JPM Tuesday roundup: Pfizer CEO talks up pipeline, bolt-on deals the name of the game in 2020?

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The latest from Day 2 of JPM 2020 (Pixabay/David Mark)

SAN FRANCISCO—The second day of the annual J.P. Morgan Healthcare Conference again saw no major M&A deals but did see some of the bigger pharma companies present and talk a little more about their pipelines and R&D.

Pfizer’s relatively new CEO Albert Bourla (announced as chief just before JPM 2019) spoke about how Pfizer is changing gear in its R&D after a period where it just wasn’t keeping up with the rest of the industry.

Bourla said in the Q&A session after Pfizer’s main presentation that when you look at phase 2 success rates, the industry is at 30%. “Pfizer for many years was at 15%, because we're taking the approach of very little scientific rigor in progressing assets to phase 2 and we were trying multiple shots. So, we got strong money in multiple approaches.”

He went on: “We changed our governance in the last five years. Right now, the success rate of phase 2 it is 50%, 5-0, compared to 30% for the industry. This is a significant transformation. And that's one of the indications of what we are doing in R&D. And it was not a simple thing to do that. It was a lot of effort and took a lot of time. It took at least 10 years to turn around our R&D. And I will give you some examples of the things that we did.

“In 2010, Pfizer was operating in 13 therapeutic areas. We were spread very thin, our research, our resources. And we were OK or mediocre in each one of them. Today, we are focusing on six therapeutic areas, and we are double downing on them. As a result, we attracted the best scientists and to attract the best scientific substrate.”

Fellow Big Pharma Merck also presented Tuesday, with its CEO Ken Frazier inevitably asked about deals. He said his thinking centers around: “What’s the next great opportunity in science, and how can we get ahold of it in a way that creates the most value for shareholders?”

In practice, he says this means “bolt-on acquisitions” that can be scaled up in a “financially disciplined way.” He points out that Merck did more than 80 transactions last year at a cost of $8 billion, including its ArQule deal. Merck is being closely watched given the reliance it has on oncology major Keytruda and questions as to how it can replace the $3 billion a quarter it’s making from the drug in the future.

Roche, also heavily reliant on cancer, is set to lose its oncology sales top spot due to the combination of Bristol-Myers Squibb and Celgene but appears also to be looking for a deeper diversification. CEO Bill Anderson said: “We think neuroscience has the potential to be in the '20s what oncology has been in the last decade,” and the Swiss major is looking to be a part of that.

This includes what the company hopes will be a 2020 launch for risdiplam in spinal muscular atrophy, a disease that robs people of physical strength by affecting the motor nerve cells in the spinal cord (although it will have competition here), and anti-IL-6 antibody satralizumab in rare disease neuromyelitis optica spectrum disorder.

The Big Pharma also shone a light on its efforts in Alzheimer's, Huntington's, Parkinson's and autism, perhaps indicating a shift in focus for the new decade.

Finally, GlaxoSmithKline was also asked whether it was “shopping” for deals. CEO Emma Walmsley says there is a lot of buzz around their tech platform partnerships, like with 23andMe, but as with nearly everyone, wouldn’t get down to specifics. “We’re always looking,” she said. “You’d expect us to be.” After spending around $5 billion on cancer biotech Tesaro this time last year, they may have a little less cash for a major deal.