OISPodcast@ASCRS – Meury: Why Allergan Won’t Miss a Beat in Building Ophthalmology Franchise
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Deals sometime collapse, but they usually don’t get hit with a smart bomb from the Department of Treasury. Allergan, newly single following the break up with Pfizer, is looking to build a business in ophthalmology. Bill Meury, the newly named chief commercial officer of Allergan, talks about the non-Pfizer deal, Allergan’s ophthalmology pipeline and where the acquisitive company will be looking for the next deal.
Tom Salemi: Hey there, everybody, Tom Salemi here. Welcome back to the OIS Podcast. Today we’re going to take you back, way back to May fifth, back in New Orleans. I had an opportunity to sit down with some of the Masters of the Universe. They of course finished off the great day with the Jim Mazzo-led panel on the big stage. But prior to that, I had a chance to sit down with many of the representatives of ophthalmology’s leaders and ask them some questions one on one. Today’s guest is Bill Meury. He is now the Chief Commercial Officer of Allergan. He was appointed or given that title a few days after OIS@ASCRS, and talked to Bill about a few things. Of course we got the Pfizer conversation out of the way early, what that was like happening and of course not happening. But then we get into how Allergan is viewing ophthalmology, where its strengths are and how it intends to grow in the future. So sit back and visit with Bill Meury, Chief Commercial Officer of Allergan.
TS: This is Tom Salemi at OIS TV. Very happy to be joined by Bill Meury.
Bill Meury: Nice to be here.
TS: He’s the Executive Vice President of Branded Pharma. I know you don’t care about titles, but we like to be precise here at OIS. Before we get into talks about the future, let’s talk a little bit about the recent past. What’s life like since the Pfizer deal didn’t go through? Is it kind of like you were left at the altar and people are kind of like, Hey, how’s it going there, Bill? You know, a little tentative to talk about it?
BM: You know, it’s a good question. Remember that only less than half of 1% of the company was actually involved in the integration of Pfizer and Allergan.
BM: Which was by design. And so all of the customer facing employees, many of the people that are working on R&D projects across the product line, not just in eye care, were not impacted by the actual integration. We knew that there was a possibility that the deal would not be actually closed. So we had a plan B. I believe in large part, people focused on their day job and doing what they get paid to do. And so I think there was a 24-hour period where people thought about it. Most employees at most companies are really happy to stay independent. And that’s ultimately what we are going to be, and I think there was a lot of celebration, actually.
TS: I believe that. And you’re right, every deal always has a chance of not going through. Very rarely, though does the sort of finger of God come down and say your particular deal is not going to through for this reason. That was surprising.
BM: Yeah. I mean things happen for a reason. I think the logic for the deal was sound, but our future as an independent company, especially with the proceeds from the sale of our generic division is very, very positive. We have over 70 products in late stages of development, and many of those are in eye care. We’ll launch three products over the next six months. And so whether we had merged with Pfizer or independent, the business fundamentally is in very good shape.
TS: And you say people inside the company sort of breathed a sigh of relief. I know for a fact people outside were kind of happy it didn’t go through.
TS: Because we like having –
TS: – local control, so to speak, over the ophthalmology kind of – it was a concern that if you got too big, it’d be lost in the large chorus that is Pfizer.
BM: Yeah. I mean listen, that’s a legitimate concern. I would all tell you it’s such a high quality, high growth product line that no matter where it is, it would never be lost. But we don’t have to worry about that now.
TS: Nope, you do not.
BM: And we are an eye care company. That’s for certain. I think we’ve been, even as we’ve gotten larger, because Allergan is a composite of Actavis, Forest, and Allergan, our focus and activity in eye care is probably greater today as a bigger company than it was before the combination of Actavis and Allergan. And I think focus isn’t just a function of scale. Big companies can have it and little companies don’t, and vice versa. And I think we’re an example of a big company that operates like an eye care company.
TS: Well, let’s re-introduce us all to Allergan because you’re right, it’s a composite of a few companies that just got together fairly recently. In ophthalmology, where do your prime – give us like an overview of what you have going on in pharma and device.
BM: Sure. One way to think about it is we cover the waterfront from ocular surface disease or dry eye – Restasis, of course, is our flagship product. We have a glaucoma product line, and then a product for retinal disease. We have pharmaceuticals and we have devices. Our largest product, of course, is Restasis. We have a terrific glaucoma business that’s going to be enhanced with the launch of a XEN45, which is a gel stent technology, probably the best IOP lowering, essentially MIG on the market. We just received top line results last week. And then we have a product in development for AMD and DME called Abicipar, which would essentially be a superior form of Eylea or Lucentis or Avastin. We have to complete the phase 3 studies, but that’s why we’re doing the studies, not to develop another anti-VEGF, but to develop a superior one. And if that in fact turns out to be the case, we have a combination of VEGF and PDGF. And so the product line is in very strong shape today, and it’ll look very different in the future: larger in terms of the number of the products, and in terms of the types of products, whether they be pharmaceuticals or devices or procedures.
TS: Is there a right balance for pharma and device? You mentioned the XEN product. You also, of course, purchased Oculeve last year. So you’ve sort of been building up on the medtech side, on the device side. Is there any sort of formula or balance or ratio that is right? Or does it really just depend upon the products?
BM: Yeah, it’s a good question. My sense is generally product line should have balance in terms of the types of products, which is what you and I are talking about, pharmaceuticals versus devices, in terms of the size of the products, in terms of where they are in their commercial life. Ultimately, though, you have to rely on deal flow and innovation. And innovation often can take you into parts of the market and towards different technologies that you may or may not have expected. And you have to be flexible and nimble, which I think that we are. I do believe that there’s some synergy that exists between a pharmaceutical and a device, as long as the customer or the user is the same. So for example, we have Restasis, and we have a multi-dose, preservative-free form of Restasis that we’ll launch at the end of the year. Alongside that we have Oculeve, which was – or to your – from Mike Ackerman up in San Francisco, those two products can be marketed alongside each other. And there are strategic, promotional and economic advantages to that. There’s a lot more synergy, I think, when you have two devices and two pharma products. But even a pharma-device product can create advantage that you otherwise wouldn’t have.
TS: So with the acquisition of those two interesting devices, is it an indicator of future interest? Would someone be correct or incorrect in saying Allergan is interested in building up its medtech portfolio or its device portfolio?
BM: Yes, I would say that that’s an accurate way to describe where we could be headed in the future. We’re not dogmatic about the types of products if we have the capabilities, and of course reduces execution risk in the development and regulatory and commercially. If we don’t have the capabilities, though we would acquire those capabilities, and it’s not uncommon for us to do that. We will launch XEN45, which is essentially our glaucoma procedure. We have Oculeve, which is a nasal neurostimulator. And I would expect over time there’ll be more technologies like that that either coexist or, in certain cases, replace our pharma product lines.
TS: Hi, everybody, Tom here. Want to take a quick break to tell you that we are posting content daily on OIS.net. All of the presentations, all of the panel discussions, all of the interviews like the one you’re listening to today, they’ll be going up there on OIS.net. And we’ll also be sending them out to you in report form so you can get a real, a complete collection of what went on at the Intercontinental Hotel in New Orleans. So go to OIS.net, make sure you sign up for Eye on Innovation, and you’ll receive all the great content from that conference directly into your inbox, or of course go to OIS.net frequently and enjoy it as it pops up. Now back to this conversation.
TS: Do you see – we talked about Allergan as a composite of several different companies that have been put together. Do you see another larger acquisition sort of to continue that composing of a larger entity? Or do you see in the future smaller acquisitions, less sort of seismic acquisitions?
BM: It’s a good question. The logic behind any acquisition, small or large, has to be new products. Often the media capture information about tax synergies and cost synergies. But ultimately the logic there has got to be new products in one of our seven therapeutic areas. And we have a big focus, of course, on eye care. We like what we see from a lot of small companies around the world. That’s where we’re focused on right now. You can never rule out a transformational deal. But even then, the logic for that has to be based on product flow, early and late stage. And I think we’re open to all things. We’re not actively pursuing something transformational right now, and the chief and others are looking to how we deploy the capital that we got.
TS: I know, it was about 12 hours after the deal was called off that people were already asking you about Bausch and Lomb.
TS: And I made the point to an analyst, Look – I said it incorrectly. I said, Allergan’s already talking about Bausch and Lomb. He said, Well, they’re talking about it because we’re all asking them about it. And you suddenly – it’s like Oh, there they go, they’re already ready to buy someone else. But you’re not looking to make a big leap forward initially, at least.
BM: That’s right.
TS: You’re looking at smaller additions to your portfolio.
BM: I think that’s a good way to think about it. Yes.
TS: And where do you search out that innovation? Are you – do you make direct investments? Do you invest in technologies at all?
BM: We do. Mostly we have a business development group on both the East and West Coast. We probably evaluate over a thousand opportunities, some big, some small, a year. We’re in contact with any major licensor or small company in the seven therapeutic areas that we cover. We have bankers, venture capitalists, private equity groups. They know that we are a fast moving – I wouldn’t say aggressive. We’re not Las Vegas gamblers. But we know how to assess risk and as long as there’s a strong scientific rationale for the compound, and we believe that there’s a regulatory and development path, then we can be a – pretty quick on the draw. And that makes us an attractive partner.
TS: Sure. Brent talked about at a previous OIS how he came upon Oculeve and was talking with doctors at conferences, and someone mentioned that the patients were upset when they had to give up the device after the trial was over.
BM: That’s exactly right. It’s a great product. The people who developed, Mike Ackerman and the rest of the group at Oculeve – if Apple decided that they wanted to get into eye care, I’m convinced that the first product they would have developed would have looked just like the product that Michael Ackerman built.
TS: I saw you said that. Why do you say that? Is it just the look and the design of it?
BM: The look and the design. It’s really, really clean. And it’s a big – it’s real popular with the patients who use it.
TS: It’s a great comparison.
BM: Yeah. And I saw a picture of it the other day, and it really – and I’ve seen it multiple times – and I realized this is a great device. Have you ever seen it?
TS: You know, I haven’t.
BM: I’ll send you one, free of charge.
TS: Oh, that’d be great. Thank you very much. I’ll declare it on my taxes, I promise. But that’s a great – how important is design in healthcare, in medtech going forward? This isn’t something you’re going to sell over the counter to patients, but how important is that?
BM: Listen, I think when people are – it’s somewhat invasive. It’s used in the nose. Any time there’s a device of any kind – and I’ve operated in respiratory and in diabetes – any time there’s a device that’s somewhat invasive, I think it’s important for patients and consumers to feel comfortable about the quality of it. And when you look at what Michael produced, it’s a high quality device. And I think it’s going to be a perfect complement to Restasis. It may be an alternative to artificial tears. And it’s a non-drop, natural tear alternative. And I think it’s going to be really popular among optometrists and ophthalmologists.
TS: Great. And final question: how are you innovating internally? Are you going to up the – what percentage are you putting toward innovation, and how does that look in the future?
BM: You mean in terms of R&D?
TS: R&D, yeah.
BM: Yeah. I mean I don’t believe an R&D budget as a percentage of sales, some arbitrary number, makes a great deal of sense. We spend roughly a billion four each year on research and development. And so let’s call it about 10% of sales. That number can go up and down based on what we see in the market. I don’t expect it would go down. The future of the company is going to be a function of products that we have in development. We love the seven areas we’re in. Eye care is arguably the most important in terms of our future growth. And we’re looking at all sorts of technologies. There’s a lot of gene therapies out there that are interesting, a lot of work being done in ocular surface disease that I think is terrific. And we’re tireless about talking to the CEOs and the scientists at these companies that are just doing great work. Brent says it a lot. We don’t have a monopoly on good ideas. It can’t be the case that we know everything and don’t need others. And it’s not the case. And so we rely on all the small companies that are at this meeting and around the world that are doing good work.
TS: Excellent. Well, thanks for taking some time. We look forward to having Allergan, I hope, at many future OIS’s.
BM: Yes, I hope so too.
TS: Bill Meury, thank you for joining me at OIS@ASCRS. I’m sure it was a busy day for you, but really enjoyed meeting you and talking about Allergan’s future. As I indicated in the interview, many people were not disappointed by the failure of the Pfizer [deal?] to happen, and I look forward to following Allergan’s many successes and acquisitions in the future. To our OIS attendees and OIS Podcast listeners, thanks for doing both. And tune in next week for another tale of ophthalmology innovation on the OIS Podcast. And don’t forget, we’re going to be posting information about OIS@ASRS on the OIS.net website as well. Do that, check it out, and we will see you in San Francisco in August.