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Feeding the Pipeline III:Re-Defining Opportunity Value in Late Stage Licensing
Ed Saltzman Ed Saltzman President President Defined HealthDefined HealthSeptember 23, 2002September 23, 2002
“There hasn’t been a true blockbusterintroduced since 1999, when Merck’sarthritis drug Vioxx was unveiled. It was the last in a string of successesduring that decade, including Lipitorfor high cholesterol, Celebrex forarthritis, and Viagra for erectile dysfunction.” Associated Press 4/7/02
“King Pharmaceuticals Reports Solid Revenue Growth for Second Quarter 2002 of 37 Percent to $282.5 Million and Net Earnings Growth of 36 Percent to $77.1 Million, Excluding Special Charges.”
The Kinks In Genentech's Pipeline The biotech giant has shrugged off breast-cancer drug Avastin's
disappointing clinical trials. Can investors afford to be as sanguine? It hasn't been the best of years for Genentech. Pipeline problems were already
hurting its stock price when, on Sept. 9, the biotech giant announced that Avastin, its much-hyped cancer drug, hadn't produced the desired results in tests on breast-cancer patients...Shares have fallen 43%, to around $31, year-to-date.
The stock is hanging tough largely because of Genentech's golden reputation and solid growth attributable to strong-selling cancer drugs such as Rituxan and Herceptin. But Wall Street is now asking for proof that the company can deliver the 25% average annual earnings it has led investors to expect through 2005. "We're hitting a critical stage," says Kris Jenner, health-care analyst at T. Rowe Price. "There's plenty of reason to be optimistic, but the investment community is looking for positive news from [Genentech's product] pipeline." http://www.businessweek.com/bwdaily/dnflash/sep2002/nf20020919_6013.htm
Press Release Genzyme General (GENZ) Revises Financial Guidance
For Third Quarter And Full Year; Hurt By Kidney Drug Sales
CAMBRIDGE, Mass., Sept. 16 /PRNewswire-FirstCall/ -- Genzyme General...today lowered its financial guidance for the third quarter of 2002 and for the full year based on reduced revenue expectations for Renagel(R) (sevelamer hydrochloride). The revised expectations for the product reflect slower-than-expected end-user growth and the continuation of Genzyme's program to reduce wholesaler inventories.
"While the underlying demand for Renagel has been growing at a rate of approximately seven percent per quarter this year, the next acceleration of the product's adoption rate has not yet occurred," said Henri A. Termeer, chairman and chief executive officer of Genzyme Corp.
According to Stelios Papadopoulos, managing director of investment banking at SG Cowen Securities Corp., companies built on technology platforms are "not viable as businesses" over the long term. The value base just can't be sustained.
"They can be acquired by a bigger enterprise or they can lose favor with investors and become inconsequential." And, Papadopoulos added, "All these scenarios might happen.“ -Signals Magazine 8/14/01
PDI Announces Termination of GlaxoSmithKline Fee for Service Contract Sales Program
…The decision to end our fee for service contract with PDI is not a function of any performance related issue” stated Jim Daly, Vice President and General Manager, Respiratory and Anti-Infectives…If termination occurs as contemplated, PDI's projected 2001 consolidated revenue would be reduced by approximately $45 million. Projected 2001 earnings per share would be reduced by approximately $0.35 to $.40. The contract cessation will have a minimal effect on PDI's results for the first quarter of 2001. Charles T. Saldarini, Vice Chairman and Chief Executive Officer stated, "We are disappointed by GlaxoSmithKline's decision to exercise its right to terminate our contract without cause. We have a longstanding relationship with them, but clearly changes within the merged companies have triggered a reduction in the use of traditional contract sales services. We will continue to concentrate on maximizing our relationship with GlaxoSmithKline through the innovative types of commercial partnering we executed through our LifeCycle Ventures unit and look forward to exploring future business opportunities with GlaxoSmithKline." Commenting further on the development, Saldarini added, "This decision underscores the importance of the direction we are taking towards full scale commercial partnering. Our decision to invest in the LifeCycle Ventures unit and our early success in offering both extension services and launch services positions us well for continued growth and long term shareholder value."
“Let’s acquire another one of those under-promoted, non-strategic 90% gross margin products rotting in the basement of one of those big pharma companies.”
“Let’s get a quid from pharma -- you know, one of those currently marketed <$100 million drugs that fits in with our strategic focus. They have tons of them to give up.”
“Let’s be a drug discovery company! Oh, but in the meantime, let’s go acquire one of those currently marketed <$50 million drugs that will help us find our strategic focus!”
“Let’s do another gain share deal on one of those under-promoted, non-strategic 90% gross margin products rotting in the basement of one of those big pharma companies!”
• So, we already know there are not very many blockbusters out there. Our business plan calls for acquiring those reams of “non-strategic” products hiding in the basements of big pharmacos.
“…This funding will enable Ovation to acquire under-promoted branded pharmaceutical products that can benefit from increased sales and marketing efforts and creative life cycle management. Opportunities to acquire these products have been created by consolidation in the pharmaceutical industry, since many products of merged and acquired companies no longer meet the sales volume or strategic objectives of the newer and larger firms…”4/24/2002 www.gtcr.com
“…But TEAMM does have several other strengths -- including a growing revenue stream, an experienced team of managers, and a business plan tightly focused on leveraging drugs that they believe have been under-promoted by other companies. TEAMM gains the rights to license or co-promote drugs (as it has to three so far) from other companies then uses its own aggressive sales organization to promote those sales to primary care practitioners…”
About ESP Pharma, Inc. ESP (Excellence in Specialty Pharmaceuticals) Pharma is dedicated to helping physicians improve patient outcomes in the acute care setting through the acquisition, development and marketing of specialty pharmaceuticals. Launched by experienced pharmaceutical industry executives, ESP Pharma focuses on acquiring and enhancing the marketing of approved specialty therapeutics and acquiring late-stage development drugs to advance through clinical studies into the market.www.apax.com
The Simpler MathThe Non-Strategic Marketed Product InventoryDefined Health Analysis:• Top 15 Pharmacos • Products with sales < $100 Million• Approved for sale in the US• Patent life for 3+ years• Launch date prior to 1997 (to omit newly launched
• Late stage licensing, as spectacularly successful as it has been in many Big Pharma companies, cannot continue to shore up a collapsing blockbuster business model. Too many big pharmas have become over-dependent on licensing, especially late stage licensing.
Re-Defining Opportunity Value in Late Stage Licensing:
• Late stage licensing, as spectacularly successful as it has been in many Big Pharma companies, cannot continue to shore up a collapsing blockbuster business model. Too many big pharmas have become over-dependent on licensing, especially late stage licensing.
• Clearly, most, if not all, pharma will find it necessary to more aggressively pursue earlier stage opportunities.
Re-Defining Opportunity Value in Late Stage Licensing:
Licensing Earlier – Much Earlier! “But you’re right in the sense that there are
fewer opportunities in the late stage. There’s more Big Pharmas out there trying to get them; and there are fewer Big Pharmas willing to license to us...I think we’ll do a lot more early stage licensing—as early as first-in-human.”
Peter Corr Head R&D, Pfizer
In-Vivo, September 2002, Pfizer R&D: The Biggest Pharmaceutical Experiment
GlaxoSmithKline and Bayer announce world-wide co-promotion agreement for vardenafil to treat erectile dysfunction
Dr. David R. Ebsworth, General Manager of Bayer's global Pharmaceuticals Business Group explained, "vardenafil will allowus to establish ourselves in a market with dynamic growth - the market for the therapy of erectile dysfunction. There is no doubt that this is a highly competitive market. But equally, I have nodoubt that we will be able to offer an excellent product for mensuffering from impaired erectile function and that together with our co-promotion partner, we will ensure the market presence necessary for success with vardenafil."
Press Release Boehringer Ingelheim, Pfizer to Jointly Market Once-A-
Day Spiriva® for Chronic Obstructive Pulmonary Disease INGELHEIM, GERMANY, AND NEW YORK, April 11, 2001 -
Boehringer Ingelheim and Pfizer Inc announced today that they have entered into a long-term worldwide agreement to jointly market Spiriva® (tiotropium), a novel once-a-day inhaled treatment for Chronic Obstructive Pulmonary Disease (COPD), which includes chronic bronchitis and emphysema. "We're very pleased to be working with Pfizer in co-promoting
Spiriva®," said Prof. Rolf Krebs, Chairman of the Board of Managing Directors at Boehringer Ingelheim. "Through this agreement, we gain a strong and experienced partner who will help increase awareness of the disease and of the significant patient benefits that this novel compound delivers."
Press Release ALTANA and Pharmacia to collaborate in Development and
Commercialisation of Respiratory Disease Product Candidate “We are enthusiastic with this landmark agreement between ALTANA Pharma and
Pharmacia concerning development and commercialization of Roflumilast”, said Dr. Hans-Joachim Lohrisch, Member of ALTANA’s Management Board and CEO and President of ALTANA Pharma. “Our companies have complementary strengths including strong clinical development capabilities and a track record of successful sales and marketing partnerships. In addition the strong presence of Pharmacia in the primary care settings in the United States make this partnership the right one for us to support our US business strategy.”
“We are very pleased to have been selected by ALTANA Pharma to collaborate in the development of this exciting product candidate for asthma and COPD”, said Göran Ando, M.D. Executive Vice President and President Research & Development, Pharmacia Corporation. “Roflumilast enhances our near-term product flow and provides us an opportunity to leverage our sales and marketing strength in particular with our primary care customers.”
Eli Lilly Press ReleaseLilly and Amylin to Collaborate on Potential Breakthrough Diabetes Treatment (Friday, September 20, 2002)If Approved, Phase III Compound, AC2993, Would Represent the First of the Next-Generation Therapies for People With Type 2 Diabetes
Eli Lilly and Company (NYSE: LLY) and Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN), announced today that they have signed a global agreement to collaborate on the development and commercialization of Amylin's compound AC2993 (synthetic exendin-4), a potential new treatment for type 2 diabetes that, if approved, could represent the first of a new class of compounds which have similar actions to GLP-1 (glucagon-like peptide-1). AC2993 is currently in Phase III clinical trials with a submission to the U.S. Food and Drug Administration anticipated as early as 2004.
Amylin is committed to discovering, developing and commercializing innovative new medicines to improve the lives of people with diabetes. This collaboration with Lilly is a significant step for Amylin and should accelerate our ability to achieve this goal," said Joseph C. Cook, Jr., chairman and chief executive officer for Amylin. "Lilly's leadership in the development and commercialization of innovative diabetes therapies makes them an ideal partner to maximize the global potential of AC2993."
Genta and Aventis Enter Worldwide Partnership to Develop and Commercialize GenasenseTM
Berkeley Heights and Frankfurt, Germany April 29, 2002 – Genta Incorporated (NASDAQ: GNTA) and Aventis (NYSE: AVE) announced today that they have entered into an agreement to jointly develop and commercialize GenasenseTM (G3139), Genta’s lead antisense compound. Genasense is currently in multiple Phase 3 clinical trials that test its ability to enhance the effectiveness of chemotherapy in patients with both hematologic cancers and solid tumors.
“This collaboration brings together world-class leadership in oncology product development,” stated Raymond P. Warrell, Jr., M.D., Chairman and CEO of Genta. “Having followed the terrific work that Aventis has conducted with its leading oncology drug (Taxotere®), we believe this new partnership is perfectly poised to maximize the blockbuster potential of Genasense on a worldwide basis. Genta’s expertise in hematologic oncology, both in development and marketing, will be a key factor in the ultimate success of the product.”
• Please, no more development-challenged specialty pharmaceutical companies!
• As more big pharmas and big biotechs move towards developing strong specialist therapeutic franchises, today’s “specialty pharmaceutical “ companies will be forced to broaden their business model– Becoming true specialist franchise players to compete with
larger pharmacos for development of stage licensing opportunities from biotechs and ex-US small and mid-sized pharmas
– Accepting development risk as well as commercial risk– Bring greater value to licensor than a field force