here's the entire piece - - j. birchenough, barclays, 5/20/09
Equity Research
May 20, 2009
Biotechnology
Recommendation Change
Concerns Overdone , ++ 2H09 Catalysts
Sector View:
New: 1-Positive
Old: 2-Neutral
1
Investment Conclusion
We are upgrading our rating on the US Biotechnology sector to 1-Positive from 2-Neutral and highlighting what we believe to be a
significant opportunity for the group into 2H09. While concerns persist following weak 1Q09 results, we believe that reimbursement
headwinds are temporary and that strong underlying product trends should support a rebound into 2H09. Additional concerns regarding
healthcare reform are adequately reflected in historic low valuations, in our view, and we believe that headline reaction to follow on
biologics and Medicare reform has been overdone. Ultimately the value proposition for US Biotech products has been vetted in Europe
within a capitated system, with direct price negotiation and with a path for biosimilars and products continue to be fully reimbursed at
parity to US pricing, with limited impact from biosimilars and with ex-US growth outpacing that in the US. With more fundamental
concerns regarding maturing product franchises, a gap in product pipelines and a lack of leadership at FDA we would highlight successful
late cycle growth strategies, a record number of 2H09 pipeline events and a new FDA commissioner as all supporting our more
constructive view on the group.
Summary
?? US Biotechnology stocks have been relatively range bound for the last several years with fundamental concerns regarding maturing
product growth in the US, a tougher FDA environment and limited pipeline visibility. More recently US Biotechnology stocks have been
under increased pressure on weak 1Q09 results, macroeconomic pressures and healthcare reform concerns with the BTK down -2.7%
vs. S&P up 0.7%. With large cap biotech stocks trading at 15x 2009 EPS vs. 21x 2009 EPS for the S&P and with EPS long term growth
still estimated at 16% vs 5.9% for S&P we believe that concerns are fully reflected and that upside potential exists on a number of fronts.
?? Weak 1Q09 performance should make way for a 2H09 rebound, in our view - underlying volume trends remain strong for key product
franchises and with the Medicare Part D "donut-hole" funding gap now traversed out-of-pocket expense should moderate.
?? Ex-US growth should offset more mature US trends - with rest-of-world (ROW) sales contributing 32% of overall US Biotech revenues
currently and with a 26% 3-year revenue CAGR ex-US through 2008 vs 12.2% for the US.
?? Balance Sheet Strength Provides Strategic Flexibility - with free cash flow yields of 10% for companies like AMGN and BIIB and with
aggregate cash balance of $16.5B for large cap biotechs the group retains significant strategic flexibility to return value to shareholders.
?? Healthcare Reform Concerns Remain Overdone - while a pathway for follow-on biologics (FOBs) is inevitable we believe that FDA
pushback against direct substitution of biologics, likely requirement for full phase III trials, strong intellectual property (IP) claims for brand
biologics and commercial barriers to adoption evidenced with biosimilars in Europe suggest limited impact over the next 5-7 years.
?? Biotech Pricing Should Hold up Under Direct Negotiations with Medicare - While there is concern that removal of the non-interference
clause by CMS and direct negotiation of drug pricing could pressure high priced biotech products, experience in Europe suggests that
current US pricing is justifiable under a capitated, cost-constrained system with direct negotiation.
?? Busy 2H09 Event Calendar Highlights Pipeline Progress and Significant Potential Sector Catalysts - as we look ahead to 2H09 we see 20
separate potential catalysts for our 24 US Biotech stocks under coverage including mBC data for AMGN's denosumab, frontline MM-015
and IFM maintenance data for CELG's Revlimid and potential approval for GENZ's Lumizyme.
May 20, 2009
Biotechnology
Recommendation Change
Concerns Overdone , ++ 2H09 Catalysts
Sector View:
New: 1-Positive
Old: 2-Neutral
Americas
Healthcare
Biotechnology
??
Equity Research
2
Investment Thesis
We are upgrading our rating on the US Biotechnology sector to 1-Positive from 2-Neutral on what we believe has become an oversold
situation following 1Q09 disappointments and on healthcare reform concerns. With large cap bellweather stocks trading at 15x 2009 EPS
estimates and 12x 2010 EPS estimates and with expectations for 15-20% earnings growth over the next 3-5 years we believe the group is
undervalued and poised for a rebound into 2H09. Earnings misses in 1Q09 were driven in large part by overzealous Consensus estimates,
which for the most part did not reflect reasonable guidance, and by a combination of seasonal buying patterns, inventory de-stocking and
higher than expected out of pocket expense for Medicare Part D patients as well as those with private insurance. Revised earnings
estimates for companies like Celgene have set a more reasonable benchmark for performance going forward, in our view, and highlight
continued opportunity for sustainable growth. We believe that reimbursement headwinds encountered in 1Q09 will not be as severe in future
periods, particularly for Medicare Part D patients that should find themselves on the other side of the "donut-hole" funding gap, and we
expect a rebound for US Biotechnology products in 2H09.
While we have highlighted for several years the risks to healthcare reform, follow-on biologics, a more difficult FDA environment and a more
challenging reimbursement environment we believe that these concerns are fully reflected in current valuations and may not be as bad as
originally thought. Headline reaction to a potential follow-on biologic pathway has been particularly overdone, in our opinion, given strong
intellectual property positions, FDA opposition to generic substitution of biologics and lack of traction for biosimilars in Europe. Concerns
regarding reimbursement challenges under Medicare reform are more reasonable, in our view, particularly if the non-interference clause is
removed and government is allowed to directly negotiate drug pricing, however experience in Europe with capitated systems and direct
negotiations suggests that biotech pricing holds up very well to scrutiny of cost-benefit analysis. Finally, while we remain concerned
regarding relatively mature product lifecycles for key biotech franchises in the US, pricing leverage is substantial, ex-US growth prospects
remain robust, and late stage biotech pipeline opportunities are finally coming to fruition with significant data flow in 2H09.
US Biotechnology Top Picks
• CELG
• GENZ
• AMGN
• ONXX
• CEPH
• CRME
• RIGL
Key Biotech 2H09 Events
• Denosumab head-to-head data vs Zometa in mBC
• Revlimid MM-015 data in frontline Myeloma
• Revlimid IFM maintenance data in post-transplant Myeloma
• Lumizyme approval at 2000L to address Myozyme supply constraints
• HIV “Quad pill” proof-of-concept data
• SATURN survival data for Tarceva
• Randomized phase II data for Nexavar in mBC
• Inhaled Remodulin PDUFA
• Nuvigil Launch as follow on to Provigil
• CEP-701 phase III data in flt-3 positive AML
• Lymphostat phase III data in SLE
• VEGF-TRAP aflibercept data in symptomatic malignant ascites
• Mipomersen phase III data in homozygous familial hypercholesterolemia (HoFH)
• Telavancin PDUFA for cSSSI
• DURATION-2 phase III data for exenatide LAR
• Pimavanserin phase III data in Parkinson’s disease psychosis
• BLOSSOM phase IIII data for lorcaserin in patients with obesity
• R788 phase IIb data in rheumatoid arthritis (RA)
• 2nd interim analysis of SUCCEED trial of deferolimus maintenance therapy in sarcoma
• Potential approval of Kynapid IV for atrial fibrillation
Equity Research
3
Biotech Remains Defensive – Advise Overweight on Sector
The US Biotechnology sector has typically been viewed as a defensive sector in periods of economic downturn with revenue, earnings and
overall productivity historically insensitive to the broader macro-economic environment. US Biotechnology products, typically focused on
grievous illness like cancer, are not typically viewed as discretionary items and historically sales have held up well during economic
downturns. Over the last 10 years biotech weighting in the S&P has picked up an incremental 250 basis points every few years from a 1%
weighting in 2001 to a 1.5% weighting in 2005. Not surprisingly, as the economic downturn has progressed the overall weighting of biotech
in the S&P has increased more dramatically from what had been a steady state at 1.5% over the last 4 years to a peak level of 2.5% early in
2009. Investors, seeking a relative defensive haven in early 2009 rotated into US Biotechnology stocks as other sectors appeared on track
for earnings misses and dramatic estimate revisions.
Figure: Relative Weighting of US Biotech in S&P 500
Biotech
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
9/11/89
8/22/90
8/5/91
7/16/92
6/28/93
6/9/94
5/22/95
5/2/96
4/15/97
3/27/98
3/11/99
2/22/00
2/2/01
1/23/02
1/6/03
12/17/0 3
12/1/04
11/11/05
10/26/06
10/11/07
9/24/08
Source: FactSet and Barclays Capital Research
During this most recent and more severe economic recession, however, a level of unemployment not seen in 25 years, combined with
funding gaps with Medicare and higher co-pays with Private Insurers has resulted in disappointing 1Q09 results for US Biotechnology
companies, in particular for profitable mid and large cap names. The weak 1Q09 performance, particularly for growth names like CELG,
has led many to question whether biotech is truly defensive, with biotech performance and weighting in the S&P negatively impacted as a
result.
While sales results in 1Q09 may have been disappointing, feedback from physicians suggests that patient demand for US Biotechnology
products continues to grow and that product utilization has been buffered by free drugs provided by US Biotechnology companies. As
suggested by several US Biotechnology companies as well as several Pharmaceutical companies, the funding gap for Medicare Part D
patients tends to be a 1Q issue that doesn’t recur in future quarters. The Medicare Part D “donut-hole” funding gap occurs for the first $5100
in initial drug costs each year and is typically passed through within 1-2 months with the assistance of foundations funded by US
Biotechnology companies.
Certainly the issue of higher co-pays for expensive biotechnology products is not a challenge restricted to 1Q09, however with expanding
co-pay assistance programs with most US biotech companies we expect sales results to be less impacted going forward. Costs of co-pay
assistance programs have been contemplated in guidance provided by US Biotechnology companies and should not be a drag on earnings.
Ultimately, volume trends remain strong for US Biotechnology companies, both in the US and Europe, and we expect a rebound in sales in
2H09 to better reflect underlying demand. We continue to believe that US Biotechnology stocks are defensive and at current valuations
provide an attractive entry point for investors seeking growth in a challenging environment.
Equity Research
4
Valuation Provides Attractive Entry Point
We believe that an unusual opportunity exists at current valuation levels for US Biotechnology stocks. While earnings multiples have
contracted to well below the 21x multiple on 2009 EPS for the broader S&P, and closer to a 15x multiple, we believe growth prospects for
the US Biotechnology sector remain unchanged. More specifically, we expect profitable US Biotechnology companies to post a 5-year
earnings CAGR of roughly 15% and would note several large cap companies guiding to long term earnings growth of >20%. Long term
growth (LTG) estimates by FactSet suggest a 16% earnings CAGR for large cap biotech stocks vs only 5.9% for the S&P and we believe
that emerging profitable mid-caps will add to this growth.
With the BTK down -2.7% YTD vs. +0.7% for the S&P and down -29% from recent highs reached in August 2008 vs. -29% for the S&P over
the same time period, large cap Biotech stocks are currently trading at a median 15x 2009 EPS estimates with a PEG ratio of <1 on BCS
long term-growth estimates of 15%. With companies like GENZ guiding to a 4-year CAGR of 20% and with CELG long-term growth
estimated at 25% we would suggest that the actual PEG ratio for the large cap Biotech group may be closer to 0.8 as opposed to 3.7 for the
S&P.
Figure: Biotech Price Performance
YTD Indices Performance
-30.0%
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
1/2/09
1/9/09
1/16/09
1/23/09
1/3 0/09
2/6/09
2/13/09
2/20/09
2/2 7/ 09
3/6/09
3/13/09
3/20/09
3/27/09
4/3/09
4/10/09
4/17/09
4/2 4/09
5/1/09
5/8/09
5/15/09
Index Performance
BTK NBI S&P
Indices Performance - Past 3 Months
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2/19/09
2/26/09
3/5/09
3/12/09
3/19/09
3/26/09
4/2/09
4/9/09
4/16/09
4/23/09
4/30/09
5/7/09
5/14/09
Index Performance
BTK NBI S&P
Source: FactSet and Barclays Capital Research Source: FactSet and Barclays Capital Research
Other valuation metrics are equally compelling with profitable large cap biotech stocks trading at 3.4x 2009 revenue estimates and 3.2x
2010 revenue estimates with a projected long term revenue CAGR of roughly 10%. Historical revenue multiples have been in the range of
8-10x and with recent acquisitions of MedImmune, Millennium, and ImClone as a guide we believe that a 10-12x multiple may be a better
reflection of fair value for US Biotechnology stocks. Certainly top-line growth has contracted from historical levels as key product franchises
in the US have matured, however US Biotechnology companies have multiple tools to maintain growth of legacy products with multiple
opportunities to accelerate growth through pipeline development and product acquisition/partnership.
Figure: Relative Biotech Valuation
Date: May 15, 2009
Market Cons Price
Ticker Company Name Cap (mm) 2009 2010 LTG 2009 2010 2009 2010 Book
Large-caps
AMGN Amgen $ 4 8,690 3.4 3.2 11.3% 10.5 9.7 0.9 0.9 2.4
BIIB Biogen IDEC $ 1 4,158 3.3 3.2 10.4% 11.9 11.5 1.1 1.1 2.4
CELG Celgene Corp $ 1 8,308 7.0 5.8 27.9% 19.5 15.0 0.7 0.5 4.9
GENZ Genzyme $ 1 5,800 3.1 2.6 21.8% 15.1 12.1 0.7 0.6 2.2
GILD Gilead Sciences $ 3 9,659 6.2 5.3 16.8% 17.6 15.2 1.0 0.9 8.3
mean $ 2 7,323 4.6 4.0 17.7% 14.9 12.7 0.9 0.8 4.0
median $ 1 8,308 3.4 3.2 16.8% 15.1 12.1 0.9 0.9 2.4
Barclays Capital Biotechnology
Cons Rev Multiple Cons P/E Cons PEG
Source : Company Reports, FactSet and Barclays Capital Research
Equity Research
5
Ultimately, we believe that current free cash flow yields and net present value (NPV) of future cash flows provides the most compelling
metric of US Biotechnology valuation and provides some insight into the flexibility that US Biotechnology companies have in returning value
to shareholders. Currently 4 of the 5 large cap companies are trading below our BCS estimate of NPV with free cash flow yields currently
ranging from 1.6% with GENZ to 10% with BIIB and AMGN. Consistent cash flows provide flexibility for share repurchase, product/company
acquisition, and even issuance of dividends and we believe that the flexibility of US Biotechnology to return shareholder value distinguishes
the sector from others.
Figure: Free Cash Flow Yield Comparisons for Large Cap Biotech
Free Cash Flow Yield - 2008
Large Cap Biotech
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
AMGN BIIB CELG GENZ GILD
Source: FactSet and Barclays Capital Research
Overall from a value creation perspective we expect large cap US Biotechnology companies to employ a mix of share buybacks, investment
in partnership with smaller development stage companies and potential acquisition of emerging mid cap product companies. We would
highlight a record number of revenue generating and even profitable mid cap biotechnology companies as providing a reservoir of potential
growth for larger cap companies and expect M&A to be a significant driver of biotech growth. From a valuation perspective mid cap product
companies appear significantly undervalued and we believe that large cap companies have the balance sheets to potentially consolidate.
Balance Sheet Strength Differentiates
Biotech balance sheets have strengthened in recent years as large cap companies have continued to hoard cash, as a record number of
cash flow positive mid cap companies have emerged and as select small cap development stage companies have attracted significant
upfront payments, milestone payments and R&D funding from larger pharmaceutical companies. In aggregate large cap biotech companies
have $16.4bln in cash, $12.8bln in debt and are generating $8.9bln a year in free cash flow. As of the end of 1Q09 AMGN held $10.4bln in
cash, GILD held $1.8bln in cash, BIIB held $1.4bln in cash, CELG held $2.2bln in cash and GENZ held $630mln in cash.
Figure: Growth in Biotech Cash Balances 2004-2008
Large Cap Biotech Cash Position
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
2004 2005 2006 2007 2008
Cash (M)
Source: Company Reports and Barclays Capital Research
Equity Research
6
Figure: Large Cap Change in cash balance over time
Large Cap Biotech Cash Position
$0.0
$2,000.0
$4,000.0
$6,000.0
$8,000.0
$10,000.0
$12,000.0
2004 2005 2006 2007 2008
AMGN BIIB CELG GENZ GILD
Source: FactSet and Barclays Capital Research
Mid cap biotech balance sheets have also strengthened as a record number of companies have made the transition from regular cash burn
to cash flow positive status. Profitable mid cap biotech companies emerging over the last 3-5 years include ONXX, UTHR, OSIP, BMRN,
IMCL, ALXN, and MYGN. That being said, mid-cap companies are decidedly less diversified than larger cap peers and long term value
creation from single product opportunities may be limited. Leveraging single product opportunities into shareholder value is the key strategic
question for many of the profitable mid cap biotech companies and following premium acquisitions of Millennium for Velcade, Pharmion for
Vidaza and ImClone for Erbitux we expect M&A to be a major value driver for the mid cap biotech group.
While large biotech companies as well as profitable mid cap peers have maintained strong balance sheets during the period of economic
downturn, smaller cap development stage companies have been considerably challenged during the recent market deterioration. In
particular, a difficult capital market environment has created a funding draught for companies reliant on external financing and at present
many companies have less than a year of cash with limited funding options. While difficult we view this period as a healthy process of
separating the wheat from the chaff and expect a stronger small cap group to emerge. While some companies may not survive the current
environment we expect capital to redistribute to healthier companies with novel platforms, deep pipelines, attractive proof-of-concept
opportunities and better diversification of risk. Clearly pharmaceutical interest remains high in development stage biotech companies and
we look at strong deals signed recently by ISIS, Alnylam, Ariad, Cardiome and Medivation as evidence of continued interest in funding of
development stage biotechnology opportunities.
Unpartnered Small Cap Biotech Assets
Currently there are several unpartnered late-stage US Biotechnology products which we believe could be of interest to larger biotech or
pharmaceutical companies and which could drive future value. Within our coverage universe we tend to favor RIGL’s R788 and ARRY’s -
162 over ARNA’s lorcaserin. A much larger group of unpartnered product opportunities exists at earlier stages of development as well and
could be of interest to larger biotech and pharma companies as well. The following is a sample list of unpartnered late stage biotech assets.
• ARNA - lorcaserin – a selective 5HT2c agonist completing phase III development for obesity
• RIGL - R788 – a syk kinase inhibitor for rheumatoid arthritis and other B-cell mediated diseases
• ARRY – ARRY-162 – a MEK inhibitor in phase II for rheumatoid arthritis (RA)
• EXEL – XL-147, XL-765 – PI3Kinase inhibitors in phase I development for solid tumors
• CGRB- abiraterone – an inhibitor of adrenal and testicular androgen production in phase III for HRPC
• ALTH – pralatrexate – a next generation anti-folate currently in phase II development
• AMAG – Ferumoxytol – upcoming June 29 PDUFA for iron deficiency anemia for patients with CKD
• DNDN – Provenge – Cancer vaccine with recent positive phase III survival data in patients with HRPC
• NPSP – Gattex – a GLP-2 analogue in a confirmatory phase III trial in short bowel syndrome (SBS)
• IMMU – epratuzumab – a humanized anti-CD22 antibody in development for NHL and autoimmune disorders
• INCY – INCB-18424 – an oral selective JAK 2 inhibitor in phase II development for rheumatoid arthritis (RA)
• ITMN – pirfenadone – a cytokine modulator with effects on collagen and fibroblasts and with positive phase III data in IPF
• AMLN – pramlintide + leptin – peripherally acting gut hormones completing phase II development for obesity
Equity Research
7
Managing the Product Lifecycle
We are currently at a mature stage of growth for key biotechnology product franchises in the US including AMGN’s ESAs, GILD’s HIV
products, BIIB’s MS products and GENZ’s earlier enzyme therapeutic products. While we have had some concern regarding the potential
for flattening of topline growth US Biotechnology companies have managed to continue to grow top-line revenues by 14.2% year-over-year
(YOY) in 2008. Within the US market sales growth has come from category expansion, market share gains, extension of dosing, new
indications, off-label reimbursement and pricing leverage.
Figure: Large Cap Revenue Growth
Source: FactSet and Barclays Capital Research
Traditional biotech markets like oncology continue to expand with an aging population and as evidence builds in favor of longer term dosing
for drugs like Avastin, Revlimid, Herceptin and Vidaza biotech share of patient wallet is expected to continue to increase. While the payer
environment remains difficult for therapeutic companies in general, recent moves by CMS to adopt NCCN treatment guidelines have the
potential to expand off-label reimbursement for injectable oncology products with private payers likely to follow suit. NCCN
recommendations for Treanda use in NHL, in advance of the recent NHL approval, and for Avastin use in ovarian cancer and glioblastoma
multiforme (GBM) in advance of any BLA filing suggest that providers are moving ahead of FDA with payers willing to follow suit. NCCN
guidelines for off-label use of oral cancer drugs have also been notable, with examples like ONXX’s Nexavar for thyroid cancer, however it
is less clear as to whether Medicare will follow suit for Part D drugs.
For more mature products like BIIB’s Avonex, CELG’s Thalomid, GILD’s Truvada, AMGN’s Aranesp, CEPH’s Provigil and even GENZ’s
Cerezyme pricing leverage is being used as a vehicle to sustain product growth and in some cases force a switch to next generation
products. Following the lead of CELG in raising price for Thalomid in concert with Revlimid launch we would highlight BIIB price increases of
for Avonex following Tysabri launch, CEPH price increases for Actiq in front of Fentora launch and for Provigil in front of Nuvigil launch,
GILD price increases for Truvada during Atripla launch and even price increases for AMGN’s Aranesp and GENZ’s Cerezyme more
recently. We believe that significant pricing flexibility continues to exist for innovative biotech products by virtue of unmet medical need that
they address, lack of competition, strong intellectual property and relatively strong patient and physician relationships.
Certainly there has been some concern regarding the impact of healthcare reform on pricing of expensive biotech products in the US,
particularly if the non-intervention clause is removed by CMS and if the government is allowed to directly negotiate price with drug
manufacturers. We would note, however, that pricing of US Biotechnology products has held up at parity to US pricing in European
countries where capitated systems exist and where direct negotiations occurs in the context of cost containment and we expect the value
proposition for US Biotechnology products to hold up equally well under any revisions to Medicare. With the UK’s NICE as an example of
the most stringent assessment of drug cost-effectiveness we would highlight recent recommendation for reimbursement of CELG’s Revlimid
at pricing parity to the US and for dosing duration up to 26 months as a leading indicator of where we believe direct negotiations will likely
go in the US.
Beyond late cycle strategies for sustaining growth in the US we believe that US biotechnology product growth prospects outside of the US
will continue to drive upside surprises for the foreseeable future. Traditional assumptions based on pharma models have suggested an ex-
US market opportunity that is smaller than that in the US with traditional pharmaceutical products in large chronic care markets like
hypertension, hyperlipidemia and diabetes typically seeing more than 50% of sales in the US. Wide pricing differentials between the US and
Europe, reliance on older established drugs over newer and more expensive "me-too drugs" in Europe as well as less aggressive treatment
practices outside of the US have resulted historically in a US market dominance of global pharmaceutical sales. This model has not been
followed by US biotechnology companies and has created upside potential to estimates derived from older pharma market models.
Large Cap Biotech Cumulative Revenues
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
2009E 2010E 2011E 2012E
Revenues (M)
3-Year CAGR: 9.9%
Equity Research
8
We believe that for the vast majority of biotech product markets ex-US revenues will ultimately exceed those in the US and far surpass
current estimates. As suggested previously and unlike branded pharmaceuticals, US biotech products have been able to command pricing
parity outside of the US and generate the same pricing premium in Europe as seen in the US. Examples of US Biotechnology products with
global parity pricing include Roche/DNA’s Avastin, Herceptin and Rituxan, BIIB’s Avonex and Tysabri, GILD’s Truvada and Atripla, GENZ’s
Cerezyme, Fabrazyme and Myozyme, CELG’s Revlimid, ONXX’s Nexavar, OSIP’s Tarceva, ALXN’s Soliris and the list goes on. Product
innovation, unmet need, urgent medical necessity and targeted populations have supported price premiums outside of the US in markets
that in many cases are larger in Europe. Absence of low cost alternatives and in many cases, similar product monopolies as seen in the US
have resulted in broader adoption of US Biotechnology products than seen historically with branded pharmaceutical products.
Indeed, despite capitated healthcare budgets, cost constraints and direct negotiation between government payers and drug manufacturers
outside of the US biotech product growth ex-US continues to exceed US product growth. The UK’s NICE represents potentially the most
restrictive program for drug reimbursement with thorough pharmaco-economic assessment prior to reimbursement approval and recent
approval of biotech products like OSIP’s Tarceva and CELG’s Revlimid at pricing parity to the US provides some comfort on the
sustainability of US parity pricing for US biotechnology products. Recent reimbursement approval for Revlimid in the UK is particularly
striking given a recommendation for dosing up to 26 months at US pricing in relapsed and refractory Myeloma patients despite the fact that
current dosing duration is only 5 months in Europe overall and only 10 months in US. Clearly the value proposition for biotech products is
being validated through NICE and provides comfort on sustainability of strong ex-US growth trends.
While the focus of ex-US sales growth has historically been in Western Europe we believe that Eastern European and Asian demand for US
Biotechnology products will also drive substantial ex-US sales growth over the coming years. In particular with increasing industrialization
and wealth creation in countries like China and India we believe that access to healthcare will inevitably improve with greatest priority given
to treatment of the most grievous illnesses typically addressed with US biotechnology products. Early successes have been seen in Asia for
products like Velcade where better than expected ex-US sales were largely driven in Japan and we would highlight certain markets like
hepatitis B, hepatitis C and hepatocellular carcinoma (HCC) where Asian prevalence is many fold greater than that seen in the US.
Government funding of biotech product access is also expected to increase and while greater pricing pressure is expected we believe that
the sheer numbers of patients in Asia will provide an obvious offset.
Overall we expect rest of world (ROW) sales contribution to continue to grow and to serve as a major driver of US biotechnology
performance. Currently 34% of total biotechnology sales are recorded outside of the US, with 51% for GENZ, 48% for BIIB, 46% for GILD,
30% for CELG and only 22% for AMGN. Over the last 3 years Rest-of-World (ROW) sales have grown at a compound annual rate of 26.2%
as compared to 12.2% for US sales with 28% year-over-year (YOY) ex-US growth in 2008 as compared to 9% in the US. Global expansion
remains relatively immature and with GENZ as a guide most companies are only 50% of the way towards full global presence. Product
launches typically occur later outside of the US than within the US and as such we believe that market penetration in individual countries is
also relatively immature. In aggregate we estimate a 5-year revenue CAGR of 20% outside of the US between 2008 and 2013 and would
suggest that this should be sufficient to offset any slowing in the US and allow for continued funding of new products to drive the next wave
of US biotech growth.
Figure: Large Cap Biotech Revenue Distribution – US vs. ex-US Contribution
Source: Company reports and Barclays Capital Research
Large Cap Biotech Product Sales by Region
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2004 2005 2006 2007 2008
Product Sales ($M)
U.S. Ex-U.S.
Ex-U.S. market sales rapidly outpacing U.S.
3-Year CAGR: 26.2%
3-Year CAGR: 12.2%
Equity Research
9
Challenges Manageable – Follow on Biologics, FDA Leadership, Payors
Certainly the issue of follow-on biologics (FOBs) remains a hot topic in 2009 as the new administration grapples with healthcare reform and
as drug pricing takes center stage. With an approval path for follow on biologics already established in Europe and with several bio-similars
already approved we believe a follow-on biologic path in the US is inevitable. With prior proposals by the BIO trade organization as well as
prominent legislators like Senators Waxman, Kennedy and former Senator Clinton the issue has momentum already and we expect an FOB
path to be established in the 2009-2010 timeframe. Already headlines have begun to appear with Merck announcing its entry into the space
with a FOB to AMGN’s ESA’s targeted for 2012.
While headline risk is inevitable around the issue of FOBs in 2009 we believe that fundamental risk is less certain and would emphasize the
high technical, regulatory and commercial barriers to FOBs beyond the simple issue of data exclusivity. Irrespective of whether data
exclusivity is extended to 5 years as suggested by Senator Waxman, 10 years as suggested by the previous Clinton and Kennedy plans or
14 years as suggested by BIO we believe that technical and commercial barriers are significant with FOB sponsors likely to require full
clinical trial development and demonstration of biologic equivalence. (please see our note dated February 27, 2009 entitled “Overreaction to
follow-on biologic Risk”.)
Recent review of Myozyme 2000L scale material by FDA provides some insight into data requirements to support approval of biologics
produced by different processes in the US, even when changes are subtle. In requiring a full phase III trial demonstrating statistically
significant and clinically relevant benefits for the larger scale Myozyme material we believe that FDA has set a precedent for FOB approvals.
We would note that the approval of Myozyme 2000L as a follow on to the existing 160L scale material was by no means a foregone
conclusion with FDA panel members actually revisiting adequacy of endpoints, raising concerns regarding potential differences in
immunogenicity and raising questions regarding adequacy of long term safety and efficacy data.
US Biotech Innovation and Pipeline Productivity
The US Biotechnology sector remains a key driver of medical innovation within the global healthcare market. Over the last 5 years at least
28 novel biotech products have been approved to address unmet need associated with 24 separate medical conditions. In aggregate these
28 products have accounted for $14bln in biotech product sales in 2008. While it is difficult to predict where the next product success will
come from what is clear is that biotech pipelines continue to expand and progress. At present we estimate 63 lead products in phase III
development, with 50 lead products in phase II development and 11 lead products in phase I development. Importantly individual product
development risk is not concentrated in any one indication with multiple indications per product and with multiple trials per indication.
Figure: New Biotech Product Approvals 2004-2009
Product Company 2008 Sales (M) Product Company 2008 Sales (M)
Avastin Genentech $4,800.0 RECOTHROM ZymoGenetics 8.8
Byetta Amylin Pharmaceuticals 751.0 Sensipar NPS Pharmaceuticals 59.6
Symlin Amylin Pharmaceuticals 86.8 Entereg Adolor 1.2
Tarceva OSI Pharmaceuticals 1,156.4 Soliris Alexion 259.0
Nexavar Onyx Pharmaceuticals 678.2 Erbitux ImClone 1,300.0
Nplate Amgen N/A Vectibix Amgen 153.0
Tysabri Biogen IDEC 813.0 Kuvan Biomarin 46.7
Revlimid Celgene 1,325.0 Ranexa CV Therapeutics 109.3
Myozyme Genzyme 296.2 Renvela Genzyme 40.0
Atripla Gilead Sciences 1,570.0 Mozobil Genzyme N/A
Fentora Cephalon 155.2 Letairis Gilead Sciences 112.9
Nuvigil Cephalon N/A Increlex Tercica 20.0
Treanda Cephalon 75.1 Treximet Pozen 42.0
rilonacept Regeneron Pharmaceuticals 6.2 IV Remodulin United Therapeutics 182.6
Source : Company reports, FDA, and Barclays Capital Research
Certainly oncology drug development remains a core focus for innovative biotechnology companies and we estimate 52 lead products in
development for oncology with 107 lead products in development for non-oncology indications. Within the oncology space we would
highlight advanced NSCLC, advanced CRC, and mBC as key areas of focus in what have become relatively crowded markets, although we
would highlight increasingly novel development strategies with combination therapies as well as patient subset targeting. Identification of
EGFR mutant and KRAS wildtype (WT) patient subsets are beginning to guide both development and commercial use of targeted agents.
Relatively untapped areas of oncology drug development include hormone refractory prostate cancer (HRPC), pancreatic CA, gastric CA,
thyroid CA, melanoma, and sarcoma with multiple novel drugs currently in development. Of greater importance may be progress towards
prevention of cancer metastases as well as neoadjuvant and adjuvant therapies with multiple trials maturing after years of enrollment and
follow up and with key data sets emerging in 2009. While initial failure of the NSABP C08 study of Avastin adjuvant therapy for early stage
colon cancer failed to meet its primary endpoint Roche has suggested that clear signs of efficacy were observed that provide
encouragement for future adjuvant trials including those ongoing in breast cancer and NSCLC. Additional data in 2010 from AMGN’s
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denosumab in the prevention of prostate cancer bone metastases could provide an even greater opportunity as could adjuvant and
neoadjuvant trials ongoing for ONXX’s Nexavar in RCC and HCC.
Beyond progress in oncology drug development we expect significant progress in non-oncology indications and would note a shift of
resources towards drug development in immunology, neurology, degenerative disease and virology. At present we estimate that roughly
108 lead products are in development for non-oncology indications with most focus on Neurology, where 23 lead products are in
development, followed by Infectious diseases, where 17 lead products are in development and Immunology/rheumatology where 16 lead
products are in development. Advances in understanding of immunology in particular have resulted in re-thinking of the roll of B- and T-cells
in disease with significant success seen with anti-B-cell therapies in what have traditionally been viewed as T-cell mediated disease.
Molecular Diagnostics Likely to Guide Efficient Development of Molecular Therapeutics
As we look back in time over the last 7-10 years of biotech innovation we would highlight the sequencing of the human genome and the
early success of molecular therapeutics as key developments that supported sustained upside for the US Biotech sector as a whole.
Following the success of Avastin in June of 2003 in particular we would highlight a period of roughly 3 years where the BTK and NBI
outperformed the broader indices in response to the validation of molecular therapeutics in one of the toughest diseases to treat. Since that
time, however, it has become clear that not everyone has the capabilities of Genentech to run large trials, fail, learn from those failures and
try again. For most US Biotechnology companies there is a single opportunity to succeed and in most instances pivotal trials are being
conducted with sub-optimal information regarding optimal drug attributes and disease targeting.
In order to level the playing field with Genentech across the spectrum of biotechnology drug development and in order to improve upon the
efficiency of the current trial and error process we believe that incorporation of molecular diagnostics into drug development will be key.
Progress with genotypic and phenotypic targeting of molecular therapeutics has already begun and will mark the next significant advance of
the US Biotechnology Sector in our opinion. Already advances in molecular targeting of molecular therapeutics have been made with KRas
testing in CRC for Erbitux and EGFR mutation testing in NSCLC for Iressa and Tarceva. Less publicized examples include testing for VEGF
polymorphisms in mBC for Avastin where certain SNPs are associated with extended progression free survival.
Significant Opportunity for Value Creation in 2H09
As we consider the wealth of data expected from US Biotechnology companies in 2H09 we see significant opportunity for value creation
across the space. With at least 20 key potential catalysts across our coverage universe of 24 small, mid and large cap names, and with
additional potential catalysts beyond our coverage universe, we expect US Biotechnology innovation to drive outperformance for the group
overall. Key potential catalysts, in our opinion, include head-to-head data for AMGN’s denosumab vs Zometa in patients with metastatic
breast cancer (mBC), 1st -and 2nd-line data for Vectibix in patients with metastatic colorectal cancer (mCRC), frontline MM-015 and IFM
maintenance data for CELG’s Revlimid and approval for GENZ’s Myozyme 2000L in US under the brand Lumizyme. We believe that there
is a high likelihood of success in each of these trials with KRas optimization guiding Vectibix development in mCRC, with prior studies for
Thalomid providing validation for Revlimid frontline and maintenance use, with earlier and more profound effect of denosumab on markers
of bone turnover likely to support numerical superiority over Zometa and with apparent agreements with FDA regarding manufacturing and
confirmatory data requirements likely supporting near term Lumizyme approval.
Our outlook for 2H09 small-mid cap potential catalysts is more mixed although we do expect more successes than failures. Expected
positive results could come from randomized phase II trials in mBC for ONXX’s Nexavar, phase IIb data in rheumatoid arthritis (RA) for
RIGL’s R788, phase III data in homozygous familial hypercholesterolemia (HoFH) for ISIS’s antisense mipomersen, phase III data in flt-3
positive AML for CEPH’s flt-3 inhibitor CEP-701, randomized phase II data for REGN’s VEGF TRAP aflibercept in symptomatic malignant
ascites (SMA), 2nd interim analysis for ARIA’s SUCCEED trial for deferolimus in Sarcoma, Nuvigil launch for CEPH as a follow on to
franchise product Provigil, DURATION-2 data for AMLN’s exenatide LAR and phase III data for pimavanserin in Parkinson’s disease
psychosis (PDP). While we have a more cautious outlook on SATURN survival data for OSIP’s Tarceva, the July 30 PDUFA for UTHR’s
inhaled Remodulin, Lymphostat phase III data for HGSI in systemic lupus erythrematosis (SLE) and BLOSSOM phase III data for ARNA’s
lorcaserin we would acknowledge that upside potential could be significant in the event of success. Looking beyond 2H09 we believe that
there are several additional pivotal data points in 2010 that could have meaningful impact on the US Biotechnology group and that could be
a focus in 2H09, including time to bone metastases data for AMGN’s denosumab in prostate cancer, 3rd line non small cell lung cancer
(NSCLC) data for ONXX’s Nexavar and substantial phase III data for REGN’s VEGF-TRAP aflibercept in larger indications of mCRC and
HRPC.
A broader review of pipeline events for the large cap biotech group is detailed in subsequent charts and highlights the substantial data flow
expected from phase I, phase II and phase III programs. Overall, biotech pipelines continue to progress and diversify and we believe should
support sustainable value creation off of current depressed levels.
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Drug M of A Product Type Phase Summary 2009 Event
AMG 102 Hepatocyte
growth factor
Antibody Phase 2 Phase 2 studies in renal (post
Sutent/Nexavar), GBM, prostate and
gastric cancer initiated
Phase 3 go/no go
AMG 108 IL-1 Antibody Phase 2 Large phase 2 open label long term
dosing study ongoing in RA; phase 2
OA study failed
Complete enrollment of diabetes
study
AMG 157 ND Antibody Phase 1 Phase 1 atopic dermatitis study listed Complete enrolment YE09
AMG 191 c-kit Antibody Phase 1 Inhibits stem cell factor binding to c-kit Initiate phase 1
AMG 208 c-Met Small molecule Phase 1 Phase 1 safety/tolerability in advanced
dx ongoing
Initiate Phase 1
AMG 221 11b-HSD Small molecule Phase 1 Phase 1 initiated in diabetes in 07 Phase 2 go/no go
AMG 222 Dpp-IV Small molecule Phase 2 Aquired with Alantos, EU partner,
Servier initiated Phase 2a
Data YE 08/ 1Q 09
AMG 223 Phosphate
binder
Small molecule Phase 2 Acquired with Ilypsa, phase 3 ready
phosphate binder
Outlicense
AMG 386 Angiopoietin Protein Phase 2 Breast, gastric, NSCLC, 2nd line CRC,
RCC and ovarian cancer initiated
Data vs Avastin (breast), RCC
(Nexavar combination), Ovarian.
Phase 3 go/no go
AMG 477 Glucagon
Receptor
Antibody Phase 1 Phase 1 ongoing in diabetes Phase 2 go/no go
AMG 479 IGF-1R Antibody Phase 1 Phase 2, 2nd line KRAS mutant CRC
and breast cancer ongoing
CE YE 09
AMG 557 B7 related
protein
Antibody Phase 1 SLE study initiated in 07 Phase 2 go/no go
AMG 655 TRAIL DR5 Antibody Phase 1 Phase 2 studies in CRC, NHL,
NSCLC, pancreatic and sarcoma
initiated 2007
Data for Sarcoma and NSCLC, CE
pancreatic, NHL, CRC
AMG 714 IL-15 Antibody Phase 2 Phase 2 study initiated in PsO Data YE 08
AMG 745 Myostatin Antibody Phase 1 Phase 1 initiated, muscle wasting
targeted
Phase 2 go/no go
AMG 761 CCR4 Antibody Phase 1 In-licensed from Kyowa-Hakko. Phase 1 asthma study ongoing
AMG 785 Sclerostin Antibody Phase 1 Data presented at ASBMR07,
immunogenicity signal
Phase 2 go/no go
AMG 811 IFN-gamma Antibody Phase 1 Phase 1 study ongoing in SLE Phase 2 go/no go
AMG 827 IL-17 Antibody Phase 1 Phase 1 ongoing in RA Phase 2 go/no go
AMG 853 PGE D2 Small molecule Phase 1 Phase 1 ongoing in Asthma Phase 2 go/no go
AMG 888 erb B3 Antibody Licensed from U3 Pharma AG/Daiichi
Sankyo
AMG 951 TRAIL Protein Phase 2 Phase 2 studies initiated in NSCLC,
sarcoma and indolent NHL
CE YE 08
Aranesp EPO Protein Phase 3 TREAT and RedHF studies ongoing TREAT data 2009
CK-1827452 Myosin activator Small molecule Phase 2 Amgen has rights to opt-in after phase
2a, program partnered with
Cytokinetics
Opt in go/no go
Motesanib (AMG
706)
multi-kinase Small molecule Phase 3 Phase 3 study in 1st line NSCLC
ongoing
CE YE09
Nplate Thrombo poietin Peptibody Phase 2 Phase 2 CIT ongoing Phase 3 go/no go
Sensipar Calcium
Recptor
Small molecule Phase 3 EVOLVE trial CE YE08
Vectibix EGF receptor Antibody Phase 3 Registration studies in 1st line and 2nd
line CRC and 1st line H&N ongoing
Potential PFS data in 1st line by YE
08, complete enrollment in 2nd line
Source: Company reports and Barclays Capital Research
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Drug M of A Product Type Phase Summary 2009 Event
Adentri Adenosine
receptor
Chemical Entity Phase 3 Phase 3 program initiated in acute
decompensated heart failure
Initiated IV phase 3, and oral phase
2 3Q08
Avonex IFN-beta Protein Phase 2 Phase 2 ulcerative colitis Initiated phase 2
BG12 fumarate Chemical Entity Phase 3 Registration studies in RRMS initiated
Q1 07. RA study 4Q08
CE 1st P3 study in 1Q09
BIB015 Cripto Antibody TAP Phase 1 P1 initiated 2Q08 Phase 2 go/no go
BIIB014 Adenosine A2A
receptor
Chemical Entity Phase 2b* Licensed from Vernalis, phase 2 early
and moderate-late stage Parkinson's
initiated in 07
Initiate Phase 2b
BIIB021 Heat shock
protein
Chemical Entity Phase 2* Acquired with Conforma, phase 2
study in GIST ongoing; oral
Initiate Phase 2
BIIB022 IGF-1R Antibody:
Humanized
Phase 1 Phase 1 study ongoing, solid tumors Phase 2 go/no go
BIIB023 TWEAK Protein Phase 1 TNF family member. RA study
planned
Phase 2 go/no go
BIIB028 Heat shock
protein
Chemical Entity Phase 1 IV HSP inhibitor. Phase 2 go/no go
CDP 323 alpha 4 beta 7 Chemical Entity Phase 2 Licensed from UCB, phase 2 proof of
concept studies initiated in RRMS
Phase 2 data; phase 3 go/no go
Daclizumab CD25 Antibody:
Humanized
Phase 3* Licensed from PDL bio, phase 2 IFN
combination study +ve
Initiate phase 3
Factor IX:Fc Factor IX Protein Phase 1 Acquired with Syntonix. Phase 3 go/no go 2H09
GA 101 CD20 Antibody Phase 1/2 3rd generation antibody increased
ADCC. NHL, CLL, MCL studies
ongoing. NHL vs Rituxan
Add phase 2 expansion cohorts for
CLL, refractory NHL and Rituxanrefractory
NHK
Galiximab CD80 Antibody:
Chimeric
Phase 3 Registration study in 2nd line NHL
ongoing, Rituxan combination
Lixivaptan V2 vasopressin
receptor
Chemical Entity Phase 3 Licensed from Cardiokine, phase 3
Hyponatremia studies initiated
Initiate phase 3 heart failure
Lumiliximab CD80 Antibody:
Chimeric
Phase 3 Registration-enabling study in
relapsed CLL ongoing, Rituxan
combination
Completed enrollment P2 portion
1Q09
Mefloquine anti-malarial Chemical Entity Phase 1 JC antiviral, phase 1 in HIV PML Data 2H '09, Phase 3 go/no go
Ocrelizumab CD20 Antibody Phase 3 2 of 3 1st line RA studies fully
enrolled. P3 LN study and P2 RRMS
studies ongoing.
Data MTX-IR and DMARD-IR RA
PEG-IFN beta 1A IFN-beta Protein Phase 3* Long-acting version of Avonex Initiate phase 3 RRMS
Rituxan CD20 Antibody Phase 3 1st line RA studies for signs and
symptoms and joint protection
completed
1st and 2nd line CLL studies
completed. Lupus nephritis and ANCA
associated vasculitis studies ongoing
MTX IR PDUFA 7/19/09, file joint
protection sBLA. File sBLAs for 1st
and 2nd line CLL. Lupus nephritis
and ANCA-asociated vasculitis data
CLL data at ASH
Tysabri Alpha 4 beta 1 Antibody:
Humanized
Phase 3 10,000 and 3600 pts treated for 12
and 18 months. SPMS and MM
studies ongoing
Initiated myeloma study 2Q08
Volociximab
(M200)
Alpha 5 beta 1 Antibody:
Humanized
Phase 2 Phase 2a chemotherapy combination
studies in ovarian, NSCLC
Phase 2 NSCLC data, ovarian
cancer study failed
Source: Company reports and Barclays Capital Research
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Drug M of A Product Type Phase Summary 2009 Event
Ad2/HIF1a HIF Gene Therapy Phase 2 Gene therapy for peripheral arterial disease Study Failed
Ataluren
PTC124
Ribosome
enhancer
Small molecule phase 2b Licensed from PTC therapeutics. Studies in Duchenne muscular
dystrophy fuly enroled 1Q09 and cystic fibrosis ongoing/planned
DMD study CE1Q09
Initiate CF study 1Q09
Campath CD52 Humanized
antibody
Phase 3 CARE-MSI and CARE MS II registration studies have been
initiated. CARE-MSI will enroll 450 treatment naive patients,
CARE-MSII 1200 treatment experienced patients randomized to
high dose Rebif or Campath (1:2), MSII design changed to
eliminate high dose (24mg) CAMPATH Primary endopint, time
to sustained accumulated disability and 2yr relapse rate. REMS
for ITP requires monthly blood draw.
CE CARE-MS-1 2H09
Initiate redosing in CAMS223
CERE-120 Neurturin Gene therapy Phase 2 Licensed ex-North American rights to CERE-120; Genzyme's
acquisition of Avigen in late 05 brought an earlier stage clinical
Parkinson's gene therapy program
Data early 09
Cholestagel Cholesterol
binder
Small molecule Phase 2 Phase 2 study ongoing in familial hypercholesterolemia. Data YE 08
Chondrogen MSC Cellular
Therapy
Phase 2 Phase 2 repeat injection in meninsectomy patients
Clolar Purine
nucleoside
Small molecule Phase 3 Label expansion studies in elderly AML patients; phase 2
studies in intermmdiate-2 and high risk MDS patients evaluating
oral formulation. sNDA filed 4Q09
PDUFA 1H09, 1st line elderly AML
( CLASSIC-II,). Re-file MAA
Fabrazyme agalsidase Enzyme Phase 4 Pediatric study (FIELD) using 1mg/month vs licensed
2mg/month in mild patients
GC-1008 TGF beta Fully human
antibody
Phase 1 GENZ has had a long interest in TGF beta inhibition. The first
Mab, also CAT (AZN) collaboration failed. The current product is
being tested in ITP and renal cell carcinoma.
Phase 2 IPF, liver fibrosis,
melanoma and combination
chemotherapy in development
GENZ 112638 Substrate
inhibitor
Small molecule Phase 3* Oral substrate inhibitor for Gauchers' disease. GENZ has 6 mo
data from 9 patients with a total of 23 patients on study. No
additional coronary AEs observed, one has been resolved as
non-drug related and a second is under investigation. GENZ is
awaiting meetings with regulatory authorities to define
registration path.
Initiate Phase 2/3 initiation in both
treatment naïve and maintenance
settings 1H09
GENZ 644470 Phosphate Small molecule Phase 3* 3rd generation phosphate binder. IND targeted for YE08 IND filing
Initiate P3
GMA161 CD16 Humanized
antibody
Phase 1 CD16 differentiation antigen associated with FCR gamma III.
Blocking CD16 inhibits FCR gamma III preventing clearance of
immune complexes, such as those associated with clearing
platelets in ITP. Reports of use of anti-CD16 antibodies in ITP
date back to early 1990's
Phase 2 go/no go
Hectoral Vitamin D Small molecule Phase 2 Phase 2 psoriasis study listed Data 1Q09
MACI Cartilage Cellular
Therapy
Phase 3 Cellular product for cartilage repair. P3 SUMMIT trial initiated
3Q08
Mipomersen apoB-100 Antisense RNA Phase 3 Phase 3 studies ongoing in homozygous and heterozygous
familial, high risk and statin intolerant hypercholesterolemia.
Need for second rodent carcinogenicity study will delay filing to
H210
Data 1Q/2Q09
Mozobil CXCR4 Small molecule Approved for stem cell mobilization, YE08 US launch
EU approval mid-09
Myozyme/
Lumizyme
Aglucosidase
alpha
Enzyme Phase 4 Myozyme 2K scale and Late-Onset label expansion received
4Q08
US 2K approval 2/28/09
4K EU approval late 1Q09
Myozyme-2 Aglucosidase
alpha
Enzyme Phase 1* 5-fold greater activity than Myozyme Initiate phase 2/3 registration study
Prochymal MSC Cellular
Therapy
Phase 3 Phase 3 studies ongoing in biologic failure Crohn's Disease and
acute GvHD. OSIR completed pre-BLA meeting with FDA for
GvHD
GvHD data 1H09
Crohn's Disease study terminated
Renvela Phosphate
binder
Polymer Phase 3 NDA approved for treatment of hyperphosphatemia in renal
dialysis patients. sNDAs for pre-dialysis filed 1H08, powder
formulation in 2H 08
CKD label mids-09
rhASM Sphingomyelinase
Enzyme Phase 1 Phase 1 initiated Enrollment update
Sepraspray Hyaluronate Polymer Phase 3 Open abdominal surgery studies initiated CE 09
Synvisc-1 Hyaluronate Polymer Approved 4Q09 US launch
Thymoglobulin T-cell antigens Polyclonal
rabbit antibody
Phase 2 Studies in renals and liver transplant completed and data
presentations scheduled. Proof of concept phase 2 studies in
type diabetes, myeloma and MDS
Phase 3 go/no go. Solid organ
transplant data publication
Thyrogen TSH Protein Phase 2 Modified release formulation entered clinical study in Q2 07 Data 1Q09
Source: Company reports and Barclays Capital Research
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Drug M of A Product Type Phase Summary 2009 Event
ACE-011 Activin Protein Phase 1 Phase 2 study in lytic myeloma ongoing Initiate study in CIA
Amrubicin Topo-II Small
molecule
Phase 3 Registration enabling study in 2nd line SCLC.
Supportive 1st line studies of amrubicin/cisplatin
versus etoposide/cisplatin ongoing in China and
amrubicin versus etoposide/cisplatin in elderly
SCLC patients in japan
Reach 90% enrollment target
Apremilast PDE IV Small
molecule
Phase 2 Phase 2a study in psoriasis completed,
randomized phase 2 in psoriatic arthritis and 2b
PsO study initiated
Phase 2b psorisis data; phase 3
go/no go
CC-10015 IMiD Small
molecule
Phase 1 Phase 1 study in systemic sclerosis Initiated phase 1
CC-11050 PDE IV Small
molecule
Phase 2 Phase 1 healthy volunteer study complete Initiation of Phase 2 auto-immune
CC-11006 IMiD Small
molecule
Phase 2 Phase 1 open label study in MDS comlpeted,
phase 2 prep underway
Initiation of phase 2 MDS
CC-4047 IMiD Small
molecule
Phase 2 Randomized Phase 2 myelofibrosis, sarcoma
and chemotherapy combinations in pancreatic
and SCLC initiated
Initite phase 2b studies in
myelofibrosis and relapsed
refractory myeloma
CC-930 JNK Small
molecule
Phase 1 Target auto immune disease Initiated Phase 1b healthy
volunteer dose escalation
PDA-001 Cellular
therapy
Phase 1 IND filed for use of placental stem cells in
Crohn's disease
Initiate study
Revimid IMiD Small
molecule
Phase 3 1st line studies in MM on going, regsitration
study in MCL and CLL maintenance studies
initiated. EU registration study for MCL, Elderly
front line CLL study and GELA-sponsored NHL
maintenance studies planned
MM-015 data, MP +/- Rev
Rev post treansplant maintenance
data from IFL and CALGB studies
Initiate ORIGIN and SPRINT and
GELA studies
Vidaza Hypo
methylating
agent
Small
molecule
Phase 2 Broad range of hematologic malignancies under
evaluation. Solid tumors include H&N,
melanoma, prostate, NSCLC, RCC and sarcoma
Initiate label expansion proof od
concept studies
Source: Company reports and Barclays Capital Research
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Drug M of A Product
Type
Phase Summary 2009 Milestones
Aztreonam Antibiotic Small
molecule
Phase 3 9/16 Complete Response letter received.
Phase 2 bronchiectasis study initiated
Define path forward with FDA
Cicletanine NOS Small
molecule
Phase 2 Acquired from Navitas. IND filed Initiate phase 2 PAH.
Darusentan Endothelin
receptor
antagonist
Small
molecule
Phase 3 311 placebo controlled study fully
enrolled, 312 guanfacine controlled study
now 71% (52% 3Q08) enrolled
311 data 2Q09
312 CEYE09 data 1Q10
Elvitegravir
(GS 9137)
HIV integrase Small
molecule
Phase 3 Head to head R/DB, double dummy
studies against Isentress >40% enrolled
Frontline Truvada/9350 co-formulated
study Q209
CE YE09.
Conduct P2 co-formulation vs
Atripla in tx-naïve.
GS 9190 HCV
polymerase
Small
molecule
Phase 2 40mg bid has clinically manageable QTc.
P2 38% enrolled
CE YE09/1Q10
GS-9131 HIV NRTI Small
molecule
Phase 1/2 NRTI active against common NRTI
mutations such as K65r and M184V
Development terminated
GS-9191 HPV NRTI Small
molecule
Phase 1 Initiation of HPV antagonist; formulated
as topical gel for anogenital warts
Data 1H09
GS-9219 NRTI Small
molecule
Phase 1 Proof of concept studies in CLL & NHL
ongoing; Q3 week IV administration
Data 1YE09
GS-9310/11 Antibiotic Small
molecule
Phase 2 Phase 2 studies in cystic fibrosis and
bonchiecstasis initiated
CE 1H08, Data 2H08
GS-9350 Small
molecule
Phase 3 Non protease inhibitor PK booster
9350 co formulated with
Truvada/elviregravir
Phase 1 coformulation data. Initiate
P2 Ritonavir H2H
GS-9411 Sodium
Channel
Small
molecule
Phase 1 P1 SAD HV study initiated Data 2Q09
GS-9450 Caspase
inhibitor
Small
molecule
Phase 2a Licensed from LG Lifesciences,
hepatoprotection study in HCV ongoing
Initiate P2b HCV
Complete phase 2 NASH
Letairis ERA Small
molecule
Phase 3 Phase 3 IPF study ongoing Initiate P2 IPF with PH
Quad TDC NNRTI/
Integrase
Small
molecule
Phase 3 Licensing stratey for tx-naïve HIV agreed
with FDA
Initiate P2, H2H versus Atripla
Source: Company reports and Barclays Capital Research
Equity Research |
