Biotech boards bur­dened: Bridg­ing the suc­cess gap

Based on our nu­mer­ous con­ver­sa­tions with board mem­bers and CEOs, we sur­mise that biotech boards are fac­ing busy meet­ing agen­das with a mul­ti­tude of top­ics rang­ing from gov­er­nance, fi­nan­cial au­dits, and bud­get re­views to com­pen­sa­tion and board nom­i­na­tion work. While it is the job of the CEO to out­line strat­e­gy and plans for the busi­ness, the board is tasked with pres­sure test­ing those pro­pos­als to en­sure that they are sound. Of­ten boards do not have am­ple time to re­view ma­te­ri­als in ad­vance, there is in­ad­e­quate time for dis­cus­sion or prop­er de­bate dur­ing the meet­ing, and mem­bers lend their sup­port with­out hav­ing all the in­for­ma­tion in re­al time to as­sess un­der­ly­ing as­sump­tions.

Fill­ing The Suc­cess Gap

As biotech boards are faced with chal­lenges giv­en tech­ni­cal com­plex­i­ties and bi­na­ry out­comes, over­com­ing the Suc­cess Gap re­quires ex­per­tise, trans­paren­cy and de­bate, which are not eas­i­ly ac­com­plished.

The Suc­cess Gap is the chasm be­tween the lev­el of in­for­ma­tion, da­ta, an­a­lyt­ics and as­sess­ment that is pre­sent­ed to the board rel­a­tive to the kind of analy­sis and depth of un­der­stand­ing that must be pro­vid­ed to the board when it is mak­ing de­ci­sions. This is the gap be­tween well thought-out de­ci­sions and those that are made un­der time pres­sures or with im­per­fect in­for­ma­tion. In our con­ver­sa­tions and based on our re­search on the top­ic, it is ev­i­dent that many board mem­bers feel that they are not suf­fi­cient­ly knowl­edge­able about key dri­vers and are not able to get in­de­pen­dent in­for­ma­tion about the com­pa­ny. In many ways, the board is large­ly ed­u­cat­ed on the busi­ness by the CEO and is re­liant on the ac­cu­ra­cy, in­sights and ob­jec­tiv­i­ty of the pro­pos­als that are pre­sent­ed.

Time To Take “SOCK” Se­ri­ous­ly? Be­cause Strate­gic Op­er­a­tional Items Can Be The Dif­fer­ence Be­tween Suc­cess And Fail­ure

We ar­gue that hav­ing am­ple over­sight on strat­e­gy may be the most like­ly de­ter­mi­nant of fu­ture suc­cess or lack there­of. We ad­vo­cate that a new Strate­gic Oper­a­tions Coor­di­na­tion TasKforce (fond­ly named “SOCK” as a friend­ly form of SOX) should be re­quired for each board. This will be a sub­set of the board that will ex­am­ine in de­tail the mer­its of cer­tain projects, strate­gic ini­tia­tives, po­ten­tial deals or crit­i­cal op­er­a­tional con­sid­er­a­tions such as ma­jor clin­i­cal/sci­en­tif­ic de­ci­sions. This group will not han­dle these items in lieu of the board but would rather en­sure that the board is well pre­pared to dis­cuss these is­sues when they come up for a broad­er dis­cus­sion. In essence, the role of SOCK is to vet these in­puts ahead of time to bridge the Suc­cess Gap.

Un­ques­tion­ably this idea will be con­tro­ver­sial. But boards are al­ready hir­ing ex­ter­nal ex­perts to help with au­dit and com­pen­sa­tion among oth­er items, and we ad­vo­cate that the SOCK task­force should al­so be able to hire ex­ter­nal ex­perts to help en­sure that there is care­ful over­sight of de­ci­sions that can trans­late in­to suc­cess or fail­ure of the com­pa­ny.

Ques­tions For In­vestors And Boards To Keep In Mind To Over­come Mis­con­cep­tions

In­vestors in the biotech sec­tor do not al­ways have ac­cess to boards and many board mem­bers are not nec­es­sar­i­ly ex­pe­ri­enced with how in­vestors at­tribute val­ue to com­pa­nies in the pub­lic mar­ket. Not sur­pris­ing­ly, this can lead to some mis­con­cep­tions and con­fu­sion. There are sev­er­al ques­tions that may jump-start a con­ver­sa­tion to build un­der­stand­ing be­tween the two sides. In­vestors should con­sid­er how the board is struc­tured, its lev­el of in­de­pen­dence, and its lev­el of op­er­a­tional biotech ex­per­tise.

We pro­pose that board mem­bers keep a keen eye on how in­vestors eval­u­ate their com­pa­nies, what the val­ue propo­si­tion is rel­a­tive to com­pet­i­tive tech­nolo­gies or drugs and get a clear sense of the dri­vers of the val­ue cre­ation rel­a­tive to what in­vestors are look­ing for. In cas­es where there is a wide gap be­tween the in­ter­nal and ex­ter­nal view, get­ting a deep un­der­stand­ing of why there is ex­ter­nal skep­ti­cism may help the board and man­age­ment fill in those gaps. In cas­es where it is not pos­si­ble to fill the gaps, the board may want to con­sid­er what is miss­ing from the in­ter­nal view and whether key in­ter­nal as­sump­tions have been vet­ted ad­e­quate­ly.

Inside FDA HQ (File photo)

The FDA just ap­proved the third Duchenne MD drug. And reg­u­la­tors still don’t know if any of them work

Last year Sarepta hit center stage with the FDA’s controversial reversal of its CRL for the company’s second Duchenne muscular dystrophy drug — after the biotech was ambushed by agency insiders ready to reject a second pitch based on the same disease biomarker used for the first approval for eteplirsen, without actual data on the efficacy of the drug.

On Wednesday the FDA approved the third Duchenne MD drug, based on the same biomarker. And regulators were ready to act yet again despite the lack of efficacy data.

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Cell and Gene Con­tract Man­u­fac­tur­ers Must Em­brace Dig­i­ti­za­tion

The Cell and Gene Industry is growing at a staggering 30% CAGR and is estimated to reach $14B by 20251. A number of cell, gene and stem cell therapy sponsors currently have novel drug substances and products and many rely on Contract Development Manufacturing Organizations (CDMO) to produce them with adherence to stringent regulatory cGMP conditions. Cell and gene manufacturing for both autologous (one to one) and allogenic (one to many) treatments face difficult issues such as: a complex supply chain, variability on patient and cellular level, cell expansion count and a tight scheduling of lot disposition process. This complexity affects quality, compliance and accountability in the entire vein-to-vein process for critically ill patients.

Stéphane Bancel speaks to President Donald Trump at the White House meeting on March 2 (AP Images)

UP­DAT­ED: Mod­er­na of­fers steep dis­count in US sup­ply deal — but still takes the crown with close to $2.5B in vac­cine con­tracts

The US pre-order for Moderna’s Covid-19 vaccine is in.

Operation Warp Speed is reserving $1.525 billion for 100 million doses of Moderna’s Phase III mRNA candidate, rounding out to about $15 per dose — including $300 million in incentive payments for timely delivery. Given that Moderna has a two-dose regimen, it’s good for vaccinating 50 million people. The US government also has the option to purchase another 400 million doses for a total of $6.6 billion, or $16.5 per dose.

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Xuefeng Yu in Hong Kong, 2019 (Imaginechina via AP Images)

CanSi­no reaps $748M wind­fall from Shang­hai IPO — as it warns Covid-19 vac­cine won't be a huge mon­ey mak­er

CanSino began the year with a clear goal to secure a secondary listing on Shanghai’s STAR market. Then something more urgent came along: As a rising vaccine developer on a mission to bring global standard immunizations to China, it heeded the call to make a vaccine to protect against a virus that would paralyze the whole world.

Xuefeng Yu and his team managed to keep doing both.

More than a month after CanSino’s Covid-19 vaccine candidate is authorized for military use in China, the Hong Kong-listed company has made a roaring debut in Shanghai. It fetched $748 million (RMB$5.2 billion) by floating 24.8 million shares, and soared 88% on its first trading day.

Cal­lid­i­tas bets up to $102M on a biotech buy­out, snag­ging a once-failed PBC drug

After spending years developing its oral formulation of the corticosteroid budesonide, Sweden’s Calliditas now has its sights set on the primary biliary cholangitis field.

The company will buy out France-based Genkyotex, and it’s willing to bet up to €87 million ($102 million) that Genkyotex’s failed Phase II drug, GKT831, will do better in late-stage trials.

Under the current agreement, Calliditas $CALT will initially pay €20.3 million in cash for 62.7% of Genkyotex (or €2.80 a piece for 7,236,515 shares) in early October, then circle back for the rest of Genkyotex’s shares under the same terms. If nothing changes, the whole buyout will cost Calliditas €32.3 million, plus up to  €55 million in contingent rights.

Qi­a­gen in­vestors spurn Ther­mo Fish­er’s takeover of­fer, de­rail­ing a $12B+ deal

Thermo Fisher Scientific had announced an $11.5 billion takeover of Dutch diagnostics company Qiagen back in March, but the deal apparently did not sit well with Qiagen investors.

After getting hammered by critics who contended that Qiagen $QGEN was worth a lot more than what Thermo Fisher wanted to spend, investors turned thumbs down on the offer — derailing the buyout even after Thermo Fisher increased its offer to $12.6 billion in July. Qiagen’s share price has been boosted considerably by Covid-19 as demand for its testing kits surged.

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James Wilson, WuXi Global Forum at JPM20

FDA puts up a red light for Pas­sage Bio’s first gene ther­a­py pro­gram, de­lay­ing a pro­gram from James Wilson's group at Penn

Gene therapy pioneer James Wilson spearheaded animal studies demonstrating the potential of new treatments injected directly into the brain, looking to jumpstart a once-and-done fix for an extraordinarily rare disease called GM1 gangliosidosis in infants. His team at the University of Pennsylvania published their work on monkeys and handed it over to Passage Bio, a Wilson-inspired startup building a pipeline of gene therapies — with an IND for PBGM01 to lead the way.

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A lab technician works during research on coronavirus at Johnson & Johnson subsidiary Janssen Pharmaceutical in Beerse, Belgium, Wednesday, June 17, 2020. (Virginia Mayo/AP Images)

UP­DAT­ED: End­points News ranks all 28 play­ers in the Covid-19 vac­cine race. Here's how it stacks up to­day

(This piece was last updated on August 13. Endpoints News will continue to track the latest developments through the FDA’s marketing decisions.)

The 28 players now in or close to the clinical race to get a Covid-19 vaccine over the finish line are angling for a piece of a multibillion-dollar market. And being first — or among the leaders — will play a big role in determining just how big a piece.

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Bayer's Marianne De Backer with Endpoints founder John Carroll, Endpoints@JPM20 (Jeff Rumans for Endpoints News)

UP­DAT­ED: Hunt­ing a block­buster, Bay­er forges an $875M-plus M&A deal to ac­quire women’s health biotech

Bayer has dropped $425 million in cash on its latest women’s health bet, bringing a UK biotech and its non-hormonal menopause treatment into the fold.

KaNDy Therapeutics had its roots in GlaxoSmithKline, which spun out several neuroscience drugs into NeRRe Therapeutics back in 2012. Five years later the team created a new biotech to focus solely on NT-814 — which they considered “one of the few true innovations in women’s health in more than two decades.”

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