< PreviousM&A ROUND-UP10 Pharma Business International www.pbiforum.net© Shutterstock /LightField StudiosHowever, both deals were eclipsed as 2019’s first major multi-billion-dollar M&A deal was announced just days into the year. In what has become one of the biggest deals in pharma history, Bristol-Myers Squibb (BMS) is swooping for Celgene in a deal valued at $74 billion. The aim is to create a “premier biopharma company” that will bring together both company’s complementary portfolios in oncology, immunology & inflammation, and cardiovascular disease. When completed, BMS shareholders are expected to own approximately sixty-nine per cent of the company, with Celgene shareholders taking charge of the remaining thirty-one per cent. Less than a week later, Eli Lilly made its largest transaction to date with the $8 billion buy of Loxo Oncology. The company said the move was the latest in a series intended to broaden its cancer treatment efforts. For Lilly, the deal means it can double down on precision medicine with Loxo Oncology developing a pipeline of targeted medicines focussed on cancers that are uniquely dependent on single gene abnormalities that can be detected by genomic testing. For patients with cancers that harbour these genomic alternations, a targeted medicine could have the potential to treat cancer with dramatic effect. On the smaller scale, we have Flex Pharma merging one of its wholly-owned subsidiaries with Salarius with the aim of accelerating the clinical development of a novel epigenetic therapy for cancer. Salarius has recently completed a $6.4 million private placement which, combined with cash from Flex Pharma, is expected to fund the newly-merged company through to mid-2020. This, Flex said, will allow it to report early cohort data from an ongoing Phase 1 Ewing sarcoma trial. The deal specifics will see Flex Pharma stakeholders own approximately 19.9 per cent of the combined company – dubbed Salarius Pharmaceuticals – while current Salarius investors will own 80.1 per cent. Flex Pharma stakeholders also receive a right to receive warrants, six months and one day following the closing date of the transaction. This allows them to purchase additional shares in the company. Although the pharma M&A market is off to a good start this year, expect some slowdown between now and our next round-up. Companies and investors are still erring on the side of caution overall as political uncertainty persists on both sides of the Atlantic. However, this first crop of deals are encouraging signs and can be seen as good omens for the market for the rest of the year and beyond. 08-11.qxp_Layout 1 11/02/2019 09:41 Page 3Pharma Business International 11 www.pbiforum.netM&A ROUND-UPDrivers in the M&A market The recent ‘2019 EY M&A Firepower’ report from EY explored a number of key industry trends likely to drive life sciences M&A in 2019 and beyond. Continued emphasis on portfolio optimisation In response to a recent EY client survey, more than forty per cent of life sciences executives indicated that they expect to do more deals in 2019 compared with 2018, and small- to medium-sized acquisitions valued at up to $10 billion are of greatest interest. Only three per cent of individuals surveyed listed megamergers or digital acquisitions as high priorities, and more than seventy per cent of respondents said that product-focused innovations and portfolio optimisation would be primary deal drivers. Divestitures will increasingly be used to unlock value As networks of relationship and therapeutic focus become more important for commercial success, it will be more difficult for companies with low-digit market share to differentiate their products to payers and providers. These companies should consider using divestitures and asset swaps to unlock value in the near-term before the competitive bar for success is raised even higher. Digital alliances should be a priority too To keep pace in the current climate, companies must build relationships with new digital entrants to improve the efficiency of research and development and better differentiate products with real world evidence. As the race to gain access to data-centric capabilities quickens, life sciences companies must consider making sizeable bets – first via alliances and then via acquisitions. 08-11.qxp_Layout 1 11/02/2019 09:41 Page 4CYSTIC FIBROSIS EXPOSÉ12 Pharma Business International www.pbiforum.netThe price of life © Kristi Blokhin / Shutterstock.com12-15.qxp_Layout 1 11/02/2019 09:42 Page 1Pharma Business International 13 www.pbiforum.netCYSTIC FIBROSIS EXPOSÉDrug pricing pressures is an existential threat for the pharmaceutical sector with research from GlobalData finding that it will remain a top concern for companies throughout 2019. It will also remain a priority for patients as life-extending or enhancing treatments remain out of financial reach. It’s an issue that cystic fibrosis patients are familiar with as a battle over treatment prices rages on in the UK. Around 100,000 people globally are affected with cystic fibrosis, a life-shortening genetic condition that causes fatal lung damage, with some 10,400 patients in the UK. One of the most common life-threatening inherited disease, cystic fibrosis is caused by a defective gene carried by one person in twenty-five with 20 million carriers in the UK alone. For sufferers, access to treatment remains a financial burden. Vertex Pharmaceuticals, a biopharma company based in Boston, Massachusetts, is best known for its life-extending cystic fibrosis drug Orkambi (lumacaftor-ivacaftor) for patients with two copies of the F508del mutation. The drug comes with a hefty annual price tag of £100,000 making it prohibitively expensive for many patients, a state of affairs that the Department of Health and Social Care says is putting the treatment “out of reach of patients”. For more than three years, Vertex has gone back and forth with the NHS in pricing negotiations that have so far failed to reach an agreement. Vertex wants the NHS to pay £105,000 per patient per year for the drug – significantly higher than its maximum © Vertex Pharmaceuticals14 ÁCystic fibrosis is the most common life-threating inherited disease; yet for many patients, the drug that would help extend their lives remains prohibitively expensive. Now a battle is waging in the UK to help usher in cheaper generics. 12-15.qxp_Layout 1 11/02/2019 09:42 Page 214 Pharma Business International www.pbiforum.netguideline price of £30,000 per quality-life adjusted year. The NHS countered with its largest commitment ever made, offering £500 million for the drug over a five-year period. Vertex, however, rejected the offer sparking a passionate response from campaigners, patients and parents. Orkambi can have a transformative effect on lung health, especially for children, and now parents of patients with cystic fibrosis are working alongside medicines campaign group Just Treat in pressuring Government to use their legal power to curtail Vertex’s market dominance. According to the campaign group, the price of an Orkambi generic would cost significantly less than the branded option, coming in at under £5,000 per patient per year. The group’s calculations claim that this would allow To find out more about cystic fibrosis or make a donation, visit www.cysticfibrosis.org.uk 12-15.qxp_Layout 1 11/02/2019 09:42 Page 3Pharma Business International 15 www.pbiforum.netCYSTIC FIBROSIS EXPOSÉall patients in the UK to access the medicine and save the NHS almost £4 billion over the next ten years. In a letter sent to Government at the end of January, parents and Just Treat state: “We cannot explain, let alone expect you to understand, the sheer dread and helplessness it causes us to know that we are likely to outlive our children. The anguish in knowing that a drug exists that can change that - sparing them unnecessary suffering and decline in health - but that they are denied access, is unbearable.” Efforts towards a cheaper generic version took a step forward this month (February) after conservative MP Bill Wigging called on Government to invoke Crown Use – which provides special copyright rules for government departments and state entities etc. – in an adjournment in the House of Commons which would allow this to happen. The official stance of the Department of Health and Social Care is urging Vertex to accept the offer laid out by the NHS. At the time of writing, Vertex said it was “determined to find a solution that allows the NHS to provide patient access to our precision medicines across the UK with budget certainty, and also allows Vertex to continue its research and focus on a cure for cystic fibrosis and other serious diseases”. However, the company added that invoking Crown Use would “seriously undermine its ability to achieve these aims” and “significantly weaken incentives for future innovation”. The debate, controversy and campaign rages on as we publish. With the Government now formally asked to take legal action in order to end Vertex Pharmaceutical’s monopoly, it has become a very real possibility that cheaper generic versions of Orkambi will become a reality for thousands of patients in the UK. 2019 may well be a year in which pharmaceutical companies worry about drug pricing pressures, but it might be a catalyst for change, inspiring a spate of cheaper generics that not only improve quality of life for cystic fibrosis patients but also extend their lives. © Shutterstock /Photographee.eu12-15.qxp_Layout 1 11/02/2019 09:42 Page 4PPE16 Pharma Business International www.pbiforum.netBarrier to entry When it comes to personal protection, those working in the pharmaceutical industry expect the highest of standards. Standards that are not always being met, especially in large, Government organisations. 16-19.qxp_Layout 1 11/02/2019 09:43 Page 1Pharma Business International 17 www.pbiforum.netPPEPersonal protective equipment is a necessity in any manufacturing industry to reduce the risk to workers, but few industries have quite the same requirements and pressure put upon them as the pharmaceutical sector. PPE is not only for the benefit of the workforce, but also prevents contamination of stock that might lead to costly recalls, or worse – pose a threat to the public. PPE came into the spotlight a few 18 Áyears back due to the Ebola crisis in Western Africa, and particularly the health and safety procedures in the industry were harshly scrutinised by Governments and associated organisations. With two Dallas nurses contracting Ebola from the first US victim, potentially due to a failure in their PPE, there is great focus 16-19.qxp_Layout 1 11/02/2019 09:43 Page 2PPE18 Pharma Business International www.pbiforum.neton ensuring the same does not happen in the event of the next big outbreak. When it comes to outbreaks or contamination of a global nature, changes have been made. The Centers for Disease and Control (CDC) have released new guidelines that call for full-body garb and hoods that protect workers’ necks, as well as stricter rules on the removal of equipment and disinfection of gloved hands. However, these are ultimately guidelines only, and cannot be enforced in hospitals. The WHO have also updated their own guidelines on the use of PPE, including mandatory training in how to use the equipment in a no-risk environment, prior to being allowed to approach patients. Although all of this is currently limited to the Ebola crisis, experts believe that the guidelines issued here could be standardised to dealing with all potentially dangerous viral epidemics in the future. For workers in the pharmaceutical manufacturing industry however, the use of PPE should be second-nature, with staff much more experienced in “Although PPE is the most visible control used to prevent transmission; it is effective only if applied together with other controls including facilities for barrier nursing and work organisation, water and sanitation, hand hygiene and waste management.” Marie-Paule Kieny, Assistant Director-General for Health Systems and Innovation at the WHO16-19.qxp_Layout 1 11/02/2019 09:43 Page 3PPEPharma Business International 19 www.pbiforum.net© Shutterstock /Rob Byronhow to use, don and dispose of equipment. The packaging process is often seen as a weak link in the safety and hygiene of a product, and not only in the pharma industry. This is where many food and beverage manufacturers are forced to face the realities of contamination. One of the causes that was identified was product to product contact, which when working with Oral Solid Dose drugs especially, can cause dust particles to disperse into the air. Steps need to be taken to minimise tablet-to-tablet contact, and to a certain degree, contact between tablets and hard substances such as stainless steel. The bottom line for pharmaceutical companies is that PPE, and the way that staff use it, has coming into the spotlight heavily over the recent months. While there have yet to be any large cases in the pharmaceutical research or manufacturing industry, it will only take a single case of contamination to open the floodgates to negative attention for these industries as well. Companies are being advised to look at their investment into PPE and consider the potential ramifications of failing to update their equipment and systems to handle the high danger of such threats as Ebola, HIV or any other dangerous virus. Investment in PPE and other safety equipment should always be kept at the forefront of business, but training of staff is also just as important – as the cases in the US with the Ebola virus highlighted. As the Assistant Director-General for Health Systems and Innovation at the WHO, Marie-Paule Kieny, says “Although PPE is the most visible control used to prevent transmission; it is effective only if applied together with other controls including facilities for barrier nursing and work organisation, water and sanitation, hand hygiene and waste management.”16-19.qxp_Layout 1 11/02/2019 09:43 Page 4Next >