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Brief View of the Latest Healthcare Industry_Issue10

May - June, 2016

Visium’s Valvani Charged With Insider Trading on FDA Leaks

U.S. Attorney Preet Bharara in Manhattan charged Sanjay Valvani of Visium Asset Management LP of fraudulently making $25 million by gaining advance word about U.S. Food and Drug Administration approvals of generic drug applications from 2005 to 2011. The case is one of the biggest insider trading cases since a 2014 court ruling made it more difficult for U.S. prosecutors to pursue traders and prove them guilty. Prosecutors assert that Valvani obtained inside information from consultant Gordon Johnston, who had contacted a former colleague and friend at the FDA. Valvani subsequently passed a portion of this information to Christopher Plaford, then a Visium portfolio manager, who made his own illegal trades. Johnston and Plaford have pleaded guilty to related charges and are cooperating with prosecutors. Stefan Lumiere, another former Visium portfolio manager, was charged with securities fraud, wire fraud and conspiracy, and freed on $1 million bond, but did not enter a plea. Valvani pleaded not guilty to five counts including securities fraud, wire fraud and conspiracy and was freed on $5 million bond.

Brexit spells upheaval for EU and UK drug regulation

Britain’s vote to withdraw from the European Union, known as “Brexit,” spells uncertainty for drug companies as the London-based European Medicines Agency (EMA) is expected to have to relocate. Industry executives are concerned that the upheaval of the EMA, which has overseen pan-European drug approvals since 1995 from its home in London, could complicate the EU’s drug approval process. There is also a concern over how Britain will domestically regulate drugs going forward. While the Brexit is not expected to negatively impact profits for global drug manufacturers, many scientists are concerned that funding and collaboration for academic research, which has been well supported by the EU in recent decades, will now be jeopardized.

Hunting growth, Samsung races to get up to speed on biosimilar drugs

With four-year-old Bioepis, South Korea’s Samsung Group hopes to offset a slowing smartphone market and capture the potentially lucrative biosimilars market, which is estimated to generate $26.6 billion global revenue by 2020 from $2.6 billion in 2014. Fixated on speed, Bioepis took only four years of development, roughly two times faster than most biosimilars that come to market, to launch a biosimilar version of Enbrel, Amgen’s blockbuster rheumatoid arthritis drug, earlier this year. Bioepis has not shied away from taking risks, including mass production ahead of clinical trials, and plans to make a U.S. initial public offering over the next few years. With large pharmaceutical companies like Pfizer dipping into the biosimilar market, Samsung must continue its large-scale investment in Bioepis to succeed.

U.S. to invest $200 million to shorten organ transplant wait lists

The U.S. government plans to invest $200 million to help shorten the waiting list for patients waiting for organ transplants. The investment will be led by the Department of Defense, and is designed to support technologies aimed at repairing and replacing cells and tissues. More than $160 million will go to a new Advanced Tissue Biofabrication Manufacturing Innovation Institute to help develop next-generation manufacturing techniques for cell therapies and $7 million will be earmarked for awards to small businesses working to advance the science of tissue preservation. The funding comes at an important time; more than 120,000 people in the United States are currently on a donor waiting list and just last year, the U.S. saw a record of more than 30,000 transplants.

House Republicans unveil healthcare alternative to Obamacare

Republicans in the U.S. House of Representatives recently introduced a proposal challenging President Barack Obama’s signature 2010 Affordable Care Act. The proposal, part of a broader effort by House Speaker Paul Ryan to maintain control of both the House and the Senate before the upcoming November 8 presidential elections, criticizes Obamacare for limiting patients’ choices, increasing consumer costs, and burying employers and health care providers under new regulations. Although it includes long-held Republican proposals such as allowing consumers to buy health insurance across state lines, expanding health savings accounts, and giving block grants to states to run Medicaid programs for the poor, the alternative plan keeps some of Obamacare’s popular provisions, including not allowing people with pre-existing conditions to be denied coverage and permitting children to stay on their parents’ coverage until age 26. While Democrats have dismissed Ryan’s proposals as merely trite ideas, industry groups remain ready to work with both parties to improve access and affordability for consumers, as the elections have yet to happen.

Pfizer completes $5.2bn acquisition of Anacor

Pfizer has completed its acquisition of all outstanding common stock shares of the Silicon Valley biotech group Anacor for $99.25 per share, equating to a total deal value of about $5.2 billion. Through this acquisition, Pfizer has secured access to the non-steroidal topical PDE4 inhibitor crisaborole, a treatment for mild-to-moderate atopic dermatitis that is currently being reviewed by U.S. regulators. A decision is expected in by January 7 of 2017 and Pfizer believes the drug could achieve at least $2 billion a year if it makes it to market; it is estimated that up to 25 million people in the U.S. suffer from atopic dermatitis.$5.2bn_acquisition_of_anacor_1049226

Shire, Baxalta Complete $32B Merger

Shire has completed its $32 billion merger with Baxalta, a biopharmaceutical business focusing on treatments for orphan diseases and underserved conditions in hematology, immunology, and oncology. Baxalta, which was spun off by Baxter International in 2015, will now be an indirect wholly-owned subsidiary of Shire. Shire, which currently has products in gastrointestinal/endocrine diseases, hereditary angioedema, neuroscience, and lysosomal storage diseases, maintains that this merger has made it the global market leader in rare diseases, with the number one rare diseases platform based on both revenue and pipeline programs. It projects that the combined company will generate approximately 65% of its total annual revenues, which is forecasted to rise to more than $20 billion by 2020. Within the next three years, Shire also plans to cut more than $500 million in costs by increasing efficiency, scaling up of the combined business, aligning Baxalta programs to Shire’s lean operating model, and optimizing the combined R&D portfolio.

Shire picks up two breakthrough badges for rare disease drugs

U.S. regulators have awarded Breakthrough Therapy badges to two of Shire’s investigational products. The first is a novel formulation of budesonide for eosinophilic esophagitis (EoE), a chronic rare disease resulting from an elevated number of eosinophils that causes inflammation in the esophagus and affects about 15-55 per 100,000 persons. Twelve weeks of the budesonide oral suspension treatment in a Phase II trial has significantly reduced both dysphagia symptoms and achieved higher proportion of subjects with histologic response compared to placebo. The second drug is maralixibat (LUM001) for type 2 progressive familial intrahepatic cholestasis (PFIC), the most common type of a group of child autosomal-recessive liver disorders that disrupt bile formation and cause cholestasis. The conditions affect around 1 in 50,000 to 1 in 100,000 births, and PFIC2 is the most common type, accounting for around half of cases. A Phase II study of LUM001-501 (INDIGO) in pediatric patients with PFIC has shown decreases in a subpopulation of patients, reductions in pruritus, and normalization of liver parameters in patients with liver enzymes.

India’s Dr Reddy’s in $350 million deal to buy eight U.S. drugs from Teva, Allergan

With an 86 percent slump in profit for its March quarter, India’s second-largest drugmaker Dr Reddy’s Laboratories Ltd has agreed to purchase eight generic drugs from Teva Pharmaceutical Industries and Allergan Plc for $350 million in cash to bolster its slowing U.S. business. The products being divested consist of generic drugs that have not yet been U.S. approved, as well as drugs that are already on the market. Teva hopes to win the U.S. Federal Trade Commission’s antitrust clearance for its $40.5 billion acquisition of Allergan’s generic drugs portfolio through this deal with Dr Reddy’s.

Sanofi, Boehringer to swap animal, consumer health assets

Sanofi and Boehringer Ingelheim have signed contracts to exchange their respective animal health and consumer healthcare businesses. Sanofi’s Merial business, which is valued at approximately 11.4 billion Euros, will be transferred to Boehringer in return for 4.7 billion Euros and Boehringer’s CHC business, which is worth around 6.7 billion Euros. Sanofi expects the transaction to be accretive after 2017, and forecasts joint CHC sales to be around 4.9 billion Euros. Boehringer believes that by combining its portfolios and technology platforms in antiparasitics, vaccines and pharmaceutical specialties with Merial’s, it will be able to boost its competitiveness and increase its health sales by more than two times, to bring in revenue of around 3.8 billion Euros.,_boehringer_to_swap_animal,_consumer_health_assets_1049222

Takeda to Invest $65M in Ultragenyx under Rare Disease Drug Collaboration

Takeda Pharmaceutical has agreed to purchase $25 million of stock from Ultragenyx Pharmaceutical along with a $15 million cash premium at closing and with a 12 month period in between, purchase another $25 million with no additional premium. As part of the strategic partnership between the two companies, Ultragenyx will license and co-develop at least one and up to six Takeda product candidates for rare diseases over a 5 year research collaboration period. Takeda will receive an exclusive option to commercialize any licensed products developed through the collaboration in Asia and an option to license one Ultragenyx pipeline treatment in Japan. This collaboration provides Ultragenyx with a continued source of product candidates and Takeda access to strong patient-centric development and regulatory capabilities in the field of rare disease; Takeda’s therapeutic areas consist of “general medicine,” including oncology, cardiovascular and metabolic, central nervous system, gastrointestinal, respiratory, immunology, and vaccines. Recently, the company has been actively pursuing development for rare disease drugs, with its partnership with BioXcel and collaboration with Kyoto University’s Center for iPS Cell Research Application last year.

Korean biopharma firms rush into IPO market this year

The largest number of stock market debuts by Korean pharmaceutical companies is expected this year. The Korean pharmaceutical industry is expected to continue steady growth as companies search for funds for global market expansion. Amid growing market expectations, Green Cross LabCell and ST Pharm got the green light for new listings on the tech-heavy KOSDAQ bourse Thursday. The two firms are part of a long list of bio companies jumping into the initial public offerings market; in the first half of 2016, five companies went public, raising a combined $216 million through IPOs. In the second half of the year, heavy lifters like Samsung BioLogics, Celltrion Healthcare, and CJ Healthcare have indicated that they will be listing as well. Samsung BioLogics, in particular, is expected to be one of the biggest IPOs this year, with industry analysts estimating about 3 trillion won worth of shares in the IPO. The rush to raise funds for R&D and production capacity increases by biopharmaceutical companies in Korea represents the hopeful mood in the industry.

Global cancer drug spending to exceed $150 billion by 2020: IMS report

In a global oncology report released by IMS Health Holdings Worldwide, worldwide spending on cancer medicines is expected to exceed $150 billion by 2020. This forecast represents an annual global growth rate for oncology drug spending of 7.5 percent to 10.5 percent through 2020, up from last year’s prediction of 6 percent to 8 percent growth through 2018. Taking into account prescription medicine list prices and supportive care drugs to address side effects, IMS found that global oncology drug spending reached $107 billion in 2015, an 11.5 percent increase over the prior year and up from $90 billion in 2011. As cancer is being redefined as a large number of narrowly defined diseases, many expensive new therapies designed to improve patient immune systems have emerged in the past five years, which is believed to be the cause of the dramatic spending increases.

Medtronic to buy HeartWare for $1.1 billion

Medtronic PLC has agreed to acquire HeartWare International Inc. at a premium for $1.1 billion. The acquisition gives Medtronic more diagnostic tools and treatments for heart failure. Over the past year, HeartWare’s stock has fallen 60% amid declining sales, problems with product studies and a terminated acquisition. The company creates ventricular assist devices (VAD) and serves a global VAD market of about $800 million, which is expected to grow by a percentage in the mid-to-high single digits this year and accelerate to a percentage in the high-single, low-double digits in future years. The deal is expected to close by late October and add to Medtronic’s earnings in its third year.

EU wants more transparency on AbbVie’s Humira, world’s top drug

The European Union’s ombudsman Emily O’Reilly recently announced that four specific data redactions regarding clinical trial details of AbbVie’s rheumatoid arthritis drug Humira, the world’s top-selling prescription medicine, are unjustified. These data redactions were part of a 2014 deal between AbbVie and the European Medicines Agency (EMA), when AbbVie dropped a lawsuit against the EMA after the agency agreed to certain data redactions on the grounds of commercial interest. Since 2010, the EMA has pushed for increased transparency, an initiative that has remained ineffective after the 2014 case. In response to O’Reilly’s statements, the EMA said it was pleased O’Reilly had found no maladministration in its handling of the matter, adding there was no agreed definition of commercially confidential data and that specific commercial interests change over time. AbbVie, while mentioning its commitment to responsible transparency, defended its previous actions, stating that there is a need to protect commercially confidential information. In recent years, drug companies around the world have come under increasing pressure to provide full disclosure of clinical trial results, following complaints by doctors and campaigners who believe access to such data is essential for consumers and medical experts.

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