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Aeterna Zentaris Inc. Message Board

  • franwurl franwurl Nov 8, 2011 6:19 AM Flag

    Patent issues suggest Roche will buy out AEZS Part 2

    One might have thought that Roche had closed all the doors. Awkwardly for Roche, AEZS obtained in Europe a patent for Perifosine in combination with Xeloda (Perifosine + Capecitabine or Xeloda) or what is called PCAP. The PCAP patent in the U.S. is pending. By the time the Perifosine patent is easily extended to 2018 (page 19) through the Hatch/Waxman bill of 1985, the U.S. patent should be granted.

    There are no concerns about PCAP patents for AEZS pending in Europe, Japan, Australia, and most of the rest of the world outside the U.S. The European PCAP patent already extends to July 2023 and other PCAP patents are already in force. That puts AEZS in a very enviable position.

    One challenge for AEZS will be to obtain sufficient patent protection in the US and the rest of the world for the drugs in its pipeline including various Perifosine combinations with other drugs that Roche may not already have covered.

    Patent law is not just confusing. It is treacherous for drug and generic developers, as Mylan found out, often because of the many forms patents can take including use, composition, data protection, and other varieties. Bottom line the pathway seems clearly open for AEZS to proceed confidently towards patenting various other Perifosine combinations than just PCAP throughout the world.

    Roche may be very envious and anxious that another drug for colorectal cancer has emerged threatening the importance of Xeloda. It is possible Bayer’s Regorafenib may work synergistically with Perifosine more than with Xeloda suggesting the need for a patent application later. Other Perifosine combinations may be fruitful and are yet to be patented.

    Purchasing AEZS and KERX is the best patent protection for Roche against Xeloda generics and Perifosine combinations emerging to compete with its Xeloda sales. Xeloda and Perifosine patent issues are confusing, and yet the implications arising from PCAP control are especially positive for AEZS. Time is running out for Roche and its Xeloda patent protection unless it can control other Xeloda drug combinations and most importantly the Perifosine/Xeloda combination thereby extending Xeloda patent protection. Although PCAP has not been approved yet by the FDA, eventual approval is probable.

    Unequivocally, ROCHE is the most logical candidate to make an offer to buy out AEZS and KERX. Sooner or later it is likely to do so.

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    • weeeeeeeeeeeee

      Sentiment: Strong Buy

    • tha'ts major

      Sentiment: Strong Buy

    • 5 stars great post wish more people would post like you .george

    • no one really cares or believes in this stock.

    • christianegeskov Nov 8, 2011 6:49 AM Flag

      I agree, Frankwurl.

      Even though large bios tend to wait for final data before acquiring small bios, I think that it would make a lot of sense regarding Roche - Aezs.

      However (being an attorney) I know that a deal on Perifosine would mean a lot of work and headache for Roche or any other interested party, since Perifocine has been licenced to:

      1. Keryx - US
      2. Yakult Honsha - Japan
      3. Handok - Korea

      Negotiations (cross-continent/culture) would be extremely difficult bordering to the impossible....imo.

      If your thesis is that Roche (a part from) buying Aezs also should buy Kerx.....what should Roche do with Yakult and Handok?

      Buy them - dont think so!

      Accept the licenses - dont think so!

      Furthermore Yakult and Handok could claim breach of contract.

      Buy back the licenses - hmmmm maybe. But it would probably involve some kind of premium all depending timing.

      • 5 Replies to christianegeskov
      • yeah baby

        Sentiment: Strong Buy

      • Christian, I think that in this case I'm going to have to agree with you. While Franwurl has laid out a very compelling case for Roche to acquire both AEZS and Keryx, I'm afraid it just doesn't make much economic sense.

        Franwurl has quoted sales figures for Xeloda of about $540 million. That makes the drug a highly profitable one, but doesn't quite put it in the "blockbuster" category. Most analysts reserve that designation for drugs with sales over $1 billion. As Fran has pointed out so well, Roche is currently waging a pitched battle to protect its sales and prevent other companies from marketing a generic version of Xeloda. While the best way to do that would be to lock up a patent combination with perifosine, let's look at the economics. Roche would need to buy out both AEZS and Keryx in order to sew up the combination patents for both the US and Europe. Now I will not get into how much either AEZS or Keryx should be bought out for, but remember, Roche is not just buying perifosine, it is also buying the pipelines of both companies. In Keryx's case that means Zerenex, while in AEZS's case that includes 130, 108, and a number of other drugs that are in preclinical or phase I/II. I am not going to argue numbers, but I think not many on either board would agree to let their company be sold for less than $600 to $700 million. (Again, I am being conservative with these numbers, I am NOT saying that this is what these companies are worth!) So let's say that Roche agrees to buy both companies for $650 million apiece. That brings Roche's outlay to around $1.3 billion. But wait, they don't get Korea and Japan, two nice sized markets. If we assume an outlay of another $100 apiece for each of those markets, we now have a total cost of $1.5 billion, or almost 3 times Xeloda's current sales. All to protect a drug whose original patent is running out in another year, and which will be facing new competition from Bayer's CRC drug, as well as numerous others.
        Yes, I understand that Perifosine will have other uses. Ultimately, if the other phase III's work out, and if it is proven effective with other drugs that it has not yet been tested with, it may prove to be a "blockbuster", although it will be a slow-motion blockbuster. Either way, Roche would be sacrificing 3 years of Xeloda sales, and would probably not see an adequate return for at least 4-5 years on Perifosine.

        So while it is nice to talk about buyouts, and certain bloggers have already "confirmed" it, only to back off the next day, I'm afraid that Roche is not buying out AEZS - AT THIS TIME.

        I have said all along, that the real prize is 108. We are about one to one and a half years out from phase III results there. Now if THOSE come out as good as the phase II trials, I think Roche and a whole bunch of other companies will be lining up to buy us out. Until then, I am hoping for good news on Perifosine early next year. So be patient, keep your fingers crossed, and let's hope next year is a very good one.


      • As long as the contracts are honored, I don't see a problem. A problem only occurs when lawyers get involved :)

      • Pretty much anyone long perifosine would prefer Roche write the NDA and perfect marketing approval and establish and maintaine patent protection, including:
        1. Keryx - US
        2. Yakult Honsha - Japan
        3. Handok - Korea
        I think a deal could be worked out and that there are more incentives to get it done than not to.

      • Interesting line of analysis. Is it possible AEZS has positioned itself to succeed WITHOUT the need to partner, or be bought out? Is it possible by entering into strategic partnerships, they have protected themselves from a buyout through the complexities listed in this email chain? IF so, AEZS may believe they can manage the drug transition process (with partners), without the need for a 'big pharma'.

        As the page turns to chapter 18 ...

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