PHARMA DEALS DURING APRIL 2014
(Part 2 out of 3)

Generics/ Specialty Pharma

Since spinning off from Covidien last year Mallinckrodt has been in fast growth and diversification mode.  Having purchased Cadence Pharmaceuticals for $1.4bn in February of this year (Ofirmev, an iv injectable acetaminophen for pain), April saw the acquisition of another California-based biotech, Questcor (formed in 1999 by the merger of RiboGene and Cypros Pharmaceutical), for $5.6bn representing a 27% premium.

This gives Mallinckrodt, Acthar Gel (repository corticotropin), which is FDA approved for 19 “difficult-to-treat” autoimmune and inflammatory associated conditions and currently primarily used to treat multiple sclerosis relapses, proteinuria associated with nephrotic syndrome, certain rheumatology-related conditions, and infantile spasms.  Whilst this is a 60-year old drug acquired by Questcor in 2001 for $100,000, generic competition is unlikely due to manufacturing challenges. Acthar sales grew by 50% in 2013 to $761.3m and is predicted to rise to $1.9bn in 2018.  Questcor also provides contract manufacturing services through its subsidiary BioVectra.

Acthar complements Mallinckrodt's portfolio of specialty pharmaceutical brands which include Exalgo, Gablofen, Pennsaid and Xartemis and reduces the company's focus on medical imaging and pain drugs. This transaction brings closer Mallinckrodt's goal to join the specialty drug big player league with a portfolio covering pain management, CNS, renal, rheumatologic and other autoimmune and inflammatory disorders.

April also saw Sun Pharmaceutical Industries relieving Daiichi Sankyo (63.9% owner) of the troubled Ranbaxy Laboratories to create India's largest pharma company, leading in 13 speciality segments, with estimated annual revenues of $4.2bn.  Sun will become the world's 5th largest specialty generic pharma company with operations in 65 countries, 47 manufacturing facilities across 5 continents, and a significant platform of specialty and generic products including 629 ANDAs.

The total cost of the all-stock acquisition is $4.0bn (an 18% premium), $3.2bn in stock and nearly $800m of Ranbaxy debt.  Daiichi Sankyo will become Sun's second largest shareholder, about a 9% ownership valued at around $2bn.  Daiichi has therefore paid a heavy price for its “generics dalliance” – this is less than half the $4.2bn it paid for its stake in Ranbaxy in 2008, not to mention the 2013 $500m payment to the US authorities to settle 7 felony charges. This move by Sun is not for the faint hearted.  Aside from the usual challenges that come with such a substantial buyout, the US regulatory cloud that has overshadowed Ranbaxy for years and the more recently announced European Medicines Agency plant inspection must be addressed.

Eclipsing all else will be restoring FDA confidence.  To this end immediate remedial action will involve management restructuring at the 4 Ranbaxy Indian plants currently subject to US shipping bans.  This may not be as simple as it seems.  Last year the FDA imposed export bans from 20 or so plants in India and warned several others, and whilst Sun Pharma has fared well in this respect, its Karkhadi plant was served with a cephalosporin antibiotics import ban for the very same issues that have dogged the Ranbaxy plants, i.e. quality control and sanitation. Once these issues have been dealt with the challenge of rebuilding prescriber confidence can commence.  Doctors have shied away from Ranbaxy brands in recent years and it is rumoured that a solution will be to replace the Ranbaxy brand with the Sun Pharma moniker at least in the US.

Sun estimates that operating synergies will save $250m in the third year, 40% coming from sales force down-sizing and 20-25% from distribution channel rationalisation.  The reward for all of this effort is Ranbaxy's new product pipeline, including generic versions of 2 blockbuster drugs: the first-to-file status for Nexium, AstraZeneca's heartburn drug, which comes off patent next month and the first to market approval for Diovan, Novartis' blood pressure drug.

A smaller generics deal was Actavis' takeover of Silom Medical Company for approximately $100m in cash.  The acquisition of this privately owned, Thailand focussed company immediately elevates Actavis into a top-five position in the growing Thai generics market, with a leading position in ophthalmics and respiratory therapeutics and a strong cardiovascular franchise. This is the latest of the Actavis buying binge frenzy adding to the acquisition of Warner Chilcott last year and Forest Laboratories last month.

Devices on the move

Zimmer Holdings, a maker of reconstructive, spinal and trauma devices such as artificial hips and knees which was spun out of Bristol-Myers Squibb in 2001, has agreed to acquire rival Biomet for $13.35bn, $10.35n in cash and shares of stock valued at $3.0bn.  Zimmer will now be second only to J&J in the fast growing $45bn muscle and orthopaedic injury market, which finds itself increasing serving sports musculoskeletal injury needs.  Zimmer and Biomet had combined revenues of $7.8bn in 2013 and are expected to generate cost savings of $135m in the first year and $270m by the third year.  This is the fifth-largest medical device deal in past decade, the biggest since J&J's Synthes purchase for $19.7bn in 2012.

April also saw Cardinal Health acquire the privately held device maker AccessClosure for $320m in cash.  This will give Cardinal access to the Mynx vascular closure device that seals the femoral artery using a secure, dissolving sealant resulting in a healed artery after 30 days.  The company generates about $80m in sales annually.

Finally New Wave Surgical was acquired by Covidien for $100+m.  The reward the D_HELP kit (to be re-named Clearify Visualization System) currently used in 1,200 US hospitals to keep laparoscopic and robotic lenses heated, defogged and clean during procedures.  Who would have thought that such inspiration would have generated a 30-40X return on investment in such a short period?  The founder/ inventor R. Alexander Gomez raised about $3m and created a company with 145 employees and $21m in revenue in just 10 years.

Pharma mainstays not forgotten – pills, orphans, diagnostics, and even stem cells

Interest in good old fashioned drug development was demonstrated by the Forest Laboratories acquisition of Furiex Pharmaceuticals for $1.1bn in cash and potentially $360m in contingent value rights should the main focus of the deal, the drug eluxadoline, receive FDA approval and is not scheduled as a controlled drug.  Eluxadoline is a first-in-class, locally-acting mu opioid receptor agonist/ delta opioid receptor antagonist for treating symptoms of diarrhoea-predominant irritable bowel syndrome (IBS-d).  NDA submission is planned by third quarter of 2014.  Forest plans to sell Furiex's royalty rights to alogliptin and Priligy on to Royalty Pharma for about $415m.

Forest is building a leading position in the $38bn gastroenterology (GI) market adding eluxadoline to its broader GI portfolio including Linzess.  Actavis has consented to Forest's acquisition of Furiex.  The timing of Actavis' previously announced acquisition of Forest remains unaffected.

The second highest value acquisition primarily involving a drug was Hyperion Therapeutics' purchase of Andromeda Biotech, the developer of DiaPep277, in a deal that could be worth close to $570m.  DiaPep277 is a first-in-class, 24-amino acid peptide derived from human heat shock protein 60 (hsp60) that has demonstrated a beneficial effect on the autoimmune attack of pancreatic beta cells in patients with Type 1 diabetes thereby preserving endogenous insulin secretion.  For sole rights to DiaPep277 Hyperion will pay $12.5m in cash and about $7.9m in stock up front, with $120m tied to regulatory milestones and $430 million for commercial success.

In recent years Roche has signed a string of deals (Constitution Medical Investors, Pacific Biosciences, Bayer) underpinning its commitment to diagnostics.  In April it added the acquisition of IQuum giving access to the CE marked and FDA cleared Laboratory-in-a-tube (Liat™) System.  This enables healthcare workers to perform rapid molecular diagnostic testing in a point of care setting, with minimal training.  The Liat™ Influenza A/B Assay, the first test available for use on the system, discriminates between influenza A and B.  IQuum is also developing a workstation that can perform up to 8 nucleic acid tests simultaneously as well as assays for HIV, cytomegalovirus, influenza subtypes and dengue fever.  For this Roche will pay $275m upfront and up to $175m in milestones.

Last but not least in significance was the cell based therapy company Neostem's $124m stock-and-cash acquisition of California Stem Cell.  This was largely driven by the phase 2 autologous melanoma stem cell immune-based therapy, Melapuldencel-T.  However the platform technology also has potential utility in hepatocellular carcinoma and other immune-responsive tumour types and may herald the much awaited fruition of this long promised modality.

For those out there still wanting to share don't despair - and note that on closer inspection early stage collaborations continue to endure as exemplified by BMS (preclinical tauopathies deal with iPerian), Roche (LSD1 inhibitors with Oryzon) and Merck & Co (Immune checkpoint antibody deal with Agenus).  There is hope yet for us all!

Fuente: PMLiVE

Haciendo click en los links siguientes, accederán a los Contenidos
de algunos de nuestros CURSOS A MEDIDA:

Programa Ejecutivo en PENSAMIENTO ESTRATÉGICO

http://msg-latam-meic.blogspot.com.ar/2014/04/programa-ejecutivo-en-pensamiento.html

Programa Ejecutivo en MANAGEMENT ESTRATÉGICO

http://msg-latam-meic.blogspot.com.ar/2014/04/programa-ejecutivo-en-management.html

Programa Ejecutivo en GESTIÓN DEL CAMBIO

http://msg-latam-meic.blogspot.com.ar/2014/04/programa-ejecutivo-en-gestion-del.html

Taller de ESTRATEGIAS EFECTIVAS para ESCENARIOS TURBULENTOS

http://msg-latam-meic.blogspot.com.ar/2014/04/taller-de-estrategias-efectivas-para.html

Por dictado IN COMPANY, consultar al mail: msg.latam@gmail.com

ó al +5411-3532-0510