Industry news, February 2012

Business roundup



PHARMACEUTICAL

BMS spends $2.5 billion on antiviral firm

Pharma giant Bristol-Myers Squibb (BMS) has struck a deal to buy US biotech Inhibitex for $2.5 billion (?1.6 billion). The move will stock BMS’s pipeline with antivirals, most notably INX-189, a nucleotide polymerase inhibitor which is in Phase II trials for treating hepatitis C virus (HCV) infection. 

There is currently a huge amount of interest in this market. According to 2004 World Health Organization estimates, 170 million people (about 3% of the global population) are infected with HCV, which is associated with potentially lethal liver damage. But many go undiagnosed for years because of the absence of symptoms in the early stages of infection. This suggests potential for market growth. Indeed, Inhibitex predicts that sales of drugs for treating HCV infection will rise to more than $8.8 billion by 2012. Furthermore, the gold standard treatment, a pegylated interferon in conjunction with ribavarin, can cause unpleasant side effects including depression, anaemia and flu-type symptoms. 

In May 2011, the US approved two protease inhibitors for treating HCV infection: Incivek (telaprevir) from Vertex and Johnson & Johnson; and Victrelis (boceprevir) from Merck & Co - the first new drugs in this area for 20 years. Furthermore, in November 2011, Gilead Sciences launched an $11 billion takeover of Pharmasset, which is currently testing three drug candidates for treating HCV infection. The lead candidate, PSI-7977, is in Phase III trials. 

BMS already has a position in this area: the company has four candidates in Phase II trials, including protease inhibitors. But it needs new drugs if it is going to sustain sales as key patents expire over the next few years. 

Whether Inhibitex represents a good bet remains to be seen. It is a company that has come back from decidedly uncertain times. 

Established in 1994, it became a public company based in Alpharetta, Georgia, in 2004. But in 2006, its lead candidate, Veronate, an antibody for preventing bacterial infections in infants, returned disappointing Phase III results causing the company share price to plummet. In the aftermath, the company cut its workforce from 80 fulltime employees, including 63 researchers, to just one and shifted the focus of its business to buying other companies or acquiring rights to their pipeline products through licensing deals. 

In 2007, the company bought FermaVir, a small biotech set up by Erik de Clercq and Jan Balzarini at KU Leuven, Belgium, and Chris McGuigan at Cardiff University, UK. Through the move, Inhibitex gained FX-100, an antiviral for treating shingles that is now in Phase II trials. Then in 2008, Cardiff researchers led by McGuigan synthesised INX-189. 

In 2011, the stock market rediscovered its interest in the company following good results for INX-189 that led to a rapid growth in share price. 

’There is significant unmet medical need in hepatitis C,’ said BMS chief executive Lamberto Andreotti. ’This acquisition represents an important investment in the long term growth of the company.’

Andrew Turley

 

GSK subsidiary prosecuted

US authorities have taken to court a GlaxoSmithKline (GSK) subsidiary, and its former chief executive, over alleged financial misconduct before GSK bought the company two years ago. The Securities and Exchange Commission alleges that, from November 2006 to April 2009, Stiefel Laboratories, a family owned company specialising in dermatology products, bought back shares from its employees at a price much lower than they were worth. The company failed to give employees key information that would have highlighted the real value. It alleges that employee shareholders lost over $110 million (?71 million) as a result and that chief executive Charles Stiefel knew at the time that private equity firms had offered prices up to 300% more. 

 

Superbug drug licensed in EU

European authorities have licensed Dificlir (fidaxomicin) for treating patients with Clostridium difficile infection (CDI) - a significant and growing problem in hospitals and other long term care institutions. The drug was developed by US pharma company Optimer, which says it is better than vancomycin at lowering the rate of CDI recurrence. The active ingredient, fidaxomicin, is a macrocyclic antibacterial compound. Hospital-acquired infections such as CDI represented a $9 billion market in 2010. 

 

Women’s libido drug failure

Another treatment for hypoactive sexual desire disorder (HSDD) in women - a medical condition characterised by low sexual desire - has failed to deliver in clinical trials. This time it is LibiGel (testosterone) from US biotech BioSante, which performed no better than placebo in two Phase III trials. ’We obviously are very disappointed by the trial results,’ said BioSante chief executive Stephen Simes. ’We will continue to analyse the data fully and determine our next steps in the LibiGel development plan.’ 

In October 2010, Boehringer Ingelheim decided to halt development of flibanserin for the treatment of HSDD in women after an advisory committee of the US Food and Drug Administration (FDA) concluded that the risks associated with the drug outweighed the benefits.

 

Abbott takes AIM at Reata

US pharma major Abbott has struck a $400 million licensing deal with Reata Pharmaceuticals for access to oral antioxidant inflammation modulators (AIMs). In September 2010, Abbott bought rights to the lead AIM candidate in the Reata portfolio, bardoxolone methyl, for $450 million. Now, it is buying rights to the rest of the portfolio including ’a large number of molecules in a broad range of therapeutic areas’. The companies are planning to start human trials with the first candidate in this collaboration in 2012. AIMs activate transcription factor Nrf2. Research suggests that suppression of Nrf2 is associated with chronic diseases, including multiple sclerosis, rheumatoid arthritis, chronic kidney disease, neurodegenerative disease and chronic obstructive pulmonary disease (COPD). 

 

AZ to cut extra US jobs and drop drug candidates

AstraZeneca says it is planning to cut an extra 1150 US leadership and sales jobs, representing a quarter of its US sales workforce. These cuts will be on top of those announced in January 2010, when the company said it would cut 8000 positions globally, including 1800 R&D jobs. These are difficult decisions that impact valued employees, said Rich Fante, president of AstraZeneca US. ’The changes we are making, however, will help us deliver better results for our business and, most importantly, continue delivering on our mission of patient health.’ The company will finalise its decisions by February 2012.

The company has also dropped development of one drug candidate, and scaled back its expectations for another, following disappointing trial results. Interim Phase II trial data for olaparib suggests that the candidate is unlikely to help patients with ovarian cancer to live longer, and as such it will not progress to Phase III trials. AZ acquired olaparib when it bought Kudos Pharmaceuticals in 2005. Meanwhile, TC-5214 for treating major depressive disorder has returned disappointing Phase III trial data.

 

Amgen eyes biosimilars

US biotech Amgen and generics firm Watson have signed a $400 million deal to develop biosimilars based on antibodies for treating cancer. Amgen will develop, make and - at least initially - sell the biosimilars, which will not be based on Amgen drugs. Watson will pay $400 million for a cut of the profits, while contributing to the development, sharing the associated risks and providing expertise gained in the generics market. Watson says: ’This collaboration reflects the shared belief that the development and commercialisation of biosimilar products will not follow a pure brand or generic model. 

 

Natural products go straight to warp speed

A US startup specialising in natural products based drugs has won financial backing of up to $125 million from a range of investors, including French drug maker Sanofi. Warp Drive Bio was launched in 2011 by Gregory Verdine at Harvard University, who developed the informatics based technology underlying the business, in association with George Church and James Wells. Two investment firms, Third Rock Ventures and Greylock Partners, have also committed money. 

 

J&J buys cancer candidate

US healthcare group Johnson & Johnson (J&J) has struck a $150 million deal for a promising anticancer drug candidate. PCI-32765, from US pharma company Pharmacyclics, is in Phase II studies and could prove effective against a range of cancer types including: chronic lymphocytic leukaemia, mantle cell lymphoma and diffuse large B-cell lymphoma. J&J will pay $150?million up front, and then enter a 50:50 profit-loss agreement in which it will share development and commercialisation of the candidate. 

 

Genentech buys pain pipeline

Canadian biotech Xenon has signed a $646 million (?420 million) deal with Roche subsidiary Genentech for new pain relief drugs. Genentech will make an undisclosed payment up front. After that, Xenon will become eligible for additional payments if and when milestones are passed. Xenon has several pain relief candidates in the pipeline that target the SCN9A gene, which is associated with a sodium channel considered essential for pain sensation. XEN402 is in Phase II trials as a topical treatment. 

 

Merck backs Chinese R&D

US drug maker Merck & Co has announced plans for a new R&D centre in China that would house 600 employees. The company will use part of a $1.5 billion (?977 million) pot it has set aside for R&D investment in the country over the next five years, with the first phase of construction scheduled for completion by 2014. The centre, to be built in Wangjing Park, near Beijing, will be for drug discovery, translational research, clinical development, regulatory affairs and external research programmes. 

 

Covidien ditches generics

Irish healthcare products company Covidien is looking to spin out its pharma unit, worth $2 billion in annual sales. The unit, which specialises in generics, is one of the biggest producers of paracetamol and opioid pain relief drugs. In addition, it is an important source of ’generators’ for producing technetium-99m, a diagnostic medical isotope. The remainder of the company comprises the medical products business, worth $9.6 billion in annual sales and divided between the devices and supplies units.

 

Smith & Nephew divests biologics division

UK medical devices specialist Smith & Nephew is to spin off its ’biologics and clinical therapies’ division, worth $223 million in sales in 2010. Investment firm Essex Woodlands will take charge of 51% of the new joint venture, called Bioventus. In return, Smith & Nephew will get $98 million in cash and a $160 million ’five year note’ from Bioventus. The ’vast majority’ of the US employees working in the existing division will transfer to the new company, but Smith & Nephew will keep the research site in York, UK. 

 

Bayer backs blockbusters

 

GSK’s big brand sell-off

GlaxoSmithKline has sold a portfolio of over-the-counter (OTC) brands to US holding company Prestige Brands for ?426 million in cash. The portfolio, which contributed sales of ?134 million in 2010, includes: pain relief brands BC Powder (aspirin, caffeine), Ecotrin (aspirin) and Goody’s Powder (aspirin, caffeine, paracetamol); as well as dietary supplement brands Beano and Fiber Choice; and Tagamet (cimetidine), for the treatment of heartburn. GSK announced plans to sell many of its OTC brands in February 2011. The company says that the process for sale of the remaining brands, representing annual sales of ?400 million and including anti-obesity brand Alli (orlistat), is continuing.

 

Alexion acquires Enobia

US pharma company Alexion has bought private Canadian biotech Enobia in a deal worth up to $1 billion. Alexion will pay $610 million in cash up front and up to $470 million in cash if and when milestones are passed. The lead Enobia drug candidate is ENB-0040 (asfotase alfa), a human recombinant protein for treating hypophosphatasia, an extremely rare genetic disease. The candidate is in Phase II trials. Alexion is best known for developing Soliris (eculizumab), a humanised monoclonal antibody for treating paroxysmal nocturnal haemoglobinuria. At around $500,000 per patient per year, Soliris is one of the most expensive drugs in the world. 

 

Australia cuts generics prices

The prices of generic drugs in Australia are to be cut by an average of 23% following a deal struck between drug authorities and the industry. The move represents anticipated reforms of the ’pharmaceutical benefits scheme’, under which generics prices in Australia are managed. According to Medicines Australia, which represents the industry, some companies are now facing price cuts of up to 70% for individual drugs. But it is backing the reforms, which it says will provide ’financial headroom’ for listing new drugs. 

 

Ranbaxy ringfences liability funds

Indian generics firm Ranbaxy says it will set aside $500 million to resolve any potential civil and criminal liabilities arising from a US Food and Drug Administration (FDA) investigation. In 2008, the FDA sent warning letters in reference to poor manufacturing conditions at two sites in India. In addition, the agency issued an import alert, which allowed US officials to hold at the border drug ingredients made at the two sites. ’We are pleased to have resolved this legacy issue with the FDA as we begin the next chapter in Ranbaxy’s history,’ said chief executive Arun Sawhney.

 

CHEMICAL

EU lists endocrine disruptor

EU member state representatives have identified 12 new chemicals to be added to the substances of very high concern (SVHCs) list, including 4-tert-octylphenol -the first to be added because of endocrine disrupting properties. 4-tert-octylphenol is a non-ionic surfactant used as a detergent, emulsifier and wetting agent. It is thought to interfere with hormones in a range of species leading to potential reproductive or developmental problems. The categorisation is part of the Reach (registration, evaluation, authorisation and restriction of chemicals) regulation, and the listed products were selected based on European Chemicals Agency (ECHA) recommendations. The final decision will be made by the European commission.

 

US bans animal antibiotics

The US has banned certain uses of an important class of antibiotics in treating animals for food production to help to prevent the development of resistance. Cephalosporin drugs are commonly used in humans to treat a range of conditions including pneumonia, skin and soft tissue infections, pelvic inflammatory disease, foot infections linked to diabetes and urinary tract infections. Some aren’t approved for use in cattle, swine, chickens and turkeys, but some food producers use them in these animals regardless because they are effective. From 5 April, this will be banned in most cases. It will also be prohibited to use cephalosporin drugs for preventing disease (as opposed to treating it).

 

US metal fires ’preventable’

US authorities have said that three accidents at a powdered metals plant in 2011 that killed five people were ’entirely preventable’. The flash fires and explosion at the site in Gallatin, Tennessee, owned by US powdered metal manufacturer Hoeganaes were caused by significant accumulation of fine iron powder, according to the US Chemical Safety Board. But the company ’did not take the necessary action to reduce the hazards through engineering controls and basic housekeeping’. 

 

German chemicals market buoyant

2011 was a relatively good year for the German chemical industry, but in 2012 growth will slow dramatically, according to the German chemical industry association (VCI). The industry enjoyed record sales, high levels of production and more jobs compared with recent years. In addition, R&D spending increased 6.5% to €8.8 billion compared with 2010. But the VCI says that in 2012 production will grow by?1%, prices by 1% and sales by?2%. Meanwhile, the ongoing economic instability in Europe remains a substantial risk.

 

S?d-Chemie and LG Chem in lithium joint venture

German speciality chemical company S?d-Chemie has signed a deal with Korean company LG Chem that will see them create a joint venture for producing lithium iron phosphate (LFP), a cathode material for rechargeable lithium-ion batteries. S?d-Chemie says that the deal will ’lay the foundation for reliable sources of LFP’ in response to burgeoning demand. At a later stage, the joint venture might extend to lithium manganese iron phosphate (LMFP), which promises batteries with higher energy density. 

 

Coca Cola invests further in green plastics

Drinks manufacturer Coca Cola has struck partnership deals with three biotech companies to help it to develop 100% plant based materials for its bottles. In 2009, Coca Cola launched a recyclable ’Plantbottle’ made from poly(ethylene terephthalate) incorporating 30 % plant-derived ethylene glycol. Now, it has signed up Virent, Gevo and Avantium, three companies that specialise in plant based materials as alternatives to materials derived from petrochemicals. 

 

GREENTECH

Canada ditches Kyoto Protocol

Canada has become the first country to pull out of the Kyoto Protocol, a historic international agreement from 1997 aimed at reducing greenhouse gas emissions and preventing harmful global warming, according to news reports. Canada’s annual emissions have risen by a third since 1990, at least in part due to its rapidly expanding oil sands industry. The country would face enormous fines if it continued to be part of the deal.

 

Seven seas of algae 

Shipping giant Maersk has started testing algae-based biofuel in a container ship en route from Northern Europe to India. The onboard engineers will test blends ranging from 7 to 100% biofuel to determine the ideal proportion. In addition, they will analyse: power efficiency; engine wear and tear; and emissions data for nitrogen oxides, sulfur oxides, carbon dioxide and particulates. The tests will be conducted in partnership with the US navy. 

 

IN BRIEF

NIH and IBM open drug database

US IT firm IBM has created a database of 2.4 million chemical compounds, which it will make available to the public via the US National Institutes of Health. IBM captured the data from 5 million patents and 11 million biomedical journal abstracts from 1976 to 2000, in collaboration with several big name companies. The database opens up access to publicly available data previously buried within reams of literature. 

 

Statins boost flu survival

Statins might one day prove useful for treating influenza, according to new research. The researchers found evidence that patients hospitalised with influenza were less likely to die if they were already taking statins for the treatment of an existing condition. Statins - such as Lipitor (atorvastatin) from Pfizer, the biggest selling drug in the world - are widely used for lowering cholesterol. 

 

AZ buys Chinese injectables

AstraZeneca has struck a deal to buy a privately owned Chinese generics company, Guangdong BeiKang Pharmaceutical, based in Conghua City, Guangdong province. The move gives AZ access to a range of injection drugs for treating infection. The company has not revealed how much it has agreed to pay. 

 

GSK’s Witty knighted

GlaxoSmithKline (GSK) boss Andrew Witty has been placed on the UK New Year honours list for 2012. The list cites ’services to the economy and to the UK pharmaceutical industry’ in relation to Witty, who has been chief executive since 2008.  

 

Ireland gets Botox injection

US pharma company Allergan, most famous for iconic anti-wrinkle drug Botox (onabotulinumtoxinA), will inject $350 million (?226 million) into its manufacturing site at Westport, Ireland. The move follows significant recent investment in the country and will create 200 new jobs over the next four years. 

 

Rare earth supplies stable

China will hold steady exports of rare earth elements following its first round of quotas for 2012, according to news reports. The country, which accounts for almost all of the global production of rare earth elements, has been cutting quotas for several years now, leading to unprecedented price rises. The move will keep exports at more or less 2011 levels and is thereby likely to calm international fears of further squeezing. 

 

BASF completes Chinese plant 

German chemical giant BASF has completed a $1.4 billion (?907 million) chemical manufacturing investment in Nanjing, China. In collaboration with Chinese company Sinopec, BASF has expanded its production capacity for ethylene, ethylene oxide and derivatives. 

 

Biofuel boost for DuPont 

DuPont has signed a deal with US biotech NexSteppe to develop bio-based fuels and chemical products from sorghum, a type of grain-producing marginal grass. As part of the deal, DuPont has invested in NexSteppe - which has several sites in Brazil - although the company has not said how much money is involved. Sorghum can be used alongside sugarcane in existing sugar-to-ethanol mills, while high biomass sorghum is suited to producing fuel. 

 

BASF sweet on Renmatix 

BASF has contributed $30 million to privately held US greentech firm Renmatix through its subsidiary BASF Biorenewable Beteiligungs, which raised a total of $50 million for Renmatix from new and existing investors. Renmatix makes industrial sugar from lignocellulosic biomass - inedible plant mass from for example wood, straw or sugar cane residue. The company says its process, which involves supercritical water, is the lowest cost route to industrial sugars.