More Divestments In Store As Takeda Digests Shire, Faces Expiries
Executive Summary
Takeda remains committed to meeting its post-Shire divestment target, as it faces up to $2bn in at-risk revenues from expiries and seeks additional cost synergies.
While Takeda Pharmaceutical Co. Ltd. is "very pleased" with the recent deal to sell Xiidra to Novartis AG, "there will be more to come" as the Japanese firm continues to rationalize assets after the Shire PLC acquisition, CEO Christophe Weber says.
The deal for ex-Shire dry eye drug Xiidra (lifitegrast) is worth up to $5.3bn in total to Takeda, which has already said it will seek up to $10bn in total divestment value after its $62bn purchase of Shire.
This prompted questions at a fourth quarter results briefing in Tokyo over how the remainder of the target figure will be made up.
Weber confirmed Takeda remains committed to the overall figure, saying "we have a clear list of products that we have in mind," although the company is not publicly disclosing these while discussions progress. He noted that 25% of current group revenue is considered non-core, providing "plenty of scope" in terms of other lines that might be hived off.
Listed under this "other" column in the presentation - but not formally confirmed as divestment candidates - are gout drug Colcrys (colchicine), antihypertensive Azilva (azilsartan) and diabetes product Nesina (alogliptin). There has also been some market talk around mature product lines in developing markets, as Takeda pivots globally towards its newer innovative products.
Addressing other speculation, Weber did confirm that legacy Shire product Natpara (parathyroid hormone) for hypoparathyroidism is still considered core, and that there is "no intent to divest" this given its good fit with the combined company's rare disease focus.
The 14 May release of Takeda's results for the fiscal year ended 31 March included the first annual forecast for the combined business after the completion of the Shire deal in early January. Costs associated with the acquisition are expected to push the combined company to an operating loss of JPY193bn ($1.75bn) this fiscal year.
$2bn At Generic Risk
Chief financial officer Costas Saroukos told the briefing that, along with multiple myeloma drug Velcade (bortezomib), expiries of exclusivity for other drugs mean that "we're looking at approximately $2bn of [combined] impact in fiscal year 2019."
While this is "extraordinarily large" the impact will lessen after this fiscal year, he noted.
The company is assuming the entry in July of an additional US generic (and the first in subcutaneous form) for Velcade, but remains unsure over the actual likelihood of this. The CFO also pointed to the loss of exclusivity for other products in the US, such as Firazyr (icatibant) for hereditary angioedema and Uloric (febuxostat) for gout (both in July), and for Enbrel (etanercept) in Japan.
But the company expects its "well balanced" portfolio of 14 newer global growth products, and underlying 5-6% business growth, to absorb most of this impact, with blockbuster inflammatory bowel disease biologic Entyvio (vedolizumab) leading the way.
In his presentation, Weber said the company has raised the peak sales estimate for its already top-selling product, which is now estimated to generate $4-5bn annually at maximum. This will be helped by increasing use in biologic-naïve patients (where it now has a 25% share), new markets such as China (where a submission may be made in fiscal 2020) and the roll-out of a more convenient subcutaneous formulation.
In the oncology sector, Ninlaro (ixazomib) for multiple myeloma is expected to lead growth, and is now seen rising to peak annual sales of $1.5-2bn. Trial data readout for maintenance use in transplant-ineligible patients is slated in the second half of this fiscal year (ie, sometime after September), R&D president Andrew Plump told the meeting.
Elsewhere in the commercial portfolio, the enlarged Takeda expects a mid-term decline for its rare hematology franchise, due to pressure on Feiba (anti-inhibitor coagulant complex) and Advate (recombinant antihemophilic factor).
But strong growth is predicted for Takhzyro (lanadelumab) for hereditary angioedema, which has already been launched in the US and is being positioned as a first-line prevention treatment.
Cost Saving Sources
As already reported, Takeda has just raised its three-year annual recurring cost synergy and savings target to $2bn from $1.4bn, with total cumulative implementation costs of $3bn.
A broad swathe of rationalization measures to achieve this will continue across general, administrative and manufacturing functions, as well as from overlapping office costs and central functions, while further procurement savings from major suppliers are also being sought. The synergy targets are embedded in management incentive schemes and are tracked closely.
"We are also targeting sales and marketing efficiencies," Saroukos added. A US sales force reduction became effective from April, and Takeda confirmed last year that it was closing down its Deerfield, IL site in the US. (Also see "Deerfield To Go As Takeda Plans Realignment Of Post-Shire US Ops " - Scrip, 12 Sep, 2018.)
In Europe, there has been a rationalization of London operations and the formation of a new European hub in Zurich, Switzerland.
Pipeline Gains/Losses
In an R&D update, Plump highlighted key late-stage pipeline catalysts over the next few months, including readout from a pivotal Phase II trial with the NAE inhibitor pevonedistat (TAK-924) in myelodysplastic syndrome, and a Phase III start for the EGFR/HER2 inhibitor TAK-788 in first-line non-small cell lung cancer.
A US approval decision on Entyvio SC for ulcerative colitis is expected in the fiscal second half, when a US submission of the formulation for Crohn's disease is also planned.
The main strategic investment focus at the moment is on the "middle bucket" of the clinical pipeline and next wave of innovation, Plump said.
A review of the updated pipeline reveals a few losses from the ex-Shire clinical portfolio over the past few months, including the C1 esterase inhibitor Cinryze (SHP616/TAK-616) for acute antibody mediated rejection and subcutaneous administration in hereditary angioedema, with work in both settings discontinued at Phase III.
Other recently dropped projects include the D-amino acid oxidase inhibitor TAK-831 for Friedreich's ataxia and the CDC7 inhibitor TAK-931 for metastatic colorectal cancer (both at Phase IIa).
On the positive side, 44 new collaborations with bioventures and academia were signed last fiscal year.
Weber Upbeat
Despite the challenges and substantial projected loss for the year, Weber remained resolutely upbeat at the briefing on the benefits of the Shire deal.
"We are on track to execute the integration…are making great progress on the R&D side with 18 assets in Phase II and III. I think we are really on track to be a growing R&D-driven values-based pharmaceutical company."