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A breath of fresh air
ZURICH, Switzerland—Novartis AG has bought Oriel Therapeutics, a privately held, Durham, N.C.-based pharmaceuticals company, giving the Swiss pharmaceutical giant's generic arm, Sandoz, exclusive rights to asthma medicine candidates and inhalers, thus boosting its portfolio in the multibillion-dollar respiratory drug market.
Sandoz signed a definitive agreement to purchase Oriel Therapeutics, which focuses on developing respiratory products as generic alternatives to patented drugs for asthma and chronic obstructive pulmonary disease (COPD). Financial details of the April 19 announced acquisition were not disclosed.
In return, Oriel will gain access to the full resources of the global Sandoz organization, from development through to commercialization and be able to leverage Sandoz's in-market respiratory products and in-house expertise.
As part of the deal, Oriel's investors—including New Leaf Venture Partners, Thomas, McNerney & Partners and HealthCare Ventures—will receive milestone payments once these products receive regulatory clearance and can be put on the market.
According to industry estimates, approximately 50 percent of the current $32 billion global market segment for asthma and COPD medicines is expected to lose patent protection in some countries by the end of 2016, says Chris Lewis of Sandoz Global Communications. That's when roughly half of this market will start to be open to generic competition, including key asthma medicines like GlaxoSmithKline PLC's Advair, AstraZeneca PLC's Symbicort and Boehringer Ingelheim GmbH's Spiriva.
"The respiratory market is expected to continue growing well above the overall pharma market driven by factors including significant under-diagnosis," Lewis says. "The market is still dominated to a large extent by patent-protected products, but this is expected to change as key patents lose protection over the next five years and beyond. We believe the generic respiratory market will significantly increase its proportion of the total market going forward, and intend to play a major role in driving this growth."
Oriel focuses on developing respiratory products with known pathways as alternatives to patented drugs for asthma and COPD, he says. The agreement gives Sandoz exclusive rights to three promising development projects targeting leading medicines in this field, as well as to related technologies, in particular the novel FreePath drug delivery technology and Solis, the multi-dose dry powder inhaler.
The proprietary Solis DPI was developed based on the FreePath delivery technology, which has the potential to address some of the hurdles facing regulatory approval of generic inhaled medicines in the United States, he says.
"The acquisition is a strong strategic fit, and will support Sandoz' strategy to offer an increasing number of differentiated generic alternatives to patent-protected products," Lewis says. "One of Sandoz's strategic objectives is to offer fully substitutable versions of key brand-name medicines, potentially including generic respiratory medicines."
Sandoz division head Jeff George says the acquisition of Oriel will increase the number of "higher-value products in our development pipeline … we offer fully substitutable generic versions of key branded medicines, including respiratory medicines. This is a key area of focus that complements our global leadership position in biosimilars and complex injectables."
The company began positioning itself for this role last year. In 2009, Sandoz announced investments of more than $60 million in a new facility at its global respiratory Center of Excellence in Rudolstadt, Germany, providing full-scale manufacturing capacities for both DPI and MDI inhalers.
Also last year, Sandoz broadened its existing respiratory portfolio by launching generic salbutamol in several European countries as the first EU-wide approved generic inhalable product under new EU regulatory guidelines.
The move suggests the Swiss drugmaker may see a simpler route to market with Oriel's electronic inhaler device than with another device from Britain's Vectura Group, which Novartis has been working on.
Sandoz has made generic respiratory drugs a key area for investment, partly via its alliance with Vectura. But last month, it handed back to Vectura U.S. rights for a drug widely believed to be a generic version of GlaxoSmithKline's Advair.
"Clearly, this news (Oriel acquisition) may suggest that Sandoz-U.S. sees an easier path for this product to get regulatory approval as a generic device than it did for Vectura's device," Sam Fazeli, an analyst at Piper Jaffray in London, told Reuters. Sandoz is still working with Vectura on its product in Europe.