Friday, 3 January 2014
Saturday, 14 December 2013
2013 Biotech & Pharma IPO Review – Most Popular Therapeutic trends, Trending Clinical Stages and post-IPO Winners & Losers
2013 was generally a good year for the markets (and underwriters!). The S&P 500 is up 26% on this time last year, with the NASDAQ composite running slightly higher at 30% - but not even close to the stellar 56% performance of the Biotech Index (fig 1). In fact, few events in other industries could compete with the Great Biotech IPO Fever of 2013, when the IPO conveyor belt went full overdrive, churning out an average of four biotechs a month into the public domain.
Figure 1. Performance of the NASDAQ composite Index, the S&P500 and
the NASDAQ Biotech Index, Dec 11, 2012 – Dec 11, 2013
An awesome $3.5 billion was raised in 46 NASDAQ biotech IPOs this year
(not even including the monster $1 billion IPO of the global CRO Quintiles, or
companies which have gone public on other exchanges) – second only to the
historic year 2000, when altogether 63 biopharmaceutical players floated,
raising nearly $6 billion. Table 1 has a list of this year’s 46
biopharmaceutical IPOs – the last one of which, TetraLogic, began trading just
20 hours ago (on Dec. 12th).
Judging by the performance of the
biotech IPO class of ’13, the markets didn’t seem to mind the craze at all. In
contrast with last year, when the opening share price median was 20% below
anticipated target range, the vast majority of ’13’s IPOs opened above IPO
offer price (despite several necessary revisions), and as of December 11 are
performing at an average of +46% on IPO price, and at +32% (mean) and +3% (median)
since their share price on the first day of trading.
Table 1. Biopharmaceutical IPOs on
the NASDAQ in 2013
For some companies, dreams of public markets did not
materialize this year. Some companies have postponed going public as the markets
no longer seem favorable this year, whilst others have withdrawn IPO filings altogether.
Table 2 has queued, postponed and withdrawn IPOs.
Stage of Development
PhII and PhIII products
constituted an equally shared majority of this year’s IPOs’ products (fig. 1),
as one of the Phase III products already failed in clinical trials (Prosensa’s disapersen).
9 of the leads in 2013 were already marketed products, and one somewhere in
between—the yet-unapproved Omthera’s (now AstraZeneca) Epanova is anticipating an
FDA verdict on May 5th.
There were no pre-clinical lead
players in the 2013 IPO frenzy, unlike the two – Verastem and Regulus—seen in
2012. However, the non-negligible portion of 5 Phase I leads appears to show
that going public for earlier-stage companies is certainly trending, although
not excelling – see below.
Figure 1. Development stages of lead products of companies which
had an IPO in 2013
Best performing clinical stage
As one would expect, market interest
is very visibly deterred by perceived clinical development risk. Development
stage is directly proportional to the performance of the company’s stock
post-IPO, and 2013 was no exception (Fig. 2). Companies with leads in PhI have
performed at an average of just +5% since opening day, whilst marketed products
in contrast performed at t 87% - thanks to some major stars like Insys and GW
Pharmaceuticals.
Figure 2. Average performance of 2013 IPO Companies’ lead products by stage
of development
Therapeutic Area
The most popular therapeutic area
of leads whose companies went public in 2013 was, by a large margin, cancer –
no surprises there (fig. 3). The popularity of this therapeutic area resonates
in other 2013 pharma activities, such as Mergers
and Acquisitions and Drug Approvals. With a higher chance of success, CNS
would have long been the therapeutic area of choice, but pharma and biotech are
seemingly shying away as chances to trial success are now extremely low (with
the exception of pain).
A novel therapeutic area in this
year’s IPO landscape was pet therapeutics (which will probably be gaining popularity
in the near future). Meanwhile, ophthalmology is a quickly expanding
therapeutic field, mainly aimed at eye disorders in the growing elderly
population.
So far, hematology, CNS and pet medicine players are the
best performers of this year’s IPO cycle. The worst performers are orphan and
genetic diseases, with a -44% average since first trade.
Emerging trend in biomarkers & other diagnostic tools
Novel diagnostic tools took
second place in this year’s therapeutic area popularity rankings, comprising
11% of 2013 IPO leads. Biomarkers and novel indicators of hard-to-detect
disease, or disease which needs to be detected in its early stages, such as
Alzheimer’s, are a quickly emerging trend – not just for diagnostic purposes in
hospital settings, but as useful tools which would help companies better define
concrete endpoints in clinical trials.
Many failed CNS drugs of recent
years, for instance, have failed to demonstrate efficacy based on endpoints
which many have deemed far too ambiguous (cognitive improvement based on verbal
memory/performance tests, etc). In fact,
it is likely that the massive potential of CNS will only explored again when
better metabolic and/or genomic markers are present – firstly, to signal the
presence of disease decades before it manifests, and secondly, to eradicate the
destructive ambiguity of questionnaire-type clinical trial design.
Figure 3. 2013 Biopharma
IPOs by therapeutic area of lead product
Rising Stars
Some of the brightest stars in
this year’s IPO group were perhaps unexpected, particularly because two of them
– Alcobra Pharma and GW Phrarmaceuticals are foreigners, hailing from Israel
and the UK, respectively.
Rather suspiciously, the markets
were particularly interested in the “weed experts” Insys Therapeutics (INSY) and GW Pharmaceuticals (GWPH), which specialize in opioid and cannabinoid
marijuana-derived therapeutics for cancer pain and nausea management. Unlike
the majority of IPOs this year, both companies already had products on the
market prior to IPO. Insys has had everyone talking with a 564% surge in just 5
months, from an opening price of $8.50 on May 2nd all the way up to $53.64 in
October. GW Pharmceuticals is up 264% since its debut in May, having hit a peak
performance of 338% in November. Two more opioid developers are due to join GW
and Insys soon: Cara Therapeutics and the Danish Egalet have both filed for
IPOs in Nov/Dec.
Update: On Dec 13th Insys Therapeutics received a subpoena from the Office of Inspector General of the Department of Health and Human Services in connection with an investigation of potential violations involving Health and Human Services programs. Insys stock plunged by 22% intra-day.
Update: On Dec 13th Insys Therapeutics received a subpoena from the Office of Inspector General of the Department of Health and Human Services in connection with an investigation of potential violations involving Health and Human Services programs. Insys stock plunged by 22% intra-day.
Another rising star is Aratana
Therapeutics (PETX) – one of the first ever developers of specialty medicines for
pets (primarily cats and dogs). Aratana’s $6 IPO share price was below its expected
$11-13 range, as the company’s unfamiliar business model may have caught some
investors off guard. Having conveyed the massive, untapped and much-too-long
ignored potential of the pet market, the PETX share price has now been steadily
climbing, currently up 129% since it started trading. Despite the fact that pet
owners spent $53 billion in 2012 on their animal companions (according to
Aratana’s website),
pet drugs are still mostly dose-adjusted drugs prescribed for humans. Aratana’s
business model is centered around licensing drugs proved effective in animals
and humans, and commercializing them through the FDA's Center for Veterinary
Medicine (CVM). The cost of licensing Aratana pays is low in comparison to
potential returns, and CVM regulatory pathways are obviously less stringent
than pathways regulating human drugs. Aratana is currently advancing three pet
drugs through their pipeline, and it shares soared on October 14 when the company announced its intention to acquire Vet Therapeutics, Inc.
Entanta Pharma (ENTA) is another starlet worth watching – the company
is now at +111% on its first-trading-day price as its Hepatitis C drug ABT-450,
co-developed with AbbVie, and is getting encouragingly close to the market
following some great results of its Phase III Sapphire-II trial. ABT-450 is part
of an antiviral cocktail shown effective in
treating an amazing 96% of the most common genotype 1 HepC sufferers who have
not responded to older treatments. Enanta’s drug is seen as one of the most
threatening contenders to the throne of new, safer and more effective HepC
medications – a throne currently being conquered by Gilead with Sovaldi, approved
just last Friday (December 6th). Like Sovaldi, ABT-450 received a Breakthrough
Therapy Designation (BTD) from the FDA, which shortens development and
paperwork times. ABT-450 is thus looking at a New Drug Application (NDA) in Q2
2014, and a Prescription Drug User Fee Act (PDUFA) date of 3-4 months later.
Alcobra Pharma (ADHD), based in Israel, is the newest entrant to the
Attention Deficit Hyperactivity Disorder (ADHD) scene, dominated by drugs like Ritalin,
Concerta, Vyvanse and Strattera. Alcobra’s lead compound, MG01CI, is an extended-release
version of metadoxine – a hepatoprotective drug which has been on the market
for nearly 30 years for the treatment of acute alcohol intoxication, alcoholism
and alcoholism-related fatty liver. Although MG01Cl is not a novel compound, it
has a crucial advantage over its “black box warning competitors” in that it is
not a neurostimulant based on methylphenidate or amphetamines. In addition, having
been tried and tested for 30 years now, metadoxine has a significantly better
side effect profile than other ADHD meds – an important factor for a medication
intended to be taken daily for many years.
An encouraging sign of buyout potential for Alcobra is the fact that New
River Pharmaceuticals, the original developer of Vyvanse - now an
$800-million-a-year modified version of Adderall, was bought by Shire in 2006
for $2.6 billion. New River was a company roughly comparable to Alcobra, and
was acquired when Vyvanse was in Phase III clinical trials. Shire and New River
were already in collaboration on the drug since Phase II.
Update: On Dec. 18, 2013 U.S. Food & Drug Administration has granted "Orphan Drug" designation to Alcobra's metadoxine for the treatment of Fragile X Syndrome.
Falling comets
The Dutch Prosensa (RNA), developing disapersen for the treatment of Duchenne’s
muscular dystrophy in collaboration with GlaxoSmithKline, announced that the
drug did not meet its primary endpoints in Phase III clinical trials, just two
months after the company began trading. Prosensa’s share price tumbled on the
news, and is currently hovering at -78% on first trading price. Several
investors are holding on, as Prosensa has two more drugs in the pipeline, which
are, however, based on the same RNA Exon-skipping idea as disapersen.
View the full RNA chart at Wikinvest
Sunday, 8 December 2013
2013 Pharma M&A Review: Earlier-Stage Pipelines, Lower Premiums, and Cancer
2013 will go down in history as the year of biotech IPO frenzy, but some may also know it as the year dealmaking bounced back to fertile levels. In 2012, $109 billion was spent on biopharma and medical device M&A, with only one deal exceeding the $10 billion mark, in contrast with four in 2011. In 2013, three $10+ billion megadeals have been struck, which include Amgen’s $10.4B takeover of Onyx and Thermo Fisher’s $13.6 billion takeover of Life Technologies.
Overall, pharma, biotech and
medical device M&A deals have continued to outpace the global market,
according to Dealogic. Whilst the global M&A scene performed only 9.3% on
last year, pharma deals are up 38%. The average deal volume is 15% up on last
year, with the total standing at over $141 billion. So far, there have been 225
biopharma, diagnostics and medical device deals, 14 of which exceeded the
500million+ mark in 2013.
The most voluminous mega-deals of
the year were in medical device and diagnostic sectors, as pharmaceutical
players have opted for less pricey earlier-stage acquisitions. In terms of
numbers, however, biotech has certainly outshined the rest, accounting for 76%
of all Pharma, Medical and Biotech (PMB) sectors, according to a recent report
by Mergermarket.
Unlocked
Pharma Cash
Post-patent-cliff in-house
R&D closures are unlocking substantial deal-ready cash for Big Pharma.
After several years of pawning, re-organizing and sorting out previous
acquisitions the giants entered 2013 with cash, strategy and malnourished
pipelines, braced for more inorganic growth. Whilst mega-M&A activity of
recent years has been filled with power play and consolidation activities, 2013
was more about pipeline acquisitions and occasional foreign market entries.
Below (table 1) is a list of the
year’s most prominent acquisitions:
Table 1. Top 2013 Biopharma deals
|
Sum
|
Premium
|
Acquirer
|
Acquisition
|
Pipeline interests
|
|
10,400
|
89%
|
Amgen
|
Onyx
|
Liver, kidney, breast, colorectal,
thyroid cancers
|
|
8,600
|
10.5%
|
Perrigo
|
Elan
|
Alzheimer’s, bipolar, Down syndrome, Multiple
Sclerosis, Crohn’s disease
|
|
8,500
|
34%
|
Actavis
|
Warner Chilcott
|
Seven pipeline products in women’s
health and Urology
|
|
4,200
|
27%
|
Shire
|
Viropharma
|
Five investigational antiviral products
|
|
4,200
|
36%
|
Salix
|
Santarus
|
Four investigational
gastrointestinal products
|
|
1,600
|
20%
|
Endo Health
|
Paladin Labs
|
Gastroenterology and growth in Canadian and
emerging markets
|
|
958
|
60%
|
Allergan
|
MAP Pharma
|
Migraine specialty
|
|
886
|
27%
|
Otsuka
|
Astex
|
Seven oncology products
|
|
704
|
15%
|
Cubist Pharmaceuticals
|
Trius Therapeutics
|
Antibiotic-resistant gram-positive antibacterials
|
|
700
|
private
|
NovoNordisk
|
Xellia
|
Novel drug delivery platforms
|
|
650 (+350 milestones)
|
private
|
Johnson & Johnson
|
Aragon Pharmaceuticals
|
Phase II prostate cancer lead,
milestone subject to FDA approval
|
|
560 (+590 milestones)
|
private
|
AstraZeneca
|
Pearl Therapeutics
|
Chronic respiratory diseases
|
|
551
|
15%
|
Cubist Pharmaceuticals
|
Optimer
|
Antibiotics
|
|
443
|
88%
|
AstraZeneca
|
Omthera Pharmaceuticals
|
Cardiovascular: fish oil – derived medicines
|
|
418
|
28%
|
Valeant
|
Obagi Medical Products
|
Specialty skin health products
|
|
340
|
private
|
Elan
|
AOP Orphan
|
Orphan diseases
|
|
324
|
private
|
GlaxoSmithKline
|
Okairos
|
Genetic vaccines
|
|
250
|
private
|
Takeda
|
InviraGen
|
Vaccines
|
|
250
|
private
|
Actelion
|
Ceptaris
|
Lymphoma drug mechlorethamine
gel, deal subject to FDA approval, which was granted in August
|
|
225 (+275 milestones)
|
private
|
Medimmune (AstraZeneca)
|
Amplimmune
|
Cancer and autoimmune diseases
|
|
207.4
|
private
|
Ipsen
|
Syntaxin
|
Targeted Secretion Inhibitor (TSI)
in development for treatments of cancer, neurological, endocrine and
inflammatory disorders
|
|
200 (+240 milestones)
|
private
|
Medimmune (AstraZeneca)
|
Spirogen
|
DNA sequence targeted agents for cancer
|
|
200 (+470 milestones)
|
private
|
Clovis Oncology
|
EOS (Ethical Oncology
Science)
|
Oncology
|
|
200
|
N/A
|
BTG
|
Targeted Therapies business of Nordion
|
TheraSphere targeted technology for cancer treatment
|
|
165
|
private
|
Teva
|
Microdose Therapeutx
|
Seven respiratory, constipation, COPD and
auto-immune pipeline products
|
|
160
|
private
|
Shire
|
SARcode
|
Ophthalmology
|
|
150
|
private
|
Watson
|
S.A. Uteron
|
Women’s health
|
|
140 (+334 milestones)
|
private
|
The Medicines Company
|
Rempex Pharmaceuticals
|
Gram-negative antibiotic resistant anti-bacterials
|
|
135
|
private
|
MEDA
|
Acton
|
Respiratory disorders
|
Development Stage
2010 and 2011 M&A landscapes
were characterized by late- and marketing-stage pipelines, in line with pharma’s
pressing need to compensate for immediate patent cliff losses. In 2012,
earlier-stage shifts became apparent with 42% of acquired products in Phase II
clinical trials. In 2013, Phase III products marked a nearly 10-fold comeback,
whilst the number of market-stage acquisitions remained virtually unchanged
from last year (Fig. 1). Early-phase and pre-clinical leads remained a popular
acquisition choice in 2013. Roughly two thirds of early-stage deals included
some form of approval-dependent milestones.
Figure 1:
Development stage of acquired products in 2013 and 2012
Therapeutic landscape
Oncology remained the most
popular acquisition area in 2013, growing in popularity nearly 35% on last
year, in line with increasing global incidence (fig. 2). However, CNS
disorders, which still appear to be the most lucrative therapeutic area in
terms of numbers and unmet need, accounted only for 7% of acquisitions in 2013
(down 10% from 2012), following a series of loud and painful CNS trial failures
in recent years. Rather than embarking on high-risk CNS trials, pharma players
have this year opted for new therapeutic entrants, such as novel drug delivery
systems, women’s health, and orphan specialists. In comparison with 2012, when
cardiovascular leads accounted of 12% of all acquisitions, 2013 saw virtually
no activity in this area, with the exception of AstraZeneca’s acquisition of
the fish oil specialist Omthera.
Another strong comeback was made
by the infectious diseases niche, growing nearly 3-fold in 2013. For the most
part, drugs in this area are targeting the unmet need for effective treatments
against antibiotic resistant bacteria, particularly gram-negative bacteria.
Vaccines and anti-viral agents remain highly coveted.
Ophthalmic acquisitions have made
a surprising comeback in recent years, due to increasing incidence of eye
disorders in the world’s ageing populations. They have accounted for 4% of all
acquisitions in 2012 and 2013.
Figure 2: Therapeutic area of acquired products in 2013
and 2012
Financials
Of the top 28 biopharma deals shown in Table 1, 12 of the acquisitions
were public companies, 15 were private and one was a divested unit. In terms of
premiums paid by public companies, the average premium figure for 2013 was 37%
- significantly lower than the 52% average of 2012, pushed up by the
Bristol-Myers – Inhibidex 163% acquisition - the highest premium paid in five
years. 2013’s highest premium was 89% in the year’s most expensive Amgen-Onyx
deal, followed closely by the 88% AstraZeneca – Omthera acquisition deal. It
will be interesting to watch happens to the premiums of the graduating IPO
class of 2013.
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