Novartis AG (NYSE:NVS; SIX:NOVN) and GlaxoSmithKline plc (LSE:GSK; NYSE:GSK) announced multi-billion dollar deals that will see the pharmas sell assets to one another. Novartis will bolster its portfolio of marketed cancer drugs and GSK will bulk up its vaccine business. The pharmas also will create a JV focused on OTC. Novartis was up $1.10 to $86.56 on Tuesday, while GSK gained 81p to 1,640p in London and $2.18 to $55.30 in New York.
Novartis will pay GSK $14.5 billion in cash to acquire GSK's portfolio of 11 marketed cancer drugs and "related R&D" for the drugs, as well as rights to afuresertib (GSK2110183), a protein kinase B inhibitor in Phase II testing for ovarian cancer. GSK is eligible for a $1.5 billion milestone tied to results of the Phase III COMBI-d trial of its melanoma drugs Tafinlar dabrafenib and Mekinist trametinib. Novartis will have opt-in rights to commercialize GSK's current and future cancer pipeline. GSK's cancer drugs posted 2013 sales of $1.6 billion.
GSK is not entirely exiting cancer. The pharma said it will continue R&D programs in cancer immunotherapy, epigenetics and the tumor environment.
GSK will pay Novartis $5.3 billion in cash for Novartis' vaccines business, including the pharma's Bexsero meningitis B vaccine. Novartis is eligible for up to $1.8 billion in milestones, plus 10% royalties. The business recorded 2013 sales of about $900 million. The deal and sales figure excludes the pharma's flu vaccine business, which Novartis said it plans to divest separately.
The JV will combine Novartis' OTC division and GSK's GSK Consumer Healthcare unit and is expected to have annual sales of about $10 billion. GSK will own 63.5% of the JV, and Novartis 36.5%.
All three deals are subject to GSK shareholder approval and are slated to close in 1H15. Goldman Sachs is advising Novartis. Lazard, Zaoui & Co., Citi; and Arkle Associates are advising GSK.
Separately, Novartis is divesting its animal health division to Eli Lilly & Co. (NYSE:LLY) for about $5.4 billion in cash in a deal slated to close at the end of 1Q15. The division had 2013 net sales of about $1.1 billion. BofA Merrill Lynch is advising Lilly, which was off $0.83 to $60.03 on Tuesday.
The deals helped boost biotech and pharma indices on Tuesday. (see below)
A slew of multi-billion pharma deals helped biotech and pharma indices post better gains than the broader markets on Tuesday. The BioCentury 100 index gained 4.1%, the NASDAQ Biotechnology index was up 3.2%, the NYSE Arca Biotechnology index gained 3% and the NYSE Arca Pharmaceutical index closed up 1.5%. The NASDAQ was up 1% on the day and the S&P and Dow Jones Industrial Average were both up 0.4%.
Gilead Sciences Inc. (NASDAQ:GILD) reported 1Q14 earnings late Tuesday, including $2.3 billion in sales of Sovaldi sofosbuvir in the HCV drug's first full quarter on the market. According to Deutsche Bank's Robyn Karnauskas, the Street was expecting $1 billion. Gilead said $2.1 billion of the sales were in the U.S., with the balance mostly in Germany and France. Gilead launched the drug in the U.S. in December and in Europe earlier this year.
Gilead reported 1Q14 non-GAAP diluted EPS of $1.48, beating the Street's $0.89 estimate and up from $0.48 in 1Q13. Revenues for the quarter were $5 billion, beating the Street's $3.9 billion estimate and up from $2.5 billion in the prior year's quarter. Gilead reiterated its 2014 net product sales guidance of $11.3-$11.5 billion, which would be a 5-6% increase over 2013 net sales. The guidance excludes Sovaldi sales.
Gilead released its earnings after market close on Tuesday. The company was up $1.26 to $72.86 on the day and gained an additional $2.22 in early after-hours trading.
Amgen Inc. (NASDAQ:AMGN) reported 1Q14 adjusted diluted EPS of $1.87, missing by $0.07 the Street's estimate of $1.94 and down from $1.96 in 1Q13. First quarter revenues increased 7% to $4.5 billion, but missed the Street's $4.8 billion estimate. Amgen reiterated its 2014 revenue guidance of $19.2-$19.6 billion and adjusted EPS guidance of $7.90-$8.20. The Street was expecting full-year EPS of $8.16 on $19.6 billion in revenues.
Amgen also said it plans to submit U.S. and EU regulatory applications for evolocumab (AMG 145) this year. The company previously said it was planning global submissions this year for the human mAb against proprotein convertase subtilisin/kexin type 9 (PCSK9), but did not disclose specific markets.
Amgen released its earnings after market close. The company was up $2.28 to $119.30 on Tuesday.
Avalanche Biotechnologies Inc. (Menlo Park, Calif.) raised $55 million in a series B round from new investors Venrock; Deerfield; Adage Capital Management; Redmile Group; Rock Springs Capital; Sabby Capital; an undisclosed affiliate of Cowen; and two undisclosed healthcare funds. Undisclosed existing investors also participated. Cowen was placement agent for the round.
Avalanche is developing gene therapies for eye disorders. The company's AVA-101 is in a Phase IIa trial to treat wet age-related macular degeneration (AMD), with data expected in mid-2015. AVA-101 is an adeno-associated virus (AAV) vector-based therapy that delivers soluble vascular endothelial growth factor (VEGF) receptor 1 (sFLT1; sVEGFR-1), a VEGF inhibitor.
Guardant Health Inc. (Redwood City, Calif.) raised $30 million in a series B round led by new investor Khosla Ventures. Existing investor Sequoia Capital and new investor Pejman Mar Ventures also participated. In February, Guardant launched its Guardant360 test, a non-invasive blood test that detects major classes of tumor genetic alterations to aid in treatment decisions. The test sequences cell-free DNA from tumors and is performed at Guardant's CLIA-certified lab. Khosla's Samir Kaul will join Guardant's board.
Principia Biopharma Inc. (South San Francisco, Calif.) raised an undisclosed amount in the first tranche of a $50 million series B round led by new investor Sofinnova Ventures. Existing investors Morgenthaler Ventures; New Leaf Venture Partners; OrbiMed; SR One; and Mission Bay Capital also participated. Sofinnova's Srinivas Akkaraju joined Principia's board.
Principia is developing small molecule reversible covalent inhibitors for cancer and autoimmune diseases. The company's most advanced compound is an oral Bruton's tyrosine kinase (Btk) inhibitor that is slated to start Phase I testing this year (see BioCentury, May 7, 2012).
Sarepta Therapeutics Inc. (NASDAQ:SRPT) proposed late Tuesday to raise up to $100 million in a follow-on underwritten by BofA Merrill Lynch and Morgan Stanley. On Monday, Sarepta jumped $9.58 (39%) to $33.98 after the company said it plans to submit an NDA to FDA for eteplirsen (AVI-4658) to treat Duchenne muscular dystrophy (DMD) by year end. In November, the company fell after saying approval of eteplirsen could be delayed by at least two years (see BioCentury Extra, April 21).
Sarepta was up $4.81 (14%) to $38.79 on Tuesday.
Allergan Inc. (NYSE:AGN) gained $21.65 (15%) to $163.65 on Tuesday after Valeant Pharmaceuticals International Inc. (TSX:VRX; NYSE:VRX) made public an unsolicited offer to merge with Allergan in a cash and stock deal that would value Allergan at about $47 billion based on 307.6 million shares outstanding as of Feb. 20. Under Valeant's proposal, Allergan shareholders would receive $48.30 in cash and 0.83 Valeant shares for each share held, which values Allergan at about $152.89 per share based on Valeant's close of $126.01 in New York on Monday, before the offer was made public.
The price would be a 31% premium to Allergan's close of $116.63 on April 10, before hedge fund Pershing Square Capital disclosed a 5% stake in Allergan. Pershing bought the shares through a newco -- PS Fund 1 LLC -- created by the hedge fund and Valeant. Pershing, which has about a 10% stake in Allergan and is the company's largest shareholder, said it will vote in favor of the deal. Allergan shareholders would own 43% of the combined company.
Allergan, which had 2013 revenues of $6.3 billion, said its board is reviewing the proposal. Valeant had $5.8 billion in revenues for the year. Goldman Sachs and BofA Merrill Lynch are advising Allergan, and Barclays and RBC Capital Markets are advising Valeant.
Valeant was up C$10.62 to C$149.38 in Toronto and up $9.40 to $135.41 in New York on Tuesday.
Biocad (St. Petersburg, Russia) said the Russian Ministry of Health approved the company's AcellBia (BCD-20), a biosimilar of autoimmune and cancer drug rituximab. Biocad said AcellBia is the first mAb biosimilar to be approved in Russia. The company could not be reached for details. Biogen Idec Inc. (NASDAQ:BIIB) and the Genentech Inc. unit of Roche (SIX:ROG; OTCQX:RHHBY) co-market rituximab as Rituxan in the U.S. Roche markets the chimeric mAb against CD20 antigen as MabThera elsewhere.
The U.K.'s NICE issued draft guidance recommending against the use of Kadcyla trastuzumab emtansine from Roche (SIX:ROG; OTCQX:RHHBY) to treat HER2-positive, unresectable, locally advanced or metastatic breast cancer in patients previously treated with the pharma's Herceptin trastuzumab and a taxane -- Kadcyla's approved indication in the EU. The committee said the most plausible incremental cost-effectiveness ratio (ICER) for Kadcyla compared to Tyverb lapatinib plus Roche's Xeloda capecitabine was L185,000 ($311,022) per quality-adjusted life year (QALY) gained, above the limit normally considered cost-effective. Roche did not submit a patient access scheme. Comments are due May 19. Kadcyla is a humanized mAb against HER2 linked to a DM1 cytotoxic agent from ImmunoGen Inc. (NASDAQ:IMGN).
GlaxoSmithKline plc (LSE:GSK; NYSE:GSK) markets Tyverb.
AbbVie Inc. (NYSE:ABBV) submitted an NDA to FDA for its all-oral regimen comprising ABT-450 plus the company's Norvir ritonavir, ABT-267 and ABT-333 with and without ribavirin to treat HCV genotype 1 infection. The regimen has breakthrough therapy designation from FDA. AbbVie plans to submit an MAA to EMA for the regimen in early May.
ABT-450, an HCV NS3/4A protease inhibitor, is the lead HCV protease inhibitor discovered by Enanta Pharmaceuticals Inc. (NASDAQ:ENTA) and Abbott Laboratories (NYSE:ABT), which spun out its pharmaceutical business into AbbVie. ABT-267 is an HCV NS5A protein inhibitor, and ABT-333 is a non-nucleoside HCV NS5B polymerase inhibitor.
AbbVie was up $0.58 to $50.01 on Tuesday. Enanta was up $2.53 to $36.82.
FDA's Anesthetic and Analgesic Drug Products Advisory Committee voted 14-0 against approval of MoxDuo IR morphine/oxycodone from QRxPharma Ltd. (ASX:QRX; OTCQX:QRXPY) to treat moderate to severe acute pain. The panel also voted unanimously that the company did not provide evidence that MoxDuo IR is safer than its individual components at comparable doses. MoxDuo IR, an immediate-release combination of oxycodone and morphine, has a May 25 PDUFA date (see BioCentury Extra, April 18).
Trading of QRxPharma was halted on Tuesday.
FDA is holding a public meeting on May 19-20 to obtain stakeholder input on the design and conduct of postmarketing requirements for extended-release and long-acting opioids. In September, FDA announced classwide labeling changes and new postmarketing study requirements to assess abuse and other risks. The agency is holding the meeting to obtain input on the studies for manufacturers of extended-release and long-acting opioids, who are required to submit final protocols for the new postmarketing requirements by August. The new postmarketing requirements include at least one study to quantitatively estimate the risks of misuse, abuse, addiction, overdose and death, as well as a trial to evaluate the risk of developing hyperalgesia, or increased sensitivity to pain (see BioCentury Extra, Sept. 10, 2013).
The meeting comes on the heels of FDA's approval of Zohydro ER hydrocodone bitartrate from Zogenix Inc. (NASDAQ:ZGNX), which has reignited debates about the best ways to balance the needs of pain patients and concerns about opioid drug addiction, abuse and overdoses. FDA Commissioner Margaret Hamburg discussed Zohydro's approval and efforts to trump FDA's approval in an interview with BioCentury This Week television that aired last Sunday (see BioCentury This Week, April 20).
FDA published final guidance on how the agency determines the sameness of mAbs under the Orphan Drug Act. The final guidance now explicitly states that FDA "does not intend to apply the considerations discussed in this guidance to determinations under the [Biologics Price Competition and Innovation] Act."
The final guidance is intended for determining sameness of mAbs only under the Orphan Drug Act, under which drugs with Orphan Drug status have an additional seven years of market exclusivity during which FDA cannot approve a sponsor's application for the same drug for the same indication. The agency determines sameness by comparing the principal molecular structures.
The final guidance is otherwise roughly identical to 1999 draft guidance on the topic. According to the final guidance, FDA determines the sameness of mAbs by comparing the amino acid sequences of the complimentary-determining regions (CDRs). The mAbs are considered the same if the sequences are the same or with "only minor" differences. For conjugated mAbs, FDA also considers differences between the functional elements of the conjugated molecule.
CMS Administrator Marilyn Tavenner announced in an internal memo that Jonathan Blum, principal deputy administrator, is departing the agency May 16. CMS declined to disclose details on his next steps or successor. Blum joined CMS in 2009 and became principal deputy administrator in August. Prior to that, he served as deputy administrator and director of CMS's Center for Medicare.
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