Week of March 6, 2017 | Vol. 6, Issue 8
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Drug Companies Block Shareholder Votes on Price Transparency Proposals
Investors' group wants companies to disclose price increases over the years, and the rationale
Several major U.S. drug companies have squelched an investor campaign aimed at forcing companies to disclose more information about when and why they raise prices.
In October, a group of institutional investors, including many with ties to religious organizations, submitted shareholder proposals
asking 11 U.S. drug companies, including
Pfizer
Inc.
and
Merck
& Co., to issue reports listing average annual price increases for their top-selling drugs between 2010 and 2016, and to state the rationale for the increases. The investors asked the companies to include the proposals on proxy ballots that will be put to shareholder votes at annual meetings this spring.
But 10 of the companies plan to omit the drug-price transparency proposals from their proxy ballots, generally on the grounds that they would interfere with "ordinary business," according to company documents filed with the Securities and Exchange Commission. An SEC rule allows a company to omit a shareholder proposal from a proxy ballot if the proposal deals with the company's ordinary day-to-day business operations, rather than a "significant social-policy issue." The SEC notified 10 companies that it won't pursue any enforcement actions if the companies exclude the drug-price proposals, according to letters posted on the SEC's website. The investor group withdrew the transparency proposal it had submitted to the 11th drug company, Regeneron Pharmaceuticals Inc., because the company said it hasn't raised the prices of its drugs and shared information about its approach to drug pricing, according to a spokeswoman for the investor group.
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Actelion Began in a Garage-Now Its Founding Couple Has $1 Billion and a New Biotech Firm
Husband and wife team sold their Swiss company to the U.S. drugmaker in an unusual $30 billion deal
Jean-Paul and Martine Clozel had to sell their house and work out of a rented garage when they started biotech company
Actelion
Ltd.
Twenty years later, after selling the Swiss company to
Johnson & Johnson in
an unusual, $30 billion deal, the husband-and-wife team is starting over again. They are embarking on the creation of a new global biotech competitor-armed with nearly $1 billion in capital, a deep-pocketed partner in J&J and soon, a stock listing in Zurich.
Dr. Clozel, 61 years old, is slated to walk away with about $1.5 billion for his 5% stake in Actelion. Johnson & Johnson persuaded him to sell only after agreeing to let him strip out Actelion's early-stage research and development to form a separate company.
The U.S. health-care giant, eager to replenish its pipeline as some top-selling drugs face competition from cheaper competitors, was willing to pay a hefty price tag. That, and its agreement to the unorthodox deal structure, cleared a hurdle that tripped up previous Actelion suitors: Dr. Clozel's well-telegraphed reluctance to give up his independence over years of deal speculation.
"My first reaction to J&J was that I didn't want to sell," Dr. Clozel said in an interview. He now will become chief executive of the new firm, which doesn't yet have a name. Along with his wife, Actelion's chief scientific officer, he will be free to pursue research that spans insomnia, lupus and neurological diseases.
Johnson & Johnson will hold on to a 16% stake in the new firm, with an option to double that. The rest will be spun off later this year to existing Actelion shareholders, giving Dr. Clozel a 4.2% stake. Johnson & Johnson is expected to provide more detail on the portfolio in a prospectus for the new company in coming weeks.
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Below are summaries and charts with the past week's transactions from the different healthcare sectors. For a detailed table showing data for each industry transaction click on any of the charts or use the download link above. Total transaction values are provided in USD millions.
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Pharma & Biotech
9 transactions totaling $407
million
Supplies, Equipment & Services
10 transactions totaling $332 million
Healthcare IT & Managed Care
5 transactions totaling $- million
Healthcare Facilities & Distributors
22 transactions totaling $278 million
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Pharma & Biotech
10 private placements totaling $130 million
Supplies, Equipment & Services
16 private placements totaling $1,108 million
Healthcare IT & Managed Care
8 private placements totaling $30 million
Healthcare Facilities & Distributors
2 private placements totaling $5 million
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Pharma & Biotech
7 public offerings totaling $24 million
Supplies, Equipment & Services
3 public offerings totaling $30 million
Healthcare IT & Managed Care
1 public offering totaling $- million
Healthcare Facilities & Distributors
2 public offerings totaling $564 million
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 Each week, w
e provide updated trading
comps for leading comp
anies from numerous healthcare subsectors.
To the right you will see a high-level breakdown of median revenue and EBITDA multiples for each of the specific subsectors
For a complete trading comp analysis (including the individual equities that comprise the subsectors), click on the table to the right or use the download link from the top of this newsletter.
Note: data reflects prior week close.
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RECENT INDUSTRY HEADLINES
A Sampling of Relevant Industry Headlines from the Last Week
Below are snippets from relevant industry news articles from the past week presented in chronological order. For additional information or the article's complete text, click the headline link to view the original publication.
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March 2, 2017 -
Wall Street Journal
Roche Holding AG shares rose sharply Thursday morning after the company reported a clinical trial success that could help cushion it against looming competition for its best-selling cancer drug Herceptin and boost sales for its newer Perjeta drug.
The Basel, Switzerland-based drug giant said women with early-stage, HER2-positive breast cancer who received chemotherapy and Herceptin plus Perjeta lived longer without their disease returning than those who had chemotherapy with just Herceptin.
Roche shares rose as much as 6.9% after Swiss trading opened Thursday. The result expands the potential market for Perjeta, which is already used in combination with Herceptin to treat women with advanced breast cancer and in certain cases of the early-stage disease.
Analysts estimate the positive result will add around $2 billion a year to Perjeta sales by 2020. In 2016, the drug generated 1.8 billion Swiss francs ($1.8 billion) in revenue.
However, analysts noted that the scale of the sales uplift would depend on the detailed results of the trial, which they expect will be revealed at a coming scientific meeting.
Prosecutors rope Pfizer into fast-growing copay assistance probe
February 27, 2017 -
Fierce Pharma
Add Pfizer to the list of the companies facing a governmental investigation about its ties to copay assistance programs.
After first focusing on biotech and specialty pharma, the feds have made their way to Big Pharma, with the New York drug giant joining a group that includes Gilead Sciences, Biogen, Valeant Pharmaceuticals and others.
In its 10-K, Pfizer disclosed two subpoenas from the U.S. Attorney's Office for the District of Massachusetts, issued in December 2015 and July 2016. The subpoenas seek information about its ties with the Patient Access Network Foundation and other nonprofits that help Medicare patients pay for their drugs. The drugmaker has been "providing information to the government," it says.
A Pfizer spokesperson told FiercePharma the company supports "initiatives, including co-pay foundations, to help patients most in need gain access to medicines." Pfizer is "among a number of companies" to receive subpoenas on the matter.
"We strive to follow government guidelines associated with any contributions we make," the spokesperson said.
February 27, 2017 - Wall Street Journal
Johnson & Johnson said it raised the list price of its prescription medicines by an average of 8.5% last year-and 3.5% after discounts-in the health-products company's first effort to address criticism about the high cost of medicines by opening up about its drug-pricing practices.
The figures are part of what J&J refers to as the
U.S. Transparency Report
for the company's Janssen prescription-drugs business.
The report is among various efforts by drug companies to show they are responsible health-care actors, amid mounting public criticism about the high costs of certain medicines and threats of a crackdown from President Trump and other politicians. "We hope that by providing even greater transparency into how we operate within the current health care system, we can advance the dialogue and sharpen the focus on the promise of a more value-based health care system," Jennifer Taubert and Anastasia Daifotis, the Janssen unit's U.S. leadership, said in a letter at the start of the report.
February 28, 2017 -
Wall Street Journal
Drug maker
Valeant Pharmaceuticals International
Inc. said its revenue fell 13% in the fourth quarter, hurt by the performance of the stomach-drug business it tried to sell late last year as well as lower drug prices.
Valeant's shares, which have shed 79% of their value in the past 12 months, lost another 4.3% in premarket trading.
The Canadian pharmaceutical company's stock has been battered by concerns about drug-price increases, accounting problems and a brush with potential debt default. The company's results topped Wall Street expectations at a time when investors are watching for signs of what kind of profitability Valeant can deliver as it distances itself from big acquisitions and large price increases for its drugs. But some analysts remain concerned about Valeant's debt burden and have questioned the strength of its drug pipeline. For the year, the company said it sees revenue in a range of $8.9 billion to $9.1 billion. Analysts expected $8.96 billion.
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As an international, healthcare-focused merchant bank and financial advisory firm, we provide world-class services and capital to middle-market healthcare companies around the globe. We aim to keep our clients well-informed of healthcare news and events. With this additional insight in mind, together, we can recognize trends and opportunities that benefit our clients. We hope that you will reach out to Bourne Partners to help execute your healthcare operational and transactional needs. To learn more about our firm, visit our website or utilize the links below to engage with us on social media.
Sincerely,
The Bourne Partners Team
Bourne Partners
550 South Caldwell Street
Suite 900
Charlotte, NC 28202
704-552-8407
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