Global Economics

Anti-Inflammatory Blockbuster?


Until recently, Brussels-based UCB was just another old-fashioned chemical and pharmaceutical conglomerate. It was founded in 1928 as the Union Chimique Belge by Belgian businessman Emmanuel Janssen, whose family still owns 40% of the company. But since Roch Doliveaux, a 50-year-old Frenchman, was made CEO of the pharma division in October, 2003, UCB has transformed itself from a traditional chemicals-and-drugs hybrid into a fast-growing biotech with global reach.

After moving quickly to divest UCB's chemicals businesses, Doliveaux scored a major coup in 2004 with the $2.7 billion acquisition of Britain's most successful biotech company, Celltech. The union gave UCB a strong pipeline of potential new drugs for cancer and a range of inflammatory diseases. UCB already had a lucrative franchise of allergy drugs, including its top-selling antihistamine Zyrtec, and Keppra, a medicine used to treat epileptic seizures. With the Celltech deal, UCB has repositioned itself as a specialty biotech whose products are aimed at niche markets, and therefore require a relatively small sales force.

Doliveaux's strategy is paying off. On Mar. 14, UCB posted a 2005 profit of $329 million on sales of $2.85 billion, up 10% and 16%, respectively. Sales of Keppra, UCB's top-selling drug, rose 34% in 2005, to $682 million. Although the drug is expected to lose its patent protection in 2009, UCB is developing potential successors which have proven much more powerful than Keppra in clinical trials.

BLOCKBUSTER TO BE? UCB's most exciting new drug is Cimzia. The antibody-based medicine is being targeted initially at people with Crohn's disease, a chronic inflammatory disorder of the digestive tract that affects nearly 1 million patients worldwide. If the U.S. Food & Drug Administration approves Cimzia, the drug will likely hit the market next year. UCB is also testing Cimzia for other inflammatory conditions, such as rheumatoid arthritis and psoriasis.

Although it will compete against Johnson & Johnson's (JNJ) Remicade, and Abbott Laboratories' (ABT) soon-to-launch Humira, analysts are optimistic that Cimzia has blockbuster potential.

BusinessWeek London correspondent Kerry Capell recently spoke with Doliveux about UCB's metamorphosis and his future plans for the company. Edited excerpts from their conversation follow:

What was UCB like when you joined in 2003?

It was a very different company then. When I arrived, it was a high-end chemical company that basically made a range of specialty chemicals such as resins, with a pharmaceutical business with $1.8 billion in global sales.... The company was highly dependent on revenues from [allergy medication] Zyrtec, which is due to lose its U.S. patent in December, 2007.

I was hired to manage the transition and find new sources of growth. The first question I had was: Can we continue to prosper in both chemicals and pharmaceuticals? We decided to focus on pharmaceuticals, as opposed to continuing as a diversified group. Then it became obvious that acquisition was the answer, as it was either acquire or be acquired.

You bought Britain's largest biotech company, Celltech, in July, 2004. How instrumental was this deal in the company's transition from chemicals to pharmaceuticals?

It was a major milestone in our development. Celltech's crown jewel was a compound they had in development for Crohn's disease called Cimzia. Celltech on its own couldn't exploit this asset. Together, though, we had the critical mass necessary to do so.

The companies were complementary. We were both focused on inflammation and central nervous system disorders. And Celltech brought an additional pillar -- oncology. They had a fantastic research engine, while UCB was stronger in specialist marketing and sales, as well as some very good science.

Analysts reckon Cimzia has blockbuster potential. What other Crohn's disease drugs are on the market, and how is Cimzia different?

The biggest rivals are Remicade from Johnson & Johnson and Abbott's Humira, a drug currently approved for use in rheumatoid arthritis that's expected to gain additional approval for use in Crohn's.

Both of these drugs are monoclonal antibodies, which are derived from very large molecules. These drugs require a lengthy, complex, and expensive manufacturing process. Because they're large molecules, they tend to penetrate tissues poorly, so they must be administered by injection. Also, these larger antibodies can often trigger unwanted immune responses.

In contrast, Cimzia is the next generation of antibodies. We use the smallest possible fragment of an antibody, called a nanobody. As these nanobodies are much smaller, they're able to penetrate tissue in the body more easily. The big advantage with nanobodies, we believe, is that it requires a much simpler manufacturing process, which means that over time it will be a lot less expensive than monoclonal antibodies to produce.

The way Cimzia is administered is also unique. While Remicade is given by an intravenous infusion at the doctor's office or hospital, Cimzia is the first Crohn's drug that is able to be given by injection through the skin. It's similar to the way diabetics are able to self-inject insulin.

Of course, what really matters is efficacy. And we're very happy with the significantly positive late-stage clinical results, which is why we submitted a biologics license application with the U.S. Food & Drug Administration in February.

When do you think Cimzia might hit the market?

We're hopeful that the FDA will grant approval and that the drug will be with patients next year.... We're also testing Cimzia for use in other indications, such as rheumatoid arthritis and psoriasis. We expect the first results on rheumatoid arthritis at the end of this year. And we have a Phase II trial of Cimzia to treat psoriasis, which is currently ongoing.

How do you plan to market Cimzia in the U.S.?

We have already demonstrated our ability to target specialized markets in the U.S. with Keppra, where we focused our efforts on targeting neurologists. With Cimzia, it will be similar in that we will address specialist markets -- in this case gastroenterologists. They are a very targeted group, so you don't need huge amounts [of money] to promote the drug.

UCB is also developing successors to its two lead drugs, Keppra and Zyrtec, which will go off patent in the U.S. in 2009 and 2007, respectively. Tell us more about these.

Zyrtec's successor is Xyzal, which was first approved in Europe in 2001. It's sold in 60 countries to date, with 2005 sales of $153 million.

We also have two new compounds, brivaracetam and seletracetam [known as Briva and Seletra] in clinical testing. Right now, Keppra is approved as an add-on therapy for epilepsy. But the medical need in epilepsy is huge. We're testing Briva for use in the treatment of epilepsy and neuropathic pain. And early Phase II clinical trials of Seletra indicate it's more than 100 times more potent than Keppra. We believe Briva has the potential to gain approval for myoclonus, a sudden, involuntary jerking associated with a wide variety of nervous system disorders including epilepsy, in 2008.

Merck's bid for Schering (SHR) underscores a problem faced by mid-size drugmakers worldwide: the need for scale in R&D and marketing. Do you see additional acquisitions as necessary in ensuring UCB's continued growth?

We don't need an acquisition to succeed, as we have a very rich pipeline.

That said, it would be irresponsible not to look at possible acquisitions to make sure interesting companies don't disappear from the map. If you asked me a year ago, I would have said no, we're busy integrating. But now, if we can do more in terms of product or even company acquisitions, we would pursue them. UCB has demonstrated that it's willing to move when it's the right thing to do.


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