An­a­lysts as­sess the dam­age — and next steps — af­ter Re­gen­eron/Sanofi get slammed in court

A fed­er­al judge’s de­ci­sion to or­der Re­gen­eron and Sanofi to pull their PC­SK9 drug Pralu­ent from the mar­ket man­aged to stun some of the most griz­zled ob­servers of the biotech world.

These patent dis­putes are not at all un­usu­al and are al­most al­ways set­tled with a share of the roy­al­ties when there’s a case to be made. And the court ac­knowl­edged that cre­at­ing a mo­nop­oly here was not in the pub­lic’s best in­ter­est. But the judge came down square­ly for Am­gen, say­ing:

(P)lain­tiffs have demon­strat­ed ir­repara­ble harm, as well as the in­ad­e­qua­cy of mon­ey dam­ages.

In­vestors clear­ly didn’t like the sound of any of this. Re­gen­eron’s shares $REGN dropped 7% — about $3 bil­lion in mar­ket cap — and Sanofi saw its stock slide 3%, about the same in mar­ket cap. Am­gen’s stock, mean­while, jumped 4.5%.

The first re­sponse, which every­one an­tic­i­pat­ed, was word from Re­gen­eron/Sanofi that the part­ners would ap­peal the de­ci­sion. But the very re­al pos­si­bil­i­ty ex­ists that an ap­peals court may not be quick to over­turn a rul­ing that came af­ter Re­gen­eron/Sanofi’s los­ing ar­gu­ment was flat­tened by the court. And the pos­si­bil­i­ty that Am­gen will pre­vail here got some top an­a­lysts think­ing over­time about the im­pli­ca­tions and pos­si­ble out­comes. We’ve gath­ered a few be­low.

Ge­of­frey Porges, Leerink

Sales of these new cho­les­terol drugs have not been im­pres­sive. But de­spite the slow take­off, a num­ber of an­a­lysts still be­lieve that these drugs will grad­u­al­ly build up a mar­ket worth bil­lions. Ge­of­frey Porges at Leerink crunched the num­bers if Am­gen’s win sticks:

As­sum­ing that AMGN cap­tures the ma­jor­i­ty of the fu­ture ~$2bn US Pralu­ent sales and main­tains a sim­i­lar mar­gin struc­ture with these in­cre­men­tal sales, our DCF val­ue for AMGN in­creas­es by $13, or 8%. This rep­re­sents a cash flow in­crease of $600mm in 2020E grow­ing to a $950mm ben­e­fit in 2025E, which AMGN could use for con­tin­ued div­i­dend growth, share buy­backs, or fu­ture ac­qui­si­tions.

Bri­an Sko­r­ney, Baird an­a­lyst

Bri­an Sko­r­ney at Baird be­lieves a roy­al­ty deal is the most like­ly out­come. He writes:

Though the rul­ing does in­di­cate that if Sanofi/Re­gen­eron do not file to ap­peal the de­ci­sion with­in 30 days, Pralu­ent will be pulled from the mar­ket, we doubt that will be the re­al­i­ty in the long run. The U.S. Court sys­tem is clear­ly cre­at­ed to in­still com­pe­ti­tion, not cre­ate mo­nop­o­lies. The Judge’s opin­ion clear­ly notes that “the pub­lic gen­er­al­ly is bet­ter served by hav­ing a choice of avail­able treat­ments. There­fore, the court finds it­self be­tween a rock and a hard place…tak­ing an in­de­pen­dent­ly de­vel­oped, help­ful drug off the mar­ket does not ben­e­fit the pub­lic.” The Judge al­so clear­ly hopes fur­ther pro­ceed­ings with “en­cour­age the par­ties to each an ap­pro­pri­ate busi­ness res­o­lu­tion.” As a re­sult, we think a hefty set­tle­ment is like­ly, pos­si­bly to the tune of 20%+ roy­al­ties to Am­gen. As a re­sult, we are rais­ing our price tar­get to $165.

If it does go to an ap­peals court, Biren Amin at Jef­feries doesn’t like the odds for Sanofi/Re­gen­eron.

Re­call in Ju­ly, we wrote about AMGN’s fil­ing an ap­peal case WBIP v. Kohler in­volv­ing low-emis­sion house­boat gen­er­a­tors in which the Ap­peals Court va­cat­ed the judg­ment of the Dis­trict Court deny­ing WBIP a per­ma­nent in­junc­tion. In this case, the Dis­trict Court felt that a PI would de­prive the con­sum­ing pub­lic “a po­ten­tial­ly life-sav­ing prod­uct.” The Ap­peals Court ar­gued that the pub­lic in­ter­est ar­gu­ment alone was not suf­fi­cient to de­ny a PI for a life-sav­ing good and specif­i­cal­ly cit­ed phar­ma­ceu­ti­cal drugs as an ex­am­ple in its rul­ing. If the Ap­peals Court is con­sis­tent with the WBIP v. Kohler rul­ing, it would mean a low like­li­hood that an ap­peal will be grant­ed.

 

Oxitec biologist releases genetically modified mosquitoes in Piracicaba, Brazil in 2016 [credit: Getty Images]

In­trex­on unit push­es back against claims its GM mos­qui­toes are mak­ing dis­ease-friend­ly mu­tants

When the hysteria of Zika transmission sprang into the American zeitgeist a few years ago, UK-based Oxitec was already field-testing its male Aedes aegypti mosquito, crafted to possess a gene engineered to obliterate its progeny long before maturation.

But when a group of independent scientists evaluated the impact of the release of these genetically-modified mosquitoes in a trial conducted by Oxitec in Brazil between 2013 and 2015, they found that some of the offspring had managed to survive — prompting them to speculate what impact the survivors could have on disease transmission and/or insecticide resistance.

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Pur­due threat­ens to walk away from set­tle­ment, asks to pay em­ploy­ees mil­lions in bonus­es

There are two updates on the lawsuit against Purdue Pharma over its role in fueling the opioid epidemic, as the Sackler family threatens to walk away from their pledge to pay out $3 billion if a bankruptcy judge does not stop outstanding state lawsuits against them. At the same time, the company has asked permission to pay millions in bonuses to select employees.

Purdue filed for chapter 11 bankruptcy this week as part of its signed resolution to over 2,000 lawsuits. The deal would see the Sackler family that owns Purdue give $3 billion from their personal wealth and the company turned into a trust committed to curbing and reversing overdoses.

Aerial view of Genentech's campus in South San Francisco [Credit: Getty]

Genen­tech sub­mits a plan to near­ly dou­ble its South San Fran­cis­co foot­print

The sign is still there, a quaint reminder of whitewashed concrete not 5 miles from Genentech’s sprawling, chrome-and-glass campus: South Francisco The Industrial City. 

The city keeps the old sign, first erected in 1923, as a tourist site and a kind of civic memento to the days it packed meat, milled lumber and burned enough steel to earn the moniker “Smokestack of the Peninsula.” But the real indication of where you are and how much has changed both in San Francisco and in the global economy since a couple researchers and investors rented out an empty warehouse 40 years ago comes in a far smaller blue sign, resembling a Rotary Club post, off the highway: South San Francisco, The Birthplace of Biotech.

As Nas­daq en­rolls the fi­nal batch of 2019 IPOs, how have the num­bers com­pared to past years?

IGM Biosciences’ upsized IPO haul, coming after SpringWorks’ sizable public debut, has revved up some momentum for the last rush of biotech IPOs in 2019.

With 39 new listings on the books and roughly two more months to go before winding down, Nasdaq’s head of healthcare listings Jordan Saxe sees the exchange marking 50 to 60 biopharma IPOs for the year.

“December 15 is usually the last possible day that companies will price,” he said, as companies get ready for business talks at the annual JP Morgan Healthcare Conference in January.

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A fa­vorite in Alex­ion’s C-suite is leav­ing, and some mighty sur­prised an­a­lysts aren’t the least bit hap­py about it

Analysts hate to lose a biotech CFO they’ve come to trust and admire — especially if they’re being blindsided by a surprise exit.

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David Grainger [file photo]

'Dis­con­nect the bas­tard­s' — one biotech's plan to break can­cer cell­s' uni­fied de­fens­es

Chemotherapy and radiotherapy are the current gladiators of cancer treatment, but they come with well-known limitations and side-effects. The emergence of immunotherapy — a ferocious new titan in oncologist’s toolbox — takes the brakes off the immune system to kill cancer cells with remarkable success in some cases, but the approach is not always effective. What makes certain forms of cancer so resilient? Scientists may have finally pieced together a tantalizing piece of the puzzle, and a new biotech is banking on a new approach to fill the gap.

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While No­var­tis ban­ish­es Zol­gens­ma scan­dal scars — Bio­gen goes on a Spin­raza 'of­fen­sive'

While Novartis painstakingly works to mop up the stench of the data manipulation scandal associated with its expensive gene therapy for spinal muscular atrophy (SMA) Zolgensma— rival Biogen is attempting to expand the use of its SMA therapy, Spinraza. 

The US drugmaker $BIIB secured US approval for Spinraza for use in the often fatal genetic disease in 2016. The approval covered a broad range of patients with infantile-onset (most likely to develop Type 1) SMA. 

Jason Kelly. Mike Blake/Reuters via Adobe

Eye­ing big ther­a­peu­tic push, Gink­go bags $290M to build a cell pro­gram­ming em­pire

Ginkgo Bioworks is on a roll. Days after publicizing a plan to nurture new startups via partnerships with accelerators Y Combinator and Petri, the Boston biotech says it has raised another $290 million for its cell programming platform to reach further and wider.

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UP­DAT­ED: Speak­er Nan­cy Pelosi to un­veil bill for fed­er­al­ly ne­go­ti­at­ed drug prices

After months of buzz from both sides of the aisle, Speaker Nancy Pelosi will today introduce her plan to allow the federal government to negotiate prices for 250 prescription drugs, setting up a showdown with a pharmaceutical industry working overtime to prevent it.

The need to limit drug prices is a rare point of agreement between President Trump and Democrats, although the president has yet to comment on the proposal and will likely face pressure to back a more conservative option or no bill at all. Republican Senator Chuck Grassley is reportedly lobbying his fellow party members on a more modest proposal he negotiated with Democratic Senator Ron Wyden in July.