With Parion Deal Done, Shire CEO Looks To Next Bright Ophthalmic Innovation
Executive Summary
Shire's CEO Flemming Ornskov says he's focused on the specialist pharma's emerging ophthalmics division - and open to fresh innovative collaborations like that signed this week with Parion Sciences.
Future collaborations to build Shire PLC 's ophthalmology activities could in theory resemble that signed this week with US-based biotech Parion Sciences Inc., whereby the Dublin-based, London-listed group acquired worldwide rights to a Phase II dry eye disease drug dubbed P-321.
Or, they could be struck with academia partners – provided they are innovative and meet unmet medical needs, the CEO of Shire said in an interview.
"Innovation comes in many shapes and forms and Shire is focused on rare and highly specialized conditions and we have an open-door policy – it doesn't need to be invented by us; we cast the net wide and seek out collaborations, it doesn't matter whether it's a commercial or academic entity," Flemming Ornskov told Scrip.
Eyeing Further Opportunities
He was speaking May 2 as Shire released better-than-expected first-quarter results - and the day after announcing an agreement that gives Shire exclusive worldwide rights to develop and commercialize P-321, an investigational epithelial sodium channel (ENaC) inhibitor designed to promote tear volume on the eye surface as a treatment for dry eye disease in adults.
Shire CEO Flemming Ornskov
Shire PLC
Orkskov, a Dane and a physician by training, came to Shire four years ago with deep experience in ophthalmology and quickly made that therapy area a priority for the company, now the world's biggest maker of drugs for rare diseases. His insight drew on prior experience as a member of the Lucentis (ranibizumab) team at Novartis AG, where he headed the ophthalmic operation, and the Eylea (aflibercept) team at Bayer AG , and from his tenure at Bausch & Lomb Inc.
"When I came to Shire … I told the board that if we wanted to expand and diversify Shire's portfolio in highly specialized conditions, then I thought the ophthalmic area was an excellent fit." – CEO Flemming Ornskov
Today, Shire's ophthalmology pipeline includes candidate SHP640 for viral/bacterial conjunctivitis, which has now moved into Phase III trials and top line data for which is expected in the second quarter of 2018. It also has preclinical candidates for autosomal dominant retinitis pigmentosa (SHP630) and glaucoma (SHP639). Another compound, SHP607, was discontinued in 2016 for retinopathy of prematurity following Phase II trial results in that condition and is now being carried forward for other complications of prematurity.
"When I came to Shire … I told the board that if we wanted to expand and diversify Shire's portfolio in highly specialized conditions, then I thought the ophthalmic area was an excellent fit. I also told the board it's going to take us some time and I thought that the best way of building a portfolio would be to go for molecules that were differentiated, have indications that will build that portfolio, and so we set out and did that."
Xiidra Now Has 22% US Market Share
Its first acquisition in ophthalmology was Xiidra (lifitegrast), which was launched in at the beginning of August 2016 for dry eye disease. Since then Shire has continued to drive expansion of the US dry eye disease market, with Xiidra increasing its market share to 22% as of March 2017.
"The fact that we've grown the market from flat to over 20% since the introduction of Xiidra showed that there's a significant opportunity there, and although Xiidra is an excellent product, we think there's further opportunity for additional mechanisms of action and products that would supplement Xiidra," he told Scrip.
Parion Sciences' product seem to fit that bill.
"I think it's a perfect fit. P-321 would be a first-in-class novel mechanism of action for dry eye. The mechanism of action is also developed for other indications," Ornskov said. Parion also has an alliance with Vertex Pharmaceuticals Inc. for cystic fibrosis.
Parion Collaboration Terms
Under its deal with Parion, Shire will make an initial $20m upfront license payment with an additional $20m payment based on the achievement of a near term development milestone. Parion will be entitled to receive additional potential milestone payments, with a total potential deal value of up to $535m. Parion has the option to co-fund through additional stages of development in exchange for enhanced tiered double-digit royalties. Parion also has the option to co-fund commercialization activities and participate in the financial outcome from those activities.
Shire was speaking to Scrip while updating markets on the group's first-quarter results, which contained a better-than-expected 14% jump in earnings, helped by cost savings and higher drug sales. Still, the company kept its guidance for the full year unchanged despite that strong quarterly performance.
Ornskov said the integration of Baxalta Inc., which aims to achieve at least $700m in cost savings by the third year, was ahead of schedule.
"We're still in the first full year after the close of the deal and we're clearly on track to produce the $300m we promised for the first year and on track for the $700m for the third full year. At this stage, we have no plans of upping that guidance - but we will continue to look for synergies where they are," he said.
2017 Priorities
The CEO said investors are taking a relaxed view about Shire's debt level acquired through its recent M&A spree. "Debt pay-down continued during the quarter and Shire remains on-track to achieve its year end debt target. We've said we aim to get it down to a level of between two to three times net debt to EBITDA by end of this year, and that's what we'll strive to do."
"Our priorities for the rest of 2017 remain unchanged: launching new products while driving commercial excellence, generating operational efficiencies, and advancing our pipeline of novel therapies. Also, we continue to prioritize paying down debt, and we are on track to achieve our full-year financial guidance."
He ruled out any further big M&A activity while the company focuses on those priorities.
On Trump And Tax Cuts
Asked about the US Trump Administration's plans for sweeping corporation tax cuts, Ornskov replied that it isn't a priority for the group. "Shire is well positioned, and I think that irrespective of which tax reform will go through, we will be able to manage with the tax guidance that we've given, so I don't see any specific change for Shire's guidance with regards to tax. We are very diversified – we operate in 70 countries and sell our products in 100 different countries," he said.