Healthcare Newsletter – July 2018

Poster drug of DTC marketing, Takeda’sEntyvio gets approval in Japan
Home-Health Takeda’s blockbuster drug for Ulcerative Colitis (UC), Entyvio (vedolizumab) has received approval from Japanese Ministry of Health, Labour and Welfare. Entyvio is already marketed in regulated markets with US and EU approval in 2014. It is now also launched in Australia, Singapore, Taiwan, Philippines, Malaysia and South Korea while it is undergoing Phase III trial in China. Sales of $1.7bn in financial year ended March 2018 and 35% year on year growth are encouraging for the first in class Entyvio. However, it faces stiff competition from incumbent TNF alpha inhibitors from J&J (Remicade) and Abbvie (Humira) as well as new generation pipeline IBD treatments such as JAK inhibitors and S1P1 inhibitors. So far, the drug has not only managed to capture share from previously untreated patients, but also in the cases where older biologics are ineffective.The drug has also proven to be a Direct to Consumer (DTC) marketing success story as the company’s comic-book marketing campaign in association with Marvel has played instrumental role in grabbing attention especially in the U.S. While the need and RoI on such DTC spending in reimbursement led markets is questionable, success in the largely out of pocket Asian markets could greatly benefit from such innovative DTC marketing in a disease that often goes untreated in these markets. While studies indicate inflammatory Bowel Disease (IBD) and GI problems were historically prevalent in the Western world, increasing incidence is reflective of evolving disease pattern and opportunity in Asian markets – a growing focus for most pharma majors.

Otsuka acquires Visterra – Emphasizes Potential of Platform Technologies in Targeted Drug Development
Home-HealthMylan has baggedUS FDA approval for Otsuka Pharmaceutical and Visterra have announced a definitive merger agreement under which Otsuka will acquire Visterra for approximately USD 430 million in an all-cash transaction. Visterra has both a drug pipeline and a proprietary technology platform Hierotope® – comprised of novel computational and experimental technologies, it enables design and engineering of precision antibody-based product candidates. Visterra’s robust pipeline includes a clinical stage candidate targeting hospital based influenza and preclinical candidates targeting IgA nephropathy and other kidney diseases, cancer, chronic pain and infectious diseases such as dengue. Visterra aborted its $50m IPO last year, but has had commendable funding success so far with investments from Serum Institute of India, Polaris Partners, Flagship Pioneering, the Bill and Melinda Gates Foundation, MRL Ventures Fund, Vertex Ventures HC, Temasek Holdings, Omega Funds, Cycad Group, Lux Capital, Alleghany Financial Group Ventures, CTI Life Sciences Fund and Alexandria Equities. The transaction, emphasizes growing focus on targeted biologic therapies and increasing interest from Asian partners to internalize discovery and development strength. This is particularly pertinent in the context of expanding focus on external research by most global pharma companies.
Visterra is also one of the few start-ups globally with pipeline of novel biologic candidates for infectious diseases such as dengue. It is poignant to note that the dengue program was one of the earliest to attract partnership interest from India’s Serum Institute but lost its lead status to the Inflenza program as Visterra advanced its pipeline. While it is encouraging to note that Otsuka’s interest spans CNS, oncology, kidney diseases, cardiovascular and infectious diseases, we wrap up this deal discussion with hope that Visterra’s infectious diseases programs aren’t deprioritized with Otsuka now steering the company forward.

Improved Regulatory robustness in Biosimilar space directed at alleviating access concerns
Interests Spike Though less than 5% of the Americans currently use biologics, the category accounts for 40% of spend on prescription drugs. The current year has been transformational for the biosimilars market with US finally warming up to biosimilars and the regulator churning out approvals at record pace. However, the regulatory itself has now explicitly acknowledged that the cost benefits are far from realized and market access continues to be a challenge.
Reflecting the Trump administration’s intent to lower healthcare costs, the FDA released a Biosimilar Action Plan (BAP) focusing on 4 major topics:

  • Improving the efficiency of biosimilars and interchangeable product development and approval process. Impact: New application review template specifically for biosimilars, Information resources and development tools for sponsors to improve over-all process
  • Maximizing scientific and regulatory clarity for biosimilar product development community. Impact: Acceptance for non-US comparators and greater use of real-world evidence. One of the immediate impacts will be reduced cost of trials and time to market
  • Developing effective communications to improve understanding of biosimilars among patients, clinicians and payers. Impact: Greater understanding of the biosimilars and acceptance from all stakeholders
  • Supporting market competition by reducing gaming of FDA requirements or other attempts to unfairly delay competition. Impact: By coordinating with FTC and legislators, any loopholes will be closed, that may delay competition

This comes at the heel of the recent Pegfilgrastim approval for Mylan-Biocon with speculation of more aggressive benchmarks in price erosion. It has been reported that Mylan will have the steepest until now discount of 33% on wholesale acquisition cost in comparison to the innovator pricing. While FDA’s BAP is a loud signalling of policy efforts to eliminate market access challenges for biosimilars, it is also clear that opening up of markets will be accompanied by gradually expanding pricing pressure. Market expanse predicted will now be a reality, but price erosion is anticipated to be more than double of erstwhile industry expectations.

Continued Indian Pharma Interest in seeking Ex-US Growth
Private Vaccines Market in India As pricing pressures continue to mount in the US market and competition gets more intensified, there is a gradual expansion of focus towards Europe, Japan and select RoW markets for Indian pharma majors. While some Indian companies are seeking organic growth, several leading companies are opportunistically considering strategic acquisitions for product portfolio expansion as well as geographic growth. In one such transaction earlier this month, Aurobindo pharma has announced acquisition of Apotex’s European business. The acquisition includes a portfolio of over 200 prescription drugs (Rx) and 88 OTC products, an additional pipeline of over 20 products which are expected to be launched over the next two years and certain supporting infrastructure in five European countries, namely, Poland, Czech Republic, the Netherlands, Spain and Belgium. Valued at a EUR 74 million transaction, the products in the deal contributed total sales of EUR 133 million to Apotex in the year ending March 2018. Aurobinodo already has commercial reach in nine European countries, with a total sales in Europe of EUR 577 million for Fiscal year 2018.The company has been actively pursuing inorganic growth in Europe, with the most notable acquisitions being that of Actavis’ commercial operations in seven Western European countries in 2014 and acquisition of Generis Farmaceutica in Portugal in 2017. European acquisitions are particularly valuable given the context of single window regulatory approval but country specific need for market access and scale-up efforts.

Fund Raise Round-up for the Month
Home-Health It has been an encouraging month for biotech venture fund raising around the world. In US, preclinical cell therapy venture Rubius Therapeutics raised USD 241 million in a successful IPO. The company is exploring a new class of medicines based on red cell based therapeutics targeting rare diseases caused by single genetic defects affecting critical enzyme/ protein production, such as Phenylketonuria, and Homocystinuria. The venture has put the Street’s apprehensions to rest on the potential of a preclinical stage venture to reach the target IPO size north of USD 200 million. This reinstates the IPO success streak of biotech ventures and particularly that of next generation therapies in the US. At the other side of the world, Chinese biotech venture Ascletis scriped a USD 400 million IPO success story and is the first to do so under Hong Kong’s new listing rules for pre-IPO and pre-revenue companies. Funds raised will support commercial launch of the lead molecule now approved in China and pipeline candidates spanning anti-viral infectives, cancer and liver disease drugs. In the India-US corridor, molecular diagnostics venture Mitra Biotech completing a USD 40 million financing round setting the stage for commercial launch and scale-up. Backed by investors such as Accel, Sequoia Capital, Sands Capital Ventures, and RA Capital Management, the company’s revolutionary CANScript™ platform provides highly specific individual treatment response predictions across cancers with high conformity to clinical performance. The CANScript™ platformalso offers a next generation screening tool for drug discovery and development with greater clinical correlation as compared to traditional approaches such as animal models or cell lines.

Expanding use of Continuous Glucose Monitors &Pervasive Pursuit of Connected Care across Devices& Diagnostics
Home-Health Senseonics Holdings has received U.S. Food and Drug Administration Pre-market Approval (PMA)to market the company’s Eversense® Continuous Glucose Monitoring (CGM) System for people with diabetes. This is first implantable CGM system which features an implantable glucose sensor and provides long-term continuous monitoring for up to three months. This is reflective of the rapid shift to value-based connected caredelivering patient-centred solutions that improve health outcomes while reducing soaring healthcare costs. The CGM market is a great example given the robust level of activity from industry leaders such as Medtronic and Abbott and specialty players such as Dexcom and Seseonics. The reimbursement landscape has also been gradually warming up to this possibility. Since January 2017 Medicare has been covering CGMs for patients on multiple daily injections of insulin (MDI) and who make frequent adjustments to those doses. In June 2018, the payor also dispensed with the restriction on access to data through smart phones and thus opened up real benefits of connected care. The economic value of continuous monitoring devices also got emphatic ratification this month with Medtronic and United Healthcare announcing first year results from analysis of Insulin Pump use. Based ondata from 6000 patients with diabetes,the companies demonstrated a 27 percent decline in preventable hospital admissions in users of the inslin pump (MiniMed 630G and its preceding generation) as compared to participants who were on multiple daily injections of insulin (MDI). These developments are significant milestones in chronic care management and offer promise that connected and continuous care with integrated use of devices could soon be a more widespread reality.

CDSCO creates  Veterinary Medicines Cell – Triggered by announcement at the CSFD-INFAH One Health India Summit
In May 2018, the Cornell Sathguru Foundation & Indian Federation of Animal Health Companies (INFAH) organized the first multi-stakeholder One Health Summit in India emphasizing the inter-connectedness of animal health, human health, food  and environment.  The historic summit triggered foundational discussions on several challenges at the intersection – AMR, zoonotic diseases and food safety.  Most notably, it also led to a significant announcement by the Drug Controller General of  India who inaugurated  the Summit.  The landmark announcement is now a reality for industry – earlier this month CDSCO officially announced creation of the Veterinary Medicines Cell with dedicated team of regulators.  With an aggregate size exceeding $500million, the Indian animal health industry is rapidly expanding across segments and is emerging as at attractive growth opportunity for both multinationals and Indian companies.

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Mandates – Ongoing Assignments and Partnering Opportunities

1. Brand Divestiture for a leading Indian cardiac brand
2. Outlicensing – liposomal, microsphere and nano-particle based complex generics from a leading Latin American company
3. Market Landscaping & Business Plan for Lab Animal breeding facility
4. Lung cancer incidence mapping & access model for biotech venture
5. India opportunity assessment & market access plan for critical care medical device
6. Valuation of API company for strategic investment
7. Technology scouting & licensing for prioritized vaccines
8. Handholding strategic collaborations for leading opthalmic institution
9. Private equity fund raising – leading Indian diagnostic company
10. Sell-side mandate for upcoming 200+ bed hospital in Tirupati

Contact us to know more…

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