The head of Helsinn Group, which is positioning itself for a big move into the U.S., says it prefers dealing with other family-owned drug companies these days because that ensures “quality, commitment and compliance.”

“In the past, we were working mostly with large pharma firms like Novartis AG and Roche, but today we work more and more with private and family-controlled businesses like ours,” said Riccardo Braglia, CEO of Helsinn.

The firm likes these kinds of partners because “they generally are more focused on what they’re hoping to do in cancer supportive care, and this gives us possibilities of longer-lasting working relationships and scenarios; and because the people who work for them are more likely to stay there and that gives us certainty and consistency,” Braglia said in a Feb. 26 interview on the sidelines of the Economist Pharma Summit 2015.

Going Solo In The U.S.

Consistency, however, is something that Helsinn is eschewing in its U.S. operations. “We decided in 2013 to establish our own organization in the U.S. where Eisai Inc. is our marketing partner, and we’ll be gradually recouping some of our product rights,” Braglia said.

The strategy means Helsinn from next year will have the rights to directly promote Aloxi and Akynzeo in the U.S., sharing the marketing rights equally with Eisai ([A#00141020009]).

Aloxi (palonosetron), approved in 2003, is an injected medicine for the prevention of acute nausea and vomiting associated with initial and repeat courses of emetogenic cancer chemotherapy. The drug has been marketed by Eisai since its acquisition of MGI Pharma Inc. in December 2007. Akynzeo, approved in October 2014, (netupitant/palonosetron) is an oral fixed-dose combination successor to Aloxi.

Helsinn does not publish annual sales figures for their products, but total global revenues last year were $355 million, of which Aloxi represented 68%. Competing drug candidates to Aloxi are mainly old generic molecules, according to the company.

Beginning next January “we’ll be doubling the number of sales reps we have in the U.S., from 20 to 40, and we’re also hiring other personnel” such as account managers and medical liaison officers, Braglia said.

The business-to-customer strategy in the U.S. is a significant shift from the firm’s traditional business-to-business model, “and it will be the only exception,” Helsinn CEO Braglia said.

This new business-to-customer strategy in the U.S. is a significant shift from the firm’s traditional business-to-business model, “and it will be the only exception,” Braglia said.

The shift is part of preparations for the company’s milestone event: its first solo launch of a product in the U.S. Anamorelin is a novel, once-daily, orally active ghrelin receptor agonist which has completed Phase III for treating cancer anorexia-cachexia syndrome in patients suffering from non-small cell lung cancer.

Helsinn plans to file anamorelin with both FDA and EMA around May or June of this year.

“Anamorelin will represent a big change for us because from 2016 we’ll have full commercial rights in the U.S., after FDA approval,” Braglia said. With that, the firm will become “a full-scale organization of about 100 people in the United States, which is a reasonable size for oncology and cancer supportive care.”

Helsinn will only hire experienced sales reps in the U.S. who have at least 20 years of experience in oncology. It will then be selling its three products on the U.S. market – Aloxi, Akynzeo and anamorelin – along with Halaven (eribulin mesylate), which is Eisai’s product.

‘Lucky’ On Reimbursement

One of the company’s strengths is that reimbursement isn’t a major concern. That’s a big plus when operating in a therapy such as oncology, which is characterized by high prices – and increasingly a high level of scrutiny by payers Also see "Cancer Immunotherapy Reaches A Tipping Point" - Scrip, 22 October, 2014..

The key for Helsinn is that its products are in the area of less costly cancer supportive care, addressing chemotherapy-induced nausea and vomiting, cachexia and anorexia, oral mucositis, hand and foot syndrome, cancer induced pain, diarrhea, pre-colonoscopy treatment, supplements and nutraceuticals, as well as medical devices.

“We’re lucky in that we don’t sell drugs that are really expensive. We generally range between $40 to $200 for our drugs; around $300 maximum. Akynzeo is list priced at around $400. We don’t have anything higher than that.”

When Akynzeo was approved, Eisai pegged the wholesale acquisition cost at $476 per capsule.

Partnering Strategy Persists In Europe

For rights to anamorelin in Europe, the company is in discussions with a number of potential partners in the remaining regions after licensing the product to Chugai in many key countries and family-owned firms in other states.

The Swiss specialty drug company last summer gave Roche’s Chugai Pharmaceutical Co. Ltd. exclusive rights to anamorelin in Germany, France, Benelux, the U.K. and Ireland [See Deal].

In December 2013 Helsinn granted Gruppo Angelini ’s CSC Pharmaceuticals Handels GMBH exclusive commercialization rights in Austria, Bulgaria, Czech Republic, Hungary, Poland, Romania, Slovak Republic, Georgia, Russia and other Commonwealth of Independent States territories to anamorelin for anorexia-cachexia syndrome related to non-small cell lung cancer [See Deal].

That deal came on the heels of Helsinn granting Italfarmaco SPA sole rights to sell anamorelin in Italy [See Deal].

From Garage To Global

Switzerland-based Helsinn began life in Braglia’s grandfather’s garage in the late 1940s and was formally founded in 1976. Today it operates in 90 countries with 70 partners using a core business model of what he terms “integrated in-licensing” of late-stage pharmaceutical compounds, medical devices and nutritional supplement products.

That business model is attractively unique, Braglia said, although “it means not having direct sales in our home country and making revenues from third-party licensing and distribution agreements – and supporting our partners throughout the life of the products in the areas of medical, marketing and regulatory activities.”

Braglia told the “The Pink Sheet” that Helsinn’s business model is based on four pillars: in-licensing, developing products and obtaining marketing authorization on international markets, and out-licensing products through a network of partners worldwide, as well as direct sales in the U.S. since 2013.

The firm’s main business areas are cancer supportive care, pain and inflammation, and gastroenterology (see chart of pipeline activity).

Helsinn's Development Pipeline

Source: Company presentation on Feb. 20, 2015

Helsinn’s most recent partnership was a distribution and licensing deal announced Feb. 11 with family-owned Mundipharma International Corp. Ltd. for exclusive rights to anamorelin in Brazil and across certain markets in the Middle East and North Africa.

Under the terms, Helsinn keeps all international, regulatory and clinical development activities and the supply of anamorelin for commercial use, while Mundipharma gets rights to marketing, promotion, distribution and sales of anamorelin in the designated territories.

News of that deal came a week after Helsinn gave Stendhal International – a privately-held specialty pharmaceutical company based in Mexico City and operating in 14 countries in Latin America – exclusive rights to NEPA, an oral fixed combination of netupitant and palonosetron developed for the prevention of chemotherapy-induced nausea and vomiting.

Licensing Deals Trade Margin For Speed

The two arrangements are representative of Helsinn’s business approach.

“These follow our original model from when we first started in 1976: the integrated licensing which means to get a product at an early stage, Phase I or Phase II, get it to approval stage in Europe and/or the U.S. and then out-license on a country-by-country basis or regional deals with our partner,” Braglia said.

That model gives the group two advantages. First, it reduces some of Helsinn’s commercial risk as partners pay up front, and do so when the product is in Phase III and sometimes when still in regulatory analysis, meaning that partners also take on some risk.

Second, “for us it generates income and finances partially the costs inherent to clinical development. Of course, we license commercial rights to the medicines, which does impact on our financial margins, but that allows us to then re-invest faster in other R&D programs,” he said.

Helsinn normally enters licensing deals around the Phase IIb stage of its assets and at the beginning of Phase III.

For example, “we are now starting to license out our next-generation product, elsiglutide for severe chemotherapy-induced diarrhea. If we strike a deal early in the drug’s development then we’ll get less in revenues but that’s part of the game,” Braglia said.

Helsinn in-licensed elsiglutide (ZP1846), a once-daily, subcutaneously administered glucagon-like peptide 2 (GGLP-2) analog, early in its clinical stage from Zealand Pharma AS of Denmark and is now moving the candidate into Phase IIb trials.

Keeping Things In The Family

Mundipharma is a long-standing partner of Helsinn. The two family-based businesses now work together in China, the Middle East as well as Latin America. “They’re an efficient company and have a high rate of investment in activities,” Braglia said.

“In China we have a JV with MundiPharma with our products Aloxi and Akynzeo. We’re on the ground in China and take care of the clinical trials and regulatory processes – so we share activities, even though the commercialization will be then in MundiPharma’s hands,” he explained.

“Another important thing about family businesses like MundiPharma and Stendhal and others is that they are very interested in high quality and compliance,” Braglia said, explaining that the family-business approach in China was decided upon as the best option.

“We evaluated local Chinese partners as possibilities, and I was very afraid about compliance,” Braglia said regarding the joint venture with MundiPharma.

“We evaluated local Chinese partners as possibilities, and I was very afraid about compliance. So I always send my compliance officer to review the partner before I sign any deal and do due diligence. That’s very important – not least because I can’t afford to pay fines because my company has been caught doing something wrong. I want my partner to always act in the proper way.”

Still, the family approach can also be seen in some big pharma companies, he noted.

“I like Boehringer Ingelheim GMBH very much, for example, but we’ve only done very marginal deals with them. They are a very good big company. Another is Roche, where the Hoffman families still own a key interest and thus they exert big pressure to do things properly.”

Asked whether Helsinn will keep growing his list of partners and alliances, Braglia said the time for an assessment was coming.

“There probably will be some consolidation going forward but there are some countries where we’re not present. At some point Africa will be an opportunity. Not just South Africa and Maghreb but also Ethiopia, Ghana, Tanzania – of course you will have to give them different prices. Even in Africa cancer is growing quiet fast due to longer life spans, life style changes and worsening urban pollution, and so this is potentially a big area for cancer care products.”

Helsinn’s major markets are the U.S., Japan, Germany, Italy, France and the U.K., Braglia said. “China will potentially become big for us, and we have good exposure in Mexico, Brazil and Columbia.”

Russia, though, “is very complicated,” Braglia said. “We have a partner there, Angelini, but it’s very difficult there. The falling ruble is bad – but the really big issue there is compliance.”

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