Merck: “Let The Hep C Cure Price Wars… Commence!”

January 29, 2016 - Leave a Response

As we had long predicted, since Kenilworth would be third to market, for this iteration of Hep C treatments, it would have to offer clear price advantages, compared to Gilead and AbbVie, in order to gain a meaningful toehold, in the vast US marketplace.

This morning, Merck announced exactly that pricing strategy, with its ZepatierTM having cleared FDA last evening. The Merck combo pill will be priced (in the US) at about 40 per cent less than Gilead’s mega-blockbuster. So — the approval is good news, and the revenue will be great for Kenilworth — but the margins are not likely to be anything like those Gilead enjoyed last year.

In fact, it is almost certain that there will now be additional pricing pressure in the coming months, on all Hep C market participants. And Merck still must secure the approvals of pharmacy benefit managers, to get dispensed — but at this price, and in a single combo-pill (i.e., the same as Gilead’s Harvoni, but one up, over Abbvie’s Viekira Pak — a multiple pill offering) that is highly likely to occur. So, on balance, quite good news, for Merck. Here’s a bit from Bloomberg, overnight:

. . . .Merck & Co. has priced its new hepatitis C drug, just approved by U.S. regulators, at a sharp discount to competing therapies from Gilead Sciences Inc. and AbbVie Inc., a move that could start a new price war in the field.

The U.S. Food and Drug Administration said Thursday that it approved Merck’s single pill, which combines the medications grazoprevir and elbasvir, after granting the drug a priority review in July.

The medication, called Zepatier, has a list price of $54,600 for a 12-week regimen, according to a Merck statement on Thursday. That’s 42 percent lower than Gilead’s Harvoni, which retails at $94,500. . . .

Happy Friday, one and all — a fun-filled, busy weekend awaits, here!

MSD (a/k/a Merck US) Strikes Its First Public Epigenetics Oncology R&D Deal: $15 Million In Upfronts — Up To $515 Million, On Milestones

January 28, 2016 - Leave a Response

[First, just to be clear, this (MSD) is the name “our” Merck (US) must use outside the US and Canada — and since this deal emanates from Australian and U.K. sources of tech, the correct way to refer to it — from Kenilowrth’s perspective — is through MSD. Whew. Silly stuff, that. Check that link if you’ve forgotten about that cha-cha, already.]

FierceBioTech has a nicely-nuanced, well-told story out, now — and truly, it is small, in terms of Kenilworth’s committed funds — only some $15 million in required Merck upfronts. But should the PRMT5 inhibitor enzyme pathway turn out to work well in arresting cancers, Merck would pay another up to $500 million on regulatory milestones being hit, and more in a running royalty, on all the eventual global sales. Still it is a good deal, because it presents only a small current period outlay, but one which would potentially generate a mega-blockbuster oncology product down the road — like in 2020 or beyond. Read all about it, here:

. . . .The deal is Merck’s first public partnership into epigenetics, the overarching science that governs heritable genes and how they express themselves. Thanks to the sprawling complexity of biology, people with the same genotypes can have widely ranging phenotypic traits, leading researchers to delve into the upstream processes that can effectively switch genes on and off in hopes of finding new therapies.

Merck’s new compounds stem from work by Australian Cooperative Research Center for Cancer Therapeutics, based in Melbourne, with the support of the Wellcome Trust. The licensing fees will be spread out among the Australian center, Wellcome and Cancer Research Technology, or CRT, which is CRUK’s commercialization arm.

“The deal provides potentially significant financial returns, which CRT will invest into life-saving cancer research, and most importantly will hopefully bring promising new drugs to cancer patients as well as those suffering from blood disorders where there are no effective treatment options available,” Phil L’Huillier, CRT’s director of business development, said in a statement. . . .

Onward — with a grin. . . Friday’s just around the corner!

As Predicted, Merck’s Lobby Spend Increased In 2015 — After A Few (Post S-P) Years Of Annual Declines

January 28, 2016 - Leave a Response

Even so, Kenilworth’s spend is still less than half of Pfizer’s annual lobbbyist spend. But as we’ve said, Pfizer’s current lobby-agenda faces significant resistance on the Hill — largely due to its tax re-domicile mega-deal ideas (during a Presidential election year). So, Mr. Read needs to spend heftily on that front, if he intends to get the Pfilergan deal closed, during 2016. [Thankfully, Pfizer has filed its year end reports on time unlike Q3 2015.]

As to Merck, in Q4 2015, the company spent on essentially the same initiatives it did in the first three quarters:

. . . .Trans-Pacific Partnership, data exclusivity for biologics. . . .

340B (no specific bill), Oncology education (no specific bill), adult vaccine policies (no specific bill), adolescent vaccine policies (no specific bill), DISARM (H.R. 4187), biosimilars (no specific bill), 21st Century Cures (H.R.6), FDA Regulatory Issues (no specific bill), general pharmaceutical industry issues, Innovation for Healthy Americans (no bill number). . . .

Comprehensive tax reform (no specific bill), international tax proposals (no specific bill), orphan drug legislation (S.1128), base erosion (no specific bill), territorial tax system (no specific bill). . . .

Medicare Part D (general education, no specific bill), changes to low-income subsidy structure in Medicare Part D (general education, no specific bill), Medicare Part B (general education, no specific bill). . . .

Intellectual property (general education), patent reform (H.R. 9, the Innovation Act; S.632, the STRONG Patents Act). . . .

Omnibus appropriations bill (general advocacy). . . .

Fairness to Pet Owners (S.1200), general animal health issues. . . .

So there you have it — and, to wax comedic for a moment — it pleases us to no end that Mr. Trump has thrown a hissy-fit (truly, do follow that link! Priceless!), and will “boycott” these last debates before the Iowa caucuses. He’s a piece of work, that guy — thinking he can dictate who gets to cover him, and what he gets asked, in a free speech enabled debate among candidates — silly lil’ xenophobic billionaire.

More seriously, we think it is bad for our Republic, generally, that he is even still being considered, by the electorate, however. But the summer convention will cure that — as will the sharp blades of the establishment GOP, we think. We don’t expect Mr. Cruz to survive as a candidate, through then, either. It will be. . . entertaining, at least. And truthfully, we think it now most likely that either Ms. Clinton (D), or Mr. Bloomberg (I) will be the 45th President of the United States, in any event. . .. Smile. Onward.

EXCLUSIVE: Martin Shkreli To Testify Before Congress Now On February 4, 2016

January 25, 2016 - Leave a Response

The very able US District Court Judge Kiyo A. Matsumoto, sitting in Brooklyn, has removed any legal impediment to Mr. Shkreli’s appearance before the Chaffetz-Cummings Committee, as of a few moments ago. More formally, that committee is known as the House Oversight and Government Reform Committee. The newly minted CEO of Valeant will also testify. [More background, here.]

News Analysis: Having said that, it is highly likely that Mr. Shkreli will assert his Fifth Amendment rights, if the hearing is not held “in-camera“. An “in camera“, or “behind closed doors” session — as to Mr. Shkreli’s portion — would essentially remove the threat of any evidentiary admission, in any subsequent criminal prosecution, or civil action — for anything he might say to the Committee. All of his remarks would be granted the immunity afforded a member of Congress. Even Arnold & Porter would be hard pressed to advise him not to answer, in that case. We shall see. [Of course, should his testimony turn out to be knowingly false, he could still be prosecuted for perjury before Congress — an entirely separate crime.]

In addition, instead of proceeding tomorrow, the hearing will occur on February 4, 2016 — due to the Snow-ma-geddon still undulating through the nation’s capital. [I have seen no other story on this — so I’ll call it an exclusive, for now. Alert me in comments if I am wrong about that.] I’d ask that you credit it — if you run this. Graphics coming shortly.

. . . .The court modifies the conditions of Mr. Shkrelis bail as follows: Mr. Shkreli shall be permitted to travel to Washington, DC for the purposes of testifying before the United States House of Representatives Committee on Oversight and Government Reform hearing on February 4, 2016; Mr. Shkreli shall submit a copy of his itinerary, including any travel tickets and accommodations, to Pretrial Services in advance of his travel; and upon his return to the Eastern and Southern Districts of New York, Mr. Shkreli shall notify Pretrial Services. Counsel is cautioned that the court does not condone correspondence “seek[ing] the Courts guidance.” (ECF No. 25 at 1.) Any application to the court must specify the relief sought and include relevant legal authority in support of the application. Ordered by Judge Kiyo A. Matsumoto on 1/25/2016. (Gong, LiJia) Modified on 1/25/2016. . . .

Note also that (toward the end of the order) the able Judge chastised this Arnold & Porter lawyer — for asking for “guidance” (by letter, no less) — in a criminal matter. That is not the role of a federal District Court Judge, not as to an indicted felony defendant, at least. Onward — and Karma is clearly a wheel, Mr. Shkreli.

Compare & Contrast: CEO Frazier Sees “Flexibilty” To Do “Bolt-On” M&A Of $10B to $20B, In 2016

January 25, 2016 - Leave a Response

The now-declining valuations available to earlier stage biotech concerns — should the same seek to tap the public markets (or even, increasingly, seek private equity backing) — put the “strategic” industry multinationals with immaculate balance sheets (and great cash flow), in an enviable position.

Mr. Frazier is clearly right that his careful capital management over the years has put Kenilworth in the driver’s seat now, should it decide it wants to snap up a few of these “add on” acquisition candidates in 2016.

I might argue that this puts him (and Merck) in a better near term strategic position than Ian Read, over at Pfizer — as Mr. Read is likely to be so tied up trying to clear the manifold regulatory authorities, on his single mega “re-domicile” deal, that Merck might just be able to start stealing franchises, here, one by one. Mr. Frazier’s strategy for 2016 certainly presents a much smaller execution risk than Mr. Read’s, in my view.

We shall see. But here is a bit, from Reuters, at Davos, Switzerland, last week:

. . . .U.S. drugmaker Merck & Co is eager to do deals to bring in promising experimental medicines and believes a recent correction in biotechnology stocks should throw up new opportunities.

“Prices have come back somewhat. That is a positive thing,” Chief Executive Kenneth Frazier told Reuters in Davos on Friday.

“In particular, some of the early-stage companies are struggling to get the next round of financing as people start to be a little less willing to pay for the promise of growth, so that gives us opportunities. . . .”

“At our size, I would say a $10 billion or $20 billion deal would qualify as a bolt-on,” he said in an interview on the sidelines of the World Economic Forum annual meeting. . . .

We will keep you posted. Meanwhile, here in Chicago, we feel the pain of our East Coast shovel crews — but for once, we are kicking our heels up, and sipping our coffee and OJ — free from that chore. We do feel for you Mike — truly. Smile.

More Detail — From The Merck & Co., Inc. V. Merck KGaA Lanham Act Suit, In New Jersey

January 23, 2016 - Leave a Response

My good buddie, Ed Silverman (now writing for STAT, in Boston, at the Globe) has a very comprehensive run-down on the US part of these now-reignited battles. Do go read it, all.

In the mean time, I’ll leave a link here, to the full complaint at law, a very large 5.5 MB PDF file, running some 78 pages. I must admit that I think the US Merck has the better of the argument, here. I also think, in time, things will get sorted out in England, as well, largely in US Merck’s favor. [My backgrounder, here.] But here’s a bit:

. . . .Over the years, disagreements have arisen between the parties relating to their respective uses of MERCK on the internet and otherwise in different jurisdictions and the parties have had a continuing dialogue which raised and, in certain instances, addressed such issues. Certain matters were not resolved between the parties and KGaA initiated litigation against Merck and related entities in 2013 in the United Kingdom, Germany and France. . . .

Merck [US] now brings this action based on KGaA’s activities in the U.S. as set forth herein. . . .

One of the issues that has not been resolved between the parties is the extent to which use of “Merck KGaA” would be made in the United States. Until recently, use of the Merck KGaA name has not been specifically directed to the United States and/or has not been used in connection with business activities that are in direct competition with Merck in the United States. . . .

Recently, KGaA has been making ubiquitous use of “Merck KGaA, Darmstadt, Germany,” “Merck KGaA” and “MERCK” as a prominent feature of its branding in the United States, including use on websites which are specifically targeted to users in the United States (despite KGaA claiming that its operating companies in the United States today purportedly operate under the trade name “EMD”) as well as on social media sites that are more broadly accessible, including in the United States. . . .

KGaA has taken a new direction and refocused its efforts on becoming a major player in the U.S. market, including specifically in the immuno oncology field where it directly competes with Merck, a well-recognized leader in that field. . . . In 2013, Stefan Oschmann, then head of pharmaceuticals for KGaA (and a former long term employee and executive of Merck Sharp & Dohme, its predecessors and/or affiliate(s)), stated that the U.S. was viewed as an emerging pharmaceutical market for KGaA and that the company was focusing on investing in its U.S. pharmaceutical business and developing new products to be offered directly by KGaA in the U.S. This was a departure for KGaA, as previously its pharmaceutical products in the United States were offered through “alliances” with other companies. . . .

On information and belief, KGaA has engaged in an intentional, increasing and continuous effort to undermine Merck’s rights and renown in the United States and to establish itself as “THE” Merck or the “ORIGINAL” Merck in the United States. . . . For example, KGaA recently launched a self-promotion campaign on websites directed to the United States dubbing KGaA as the “Original Merck” and featuring KGaA’s U.S. employees declaring their pride in working for the “ORIGINAL” Merck. . . .

As I say, this will all get sorted out, in due course, but using a 1970s-era agreement to address the seamless but complicated nature of the global internet-enabled economy for two very large companies competing in several of the same disease franchises, with very similar names, does not cast a very flattering light — on either of these companies. This is — and more importantly, was — avoidable. Stay warm, one and all!

Sierra Leone 2016 Ebola Flare-Up: Tough News — Second Confirmed Case In A Week

January 22, 2016 - Leave a Response

I suppose the only mote of softening news, here is that this latest new case arose in an already-known contact of the woman who died last week — an aunt who provided the first woman — with care. Thus, this flare-up remains definitively within the 100 or so known contacts, already being quarantined (voluntarily) and monitored, by local health- authorities.

Most of the 27 or so high risk contacts have likely already received Merck’s vaccine candidate, as an emergency precaution (assuming they’ve consented to being part of the clinical field trial). Sadly, and in sum, we should prepare ourselves for more of this. It will require long term vigilance — and significant changes in behaviors, among the exposed — to avoid travel or other contacts for at least 42 days, and very proactive hygiene, more generally, in affected locales. Here’s a bit from CNN, overnight — do go read it all:

. . . .The two cases are connected. The latest patient — a woman being treated in the capital, Freetown — is an aunt of a 22-year-old woman who died of Ebola last week in Sierra Leone, World Health Organization spokesman Tarik Jasarevic said Thursday.

The aunt, who had cared for her sick niece, tested positive for the virus after developing symptoms while in quarantine Wednesday. . . .

Truly heart-breaking. But it will indeed take time, resolute safe practices, and patience, to completely tamp this latest flare-up all the way out. Onward — do enjoy the snow — and one anothers’ company!

MRK-01-22-16

“O/T For Friday” Space Science: NEW Planetary Discovery? Caltech Has It All [VIDEO] — On A Snow Day

January 21, 2016 - Leave a Response

For those of us who were saddened by Pluto’s demotion, a while back — the daughter of Dr. Mike Brown, in the video below, is encouraging him to have this massive new candidate — close to ten times the mass of Earth, and rocky at its core — declared Pluto Prime. . . and that, all by itself, is grin-worthy!

As much of the nation hunkers down and stays home, avoiding rain changing to snow, sleet and ice storms, we encourage you to snuggle up — and watch the Caltech story of Planet 9 unfold, before your eyes (about 2 minutes in duration):

Do stay safe, and dry and warm (all you precious cargo, on our little third rock). . . knowing we almost certainly have another son or daughter in the system, albeit traveling through an elliptical orbit spanning hundreds of generations of our own life-times. And that offspring, like another body of unwasted grace, serves as a “shepherd moon” (of sorts, though it is no moon, at all), to other little world-itas. . . fantastic! Be excellent to one another. . . it’s almost the weekend!

In Which Forbes’ Matt Herper Offers A More Serious Look — At Martin Shkreli. Do Go Read It.

January 20, 2016 - Leave a Response

I had (again) planned a largely satirical piece for this evening, on one of Mr. Shkreli’s uncanny abilities — in this case, to alienate even top-notch, hard-boiled, expert criminal defense lawyers. [Yesterday Arnold & Porter filed papers in New York — to withdraw, as his criminal counsel. Speculation in legal circles presently runs along the lines that his weekend TV interview on Fox 5 NY had made it very difficult to represent him — given those very public statements — from his own mouth — that are at variance with what most sensible people would see as the likely truth, related to the matters involved. So (the speculation goes) the able firm indicated that it could no longer effectively handle his case — again, the idle speculation runs, of course.] That was going to be the gist of this. But then Matt messed up all of that largely meaningless fun.

So — as a grown-up, I’ll devote more column space to Mr. Herper — and ask you to read a far more sobering, and more broadly policy-shaping piece — which he dropped into Forbes online, this morning. It will be in the paper version in early February 2016.

The notion is not entirely original, but Matt makes the case quite forcefully: Shkreli is not an abberation — or an exception to the rule — no, he is the rule. When pharma CEOs say they are not like him, they are of course right insofar as none of them stands accused of seven felonies — and facing up to 20 years of federal incarceration. But, as Matt makes plain — and I hinted at in September 2015 — his price gouging is not uncommon in pharma. It is just dressed up — in better linens, when the majors play the game. That’s his thesis (and he deftly reiterates Shkreli’s early and abiding devotion to one “Fast” Fred Hassan, and less so lately — to Brent Saunders — Hassan’s protégé). So we had to mention it. Again. Do go read it top to bottom — especially the part toward the end, about allowing direct governmental negotiations — on pharma pricing. And on remimportation initiatives. Follow this link:

. . . .Martin Shkreli has a knack of saying exactly the thing that will make people angry. But the industry’s dirty little secret is that it is full of Martin Shkrelis, albeit less greedy ones with nicer shoes and more polished manners. They usually don’t raise prices on old drugs by 5,000%–just 50% or 500%. Over the past three years Merck’s price increases have amounted to 29% of its sales growth, Pfizer’s 34% and AbbVie’s 112%, according to consultancy SSR, which does health care research. . . .

This is pharma’s Shkreli problem. Yes, many new drugs must be expensive, or nobody would spend years and billions of dollars to invent them. But should Shkreli — or anyone else — be able to raise the price of a 62-year-old drug 5,000% in one fell swoop? What if he raised the price by just 200%? What if he made sure patients who can’t afford the drug get it for free — as he claims he does? Or if he promised to put some of the money into research and development — as he also says he does? Would any of this have made it okay?

We have a new measure for claims about drug prices: the Shkreli test. How would any justification for raising the cost of a drug sound coming out of Martin Shkreli’s mouth rather than smoothly parsed in legally vetted sound bites? Some price hikes, like those for innovative drugs, clearly pass. But many others don’t. . . .

[In 2012, Shkreli told Herper — over lunch — that he] wanted to invent drugs, and he’d started a company called Retrophin to do it. Shkreli initially got money to license a muscular dystrophy drug from investors including Fred Hassan, the legendary former chief executive of drug giant Schering-Plough, and Hassan’s protégé Brent Saunders. (Both now claim that their relationships ended quickly and Shkreli exaggerated their importance.) “The only person I needed affirmation from was Fred Hassan,” Shkreli told me then. . . .

For my part, I had said that Shkreli’s odious behavior was just Fred Hassan’s world-view, taken to its logical conclusion. That was in September of 2015 — long before his rain-soaked December perp walk. And so — I think the current leadership at PhRMA ought to be thinking now about making concessions to at least some of Candidate Hilary Clinton’s points — on pricing. The tide may have turned here, just as it did in mid-2008, on health care reform, more generally. We shall see.

Sleep tight one and all!

Merck’s Ebola Vaccine Efforts Rewarded With GAVI Contract Support — To Secure Global Approvals

January 20, 2016 - Leave a Response

My regular readers will recall that just over a year ago, HHS granted Merck’s Ebola vaccine candidate so-called “PREP Act” suit-immunity, which essentially provides that Kenilworth won’t ever face US claims — for having been a Good Samaritan, here — in producing the vaccine candidate, to respond to last year’s devastating West African epidemic. Now, Merck will likely be at least cash neutral, as it seeks various global regulatory approvals — from the commitments in this initial GAVI contract.

Until those approvals are secured, though, the vaccine may only be used to quell contact flare-ups, on an emergency basis. That is happening this week, in Sierra Leone, for just over 100 contacts of the latest reported victim of the virus. But in time, Merck might secure governmental/W.H.O. funding — for wide scale vaccinations, in threatened populations. We shall see — this could actually be a slightly profitable franchise — even though that was not the original primary objective.

The newly-proactive global health approach — from a wide array of interested parties — is quite gratifying. Here’s a bit from Reuters overnight, out of Davos, Switzerland — but do go read it all:

. . . .If approved, Merck’s so-called VSV-ZEBOV live attenuated Ebola Zaire vaccine would become one of the world’s first licensed Ebola shots and Gavi would be able to start buying it to create a stockpile for future outbreaks, it said in a statement issued at the World Economic Forum in Davos.

“The suffering caused by the Ebola crisis was a wake-up call to many in the global health community,” said Gavi’s chief executive Seth Berkley.

“New threats require smart solutions and our innovative financing agreement with Merck will ensure that we are ahead of the curve for future Ebola outbreaks.”

The deal was agreed on the understanding that the vaccine will be submitted for a license by the end of 2017.

Speaking to Reuters in Davos, Berkley said the advance commitment should give a positive signal to drugmakers developing products that may not have an immediate market

“It’s critical that we give confidence to companies that when they make this type of effort, there is somebody to buy it,” he said.

As part of the agreement, Merck will ensure that 300,000 doses of the vaccine are available from May 2016 to be used in expanded use clinical trials as well as for emergency use as needed while development work on the shot continues. . . .

Good news for all concerned. Enjoy the softly wheeling snowflakes around much of the mid-nation, this morning. . . smile. . . .

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