EP Vantage is a new forward-looking comment and analysis service tailored to the needs of pharma and finance professionals, focusing on the events that will define the future of companies, products and therapy areas. Written by experienced journalists, EP Vantage provides timely financial... More
Johnson & Johnson has today taken what looks like a $1.5bn gamble on experimental drug bapineuzumab and the rest of Elan’s Alzheimer’s pipeline. In a surprising announcement the US group revealed that it would be investing $1bn in exchange for an 18.4% stake in the Irish group and the full rights to its Alzheimer's Immunotherapy Program (AIP).
J&J will also be dipping its hand into its pocket again to contribute up to $500m to shoulder the development costs and launch of bapineuzumab. In return, Elan is set to receive a 49.9% stake in a J&J company that will be formed to acquire the AIP, and will be eligible for a 49.9% slice of any profits and tiered royalties generated by marketed products from the collaboration.
Shares in Elan surged as news of the deal, which will also see J&J get a seat on the board and 107 million of Elan’s ADRs at $9.32, a 33% premium to last night's closing share price. In early trade Elan's ADRs jumped 17% to trade at $8.19.
With so much talk of patent cliffs and biosimilar regulatory pathways, 2009 is shaping up to be a boom time for investors in generic companies, a half-yearly analysis of stock performance by EP Vantage has revealed.
Alongside Teva Pharmaceutical, as a rare big pharma stock to register a gain in the first half of the year, all five of the biggest winners for mid-cap companies were generic, with the average gain for global generic stocks a healthy 28% (see tables below). In comparison, the average decline for big pharma was 11%, excluding the bid targets Wyeth and Schering-Plough. With cuts to dividend payouts and scrapping of share buy-back schemes compounding the patent risk exposure of big pharma, it seems investors are switching their allegiance to the generic companies which will profit the most from the woes of big pharma (Vantage Point - boom time for generics as patent cliff looms large, May 18, 2009).
Cell Genesys has been rescued from what looked like a certain slow death by BioSante Pharmaceuticals, which has agreed to buy the developer of one of last year’s failed cancer vaccine projects for $38m in an all-stock transaction (Cell Genesys' prostate cancer vaccine heads for the dustbin, October 16, 2008).
The press release announcing the deal highlighted a 12% premium to Cell Genesys’ share price, but considering the stock has been trading at a fraction of its value prior to the initial failure of its GVAX Immunotherapies, this measure is largely irrelevant. A clearer picture can be gained by looking at the premium over cash; with $36m in the bank as of last week, BioSante has actually paid very little for a company which was valued at $275m this time last year.
BioSante, on the other hand, has only $6m in the bank, and ongoing pivotal trials to pay for. The company, which specialises in hormone therapy products for female sexual health, has three phase III trials of LibiGel underway, its product to treat hypoactive sexual desire disorder in menopausal women.
Six months on from EP Vantage’s review of companies in critical need of securing a partner for their late stage asset (Companies desperate for a partner, November 28, 2008), not only to commercialise the product but critically to provide much-needed cash, the same analysis reveals that the list has grown from 22 to 24 companies, with only Cougar Biotechnology truly successful in finding a partner following its recent takeover by Johnson & Johnson.
Almost two-thirds of the original list of 22 companies appear again (see table below), suggesting that the majority of partnering discussions have been slow to progress. Whilst the likes of Mannkind, NeurogesX and NicOx remain convinced that a major partnership is just around the corner, the going concern statements affecting others like Anesiva and Repros Therapeutics reflect the dangerous predicament a number of these companies are currently facing.
The following analysis presents essentially one-product companies, whose single-product NPV equals the total NPV, who have yet to sign a partner for their late stage asset in a major market.
Companies with a single product NPV = 100% of total NPV (ranked on years of cash)
Think of the industry’s most profitable companies and the usual suspects such as Johnson & Johnson or Pfizer come flooding to mind, but put aside the idea of measuring solely on the size of profits and focus on margins, then the list becomes a lot more interesting.
A recent analysis of net margins by EvaluatePharma (World Preview 2014) shows that rather than a big hitter the most profitable company last year was PDL BioPharma, with extremely impressive net margins of 68.9%, a figure that is way in excess of the next most profitable company, Leo Pharma, with still fat looking margins of 44.3% (see table below).
Despite some recent setbacks for Avastin’s life cycle management, the cancer antibody is still set to be the industry’s biggest-selling drug in 2014 with revenues of $9.23bn, according to latest consensus forecasts from EvaluatePharma.
The fact that a biotech product will assume Lipitor’s crown in 2012, after the cholesterol-lowering drug phenomenon goes off patent, is indicative of the increasing dominance of biotech products, and specifically cancer antibodies; seven of the top 10 drugs in 2014 are forecast to be biotech in origin, compared to five in 2008 and just one in 2000 (see tables below). In addition, recent analysis by EvaluatePharma (World Preview 2014) reveals that biotech drugs will account for 50% of the top 100 drugs in 2014, compared to just 28% last year and 11% in 2000. Although the patent life for the majority of these blockbuster biotech products extends well beyond the current patent cliff for conventional drugs, these facts illustrate the huge significance of the ongoing debate over a regulatory pathway for bio-similars in the US.
Increasing dominance of antibodies
Not only will there be a dominance of biotech products in 2014, the fact that all of the top six best-selling drugs will be biotech illustrates the importance of these products as growth drivers for the industry as it faces its biggest challenge to date, given the scale of the small molecule patent cliff (Vantage Point - boom time for generics as patent cliff looms large, May 18, 2009).
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J&J comes riding to Elan’s rescue
Johnson & Johnson has today taken what looks like a $1.5bn gamble on experimental drug bapineuzumab and the rest of Elan’s Alzheimer’s pipeline. In a surprising announcement the US group revealed that it would be investing $1bn in exchange for an 18.4% stake in the Irish group and the full rights to its Alzheimer's Immunotherapy Program (AIP).
J&J will also be dipping its hand into its pocket again to contribute up to $500m to shoulder the development costs and launch of bapineuzumab. In return, Elan is set to receive a 49.9% stake in a J&J company that will be formed to acquire the AIP, and will be eligible for a 49.9% slice of any profits and tiered royalties generated by marketed products from the collaboration.
Shares in Elan surged as news of the deal, which will also see J&J get a seat on the board and 107 million of Elan’s ADRs at $9.32, a 33% premium to last night's closing share price. In early trade Elan's ADRs jumped 17% to trade at $8.19.
More »Generic players continue to impress in the first half
Alongside Teva Pharmaceutical, as a rare big pharma stock to register a gain in the first half of the year, all five of the biggest winners for mid-cap companies were generic, with the average gain for global generic stocks a healthy 28% (see tables below). In comparison, the average decline for big pharma was 11%, excluding the bid targets Wyeth and Schering-Plough. With cuts to dividend payouts and scrapping of share buy-back schemes compounding the patent risk exposure of big pharma, it seems investors are switching their allegiance to the generic companies which will profit the most from the woes of big pharma (Vantage Point - boom time for generics as patent cliff looms large, May 18, 2009).
The picture for the first half of the year for big and mid-cap pharma stocks confirms a trend seen in the first quarter (Generic companies come out on top in first quarter of 2009, April 1, 2009).
Outside of the bid targets, the only stocks to register a gain over the first half of 2009 were Teva and Alcon.
BioSante appears to see something in Cell Genesys beyond its cash
Cell Genesys has been rescued from what looked like a certain slow death by BioSante Pharmaceuticals, which has agreed to buy the developer of one of last year’s failed cancer vaccine projects for $38m in an all-stock transaction (Cell Genesys' prostate cancer vaccine heads for the dustbin, October 16, 2008).
The press release announcing the deal highlighted a 12% premium to Cell Genesys’ share price, but considering the stock has been trading at a fraction of its value prior to the initial failure of its GVAX Immunotherapies, this measure is largely irrelevant. A clearer picture can be gained by looking at the premium over cash; with $36m in the bank as of last week, BioSante has actually paid very little for a company which was valued at $275m this time last year.
BioSante, on the other hand, has only $6m in the bank, and ongoing pivotal trials to pay for. The company, which specialises in hormone therapy products for female sexual health, has three phase III trials of LibiGel underway, its product to treat hypoactive sexual desire disorder in menopausal women.
More »Healthcare companies still desperate for a partner
Six months on from EP Vantage’s review of companies in critical need of securing a partner for their late stage asset (Companies desperate for a partner, November 28, 2008), not only to commercialise the product but critically to provide much-needed cash, the same analysis reveals that the list has grown from 22 to 24 companies, with only Cougar Biotechnology truly successful in finding a partner following its recent takeover by Johnson & Johnson.
Almost two-thirds of the original list of 22 companies appear again (see table below), suggesting that the majority of partnering discussions have been slow to progress. Whilst the likes of Mannkind, NeurogesX and NicOx remain convinced that a major partnership is just around the corner, the going concern statements affecting others like Anesiva and Repros Therapeutics reflect the dangerous predicament a number of these companies are currently facing.
The following analysis presents essentially one-product companies, whose single-product NPV equals the total NPV, who have yet to sign a partner for their late stage asset in a major market.
Smaller companies win in most valuable race
Think of the industry’s most profitable companies and the usual suspects such as Johnson & Johnson or Pfizer come flooding to mind, but put aside the idea of measuring solely on the size of profits and focus on margins, then the list becomes a lot more interesting.
Biotech set to dominate drug industry growth
Despite some recent setbacks for Avastin’s life cycle management, the cancer antibody is still set to be the industry’s biggest-selling drug in 2014 with revenues of $9.23bn, according to latest consensus forecasts from EvaluatePharma.
The fact that a biotech product will assume Lipitor’s crown in 2012, after the cholesterol-lowering drug phenomenon goes off patent, is indicative of the increasing dominance of biotech products, and specifically cancer antibodies; seven of the top 10 drugs in 2014 are forecast to be biotech in origin, compared to five in 2008 and just one in 2000 (see tables below). In addition, recent analysis by EvaluatePharma (World Preview 2014) reveals that biotech drugs will account for 50% of the top 100 drugs in 2014, compared to just 28% last year and 11% in 2000. Although the patent life for the majority of these blockbuster biotech products extends well beyond the current patent cliff for conventional drugs, these facts illustrate the huge significance of the ongoing debate over a regulatory pathway for bio-similars in the US.
Increasing dominance of antibodies
Not only will there be a dominance of biotech products in 2014, the fact that all of the top six best-selling drugs will be biotech illustrates the importance of these products as growth drivers for the industry as it faces its biggest challenge to date, given the scale of the small molecule patent cliff (Vantage Point - boom time for generics as patent cliff looms large, May 18, 2009).
Top 10 products by sales in 2014
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