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In Vivopharma intelligence ❚ informa

December 2016 invivo.pharmamedtechbi.com

vol. 34 ❚ no. 11

The Core Challenge Of Multichannel Marketing

Patheon Aims To Transform Pharma Outsource ManufacturingBy Marc Wortman

Admedus Opts For A RestartBy Ashley Yeo

Biopharma R&D Productivity And Growth 2016By Markus Thunecke and Graham Scholefield

By Sarah Rickwood, Gareth Dabbs, Alexandra Smith and Christopher Wooden

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©2016 Informa Business Information, Inc., an Informa company December 2016 | In Vivo

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How To Restructure: Admedus Opts For A Restart Ashley yeo

Admedus and its product mix was an unfolding success story – and still is, due to a restructuring of activities and a resetting of aims that have ensured the Australia-US tissue engineering company does not miss out on the opportunities it has crafted for itself.

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Tightening The Supply Chain: Patheon Aims To Transform Pharma Outsource ManufacturingMArc WortMAn

Fueled by a series of strategic acquisitions, Patheon hopes to become the biopharma industry’s first single-source, end-to-end manufacturing service provider.

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Atlas Genetics Ready To Play Its Part In The POC Workflow Revolution Ashley yeo

Do it once, do it right and do it quick: when it comes to diagnostic testing, that suits patients and payer systems that are pursuing budget-sensitive, quality-driven health care solutions. It could also be the shorthand mission statement of POC diagnostics developer Atlas Genetics, which is developing a new IVD platform technology for infectious disease tests.

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Biopharma R&D Productivity And Growth 2016: Innovation Performance Improves MArkus thunecke And

GrAhAM scholefield

Catenion updates its annual list of the year’s top pharma R&D performers, based on R&D productivity and growth. This year Regeneron shoots to the top and Gilead drops to third place.

4 0 Biosimilar Dealmaking Moves The Needle Forward AMAndA Micklus

Dealmaking is advancing the biosimilar field. Since 2000, the volume of biosimilar deals has grown at a 15% compound annual rate, according to a new report from Datamonitor Healthcare.

December 2016

❚ Channel Preference Versus Promotional Reality: The Core Challenge Of Multichannel Marketing

Sarah Rickwood, Gareth Dabbs, Alexandra Smith and Christopher Wooden

Pharma is one of the last industries to hold on to the use of sales representatives to sell its goods. It’s time to harness digital technologies that enable multiple ways to approach clients on their own terms.

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In VivoPharma intelligence |

F E aT u r E S

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In Vivo | December 2016 invivo.pharmamedtechbi.com

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In VivoPharma intelligence | December 2016

As we all continue to process the political seismic shifts of 2016, it’s good to remind our-selves that change always brings opportunity. We look forward to watching the pharma and medtech industries seize those opportunities in 2017.

Two items of business as we welcome the new year: if you haven’t done so already, please take a few minutes to complete our no-strings-attached reader survey at http://bit.ly/2gSuZdU. Your feedback will help us continue to meet your needs and, we hope, exceed your expectations in the coming year.

Also, our annual Deals of the Year contest has launched and polls will remain open through mid-January. We’ve nominated what we think are the most significant strategic alliances, financings and M&A deals of 2016. Please visit invivo.pharmamedtechbi.com to cast your vote in recognition of superior dealmaking by your peers or perhaps by your own company.

Thanks for reading us in 2016. We can’t wait to continue the conversation next year.

❚ From The Editor

d E pa rT m E N T S

AROunD The InDuSTRy 4 Biopharma IPOs In 2016: Fewer

Offerings, Better Returns As Firms Adjust To Market Realities MAnDy JACkSOn

6 US Medtech Under Trump: Below The Radar Or In The Line Of Fire? ASHLey yeO

8 Cell Therapy Manufacturing: Challenges Remain PeTeR CHARLISH

42 On The MOVeSignificant recent job changes in pharma, medtech and diagnostics

46 DeAlMAkInGDeals Shaping The Medical Industry, november 2016

/invivo@invivo/invivo

E x C lu S i v E O N l i N E CO N T E N T

❚ Device/Diagnostics Dealmaking Statistics Q3 2016 MAureen riordAn And AMAndA Micklus

❚ Deals In DepthAn overview of biopharma, medtech and diagnostics dealmaking in October 2016 AMAndA Micklus

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❚ Six Big Shifts In life Sciences BRIAn SMITh

❚ Brexit: The uk MhRA’s View Of The elephant In The Room AShley yeO

❚ In Vivo’s Deals Of The year Contest

NaNCy dvOriN

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Biopharma IPOs In 2016: Fewer Offerings, Better Returns As Firms Adjust To Market RealitiesThe number of US biopharma IPOs during the first 11 months of 2016 – 29 companies went public – is less than half of the 2015 total of 62, but stock performance has improved as investors focus on quality.

The window for initial public offerings has narrowed during the past year and a half in an attempt to improve the quality and value of newly public biopharmaceu-tical companies, which is why only 29 biopharma firms completed IPOs in the US this year as of November 30 compared with 62 therapeutics firms that went pub-lic in 2015.

Generalist investors – and, to a lesser extent, biopharma-focused investors – withdrew capital from the sector last year as valuations slid in response to political pressure for drugmakers to lower the prices of their medicines. Most health care specialists continue to invest in the industry for the long haul, but they’re be-ing more selective about where they put their money, based on sound science and a clear path to regulatory approvals, payer reimbursement and commercial sales.

Gene therapy developer AveXis Inc. raised a private $65 million mezzanine financing round in September 2015, but decided soon after to pursue an IPO so the Chicago-based company could build manufacturing capabilities that would support both clinical and commercial gene therapy production.

The path to the public market hasn’t been smooth for biopharma firms like AveXis, which had only preclinical and early clinical data to share with prospec-tive investors. However, the company was able to report strong preliminary results from its ongoing Phase I study in infants with spinal muscular atrophy (SMA) type 1 and lay out a path to late-stage testing, approval, manufacturing and commer-cialization that struck a chord with IPO investors.

“It’s been a very nice year and we’ve

been pleased with how things have come about,” says AveXis CEO Sean Nolan. The company went public at $20 per share in February for net proceeds of $98.2 million and the stock ended November at $59.12 – the best performance of any biopharma company to go public in the US in 2016 with a 195.6% return as of November 30 compared with the firm’s IPO price. (Also see "Year's First 4 IPOs Go South As Pro-teostasis, AveXis Launch" - Scrip, February 12, 2016.) “Foundational to that perfor-mance is that the science has translated extremely well into patients,” says Nolan.

InvesTORs shIFT PRIORITIes, FOcus On scIence In 2016, 2017Bryan Giraudo, a managing director spe-cializing in financial transactions for life science firms in the San Francisco office of investment bank Leerink Partners LLC, has worked on more than 100 IPOs and follow-on financings for biopharma and medical device companies.

“An IPO is just about the riskiest in-vestment you can do,” Giraudo says. For investors since the second half of 2015, “it has been a very skittish market and the biggest casualty of that has been the biotech IPO market.”

Health care investors have focused on particularly novel ways of bringing medi-cines to patients. That's why three gene editing companies working with CRISPR/Cas9 technologies – editas Medicine Inc., Intellia Therapeutics Inc. and cRIsPR Therapeutics AG – were able to launch some of 2016’s more successful IPOs. Giraudo worked on the Intellia offering, which priced at $18 per share in May and traded as high as $30.40 before falling to $15.75 by the end of November as CRISPR-

focused companies prepared to take their patent dispute to court. (Also see "IPO Update: Intellia Launch Shows CRISPR Still Excites While Others Struggle" - Scrip, May 8, 2016.)

Generally, Giraudo says, companies working on clinical trials that already had some data that defined the drug development risk were able to go public at a reasonable valuation. Without clini-cal data, IPO hopefuls needed a strong research and development program that could provide multiple opportunities for new therapies.

“For companies with revolutionary big leaps, most of them are already public. We will see a lot of people doing follow-on in-vestments in those companies,” Giraudo says. “The IPOs we will be involved with in 2017, by and large, are clinical compa-nies. They have a basket of assets that are through proof-of-concept or they have enough suggestion of proof-of-concept to get there.”

Even then, investors are taking a more conservative approach. Giraudo points to Protagonist Therapeutics Inc., which is developing oral peptide therapeutics with a lead indication in irritable bowel disease (IBD), as an example. Protagonist went public at $12 per share in August, raising $83.7 million in net proceeds ($90 mil-lion gross), and the stock was trading up 107.9% at $24.95 as of November 30. (Also see "IPO Update: Protagonist, Gemphire, Kadmon Launches Fall Flat" - Scrip, August 18, 2016.) “They have a known target, trials under way, and early safety data that looked good, but they had a modest valuation at $90 million,” Giraudo says.

The US presidential election, making millionaire real estate developer Donald Trump the president-elect, originally gave biopharma stocks a “Trump bump,” but his views on science, medicine and regula-tions still are largely unknown, although

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he has criticized rising drug costs. Laurie Halloran, President and CEO of

the Boston-based life science manage-ment and strategy consultancy Halloran Consulting, said it will be interesting to see what happens to biopharma stocks between now and Trump’s inauguration in January. “Republican presidents tend to be pro-business,” Halloran says. “And there was an initial market reaction of relief that the election was over, but from what I’m reading now, it seems to be an untraditional Republican presidency. There’s a lot of uncertainty about what’s going to happen or won’t happen.”

As a result, investors are putting money back into the stock market, but that cash may bypass pre-commercial biopharma companies. “At the end of the day, a lot more money is coming back into the market, but not necessarily into life sciences per se,” Giraudo says. “There are billions being invested, but the vast majority is from big funds buying into exchange-traded funds – they’re buying into a fund with a little bit of Gilead Sci-ences and Vertex Pharmaceuticals.”

Biotech specialists or biopharma groups within larger investment funds will keep the sector’s IPO window open in 2015, but Giraudo expects more scrutiny of companies’ science, regulatory and commercial risks. Companies “will have to be prepared for a deeper level of dili-gence,” he says.

Indeed, even smart investors probably have been burned by the biopharma IPO market during the past few years. The av-erage return versus the IPO price for the 62 therapeutics companies that went public in 2015 was 8.6% at the end of last year, but the return became an average loss of 16.9% by November 30 of this year. Losses for the five worst performing biopharma IPOs in 2016 ranged from roughly 40% to 60%. (Also see "Half of 2016 Biotech IPOs Positive At Mid-Year; 2015 Success Rate Sours" - Scrip, July 10, 2016.)

Is GOInG PuBlIc RIGhT FOR YOuR cOMPAnY?“We are seeing that if there’s a really good product or portfolio, there’s enough for at least an IPO filing,” Halloran says. “If something represents a real breakthrough therapy or there’s significant opportunity for revenue, a company has a better op-

Exhibit 1

2016’s Top Five Biopharma IPOs Based On Performance

COMPANy IPO PRICE NOV. 30 PRICE RETURN

AveXis Inc. $20 $59.12 195.6%

Novan Inc. $11 $26.86 144.2%

Reata Pharmaceuticals Inc. $11 $25.99 136.3%

Clearside Biomedical Inc. $7 $14.64 109.1%

Protagonist Therapeutics Inc. $12 $24.95 107.9%

SOURCE: Strategic Transactions; Scrip | Pharma Intelligence, 2016

Exhibit 2

2016’s Bottom Five Biopharma IPOs Based On Performance

COMPANy IPO PRICE NOV. 30 PRICE RETURN

Kadmon Corp. LLC $12 $4.99 -58.4%

PhaseRx Inc. $5 $2.10 -58%

Moleculin Biotech Inc. $6 $2.70 -55%

Aeglea Biotherapeutics Inc. $10 $5.17 -48%

Oncobiologics Inc. $6 $3.64 -39.3%


Exhibit 3

2015 And 2016 Biopharma IPOs side-By-side

COMPANy2015

(FULL yEAR)2016

(THROUGH NOV. 30)

Number of IPOs 62 29

Total Net Proceeds $4.9bn $1.8bn

Average Net Proceeds Per Company $79.8m $63.7bn

Range Of Per-Share IPO Prices $2.75 to $68.56 $5 to $24

Average IPO Share Price $13.87 $11.90

Stock Price Average on Dec. 31, 2015 $13.70 NA

Average Return Vs. IPO on Dec. 31 $8.6% NA

No. Of Companies Trading Below IPO Price 31 NA

Stock Price Average on Nov. 30, 2016 $11.01 $14.95

Average Return Vs. IPO on Nov. 30 -16.9% 18.6%

No. Of Companies Trading Below IPO Price 44


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portunity to go public, but that depends on how much money the company will be able to raise.”

Many biopharma companies went pub-lic too early in their drug development pro-cess. They’ve suffered the consequences of small missteps that are common early in R&D programs while having their stock traded in public eye. Several companies would have been better off to raise private money – either venture capital or licensing fees from partners – instead of going pub-lic while generalist investors were pump-ing billions of dollars into biopharma IPOs.

“I don’t see nervousness in the ecosys-tem in Boston for funding. I see activity for deals and acquisitions. There’s a lot going on, because there’s a continuous search for products to pull in to big pharma,” Halloran says. “For the little companies, it’s about finding the funding to do what they need to do, but with the IPO window open they had more options.”

An IPO may be something that existing VC investors push for to generate returns on investments in their portfolios, but the last thing a small biopharma firm wants to

do is lose its valuation by going public and having its stock go down.

“It’s about which is better or worse for the management team. If they can get their funding from a syndicate or a partner, it makes no sense to go public,” Halloran says. “When a company goes public, there’s a shift for the C-level execu-tives – they become much less involved in daily operations. I had a company go public and the CEO saw a major shift from making sure the company was working and moving forward to a much more out-ward focus and less availability.”

sTAY FOcused, KeeP InvesTORs InFORMed, see vAlues RIseAveXis CEO Nolan and Vice President of Investor Relations Jim Goff agree that the gene therapy firm’s positive clinical trial results combined with regular data and regulatory updates have given investors confidence to invest in the company.

The US FDA granted a breakthrough therapy designation for the Phase I gene therapy AVXS-101 in the treatment of type 1 SMA in July and the agency recently

agreed to let the company initiate a pivotal trial, which will begin during the first half of 2017. Between its pre-IPO mezzanine financing, its IPO and a $149.1 million fol-low-on offering in September, AveXis had $263.6 million in cash as of September 30 to support construction of a manufactur-ing facility as well as the ongoing Phase I and planned Phase III program.

Halloran expects the IPO market for certain attractive biopharma investments to hold steady in 2017 without a big rise or fall in the number of offerings by thera-peutics companies. And for those who stay private, there will be partnership opportunities and venture capital options.

“If you think of the ecosystem and where the money is coming from, phar-ma’s looking for products,” she said. “It’s really still about making sure companies are able to go toward their next funding round and reach their next value inflec-tion point.” IV004983

MAndY [email protected]

us Medtech under Trump: Below The Radar Or In The line Of Fire?The return of a Republican president to power in last month’s US elections showed – for the second time in 2016 – that punditry can be misleading and opinion polls do not always equate with reality. With just a few weeks to President Trump’s inauguration, ZS Associ-ates’ Brian Chapman gives an early appraisal of how the new administration might view the health care brief in general and the medtech industry in particular.

Health care was not one of the US election’s main talking points. Donald – President Elect – Trump was doing away with the Affordable Care Act (ACA), and that was that. Little center ground or any chance to air the pros and cons. But barely two weeks after the historic vote, an outcome that yet again confounded the pollsters, here he was backtracking and apparently softening his tone.

Was this the first sign of a maturing, more collegiate approach to the next four years of US health care governance? Half the population might have hoped so. But any early thoughts of Trump doing an about-face on health care were dashed when he nominated representative Tom

Price, MD (R-GA), a hardliner and long-standing critic of Obamacare, as secretary of the Department of Health and Human Services (HHS). (Also see "Fierce Critic Of Obamacare, Medicare Delivery Reforms Tapped To Run HHS" - Medtech Insight, November 29, 2016.)

US medtech industry association AdvaMed was quick to officially welcome Price, an orthopedic surgeon by training, helpfully (and no doubt, hopefully) airing the notion that the new HHS incumbent understands the important role medical technology plays in improving patient outcomes and in adding value to health care systems.

ZS Associates’ Brian Chapman agrees

that the US voting pattern in 2016 was unexpected. Others have argued that the victory was built on false premises. “Take a look at some of the things Trump has said – for instance, about repealing Obam-acare – and consider whether he means it. At this stage, we can take any statements with a large pinch of salt,” says Chapman, principal at ZS and leader of the consult-ing practice for ZS’ Medical Products and Services team. (Also see "Medtechs Must Partner With US Providers As Outcomes Revolution Ramps Up" - In Vivo, August 2016.)

He adds, “A lot of legislators swept in on the idea of repealing the ACA, but my own view is that it’s very questionable when you look at the nuts and bolts of what is required to do that, and the practicalities involved.” Could the incoming president really repeal a 2,000-page document that has been through many stages of imple-mentation for the past six years without

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an immediate replacement, Chapman wonders. It seems implausible.

Nevertheless, he thinks some areas of the ACA do look likely to be targeted. And some will be left alone. It’s still a pick-and-mix in that respect, but he believes the ACA can be viewed as a couple of big areas – insurance reform, that is, the mandate on all individuals to set up health insurance or pay a fine; and payment reform.

It seems that in the wake of the vote, Trump has found some of elements of the ACA to be somewhat attractive – espe-cially the one on coverage of preexisting conditions. The prospect of policies being cancelled has been causing a lot of politi-cal angst. Chapman asks, is the idea of the uninsured getting hospital care something that people would be so unhappy about? He believes, personally, that there is no political will to remove that particular ele-ment of the ACA.

But Chapman feels that “it’s reasonable to believe we could see some changes as to how the insurance reform part of the ACA is implemented, as it’s been pretty unsatisfactory so far. This is the area where we’ll see a lot of action from the new ad-ministration.”

Indeed, there has been a lot of specula-tion over where that part of the law would have ended – possibly in a single payer system. And would the government have taken over the health exchanges/health insurance marketplaces – the organiza-tions set up under the ACA to facilitate the purchase of health insurance by uncovered individuals?

The TRuMP – And OTheR – eFFecTs On shAResThe November 8 vote prompted a number of big effects, the first being immediate stock price moves. The notion took hold that post-Trump, Medicaid would be covering those people without insurance when they came to the hospital.

The device makers, the likes of Medtron-ic Plc and st. Jude Medical Inc., did not move a lot, but the major for-profit hospital operators, such as community health systems Inc. (CHS), hcA Inc. and Tenet healthcare corp. – saw immediate stock price plummets. Tenet dropped by almost a quarter to $15.21 on November 9, which was under half its April 27 value of over $32. The stock has trended down all year, and

has been flat (to December 7) since hitting a 2016 low of $14.51 on November 10.

HCA Holdings rose sharply in the five days before the election, but then col-lapsed by almost 14% to $69.58 in the fol-lowing three days. It is currently (December 7) stuck just above that price.

Chapman explains that the private hospital operators faced the prospect of a sudden change in the way they are paid, and thus a potentially substantial loss of funding income. If the medtechs are not affected directly by stock price falls, they will be concerned about possible repercus-sions from plummeting prices elsewhere.

For the private hospital operators, the situation was already uncertain, without the extra uncertainties Trump has added to the mix. CHS, for instance, dropped by 21.5% on November 9, but its stock price had already fallen off the cliff on October 27, dropping by 49.7% in one day alone. That was due to system headwinds gen-erally, and poor third-quarter guidance specifically.

CHS said it was suffering lower volumes and larger state program reimbursement reductions than expected. Its challenging situation is exacerbated by increases in health insurance costs, medical specialist fees and implant supply costs. How its own

situation – and that of the entire sector – changes after January 20 (the presidential inauguration day) will be the dominating US health care theme in 2017.

Elsewhere, Chapman notes that some of the more capital-oriented stocks – for example, hospital bed manufacturer hill-Rom holdings Inc. – were seeing delayed purchases. “Uncertainty has hit those stocks in the short term,” he says.

But on the other hand, the entire US stock market was slightly positive, imme-diately post-vote. Notably, pharma stocks benefited from the fact that any “Clinton effect” was no longer on the horizon, her ideas on penalizing local companies by importing cheaper analogs, subsidizing competitors and expanding access and competition via financial penalties being consigned to the trash can.

QuesTIOns On The FuTuRe OF PAYMenT ReFORMThe second big area of the ACA, payment re-form, is very relevant for the provider/hos-pital/medtech industry world. The Centers for Medicare and Medicaid Services (CMS) has put in place a variety of mechanisms to make hospitals more accountable for the long-term outcomes of their patients. “This is a very positive step forwards,” says Chapman. Hospitals are now made more responsible for inpatients’ health after their hospital stay has ended, and must pay the cost of treating conditions (bed sores, etc.) that arise during the patient’s stay.

For the past four years, CMS has been withholding a hospital’s Medicare reim-bursement if the quality of its performance is judged negatively. Hospitals are given a score under the Hospital Consumer Assess-ment of Healthcare Providers and Systems (HCAHPS), which is a measure of customer satisfaction. Hospitals’ reimbursement can be reduced if their “score” is low or reduced.

Other mechanisms, such as the compre-hensive joint reconstruction (CJR) payment, are also now in play. The CJR payment is based on surgical treatment for 90 days, and it makes the hospital responsible for a patient’s rehab. “It’s very different from how it used to work, and, regarding that area of ACA – the payments to hospitals and ACOs – I don’t see a lot of political will to change that,” says Chapman.

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RePuBlIcAns’ cleAn sweeP MAKes A dIFFeRence?

Does Republican control of both the House and the Senate give them a big mandate to make sweeping changes? Chapman says yes, in theory, but only if all Republican members of Congress think the same way. Equivocally, he says, “I’m not so sure, espe-cially when a lot of Republicans denounced Obamacare and then, when Trump came to take a long hard look at it, he actually liked some of it. That shows the size of the fracture that exists.”

Obamacare is intricate and by now is interwoven into the fabric of US health care. “The impacts of that legislation six years on are pretty big. It’s forced much consolida-tion among payers and providers – and there have been horizontal and vertical mergers, and a lot more hospitals are now associated with rehab downstream. Those changes don’t get reversed if the act gets repealed.”

It’s almost unthinkable. “If something happened to the act itself, it would be a mess. And on the funding side, I’m not sure they would strike its down and want to erase everything it does. There is no clear reason for reversing the funding mechanisms. But you can see insurance changing quite a lot,” he adds.

The 2.3% medical device excise tax is sus-pended until the end of 2017. But is there an appetite to bring it back? Chapman feels the decision could go either way, but if it was permanently repealed, “they’d have to figure out where the money is going to come from.” Looked at in another way, it has been paused and what’s to stop it dis-appearing for good, he speculates.

However, it feels like the industry has gone through a process of complaining about the tax and using it as an excuse. And now, it seems to have moved on. “It’s very different to saying that 30% of the popu-lation is suddenly no longer covered any more – that’s a much bigger uncertainty than taking a few percentage of sales in a tax,” says Chapman.

“As a theme, the device tax is material, but it’s not behavioral,” he says. US jobs, manufacturing and R&D have not gone away; and does it really affect where a company does its manufacturing, he asks. “There’s less money available for R&D, and yes, some of the arguments against it are compelling. But there’s been no cataclys-mic shift that has meant companies no longer exist or SMEs can’t get funding.”

Chapman feels that it would be more se-rious if health care compliance, information protection or funding flows were targeted:

they are also relevant to the ACA and in fact are all much bigger than the tax.

“The debate about the effects of in-surance changes in the ACA is politically charged. But we have seen bigger state-ments around pharma, where there is more in store in terms of potential regulation around pricing. In some ways our medtech industry flies below the political radar. We’re not directly in the target sights, whether that is for good or bad.”

Looking at the incoming administra-tion as of January 20, 2017, what should the likes of Johnson & Johnson and cvRx Inc. – and medtech manufacturers active in the US market generally – be preparing for? There’s change everywhere in every indus-try and corner of the globe and the US has had a relatively stable market compared with others for many years, says Chapman.

“Anything that is bad for a hospital is bad for a supplier to the hospital,” he adds. “I can see some energy developing among companies around how the uninsured are cared for at the hospital, and in making sure that doesn’t change. In short, I would be thinking hard about the health of my own customers,” Chapman advises. IV004984

AshleY [email protected]

cell Therapy Manufacturing: challenges RemainIf cell therapies are to realize their full potential, manufacturing procedures need to be in place to ensure their safety, potency and consistency at an economically sustainable cost. We aren’t there yet, according to a panel at the Alliance for Regenerative Medicine’s European Investor Day in London.

Cell therapy continues to attract great interest from both the research community and health care companies, not to mention biotech investors. Although the main focus is cancer, cell therapy products are show-ing promise in the treatment of diseases as varied as heart failure, osteoarthritis, diabetes mellitus, graft-versus-host dis-ease and Alzheimer’s disease.

According to Informa’s Pharmaprojects, more than 300 companies worldwide are developing cell therapy products, and be-tween them they are responsible for more than 500 individual R&D projects. Around 30 of these are in advanced clinical trials.

A recent report from market research firm Scalar predicts that the global stem cell therapy market will grow by more than 30% a year for the next several years, rising from a value of around $12 billion this year to just over $60 billion by 2022.

But companies that hope to commercial-ize cell therapy products face a challenge to develop dependable manufacturing pro-cesses that ensure the effectiveness, safety and consistency of cell therapy products at an economically sustainable cost. Meeting current GMP requirements, which were not developed with such products in mind, is especially difficult. Developing new regu-

latory requirements could be even more difficult, given the scope of potential cell therapy products. For example, autologous cell products would be manufactured using relatively short batch processes before being re-administered to patients, while allogenic cells would probably be subject to much lengthier processes that could however be scaled up to supply multiple patients and thereby achieve economies of scale. A further problem with products manufactured for individual patients is that they must be re-administered within a relatively short time frame, which might not give enough time for sterility and other QC procedures to be carried out.

In short, if cell therapies are to realize their full potential, procedures need to be in place to ensure their safety, potency and consistency. This will be an expensive

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process, and companies need to ensure that adequate funding is available to support the entire process. Such was the consensus among delegates at the Alliance for Regenerative Medicine’s (ARM’s) fourth annual European Investor Day in London in early November.

According to Thomas Fellner, PhD, head of commercial development, cell therapy at leading custom development and manu-facturing company lonza Group ltd., the biggest challenge currently facing contract manufacturers of cell therapy products is the large number of research companies with products in Phase III trials that do not have sufficient understanding of how an experimental therapy is translated into a commercially viable product. If they all needed to outsource manufacture of their products at the same time, for example, the CMO (contract manufacturing organization) sector might not be able to cope.

Fellner’s concern was shared by Ryan Guest, PhD, co-founder and director of cell production at cellular Therapeutics ltd., an immuno-oncology company specializing in the use of autologous tumor infiltrating lym-phocytes to treat a range of cancers. To date the main focus in cell therapy has been get-ting trials up and running, Guest said, but companies should now be thinking about how to go about scaling up manufacture in anticipation of their products receiving regulatory and reimbursement approval.

chAllenGe undeResTIMATedThere is a perception in some quarters that the difference between treating 10 or 15 patients in a clinical trial and treating hundreds or perhaps thousands of pa-tients once a product has been marketed is merely a question of scale, which it definitely is not, according to Phil Vanek, general manager, cell therapy growth strategy at General electric co.’s Ge healthcare. Currently, insufficient thought is given to manufacturing issues when a product is still in development, he main-tained, reflecting what other speakers had said, and nothing short of a shift in mind-set is needed. There is, for example, relatively little awareness of the demands of GMP or other regulatory issues such as how to manage quality control and how to monitor potency of a product. In the latter respect, Vanek said, some sort of interna-tional standardization may be needed.

Roundtable chairman Alain Vertès, PhD, director of the European Section at ARM, put the problem in a slightly differ-ent way. At present, he said, it is relatively straightforward for a cell therapy product to be made for a named patient by an individual doctor in a single hospital. But how to scale up this process is frequently not at all clear. Too often, Vertès argued, new technology is shoehorned into old procedures, a view shared by GE’s Vanek when he said that most manufacturing processes in use today have been around for at least 15 years and are based on procedures used in other sectors, such as blood product manufacturing.

There was a consensus among the panelists that manufacturing cell therapy products is quite different from traditional

pharmaceutical manufacturing. yet the “drug” mind-set persists, said Vanek, argu-ing that different types of product demand their own approach to manufacturing.

And it is not just manufacturers that need to rethink their approach: hospitals too need to reassess their procedures the better to deal with cell therapy products.

cOMMunIcATIOn Is KeYOne cell therapy contract manufacturer and process development company that has considerable experience in this area is Roslin cell Therapies, based in Edin-burgh. The company’s CEO, Janet Downie, advised that based on her experience, the secret to successful scaling up of a cell technology from the lab of a research com-pany to a CMO is effective communication, including comprehensive documentation. “The biggest cost is clean room space, and the longer the manufacturing process, the longer the product remains in the clean room and hence the greater the cost,” she warned. Downie spoke of the benefits of using the UK as a manufacturing base, and said that a great deal of effort is currently being expended to make the UK an attrac-tive location for manufacturing. (For a look at one of those efforts, see online-only sidebar, “CGT Catapult Builds Cell/Gene Manufacturing Facility.”)

It was, perhaps, an illustration of the newness of cell therapy manufacturing that the four panelists failed to agree on what is the most significant issue the industry currently faces. CTL’s Guest thought it was planning, whereas Lonza’s Fellner opted for strategy and Roslin’s Downie for communi-cation. However, GE’s Vanek was probably nearer the truth when he said “ecosystem,” by which he meant the entire process of scale-up and manufacture. Whoever was right (and they were probably all right to a degree), what is clear is that cell therapy is an exciting new treatment modality that is at the same stage that monoclonal antibod-ies were 30 years ago. Just as manufactur-ers then had to overcome a number of hur-dles before monoclonal antibodies became an accepted part of mainstream medicine, so too will cell therapy companies have to address a number of challenges before they can ultimately be successful. IV004980

PeTeR [email protected]

cGT catapult Builds cell/Gene Manufacturing Facility

CGT Catapult aims to capture the commercial potential of the UK's cell and gene therapy research.

http://bit.ly/2hR1ilX

READ MORE ONLINE

Companies that hope

to commercialize cell

therapy products

face a challenge to

develop dependable

manufacturing processes

that ensure the

effectiveness, safety

and consistency of cell

therapy products at

an economically

sustainable cost.


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• The use of sales reps mains strong in pharma despite challenges from payers and regulatory restrictions on promotions.

• Digital technology has enabled multichannel marketing that allows pharmas to give customers what they want, when they want it and how they want it.

• QuintilesIMS' research indicates that health care professionals in many countries want a greater level of digital communication with pharma than they currently get.

• Bridging the gap between the type of communication that health care professionals expect from pharma and what pharma is actually delivering is at the heart of multichannel marketing.


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One of the oldest commercial models is extensive use of sales representatives, working face-to-face with individual clients. This

model, while eroded or vanished in many industries such as consumer goods or financial services, remains strong in pharma, despite well-established challenges. For decades, increasingly dominant payer power and promotional restrictions have challenged the classi-cal model of the pharmaceutical sales rep visiting individual doctors, but it has proven remarkably resilient. The total number of reps the pharmaceutical industry employs has stayed quite steady at between 400,000 and 500,000 equiva-lents globally. The most fundamental challenge to the traditional sales model, however, has been more recent. The rise of digital technologies, enabling the growth of multichannel marketing, has revolutionized the commercial model in ways other trends have not, because digital simultaneously and dramatically diversifies the channels of communica-tion and sources of information. It is also, fundamentally, customer led. Health care professionals (HCPs), like the patients

they treat, have moved online to seek in-formation, communicate with peers and to make health care decisions. Pharma-ceutical companies have followed them.

The developed major markets – US, top five Europe, and Japan – account for over 85% of the first five years of sales (nor-malized, value) of New Chemical Entities, the innovative drivers of research-based pharma. Unsurprisingly, these countries are the focus of pharmaceutical com-pany promotional spend. However, our QuintilesIMS ChannelDynamics audit of pharmaceutical promotional and com-munication activity shows that the rise of digital and multichannel has been far from uniform across major countries. In previously published white papers, we’ve seen that Japan leads the world in terms of pharmaceutical company use of digital channels to communicate with HCPs, and the US has followed with a strong rise in the importance of digital, and therefore multichannel diversity. Europe, which is the second key region for New Chemical Entity sales, and therefore crucial for promotional investment, lags on digital share and multichannel diversity. How-ever, if we break Europe into countries, the picture is more mixed: some coun-

tries, Poland leading, have high digital volume shares. In others, the sales force still dominates promotional activity.

The rise of digital communication is a global phenomenon. Doctors across all these three regions are in sophisticated countries with access, at home and work, to the necessary digital infrastructure. The very different levels of multichannel maturity, backed by a wealth of objec-tive data and empirical observation, are driven by the “soft” factors – HCP culture and preference on the one hand, and on the other, pharmaceutical company culture and established practices. (See Exhibit 1.) Nevertheless, while there are multiple speed lanes toward mul-tichannel maturity, there’s only one direction of travel, as real-world time for communication between HCPs and pharmaceutical companies diminishes, and the proportion of time spent in the virtual world grows. Understanding if there is a disconnect between what HCPs want and expect in terms of channels of communication from pharmaceutical companies and what pharmaceutical companies are actually supplying them with is at the heart of making multichan-nel marketing a success.

Pharma is one of the last industries to hold on to the use of sales representatives to sell its goods. It’s time to harness digital technologies that enable multiple ways to approach clients on their own terms.

By Sarah rickwood, Gareth daBBS, aLeXaNdra Smith aNd chriStopher woodeN

Channel Preference Versus Promotional Reality: The Core Challenge Of Multichannel Marketing


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Using the ChannelDynamics instru-ment, QuintilesIMS has surveyed a very broad range of HCPs across 35 countries to ask them what channels they most prefer pharmaceutical companies to use to communicate with them. We analyzed these responses versus the reports the same HCPs made of the channels that pharmaceutical companies actually used to communicate with them. Our findings show that disconnect between what HCPs say they want in terms of channels and what they get is much more common than convergence, but also that the picture’s hugely variable by country, and by type of health care professional.

It’s worth stating at this point that what HCPs say they want, in terms of channels of communication, should not necessarily be what they get, for optimal communication and indeed for optimal impact from a pharmaceutical company perspective. We can classify the functions of communication into four main areas:

•to generate awareness, •to provide depth information, •to build relationships, •and to receive feedback.

Email or journal advertising’s strength is in generating awareness; only an in-teractive channel can receive feedback, and until recently pharma/HCP relation-ships were built primarily on real-world contact. It’s important to note that our survey still shows that most health care professionals in all markets state their first preference remains for face-to-face interaction with pharmaceutical compa-nies, mostly rep interaction. However, what we are seeing is a significant minor-ity of HCPs – in some cases, over one third of a particular group in a specific country (e.g., 33% of Italian diabetologists, 37% of German cardiologists) – state that their very first preference for communi-cation from pharmaceutical companies is digital.

Further, many HCPs in our survey have stated preferences for digital contact that

far exceeds what they actually receive. Is this in fact a signal that they feel “over-contacted” face-to-face and want to dial back face-to-face communication? Do they feel that digital channels may fit better with the time pressures they ex-perience on their jobs? Pharmaceutical marketers may want to be sensitive to such signals, but not necessarily to act to the degree suggested by the reported preference if the HCPs are in a crucial, competitive promotional area. Interpret-ing the rush of data on the way HCPs engage, separating the signal from the noise, and then acting to create the most effective multichannel experience by HCP and country will be the key challenge of multichannel for the next decade.

Key questions that we answered are:• For the US, Japan and leading Europe, is there alignment or mismatch between the channels health care professional state they prefer to be communicated with by pharmaceutical companies, and what is actually happening?

Low digital share and multichannel sophistication

A true multichannel environment:digital and traditional channelswork together Multichannel a real

possibility, but overall channel coordination still low

Digital Content Sophistication

Trad

ition

al V

s. D

igita

l Sha

re

Dominatedby traditional

channels

Basic: email, little digital interaction or coordination with traditional channels

Sophisticated: high digital channel use, either alone or with traditional channels

Channels diversi�ed

into an e�ective mix

No country, as a whole, has a truly mature multichannel environment, although individual campaigns may be mature.

Exhibit 1key developed markets are at Very different Stages of multichannel maturity

SOURCE: QuintilesIMS


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• What are the trends across countries, and HCP type?• What’s the implication for the ef-fectiveness of pharmaceutical company promotional activity with HCPs across the multiple channels available to them now?

For each country, we had data for the HCP specialties available in ChannelDy-namics MAT Q1 2016, for the actual vol-ume share of digital contacts, measured as e-detailing, both live and automated, e-meetings, both live and automated, and email, and in the Global Communication Channel Preference Survey, for the pro-portion of respondents who cited online resources as their most preferred commu-nication channel (online resources was defined as digital resources including all the digital channels that we audit, but in addition websites, both company and other).

The HCPs were asked by which channel they most preferred to receive informa-tion about pharmaceutical products and treatment. Our analysis focused on the proportion of health care professionals

indicating digital was their “most pre-ferred” channel group. This was plotted against the actual share of all promo-tional volume that was via the digital channels audited in ChannelDynamics for the same HCPs in the same time period. In the US, health care professionals sur-veyed are the same, and the time periods are the same, for each of the axes; the axis of channel preference, the x-axis, has a broader definition of digital than the y-axis, which tracks actual digital activity, so the line of equality is a guide rather than an aspiration. What is strik-ing, however, is how few HCP groups are even close to it. (See Exhibit 2.)

Specialists prefer digitalDiabetologists, cardiologists and rheu-matologists are three specialty groups that see a particularly high level of measured promotional spend in the US and elsewhere, unsurprising given the recent levels of launch activity in the disease areas covered by these doctors. All three groups have a stated first prefer-

ence for digital significantly greater than the volume of pharmaceutical industry contact that is actually digital. What’s happening? This could be an example of how surveying channel preference is un-covering an expression of saturation on the part of these doctors: they’d like to see less face-to-face, and seek more of their information online. Given these special-ties see among the highest promotional spend per doctor, is there a case for the industry to achieve greater efficiencies by listening and responding to what the doctors say they prefer? Of course, in highly competitive disease areas the countervailing argument will always be that a company cannot afford to lose share of voice in face-to-face detailing, but what might be the benefits to the first mover that adjusts its channel mix in an intelligent manner? Better customer insight would help.

On the other side of the line, there are outlier HCP groups where the clear statement appears to be precisely the opposite: they experience far more digital channel communication than they want. This includes groups such as pharmacists and practice nurses where we are most likely seeing the impact of an understandable pharmaceutical industry policy of using lower cost channels to provide essential information to groups with lower decision-making power over prescriptions. Here the maxim that what health care professionals want should not necessarily be what they get might kick in: the most expensive resources of sales representatives must be allocated wisely. But again, is there a way to en-sure that these groups aren’t perceiving a lack of face-to-face contact as a lack of relationship? What is it they think they could receive from more traditional con-tacts that they don’t get from their digital interactions? Again, better customer insight would help.

We expanded this analysis to a wider group of eight countries that represent some of the key markets out of the full ChannelDynamics coverage of 33. We divided health care professional groups into three: •Those groups that received a volume

share of digital communication in proportion to their reported preference

Exhibit 2many US health care professionals Get more digital contact than they want

Note: D=Dermatologists, GE=Gastroenterologists, GP=General Practice, Gyn=Gynecologists, HO=Oncology/Hematology, ID=Infectious Disease, IM=Internal Medicine, N=Neurologists, NEPH=Nephrologists, NP=Practice Nurses, ON=Oncology Medical, OPH=Ophthalmologists, ORS=Ortho Surgeons, P=Psychiatrists, PA=Physician’s Assistants, PD=Pediatricians, PNA=Pneumologists, R.Ph=Pharmacists, U=Urologists


GP

GYN

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R.Ph

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NP

CardiologistsD

DiabetologistsGE

ID

N

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ONOPH

PNA

P

Rheumatologists

U

ORS

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HCPs Whose First Preference Is Digital Contact (%)

Volume VS. Preference

PrimarySecondaryTertiary

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Where the share of actual digital activity matches HCP stated preference*

*Data point area correlates to total promotional spend (digital and traditional) per HCP. For reference: Cardio = $74,144; Physician’s Assistants = $12,640

NEPH


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– these were the HCP groups 10% above or below the line of equality, marked as blue in the bars of Exhibit 3.

•HCP groups where the actual volume share of promotion that is digital is significantly higher than the stated preference (more than 10%), marked as orange.

•Those for which the actual digital volume is significantly lower than the stated preference (less than 10%), marked as red.

three key Findings From this analysis:Variability of digital preference and digital activity: Digital preference varies widely across countries and between HCP groups within countries. This should not surprise: as Exhibit 1 shows, the share and impact of digital promotional activity, by volume, is widely variable across the developed country markets that constitute the majority of promotional activity. Japan is the most advanced country in terms of digital activity – digital volume share grew earliest and is highest globally. The US, perhaps unsurprisingly, is next. Europe, however, lags the US and Japan, with few country exceptions, in terms of digital share and impact. Of the lead five countries only the UK shows significant digital share.

Digital saturation? The points of immediate interest lie at the extremes: Japan, the most digitally advanced in terms of share, and the US, with the sec-ond highest share, show digital satura-tion – the majority of HCP groups would prefer less communication via digital channels. Has the pendulum swung too far on digital share, or is there a reaction to how digital channels are being used that can be addressed?

Digital potential? At the other end of the spectrum, European countries with low levels of digital maturity are Italy, Spain, Germany and France. In these countries, the traditional promotional model still rules; digital channels are a very low share of all channel activity, by volume. What is striking, therefore, is that the majority of health care profes-sional groups express a strong preference for more use of digital – what’s driving this preference, and what are the bar-riers to meeting this demand for digital channel activity?

has real customer insight Been Lost in our digital world?Our survey paints a picture of wide-spread suboptimal digital channel use. Where digital channels have become mainstream (Japan, US, UK to a certain extent), many groups of HCPs state they prefer nondigital channels. Where health care professionals are asking for more communication via digital channels, as in Italy, France, Germany, Spain and (as one example of an emerging market country) China, that demand is not be-ing met. In both cases, we believe that the root causes include: 1) suboptimal or out-of-date customer insight, 2) failure to put customer feedback and insight at the heart of channel mix decision-making, and 3) pharmaceutical company organi-zational challenges.

The last five years saw an explosion of digital opportunity for pharmaceuti-cal marketeers. Digital communication opportunities ballooned, and the audi-ences (HCP, patient, health care provider, health care payer, general public) for which digital communication and infor-mation became a necessity multiplied. In this generative phase of digital market-ing, keeping abreast of the technological developments, introducing them into

Exhibit 3in many countries, health care professionals would prefer more digital interaction than they Get


0%

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Proportion Of Specialties Receiving Their Preferred Amount Of Digital Activity

� Digital activity exceeding demand� Digital activity falling short of demand� Digital activity meeting demand (within +/- 10%)

Prop

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the quite traditional and often conser-vative commercial structures of major pharmaceutical companies, and doing so across a wide range of very disparate country markets were, in themselves, major and time-consuming tasks. And, as they consumed time, we believe they pushed marketing focus away from the fundamental customer insight principles that hold true, regardless of channel. As multichannel marketing moves from an early, establishment phase and becomes a mainstream and more mature activity, it’s time to re-visit those fundamental principles to ensure that multichannel truly realizes its promise.

Building the right role For digital when hcps’ preference is Not currently metOur research has uncovered an appetite from HCPs in many countries for a greater level of digital communication with pharma than they currently get. This is important and positive news; it validates projects to drive a greater role for digital in multichannel mix. However, compa-nies need to meet digital demand while simultaneously continuing to maintain promotional presence and impact and, crucially, ensuring that the sales teams,

who will always be a core element of the mix, are on board with the digital jour-ney. Accomplishing this requires both detailed insight of HCPs as customers and of pharmaceutical companies’ own sales teams as enablers and users of digital channels.

Companies must develop customer insight to understand what drives health care professionals to want more digital interaction. When QuintilesIMS under-took in-depth research on the reasons why HCPs in the UK and Spain like digi-tal interaction, in this case specifically e-detailing, the findings (see Exhibit 4) were very clear – convenience and the ability to fit pharmaceutical company interaction into busy working lives were especially valued. Digital channels are particularly effective here not just be-cause they can be fit into out of hours or in spare moments and re-scheduled more easily, but because by their nature they are less about social interaction, more about information exchange, something that was also called out as a reason (al-though a smaller one).

But what about the reps?In countries where digital activity is not meeting HCP demand, a key challenge

is the perception of digital by the com-pany’s own sales force. It’s an unfortu-nate fact that sales representatives can see the adoption of digital channels as a threat, diluting and challenging their carefully built relationships with doc-tors, and even, potentially threatening their own roles. This is not helped when executives have, on occasion, sought to frame multichannel discussions in terms of return on investment on digital versus real-world interactions. Although that measure can be a tool, the correct focus must be on the overall impact of a multichannel campaign with the right mix of all channels.

As one pharmaceutical executive who has lived through this process com-mented to us, “to actually get the sales force to trust that you are not trying to replace their jobs is very hard.” The companies that have been most success-ful at growing digital with, not against, the activities of the sales force are those that have developed sales force as well customer insight and have used that insight to good effect. Sales representa-tives naturally wish to keep their jobs, but they also want to be more effective and have a competitive edge on building and maintaining doctor relationships. Digital channels can be positioned as enablers of their roles, and their sales effectiveness. The companies that have been most effective in introducing a truly integrated multichannel model are the ones that take time to:•Develop insight on their sales force’s

motivations: what do sales reps value that multichannel could help them achieve?

•Communicate to the sales force on your customer insights: do they understand how they fit into the wider customer needs?

•Draw up an integrated plan for change – have the sales force (or handpicked representatives) involved in lead-ing the change. Start slowly; aim for incremental progress; regularly com-municate early success stories to the wider sales team.

Leveraging customer insight in digitally Saturated countriesOur research into the patterns of uptake and use of digital communication chan-

Exhibit 4key Benefits of e-detailing

Notes: Respondents were asked to name the key benefits of online or phone contact with a representative compared with a face-to-face meeting. Base: 101 HCPs (30 Specialist physicians, 41 Primary physicians, 30 Nurses).


57%of virtual calls to specialists took place at home

Easier to re-schedule

Fits into my work schedule better

Saves me time vs. face-to-face meetings

Being able to download information from the online facility

Allows me to discuss information at home if I choose to do so

Means that it doesn’t commit me to being in work

I concentrate more on the information

Complements face-to-face contact

Stops it becoming a mostly social chat

Feels more educational

Easier to ask questions

Feel I can speak my mind more than in a face-to-face discussion

79%

76%

73%

71%

69%

68%

60%

53%

50%

45%

37%

29%

% HCPs (n=101)


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nels by doctors across different channels shows the very strong influence of culture and historical precedent. Japan is an ex-ample of a country with early adoption of digital portals, driven by the rapid rise of a small number of leading providers, where in some cases, small incentives in the form of vouchers were available to en-courage doctors to go through e-details. This has undoubtedly encouraged digital activity; Japan has the highest share of digital channel activity in the world. However, our research also shows that impact of digital activity in Japan, in terms of how health care professionals report they will choose to change their prescribing after a digital contact, is less positive than in the US, and indeed the UK and Poland, other countries with high digital share. In addition, our research on channel preference demonstrates that regardless of their specialty, Japanese HCPs report they’d prefer a lower level of digital communication than they are currently receiving. (See Exhibit 5.)

The Japanese could be in a situation where the initial success of digital has resulted in overkill and saturation, a cer-

tain level of disenchantment with digital channels as they are currently presented. Certain multinational corporations have already challenged the status quo, moving from presence on the generally available doctor portals to creating their own portals where they have full control over the nature of the doctor engagement.

However, in a situation where digital share is so high, competitive pressure against dialing back digital activity would be intense, and there’s no guaran-tee it would (if used in isolation) be the solution. Japan’s an extreme example, but our research shows it’s not the only one – the US falls into this group and in other countries certain health care professional groups do – for example, in Germany, internists report a higher share of digital than they would like, but other specialties report they would prefer more digital than they receive.

Companies faced with this situation need to understand what is driving their HCP audience to devalue digital interac-tion. Is it the nature of the digital channel or platform that is being used? Is it the richness and relevance of the information

that is being provided? Is it a suboptimal mix between information provision and interactivity? What is clear is that achiev-ing a high share of digital activity is not an end in itself and by no means the end of the journey to multichannel maturity; adjustments must be made continuously, and the basis of those adjustments is a highly effective collection of customer insight and feedback.

FindingsCustomer insight, channel preference and orchestrated customer engage-ment: From our research, we can see that the journey to multichannel maturity is not over even in the most advanced countries or companies.

Significant differences in multi-channel maturity remain across the developed markets that are the focus of most promotional value: While the US, Japan and Europe all remain the key regions for focus when launching and growing innovative, protected agents, their digital maturity, and therefore multichannel maturity, is quite different. Japan leads with the US closely following (albeit with a quite different set of digital models), but most European countries are quite significantly behind in terms of the diversity of channels widely used to create a full multichannel model.

In most major countries, there is significant mismatch between HCP digital channel preference and phar-maceutical company digital channel communication: One of the visions of multichannel marketing is that a diver-sity of channels allows pharmaceutical companies to engage more health care professionals, more effectively, via their preferred channels. For digital at least, our research suggests that this does not happen in most countries, and the mis-match can occur both in those countries with strong digital share (Japan) and those with low digital share (Italy, Ger-many, China).

More investment is needed in devel-oping real customer insight into HCP motivations and preferences if multi-channel is to mature into orchestrated customer engagement: HCP channel preference is complex. Our research presented here demonstrates that the

Gyneco

Pediatricians

Cardio

Dermato

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NOncology

Ophtalmo

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Psy

Radiology

Urologists

Anesthesio

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0 5 10 15 20 25Percentage Of HCPs Stating Digital Contact Is Their First Preference

Volume VS Preference

Data point area correlates to HCP universe

For reference:Pediatricians = 17,531Diabeto = 4,446

Where the share of actual digital activity matches the share HCPs

Dig

ital C

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PrimarySecondaryTertiary

Exhibit 5hcps Saturated with digital in Japan

SOURCE: Quintiles IMS


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preference for one set of digital channels varies widely by HCP specialty and coun-try. Other depth work that we have done shows that a single physician’s channel preference can vary by the disease area for which they receive communication. How can companies, faced with such complexity, ever hope to master customer preference? (See sidebar, “Five-Point Plan For Mastering Customer Preference.)

In the past, most pharmaceutical mar-keting functions have been organized around equipping an internal customer (the sales rep); and most marketers’ ef-forts have been focused on developing a sales aid, checking if ‘their’ messages were resonating, and that the reps were doing as instructed.

In contrast, today’s pharmaceutical commercial function needs to be focused on your external customers – the patient, the prescriber and the payer – equipping them with the information they need (fac-tual content), when they need it (channel choice), to make appropriate prescribing decisions and ensure optimal use of treat-ment and to achieve treatment goals.

This is quite a change: we are in the process of remaking a model that was five decades or more in creation, and we are changing it in just a few years. It’s unsurprising pharmaceutical companies struggle with the degree of transforma-tion and capabilities needed to make it happen. In the end, it’s not the technol-ogy that will be the transformational agent, but the attitudes and beliefs of the pharmaceutical marketeers and sales people who make it happen. IV004949

Sarah Rickwood ([email protected]) is Vice President, European Thought Leadership, Gareth Dabbs is Principal, Technology & Applications Resources, Alexandra Smith is Analyst, European Thought Leadership and Christopher Wooden is Vice President, ChannelDynam-ics, QuintilesIMS.

❚ FIVe-PoInt Plan For MasterIng CustoMer PreFerenCe

Make your customer insight more personal and specific. The “segment of one” concept has been over-used into cliché, but for pharmaceutical marketing it remains highly valuable, because, as launches tend increasingly to specialty with limited populations of patients and HCPs treating them, understanding those few, but highly valuable doctors, in depth is essential.

Build an integrated picture of each HCP’s channel and relationship preference. Make sure that the sales force is a core element of this process and is fully informed of the feedback from other channels. Ensure that the full universe of relevant HCPs is covered, including those that are not accessible by sales force. For HCPs with multiple relevant disease areas of interest, don’t assume that preference is uniform across therapy areas – build a picture by each.

Collect feedback and revise channel preference pictures continu-ously. Customer insight will be a complex, continuously developing picture. Channels that were preferred and worked well in the past may be rejected by HCPs if over used or without effective content. Further, stated preferences are only a starting point; learnings from responsiveness to specific channel actions should be then used to adjust – where channels are inexpensive, as many digital channels are, the cost of experimentation is low and the rewards potentially high.

Use customer insight across all channels and all commercial team players. Customer insight should be shared continuously and acted upon in a timely fashion, to help both marketing and sales make better channel targeting decisions. A doctor may give feedback that she does not want to see reps on a given mature therapy area any more – is she made aware of ways to keep in touch digitally if there’s news that’s relevant?

Measure activity and impact – and share feedback. One of the key enemies to the development of digital channels and the journey to true multichannel maturity is the preconceptions of a pharmaceu-tical company’s own employees. Whether it’s a senior executive who does not wholeheartedly endorse multichannel initiatives or a sales representative who equates the introduction of digital with the loss of their job, outdated perceptions die hard and cause huge damage by their persistence. Feedback, on what their HCP custom-ers want, and what works in terms of channels is at the core of the journey to a truly effective multichannel maturity.

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In Vivo | December 2016 invivo.pharmamedtechbi.cominvi

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Recent In Vivo interviews with executives from the Australian Stock Ex-change-listed tissue devices and therapeutic vaccines innovator Admedus Ltd. (ASX: AHZ) have described a company with a unique business model and product mix that is on the cusp of major market success in more than one area. (Also see “Marketing Efforts Pay Off As Admedus Ups CardioCel

Centers By 50%” - In Vivo, March 2016.)Its potential is both compelling and undeniable, but the buzz about Admedus’ pace

of progress took on a different tone earlier this year, and frustrations began to simmer. Some of the senior team began to question whether those in executive management were hungry enough and had abilities appropriate to the task ahead. They also won-dered whether the current investors were perceptive enough to play the long game that would be required. In short, was this beginning to look like a major opportunity that could be wasted?

Wayne Paterson thought so. A board member at Admedus for some two years, he had been observing the company’s progress from a non-executive viewpoint. He had joined to help the company expand internationally, but, together with a fellow direc-tor based in Minneapolis, he had become increasingly concerned at its slow pace of activity. To Paterson, who was later also installed as board chairman, the executives in charge were failing to drive the opportunity.

He should know. While with Merck Serono SA, Paterson was president of Europe, emerging markets and Japan, and had been the global cardiovascular president, prior to which, at Roche Pharma AG, he had headed Korea, the APAC regions, and China/Shanghai out of offices in London and Basel. He has a long pedigree of industry success for someone at the relatively young age of 50, having overseen 37 product

How To Restructure: Admedus Opts For A Restart

Admedus and its product mix was an unfolding success story – and still is, due to a restructuring of activities and a resetting of aims that have ensured the Australia-US tissue engineering company does not miss out on the opportunities it has crafted for itself. Chairman and interim CEO Wayne Paterson explains what changes were required and why.

When to make the hard decisions and how to follow through on them are traits that mark a CEO, and Admedus chairman and board member Wayne Paterson was called on to leverage these trademark qualities earlier this year to prevent a sound business base from losing its potential market advantages.

Recently stepping in as interim CEO of the ASX-listed company, the ex-Merck Serono and Roche senior executive has reshaped the board, refocused the product mix and somewhat rebranded the Australian-registered company in anticipation of a global future.

Planning an earlier move into profit, making better use of the managerial talent and resolving to commit solidly and swiftly to the ADAPT platform that has yielded CardioCel are some of the other key decisions of the past few months.

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launches. He is also on the board of NASDAQ-listed Cepheid.

Paterson explains that the Admedus board had begun a restructure in January, but by April there was a sense that mat-ters needed to be expedited – the share price looked to be nudging down to 10 cents and the incumbent CEO Lee Rodne was not getting the market’s attention. “We needed to raise A$10 million [US$7.5 million], and were probably just a quarter or two away from something unpleasant. And yet we had fantastic assets,” he says.

With chances being missed, serious financing issues and ever-decreasing valuations, Paterson moved himself into the role of CEO ad-interim in April 2016.

Australian-born, but preferring to brandish a hard-won international health care business passport, Paterson’s pedi-gree speaks for itself. The new company CEO had in fact chosen to step out of the corporate world three years earlier to do other things. “I was reluctant to come back to corporate work, which can be very time-consuming, but the issues were significant and it left me with not a lot of options.” On the flip side, and a draw to the temporary CEO, Admedus in the US was doing new medical research.

Paterson also moved the group’s US headquarters to Minneapolis – for many the device industry’s de facto global headquarters, and Admedus’ global headquarters location is also being trans-ferred – quite rapidly, if still virtually – to the US, “where the market is.”

He elucidates, “looking at strategic financial management, we had a window on profitability that was five to six years away – and that’s just too far away.” The CEO saw cases of systems and processes that just weren’t in place. “The commer-cialization side was badly structured and the company itself had no structure.”

Globally, Admedus was also poorly represented. Most of its global jobs were being run out of Australia, where the company had no global business. “It was a bit lopsided,” notes Paterson, who found there was insufficient knowledge of how to work with the US FDA, say, or how to approach the UK market. In that way, it was a “dysfunctional” operation, but for Paterson, a veteran of four company re-structurings on a bigger scale (including Merck Europe), the cleanup that was on

the cards, in fact, looked relatively easy.

The Restructure – “Code Red” No. 5 Paterson looked to cut around 30% of headcount costs and make certain stra-tegic senior replacements. The company hired a new global head of manufactur-ing, Scott Bliss, formerly of Synovis Life Technologies Inc. (bought by Baxter in late 2011/early 2012) with 20 years of ex-perience in manufacturing tissue. He very quickly brought the cost of goods down, by 30%, and oversaw an operational scale-up from lab to commercial-scale production.

At the same time, Admedus was putting together commercial plans for Mexico, Brazil and Argentina, with launches targeted in the final months of 2016. Here, the company will work through GenPharm International Inc., with which it already partners in the Middle East. Paterson has a business re-lationship with GenPharm going back 15 years, and Admedus may use some of its US manufacturing capacity to supply the Latin American and US markets, making the cost of goods cheaper.

These were the beginnings of what Paterson calls a Code Red – a complete review and restructure that takes no prisoners. “It’s my own tag, and anyone who has ever worked with me has been on a Code Red at some point,” he says, and Admedus is Paterson’s fifth. The Code Red brought the share price up from A$0.28 to A$0.57. “I immediately grabbed the top of that and went straight for a cap raise, where we had to discount and raise at about $A0.32.” The price on December 5 was A$0.355.

He continues, “We raised decent mon-ey, about A$20 million/US$15 million, which was more than we had imagined, in a mix of institutional money and a shareholder rights issue.”

By this time, Paterson had a clear view of finances, products and the forecasts, and had worked out where he needed to get efficiencies. The company then worked out cash flow, did aggressive fore-casting for first-quarter and second-quar-ter 2018, and put a target on profitability of about 18 months. “I have promised the market that we will not go looking for extra operational capital, so we have to be cash-positive by then,” he states.

Admedus hit top and bottom line targets in its first quarter after restruc-ture. The prediction was to come out of that first quarter spending A$12 million against A$24 million a year earlier. The actual spend was A$3.1 milion. And sales went up – by 40% – a good sign, given that the company had already come through the worst of the restructure.

Identifying The Key Assets An extra bonus was that Admedus had come through the Code Red with a better understanding of the ADAPT platform (the company’s patented tissue engi-neering process that enhances the inte-gration of an implant into native tissue), and recognized that it was considerably underselling on that opportunity. The supposition was that former manage-ment had been looking to Admedus’ other proprietary business stream – the therapeutic vaccines, and specifically the herplex simplex virus (HSV) vaccine program – as the savior, without bearing in mind “the multitude of sins” going on elsewhere.

But Paterson is clear: the way that proj-

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ect was being structured gave Admedus probably less than a 1% chance of getting the product to market.

He says, “There was a lot of overprom-ising to the market, and I don’t subscribe to that when it comes to clinical assets.” Admedus had made a few announce-ments on the HSV product, but the reg-ister of investors was made up of a few very large retail investors who might have caused short-term volatility in the share price. Paterson’s policy is to “walk the line with the share price,” and include all caveats and disclaimers.

It’s another reason why the investor base needs to be right for the indus-try. Admedus was founded by mining magnate Andrew Forrest, who is on Australia’s top 10 richest list. “We had good people, but they were of a mining background,” says Paterson.

As to the tissue activities, the com-pany discovered the potential for a whole portfolio of products coming off the back of CardioCel, the cardiovascular tissue repair scaffold. That led to work on a carotid artery repair product, VascuCel, which is US FDA-approved and was launched on November 1.

In a stroke of fortune, the competitor product, Baxter International Inc.’s

peripheral vascular patch Vascu-Gard, was pulled off the global markets in mid-summer 2016 due to user complaints over how to place the patch. “With them off the market, we were already getting pressure from surgeons to launch the product,” Paterson says. Admedus will use its own reps in the US. “We’re already in those hospitals [with CardioCel], it’s just a case of stepping into the next department!”

A product for neonates, CardioCel Neo, which uses thinner-grade pericardium, has been brought forward. It’s a “sweet spot” in the market, as there’s no one product that’s targeted toward neonates. It will be launched in December 2016, and will sell at a premium price.

On June 1, 2017, there is a scheduled launch of “the big one,” an Admedus aortic arch repair solution. This has been elusive in the industry for a long time. “Unlike other tissue, we can bend ADAPT into different shapes. This product should see a price of US$3,000 to US$4,000 – quite a premium. We have a 510(k) path,” Paterson says.

There are many other tissue projects behind that one, says Paterson, but he adds, “We won’t be exploring every one of them. However, once we stabilize and get the profitability right, we’ll be looking at products and company acquisitions to get some scale.”

Paterson continues, “It turns out that ADAPT triggers the most beneficial process you can have in tissue, and we have almost 10 years’ data on calcifica-tion [anecdotally up to 11].” Most tissue implants have to be explanted at some point – but Admedus’ tissue is starting to show the properties of native tissue, or very close to it.

“We pretty much expect it to dominate the market and achieve global market penetration across tissue products of 85% within the next 12 months,” asserts Paterson.

Challenges AheadAdmedus’ main challenge will be supply and scale. At present, all product is sup-plied from Australia – a bovine spongi-form encephalopathy (BSE)-free country. The major competitors such as Edwards Lifesciences Corp. and Medtronic PLC all use Australian pericardium, because

that’s the way it has to be for EU cus-tomers.

But the company has worked on new processes, has introduced automa-tion and has even invented some new machines. Another success has been bringing down rejection rates from 70% to a goal of 30% - and that rate has been exceeded already.

Another challenge was learning how to professionalize sales and commercial-ization. Several marketing agencies are pitching to Admedus at present. The com-pany has fired a lot of its underperform-ing sales reps and has been developing digital sales material on iPads for the reps now in place. This will ensure consistent messaging for the products – a very “drug company” approach that device compa-nies tend not to opt for.

As Paterson explains it, drug compa-nies in this respect are much more ag-gressive. They need to first convince the customer, while not getting a sale at the point of call; and then they need to go back and check a week or so later with the pharmacist to see if the doctor has actually made the order. If not, the rep goes back to confront the doctor again. “The long and short is that as a sales rep you need a lot of metrics to understand if you’re winning or losing.”

On the other hand, device reps go in pretty much to get a sale, then go to the procurement department. It’s less sophis-ticated and doesn’t use numbers in the way that pharma reps do. And if there is a lot of relationship selling going on, there is lower penetration and no messaging. “We’re throwing all that out the door and going down the path of positioning the competitor, and then really slamming them,” Paterson states.

Positioning The Company In health Technology Paterson wants a definite identity for Admedus as a company that can expand beyond its current focuses. “We are a health care technology company, not a tissue company. Tissue will be one part of our business, but we want to take a much broader view of technol-ogy – to take in, say, implantable chips and smart devices,” he says. “It’s a very competitive space, but we may go down the TAVI route.” Admedus has the tissue

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already and knows a lot of engineers in and around Minneapolis who specialize in that technology. “The first step is to get some scale and some revenue back in the door.”

The company has set high aims and is not afraid to think big. “We want to be able to get on NASDAQ in the next three to five years if needed. The board is now made up of highly experienced individuals who are not that impressed by a 30-cent share price. We have bigger ambitions. They also want to see a bigger market cap, not the A$100 million Adme-dus was worth in October,” Paterson says.

“As long as you do the math the sums are eminently achievable. We’ve got banks working for us looking at acqui-sitions on both sides of the pond,” he points out.

Paterson reiterates that his approach would be to start with product acquisi-tions, where Admedus can use its own field force and thereby avoid making mistakes with money. He sees companies like Medtronic as having portfolios rich with good products that are just too small for them to focus on. “We’re looking at a few of those now – but they must be owned products; we don’t want to do distribution.”

He notes that some medtech and in-vestor hotspots – Minneapolis, Geneva, Zurich and others – are full of device companies that have “fantastic, smart technology that just don’t know where to go with it. There are opportunities. But we have to build a scale company first, before we can take those next steps.”

Right now, with the major focus on revenue and the top-line, Paterson can foresee Admedus growing to such a level that even reverse mergers become pos-sible. To Paterson, it’s an opportunity that must be grasped, and he knows the limits of the corporate vision lie with the CEO. “You’ve got to have a plan, but also be realistic. You need to have a view of how this works. The ambitions are sen-sible, yet huge.”

He says his job is made easier by hav-ing a board that understands money, and that knows which funds to talk to. Admedus in turn benefits from Paterson’s NASDAQ board seat and his networking, and his familiarity with the likes of Gold-man Sachs and the banks in general.

“So we have a plan, but you have to be careful who you articulate it to. We are at step 1 of 4,000 now. But the first steps are the right ones, and we’ll keep moving.”

Addressing A Confusing Company structureThe next step is to address the structure of the company, which Paterson thinks may currently be viewed by the banks and by drug companies as a disparate group of assets put together by people without health care backgrounds.

In addition, there have been a lot of missed opportunities and wrong as-sumptions. “As well as CardioCel being undersold, there had been too much ‘blue sky hype’ around the immunotherapy programs. From the outside, the company looks confusing,” he comments. The valuation suffers as a result. “Combined, the company has a market cap of around A$100 million [in October 2016]. But

we have two companies here that both should have market caps of over A$100 million. it’s counter-intuitive!”

While the Admedus team is finally getting a clear view of the emerging op-portunity for CardioCel for the first time, it feels that a perceived risk with the clinical development programs for the therapeutic vaccines is putting a cap on the CardioCel business. Investors don’t want to move much right now.

For these reasons, Paterson has pro-posed to separate the two businesses, and has put the idea to shareholders. “It makes sense, as there are four or five immunotherapy projects in there that we can’t properly fund right now.” Admedus allocates A$3 million to A$5 million a year, whereas research projects need A$200 million to A$1 billion to bring a drug to market.

“It’s doing a disservice to all concerned – in being a drain on your balance sheet and in being under-resourced,” Patterson asserts. A recent readout for the HSV II project justified moving it to a Phase IIb. “From there we will consider a spin-out of the entire division, with a number of good projects, and potentially establish it as a separately listed public company.”

Essentially, Paterson will be the chair-man of the broader company, Admedus Ltd., and of the spun-out immunotherapy businesses. He has appointed Neil Fin-layson as CEO of the Admedus Immu-notherapies business, and researcher Ian Frazer, MD (also the discoverer of cervical cancer vaccine Gardasil) sits on the board.

Like Admedus Ltd., the immunothera-pies business could be listed on the ASX, at least until some scale and results come out from the Phases IIb to III in the HSV II project. But the big one here is the hu-man oapillomavirus (HPV) project, which has just undergone toxicity and safety studies. Using this therapeutic vaccine in combination with a PD-L1 checkpoint inhibitor for head and neck cancer is a fascinating proposition to Paterson: “It’s a hard to treat disease. And if we cracked it, that would be a game changer.”

The HPV vaccine will enter a Phase I trial early next year. The precise time line will be built around the spin-off date, and how much capital Admedus raises. “I’d ex-pect to raise A$20 million to A$30 million

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very quickly in a spin-off,” Paterson says. Precisely when that happens depends on which of the several options the directors go for, but it will probably in the first half of 2017. “We want to get it done as soon as possible – to cut both companies free and be able to raise capital.”

The Next Ceo of Admedus…Meanwhile the search goes on for a per-manent CEO for Admedus Ltd. The brief is for a person with global operations experience, which Paterson admits takes a long time to acquire. He concedes that the size of the paycheck might also be a problem. Typically, a Europe region presi-dent in this industry might earn $3 mil-lion a year. Admedus can’t yet match that, but still requires the operating hours and input of someone who is receiving that salary. The revenues might still be low, but the job’s complexity is the same.

An ideal candidate might be a product manager making $300,000 to $400,000, working in Basel and looking for the next step up. Paterson sees a dilemma. Should the Australian ASX-listed company use a CEO who has perhaps never left the coun-try, or go with an international product manager who doesn’t have the track re-cord or the potential that Admedus seeks? “We’re looking in the middle. We’ll need to be patient and find the right person.”

As to his – or her – age, that’s largely immaterial. For Paterson, it is all about experience. “Management is all about energy. If you’ve got that, you’ve got the right person, regardless of age, sex, color, creed – it doesn’t matter. I’m big on diversity and I’m not ageist, says Paterson – except, that is, for sales staff, who need to be “30-year-old Armani-wearing angry guys and who are not lazy,” he jokes.

But the CEO is unlikely to be an Aus-tralian national. “If you can’t answer the question about how do you globalize, then you’re not the right person.”

Paterson is just as direct about where Admedus will locate its jobs, some of which will be moved out of Australia. That might stick in the craw of original investor Andrew Forrest, but through Paterson’s unmisted lens, strategic ob-jectivity is all. “As to moving jobs out of Australia, you have to go where the markets are,” he insists. Speaking to In Vivo ahead of the group’s November

2016 annual general meeting (AGM) in Brisbane, QLD, Paterson was aware of the hornet nest he was stirring up. But expect that from a CEO.

“I have a perspective on – and experi-ence in – every part of the market glob-ally. Our new CEO has to be sitting in the EU or US – not Sydney or Melbourne.” For the time being, the registered office stays in Australia, but that may change after the company gets a NASDAQ listing. Admedus might have a dual listing, or be delisted from the ASX.

The Figures – looking UpAGM attendees breathed a collective sigh of relief that the company is hitting profit. The first quarter out of the restructure was an unknown quantity, but Paterson had been looking forward to telling the meeting that the management was already doing what it said it would do. “The market has supported the transi-tion significantly. The negative sentiment around the previous CEO, who was not able to seize the opportunity and stir enthusiasm, has seemingly evaporated in a few short months.”

The annual report for the year ended June 30, 2016, showed a consolidated net loss of A$25.1 million (down by 6.3%) on income up 39.6% at A$14.2 million, with CardioCel sales rising by 94% and infu-sion business sales rising by 18% to A$8.9 million. First-quarter 2016–17 showed the quarter-on-quarter loss dropping by 36% and the sales rising by 50%.

The AGM was a chance to state pub-licly where the company was regarding the Code Red, and to take a look at the portfolio and the developments to come including what was being prepared for the immunotherapies business. New ap-pointees Mark Ziirsen (CFO) and Michael Walker (EVP of Europe) were announced.

Paterson did not particularly chose the CEO job, but now that he has it, he is reveling somewhat in the opportunities he and the board are lining up. “At the AGM, I wanted to give the shareholders a broader vision of where we’re headed,” he says. But being an Australian, presenting in Australia on the plans for an Australian company is useful, says Paterson. “It’s good to be able to speak the facts. I said I would not overpromise, and I won’t mis-lead anyone. I’ll tell you if it’s good, bad or

❚ Key Figures From Admedus’ 2016 Annual Report

$14,150,521 (+39.6%)Revenue from continuing operations of which:

A$5,280,707 (+94%)Regenerative tissue franchise (CardioCel)

A$8,869,814 (+18%)Infusion business

A$9,028,415 (+26.0%)Cost of sales

A$5,122,106 (+72.6%)Gross profit

A$25,130,410 (–6.2%)Loss for the year

by The NUmbeRs

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indifferent. Some love it – some hate it.”

maximizing The Resources At handCrucially, Paterson is seeking to make the sales force take a different approach to the market. He took on a new field force optimization manager, in the belief that the industry is wide open for a “drug-company style attack on the market.” He also stresses that the previous sales team significantly undersold ADAPT, and all its potential permutations, so the new sales force is kitted out with digital tools to ensure they are all selling on the same message, “like they do in pharma.”

Not every part of the “old Admedus” was in need of remedial attention, how-ever. The third plank of its offering, the infusion distribution business, has been a bit of a godsend, as Paterson puts it. It’s a well-run business that’s locally managed and is doing a turnover of A$15 million annually in Australia and New Zealand. “The quality is amazing,” he says, but points out the dangers of dis-tribution businesses and of being at the whim of the supplier.

There’ll come a point when the infu-sion business will be maxed out, but that’s not quite yet, says Paterson, who is investigating expanding the business into Asia. In the longer run, it could result in a business asset sale, but in the short term at least, the infusion business will sit alongside the CardioCel business until such time as a sell-off is decided.

Geographic expansionNot only has Admedus’ product mix undergone a rapid review, but the mar-kets in which they are sold have been scrutinized too, and augmented, and the regional job functions reviewed. “We were not well structured in the emerg-ing markets, so we’ve broken it up into regional VP functions. A new RVP of Europe (Michael Bennett, an ex-Roche se-nior executive) has been added, and the former head of Europe has been named as global head of marketing.

Paterson thinks that Europe was not running well before the restructure, and the new RVP plans to scale up Germany, and generally employ more reps in Eu-rope, bearing in mind that some have been fired in parts of Europe. The UK

operation is generally said to work well. Tom Riester is now RVP of sales in the

US, where the Code Red led to quite a few local sales reps being fired. There is a hiring target in the next 12 months and a drive to bring the total back up to 25. In terms of their performance, Admedus reps are now undergoing incremental return analyses and are asked to be cash-flow positive – or at least have the potential to be – within six months.

Eighty percent of Admedus’ revenues currently come from 20% of its markets. While Admedus plans to attack the US and Europe first, China and the RoW are now re-emerging, under Danny Zanardo, who was formerly head of global sales. Zanardo has made some connections in India, and in China, where Paterson has a deep involvement already (and Japan); the next focus is regulatory and doing Chinese studies ahead of first approvals, which are some two years away. Admedus does not have a local China office, but has a regional liaison office in Singapore.

The UK QuestionFew global businesses can profess to be entirely disinterested in the UK’s Brexit machinations, even though the US presi-dential race may have knocked it down the page for a while at least. Brexit is emotive for many, but Paterson prefers to take an objective view of the newly form-ing business landscape in the UK. And he is optimistic that Brexit is not going to be significant to the way Admedus does business in the UK. He is not planning to shift operations into mainland Europe. “We’ll keep the doors open. Common sense will prevail. London is the business and banking center of the universe – and that won’t change.” But a CEO does not make such decisions on the hoof, and in fact Paterson was looking at European options as long ago as 2010.

Does it matter to him if the European Medicines Agency (EMA) is not in Lon-don? No, it’s a global market, and talent is global – it works across borders. The British and mainland Europeans have grown up in recent decades knowing multiple markets, applying multiple languages and respecting multiple cul-tures. “That isn’t going to change now,” he believes.

It’s a calm and rational take on a theme

that very often gets people hot under the collar. It’s a CEO’s take, or at least, an interim CEO’s take, which thinks busi-ness progress first, and almost everything else second.

It is the mind-set that ended the deal to distribute Coroneo Inc.’s products (including its aortic annuloplasty ring) in early fall, a recently set up agreement that wasn’t panning out. Although it was a good product, Paterson is clear that it did not fit Admedus “at all.” In fact, it was indicative of the way the company had been operating.

Paterson is also pressing for corporate identity change. If Admedus stays as a “tissue company,” it may achieve sales of A$50 million to A$100 million. But if it styles itself as a “health technology” company, it can bring in health technol-ogy engineers and work in markets that do not have a finite value.

CardioCel/ADAPT is its first entry into that wider market, and competitors such as Medtronic and St. Jude Medical Inc. should take note, for they will likely feel quite some pressure when they hear that surgeons are asking for ADAPT. “Three or four months into 2017, they’ll know we’re out there, and we’re more organized and better structured,” says Paterson. “They will certainly care when we take our next steps and look at, say TAVR, or other options.”

Meantime, there might be some tissue industry consolidation, and Admedus may well look at participating in that to get traction more quickly. “It depends on just how successful we are. By mid-2017, I’ll have a better feel about what that looks like,” he states.

Things are happening very rapidly at Admedus, and it’s a 15-hour-a-day job for Paterson. “But I know the end is in sight and it’s actually very motivating to be driving change.”

At some point, he’ll hand over execu-tive control – probably in a half-year or so – but then only to someone who won’t suffer under the chaos, who has the full skill set, and who Paterson, as chair-man, won’t “step on.” He says, “If I see the right person, I’ll know. But it will be a special character.” IV004971

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om❚ contract manufacturIng

Opportunities to transform an industry are rare, but often they develop from unexpected sources. Long considered an essential yet largely com-modity-output business, biopharmaceutical supply chain management may emerge as a hidden transformational force for the industry. That has been James Mullen’s bet since he took over as CEO of Patheon NV in

2011. With the contract drug development and manufacturing organization (CDMO)’s revenues tripling since Mullen’s arrival, Patheon is now the largest provider of contract drug manufacturing services and one of the top three outsourced manufacturers of biological drug substances, the industry’s fastest growing segment. Patheon is also the number one global provider of formulation services with offerings across about 40 dosage forms, as well as analytical services and life-cycle management. In July 2016, Patheon, which had gone private, returned to the public markets, raising $640 million on the New York Stock Exchange. That has given the company both cash flow and equity to grow its business.

The firm is now looking to shake up the contract manufacturing business. Patheon intends to serve as a single-source for most drug manufacturing needs, with technology solutions ranging from pharmaceutical development to final formulation services and life-cycle management. Patheon envisions CDMO outsourcing will become a larger and more integral arm of the biopharmaceutical industry, altering how drugs get made in a model similar to the rise of the large clinical research organization.

CDMOs typically manufacture large- or small-molecule active pharmaceutical in-gredients (APIs) or finished dosage formulations (FDFs), for solid dose or parenteral delivery, or in gels, patches or ointments, as well as drug delivery packaging, for drug-maker clients. No company does it all: some focus on small-molecule drugs or complex biologics, whereas others offer specific and sometimes patented technologies that help in getting the API to its target in the body. Given the complexities of dealing with different national and regional regulatory authorities, many contract manufacturers

Tightening The Supply Chain: Patheon Aims To Transform Pharma Outsource Manufacturing

Most manufacturers in the $40 billion contract development and manufacturing organization marketplace serve narrow segments, resulting in a fragmented supply chain.

Since bringing in a biopharma-experienced management team in 2011, Patheon has focused on attracting new business while broadening its capabilities and adding capacity.

The company hopes to simplify supply chain management through OneSource, a program that seeks to provide solutions from active ingredient development and supply through commercial scale-up for nearly all types of drugs.

But with global biopharmas outsourcing relatively few products and complex biologics and niche products receiving an increasingly large share of investment and drug approvals, Patheon faces headwinds as it seeks to drive growth.

by Marc WortMan

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Fu e l e d by a s e r i es o f

strategic acquisit ions,

Patheon hopes to become

the biopharma industry’s

first single-source, end-to-

end manufacturing service

provider.

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service only specific geographic regions. Other CDMOs serve niche markets for spe-cialized formulations, offer proprietary technology or sell packaging. As a result, most pharma products require that their developers contract with several vendors before reaching the market, leading to complex, inefficient management issues all along the supply chain. Along with concern about guarding trade secrets, many big pharma companies opt to keep production in-house rather than deal with outside vendors. Less than 30% of big pharma drug production gets outsourced, even though factories can cost many hundreds of millions to build and operate. Not surprisingly, outsourc-ing growth for contract manufacturing services has been tepid, about 4% to 6% annually, more or less tracking the pace of overall drug sales growth, according to PharmSource, which reports on trends in pharmaceutical contract sectors.

That led many industry observers to scratch their heads when Mullen moved from Boston’s hot biotech hub to become CEO of Patheon at its Durham, NC, head-quarters. Mullen had retired the year before as CEO of Biogen Idec (BIIB). He had also done a stint as chairman of the powerful Biotechnology Industry Orga-nization (BIO). In an industry that prides itself on driving advances in biomedical science, he had been in the catbird seat. Mullen laughs as he recalls that when he took over leadership of a troubled company within what many regarded as a backwater business segment: “Most people thought I was crazy.”

The company’s future did look bleak. When he arrived, Patheon had just $720 million in revenue and was bleeding cash as a result of an earlier acquisition of a Puerto Rican company that turned out to be a money loser, leading to ouster of the entire previous management team. JLL Partners, a private equity firm that had long been an active investor in the biomedical space including outsourcing services, had acquired the company in 2007. It brought in Mullen to turn the busi-ness around.

The struggling CDMO had a substantial existing factory capacity – some of it redundant – and a large base of long-term client contracts. Its factories cov-ered most of the largest pharmaceutical

markets. Mullen says, “The bones of the company were good. The financials were troubled but not yet tragic.” In Patheon, though, he says, “I saw an opportunity to inject the customer’s view into the busi-ness because I’d been a customer in the past. We could transform the way we were doing that business and over time trans-form the company and the industry.”

He saw clinical research organizations (CROs) as an outsourcing model for the CDMO business. At the start of the 2000s, contract research was a small and frag-mented part of the industry paid for the most part to aggregate patients for studies, oversee sites, and collect data in specific disease or geographic areas. However, as a few CROs consolidated and expanded their offerings, they emerged as integral partners with drug discovery firms, par-ticularly biotechs, and began to take on an ever more indispensable and fast-growing role within the industry as a whole.(Also see “Super-Specialist CROs: Commercial-izing Pharma R&D Expertise” – In Vivo, May 2016.)

a Highly Fragmented IndustryCDMOs first emerged in the 1990s as a way for drugmakers to serve different nations’ mix of products and regula-tory environments, especially in Europe. Today, most CDMOs serve just a small number of countries or offer technology needed in specific parts of the API or FDF supply chain. Not atypically, outsourc-ing drug companies need four or five CDMO vendors to bring even their niche products to market and require multiple oversight teams to manage the supply chains needed to produce a portfolio of products. The rise of complex biologics and new drug delivery systems has added yet another layer of complexity to the supply chain.

A jaw-dropping 650 CDMOs are now in operation. All but a few are small, with under $250 million in annual revenue, and the majority produce at most one or two drugs or drug technologies for individual clients. They generally have little or no sales force of their own and scant prospects for growth. “There’s a very, very long tail of small companies out there,” says Mullen. Just a handful of CDMOs – Patheon, Lonza Group Ltd., Catalent Inc. and Capsugel – have

greater than $1 billion in total yearly revenue. Another group of eight to 10 companies do about half a billion dol-lars in business each, and the rest of what PharmSource calculates as a $40 billion industry in 2015 gets spread among hundreds of companies scattered around the globe.

Despite this enormous fragmentation, Mullen believes that drugmakers across the board want to outsource more of their product API development, formu-lation and manufacturing. He says that when he joined Patheon, “I thought about where the whole industry was going. The industry was creating great products solving unmet medical needs. What doesn’t get valued are the activities outside that. One is supply chain. No investor ever values a company because it’s great at supply chain management.” Moreover, for outsourcers, the CDMO business was simply too complex. “What customers wanted,” he says, “was to outsource to fewer suppliers with a broader set of capabilities.”

Mullen and JLL believed that building Patheon into a company with sufficient scale and breadth and that manufactured in a capital-efficient way could drive significantly increased outsourcing. No company combined all of those assets and capabilities. Among the biggest CDMOs, Catalent is as large as Patheon, but focuses on bioavailability and formulation solutions; Lonza special-izes in biological manufacturing and small-molecule chemical synthesis; and Capsugel has made its mark through its encapsulation technologies. Mullen says that missing among the industry leaders was “a really high-performance company that had real technical expertise and ex-perience to bring to projects and that had sufficient breadth of scale.” He set out to make Patheon that company. (Editor’s note: on December 15, as In Vivo was go-ing to press, Lonza announced its plan to acquire Capsugel for $5.5 billion in cash.)

From Manufacturer to Service Provider Michel Lagarde spent eight years as a partner at JLL and guided its Patheon in-vestment. The thesis behind investing in biopharma outsourcing, he says, is that “these services are important to pharma

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but not strategic,” making them ripe for handing off to a more efficient vendor. Many in the industry, though, look upon CDMOs as commodity suppliers that turn out drug products as reliably as possible while winning onerous regulatory ap-provals for their manufacture. Most fre-quently, a biopharmaceutical company’s willingness to outsource manufacturing reflects reluctance to invest in very ex-pensive manufacturing plants on its own. But the existing CDMOs’ inefficiencies held them back from capturing a greater share of the industry’s outsourcing busi-ness. The CDMO market appeared ripe for consolidation and improvements that could turn an industry backwater into a growth sector.

“First we needed to change the Pathe-on company culture,” Mullen recalls. “The idea that we were a service business was a new concept to our people. They always thought of us as a manufacturing business, but really manufacturing is just one of the services we provide.”

According to Lagarde, aggregating and scheduling the company’s 700 products made plant utilization more constant and capital-efficient, improved quality and boosted on-time performance – while cost of goods fell dramatically. Lagarde says that the company’s operating mar-gin has increased from around 4% in 2011 to the mid-20% range today. “That trans-lates to the financial top line,” he says.

Part of the company turnaround also

required extending its capabilities, for large-molecule biologics and for for-mulation technologies, to compete with the other big players. Mullen along with Michael Lytton, EVP, Corporate Devel-opment and Strategy, who had served a similar role with Mullen at BIIB, made a series of five major business acquisitions starting in 2012, worth an aggregate $1.4 billion. They include the 2012 purchase of Banner Pharmacaps Inc. for its soft-gel technology to expand Patheon’s oral dosage business. The March 2014 merger with DSM Pharmaceutical Products marked a major transition for the com-pany by adding greatly to its small- and large-molecule offerings in Europe and essentially doubling company revenues. The August 2014 acquisition of Gallus BioPharmaceuticals brought additional North American capabilities to existing biologics operations there. In March 2015, Patheon acquired IRIX Pharmaceuticals, a specialist in complex-to-manufacture APIs, adding high-value technology solutions. That same month, the com-pany purchased Agere Pharmaceuticals, gaining additional technology for drug solubility and delivery challenges, espe-cially important for biotechs dealing with bioavailability issues in advancing their drugs into the clinic. “Each of the five acquisitions added capabilities so that we have a more complete service menu,” says Lytton. (See Exhibit 1.)

Adding customers, capacity and capa-

bilities has lifted Patheon from $720 mil-lion in revenue with roughly 300 clients in two segments and nine manufacturing facilities to more than $2 billion in rev-enue with more than 400 clients across three deeper segments – Drug Product Services, Drug Substance Services and Pharmaceutical Development Services. The company presently operates 26 facilities, with a product presence in 70 countries. According to Patheon, clients include all 20 of the largest pharmaceuti-cal firms, eight of the top 10 biotechs, and nine of the top 10 specialty pharma com-panies. In total, Patheon now produces more than 700 drug products, including 20 of the world’s 100 largest selling drugs.

That growth in scale and breadth also brought what Mullen considers a qualitative change to what was previ-ously a “transactional” business. He says, “Merck, Endo and our other customers used to tell us what to do and how. Now they want us to give them advice on the process.” He points to Patheon’s 600 scientists and says, “Like CROs, we are becoming a strategic partner. We try to find the best scientific and technology solutions for our clients.”

Lagarde agrees: “If you do well for your customer, you’ll get more business.” He became convinced enough about the company’s opportunity that he left JLL to join Patheon as its president in May 2016. “We’re already transforming an indus-try,” he says. “It’s rare to be part of that.”

Exhibit 1Patheon’s Recent Acquisitions

ComPAny (yEAR ACquiREd)

ACquisition PRiCE CAPAbilitiEs GEoGRAPhy FACilitiEs

banner Pharmcaps (2012) $269m softgel technology us, netherlands, Canada 4

dsm Pharmaceutical Products (2014) $665.6m large-molecule drug substance

and nA steriles

north America, Europe, latin America, Australia 10

Gallus bioPharmaceuticals

(2014)$259.1m biologics commercial scale us 2

Agere Pharmaceuticals (2015) $26m low solubility us 1

iRiX Pharmaceuticals (2015) $160.6m APi and development scale north America 2

souRCE: Company reports

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From Early Stage to commercializationPatheon hopes to capitalize on its broad service offerings and capacity to grow its business as the biopharmaceutical industry as a whole has been doing: by building a pipeline of early-stage drugs that could one day win approval. Ac-cording to the company, it had a part in some 560 different development-stage molecules that came online in 2015. Eighty percent of its present clients are emerging or mid-size biopharmas. Unlike big pharma, which typically own existing manufacturing sites with sunk costs, smaller companies are likelier to out-source products. Often they need help in figuring out what formulation to pursue. “Our expertise outstrips our customers by big orders of magnitude,” Mullen says. “We can put far more technical people on a project than any of our customers. Like a CRO, Patheon could become a strategic partner and technology provider for drug developers allowing them to focus on their core capabilities – drug discovery.”

By establishing earlier relationships in the drug development process, the com-pany expects to capture a larger market share as some of those early-stage com-pounds move successfully through the pipeline to approval and then scale up into commercialized drugs. That seems to be working: in 2015, Patheon manufac-tured 17 New Drug Approvals (NDAs). (See Exhibit 2.) No other CDMO had more than two in that same period, whereas half of all CDMOs haven’t had even one over the past decade, according to Mullen. He says the development projects are a profitable business in themselves. The big payoff, though, will come with approval and commercial scale-up. He says there’s “tremendous stickiness” to the business. Unlike bigger pharma companies that manufacture about 70% to 80% of their own drugs, smaller biotechs will most often outsource manufacturing. Even when a newly approved biotech drug changes hands through acquisition or licensing, the new owner will nearly al-ways continue outsourcing to the existing manufacturer. That reflects a regulatory environment that may require upwards of 40 to 50 separate agency approvals before a facility can manufacture a drug, making any move to another site prohibi-

tively time-consuming and costly. “They [NDAs] don’t leave our factory,” says Mullen. “Eighty to 90% of the products we develop end up in our factories after approval. Customers know we have the technical expertise and can perform in scale-up.”

However, like any biopharma pipeline, the failure rate of those drugs in develop-ment will always be high. David Windley, an equity analyst at Jefferies LLC, which was one of the five underwriters for Patheon’s IPO, says, “Patheon needs the ratio of successful versus failed products to remain steady or improve. The NDAs represent the ones they win for big-dollar projects.” Like a venture capital investor or a pharma pipeline, a string of clinical failures can lead to poor returns.

Still, Patheon thinks by establish-ing early relationships with biotechs and some pharma companies, helping engineer their products and then scal-ing up for commercial launches, these companies will entrust Patheon with more and more of their pipelines. The company has branded its step-by-step, end-to-end supply chain management solution OneSource a comprehensive relationship strategy, offering API de-

velopment, manufacturing, formulation development, FDF services, commercial drug manufacturing and packaging, as well as life-cycle management. The company contends that using a single CDMO provider can drive significant cost-savings over time. Development EVP Lytton says Patheon’s full network of services enables “a quicker hand off [of components] between sites than if you are just juxtaposing vendors” while try-ing to coordinate and manage the supply chain in-house.

While OneSource represented only about 8% of Patheon’s 2016 business, according to Mullen it is “increasing at a rapid pace.” That single supply chain outsourcing model represents a signifi-cant shift for the industry. “There were doubters,” he says. “Nobody really had that business model.”

Still, Patheon is not yet able to offer a single source solution for every drug API type or formulation. For instance, Donna Jarlenski, VP, clinical, at Mersana Therapeutics Inc., says her company considered multiple CDMO proposals for its first antibody-drug conjugate (ADC) therapeutic following its recapitalization in 2015, but found no company alone

NDA Approvals from 2006-2015

NDA Approvals in 2015

92

6

6

6

6

7

12

15

16

42

17

1

1

2

2

2

2

Patheon

Catalent

Vetter

Baxter

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Aenova

GSK

AstraZeneca

Fresenius

Milkart

8x

17

~21%

NDA approvals in 2015

2x More than the next closest competitor in the last decade

BY THE NUMBERS

Of all outsourced FDA approvals over the last decade

More than the next closest competitor in 2015

Exhibit 2ndA Approvals

souRCE: Patheon

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could manufacture its ADC therapeutic. In the end Mersana outsourced its supply chain to several separate vendors. She says, “There is no one vendor that can execute on all parts of ADCs. A company that could bring ADC manufacturing under one umbrella would be amazing.” But ADCs and some other emerging biotechnologies remain too specialized for any single CDMO to produce for now.

At the same time, global biopharma corporate trends generally indicate that the biggest companies prefer to keep manufacturing of their products in-house. PharmSource looked at outsourc-ing data from 2006 to 2015 and found the largest drug companies continue to invest in internal capacity, whereas their outsourcing of new molecular enti-ties, which leads to future products, has declined overall. Outsourced NDA ap-provals by global bio/pharma companies declined from 41% in 2006 to 24% in 2015, while outsourced NMEs fell from a peak of 62% in 2006 to just 22% in 2015.

Patheon also must serve changing bioscience technology needs. As with the ADC business, some formulations and delivery systems remain outside its present capabilities. Among them are viscous formulation and protein aggrega-tion capabilities, nor does the company

serve transdermal or inhalation delivery markets. It has also not entered the market for drug delivery devices such as syringes, vials or patches. In addition, its plants are concentrated in Europe and North America, leaving significant geographies, especially in emerging mar-kets, uncovered. According to Lytton, the company is considering entry into one or more of the technologies and markets in the next year or so.

Despite these headwinds, Lagard says that Patheon is now growing organically at a rate of about 8% annually, signifi-cantly outpacing the CDMO industry as a whole. (See Exhibit 3.) In a business with long cycles between contracts and delivery dates, the firm has good forward visibil-ity, leading him to project strong future growth. He says that the company expects to spend around $100 million annually for the foreseeable future to expand its exist-ing capacity, “but we also see the need for acquisitions to add capacity and capa-bilities.” And, in late November, Patheon announced plans to acquire a large Roche API facility in South Carolina. Under the terms of the deal, Patheon will take over the Roche site for a nominal amount. Perhaps indicating Roche’s desire to unburden itself of an inefficient facility, the pharmaceutical company agreed to

contract with Patheon to utilize the plant for its API supply needs while Patheon consolidates other manufacturing there to improve its efficiencies.

Overall, Jefferies analyst Windley ex-pects growth will drive more growth as Patheon’s portfolio of services and capac-ity expands. He contends, “If I’m a drug-maker, I’m thinking about the reliability of my product supply. I’m concerned about capacity, quality and management of complexity. I’m going to feel a lot more comfortable [outsourcing] with a $2 billion-size business” than with one of the many CDMOs smaller than $250 million.

After five years, Mullen says, “Nearly all the pieces are in place. We’ve been on the other side of this business as custom-ers. We’ve got insights into the problems our customers are trying to solve. The opportunity was there to bring new think-ing and be impactful in this business. I’m delighted with how much change we could make and how quickly.” iV004977

Editor’s note: Michael Lytton passed away shortly before we went to press. We send our sincere condolences to his family and friends.

277402

274

AMRI

+21%

� 2015� 2014� 2013

1,8311,8281,800

Catalent

+1%

991

1,483

1,774

Patheon

+34%

Cambrex

+17%434

374317

1,4001,4211,368

West

+1%

Revenue $ In Millions

Exhibit 3historical Growth: Patheon Versus Peers, 2013–2015

note: All revenues on a reported basis.souRCE: Patheon

comments: Email the editor: [email protected]

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UK company Atlas Genetics Ltd. was founded in 2005 as a spin-out from Osmetech PLC and the University of Bath to exploit the point of care (POC) market for infectious diseases. When John Clarkson, PhD, joined US-based and UK-listed Osmetech as incoming CEO of the unit that became Atlas Genetics Ltd. he recognized that the company was under-

utilizing some of its IP assets and saw both the opportunity – and the challenges – of developing its infectious disease diagnostic chemistry.

Clarkson had to strike the right balance of investment: it had to remain modest until the company had developed a first prototype. He says it took five years to get the highly novel electrochemical sensors right, in a research partnership with the University of Bath (UK), near the company’s west of England HQ. In parallel, Johns Hopkins Uni-versity did a 300+ patient study of Atlas’ technology in the US, which provided data that showed very high sensitivity and specificity. It also gave the system valuable third-party recognition.

That provided the launch pad to develop the molecular diagnostic product – called the io system, comprising a disposable cartridge and small desktop instrument. Atlas spent some £35 million ($44 million) establishing the chemistry and developing the hardware. The funding has been raised from a supportive investor syndicate including Consort Medical PLC, and the corporate venture funds of Novartis AG and Johnson & Johnson.The company is now pursuing another round of funding for its US clinical trials and commercialization purposes. That round should close in first-quarter 2017.

Atlas is applying its CE-marked but not-yet-US-approved test initially for the rapid diagnosis of sexually transmitted infections (STIs), beginning with chlamydia and gonorrhea. But as io is an infectious disease platform, Atlas can later extend it beyond STIs, with the potential to load tests from third parties as well as those from its own R&D. At present, the system is undergoing a number of beta studies, at St George’s

Atlas Genetics Ready To Play Its Part In The POC Workflow Revolution

Do it once, do it right and do it quick: when it comes to diagnostic testing, that suits patients and payer systems that are pursuing budget-sensitive, quality-driven health care solutions. It could also be the shorthand mission statement of POC diagnostics developer Atlas Genetics, which is developing a new IVD platform technology for infectious disease tests.

Atlas Genetics is one of a new breed of companies whose POC tests could solve the problems associated with long lab test result time lines and falling numbers of trained lab staff.

Starting with rapid sexually transmitted infection test launches in the major markets, the UK-US company plans to build on its assets and become a strong player in diagnostics.

The proper integration of accurate POC testing, triaged as necessary, offers the classic win-win, and even addresses the stigma that can deter STI sufferers from approaching the sexual health clinic.

If the questions being posed are to do with speed, accuracy, throughput volumes and cost, then Atlas Genetics CEO John Clarkson believes that his platform technology is a big part of the answer.

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University Hospital (London), and in the US at the Cincinnati Children’s Hospital, the University of Alabama and the Johns Hopkins University.

Atlas CEO John Clarkson sees large potential for a technology that is no longer viewed negatively by the central labs, which once saw it as unwelcome competition. He spoke to In Vivo about the market niche for a suite of rapid POC tests that match health care budgets and is flexible enough to appeal to even the most reluctant STI clinic patients.

In Vivo: With the flexible technology you are developing, why have you targeted STIs as the first application?

John Clarkson: The io platform and disposable cartridges can be used for any genetic test to measure specific se-quences of RNA or DNA, but we started with STIs as this is a huge market in terms of volume and clinical need. In 2015, around 17 million tests for chlamydia and gonorrhea were performed in the EU, and in the US there were approximately three times as many, around 50 million tests. At present, over 95% of these tests are carried out in a lab, but the problem is that patients present in primary care settings, specialized clinics or STI clin-ics (GUM clinics in the UK), meaning the patient is separated from where the test is analyzed. However, the Atlas test is a 30-minute episode in the STI clinic or doctor’s office, and so the patients will get their results on the spot, which can have a big effect on patient management.

We honed in on this clinical area through market research, and we found that people are still embarrassed about STIs, which leads to a problem of access to testing. The main burden of disease in STIs is in 15- to 25-year-olds, a group that doesn’t access health care very well at all, particularly at the younger end. So the Atlas technology makes access easier, and that is viewed very positively by patients.

The current pathway is that patients will go to a clinic and provide a specimen. The labs will then run a highly accurate molecular test, but due to the time lapse between test and results, the test results are not always picked up by the patient back at the clinic, and “loss to follow-up” is a real issue. For the clinic, chasing up

these patients can eat up a significant proportion of its budget. Public Health England (PHE) reports patient return rates of 94%, but in the US, there are reports of up to 40% dropout rates.

Because of the risk that the STI clinics won’t see some of their patients again, they might prescribe a broader-spectrum antibiotic than is necessary where an older, cheaper antibiotic could have been used. And in some cases, it’s the wrong antibiotic. Given the drive for antibiotic stewardship, if the organism can be iden-tified, we’re better able to guide clinicians about what treatment they should use. Future STI tests from Atlas will both type the organism and actually indicate which antibiotic should be used, thereby giving the patients the right treatment, immediately.

The platform and tests can also go into non-traditional settings, such as student clinics, and potentially high street phar-macies, and be used in other settings, such as outreach programs to increase sexual health awareness.

We look at STIs as a global market, and we have to understand the individual health care systems before we can deter-mine how best to intervene. In the UK, for instance, commissioning of testing for STIs is predominantly devolved to the local authorities where a block pay-ment is often made based on numbers of patients. This is typically as a single pay-ment per patient (regardless of the num-ber of visits), so a clinic that introduces POC is providing more rapid patient care plus capturing the whole payment.

Another positive is that it can be cheaper to do tests in the clinic, avoiding the cost of multiple interactions with the clinician. As such, it is a way of rationaliz-ing services. The challenge in the UK has been in the issue of who saves the money and who gets the benefit of that. But fundamentally, this procedure promotes early intervention, improved health of the individual patient, and general sav-ings for the system, and it has a positive impact on onward transmission by way of nipping the problem in the bud and preventing disease spread.

The level of STIs is rising everywhere, part of which is down to better diagnosis, but it is also down to rising prevalence. And some of these diseases are not

strongly symptomatic, for example, chla-mydia is a very common infection, and is asymptomatic in 50% of patients. Unfor-tunately, untreated infections can cause pelvic inflammatory disease, which can lead to infertility, which has significant cost, both emotionally and financially.

What adjustments will clinics need to make to integrate the io suite of tests?

Clinicians have a desire to take on new tests and are mindful of opportuni-ties ahead, but in some ways, POC tests will be challenging in terms of the clinic workflow adjustments needed. And the challenge for Atlas, commercially, is how to optimally integrate our POC test into busy clinics.

While the practical considerations should not be underestimated, clinics may need to make just small changes to their routines. As to the workflow, the collection of the patient sample and its delivery to the nurse are unchanged, but with POC, the nurse goes ahead and proceeds with the test resulting in more “hands-on” time in the clinic.

In addition, STI clinics in the US can make revenues through this POC test. They are under great pressure in terms of their budget, and if they could run tests themselves, they’d be able to claim the reimbursement and generate income from the test. At present, the lab tests are a cost, but they can turn that diagnostic activity into a revenue stream.

What is the rationale for the beta studies?

Our aim is to launch the first test in Europe in the first half of 2017, and in the US in the second half of the year after receiving US approval.

Part of the reason for carrying out the clinical studies this year [the beta studies] ahead of launch next year is that we’re picking up information about best practice, and learning how best to introduce our POC technology into a clinic. The US beta studies have shown clinicians appreciate the convenience of getting the test result straight away and the reception we’ve had has been uniformly very positive.

We also wanted to get comments from women about self-collected vaginal swabs compared to urine or clinician-collected

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swabs. We had a very positive response from women about self-collection.

A third element has been to gauge patients’ willingness to wait. They are usually in the clinic for about two hours, so would they wait an additional 30 minutes to get a test result? The answer came back as a resounding yes – and it might not even be as much as 30 minutes with workflow reorganization. Work at St George’s has indicated that symptomatic patients, in particular, are very keen to get their results on the spot, if they know they will get a quick result and immedi-ate treatment. The UAB is looking at workflows in the clinic, and where this test would sit in the workflow.

What are Atlas’ geographic market priorities?

The markets we are primarily focused on are the US and Europe, and thereafter others on an opportunistic basis. The regulatory package in Europe is EU-wide, but the reimbursement systems are entirely different, and there are na-tional differences in testing rates. There is nothing to suggest that prevalence is any different, but STI testing is generally more common in northern Europe. Our European priorities are Germany, Spain, Scandinavia and the UK. France, where there has been a rather limited uptake of POC testing, will come later. France tends to be more lab based, but that is changing with rapid tests for flu and group A strep being implemented of late.

In the US, where we’ve just appointed a VP of sales and marketing, Keith Stauffer, we’ll start with direct sales. US distribu-tors are very good at managing logistics, but it’s important that we demonstrate some success with the product first. Once we’ve started selling to the around 1,400 STI clinics in the US, we will see about how we play to the distributors’ strengths. In the UK, we’ll also go di-rect, and in the mainland EU, we’ll use distributors.

In terms of the “labs versus the POC systems,” is that a challenge?

To start with I thought it was, but the lab people we talk to now are increasingly interested in POC. I think they see a role for themselves both as initial validators of the systems and also in terms of oversight

of QC and archiving data. Most hospitals have POC care coordinators that work closely with the POC sites. Quality con-trol is uppermost. But for the labs, it is a struggle to get trained staff, and that is a global issue. So automated POC tests are not necessarily seen as a problem, and there’s not the same antipathy toward them that there was five to 10 years ago.

Another point is that POC is “up-stream” from the labs: in terms of STIs, we’re getting to the patient first and in that respect, the POC settings typically “own” the patient, and there are clearly strong patient benefits of accurate POC. Indeed, it would be hard to argue against POC testing that does the job on the spot.

We think there will be a mix of POC and lab testing for quite some time to come, and with a 65 to 70 million test market (in the US and Europe), we don’t need Atlas to jump right in and take a huge share of the market. What could happen is that clinics might focus on high-risk patients, and the vulnerable young, say, while triaging might push others down the POC route.

Who do you see as the competitors standing between Atlas and market success?

The concept of POC testing has been around for decades but there has been a particularly strong interest in POC over the last five to 10 years. The competition for us today are the large diagnostic companies that make fully automated lab systems that sit in central labs. We’re pulling business away from them. Additionally, a lot of early-stage VC has been invested in early-stage companies, and there are companies around that are following this early-diagnostics pathway, for example, Genedrive [Genedrive PLC (formerly Epistem PLC)], Roche Diagnos-tics [Roche Diagnostics Corp.]’s rapid molecular flu test, and Alere [Alere Inc.], with its own system for rapid flu and group A strep tests, to name but three.

Bearing in mind the planned launches and commercial milestones, how far can you take the company?

The next stage for us is commercial-ization, and we need a well-thought-through commercial plan that we can execute with the investments from our

“ We think there will

be a mix of POC and

lab testing for quite

some time to come...

clinics might focus

on high-risk patients

and the vulnerable

young, say, while

triaging might push

others down the

POC route.”

– John Clarkson

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shareholders. We are not thinking about an exit in terms of M&A; our aim is to launch products, build revenues and be a credible new player in diagnostics. If we do that well, we will automatically be providing our shareholders with options, which could potentially include going to the public markets, not now, but maybe in 2018 and beyond.

That in turn would give us partnership and/or M&A opportunities, but I think those develop out of being successful, not out of planning to sell the business. So while we don’t spend a lot of time talking about M&A, we do spend a lot of time talking about operational matters.

At some point, we could be an attrac-tive buy for a diagnostics business, but we are not focused on that now.

You have a large board of 10 directors. What are the reasons and advantages of that?

We have six Series C investors that each own 10% or above, and it’s good to hear those voices directly. They include Novartis Venture Fund and J&J Develop-ment Corp. as well as Consort Medical PLC, which manufactures for Atlas, and other VCs – RMI [part of RusnanoMed-Invest], LSP [Life Science Partners] and BB Biotech Ventures. It provides a good dynamic and is a good mix.

To balance that out, we have three non-executive directors, including the Atlas Genetics chairman Neil Butler (ex-CEO of Vivacta Ltd.), Professor Chris Price, and ex-J&J’s Mike Saunders, as well as me, the CEO. A step down in board numbers could be achieved – but if they’re happy, I’m happy; it works pretty well.

What business model will you be employing?

That depends on what the customer wants. In the US it will be predominantly reagent rentals, where we’ll provide the instrument with no capital cost up front and we’ll load the cartridges with minimums using fixed-year terms. If someone wants to buy the instrument, we can adjust the price to suit. Germany, for instance, has a tradition of buying capital equipment under the €5,000 ($5,390) to €10,000 bracket. In UK STI clinics, the approach will vary and so we’ll be flexible on the package. The instrument costs us

about $5,000 to make, so even on a rela-tively low throughput we can amortize those costs without too much difficulty. It means more working capital on the busi-ness, but we can cope with that.

The number of instruments we put in each clinic will depend on their through-put of tests. Taking a mathematical aver-age across clinics in the UK – they are probably doing 20 to 25 CT/NG [Chlamydia trachomatis and Neisseria gonorrhoeae] tests every day. For an average clinic, we would provide a number of instruments – our working assumption is that about five to 10 tests per day per instrument is what we should be doing. We estimate a potential global market of around 100 million tests per year, including the 65 to 70 million US and European tests.

What will be your next steps and ideal first contracts?

The first contract will most likely be to a reference site – one of our beta sites that already has the instruments and decides to adopt the platform. The systems would stay there free of charge, and the sites would start buying cartridges. We’ve also been doing a lot of visits lately to check pricing and decision-making options among potential customers who might have existing contracts in place with other suppliers.

Further down the line we’re interested in HPV – most of the new HPV tests aren’t really geared toward testing the high-risk genotypes, and we think that type of test would work extremely well on our plat-form. We’d potentially look at a Zika virus test for the US, given that CDC surveys have shown infection rates of up to 8% in returning US holidaymakers. Testing could take place in an OB-GYN office. And later still, we’d maybe look at an HIV test, although HIV and HPV tests bring more regulatory challenges.

We’ve also started to look at the type of strategic partnerships that might expand our capabilities for generating new as-says. That’s one of our areas of focus for 2017, and launching the platform and first test next year would be a good opportu-nity for us to reach out to other diagnostic companies that might be interested in putting their assays on our platform. That is also one way for us to expand our geographic range in terms of sales.

We’ve spent a lot of money develop-ing the platform, but we need to rapidly develop the tests to put on it. It will be-come lower risk if we had a partner that is generating business already. For the next couple of years, we’ll be focusing on STIs, starting with chlamydia/gonor-rhea, and then adding trichomonas and mycoplasma, which all cause similar symptoms, urethritis. Respiratory tests will come next – unless a partnership presents opportunities sooner.

Our goal is to have fully symptomatic panels of tests, with typically four or five – though the technology can go much higher – on each cartridge, making it easier for clinicians to test for a number of infections at one time. That is a potential productivity advantage.

What other ways would the technology suit affordable health care delivery programs?

At present, the UK NHS treats gonor-rhea using a third-generation cephalo-sporin, which is the only antibiotic avail-able for that. There have been sporadic concerns where reduced sensitivity has been identified, most recently in Hawaii. And yet we know that, in the UK, around 70% of patients are infected with gonor-rhea strains that are sensitive to earlier-generation fluoroquinolones. In col-laboration with St George’s Hospital and funded by a grant from the UK National Institute for Health Research [NIHR], we are developing a test that is geared to-ward detecting sensitivity so that patients can be treated with an older-generation antibiotic, rather than the “last-ditch,” antibiotic. We think that is one way of moving clinical practice forward – in this instance by making good use of an older, cheaper drug, and in this case, an orally administered – not an injectable – drug, giving cost savings here too.

Overall, we believe that our io platform has the potential to advance diagnostics to help improve patient outcomes through rapid diagnosis and immediate treatment while generating cost savings for the clini-cian in a budget-driven era. IV004985

Comments: Email the author: [email protected]

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❚ R&D PRoDuctIVIty in

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Biopharma R&D Productivity And Growth 2016: Innovation Performance ImprovesCatenion updates its annual list of the year’s top pharma R&D performers, based on R&D productivity and growth. This year Regeneron shoots to the top and Gilead drops to third place.

Has R&D productivity in-creased since last year’s analysis? Who are the new entrants into the elite top five group, and

who has dropped out? Have the positive innovation dynamics of recent years continued? (Also see “Value-Based R&D Pharma Productivity 2015: Oncology And Hep C Drive Top Performers” – In Vivo, December 2015.)

Our annual survey suggests that the fundamental innovation performance of our sample of top 30 companies has im-proved considerably since we published the first survey in 2014. (Also see “Value-Based Pharma R&D Productivity: Is There A Sweet Spot?” – In Vivo, June 2014.) The overall R&D productivity in our sample has increased by 46% from 2014 to 2016 with oncology driving just under half of that rise. This trend holds true both for the metric that looks at pipeline value versus spending (momentum ranking) and for the metric that includes products launched within the last five years (long-term ranking). (For a detailed description of our methodology, see sidebar, “Method-ology: R&D Productivity Ranking.”) Not surprisingly, PD-1 and PD-L1 monoclonal antibodies (mAbs) account for almost 12% of the overall growth, followed by anti-PCSK-9s in cardiovascular and the VEGFr inhibitors in ophthalmology. The biggest loser in value is the monotherapy hepatitis C nucleoside analogue class (e.g., Sovaldi); however, this has been off-set by fixed-dose combos (e.g., Harvoni).

We wanted to be sure that the increase we saw using our value-based method was not just based on broader analyst

coverage of assets or analysts simply being more bullish about individual as-sets, but rather reflected a truly improved outlook in terms of quality and prospects. We have checked the number of assets covered by analysts, and have reviewed the increase in the share prices of these companies, the number of NME ap-provals and compounds granted break-through designations. All data points were consistent with a fundamental improvement in innovation performance.

As our method relies on consensus views of future performance, the impact of external events such as health care reform and drug pricing pressures can still change the picture in the end. Drug pricing in the all-important US market has been a matter of much debate both before and after the recent presidential election. While most of the companies in our top 30 survey are first and foremost in the business of creating value through meaningful innovation for patients, some have focused on more dubious business models by exploiting inefficiencies in pricing and niche marketplace dynam-ics – for that reason we have excluded Valeant Pharmaceuticals International Inc. from our ranking.

Mid-size Companies Still More ProductiveOn average, mid-size companies continue to dominate the top-five outperformers in both R&D productivity and corporate growth rankings (four of five companies). (See Exhibits 1 and 2.) This shows once again that having a deep disease focus and a still manageable size can go a long way in biopharma R&D. (For another take

BY MarkuS ThuneCke and GrahaM SCholefield

Mid-size companies

continue to dominate

the top-five

outperformers in

both R&D productivity

and corporate growth

rankings. This shows

once again that

having a deep

disease focus and a

still manageable size

can go a long way in

biopharma R&D.

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on mid-size pharma R&D productivity, Also see “When It Comes To Pharma R&D ROI, Mid Pharma Companies Outperform” – In Vivo, October 2016.)

With the blockbuster success of Gilead Sciences Inc., Bristol-Myers Squibb Co. and others, it was necessary to revise our definition of big pharma from pharma-ceutical sales of more than €15 billion to having more than 40,000 employees to ensure this group reflects “traditional” big pharma as was the intention when we started our survey in 2014.

The relative distance between the out-

performers and the rest in absolute terms is still significant, but the difference has become roughly 20% smaller since 2014, showing that the average performance is increasing. Interestingly, big pharma is at the head of the pack with an average rank increasing from 18 in 2014 to 15.3 today and as with last year, a few big pharma compa-nies made it into the top 10 – Novo Nordisk AS ranks fifth, and Roche seventh, whereas Johnson & Johnson shares ninth place with BMS. It seems that several traditional large pharmas may be successfully revamp-ing their struggling R&D organizations,

often through clever sourcing of external innovation (in fact, most key value drivers in our top 10 big pharma group stem from external sources or acquisitions). (Also see “External R&D Is Up, But Which Companies Are Reaping The Most Benefit?” – Scrip, October 5, 2016.)

Shooting Star regeneronIn 2015, Regeneron Pharmaceuticals Inc. became one of the 30 largest biopharma companies, and more importantly, its R&D productivity and corporate growth performance catapulted this new entrant

Exhibit 1

2016 r&d Productivity and Corporate Growth ranking, Top 10 Companies

By and large, mid-sized companies are the top performers in both R&D and overall company rankings

R&D PRoDuctivity comPany PeRfoRmance

final nPv Rank company

momentum(Pipeline nPv)

Long-term(all nPv)

final corp.Growth

Rank companyPast

Performanceforecasted

Performance

1 Regeneron Pharma 2 1 1 Regeneron

Pharma 2 1

2 Biogen 1 3 2 celgene 4 3

3 Gilead Sciences 9 2 2 Shire 5 2

4 celgene 3 5 4 novo nordisk 7 8

5 novo nordisk 4 6 5 allergan 1 15

6 abbvie 5 10 6 Biogen 6 11

7 roche 10 9 7 chugai Pharma 14 4

8 astellas Pharma 17 7 8 abbvie 17 4

9 Johnson & Johnson 15 8 9 Bayer 10 13

9Bristol-myers

Squibb27 444 10

Bristol-myers

Squibb20 4

ToP 5

NoTE: orange=big pharma >40k employees in 2015SoURCE: Catenion

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to the top of both our R&D and corpo-rate growth rankings. To many industry observers this is not a big surprise as the company’s leadership duo of Leonard Schleifer, MD, PhD, and George Yanco-poulos, MD, PhD, has steadily built the firm following a similar path outlined by Genentech Inc. under Art Levinson, PhD, or Merck & Co. Inc. under Roy Vagelos, MD. It is no coincidence that the latter is chairman of Regeneron’s board. Its model for success is based on strong, visionary

leadership and a culture of scientific and technological excellence. (Also see “What Can The Biopharmaceutical Industry Learn From Apple Inc.?” – In Vivo, January 2014.) Regeneron’s slogan, “Make great medicine. And then do it again and again.” has be-come a reality as the company has not only launched best-in-class Eylea (aflibercept) for wet age-related macular degeneration (AMD) and diabetic macular edema (DME), but has also created a pipeline containing several potential mega-blockbusters such

as dupilumab (anti IL-4 for asthma/atopic dermatitis), sarilumab (anti-IL-6R for RA) and alirocumab (anti PCSK-9 for severe dyslipidemia). Although there have been some setbacks recently (clinical hold for anti-NGF, complete response letter for dupilumab), the long-term prospects look promising, fueled by an ever increasing pipeline of differentiated NBEs, many of which are still fully owned by Regeneron and not part of the large alliance with Sanofi.

Exhibit 2

rank Movement driver analysis, 2016 Versus 2015

R&D PRoDuctivity



Long-term(all nPv)

2015Rank

final Rankmovement major Driver of the movement

1 Regeneron Pharma 2 1 New Entrant See article

2 Biogen 1 3 2 0 -

3 Gilead Sciences 9 2 1 -2

Cumulative R&D & deal spend has increased 26% while the NPV of their pipeline has decreased 71% to €13.1 bn, primarily because of analyst revaluation of their Hep franchises.

4 celgene 3 5 5 1 -

5 novo nordisk 4 6 3 -2

NPV has increased 252% driven by Semaglutide and faster-acting insulin Aspart which have doubled and tripled respectively. Novo has slipped in the rankings simply because Regeneron and Celgene out-performed them.

6 abbvie 5 10 3 -3

AbbVie increased its total NPV by 142% primarily due to the launch of Ventoclax and the acquisition of Stemcentrx (for Rovalpituzumab tesirine). This came at the cost of €8.1 bn and thus overall the companies above have outperformed them.

Detailed rationales for companies that have moved ≥2 places in the rankings since the last analysis

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Exhibit 2

rank Movement driver analysis, 2016 Versus 2015

R&D PRoDuctivity



Long-term(all nPv)

2015Rank

final Rankmovement major Driver of the movement

7 roche 10 9 10 3

The launches of Cobimetinib, Alectinib, Venetoclax, Atezolizumab have almost tripled the total NPV of Roche’s marketed products, with the latter contributing 75% of that increase. Despite the ‘loss’ of Atezolizumab from the pipeline, the NPV of ocrelizumab has increased 5-fold and the newly valued Emicizumab also makes a significant contribution (~17%). overall Roche’s total pipeline NPV remains virtually unchanged from last year.

8astellas Pharma 17 7 20 15

The main driver is the NPV of their marketed drugs which has increased 35%, driven by Enzalutamide and Mirabegron.

9 Johnson & Johnson

15 8 11 2

J&J has more than doubled the NPV of its pipeline because Sirukumab, Guselkumab and Apalutamide are valued 4-8 fold higher than last year. Also, the launch of daratumumab has increased the NPV of marketed products by 35%.

9Bristol-myers

Squibb 27 4 8 -1 -

This type of alliance must be every bio-pharma CEO’s dream as it has created great stability for Regeneron: providing funding for research ($160 million annually for a certain period) and development (Sanofi paying for a large majority of costs), while also providing commercial opportunities (Regeneron gets 50% of US and 35% to 45% of ex-US profits, retains co-promote rights in the US and other major markets). In ad-dition, there is a real commitment as Sanofi took around a 20% equity stake.

Gilead losing Momentum, BMS dominated By Checkpoints With little To followWhile new entrant Regeneron moved AbbVie Inc. out of our top five, the other companies have defended their positions (Gilead, Biogen Inc., Celgene Corp. and Novo Nordisk). Gilead as the former num-ber 1 has lost considerable momentum as it has dropped to third place – this is explained by its increasing R&D and deal spending at twice the average rate, and

a devaluation of its pipeline with both HepC and HepB forecasts and NPV going down considerably compared with last year (ninth in momentum ranking). The other new entrants in the top 10 are Astel-las Pharma Inc. (eighth) and J&J (ninth, shared with Bristol-Myers Squibb).

Some may wonder why Bristol-Myers Squibb has been slipping down the pro-ductivity rankings since 2014 and only just barely made it into the top 10 today, even though it has the industry’s most

NoTE: orange=big pharma >40k employees in 2015SoURCE: Catenion

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valuable drug with nivolumab. The short answer is that the company’s advanced pipeline, which is considered for our ranking, contains no high-value assets (it is 27th in the momentum ranking). The numerous nivolumab combo trials require development capacities and spend-ing but are counted as life-cycle management of a mar-keted drug – therefore the long-term R&D ranking of BMS (fourth) is very good, but not sufficient to overcome the poor momentum ranking.

By contrast, when we look at Roche, we can see that in addition to launching four new drugs since our last update, including the highly valuable atezolizumab, the firm also has several high-value drugs in its late-stage pipeline including ocrelizumab (anti-CD20) and emici-zumab (coagulation stimulator). This demonstrates how the methodology rewards continuous innovation.

Japanese Pharma at a CrossroadsJapan’s Astellas has greatly improved its overall position and is now number 8 in the R&D ranking, driven by the success of marketed drug enzalutamide in prostate can-cer, with which it shares rights with Pfizer Inc./Mediva-tion Inc. There has also been some notable progress in its pipeline; but when factoring in R&D spending it still only leads to an average pipeline performance (17th). It may take a while before the improved R&D productivity of Astellas fully translates into corporate growth, where the company is number 18 in the ranking.

From an overall corporate growth perspective, the best-performing Japanese company is Chugai Pharmaceutical Co. Ltd. (seventh). Chugai obviously also benefits from having access to Roche’s portfolio for Japan, in spite of an only average R&D performance (15th).

Nevertheless, overall the Japanese companies cluster toward the bottom part of the ranking (five of seven com-panies in both R&D and corporate growth rankings). It seems that Japanese pharma is really in a transition phase moving from historical strengths in small-molecule drug discovery in cardiometabolic markets to NBEs, oncology and accessing innovation externally. Globalization of their commercial and R&D footprint as well as manage-ment structures is still a top priority for most players, who face little to stagnant growth in their home market. Recently, the first western CEO, Christophe Weber, took the helm at Takeda Pharmaceutical Co. Ltd., a rare but noteworthy exception, and perhaps a sign that Japanese pharma is serious about challenging and changing es-tablished views and corporate models. iv004975

❚ Methodology: R&d PRoductivity Ranking

To evaluate the R&D productivity of the world’s 30 largest public pharmaceutical companies, as judged by total pharmaceutical sales, the Catenion methodology takes an approach that focuses on value. We compared the total R&D spending from 2005 to 2015 including costs from M&A and a 7% cost of capital with the total expected net present value (eNPV) today of compounds marketed in the last five years and all pipeline products.

Using these data, two distinct rankings were calculated – a mo-mentum and a long-term ranking. The momentum ranking aims to capture the value a company is forecasted to generate by taking the current NPV of its entire pipeline and dividing it by the firm’s R&D and M&A costs, both adjusted for cost of capital, as described above. By contrast, the long-term ranking focuses on the value a company has already generated in the recent past, specifically the eNPV of products marketed in the last five years are added to the pipeline NPV before being divided by the total cost as per the momentum rank.

The overall R&D productivity rank was then generated by weighting the momentum rank ¼ versus ¾ for the long-term rank.

incoRPoRating the costs of M&aTo fairly allocate M&A costs to the R&D costs, each deal was de-fined by its primary driver. If the acquired firm had pharma sales greater than €1 billion, then it was said to be commercial and thus 25% of the total deal value was added to the R&D costs for that year. By contrast, a deal involving a firm with no marketed products was, by definition, a pipeline-driven deal, thus 80% of the deal costs were taken. In addition, if the total cumulative sales of the target company up until the deal date were less than 20% of the deal value, then the deal also was considered to be a pipeline-driven deal (e.g., abbvie inc.’s acquisition of Pharmacyclics inc.). Finally, if a firm had pharma sales of less than €1 billion, then it was considered a hybrid of the two deals and thus 50% of the M&A cost was used.

coRPoRate gRowth RankingTo evaluate the corporate performance of each firm, the histori-cal and forecasted CAGR for pharmaceutical sales, EBITDA and market cap (historical only) were calculated. Each company was ranked independently on each of the five metrics before they were combined with equal weighting to generate the overall corporate growth ranking.

See our ranking methodology graphic at:

http://bit.ly/2gOG4zE

Read MoRe onlineMethodology:

R&D Productivity RankingMarkus Thunecke, PhD (markus.thunecke@ catenion.com), is a founding Senior Partner of Catenion, a biopharma-focused strategy consulting firm. Graham Scholefield, PhD ([email protected]), is a Manager at Catenion.

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Biosimilar Dealmaking Moves The Needle ForwardDealmaking is advancing the biosimilar field. Since 2000, the volume of biosimilar deals has grown at a 15% compound annual rate, according to a new report from Datamonitor Healthcare.

The establishment of a regula-tory approval pathway in the US – via the enactment of the Biologics Price Competition and Innovation Act of 2009 as

part of the Affordable Care Act – has given way to approval of the first US biosimi-lars, two of which have launched to date (Sandoz International GMBH’s Zarxio (filgrastim-sndz) and Pfizer Inc.’s Inflectra (infliximab-dyyb). In the European Union, where there has been a regulatory path-way for considerably longer, 23 biosimilars are approved. The potential cost-savings from biosimilars provide incentives to companies to advance these therapeutics. And dealmaking has helped those efforts.

Antibody Biosimilars Are Now The Focus Of Most Deals According to “Biosimilars Portfolio and Pipeline Trends, 2016”, a new Datamoni-tor Healthcare report, approximately 128 deals involving biosimilars were signed worldwide between 2000 and early September 2016, at an average of eight transactions per year. (This includes deals that have been announced, completed, or terminated.) Transaction volume steadily rose from 2000 to 2009; since then, annual deal activity has fluctuated, although the number of partnerships has not increased or decreased dramatically year over year. The volume of biosimilar partnerships has grown at a 15% compound annual growth rate since 2000.

In the early part of this 17-year time pe-riod, specifically between 2000 and 2009, most of the deals concentrated on biosimi-lars of proteins other than antibodies: for example, erythropoietin or granulocyte-macrophage colony-stimulating factor (GM-CSF). Starting in 2010, the number of annual deals for antibody biosimilars

began to match those of other proteins. From 2013 to late 2016, there has been a consistently higher volume of antibody biosimilar agreements. This may be a re-sult of the larger commercial potential of antibody drugs along with the impending patent expirations on these key biologics. That being said, antibody biosimilar deals have one of the most notable declines in annual volume in the 2000–16 period: from a peak of 19 partnerships in 2013 to just 10 transactions in 2014. In 2015, there was no change in antibody biosimilar deal volume and in 2016 (through September), six such agreements have taken place. There has not been a corresponding increase since 2013 in other types of biosimilar deals, although from 2015 to September 2016, biosimilar agreements for other proteins doubled from two to four. Again, these changes in volume are not relatively significant, and antibody biosimilars are expected to continue to represent the largest share of biosimilar dealmaking.

Biotech Companies Lead In Out-LicensingSeveral active out-licensers have emerged among companies that have developed biosimilars, partnering themselves with others for future development and/or commercialization. During the 2000–16 period, Mabion SA, a publicly traded Pol-ish firm, has forged the most out-licensing deals. The agreements focus on the dis-tribution of the company’s MabionCD20, a biosimilar of rituximab, in various geo-graphic markets. Through a partnership with LMC, the drug is closest to market in Argentina, where it is awaiting approval. Other active out-licensers between 2000 and 2016 include Coherus BioSciences Inc., Epirus Biopharmaceuticals Inc., and Oncobiologics Inc. The only active

big pharma biosimilar out-licensers are Teva Pharmaceutical Industries Ltd. and Amgen Inc. Teva, incidentally, would like to increase its biosimilar in-licensing deal activity according to Sigurdur Olafsson, the company’s chief executive officer of global generic medicines. Olafsson says that as of late 2016, Teva has done due diligence on around 36 potential biosimilar partners. He believes the company will be able to develop biosimilars in-house and could start launching products after 2021. (Also see “Teva’s ‘Key Ingredient’ For Growth: Biosimilars” – Scrip, September 13, 2016.)

When Pfizer bought Hospira Inc. in 2015, the acquisition provided Pfizer with a pipeline of biosimilars. Hospira has in-licensed rights to biosimilars epoetin alfa, GM-CSF, and filgrastim (via Pliva/Teva); erythropoietin and pegfilgrastim (via Stada Arzneimittel AG); and infliximab (via Celltrion Inc.). The Hospira takeover was a major turning point for Pfizer’s biosimilars strategy, and since then the big pharma has further invested in its capabilities. Pfizer is spending $350 million to build a new, dedi-cated biosimilars facility in China, where the company can take advantage of China’s pledge to add value to and modernize its biopharma industry. The Pfizer Global Biotechnology Center will be based in the Hangzhou Economic Development Area and is expected to manufacture biosimilars for the Chinese and global markets. The center should be completed by 2018. (Also see “New $350m Site To Build Pfizer’s China Biosimilar Capacity” – Scrip, June 28, 2016.)

Other big and mid-sized companies that are active in biosimilars in-licensing include Merck & Co. Inc., Baxalta Inc., Sandoz, and Allergan PLC. Sandoz, for example recently gained rights from Pfizer/Hospira to develop and commer-cialize the latter’s biosimilar infliximab in

BY AMANDA MICkLus

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the European Economic Area (where the drug is approved as Inflectra). It is worth noting that the relative number of transac-tions overall is quite small (and Baxalta/Baxter International Inc.’s count now includes only terminated deals, formerly with Coherus BioSciences and Momenta Pharmaceuticals Inc.) Shire PLC (which acquired Baxalta in 2015) has decided to shift the strategic priorities of its pipeline and portfolio to focus on its rare diseases portfolio and growing its oncology busi-ness. (Also see “Shire Exits Biosimilars, Streamlines Oncology Business” – Scrip, November 1, 2016.)

Later Entrants Take Lead In Biosimilar In-LicensingSome developers, such as Hospira and Sandoz, were early adopters in biosimilar development and have paved the way for future work in this area. A larger group of pharmaceutical and biotech companies have taken the lead from these established biosimilar firms and have entered the playing field, including Pfizer, via its ac-quisition of Hospira, and Biogen Inc. Some trends may be teased out to categorize the in-licensers as either established develop-ers/early adopters of biosimilar technology, or later entrants. Between 2000 and 2016, around two-thirds of biosimilar deals were signed by newer-entrant licensees, while one-third of the licensees are established biosimilars developers. Unsurprisingly, the dominance of later-entrant in-licensers has not always been the case; as the early-adopters led the charge, they also signed the majority of deals. This was the situation through 2008 when newer entrants into the market began to take a more prominent role in in-licensing. IV004973

Editor’s note: Biosimilars Portfolio and Pipeline Trends, 2016 is available from the Informa Pharma Intelligence Report Store, pharmastore.informa.com.

SOURCES FOR EXHIBITS: Medtrack | Pharma Intelligence, 2016; Strategic Transactions | Pharma Intelligence, 2016

Exhibit 3

Most Active Biosimilar In-Licensers, 2000–16*

Notes: *2016 data are through early September. The chart includes companies that did three or more in-licensing deals.

0

5

10

15

20

25

2000 2002 2004 2006 2008 2010 2012 2014 2016*

Num

ber O

f De

als

Other ProteinAntibody

Insulinn/aTotal

Exhibit 1

Biosimilar Deal Volume By Biosimilar Type, 2000–16*

Notes: *2016 data are through early September.

n/a = not available. Data include announced, completed, and terminated deals. If a single deal crosses more than one category (antibody, insulin, or other protein), the deal is counted more than once, in each category (the exception is the total line, which only graphs unique deals per year).

0

1

2

3

4

5

6

7

8

Num

ber O

f De

als

Mabion

Coherus BioScie

nces

Epirus Biopharm

aceutic

als

Oncobiologics

Biocero

s

Momenta Pharmace

uticals

Teva

Amgen

Biocon

Innogene Kalbiotech

JCR Pharm

aceutic

als

Selexis

Celltrio

n

0

1

2

3

4

5

6

7

8

Num

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f De

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Epirus Biopharm

aceutic

als

Merck &

Co.

Stada

Allerg

an

P�zer/H

ospira

Oncobiologics

Baxalta/B

axter

Novarti

s/Sandoz

Polpharma

Exhibit 2

Most Active Biosimilar Out-Licensers, 2000–16*

Notes: *2016 data are through early September. The chart includes companies that did three or more out-licensing deals. Teva’s count includes deals by acquired entities Barr Pharma-ceuticals/Pliva.

See our comparison of biosimilar in-licenser types

http://bit.ly/2hSXhWG

READ MORE ONLINE

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❚ On the MoveRecent executive appointments in the life sciences industry

COMpaNy CHaNgEs

BISHOP, Kathie M., PhD To: Otonomy Inc., CSO (November) From: Tioga Pharmaceuticals, CSO Phone: 858-242-5200

BOGATYRENKO, Yulii To: TherapeuticsMD Inc.,

SVP, Bus. Dev. (November) From: Paratek Pharmaceuticals Inc.,

SVP, Bus. Dev. Phone: 561-961-1900

BONNY, Christophe, PhD To: Enterome Bioscience SA,

CSO (November) From: Bicycle Therapeutics, CSO Phone: +33 1 7577 27 85

CARTER, Martha J. To: Albireo Pharma Inc.,

Chief Regulatory Officer (November)

From: Aegerion Pharmaceuticals Inc., SVP, Chief Regulatory Officer

Phone: 857-415-4774

CHRISTOPHER, Richard To: iCAD Inc., EVP, CFO (December) From: Caliber Imaging & Diagnostics Inc.,

Chief Financial & Operating Officer Phone: 603-882-5200

CLOSS, Jeffrey M. To: Ancora Heart Inc.,

Pres. & CEO (October) From: Guided Delivery Systems Inc.

Pres. & CEO Phone: 408-727-1105

CROWLEY, John To: Merus BV, CFO (November) From: Charles River Laboratories

International Inc., SVP, Corp. Controller & Chief Accounting Officer

Phone: +31 30 253 88 00

DABLE, Habib To: Acceleron Pharma Inc.,

Pres. & CEO (December) From: Bayer AG, Pres.,

US Pharmaceuticals Phone: 617-649-9200

DE SAMPAÏO, Guillaume To: NovImmune SA, Global Head,

Project Mgmt. (November) From: Forward Pharma SA,

Clinical Dev. Group Phone: +41 22 839 71 41

DUKE, Christopher To: Advaxis Inc., SVP,

Chief Operating Officer (October) From: Amicus Therapeutics Inc.,

VP, Global Commercial Ops. Phone: 609-452-9813

FEENER, Edward P., PhD To: KalVista Pharmaceuticals Inc., CSO

(November) From: Joslin Diabetes Center,

Senior Investigator, Vascular Cell Biology

Phone: 857-241-3897

FUREY, John To: Spark Therapeutics Inc.,

COO (December) From: Baxalta Inc., SVP, Head,

Global Ops. Phone: 202-279-4089

❚ KATHIE BISHOPCSO, Otonomy

❚ MARTHA CARTERChief Regulatory Officer

Albireo Pharma

❚ ANNETTE CLANCYChairman, Enyo Pharma

❚ STEPHANIE KLADAKISVP, R&D, Carmell Therapeutics

❚ DOUG DELANEYChief Commercial Officer, Cynosure

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GAYNOR, Richard, MD To: Neon Therapeutics,

Pres., R&D (November) From: Eli Lilly & Co., SVP,

Global Product Dev. & Medical Affairs, Oncology

Phone: 617-337-4701

GHIGLIERI, Stephen F. To: Galena Biopharma Inc.,

EVP, CFO (November) From: MedData Inc., CFO Phone: 503-400-6610

GOESLING, David To: C3J Therapeutics Inc.,

VP, Finance & Accounting (November)

From: Consultant Phone: 310-665-2928

HALKUFF, Dawn To: TherapeuticsMD Inc.,

Chief Commercial Officer (November)

From: Pfizer PLC, SVP, Consumer Healthcare Wellness

Phone: 561-961-1900

JORN, Deb To: pSivida Corp., EVP,

Corp. & Commercial Dev. (November)

From: Valeant Pharmaceuticals, EVP, Company Chair

Phone: 617-926-5000

KENNEDY, Keith To: Veracyte Inc., CFO (November) From: MCG Capital, Pres. & CEO Phone: 650-243-6350

KLADAKIS, Stephanie, PhD To: Carmell Therapeutics Corp.,

VP, R&D (October) From: Cohera Medical Inc., VP, R&D Phone: 412-208-8033

LITTLER, Eddy To: ReViral Ltd., CEO (October) From: Domainex Ltd. Phone: +44 29 2078 1795

MCELHENY, Rick To: Clearside Biomedical Inc.,

VP, Bus. Dev. (November) From: Sarvint Technologies, SVP,

Corp. Dev. Phone: 678-270-3631

MILLS, Roger, MD To: Addex Therapeutics,

CMO (November) From: Acadia Pharmaceuticals Inc.,

EVP, Dev. & CMO Phone: +41 22 884 1552

MORL, Christopher J. To: Deciphera Pharmaceuticals LLC,

CBO (October) From: miRagen Therapeutics Inc., COO Phone: 781-209-6400

OBENSHAIN, Andrew To: bluebird bio Inc.,

SVP, Head, Europe (December) From: Shire PLC, General Mgr.,

France & Benelux Phone: 339-499-9300

O’KEEFE, Linda To: Acasti Pharma Inc.,

CFO (November) From: Consultant Phone: 450-686-4555

POWELL, Fred M. To: Antares Pharma Inc.,

SVP, CFO (October) From: Celator Pharmaceuticals Inc.,

VP, CFO Phone: 609-359-3020

STORER, Scott M. To: Momenta Pharmaceuticals Inc.,

SVP, CFO (November) From: Baxalta Inc., SVP, Finance Phone: 617-491-9700

SYMMES, Tricia To: Acerus Pharmaceuticals Corp.,

COO (November) From: Alcon Canada, General Mgr. Phone: 416-679-0771

❚ S. CHRISTOPHER LINTHWAITECEO, Fluidigm

❚ EDDY LITTLERCEO, ReViral

❚ JÖRG VOLLMERCSO, Rigontec

❚ SERGEY YURASOVSVP, Clinical Development & CMO

Immune Design

❚ NADIA WHITTLEYCEO, Arquer Diagnostics

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VAN HOOREN, Eric To: Xenikos BV,

Chief Dev. Officer (November) From: Acerta Pharma, Dir., Clinical Ops. Phone: +31 23 24 300 100

VOLLMER, Jörg To: Rigontec GMBH, CSO (November) From: Nexigen GMBH,

CEO & Managing Dir. Phone: +49 228 763701 11

WHITTLEY, Nadia To: Arquer Diagnostics Ltd.,

CEO (December) From: Tefen Management Consulting,

Partner & Managing Dir., Europe Phone: +44 191 516 6765

YURASOV, Sergey, MD, PhD To: Immune Design Corp., SVP,

Clinical Dev. & CMO (October) From: Clovis Oncology Inc., SVP,

Clinical Dev. Phone: 206-682-0645

DIrECTOrs

ALLEN, Patricia L. To: Deciphera Pharmaceuticals LLC,

Director (October) Phone: 781-209-6400

BENZ, Jr., Edward J., MD To: Deciphera Pharmaceuticals LLC,


CLANCY, Annette To: Enyo Pharma SAS,

Chairman (November) Phone: +33 4 37 70 02 19

LANGER, Dennis H., MD To: Pernix Therapeutics Holdings Inc.,

Director (November) Phone: 800-793-2145

LEUNG, Gabriel To: Pernix Therapeutics Holdings Inc.,


MAHATME, Sandesh To: Elcelyx Therapeutics Inc.,


MIAO, Graham G., PhD To: Pernix Therapeutics Holdings Inc.,


NORDEN, Greg To: Entasis Therapeutics,


PLANTS, J. Daniel To: Cutera Inc., Chairman (October) Phone: 415-657-5500

RUSSELL, Lesley To: Enanta Pharmaceuticals Inc.,


THOMAS, Thomas T. To: Opiant Pharmaceuticals Inc.,


WAHLSTRÖM, Mats To: Surefire Medical Inc.,

Chairman (November) Phone: 303-426-1222

aDVIsOrs

ANDERSON, Ken, MD To: C4 Therapeutics Inc.,

Scientific Advisor (November) Phone: 202-421-7994

EVAN, Gerard, PhD To: Avacta Group PLC,

Scientific Advisor (November) Phone: +44 844 414 0452

FISCHER, Eric, PhD To: C4 Therapeutics Inc.,


GRAY, Nathanael, PhD To: C4 Therapeutics Inc.,


KIRK, Christopher, PhD To: C4 Therapeutics Inc.,


LANE, Alfred T., MD To: Fibrocell Science Inc.,

Chief Medical Advisor (November) Phone: 484-713-6000

ROBERTS, Matthew, PhD To: ChromaDex Corp.,


prOMOTIONs

DELANEY, Douglas J. To: Cynosure Inc. New Title: Chief Commercial Officer

(November) Previous Title: EVP, Worldwide Sales Phone: 978-256-4200

ELLIOTT, Jeff To: Exact Sciences Corp. New Title: CFO (November) Previous Title: VP, Bus. Dev. & Strategy Phone: 608-284-5700

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FOUSSAT, Arnaud, PhD To: TxCell SA New Title: SVP, Corp. Dev. & Head,

External Collaborations & Alliance Mgmt. (November)

Previous Title: CSO Phone: +33 497 218 300

FRETZEN, Angelika, PhD To: Catabasis Pharmaceuticals

Inc. New Title: SVP, Product Dev. (October) Previous Title: VP, Product Dev. &

Program Mgmt. Phone: 617-349-1971

LINTHWAITE, S. Christopher To: Fluidigm Corp. New Title: CEO (October) Previous Title: Pres. & COO Phone: 650-266-6000

MCGILLIN, Frank To: NeuroMetrix Inc. New Title: SVP, Chief Commercial

Officer (November) Previous Title: SVP, GM Consumer Phone: 781-890-9989

NICHOLS, Andrew, PhD To: Catabasis Pharmaceuticals

Inc. New Title: CSO (October) Previous Title: SVP, Research &

Nonclinical Dev. Phone: 617-349-1971

SCHALOP, Lee, MD To: Oncoceutics Inc. New Title: COO (November) Previous Title: CBO Phone: 917-327-6423

SOUG, Oystein To: Targovax ASA New Title: CEO (November) Previous Title: CFO Phone: +47 21 39 88 10

rEsIgNaTIONs

DUPONT, Jakob, MD From: OncoMed Pharmaceuticals Inc.,

SVP, CMO (December) Phone: 650-995-8200

THOMPSON, Brad, PhD From: Oncolytics Biotech Inc.,

Pres. & CEO (November) Phone: 403-670-7377

ZAHND, Christian, PhD From: Molecular Partners AG,

CEO (November) Phone: +41 44 755 7700

IN MEMOrIaM

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Derived from Strategic Transactions, Informa’s premium source for tracking life sciences deal activity, the Dealmaking column is a survey of recent health care transactions listed by relevant industry segment – In Vitro Diagnostics, Medical Devices, Pharmaceuticals, and Research, Analytical Equipment and Supplies – and then categorized by type – Acquisition, Alliance, or Financing.

Strategic Transactions is updated daily with in-depth deal analysis, structural and financial terms, and links to SEC-filed contracts.

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�❚ DealmakingCovering deals made November 2016

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❚ In VItro DIagnostIcsAlliancesAllergan, T2 Biosystems develop blood-based diagnostic aimed at antimicrobial resistance

Seegene develops multiplex assays for Hologic’s Panther Fusion system

FinancingsBioPorto Diagnostics nets $2.9mm in PIPE

Invitae nets $41.4mm through follow- on offering

Public offering nets $28.2mm for Veracyte

❚ MeDIcal DeVIcesMergers & AcquisitionsSofregen acquires the SERI surgical scaffold line from Allergan

CooperSurgical acquires Smiths Medical’s Wallace IVF products for £140mm

Edwards Lifesciences offers to buy Valtech for $340mm in cash and stock

AlliancesArthrex to sell CollPlant’s Vergenix in various markets

Medikit to sell Cardiovascular Systems’s Diamondback 360 in Japan

Luqa, Uni-Bio Science sign Chinese co-promotion for dermatology products

Masimo, Philips sign joint marketing agreement, settle pending litigation; Philips pays $300mm

FinancingsBovie Medical nets $5.6mm in FOPO

Theralase Technologies to raise up to $6mm in FOPO

Xtant Medical nets $3.4mm in rights offering

Zecotek Photonics raises Cdn$300k through PIPE; adds second tranche for additional Cdn$1.1mm

❚ PharMaceutIcalsMergers & AcquisitionsAllergan acquires Chase for a possible $1bn

Celldex buys Kolltan for $62.5mm, plus earn-outs, in stock-for-stock deal

Eagle Pharmaceuticals enters biosimilars market with acquisition of Arsia Therapeutics

Karo Pharma acquires BioPhausia from Medivir for SEK908mm

Novartis exercises option to acquire Selexys for up to $665mm

Sorrento’s TNK acquires Virttu Biologics

AlliancesMediolanum licenses Acticor’s ischemic stroke candidate ACT017

Aimmune gets $145mm equity investment from new partner Nestle Health Science

EnBiotix gets antimicrobial peptides from AMP Therapeutics

BenevolentAI gets late-stage compounds from Janssen

Upsher-Smith licenses US rights to Bluepharma SA’s generic

BMS and Infinity enter Opdivo trial collaboration agreement

Nitto Denko partners siRNA fibrosis candidates with BMS

Genexine and Merck enter clinical trial collaboration for HPV-induced cancers

Vivelix licenses first candidate; gets global rights to Idera’s IMO9200

Verastem gets rights to Infinity’s duvelisib for blood cancers

Amgen, Janssen team up in trial collaboration for myeloma

Mitsubishi Tanabe gets Japanese rights to Invossa from Kolon

Leo Pharma and MorphoSys develop therapeutic antibodies for skin conditions

Orexigen grants Valeant license to sell Contrave in Australia, New Zealand

Heptares, Jitsubo work on peptides for GI conditions

FinancingsAmpliPhi nets $3.76mm via FOPO

BeiGene nets $173.9mm through public ADS sale

Bellerophon nets. $11.3mm via FOPO

Cellectar nets $8.5mm through public offering

Nutraceuticals company ChromaDex secures $5mm in debt from Bridge Bank

Cidara enters $20mm credit facility with Square 1 Bank

Flexion nets $61mm via follow-on

MorphoSys raises €115mm through private placement

Motif Bio nets $16.6mm through US IPO

Motif Bio nets $7.8mm via European PIPE

Biopharma company Omeros raises $80mm via term loan under $125mm credit facility

PDL BioPharma nets $146mm through public notes offering

Progenics gets $50mm loan from HC Royalty

Samsung BioLogics raises $1.9bn in IPO

Siga gets $35.3mm via rights offering

Spring Bank Pharmaceuticals grosses $15mm in PIPE

Synthetic Biologics nets $23.5mm via FOPO

Tesaro nets $224mm through public offering

Theratechnologies nets $Cdn15.5mm via FOPO

Tracon nets $16.3mm in follow-on offering

Xenetic Biosciences nets $9.5mm through FOPO; uplists to Nasdaq

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Financings/In Vitro Diagnostics

BIOPOrTO DIAGNOSTICS ASBioPorto Diagnostics AS (diagnostic tests and antibodies) netted $2.9mm (DKK 20.8mm) through the sale of 12.9mm new shares at a subscription price of $0.24 (DKK 1.69; 4% premium to prior 10-day trading av-erage). The company will use the proceeds to strengthen the implementation of the FDA application process and toward its overall liquidity. (Nov.)

INVITAE COrP.Invitae Corp. publicly sold 7.3mm common shares at $6 a piece for net proceeds of $41.4mm. The company develops and pro-vides diagnostic tests and testing services in the rare disease, neurology, cardiology, pediatric disease, and cancer markets. (Nov.)Investment Banks/Advisors: Cowen & Co. LLC; JP Morgan Chase & Co.

VErACyTE INC.Veracyte Inc. (molecular cytology for cancer and lung diseases) netted $28.2mm through the public sale of 5mm common shares at $6. (Nov.)Investment Banks/Advisors: BTIG LLC; Leer-ink Partners LLC

❚ MeDIcal DeVIcesMergers & Acquisitions

ALLErGAN PLCSOFrEGEN MEDICAL INC.Allergan PLC sold the SERI line of surgical scaffold products to Sofregen Medical Inc. Polaris Partners and other investors pro-vided financing to facilitate the transaction; details were not disclosed. (Nov.)SERI is an FDA-approved silk-based surgical mesh that promotes tissue regeneration by enhancing the generation of well-vascular-ized tissue during reconstructive surgery, soft tissue reconstruction, and plastic sur-gery procedures. Allergan originally gained the technology through its 2010 acquisition of Serica Technologies. (Serica was spun out of the lab of David Kaplan, PhD, and Fiorenzo Omenetto, PhD, at Tufts Univer-sity in 1998; Sofregen was founded in 2014 based on further silk-based biomaterial IP stemming from Kaplan and Tufts together with technology from the University of Pittsburgh.) Sofregen will commercialize SERI while continuing to develop its own regenerative materials based on silk fibroin (the silk from Bombyx mori silkworms); the company hopes to design products to treat combat trauma injuries, remove scars and wrinkles, reconstruct breast tissue, and for vocal cord augmentation procedures.

COOPEr COS. INC.CooperSurgical Inc.SMITHS GrOUP PLCSmiths MedicalCooperSurgical Inc. acquired the Wallace line of in vitro fertilization (IVF)/assisted reproduction technology (ART) devices and consumables from Smiths Medical for £140 ($168mm), almost six times the revenues those products brought in last year. (Nov.)The Wallace IVF/ART products are part of Smiths Medical’s specialty products sector, which makes up 8% of Smiths Medical’s revenues. Smiths Medical is divesting the Wallace line (which represents 2% of the specialty product sector’s sales) to focus on the other more profitable core segments within the specialty sector, including infu-sion therapy, vascular access, and vital care. The Wallace offerings include intracy-toplasmic sperm injection (ICSI) pipettes, the SureView and Sure-Pro brands of em-bryo transfer catheters for IVF procedures, amniocentesis needles for amniotic fluid sampling, intrauterine insemination (IUI) catheters for artificial insemination, oocyte collection products, and other gynecological instruments such as single-use speculums and PVC pessary rings (for uterine or vagi-nal prolapse). This deal further enhances and is complementary to CooperSurgical’s fertility business, which the company has been building up through the purchases of six IVF- or ART-focused firms over the past year. Investment Banks/Advisors: Gleacher & Co. Inc. (Smiths Group PLC)

EDwArDS LIFESCIENCES COrP.VALTECH CArDIO LTD.Edwards Lifesciences Corp. agreed to pay $340mm in cash and stock to acquire Valtech Cardio Ltd., a developer of devices for mitral and tricuspid valve repair and replacement. (Nov.)Edwards may also shell out up to another up to $350mm in specified earn-outs over the next ten years. Before the transaction closes, Valtech will spin off its early-stage Cardiovalve transseptal low-profile mitral valve replacement system, which Edwards has the option to acquire. Edwards gains Valtech’s CE-marked Cardioband, which consists of a reconstruction implant and transcatheter transseptal delivery system allowing physicians to repair the mitral valve with potential for performing future percutaneous or surgical valve repair and/or replacement. Valtech had also been devel-oping Cardioband for reconstruction of the tricuspid valve. Other products include the CE-marked Cardinal semi-rigid adjustable annuloplasty ring system, which enables fine-tuning of the ring size on a beating heart during mitral repair procedures. In the pipeline Valtech has V-Chordal, a surgical and interventional chord replacement sys-tem for mitral repair. Edwards is already a key player in the transcatheter aortic valve

❚ In VItro DIagnostIcsAlliances

ALLErGAN PLCT2 BIOSySTEMS INC.T2 Biosystems Inc. and Allergan PLC are teaming up to develop a diagnostic panel to detect Gram-negative bacteria and an-tibiotic resistance in patients with serious bacterial infections, including those that result in sepsis. (Nov.)Allergan will pay $4mm in milestones tied to the development of the bacterial resistance panel and an expansion of the T2Bacteria panel being developed by T2. T2 Biosystems keeps exclusive global rights to distribute any resulting products, while Allergan can opt to co-market T2’s sepsis diagnostics to hospitals using its experienced sales team. The panel will target the resistance to carbapenems, which are the last resort of antibiotics for treating serious Gram-negative infections. If successfully developed, it would be the first available blood-based test for antimi-crobial resistance.

HOLOGIC INC.SEEGENE INC.Seegene Inc. will use its multiplex PCR tech-nologies to create high multiplex molecular diagnostic assays for use on Hologic Inc.’s own molecular diagnostics platform. It will also develop and supply Hologic with real-time PCR reagents. (Nov.)Seegene will develop and manufacture multiplex assays using its own enabling technologies: DPO (Dual Priming Oligo-nucleotide; provides accurate PCR results and high PCR specificity), TOCE (confirms multiple-target genetic detection and varia-tion through qualitative test and quantita-tive analysis), and MuDT (simultaneously identifies and quantifies multiple targets in a single fluorescence channel). Hologic will have worldwide commercialization rights to the resulting tests, which will be used with Hologic’s Panther Fusion next-generation molecular diagnostics platform. The Panther is an automated sample-to-answer nucleic acid testing instrument, which eliminates the batch processing step and through a single, integrated platform. The Fusion module, once commercialized, will enable laboratory customers to add an expanded assay menu with real-time PCR capabilities in a single-unit-dose format to their existing Panther systems. Seegene has similar 2015 agreements with both Qia-gen and Becton Dickinson, for which it’s developing and manufacturing multiplex assay panels for use with Qiagen’s Rotor-Gene Q (a real-time PCR cycler molecular diagnostics system) and BD’s BD MAX (automated molecular testing workstation), respectively.

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replacement market and now will continue building up its products for transcatheter mitral valve repair. (Last year the firm paid $350mm for CardiAQ Valve Technologies and its transcatheter mitral valve implant technology.) As part of the Valtech buy, Edwards’ board authorized a new share repurchase program for up to $1bn to offset the dilution of the acquisition. Last year Heartware International offered to acquire Valtech for $368mm in stock plus earn-outs but that deal fell through in January 2016 after pressure from activist shareholder En-gaged Capital caused HeartWare back out.

Alliances/Medical Devices

ArTHrEX INC.COLLPLANT LTD.CollPlant Ltd. licensed Arthrex Inc. exclu-sive rights to distribute its Vergenix STR (soft tissue repair) matrix for treating tendinopa-thy in Europe, the Middle East, India, and certain African countries. (Nov.)Vergenix combines cross-linked plant-based recombinant human collagen (rhCollagen) with platelet-rich plasma (PRP) to stimulate tissue generation and repair and help in the healing process. When administered it acts as a scaffold to enable cell adhesion and proliferation involved in tendon healing. Fol-lowing injection, a viscous gel matrix forms to hold the platelet concentrate in place. The matrix can then release growth factors in a controlled manner with controlled biodeg-radation time for optimal healing. Arthrex is an ideal partner for CollPlant given its global presence in the orthopedics market.

CArDIOVASCULAr SySTEMS INC.MEDIKIT CO. LTD.Cardiovascular Systems Inc. (CSI) licensed Medikit Co. Ltd. exclusive rights to distrib-ute its Diamondback 360 coronary and peripheral orbital atherectomy systems (OAS) in Japan. (Nov.)CSI receives $10mm up front. Medikit is an ideal partner for CSI because of its exten-sive sales channels in Japan where it has 120 sales reps selling to more than 800 hospitals. Japan represents the second-largest market for coronary intervention procedures. Back in June, CSI submitted for Japanese approval its Diamondback 360 coronary OAS to treat severely calci-fied coronary arteries. A launch is expected during 2018. CSI plans to file for Japanese approval of the Diamondback 360 periph-eral OAS sometime in the near future. Both devices are already sold in the US.

LUQA PHArMACEUTICALSUNI-BIO SCIENCE GrOUP LTD.Under a three-year agreement, Uni-Bio Sci-ence Group Ltd. will co-promote in China Chinese spec pharma Luqa Pharmaceu-ticals’ Shanghai division’s dermatology treatments. (Nov.)

Under the alliance, which Uni-Bio has the option to renew for a two-year period, Uni-Bio will co-promote selected Luqa der-matology products to hospital, drug and retail stores, and other institutions within specified territories in mainland China. The partners could also co-market each other’s current and future therapies within the dermatology field. Luqa’s portfolio, built up through licensing deals, includes mostly aesthetics classified as medical devices such as Strataderm silicone scar treatment and Stratamark topical gel for stretch marks (both in-licensed from Stratpharma) and IaluXid (a topical anti-inflammatory to pro-mote wound healing), licensed from BMG Pharma. The addition of Luqa’s dermatology products will complement Uni-Bio’s mar-keted wound healing drugs, which include GeneTime and GeneSoft rEGF (recombinant human epidermal growth factor) for skin injury and cornea wounds, respectively.

MASIMO COrP.rOyAL PHILIPS ELECTrONICS NVMasimo Corp. and royal Philips Electronics NV have settled pending patent litigation and entered into a product integration and joint marketing partnership surrounding their com-plementary patient monitoring solutions. (Nov.)In 2014, Masimo was awarded a $467mm settlement related to Philips’ infringement of two patents regarding blood oxygen measurement systems. The current agree-ment settles that pending lawsuit and settlement, instead providing a means for the firms to work together, and for Philips to pay only $300mm to Masimo and invest in the partners’ future relationship. To-gether with its own patient monitoring and select therapy solutions, Philips will jointly market (in North America and certain Asian and European markets) Masimo’s nonin-vasive sensor technologies, including the rainbow SET pulse CO-oximetry platform, which measures dyshemoglobins and total hemoglobin concentration. Philips has also agreed to integrate rainbow and other Masimo platforms (including SedLine brain function monitoring, O3 regional oximetry, and Nomoline capnography) into its Intel-liVue bedside patient monitors.

Financings/Medical Devices

BOVIE MEDICAL COrP.Bovie Medical Corp. (electrosurgical products) netted $5.6mm in a follow-on public offering of 1.5mm shares at $4. Selling shareholders also sold an additional 1.5mm shares. The company will use the proceeds to expand its salesforce, for marketing activities and R&D, and to conduct clinical trials. (Nov.)Investment Banks/Advisors: Piper Jaffray & Co.

THErALASE TECHNOLOGIES INC.Theralase Technologies Inc. (lasers for pain, inflammation, tissue healing and

muscle/joint conditions) plans to raise up to $6mm through a follow-on public offering of 20mm units at $0.30 per unit. Each unit will consist of one common share and one war-rant to purchase a common share at a strike price of $0.375 for a period of five years. The company will use the proceeds to fund R&D for its Photo Dynamic Therapy Division and for commercialization by its Therapeutic Laser Technology Division. (Nov.)Investment Banks/Advisors: Echelon Wealth Partners

XTANT MEDICAL HOLDINGS INC.Xtant Medical Holdings Inc. (regenerative medicine and medical devices) netted $3.4mm through a rights offering of 5mm units (each unit will consist of one common share and one five-year warrant to purchase one common share at $0.90) at $0.75. Xtant had originally filed for up to 15mm units. The company will use the proceeds to support its growth strategy including increasing surgical instruments and fixation biologics inventory and for R&D and business development needs. (Nov.)Investment Banks/Advisors: Maxim Group LLC

ZECOTEK PHOTONICS INC.Zecotek Photonics Inc. (photonics technol-ogy for medical, high-tech and industrial sectors) grossed Cdn$1.4mm ($1.05mm) through a two tranche private placement offering of 4.6mm units at Cdn$0.30 (15% premium; Cdn$300k in the first tranche and an additional Cdn$1.1mm in the second tranche). Each unit in the offering entitles the holder to one common share and one warrant to purchase an additional common share at a strike price of Cdn$0.43 for a period of up to two years (subject to a four-month hold period). The company will use the proceeds to complete the transfer of technology for immediate commercializa-tion, to strengthen and maintain its IP, and for purchase order financings. (Nov.)

❚ PharMaceutIcalsMergers & Acquisitions

ALLErGAN PLCCHASE PHArMACEUTICALS COrP.Allergan PLC acquired private neurode-generative therapeutics biotech Chase Pharmaceuticals Corp. (focused improving the symptomatic treatment of Alzheimer’s disease) for up to $1bn. (Nov.)Allergan will pay $125mm up front and could provide additional regulatory and com-mercialization earn-outs of up to $875mm related to Chase’s lead compound. Chase was founded in 2007 and already has on its management team three former Allergan ex-ecutives, who were appointed within the last year. It has raised $24mm to date through backers including New Rhein Healthcare In-vestors, Edmond de Rothschild Investment Partners, Cipla Ventures, and Brain Trust Ac-

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celerator Fund. Allergan is mainly interested in Chase’s lead Alzheimer’s disease candi-date CPC201--an oral combination of done-pezil (a commonly prescribed acetylcholin-esterase inhibitor (AchEI) known to improve AD-associated cognition and behavioral symptoms) and solifenacin (an orally-active muscarinic receptor antagonist/cholinergic blocker capable of crossing the blood-brain barrier)--which completed Phase II trials for mild-to-moderate AD earlier this year. CPC201’s patented formulation is intended to counteract dose-limiting intolerability experienced with donepezil alone. Allergan expects to begin Phase III trials sometime next year. Chase also has in Phase I CPC212 and CPC250, patch formulations of an AChEI combined with a side-effect reducing drug, for AD and other neurological disease indications. The deal will enable Allergan to expand its CNS pipeline, which has 13 ongoing programs, three of which are in AD. Investment Banks/Advisors: Cowen & Co. LLC (Chase Pharmaceuticals Corp.)

CELLDEX THErAPEUTICS INC.KOLLTAN PHArMACEUTICALS INC.Celldex Therapeutics Inc. issued $62.5mm of its stock to acquire privately held Kolltan Pharmaceuticals Inc. (antibody therapies for cancer). Kolltan could also receive up to $172.5mm in earn-outs based on development, regulatory, and sales achievements. (Nov.)Kolltan is developing antibody-based drugs targeting receptor tyrosine kinases (RTKs), which are involved in the regulation of cell pro-cesses, including those related to the forma-tion of cancers. The company aims to develop treatments that overcome tumor resistance associated with currently available tyrosine kinase inhibitors, and help patients whose treatments with other therapies have failed. Its pipeline includes KTN01058, a KIT activation inhibitor in Phase I for gastrointestinal stromal tumors; KTN3379, an ErbB3 (HER3) inhibitor in-licensed from MedImmune and in Phase I for head and neck squamous cell carcinoma; and a TAM program (candidates that modulate the Tyro3, Axl, and MerTK kinases). The acqui-sition brings Celldex’s clinical-stage immuno-oncology pipeline total to seven candidates, and now includes antibodies, antibody-drug conjugates, and immune system modulators. Kolltan was spun out of the yale University School of Medicine in 2007 and raised over $133mm through four venture rounds before attempting (and ultimately withdrawing) an initial public offering in 2014. Investors include KLP Enterprises, Purdue, Deerfield Management, HBM Healthcare, and Celtic Therapeutics Holdings. Investment Banks/Advisors: Guggenheim Partners LLC (Celldex Therapeutics Inc.)

EAGLE PHArMACEUTICALS INC.ArSIA THErAPEUTICS INC.Eagle Pharmaceuticals Inc. acquired pri-vate biotech company Arsia Therapeutics Inc. for total consideration of up to $78mm

in cash, stock, and potential earn-out pay-ments. Along with the acquisition, Eagle will also establish a biologics innovation center in Kendall Square in Cambridge, MA. (Nov.)Eagle will pay $30mm at closing ($27.3mm in cash and $2.7mm in Eagle common stock) with an additional $48mm in milestones payable in the future. The acquisition is critical for Eagle as it gives the company entry into the fast growing biologics market. It is estimated that this market could reach between $20 and $26bn by 2020 with over 22 biosimilars approved by the EU and four approved in the US. Samsung BioLogics also just priced its IPO raising nearly $2bn to focus further in this burgeoning sector. Arsia was founded by MIT professors Robert Langer and Alex Kibanov PhD along with VC Polaris Partners. It’s platform technology enables subcutaneous delivery of high-dose biologics and the company already has several early-stage partnerships in place with Big Pharma. The founders have also simultaneously entered into agreements with Eagle to develop new formulations and address delivery challenges with large molecules.

KArO PHArMA ABMEDIVIr ABBioPhausia ABKaro Pharma AB paid SEK908mm ($101mm) in cash to buy Medivir AB’s commercial products division BioPhausia AB. (Nov.)Medivir and BioPhausia have been linked since 2010, when BioPhausia sold to Me-divir a portfolio of eight OTC products for $28mm. At the time, the divestment allowed BioPhausia to focus on prescription drugs. In 2011, Medivir acquired the entirety of BioPhausia for $93mm, giving Medivir a stronger commercial infrastructure. Medivir had been planning to split up the company, and initially wanted to spin off BioPhausia, which houses the commercial side (also known as the Nordic brands), into a separate publicly traded company. Instead, Medivir is now selling the division to Karo, stating that this transaction would better serve the interest of shareholders. Medivir says fol-lowing the sale, it will also have a stronger cash position, and be better equipped to concentrate on oncology R&D (the company also works in infectious disease). Karo Bio specifically gets 13 branded products that reached SEK189mm in sales during for the twelve months ending June 30, 2016. The deal does not include the 10 employees who work at BioPhausia currently. BioPhausia’s drugs cover multiple therapy areas, includ-ing CNS, respiratory, cardiology, and gas-trointestinal diseases. Karo also takes on an option that BioPhausia had as part of a 2016 licensing agreement with Trek Therapeutics for rights to preclinical hepatitis C candidate MIV802 in certain European and Nordic mar-kets. Investment Banks/Advisors: Carnegie Investment Bank AB (Medivir AB)

NOVArTIS AGSELEXyS PHArMACEUTICALS COrP.Novartis AG exercised its option under a 2012 alliance to acquire private inflam-matory disease-focused biotech Selexys Pharmaceuticals Corp. (Nov.)Selexys shareholders could potentially re-ceive up to $665mm in up-front, acquisition-related, and earn-out payments. Novartis exercised the option following the comple-tion of the Phase II SUSTAIN study of SelG1 (the subject of the 2012 deal) in sickle cell disease (SCD), a hereditary blood disorder. Specifically, the trial evaluated SelG1 in its ability to reduce vaso-occlusive pain crises, which occur when sickle-shaped red blood cells obstruct blood vessels. SelG1, an anti-P-selectin antibody, works by blocking the P-selectin adhesion molecule that causes cells to stick together, and thus aims to avert the crises. Founded in 2002, Selexys has raised to date over $26.5mm (including a $23mm 2012 Series A round in which No-vartis participated) from backers including MPM Capital, Oklahoma Life Sciences Fund, and Oklahoma Seed Capital Fund. This deal will enable Novartis to grow its hematology pipeline, which has sixteen ongoing pro-grams in clinical trials, but none yet in SCD. Selexys also had in preclinical development SelK1, an anti-PSGL-1 (P-selectin glycopro-tein ligand-1) antibody for Crohn’s disease, multiple myeloma, and other inflammatory disorders, but no development has been reported since late 2013; at the time of the 2012 collaboration, Novartis said it would spin this asset into a separate company.

SOrrENTO THErAPEUTICS INC.TNK Therapeutics Inc.VIrTTU BIOLOGICS LTD.Sorrento Therapeutics Inc.’s TNK Thera-peutics Inc. division signed a binding letter of intent to acquire Virtuu Biologics Ltd., a privately held oncology biotech. (Nov.)Virttu shareholders get $5mm in Sorrento stock up front, and another $20mm in TNK shares once TNK completes a private financ-ing of at least $50mm. (If a financing is not completed within 12 months, Sorrento will issue $20mm of its own shares to Virttu instead.) Virttu was formed in 1999 and is developing oncolytic immunotherapeu-tics. The company’s Seprehvir (HSV1716) is based on the herpes simplex virus and works by selectively killing cancer cells while also stimulating an anti-T-cell medi-ated immune response in the patient to help fight off future cancer recurrence. Modes of administration include intra-tumor and intravenous infusion. It is in Phase II trials for mesothelioma, entering Phase II for head and neck and adult brain cancers, and in Phase I for pediatric non-CNS solid tumors. Seprehvir (and next-gen Seprehvec) are highly complementary to Sorrento and TNK’s immunotherapy pipelines.

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Alliances/Pharmaceuticals

ACTICOr BIOTECHMEDIOLANUM FArMACEUTICI SrLActicor Biotech SAS and Mediolanum Farmaceutici SrL will jointly collaborate on the research and development of Acticor’s ACT017 for ischemic stroke (the occlusion of the artery delivering blood to the brain), which is the cause of 80% of all strokes and can lead to serious neurological damage and even death. (Nov.)ACT017--a fragment antigen-binding anti-body (Fab; a class of humanized monoclonal antibodies)--is in preclinical development for acute ischemic stroke indications. Under the deal, Mediolanum will provide co-funding for R&D, including an up-front payment for preclinical development and additional payments upon the start of both Phases I and II. In exchange, it will co-own resulting collaboration research and have exclusive marketing rights in two unnamed European countries. A 2013 spin-off from INSErM, Acticor is focused on the academic research by that institution’s Drs. Martine Jandrot-Perrus and Christian Gachet and Philippe Billiald, PhD, surrounding the role of therapeutic Fabs that target platelet gly-coprotein VI (GPVI; a protein identified as a receptor for collagen involved in platelet adhesion during thrombosis). Earlier this year, Acticor licensed Catalent’s GPEx mammalian cell line platform to optimize the production of ACT017. Acticor aims to create a therapy that inhibits blood clot formation and growth, without increasing bleeding risks often associated with current anti-thrombolytic and antiplatelet drugs. The company’s animal studies have thus far demonstrated efficacy and favorable risk/benefit ratios. The addition of ACT017 to Mediolanum’s pipeline complements its other vascular and neurology programs.

AIMMUNE THErAPEUTICS INC.NESTLE SANestle Health Science SANestle Health Science SA and Aimmune Therapeutics Inc. partnered to advance devel-opment and commercialization of Aimmune’s food allergy treatments. In connection with col-laboration, Nestle made a $145mm investment in Aimmune through the purchase of 7.55mm shares at $19.20 (a 16% premium); Nestle now holds a 15.12% stake. (Nov.)Aimmune’s drug development efforts center around its CODIT (Characterized Oral De-sensitization ImmunoTherapy) oral immu-notherapy platform, which involves allergen desensitization through controlled expo-sure to food proteins. AR101, the company’s first investigational project, is in Phase III trials for peanut allergy; an egg allergy candidate is in preclinical studies, along with another undisclosed program. Aside from its investment, Nestle does not gain any rights to Aimmune projects or technolo-

gies, nor does the deal include milestones or royalties. The two-year collaboration does get Nestle a seat on Aimmune’s board of directors, and allows for Nestle to provide scientific, regulatory, and commercializa-tion guidance when needed. New products and IP remain the property of Aimmune, but if the company decides to seek a partner for one of its CODIT candidates during the two-year term, Nestle gets a three-month exclusive negotiation period with Aimmune.

AMP THErAPEUTICS GMBHENBIOTIX INC.EnBiotix Inc. acquired a portfolio of antimi-crobial peptides from AMP Therapeutics GMBH. (Nov.)EnBiotix has concurrently created EnBiotix GMBH to facilitate the deal and pursue European partnerships and fundraising. The licensed assets are potent, non-toxic to human cells, and have demonstrated broad antibacterial activity, particularly against infections caused by drug-resistant bacteria. The peptides have potential as payloads for EnBiotix’s engineered phage platform. EnBiotix is teaming up with Profes-sor Ralf Hoffmann, PhD’s lab at University of Leipzig to optimize the anti-microbial peptides for various indications, initially for ventilator-associated and hospital-acquired pneumonias. (Dr. Hoffmann is a scientific co-founder of AMP.)

BENEVOLENTAIJOHNSON & JOHNSONJANSSEN PHArMACEUTICA NVJanssen Pharmaceutica NV licensed artifi-cial intelligence firm BenevolentAI exclusive global rights to develop, manufacture, and commercialize a series of clinical-stage small-molecule drug candidates and related patents for all indications. (Nov.)BenevolentAI scientists have used its technology to evaluate the potential of the compounds, which demonstrated their potential in difficult-to-treat diseases. The company expects to commence Phase IIb trials in mid-2017.

BLUEPHArMA SAUPSHEr-SMITH LABOrATOrIES INC.Upsher-Smith Laboratories Inc. licensed exclusive US marketing and distribution rights to a generic product from Portuguese company Bluepharma SA. (Nov.)The undisclosed generic competes in a therapeutic category with a US market of more than $75mm. Bluepharma retains de-velopment and manufacturing rights; it will then supply the product to Upsher-Smith, which will submit the ANDA, and exclusively market and distribute it in the US under the Upsher-Smith brand name. Although no specific product was mentioned, Blueph-arma’s generic portfolio offers medicines in cancer, and cardiovascular, CNS, infectious, metabolic, and musculoskeletal diseases. The company’s business areas include drug

delivery platforms (including oral thin-film, hot-melt, and multi-layer) for known drugs, development of generic pharmaceuticals, manufacturing of solid oral dosage forms, and contract research services. It recently invested over €15mm in nanotechnologies and oncology R&D. Just last month, Upsher-Smith licensed 20 marketed US generic products from Sandoz Inc. and prior to that signed an agreement with an unnamed pharmaco for US rights to a marketed CNS generic. This alliance with Bluepharma fur-ther expands its generics portfolio.

BrISTOL-MyErS SQUIBB CO.INFINITy PHArMACEUTICALS INC.Infinity Pharmaceuticals Inc. and Bristol-Myers Squibb Co. entered into a trial col-laboration agreement to evaluate Infinity’s Phase I cancer candidate IPI549 in combina-tion with BMS’s marketed mAb Opdivo for solid tumors. (Nov.)Infinity’s IPI549 is a PI3K gamma inhibitor in Phase I trials for non-small cell lung cancer, melanoma, and head and neck cancer. Preclini-cal studies have suggested that the compound could enhance the activity of checkpoint in-hibitors and reverse tumor resistance to such drugs by altering the immune-suppressive microenvironment, thus making it an ideal partner-drug for Opdivo, which itself is de-signed to overcome immune suppression. BMS markets Opdivo for melanoma, Hodg-kin’s lymphoma, NSCLC, and renal cancer. The drug is awaiting approval for head and neck and bladder tumors, and is in about two dozen clinical trials for a wide variety of solid and blood cancers. Once the dose-escalation portion of Infinity’s Phase I trial with IPI549 as a monotherapy is complete, the partners will begin Phase I combo studies in patients with advanced solid tumors. An expansion phase is planned to then study the combina-tion in specific solid tumors including NSCLC, melanoma, and squamous cell carcinoma of the head and neck.

BrISTOL-MyErS SQUIBB CO.NITTO DENKO COrP.Bristol-Myers Squibb Co. received an exclu-sive global license to develop, manufacture, and sell Nitto Denko Corp.’s siRNA candidates developed using vitamin A-coupled lipid nanoparticle delivery technology. The deal includes lead Phase Ib program NDL02s0201, a heat shock protein 47 (HSP47) antagonist for advanced liver fibrosis due to non-alcoholic steatohepatitis (NASH) or hepatitis C virus (HCV). (Nov.)Nitto also granted BMS an option to license ex-clusive rights to HSP47-targeting siRNAs, simi-larly formulated in the vitamin A nanoparticles, for lung fibrosis and other organ fibrosis. BMS pays $100mm up front plus clinical, regula-tory, and commercial milestones, royalties, and option-exercise payments. NDL02s0201 works by preventing collage deposition and enabling resolution of fibrosis already pres-ent in the body. The drug is formulated within

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liposomes conjugated to vitamin A for targeted delivery to hepatic stellate cells, where colla-gen is synthesized. The candidate is currently the only HSP47 antagonist in development in these indications; more common targets in the pipeline from competitors include the ileal bile acid transporter/atypical sodium-dependent bile acid transporter and farnesoid X receptor. NDL02s0201 has US fast track designations in liver fibrosis and cirrhosis secondary to NASH, and liver fibrosis and cirrhosis secondary to HCV. The transaction with Nitto follows a string of deals BMS has done in fibrosis. The Big Pharma has the option to acquire both Promedior and Galecto, anti-fibrotic drug developers, and holds exclusive rights to small-molecule fibrotic therapeutics from the California Institute for Biomedical research.

GENEXINE INC.MErCK & CO. INC.Genexine Inc. and Merck & Co. Inc. will work together to investigate the combination of Genexine’s DNA vaccine GX188E together with Merck’s cancer immunotherapy Keytru-da as a potential treatment for HPV-induced cervical cancer. (Nov.)Genexine’s GX188E is an immunostimulant in Phase II trials for cervical intraepithelial neoplasia and HPV-induced cancers caused by HPV 16/18. Keytruda, a PD-1 antagonist, is marketed for melanoma and non-small cell lung cancer, awaiting approval for head and neck cancer, and is in almost two dozen mid-to-late-stage clinical trials for a variety of solid and blood tumors. The companies believe that GX188E is complementary to Keytruda and that together the therapy could increase T-cell specific immunother-apy. During the first half of 2017, Genexine will carry out a Phase Ib/IIa trial with the combination treatment to assess safety and efficacy. The agreement could be expanded to include a future Phase III study.

IDErA PHArMACEUTICALS INC.VIVELIX PHArMACEUTICALS LTD.Idera Pharmaceuticals Inc. licensed eight-month-old Vivelix Pharmaceuticals Ltd. exclusive worldwide rights (including rights to sublicense) to develop and market IMO9200 for non-malignant gastrointestinal disorders. (Nov.)The start-up will pay Idera $15mm up front, up to $65mm in development and regulatory milestones, $75mm in sales milestones, and escalating sales royalties in the mid-single-digits to low double-digits (Strategic Trans-actions estimates 5-29%). In addition, Idera will develop potential back-up compounds for Vivelix in exchange for up to $35mm in development and regulatory milestones, $17.5mm in sales milestones, plus royal-ties in the mid-single to low double-digits. IMO9200 is an oligonucleotide-based an-tagonist of toll-like receptors 7,8, and 9. In animal models, the candidate showed activity in disorders characterized by acute and chronic inflammation in the GI tract. In

Phase I trials it was demonstrated to be safe and tolerable in healthy volunteers. Idera had been working on IMO9200 for autoim-mune diseases but discontinued develop-ment due to strategic reasons.

INFINITy PHArMACEUTICALS INC.VErASTEM INC.Infinity Pharmaceuticals Inc. granted Ve-rastem Inc. exclusive worldwide rights to develop and sell the Phase III blood cancer candidate duvelisib (IPI145). (Nov.)The deal does not include any up-front money, but Verastem will pay milestones: $6mm upon positive data from the current DUO Phase III study in relapsed/refractory chronic lymphocytic leukemia (CLL), and $22mm upon the first regulatory approval in any global territory. Duvelisib is on oral inhibitor of PI3K delta and PI3K gamma, and is a potential treatment for CLL, indo-lent non-Hodgkin’s lymphoma, and T-cell lymphomas. Infinity originally gained rights to the compound from Intellikine (since acquired by Takeda) in 2008, and was devel-oping it under an existing co-development and co-commercialization partnership with Purdue Pharmaceutical and Mundipharma. Terms of the latter deal called for Infinity to pay Purdue and Mundipharma royalties on projects that resulted from the deal, in-cluding duvelisib. (In 2014, Infinity granted AbbVie rights, but that deal ended earlier this year and all rights returned to Infinity.) Verastem is now responsible for all develop-ment and commercialization, and will pay tiered mid-to-high single-digit royalties to Infinity, and will also cover the single-digit royalties owed by Infinity to Purdue and Mundipharma. In connection with the licensing, Infinity announced a corporate restructuring plan that will cut 19 positions across the company (or about 54% of the company), including elimination of the COO position that was held by Sujay Kango; he will leave in January.

JOHNSON & JOHNSONJanssen Biotech Inc.AMGEN INC.Onyx Pharmaceuticals Inc.Janssen Biotech Inc. and Amgen Inc.’s Onyx Pharmaceuticals Inc. entered into a trial collaboration agreement to evaluate the efficacy and safety of Janssen’s Darzalex (daratumumab) in combination with Onyx’s Kyprolis carfilzomib and dexamethasone as a treatment for cancer. (Nov.)Darzalex is a CD38 antagonist marketed for multiple melanoma but also in Phase II trials for lymphoma. (It received FDA approval in November 2015.) The proteasome inhibitor Kyprolis is also sold for melanoma but is un-dergoing Phase II development in leukemia, lymphoma, mesothelioma, and renal, ovar-ian, and lung cancers. Dexamethasone is a corticosteroid that prevents the release of sub-stances in the body that cause inflammation. The Phase III combination trial will determine

whether or not daratumumab in combination with carfilzomib and dexamethasone improves progression-free survival compared to carfil-zomib and dexamethasone alone in multiple myeloma patients who have received one to three prior therapies. The trial should com-mence in 2017. Under a previous partnership, Janssen and Amgen are conducting a Phase I study of daratumumab in combination with several multiple myeloma therapies including carfilzomib.

KOLON LIFE SCIENCE INC.MITSUBISHI CHEMICAL HOLDINGS COrP.Mitsubishi Tanabe Pharma Corp.In the largest single-territory deal by a South Korean biopharma company, Kolon Life Science Inc. licensed Mitsubishi Tanabe Pharma Corp. exclusive rights to develop and commercialize the osteoarthritis gene therapy Invossa in Japan. (Nov.)Mitsubishi will pay Kolon $24mm up front, up to $410mm in development, regulatory, and commercial milestones, and double-digit sales royalties. Mitsubishi will pay for all costs of clinical trials and commercialization in Japan, while Kolon will supply the finished product. Invossa is the world’s first cell-me-diated gene therapy for OA. TissueGene Inc. discovered the drug and licensed Kolon Asian rights in 2009. Invossa is comprised of donor cartilage cells that have been genetically modified to produce the therapeutic growth factor TGF-beta1, which induces cartilage regeneration in OA patients. Unlike current OA therapies that just treat the symptoms it also can treat the underlying disease itself. Invossa is administered via intra-articular injection and can effectively control pain for a minimum of one to two years per injection and delay disease progression. Clinical trials have been completed in Korea and US Phase III studies are expected in Q2 2017. The drug should reach the Japanese market around 2022 to 2023.

LEO PHArMA ASMOrPHOSyS AGLeo Pharma AS and MorphoSys AG will work together to develop new therapeutic antibodies for skin diseases. (Nov.)MorphoSys will use its Ylanthia 100bn-plus fragment antigen-binding (Fab) antibody library to generate fully human antibodies against multiple targets selected by Leo. MorphoSys conducts all discovery and pre-clinical work, and Leo will take over clinical development and sales of compounds in all indications excluding cancer. (For skin cancer applications, MorphoSys gets an option to co-develop and, in Europe only, co-promote.) Mor-phoSys gets R&D funding and up to €111.5mm ($123mm) in development, regulatory, and sales milestones per candidate, plus royalties. (If the deal is expanded to include other cancer indications aside from skin, MorphoSys will have certain development and commercializa-tion options.) The Ylanthia antibody technol-ogy is being used by MorphoSys in other drug

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discovery partnerships including alliances with Novartis, Galapagos, Heptares, Merck Serono, and most recently MD Anderson Cancer Center.

OrEXIGEN THErAPEUTICS INC.VALEANT PHArMACEUTICALS

INTErNATIONAL INC.Orexigen Therapeutics Inc. licensed Vale-ant Pharmaceuticals International Inc. rights to commercialize its obesity therapy Contrave (naltrexone HCl/bupropion HCl extended release) in Australia and New Zealand. (Nov.)Valeant will obtain regulatory approvals and handle all commercialization activities. Orexigen will supply Contrave to Valeant in exchange for an agreed transfer price. Vale-ant will also shell out potential payments tied to sales milestones. Regulatory filings are expected in Australia and New Zealand in H1 2017. Just three months ago Orexigen licensed Valeant rights to commercialize and distribute Contrave in Canada, and back in March Valeant received rights in 19 countries in Central and Eastern Europe, where the drug is sold as Mysimba.

SOSEI GrOUP COrP.Heptares Therapeutics Ltd.JITSUBO CO. LTD.Sosei Group Corp.’s subsidiary Heptares Therapeutics Ltd. and Sosei affiliate Jitsubo Co. Ltd. are teaming up to develop peptides targeting a discovery-stage G protein-cou-pled receptor (GPCR) implicated in severe gastrointestinal diseases. (Nov.)Jitsubo will apply its Peptune peptide modi-fication technology and Molecular Hiving peptide manufacturing technology and medicinal chemistry tools to a GPCR target selected by both Jitsubo and Heptares. Hep-tares contributes its StaR stabilized receptor platform to look into the 3D structure of the receptor at the atomic level. Under the col-laboration Heptares gets rights to develop and commercialize resulting peptides and will pay Jitsubo milestones and sales royal-ties. Through a 2014 deal, Sosei acquired a majority stake in Jitsubo, but in a transaction concurrent with this alliance, Sosei reduced its ownership in Jitsubo to 43.4%.

Financings/Pharmaceuticals

AMPLIPHI BIOSCIENCES COrP.Infectious disease-focused AmpliPhi Biosci-ences Corp. netted $3.76mm through the public sale of 5.3mm common shares at $0.75 each. The company also issued the same number of five-year warrants to buy one share exercisable at $0.75. (Nov.)Investment Banks/Advisors: Griffin Securities Inc.; Roth Capital Partners

BEIGENE (BEIJING) CO. LTD.Less than a year after completing its $147mm IPO, immuno-oncology firm BeiGene (Beijing)

Co. Ltd. netted $173.9mm through a follow-on public offering of 5.78mm ADSs at $32 apiece. (Selling stockholders also sold 469k ADSs.) Each ADS represents 13 ordinary shares, for a total of 75mm shares. Proceeds will support continued pipeline development, including Phase I trials of BGB311 (BTK inhibitor for B-cell malignancies); BGBA317 (PD-1 antagonist for solid and blood cancers); and BGB290 (PARP inhibitor for solid tumors). (Nov.)Investment Banks/Advisors: Cowen & Co. LLC; Goldman Sachs & Co.; Morgan Stanley & Co.; Robert W. Baird & Co. Inc.; William Blair & Co.

BELLErOPHON THErAPEUTICS INC.Bellerophon Therapeutics Inc. (develop-ing drugs and devices for cardiopulmonary diseases) netted $11.3mm through a follow-on public offering of 17.1mm Class A units at $0.70. Each unit consists of one common share and a five-year warrant to buy a share at an exercise price of $0.80. Any purchasers owning over 4.99% after the offering can opt to purchase 3,000 Class B units. (Each would consist of one Series A convertible preferred share valued at $1,000 and convertible into common shares at $0.70, together with the equivalent number of warrants as would have been issued to the purchaser had they purchased Class A units based on the public offering price.) (Nov.)Investment Banks/Advisors: HC Wainwright & Co.

CELLECTAr BIOSCIENCES INC.Oncology therapeutics firm Cellectar Bio-sciences netted $8.5mm through its latest public offering. Investors bought 1.6mm common shares (including the overallot-ment) at $1.50, and buyers whose purchase of common shares would result in their ben-eficial ownership exceeding 4.99% bought 68 shares of Series A preferred shares at $100k per share. (The preferred shares convert into 66,667 common.) All investors also received five-year warrants to purchase 800k shares at $1.50. (Nov.)Investment Banks/Advisors: Aegis Capital Corp.; Ladenburg Thalmann & Co. Inc.

CHrOMADEX COrP.ChromaDex Corp. (nutraceuticals and OTC products) raised $5mm in debt funding from Bridge Bank. The company will use the funds for future growth and to expand its proprietary ingredient business. (Nov.)

CIDArA THErAPEUTICS INC.Square 1 Bank provided Cidara Therapeutics Inc. (anti-infectives and immunotherapies) with a $20mm credit facility. Cidara will use the funds for ongoing development of its Phase II CD101 and preclinical CD201 for fungal and multi-drug resistant bacterial infections. (Nov.)

FLEXION THErAPEUTICS INC.Flexion Therapeutics Inc. (focused on devel-oping therapies for musculoskeletal condi-tions) netted $61mm through the public sale

of 3.6mm common shares at $18 each. The company will use some of the proceeds to manufacture and commercialize its osteo-arthritis drug Zilretta, should the product receive approval. (Nov.)Investment Banks/Advisors: BMO Financial Group; RBC Capital Markets; Wells Fargo Securities LLC

MOrPHOSyS AGMorphoSys AG (therapeutic antibodies) raised €115mm ($124mm) through the pri-vate sale of 2.6mm new shares at €44 (a 5% premium) to institutional North American and European investors. The company will use the money for development activities, including the advancement of MOR208, an anti-CD19 antibody, into a pivotal Phase III trial for diffuse large B-cell lymphoma. (Nov.)Investment Banks/Advisors: Deutsche Bank AG; JP Morgan Chase & Co.; Trout Capital LLC

MOTIF BIO PLCInfectious disease-focused Motif Bio PLC netted $16.6mm through its initial public offering on the Nasdaq. The company sold 48.8mm common shares at $0.35 each. (The shares were issued in the form of 2.4mm American Depositary Shares and five-year warrants to purchase 1.2mm more ADSs with each ADS equal to 20 common shares.) (Nov.)Investment Banks/Advisors: HC Wainwright & Co.

MOTIF BIO PLCMotif Bio PLC (infectious disease therapies) netted $7.8mm through a PIPE financing of 22.9mm common shares at $0.35 each (a 19% discount) to fund Phase III trials of iclaprim for acute bacterial skin and skin structure infection. The company concurrently netted $16.6mm through its IPO in the US. (Nov.)Investment Banks/Advisors: Northland Securities; Zeus Capital Ltd

OMErOS COrP.Omeros Corp. (small-molecule and protein therapeutics for variety of indications) raised $80mm through a term loan with health care investment fund CRG LP. The company used $76mm of the proceeds to repay part of its prior credit facility. The current facility has a six-year term with a minimum of four interest-only payments (can be extended to maturity). Remaining funds available under the $125mm credit facility are up to $25mm through September 19, 2017, and up to an additional $20mm through March 21, 2018. (Nov.)

PDL BIOPHArMA INC.PDL BioPharma Inc. (monoclonal antibody therapies for cancer and immune diseases) netted $146mm through the public sale of $150mm principal amount of its 2.75% senior notes due December 2021. The notes convert to common at 262.2951 shares per $1k principal amount purchased, or $3.81 per share. (PDL’s stock averaged $3.31 at the time of the sale.)

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The company will use the majority of the pro-ceeds to repurchase $120mm of its outstanding 4% senior convertible notes due 2018. (Nov.)Investment Banks/Advisors: Piper Jaffray & Co.; RBC Capital Markets; Roth Capital Partners

PrOGENICS PHArMACEUTICALS INC.Progenics Pharmaceuticals Inc. has se-cured a $50mm term loan agreement with HealthCare Royalty Partners to be repaid from royalties related to the sales of Relis-tor (methylnaltrexone bromide) injection and tablets for advanced opioid-induced constipation for whom laxative therapy has failed. (The loan has a maturity date of June 30, 2025.) Under a February 2011 deal, Progenics licensed Salix Pharmaceuticals (now part of Valeant) exclusive global rights (except in Japan) to the drug. Progenics will use the funds to launch its ultra-orphan radiotherapeutic candidate Azedra. (Reg-istrational topline results are expected in early 2017.) Other proceeds will advance the company’s pipeline of prostate cancer imaging agents and therapeutics. (Nov.)

SAMSUNG ELECTrONICS CO. LTD.Samsung BioLogicsSamsung BioLogics (Samsung Electronics Co. Ltd.’s drug manufacturing arm) raised $1.9bn in its initial public offering of 16.5mm shares at 136,000 won per share (priced at top of the range) on Korea’s KOSPI (Korea Composite Stock Price Index). The IPO values the company at nearly $7.9bn and is the third-largest IPO in South Korea’s history. (Nov.)

SIGA TECHNOLOGIES INC.Siga Technologies Inc. (developing prod-ucts for biothreats) grossed $35.3mm through a fully subscribed rights offering of 23.5mm common shares at $1.50 each. The company will use the proceeds to satisfy remaining payments due to PharmAthene. (The Delaware Supreme Court said Siga was liable for breach of its obligation under both a bridge loan agreement and 2006 merger agreement with PharmAthene.) (Nov.)

SPrING BANK PHArMACEUTICALS INC.Spring Bank Pharmaceuticals Inc. (therapeu-tics for viral infections, cancer and inflamma-tory diseases) grossed $15mm in its first private placement since its IPO six months ago. (Nov.)Investment Banks/Advisors: William Blair & Co.

SyNTHETIC BIOLOGICS INC.Synthetic Biologics Inc. (therapeutics focused on the gut microbiome) netted $23.5mm through the follow-on public of-fering of 25mm common shares at $1 each. The company also issued warrants to buy another 50mm common shares. The stock and warrants will be sold in combination, with two warrants (a Series A and Series B) to purchase one share of common stock for each one share bought. The four-year Series A warrants are exercisable at $1.43, and the Series B warrants have an exercise

price of $1.72 per share until December 31, 2017. (Nov.)Investment Banks/Advisors: Cantor Fitzger-ald & Co.

TESArO INC.Tesaro Inc. (cancer drug development) netted $224mm through the public sale of 1.75mm common shares at $135 per share. Proceeds will fund pipeline development and general corporate purposes. Earlier this month, Tesaro announced that it completed the rolling NDA submission for niraparib, a PARP inhibitor indicated as a maintenance therapy for patients with platinum-sensi-tive, recurrent epithelial ovarian, fallopian tube, or primary peritoneal cancers. (Nov.)Investment Banks/Advisors: Citigroup Inc.; Credit Suisse Group; FBR & Co.; Guggen-heim Partners LLC; Leerink Partners LLC; Raymond James & Associates Inc.; Robert W. Baird & Co. Inc.; SunTrust Banks Inc.; Wedbush PacGrow Life Sciences; Wells Fargo Securities LLC

THErATECHNOLOGIES INC.HIV-focused Theratechnologies Inc. netted $Cdn15.5mm ($11.5mm) through the public of-fering of 5.3mm common shares at $Cdn3.10. The company will use the proceeds for the po-tential US and Canadian launch of ibalizumab (licensed from TaiMed Biologics earlier this year); to fund the qualification for a second supplier of its HIV-associated lipodystrophy product Egrifta; develop an F4 single vial for-mulation of Egrifta; and for potential licensing deals and or/acquisitions. (Nov.)

TrACON PHArMACEUTICALS INC.Tracon Pharmaceuticals Inc. (therapies for cancer, ophthalmic and fibrotic diseases) netted $16.3mm through the sale of 3mm common shares (including full exercise of all 394mm over-allotment shares) at $5.75 through a follow-on public offering. The com-pany will use the proceeds to pay for ongoing and planned development of TRC105 (endoglin antibody being developed for cancers and wet AMD), including for a planned Phase III trial in angiosarcoma, and for development of other pipeline products including TRC205 (lgG4 endoglin antibody in preclinical development for fibrotic diseases). This is the first financing Tracon has undertaken since its $33.5mm IPO back in early 2015. (Nov.)Investment Banks/Advisors: BTIG LLC; Jef-feries & Co. Inc.; Stifel Nicolaus & Co. Inc.

XENETIC BIOSCIENCES INC.Xenetic Biosciences Inc. (formerly Lipoxen; developing next-gen biologics and orphan oncology treatments) netted $9.5mm through the public sale of 2.4mm units at $4.125 apiece. The company also an-nounced that its stock will uplist from the OTCBB to Nasdaq concurrent with the clos-ing of the offering. (Nov.)Investment Banks/Advisors: Ladenburg Thalmann & Co. Inc.

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