JP Morgan 2018 - your essential guide to the key stories from pharma’s biggest investor conference

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Celgene | Merck & Co. | Biogen | Incyte | Regeneron | Ablynx | Shire | Neurocrine | Axovant | Alder

Celgene promises more

JP Morgan 2018 kicked off on Monday without the fanfare of M&A announcements that investors were hoping for, although Novo Nordisk’s pursuit of Ablynx (more below) is at least simering in the background.

Investors were expecting more and Celgene was one of the companies earmarked to potentially deliver a big announcement. Having confirmed a smaller deal to acquire Impact Biomedicines yesterday, Celgene did at least indicate further acquisitions could occur later in 2018, with CEO Mark Alles suggesting US tax reform will free up investable cash; a message consistently delivered by senior management teams at the majority of US bio-pharma companies.

Merck & Co. CEO Kenneth Frazier delivered a word of warning; while tax reform will likely result in an uptick in larger acquisitions he plans to be prudent in not changing the company’s underlying capital allocation strategy just because more cash is available. That said, it will provide greater flexibility and business development will likely play an important role in offsetting patent expiry for Januvia, hinted Frazier.

Were investor expectations set too high?

Bullish Biogen

Biogen expects to benefit from tax reform but also boasted of its ability to reinvest healthy cash flow, forecast to be worth around $37 billion, over the next five years. This is based on extrapolation of its multiple sclerosis and spinal muscular atrophy (SMA) portfolios - based on performance during the first three-quarters of 2017 - and does not factor in any potential upside from Biogen’s Alzheimer’s disease pipeline, said CEO Michel Vounatsos.

Growth in both the MS and SMA markets is sustainable, despite recent and potential competitive threats in both segments, says Biogen, with the future impact of AveXis’ SMA therapy AVXS-101 played down in particular. Looking to enhance its current position of exclusivity in the SMA treatment market, Biogen also confirmed plans to move a gene therapy into clinical testing by mid-year.  

Incyte plays down competitive threat

On the issue of Impact BioMedicines’ JAK2 inhibitor fedratinib, Incyte CEO Herve Hoppenot was asked on Monday what kind of competitive threat it could pose to Jakafi - the myelofibrosis and polycythemia vera treatment marketed with Novartis. Celgene is confident fedratinib could be best-in-class and plans to file in MF by mid-2018.

If fedratinib reaches the market it will be “a positive development for patients,” said Hoppenot, although he claims that due to the specificity of its targeting mechanism, Jakafi’s safety profile will be “unmatchable.” Gastrointestinal toxicity could provide a meaningful headwind that limits future adoption of fedratinib in chronically treated MF and PV patents, says Incyte, and as a result the company is confident that if approved, fedratinib will most appropriately be used to treat Jakafi ineligible patients.

Furthermore, Incyte increased its long term revenue guidance for Jakafi to between $2.5 billion and $3 billion in 2027, based primary on increased penetration of current indications but also label expansion into essential thrombocythemia and graft versus host disease.

Regeneron - don’t count us out of PD-1 race

Hot on the heels of announcing additional investment (through its partnership with Sanofi) into its PD-1 inhibitor cemiplimab, Regeneron presented both impressive data for the compound in metastatic cutaneous squamous cell carcinoma (cSCC) and an aggressive development programme comprising eleven clinical studies across multiple solid tumour types.

Phase II data in cSCC - showing a response rate of 46 percent in 82 patients - will be used to support a regulatory application in the US by the end of this quarter, with Regeneron hopeful that cemiplimab will be approved by the FDA in the second half of 2018 (see ViewPoints: Regeneron, Sanofi obtain ticket to PD-(L)1 party)

While many patients are well treated with surgery, cSCC accounts for between 3,900 and 8,800 deaths a year in the US, Regeneron estimates, and there are currently no approved therapies for this type of cancer.

Looking ahead - including provisional readouts for cemiplimab in first- and second-line non-small cell lung cancer later this year - chief scientific officer George Yancopoulos suggested that despite recent progress “many people had expected the field, collectively, to have moved further along.” The suggestion being that Regeneron may have a better than expected chance of closing the gap on first-generation PD-(L)1 players; the market “needs some new players in the game,” predicts Yancopoulos.

Novo takes pursuit of Ablynx public

Novo Nordisk is keen to get on the M&A bandwagon that investors were hoping would ride through San Francisco this week. The diabetes specialist confirmed on Monday, however, that it has been rebuffed twice in a bid to acquire Ablynx.

Expected to launch this year, Ablynx’s lead Phase III product is caplacizumab for the treatment of Thrombotic Thrombocytopenic Purpura (TTP); an “attractive asset,” which would accelerate Novo’s stated strategy of expansion outside of diabetes, wrote analysts at Credit Suisse in a note to investors. Speaking at JP Morgan 2018, Ablynx CEO Edwin Moses noted that internal revenue projections for caplacizumab have recently been increased from around $960 million to $1.4 billion, on the basis of a new pricing study.

Caplacizumab would fit well into Novo Nordisk’s haematology portfolio and allow it to leverage existing regulatory, medical and commercial infrastructure, argue analysts at Morgan Stanley. It would also help to alleviate anticipated competition for the NovoSeven franchise stemming from Roche’s Hemlibra in the haemophilia market, they add.

Ablynx provided further intrigue on Monday by announcing that Peter Fellner, who had served as chairman since 2013, had resigned with immediate effect. He has been replaced by Dane Bo Jesper Hansen, who has been a non-executive director of Ablynx since November 2013, and has been unanimously elected by the Ablynx Board as the new Chairman.

Novo has turned the screw by taking its pursuit public, although counter offers may now materialise, warn analysts.

Shire has to settle for less but remains on track, argues CEO

Two years ago it was Shire setting the M&A agenda at JP Morgan 2016 with the acquisition of Baxter. That deal was expected to propel revenues to $20 billion by 2020 but Shire announced on Monday that estimates have been revised downwards to between $17 billion and $18 billion. Further potential genericisation of small molecule brands, coupled with competitive entries in the haemophilia and hereditary angioedema markets - from Roche and CSL, respectively - were cited as material headwinds in 2018, with pressure from Roche’s Hemlibra franchise likely to extend into 2019, Shire conceded.

In addition, Shire announced that its rare disease and neuroscience businesses will operate separately moving forward, with a view to potentially spinning out the former later this year. In the process preventing another potential M&A catalyst from coming into play.

Competition hasn’t hamstrung Neurocrine’s Ingrezza

Neurocrine Biosciences’ launch of Ingrezza has been much stronger than the Street envisioned when it was first introduced this spring, and if there were concerns that the tardive dyskinesia (TD) drug might get tripped in the first full quarter of competition, the company appears to have been dispended with its preannounced Q4 earnings.

On Sunday, Neurocrine revealed that preliminary fourth quarter 2017 sales of Ingrezza came in at $64 million, well ahead of the consensus estimate of $51 million, making it the third successive quarter in which the drug has posted a better-than-expected performance (See ViewPoints: Neurocrine’s Ingrezza off to a hot start – is it sustainable?)

Unlike in Q3 2017, however, Ingrezza’s impressive sales – driven by a 78-percent quarter-over-quarter jump in scripts to 9100 during the period – were posted despite a head-to-head battle for market share with Teva’s Austedo, which was approved for chorea associated with Huntington’s disease last April and was granted an expanded label for TD on August 30.

“Ingrezza’s performance in the fourth quarter is particularly notable given two meaningful headwinds to revenue during the quarter,” remarked Cowen analyst Phil Nadeau, noting that in addition to competition from Austedo the FDA also approved an 80mg dosage form of Ingrezza in October, which effectively decreased the cost of therapy to $6225 from $10 550. All the more reason to be impressed by Neurocrine’s Ingrezza launch.

Axovant’s thesis in question

Axovant Sciences exploded onto the scene three years ago with one of the industry’s biggest-ever IPOs as investors everywhere wanted to buy in on founder and CEO Vivek Ramaswamy’s brain. The company has since diversified beyond a lead programme in Alzheimer’s disease but a final nail in intepirdine’s coffin begs questions about Ramaswamy’s ability to find diamonds in the rough.

Intepirdine had been languishing on the scrapheap at GlaxoSmithKline when Axovant licensed the 5-HT6 receptor antagonist for peanuts, dusted it off a bit, spun an optimised dosing story around it, and leveraged newfound interest in the programme into a $315-million public financing in 2015 and a multi-billion dollar market cap.

The bigger they are the harder they fall, however, and Axovant has come hurtling back to earth this year after intepirdine failed the Phase III MINDSET trial to treat Alzheimer’s disease in September and has now been shelved entirely after falling short in Phase III and Phase II trials for dementia with Lewy bodies (DLB) and gait impairment in patients with dementia, respectively.

With intepirdine officially terminated, the pressure is now squarely on Axovant’s nelotanserin, a 5-HT2A receptor reverse agonist licensed from Arena Pharmaceuticals in 2016. Hoping to save some blushes, the company reported post hoc Phase II data this week showing the agent generated positive trends on visual hallucinations in patients with DLB or Parkinson’s disease dementia (PDD), though it only achieved statistical significance in a subset of DLB.

Axovant plans meet with regulators to discuss plans for a larger study of nelotanserin, but the panoply of clinical findings – intepirdine’s implosion in particular – has raised serious doubts about the ability of Ramaswamy (who has since handed the reigns of the company over to CEO David Hung) to in-license winners. Shares of the company tumbled 57 percent on January 8, leaving it with a market cap of just under $250 million.

Alder compensated for securing its freedom

The upshot after a newsy day for Alder Biopharmaceuticals is that the company has been rewarded by investors for burnishing the credentials of anti-calcitonin gene-related peptide (CGRP) mAb eptinezumab and locking in both its financial and operational freedom.

Alder released a dizzying array of announcements Monday, beginning with an agreement in which the biotech received access to Teva’s patents covering anti-CGRP antibodies in exchange for a $25-million upfront payment, another $25 million upon approval of eptinezumab, and $75 million milestones payable if it achieves cumulative sales of $1 billion and $2 billion.

In two subsequent press releases, Alder also revealed it had received a commitment from the Redmile Group to purchase up to $250 million in preferred shares, which would be used to pay Teva and fund for commercial-readiness activities, along with top-line Phase III (PROMISE 2) results showing quarterly infusions of eptinezumab achieved high statistical significance in preventing migraines versus placebo.

“We had three big overhangs and what we did today was put them all behind us, which builds confidence with investors,” said Randall Schatzman, president and CEO of Alder. Indeed, the settlement and financing appear to clear the company’s path to market with eptinezumab, while data from a second positive pivotal trial bring it that much closer to a BLA submission.

Shares of Alder jumped 17 percent on the day, pushing the company’s market cap just north of the $1-billion mark.

Schatzman told attendees at JP Morgan that Alder plans to submit the application in 2H18, putting it on track to be the fourth anti-CGRP mAb to market but the first intravenous option. “This should differentiate us from the three subcutaneous products,” as the company’s market research indicates there is a subset of physicians who would strongly prefer the ensured compliance and strong efficacy of a clinical-administered product.