Friday, January 23, 2009

Biotech strategies to avoid falling prey to cash rich pharma

The Big Pharma market has over the last decade increased its dependence on the biotechnology sector to help replenish its dwindling product pipelines. This along with relatively easy financing had enabled, until recently, biotech companies to partner their products at quite advanced stages of development. This in turn allowed them to wield significant power.

With the onset of the credit crunch the tables have however turned and the sector has witnessed the start of a period of licensing and M&A activity...but on Big Pharma’s terms. How can biotech companies respond?

Biotech’s position has become destabilized and as a result some companies may be forced into negotiating deals (both licensing and M&A) that would not have been dreamed of until recently.

On average non-profitable public US biotechs have 1.7 years of cash remaining. To avoid being snapped up by Big Pharma, biotechs have two options: cutting costs to reduce high cash-burn rates, or accessing quick cash from external sources.

Accessing external financing is becoming increasingly difficult especially in the face of dwindling share prices. The capital raised by US biotech firms has declined from over $2.1 billion in Q4 2007, to under $700m in Q4 2008. Also no IPOs have occurred in the US Biotech industry since Q1 2008.

While raising quick cash from traditional sources represents a problem the options are to go to plan B: reducing burn rate; or to explore new funding opportunities...and thankfully there are some.

New funding opportunities include: obtaining government support, identifying novel investor strategies, and grants and donations. These opportunities are there but will likely only be available to the strongest companies. Others will have to contend with reducing costs further until the only options left are acquisition or in the worst case scenario, winding down the company.

Source: Biotech Financing in the Credit Crisis: Strategies for a radically altered landscape

Published December 2008 - $3800 (Contact us for biotech discounts or for free pages)

Thursday, January 22, 2009

Narcolepsy - a small market capable of launching blockbuster therapeutics

Although representing a total market of just $230 million narcolepsy offers an entry point for blockbuster products

Still a small market, sales of narcolepsy therapeutics have increased by approximately six-fold over the last 4 years, reaching $230m in 2007. This rapid expansion is mainly due to
better awareness of the disorder, and the significant penetration of two approved treatments,
Provigil (modafinil, Cephalon) and Xyrem (sodium oxybate, Jazz Pharma).

Yet narcolepsy driven sales belies the bigger picture for products such as Provigil.

Cephalon’s Provigil has become the clear narcolepsy market leader with 2007 indication-specific sales of $166 million. Despite this modest revenue stream the total brand sales were $852 million in 2007. One of the reasons for this is Cephalon’s label expansion efforts.

Provigil’s label now includes obstructive sleep apnea/hypopnea syndrome and shift work sleep

The main threat to Provigil comes from generic incursion expected from 2012 and also Xyrem. Cephalon has attempted to throw down barriers to generic incursion largely through the development of Nuvigil, a reformulation of modafinil. On the other hand threats from Xyrem have been minimized by its black box warning. This is despite the fact that Xyrem has the advantage of being approved for both major symptoms: excessive daytime sleepiness and cataplexy.

Consequantly, Xyrem’s sales are substantially lower than that of Provigil at only $42.3m across the seven major markets in 2007.

So there is room for novel compounds within the narcolepsy market – primary those with improved efficacy and safety. Developers should not be put off by the relatively low value of this market. Targeting narcolepsy as a primary indication and then expanding represents a strategy proven by Provigil.

Read more about the narcolepsy market and how it offers a stepping stone to much greater sales in our new feature "Narcolepsy - Entry-point to a lucrative fatigue-associated market" or request sample pages from the report by contacting

Sarcoma treatment - where are we now

Incidence of sarcomas estimated to have to have hit 36,000 in 2008 in the seven major markets - Treatment of GIST represents a success story in oncology while significant unmet needs remain for other sarcomas

Sarcomas are a diverse group of rare connective tissue tumors representing only 1% of all adult and 15% of all childhood cancers, the development of metastatic disease is a major clinical problem particularly for soft tissue sarcomas.

Treatment depends mainly on the sarcoma subtype. For example, advanced gastrointestinal stromal tumors (GIST) are primarily managed using molecular-targeted therapies, whereas other soft tissue sarcoma subtypes and bone sarcomas are managed using conventional chemotherapy with surgery and/or radiotherapy.

In a just released report on the current state and future of sarcoma treatment it was concluded that better classification and understanding of disease mechanisms may facilitate a shift towards the use of more novel molecular-targeted therapies.

The treatment of GIST represents one of the success stories in modern day oncology.

The identification of specific mutations that are key drivers of GIST has permitted the use of two effective small molecule tyrosine kinase inhibitors: Gleevec/Glivec (imatinib; Novartis) and Sutent (sunitinib; Pfizer).

Nevertheless, the development of tyrosine kinase-resistance in Gleevec-treated GIST patients has created opportunity for more novel molecular-targeted therapies to enter the market. These include Novartis’s second-generation Tasigna (nilotinib) for third line GIST, Genentech/Roche/Chugai’s Avastin (bevacizumab) for first-line GIST and Infinity/MedImmune’s Hsp90 inhibitor retaspimycin for third-line GIST.

As the manufacturer of the current standard first line GIST drug Gleevec, Novartis is perfectly positioned to ensure a potentially smooth and high impact entry of Tasigna into the third-line GIST market.

Improved treatments of unresectable, metastatic bone and soft tissue sarcomas (excluding GIST) represents a key unmet need. Limited therapeutic advances have been made in the treatment of this oncology sub-class. One such agent in Phase III development for metastatic soft tissue and bone sarcomas is ARIAD/Merck & Co’s oral mTOR (mammalian target of rapamycin) inhibitor deforolimus, which has the potential to improve the currently unchanged survival of metastatic sarcoma patients.

Read more about current options, unmet needs and pipeline candidates in sarcoma here