Can you cut $600M in R&D costs with­out slash-and-burn tac­tics? Andy Plump aims to show us how

Big bio­phar­ma merg­ers have been out of fa­vor in the in­dus­try for close to a decade now, soured by the large scale de­struc­tion that at­tend­ed deals like the 2009 Wyeth buy­out by Pfiz­er, which was fol­lowed by slash and burn tac­tics that played hav­oc with re­search teams.

Now, years af­ter the bolt-on ac­qui­si­tion be­came a stan­dard fea­ture at the largest bio­phar­mas, which large­ly swore off ma­jor merg­ers, Take­da’s ex­ec­u­tive team has set a goal for it­self to see if a 237-year-old bio­phar­ma com­pa­ny based in Japan can in­te­grate two large re­search groups in­to a sin­gle glob­al net­work fo­cused heav­i­ly in the Cam­bridge/Boston hub — and use the big­ger op­er­a­tion to cat­a­pult them in­to the league of glob­al heavy­weights.

Slash-and-burn is not on the ta­ble in R&D, says re­search chief Andy Plump.

“We wouldn’t have done this if we didn’t tru­ly be­lieve this would be a trans­for­ma­tive act for us,” Plump tells me on Tues­day. “We be­lieve it’s high­ly strate­gic for us.” Lat­er in our con­ver­sa­tion he not­ed that “it’s very ex­cit­ing for us. We’re not do­ing this be­cause we need to do, we’re do­ing re­al­ly well,” and the buy­out is in­tend­ed to ac­cel­er­ate their progress.

Plump and his crew face some ex­tra­or­di­nar­i­ly deep skep­ti­cism from an­a­lysts and in­vestors fret­ting over the debt and as­pects of the com­pa­ny they’re buy­ing. And even with a care­ful ap­proach, there will be some big changes need­ed to make it hap­pen.

Take­da’s $62 bil­lion Shire buy­out deal — if com­plet­ed — will de­liv­er an R&D group that’s been in tran­si­tion for sev­er­al years. Soon af­ter Flem­ming Orn­skov took over as CEO, he be­gan to con­cen­trate Shire’s re­search forces pri­mar­i­ly in Lex­ing­ton, MA, then vault­ing in­to Cam­bridge af­ter the $32 bil­lion buy­out of Bax­al­ta, which had grabbed a big chunk of space for it­self in the heart of one of the biggest bio­hubs on the plan­et.

Take­da spent about $2.85 bil­lion on re­search in the past year, while Shire racked up $1.7 bil­lion in costs dur­ing 2017. To­geth­er, Plump will be hand­ed a group with col­lec­tive costs of a lit­tle more than $4.5 bil­lion, with a goal to cut that by about $600 mil­lion. Based on their lay­off plans out­lined to­day, that will cost rough­ly 1,000 jobs. (All of these num­bers are based on the re­lease from Take­da this morn­ing and pub­lic records. Plump did not out­line any spe­cif­ic num­bers in our dis­cus­sion.) Even af­ter the cuts, at close to $4 bil­lion in an­nu­al spend­ing, the new­ly ex­pand­ed Take­da would cat­a­pult up from the bot­tom of our top 15 list to about the 12th or 13th spot, just ahead of Gilead and per­haps be­hind Ab­b­Vie.

But that’s not hap­pen­ing overnight. The deal it­self won’t close un­til next year, and there’s time to start con­sid­er­ing how to man­age the process.

Plump has al­ready un­der­tak­en an over­haul of R&D at Take­da, where they scaled back and be­gan to en­gage in more of the ex­ter­nal­iza­tion strat­e­gy that has be­come com­mon in the in­dus­try. Right now Plump es­ti­mates that the R&D spend is split 60/40 be­tween ex­ter­nal and in­ter­nal.

They’re most ex­cit­ed about adding Shire’s rare dis­ease drugs to the pipeline.

“We still want to stay fo­cused,” says Plump, who’s been lasered on on­col­o­gy, CNS and GI, “es­sen­tial­ly add rare dis­eases.”

Where Take­da has been fo­cused on small mol­e­cules, Shire has been adding new drug tech­nolo­gies that di­ver­si­fy their work, adding to the com­ple­men­tary as­pects of the deal. Plump loves the ear­ly-stage gene ther­a­py work he’s been see­ing at Shire. And he’s quick to cite lanadelum­ab, Shire’s top late-stage as­set now un­der FDA re­view, with an­a­lysts look­ing for block­buster re­turns.

It be­comes a nat­ur­al fol­low to look at ar­eas that lie in­side their strate­gic in­ter­est and what lies out­side their strate­gic in­ter­est — think oph­thal­mol­o­gy here — where Take­da can see what it wants to keep and what it needs to move out.

Again, that doesn’t mean slash and burn. Plump’s group has es­tab­lished 10 dif­fer­ent spin­out com­pa­nies, in ad­di­tion to a string of out­li­cens­ing pacts, that can keep any­thing of val­ue mov­ing for­ward.

And the same ap­proach works in ge­og­ra­phy. Adding Shire great­ly ex­pands their pres­ence in Boston/Cam­bridge, which Plump sees as a big ben­e­fit, with op­er­a­tions in Japan and a biotech group in San Diego. Any­thing that Shire has out­side of those ar­eas, he says, are al­so go­ing to get the clos­est scruti­ny to see if they should re­main.

“We will treat peo­ple with deep re­spect,” em­pha­sizes Plump, who’s arranged deals in Japan that trans­ferred re­searchers to CROs the com­pa­ny is aligned with, rather than sim­ply cut jobs. 

The ex­pand­ed Take­da wont have to strain around prof­it mar­gins, the R&D chief adds. Yes, it will take a few years to bring debt down, but he doesn’t be­lieve that will take long with the mar­gins they have. The deal “gives us a lot of op­tion­al­i­ty in in­vest­ing in pipeline part­ner­ships,” he says. And while they’d be plan­ning to slow down on the deal side in any case, “our fo­cus will al­ways be in look­ing at op­por­tu­ni­ties.”

Hal Barron, GSK

Break­ing the death spi­ral: Hal Bar­ron talks about trans­form­ing the mori­bund R&D cul­ture at GSK in a crit­i­cal year for the late-stage pipeline

Just ahead of GlaxoSmithKline’s Q2 update on Wednesday, science chief Hal Barron is making the rounds to talk up the pharma giant’s late-stage strategy as the top execs continue to woo back a deeply skeptical investor group while pushing through a whole new R&D culture.

And that’s not easy, Barron is quick to note. He told the Financial Times:

I think that culture, to some extent, is as hard, in fact even harder, than doing the science.

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Some Big Phar­mas stepped up their game on da­ta trans­paren­cy — but which flunked the test?

The nonprofit Bioethics International has come out with their latest scorecard on data transparency among the big biopharmas in the industry — flagging a few standouts while spotlighting some laggards who are continuing to underperform.

Now in its third year, the nonprofit created a new set of standards with Yale School of Medicine and Stanford Law School to evaluate the track record on trial registration, results reporting, publication and data-sharing practice.

Busy Gilead crew throws strug­gling biotech a life­line, with some cash up­front and hun­dreds of mil­lions in biobucks for HIV deal

Durect $DRRX got a badly needed shot in the arm Monday morning as Gilead’s busy BD team lined up access to its extended-release platform tech for HIV and hepatitis B.

Gilead, a leader in the HIV sector, is paying a modest $25 million in cash for the right to jump on the platform at Durect, which has been using its technology to come up with an extended-release version of bupivacaine. The FDA rejected that in 2014, but Durect has been working on a comeback.

In­tec blitzed by PhI­II flop as lead pro­gram fails to beat Mer­ck­'s stan­dard com­bo for Parkin­son’s

Intec Pharma’s $NTEC lead drug slammed into a brick wall Monday morning. The small-cap Israeli biotech reported that its lead program — coming off a platform designed to produce a safer, more effective oral drug for Parkinson’s — failed the Phase III at the primary endpoint.

Researchers at Intec, which has already seen its share price collapse over the past few months, says that its Accordion Pill-Carbidopa/Levodopa failed to prove superior to Sinemet in reducing daily ‘off’ time. 

Cel­gene racks up third Ote­zla ap­proval, heat­ing up talks about who Bris­tol-My­ers will sell to

Whoever is taking Otezla off Bristol-Myers Squibb’s hands will have one more revenue stream to boast.

The drug — a rising star in Celgene’s pipeline that generated global sales of $1.6 billion last year — is now OK’d to treat oral ulcers associated with Behçet’s disease, a common symptom for a rare inflammatory disorder. This marks the third FDA approval for the PDE4 inhibitor since 2014, when it was greenlighted for plaque psoriasis and psoriatic arthritis.

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Francesco De Rubertis

Medicxi is rolling out its biggest fund ever to back Eu­rope's top 'sci­en­tists with strange ideas'

Francesco De Rubertis built Medicxi to be the kind of biotech venture player he would have liked to have known back when he was a full time scientist.

“When I was a scientist 20 years ago I would have loved Medicxi,’ the co-founder tells me. It’s the kind of place run by and for investigators, what the Medicxi partner calls “scientists with strange ideas — a platform for the drug hunter and scientific entrepreneur. That’s what I wanted when I was a scientist.”

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Af­ter a decade, Vi­iV CSO John Pot­tage says it's time to step down — and he's hand­ing the job to long­time col­league Kim Smith

ViiV Healthcare has always been something unique in the global drug industry.

Owned by GlaxoSmithKline and Pfizer — with GSK in the lead as majority owner — it was created 10 years ago in a time of deep turmoil for the field as something independent of the pharma giants, but with access to lots of infrastructural support on demand. While R&D at the mother ship inside GSK was souring, a razor-focused ViiV provided a rare bright spot, challenging Gilead on a lucrative front in delivering new combinations that require fewer therapies with a more easily tolerated regimen.

They kept a massive number of people alive who would otherwise have been facing a death sentence. And they made money.

And throughout, John Pottage has been the chief scientific and chief medical officer.

Until now.

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Vlad Coric (Biohaven)

In an­oth­er dis­ap­point­ment for in­vestors, FDA slaps down Bio­haven’s re­vised ver­sion of an old ALS drug

Biohaven is at risk of making a habit of disappointing its investors.

Late Friday the biotech $BHVN reported that the FDA had rejected its application for riluzole, an old drug that they had made over into a sublingual formulation that dissolves under the tongue. According to Biohaven, the FDA had a problem with the active ingredient used in a bioequivalence study back in 2017, which they got from the Canadian drugmaker Apotex.

Apotex, though, has been a disaster ground. The manufacturer voluntarily yanked the ANDAs on 31 drugs — in late 2017 — after the FDA came across serious manufacturing deficiencies at their plants in India. A few days ago, the FDA made it official.

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Chas­ing Roche's ag­ing block­buster fran­chise, Am­gen/Al­ler­gan roll out Avastin, Her­ceptin knock­offs at dis­count

Let the long battle for biosimilars in the cancer space begin.

Amgen has launched its Avastin and Herceptin copycats — licensed from the predecessors of Allergan — almost two years after the FDA had stamped its approval on Mvasi (bevacizumab-awwb) and three months after the Kanjinti OK (trastuzumab-anns). While the biotech had been fielding biosimilars in Europe, this marks their first foray in the US — and the first oncology biosimilars in the country.