Bat­tered by le­gal ex­pens­es, opi­oid drug­mak­er In­sys files for bank­rupt­cy days af­ter $225M deal to set­tle gov­ern­ment probes

To no­body’s sur­prise, con­tro­ver­sial opi­oid drug­mak­er In­sys is fil­ing for bank­rupt­cy.

John Kapoor In­sys

Last week, the com­pa­ny $IN­SY agreed to pay $225 mil­lion to set­tle the US gov­ern­ment’s sep­a­rate crim­i­nal and civ­il in­ves­ti­ga­tions re­lat­ed to its fen­tanyl spray Sub­sys, about a month af­ter its founder and for­mer se­nior ex­ec­u­tive team were found guilty by a fed­er­al ju­ry of rack­e­teer­ing. Founder John Kapoor and his four com­pa­tri­ots’ an­tics in­clud­ed brib­ing doc­tors to pre­scribe the po­tent, ad­dic­tive painkiller and dup­ing in­sur­ers in­to pay­ing for the dead­ly opi­oid drug.

The US De­part­ment of Jus­tice set­tle­ment com­pound­ed the stress on a fi­nan­cial­ly strained In­sys. Last month, the com­pa­ny in­di­cat­ed it was fac­ing a liq­uid­i­ty cri­sis trig­gered by the litany of law­suits it was sub­ject to, and in April, In­sys’ au­di­tor raised doubts on the drug­mak­er’s abil­i­ty to con­tin­ue as a go­ing con­cern.

“Af­ter con­duct­ing a thor­ough re­view of avail­able strate­gic al­ter­na­tives, we de­ter­mined that a court-su­per­vised sale process is the best course of ac­tion to max­i­mize the val­ue of our as­sets and ad­dress our lega­cy le­gal chal­lenges…” In­sys CEO An­drew Long said in a state­ment on Mon­day. The com­pa­ny’s shares $IN­SY sank about 46% in­to pen­ny stock ter­ri­to­ry at 71 cents in ear­ly morn­ing trad­ing.

The chap­ter 11 fil­ing will al­low for the pletho­ra of lit­i­ga­tion against In­sys to be pre­sent­ed be­fore a soli­tary judge who will de­ter­mine what each plain­tiff will re­ceive.

The firm will con­tin­ue to sell Sub­sys, while it looks for buy­ers for the spray and its oth­er as­sets. If In­sys is un­able to woo a Sub­sys suit­or in 90 days, the com­pa­ny will be com­pelled to stop mar­ket­ing it, ac­cord­ing to a June 5 agree­ment with the HHS. Sub­sys ac­count­ed for a bulk of $82 mil­lion in 2018 In­sys sales (to­tal loss for that year was about $124 mil­lion), down from $141 mil­lion in 2017 and a far cry from $242 mil­lion in 2016.

Af­ter re­view­ing In­sys’ court doc­u­ments, Er­ic Sny­der of NYC-based law firm Wilk Aus­lan­der found that the In­sys has 92 patents and 62 patent ap­pli­ca­tions pend­ing, mak­ing it dif­fi­cult to val­ue the com­pa­ny’s as­sets. “They say that they are seek­ing to con­duct an auc­tion sale of all of their as­sets on an ex­pe­dit­ed ba­sis, but they have yet to file a mo­tion seek­ing this au­thor­i­ty,” he said in an emailed state­ment.

“This case is very un­usu­al, be­cause they (In­sys) do not have a se­cured cred­i­tor/lender.  So, they are self-fund­ing the bank­rupt­cy. This is very ex­pen­sive and that is prob­a­bly the rea­son they mov­ing for an im­me­di­ate auc­tion, even though they have no “stalk­ing horse” (par­ties in con­tract) bid­ders,” added Sny­der, who serves as chair­man of his firm’s bank­rupt­cy de­part­ment.

In­sys is hard­ly the on­ly opi­oid drug mak­er in fi­nan­cial trou­ble. Pur­due Phar­ma — the mak­er of one of the most wide­ly abused pre­scrip­tion opi­oid painkiller Oxy­con­tin — is re­port­ed­ly con­sid­er­ing bank­rupt­cy. Mean­while, oth­er drug man­u­fac­tur­ers, dis­trib­u­tors and phar­ma­cies are al­so fac­ing hun­dreds of civ­il law­suits for their role in prop­a­gat­ing the opi­oid cri­sis.

“(T)here is lit­tle doubt that Pur­due, the mak­er of Oxy­con­tin, will be next. The po­ten­tial li­a­bil­i­ty and the stig­ma of its as­so­ci­a­tion with the drug over­comes any val­ue of the as­sets,” Sny­der said.

In­sys’ Sub­sys — which is made of fen­tanyl, the man-made opi­oid 50 times more po­tent than hero­in and 100 times more po­tent than mor­phine — was ap­proved in 2012 by the FDA for break­through can­cer pain. Pros­e­cu­tors charged the for­mer In­sys ex­ec­u­tives with in­flat­ing Sub­sys sales by brib­ing doc­tors to pre­scribe the drug to pa­tients with­out can­cer — in an elab­o­rate scheme that in­clud­ed win­ing and din­ing physi­cians, pay­ing them to speak at “ed­u­ca­tion­al events” — there­by fu­el­ing the rag­ing opi­oid cri­sis that kills 130 Amer­i­cans every day. Ju­rors at the tri­al were giv­en a front-row seat to the video en­gi­neered to train the com­pa­ny’s sales reps, in which two im­pec­ca­bly suit­ed men — os­ten­si­bly In­sys em­ploy­ees — rapped about com­pa­ny busi­ness strat­e­gy: “I love titra­tions. Yeah, that’s not a prob­lem. I got new pa­tients, and I got a lot of ‘em…If you want to be great, lis­ten to my voice. You can be great — but it’s your choice.”

Founder John Kapoor — and four mem­bers of the for­mer se­nior ex­ec­u­tive team — face up to 20 years in prison and will be sen­tenced in Sep­tem­ber.

Bat­tered by scan­dal, In­sys in re­cent years sharp­ened its fo­cus on cannabis-de­rived drug de­vel­op­ment, but even in that are­na its track record is trou­bling. In 2016, the Ari­zona-based com­pa­ny re­port­ed­ly do­nat­ed $500,000 to a cam­paign against the le­gal­iza­tion of cannabis in the state, out­rag­ing mar­i­jua­na ac­tivists who ac­cused the com­pa­ny of try­ing to sti­fle com­pe­ti­tion. That skep­ti­cism was war­rant­ed when the fol­low­ing March In­sys’ cannabi­noid oral so­lu­tion Syn­dros was resched­uled by the DEA — at the fed­er­al lev­el cannabis is strict­ly con­trolled in the same sched­ule LSD and hero­in is, and any de­rived prod­uct must be rel­e­gat­ed to low­er cat­e­go­ry be­fore it can be sold — and thus primed for launch.

Im­age: In­sys (Glass­door)

The FDA will hus­tle up an ex­pe­dit­ed re­view for As­traZeneca’s next shot at a block­buster can­cer drug fran­chise

AstraZeneca paid a hefty price to partner with Daiichi Sankyo on their experimental antibody drug conjugate for HER2 positive breast cancer. And they’ve been rewarded with a fast ride through the FDA, with a straight shot at creating another blockbuster oncology franchise.

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Sean Parker, AP

Sean Park­er helps cre­ate a CRISPRed cell ther­a­py 2.0 play — and he’s got a high-pro­file set of lead­ers on the team

You can rack up one more high-profile debut effort in the wave of activity forming around cell therapy 2.0. It’s another appealing Bay Area group that’s attracted some of the top hands in the business to a multi-year effort to create a breakthrough. And they have $85 million in hand to make that first big step to the clinic.

Today it’s Ken Drazan and the team at South San Francisco-based ArsenalBio that are coming from behind the curtain for a public bow, backed by billionaire Sean Parker and a collection of investors that includes Beth Seidenberg’s new venture investment operation based in LA.
Drazan — a J&J Innovation vet with a long record of entrepreneurial endeavors — exited the stage in 2018 when his last mission ended as he stepped aside as president of Grail. It wasn’t long, though, before he was helping out with a business plan for ArsenalBio that revolved around the work of a large group of interconnected scientists supported by the Parker Institute for Cancer Immunology.
The biotech started by putting together an “arsenal” of technologies aimed at making cell therapies for cancer much, much better than the rather crude first-generation drugs that hit the market from Novartis and Kite.
Their drugs have become the baseline against which all others are being measured.
“The technology set we’re developing is independent of the chassis,” Drazan tells me. “It doesn’t have to be autologous (extracted from the patient) or allogeneic (off the shelf). It doesn’t have to be a T cell, it could be a B cell.” But they are starting out on the autologous side, where they have the most knowledge and insight into manufacturing techniques.
It also doesn’t have to be close to the clinic.
Drazan expects the biotech will be working its way through preclinical operations for “a few years,” with enough money from the $85 million launch round to get into humans.
By today’s superheated fundraising standards, that’s not a huge amount of cash. Lyell, another cell therapy 2.0 startup we featured last week, raised $600 million in a year, including a big chunk of cash from GlaxoSmithKline. Drazan is interested in dealmaking as well, but he also knows he has the cash necessary to support the company for a good run — a key part of what it takes to bring together a stellar team of top players.

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Eli Lil­ly’s first PhI­II show­down for their $1.6B can­cer drug just flopped — what now?

When Eli Lilly plunked down $1.6 billion in cash to acquire Armo Biosciences a little more than a year ago, the stars seemed aligned in its favor. The jewel in the crown they were buying was pegilodecakin, which had cleared the proof-of-concept stage and was already in a Phase III trial for pancreatic cancer.

And that study just failed.

Lilly reported this morning that their cancer drug flopped on overall survival when added to FOLFOX (folinic acid, 5-FU, oxaliplatin), compared to FOLFOX alone among patients suffering from advanced pancreatic cancer.

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Swamy Vijayan. Plexium

San Diego up­start de­buts dis­cov­ery en­gine that puts a twist to pro­tein degra­da­tion

For years, the idea of protein degradation — utilizing the cell’s natural garbage disposal system to mark problematic proteins for destruction — remained an elegant but technically difficult concept. But now established as a promising clinical strategy, with major biopharma players such as Bayer, Gilead and Vertex trying to grab a foothold via partnership deals, a San Diego startup is looking to exploit it and push its limits.

CSL ac­cus­es ri­val Pharm­ing of par­tic­i­pat­ing in a scheme to rip off IP on HAE while re­cruit­ing se­nior R&D staffer

Pharming has landed in the middle of a legal donnybrook after recruiting a senior executive from a rival R&D team at CSL. The Australian pharma giant slapped Pharming with a lawsuit alleging that the Dutch biotech’s new employee, Joseph Chiao, looted a large cache of proprietary documents as he hit the exit. And they want it all back.
Federal Judge Juan Sanchez in the Eastern District Pennsylvania court issued an injunction on Tuesday prohibiting Chiao from doing any work on HAE or primary immune deficiency in his new job and demanding that he return any material from CSL that he may have in his possession. And he wants Pharming to tell its employees not to ask for any information on the forbidden topics.
For its part, Pharming fired off an indignant response this morning denying any involvement in extracting any kind of IP from CSL, adding that it’s cooperating in the internal probe that CSL has underway.

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Hal Barron, GSK's president of R&D and CSO, speaks to Endpoints News founder and editor John Carroll in London at Endpoints' #UKBIO19 summit on October 8, 2019

[Video] Cel­e­brat­ing tri­al fail­ures, chang­ing the cul­ture and al­ly­ing with Cal­i­for­nia dream­ers: R&D chief Hal Bar­ron talks about a new era at GSK

Last week I had a chance to sit down with Hal Barron at Endpoints’ #UKBIO19 summit to discuss his views on R&D at GSK, a topic that has been central to his life since he took the top research post close to 2 years ago. During the conversation, Barron talked about changing the culture at GSK, a move that involves several new approaches — one of which involves celebrating their setbacks as they shift resources to the most promising programs in the pipeline. Barron also discussed his new alliances in the Bay Area — including his collaboration pact with Lyell, which we covered here — frankly assesses the pluses and minuses of the UK drug development scene, and talks about his plans for making GSK a much more effective drug developer.

This is one discussion you won’t want to miss. Insider and Enterprise subscribers can log-in to watch the video.

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Med­ical an­i­ma­tion: Mak­ing it eas­i­er for the site and the pa­tient to un­der­stand

Medical animation has in recent years become an increasingly important tool for conveying niche information to a varied audience, particularly to those audiences without expertise in the specialist area. Science programmes today, for example, have moved from the piece-to-camera of the university professor explaining how a complex disease mechanism works, to actually showing the viewer first-hand what it might look like to shrink ourselves down to the size of an ant’s foot, and travel inside the human body to witness these processes in action. Effectively communicating a complex disease pathophysiology, or the novel mechanism of action of a new drug, can be complex. This is especially difficult when the audience domain knowledge is limited or non-existent. Medical animation can help with this communication challenge in several ways.
Improved accessibility to visualisation
Visualisation is a core component of our ability to understand a concept. Ask 10 people to visualise an apple, and each will come up with a slightly different image, some apples smaller than others, some more round, some with bites taken. Acceptable, you say, we can move on to the next part of the story. Now ask 10 people to visualise how HIV’s capsid protein gets arranged into the hexamers and pentamers that form the viral capsid that holds HIV’s genetic material. This request may pose a challenge even to someone with some virology knowledge, and it is that inability to effectively visualise what is going on that holds us back from fully understanding the rest of the story. So how does medical animation help us to overcome this visualisation challenge?

UP­DAT­ED: Alex­ion pays $930M to buy out Achillion and its promis­ing com­pan­ion drug to Soliris

After a series of stock-crunching setbacks over the years, Achillion enjoyed a turn in the sun a few weeks ago as the FDA blessed their lead drug danicopan (ACH-4471) — a complementary therapy for PNH patients taking Alexion’s Soliris — with a breakthrough drug designation after taking a look at some solid supporting Phase II data.

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The $102B club: The top 15 R&D spenders in the glob­al bio­phar­ma busi­ness — 2019 edi­tion

Over the past few years, the deluge of capital into biotech has helped lead to a dramatic shift in focus on new drug approvals, as startups are now able to raise enough cash to get through a pivotal and onto the market. But the top 15 players still account for $102 billion in spending, and their successes and failures continue to determine just how productive the industry is.

Recently we’ve seen a number of new R&D chiefs take their places at the Big 15, either setting the stage for a more focused R&D strategy — often playing more heavily in oncology. That’s true for AstraZeneca, which has had some landmark successes, and GSK, which is in search of its own turnaround in pharma R&D. HIV and vaccines are separate from that group, now led by Hal Barron.

I’ve made a point of watching their track record every year for more than a decade now. What follows is intended as a broad gauge of their activity. You don’t have to have a lot of major successes to score a winning record here, but it’s virtually impossible without a blockbuster or three in the pipeline.

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