Replies to post #70793 on Biotech Values

[DewDiligence]

FDA Approves Valturna, a Diovan+Tekturna Combination Pill

[Diovan is NVS’ biggest-selling drug at about $5B per annum, but it goes off-patent in all major countries in 2012-2014. The solution to this patent cliff? Combine Diovan and NVS’ newest hypertension drug, Tekturna, into a single pill that will presumably be priced at only a modest premium to standalone Tekturna.

The medical impetus for the combination pill is that there’s additive efficacy in controlling hypertension from combining an ARB (Diovan) and a direct rennin inhibitor (Tekturna), which works further upstream in the rennin/angiotensin pathway. The FDA label is sufficiently broad that it includes just about anyone with hypertension, and hence this combination pill has the potential to be a big-selling drug. I’ll go out on a limb and predict that it will become one of the two biggest-selling combo pills of all time (the other one being Vytorin).

The brand name of the combo pill, Valturna, is one that did not necessitate hiring a high-priced branding consultant! The first half of the name comes from valsartan, (the non-proprietary name for Diovan) and the second half comes from Tekturna. What could be simpler?]

http://finance.yahoo.com/news/Novartis-Receives-FDA-prnews-1536200395.html?x=0&.v=1

›- Valturna combines in a single pill valsartan, an angiotensin receptor blocker, with aliskiren [Tekturna], the only approved direct renin inhibitor

- Valturna is the first therapy to target two points within the renin angiotensin aldosterone system (RAAS), which plays a key role in regulating blood pressure

- Valturna offers significantly greater blood pressure reduction than either valsartan or aliskiren alone

›Thursday September 17, 2009, 4:05 pm EDT

EAST HANOVER, N.J., Sept. 17 /PRNewswire/ -- The US Food and Drug Administration (FDA) has approved Valturna(®) (aliskiren and valsartan) tablets, the first and only medicine to target two key points within the renin system, also known as the renin angiotensin aldosterone system (RAAS), an important regulator of blood pressure. This is the first approval for Valturna, which is indicated for the treatment of high blood pressure in patients not adequately controlled on aliskiren or angiotensin receptor blocker (ARB) monotherapy and as initial therapy in patients likely to need multiple drugs to achieve their blood pressure goals. [NVS couldn’t have asked for a better label than this!]

"This unique combination brings together the powerful blood pressure lowering effects of valsartan and aliskiren," said Joe Jimenez, CEO of the Novartis Pharmaceuticals Division. "It offers an important additional treatment option for physicians and hypertension patients, many of whom are not at their blood pressure goal. Valturna builds upon our strong cardiovascular franchise and is consistent with our long-term commitment to developing effective and innovative therapies. It further strengthens our growing portfolio of single-pill combinations to treat high blood pressure."

Valturna combines in a single pill valsartan, the active ingredient in Diovan(®), the number one selling branded high blood pressure medicine worldwide, and aliskiren, the active ingredient in Tekturna(®), the only approved direct renin inhibitor (DRI). Valturna offers significantly greater blood pressure reduction than either valsartan or aliskiren alone.

"When it comes to diagnosing and treating high blood pressure, there is a real need for innovative therapies that help patients get to a healthier blood pressure range," said John Flack, M.D., Valturna investigator, and Chairman of the Department of Internal Medicine, Wayne State University, Detroit. "Now for the first time, we have a treatment option in one pill that targets two key points of the RAAS, which may be overactive in many hypertensive patients."

This approval was primarily based on a pivotal eight-week randomized, double-blind, placebo-controlled clinical trial in approximately 1,800 patients, which studied aliskiren 150 mg and 300 mg and valsartan 160 mg and 320 mg alone and in combination. The initial doses of aliskiren and valsartan were 150 mg and 160 mg, respectively, and were increased at four weeks to 300 mg and 320 mg, respectively. Blood pressure reductions with the aliskiren/valsartan combination were significantly greater than with the monotherapies or placebo at the eight-week primary endpoint. Mean systolic and diastolic blood pressure reductions from baseline were 17.2/12.2 mmHg for aliskiren 300 mg/valsartan 320 mg, compared with 12.8/9.7 mmHg for valsartan 320 mg, 13.0/9.0 mmHg for aliskiren 300 mg, and 4.6/4.1 mmHg for placebo (p<0.05 for aliskiren/valsartan vs monotherapies or placebo).

The single-pill combination Valturna targets the RAAS in two ways. The valsartan component blocks, at the receptor level, the action of angiotensin II, an important end product of the RAAS that causes blood vessels to tighten and narrow. The aliskiren component reduces angiotensin II levels by directly inhibiting renin, an enzyme produced by the kidneys that starts a process which leads to formation of angiotensin II. An overactive RAAS is an important contributor to high blood pressure in many patients. By targeting two key points within the RAAS, Valturna helps blood vessels relax and widen so blood pressure is lowered.

Research suggests that up to 85% of hypertensive patients may need multiple medications to help control their blood pressure, underscoring the need for effective combination treatments.

High blood pressure affects approximately 74 million, or nearly one in three, US adults. Although high blood pressure can be easily diagnosed and often successfully managed, approximately 36% of US adults treated with antihypertensive medication do not have their blood pressure controlled. If left untreated, high blood pressure can lead to stroke, heart attack, heart failure, kidney failure and vision problems.

Valturna, Tekturna and Diovan are not approved to treat or prevent stroke, heart attack, heart failure, kidney failure or eye problems resulting from high blood pressure.

History of Diovan(®) (valsartan) tablets and Tekturna(®) (aliskiren) tablets

Diovan, which marked its 10th anniversary in 2007, is the number one selling branded high blood pressure medicine worldwide. Diovan's extensive clinical trials program demonstrates the longstanding commitment of Novartis to research.

Tekturna is a direct renin inhibitor in the first new approved class of high blood pressure medicine in more than a decade. Tekturna was approved by the FDA in March 2007 for the treatment of high blood pressure as monotherapy or in combination with other high blood pressure medications. The use of Tekturna in combination with maximal doses of angiotensin-converting enzyme (ACE) inhibitors has not been adequately studied.

The long-term potential of the direct renin inhibitor Tekturna is being evaluated in an extensive clinical program known as ASPIRE HIGHER.

…Valturna is available in two strengths as tablets containing aliskiren and valsartan: 150 mg/160 mg and 300 mg/320 mg.‹

[DewDiligence]

Takeda’s New ARB Outduels Diovan and Benicar

[Diovan goes off-patent soon, so the competitive damage to NVS from Takeda’s entrant will likely be slim to none.]

http://www.reuters.com/article/idCNN0220734220100503

›Mon May 3, 2010 6:31am EDT
By Bill Berkrot

* Takeda drug lowers BP more than Diovan, Benicar

* Takeda's azilsartan awaiting FDA approval decision

* Analysts see azilsartan sales of $733 mln in 2014

NEW YORK, May 3 (Reuters) - An experimental hypertension drug being developed by Japan's Takeda Pharmaceutical Co<4502.T> lowered blood pressure more than two rival medicines from the same class in a pair of late-stage studies.

The Takeda drug, azilsartan medoxomil, which belongs to a class of blood pressure medicines called angiotensin receptor blockers, or ARBs, was tested against the highest doses of Diovan, a big seller for Novartis <NVS>, and Benicar, sold by Daiichi Sankyo.

Data from the Phase III studies, which were being presented on Monday at the American Society of Hypertension meeting in New York, is part of the package under review by the U.S. Food and Drug Administration. Takeda filed its submission seeking U.S. approval of azilsartan last week.

Analysts polled by Thomson Reuters expect the Takeda drug to reach annual sales of $733 million in 2014 if approved.

One six-week study of 1,291 patients compared the Takeda drug at 40 milligrams or 80 mg with a 40 mg dose of Benicar, known chemically as olmesartan medoxomil, or 320 mg of Diovan, known chemically as valsartan.

The studies evaluated 24-hour mean systolic blood pressure by ambulatory blood pressure monitoring. Systolic is the first, or upper number, in a blood pressure reading.

Azilsartan at 80 mg lowered systolic blood pressure by 14.5 mmHg, while the 40 mg dose took the number down by 13.4 mmHg. Diovan patients saw an average reduction of 10.2 mmHg, while Benicar led to a 12 mmHg reduction. The difference in reduction between the high dose azilsartan and both rival medicines was considered to be statistically significant, researchers said.

The other six-week study of 1,272 patients tested azilsartan at three doses -- 20 mg, 40 mg and 80 mg -- against 40 mg of Benicar.

The 80 mg dose of the Takeda drug lowered systolic blood pressure by 13.2 mmHg, while it went down by 12.1 points at 40 mg and 10.8 at 20 mg. That compared to a reduction of 11.2 seen with Benicar. Once again, the difference between the highest dose of azilsartan and Benicar was considered statistically significant, researchers said.

There was also a statistically significant difference in reduction between 80 mg of azilsartan and 40 mg of Benicar when measuring sitting blood pressure in the clinic -- 8.6 mmHg versus 7.1 mmHg, Takeda said.

The most commonly reported adverse side effects from azilsartan were dizziness, increased blood creatine phosphokinase and diarrhea, the company said.

Takeda is hoping the data will not only convince the FDA to approve the drug, but help to differentiate azilsartan in a crowded field of blood pressure lowering medicines [duh].

"We were encouraged at the results demonstrating azilsartan medoxomil achieved greater reductions in 24-hour mean systolic blood pressure when compared to two other commonly used ARBs at their respective maximum doses," Stuart Kupfer, executive medical director for Takeda clinical science, said in a statement.‹

[DewDiligence]

Novartis Shares Are Cheap, Says Barron’s

http://online.barrons.com/article/SB50001424052970204870904575602683197788138.html

›Novartis is due to lose key patents and is struggling to complete its purchase of Alcon, but its shares are still cheap

SATURDAY, NOVEMBER 13, 2010
By VITO J. RACANELLI

Over the past 12 months, shares of drug maker Novartis have bounced up, down and up again, yet have managed only half the market's 11% gain. Over the longer term, at 56, its American depositary receipts (ticker: NVS) sit roughly where they did at the end of 2005, although since then, the Swiss health-care giant has doubled its dividend and increased profits at an average double-digit rate.

Blame the stock's sluggish performance partly on sector problems, such as expirations of drug patents over the next few years, which could mean revenue gaps across Big Pharma, including Novartis. Some observers deem expensive the company's $38.7 billion purchase this year of a 77% stake in Alcon (ACL). They're worried by potential dilution as Novartis battles to buy the rest of the fast-growing eye-care company from minority holders.

And just last week, the drug maker said it will halt testing of a lung-cancer drug after study results indicated it didn't improve patient survival rates [ASA404, licensed from Antisoma (#msg-56555376)]. As a result, Novartis will take a charge of $120 million against fourth-quarter earnings.

But failures, like successes, are part of the drug business, and the main concerns appear overblown. Novartis is one of the few drug companies likely to post double-digit earnings growth into the teeth of the patent-expiry period, thanks to a diverse pipeline of cardiovascular, oncology, ophthalmic, respiratory and immunology compounds.

The diversity is also geographic, with 68% of sales outside the U.S. and 22% in emerging markets, as well as operational, with important vaccine and generic businesses, in addition to branded drugs. Novartis has a strong balance sheet, prodigious cash flow and a dividend yield of 3.5%, with prospects for higher payouts.

Patent worries currently obscure the improvements to come at Novartis, but as revenue from new drugs and from Alcon kick in, the shares are poised for significant outperformance, with potential total returns of 25% to 30% over the next two years.

Over the next five years, Novartis will lose patents on key drugs. Hypertension drug Diovan, its most important drug at $6 billion annually, or about 14% of total revenue, loses patent protection in stages during 2011-13, and will most likely be hurt by generic competition. [However, Diovan generates a lot of business in emerging markets where it has never been patent-protected; these sales should enable Diovan to be a big-selling drug after the patents expire in the US and EU.]

And after paying a hefty $168 a share for its Alcon stake, or 25 times Alcon's 2009 earnings per share, Novartis is offering 2.8 of its own shares, currently worth about 157 a share, for each of the remaining 23% of Alcon shares it doesn't own. But a slate of independent Alcon board members has rejected this. A raised stock bid could mean more dilution at Novartis than expected, but with $10 billion in pre-Alcon annual free cash flow, Novartis could pay in cash, making the deal more accretive. Alcon shares closed Friday around 163.

Novartis faces typical sector headwinds, too: tougher regulatory oversight around the world, health-care reform in the U.S., price cuts in European markets and longer and costlier drug lead times. But investors seem to be overlooking some important differences between Novartis and the rest of the drug pack. For one, the Basel-based company is relatively less pained by patent expiries, and the stock's valuation seems to already discount this concern. Besides Diovan, Novartis' other big patent expiry is further out, the $4 billion of annual sales of Gleevec, a drug to treat certain forms of leukemia, in 2014-2016. [Fortunately, NVS has Tasigna to retain a decent portion of this market.]

"Diovan is going to hurt, but it's priced into the stock already," maintains Channing Smith, a money manager at Capital Advisors, a growth institutional investor that owns about 93,000 shares. He expects low-double-digit earnings growth, "much higher than the industry average," supported by Alcon, improving margins, new drugs that will surprise on the upside, and expense controls.

Novartis also sports deep research and development capabilities—among its rivals it's had the most compounds approved by U.S. and European authorities in the past three years—and a pipeline of 143 drug projects in development, including 56 molecular compounds. [LOL re the phrase, “molecular compounds”—obviously, the author meant to say *new* molecular compounds.]

For example, Gilenya, the first oral medication for relapsing multiple sclerosis, which affects over two million people worldwide, is likely to be a blockbuster, notes Matthew Burdett of Thornburg Investment Management. Analysts expect the medication to pull in $1 billion to $3 billion at its peak.

Then there's Tasigna, a second- line therapy for leukemia, and Afinitor, an existing kidney-cancer drug that has been approved for new indications in Europe; Novartis expects Afinitor sales to top $1 billion. MenB, a meningitis vaccine for which Phase 3 trials were just completed, is expected to garner $500 million in annual sales [#msg-55887085]. With new drugs, "they have built a bridge over the patent cliff," says Burdett. Thornburg owns about 10 million shares.

Such compounds plus Alcon—which has higher operating margins, 34% versus Novartis' nearly 20%, and produced $2 billion in net income on $6.5 billion in sales—should handily offset the lost revenue and profits from patent expiries. Better still, Alcon "is a lot more steady than a drug," opines Sanford C. Bernstein analyst Timothy Anderson, who has an Overweight rating on Novartis.

Notes Joseph Jimenez, Novartis CEO, in an interview: To move Novartis through the patent cliff, "we've built a plan that doesn't rely on any one compound, like Gilenya, for example…and should result in significant growth for the company."

Drugs were about two-thirds of sales and 77% of operating profits in 2009, but the company has a small but growing vaccine business, 5% of sales, and its Sandoz subsidiary, 17% of sales and the world's No. 2 producer of generic drugs. Novartis' over-the-counter brands include Excedrin and Maalox.

With full ownership of Alcon, pharma will likely make up roughly 55% of total sales, adds Jimenez. Emerging-markets revenue is growing at double-digit rates versus single digits in developed nations, and 22% of Novartis' sales derives from emerging markets, where sales will grow significantly as a percentage of the total sales, he predicts.

Henry Smith, chief investment officer at institutional investor Haverford, adds that "through Novartis you can play several important health-care trends," like generics. "Sandoz doesn't get enough attention, and the drug maker also has a good presence in emerging markets, where the creation of a middle class will help purchasing power." [I.e. NVS is a clear beneficiary of The Global Demographic Tailwind.] Haverford owns about 760,000 Novartis shares.

With its better growth prospects, Novartis' shares are a relative value in its group. The stock changes hands at a sector multiple of about 10 times 2011 consensus estimates of $5.40. In 2009, Novartis posted revenue of $44.3 billion and earnings of $8 billion, or $3.71 a share. In the first nine months of 2010, which includes Alcon only partially in the third quarter, sales rose 16% to $36.4 billion and net income 26% to $7.7 billion, or $3.34 a share.

Patent-expiration dates for some key Novartis products, along with some big drugs in the pipeline.

 
 Product  Ailment      Patent ends  Sales $bln 
 Diovan   Hypertnsion  2011-2013    6.0 
 Gleevec  Leukemia     2014-2016    4.0 
 Gilenya  MS           NA           1-3E 
 Tasigna  Leukemia     2023         1.0E 
 MenB     Meningitis   NA           0.5E

Novartis' historically steady 10% growth in earnings per share suggests $6.50 in 2013. A price/earnings ratio of 10 brings the stock to 65. Add three years of dividends, currently about $2 a share, and at 71 the return is 25%—potentially higher if some of the new drugs prove better than expected.

Channing Smith, who believes Gilenya is a $3 billion drug and that Alcon's results aren't fully expressed in the estimates, argues the P/E should be higher, perhaps 12 to 13 times. An expanded multiple could provide a return [i.e. a share price] of around 80.

John DeGulis, a portfolio manager at Sound Shore Management, says Novartis has yet to make a disciplined attempt at expense reduction, which could add five percentage points of operating margin. DeGulis' firm owns about 2.6 million Novartis shares.

The shares have been afflicted with lethargy, but once the Alcon battle is over and as new drug successes emerge, the market will begin to recognize Novartis as one of the most attractive and diversified global health-care companies around.‹

[DewDiligence]

Novartis CEO Says Big M&A Unlikely

[The header is a bit silly insofar as no Big Pharma CEO reveals that a big merger or acquisition is in the cards until it has been formally announced. However, in NVS’ case, a big M&A deal is indeed unlikely, IMO, unless the marriage partner is Roche, and so far Roche has rejected the idea. Regarding Diovan, NVS’ biggest-selling drug that went off-patent in the US two weeks ago, NVS has been planning for generic competition for at least four years (see 2008 article in #msg-34492678); however, some of the drugs intended to pick up the slack, such as Tekturna/Rasilez, have not panned out, which will make it hard for NVS to grow or even maintain revenue during the next year or two.]

http://www.reuters.com/article/2012/10/07/us-novaris-ceo-idUSBRE89606A20121007

›Oct 7, 2012 6:59am EDT

ZURICH (Reuters) - Novartis is keen to maintain its dividend and is looking to boost growth via mid-sized acquisitions, though big deals are unlikely, the Swiss drugmaker's chief executive said in a newspaper interview on Sunday.

Like many of its rivals, Novartis is struggling to grow in the face of patent expiries on key drugs, particularly Diovan for high blood pressure. It is relying on new products, like multiple sclerosis pill Gilenya, to fill the gap.

In 2010, Novartis made headlines when it wrapped up its buyout of the remainder of U.S. eyecare group Alcon for $12.9 billion. The Basel-based firm in May agreed to buy Fougera Pharmaceuticals, a maker of generic dermatology products, for $1.53 billion in cash.

"Defending the dividend is a priority," CEO Joe Jimenez told the SonntagsZeitung. "We want to stick with a good dividend yield in the future."

Novartis paid a dividend of 2.25 Swiss francs a share last year, a yield of 3.9 percent.

"Then we want to conduct medium-sizes acquisitions to boost our growth," he also said. "In the foreseeable future we're most probably not going to do any mega takeovers."

Novartis sees annual revenues of $5.6 billion from Diovan, Jimenez said, and the drug's loss of exclusivity in Europe and the United states meant the firm would face three "very challenging quarters".

No new cost-control programme would be announced, though some ad-hoc savings could be made over time, Jimenez said, as other treatments coming on line would help make up for the fall: "Our sales should rise markedly in the second-half of 2013."

For the third quarter, currency effects would shave 3-4 percent off operating income, he said, reiterating what he said at the time of the firm's first-half results in July.

At the time, Novartis confirmed its full-year outlook for net sales in constant currencies to meet those of 2011 [i.e. 0% year-over-year growth].

Although he declined to comment on the third quarter, Jimenez said: "As I said at the presentation of the half-year figures: We're on course."

Cancer is an increasingly important therapeutic area for Novartis, which faces stiff competition in the field from cross-town rival Roche Holding AG, the world leader in oncology and in which it holds a third of the shares. [This is a constant source of misstatement in the mainstream press. In fact, NVS owns approximately 1/3 of Roche’s voting shares, but this amounts to only about 6% of Roche’s overall shares.]

"We're holding on to our stake, since it's a strategic decision [i.e. to pressure Roche for a merger] and so far we've done well with it," he said. "Should Roche want to raise equity, we'd have to agree with that."‹