· Healthcare companies still desperate for a partner
· Jun 30, 2009 12:34 pm | about stocks:
o Six months on from EP Vantage’s review of companies in critical need of securing a partner for their late stage asset (Companies desperate for a partner, November 28, 2008), not only to commercialise the product but critically to provide much-needed cash, the same analysis reveals that the list has grown from 22 to 24 companies, with only Cougar Biotechnology truly successful in finding a partner following its recent takeover by Johnson & Johnson.
o Almost two-thirds of the original list of 22 companies appear again (see table below), suggesting that the majority of partnering discussions have been slow to progress. Whilst the likes of Mannkind, NeurogesX and NicOx remain convinced that a major partnership is just around the corner, the going concern statements affecting others like Anesiva and Repros Therapeutics reflect the dangerous predicament a number of these companies are currently facing.
o The following analysis presents essentially one-product companies, whose single-product NPV equals the total NPV, who have yet to sign a partner for their late stage asset in a major market.
Aside from Cougar’s takeover by J&J, the other companies no longer in the list forpositive reasons are: Dendreon, reported positive phase III data for Provenge causing massive share price gains which enabled a decent equity issue (The Dendreon rollercoaster continues , April 29, 2009); MolMed, reported positive phase I data for Arenegyr which attracted new analyst valuations so de-risking their pipeline; Vanda Pharmaceuticals, who gained the surprise FDA approval of the decade for Fanapt (Vanda shares rocket after surprise Fanapt approval , May 7, 2009), the company is still in need of a partner but the product has yet to attract renewed analyst valuations.
Meanwhile, La Jolla Pharmaceutical also drops off the list, having almost produced a fairy-tale ending for its arduous development of lupus drug Riquent by signing a deal with BioMarin Pharmaceutical, only for the drug to fail in phase III trials (La Jolla drug failure leaves few options, February 12, 2009).
Probably the most high profile name on the list is MannKind, the only company brave enough to be pushing on with an inhaled insulin product. At the recent American Diabetes Association meeting earlier this month, the company’s chief executive Alfred Mann was once again talking up prospects for a deal. Despite the company’s bullish stance real concerns over the approvability and commercial potential of the product exist. As such, the chance of securing a deal before the outcome of the January 15, 2010 PDUFA date is known, looks slim.
Advanced Life Sciences' chances of finding a partner for its antibiotic cethromycin were effectively dashed by a ruling by an FDA advisory committee earlier this month. The panel ruled in favour of the drug’s safety, but voted strongly against efficacy. A decision from the regulator due by July 31 is unlikely to be positive.
Although ALS has $2m cash at hand and has the option to draw down a further $12m over the next 15 months from a committed financing agreement, the outlook for the company appears fairly bleak. As such, if any partners are tempted, the asset is likely to be available a lot cheaper in the months ahead (Advanced Life Sciences reeling from FDA rejection June 3, 2009).
Anesiva meanwhile is in an even worse financial situation, its auditors having issued a going concern qualification in April, and its stock breaching Nasdaq listing rules. The group has pared back costs and plans to be operating largely as a virtual company by year end, in an attempt to keep hopes of finding a partner for Adlea, its long-acting, non-opioid analgesic drug candidate which is in development for the management of acute pain following orthopaedic surgery.
Savient Pharmaceuticals meanwhile has long been in search of a partner for its gout treatment Krystexxa, but has learnt the hard way about toying with investors’ expectations. A long promised deal failed to materialise in 2008, and the stock was hit hard (Savient's broken promises cause share woe, September 30, 2008). As a result, management are now refusing to comment on the situation, other than to say options are being explored, but following strong endorsement for the product at an FDA advisory committee earlier this week, ahead of an August 1 PDUFA, there is a good chance that Savient will not be on the same list in six months time.
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