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BioCentury Extra
As published Monday, November 23, 2015 8:00 PM PST

  • Pfizer, Allergan advance mega-merger

    Pfizer Inc. (NYSE:PFE) and Allergan plc (NYSE:AGN) agreed to a merger valued at $160 billion, telling both Wall Street and Washington that investors and regulators should look at the strategic merits rather than the tax inversion effects.

    The new business, Pfizer plc (NYSE:PFE), will be domiciled in Ireland and operationally headquartered in New York City. It expects to have an adjusted effective tax rate of 17-18%; Pfizer reported a 25% effective tax rate in its 3Q earnings statement.

    On a conference call, Pfizer EVP of Business Operations and CFO Frank D'Amelio said the pharma was "not doing this transaction simply as a tax transaction. We're doing this because of the strategic importance of the franchise."

    Also on Monday, Pfizer Chairman and CEO Ian Read sent a letter to Senate Majority Leader Mitch McConnell (R-Ky.) touting the advantages of the merger. Read said "Pfizer and Allergan have deep roots and are committed to the United States, and a Pfizer-Allergan combination builds even more the combined companies' presence in the United States."

    He added that "we believe this will be good for patients and for U.S. competitiveness."

    D'Amelio told the call that "we've assessed this deal looking at present regulations, the new notices, and all of the information we can glean. And we believe this deal is a great deal for the shareholders both of Allergan and Pfizer."

    The deal culminates a year and a half during which Pfizer has transformed its business outlook through bolt-on acquisitions, new approvals and progress in its pipeline (see BioCentury, Nov. 9).

    Allergan shareholders will receive 11.3 Pfizer shares for each Allergan share. The implied price of $363.63 per Allergan share is a 16% premium on its Friday close of $312.46. Pfizer shareholders will own 56% of the entity.

    Pfizer said the merger will not affect dividends on a per share basis. It expects the transaction to be neutral to adjusted diluted EPS in 2017 and more than 10% accretive in 2019.

    Read will remain chairman and CEO. Allergan President and CEO Brent Saunders will serve as president and COO. All 11 of Pfizer's current directors will be on the board of Pfizer plc, joining Allergan's Saunders, Executive Chairman Paul Bisaro, and two directors that remain to be chosen.

    The transaction is expected to close in 2H16, pending shareholder and regulatory approval. Last week, the U.S. Treasury Department issued new rules aimed at deterring and reducing the benefits of corporate inversion deals. But in a letter to lawmakers last week, Secretary of the Treasury Jacob Lew noted the agency is unable to stop inversions without new statutory authority (see BioCentury Extra, Nov. 20).

    On the call, Read also said the transaction preserves the option for the company to split into separate innovative and established businesses. It expects to make a decision on the split by YE18.

    Pfizer fell $0.85 to $31.33 on Monday; Allergan sank $10.74 to $301.72.

  • CVS picks Amgen's Repatha

    CVS Health Corp. (NYSE:CVS) has selected Repatha evolocumab from Amgen Inc. (NASDAQ:AMGN) as its exclusive PCSK9 inhibitor in exchange for undisclosed discounts on the lipid-lowering mAb.

    "We have determined that choosing a single PCSK9 inhibitor for our commercial formularies allows us to get the best price possible for clients and preserves our commitment to deliver the best care available," CMO Troyen Brennan said in a statement.

    The PBM said its pharmacy and therapeutics (P&T) committee determined that Repatha and the competing Praluent alirocumab PCSK9 inhibitor from Regeneron Pharmaceuticals Inc. (NASDAQ:REGN) and Sanofi (Euronext:SAN; NYSE:SNY) were therapeutically equivalent.

    Amgen spokesperson Kristen Neese said the CVS deal is a value-based contract that links the net price of Repatha to expected LDL cholesterol reductions. Further details are undisclosed.

    This is the second exclusive deal for Repatha. On Nov. 9, Harvard Pilgrim announced a similar deal for the Amgen drug (see BioCentury Extra, Nov. 9).

    In October, Express Scripts Holding Co. (NASDAQ:ESRX) announced it would provide both drugs on its National Preferred Formulary (see BioCentury Extra, Oct. 6).

    On Monday, Amgen shares added $2.56 to $162.47; Regeneron was off $8.72 to $570.85.

  • Zai gets China rights to Hanmi's EGFR inhibitor

    Hanmi Pharmaceutical Co. Ltd. (KOSDAQ:128940) granted Zai Laboratory Ltd. (Shanghai, China) exclusive rights in China to HM61713 to treat EGFR mutation-positive non-small cell lung cancer (NSCLC). The deal includes rights in Hong Kong and Macau. Financial terms weren't disclosed.

    In July, Hanmi granted Boehringer Ingelheim GmbH (Ingelheim, Germany) exclusive, worldwide rights to the third-generation EGFR mutant-selective inhibitor outside South Korea, China and Hong Kong. Hanmi received $50 million up front in that deal, and is eligible for $680 million in milestones plus double-digit royalties.

    Boehringer has begun a pivotal Phase II study of the compound, which it has renamed BI 1482694, to treat T970M mutation-positive NSCLC (see BioCentury Extra, July 28). According to Boehringer, the mutation comprises the most common resistance mechanism to treatment with EGFR tyrosine kinase inhibitors, and is found in 50-60% of patients who previously received TKI therapy.

    The Zai partnership is at least the sixth out-licensing deal announced this year by Hanmi, including deals with Johnson & Johnson (NYSE:JNJ), Sanofi (Euronext:SAN; NYSE:SNY), Boehringer Ingelheim GmbH (Ingelheim, Germany), Spectrum Pharmaceuticals Inc. (NASDASQ:SPPI) and Eli Lilly and Co. (NYSE:LLY) (see BioCentury Extra, Nov. 9).

    Hanmi gained W56,000 to W847,000 on Monday.

  • FDA approves Opdivo in RCC

    FDA approved Opdivo nivolumab from Bristol-Myers Squibb Co. (NYSE:BMY) to treat advanced renal cell carcinoma in patients who have received prior anti-angiogenic therapy. The approval came well in advance of the drug's March 16, 2016, PDUFA date.

    The human IgG4 mAb against PD-1 is already approved to treat advanced melanoma and metastatic squamous and non-squamous non-small cell lung cancer (NSCLC).

  • BeiGene's BGB-3111 produces Phase I responses

    Data from an abstract released ahead of the American Society of Hematology (ASH) meeting showed BGB-3111 from BeiGene Ltd. (Beijing, China) produced an objective response in 64% of patients in an interim analysis of a Phase I study to treat relapsed-refractory B cell malignancies.

    The data are the first human results for the company's highly selective oral Bruton's tyrosine kinase (Btk) inhibitor.

    In the abstract, Australian and company researchers reported one complete response (CR) among six patients with mantle cell lymphoma (MCL), as well as four objective responses. Six of eight patients with chronic lymphocytic leukemia (CLL) and five of six with lymphoplasmacytic lymphoma had an objective response.

    The primary endpoint of the dose-ranging study was number of participants with adverse events. No dose-limiting toxicities were reported and the maximum tolerated dose was not reached. There were no drug-related serious adverse events; three serious neutropenia events were possibly drug related.

    The study enrolled 25 patients with seven different B cell malignancies. Median treatment duration was 204 days.

    Last month, BeiGene filed to raise up to $100 million in a NASDAQ IPO. It raised $96.6 million in a venture round in May (see BioCentury Extra, Oct. 19).

    The results will be presented on Dec. 7 at the ASH meeting in Orlando, Fla.

  • ObsEva raises CHF60M, strikes endometriosis deal

    ObsEva S.A. (Geneva, Switzerland) raised CHF60 million ($58.9 million) in a series B round led by new investor HBM Healthcare Investments. Also participating were new investors New Enterprise Associates, OrbiMed and Rock Springs Capital, as well as existing investors Sofinnova Partners, Sofinnova Ventures, Novo Ventures and MS Ventures.

    On Nov. 20, the reproductive health company obtained ex-Asia rights to gonadotropin-releasing hormone (GnRH) antagonist KLH-2109 from Kissei Pharmaceutical Co. Ltd. (Tokyo:4547). The companies said they will develop the compound in parallel to treat endometriosis. Kissei has already completed three Phase IIa studies of KLH-2109 in Japan. ObsEva intends to start a placebo-controlled Phase 2b study in mid-2016; it has renamed the compound OBE2109.

    Financial terms were not disclosed.

    ObsEva also intends to start a Phase I study in mid-2016 of OBE002, its prostaglandin F2 alpha receptor (PGF2 alpha) antagonist, to treat preterm labor.

    Leerink was ObsEva's financial advisor. NEA's Ed Mathers will join the company's board.

  • GAO report highlights Part B drug costs

    A U.S. Government Accountability Office report released Friday highlights the costs of drugs purchased for patients in Medicare Part B, which covers drugs used in hospitals and out-patient settings such as physicians' offices. Rep. Chris Van Hollen (D-Md.) said the report shows a need for government intervention to reduce the cost of specialty pharmaceuticals.

    GAO found that three drugs -- Lucentis ranibizumab, Eylea aflibercept and Prolia denosumab -- accounted for 53% of the $5.9 billion spent by Medicare Part B and its beneficiaries on new drugs in 2013. Lucentis from the Genentech Inc. unit of Roche (SIX:ROG; OTCQX:RHHBY) and Eylea from Regeneron Pharmaceuticals Inc. (NASDAQ:REGN) are marketed to treat ophthalmic indications. Amgen Inc. (NASDAQ:AMGN) markets Prolia to treat osteoporosis.

    The GAO report noted that Medicare patients who do not have Medigap insurance policies are responsible for 20% of Part B drug costs. Annual beneficiary out-of-pocket expenses in 2013 were $9,400 for Lucentis, $9,900 for Eylea, and $2,800 Prolia. Annual out-of-pocket expenses for Part B beneficiaries for 11 Orphan drugs ranged from $10,000 to $91,000.

    Van Hollen, who released the GAO report, said in a statement that it demonstrates the need for policies that "promote innovation in a way that allows greater access and affordability for all Americans - not just the wealthy few." Van Hollen, who is campaigning for the Senate seat of the retiring Sen. Barbara Mikulski (D-Md.), said the report is evidence of the need to "act with urgency to address the skyrocketing prices that make these drugs unaffordable for most Americans."

    In a statement responding to the report, PhRMA said Part B drugs "continue to be a small and stable share (3% in 2013) of overall Medicare spending." PhRMA also said the volume weighted average sales price for all Part B drugs has "remained steady year over year," and said price growth for Part B drugs "is below overall medical inflation."

  • CFDA implements new drug approval policies

    China FDA said new drug approval policies previously announced by the State Council will go into effect on Dec. 1. The initiatives aim to reduce time to market for new drugs and promote innovation in China, according to an analysis by law firm Ropes & Gray (see BioCentury, Oct. 19).

    CFDA will update its definition of a new drug to include therapeutics not yet approved anywhere in the world. Previously, the agency categorized new drugs as therapeutics not yet approved in China. Ropes & Gray's Katherine Wang told BioCentury that while the policy applies primarily to new applications, sponsors of applications currently under review may request expedited approval if they meet program requirements.

    The State Council released its updated guidelines in August (see BioCentury Extra, Aug. 19).

    CFDA will also expand its expedited approval pathway to include treatments for China-prevalent diseases, pediatric and geriatric drug candidates, and foreign innovative drugs manufactured domestically. The State Council released the review initiatives in August (see BioCentury Extra, Aug. 4).

    In addition, CFDA will implement a three-year pilot program to allow researchers of Chinese nationality, domestic drug manufacturers and domestic R&D institutions to seek marketing authorizations for new drugs separately from manufacturing licenses. The pilot program will allow Chinese innovators to outsource production to contract manufacturing organizations provided they arrange for insurance or financial guarantees to cover potential product liabilities, Ropes & Gray noted. The State Council announced the pilot program earlier this month (see BioCentury Extra, Nov. 5).

  • Senators propose 'targeted' drug imports

    U.S. Sens. Chuck Grassley (R-Iowa) and John McCain (R-Ariz.) asked HHS Secretary Sylvia Burwell to allow targeted importation of lower cost drugs from Canada to address dramatic drug price increases highlighted in recent news reports. Both senators have long championed drug importation.

    In a Nov. 20 letter, Grassley and McCain noted that the Medicare Modernization Act of 2003 gives FDA authority to allow drug importation if HHS can certify that importation poses no risk to the health and safety of Americans and would lead to significant cost reductions. HHS secretaries in Republican and Democratic administrations have determined that these criteria have not been satisfied.

    The letter acknowledges that meeting those criteria "may be a difficult standard for the importation of all drugs from Canada." The senators suggested that importation would be feasible for a limited number of drugs, and recommend implementing a policy that is "expressly limited so that it does not impact innovator companies that invested in the development of the drug."

    The letter asks Burwell to consider immediately allowing importation of drugs from Canada if the drugs are "off patent or no longer marketed in the United States by the innovator company that initially developed the drug" and if there has been a "significant and unexplained" price increase. The proposal is limited to situations in which there is no direct competitor in the market and importation of a competitor drug will reduce costs to taxpayers and consumers, or when "the drug is produced in another country by the name brand manufacturer that initially developed the drug or by a well-known generic manufacturer that commonly sells pharmaceutical products in the United States."

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