Healthcare Newsletter – March 2018

First Novel Biologic Approval for Sun Pharma: Indian Pharma making New Inroads
Home-Health While India has been touted as the pharmacy of the world, most of the past laurels have conventionally been in the world of small molecule generic drugs. While specialty pharma and biosimilars are becoming more popular growth avenues pursued to graduate beyond this comfort zone, Sun Pharma has bagged US FDA approval for its first biologic drug Ilumya this year. Sun Pharma is one of the major contributors in scripting India’s leadership in generics, with a whopping record of 587 ANDA approvals (as per 2017 data), ranking 5th among global peers in terms of number of ANDAs held, and is a clear leader amongst Indian companies in US generics, 2nd only to Aurobindo Pharma.A milestone approval for Indian pharma, Sun’s IL-23 inhibitor tildrakizumab enters a highly crowded space for plaque psoriasis, marked by strong incumbent competition from players such as Johnson & Johnson. While Sun Pharma acquired the product as a late stage asset from Merck in a USD 80 million upfront deal, the value realization of the product is likely to be heavily driven by competition. The product competes head-on against J&J’s IL-23 inhibitor Tremfya,and other IL-17 inhibitors from Novartis and Eli Lilly also pose a competitive threat. Although Ilumya has a dosing advantage being a once in 12 weeks drug as against Tremfya with a 8-week schedule, the competition is undeniably dense and intense. While the approval for Sun Pharma marks a landmark moment in the company’s history, the real strategic test now lies in quickly expanding the novel biologics portfolio with a plan that is commensurate with risk of asset class.

Perpetuating Big Pharma Race to Lead in Regenerative Therapies
Home-HealthGilead has partnered with California based Sangamo at a deal valued $ 150 million upfront(and upto $ 3 billion in future payments) to to use the latter’s robust gene editing technology targeting the zinc finger class of proteins for its cell therapy applications. Ever since Novartis bagged its first cell therapy approval for Kymriah, elevating the status of the filed of cell and gene therapies from “future science” to commercial mainstream, developments from competitive rivals have been ceaseless. Gilead is indisputably one of the forerunners in the field, quickly following Novartis’s footsteps in sailing through FDA approval for Kite Pharma’s CAR-T therapy candidate Yescarta, an asset the company snapped up through a $ 11.9 billion M&A deal just a month before its approval. The company has been incessantly wagering in the frontier science ever since and acquired US based Cell Design Labs, later last year at a deal valued at $ 175 million upfront payments and a further $ 322 million tied in development and approval milestones. Coming at this milieu, this recent deal further reinstates continuing big pharma interest in cell and gene therapies presenting a great future for innovative medicine. With companies also increasingly taking cognizance of the importance of reconsidering pricing strategies by trying innovative pricing models (Rethinking Pricing Models for Innovation-led Therapies: A new era in Sustainability), the promise held by cell and gene therapies is becoming more tangible by day.
Continuing Complexity in Diabetes Market– Drugs & Diagnostic Devices
Interests Spike Johnson & Johnson could potentially be exiting the blood glucose-monitoring diagnostics business LifeScan, having received a binding offer of $ 2.1 billion from PE firm Platinum Equity. LifeScan’s OneTouch has been one of the highly successful brands in the space, enjoying high brand equity among patients in regulated as well as emerging markets. Additionally, the relatively mellow sales multiple of 1.4 X points to perpetuating complexity in the diabetes diagnostics market landscape. OneTouch was one of the first products to hit POC diagnostics market. However, the market today witnesses staggering competition from proliferation of low cost products which have resulted in high market genericization and price erosion. While private label brands of retail chains exert strong dominance in regulated markets, the emerging markets have fallen prey to cheap imports from China and Taiwan, threatening margins and market share of branded competitors. The outlook of diabetes drug landscape is not rosy either. With increasing regulatory scrutiny on cardiovascular outcomes, the market has hit a crossroads, where companies are in constant fear of drug pipeline security and lack of direction for portfolio expansion. This is however balanced by strong growth in markets such as India and South Korea where local pharma companies are stepping up multi fold investments in diabetes marketing as well as investing in NCEs.
M&A – Device Companies’ interest in software & portfolio driven deals in pharma
Private Vaccines Market in India Two noteworthy acquisitions marked the rife M&A landscape in global pharma and medical devices space this month – Lundbeck’s acquisition of Preston Therapeutics and J&J’s acquisition of Orthotaxy. Mid-sized specialty pharma player Lundbeck’s acquisition of Preston Therapeutics at a deal value of $ 123 million in upfront payments gives Lundbeck access to the company’s mGluR4 positive allosteric modulator, foliglurax, for Parkinson’s disease. While the phase II results are expected later in the year, Lundbeck has taken an early plunge, lured by the promising data generated so far. If approved, the drug will battle with traditional dopaminergic agents such as levodopa currently used in management of the debilitating disease. On the medical devices end, J&J has acquired surgery tech company Orthotaxy, expanding its technological prowess in next generation robotic assisted surgery. This deal reinstates the growing importance of embedded software technologies in medical devices, which represents a critical ingredient to stay ahead of the innovation curve.
Round-Up of Scale-up Funding for March
Home-Health A robust funding landscape is an indicator of a ripe innovation environment and the month of March proved rewarding to early stage ventures US based Unity Biotechnologies and Shangai based Tasly Pharma. Unity, a revolutionary venture with focus on obstructing the ageing process as a means to prevent age-related diseases, received a $ 55 million in series C funding, in time to advance its first pre-clinical candidate into regulatory filing. The company’s core focus lies in obstructing the production of Senescence Associated Secretory Phenotype (SASPs), thereby preventing age-related diseases such as glaucoma, age-related macular degeneration (AMD) and idiopathic pulmonary fibrosis. The $ 55 million follows a $ 116 million series B in October 2016 and the company is all set to move on the road to commercialization. On the other side of the world, Chinese firm Tasly Pharma has announced intent to list its bio pharma unit in the all-new Hong Kong stock exchange in a $ 1 billion IPO. When the Hong Kong stock exchange repealed its listing rules in December last year, in an effort to change its status quo of listings from just large large industrial or financial ventures, it opened the gates for pre-revenue ventures that can list on the basis of portfolio strength and Tasly is one of the early ventures capitalizing on this new funding vehicle.

FY 17-18 Deal Closures by Sathguru:

  • Veterinary vaccine technology access for leading Indian animal health player
  • Strategic Marketing Partnership for a differentiated cattle nutritional supplement developed by an Indian start-up with a leading Agri Inputs Company
  • USD 2 Million Pre Series A fund raise from family offices of leading primary healthcare chain in NZ and Thailand based business group
  • Structured partnership with Draeger for neonate cooler device developed by Pluss Advanced Technologies
  • Divestment of stake by minority shareholders in SGD Pharma to Netherlands Glass Investment BV, an affiliate of Oaktree Capital
  • Out-licensing of topical generic formulation for US market for a leading Israeli CDMO
  • Transaction Advisory to RDP Workstations Pvt Ltd for investment from Bennett, Coleman and Company Ltd

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