2017 gets start­ed with a bang as we get a glimpse of the good, the bad and the ug­ly

End­points as­sess­es the big bio­phar­ma R&D sto­ries of the week, with a lit­tle added com­men­tary on what they mean for the in­dus­try.

Pre-JPM biotech news burst un­der­scores a strong start to 2017, for the pri­vate side

Brad Lon­car not­ed on Twit­ter ear­li­er to­day that there’s been a dearth of pub­lic biotech news ahead of the big JP Mor­gan con­fab next week. But the pri­vate side has been any­thing but qui­et. Case in point: George Scan­gos quick piv­ot from CEO at Bio­gen to chief of a start­up called Vir Biotech­nol­o­gy. Arch has al­ready com­mit­ted $150 mil­lion in back­ing, and Gates and oth­ers will add hun­dreds of mil­lions more. The news, along­side a blast of new de­vel­op­ments that dom­i­nat­ed this short work week, un­der­scores that the fund­ing side in biotech re­mains ac­tive, even as pub­lic biotechs con­tin­ue to face a dif­fi­cult and un­for­giv­ing mar­ket. We count that as a glass more than half full, which is a good way to start the year.

 M&A val­u­a­tions are shoot­ing sky high. How long can that last?

We start 2017, like 2016, with some big ex­pec­ta­tions on the M&A side of things. Af­ter a woe­ful year in new drug ap­provals, Big Phar­ma — as well as Big Biotech — is in big­ger need of new deals than ever. But buy­outs have lagged far be­hind ex­pec­ta­tions. And a new analy­sis of val­u­a­tions helps ex­plain why. The cost of new biotech ac­qui­si­tions has been steep, and it’s grow­ing at a rapid pace. With few­er at­trac­tive late-stage as­sets, it’s a sell­er’s mar­ket, and they know it. Pre­mi­ums are burst­ing far be­yond old ex­pec­ta­tions. And it’s beg­ging a sim­ple ques­tion: How long can that kind of trend last? Big Phar­ma’s R&D mod­el is al­ready bust­ed and ex­posed to huge pres­sure if pric­ing re­forms take shape. A reck­on­ing won’t be pain­less.

 A painful down­turn in new drug OKs ex­pos­es a se­ri­ous weak­ness

Don’t let sooth­ing pro­jec­tions of high­er new drug ap­provals for this year per­suade you to over­look just how se­ri­ous 2016’s ane­mic record is for the in­dus­try. Too many Big Phar­mas are al­ready suf­fer­ing from a short­age of new prod­uct OKs. And too many ap­provals that do ar­rive are for drugs that are poised to en­ter bru­tal com­pe­ti­tions. A sim­ple re­turn to the ap­proval rates we grew ac­cus­tomed to in 2013-2015 isn’t go­ing to fix that fun­da­men­tal prob­lem. And Big Phar­ma ac­counts for a huge share of the over­all R&D dol­lar in bio­phar­ma. Some­thing has to give here, which may en­cour­age new mod­els of drug de­vel­op­ment that will force a fo­cus on late-stage pipelines above all else. Too much mon­ey is wast­ed on R&D, and waste is get­ting in­cred­i­bly un­fash­ion­able. Any big play­er that fig­ures out a sus­tain­able mod­el for new prod­uct de­vel­op­ment will be quick­ly copied.

 Aca­d­e­mics are break­ing the mold in ear­ly-stage R&D

I’ll ad­mit right off the bat that I have a keen in­ter­est in biotech star­tups that like to break the mold. And PvP Bi­o­log­ics, a spin­out from the Uni­ver­si­ty of Wash­ing­ton, ac­com­plished that nice­ly this week, go­ing from start­up to Take­da part­ner with $35 mil­lion in R&D sup­port to back a proof-of-con­cept study for a new treat­ment for celi­ac dis­ease. No VC cash. No huge di­lu­tion. But lots of ex­pert ad­vice. The move un­der­scores a small but grow­ing trend as aca­d­e­mics do more than ac­cept a sliv­er of eq­ui­ty for their pre­clin­i­cal work. This is a com­pa­ny, and a trend, well worth watch­ing.

 Big Phar­ma ex­ecs are mak­ing a bee-line to biotech

As chance would have it, I had the op­por­tu­ni­ty to talk to Neon Ther­a­peu­tics CEO Hugh O’Dowd ear­li­er in the week about a big new round. The No­var­tis vet had just ex­changed emails with David Ep­stein, the for­mer phar­ma chief for No­var­tis who joined Flag­ship as an ex­ec­u­tive part­ner this week. And that news came right on the heels that No­var­tis on­col­o­gy de­vel­op­ment head Alessan­dro Ri­va had jumped ship for Gilead, which needs all the help it can get to ex­e­cute a turn­around on a suf­fer­ing pipeline. No­var­tis has been push­ing a ma­jor over­haul over the past year, and a string of top ex­ecs has been fan­ning out in­to the biotech world. That’s an­oth­er in­di­ca­tion of the more vi­brant for­tunes avail­able in biotech these days, as well as a vote for where in­no­va­tion will lie in the years ahead.

Paul Hudson, Sanofi CEO (Getty Images)

Sanofi CEO Paul Hud­son has $23B burn­ing a hole in his pock­et. And here are some hints on how he plans to spend that

Sanofi has reaped $11.1 billion after selling off a big chunk of its Regeneron stock at $515 a share. And now everyone on the M&A side of the business is focused on how CEO Paul Hudson plans to spend it.

After getting stung in France for some awkward politicking — suggesting the US was in the front of the line for Sanofi’s vaccines given American financial support for their work, versus little help from European powers — Hudson now has the much more popular task of managing a major cash cache to pull off something in the order of a big bolt-on. Or two.

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The Avance Clinical leadership team: CEO Yvonne Lungershausen, Sandrien Louwaars - Director Business Development Operations, Gabriel Kremmidiotis - Chief Scientific Officer, Ben Edwards - Chief Strategy Officer

How Aus­tralia De­liv­ers Rapid Start-up and 43.5% Re­bate for Ear­ly Phase On­col­o­gy Tri­als

About Avance Clinical

Avance Clinical is an Australian owned Contract Research Organisation that has been providing high-quality clinical research services to the local and international drug development industry for 20 years. They specialise in working with biotech companies to execute Phase 1 and Phase 2 clinical trials to deliver high-quality outcomes fit for global regulatory standards.

As oncology sponsors look internationally to speed-up trials after unprecedented COVID-19 suspensions and delays, Australia, which has led the world in minimizing the pandemic’s impact, stands out as an attractive destination for early phase trials. This in combination with the streamlined regulatory system and the financial benefits including a very favourable exchange rate and the R & D cash rebate makes Australia the perfect location for accelerating biotech clinical programs.

As­traZeneca trum­pets the good da­ta they found for Tagris­so in an ad­ju­vant set­ting for NSCLC — but many of the ex­perts aren’t cheer­ing along

AstraZeneca is rolling out the big guns this evening to provide a salute to their ADAURA data on Tagrisso at ASCO.

Cancer R&D chief José Baselga calls the disease-free survival data for their drug in an adjuvant setting of early stage, epidermal growth factor receptor-mutated NSCLC patients following surgery “momentous.” Roy Herbst, the principal investigator out of Yale, calls it “transformative.”

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Pablo Legorreta, founder and CEO of Royalty Pharma AG, speaks at the annual Milken Institute Global Conference in Beverly Hills, California (Patrick T. Fallon/Bloomberg via Getty Images)

Cap­i­tal­iz­ing Pablo: The world’s biggest drug roy­al­ty buy­er is go­ing pub­lic. And the low-key CEO di­vulges a few se­crets along the way

Pablo Legorreta is one of the most influential players in biopharma you likely never heard of.

Over the last 24 years, Legorreta’s Royalty Pharma group has become, by its own reckoning, the biggest buyer of drug royalties in the world. The CEO and founder has bought up a stake in a lengthy list of the world’s biggest drug franchises, spending $18 billion in the process — $2.2 billion last year alone. And he’s become one of the best-paid execs in the industry, reaping $28 million from the cash flow last year while reserving 20% of the cash flow, less expenses, for himself.

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Dan O'Day, Gilead CEO (Andrew Harnik, AP Images)

UP­DAT­ED: Gilead leas­es part­ner rights to TIG­IT, PD-1 in a $2B deal with Ar­cus. Now comes the hard part

Gilead CEO Dan O’Day has brokered his way to a PD-1 and lined up a front row seat in the TIGIT arena, inking a deal worth close to $2 billion to align the big biotech closely with Terry Rosen’s Arcus. And $375 million of that comes upfront, with cash for the buy-in plus equity, along with $400 million for R&D and $1.22 billion in reserve to cover opt-in payments and milestones..

Hotly rumored for weeks, the 2 players have formalized a 10-year alliance that starts with rights to the PD-1, zimberelimab. O’Day also has first dibs on TIGIT and 2 other leading programs, agreeing to an opt-in fee ranging from $200 million to $275 million on each. There’s $500 million in potential TIGIT milestones on US regulatory events — likely capped by an approval — if Gilead partners on it and the stars align on the data. And there’s another $150 million opt-in payments for the rest of the Arcus pipeline.

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No­var­tis jumps in­to Covid-19 vac­cine hunt, as Big Phar­ma and big biotech com­mit to bil­lions of dos­es

After spending most of the pandemic on the sidelines, Novartis is offering its aid in the race to develop a Covid-19 vaccine.

AveXis, the Swiss pharma’s gene therapy subsidiary, has agreed to manufacture the vaccine being developed by Massachusetts Eye and Ear and Massachusetts General Hospital. The biotech will begin manufacturing this month, while the vaccine undergoes further preclinical testing. They’ve agreed to provide the vaccine for free for clinical trials beginning in the second half of 2020, but have not disclosed financials for after.

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Bryan Roberts, Venrock

Ven­rock sur­vey shows grow­ing recog­ni­tion of coro­n­avirus toll, wan­ing con­fi­dence in ar­rival of vac­cines and treat­ments

When Venrock partner Bryan Roberts went to check the results from their annual survey of healthcare leaders, what he found was an imprint of the pandemic’s slow arrival in America.

The venture firm had sent their form out to hundreds of insurance and health tech executives, investors, officials and academics on February 24 and gave them two weeks to fill it out. No Americans had died at that point but the coronavirus had become enough of a global crisis that they included two questions about the virus, including “Total U.S. deaths in 2020 from the novel coronavirus will be:”.

Roger Perlmutter, Merck R&D chief (YouTube)

UP­DAT­ED: Backed by BAR­DA, Mer­ck jumps in­to Covid-19: buy­ing out a vac­cine, part­ner­ing on an­oth­er and adding an­tivi­ral to the mix

Merck execs are making a triple play in a sudden leap into the R&D campaign against Covid-19. And they have more BARDA cash backing them up on the move.

Tuesday morning the pharma giant simultaneously announced plans to buy an Austrian biotech that has been working on a preclinical vaccine candidate, added a collaboration on another vaccine with the nonprofit IAVI and inked a deal with Ridgeback Biotherapeutics on an early-stage antiviral.

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Stymied by the pan­dem­ic, Im­munomedic­s' new CEO bows out, tak­ing a mil­lion bucks plus perks as he heads out the vir­tu­al ex­it

Just a little more than a month since taking over as the latest CEO to helm Immunomedics, $IMMU Harout Semerjian is exiting the company after being confronted by “logistical” obstacles thrown up by the pandemic that made it impossible for him to move from London to carry out the job. And he’s getting a little over a million dollars in cash plus perks to grease the skids on the way out.

Word of the changeup arrived right after the market closed Wednesday.

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