2012 A Key Year For Astellas, Says New CEO Yoshihiko Hatanaka

Astellas is on the verge of significantly increasing its heretofore small presence in oncology in the U.S. and abroad as it, along with its partners, prepares to file one and possibly two NDAs, including for the promising prostate cancer treatment MDV3100.

Nearly two years after initiating a hostile and ultimately successful high-profile takeover of New York-based biotech OSI Pharmaceuticals LLC, Astellas Pharma Inc. has transformed it into a base for its increasingly important oncology R&D operations. This is likely to be a key year for Astellas oncology, even as the company waits on regulatory and clinical development events in some of its other franchises and adjusts to a new CEO, Yoshihiko Hatanaka.

Hatanaka, a long-time Astellas executive, previously was CFO and president of the company’s U.S. business. He has said publicly that he is more likely to change management style than strategy. Certainly, he is continuing Astellas’ aggressive efforts to bolster its pipeline, particularly in oncology, in response to the 2010 patent expirations of key drugs: the transplant immunosuppressant Prograf (tacrolimus) and the urology drug Harnel/Flomax (tamsulosin) (Also see "Astellas Fortifies Vesicare And Mirabegron; Looks For Organic Growth In Emerging Markets" - Scrip, 13 May, 2011.).

The company is forging ahead in five core therapeutic areas: urology and transplantation medicine, where it already is strong, as well as oncology, neuroscience, and complications from diabetes and metabolic diseases, Hatanaka said in an interview at the JP Morgan Healthcare Conference in San Francisco on Jan 9 (Also see "Japan Earnings Roundup: Astellas' Oncology Gains, Eisai Hit Hard, KHK Domestic Strength" - Scrip, 8 Nov, 2011.).

In urology, the company has filed an NDA and is waiting for approval of a first-in-class treatment for overactive bladder incontinence, Betanis (mirabegron), which it launched in Japan in September; a PDUFA date is set for June 29, 2012. Astellas already sells Vesicare (solifenacin), now the number-one branded OAB drug with global sales of more than $1 billion in fiscal year ended March 30, 2011, but it is one of several anti-cholinergic agents, including generics, on the market.

Betanis, a beta3 agonist, has fewer side effects, such as dry mouth, which limit patient adherence to current OAB medications, and thus curtail efficacy, says Jefferies analyst Naomi Kumagai, who has listed the stock as a top pick for 2012. The company believes it can maintain growth of the total urology franchise, even following Harnal’s loss of patent exclusivity, with sales of more than $2 billion by fiscal year 2014.

Deal-Making Kick Starts Oncology

Astellas began building its oncology base in 2006. Since then, it has expanded its in-house R&D in the field, signed agreements with MorphoSys AG for its phage antibody library and with Regeneron Pharmaceuticals Inc. for that biotech’s fully human monoclonal antibody discovery platform VelocImmune (Also see "Astellas Pays, And Pays Big, To Extend VelocImmune License With Regeneron" - Pink Sheet, 28 Jul, 2010.). In October 2009, it signed a deal with the U.S. biotech Medivation Inc. for MDV3100, a prostate cancer drug, and in February 2011, it entered into another deal with Aveo Pharmaceuticals Inc. for tivozanib, a drug for advanced renal cell carcinoma (Also see "Astellas Pays $125MM Up-Front To Share Rights To AVEO's Tivozanib" - Pink Sheet, 16 Feb, 2011.). In addition, it acquired Agensys Inc. in December 2007 and the much larger OSI, in June 2010, the latter for $3.5 billion (Also see "Astellas Wins OSI But Victory Comes At A Price" - In Vivo, 1 Jun, 2010.).

OSI brought into the fold a marketed drug, the EGFR inhibitor for non-small-cell lung cancer Tarceva (erlotinib), which had sales of $713 million worldwide in the first six months of the fiscal year ending March 30, 2012, but just as important, it “allowed us to greatly expand our oncology business” and brought the company “a huge commercial base in the U.S., which will help us launch MDV3100 and other late-stage compounds,” Hatanaka said. OSI’s former headquarters on Long Island is now the center of Astellas’ oncology R&D, with other sites based in Santa Monica, Calif., and Tsukuba Research Center in Japan. Stephen Ryder, who is global head of R&D, is based at Astellas’ U.S. headquarters in Deerfield, Ill.

The company currently has 15 oncology compounds in late-stage development, with two partnered drugs that are possible candidates for NDA filings in 2012 (Also see "Astellas Balks On Vibativ License, But Focus Shifts To Tivozanib And MDV3100" - Scrip, 12 Jan, 2012.). Of these, MDV3100 is likely to be one of Astellas’ most important catalysts for the year; in November, Medivation and Astellas announced interim results of a Phase III, 1,199-patient study showing that the drug produced a median survival of 18.4 months compared to 13.6 months in a placebo group. An independent data monitoring committee recommended that the trial be stopped early and all patients offered the drug. The partners plan to announce a timetable for a regulatory filing after a pre-NDA meeting with FDA, expected to be held early this year. A launch could come in the second half of the year, said Hatanaka.

Tivozanib, on the other hand, is expected to be a smaller opportunity, analysts say. Astellas and Aveo released top-line data Jan. 3 showing the compound outperformed Onyx Pharmaceuticals Inc./Bayer AG’s Nexavar (sorafenib) in a head-to-head Phase III study, showing progression-free survival benefits for advanced RCC patients. But the advantage was a slight 2.8 months, which disappointed investors. Aveo plans to release full results of the study at the ASCO annual meeting in June.

Even as Astellas is building on OSI’s oncology platform, it has, with relative speed, out-licensed much of the acquired assets’ diabetes portfolio, which resided in OSI’s Prosidion subsidiary; this includes licensing an option to two early clinical-stage compounds to AstraZeneca PLC and selling patents on a group of early-stage DPP4 inhibitors to Royalty Pharma for $609 million. The anti-hyperglycemic field is too big and too competitive, Hatanaka said, although complications arising from diabetes remain a core focus of Astellas’ R&D and the company continues to work on global trials of a late-stage, internally developed SGLT-2 compound. Meanwhile, Kumagai believes that Astellas will partner that expensive program as well.

Besides largely opting out of the diabetes space, Astellas has abandoned its anti-coagulant program as well as a global licensing, development and commercialization deal with Innoviva Inc. for a recently approved anti-infective Vibativ (Also see "Astellas Balks On Vibativ License, But Focus Shifts To Tivozanib And MDV3100" - Scrip, 12 Jan, 2012.). Sales of the drug were only $9 million in fiscal year 2010. Still, it has decided to stay in oncology, an area of unmet need where opportunities exist for targeted therapies, despite the growing competition and tougher market access hurdles, said Hatanaka.

Astellas is working hard to demonstrate the “value proposition of its products to doctors and payers,” he said. He wouldn’t comment on the strategy Astellas and Medivation are taking to obtain market access for MDV 3100 if it gets a regulatory green light, noting only that “affordability and accessibility are very critical for the oncology area, so it is very important for us to work seriously with our partner.”

(Editor’s Note: This article has been updated to reflect the correct timing of the presentation of the full tivozanib data will be at the ASCO annual meeting in June.)