Tuesday, July 2, 2019
USANA Health Sciences cuts 2019 outlook
USANA Health Sciences (NYSE:USNA) anticipates Q2 sales in the range between $253M – $256M, compared to $301M last year, and EPS of ~$0.91 – $0.95, compared with $1.36 in the prior-year period.
The company lowered its FY19 outlook, amid challenging consumer environment in China due to negative media coverage of the health products and direct selling industries
Forecasts sales of ~$1.02B – $1.06B as compared to prior guidance of $1.21B-$1.26B, with EPS of $3.70 – $4.10 down from prior guidance of $5-5.35
Q2 results will be released on July 23, 2019.
Arbutus sells portion of Onpattro royalties to Canadian pension plan
Arbutus Biopharma (NASDAQ:ABUS) has sold a part of its royalty interest in future global sales of Alnylam Pharmaceuticals’ ONPATTRO (patisiran), approved by the U.S. and Europe in August 2018 for polyneuropathy caused by hATTR, to an Ontario, Canada-based pension plan called OMERS.
Under the terms of the agreement, Arbutus will receive $20M gross, to be retained by OMERS until it has received a total of $30M in royalties.
Under the terms of its license with Alnylam, Arbutus will receive tiered royalties of 1.00 – 2.33% after offsets. The royalties that it will receive under its license deal with Acuitas Therapeutics are unaffected.
Bayer backs cell therapy startup with $215M in funding
- Bayer is betting cell therapy’s future will be led by allogeneic, or “off-the-shelf,” treatments, backing biotech start-up Century Therapeutics with $215 million.
- The financing, which was announced Monday, comes via the German pharma’s venture investment arm Leaps by Bayer. Versant Ventures, Century’s creator, and Fujifilm Cellular Dynamics will add another $35 million to bring Century’s funding to $250 million.
- Century aims to develop therapies for blood cancers as well as solid tumors. Unlike other allogeneic companies, however, the newly minted biotech will use induced pluripotent stem cells, manufactured by Fujifilm.
First-generation cell therapies, such as those developed by Novartis and Gilead, rely on immune cells collected from each individual patient. A painstaking manufacturing process then yields the engineered CAR-T cells capable of seeking out and attacking cancer, which are then reinfused back into the patient.
That complex production is one reason driving investment and research into so-called allogeneic cell therapies.
Freed from the need to extract patient immune cells each time, such treatments could in theory be administered rapidly, rather than in the two to three weeks now typical for CAR-T therapies like Novartis’ Kymriah (tisagenlecleucel) and Gilead’s Yescarta (axicabtagene ciloleucel).
Allogene Therapeutics, for example, raised more than $300 million in an initial public offering last fall based on the promise of its allogeneic product pipeline. Led by the founders of Yescarta’s original developer, Kite Pharma, Allogene is seen as one of the leaders in “off-the-shelf” cell therapy.
Allogene uses T cells from screened healthy donors it then engineers to express chimeric antigen receptors, or CARs — a point of contrast with Century’s planned approach using induced pluripotent stem cells, or iPSCs.
Reprogrammed into an embryonic-like state, iPSCs can be developed into other cell types and propagate indefinitely. For Century, the cells will be expanded and differentiated into immune effector cells, the foundation for the biotech’s planned allogeneic programs.
Fujifilm’s backing gives Century an iPSC manufacturer from the start.
Others are exploring use of iPSCs in cancer cell therapy. Fate Therapeutics, for example, has a pipeline of iPSC-based immuno-oncology candidates.
For Bayer, the funding gives a window into early allogeneic research. While the pharma has invested more heavily in cancer, owning full rights to Loxo Oncology’s Viktrakvi, it hasn’t moved into the cancer cell therapy field.
It has, however, invested in iPSCs, having teamed up with Versant in 2016 to launch BlueRock Therapeutics with $225 million in funding. BlueRock, though, is exploring whether iPSCs could be used to develop treatments for cardiovascular and neurological disorders.
Bayer’s venture arm has also backed Casebia Therapeutics, a CRISPR-based gene editing biotech, and Jyon Bio, which is focused on agriculture.
Researchers Create “Embryoids” Using Stem Cells
Much of what happens as a human embryo develops is unknown. It’s been defined in animal models, but not in humans. Much of the reason for that is related to ethical limitations on what type of research can be conducted on human embryos. There is a ban, which is called the 14-day rule, on conducting experiments on real human embryos after 14 days of growth.
Researchers at Rockefeller University appear to have found a way to work around that ethical limitation, although it brings its own set of concerns with it.
The scientists, led by molecular biologist Ali Brivanlou, used human embryonic stem cells to develop living models of human embryos that could be studied in the laboratory. The three-dimensional model of a human epiblast had the size, cell orientation and gene expression roughly equivalent to a day 10 human epiblast.
“We came up with a model of human embryos that are developed outside of the womb and is not the product of the sperm and the eggs but is the product of human embryonic stem cells that self-organize into complicated structures,” Brivanlou told NPR.
The team took human embryonic stem cells and placed them into Petri dishes that contained a gel and added a protein. The cells organized into three-dimensional balls that were hollow inside but resemble early embryos.
“Our experimental model looks like a ball—a shell—of cells,” Mijo Simunovic, the study’s first author told NPR. “This is more or less what the embryonic tissue looks like at this stage.”
Perhaps more importantly, the cell ball then self-organized, breaking symmetry.
“This process of symmetry breaking is a major holy grail of development biology,” Brivanlou stated. “Life is a continuation of symmetry-breaking events.”
“Scientifically, this research is important,” George Daley, a leading stem-cell researcher and the dean of the Harvard Medical School, told NPR. “We really don’t have access to the earliest stages of development. And here we have this remarkable tool in a petri dish.”
From an ethics standpoint, the research is promising but does raise some questions. These synthetic embryos have shown the very first signs of developing what is called the primitive streak, which is the earliest indication of the embryo in a fertilized ovum in higher vertebrates. The primitive streak is much like the 14-day rule, in that it typically marks the end of embryonic experiments.
“As the embryo models become much more complete and much further along in showing us how the human body develops after fertilization, one might begin to wonder: At what point do these models effectively just become the real thing?” said Insoo Hyun, a bioethicist at the Case Western Reserve University and Harvard Medical School, who was not involved in the research, reports NPR.
Simunovic, however, is quick to point out that, “These are not actual human embryos. And they would never become human embryos if we let them grow.”
But the researchers are working on developing more sophisticated embryoids, which will undoubtedly continue to challenge medical ethics and experimental guidelines. The International Society for Stem Cell Research, for example, plans to revise its guidelines for this type of research as a result of this study.
“The research is unpredictable,” Hyun told NPR. “The cells are self-organizing in a way that sometimes surprises the researchers—they get a level of complexity that they did not expect. There are dangers lurking ahead.”
The research was published in the journal Nature Cell Biology.
Amarin Plans to Double Size of Sales Force to 800
Amarin Corporation, based in Bedminster, New Jersey and Dublin, Ireland, provided a mid-year update, noting that it is increasing revenue guidance for the year. It is also planning to dramatically expand its sales force for Vascepa (icosapent ethyl) because growth is faster than expected.
Vascepa is made up of a purified component of fish oil called eicosapentaenoic acid (EPA). The drug has been approved to treat patients with triglyceride levels higher than 500 milligrams per deciliter, triple normal levels.
Part of the company’s update was to remind everyone that it has a September 28 target action date with the U.S. Food and Drug Administration (FDA) for its supplemental New Drug Application (sNDA) for Vascepa for broader promotion of the drug. The sNDA is based on positive data from the REDUCE-IT cardiovascular outcomes trial. If approved, it will be the first drug to indicate it can decrease residual cardiovascular risk in patients with statin-managed LDL-cholesterol but persistently elevated triglyceride levels.
Amarin also reported record revenue levels. Net total revenue for the first quarter were $97 to $101 million and for the six-month mark, between $170 and $174 million. That’s an increase of about $44 to $48 million, or 84% to 92% for the second quarter 2019 over the same period of 2018 and an increase of $73 to $77 million, or 76% to 80% for the first half of 2019 over the same period last year. Those are mostly driven by Vascepa sales.
As a result, Amarin increased its net total revenue guidance for the year to $380 to $420 million.
And because of the growth of Vascepa, it plans to increase the size of its U.S. sales force to about 800 sales representatives. It hopes to have the expanded team hired, trained and in the field by October 2019. This will essentially double the size of its current sales force.
The company noted, “The size of the planned expansion reflects the result of evaluations involving multiple contributing factors. Previously Amarin had estimated the potential expansion of its sales force to reach between 600 and 800 sales representatives and for the expansion to potentially occur in phases. The decision to expand the sales to approximately 800 sales representatives by October 2019 was based on new information including the encouraging progress being made by sales representatives hired at the start of 2019, positive feedback from physicians with deep understanding of the REDUCE-IT data, additional data on the commercial opportunity that exists in detailing physicians who have not yet been educated about Vascepa and data suggesting that education of healthcare professionals regarding Vascepa will be improved if our sales representatives call on physicians with greater frequency.”
Last year, Amarin hired and deployed 265 new sales members within about three months after the REDUCE-IT trial data was reported. They received more than 20,000 applications for those open sales jobs. Based on that, as well as the Vascepa trial data, the company believes it can double its sales force to 800 by October.
In a crowded psoriasis field, who could nab Celgene’s Otezla—and at what price?
Antitrust regulators recently surprised industry watchers with the stipulation that Bristol-Myers Squibb sell Celgene’s Otezla to win U.S. clearance for its $74 billion merger. But since then, as there’s no way around it, analysts have pulled out their calculators trying to put a dollar figure on the drug.
Otezla could get Bristol about $5.4 billion, Bernstein analyst Ronny Gal said in a Monday note to clients. But his peers at Credit Suisse, Jefferies, RBC Capital and Wolfe Pharma are modeling around $8 billion to $10 billion.
As Gal put it: “This is primarily a question of IP.”
Most of the patents around Otezla expire in September 2023, Gal noted. There is one patent covering its use in psoriatic arthritis that expires in 2034, which Gal said could be bypassed because it’s a small carveout covered by what’s known as a “section VIII statement” under Hatch-Waxman, where a generic drugmaker can seek approval by carving out a protected indication.
The main controversy lies in a patent covering “optically pure” Otezla that expires in August 2028. While the other analysts based their calculations on Otezla exclusivity lasting at least into 2028, Gal argued the 2028 patent “has to be viewed as suspect given [composition of matter] expires earlier and ~20 generics challenged the patent.”
Gal figures a buyer could get away with paying the full price for the drug through the 2023 patent cliff and then for only 33% odds of it reaching 2028. Currently, consensus pegs Otezla’s 2020 sales at $2.06 billion, jumping to $2.42 billion in 2023 and then plateauing at $2.49 billion throughout 2028. After considering direct costs of $600 million—because psoriasis is a highly competitive market—and an acquirer tax rate of 20% and 7.5% discount rate, Gal arrived at $5.4 billion.
For RBC Capital Markets analyst Brian Abrahams’ team, annual revenue estimates for Otezla are largely in line with the Street’s average, though slightly higher. Abrahams applied a 9% discount rate that considers potential unfavorable IP developments and competition from TYk2 inhibitors, such as the BMS-986165 candidate that Bristol is keeping instead of the Celgene drug. Assuming exclusivity into 2028, “fair value would be $8B for the franchise, potentially as much as $10B with a modest premium in a competitive bidding situation,” he said in a June 25 investor’s note.
Jefferies analyst Michael Yee also put Otezla’s value at four to five times sales, or $8 billion to $10 billion, even though he acknowledged BMS may not fetch the high end given that buyers know the New York pharma has to sell the product.
Credit Suisse’s Vamil Divan expressed a similar opinion. “Given Bristol is a forced seller in this situation, we would be surprised if they obtain a significant premium for the asset, but the range of possible buyers suggests to us that they likely do not need to sell it at a significant discount either,” he noted recently. He said his shop’s database suggests Otezla is worth $9.3 billion.
Now, who could take Otezla over, especially given the U.S. Federal Trade Commission’s stricter stance on pharma M&A that caused the sale in the first place?
“[A] buyer presumably must not have too much direct overlap but yet is interested in immunology and dermatology,” Jefferies’ Yee said. “This seems to be threading a needle.” He figured some specialty pharma or European firms might pull it off, as most Big Biotech and Big Pharma companies already have direct competitors.
Novartis has Cosentyx, Amgen has Enbrel, AbbVie has Humira and Skyrizi, Eli Lilly has Taltz, and Johnson & Johnson has Tremfya, just to name a few. These companies might be interested, but the stress is on “assuming they do not see any regulatory concerns,” Credit Suisse’s Divan said. RBC’s Abrahams added Gilead to the list, saying that it could benefit from bolting on an immunology infrastructure ahead of the launch of its JAK1 inhibitor filgotinib.
For his part, Bernstein’s Gal argued “we can’t really see FTC limiting psoriasis companies with non-dominant share and only injectable (JNJ, BI, NVS, AMGN) or pipeline assets only (GILD).” He listed Gilead, J&J and Amgen as potential buyers.
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