A breath of fresh air

Novartis acquires Oriel Therapeutics, gains portfolio of respiratory products targeting asthma and COPD

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ZURICH, Switzerland—Novartis AG has bought OrielTherapeutics, a privately held, Durham, N.C.-based pharmaceuticals company,giving the Swiss pharmaceutical giant's generic arm, Sandoz, exclusive rightsto asthma medicine candidates and inhalers, thus boosting its portfolio in themultibillion-dollar respiratory drug market.
Sandoz signed a definitive agreement to purchase OrielTherapeutics, which focuses on developing respiratory products as genericalternatives to patented drugs for asthma and chronic obstructive pulmonarydisease (COPD). Financial details of the April 19 announced acquisition werenot disclosed.
In return, Oriel will gain access to the full resources ofthe global Sandoz organization, from development through to commercializationand be able to leverage Sandoz's in-market respiratory products and in-houseexpertise.
As part of the deal, Oriel's investors—including New LeafVenture Partners, Thomas, McNerney & Partners and HealthCare Ventures—willreceive milestone payments once these products receive regulatory clearance andcan be put on the market.
According to industry estimates, approximately 50 percent ofthe current $32 billion global market segment for asthma and COPD medicines isexpected to lose patent protection in some countries by the end of 2016, saysChris Lewis of Sandoz Global Communications. That's when roughly half of thismarket will start to be open to generic competition, including key asthmamedicines like GlaxoSmithKline PLC's Advair, AstraZeneca PLC's Symbicort andBoehringer Ingelheim GmbH's Spiriva.
"The respiratory market is expected to continue growing wellabove the overall pharma market driven by factors including significantunder-diagnosis," Lewis says. "The market is still dominated to a large extentby patent-protected products, but this is expected to change as key patentslose protection over the next five years and beyond. We believe the genericrespiratory market will significantly increase its proportion of the totalmarket going forward, and intend to play a major role in driving this growth."
Oriel focuses on developing respiratory products with knownpathways as alternatives to patented drugs for asthma and COPD, he says. Theagreement gives Sandoz exclusive rights to three promising development projectstargeting leading medicines in this field, as well as to related technologies,in particular the novel FreePath drug delivery technology and Solis, themulti-dose dry powder inhaler.
The proprietary Solis DPI was developed based on theFreePath delivery technology, which has the potential to address some of thehurdles facing regulatory approval of generic inhaled medicines in the UnitedStates, he says.
"The acquisition is a strong strategic fit, and will supportSandoz' strategy to offer an increasing number of differentiated generic alternativesto patent-protected products," Lewis says. "One of Sandoz's strategicobjectives is to offer fully substitutable versions of key brand-namemedicines, potentially including generic respiratory medicines."
Sandoz division head Jeff George says the acquisition ofOriel will increase the number of "higher-value products in our development pipeline … we offer fullysubstitutable generic versions of key branded medicines, including respiratorymedicines. This is a key area of focus that complements our global leadershipposition in biosimilars and complex injectables."
The company began positioning itself for this role lastyear. In 2009, Sandoz announced investments of more than $60 million in a newfacility at its global respiratory Center of Excellence in Rudolstadt, Germany,providing full-scale manufacturing capacities for both DPI and MDIinhalers. 
Also last year, Sandoz broadened its existing respiratoryportfolio by launching generic salbutamol in several European countries as thefirst EU-wide approved generic inhalable product under new EU regulatoryguidelines.
The move suggests the Swiss drugmaker may see a simplerroute to market with Oriel's electronic inhaler device than with another devicefrom Britain's Vectura Group, which Novartis has been working on.
Sandoz has made generic respiratory drugs a key area forinvestment, partly via its alliance with Vectura. But last month, it handedback to Vectura U.S. rights for a drug widely believed to be a generic versionof GlaxoSmithKline's Advair.
"Clearly, this news (Oriel acquisition) may suggest that Sandoz-U.S.sees an easier path for this product to get regulatory approval as a genericdevice than it did for Vectura's device," Sam Fazeli, an analyst at PiperJaffray in London, told Reuters. Sandoz is still working with Vectura on itsproduct in Europe.

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