Biotech Values

[DewDiligence]

Here’s the WSJ story on the MRK-Portola partnership.
There’s a slight misconception by the author about the
classes of oral anticoagulants, as noted below, but at
least the article doesn’t have any boneheaded mistakes
(such as using the word “loose” instead of “lose”). The
article does capture the most consequential point for
investors: the potential market for new anticoagulant
drugs is enormous.

http://online.wsj.com/article/SB124714760145518187.html

›Merck Acquires Rights to Anticoagulant

JULY 9, 2009, 11:15 A.M. ET
By RON WINSLOW

Merck & Co. on Thursday said it has obtained worldwide rights to co-develop and commercialize an experimental drug in a crowded race to replace the anticoagulant warfarin, one of the oldest pills in medicine.

The Whitehouse Station, N.J., drug company will pay closely held Portola Inc., of South San Francisco, Calif., $50 million to license the drug. The medication, called betrixaban, is in midstage, or Phase II, human studies to prevent the formation of blood clots in a variety of conditions.

Portola said it may receive additional payments totaling as much as $420 million if the drug meets certain regulatory and commercial milestones, as well as royalties if the drug reaches the market.

Other companies have similar compounds further in development to prevent or treat potentially life-threatening clots in heart and surgery patients.

Boehringer Ingelheim GmbH's dabigatran anticoagulant is on the market in Europe for clot prevention after hip- and knee-replacement surgery, and data are expected soon from a large trial in heart patients with atrial fibrillation. Rivaroxaban, from Johnson & Johnson and Bayer AG, is on the market in Europe for hip- and knee-replacement patients and is under consideration for Food and Drug Administration approval. Pfizer Inc. and Bristol-Myers Squibb Co. are jointly developing a drug called apixaban. [This is misleading insofar as dabigatran (a/k/a/ Pradaxa) belongs to a different drug class than betrixaban, rivaroxaban (a/k/a/ Xarelto), and apxiaban. The former is a direct thrombin inhibitor, while the latter three are FXa inhibitors. Although there will probably be some overlap in the approved indications of these two classes, the distinctions between them are nonetheless apt to be consequential!]

Analysts have estimated that annual sales of a successful new anticoagulant or class of such medicines could exceed $10 billion by the middle of the next decade. [Indeed, this is one of the largest untapped markets in the entire pharma industry.] Warfarin is taken by several million patients, but it requires frequent monitoring and often reacts with other drugs, making it difficult to take. By some estimates, doctors prescribe it for fewer than 50% of patients who need it. [This 50% figure pertains to the US, specifically; in Europe, the percentage is closer to nil.]

Charles Homcy, president and chief executive at Portola, says he expects nearly 200,000 patients will soon be participating in clinical trials involving such compounds. The intense interest "is a reflection of the market opportunity and what the unmet medical need is," he says.

Despite its problems, warfarin, which is available in generic versions, has proven staying power. Late Tuesday, Aryx Therapeutics Inc., a Fremont, Calif., biopharmaceutical company, reported that its tecarfarin drug failed to prove superior to warfarin in a 612-patient study. Tecarfarin, designed to act like warfarin without the dosing challenges, is different from most other agents in development, but the news reflects years of frustration drug developers have experienced in the quest for a better anticoagulant pill.

For Merck, the new pact adds another compound to its pipeline of nearly a dozen cardiovascular drugs. It also gives the company a potential two-pronged attack against atrial fibrillation, a heart-rhythm disorder that is a common cause of strokes and that afflicts 2.2 million Americans and more than five million people world-wide. In April, Merck signed a separate licensing agreement with Cardiome Pharma Corp., of Canada, to develop a drug called vernakalant to treat the rhythm condition.

Depending on the results of a Phase II study expected later this year, Merck and Portola say they plan to launch a late-stage trial of betrixaban to reduce blood-clot risk in atrial fibrillation, possibly in late 2010. If all goes well, the drug could reach the market by 2013, Portola says. [This seems rather optimistic, but not necessarily impossible.]

Luciano Rossetti, a Merck senior vice president for atherosclerosis and cardiovascular research, says that while betrixaban trails rivals in development, he believes certain characteristics of the drug will give it advantages in the marketplace if it eventually wins regulatory approval. [I presume he’s referring to the long half-life.]

For Portola, the agreement is the second major licensing deal with a pharmaceutical company this year. In February, Novartis AG, of Switzerland, agreed to pay $75 million plus additional milestone payments and royalties for a different type of anticlotting drug.‹