Newswires have long been waiting for Sanofi-Aventis to officially announce its acquisition of US biotech company Genzyme, but what few analysts were expecting is just how much the transaction would hedge on one potentially controversial product. As the focus of Sanofi’s contingent value rights (CVR) approach, Genzyme’s multiple sclerosis treatment Lemtrada (also sold as Campath to treat leukaemia) has effectively become the deal clincher.
Sanofi has agreed to pay $74 a share for Genzyme — totalling a $20.1 billion upfront payment. But the CVR could boost the payments to Genzyme’s stockholders by up to $14 a share, dependent, largely, on Lemtrada becoming an MS blockbuster. Sanofi is backing this outcome — it says the drug has the potential to achieve annual sales of up to $3.5 billion — but the CVR, said CEO Chris Viehbacher in a press conference call announcing the deal, “was an extremely important tool to bridge differences in value.”
Sanofi will pay $1 per CVR if Lemtrada wins US approval, which the company expects will happen in the second half of 2012; increasing amounts of dollars-per-CVR depend on it passing various sales milestones. Lemtrada is currently in Phase III in the US. A Phase II trial of 334 people with early stage, active relapsing remitting MS, conducted over a three-year period in Cambridge, UK, reported in 2008 that the drug led to a 71% reduction in disability progression in participants (compared with those taking beta-interferon) and a 74% reduction in the relapse rate per year. On average, participants also experienced an improvement in disability at six months that was sustained for the three years.
But Lemtrada’s path to ‘blockbusterdom’ is far from certain. The side effects reported in the Cambridge study included a high rate of (mainly respiratory or urinary tract) infections (affecting 66% of participants). Around 30% suffered from thyroid disorders and there were six cases of immune thrombocytopenic purpura (ITP). Speaking to Bloomberg, Howard Weiner, of the Brigham & Women’s Hospital in Boston, said Lemtrada “is a theoretical cure, but to know that you need to follow people for 10 years. It’s a very strong drug and has potential side effects.” Phil Nadeau, an analyst with Cowen & Co. (New York) added: “We think the side-effect profile is going to relegate [it] to later lines of therapy,” predicting “relatively modest peak sales estimates,” of $500 million to $1 billion.
Although the number of new MS therapies on way is showing that the basic science of innovation is working, the unknown side effect profiles potential in all these drugs show that the transition from bench to actual bedside is harder than ever.
The Multiple Sclerosis Activism Foundation has also expressed concerns about Lemtrada’s role in the Sanofi-Genzyme deal and what it might mean for subsequent pricing, saying that “for it to be used as a possible treatment for MS, and for Genzyme to be using this as leverage for a higher asking price, is… in our opinion, shameful considering the price of Campath, aka Lemtrada.” Campath, MS Activism goes on, “now sells for $30,000 for leukaemia treatment. But MS patients need only a fraction of the dose used in cancer patients. At the current price, MS patients could get Campath for $7,000 or so. That’s far less than other MS treatments.” But what would stop doctors from using the cancer-priced vials rather than the far more expensive MS priced vials, the group asks — could this have anything to do with rebranding Lemtrada “to make us think it isn’t a cheaper drug?”
The CVR aspect of the Sanofi-Genzyme deal, of course, reflects some of these uncertainties, despite Sanofi’s optimistic pronouncements of Lemtrada’s sales potential. But with both companies putting most of their eggs into the Lemtrada basket, there is a danger some of it could end up on their faces.