Global Insight Perspective | |
Significance | GlaxoSmithKline (GSK)'s agreed acquisition of Praecis caps a remarkable run for the U.K. company, with six deals to access new drug programmes and technologies in just the last two weeks. |
Implications | Praecis has a novel MetAP-2 inhibitor, PPI-2458, in Phase I clinical trials for non-Hodgkin's lymphoma and solid tumours that will lend more weight to GSK's oncology portfolio. The Massachusetts-based company also has a proprietary drug discovery technology geared to orally active compounds, and a research and development programme for S1P-1 agonists that could have applications in autoimmune diseases such as multiple sclerosis. |
Outlook | GSK's aggressive engagement with novel possibilities for drug discovery and development should help to silence criticisms that its own pipeline is beginning to sag. Although the strategy carries inevitable risks, for the moment it puts GSK at the forefront of what is increasingly an industry-wide trend of trawling for gold among the numerous small biotechs eager for partnerships. |
As Christmas shopping sprees go, GlaxoSmithKline (GSK)’s takes some beating. Only a couple of months ago, analysts were muttering about significant “pipeline slippage” and other threats to GSK’s long-term growth such as dwindling prospects for the anti-asthmatic Advair (salmeterol/fluticasone) and diabetes treatment Avandia (rosiglitazone), as well as the tightening noose of generic competition. Since then the U.K. company has gone into overdrive in its determination to keep its development pipeline fresh and flowing.
Just in the last two weeks, GSK has:
- Paid out £230 million (US$451.2 million) in cash for fellow U.K. company Domantis, a pioneer in developing the next generation of antibody therapies.
- Announced a worldwide strategic collaboration with Epix Pharmaceuticals of the United States, targeting for G-protein coupled receptors for the treatment of a wide range of diseases.
- Struck a worldwide co-development and marketing agreement, potentially worth a record US$2.1 billion, with Danish biotech Genmab for the latter’s investigational monoclonal antibody HuMax-CD20.
- Agreed to buy 1,000 HumanHap550 BeadChips for whole-genome genotyping from U.S. specialist Illumina, in what the latter described as a “multi-million dollar” deal.
- Signed a joint licence agreement with U.K. gene therapy specialist Oxford BioMedica and its U.S. partner Sigma-Aldrich for their LentiVector gene delivery technology.
Just to drive the point home, GSK has appointed a new senior vice-president of worldwide business development, research and development to head up its in-licensing and collaboration activities. Adrian Rawliffe, who succeeds Moncef Slaoui—now moved up to chairman, R&D—in the position, was previously managing partner and president of SR One, the company’s venture capital business.
Now comes the definitive agreement to acquire all of the outstanding shares of U.S. biopharmaceutical company Praecis Pharmaceuticals for US$5 per share. The cash tender offer, which is more than double the closing price of Praecis’s shares on the U.S. Nasdaq system on Wednesday (20 December) and values the company at around US54.8 million, is expected to start in early January 2007 and close in the first quarter of next year.
What GSK gets is a company that bills itself as “focused on the discovery and development of novel compounds to address unmet medical needs or improve existing therapies.” Praecis’s most visible asset is PPI-2458, a novel MetAP-2 inhibitor in Phase I clinical trials for non-Hodgkin’s lymphoma and solid tumours. It also offers Direct Select, a proprietary technology with the capacity to generate “ultra-large libraries” for the discovery of orally active drug candidates; and a research and development programme for S1P-1 (sphingosine-1-phosphate receptor-1) agonists, which could have applications in autoimmune diseases such as multiple sclerosis.
PPI 2458, which could usefully fill out what is regarded as a rather meagre oncology pipeline at GSK, is a novel oral compound designed to inhibit the enzyme methionine aminopeptidase type 2 (MetAP-2). It is based on the fumagillin class of compounds, which has been shown to prevent the formation of new blood vessels (angiogenesis), as well as abnormal cell growth, Praecis says, both known contributors to the growth of aberrant tissues in diseases such as cancer and rheumatoid arthritis.
According to the company, previous clinical development with fumagillin derivatives has been hampered by their pharmacokinetic and toxicity profiles. In preclinical studies to date, PPI 2458 has “demonstrated the potent activity of this class of compounds, while displaying an improved pharmacokinetic and toxicity profile,” Praecis notes. With the added advantage of oral administration, the company believes the compound has the potential to address a broad therapeutic spectrum.
A Phase I clinical trial of PPI-2458 in non-Hodgkin’s lymphoma patients who were no longer responding to other therapies first started in the fourth quarter of 2003. The trial was placed on hold by the U.S. Food and Drug Administration in March 2004 “due to a non-clinical safety concern”, but resumed late in that year and was expanded to patients with solid tumours in the first quarter of 2005. Praecis is also examining the potential of PPI-2458 in inflammatory and autoimmune disorders, including rheumatoid arthritis.
The U.S. company’s drug development efforts have by no means been plain sailing. Apart from the temporary clinical hold on PPI-2458, the company has seen two major pharmaceutical players retreat from partnerships for Praecis’s ill-starred prostate cancer drug Plenaxis (abarelix for injectable suspension). In December 2001 Amgen terminated the companies’ co-development agreement for Plenaxis after the drug failed to gain U.S. approval following an “inadequate” application from Praecis. In October 2005 Germany’s Schering AG was reported to have paid out US$4 million to scrap a licensing and distribution agreement for Plenaxis after Praecis missed a deadline for obtaining German approval for the drug with the right labelling.
In June Praecis announced that it was giving up on its efforts to find a new partner for Plenaxis and would work with the FDA to “discontinue the limited distribution of the product in the United States as soon as is reasonably practicable.” The company would also cease its attempts to commercialise Plenaxis outside the United States. The wind-down was reflected in an increased net loss of US$5,168,000 for the third quarter of 2006.
Outlook and Implications
If there were any doubts about GSK’s seriousness in tackling any perceived weaknesses in its pipeline, they must have been put to rest. The pace of its recent acquisition spree, not to mention the premium prices the U.K. company is paying, will no doubt raise some eyebrows. Yet it seems inconceivable that a company of GSK’s experience and standing would rush into deals just to show willing.
Of course, it is also a strategy fraught with risks. If anyone needed reminding about the fragility of the new biologicals boom, then the recent scare over the risk of progressive multifocal leukoencephalopathy with Genentech/Biogen Idec’s Rituxan (rituximab) will have driven the point home. The risks also lie in the long trawl through development, something to which Praecis itself can testify. Then there are the inevitable debates about pricing and cost-effectiveness further down the line. No-one has really worked out yet how a stream of expensive biological drugs can be squared with increasingly stretched national healthcare budgets.
However, these are risks faced by the whole of the mainstream pharmaceutical industry if it wants to protect its own long-term health. For the moment, biologicals and other new avenues to drug development are the place to be. GSK is making sure it is there in strength.
Related Articles
- United Kingdom: 11 December 2006: GlaxoSmithKline to Acquire Next-Generation Antibody Specialist Domantis for US$452.3 mil.
- United Kingdom: 13 December 2006:GSK, Epix Team Up on Drug Candidates Targeting G-Protein Coupled Receptors
- United Kingdom: 19 December 2006: GSK Licenses Genmab's HuMax-CD20, Drops Vertex's Brecanavir
- United States: 21 August 2002: Amgen Receives Pay-Off from Praecis Over Terminated Cancer Drug Deal
- World: 26 October 2005: Schering AG Ends Distribution Deal with Praecis Pharma in US$4 mil. Settlement