Cancer R&D and Drugs Dominate Pharma Deals in 2017

Global sales of cancer drugs about $80 billion a year, growing over 10% annually

c1Cancer is one of the pharmaceutical industry’s biggest markets, with worldwide sales amounting to roughly $80 billion a year and growing more than 10% annually, according to EvaluatePharma and as reported by The Wall Street Journal. In recent years, immune-oncology (IO) has become one of the most promising and fastest growing areas of cancer research and drug development. Cancers grow and spread because tumor cells evade being targeted by the immune system. One of the most recent discoveries in cancer therapy has been to identify ways to enable the immune system to target and destroy tumor cells through a process called immune checkpoint inhibition. These therapies not only have the potential to reduce tumor growth like traditional therapies, but also potentially eliminate the cancer entirely.

c2It comes as no surprise that drug companies are focusing their R&D efforts on cancer drugs or entering into deals with companies that are focused on potential cancer treatments. One of the mega deals in 2016 in the area of IO drugs was Pfizer Inc.’s (NYSE: PFE) acquisition of Medivation Inc., a biopharmaceutical company that develops and commercializes small molecules for oncology, for about $14 billion in August 2016. Pfizer’s drugs portfolio includes the breast cancer treatment Ibrance and several other promising IO products.

Medivation’s prostate cancer drug Xtandi, a leading novel hormone therapy already approved for sale in the US, is also being further developed in Phase 2 studies for the treatment of advanced breast cancer and hepatocellular carcinoma. Xtandi is forecast to generate $5.7 billion in sales by 2020 and competes with Johnson & Johnson’s (NYSE: JNJ) prostate-cancer treatment Zytiga. Xtandi would also face potential competition in the future from Johnson & Johnson’s new prostate-cancer drug, which is still in its development phase.

Kite Pharma partners with Daiichi Sankyo

c3It appears that cancer drugs are set to dominate pharma deals in 2017. A case in point is Kite Pharma Inc.’s (NASDAQ: KITE) partnership with Daiichi Sankyo Co. Ltd, announced on January 09th, 2017, to develop and commercialize its cancer treatment therapy in Japan. Under the partnership, Kite would receive up to $250 million in payments and low to mid double-digit sales royalties. Of the $250 million, Kite said it would receive $50 million as upfront payment.

Kite’s lead investigational therapy, axicabtagene ciloleucel, is part of an experimental class of drugs that are made by genetically altering a patient’s T-cells, a type of white blood cell, in the lab to help the immune system find and kill cancer cells. The modified cells, called chimeric antigen receptor T-cells, or CAR-T, are then infused into the patient.

Takeda acquires Ariad in $5.2-billion deal

c4Japan’s Takeda Pharmaceutical Co. agreed on January 09th, 2017, to acquire cancer drug maker Ariad Pharmaceuticals Inc. (NASDAQ: ARIA) in a $5.20 billion deal. The Ariad transaction, at a 75% premium, is the latest example of pharmaceutical giants paying big money to acquire promising drugs owned by rivals in a bid to secure stable revenue growth, particularly for the treatment of cancer or rare diseases. Takeda’s move comes as it braces to fend off generic competition for its top-selling blood cancer drug Velcade, with other key products slated to go off patent later from 2020.

Takeda’s Chief Executive Officer Christophe Weber said the potential returns from Ariad’s lung cancer treatment, Brigatinib, and its leukemia drug, Iclusig, along with other formulas in its pipeline justified the high premium. Takeda predicts that annual sales from Brigatinib, which is pending approval by the U.S. Food and Drug Administration (FDA), could exceed $1 billion.

AbbVie enters into research pacts for cancer therapy

abbAbbVie Inc. (NYSE: ABBV) announced four new global research collaborations on January 09th, 2017, that focuses on fields including IO and genomics. AbbVie has teamed up with Genomics Medicine Ireland (GMI) to sequence the genomes of 45,000 volunteers. GMI and AbbVie will enroll people with several types of immune-mediated diseases, neurological disorders, and cancer as well as individuals unaffected by these conditions in the sequencing program. AbbVie plans to pair these genotypic data to phenotypic information to identify new therapeutic targets and biomarkers.

One of the oncology deals sees AbbVie teaming up with Pure MHC to discover and validate peptide targets. AbbVie plans to use the targets with T-cell receptor drugs in various cancers. The other oncology deal gives AbbVie the license to use Dong-A ST’s MerTK inhibitors in combination with IO therapies. AbbVie expects that Dong-A ST’s preclinical programs may boost the effectiveness of checkpoint inhibitors.

Merrimack sells oncology assets to Ipsen

c6Merrimack Pharmaceuticals Inc. (NASDAQ: MACK) announced on January 09th, 2017, that it would sell its oncology assets, including pancreatic cancer drug Onivyde and its generic version Doxil, to French drug maker Ipsen SA in a deal worth up to $1 billion. Merrimack will receive $575 million in cash when the deal closes, and can receive up to $450 million in additional milestone payments. The transaction is expected to close by the end of the first quarter of 2017.

The current deal would give Merrimack the resources to fund the development of three new compounds MM-121, MM-141 and MM-310 targeting pancreatic, lung, and other types of cancers. Non-small cell lung cancer drug MM-121 and metastatic pancreatic cancer program MM-141 are in phase 2, making them the most advanced of the three assets. In July 2016, its MM-121 or seribantumab treatment was granted fast-track designation by the FDA for development in patients with lung cancer.

On the other hand, the deal would boost Ipsen’s portfolio, which has traditionally focused on endocrinology. Ipsen would also get US commercialization rights for Onivyde and Merrimack’s licensing agreements with Shire PLC outside the US and with PharmaEngine Inc. in Taiwan.

Stock Performance

c7Kite’s stock stood at $49.05, slipping 5.20%, at the close on Wednesday, January 11th, 2017, having vacillated between an intraday high of $51.74 and a low of $48.20 during the session. The stock’s trading volume was at 1,100,695 for the day. The Company’s market cap was at $2.37 billion as of Wednesday’s close.

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