Novartis Acquires Corthera, Secures Positive CHMP Recommendations for Menveo and Paediatric Diovan

Novartis Acquires Corthera for US$120 mil.

Swiss pharma major Novartis has snapped up privately held U.S. based biotech company Corthera for an estimated US$120 million. The main attraction for this acquisition is Corthera's Phase III investigational drug, relaxin, for the treatment of patients with acute decompensated heart failure (ADHF), for which Novartis now has the exclusive worldwide rights. Relaxin excelled in its Phase II trials, where it was shown to have a good safety and efficacy profile in ADHF patients with normal-to-severe high blood pressure. Phase III trials for the compound started back in October and according to the terms of the agreement Novartis will take over the clinical development and potential commercialisation of the compound. In an addition to the initial US$120-million payment for the company, Corthera could potentially benefit from payments of up to US$500 million subject to the achievement of clinical and regulatory milestones as well as royalties of sales of the drug. There are no other drugs in Corthera's portfolio.

Novartis already has a lucrative cardiovascular portfolio spearheaded by its best-selling drug Diovan (valsartan), which clocked sales of US$5.7 billion in 2008. As a result, the acquisition is expected to complement this portfolio. According to Novartis, relaxin's regulatory filings are expected to be made by 2013. Another attraction is that relaxin already has U.S. FDA fast-track approval status, which should simplify the approval process.

Positive CHMP Recommendations for Menveo and Paediatric Diovan

Separately, the European Medicines Agency (EMEA)'s Committee for Medicinal Products for Human Use (CHMP) has provided positive recommendations for two Novartis products, namely its meningococcal disease vaccine Menveo and blockbuster drug Diovan in its paediatric indication. According to the CHMP, the drug can be used in the immunisation of adolescents aged 11 years and over as well as adults who are at risk of exposure to neisseria meningitidis groups A, C, W135, and Y. Diovan can now be used to treat adolescents with hypertension aged 6 to 18 years. Based on the recommendation, a positive final decision by the European Commission can be expected shortly.

Outlook and Implications

According to Novartis's Global Head of Development, Trevor Mundel, ADHF is a major cause of hospitalisation in the elderly population and it is associated with a high level of mortality. Novartis already has a wide range of products for the treatment of heart failure; nevertheless, the acquisition of relaxin is an important boost to its cardiovascular pipeline. Given Novartis' experience in developing and marketing these types of products, this is an important drug to keep an eye on going forward. This is a strategic move on Novartis's part as Diovan is due to lose its patent in 2012. Therefore, the company is lining up potential successors to the Diovan throne in order to prevent it from feeling the pinch when Diovan's revenues plunge. This drug fits into that category. Given that Novartis is buying the entire company and not just the rights to this drug, it is fair to say that the acquisition of this biotech firm will strengthen Novartis's biotech arm—an increasingly prominent strategy being employed by Big Pharma names. For example, U.K. pharma major GlaxoSmithKline has indicated that its biotech drugs now account for up to 15% of its clinical pipeline, and this is set to increase in the future.

The positive regulatory nod for Menveo is an important development as this guarantees Novartis the coveted first-to-market title in the European market. The regulatory process in the United States has been subject to delays following the FDA's complete response letter requesting more information on the clinical and CMC (Chemistry Manufacturing and Control) sections of Menveo's supplementary Biologics License Application (sBLA) (see Switzerland: 2 July 2009: FDA Complete Response Letter Demands More Data on Novartis's Menveo). If and when Menveo is approved in the United States, the vaccine is expected to capture market share from the currently marketed Menactra as it has already been shown to be more effective in terms of providing greater immune response. Given the lucrative nature of the vaccine market and the huge unmet need for prevention against the meningococcal disease, Menveo is expected to feature as an important revenue earner for Novartis going forward. Early estimates suggest that annual sales could peak at US$500 million. Even though the latest Diovan indication comes at a time when the drug patent expiry date is fast approaching, it will help Novartis to further milk its sales in anticipation of the future revenue fall.