Big Pharma's Cancer Race
Big Pharma's Cancer Race
Photo:
Darron Cummings/Associated Press
Not long ago America’s political class was fretting about too many “me-too” drugs.
Eli Lilly
’s
bid for
Loxo Oncology
,
which follows a flurry of biotech deals, shows how the pharmaceutical landscape is fast-evolving as U.S. drug companies compete to become leaders in oncology.
Indianapolis-based Eli Lilly on Monday announced plans to purchase the Stamford, Conn., start-up Loxo for $8 billion with the goal of expanding its oncology portfolio. Loxo has pioneered an experimental therapy targeting single-gene abnormalities that can cause tumors throughout the body. Most cancer treatments target specific body sites, so Loxo’s innovation may be revolutionary.
In November Loxo’s Vitrakvi became the first tumor-agnostic treatment to receive FDA approval. Three-quarters of patients in clinical trials responded to the drug, which targets a rare gene “fusion.” The market for Vitrakvi may be small, but Lilly’s backing will help bring the drug to more patients.
Lilly and other pharmaceutical giants are seeking to develop novel oncology treatments as expiring patents undercut profit margins on their blockbusters. Last June Lilly bought Armo Biosciences, a trailblazer in immunotherapy treatments that harness the body’s immune system to fight cancer. Lilly CFO Josh Smiley says a lower corporate tax rate is helping his company compete with foreign rivals for biotech start-ups.
Recall how U.S. drug makers a few years ago sought to exploit lower rates abroad with corporate inversions. The GOP corporate tax reform, which cut the U.S. rate to 21% from 35% and allowed businesses to repatriate overseas profits tax-free, has given U.S. drug makers more cash to invest. Now they’re acquiring companies to advance innovation rather than engage in tax arbitrage as they did pre-reform.
The Lilly-Loxo deal follows
Bristol-Myers Squibb
’s
$74 billion bid last week for Celgene. Bristol-Myers is a top developer of immunotherapy drugs while Celgene has dominated the multiple myeloma field. Celgene’s top-selling drug Revlimid could face generic competition as early as 2022, but Bristol-Myers CEO Giovanni Caforio assured investors that, “We look at [the merger] actually as a science and pipeline deal.” In other words, Bristol-Myers is buying Celgene for its drugs in development.
Celgene last year purchased Juno Therapeutics with the goal of becoming a leader in CAR-T cell therapy, which targets specific proteins on tumors. Future CAR-T multiple-myeloma treatments could diminish the revenue hit from generic competition to Revlimid. Celgene is also conducting clinical trials on other immunotherapies that target solid and blood tumors including the hard-to-treat brain cancer glioblastoma, which killed John McCain.
Gilead has likewise pushed into the CAR-T field with its acquisition in 2017 of Kite Pharma whose therapies could offset declining sales from its Hepatitis C drugs. Patients will be the beneficiaries of such novel immunotherapies, which have fewer side effects than traditional treatments and may make many more cancers survivable.
Consolidation can indicate industry sclerosis, but these drug mergers have the potential to be salutary for investors and patients. Big Pharma can provide start-ups with much-needed capital to manufacture breakthrough therapies while investing in more novel treatments. Now if only drug makers could develop a cure for Washington’s political dysfunction.
Appeared in the January 10, 2019, print edition.
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