The Friday Five – 5 key issues in pharma this week

Big Pharma steps up Ebola effort

Big Pharma's presence in the development race for an Ebola vaccine was stepped up this week with Johnson & Johnson announcing an agreement with Bavarian Nordic, and GlaxoSmithKline promising it will be the first company to deliver a useable vaccine that can be deployed by global healthcare authorities.

Bavarian Nordic's deal with Johnson & Johnson – comprising an upfront payment of $100 million and a $43 million equity investment – appears to position the Danish company ahead of a handful of US biotech rivals which have seen their share prices rollercoaster in recent weeks.

Johnson & Johnson and Bavarian Nordic hope to have 250 000 doses of its proposed combination vaccine ready for clinical studies in May 2015, rising to 1 million doses later in the year.

Big Pharma collaboration in the face of the Ebola crisis is also in evidence at Amgen, which announced this week proposals to work with external parties to devise an alternative manufacturing strategy for Mapp Pharmaceuticals' experimental treatment ZMapp. The product has been used with some success in western aid providers who have contracted Ebola, but supply has been exhausted quickly.

GlaxoSmithKline CEO Andrew Witty indicated that the first doses of its vaccine would be available by year end. The company is in discussions with other industry players, including Johnson & Johnson, as to how it can scale up production to boost access in 2015.

Immuno-oncology continues to dominate licensing landscape

Roche's licensing deal with NewLink Genetics this week saw the Swiss player break away from the crowd to gain exclusive access to an IDO pathway inhibitor and further demonstrated that the trend for licensing agreements and collaborations in the immuno-oncology space shows no sign of slowing down (ViewPoints: Roche says 'IDO' to NewLink; Incyte left in the dating game?).

Twenty five such deals have been signed in 2014, including five in October alone. Each of the main immuno-oncology players (AstraZeneca, Bristol-Myers Squibb, Merck & Co. and Roche) had previously signed non-exclusive deals with Incyte to gain access to its IDO candidate, and it would appear that Roche has seen enough promise with this approach to part with $125 million upfront as part of a deal that could be worth up to $1 billion.

See Spotlight On: The immuno-oncology licensing landscape.

A flurry of recent deals are focused on the assessment of various immuno-oncology combinations, with the collaboration between Bristol-Myers Squibb and Pharmacyclics/Johnson & Johnson of particular note (ViewPoints: Opdivo, Imbruvica could be one another's key to crossing over into blood cancers, solid tumours, respectively). The two companies will assess Opdivo and Imbruvica in a selection of haematological malignancies, but the deal would act as a trigger to demonstrate potential treatment of solid tumours with Imbruvica; an opportunity completely overlooked by the street at present, noted a number of analysts recently.

AbbVie and Shire call it off

Not a story of great surprise, but confirmation this week that AbbVie's proposed acquisition of Shire is officially dead is significant nonetheless.

A key implication is the impact on future tax-inversion deals, but focus has also sharpened on the respective futures of AbbVie and Shire.

While many expect the UK player to turn from acquisition target to potential buyer (the company had not only beefed up its purchasing capabilities prior to the AbbVie offer, but received an additional $1.6 billion in the form of a break-up fee), it is AbbVie which arguably has the more interesting post-deal narrative.

The company may be making a recovery in terms of pipeline opportunity, but versus its peers, AbbVie remains heavily reliant on just one product, albeit the world's best selling drug – Humira. Talk in the build-up to its change-of-heart over Shire suggested that the deal had enough strategic benefit to be implemented at a higher cost; the key question is whether AbbVie management can find any suitable alternative. In the meantime, it aims to placate investors with a share buyback programme and increased dividend.

Celgene delivers on Crohn's disease promise

Celgene's reputation as one of biotech's savviest in-licensers remains intact following the publication of positive Phase II data this week for the Crohn's disease treatment GED-0301 (ViewPoints: Expectations heightened for Celgene's Crohn's disease gamble).

Licensed from little-known Nogra Pharmaceuticals with an upfront cost of $710 million in April, GED-0301 was expected to deliver compelling mid-stage data. Presented at the United European Gastroenterology Week (UEGW) on Tuesday, the data supports a view that GED-0301 – now also known as mongersen – could drive a paradigm shift in the treatment of Crohn's disease via improved efficacy versus standard-of-care TNF inhibitors and the added benefit of oral dosing, chorused analysts.

FirstWord will be polling gastroenterologists next week to gauge their initial reaction to this exciting development in the Crohn's disease market.

Merck's Januvia overhang

The interplay between the stock performances of Bristol-Myers Squibb and Merck & Co. since the beginning of 2014 has been an interesting dynamic to watch. As recently noted by FirstWord, Merck has emerged as one of Big Pharma's strongest performers for the year to date, while expectation appears to have weighed on Bristol-Myers Squibb's share price (Spotlight On: Big Pharma's leaders and laggards in 2014).

The performance of both stocks has been interwoven with each company's momentum in the immuno-oncology development race (where there appears to have been the perception that Bristol-Myers Squibb has a lead to lose and Merck the opportunity to play catch up) and to a smaller extent efforts to remain competitive in hepatitis C.

With Big Pharma share prices suffering over the past month, however, Bristol-Myers Squibb has proven to be a more defensive option; its share price suffering less than its peers as anticipation grows for important data readouts in lung cancer and a smaller exposure to the European markets.

Merck on the other hand has experienced a month shareholders would rather forget. While the pipeline narrative remains firmly on an impressive recovery tack, investors appear to be particularly spooked about impending cardiovascular safety data for the company's diabetes treatment Januvia.

Second guessing whether these concerns are valid is a challenging task, remarked Bernstein analyst Tim Anderson in a recent note to investors. The data in question come from the TECOS study, which is due to read out between now and early 2015, and is assessing the cardiovascular profile of Januvia.

Other products in the DPP-4 inhibitor class – Onglyza, Nesina and Galvus – have demonstrated "heart failure signals of sort," says Anderson, but the TECOS study will evaluate this risk more definitively due to the way it is designed. Given that Januvia generates around $6 billion a year in annual sales, even a small risk is worth assessing, adds Anderson, although he concedes that it is reaction to any negative data from academic critics, rather than the data itself, which poses the greatest risk to Januvia sales. Anderson cites the cases of Vytorin and Avandia as recent examples where negative data was "blown out of proportion" with significant commercial consequences.

ISI analyst Mark Schoenebaum suggests that this risk may be overplayed, given the scrutiny that such assessments have subsequently come under, but concerns pertaining to Januvia appear to be an overhang nonetheless.

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