Roche doesn’t need M&A to boost sales, sees growth from own meds – CEO

Swiss drugmaker Roche sees sales rising in the longer term from medicines in its own pipeline, Chief Executive Severin Schwan told Reuters on Friday, adding he does not want or need to do takeovers to mitigate looming patent losses.

In an interview at Roche’s Basel headquarters, Schwan also said ongoing U.S. Federal Trade Commission (FTC) scrutiny of Roche’s $4.3 billion takeover of Spark Therapeutics came as a surprise, forcing delays.

Roche has twice upgraded 2019 sales forecasts, the latest time to mid- to high-single-digit percentage rate growth, as medicines including Ocrevus for multiple sclerosis and Hemlibra for haemophilia A offset incursions by rivals’ copies of its $22 billion-per-year cancer trio Herceptin, Rituxan and Avastin.

Schwan sees these newer drugs — combined with late-stage trial hopefuls including for Huntington’s disease, lupus and spinal muscular atrophy — maintaining momentum without forcing him to look beyond Roche’s own research departments for help.

“I feel confident that we have a strong pipeline that would support growth in the longer term,” said Schwan, in his 12th year as CEO.

Roche shares have risen 11% this year, lagging the 20% gain of the Stoxx European Health Care Index <.SXDP>, as investors continue to worry about rivals’ copies taking market share in Europe and increasingly in the United States, Bank Vontobel analysts said in an Aug. 30 note.

Schwan distanced himself from big takeovers, saying M&A to spur growth is too risky.

“I don’t think it’s a wise strategy in the long term to fill a growth gap by M&A,” he said. “If you start filling gaps, you run the risk that you overpay or you take on board assets which do not fit strategically.”

Still, Roche is screening bolt-on technology deals, Schwan said, such as the Spark transaction to add one approved gene therapy, $850,000-per-patient blindness treatment Luxturna, and several others in trials, including for haemophilia A.

The FTC’s move to put the Spark transaction under its microscope came unexpectedly, said Schwan, forcing him to abandon original expectations to take ownership by June.

It is now expected by year’s end, he said, at identical terms announced in February.

“We thought we should close this relatively quickly without a more-detailed review,” Schwan said. “That was not in line with our expectations.”

https://www.marketscreener.com/SPARK-THERAPEUTICS-INC-20798561/news/Roche-doesn-t-need-M-A-to-boost-sales-sees-growth-from-own-meds-CEO-29169399/

Novartis wins FDA’s breakthrough tag for lung cancer hopeful

 Novartis has secured the U.S. Food and Drug Administration’s Breakthrough Therapy Designation for its investigational medicine capmatinib, which it aims to file for approval later this year against a mutated form of lung cancer.

Novartis is aiming to win approval for oral capmatinib as a first-line treatment for patients with metastatic MET exon14 skipping-mutated non-small cell lung cancer (NSCLC), a form of the disease for which there are no targeted therapies now, the Basel-based company said on Friday.

https://www.marketscreener.com/NOVARTIS-9364983/news/Novartis-wins-FDA-s-breakthrough-tag-for-lung-cancer-hopeful-29167013/?countview=0

Endo files U.S. application for product for cellulite treatment

Endo International plc (ENDP +9.7%) has submitted a marketing application to the FDA seeking approval to use collagenase clostridium histolyticum (CCH) to treat cellulite in the buttocks.

CCH, a combination of bacterial enzymes that break down collagen, is marketed in the U.S. by Endo’s pharmaceutical unit as XIAFLEX for the treatment of Dupuytren’s contracture and Peyronie’s disease.

https://seekingalpha.com/news/3497671-endo-files-u-s-application-cch-cellulite-shares-10-percent

AtriCure rebounds from bearish report-stoked selloff

Thinly traded AtriCure (ATRC +6.8%) is up on average volume, a modest 200K shares, as JPMorgan steps in to defend the stock after yesterday’s 10% selloff in apparent reaction to a bearish report from Culper Research.

Culper believes that there is 57% downside risk in the stock citing pressure on its open heart segment (65% of revenues) as procedures migrate to minimally invasive approaches to treat atrial fibrillation. It also questions the objectivity of a group of physicians that the company generously pays ($19.8M from 2013 – 2018) to promote their minimally invasive procedures directly to patients and an ongoing U.S. Justice Department investigation into its promotional activities (off-label use).

JPMorgan’s Robbie Marcus (Overweight/$40) counters that Culper’s information is neither new nor material and believes that the selloff represents an attractive buying opportunity.

https://seekingalpha.com/news/3497697-atricure-rebounds-bearish-report-stoked-selloff-7-percent

Lannett’s Posaconazole Deal May Avert Bankruptcy Concerns

LCI’s new distribution agreement for Sinotherapeutics’ Posaconazole 100mg tablets has the potential to generate $72 million in sales in the first year.

Despite being based in Shanghai, Sinotherapeutics’ manufacturing facilities have been routinely inspected by the FDA, with no Form 483(s) ever issued.

Combined with organic R&D growth, sales from LCI’s new distribution deal will more than offset the risk of Medicare reform.

A return to growth will allow the company to refinance, which will definitively steer the company away from bankruptcy.

Updated Company Thesis

Lannett Company’s (LCI) previous sell rating was issued on the basis of its debt and potential price fixing lawsuit settlements overwhelming the company’s assets. In addition, drug price erosion due to Medicare reform were projected to be en route to wiping out the company’s revenue CAGR from 2020 to 2022. The recent generic Noxafil deal with Sinotherapeutics, however, definitively tips the scale in favor of growth for LCI. Moreover, residual sales of Levothyroxine from a new distribution agreement commencing no later than 2022 certainly shines a light on the company’s cash flow situation. In all, the author is now confident in management’s guidance of 15% net revenue CAGR. Furthermore, growth from the company’s surprisingly profitable R&D program now places refinancing on the table. With bankruptcy now several leagues away from its pre-Q2 2019 earnings call, the stock’s distress discount should now dissipate to make way for a successful turnaround.

https://seekingalpha.com/article/4289581-lannetts-posaconazole-deal-highly-credible-partner-definitively-averts-bankruptcy-concerns

Cytokinetics’ target raised to $20 from $14 at Cantor Fitzgerald

Cytokinetics (NASDAQ:CYTK)‘s stock had its “overweight” rating reiterated by investment analysts at Cantor Fitzgerald in a research report issued to clients and investors on Friday, The Fly reports. They currently have a $20.00 target price on the biopharmaceutical company’s stock, up from their previous target price of $14.00.

Cytokinetics’ (CYTK) “Overweight” Rating Reaffirmed at Cantor Fitzgerald

Boston’s Seaport District poised to break out as second-largest lab cluster in Mass.

As Greater Boston further cements itself as the global epicenter of life sciences research, developers are trying to keep up with demand. Not surprisingly, the region has once again topped the list of premier life sciences clusters in the U.S according to JLL’s eighth annual Life Sciences Outlook. Finding lab space, however, remains a key challenge with developers unable to build new space quickly enough and vacancy rates getting lower and lower.

“Finding space for growth in these top life sciences clusters is getting more and more difficult,” said JLL director of life sciences research Lisa Strope. “Even with over 3.3 million s/f of new construction under way in Boston, there is no end in sight. Additionally, we’re continuing to see the blurring of boundaries of the traditional cluster.”

The Greater Boston life sciences cluster has long been dominated by Cambridge, but with rising real estate costs and low availability, other Boston neighborhoods are continuing to dominate lab leasing and development activity. New class A asking rents in Kendall Sq. have topped $100 NNN per s/f for the first time ever, while asking rents in West Cambridge are also reaching all-times high at above $70 NNN. Coupled with less than a 1% vacancy in the market, lab companies are increasingly looking to the suburbs and Seaport District as in-demand locations.

“The Seaport is arguably one of the hottest new urban lab clusters,” said JLL managing director and life sciences brokerage lead Don Domoretsky. “We’re seeing developers heavily invest in both future lab and mixed-use sites around the neighborhood. Although the current market is only about 1.7 million s/f, the proposed development pipeline of about 3 million s/f could make the Seaport the second-biggest lab cluster behind Kendall Square within a few years.”

Quickly becoming one of Boston’s most innovative and growing neighborhoods, the Seaport is already home to quite a few notable life science developments, including Innovation Square’s (iSQ) 385,000 s/f campus. With Phase I of iSQ completed earlier this summer, Phase II has already broke ground and will include 260,000 s/f of LLED certified state-of-the-art lab, amenity, retail and green space.

Other proposed projects include Related Beal’s 6.5-acre future mixed-use site that could accommodate more than 1 million s/f of office, multifamily and lab. Additionally, Tishman Speyer announced plans for a 245,000 s/f speculative lab building on the A St. corridor that will replace an existing flex warehouse building.

Although Greater Boston has maintained its ranking as the #1 life sciences cluster for eight consecutive years, San Francisco remains eagerly right behind. With fast growing clusters like Denver and Raleigh-Durham uniquely positioned for growth with some of the highest vacancy rates, Boston needs to continue finding emerging clusters within its neighborhoods and suburbs to maintain its top spot in the nation.

JLL’s annual Life Sciences Outlook tracks geographic shifts in life sciences innovation, operations and facilities investments, including an analysis of markets actively investing in their life sciences sectors. It includes a ranking of the top U.S. life sciences clusters, as well as an analysis of global trends.

https://nerej.com/boston-s-seaport-district-poised-to-break-out-as-second-largest-lab-cluster-in-mass