Deals Of The Week Presents Last Week's Deals

Not to go all eschatological on you, but this blogger owes the IVB readership a confession. Religious broadcaster Harold Camping's exhortations (and innumerable billboards and emails) announcing May 21, 2011 as the onset of the Rapture and the ensuing end-of-days offered this blogger an excuse to book out early to enjoy a last supper with friends and family. (At which there was much speculation about the soon-to-be revealed identities of the four horsemen.)

In the blogger's defense, the signs were all there. (And no, we aren't talking about cataclysmic earthquakes, the rise of either false prophets (Beck or Trump?) or the Mississippi River, or the sky-rocketing home prices in the Bay Area tied to LinkedIn's IPO.) How can you deny it's not the end of the world, when the Cleveland Indians are leading their division, Oprah's pulling the plug on her daily tv show, and reality stars like Jersey Shore's Snooki command speaking fees higher than Nobel prize winning writers?

Thus, in the hopes of cramming celebratory fun into the final hours of May 20 (we had until 11pm PT by dear Harold's calculations), DOTW seemed a wee bit, well, unnecessary.

In the face of Armageddon, who really cares about Shire's decision to diversify into regenerative medicine with its non earn-out purchase of Advanced BioHealing? (Dermagraft, after all, can't be used to treat the gnashing of teeth.) And, really, with the world absolutely ending on Oct. 21, it's not like Takeda needs Nycomed to bridge its 2012 Actos patent cliff. (Now if Nycomed sold an OTC product to repair the rending of hair, we might pay attention given its apocalyptic best-seller potential.)

Oh wait, it's Monday May 23-- and we're still here (and so is everyone else). Damn. That means we'll be writing this column until at least December 21, 2012, which REALLY, TRULY is the end of days. With apologies for our tardiness, it's time for another edition of...

Takeda/Nycomed: The Rapture may not have come to pass but Takeda/Nycomed did. On May 19, after a week of speculation and a press release warning journos not to get too hasty, Takeda announced its €9.6 billion ($13.6 billion) purchase of privately-held Nycomed. As IN VIVO Blog told you last week, the deal satisfies a number of strategic and financial imperatives for Japan's largest drugmaker, as it faces generic competition to best-selling diabetes drug Actos from 2012 and seeks to expand its footprint beyond Japan and the U.S. The deal doubles the Japanese firm's European sales, jump-starts its emerging markets presence and provide an immediate 30% revenue boost, increasing operating income by more than 40%, according to the company. Swiss-based Nycomed brings to Takeda not only the fruits of recently-launched chronic obstructive pulmonary disease drug Daxas, but also a more diversified product mix, including OTC and branded generics, regulatory expertise, and an entrepreneurial culture that Takeda President and CEO Yasuchika Hasegawa said he hoped could "vitalize" his firm. As such, the deal helps accelerate the 2011-2013 mid-range growth plan unveiled by Hasegawa earlier this month. The transaction – worth slightly more than initial reports suggested – values the Swiss-based Nycomed at about 3.4 times its 2010 revenues, excluding its U.S dermatology business, which is not part of the deal. The higher price tag means Takeda will take a ¥600-700 billion ($7.33 billion to $8.55 billion) loan to finance the deal, which is the largest yet in the Japanese firm's aggressive ongoing bid to expand its presence and pipeline through M&A. --Melanie Senior

Shire/Advanced BioHealing: Shire/Advanced BioHealing marks the return of the IPO as a stalking horse, a private M&A deal with NO earn-outs, and an ROI greater than 10x for certain investors. True venture like returns --it must be the end of days!! Just before its planned debut on the New York Stock Exchange, Advanced BioHealing instead agreed to a $750 million all cash offer from the specialty pharma Shire, which has a history of using acquisitions to jump quickly into new lines of business. With ABH, Shire dives into regenerative medicine, grabbing the commercial product Dermagraft, a patch that uses natural cells called fibroblasts to heal diabetic foot ulcers. (Dermagraft has a long and painful history, which you can read about in greater detail here.) The current deal builds on Shire's willingness to pay healthy premiums for companies that it sees as cornerstones to new lines of business. The most striking example is Shire's 2005 purchase of Transkaroytic Therapeutics for $1.6 billion, an acquisition that gave the pharma access to enzyme-replacement drugs for rare diseases and a technology platform for further growth. As part of Shire, ABH will be run as a semi-autonomous unit, with retention of top management one of the hoped for outcomes post-integration. The all-cash offer was a 25.6% premium to the amount ABH was expected to raise had it debuted at $15-a-share, the midpoint of its expected range. Since the IPO was reportedly oversubscribed and pricing was on the upswing, a public debut might have resulted in a larger return to investors -- eventually. Still, ABH's backers, which included Canaan Partners and Safeguard Scientific had to be more than satisfied with the terms-- and certainty of exit --offered by the Shire take-out. Canaan apparently reaped a 15x return on the deal, while Safeguard's ROI was a not too shabby 13x. -- Alex Lash and EL

Roche/Merck:The two current heavyweights in hepatitis C therapy got together May 17 with a plan to co-promote Merck’s newly approved protease inhibitor Victrelis , in what was widely viewed as an effort to squeeze upstart Vertex Pharmaceuticals out of the HCV market despite superior efficacy data for its protease inhibitor, Incivek. Boceprevir was approved by FDA on May 13; telaprevir's PDUFA date is today, May 23. Under the non-exclusive agreement, Roche reps will include boceprevir as part of their promotion to health care providers on the use of Pegasys in triple combination therapy for HCV. Pegasys, part of the current two-drug backbone of HCV therapy, commands about 80% of the peg-interferon market in HCV, far ahead of Merck’s competing product, PEG-Intron. Roche will not bundle boceprevir with Pegasys, however, and the deal does not preclude Merck from marketing its HCV drugs in a discounted bundle. (Nor does it preclude Roche from inking a deal with Vertex though analysts think that's unlikely.) The two peg-interferon products will continue to be marketed separately, both companies said, and Merck added that the collaboration will not affect the pharma’s economics for its new product. Merck and Roche, each of which has other HCV compounds in clinical development, also will test their compounds together in combination therapy trials.--Joseph Haas

Stryker/Orthovita: Yes, dear readers, a device deal, which means the rapture must be coming (even though Harold Camping's calculations this time around were off). In 2010 IN VIVO wondered if Orthovita, hit hard by scientific debate about the merits of vertebral compression fracture treatment and allegations of fraud, was giving up its grand dreams. Thanks to Stryker’s $316 million acquisition last week, its independent efforts at becoming the specialty spine player are over. But with a take-out price tag that included a 41% premium, did Orthovita's investors win? The deal allows Stryker to pair its existing hardware with Orthovita’s Vitoss bone graft and Cortoss bone filler. The former can be used along with Stryker’s spinal implants while the latter might serve as a hook to help sell Stryker’s new vertebral augmentation products, giving the med-tech giant another way to differentiate itself from Medtronic’s line of Kyphoplasty products, which use traditional bone cement polymethylmethacrylate (PMMA.)If Orthovita’s products live on, it's fair to say the company never recovered from a series of er, crushing (compressing?) blows. First, in 2009, New England Journal of Medicine published two studies suggesting vertebroplasty – the filling of fractured vertebra with cement (or Cortoss) – wasn’t an effective method of relieving pain from vertebral compression fractures. The studies were published just two months after the company received FDA approval for Cortoss. Then a Medicare fraud investigation by Department of Justice forced vertebral compression procedures to move from in-patient – where Orthovita’s Vitoss and other materials are currently used -- to outpatient settings. The shift caused problems with pricing and, analysts say, distracted Vitoss sales reps. In the end, economic pressures that have been a drag on the entire orthopedics sector also weighed heavily on Orthovita, which had high hopes that Cortoss sales would quickly ramp total sales to $300 million annually. -- Tom Salemi

ThermoFisher/Phadia: The European private equity firm, Cinven, is to exit ownership of the Swedish in vitro diagnostics company, Phadia, after four years by selling it to Thermo Fisher Scientific, reportedly more than trebling its investment in the process. US laboratory equipment manufacturer Thermo Fisher Scientific Inc. aims to strengthen its allergy and autoimmune disease diagnostics business by acquiring Phadia for a hefty €2.47 billion ($3.5 billion) in cash, announced May 19. (In case you are keeping track, Phadia was spun out of Pharmacia in 2004 when Pfizer acquired the parent company, and was acquired by Cinven in 2007 in a deal that valued the company at €1.285 billion.) Phadia markets complete blood test systems to support the clinical diagnosis and monitoring of allergy and autoimmune diseases and chalked up 2010 revenues totaling €367 million thanks to strong sales in Europe and emerging markets. Thermo Fisher is using a mixture of debt financing from Barclays Capital and cash to fund the Phadia acquisition, which is expected to complete in the fourth quarter, and be immediately accretive to Thermo Fisher's adjusted earnings per share. The deal completes a busy week for Thermo Fisher, which completed its $2.1 billion acquisition of Dionex on May 17 and one day later announced the $35 million purchase of UK player Sterilin.--John Davis

Image courtesy of flickrer WarmSleepy via a creative commons license.

Navigating The FDA Advisory Committee Road To Success … Or Not

On the eve of FDA’s Antiviral Drugs Advisory Committee reviews of the first protease inhibitors for hepatitis C, the drugs’ sponsors – Merck (boceprevir) and Vertex Pharmaceuticals (telaprevir) – are no doubt scrambling to make sure everything is in order.

Presumably, the companies have already locked down their slide decks, put the finishing touches on their presentations, researched the backgrounds of the committee’s standing members and shipped their AdComm teams off to hotels near FDA’s White Oak headquarters, where the meetings will take place.

Boceprevir and telaprevir are viewed as therapeutic breakthroughs in the treatment of HCV, both having shown improved cure rates when added to the current standard of care. However, the drugs have complicated and differing dosing regimens, which are likely to be an area of AdComm discussion.

Merck, which will present its case on April 27, is an old hand at the AdComm process, having most recently gone before a panel in December when it unsuccessfully sought to add prostate cancer risk reduction language to the label of its BPH drug Proscar. Vertex, on the other hand, is making its maiden voyage on the USS AdComm. The company will present its case on April 28 and should benefit from hearing panelists’ questions and concerns in their review of boceprevir the day before.

No matter how well prepared the sponsors think they might be, the AdComm road is littered with landmines. That, in a nutshell, was the message conveyed by AdComm meeting veterans at the Center for Business Intelligence’s Second Annual Forum on Effective Preparation for FDA Advisory Committees in Washington, D.C. last month.

At the two-day conference, battle-hardened veterans of the AdComm process – including pharma employees and consultants who make their living preparing drug companies for meetings – shared experiences from the trenches and offered some best practices to consider when tackling what has become a significant hurdle in drug development.

Some suggestions fall in the common sense category. It's imperative not only to have good communications with FDA leading up to an AdComm, but also to begin the meeting planning process early. Practicing presentations and Q&A is not surprisingly also considered good AdComm hygiene. But the CBI speakers voiced some additional pearls of wisdom that sponsors appearing before FDA committees might want to keep in mind, starting with…

Know Your AdComm
Pete Taft, founder and CEO of PharmApprove, a company that provides AdComm meeting preparation services, said sponsors should be ready to deal with four general types of personalities on FDA panels:

the expert – someone who knows a lot about your field and possibly your product, and is going to be well prepared for the meeting;

the judge – an individual who is swift to make judgments about your product or argument;

the thoughtful one – a quiet panel member; and,

the naysayer – the “Simon Cowell of AdComs” who you can either fight or forget about securing their vote.

PharmApprove has interviewed former AdComm members to find out how they prepare and what they expect from sponsors. At the top of their list is this nugget of wisdom...

Keep It Simple, And Don’t Be Irritating
The importance of clarity and simplicity in a sponsor’s presentation was echoed by FDA Director of Advisory Committee Oversight Michael Ortwerth, the lone agency presenter at the CBI conference. “That’s a really important thing, that the message is clear … and slides are very well put together,” Ortwerth said. “When you have slides that are so busy and so ladened and heavy, then you can’t focus on what the actual issue is.”

If AdComm members don’t like busy slides, they’re also not thrilled with sponsors or presenters who come off as cocky or overconfident. “I’ve always had this intuitive sense that if we press the committee or cause them to feel irritated, that some of that emotion will be transferred to their rational thinking,” said Taft, whose suspicion has now been confirmed. He noted the comments of a former AdComm chairman, who said: “You don’t want to make me angry about you, because then I transfer that from you onto the data and onto the drug.”

AdComm prep needs to be heavy on practice, planning and contingency planning, the speakers said. In the course of advance planning, it’s important that sponsors …

Don’t Let Belly Dancers Get In The Way
Don Cilla, vice president and product development team lead at AstraZeneca’s MedImmune division, led the company’s AdComm team for the June 2010 review of motavizumab for prophylaxis of respiratory syncytial virus. He recommends conducting AdComm team practice sessions and holding pre-meeting preparations in the same hotel ballroom that FDA will use for the meeting (when they’re not being held at White Oak). At the time of the motavizumab meeting “there was a convention of belly dancers that had that room booked for the three days leading up to it, so we couldn’t get in there to practice.”

If the company's AdComm team is all staying, and eating, together as a group for two or three days before a meeting, they should …

Avoid Eating The Mayonnaise
One of the speakers at the CBI conference recounted how a consultant, upon seeing open mayonnaise sitting at a buffet, banned all condiments at future meals so as to avoid the risk that team members would come down with a debilitating case of food poisoning on the day of the big meeting. “We had backups for everybody,” Cilla said of his team for the motavizumab meeting. “We didn’t know if they were going to get the bad mayonnaise or the Mexican food the night before or if they just couldn’t get there.”

While sponsors should plan for anything and everything to go wrong logistically, there are some factors they may have no control over. This includes the possibility that committee members will be suffering from …

An Avandia Hangover
Back-to-back scrutiny of different drugs on consecutive days can have a detrimental effect on those coming at the end of a multi-day meeting, suggested Alexander Fleming, president and CEO of the consulting firm Kinexum.

Case in point is Vivus’ obesity drug Qnexa. At a July 15 meeting, FDA's Endocrinologic and Metabolic Drugs Advisory Committee voted 10-6 against approval due to safety concerns. The negative vote took some FDA officials by surprise, but Fleming believes timing was a crucial factor. The Qnexa review marked the third consecutive day of work for the committee, its two previous days having been spent on an extensive and intensive review of the cardiovascular safety of GlaxoSmithKline’s diabetes drug Avandia.

“If nothing else, the advisors had to be exhausted” by the time they got to Qnexa, Fleming said. Calling the AdComm timing “pure bad luck” for Vivus, Fleming said the company knew “this was going to be a real disadvantage to them ... and only in retrospect do you see how it really had a major effect.”

Sponsors also may have no control over an AdComm’s walk down the path of …

Comparative Effectiveness And Cost
Disease background presentations by the sponsor are a hallmark of any product-specific AdComm. A good presentation will include a comparison of products that are on the market, including mechanism of action and limitations, said Mary Rofael, COO of scientific and regulatory communications at ProEd Communications, a firm that provides AdCom prep services.

“Many of you will say we’re here at an advisory committee, the committee should focus on evaluating the benefit/risk of a particular product,” Rofael said. “In this day and age you can’t stop people from thinking about comparing it to what they’re using currently or what’s on the market. It’s just a discussion that’s going to take place. Whether or not you engage in it, that’s a different story, but it’s important to anticipate it because these kinds of questions are being asked more and more today.

“It’s almost like the question of cost,” Rofael continued, venturing down a road that almost no sponsor wants to travel during an AdComm. “The advisory committee room is the only room where cost is not discussed … but eventually I think it’s going to make its way in. People are starting to ask about the cost of products and what the burden of cost is on the health care system.”

Aside from the detour down the cost path, what’s a sponsor to do when an AdComm’s discussion of the data starts …

Spiraling Out Of Control?
If the panel’s conversation has gone awry at some point after the sponsor’s presentation, the best a company can hope for is that the meeting agenda includes an upcoming break, said PharmApprove principal Martha Arnold. “If there’s a situation where things just are spiraling out of control, and … you think perhaps the committee is dealing with information that is just plain wrong, that there’s been a misinterpretation either of your data or FDA’s data, if there’s a break you have an opportunity to at least approach the chair” and express concern, she said.

If there are no further scheduled breaks, the sponsor could pass a note to the panel’s industry representative “or tap them on the shoulder and say, ‘Hey, can you help us out here,’” said Bruce Burlington of DB Burlington Consulting, who often serves as the industry rep on AdComms. “Alternatively, if it’s really outrageous, just stand up and say, ‘Mr. Chairman, I request your permission to insert a correction in the discussion at this point.’”
It may be more problematic, however, for sponsors to insert themselves into the process of …

Question-Morphing
Anyone who has sat through at least a handful of AdComms can confirm that panelist confusion over the wording of FDA’s questions is a fact of life, often leading to discussions as to whether and how the questions should be re-written on the fly. While these question-writing “audibles” can be disconcerting for sponsors, so can the initial questions themselves.

CBI conference attendees cited tremendous variability among review divisions in the types of questions posed at AdComs, ranging from straightforward questions on risk/benefit to queries that run multiple pages and “in essence make the FDA case in the form of a question,” one conference attendee said.

FDA’s Ortwerth acknowledged room for improvement in how review divisions ask questions. “It is important that there be consistency in the way we try to communicate. … There needs to be the right way to communicate something and a clear way to communicate something and not to drive the direction of the answer.”

Even if sponsors are able to navigate all the trouble spots outlined above, they need to keep in mind that they can …

Spend Big Money, But Still Lose Big
Preparing for an AdComm involves shelling out big bucks, all of which can be for naught if a drug is decimated when it comes to the panel’s vote. MedImmune’s Cilla said his company spent approximately $900,000 on AdCom preparations for motavazimub, which included the cost of consultants, meeting space and four mock panel meetings at approximately $60,000 each. The investment resulted in a 14-3 AdComm vote against approval, which was followed by an FDA “complete response” letter and the company’s decision to withdraw the BLA.

Sanofi-Aventis Associate Vice President of Global Regulatory Affairs Kevin Malobisky said his company spent about $1.3 million preparing for one meeting that resulted in a 14-0 vote against approval – an apparent reference to the unsuccessful June 2007 AdComm for the obesity drug Zimulti (rimonabant).

Were IN VIVO Blog writing an AdComms for Dummies manual, we might put it this way: it's expensive and a lot of work to prep for an AdComm, but you have to do it. Even so, there's no money-back guarantee.

Maybe we should start consulting--at least we've got a sense of humor.

-- By Sue Sutter (s.sutter@elsevier.com)

Notes from AASLD: Apples and Oranges and Null Responders

The liver disease community – if not the investment community – has largely moved on from the novelty of comparing Vertex Pharmaceuticals' telaprevir and Merck's boceprevir, the two direct-acting antivirals that together form the threshold to a new era in hepatitis treatments if the buzz at the American Association for the Study of Liver Diseases is any indication.

Instead, physicians are celebrating the fact that two therapies may soon be available that can help patients achieve success rates that handily best the current 50% success rate from the standard of care interferon and ribavirin therapy, which is described as 48 weeks of constant flu-like symptoms and PMS.

The sense of promise is palpable at AASLD, now under way in Boston, where many of the sessions are standing room only.

A lot of the excitement now is around the IL28b genetic marker and its implication for better cure rates, and the lure of a still-years-away all-oral therapeutic regimen.

But first, there will be protease inhibitors. Merck and Vertex, who are jockeying to be first-to-market with a direct-acting antiviral for hepatitis C, plan to complete FDA submissions by the end of the year, with approval possible in mid-2011.

Based on overall profile, the odds-on favorite for best-in-class in this initial class of two seems to be telaprevir, but boceprevir may find a top-rung niche in experienced patients.

However, comparisons can be tough. Vertex had no short-course option in the Phase III study of telaprevir in experienced patients, REALIZE. Final results in that study have not yet been reported, but top line data showed 65% of experienced patients treated with telaprevir achieved SVR compared to 17% in the control arm.

Meanwhile, Merck released data at AASLD showing their response-guided therapy plan, which shortens the treatment period for patients who respond early, can work in prior treatment failures.

Another question frequently asked of presenters this year at AASLD concerns the definition of null responder, that is, patients who have had the poorest results with standard of care.

The definition of null responder used by Merck in RESPOND-2 is those who achieved less than 1 log decrease in viral load after the four-week lead-in period with standard of care. According to the abstract on the trial presented at AASLD, 33% of null responders (15/46) in the response-guided arm achieved SVR, a statistically significant improvement over the control arm, in which none of 12 patients had a cure. Null responders in the 44-week triple therapy arm had a 34% cure rate (15/44), also statistically significant.

That null-responder definition, however, appears to be at odds with the FDA guidance. In the document, FDA describes that population as people with "less than a 2 log10 reduction in HCV RNA at week 12" of standard of care therapy, the point at which the therapy is typically dropped for futility.

A footnote in the draft indicates that "other definitions for null response have been proposed, such as less than 1 log decline in HCV RNA at week four of treatment. However, failure to achieve a greater than 2 log decline … at week 12 has typically been used as a treatment futility criterion," and use of the 1 log decline definition "causes a gap in classification for individuals with a viral load reduction" that falls between the two.

Vertex has used that definition in its REALIZE study in experienced patients. In an interview, Robert Kauffman, chief medical officer at Vertex, reasoned that using what he called the "standard definition" prospectively to identify patients at the time of enrollment, rather than "on treatment," ensured that all patients were in the appropriate group.

To test the difference in the two definitions, Vertex used a four-week induction arm in REALIZE, and looked at the correlations between less than a 1 log drop at week four of the delayed start and the standard definition, Kauffman explained.

The outcome of the analysis was "a clear difference," he said. The two groups had different responses to the triple therapy. In addition, he said, the trial showed that both groups can have a "very, very good response."

A subanalysis of REALIZE reported at AASLD showed that among combined partial responder and relapser patients in the lead-in arm, 18% (31/171) fit the less than 1 log reduction definition at the end of the lead-in with standard of care. Of those patients 58% (18/31) went on to achieve SVR compared to 31% (46/147) patients prospectively-defined as prior null responders using the "standard" definition.

– Shirley Haley

flickr image by e g g used under a creative commons license.