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Healthcare companies still desperate for a partner

|Includes:ADLS, ANSV, ARNA, Cougar Biotechnology (CGRB), DNDN, JNJ, MNKD, SVNTQ, VNDA, WINT

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) 
 
Company 
Product 
Product Type 
Phase 
NPV ($m) 
NPV as % of Market Cap 
Latest Cash ($m) 
Years of Cash 
1  
Advanced Life Sciences 
Cethromycin (ABT-773)  
Anti-bacterial  
Filed  
584 *  
n/m  
0.5  
(0.9)  
2  
Anesiva 
Adlea 
Non-narcotic analgesic 
Phase III  
199  
n/m  
0.3  
(0.8)  
3  
Repros Therapeutics 
Proellex 
Female sex hormone  
Phase III  
558  
495%  
12  
(0.3)  
4  
MannKind 
Afresa 
Anti-diabetic  
Filed  
2,285  
273%  
30  
(0.3)  
5  
Discovery Laboratories 
Surfaxin 
Other respiratory agent  
Phase III  
351  
308%  
19  
(0.3)  
6  
Pharming 
Rhucin 
Other haematological  
Phase III  
332  
393%  
21  
(0.1)  
7  
Arena Pharmaceuticals 
Lorcaserin 
Anti-obesity agent  
Phase III  
930  
220%  
70  
(0.1)  
8  
NeurogesX 
Qutenza 
Non-narcotic analgesic 
Filed  
476  
405%  
19  
0.0  
9  
Alexza Pharmaceuticals 
AZ-004 
Anti-psychotic  
Phase III  
455  
548%  
47  
0.2  
10  
TiGenix 
ChondroCelect 
Other musculoskeletal agent  
Filed  
227  
158%  
29  
0.3  
11  
Savient Pharmaceuticals 
Krystexxa 
Anti-gout preparation  
Filed  
664  
88%  
58  
0.4  
12  
Somaxon Pharmaceuticals 
Silenor 
Sedatives & hypnotic  
Filed  
90  
429%  
4  
0.4  
13  
BioMimetic Therapeutics 
Augment OS1 
Bone calcium regulator  
Approved  
991  
506%  
52  
0.4  
14  
Poniard Pharmaceuticals 
Picoplatin 
Platinum compound  
Phase III  
289  
172%  
60  
0.5  
15  
Protalix BioTherapeutics 
prGCD 
Other therapeutic product  
Phase III  
341  
108%  
35  
0.5  
16  
OXiGENE 
Zybrestat 
Other cytostatic  
Phase III  
309  
327%  
27  
0.6  
17  
Biodel 
VIAject 
Anti-diabetic  
Phase III  
841  
669%  
90  
0.7  
18  
Acusphere 
Imagify 
Diagnostic imaging  
Phase III  
430  
n/m  
16  
0.7  
19  
NicOx 
HCT 3012 
NSAID 
Phase III  
850  
155%  
110  
0.9  
20  
Allos Therapeutics 
PDX 
Anti-metabolite  
Filed  
706  
104%  
131  
1.0  
21  
Dyax 
DX-88 
Other haematological  
Filed  
595  
462%  
52  
1.2  
22  
Cadence Pharmaceuticals 
Acetavance (IV APAP) 
Non-narcotic analgesic 
Filed  
807  
180%  
119  
1.9  
23  
Clinical Data 
Vilazodone 
Anti-depressant  
Phase III  
2,360  
810%  
56  
2.1  
24  
Dynavax Technologies 
Heplisav 
Vaccine  
Phase III  
95  
160%  
60  
4.9  
 
* NPV prior to negative FDA AdCom ruling on 3 June 
Aside from Cougar’s takeover by J&J, the other companies no longer in the list for positive reasons are: Dendreon, reported positive phase III data for Provenge causing massive share price gains which enabled a decent equity issue (The Dendreon rollercoaster continues , April 29, 2009); MolMed, reported positive phase I data for Arenegyr which attracted new analyst valuations so de-risking their pipeline;  Vanda Pharmaceuticals, who gained the surprise FDA approval of the decade for Fanapt (Vanda shares rocket after surprise Fanapt approval , May 7, 2009), the company is still in need of a partner but the product has yet to attract renewed analyst valuations.

Meanwhile, La Jolla Pharmaceutical also drops off the list, having almost produced a fairy-tale ending for its arduous development of lupus drug  Riquent by signing a deal with  BioMarin Pharmaceutical, only for the drug to fail in phase III trials (La Jolla drug failure leaves few options, February 12, 2009).

Current predicaments

Probably the most high profile name on the list is MannKind, the only company brave enough to be pushing on with an inhaled insulin product. At the recent American Diabetes Association meeting earlier this month, the company’s chief executive Alfred Mann was once again talking up prospects for a deal. Despite the company’s bullish stance real concerns over the approvability and commercial potential of the product exist. As such, the chance of securing a deal before the outcome of the January 15, 2010 PDUFA date is known, looks slim.

Advanced Life Sciences' chances of finding a partner for its antibiotic cethromycin were effectively dashed by a ruling by an FDA advisory committee earlier this month. The panel ruled in favour of the drug’s safety, but voted strongly against efficacy. A decision from the regulator due by July 31 is unlikely to be positive.  

Although ALS has $2m cash at hand and has the option to draw down a further $12m over the next 15 months from a committed financing agreement, the outlook for the company appears fairly bleak. As such, if any partners are tempted, the asset is likely to be available a lot cheaper in the months ahead (Advanced Life Sciences reeling from FDA rejection  June 3, 2009).

Anesiva meanwhile is in an even worse financial situation, its auditors having issued a going concern qualification in April, and its stock breaching Nasdaq listing rules. The group has pared back costs and plans to be operating largely as a virtual company by year end, in an attempt to keep hopes of finding a partner for  Adlea, its long-acting, non-opioid analgesic drug candidate which is in development for the management of acute pain following orthopaedic surgery.

Savient Pharmaceuticals meanwhile has long been in search of a partner for its gout treatment  Krystexxa, but has learnt the hard way about toying with investors’ expectations. A long promised deal failed to materialise in 2008, and the stock was hit hard (Savient's broken promises cause share woe, September 30, 2008). As a result, management are now refusing to comment on the situation, other than to say options are being explored, but following strong endorsement for the product at an FDA advisory committee earlier this week, ahead of an August 1 PDUFA, there is a good chance that Savient will not be on the same list in six months time. 

Disclusre: No Positions