The Zer­houni rule: “Every com­pa­ny that ac­quires a plat­form com­pa­ny kills it.”

Why Medi­va­tion makes the per­fect biotech takeover tar­get for Sanofi


John Car­roll, Ed­i­tor

Last Jan­u­ary at the J.P. Mor­gan con­fab, I had a chance to sit down with Sanofi R&D chief Dr. Elias Zer­houni. He made it clear up front he’s been fol­low­ing my writ­ing for some years. He even seemed to have en­joyed some of it — ex­cept for the parts in which I rou­tine­ly point­ed to Sanofi’s lack of in­ter­nal in­no­va­tion and a heavy re­liance on its de­vel­op­ment part­ners (es­pe­cial­ly Re­gen­eron) to ad­vance ma­jor new drugs.

(Feb 7, 2007: Pres­i­dent George W. Bush and NIH Di­rec­tor Dr. Elias Zer­houni en­joy an ex­change. Cour­tesy NIH)

The for­mer head of the NIH took ex­cep­tion to what he sees as a reg­u­lar theme of mine: that Sanofi “just buys” in­no­va­tion at part­ner com­pa­nies. And that set the stage for a con­ver­sa­tion on his track record at the French phar­ma gi­ant since ex-CEO Chris Viehbach­er re­cruit­ed him in 2009, set­ting him on a mis­sion to cre­ate the kind of R&D struc­ture at a glob­al op­er­a­tion that can be man­aged ef­fi­cient­ly and gen­er­ate im­por­tant new ther­a­pies.

There wasn’t a hint in that ex­change that Sanofi had its eyes on Medi­va­tion, a com­pa­ny that had played a break­through role in treat­ing prostate can­cer and fol­lowed that up with a ma­jor league PARP in­hibitor deal as it jock­eyed for po­si­tion against some big ri­vals. But look­ing back, you can see all the in­tel­lec­tu­al build­ing blocks that de­fine what makes Medi­va­tion — or a sim­i­lar biotech — the per­fect takeover tar­get for the French phar­ma gi­ant and its new CEO, Olivi­er Brandi­court.

Zer­houni, who had re­cent­ly dropped an op­tion to buy Warp Dri­ve Bio in fa­vor of a long­time col­lab­o­ra­tion, be­lieves that any phar­ma com­pa­ny that wants to buy a plat­form biotech–build­ing a pipeline out of its own dis­cov­ery en­gine–is on a fool’s mis­sion.

“Every com­pa­ny that ac­quires a plat­form com­pa­ny kills it,” he told me blunt­ly. So a few years ago when the board at Sanofi start­ed ask­ing about buy­ing Re­gen­eron, a close part­ner which Sanofi al­ready owns a big stake in, he wasn’t in­ter­est­ed.

Zer­houni’s re­sponse: “That would be the stu­pid­est thing you could do.”

At that point I not­ed that Viehbach­er—who al­so told me in a re­cent in­ter­view that he didn’t be­lieve any Big Phar­ma op­er­a­tion could be tru­ly in­no­v­a­tive — had once men­tioned in an in­ter­view that if Sanofi had bought Re­gen­eron, they would prob­a­bly just screw it up.

“I told Chris that,” re­spond­ed Zer­houni em­phat­i­cal­ly.

I was re­mind­ed of that con­ver­sa­tion as I was read­ing over Medi­va­tion’s caus­tic kick­back against Sanofi’s $9.3 bil­lion buy­out of­fer. Medi­va­tion is any­thing but a plat­form com­pa­ny. It was go­ing af­ter prostate can­cer at the same time it was mak­ing a failed bet that a Russ­ian an­ti­his­t­a­mine could be the per­fect new drug for Alzheimer’s. (Wrong.) But they scored block­buster gold with Xtan­di, a drug that came out of the UCLA lab of Charles Sawyers, one of the lead­ing lights in an­dro­gen re­cep­tor drug tech now at Memo­r­i­al Sloan-Ket­ter­ing. Pick­ing up their com­ple­men­tary late-stage PARP in­hibitor, ta­la­zoparib,  last year from Bio­Marin was a pure play add-on deal.

There wasn’t any­thing in­no­v­a­tive about it. But it was smart. And Medi­va­tion CEO David Hung is a very smart deal­mak­er. One of the best.

If the PARP drug works, it will be be­cause the drug is ef­fec­tive, rel­a­tive­ly safe and the de­vel­op­ment team didn’t screw it up. Xtan­di is al­ready a known, ap­proved prod­uct. Medi­va­tion’s jab at Sanofi’s failed Bi­Par deal won’t fly. If Big Phar­ma is good at any­thing, it’s as­sem­bling deeply pro­fes­sion­al de­vel­op­ment teams and spend­ing big on con­vinc­ing Phase III da­ta. Sanofi, with its $6 bil­lion an­nu­al R&D bud­get, is every bit as good at that as any of its Big Phar­ma brethren.

It’s not in­no­v­a­tive.

If the drug doesn’t work, that will be on the Medi­va­tion team that bought it — as much as Sanofi for tak­ing a gam­ble on it. It’s as low risk as it gets in R&D.

Over­all, Zer­houni es­sen­tial­ly gives him­self a sol­id though not spec­tac­u­lar grade on new prod­uct de­vel­op­ment, to date. Start­ing with “noth­ing in the pipeline,” he’s scored 18 prod­uct launch­es, a record he de­scribes as “good, not great,” in­clud­ing some drugs that he read­i­ly of­fers weren’t all that in­no­v­a­tive to be­gin with. And he’s done it while re­struc­tur­ing R&D, cut­ting the head­count 37%, from 14,000 to about 8,000 (“I closed 22 sites”), and switch­ing a pri­ma­ry fo­cus on small mol­e­cules to one that is now 75% bi­o­log­ics, which can cut de­vel­op­ment times from 7 to 4 years.

For what it’s worth, I agreed with Zer­houni that I have rou­tine­ly not­ed Sanofi’s lack of in­ter­nal in­no­va­tion. That seems more than ob­vi­ous, though per­haps Zer­houni is right and Sanofi can one day re­form its in-house R&D im­age. But Re­gen­eron has proved re­peat­ed­ly that it has one of the best de­vel­op­ment ef­forts in the in­dus­try. And far from sug­gest­ing that Sanofi “just buys” in­no­va­tion, I’d say that af­ter watch­ing a slew of Big Phar­mas waste bil­lions of dol­lars chas­ing sci­en­tif­ic shad­ows, I give high marks to any­one that can strike the right kind of part­ner­ships and push them in the right di­rec­tion.

Sanofi has de­vot­ed con­sid­er­able ef­fort and cash to make the Re­gen­eron deal work, as it is do­ing with Al­ny­lam and a host of oth­er com­pa­nies. If you want to know how Zer­houni thinks of it in chart for­mat, here’s the schemat­ic he drew up:


In Zer­houni’s world, he sits in the mid­dle of a host of re­la­tion­ships with big and small com­pa­nies that have plen­ty of in­no­v­a­tive plat­form work go­ing on. He doesn’t want to buy and kill any of it. He does want to fos­ter it and prof­it from the work.

In Medi­va­tion, Sanofi has a per­fect mix of late-stage and com­mer­cial­ized prod­ucts. There’s no plat­form to kill. And it speaks to the phar­ma com­pa­ny’s in­tent when its ex­ec­u­tive crew say they’re de­ter­mined to com­plete the merg­er. Medi­va­tion, or a com­pa­ny just like it, fits neat­ly in­to Zer­houni’s view of the bio­phar­ma food chain.

Ryan Watts, Denali CEO

Bio­gen hands De­nali $1B-plus in cash, $1B-plus in mile­stones to part­ner on late-stage Parkin­son’s drug

Biogen is handing over more than a billion dollars cash to partner with the up-and-coming neurosciences crew at Denali on a new therapy for Parkinson’s. And the big biotech is ready to pile on more than a billion dollars more in milestones — if the alliance is a success.

For Biogen $BIIB, the move on Denali’s small molecule inhibitors of LRRK2 puts them in line to collaborate on a late-stage program for DNL151, which is scheduled to start next year.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 86,700+ biopharma pros reading Endpoints daily — and it's free.

Michel Vounatsos, Biogen CEO (via YouTube)

UP­DAT­ED: Bio­gen scores a pri­or­i­ty re­view for its Alzheimer's drug ad­u­canum­ab, mov­ing one gi­ant leap for­ward in its con­tro­ver­sial quest

Biogen scored a big win at the FDA today as regulators accepted their application for the controversial Alzheimer’s drug aducanumab and gave it a priority review.

The PDUFA date is March 7, 2021.

Significantly, Biogen says it did not use its priority review voucher to win special treatment at the FDA. The agency handed that out gratis.

That’s the ideal scenario Biogen was looking for as disappointed analysts wondered aloud about the delayed application earlier in the year.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 86,700+ biopharma pros reading Endpoints daily — and it's free.

Moncef Slaoui, Getty Images

When will it end? Big Phar­ma's top vac­cine ex­pert at OWS of­fers a speedy time­line for a Covid-19 vac­cine — ei­ther be­fore or right af­ter the elec­tion

Moncef Slaoui hasn’t started making plans for his summer vacation next year. But he offers high odds that all Americans will be able to do that in the not too distant future.

In an interview with a pair of sympathetic podcasters at the conservative American Enterprise Institute, Slaoui provides an education to listeners on how any drug or vaccine can be sped through trials. And he leaves the door wide open to the notion that the leading vaccine developers can demonstrate efficacy and safety in a compelling fashion as early as October — or as late as the end of this year.

President Trump speaks with members of the media before boarding Marine One (AP Images)

'Oc­to­ber is com­ing,' and every­one still wants to know if a Covid-19 vac­cine will be whisked through the FDA ahead of the elec­tion

Right on the heels of a lengthy assurance from FDA commissioner Stephen Hahn that the agency will not rush through a quick approval for a Covid-19 vaccine, the President of the United States has some thoughts on timing he’d like to share.

In an exchange with Fox News’ Geraldo Rivera on Thursday, President Trump allowed that a vaccine could be ready to roll “sooner than the end of the year, could be much sooner.”

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 86,700+ biopharma pros reading Endpoints daily — and it's free.

Covid-19 roundup: Gates Foun­da­tion pours $150M in­to In­dia’s Serum In­sti­tute; Pfiz­er teams with Gilead on remde­sivir

By CEO and scion Adar Poonawalla’s estimation, the Serum Institute in India has already poured hundreds of millions of dollars into scaling up the unproven Covid-19 vaccine being developed by AstraZeneca and Oxford for use in low and middle income countries. It’s meant taking on a risk that other companies, including AstraZeneca, have mitigated with huge amounts of government funding.

Now, for the first time, Poonawalla is getting some outside help. The Gates Foundation has agreed to pay the institute $150 million to supply 100 million vaccines to India and other emerging economies next year, Reuters reported. That includes both the vaccine being developed by AstraZeneca and the one being developed by Novavax. Those vaccines will be available in 92 countries and be priced at $3 per dose.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 86,700+ biopharma pros reading Endpoints daily — and it's free.

Bio­haven adds near­ly $1B in Nurtec deals with Roy­al­ty Phar­ma, Sixth Street

Biohaven just added nearly $1 billion to their balance sheet.

On Friday morning, the neuroscience biotech announced a pair of creative agreements with Royalty Pharma and the investment firm Sixth Street to bolster the commercial launch of their new migraine drug, Nurtec. Biohaven will sell a sliver of its royalties on Nurtec and 3% of the royalties on their experimental migraine drug zavegepant to Royalty Pharma as part of a larger agreeement that will pay $450 million. At the same time, the company announced they took out a $500 million loan from Sixth Street.

Ab­b­Vie set­tles in­sur­ance fraud suit, agrees to tweak nurse am­bas­sador pro­gram; CStone aims for NSCLC OK with pos­i­tive PhI­II da­ta

AbbVie has resolved a California lawsuit alleging insurance fraud in the promotion of its cash cow Humira, paying $24 million to settle things with the state’s insurance regulator.

The settlement comes almost four years after a whistleblower first reported AbbVie’s practice of deploying registered nurses to visit patients at home or call them by phone to ensure that Humira prescriptions are filled. AbbVie was also charged with providing illegal kickbacks to doctors in an attempt to encourage them to prescribe Humira for a range of anti-inflammatory diseases.

Per­cep­tive fields SPAC #3 as an­oth­er group of biotechs scoops up $364M in lat­est Nas­daq romp

There’s no sign that the windfall of cash dropping biotech’s way on Wall Street is abating. Three more biopharmas priced IPOs on Thursday and Friday morning, riding a historic boom with a $364 million payoff.

London-based biotech Freeline Therapeutics took home the lion’s share of the cash with $159 million after pricing 8,823,529 shares at $18 a pop. Checkmate Pharmaceuticals, of Cambridge, MA, raised $75 million with an offer of 5 million shares at $15 — right at the midpoint of its range. And Arya Sciences Acquisition Corp III, the third in a series from Perceptive, priced 13,000,000 shares at $10 per share.

UP­DAT­ED: No­vavax her­alds the lat­est pos­i­tive snap­shot of ear­ly-stage Covid-19 vac­cine — so why did its stock briefly crater?

High-flying Novavax $NVAX became the latest of the Covid-19 vaccine players to stake out a positive set of biomarker data from its early-stage look at its vaccine in humans.

Their adjuvanted Covid-19 vaccine was “well-tolerated and elicited robust antibody responses numerically superior to that seen in human convalescent sera,” the company noted. According to the biotech:

All subjects developed anti-spike IgG antibodies after a single dose of vaccine, many of them also developing wild-type virus neutralizing antibody responses, and after Dose 2, 100% of participants developed wild-type virus neutralizing antibody responses. Both anti-spike IgG and viral neutralization responses compared favorably to responses from patients with clinically significant COVID‑19 disease. Importantly, the IgG antibody response was highly correlated with neutralization titers, demonstrating that a significant proportion of antibodies were functional.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 86,700+ biopharma pros reading Endpoints daily — and it's free.