Friday Five – This week’s key news stories

Sanofi and Merck KGaA look to downsize

European drug manufacturers Sanofi and Merck KGaA are both looking to streamline their operations and announced this week the proposed sale of their generics and consumer healthcare businesses, respectively.

Sanofi's Zentiva unit will be acquired by the private equity company Advent International for $2.4 billion; the deal follows the recent announcement of two acquisitions by Sanofi (Ablynx and Bioverativ) designed to strengthen its prescription pharmaceutical business and specifically a focus on rare diseases. Advent's deal follows the acquisition of German generics player Stada by private equity companies Bain and Cinven last year.

Merck agreed to sell its consumer business to Procter & Gamble for $4.2 billion having previously announced last September it was evaluating strategic options for the asset. Noting the sale price represents 10 percent of Merck's market cap and 4 percent of group EBITDA, analysts at Bernstein suggested it is "hard to dislike the logic" behind the sale. Merck's healthcare business will now focus exclusively on innovative pharmaceuticals.

Takeda looks to upscale - but may struggle

Shire also announced the sale of its oncology portfolio to Servier for $2.4 billion, prompting speculation whether this is designed to curtail Takeda's interest in acquiring Shire or highlight the company's value.

The UK company subsequently announced on Thursday it received - and unanimously turned down - three proposals tabled by Takeda between March 29 and April 13. The third bid, worth $61 billion, is not unreasonable, wrote Jefferies analyst Peter Welford in a note to investors, though Shire may view it as opportunistic nevertheless. Of equal significance, 62 percent of the consideration is in new Takeda shares; this not only raises the value risk for Shire investors, but suggests Takeda has little scope to raise its bid further.

Furthermore, Allergan initially confirmed reports on Thursday that it was weighing an offer for Shire before quickly confirming it had ended any interest in a deal (Allergan investors reacted negatively to its confirmed interest). Sources suggest the UK drugmaker may also be attracting attention from at least one other bidder.

Keytruda delivers against the pre-game hype

Presentation of the newest Phase III data for cancer immunotherapies in first-line lung cancer at last weekend's AACR annual meeting was widely touted as the oncology 'Super Bowl.'

Merck & Co.'s Keytruda/chemotherapy combination emerged victorious it would appear; delivering not only better than expected survival improvements, but across a broad spectrum of patients. Bristol-Myers Squibb presented intriguing data for its combination of Opdivo and Yervoy which provides the best validation yet of tumour mutation burden (TMB) as a biomarker for patient selection. Though whether these results will deliver notable commercial returns - or at this stage are sufficient to secure regulatory approvals - remains to be seen.

Analysis

The Q&A: Reassessing NSCLC in wake of CheckMate-227 and Keynote-189 – the five key questions

KOL Views Results: Keytruda is new standard in NSCLC but CheckMate-227 is useful starting point for TMB, says leading medical oncologist

Physician Views Poll Results: Oncologists proclaim a resounding win for Merck & Co.'s practice changing Keynote-189 data

While the showdown between Keytruda and Opdivo stole much of the limelight, there was a host of other promising clinical data presented at this year's AACR, none more so than that presented for Blueprint Medicines' BLU-667 in RET-altered solid tumours (ViewPoints: Blueprint lays down a promising marker in RET duel).

Fate Therapeutics laid out its ambition in allogeneic CAR-T therapies, while Checkmate Pharmaceuticals and Dynavax presented promising early stage data for TLR9/PD-1 combinations.

Management tracks

Later this year, new R&D chief Hal Barron will outline his plans at GlaxoSmithKline; this week the company announced it has hired Kevin Sim from Barron's former employer Genentech. Sim will head up global business development in pharmaceuticals R&D at GlaxoSmithKline, as CEO Emma Walmsley continues to add more players to her "dream team."

In conjunction with its first-quarter results, Novartis announced that Amgen's current chief medical officer John Tsai will assume the role of head of global drug development effective next month; effectively replacing new CEO Vasant Narasimhan.

Narasimhan described Tsai as not only bringing to the table a broad set of development (having worked in the areas of cardiovascular, neuroscience and oncology) and medical skills, but an appreciation and comfort with new technologies thanks to his earlier background as an electrical engineer; a particular facet rarely found in medical executives, suggested Narasimhan, and one that clearly fits his vision for Novartis. 

A step too far from the FDA?

The US drug regulator has won many plaudits in recent months for the speed it has frequently worked at to deliver novel medicines to market, but may now face questions over its unprecedented decision to rescind a refuse-to-file letter for Alkermes' depression drug candidate ALKS 5461 just two weeks after it was issued - more here.

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