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Ipsen: Becoming a “development powerhouse”

Published on 01/03/18 at 11:16am

Immediately following the release of impressive full year financials, Ipsen CEO David Meek speaks on how the company is hitting its stride, with an ambitious outlook to grow its product offering in the coming years.

The financials released from Ipsen showed strong results across the board – what were the key drivers behind this?

We released strong results from the top line to the bottom line, as well our pipeline. The top line was driven by a few different things: Somatuline experienced growth for the third year in a row at over 30%, and it’s part of our speciality care franchise, which grew almost 26% year-over-year. Also, the launches of Cabometyx and Onivyde, as part of our oncology franchise, were positive. We also saw double digit growth of Dysport at 15%. So, pretty much across the portfolio, we saw nice growth on specialty care side. It was also an important year for our consumer healthcare business: while it wasn’t rapid growth, in the past years the business had been declined, so it was important for us to bring that business back to growth, which it did at 1.4%.

We improved our margins by a couple of points as well; our core operating income came in at 38.4% – remember, our top line grew at 21% and so our core operating income came in at close to double that. We did that despite double digit increases in our R&D investment, we were able to launch and expand our organisation in order to capitalise on the commercial launches of Cabometyx and Onivyde.

For the longer term is our R&D transformation and external innovation plans, with our transformations, kicked off last year, well under way and many more programmes that are in our mid- and late-stage pipelines due to Cabometyx and Onivyde – as well as accelerating some earlier stage programmes. Our external innovation plans are also underway, by expanding the number of people that we have – we’ve added people in Cambridge in the US, Milton Park, Oxford in the UK, Paris and also in Asia. We are preparing for the long-term sustainability of the company and our pipeline.

How are you planning on maintaining the momentum seen in the financials?

The real growth drivers will continue to be Somatuline, our number one product. It’s a global asset and we own it, and it’s also our highest profit product so this is also really important for our core operating income and our cash flow. Also, the two launches of Cabometyx and Onivyde – this will be the first full year for both products. We will have the first full-year effects of Cabometyx now that we have full reimbursement in the major markets in Europe – that was all finalised in Q4 2017, so this will be the first full year in second-line renal cell carcinoma (RCC). We also only had Onivyde for half of the year last year, so we expect sales to ramp up for that product, as well. Those are the three main growth drivers.

You’ve revealed further solid data from Cabometyx – what further indications are you looking at?

We see a couple of inflection of points for Cabometyx: near-term, second-line RCC full year launch; next is first-line RCC approval and launch; the next one after that is the second-line liver cancer approval and launch. Beyond that, we actually have a Phase 3 trial that we started last year: a combination trial involving Cabometyx, plus Bristol-Myers Squibb’s Opdivo, for front-line RCC. This Phase 3 trial should read out in the next couple of years, with the global trial just beginning at the end of last year.

There’s a clear focus on oncology across your portfolio. Has this been concerted effort to strengthen this aspect of your business?

Even today, 60% of our sales are in oncology, with most of our Phase 2 and 3 programmes also in this space. The area is a key growth driver today, as well as the future, but, importantly, it’s not our only driver. I want to be careful to make it clear that we don’t plan on making a purely oncology play – neuroscience and rare disease are our other two therapeutic areas, alongside our small consumer healthcare unit.

Bringing individuals with experience in oncology has been part of the strategic effort since I joined the organisation, to really advance our oncology expertise. I think that began with me having a deep background in oncology, at Novartis Oncology, as just one example. The two recent hires that we’ve had – one about year ago was Harout Semerjian, who is our Global Head of Specialty Care and President. He joined us from Novartis Oncology, where he was running a multi-billion US oncology business, and he’s been in the area for over 20 years. Most recently, our new head of North America, Richard Paulson, who just started three weeks ago, ran the US oncology business for Amgen. We’ve brought in country heads as well, with deep expertise in oncology and our R&D expertise in oncology has expanded as well.

What is your R&D plan going forward?

Last year, we announced an R&D transformation. What we said was that our ambition was to become a drug development powerhouse in oncology, neurosciences and rare diseases. Historically, there was perhaps a greater focus on basic research, but what we realised is other people can do that more efficiently than we can do it. So, we shut down our peptide discovery programmes and we’re now going to use external searches for that. We know that there’s biotechs and academic institutions that can do that better than we can, so we can partner with them instead. What we’ve done is enhanced our development powerhouse and one of the reasons our pipeline has advanced so much in the last 12 months is that we’ve had a greater focus on developing drugs. We’ve increased the number of oncology experts pretty much across the whole chain of R&D; we also brought in oncology expertise onto our Peptide Receptor Radionuclide Therapy programme, alongside nuclear medicine expertise in that space as well. In our neurotoxin business, where we’re a world-leader, we’ve got world-class experts in developing neurotoxins at Milton Park, Oxford, where we have our R&D site.

You’ve previously mentioned there are funds to bring in further assets – what’s your current angle on making an investment?

We have a robust system of how we assess assets that we want to bring into the organisation and where we want to invest. We use three criteria: is it strategic? Is it financially viable? And, can we integrate it?

Strategically the criteria is: is it oncology, neuroscience or in rare disease? Within oncology, we’re more in the solid tumour space. For neuroscience, it’s not the mass market of depression or Alzheimer’s – we’re more interested in the niche market. So, that’s the first cut, and then we look at what’s financially viable – in the long run, is it going to provide us innovation? When we look at innovation, we ask: is it going to be best-in-class and a global asset? Finally, can we integrate it with minimal disruption? Can we accelerate it without hurting existing programmes? That’s what we look at.

We’ve talked already about the team, we’ve got search and evaluators; we’re now in the right ecosystems to be close to academic sites and close to the biotech clusters, working hand-in-hand with them and, literally across the street from them. Through this, we can have an early look into this innovation. Our team has expanded for external innovations and our development powerhouse has expanded so we can bring in the assets, then accelerate the development of it and bring it to patients.

The results are very positive, but are there any areas you are focused on improving within the business?

Growing the pipeline. In today’s world, innovation is fast and it’s a lot faster than it’s ever been, so having a pipeline that can deliver a stream of new product launches on an annual basis is really important. For us, it’s strategically and competitively important to have as broad and deep of a pipeline of innovative assets as possible. This is the key priority for my management team and me every day – build a very sustainable pipeline. What we do know is, as exciting as it is to be in oncology, the pace of innovation is very fast and lifecycles are shorter than they’ve ever been. Constantly innovating is really important.

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