|May 2013, Volume XXIII, No. 3|
Industry News In Brief
by Patti Charek, RF Walsh Collaborative Partners
Industry News In Brief, a regular feature of the Boston Area Chapter Newsletter, presents news items concerning companies in the pharma, biotech, medical device and related fields, with an emphasis on companies with a local presence and topics of special interest to our readers.
Sanofi-aventis and Genzyme Corporation have announced that they have entered into a definitive agreement under which sanofi-aventis is to acquire Genzyme for $74 per share in cash, or approximately $20.1 billion. In addition to the cash payment, each Genzyme shareholder will receive one Contingent Value Right (CVR) for each share they own, entitling the holder to receive additional cash payments if specified milestones related to Lemtrada (alemtuzumab MS) are achieved over time or a milestone related to production volumes in 2011 for Cerezyme and Fabrazyme is achieved. The transaction, which has been unanimously approved by the Boards of Directors of both companies, is expected to close early in the second quarter of 2011, subject to customary closing conditions.
"This agreement with Genzyme is both consistent with our long-term strategy and creates significant long-term value for our shareholders," said Christopher A. Viehbacher, Chief Executive Officer of sanofi-aventis. "This transaction will create a meaningful new growth platform for sanofi-aventis while expanding our footprint in biotechnology..."
"This transaction represents a new beginning for Genzyme," said Henri A. Termeer, Chairman of the Board, President and Chief Executive Officer of Genzyme Corporation. "Genzyme has a record of innovation and a unique and pioneering approach to serving patients. We also share an exciting vision of the future, one in which Genzyme and sanofi-aventis grow and innovate by developing breakthrough treatments that change the lives of people with serious diseases. Sanofi-aventis believes in what we do, in our people and in our potential. We look forward to building a sustainable future together."
Sanofi-aventis' global footprint, significant resources and proven track record of successfully expanding franchises will create new long-term growth opportunities for the combined company, particularly in emerging markets. Genzyme will become an important new platform in sanofi-aventis' sustainable growth strategy and expand the company's presence in biotechnology. Sanofi-aventis intends to make Genzyme its global center for excellence in rare diseases and the acquisition will reinforce sanofi-aventis' commitment to the greater Boston area, where it already has a sizeable presence.
Beyond rare diseases, Genzyme has built strong Renal-Endocrinology, Hematology-Oncology and Biosurgery businesses that are complementary to existing sanofi-aventis businesses and include highly differentiated, market-leading products that provide significant benefit to patients. Sanofi-aventis will work with Genzyme through the integration process to develop plans to enhance the opportunities for these businesses going forward. Consistent with sanofi-aventis' approach in other transactions, Genzyme will retain its corporate brand.
Genzyme and sanofi-aventis will immediately begin integration planning, including the formation of a joint Integration Steering Committee. Henri A. Termeer will resign as Chairman of the Board, President and Chief Executive Officer of Genzyme following the close of the transaction, but will advise on the integration in his role as Co-Chairman of the Integration Steering Committee with Christopher A. Viehbacher. (Source: Genzyme Website, 16 February, 2011)
Pfizer said it will add about 350 jobs in the Boston area and look for a new site to house a pair of research units it will move here from southeastern Connecticut. The news came as Pfizer, the world's largest drug company with $67.8 billion in revenue last year, unveiled a broad restructuring plan that will slash its global research and development outlays by $1.5 billion, resulting in the loss of thousands of jobs around the world. It was the second major research cutback since New York-based Pfizer acquired Wyeth Pharmaceuticals in 2009.
But even as Pfizer shrinks research operations globally, it will be growing in Massachusetts, where it already has about 2,300 workers at two research labs in Cambridge and a former Wyeth biotechnology plant in Andover. "We have recognized that we want to have a very significant footprint in Massachusetts," said J.C. Gutierrez Ramos, the Cambridge-based Pfizer senior vice president of biotherapeutics research and development. "This emphasizes Pfizer's commitment to increase our interactions with the academic medical centers, our interactions with the biotechnology companies and entrepreneurs, with all of the stakeholders in biomedical research."
Pfizer's decision to increase research in the Boston area follows similar recent moves by global drug makers such as Novartis AG of Switzerland and Sanofi-Aventis SA of France, which want to plug into the area's life sciences industry at a time when drug discovery has slowed worldwide. Like other companies, Pfizer is also refocusing its own research on core areas ranging from neurology and immuno-inflammation to vaccines and cancer treatments.
"It's a confirmation that, when some of these companies have to make tough decisions, they continue to favor Massachusetts,'' said Susan Windham-Bannister, president of the Massachusetts Life Sciences Center, a state agency created to implement Governor Deval Patrick's life sciences initiative.
Even as it eliminates 1,100 jobs in Groton, CT, about a quarter of its workforce there, the company said it will be consolidating its neuroscience and cardiovascular metabolic research operations in the Boston area. Those operations will be housed in a new site, probably in Boston, Cambridge, or Waltham, said Gutierrez. Together, they are expected to create about 450 jobs here, he said. But Pfizer will cut about 100 other jobs in the Boston area, many at a lab it plans to close on Memorial Drive in Cambridge. That lab conducts research into regenerative medicine and other therapeutics. Pfizer will continue to be involved in those types of research, but will do less work with its own staff and more with outside collaborators, Gutierrez said.
Gutierrez said some of the projects taking place on Memorial Drive may be folded into other Pfizer operations and some researchers there may be transferred to other sites. Pfizer will still operate another lab, formerly owned by Wyeth, in the Alewife neighborhood of Cambridge.
Windham-Bannister said state government officials will work with Pfizer to assist any employees who lose their jobs as part of the restructuring, helping them to find other life sciences jobs in Massachusetts. (Source: Robert Weisman, Boston Globe, 2 February, 2011)
Vertex Pharmaceuticals said regulators in the U.S. and Canada will speed their reviews of its drug candidate telaprevir, meaning the hepatitis C therapy could be approved months earlier than usual. Vertex said the FDA will do a six-month priority review on telaprevir, which means the agency expects to make a decision by May 23. Typical FDA reviews last about 10 months, starting from the date the drug maker files for approval. The Therapeutic Product Directorate of Health Canada will take six to nine months to make its decision, Vertex said. Standard reviews in Canada take about a year and a half.
Telaprevir is already receiving an accelerated review in Europe. Analysts believe Vertex could get billions of dollars in annual revenue from telaprevir, the first in what could be a series of new treatments for hepatitis C. Telaprevir and Merck & Co.'s drug boceprevir are more effective than older therapies in controlling the viral liver disease. (Source: Associated Press, 21 January, 2011)
Germany's largest independent pharmaceutical firm Boehringer Ingelheim and U.S. drug major Eli Lilly announced a global agreement to jointly develop and commercialize a portfolio of anti-diabetic compounds currently in mid- and late-stage development for the fast-growing diabetes market. Included in the deal are Boehringer Ingelheim's two oral diabetes agents - linagliptin and BI10773 - as well as Lilly's two basal insulin analogues - LY2605541 and LY2963016. There is also the option to co-develop and co-commercialize Lilly's anti-TGF-beta monoclonal antibody.
Under the terms of the accord, Lilly will make an initial one-time payment to Boehringer Ingelheim of 300 million euros ($389.4 million). The German company will be eligible to receive up to a total of 625 million euros in success-based regulatory milestones for linagliptin and BI10773. For its part, Lilly will be eligible to receive up to a total of $650 million in success-based regulatory milestones on its two basal insulin analogues.
Should Boehringer Ingelheim elect to opt-in to the Phase III development and potential commercialization of the anti-TGF-beta monoclonal antibody, Lilly would be eligible for up to $525 million in opt-in and success-based regulatory milestone payments. The companies will share ongoing development costs equally. Upon successful regulatory approval of any product resulting from the alliance, the companies will equally share in the product's commercialization costs and gross margin. Each company will also be entitled to potential performance payments on sales of the molecules they contribute to the collaboration.
Diabetes affects an estimated 285 million adults worldwide and more than 24 million people in the U.S. Approximately 90-95 percent of those affected have type 2 diabetes. Diabetes costs approximately $174 billion per year in direct and indirect medical expenses in the U.S. According to the Centers for Disease Control and Prevention's National Health and Nutrition Examination Survey, approximately 60 percent of people with diabetes do not achieve their target blood sugar levels with their current treatment regimen. (Source: thepharmaletter, 12 January 2011)
Pfizer said it is expanding a partnership with RNA drug developer Santaris Pharma A/S in a deal that could be worth more than $600 million. Pfizer said it will pay the Danish company $14 million upfront for the drug candidates, which are designed to target RNA. Santaris could get up to $600 million in milestone payments, plus royalties if any drugs from the collaboration are approved. The New York drugmaker said Santaris will deliver drugs for up to 10 RNA targets. RNA is genetic material that's produced inside cells by DNA. RNA makes proteins that control cellular operations, including disease processes.
The deal expands an agreement between Santaris and Wyeth, which is now part of Pfizer. In January 2009, Wyeth agreed to pay Santaris $7 million upfront and make a $10 million investment in the company. Santaris could also receive milestone payments as part of that deal. Pfizer said some programs from that partnership have been advanced and reached early milestones. (Source: Associated Press, PharmPro Website, 4 January, 2011)
Biogen Idec Inc. has purchased the rights to three neurodegenerative disease programs from Neurimmune Holding AG, which it had been partnering with to develop the drugs. Biogen said it will pay Switzerland-based Neurimmune $32.5 million, and up to $395 million more in contingent payments, for research programs focused on Parkinson's disease, Alzheimer's disease, and amyotrophic lateral sclerosis, also known as ALS or Lou Gehrig's disease.
"The unmet medical need among patients suffering from devastating neurodegenerative diseases is high," said Alfred Sandrock, senior vice president at Biogen. As many as 5 million Americans suffer from Alzheimer's, according to the Centers for Disease Control and Prevention (Source: Bloomberg News, 21 December 2010)
Biogen Idec said it has lured biotechnology industry veteran Douglas E. Williams from Seattle to head its research and development operations, a critical job that had been vacant since October 2009. Williams, 52, will arrive about two months after Biogen Idec, the state's second-largest biotech company, unveiled a broad restructuring plan that shut down its research in oncology and cardiovascular medicine while intensifying its concentration on neurology, immunology, and hemophilia.
Williams, who will be an executive vice president at Biogen Idec, was most recently chief executive of ZymoGenetics Inc., a Seattle company bought last fall by pharmaceutical giant Bristol-Myers Squibb Co. Williams previously headed research at another Seattle company, Immunex Corp. He grew up in the Western Massachusetts town of Greenfield, and describes himself as "a lifelong Red Sox and Bruins fan'' who is returning home.
Shortly after his predecessor, Cecil Pickett, retired from Biogen Idec, the company's then-chief executive James C. Mullen disclosed that he, too, would depart. The research job, a crucial position at any biotech firm, remained open while the board searched for a new chief executive. George A. Scangos, who assumed that role in the summer - and also came from a West Coast biotech company - said filling the research post was a priority.
Biogen Idec also said that it has named Steven H. Holtzman, 56, to the new position of executive vice president for corporate development. Holtzman will oversee corporate strategy, business development, portfolio management, program leadership, and the company's venture capital fund, all of which had previously been independent business units. He most recently had been chief executive at Infinity Pharmaceuticals Inc. of Cambridge.
With the two appointments and the restructuring announced in November, Scangos, who previously ran Exelixis Inc. in San Francisco, has begun to put his mark on Biogen Idec. The company is best known for drugs that treat multiple sclerosis and rheumatoid arthritis. (Source: Robert Weisman, Boston Globe, 6 January 2011)
Roche and Biogen Idec won expanded U.S. approval for use of the Rituxan medicine against a common form of blood cancer. The FDA authorized the use of Rituxan as a follow-up therapy in patients with advanced follicular non-Hodgkin's lymphoma who have received an initial primary treatment, the companies said. Rituxan, also called MabThera, won European approval in October for the same patients. The medicine is approved for use in rheumatoid arthritis, chronic lymphocytic leukemia, and non-Hodgkin's lymphoma. It generated $1.61 billion in revenue for Basel, Switzerland-based Roche during the third quarter and $258 million for Biogen Idec, the companies said.
Results of a study released in May showed that among follicular lymphoma patients given follow-up therapy with Rituxan for two years, 82 percent had no worsening of their condition compared with 66 percent of those who didn't get maintenance doses. (Source: Bloomberg News, 29 January, 2011)
There's big news for Taligen Therapeutics. Cheshire, CT-based Alexion Pharmaceuticals has bought the Cambridge, MA biotech startup for $111 million and potential future payments, the buyer said. The deal allows Alexion to obtain Taligen's lead candidate, TT30, which Taligen had been developing as a potential rival to Alexion's drug eculizumab (Soliris) for a rare blood disease known as paroxysmal nocturnal hemoglobinuria (PNH). Alexion started selling eculizumab in 2007 and has no other products on the market.
This transaction does keep at least part of the Taligen team together. The biotech's staff is expected to serve as the core of Alexion's new translational medicines group in Cambridge, where former Taligen CEO Abbie Celniker will head research. Alexion says that Taligen's pipeline includes a potential treatment for age-related macular degeneration and other eye disease. The deal will bolster the pipeline of Alexion, one of the hot growth stories in all of biotech. Primarily on the strength of its one hit drug that has sent its stock on a bull run, Alexion is now worth more than $7.5 billion, almost as much as Cambridge-based Vertex Pharmaceuticals.
Now Alexion controls the fate of Taligen's science, which has focused on using protein drugs to target an overactive immune activity called the complement pathway. This immune malfunction causes inflammation and harms tissue. (The company's technology initially came from the University of Colorado, and was founded there by academics Woodruff Emlen and Michael Holers.) Taligen's lead drug, TT30, might be able to target specific tissues where inflammation occurs - a big improvement from the current practice of using corticosteroids to fight such inflammation in a more generalized way, which causes side effects.
Taligen had planned to begin early clinical trials of its lead compound in late 2010 for rare blood diseases such as PNH, according to Celniker. Alexion says it's the first and only company to get FDA approval for a drug specifically for PNH, which causes immune reactions that attack and destroy red blood cells. The company says there are only 8,000 to 10,000 people in North America and Western Europe with the rare blood disorder. (Source: Ryan McBride, Xconomy, 31 January, 2011)
Amgen is bolstering its late-stage drug pipeline by buying the privately held cancer drug maker BioVex Group, of Woburn, MA, in a deal that could be worth as much as $1 billion. BioVex's drug candidate, OncoVex, is based on a virus that attacks cancer cells, destroying tumors and stimulating the immune system to fight cancer throughout the body. Separately, Amgen said it expects the acquisition of BioVex to close in the first quarter. It agreed to pay $425 million at closing and another $575 million if BioVex's products reach regulatory and sales milestones.
OncoVex is in late-stage testing as a treatment for metastatic melanoma, the most aggressive type of skin cancer, and squamous cell carcinomas of the head and neck. BioVex is also running an early stage clinical trial of the genital herpes vaccine ImmunoVex.
Sales of Amgen's drugs Neulasta and Neupogen, which are used to prevent infections in chemotherapy patients, rose 3 percent to $1.24 billion. The increase came mostly from higher prices. Changes in inventories by wholesalers also aided its revenue, and tax credits boosted Amgen's quarterly results. Sales of Amgen's anemia drugs Aranesp and Epogen continued to slide, declining a combined 9 percent to $1.22 billion because of lower demand, primarily for Epogen. Sales of the two drugs have dropped in recent years because of safety warnings and tighter restrictions on their use.
Amgen reported $28 million in sales of its newest drug, denosumab. The drug is approved under the name Prolia as a treatment for osteoporosis in postmenopausal women, and it is sold as Xgeva for the prevention of bone fractures in patients with advanced cancer. Amgen said Prolia sales totaled $20 million and Xgeva sales reached $8 million. (Source: Marley Seaman, Associated Press, 25 January 2011)
Abbott Laboratories said it would eliminate 1,900 employees to keep profits up, indicating that one of the pharmaceutical industry's few success stories of recent years is not immune to cost pressures squeezing the sector. The maker of drugs and devices said the terminations involve U.S. marketing and manufacturing positions. The cuts, which represent about 2 percent of the company's workforce, are expected to save the company $200 million annually in coming years. Abbott blamed the cuts on new fees and pricing pressures associated with the health reform law and a "challenging regulatory environment" at the FDA.
Abbott has steadily increased its revenue year after year, even as most of its pharmaceutical peers have watched sales fall as patents on blockbuster drugs expire. And while the company's multibillion dollar, anti-inflammatory drug Humira continued to deliver in the latest quarter, Abbott has stumbled in efforts to develop new therapies. Recently the company withdrew its application for a next-generation psoriasis drug after the FDA indicated additional work would be needed to win approval.
Abbott has also wrestled with safety problems in the past year. It pulled its diet drug Meridia from the market in October because of heart risks, only one month after it recalled millions of containers of its Similac baby formula because of possible contamination from insect parts. (Source: Associated Press, 27 January, 2011)
Vertex signed a letter of intent to relocate its headquarters from Cambridge to the Fan Pier complex in late 2013. The deal is a watershed in Boston's campaign to court a biotech industry that has largely eluded it, with most drug companies preferring to be closer to Cambridge's prestigious universities or out in massive suburban office parks that offer cheaper rents and room for expansion. "This is a jump-start for the entire waterfront,'' said Mayor Thomas M. Menino, who has been trying to remake the area into an "Innovation District'' by offering incentives to companies to locate there. "Vertex has made the decision to be on the forefront of the Innovation District, and that decision will lead other companies to follow suit.''
Terms of the deal have not been disclosed, and the company has not yet signed the lease. The lease is contingent on an unusual clause: Vertex must receive federal approval of its first major in-house commercial drug, telaprevir, a treatment for hepatitis C. US regulators are expected to act on the company's application by June.
Vertex would occupy about 1.1 million square feet, filling a pair of 18-story buildings at Fan Pier, with an option to expand into a third to be built there. Vertex's portion of the $2 billion Fan Pier complex is estimated at $800 million, according to state officials. State and city leaders are providing Vertex with a substantial tax break and other inducements to help close the deal. Vertex's lease will require it to pay real estate taxes on the new buildings. Boston will provide Vertex with an $11.8 million reduction in property taxes through 2018.
The state, meanwhile, will provide $10 million in tax breaks in exchange for Vertex creating 500 additional full-time jobs by 2015. Massachusetts will also borrow $50 million for roads, water and sewer, and other necessary infrastructure, to be repaid with tax revenues generated from Vertex's buildings. Any shortfall in revenue needed to pay off the state's bonds would come from the City of Boston or from the developer.
The relocation will allow Vertex to consolidate its 1,300 workers, now divided among 10 buildings across Cambridge, into a single location. The decision to relocate comes at a critical juncture for the biotech, which has recently hired 300 employees in anticipation of selling telaprevir, a drug it has been developing for 15 years. If it gets a regulatory nod this spring, Vertex will be the first approved, commercially available treatment for hepatitis C. (Source: Casey Ross, Boston Globe, 25 January 2011)
Novartis AG will take full control of Alcon, the world's largest eye-care company, after agreeing to pay about $12.9 billion for the stock it doesn't own to end an 11-month dispute with minority shareholders. Alcon will become the eye-care division of Novartis, which will also include CIBA Vision contact lenses and eye medicines. The unit would have had sales of $8.7 billion last year.
Novartis chief executive Joseph Jimenez is looking to Alcon to help the Swiss company diversify away from pharmaceuticals, a model also pursued by New Jersey-based Johnson & Johnson, which sells prescription drugs, medical devices, and consumer products such as Tylenol. The purchase values Alcon at about 25 times net income, compared with an average multiple of 26 for past eye-care acquisitions, according to data compiled by Bloomberg. Based on the new terms, the Swiss company will have paid a total of about $51.6 billion for Alcon.
Jimenez, a former executive at ConAgra Foods Inc. and H.J. Heinz Co. named to the top job at Novartis in January, is finishing a deal started in 2008 by predecessor Daniel Vasella. Novartis expects the deal to close in the first half of 2011. Vasella, who is still the chairman, struck an agreement in 2008 to buy a 25 percent stake in Alcon from Nestle SA for $143 a share. The Swiss drug maker in January this year exercised an option to buy Nestle's remaining 52 percent for an average $180 a share.
Alcon, based in Switzerland, got 87 percent of its revenue last year from surgical equipment for ophthalmology and prescription drugs for the eye, with 13 percent from consumer products such as contact-lens solutions. (Source: Eva von Schaper, Bloomberg News, 16 December 2010)
The Obama administration has become so concerned about the slowing pace of new drugs coming out of the pharmaceutical industry that officials have decided to start a billion-dollar government drug development center to help create medicines. The new effort comes as many large drug makers, unable to find enough new drugs, are paring back research.
Promising discoveries about such illnesses as depression and Parkinson's that once would have led to clinical trials are instead going unexplored because companies have neither the will nor the resources to undertake the effort, and pharmaceutical companies have typically spent twice as much on marketing as on research, a business model that is increasingly suspect.
The initial financing of the government's new drug center is relatively small compared with the $45.8 billion that the industry estimates it invested in research in 2009. The cost of bringing a single drug to market can exceed $1 billion, according to some estimates.
The National Institutes of Health has traditionally focused on basic research, such as describing the structure of proteins, leaving industry to create drugs using those compounds. But the drug industry's research productivity has been declining for 15 years, "and it certainly doesn't show any signs of turning upward,'' said Dr. Francis S. Collins, director of the institutes.
The job of the new center, to be called the National Center for Advancing Translational Sciences, is akin to that of a home seller who spruces up properties to attract buyers in a down market. In this case, the center will do as much research as it needs to do so that it can attract drug company investment. In other cases, the center may need to not only discover the right chemicals but also perform animal tests to ensure that they are safe and even start human trials to see if they work. All of that has traditionally been done by drug companies, not the government.
Whether the government can succeed where private industry has failed is uncertain, officials acknowledge, but they say doing nothing is not an option. The health and human services secretary, Kathleen Sebelius, sent a letter to Congress on Jan. 14 outlining the plan to open the new drug center by October - an unusually rapid turnaround for an idea first released with little fanfare in December.
Under the plan, more than $700 million in research projects already underway at various institutes and centers would be brought together at the new center. But officials hope that the prospect of finding new drugs will lure Congress into increasing the center's financing well beyond $1 billion.For the plan to go into effect by October, the administration must by law get rid of one of the 27 centers and institutes already in existence at the NIH. The administration plans to downgrade the National Center for Research Resources, in part by giving some of its functions to the new center. (Source: Gardiner Harris, Boston Globe, 23 January 2011)
Chapter Manager: Amy Poole, CAMI - Tel: 1.781.647.4773 and E-mail: email@example.com