Contributor: Niamh Murphy

On November 18th the FDA officially revoked Avastin’s breast cancer label in the United States. For those who have been following the Avastin breast cancer debate this decision, however unsurprising, has been met with mixed opinion and on the side of patients in particular mixed emotion.

The “Avastin Saga” in breast cancer began in earnest in mid-2010 when the Oncology Drug’s Advisory Committee (OCAC) recommended that the FDA remove Avastin’s label in HER-2 negative breast cancer because it “does not prolong overall survival in breast cancer patients or provide a sufficient benefit in slowing disease progression to outweigh the significant risk to patients”. This recommendation was made based on a full review of three Phase III studies; E2100, AVADO and RIBBON-1 which evaluated Avastin plus chemotherapy in first-line metastatic breast cancer. Although all three studies demonstrated a statistically significant improvement in progression-free survival (PFS) (the primary endpoint in all three studies), AVADO and RIBBON-1 failed to emulate the magnitude of PFS benefit (5.5 months) demonstrated in the original Avastin plus paclitaxel E2100 study, the results of which led to Avastin’s conditional approval in 2008.

The process to remove Avastin’s conditional approval has been a lengthy and heavily debated one. After the FDA announced in December 2010 that it intended removing Avastin’s label Genentech launched an official appeal which culminated in a two-day hearing in June 2010. After intensive and at times emotive debate, as well as protests from breast cancer patients and support groups the appeal failed and an advisory committee to the FDA voted to uphold the decision to revoke Avastin’s label. Almost one year after the FDA announced its original decision, the FDA commissioner Margaret Hamburg published in a 69-page memorandum this month that the process has been finalized.

Many believe that the FDA’s decision on Avastin will help to uphold the integrity of the accelerated approval program which allowed its approval in the first place. However, this is likely to come as little consolation to breast cancer patients, who after hearing of countless success stories of Avastin in breast cancer may feel that a valuable therapeutic option has been denied them. Perhaps even more confusing to patients is that Avastin plus paclitaxel is still recommended by the National Cancer Comprehensive Network (NCCN) guidelines, a recommendation that was reaffirmed in October 2010.

Adding to the confusion is the European Medicines Agency’s contrasting stance on Avastin in breast cancer. After reviewing the same Avastin data the European Medicines Agency reaffirmed approval of the drug in combination with paclitaxel in December 2010. Although the European Medicines Agency no longer recommends Avastin in combination with docetaxel they have since extended Avastin’s label to allow it use in combination with Xeloda for first-line metastatic patients who are ineligible for treatment with a taxane or anthracycline. In an additional twist the Japanese Regulatory Authority approved Avastin in combination with paclitaxel as a first-line treatment for metastatic HER2-negative breast cancer in September 2011. Notably, the United Kingdom’s National Institute of Clinical Excellence (NICE) never recommended Avastin as a treatment for breast cancer patients.

Breast cancer patients in the United States may still be prescribed Avastin off-label and government officials have said that Medicare will continue to provide coverage though they intend to “monitor the issue and evaluate coverage options”. For the time being at least Avastin is also still covered by third-party health insurers, although some including the 3.3 million member health plan Blue Shield have already announced that they will no longer cover the cost of Avastin for breast cancer patients.

Prescribing of Avastin for breast cancer has already declined dramatically in the United States and is likely to fall even further now that the FDA’s decision is finalized. Even in Europe where the agent has retained its label prescribing has declined due to reimbursement restrictions and more discerning prescribing by oncologists. Avastin’s hope of recovery to its original glory in breast cancer now relies on the identification of a predictive biomarker to identify patient most likely to respond to treatment. Genentech have pledged to carry out an additional Phase III study of Avastin in plus paclitaxel in first-line metastatic breast cancer to evaluate a potential biomarker candidate. However, considering the huge amount of research that has been invested into finding a biomarker for Avastin, one can’t help but wonder, if there is such a biomarker why hasn’t is already been found it?

Contributer: Gemma Nock

In light of recent positive data, regorafenib (Bayer HealthCare) and perifosine (Keryx Biopharmaceuticals/AEterna Zentaris/Yakult Honsha) are poised for FDA approval as third-line therapies for patients with metastatic colorectal cancer (mCRC), a current area of high unmet need. Currently, there are limited treatment options in the third-line setting for patients with mCRC, as a large proportion of patients exhaust all treatment options in earlier lines. This is particularly relevant for patients with mutations in the KRAS gene, who are non-responsive to anti-epidermal growth factor receptor treatments, commonly used agents in later lines of therapy.

A multinational Phase III clinical trial (CORRECT trial) for regorafenib was initiated in April 2010, evaluating regorafenib in combination with best supportive care compared to best supportive care alone, as a third-line treatment in patients with mCRC. In a press release from Bayer on October 26, 2011, it was announced that a pre-planned interim analysis showed a significant benefit in overall survival in patients receiving regorafenib. The study has since been unblinded and patients in the placebo arm will be offered treatment with regorafenib. Although the completion date for the trial was initially estimated as June 2013, Bayer are in discussions with health authorities worldwide, including the FDA and the European Medicines Agency, regarding the next steps in filing for approval of regorafenib in the treatment of mCRC. Considering the fast track designation granted by the FDA for regorafenib (for the treatment of patients with mCRC who have progressed after approved standard therapies) and the positive results from the Phase III study, we anticipate an approval for regorafenib in the U.S. nearing the end of 2012.

Should regorafenib meet the requirements of the FDA, it would be the first small molecule tyrosine kinase inhibitor to gain approval in CRC, an unexpected triumph against the backdrop of high profile failures of small molecule tyrosine kinases in CRC, such as Pfizer’s sunitinib and AstraZeneca’s cediranib, which both failed in Phase III first-line studies and were discontinued in June 2009 and May 2010, respectively. Indeed, experts interviewed by Decision Resources just a few months ago were skeptical that a small molecule tyrosine kinase inhibitor could be successful in CRC in light of previous failures; therefore the promising data for regorafenib comes as pleasant surprise.

The Phase III X-PECT trial for perifosine in mCRC was initiated in April 2010 and is comparing perifosine in combination with capecitabine to capecitabine alone in heavily pretreated, refractory, mCRC patients. On August 31, 2011, a press release from AEterna Zentaris announced the completion of a pre-specified interim analysis for safety and efficacy. These interim Phase II data were recently published in the Journal of Clinical Oncology on November 20, 2011 (Bendell JC, 2011). In response to these results, the Data Safety Monitoring Board has recommended that the Phase III X-PECT study continue to completion, as planned. The trial is expected to complete in February 2012 and we anticipate an approval for perifosine in the third quarter of 2012 in the U.S.

Thought leaders interviewed by Decision Resources welcome new agents into the third-line setting. With the anticipated launch of two new agents, the proportion of patients receiving a third-line treatment is set to increase, particularly for patients with mutations in the KRAS gene. Given that both regorafenib and perifosine have the convenience of being orally administered agents and are expected to launch in close succession, final efficacy and safety data are likely to determine which agent will garner increase patient share in this setting. Although regorafenib and perifosine will not have a significant impact on the overall CRC market, considering the size of the third-line patient population, these two emerging agents will undoubtedly be well-received by physicians and will provide treatment options in a setting with a high current unmet medical need.


Bendell JC et al. Randomized Placebo-Controlled Phase II Trial of Perifosine Plus Capecitabine As Second- or Third-Line Therapy in Patients With Metastatic Colorectal Cancer. J Clin Oncol. 2011 Nov 20;29(33):4394-400. Epub 2011 Oct 3.

Contributer: Ben Duncan

In November 2011, Amylin and Lilly announced that they were to end their diabetes pact that spawned the emergence of the exciting GLP-1 market. Although this news was unexpected, it does not come as a complete surprise given the ongoing litigation between the two companies; Lilly's global agreement with Boehringer Ingelheim, which includes two oral diabetes treatments, sparked Amylin to initiate legal proceedings as a result of a perceived conflict of interest with their GLP-1 agreement.

The disbanding of this collaboration will see Lilly absolve itself from any marketing responsibilities for both Byetta (launched) and Bydureon (awaiting approval) in the US as of November 2011. Outside the US, Lilly will continue to market Bydureon in Europe (launched in mid-2011) until Amylin secures a new commercialization partner for this region, or until 2013, at which point Lilly's marketing obligations cease. The deal also puts an end to any ongoing litigation and the release of all Amylin's claims against Lilly.

The following key financial terms and conditions were agreed:

• Amylin will pay Lilly and upfront fee of $250m
• Amylin will pay Lilly 15% of global net sales of Byetta / Bydureon up to $1.2b (plus interest)
• If Bydureon has not received approval by June 30, 2014, Amylin's liability will fall to 8% of total global net sales of Byetta / Bydureon
• Amylin will pay Lilly a $150m milestone should a once-monthly suspension of Bydureon secure approval (currently Phase II)

The termination of its agreement with Eli Lilly will provide Amylin with full control of the Byetta / Bydureon (exenatide) franchise in the US, with the company anticipating this decision to become accretive to cash flow by the end of 2013. Although Amylin has lost the partnership of a major diabetes player, this is not expected to have a dramatic impact on the performance of the Byetta / Bydureon franchise in the US; in this region, Amylin has been the primary driver of the commercialization effort. Previously, Amylin had prepared 325 sales representatives to detail Bydureon first and Byetta second. With Lilly no longer contributing to the US marketing arrangement, however, Amylin has increased its exenatide franchise sales force to 650 reps, who will focus their marketing efforts primarily on Bydureon. Amylin reports that as a result, Bydureon will now actually receive more first and second details than would have been the case with the prior marketing arrangement with Lilly.

Outside the US, where Lilly will continue to market Bydureon until December 2013 (or until Amylin secures an additional partner), Amylin had, and still has, no part to play (outside contributing to the marketing method and message). We currently believe that Amylin will succeed in securing a new partner for ex-US commercialization, given that the drug is already on the market in some EU countries. Despite fierce competition from Novo Nordisk's Victoza, Bydureon could prove a useful acquisition for any player seeking to either bolster a current diabetes presence or to secure entry into the hugely lucrative and fast-growing diabetes market. Until such a deal is secured, however, Lilly will maintain its revenue stream in ex-US markets until 2013, at which point it will cease its marketing activities altogether (although it will continue to receive royalties on global net sales up to the $1.2b threshold).

In terms of potential ex-US partners for Amylin, two companies in particular stand out. Takeda, with Actos poised for a dramatic decline ahead of key patent expiries in the US and ex-US markets, is desperate to find candidates to help fill the gap; Bydureon could offer the company an opportunity to utilize its diabetes experience outside the US. Although the company does have a DPP-IV inhibitor (Nesina), this drug is yet to launch in any major markets other than Japan and realistically will struggle to compete even if it does launch in these regions. The second potential suitor is Roche, who saw its own once-weekly GLP-1 analog (taspoglutide) spectacularly fall from grace after unexpected side-effects in Phase III trials. Bydureon could offer Roche another opportunity to access the GLP-1 space and potentially negotiate co-rights to any of Amylin's other exenatide candidates (e.g. the once-monthly suspension formulation in Phase II).

For Eli Lilly, the termination of the partnership with Amylin represents a move to re-prioritize and re-position its diabetes portfolio to give it the best possible chance of longer-term franchise growth. Its January 2011 deal with Boehringer Ingelheim (BI) signaled Lilly's intent to become the only diabetes player with a full complement of treatment options, from orals to GLP-1 analogs to insulin (both human insulin and insulin analogs). This strategy effectively represented a conflict of interest with its Amylin arrangement, however, given that its commercialization efforts alongside BI for Tradjenta (an oral DPP-IV inhibitor used early in the course of the disease) would run counter to Amylin's interest in pushing the injectable Bydureon up the treatment algorithm and into the oral space.

We view this move as representing a change in strategy for Lilly, who has shifted its bet to Tradjenta (in addition to the Phase III SGLT-2 inhibitor, empagliflozin) from Byetta / Bydureon. This turn of events could be interpreted as a vote of no confidence from Lilly in Bydureon's ultimate commercial potential, relative to the overall potential that the GLP-1 market holds. Moreover, Lilly has two of its own GLP-1 analogs in development for which no revenue-sharing obligations exist. The first, dulaglutide (Phase III), is a GLP-1 / antibody fragment fusion compound, also dosed once-weekly, that could offer greater resilience to the DPP-IV enzyme (responsible for degrading GLP-1). This property suggests dulaglutide has potential to offer advancements in administration (lower required dose and smaller needle) as well as efficacy (longer-lasting GLP-1 activity) in comparison to Bydureon. The second is a pegylated form of GLP-1 (Phase II) about which little is currently known.

Overall, this outcome steps up the pressure on Tradjenta and empagliflozin to deliver a level of commercial success that justifies Lilly's exit from the exenatide franchise. If these products fail to impress, shareholders may be left ruing Lilly's decision to jump ship from the exenatide franchise in favor of the costly BI deal; in securing access to BI’s Tradjenta and empagliflozin, Lilly has also sacrificed co-commercialization rights to its two developmental insulin analogs (an ultra-long acting insulin and a biosimilar version of insulin glargine).

Contributer: Lulu Pickering, Ph.D.

In March 2011, Teva and Proctor & Gamble announced a new OTC joint venture to be called PGT Healthcare. According to Teva CEO Shlomo Yanai, this partnership created one of the broadest product portfolios and geographic footprints in the OTC industry, and it represents a transformational new model that has the potential to reshape the entire global OTC market. So the question becomes, what is so potentially transformational about this new venture?

On the face of it, the new joint venture will merge the respective OTC businesses of Teva and Procter & Gamble outside of North America to create a combined business that will start with about $1.3 billion in sales with plans to grow those sales to more than $4 billion towards the end of the decade. The joint venture will strengthen both companies’ positions in consumer healthcare markets and foster prescription drug-to-OTC switches–both are market sectors that are important in emerging markets where many people cannot afford brand drugs.

But consolidating these two OTC businesses to create a mega-business does not make this deal transformational. Megamergers and consolidation within the pharmaceutical industry, for example, have not produced huge synergies or major improvements in pipeline productivity. So what is much more intriguing about the PTC Healthcare joint venture than its scale or geographic reach?

The answer revolves around Teva and Proctor & Gamble’s ability to maximally exploit each company’s sales channels in emerging markets. In September 2011, CEO Yanai told investors that Proctor & Gamble was a “leading player with strong brand recognition and loyalty” in the fast growing emerging markets of Brazil and India but Teva had only a minimal presence in those two countries. Yanai explained that the joint venture would enable both companies to reach more customers in these markets: “Teva will bring to the joint venture our very strong market reach with pharmacies. P&G will bring its strong relationships on retail and consumer side. We will be able to leverage P&G's channels and sell Teva's products in retail stores, and we will leverage Teva's channels by selling P&G's products in pharmacies.”

If successful, this new sales channels strategy could indeed make the OTC-pharmaceutical partnership model a visionary one because as the partnership evolves, Teva will have the opportunity to push all of its products (brands, branded generics, generics, biosimilars, and OTC products) across multiple sales channels to more effectively penetrate emerging markets with its whole portfolio of products.

Exploiting OTC sales channels represents a complementary strategy to the branded generics strategy that many Big Pharma companies are now adopting to better access and penetrate emerging markets. These companies are inlicensing generics in order to create portfolios of branded generics for sale in emerging markets. The ability to be able to sell a portfolio of innovative brands and branded generics in emerging markets is expected to reach a greater number of patients because of their differing abilities to pay for drugs.

Teva seems to be leveraging this market access and expansion strategy to also include OTC products and OTC sales channels in emerging markets, which has the potential to reach even more patients. In emerging markets, product and company brand perception is keenly important and combining the brand and advertising strengths of an OTC company with a pharmaceutical company’s pipeline does add another dimension to how to maximize market access in emerging markets and get your drugs into the hands of more patients.

So is there any other dealmaking activity in the industry that involves forming a partnership between an OTC company and a pharmaceutical company to further penetrate an emerging market? One such deal in 2011 comes to mind: the Aurospharma joint venture between Aurobindo Pharma of India and CJSC Ofifen (a Diod pharmaceutical company in Russia) that will manufacture and sell both non-penicillin and non-cephalosporin generics and OTC products in Belarus, Kazakhstan, and Russia. The question for many Big Pharma companies now becomes whether they have the ability (or interest) to further diversify along the OTC vector through a partnership or whether their resources are already too thinly spread in emerging markets along generics, biosimilars, or branded generics vectors to take advantage of this new strategy.

Contributor: Mike Latwis

Pfizer's third quarter financial results were well ahead of consensus expectations on both the revenue and earnings lines, despite ongoing headwinds from patent expiries and currency pressures on its cost base. Management noted a number of significant factors in the quarter, including a $950m hit from the generic erosion of several large pharma products and a negative $150m or 1 percentage point (ppt) top-line impact from healthcare reform in the US. On the positive side, third quarter revenues enjoyed a $951m or 5 ppt contribution from currency and a $353m or 3ppt benefit from the consolidation of King Pharmaceuticals. Overall, Pfizer's Biopharmaceutical business advanced 6% YoY to $14.7b with domestic sales dropping 4% in the quarter, while international revenues jumped 14% (with an 11 ppt currency benefit). Within the Biopharmaceutical division, its Emerging Markets business showed the fastest YoY growth in the quarter, with an 18% gain (+12% without currency). Pfizer's Animal Health, Consumer Healthcare and Nutrition businesses all recorded double-digit sales gains in the quarter. Despite strong contributions, management still intends to split-off its Animal Health and Nutrition businesses with an announcement of its plan expected in 2012.

Pfizer's gross margin declined in the quarter, with a deterioration in its product mix and the weak US dollar inflating its overseas expenses. Specifically, currency added $551m or 6 ppts to third quarter operating expenses, with a 10 ppt impact on cost of goods sold, and 5 ppts on SG&A costs. The company's total operating costs increased 3% YoY, with savings from prior restructuring initiatives holding spending on the SG&A and R&D lines (ex-items) below the pace of top-line growth. As a result, Pfizer's operating margin improved 2.3 ppts form the prior year, excluding special charges.

Overall, Pfizer's non-GAAP earnings of 62-cents a share showed a 15% improvement over the prior year, and were 6-cents a share ahead of consensus forecasts. Pfizer’s non-GAAP earnings exclude purchase accounting charges, acquisition-related costs and other special items, as well as the $1.3b gain from the sale of its Capsugel business. The company's bottom-line also benefited from a 3% reduction in its share count from the prior year, due to $6.5b in share repurchases year-to-date, with $2.1b completed in the third quarter. With the divestment proceeds from Capsugel, management announced an expansion of its share buyback goal to $7b to $9b for the full-year, which is up from its prior $5b to $7b target.

Following this quarter's strong financial performance, management upgraded its sales and earnings guidance for the full-year. The company now expects $66.2b to $67.2b in revenues, which is the upper-end of its prior $65.2b to $67.2b full-year range. Non-GAAP EPS guidance moved up to $2.24 to $2.29 for 2011, from a range of $2.16 to $2.26, previously. Management did not make any changes to its 2012 forecasts, which will include the first full-year impact from the nearing Lipitor patent expiration in the US market. The company believes it has taken financial measures to manage its business through the expiration of the Lipitor patent, with cost-cutting and share buyback activity, while remaining committed to dividend increases for shareholders. Pfizer will also participate in an authorized generic version of Lipitor through its deal with Watson. The company's intention to divest its Animal Health and Nutrition businesses should continue to support Pfizer's strong financial position and buyback activity in the near-term. The timely regulatory approvals of its Eliquis (in US), tofacitinib, and axitinib projects, along with the successful launch of Xalkori, and Prevnar 13 line extensions will be needed to help restore confidence in the longer-term growth prospects of its pharma business.