Audentes Therapeutics initiated with a Sell at B. Riley FBR. B. Riley FBR analyst Madhu Kumar started Audentes Therapeutics with a Sell rating and $20 price target. A modest market size opportunity and clinical data suggest the shares are overvalued, Kumar tells investors in a research note.
Thursday, September 6, 2018
Mylan reveals its $463M mystery buy: Novartis’ TOBI cystic fibrosis products
After hinting at a mystery purchase in its second-quarter earnings release, Mylan has finally pulled back the veil on what it bought.
The company has closed a $463 million buy of Novartis’ TOBI Podhaler and TOBI liquid, two cystic fibrosis products. The company expects to pay $240 million of that sum this year, it said.
The reason for the secrecy? “The transaction was subject to … pre-closing confidentiality restrictions,” Mylan said in a statement.
Mylan alluded to the deal last month in its second-quarter earnings release, noting that it had struck the agreement at the end of July. But the move drew heat from Wells Fargo analyst David Maris, who chastised the company for its lack of transparency.
“We believe that investors should know more about the details of this deal, especially given its size,” he to clients at the time. “If it is accretive, it may mean that Mylan’s 2018 guidance lowering may be more conservative than anticipated,” he added.
Details on how the new therapies will benefit Mylan are still scant; the generics giant didn’t offer forecasts, saying only that its new therapies would “further enhance Mylan’s respiratory portfolio in the U.S., Europe and certain Rest of World markets.” Novartis did not break out 2017 sales of the drugs in its most recent annual regulatory filing.
Mylan’s respiratory unit could use some firepower in the absence of its anticipated generic of GlaxoSmithKline’s Advair, though. In June, the FDA handed the copy its second rejection, citing what Mylan called “minor deficiencies” in its application.
Analysts, though, are optimistic that the product can snag a regulatory OK by year’s end to become the first knockoff of the GSK blockbuster to hit the market. “Minor deficiencies are often very easily addressed,” Maris wrote at the time, though Leerink Partners’ Ami Fadia cautioned that “in the end, the bar for approval of generic respiratory inhalers remains a moving target and crossing the goal line remains difficult to reach.”
Meanwhile, Novartis has been busy casting off non-core assets so far in 2018. Earlier in the year, it agreed to hand over its share of its GlaxoSmithKline consumer health JV to its British partner for $13 million, and Thursday, its Sandoz generics arm struck a pact to unload about 300 U.S. generics to India’s Aurobindo for $1 billion.
Supernus Wins Patent Appeal
Supernus Pharmaceuticals, Inc. (NASDAQ: SUPN), a pharmaceutical company focused on developing and commercializing products for the treatment of central nervous system (CNS) diseases, today announced that the U.S. Court of Appeals for the Federal Circuit affirmed the New Jersey District Court’s decision that TWi infringed three Oxtellar XR Orange Book patents (U.S. Patent Nos. 7,722,898; 7,910,131; and 8,821,930) and that all three Oxtellar XR Orange Book patents are valid. This ruling follows a December 12, 2016 appellate decision affirming a decision by the same district court that Actavis also infringed Supernus’ Oxtellar XR patents. “We are very pleased with the Appeals Court decision which marks the end of any outstanding litigation issues and generic challenges to Oxtellar XR. This decision, following the New Jersey District Court’s decision in 2017, further substantiates Supernus’ strong patents protecting Oxtellar XR,” said Jack A. Khattar, President and CEO of Supernus. Supernus is focused on building Oxtellar XR into a long term sustainable franchise. We continue to be excited about the future growth of Oxtellar XR including the potential label expansion to include monotherapy treatment of partial seizures of epilepsy and the development program in bipolar disorder. Oxtellar XR is protected by eight issued patents that expire no earlier than 2027.
Boston Scientific To Acquire Augmenix
Boston Scientific (NYSE: BSX) today announced that it has entered into a definitive agreement to acquire Augmenix, Inc., a privately-held company which has developed and commercialized the SpaceOAR®System, a therapy used to reduce common and debilitating side effects that men may experience after receiving prostate cancer radiotherapy. The transaction consists of an upfront cash payment of $500 million, and up to $100 million for reaching sales-based milestones.
Each year, more than 1.1 million men are diagnosed with prostate cancer worldwide and approximately 400,000 men will undergo prostate radiotherapy.1,2 One of the most common complications of treatment is rectal radiation injury, due to the rectum’s proximity to the prostate and the resulting high doses of inadvertent radiation exposure. Prior to radiation therapy, the SpaceOAR hydrogel is injected to create additional space between the rectum and prostate during treatment, thereby reducing rectal radiation dose and associated side effects.
The SpaceOAR hydrogel is CE Marked, cleared by the FDA and has been used in more than 30,000 patients worldwide. As a result of commercial adoption, expanded U.S. reimbursement and a total addressable market valued at $750M, product sales are estimated to reach $50M in 2018, and approach $90M in 2019.
“The acquisition furthers our category leadership strategy in urology and the SpaceOAR hydrogel is a crucial addition to our growing prostate health treatment portfolio of products that improve the quality of life and clinical outcomes for men with prostate cancer and benign prostatic hyperplasia,” said Dave Pierce, president, MedSurg, Boston Scientific. “The injection of this hydrogel during a minimally-invasive, in-office procedure can reduce the unwanted and unintended side effects of prostate radiation and provide substantial peace of mind for patients and their treating physicians.”
Clinical trials in Europe and the U.S. have demonstrated that the space created by the hydrogel significantly reduces the amount of radiation delivered to the rectum. Additionally, the randomized SpaceOAR hydrogel U.S. clinical trial demonstrated that patients who received the hydrogel spacer reported significantly less rectal pain during prostate radiotherapy and had significantly less severe long-term rectal complications, including zero incidence of grade 2 rectal toxicity versus a 5.7% rate experienced by patients without the spacer.
A single injection of the SpaceOAR hydrogel is designed to maintain the space between the rectum and prostate for three months – within the duration of a standard radiation treatment schedule. The absorbable hydrogel is gradually reabsorbed by the body within six months of injection.
“We are proud of the clinical and commercial outcomes we’ve been able to achieve for SpaceOAR hydrogel thus far, and are excited to drive accelerated adoption leveraging Boston Scientific’s urology and pelvic health expertise,” said John Pedersen, chief executive officer, Augmenix. “The company also has the additional resources needed to further explore expansion of indication to other organs throughout the body that could benefit from space creation – such as gynecological and pancreatic cancers.”
The transaction is expected to be immaterial to adjusted earnings per share in 2018 and 2019, accretive in 2020 and increasingly accretive thereafter. On a GAAP basis, the transaction is expected to be less accretive, or more dilutive as the case may be, due to amortization expense and acquisition-related net charges. The acquisition is projected to close early in the fourth quarter of 2018, subject to customary closing conditions.
Augmenix, founded in 2008 based on technology from Incept LLC, is based in Bedford, MA, and has approximately 140 employees. Additional information about Augmenix and the SpaceOAR Hydrogel can be found at www.spaceoar.com.
In EpiPen shortage, Walgreens teams with drug firm Kaleo for free alternative
Amid a shortage of EpiPens, Deerfield-based Walgreens is partnering with a competing drugmaker to make it easier for consumers across the country to get its devices.
Auvi-Qs — devices used to inject epinephrine to counter severe allergic reactions — are available for the first time at Walgreens stores nationwide. Before, consumers seeking Auvi-Qs mostly got them through the mail.
A two-pack of the devices has a wholesale price of $4,900, according to Elsevier’s Gold Standard Drug Database, but the devices will be free to most consumers. Drugmaker Kaleo will cover any out-of-pocket costs for people with private insurance, regardless of whether their insurance agrees to cover the medication.
If a consumer’s insurance company agrees to cover the product, the consumer can get it at Walgreens and Kaleo will cover any deductible or copay costs. If a person’s insurance doesn’t cover the product, Walgreens will reach out to Kaleo’s hub of specialty pharmacies, which will mail the devices to the customer’s home, Kaleo President and CEO Spencer Williamson said.
The companies partnered “to try to address this supply shortage,” especially now, during back-to-school season, which is when a majority of epinephrine prescriptions are filled, Williamson said.
“There’s been a lot of awareness around the epinephrine shortage, and it’s a very important lifesaving medication, so we really wanted to be innovative and partner with someone to help improve the accessibility for the medication,” said Nicole Leiter, a corporate operations vice president with Walgreens.
The most popular type of epinephrine auto-injector, the EpiPen, has been in short supply for months, sending some parents and patients scrambling.
The U.S. Food and Drug Administration added EpiPens and a similar epinephrine auto-injector made by Impax Laboratories to its drug shortage list in May. The EpiPen shortage is due to “manufacturing constraints” at the Pfizer subsidiary that makes the device, according to the FDA.
Pfizer recently extended the expiration dates of many of EpiPens to try to ease the shortage, and the drugmaker has said it expects supplies to stabilize in the fourth quarter of this year. The FDA also recently granted another company approval for a generic EpiPen.
Auvi-Qs perform the same function as EpiPens but are shaped differently and play audio that walks users through the process of delivering injections.
The list price of Auvi-Q is much higher than that of EpiPens, which can cost as much as $600 for a two-pack, according to Elsevier.
Williamson said Kaleo set the Auvi-Q’s price where it did because many large insurers refused to cover it at the same level as other similar products when the company reintroduced the device in 2017. Kaleo had to set the price at a certain level so it could give the auto-injectors for free to the many consumers whose insurance plans wouldn’t cover it, he said.
“That’s how we provide access to all patients,” Williamson said.
It’s a tactic that has drawn criticism from some, including Sen. Chuck Grassley, R-Iowa, who last year wrote in a letter to Williamson, “Your pricing structure may simply shift the burden and cost to another entity within the health care system.”
Michael Carrier, a professor at Rutgers University Law School, said it’s a particularly aggressive strategy for getting a product into patients’ hands.
“It shows how our health care system is broken, the fact that some entities are paying $5,000 and some are getting it for free,” Carrier said.
Walgreens customers will generally need prescriptions for Auvi-Qs from their doctors to get the devices, Leiter said. If a customer has a prescription for a different auto-injector that’s out of stock, Walgreens can reach out the customer’s doctor to see if a prescription for a different device can be written, she said.
Quest: Drug Misuse Stays Constant, High, Opioid-linked Drug Combining Prevalent
More than half (52 percent) of Americans tested in 2017 misused their prescription drugs, the same rate as in 2016, but the epidemic is shifting beyond prescription opioids to encompass other drugs and dangerous drug combinations, finds a new Health Trends™ report released today by Quest Diagnostics (NYSE: DGX): Drug Misuse in America 2018.
Based on 3.9 million de-identified test results performed for patients by Quest Diagnostics between 2011 and 2017, this report is believed to be the largest of its kind to provide current insights into prescription and illicit drug use and misuse in the United States based on laboratory insights.
To access the full report, go to www.QuestPDMReport.com.
“The majority of patients continue to show evidence of drug misuse, and this problem affects all age groups and both genders. When it comes to drug misuse, everyone is at risk,” said lead author F. Leland McClure, PhD, MSci, F-ABFT, director, medical science liaison, medical affairs, Quest Diagnostics. “The overall rate of misuse did not change, but our data found significant shifts in the nature of the epidemic. We’re encouraged by a decline in the use of non-prescribed opioids and other drugs among general care patients, but alarmed by sharp increases for certain drugs among patients in treatment for substance use disorders (SUD).”
Among general care patients, who account for more than nine in ten of patients tested by Quest Diagnostics, the Health Trends report shows a decline in the use of non-prescribed opioids and amphetamines, as well as illicit drugs. Among patients in treatment for SUD, the data show use of non-prescribed and illicit drugs surged across almost all drug classes. Additionally, for this group of patients, misuse of heroin and non-prescribed fentanyl increased nearly 400 percent.
Report reveals dangerous opioid-related drug combining
The Health Trends report additionally found that drug mixing is the most common type of misuse. One in five (20 percent) test results showed potentially dangerous concurrent use of opioids and benzodiazepines in 2017. In almost two-thirds of these cases (64 percent), at least one of the drugs was not prescribed. Patients who were older and in Medicare were at heightened risk. These findings were presented at PAINWeek, a national conference held in September 2018 in Las Vegas.
The Health Trends report additionally found that drug mixing is the most common type of misuse. One in five (20 percent) test results showed potentially dangerous concurrent use of opioids and benzodiazepines in 2017. In almost two-thirds of these cases (64 percent), at least one of the drugs was not prescribed. Patients who were older and in Medicare were at heightened risk. These findings were presented at PAINWeek, a national conference held in September 2018 in Las Vegas.
In addition, the report found that mixing of heroin and fentanyl – a synthetic opioid that is 50 to 100 times more potent than morphine – is on the rise. Heroin and fentanyl belong to the opioid class of drugs, and combinations of the two can powerfully depress respiration. Among the patient test results that were positive for heroin, 83 percent were also positive for non-prescribed fentanyl, nearly double the rate in 2016 (45 percent).
“Quest’s Drug Misuse in America 2018 report provides sobering data-driven insight into one of the most pressing health issues facing our country. It highlights the need for a sharper focus on patients with substance use disorders,” commented Charles Neighbors, PhD, director of health services research for Center on Addiction, a nonprofit organization focused on improving the understanding, prevention and treatment of addiction. “The surge in heroin and non-prescribed fentanyl among this group is especially alarming, given its often deadly effect. Clearly more must be done to ensure this group of patients receives effective treatment.”
Additional findings in the Health Trends report include:
- Gabapentin misuse is on the rise. While use of non-prescribed gabapentin increased slightly among general care patients (up 1.8 percent), it surged by nearly 800 percent among patients in treatment for SUD, the most dramatic rate of increase of any of the drug classes tracked by Quest. Eight percent of the substance use disorder treatment population used non-prescribed gabapentin, compared to 9.6 percent of the general care population. While the medication is generally not addictive in itself, gabapentin can exaggerate the effects of opioids. Research shows that individuals taking prescription opioids and gabapentin concomitantly have a 49 percent greater risk for opioid-related death than those treated with opioids only.1
- Use of medical marijuana surged by nearly 620 percent overall, with the general care population experiencing the highest rate of increase. Just over two percent (2.1 percent) of the general care population used medical marijuana, compared to less than one-half of one percent (0.4 percent) of the substance use disorder treatment population. Recreational marijuana use dropped more than 5 percent across both populations, though its overall rate of use, at 14.7 percent, was still higher than medical marijuana. “Medical” and “recreational” use of marijuana was determined based on information about the medication regimen provided by the patient’s physician.
- Cocaine use declined while use of non-prescribed amphetamines rose, driven by sharp increases among patients in substance use disorder treatment.Among stimulants, the use of cocaine declined by 40 percent among all patients tested, but use of non-prescribed amphetamines increased, driven by surging rates of use among patients in treatment for SUD.
“Our data suggests that some physicians and patients may be turning to alternative sources of pain relief, perhaps in response to mounting controls on opioid prescribing,” said report co-author Jeffrey Gudin, MD, a medical advisor to Quest Diagnostics and director of pain and palliative care at Englewood Hospital and Medical Center, New Jersey. “This is a reminder that sharp restrictions on opioid prescribing alone will not solve the prescription drug epidemic. Until improved solutions emerge for treating chronic pain, better monitoring of patients taking prescription opioids and other potentially dangerous medications is essential.”
The report’s methodology, including the strengths and limitations of Quest data, is described in detail on page 16 of the report which is available for download at www.QuestPDMReport.com.
Quest Diagnostics manages the largest database of de-identified clinical laboratory data, based on 44 billion laboratory test results. From this data, the company derives clinically significant insights that empower patients, healthcare practitioners and policymakers to improve health. Developed in collaboration with top researchers and institutions, Quest Diagnostics Health Trends™ studies are published in peer-reviewed medical journals and by the company as a public service. Quest Diagnostics Health Trends™ reports have yielded novel insights to aid the management of allergies and asthma, clinical (prescription) drug monitoring, chronic kidney disease, diabetes, heart disease, influenza and wellness. The company also produces the Drug Testing Index (DTI)™, a series of reports on national workplace drug positivity trends. More information about the Quest Diagnostics Health Trends studies can be found at QuestDiagnostics.com/HealthTrends.
CVS Caremark to Tackle Drug Prices with New Program
Although there is a general complaint about drug prices, which rocketed into the public domain during the 2016 U.S. presidential election, nothing particularly dramatic has been done about it. There appear to be at least two primary components of high drug prices: high launch prices of new brand biologics and overall year-to-year price increases for brand drugs already on the market. One report, according to the Association for Accessible Medicines, cites the average annual price of specialty drugs tripling over the last decade, jumping from about $18,000 to more than $52,000.
One thing that was supposed to decrease the price of biologics was the advent of biosimilars. Biosimilars are basically generic versions of biologic drugs, although unlike generic drugs, though they are not direct copycats of the originating drugs, but “similar.” This requires them to undergo a regulatory process similar to that for the drug they are copying.
However, although biosimilars have caught on in Europe, they have a much smaller presence in the U.S. market. The U.S. Food and Drug Administration (FDA) has only approved about 11 biosimilars in the U.S. compared to approximately 25 in Europe. And only about three of them are available in the U.S. because of business tactics branded drug companies have used to slow the competition.
FDA Commissioner Scott Gottlieb, in a July speech to the Brookings Institution, said, “It’s anemic because consolidation across the supply chain has made it more attractive for manufacturers, Pharmacy Benefit Managers, Group Purchasing Organizations and distributors to split monopoly profits through lucrative volume-based rebates on reference biologics—or on bundles of biologics and other products—rather than embrace biosimilar competition and lower prices.”
He also denounced litigation that has delayed market access for biosimilar products. In that regard, the FDA developed a Biosimilars Action Plan with 11 key actions designed to improve biosimilar presence in the U.S. They include:
- Develop and implement new FDA review tools.
- Create information resources and development tools for sponsors.
- Enhance the Purple Book to include more data about approved biological products.
- Explore the possibility of data sharing agreements with foreign regulators.
- Establish a new Office of Therapeutic Biologics and Biosimilars (OTBB).
- Expand on the agency’s Biosimilar Education and Outreach Campaign.
- Publish final or revised draft guidance on biosimilar product labeling.
- Provide more or extra clarity for developers on demonstrating interchangeability.
- Provide additional clarity and flexibility on analytical approaches to evaluating product structure and function.
- Give more support over product quality and manufacturing processes.
- Engage in a public dialogue through a Part 15 hearing and opening a docket to request additional information from the public.
CVS Caremark took matters into its own hands recently and launched a new program that will compare the cost and effectiveness of specific medications, particularly launch prices of new drugs, hoping to pressure manufacturers to decrease drug costs.
“No one but manufacturers have, until now, had any control over the launch price of newly patented drugs,” CVS stated in its announcement. “This new approach, harnessing the power of the market, could change manufacturer behavior.”
Part of the company’s initiatives is the CVS Pharmacy Rx Savings Finder, “which will enable the company’s retail pharmacists for the first time to evaluate quickly and seamlessly individual prescription savings opportunities right at the pharmacy counter. This new tool further enhances existing savings opportunities the company’s pharmacy benefit manager (PBM) CVS Caremark is currently offering its clients such as the preventive drug lists that make medications for many common, chronic conditions available at a $0 copay.”
CVS also said it plans to offer real-time, member-specific drug costs and lower-cost alternatives to prescribes via its electronic health record system and a member portal.
Kevin Hourican, executive vice president, Retail Pharmacy, CVS Pharmacy, stated, “Armed with the information available through our Rx Savings Finder, our more than 30,000 CVS pharmacists can play an important role by helping patients save money on their medications, providing advice on how and when to take them, and ultimately helping them achieve better health outcomes. We are beginning this process with our CVS Caremark PBM members and expect to roll it out more broadly throughout the year.”
The company plans to set a threshold of $100,000 per QALY, or quality-of-life years for drug launches. This measures the quantity and quality of life created by providing a treatment.
It would appear that 2018 is the year that pharmacy benefit managers have taken a great deal of criticism from the industry, while also punching back. In April, Express Scripts, the largest prescriptions benefits manager in the U.S., targeted Amgen and Eli Lilly’s new migraine medicines to control drug prices.
The typical strategy is having a high U.S. list price, then lowering it for health plans through rebates. Express Scripts is pushing the two companies to skip that strategy. Reuters notes, “It is also seeking a refund if the drugs don’t work within a defined timeframe. The shift could help Express Scripts and other pharmacy benefits (PBMs) bring prices down and deflect growing criticism of their role as ‘middlemen’ in the drug supply chain.”
Express Scripts’ chief medical officer, Steve Miller, told Reuters, in a message seemingly aimed at drug companies, “If your expectation is that you are not going to actually get that high list price, then don’t do that to patients who have high co-pays. Let’s be more balanced. Let’s get back to where gross-to-net is not so different.”
At the end of July, Leonard Schleifer, the co-founder of Regeneron Pharmaceuticals criticizedpharmacy benefits managers during a Forbes interview.
Forbes provided a succinct description of U.S. drug pricing, writing, “In a complicated ritual, a drug developer sets a steep list price on a novel treatment, then cuts rebate deals with the middlemen called pharmacy benefit managers. The rebates, which go back to insurance companies or the employers that pay insurance companies, mean insurance plans favor one medicine over another for financial reasons. Schleifer says the whole system ‘needs a reboot.’ But in the meantime, he has to play the game.”
One thing that Regeneron does in terms of pricing that seems a little unusual, is to submit its pricing scheme to the Institute for Clinical & Economic Review, a nonprofit that typically argues drugs are too expensive. Regeneron submitted Dupixent to the Institute for their review. “This is really a great example of how it should work,” said Steven Miller, the chief medical officer at Express Scripts, at the time.
Maybe, although Schleifer clearly isn’t a fan of how the pharmacy benefit managers fit into the pricing system. Forbes notes, “The difference between a $10,000 drug with a $4,000 rebate and a drug simply priced at $6,000 is that the former lets the benefit manager crow about the savings it delivers and pass money back to the company buying the health plan. ‘I would like to see the rebate system go away,’ Schleifer says.”
Only a few days later, Ian Read, Pfizer’s chief executive officer, took a turn criticizing rebates and pharmacy benefits managers. Read indicates that Pfizer presently gets about 58 percent of its list prices on drugs, with about 40 percent going to middlemen. Reuters notes, “He said ending the rebate system would allow drugmakers to keep price hikes in line with health care inflation. The largest U.S. drugmaker retreated from planned price hikes on about 40 of its drugs earlier this month, following criticism from President Trump. Read has spoken with Trump and visited the White House since deferring those price increases.”
Reuters noted that the Trump Administration has proposed a rule to push back protections already in place that allow rebates between drug companies and pharmacy benefit managers (PBMs). Read believes the administration wants to eliminate them completely and has discussed its plans “in broad terms” with Health and Human Services Secretary Alex Azar.
At heart, it sounds like drug companies are blaming the high cost of drugs on the cuts pharmacy benefits manager take on drugs, while the PBMs blame the drug companies for the high initial prices. It’s not inconceivable that CVS Caremark and other PBMs are responding to criticisms by the industry, but also attempting to put policies into place that could fend off dramatic changes by the Trump Administration. Or perhaps, as STAT points out, “PBMs are under pressure to demonstrate their own value at a time of rising drug prices.”
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