Friday Five – This week’s key news stories

Takeda outlines its Shire strategy

Takeda has finally reached an agreement to acquire Shire for $62 billion. With combined global revenues of around $31 billion, the deal will push the Japanese company into pharma's top 10.

But at what cost? Takeda will take on significant debt to fund the acquisition.

CEO Christophe Weber is hopeful that a combination of increased cash flow and savings will quickly appease Takeda's creditors, and also outlined considerably higher cost reductions versus those modelled by analysts.

Takeda expects to achieve annual cost synergies of $1.4 billion by the end of the third fiscal year after the acquisition has completed, of which around 43 percent will come from reduced R&D expenditure.

This will raise eyebrows; large-scale M&A has a habit of slowing R&D momentum rather than accelerating it; Takeda's late-stage pipeline is relatively bare, and Shire's boasts just one product forecast to become a blockbuster. A company of Takeda's soon-to-be size may require more.

Shire too has relied heavily in recent years on acquisitions to bolster its pipeline and Takeda is hopeful there is still fuel in the tank; it is particularly impressed with Shire's portfolio of rare disease drugs.

The aim is to increasingly focus on rare diseases as a means to drive future revenue growth, while simultaneously reducing R&D expenditure through lower clinical trial costs, Takeda management told analysts at Credit Suisse this week.

Eli Lilly's immuno-oncology aspirations take shape

In contrast, a number of Big Pharma companies played down the prospect of large-scale M&A during their recent first-quarter earnings calls, including Eli Lilly.

Instead, the company said it is looking to sign four or five early-stage deals a year as it looks to expand external investment from around 10 percent to 30 percent of its R&D budget.

Eli Lilly also did little to play down the suggestion that these deals are likely to have a focus on oncology. Having recently announced that Leena Gandhi will leave her role as director of thoracic medical oncology at the New York University School of Medicine to head up its immuno-oncology development team next month, Eli Lilly confirmed on Thursday it will acquire ARMO BioSciences for $1.6 billion.

Eli Lilly is paying a significant premium to acquire ARMO, which IPOed just four months ago, but views the deal as potentially accelerating it towards the immuno-oncology market. Eli Lilly is not in the group of front runners that have already bought a PD-1 or Pd-L1 inhibitor to market, but ARMO's lead asset AM0010 - an IL-10 cytokine - is being studied in combination with this class; specifically in patients where PD-1 and PD-L1 monotherapies have been shown to have lower activity.

Luxturna's launch

So how quickly can Spark Therapeutics sell its gene therapy Luxturna? A treatment for a rare form of blindness that costs $425,000 per eye.

The answer - in the first quarter at least - is that three patients were treated with Luxturna, generating Spark $2.4 million in revenue (it was approved in late December).

Spark warned that it is still working its way through the intricacies of payer coverage and suggested quarterly sales could decline before they increase; partly as there was strong interest from some treatment centres to be first to use this novel therapy.

Commercial performance of Luxturna is also encouraging versus prior gene therapy launches in Europe; Novartis has in-licensed marketing rights for Spark's drug on the continent. 

Cardiologists impressed with PCSK9 pricing plan

Regeneron Pharmaceuticals and Sanofi could be onto something by reducing the price of their PCSK9 inhibitor Praluent for patients who are enrolled in plans covered by Express Scripts' national preferred formulary.

The partners, who announced a deal with the pharmacy benefit manager last week, hope increased utilisation of Praluent will be sufficient to compensate for a lower price. In exchange for lower pricing, Express Scripts says it will simplify the attestation process for securing access to Praluent and hopes to reduce patient out-of-pocket costs by around a third.

The former will be particularly critical if the pricing strategy is to work, indicates feedback from 71 US cardiologists who we snap-polled this week; more so, in fact, than any impact on out-of-pocket expenditure.

Migraine therapies in focus

The FDA is shortly expected to approve Amgen and Novartis' Aimovig for the prevention of migraine, which would become the first-in-class CGRP inhibitor. Similar products being developed by Eli Lilly and Teva are not far behind, with approvals expected later this year or next; analysts have predicted peak multi-billion dollar sales for the class and neurologists appear suitably enthused, if cautious about pricing.

And the CGRP plot thickens, with late-stage development of oral drugs targeting this same mechanism - for the treatment of acute migraine - reaching a crescendo. Allergan recently announced positive data from the second of two Phase III studies for its agent ubrogepant, while Biohaven Pharmaceutical’ is developing the drug rimegepant.

Has Allergan's most recent data allayed concerns about liver toxicity and how will these drugs - if approved - fit into the treatment of acute migraine? - KOL Views Results: Leading neurologist untroubled by ubrogepant’s liver safety but sees the class slotting in behind triptans

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