Recently Yahoo Finance printed in ZURICH via (Reuters) that Big Pharma Roche is open to making big acquisitions if they make "sense", Chief Executive Thomas Schinecker said, with the Swiss drugmaker unencumbered by its $20.7 billion deal last year to buy back its shares from Novartis.
"Of course, we also look externally for opportunities," Schinecker, who became Roche CEO in March,” the newswire published. "If it makes scientific and financial sense, we can also imagine a large acquisition," he added.
Then earlier in the week Bloomberg published the following article:
https://www.bloomberg.com/news/articles/2023-09-11/roche-ceo-eyes-drug-failures-seeks-pipeline-productivity-push?embedded-checkout=true
Roche CEO Seeks High-Risk, High-Reward Drugs to 'Deliver Value Fast'
- Drugmaker aims to move fast on high-risk, high-reward projects
- Swiss company slipped from top spot in oncology to third
By Naomi Kresge
11 September 2023 at 9:39 pm AEST
Updated on 11 September 2023 at 10:56 pm AEST
Roche Holding AG will push for a more productive pipeline of new medicines as a new management team seeks to learn the lessons from recent research setbacks.
The company aims to move fast on high-risk, high-reward projects, Chief Executive Officer Thomas Schinecker said at a meeting with analysts and investors in London. Roche will also seek deals, he said, looking at potential targets that are already in human trials, typically a pricier class of assets.
“We need to deliver value fast, and that’s the mentality we want in the organization,” Schinecker said on Monday.
The new CEO, who took over in March, is facing the loss of billions of dollars of revenue from Covid-19 tests and treatments even as sales from a trio of cancer medicines that long powered growth continue to erode. At the same time, Roche has had an unusual number of clinical-trial stumbles, including high-profile projects in cancer and Alzheimer’s disease.
Once the leader in oncology, Roche is now No. 3 in the market, Schinecker said. Instead, the company is diversifying into more types of diseases.
As it sought new avenues of growth, Roche embarked on too many large late-stage trials — known in the industry as phase 3 tests — without having some run smaller studies to further probe the medicines, the CEO said. In particular in immune oncology, “there was a push to go directly into phase 3 in order to catch up,” he said.
Roche fell as much as 1.4% in Zurich trading. The stock has lagged behind other major European drugmakers this year.
The new management team presented the results of a review of the company’s research and development, a 140-page document, to the board in July. Employees were told about it last week.
“We have some significant growth opportunities ahead,” Teresa Graham, chief of Roche’s pharmaceutical unit, said at the London meeting, pointing to an experimental drug for high blood pressure as well as medicines for eye disorders, multiple sclerosis and haemophilia.
WMHB Opinions
The recent capital raise exemplifies the difficulties faced by biotechs such as Imugene as they need to be across all aspects of the commercial and financial aspects of running a public company, whilst at the same time keeping shareholders abreast of them, through effective communication. During extensive shareholders meetings only a month or two prior to the announcement of the current capital raise no mention was made of their CAR T/Azer Cel/manufacturing commercial strategy, hence the subsequent disillusionment surrounding the current offer. Shareholders were in the main blindsided by the company’s decision. Whilst many acknowledged the rationale behind the move to acquire Azer cel from Precision, once again the future plans and funding pertaining to the deal along with forecast revenue remained somewhat murky. This time shareholders weren’t too impressed. Paul Hopper was on the nose after previous capital raises headed south, and the name Bell Potter did little to engender excitement among them, as historically the appointed brokers customers had been ongoing sellers of Imugene, in the same breath as they were buying.
Analytically speaking Imugene appears to be attempting to be all things to all people when It comes to oncology and immunotherapy treatment. Their B cell platform, TIGS acquisitions, oncolytic virus products, oncarlytics platform and now foray into allogenic therapy, whilst all complimentary to one another, require large amounts of capital and resources if they are to proceed from bench to bedside. In doing so they come up against and have to compete with big pharmaceutical company’s renowned for ruthlessness when it comes to protecting their own market share in the rapidly expanding field of oncology.
My view as stated previously is that Imugene should have partnered with a larger pharmaceutical and licensed their B cell technologies some time ago, to then focus on Professor Yuman Fongs oncolytic virus therapy, in particular Vaxinia, and the clinical development of Saul Priceman M.D.’s oncarlytics platform. The money obtained from an upfront payment for Her Vaxx, PD1 Vaxx and their other B cell immunotherapies (i.e., TIGS) in addition to milestone payments from the acquirer down the track, could have funded not only the Vaxinia and Oncarlytics trials, but the acquisition of complimentary products such as azer cel from Precision. Such a commercial decision would have mitigated the need for constant capital raises, shareholder dilution and share price decline. The company would still benefit from the development of their B cell therapies through the resultant partnership with a larger pharmaceutical company and the ongoing milestone payments that ensued. A smaller piece of the ultimate pie would be obtained from Her Vaxx and PD1 Vaxx sales, but the company’s ability to pursue the more lucrative solid tumour market with adequate capital in hand would have been the result.
When it became clear Imugene’s internal staff were not realising a deal for their promising B cell technology I made it clear I thought the company should out source these M&A activities to an experienced and professional third party organisation, whose job it was to create and close out such deals with Big Pharma’s. This in my mind would have created transparency, rather than a sense of “smoke and mirrors” or the "behind closed doors” theme that has so often plagued Imugene to date. At the same time Imugene’s management could have prioritised the development of Vaxinia, expanded existing their MAST trial and proceeded forthwith toward an FDA Fast track approval for the drug. All is well in hindsight but once Vaxinia results came to hand Imugene would then have been in a much stronger position to raise capital had they sold a share in their B cell technology for a little less a little earlier to a Merck, Pfizer or more recently Roche (see above), who have been all screaming out for a firmer foothold in the expanding field of oncology.
Capital could be then be raised via a Nasdaq listing, which as outlined by me on innumerable occasions, would bring with it far more capital than any locally run CR with the likes of Bell Potter. In my opinion Professor Yuman Fong and Saul Priceman’s technology would have little trouble reaching if not surpassing 2002 Nasdaq IPO figures given the excitement surrounding treatment having the potential to cure solid tumours in cancer patients. Keep in mind 90% of all cancer diagnosis are solid tumour, as opposed to blood related. This is an extremely profitable and as of yet untapped market. In 2002 HilleVaxNasdaq-listed: HLVX raised $200M USD,Cancer PharmaNasdaq-listed: CINC raised $194M USD and Amylyx PharmaceuticalsNasdaq-listed: AMLX raised $190M USD, all being examples of what can be achieved by Imugene through listing on that bourse.
With Imugene investor sentiment at all time lows in spite of the company's brilliant science, the chickens must surely be coming home to roost for a management team whose blind faith in their science and perceived disdain for shareholder opinion has left them without a clear and distinct commercial pathway for investors and the market to hang their hat on. At present the lack of upfront or prospective milestone payments for their products, the absence of a corporate partner, such as Roche (see above), has left many wondering what is the road to market for Imugene, and when it is going to occur. Spreading oneself to thin could be the outcome of a strategy wherein Imugene continues to develop multiple oncology platforms across multiple cancer indications. Let us hope this indeed is not the situation, as many more shareholders are now on the register than before the capital raises of recent years began. I guess by building a mini Genentec the long term value of Imugene could indeed be far greater than the sum of their remaining parts, were my above mentioned licensing and partnership scenario to have occurred. However I for one would prefer to see Imugene in a position to develop their best technology, Vaxinia, in order for it to reach its ultimate potential, rather than having to sell the company as a whole prior to that occurring, due to a lack of funds and ongoing revenue. Or to put it bluntly the lack of a commercial partner such as Roche.
DYOR - Seek investment advice as and when required - Opinions only
(20min delay)