Baxter International Inc. emphasized “solid growth opportunities” in revealing its plan to create separate, independent global health care companies, with one focused on the development and commercialization of biopharmaceuticals and the other on medical products.

The decision, disclosed early Thursday, came little more than a year after Abbvie Inc. launched as an independent biopharma, splitting from Abbott in a plan initially disclosed in October 2011. (See BioWorld Today, Jan. 3, 2013.)

Baxter, of Deerfield, Ill., is following the same playbook. Speaking on a call with analysts, Bob Parkinson, Baxter’s chairman and CEO, acknowledged that, historically, he had strongly advocated the merits of Baxter as a diversified operation. However, he said Baxter regularly re-visited with its board the prospect of splitting into separate businesses to respond to the competitive business landscape and changing health care dynamics. The key was to recognize when the merits of a spin-off might generate more value than that of a single, diversified company.

“In our view, today we’re at that point,” Parkinson said. “More importantly, we think the value of the spin-off will only increase over time.”

The transaction will take the form of a tax-free distribution to Baxter shareholders of publicly traded stock in the new biopharmaceuticals company. The split is expected to close by the middle of next year, subject to market, regulatory and other conditions, including final approval by Baxter’s board, receipt of a favorable opinion on the tax-free nature of the transaction and the effectiveness of a Form 10 registration statement that will be filed with the SEC.

Baxter said it will incur one-time charges related to the transaction during the reporting periods preceding the separation. Otherwise, the deal is not expected to affect the company’s 2014 financial guidance.

Parkinson will serve as chairman and CEO of the medical products company, which will retain the Baxter International name. Ludwig N. Hantson, president of Baxter’s Bioscience unit, will become CEO of the biopharmaceuticals company. Hantson joined Baxter in 2010 from Novartis Pharmaceuticals Corp., where he served in a number of roles, culminating as CEO of the Pharma North America unit. Prior to Novartis, Hantson spent 13 years at Johnson & Johnson.

Wayne T. Hockmeyer, who joined Baxter’s board in 2007, will chair the biopharmaceuticals company. Hockmeyer founded Medimmune Inc., and served as its chairman and CEO until its sale in 2007 to Astrazeneca plc, of London. (See BioWorld Today, April 24, 2007.)

The as-yet unnamed biopharma business, with 2013 revenues of approximately $6 billion, will consist of a portfolio of recombinant and plasma-based proteins to treat hemophilia and other bleeding disorders, capped by market leader Advate [antihemophilic factor (recombinant) plasma/albumin-free method, or octocog alfa)] in hemophilia A and follow-on BAX 855, a full-length, longer-acting recombinant factor VIII (rFVIII) antagonist that completed phase III U.S. development last year. A new drug application filing for BAX 855, partnered with Nektar Therapeutics Inc., is expected this year. (See BioWorld Today, Jan. 24, 2014.)

Baxter also has Rixubis (coagulation Factor IX [recombinant]), approved by the FDA last year for routine prophylaxis treatment, control of bleeding episodes and perioperative management in adults with hemophilia B. The company filed for the pediatric indication in the U.S. and submitted applications in the European Union (EU), Japan and Australia. A follow-on gene therapy, BAX 335, initiated phase I studies last year in hemophilia B.

Other biotechs with hemophilia B programs in development include Spark Therapeutics LLC, with a phase I/II program under way, and Catalyst Biosciences Inc., of South San Francisco, with factor IX candidate, FIX-NG (CB 2679d). (See BioWorld Today, March 26, 2014.)

Baxter expanded its hemophilia franchise early last year by picking up global rights to OBI-1 (recombinant porcine factor VIII), the lead hemophilia program at Inspiration Biopharmaceuticals Inc., of Cambridge, Mass., as part of that company’s Chapter 11 bankruptcy proceeding. After completing phase II/III studies in acquired hemophilia A and in congenital hemophilia A with inhibitors against human FVIII, Baxter filed for U.S. approval of that drug, previously partnered with Ipsen SA, of Paris, in the fourth quarter of 2013. OBI-1 has orphan drug designation both in the U.S. and EU. (See BioWorld Today, Jan. 25, 2013.)

HEMOPHILIA, RELATED PROGRAMS REMAIN HIGH PRIORITY

Hantson made clear on the conference call that the new biopharma intends to tighten its grip on the global hemophilia market by “exploring additional models” to partner with governments as the provider of choice, particularly in emerging markets. For example, he pointed out that Baxter is an exclusive provider in Brazil, the world’s third largest hemophilia market.

“We are the leader in hemophilia today, and we believe we have the right products, right strategy and team to maintain this leadership going forward,” Hantson said.

That pronouncement put several biotechs on notice, including Biogen Idec Inc., of Cambridge, Mass. In December 2013, the company disclosed positive findings from A-LONG, a phase III trial that evaluated a long-lasting clotting factor candidate in people with hemophilia A. Top-line results for long-lasting rFVIIIFc fusion protein, partnered with Swedish Orphan Biovitrum AB, of Stockholm, showed the candidate, branded Eloctate, was effective in the control and prevention of bleeding, routine prophylaxis and perioperative management, and was generally well tolerated. (See BioWorld Today, Nov. 1, 2012, July 9, 2013, and Oct. 29, 2013.)

Last week, Novo Nordisk A/S, of Bagsvaerd, Denmark, reported positive results from pathfinder2, the first phase III trial with long-acting rFVIII, N8-GP (turoctocog alfa pegol), in hemophilia A. The multinational trial is evaluating the safety and efficacy of N8-GP as prophylaxis and on-demand treatment in hemophilia A patients who are 12 or older. The three remaining trials in the pathfinder program are expected to read out within the next 12 months.

In a first glance on Baxter last week following the release of Novo’s phase III data, RBC Capital Markets analyst Glenn Novarro observed that differentiating outcomes among long-term hemophilia A candidates is increasingly difficult.

“A lot is riding on BAX’s ongoing longer-acting rFVIII trial, which is expected to read out in 3Q14,” he wrote. “With two cases of hypersensitivity reported with BAY94-9027 and one inhibitor reported with N8-GP in previously treated patients, this has left the door open for BAX-855 to have a slightly better safety profile.”

The inclusion of clotting factor muddies the competitive landscape even more, including the December 2013 approval of Novo’s Tretten (coagulation factor XIII A-subunit [recombinant]) for routine prophylaxis of bleeding in patients with congenital factor XIII A-subunit deficiency. (See BioWorld Today, Dec. 26, 2013.)

Split means boost for oncology, biosimilars

The Baxter biopharma spin-off also will house units in biotherapeutics, hematology and oncology and biosimilars. Approximately half of Baxter’s 2013 sales on the biopharma side came from outside the U.S., including some 15 percent from emerging markets. The new entity intends to expand its global footprint by increasing the penetration of existing therapies and expanding its product pipeline.

“We will continue to drive scientific innovation and leverage our expertise into new scientific areas through acquisitions and collaborations, balancing risk and return,” Hantson said on the analyst call.

He singled out the company’s agreement with Onconova Therapeutics Inc., of Newtown, Pa., for exclusive EU rights to rigosertib. That program, worth up to $565 million, took a beating last month when the phase III trial ONTIME in higher-risk myelodysplastic syndromes failed to meet its primary endpoint of overall survival. In December, the PI3K/PLK inhibitor faltered in pancreatic cancer. (See BioWorld Today, Sept. 20, 2012, Dec. 19, 2013, and Feb. 21, 2014.)

Hantson pointed out that ONTIME suggested a statistically significant benefit in median survival in a subset of patients who did not previously respond to hypomethylating agents.

“We’re currently evaluating the next steps and are engaging key opinion leaders and regulatory authorities,” he said.

Hantson also cited a collaboration with Cell Therapeutics Inc. to develop and commercialize the JAK2/FLT3 inhibitor pacritinib, with two phase III programs under way in myelofibrosis. (See BioWorld Today, Nov. 18, 2013, and March 4, 2014.)

In addition, Baxter has deals with Coherus Biosciences Inc., of Redwood City, Calif., on etanercept, a biosimilar product for Enbrel (etanercept, Amgen Inc.), and an earlier-stage arrangement with Momenta Pharmaceuticals Inc., of Cambridge, Mass. In general, Hantson called biosimilars “an attractive growth opportunity for our company.” (See BioWorld Today, Dec. 28, 2011, and Sept. 4, 2013.)

Although Hantson predicted 10 product launches in the next three to four years for the spin-off, the company did not tip its hand about becoming more collaborator or contender with other drug developers.

“Baxter’s partners and the programs we’ve established remain central to the success in creating these two independent companies,” spokeswoman Deborah Spak told BioWorld Today. “We will continue to pursue our development programs.”

Spak said company officials had no additional comment for the time being, noting that, “Until the launch of both companies in 2015, Baxter will continue to operate as one company. All of our business operations will continue as usual.”

On Thursday, Baxter’s shares (NYSE:BAX) gained $2.72, closing at $72.80.