­i­cal con­di­tions.

There were back-to-back mi­cro­bio­me pacts with up­start biotechs – Finch and Nu­Biy­ota – in­side a week. In Jan­u­ary they in­vest­ed $125 mil­lion in Mav­er­ick Ther­a­peu­tics, pick­ing up an op­tion to buy the biotech and its T cell en­gage­ment plat­form. And the com­pa­ny dis­closed a re­search pact with Ko­rea’s LegoChem Bio­sciences to study next-gen an­ti­body drug con­ju­gates.

In short, Take­da is on a glob­al tear, and tear-up, and this kind of trans­for­ma­tion move comes with lots of fresh op­por­tu­ni­ties, and risks, as Ari­ad staffers could tell you af­ter their new own­ers laid off more than half the staff.