Welcome to the latest edition of our weekly EuroBiotech Report. Weeks after being criticized for encouraging profit-shifting, the United Kingdom unveiled plans to discourage multinationals from funneling money out of the country. The law--dubbed the "Google tax"--is targeted at multinational tech giants but could snare Big Pharma, too. AstraZeneca ($AZN) was among the companies that experienced a dip in share price after the plan became public. Earlier in the week, the Anglo-Swedish drugmaker struck a 5-year deal to make its compound library and Cambridge facility available to Cancer Research UK. Bayer talked up its life science R&D program, revealing it plans to up spending to €3.2 billion ($3.9 billion) this year. Zeltia (BME:ZEL) revealed it is considering merging with its oncology-focused subsidiary and listing on Wall Street. Anergis raised $15 million to finance its pipeline of allergy vaccines. And more. Nick Taylor (email | Twitter)
1. Fallout from U.K.'s 'Google tax' likely to hit Big Pharma
2. Bayer ratchets up life science R&D spend to €3.2B
3. AstraZeneca opens up Cambridge labs, compound library to CRUK
4. Zeltia mulls merger to prepare for Wall Street IPO
5. Anergis raises $15M to move fast-acting allergy vaccine into PhIII
And more >>
The United Kingdom government has proposed a tax to stop £1 billion ($1.6 billion) from being diverted out of the country by multinational profit-shifting schemes over the next 5 years. Multinational tech firms are the primary target of the policy--leading to it being dubbed the "Google tax"--but it is likely to snare Big Pharma companies, too.
|Chancellor of the Exchequer George Osborne|
Chancellor George Osborne introduced the tax in his autumn statement, but the policy is light on details for now. The big idea is to apply a 25% tax rate to profits that are generated in Britain before being "artificially shifted" overseas. Tech giants such as Amazon ($AMZN) and Google ($GOOG) are the poster boys for such profit-shifting schemes, but large pharma and biotech companies use the model, too.
"This new multinationals tax, while clearly aimed at catching U.K. generated profits from online operators such as Amazon and Google, may have unintended consequences on global manufacturers with U.K. listings from Unilever to SABMiller to Big Pharma," Neil Shah, director of research at Edison Investment Research, told CityA.M. Last month an investigation detailed how Shire ($SHPG) funnels money into low-tax Luxembourg.
Whether the "Google tax" will do anything to stop such schemes when it comes into force in April is open to question. More details will arrive next week when the Treasury releases draft legislation, but some observers have already dismissed the likelihood of it making a meaningful difference. Toby Ryland, a partner at accountants HW Fisher & Company, told The Guardian "most multinationals will be able to sidestep these new rules without breaking into a sweat."
Michael Devereux, director of the Oxford University Centre for Business Taxation, was equally sceptical of what he sees as the latest in a long line of attempts to stop profit shifting. "Governments have been worrying about shifting profits of companies for some time and paying less tax in the UK. Every time there is a budget they announce a crackdown. What is not clear is what they will do differently," Devereux told The Register. - read coverage in the Guardian, CityA.M. and the Register
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|Bayer Chairman Marijn Dekkers|
After a period in which its output has put some pure-play Big Pharma companies to shame, Bayer has upped its R&D spending in a bid to keep its drug pipeline well stocked and advancing. The German conglomerate expects to commit €3.2 billion ($3.9 billion) to life science R&D this year, putting it just outside the 10 biggest spenders in the industry.
Leverkusen, Germany-based Bayer has clocked up a handful of big approvals over the past 5 years. Management now expects annual sales of its 5 big, recently approved drugs--Adempas, Eylea, Stivarga, Xarelto and Xofigo--to top out at upward of €7.5 billion, €2 billion more than it predicted one year ago. With the commercial engine whirring away and plans to spin off the €10 billion plastics unit in the pipeline, Bayer is ploughing cash into life science R&D.
The life science R&D budget for 2014 is €3.2 billion, although around 30% of that is allocated to crop science. In 2013, Bayer as a whole spent just shy of €3.2 billion on R&D, but that figure includes a €208 million outlay by the material science unit. The uptick in R&D investment continues the trend at Bayer since 2005, when its budget bottomed out at €1.9 billion. The surge in investment has helped Bayer build a pipeline of 57 clinical-phase candidates, 18 of which are in late-stage studies.
At a media day, Bayer singled out the Phase III prostate cancer drug it picked up through its deal with Orion and hemophilia treatment BAY 81-8973 as exciting late-stage candidates. Bayer filed for approval of BAY 81-8973 in Europe this week. - read the release and FierceBiotech's BAY 81-8973 coverage
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|AstraZeneca Executive Vice President Menelas Pangalos|
AstraZeneca ($AZN) has taken steps to further tighten its ties to the United Kingdom's research establishment. The latest element in the process is a deal with Cancer Research UK (CRUK), which sees AstraZeneca open up its Cambridge campus and compound library to the nonprofit's drug discovery team.
CRUK researchers will have access to the more than two million molecules in AstraZeneca's library, as well as screening tools with which to mine the resource for promising drug candidates. The tools are housed at the AstraZeneca MRC UK Centre for Lead Discovery the Big Pharma is building with the Medical Research Council (MRC). When the unit opens in 2016, researchers from AstraZeneca, MRC and CRUK will all use its facilities.
AstraZeneca EVP Menelas Pangalos framed the CRUK agreement as part of the company's attempt to "create a truly permeable research environment at our new site in Cambridge." CRUK researchers will have access to the site for at least 5 years. And AstraZeneca is open to having other academic researchers work at the campus for defined periods of time. Such collaborations are part of why AstraZeneca decided to uproot its R&D operation and make Cambridge the focus of its U.K. business.
Cambridge is one corner of the U.K.'s "Golden Triangle," the triumvirate of cities in south east England that the country wants to present as a high-tech hub. However, while Cambridge, London and Oxford all have irrefutable credentials in life science and tech research, the time taken to travel between them undermines the hub idea. Tech entrepreneurs are pressuring the government to slash the time taken to travel between Cambridge and Oxford by train, the Financial Times reports. - read the CRUK release and FT article
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|Zeltia Chairman Jose María Fernández Sousa-Faro|
Zeltia (BME:ZEL) has become the latest European biopharma to see a Wall Street IPO in its near-term future. But before the board pushes ahead with the plan, it wants to weigh up whether a merger of Zeltia and its oncology-focused subsidiary PharmaMar would give the company the best chance of pulling off a successful IPO.
The fate of the project is now in the hands of the Zeltia executive committee and a group of lawyers who the board has asked to help with the corporate reorganization. If the executive committee gives the merger the thumbs-up, Zeltia will combine its operations with PharmaMar before heading to New York to take its chances with public biotech investors. Zeltia has yet to decide on the structure of the merged company--other than that other firms in the group would remain subsidiaries--or a timeline.
While Zeltia is still firming up many of the details, its focus on the U.S. is clear. Zeltia is mulling the plan to list PharmaMar in New York at a time when the U.S. is on the cusp of becoming a more important market for the company. Late last month, Johnson & Johnson's ($JNJ) Janssen Research & Development unit filed an NDA with the FDA for Yondelis, the soft tissue sarcoma (STS) drug it licensed from PharmaMar outside of Europe and Japan.
Yondelis is already approved as a treatment for STS and relapsed platinum-sensitive ovarian cancer in Europe. The drug emerged from PharmaMar's pipeline of marine-derived cancer therapies. A Phase III trial of Aplidin as a fourth-line treatment for refractory multiple myeloma is underway. PharmaMar is also trialling the drug in combination with J&J's Velcade in an attempt to secure it a place earlier in the treatment pathway.
PM1183--dubbed a second-generation Yondelis by Zeltia--is also due to enter Phase III next year. Data released this week from a Phase IIb trial showed platinum-resistant ovarian cancer patients who took PM1183 had a median overall survival of 18.1 months, compared to 8.5 months for topotecan. - read the release and PM1183 data
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|Anergis CEO Vincent Charlon|
Anergis has raised CHF 14.5 million ($15 million) in a Series B round to fund development of its pipeline of fast-acting vaccine candidates. Some of the cash will go toward preparing for and running a Phase III trial of Anergis' lead candidate, a birch allergy vaccine that has shown the potential to create long-term immune memory after 5 injections.
Phase IIb data on the birch allergy vaccine, AllerT, were strong enough to persuade all of Anergis' existing investors to return for the Series B round. Lausanne, Switzerland-based Anergis also added two new U.S.-based investors, including WJFS, which led the round with Sunstone Capital, BioMedInvest and Renaissance PME. AllerT represents the best hope of near-term revenue--Anergis is targeting a 2018 approval--but it is the broader portfolio and underlying science that attracted WJFS.
"Since the company's COP [contiguous overlapping peptide] platform will allow developing products for additional allergy indications, we believe that Anergis' portfolio has great potential for establishing a new generation of allergy treatments," WJFS CEO Robert Donohue said in a statement. COPs are synthetic peptides of up to 80 amino acids that copy sequences of the allergen. The COPs in AllerT contain the full allergen sequence but without the 3-D structure that reacts with immunoglobulin E.
Anergis thinks this approach will allow it to administer high doses without the risk of side effects, cutting the time it takes to desensitize people to an allergen. A clutch of other European biotechs have similar aspirations. France's Stallergenes and Britain's Circassia both have birch pollen vaccines in their early-stage pipelines. And all three companies have candidates against ragweed and dust mites. - read the release
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AstraZeneca ($AZN) made a "significant contribution" to a £5 million ($7.8 million) fund for startups based at its former Alderley Park site. BioCity will manage the fund and dole it out in £50,000 to £250,000 equity investments. Release
Eli Lilly ($LLY) agreed to set up a partnership desk at Stevenage Bioscience Catalyst. The desk will give Lilly access to the network of biotechs and academic institutes that are involved with the British incubator. Release
Alizé Pharma bought the global rights to a family of peptides with the potential to treat bone diseases. Lyon, France-based Alizé Pharma licensed the science from a University of North Carolina spinoff company. Release
The University of Oxford began trialling Bavarian Nordic's (CPH:BAVA) Ebola booster vaccine. The trial will give the booster to 30 people who have already received GlaxoSmithKline's ($GSK) vaccine. Reuters
Sanofi ($SNY) struck a €252 million ($310 million) deal with Evotec (ETR:EVT). The pair are still ironing out the details of the agreement, but the basic idea is for Evotec to take over one of Sanofi's sites. Evotec will provide services to Sanofi from the site. FierceBiotech
The Lancet Oncology joined the chorus of criticism of Lord Saatchi's Medical Innovation Bill. Saatchi argues that the bill will give patients with terminal illnesses new options, but the medical community has picked holes in the text. The editorial called the bill "alarmingly non-specific in its wording." Lancet
Ascendis Pharma raised $60 million (€49 million) in a Series D round. The Danish biotech will use the cash to advance its treatment for growth hormone deficiency into late-phase trials. FierceBiotech
NeuroVive Pharmaceutical and Skåne University Hospital initiated a Phase II trial to test the ability of CicloMulsion to prevent acute kidney injury in patients undergoing heart surgery. The study is due to start recruiting in the first half of 2015. Release
GeNeuro struck a $455 million (€370 million) deal with Servier. The Swiss biotech will receive $47 million from Servier to wrap up a Phase IIb trial of its experimental therapy for multiple sclerosis. FierceBiotech
The European Medicines Agency (EMA) awarded Inventiva's IVA337 orphan drug status as a therapy for idiopathic pulmonary fibrosis. IVA337 picked up an orphan drug nod for systemic sclerosis in October. Release
Johnson & Johnson ($JNJ) committed £176 million ($277 million) in milestones to partner up with British biotech Modern Biosciences, which is due to move a drug into Phase I next year. FierceBiotech
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