Two specialty firms drew a line in the sand this week after announcing that offers from larger pharma firms weren’t up to snuff for their shareholders. 

CV Therapeutics and Genentech both rebuffed bids from Astellas Pharma and Roche, respectively. 

The Genentech/Roche negotiations have dragged on for months. In July 2008, the Big Pharma firm offered $89 a share for the remaining stock Roche didn’t already own. Genentech’s board of directors rejected the offer citing that it undervalued the company’s pipeline. Roche rebutted with a hostile $86.50 a share ($42 billion) offer directly to stockholders.

On Monday, a committee created to advise Genentech’s minority shareholders unanimously recommended that the offer be denied. 

“Over the past seven months, the special committee persistently attempted to work constructively with Roche and we were consistent in our stated willingness to negotiate toward a price that recognizes the full value of Genentech,” stated special committee Chairman Charles Sanders in a letter to shareholders. “We are disappointed that Roche has chosen not to consider an appropriate price range for Genentech's minority shares or to constructively negotiate with our committee, and we must recommend that stockholders not tender their shares as a result.”

Investors seem to agree, noting-almost universally-that both bids seemed way too low for a company that brought in $3.4 billion in income last year. 

“The Roche model is unduly conservative, while Genentech's is a mixture of realistic and aggressive, but overall we believe it supports a $100-plus deal price,” stated JP Morgan analyst Geoffrey Meacham in a letter. “We believe Roche is committed to the acquisition and hence will ultimately have to increase its bid.”

Sanders made it clear that its worldwide commercialization agreement with Roche is set to expire in 2015, and while it would like to extend the contract, it doesn’t necessarily have to be with Roche.
    


  Meanwhile, CV Therapeutics made it clear to Astellas that it has not changed its mind about turning down a $1 billion offer to turn the company over to the Japanese drug firm. Astellas made the $16 a share offer privately in November 2008, which was promptly rejected. CVT reassessed the offer after a spike in shares, but once again turned it down last Friday.

CV Therapeutics CEO Louis Lange stated that the company has a strategic plan in place that “enhances” the value of the company. 

“The full promotional launch of the improved US Ranexa labeling is just beginning, the introduction of Ranexa in Europe is imminent, and Lexiscan is showing real growth in the marketplace,” Lange said in a letter. 

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News Analysis

CV Therapeutics and Genetech rejected offers from big-name suitors. Are they playing hard to get or are they just not that into them?

Specialty Firms Shoot Down Big Money Bids

Pfizer, on Tuesday, announced that it would end development of two drugs currently in Phase III programs.  

The drugs were shelved as part of a larger plan to optimize the company’s overall portfolio by focusing its attention on compounds that either meet new critical needs or that serve a purpose beyond what’s currently available on the market.

“This is a clear example that we are putting our money where our mouth is,” Pfizer spokesperson Ray Kerins told Pharm Exec on Wednesday. “When it comes to R&D, resources are not finite-we have to take what we have available to us, in this environment, and put it towards areas of unmet medical need.”

The two treatments on the chopping block were esreboxetine for fibromyalgia and PD 332,334 for generalized anxiety disorder. Both investigational compounds were found to have no “meaningful benefit beyond the current standard of care.” In esreboxetine’s case, Pfizer already has a strong fibromyalgia drug in Lyrica, which it will continue to test for expanded indications. 

Pfizer made it clear that neither drug was pulled because of safety reasons, however patients in trial settings will have to discontinue use of the drugs. 

“ Both of those products didn’t demonstrate data that would have made them more attractive to Lyrica,” Deutsche Bank analyst Barbara Ryan said. “In the current environment, if you don’t have a follow-on that is going to be significantly better in safety or efficacy it’s like throwing good money after bad.”


  The most surprising aspect of Pfizer’s decision to pull the drugs is the timing. By the time a drug makes it to a Phase III programs it’s usually expected to make it to FDA.

Kerins said that this is all part of Pfizer’s 

, which didn’t officially come into being until January 1, 2009. 

In early 2008, Pfizer unveiled a plan to restructure its drug development program into business units, allowing the development teams to make decisions about what compounds to focus their resources on. 

“In the old days you would have R&D make the decisions and hand them off to the commercial teams,” Kerins said. “We’ve seen enough examples in the last decade when a drugs come to market, it’s not necessarily what the market was looking for. Either it didn’t improve upon the existing medicines or it just wasn’t something that doctors or patients really wanted.”

The business units were tasked with determining which compounds are the most promising and ending any floundering trials. Within six weeks of launch, these two programs were discovered.

While no specifics were revealed, Pfizer said that all drugs would be reviewed and more drugs could be shelved in the future. 

“There has been this overall strategy in the industry of “shots on goal”-the idea that the more compounds you have in your pipeline-the more likelihood something is going to come out the other end,” Kerins said. “This is the complete opposite of that strategy. We need to focus our resources on where we feel we will have the best opportunity--whether that’s based on our expertise and science or market conditions.”

Kerins noted that it is boosting resources for its investigational pain drug tanezumab and would 

 esreboxetine or PD 332,334 down the line to another company.

Pfizer currently has 26 compounds in Phase III trials. 

A sign of the times or a rash decision? In an effort to curb unnecessary costs, Pfizer kills development of two late-stage products rather than sink more money into them.

Pharmaceutical Executive-02-26-2009

Specialty Firms Shoot Down Big Money Bids

Pfizer Pulls Two Late-stage Drugs from Development