Smokers Lung Treatment May Fail to Fire Up Nycomed Bidders
Nycomed, controlled by Nordic Capital and a buyout unit of Credit Suisse Group AG, is targeting as much as 10 billion euros ($13.4 billion) from a possible sale after the financial crisis soured plans for an initial public offering, a person familiar with the situation said last month. The Zurich-based company has hired Goldman Sachs Group Inc. to explore a divestment as the buyout firms seek a return on the 2006 purchase of Altana AGs drug unit, two people familiar with the matter said.
Nycomed is seeking a marketing partner to promote U.S. sales of Daxas, the companys drug for smokers cough, which is about to be submitted for regulatory approval. Nycomed needs Daxas to offset sales that the company will lose when patent protection expires for its Pantoprazole heartburn remedy. That medicine is Nycomeds best-selling product in a portfolio that lacks more promising treatments, said Olav Zilian, an analyst at Helvea SA in Geneva.
“Its got cash but too few drug candidates,” said Zilian in a March 24 interview.
Nycomed gained Daxas through the 4.5 billion-euro purchase of the Altana business. The drug, the first in a new class of so-called PDE4 inhibitors, was designed to treat the respiratory condition known as chronic obstructive pulmonary disease, an illness that mostly afflicts smokers and can cause emphysema, bronchitis and asthma. The medicines relieve symptoms by targeting the inflammation process behind COPD compared with standard inhaled bronchial dilator treatments.
Seeking Approval
Nycomed plans to submit Daxas to U.S. and European drug regulators this year after an analysis of four late-stage clinical trials in October showed it reduced the rate of breathing attacks and improved lung function.
The submission will be the second attempt at gaining approval after regulators in 2005 asked for more tests. New York-based Pfizer Inc. withdrew as a partner in the U.S. to pursue an alliance with Boehringer Ingelheim GmbH, which sells the competing Spiriva medicine.
The setbacks prompted Altana to sell its drug business. Nycomed bought the unit for 4.5 billion euros in 2007 after Altana had spent 11 months trying to find a buyer.
Nycomed has done additional tests on patients with severe COPD to alleviate regulators concerns about its effectiveness.
“We are looking for a partner for Daxas in the U.S. and a sale is completely up to our owners,” Tobias Cottman, a Nycomed spokesman, said in a telephone interview.
Possible Bidders
London-based GlaxoSmithKline Plc may see potential in Daxas, according to Andy Smith, a fund manager at AXA Framlington in London. Glaxos top-selling product is the Advair Diskus asthma inhaler.
The treatment “would fit in well with GSK as they seem to be very aggressive in the respiratory space,” Smith said.
Eric Althoff, a spokesman for Basel, Switzerland-based Novartis, declined to comment as did Ayala Miller, a spokeswoman for Petah Tikva, Israel-based Teva. Glaxos David Outhwaite, AstraZenecas Chris Sampson, Sanofis Jean-Marc Podvin and Mercks Amy Rose also declined to comment. Lilly spokesman Mark Taylor wasnt available for comment.
Killer Disease
COPD kills more than 3 million people globally each year, including 120,000 in the U.S., according to Glaxo. Patients, mostly cigarette smokers, develop blockages in their airways that can worsen over time, leading to respiratory failure.
“Its an unmet medical need and the number of patients that will need treatment should rise in the years to come,” said Ulrich Huwald, an analyst at MM Warburg in Hamburg.
A price of 10 billion euros would be almost 10 times 2008 earnings, a bigger multiple than Pfizer Inc. is paying to buy Wyeth. Nycomed, which had revenue of 3.4 billion euros last year, gets more than one-third of its sales from Pantoprazole. The drug is set to lose patent protection in Europe this year and in the U.S. in 2010.