pharmaceutical case competition 2007 biogen idec: a good buy? november 30, 2007 team 7: rachel...
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Pharmaceutical Case Competition 2007Pharmaceutical Case Competition 2007
Biogen Idec: A Good Buy? Biogen Idec: A Good Buy?
November 30, 2007November 30, 2007
Team 7: Rachel Dexter, PhD Chemistry
Han Lee, MBA/PhD Genetics
James Park, MD/PhD Neuroscience
Johanna Rodriguez, PhD Chemistry
Pauline Wyrembak, PhD Chemistry
Infectious and Respiratory Diseases
Urology
Oncology
EndocrineDisorders
Opthamology
All Other
AllianceRevenue
20%
22%
15%12%
7%
11%
13%
Distribution of Pfizer’s Interests
Possible Initiatives
Cardiovascular DiseaseBiologicsVaccinesAlzheimer’s DiseaseMultiple Sclerosis
Pfizer as a CompanyPfizer as a Company
Multiple Sclerosis (MS) OverviewMultiple Sclerosis (MS) Overview
Disease Profile U.S Market Sales for RRMS Drugs
Total U.S. Sales $2.5 Billion
Rodman and Renshaw Report, Sep 2006
• 493,600 patients in the U.S
• 85% of all patients - relapsing-remitting or secondary progressive MS Avonex
Copaxone
Rebif
Betaseron
Tysabri
Unmet Needs in MS:Mechanics - Compliance - Efficacy
FDA Approved MS DrugsFDA Approved MS Drugs Biogen:
– Avonex: Immunomodulator, Interferon– Tysabri (Elan): Immunosuppressant, Monoclonal antibody
Competition:– Betaseron: Bayer Schering Pharma AG– Copaxone: Teva– Rebif: Merck Serono Sanofi-Aventis– Novantrone: EMD Serono, Inc. and OSI Pharmaceuticals, Inc.
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Patent Expiration AVONEX
LIPITOR VIAGRAPfizer Drugs:
TYSABRI
CELEBREX
Pipeline MS DrugsPipeline MS Drugs Biogen:
– Rituxan (Genentech): Phase II/III, Immunosuppressant, Monoclonal antibody – BG-12 (Oral): Phase III, Immunomodulator, Fumarate
Competition:– IV: MBP8298 (BioMS), ABT-874 (Abbott), CAMPATH (Genzyme)…
– Orals: FTY720 (Novartis), Mylinax (Serono/Merck), Teriflunomide (Sanofi-
Aventis), Laquinimod (Teva)…
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Enter Market
Patent Expiration
BG-12
AVONEX TYSABRI & RITUXAN
ORALS?
LIPITOR VIAGRAPfizer Drugs: CELEBREX
Positives Negatives- Diversification into MS market
- $5 Billion global market
- Access to Biogen’s pipeline
- Patent expiration of Avonex
- Biogen’s existing partnerships
- Tysabri side effects
(Litigation)
- Market saturation
- Exacerbation of pipeline issues
Should Pfizer acquire Biogen?Should Pfizer acquire Biogen?
0
50
100
150
200
250
300
350
400
450
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Year
$US
(in
mil)
AvonexTysabriRituxanBG-12Total
Projected Profits for Biogen’s Projected Profits for Biogen’s MS Drugs In US MarketMS Drugs In US Market
Assumptions: Cost of Capital (COC) = 13 %Inflation = 3 % g = 4 % (Long-term GDP growth rate)
Patent Expires: 80% drop in Revenue
Orals Compete for Market Share
Added Competition
from Generics
Bottom Line: $2 Billion
Pfizer’s OptionsPfizer’s Options
Scenario 1: Acquire Biogen
Scenario 2: Pass on Biogen
Scenario 3: License from Biogen
Scenario 4: Alternative acquisition
Scenario 3: License from Biogen
Scenario 4: Alternative acquisition
RecommendationsRecommendations
Scenario 3: License BG-12 from Biogen
- $25 Million for BG-12 (50% profit share)
Scenario 4: Alternative Acquisition
- Acquire BioMS Medical Corp. for MBP8298
- Market cap $238 Million (Toronto Stock Ex.)
- MBP8298 predicted to have sales of $10 Billion between 2012 and 2018
- Slows progression, better dosing schedule (better compliance)
- Returns: 16% (conservative estimate)
AcknowledgementsAcknowledgements
Yale Biotechnology & Pharmaceutical Society
Yale School of Management
Boehringer Ingelheim, Pfizer, Roche, Vion
Compass Strategic Consulting
BioMS: Amanda Stadler
Professor Charles Ahn, Yale University, Dept. of Applied Physics
Therapeutic Area Recent Pfizer Initiatives
Oncology Acquisition of Idun (4/2005) - Therapies to control apoptosis License agreement with Coley ( March 2005) -Toll-like receptor agonist for the potential treatment, control and prevention of cancer.Acquisition of Campto/Camptosar from Sanofi-Aventis (9/2004) -Treatment of colon cancer Potential acquisition of Biogen
Cardiovascular Disease
Acquisition of Esperion (2/2004) -Discovery and development of high-density lipoprotein (HDL)-targeted therapies
Biologics Acquisition of Rinat (5/2006) -Company with several new central-nervous system product candidates. Acquisition of Bioren (8/2005) -Technology for optimizing antibodies
Vaccines Acquisition of PowerMed (12/2006) -DNA-based vaccines for the treatment of influenza and chronic viral diseases
Alzheimer’s Disease
License/collaboration agreement with TransTech (9/2006) -Develop and commercialize small and large molecules
Multiple Sclerosis Agreement with Serono (7/2002) -Co-promote RebifPotential acquisition of Biogen
Pfizer: Potential Growth AreasPfizer: Potential Growth Areas
Clinical Patterns of MSClinical Patterns of MS
SP
PP
RR
PR
Relapsing-remitting
Secondary Progressive
PrimaryProgressive
Benign
45%197.8 40%
175.8
10% 44
5% 22
Injection Oral
DrugCopaxon
eTysabri MBP8298 FTY720
Laquinimod
Stage In Use In Use Phase III Phase III Phase III
Deliverys.c
40mg/dayi.v
300mg/28daysi.v.
500mg/6monthsoral 1.25mg/day
oral
0.3mg/day
MRI Lesion Decrease
38% 24% Univestigated Positive 44% (phase I)
Relapse Rate Decrease
75% 66% 60% (phase II) 53% (phase II)None (phase I)
8% (phase IIb)
Disease Course RR-MS RR-MSChronic
progressiveRR-MS RR-MS
Side Effects
Local injection site
reactions, naseau, anxiety,
hypertonia
Rash, arthralgia, headache, 2 instances of
PML
Local injection site reactions,
occasional flush, mild
hypotensions
Sinusitus, mild headaches,
gastrointestinal disorders,
bradycardia
Transient increases in
liver enzymes
s.c – sub cutaneouslyi.v – intra venouslyPML – progressive multifocal leukencephalopathy Kleinschnitz, et. al. J. Neurol. (2007), 254, 1473-1490
Financial FundamentalsFinancial Fundamentals
0
20
40
60
80
100
120
140
160
P/E Market Cap ($US Billions)
Amgen Genentech Genzyme Biogen Industry Average
19.7929.89
147.74
42.67
29.24
$59.5
$80.4
$19.8 $20.6
• Current global MS market = $5 Billion
• United States (US) accounts for 50% of the global MS
market
• 25,000 new cases per year in US (growth 0.5% per year)
• Biogen’s US MS drug sales represents ~40% total revenues
• Margins = 25%
• Minimal synergy
Facts and Assumptions in DCFFacts and Assumptions in DCF
13%8%
8%13%
Industry Average P/E Current NPV (DCF, COC = 13%) NPV (DCF, COC = 8%)
Value of BiogenValue of Biogen
415
6
70
48
2
20
14
Value of BiogenValue of Biogen
Industry Average P/E Current NPV (DCF, COC = 13%) NPV (DCF, COC = 8%) NPV (DCF, COC = 8%, Optimistic
AVONEX Sales)
4
18
13%
8%
8%
61
15
8%
13%
8%
6
70
48
2
20
14