Nick Leschly via Getty

Blue­bird shares sink as an­a­lysts puz­zle out $1.8M stick­er shock and an un­ex­pect­ed de­lay

Blue­bird bio $BLUE has un­veiled its price for the new­ly ap­proved gene ther­a­py Zyn­te­glo (Lenti­Glo­bin), which came as a big sur­prise. And it wasn’t the on­ly un­ex­pect­ed twist in to­day’s sto­ry.

With some an­a­lysts bet­ting on a $900,000 price for the β-tha­lassemia treat­ment in Eu­rope, where reg­u­la­tors pro­vid­ed a con­di­tion­al ear­ly OK, blue­bird CEO Nick Leschly said Fri­day morn­ing that the pa­tients who are suc­cess­ful­ly treat­ed with their drug over 5 years will be charged twice that — $1.8 mil­lion — on the con­ti­nent. That makes this drug the sec­ond most ex­pen­sive ther­a­py on the plan­et, just be­hind No­var­tis’ new­ly ap­proved Zol­gens­ma at $2.1 mil­lion, with an­a­lysts still wait­ing to see what kind of pre­mi­um can be had in the US.

Like No­var­tis, blue­bird will be set­ting it up as an in­stall­ment plan, with the charges spread out over 5 years as physi­cians eval­u­ate whether it’s work­ing or not. The com­pa­ny will charge 315,000 eu­ros a year. If it works, the an­nu­al pay­ments will con­tin­ue, Leschly said in a call to­day, “if not, they stop. It’s not rock­et sci­ence; it just makes sense.”

These new, high­er, num­bers will spur an­a­lysts to sit down and crunch the num­bers again for this drug. SVB Leerink es­ti­mat­ed peak sales of $800 mil­lion for the first in­di­ca­tion, with sick­le cell dis­ease tak­ing that in­to block­buster ter­ri­to­ry. 

But in­vestors didn’t warm up to the pre­sen­ta­tion for the biotech, which has a mar­ket cap of $6.5 bil­lion. Blue­bird shares slid 4.5% in ear­ly trad­ing Fri­day. By ear­ly af­ter­noon the stock was more than 5% in the red.

Leschly says blue­bird has es­tab­lished a clear “in­trin­sic” val­ue of $2.1 mil­lion — de­liv­er­ing 22 QALYs, or qual­i­ty-ad­just­ed life years — for the most suc­cess­ful cas­es, not­ing that their price re­flects a 15% dis­count on that fig­ure. But the biotech al­so looked at pro­vid­ing a one-time treat­ment that could de­liv­er a life­time of val­ue — with­out ac­tu­al­ly prov­ing just how long these ther­a­pies can be ef­fec­tive. And they pro­pose be­ing ful­ly paid in 5 years, leav­ing pay­ers to con­sid­er what hap­pens if it fails past that point.

An­oth­er point: This is a com­pli­cat­ed pro­ce­dure, which adds costs on top of the treat­ment ex­pense.

Then, in the ear­ly af­ter­noon, Cowen an­a­lyst Yaron Wer­ber got in­to the act, not­ing his sur­prise that blue­bird is de­lay­ing the launch in or­der to make some last minute changes to the man­u­fac­tur­ing process, which adds an ex­tra el­e­ment of risk for the biotech.

(T)he key un­ex­pect­ed news is that EMA has re­quest­ed amend­ments to the fi­nal drug prod­ucts spec­i­fi­ca­tions and to the man­u­fac­tur­ing pa­ra­me­ters. Hence this de­lays the launch and would re­move any sales in FY19 to ear­ly ’20. The good news is that it would en­able blue to on­board the qual­i­fied treat­ment cen­ters and help fur­ther prep for the launch. How­ev­er, un­ques­tion­ably this re­quest adds an el­e­ment of sur­prise and would re­quire blue to make a few mn­fg process changes ahead of launch which would al­so add some new risk.

Leschly care­ful­ly de­tailed how the com­pa­ny came up with its price and pay­ment mod­el, not­ing that the sys­tem is geared to cov­er­ing the cost of care de­liv­ered over a longterm ba­sis, rather than a po­ten­tial one-time event.

In mak­ing the case for the drug, blue­bird’s CEO used a health eco­nom­ics case, eval­u­at­ing the gains in life ex­pectan­cy and the qual­i­ty of life mea­sures. Leschly al­so specif­i­cal­ly ex­clud­ed the sav­ings from the ther­a­py Zyn­te­glo re­places.

“In prin­ci­ple, I ac­tu­al­ly think this is progress,” says Pe­ter Bach from the Memo­r­i­al Sloan Ket­ter­ing Can­cer Cen­ter, “I ac­tu­al­ly think it’s a good trend.”

But…

If they re­al­ly want to fol­low through with a rig­or­ous health eco­nom­ics case, says Bach, they should pub­lish their num­bers so pay­ers could take a care­ful look at how they ac­tu­al­ly stack up. Al­so, if they want­ed to be con­sis­tent, he adds, the com­pa­ny could start with a price that made sense based on the da­ta at hand, and then ad­just it as they find out more about how it works on a longterm ba­sis.

“In the old days you could come to mar­ket when you proved drugs work with dura­bil­i­ty. Now they come with un­sure dura­bil­i­ty, but they still want to charge at the up­per end.” And they’re get­ting the full pay­ment for a life­time ben­e­fit in the first 5 years, shift­ing the risk on­to pa­tients and pay­ers.

When it works, blue­bird bio’s gene ther­a­py for β-tha­lassemia has been shown to keep pa­tients trans­fu­sion free for up to 3.8 years, ac­cord­ing to an up­date to­day at the big EHA meet­ing. But even some Wall Street an­a­lysts are hav­ing trou­ble with the price, as well as the mar­ket ex­pec­ta­tions. Piper Jaf­fray’s Tyler Van Bu­ren:

(B)ased on con­sen­sus es­ti­mates, the Street is mod­el­ing that blue­bird trans­plants thou­sands of pa­tients with Zyn­te­glo/Lenti­Glo­bin. Put sim­ply, this is a dis­con­nect that is im­pos­si­ble for us to rec­on­cile. We al­so be­lieve that the $1.8MM price tag of Zyn­te­glo is hard to jus­ti­fy giv­en the $2.1MM comp of Zol­gens­ma, which treats chil­dren with a cer­tain out­come of death, as op­posed to a pop­u­la­tion where the ma­jor­i­ty of pa­tients are ad­e­quate­ly main­tained on trans­fu­sions.

And this is from SVB Leerink’s Mani Foroohar:

Like any cell ther­a­py, ‘process is the prod­uct’ for Zyn­te­glo, and whether the ul­ti­mate com­mer­cial prod­uct will live up to the clin­i­cal da­ta seen to date is un­clear due to nec­es­sary man­u­fac­tur­ing changes — in­creas­ing the risk to the 80% of rev­enue/pa­tient at-risk un­der a 5-yr val­ue based con­tract. More con­cern­ing is that BLUE was un­able to ex­e­cute on the man­u­fac­tur­ing process de­vel­op­ment that is the crit­i­cal core com­pe­ten­cy of any cell ther­a­py fran­chise, per­haps rais­ing ques­tions on the com­pa­ny’s abil­i­ty to hit stat­ed time­lines for many of its pro­grams.

The dev­il, as al­ways, is in the da­ta.

Here’s the lat­est from blue­bird $BLUE: While 8 of 10 pa­tients with a less se­vere form of the dis­ease re­main trans­fu­sion-free in the Phase I/II study used for the reg­u­la­to­ry sub­mis­sions, it’s not a sure thing. And in an­oth­er group of 8 pa­tients with a β0/β0 geno­type, on­ly 3 were trans­fu­sion in­de­pen­dent.

Those re­sults now ex­tend over to the Phase III tri­al, where 4 of 5 pa­tients with­out the β0/β0 geno­type are trans­fu­sion-free. One evalu­able pa­tient with the more se­vere form of the dis­ease achieved in­de­pen­dence from trans­fu­sions, and 5 pa­tients had stopped trans­fu­sions for at least three months.

That 3.8 years of trans­fu­sion in­de­pen­dence is crit­i­cal for blue­bird.

These dis­cus­sions by the pi­o­neers in the field will prove tremen­dous­ly in­flu­en­tial for the rest of the field, lock­ing in price ranges and pay­ment plans that — if they work — may well dic­tate the num­bers for every­one else. 

On the heels of promis­ing MCL da­ta, Kite hus­tles its 2nd CAR-T to the FDA as the next big race in the field draws to the fin­ish line

Three days after Gilead’s Kite subsidiary showed off stellar data on their number 2 CAR-T KTE-X19 at ASH, the executive team has pivoted straight to the FDA with a BLA filing and a shot at a near-term approval.

In a small, 74-patient Phase II trial reported out at the beginning of the week, investigators tracked a 93% response rate with two out of three mantle cell lymphoma patients experiencing a complete response.

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Paul Hudson, Getty Images

UP­DAT­ED: Sanofi CEO Hud­son lays out new R&D fo­cus — chop­ping di­a­betes, car­dio and slash­ing $2B-plus costs in sur­gi­cal dis­sec­tion

Earlier on Monday, new Sanofi CEO Paul Hudson baited the hook on his upcoming strategy presentation Tuesday with a tell-tale deal to buy Synthorx for $2.5 billion. That fits squarely with hints that he’s pointing the company to a bigger future in oncology, which also squares with a major industry tilt.

In a big reveal later in the day, though, Hudson offered a slate of stunners on his plans to surgically dissect and reassemble the portfoloio, saying that the company is dropping cardio and diabetes research — which covers two of its biggest franchise arenas. Sanofi missed the boat on developing new diabetes drugs, and now it’s pulling out entirely. As part of the pullback, it’s dropping efpeglenatide, their once-weekly GLP-1 injection for diabetes.

“To be out of cardiovascular and diabetes is not easy for a company like ours with an incredibly proud history,” Hudson said on a call with reporters, according to the Wall Street Journal. “As tough a choice as that is, we’re making that choice.”

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As­traZeneca joins Mer­ck, Bris­tol-My­ers in Chi­na's check­point race as reg­u­la­tors OK first PD-L1

AstraZeneca has made a stride toward realizing its ambitions in China as regulators greenlight Imfinzi as a treatment for non-small cell lung cancer.

In particular, the PD-L1 agent is filling a void for immunotherapies in Stage III unresectable case, the company said, where the cancer has not spread to the rest of the body. It is to be used, with curative intent, in patients whose cancer hasn’t progressed following concurrent platinum-based chemotherapy and radiation therapy.

Cor­re­vio is putting it­self up on the auc­tion block af­ter FDA re­view pan­el points to an­oth­er re­jec­tion

For 13 years, the Canadian biotech Correvio tried to get the FDA to accept a heart drug since abandoned by Merck and Astellas. Yesterday, the agency’s outside experts voted 11-2 against approval, all but assuring another rejection for the atrial fibrillation compound vernakalant.

And today Correvio announced that Correvio may soon be no more. The company said it is looking to sell itself as its stock plummets into penny-stock territory $CORV and its potential moneymaker sputters once more.

Psilocybin mushrooms (via The Denver Post)

In a key step for psy­che­del­ic re­search, mag­ic mush­room com­pound clears first clin­i­cal safe­ty hur­dle

Exasperated with the often-ineffective existing slate of antidepressants, COMPASS Pathways set up shop in London 2016 — and made a beeline for psilocybin, the psychoactive ingredient in magic mushrooms.

On Wednesday, the startup said its man-made version of the chemical — which is illegal across geographies in its natural fungi form — had been well-tolerated in an early-stage, placebo-controlled trial in 89 healthy volunteers.

Al­pham­ab On­col­o­gy rounds out HKEX's sec­ond biotech IPO year with $230M raise and high lo­cal in­ter­est

Alphamab Oncology has inspired a surge of local interest in what will likely be the Hong Kong Stock Exchange’s last biotech run of the year, pricing its IPO on the high end of the range and raising over $230 million (HK$1.83 billion).

After rejigging the offering structure and making up to 50% available for enthusiastic local investors, the biotech sold 179.4 million shares at $1.31 (HK$10.2) and saw its stock rise to $1.77 ($13.8) on the first day of trading.

For sale: Long-act­ing PhI­II GLP-1 di­a­betes drug that’s way be­hind ri­vals, now spurned by Sanofi

Almost exactly 4 years ago Sanofi came to the bargaining table with South Korea’s Hanmi bearing $434 million dollars in cash and offering about $4 billion in milestones to in-license their once-weekly GLP-1 injectable. The pact was intended to revive their ailing diabetes division. Instead, it turned into a very expensive grave to mark the end of Sanofi’s R&D ambitions in the field.

Sanofi CEO Paul Hudson used efpeglenatide’s demise — while committing to paying hundreds of millions of more dollars to push it through 5 late-stage studies — as a marker of the company’s determination to stay focused on first and best-in-class drugs.

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What does $6.9B buy these days in on­col­o­gy R&D? As­traZeneca has a land­mark an­swer

Given the way the FDA has been whisking through new drug approvals months ahead of their PDUFA date, AstraZeneca and their partners Daiichi Sankyo may not have to wait until Q2 of next year to get a green light on trastuzumab deruxtecan (DS-8201).

The pharma giant this morning played their ace in the hole, showing off why they were willing to commit to a $6.9 billion deal — with $1.35 billion in a cash upfront — to partner on the drug.

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Parkin­son's trans­plants emerge as stem cell pi­o­neer Jeanne Lor­ing joins R&D race

Jeanne Loring hadn’t studied Parkinson’s in 22 years when she got an email from a local neurologist.

The neurologist, Melissa Houser, didn’t know Loring had ever published on the disease. She was just looking for a stem cell researcher who might hear her out. 

“I think I was just picked out of a hat,” Loring told Endpoints News. 

At a meeting in Loring’s Scripps Research office, Houser and a Parkinson’s nurse practitioner, Sherrie Gould, asked her why there was so much research done in stem cell transplants for other neurodegenerative diseases but not Parkinson’s. They wanted to know if she would work on one.