Business briefs: Lundbeck and Otsuka; Omnicom; Vivus
Otsuka is partnering with Lundbeck on an Alzheimer's drug, LU AE58054, a selective 5-HT6 receptor antagonist entering Phase III clinical trials. Otsuka agreed to pay $150 million upfront and $675 million in benchmarked payments if the drug progresses. It's an evolution of an alliance on CNS drugs, including Abilify, that the companies formed in 2011.
Omnicom said Tom Harrison, longtime head of its Diversified Agencies Services unit which houses the holding company's healthcare agencies, will become chairman emeritus of the division April 1. Harrison, whose namesake agency Harrison & Star was acquired by Omnicom in 1992, has headed DAS, as it is known, for 16 years. Dale Adams succeeded Harrison as CEO in 2011, and Harrison continued as chairman of the group.The Street's Adam Feuerstein is not a fan of how weight-loss drug maker Vivus has framed its most recent financial strategy—a $110 million “non equity financing” deal with Pharmakon Advisors—as something other than debt. According to the deal Vivus announced Tuesday, Pharmakon is providing it with a tranche that will be divided into an initial payment of $50 million, and the balance being chipped away at in increments as needed, in exchange for quarterly repayments that will kick in during next year's second quarter. Payments will be pegged to Qsymia sales. Among the problems Feurstein has with the deal include that Vivus will end up paying almost $70 million for that first $50 million, putting the interest rate at around 13%. Further, he wrote that the company's Qsymia patent and trademarks are among the loan's collateral and “if Vivus defaults, Pharmakon gets basically everything of value.” Although Qsymia is the first new prescription weight-loss drug to hit the market in decades, the California company has been struggling with low sales which have been partially attributed to costs: according to Bloomberg, patients could end up paying around $200 a month for the medication, which is taken like a chronic medication, instead of a short-term therapy. Recent attempts to boost sales have included a free trial offer, a weight-loss app marketed to healthcare providers and an attempt to go beyond mail-order to retail-level distribution. The FDA is expected to decide on the retail option in April.