July 1, 2017 (Vol. 37, No. 13)

Industry Watch: Planned Retirement of CEO Opens Opportunities for Perrigo

When Perrigo holds its annual general meeting on July 20, 2017, CEO John T. Hendrickson will stand for election to the board, notwithstanding plans to retire within 60 days of a successor being named.

That planned retirement, announced just 14 months into his tenure at Perrigo’s helm, will end a turbulent period for Hendrickson and the company. In addition to the death of his 21-year-old son in November, Hendrickson dealt with numerous business challenges—including the elimination of 750 jobs this year, a U.S. Justice Department search of Perrigo’s offices in a drug-pricing investigation, and disappointing 2016 results, prompting the company to lower its earnings forecasts twice.

Activist investor Starboard Value—which owned about 6.7% of Perrigo stock as of February 2017—demanded the company divest some operations and shake up its board. Perrigo agreed to the reorganization, naming Starboard CEO Jeffrey Smith and four other independent directors between February and May.

Over the past year, Perrigo sold its Indian API business and its vitamins, minerals, and supplements business. For up to $2.85 billion, Perrigo sold its royalty stream for Biogen’s multiple sclerosis drug Tysabri® (natalizumab) to Royalty Pharma.

“We believe this transition could help the board execute a broad strategic realignment at Perrigo, potentially unlocking shareholder value as a consumer-focused business,” Dewey Steadman, Canaccord Genuity pharmaceutical analyst, said in a note to investors.

Steadman sees opportunity for investors in Perrigo if it can “define and detail durable growth in the consumer business, commit to definitively keeping or selling the generics business, and deploy capital to drive inorganic growth.”

The blog Activist Stocks suggests Perrigo sell its prescription drug business, whose adjusted first-quarter gross profit of $118 million was 23% below Q1 2016. Prescription drugs saw a 12% year-to-year drop in net sales during the quarter, as price erosion for Entocort® (budesonide) capsules ($25 million less) and other existing products ($22 million less) erased $17 million in new product sales.

Last year, gross profit for prescription drugs was $501.1 million, down nearly 8% from 2015. Perrigo delayed filing its 2016 Form 10-K annual report until May, after agreeing with auditor Ernst & Young to restate results stretching to December 28, 2013.

Discovery & Development: A Place for Repair-in-Place Gene Therapy

Gene therapy had to regroup after suffering several well-publicized setbacks, but it has been making good progress since 2012, the year the European Union issued its first gene therapy approval for Glybera, a one-time treatment for patients with familial lipoprotein lipase deficiency (LPLD). Although Gylbera has struggled commercially—due to a combination of factors including the drug’s expense and LPLD’s rarity—the drug has demonstrated that gene therapy can satisfy regulators’ safety concerns.

According to a recent review in the Journal of Market Access & Health Policy, between 1989 (the year of the first gene therapy) and 2015, 2,335 gene therapy clinical trials were approved worldwide. This review, which was prepared by scientists based at Aix Marseille University, Paris, adds that the number of trials reached its highest peak at the end of the study period, in 2015 (163 trials).

Many of the current trials reflect a repair-and-replace strategy—cells are removed, manipulated ex vivo, and returned to the patient. Another approach is to treat the patient directly, which poses special challenges. For example, the vectors used to insert new genetic material may stimulate an immune response. Also, there is the difficulty of introducing new genes to nondividing cells, such as those in the liver, muscle, and nervous system.

Undeterred by these challenges, Pfizer and Sangamo Therapeutics are collaborating on the development and commercialization of direct-in-patient gene therapy programs for hemophilia A. The agreement encompasses SB-525, one of Sangamo’s four lead candidates.

SB-525 consists of a recombinant adeno-associated virus (rAAV) vector carrying a gene construct for Factor VIII, a blood-clotting protein. The gene construct, a complementary DNA, is driven by a synthetic, liver-specific promoter.

The FDA has cleared initiation of clinical trials for SB-525, which also has been granted Orphan Drug designation. According to Sangamo, SB-525 is on track this quarter to start a Phase I/II clinical trial to evaluate safety and to measure blood levels of Factor VIII protein and other efficacy endpoints.

These developments parallel the points made in the review article, which noted that regulators “are creating a path for rapid access of new therapies, providing hope for manufacturers, healthcare professionals, and patients.” The review, however, adds this caveat: “Payers are increasingly scrutinizing the additional benefits of the new therapies.”

Genomics & Proteomics: Ancestry Migrates to Amazon Web Services

Amazon Web Services (AWS) recently announced that Ancestry, a genealogy and consumer genomics company, will move all its applications and data to AWS. Ancestry is confident that they will be able to achieve superior scalability, performance, reliability, security, and privacy by choosing functionality with a wide range of analytics and machine learning capabilities.

“We’re providing consumers with insights that can transform their lives,” explained Nat Natarajan, executive vice president of product and technology at Ancestry. “By enabling people to dive deeper into themselves and the lives of the people and cultures that led to them, we help customers change their perspective on who they are and how they fit into the world that surrounds them. Accomplishing that requires that we securely manage and analyze an incredible amount of unique, personal data on a daily basis.”

Ancestry analyzes and compares billions of historical records, tens of millions of family trees, and millions of existing customer DNA profiles to deliver data-driven insights that help customers develop a new sense of self. The company requires a highly scalable and secure IT infrastructure on which to store and analyze large volumes of sensitive information. Ancestry’s goal is to empower people to take their journey of self-discovery, providing actionable insights that have a meaningful impact. It offers customers a deeper view into their ethnic backgrounds, hints about their family history, and connections to possible genetic cousins.

“With our continuing growth, migrating to the cloud provides us with clear scalability and security advantages,” Natarajan noted. “AWS also provides us with the flexibility we need to stay at the forefront of consumer genomics, as the science and technology in the space continue to evolve rapidly.”

“Because AWS offers much more functionality than any other infrastructure provider, Ancestry can easily move existing apps, develop any new app their builders dream up, and leverage AWS’s expansive analytics and machine learning offerings to understand their data better and infuse their applications with more intelligence,” added Mike Clayville, vice president, worldwide commercial sales at AWS.

Bioprocessing: Rentschler Companies Partner on New Fill-and-Finish Facilities

Rentschler Biotechnologie, a CDMO, and Rentschler Fill Solutions, an independent specialist for aseptic fill and finish services, formed a strategic partnership to provide new state-of-the-art fill-and-finish facilities and one-stop solutions for biopharmaceutical products to meet the needs of Rentschler Biotechnologie’s clients.

Rentschler Fill Solutions will prospectively serve as the exclusive partner for the fill-and-finish services of Rentschler Biotechnologie’s manufacturing projects. Rentschler Fill Solutions is owned by the Rentschler family and will begin operations in mid-2018. In addition to servicing Rentschler Biotechnologie’s clients, Rentschler Fill Solutions will offer its fill-and-finish services on a clinical as well as commercial scale to its own client base.

“Based on the maturity of the biotech industry and demand for new drugs in growing international markets, we are seeing more and more demand, not only in terms of manufacturing for clinical studies, but for commercial-scale manufacturing and market supply,” said Frank Mathias, Ph.D., CEO of Rentschler Biotechnologie.

“Clients will have one contact person and qualified project manager who is responsible for managing all aspects of the clinical full-service project,” explained Rentschler Biotechnologie’s spokesperson Marion Schrader, Ph.D. “With the processes all optimally aligned, Rentschler should be able to meet the client’s projected timelines (to get on the market).”

The new technologies and facilities in Austria will enable both companies to meet the future needs of their clients, added Dr. Schrader, who noted that the area in Rankweil, Austria “easily allows” any further expansions of the facility.

Reinhold Elsaesser, general manager of Rentschler Fill Solutions, said that as an independent specialist for the aseptic filling of liquid and lyophilized biopharmaceuticals, “we aim to manage the specific filling requirements of a wide range of biopharmaceutical companies from clinical studies through market supply.” He pointed out that the Rankweil facility will be able to handle small to medium-sized batches (up to 60,000 vials/240 L per batch) and offer advanced aseptic filling technology with a RABS (restricted access barrier system). Single-use and stainless-steel equipment will be available.

“The facility contains a 15 m2 freeze dryer with a maximum capacity of 60,000 vials based on DIN2R and there is a capping process within RABS,” continued Elsaesser. “Analytics will be performed according to EP/USP, and include stability and process validation services as well as terminal sterilization.”

Molecular Diagnostics: Biocartis, MRC Technology to Develop Liquid Biopsy Test for Breast Cancer

London-based medical research charity MRC Technology (MRCT) and Belgian molecular diagnostic developer Biocartis announced a partnership that will see the two entities work to develop a range of diagnostic tests on the Biocartis Idylla platform. The first project will be a new liquid biopsy test for the monitoring of breast cancer patients for resistance to hormone therapy.

Under the agreement, the financial terms of which were not disclosed, the two companies will codevelop molecular diagnostic tests on the automated PCR-based Idylla platform, with MRCT acting as a development contractor while Biocartis will handle the commercialization of any developed tests.

“Building partnerships with third parties to accelerate the expansion of our menu of molecular diagnostic tests is a key element in our strategy,” said Erwin Sablon, head of R&D and alliance management at Biocartis. “MRCT has an experienced team in place and we are confident that together we can successfully develop a range of high-quality tests for the Idylla platform, beginning with this first test for breast cancer.”

According to Biocartis, the initial focus on developing a liquid biopsy test for breast cancer fits well with its continued development of a portfolio of tests for breast cancer. Currently, the company has three RUO liquid biopsy tests for sets of actionable mutations in melanoma and colorectal cancer.

For MRCT, the partnership with Biocartis furthers its commitment to funding the development of promising biotech and pharma technologies and potential therapies. To date, the charity, which generates its revenue via royalties from its codevelopment activities, has helped nearly 20 start-up companies and aided in the development and launch of a variety of approved drugs including Humira and Keytruda (pembrolizumab).

Michael A. Dalrymple, Ph.D., director, diagnostics and science foresight at MRCT, noted that the organization sees the Idylla platform as one that could “impact the way molecular diagnostics for oncology is done today.”

“This resonates well with our focus of translating medical innovation into viable and accessible treatments and diagnostics that patients can benefit from,” Dr. Dalrymple continued. “Breast cancer has an enormous impact on many lives every day and we see this assay as an important project to start our partnership with.”

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