Novartis To Pay $9.7bn For The Medicines Company
Bid Follows Strong Data For Twice-Yearly Gene Silencing Cholesterol Lowerer
Executive Summary
Novartis is to acquire the Phase III siRNA drug inclisiran in a cash deal that swells its cardiovascular portfolio. The move will not be welcomed by Amgen, Sanofi or Regeneron.
Rumours that Novartis AG was in talks to acquire The Medicines Company were confirmed on 24 November with the announcement of a $9.7bn agreed deal. The acquisition brings it a soon-to-be-filed novel PCSK9 inhibitor that is poised to take on the incumbent drugs on the market with claims of greater convenience, excellent safety and comparable efficacy.
The Swiss major will pay $85.00 per share in cash, representing a premium of about 41% over the 30-day average of the NASDAQ-listed firm’s share price. It hopes to complete the transaction in the first quarter of 2020.
The deal gives Novartis inclisiran, a first-in-class small-interfering RNA (siRNA) drug that is in late-stage trials to reduce low-density lipoprotein C (LDL-C). Results from two Phase III trials of inclisiran in different patient populations impressed at the recent American Heart Association conference, and The Medicines Company expects to file for US approval before the end of the year, and for European approval in the first quarter of 2020. (Also see "The Medicines Company Rises On Novartis Takeover Rumors" - Scrip, 20 Nov, 2019.)
Bad News For Amgen, Sanofi, Regeneron
Inclisiran is expected to offer an attractive treatment alternative to the under-performing PCSK9 inhibitors Praluent (alirocumab, Sanofi/Regeneron Pharmaceuticals Inc.) and Repatha (evolocumab, Amgen Inc.). Those drugs are monoclonal antibodies that must be administered every two or four weeks, whereas inclisiran is dosed twice a year. The former products have failed to live up to early expectations since their launch in 2015, and have had their prices slashed. The Medicines Company has previously indicated that it would price its product lower than Praluent and Repatha.
"We now have utter conviction inclisiran can disrupt cholesterol therapy." – Madhu Kumar
Inclisiran was licensed from RNA specialist Alnylam Pharmaceuticals Inc. (which will retain a right to royalties on sales of the product). It targets mRNA to silence genes that lead to the production of PCSK9 (proprotein convertase subtilisin-kexin type 9) in the liver.
The subcutaneous drug’s efficacy looks to be on a par with Repatha and Praluent and it has a safety profile comparable to placebo. In one trial, ORION-9, it achieved 50% LDL-C lowering sustained over 18 months of treatments in patients with heterozygous familial hypercholesterolemia. In the other, ORION-10, it achieved 58% LDL-C lowering over 18 months in patients with atherosclerotic cardiovascular disease. According to Novartis there are more than 50 million patients "across key markets" with atherosclerotic cardiovascular disease or familial hypercholesterolemia on current standard of care who are not at goal.
With twice-yearly subcutaneous dosing, it is expected to be administered during patients’ routine visits to their healthcare professionals, which Novartis says should help improve patient adherence. In the trials, it was given to patients at baseline, at three months and every six months thereafter for 18 months.
“We now have utter conviction inclisiran can disrupt cholesterol therapy,” wrote Baird Equity Research analyst Madhu Kumar in an 18 November note following the ORION-9 and -10 data presentations at AHA, where he also highlighted previously presented data from the European ORION-11 trial also in atherosclerotic cardiovascular disease.
“Unlike PCSK9 mAbs […] we believe inclisiran could potentially see widespread uptake for the treatment and prevention of hypercholesteremia much like a yearly flu vaccine,” wrote SVB Leerink analysts, also on 18 November.
Not everyone was so enthusiastic. Wolfe Research's Tim Anderson, Richard Law and Wai-Tsing Chan listed three reasons for caution over inclisiran."First, as is well known, there is no data yet from clinical trials "proving" definitively that inclisiran improves clinical outcomes," they said in a 24 November note. Results of the 15,000-patient ORION-4 cardiovascular outcomes trial are not expected until 2024. (Both Praluent and Repatha had their labels updated with cardiovascular risk reduction claims following post-approval CVOT data.) Jefferies analysts also underlined this point, warning in a 25 November that its survey of doctors indicated most would want to see cardiovascular outcomes data and longer term safety before prescribing inclisiran.
Second on the Wolfe Research list of warnings, the acquisition "only brings to Novartis a single product and not a broader R&D platform or other meaningful assets – for an outlay of $9B, it would be nice to have the latter."
Third, they noted that "Novartis may not have an extended monopoly with inclisiran": CiVi Biopharma in taking a similarly acting product, CiVi007, into Phase II development.
Complex Therapies
Separately, one key point that Kumar underlined in his 18 November note was “the unique manufacturing costs associated with mass production of a RNAi drug like inclisiran for CV disease, and whether a big Pharma firm would be willing to commit the CapEx necessary to generate inclisiran as a solo asset.”
Novartis is no stranger to taking on advanced therapies with complex manufacturing, however, with recent launches including the gene therapy for spinal muscular atrophy, Zolgensma (onasemnogene abeparvovec, acquired with AveXis Inc. in 2018), and the CAR-T therapy Kymriah (tisagenlecleucel). Nor is it a stranger to developing RNA-targeting lipid-lowering candidates: only this year, it took up an option to license the antisense oligonucleotide TQJ230 (AKCEA-APO(a)-LRx) from Ionis Pharmaceuticals Inc. affiliate Akcea Therapeutics Inc., paying $150m for development and commercialization rights and planning a Phase III trial for cardiovascular risk reduction in patients with elevated lipoprotein(a).
Blockbuster Intentions
Meanwhile, inclisiran would put its existing cardiovascular field force to good use. The latter has been focused on bringing heart failure drug Entresto (sacubitril/valsartan)’s annual sales beyond $1bn following a slow launch after approval in 2015, and following the patent expiry of one-time growth driver Diovan (valsartan). Novartis said it would only require a few hundred more reps to support inclisiran's launch in the US, while its existing Entresto sales force would be able to meet 90% of the requirements to launch inclisiran in the five major EU markets, Japan and China.
Novartis expects that, assuming completion in the first quarter of 2020, inclisiran will begin contributing to group sales from 2021 “with the potential to become one of the largest products by sales in the Novartis portfolio.” It cited four brokers who had estimated future revenues for the product ranging from $4bn to more than $8bn by 2029.
Novartis’s top selling drug in 2018 was Gilenya (fingolimod) for multiple sclerosis, with sales of $3.3bn. Entresto, its best-selling cardiovascular medicine, was 10th best overall on $1.0bn.
With sales of Repatha and Praluent amounting to $550m and $307m in 2018, Amgen and Sanofi/Regeneron now face the unappealing prospect of needing to lower their prices further in the near future to compete with an unwelcome upstart newly in the hands of commercial giant.
Nevertheless, according to a survey of 20 payers covering 152 million lives published by Jefferies in October, inclisiran could still face reimbursement hurdles as several indicated they would impose similar restrictions as they impose on the MAb PCSK9 inhibitors. However, they would be willing to remove restrictions on PCSK9 inhibitors should they cost less than a median price point of $2,500 a year (which Jefferies notes is less than half of the current list price of Praluent and Repatha).