Life Science Today 038 – Amgen, Five Prime, KemPharm, Colfax

Originally Published as The Niche Podcast

Amgen nabs Five Prime Therapeutics in $1.9B deal, KemPharm ligates their way out of debt with ADHD, three failed COVID19 pipelines, and Colfax follows 2019 merger with corporate split.


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Music by Luke Goodson
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Life Science Today is your source for stories, insights, and trends across the life science industry. Expect weekly highlights about new technologies, pharmaceutical mergers and acquisitions, news about the moves of venture capital and private equity, and how the stock market responds to biotech IPOs. Life Science Today also explores trends around clinical research, including the evolving patterns that determine how drugs and therapies are developed and approved. It’s news, with a dash of perspective, focused on the life science industry.

Transcript

Introduction

Welcome to The Niche Podcast – Your weekly rundown of the biotech, clinical research, and life science industries. I’m your host, Dr. Noah Goodson. This week, Amgen nabs Five Prime Therapeutics in $1.9B deal, KemPharm ligates their way out of debt with ADHD, three failed COVID19 pipelines, and Colfax follows 2019 merger with corporate split.


Amgen Acquired Five Prime Therapeutics in $1.9B Deal

Five Prime Therapeutics has been acquired by Amgen in a deal valued at $1.9B dollars. The clinical stage immune-oncology company has been developing a suit of targeted oncological therapies. Their lead product, bemarituzumab is entering Phase 3 clinical trials for advanced gastric and gastroesophageal junction cancer.

Bemarituzumab has relatively promising Phase II clinical trial data. But it is also a first in class anti-FGFR2b receptor antibody. In certain cancers, fibroblast growth factors bind to FGFR2b and can drive pro-tumor signaling pathways. Bemarituzumab blocks this interaction and may allow for more effective chemotherapy as the spread of cancer is dramatically inhibited. Practically, this provides a lot of promise for a multi-indication oncological product. Long-run, in the clinic, it is likely that bemarituzumab will be an accompanying therapy to a range of other treatments giving it significant use potential. Particularly as the oncology field increases genetic testing regimes to drive the use of targeted oncological products.

Bemarituzumab accounts for the bulk of the price tag, but Amgen could have just done a bio-bucks pipeline license. So why didn’t they? I think there are a couple of reasons. First, they probably see some meaningful promise in the early clinical and preclinical data from Five Prime’s other products. I think they also see the potential long-term royalties on bemarituzumab as exceeding the cost of a direct buy. Basically, by the time they spend $800M-1.2B for licensing and milestones, then pay a meaningful royalty steam they’ve spent more money and mitigated less risk. I see this deal as making sense assuming, bemarituzumab has robust clinical promise.
 

KemPharm Ligating their Way Out of Debt

KemPharm has received FDA approval for Azstarys to treat ADHD in patients six years and older. KemPharm works in a super-niche section of biopharma, Prodrugs. Prodrugs are compounds that are already approved but may be poorly absorbed or processed. To make a product, the existent pharmaceutical is converted to a novel therapeutic by ligating a biologically digestible chemical chain to create a novel compound that can be returned to it’s original active form by the body. The idea is that the new ligation improves delivery, absorption, release time, or decreases symptoms. These redesigns have to go through the same safety and efficacy testing as any other pharmaceutical, but when they work, it allows a new “old” drug to re-enter the market. Functional prodrugs are metabolized in the body to become their active form. Azstarys contains the pro-drug serdexmethylphenidate (SDX) and drug dexmethylphenidate (d-MPH) in a 70:30 ratio. Upon consumptions, d-MPH is immediately active while SDX is slowly metabolized to d-MPH provided extended function of Azstarys. D-MPH has been approved to treat ADHD for years under the brand name Focalin. KemPharm created SDX by ligating additional chemical chains to extend release and create SDX.

The re-imagining of extant therapies through the creation of pro-drugs is KemPharm’s niche. However, in the last few years they have cranked up significant debt with totals closing in on $100M last year, compared to just $12M in assets. Azstarys’ FDA approval certainly represents a big step forward. They also got the greenlight on an additional IND in late January. I think they probably still have a ways to go to dig out of their current hole. They can either scrape their current line along until cash starts flowing, or try to turn new products into optioned deals that bring positive cash-flow. Either way, they were in a rough spot in 2019. Today, they may be on the road to meaningful recovery and expansion of a new Prodrug market within Biopharma.


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Three Failed COVID19 Therapies

In the interview with Dr. Mitrani last week, we spoke about the development of COVID19 therapies. Numerous companies for both fiscal and moral reasons have dug through their vaults to identify potential COVID19 therapeutics. Since many of these studies started early on in pandemic, knowledge about COVID19 disease was limited and they were inherently risky endeavors. This week, three more investigation programs have been shuttered.

Apellis Pharma closed their study of candid APL-9 as an acute intervention. Their lead product, pegcetocoplan, remains in ongoing phase III studies for various indications in hematology, nephrology, and ophthalmology.

MediciNova closed down a COVID19 vaccine program. The company still has a huge range of therapeutics in Phase II/III trials and the COVID19 vaccine was definitely a side-show for their main line of inquiry. Earlier this year they closed a $20M private stock deal with a private Singapore based hedge fund to develop clinical research on their MN-166 and MN-001 investigational treatments.

Brii Biosciences closed down it’s COVID19 antibody program for both investigational products. Their Data & Safety Monitoring Board determined there was no evidence of efficacy. Launching in mid-2018 with $260M, it’s no surprise that Brii’s pipeline is still predominately in preclinic cal through Phase II clinical trials. 


Colfax Divides to Conquer

Colfax Corporation became a massive “we make stuff” conglomerate after the acquisition of DJO for $3.15B in 2019. The corporation made everything from orthopedic devices and those boots you see on anyone with a broken foot to the entire ESAB line, which is a leading manufacturer of welding and manufacturing equipment and also… like everything else. While certain expertise in product lines are in alignment there are clear market differences between medical devices and sundries and industrial supplies. The split feels like a long-planned move that probably only got punted till now because of the pandemic. The basic strategy was acquire, consolidate, divide, conquer. The split will create medical device corporation with revenues in excess of $1.4B annually and a manufacturing corporation with $2.2B in revenue. It should allow the corporation to focus on their respective markets and avoid lumbering behemoth syndrome. I doubt this is the end of it either. With shifts in medical supply and device pipelines happening across the market there is definitely room for further acquisitions or combined divest and acquire moves. Keep your eyes out for those to get lined up in 2022 when the Colfax split has been fully actualized.


Closing Credits

Thanks for joining me on The Niche Podcast; your weekly summary of top news in the biotech, clinical trials, and life science industries. You can learn more at thenichepod.com or find us on your favorite podcast app. Like, comment, subscribe, and most of all share with your friends. If you like what you hear, please rate and review, it really helps us. Once again, I’m Dr. Noah Goodson, I’ll see you next week.