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Deal with GSK brings New Personalized Rx Opportunities to Novartis

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Originally published April 29.

NEW YORK (GenomeWeb) — In garnering rights to GlaxoSmithKline's portfolio of oncology drugs, Novartis has access to several newly launched personalized cancer agents that the company hopes to drive to blockbuster status in coming years.

Novartis last week agreed to acquire GSK's oncology products for $14.5 billion. The agreement is subject to certain conditions, such as shareholder approvals and regulatory approvals of key drugs. However, if certain development milestones are met, then GSK stands to receive up to $1.5 billion from Novartis. The terms of deal also give Novartis opt-in rights to GSK's current and future oncology R&D pipeline.

With this deal, Novartis is hoping to add a few more profitable precision medicine products to its cancer drug portfolio, which already includes the personalized medicine blockbusters Gleevec (imatinib) and Tasigna (nilotinib). During a recent call with investors, David Epstein, head of Novartis' pharmaceuticals division, specifically highlighted three of GSK’s cancer drugs – the MEK inhibitor Mekinist (trametinib), the BRAF inhibitor Tafinlar (dabrafenib), and a TK inhibitor Votrient (pazopanib) – as having annual revenue potential of more than $1 billion.

Epstein told investors during the call that he believes Novartis can do a better job than GSK of capturing the market potential of Votrient, Mekinist, and Tafinlar. "When you take these products and add them to our considerable development and commercialization capabilities, we believe these products can be bigger in our hands than they ever could have been in GSK’s hands," Epstein said during a recent earnings call.

Industry experts closely watching the dealings between Novartis and GSK believe the move ultimately reflects how well drugmakers have managed cost pressures, handled drug development setbacks, and adapted to personalized medicine advances.

Precision medicine proponents uphold Novartis as a personalized medicine leader among pharma players. The company entered the space in 2001 with the launch of Gleevec, a treatment for Philadelphia chromosome-positive chronic myeloid leukemia, a disease characterized by BCR-ABL translocations. The deal around GSK's oncology products comes as Gleevec, Novartis' best selling product, is slated to lose patent protection in 2015. In anticipation of this, Novartis has focused on growing adoption of Tasigna, hoping it will eventually take the place of Gleevec in the leukemia market.

Last year, Gleevec had revenues of $4.7 billion and Tasigna brought in more than $1 billion. As part of its broader strategy to grow sales of these two leukemia drugs, Novartis has invested in standardizing BCR-ABL testing across labs in Europe. For example, Asuragen and Novartis inked an exclusive agreement in 2010 to develop calibrators and laboratory software reporting tools. Even earlier, starting in 2007, Novartis and the European LeukemiaNet launched the European Treatment Outcome Study (EUTOS), aimed at improving the understanding and treatment of CML through the establishment of a patient registry and molecular monitoring standards, among other things.

“Novartis has taken a very hands-on approach with the support of diagnostic standards to support … the Gleevec/Tasigna franchise with continuous and public [backing] for quality schemes in laboratories like EUTOS,” Peter Keeling, CEO of the personalized medicine-focused consulting firm Diaceutics, told PGx Reporter over e-mail. Keeling suggested that Novartis is poising itself to take a leadership role in personalized medicine, similar to Roche, by establishing internal diagnostic capabilities through its acquisition of Genoptix and Vivacta.

“These initiatives illustrate to us that Novartis understands both the dependencies between quality testing and accurate prescribing and the value of partnering with laboratories (versus just diagnostic suppliers) in the development of the personalized medicine space,” he said. “Novartis and Roche have invested in learning the commercial relationship between test and treatment … and move ever closer than their peers towards leveraging personalized medicine to transform patient pathways. In this regard we [at Diaceutics] would agree [with Novartis’ Epstein] that GSK’s PM oncology assets will be placed under a brighter spotlight by the Novartis team.”

Epstein told investors during the call that Novartis plans to leverage its connections with physicians to better drive adoption of Mekinist, Tafinlar, and Votrient. "A company like GSK frankly just does not have access to physicians in a way that a company like we do, to get your products prescribed," Epstein said. "So you’re getting the immediate synergy, once we have the products in our hands, that we can grow them much faster than the other."

Novartis believes there are additional market opportunities for Tafinlar, Mekinist, and Votrient, in combination with various agents, in different tumor indications, and in earlier stages of disease. Epstein projected that the market growth for the three agents will start to reach peak sales after 2018.

GSK, meanwhile, has also invested in personalized medicine, but in a slower and more reactive fashion, according to Keeling. For example, he pointed out that GSK could have invested in companion diagnostics and biomarkers research to elucidate the mechanistic differences between its HER2 breast cancer drug Tykerb (lapatinib) from Roche/Genentech’s market leading agent Herceptin (trastuzumab).

In 2013, worldwide sales for Herceptin – indicated for HER2-positive gastric cancer, as well as adjuvant and metastatic breast cancer – were CHF 6.1 billion ($6.9 billion). Comparatively, Tykerb, indicated for advance HER2-positive, previously treated breast cancer patients, brought in £207 million ($348 million) last year. GSK decided to not to advance the drug in gastric or head and neck cancer after studies in these indications failed to meet their primary endpoints.

“We have never been certain if GSK ever really liked the dependencies with diagnostics implicit in personalized medicine,” he said. “GSK decided to abdicate responsibility for development of the HER2 testing franchise to Roche/Genentech and focus on promoting what they knew best, namely their own therapy.” Roche, in contrast, snatched up the leadership position in this space, developing and marketing multiple companion tests and making HER2 testing synonymous with Herceptin, and now follow-on HER2-targeted agents Perjeta (pertuzumab) and Kadcyla (ado-trastuzumab emtansine).

“Tykerb never got into the race,” Keeling reflected.

GSK had a chance to apply the lessons from Tykerb when last year it launched Mekinist and Tafinlar, two melanoma drugs that will compete with Roche’s BRAF-inhibiting melanoma drug Zelboraf (vemurafenib). And the company seemed to be moving in this direction by partnering with BioMérieux to develop and launch a companion test for Mekinist and Tafinlar. But, history repeated itself, according to Keeling, and again, GSK didn’t do enough to differentiate its drugs from Zelboraf.

The US Food and Drug Administration first approved Mekinist and Tafinalr alongside the companion test last year as single agents to treat unresecetable, metastatic melanoma patients with certain genetic mutations in the BRAF gene. Then, earlier this year, the agency approved the combination of Tafinlar and Mekinist for the same subset of patients. “Of course, new therapies in melanoma are welcome given the paucity of good treatment choices,” Keeling observed. He noted, however, that although GSK advanced a companion test for its drugs, the company didn’t invest in establishing a lab network, for example, that would have helped drive adoption of the FDA-okayed test kit and the drug.

“The concept of truly commercially leveraging the diagnostic and laboratory landscape for GSK’s oncology portfolio is not something we have seen GSK do to date,” Keeling said. “Their exit from oncology and the recent failure of their Mage-A3 [drug] is in our view as much an exit from personalized medicine as anything else.”

In April, GSK had a major setback for one of its investigational personalized medicine efforts. The company decided to halt the Phase III MAGRIT trial involving its MAGE-A3 cancer immunotherapeutic for non-small cell lung cancer, in which the company was trying to identify a genetically-defined patient subset that benefited from the agent. This is after the drug had already failed to show a benefit in a Phase III study involving melanoma patients.

With GSK’s oncology portfolio in its hands, Novartis is focusing on the positives. Novartis officials are also awaiting results from the Combi-D study, the successful completion of which would convert the accelerated approval of the Mekinist/Tafinlar regimen into full market approval. This study is slated for completion this year or early next year. Given that these two melanoma drugs just entered the market, successful completion of Combi-D will give Novartis time to drive adoption and grow their market.

There may also be personalized medicine opportunities in Votrient, a GSK drug currently approved for late-stage kidney cancer and advanced soft tissue sarcoma. Recently published studies suggest that the drug in combination with Novartis' mTOR inhibitor Afinitor (everolimus), may lead to robust responses in a small subset of bladder cancer patients with mTOR mutations.

Novartis is also working internally to grow its presence in the personalized medicine field. The company recently receive regulatory approval in the US for Zykadia or ceritinib for advanced ALK-positive NSCLC patients who have progressed on Pfizer’s Xalkori (crizotinib) (see related story, in this issue). Novartis is studying the drug in treatment naïve patients, which if successful would make Zykadia a competitor to Pfizer’sALK inhibitor.

In parallel with gaining rights to GSK’s oncology pipeline, Novartis also agreed to divest its vaccines business to GSK, excluding its influenza-related products; and the two pharma giants entered into a joint venture to create a global consumer health-focused, over-the-counter products business. Finally, Novartis also agreed to divest its Animal health division to Eli Lilly. These strategic changes follow Novartis' portfolio review last year, after which the company's leaders decided grow its smaller divisions in OTC, vaccines, and animal health through partnerships and divestitures.

Novartis, GSK, and BioMérieux did not respond to questions ahead of press time.

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