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.

A New Fron­tier: The In­ner Ear

What happens when a successful biotech venture capitalist is unexpectedly diagnosed with a chronic, life-disrupting vertigo disorder? Innovation in neurotology.

That venture capitalist was Jay Lichter, Ph.D., and after learning there was no FDA-approved drug treatment for his condition, Ménière’s disease, he decided to create a company to bring drug development to neurotology. Otonomy was founded in 2008 and is dedicated to finding new drug treatments for the hugely underserved community living with balance and hearing disorders. Helping patients like Jay has been the driving force behind Otonomy, a company heading into a transformative 2020 with three clinical trial readouts: Phase 3 in Ménière’s disease, Phase 2 in tinnitus, and Phase 1/2 in hearing loss. These catalysts, together with others in the field, highlight the emerging opportunity in neurotology.
Otonomy is leading the way in neurotology
Neurotology, or the treatment of inner ear neurological disorders, is a large and untapped market for drug developers: one in eight individuals in the U.S. have moderate-to-severe hearing loss, tinnitus or vertigo disorders such as Ménière’s disease.1 With no FDA-approved drug treatments available for these conditions, the burden on patients—including social anxiety, lower quality of life, reduced work productivity, and higher rates of depression—can be significant.2, 3, 4

Patrik Jonsson, the president of Lilly Bio-Medicines

Who knew? Der­mi­ra’s board kept watch as its stock price tracked Eli Lil­ly’s se­cret bid­ding on a $1.1B buy­out

In just 8 days, from December 6 to December 14, the stock jumped from $7.88 to $12.70 — just under the initial $13 bid. There was no hard news about the company that would explain a rise like that tracking closely to the bid offer, raising the obvious question of whether insider info has leaked out to traders.

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Ab­b­Vie do­nates $1M+ of the HIV drug that Chi­na is now rec­om­mend­ing for coro­n­avirus treat­ment

AbbVie is donating more than $1 million worth of an HIV drug to help combat the fast-spreading coronavirus outbreak in China, the company announced on Friday.

China’s National Health Commission has suggested Aluvia, a pill containing lopinavir and ritonavir, as one of two possible treatments for the symptoms of the virus currently known as 2019-nCoV in the absence of effective antiviral medications. The other part is nebulized alpha-interferon.

Ab­b­Vie and Al­ler­gan di­vesti­tures are in, and an old As­traZeneca drug comes home

When AbbVie announced their $63-billion Allergan acquisition last year, executives acknowledged the two companies would have to divest some drugs to satisfy regulators. The two main assets in discussion have now been sold off – and one of them is coming home.

AstraZeneca will acquire brazikumab, Allergan’s late-stage IL-23 candidate for Crohn’s disease and ulcerative colitis. The drug was originally developed by AstraZeneca’s defunct subsidiary MedImmune, in collaboration with Amgen. Allergan licensed it for $250 million upfront and $1.27 billion in milestones.

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As­traZeneca makes case for use of blood thin­ner Bril­in­ta in stroke pa­tients

AstraZeneca’s extravagant projections for its clot fighter Brilinta may have fizzled in the face of underwhelming trial data — but a new pivotal study is set to expand its use substantially.

On Monday, the British drugmaker said the drug, when taken in conjunction with aspirin, induced a statistically significant reduction in the risk of the primary composite endpoint of stroke and death, compared to aspirin alone, in 11,000 patients that have suffered minor acute ischaemic stroke or a high-risk transient ischemic attack (TIA).

Samantha Truex (file photo)

Bruce Booth and Saman­tha Truex's lat­est ven­ture aims just above Hu­mi­ra

In 2000, about a year after the first trial data on Humira came out, a Japanese team identified a new gene that appeared to prevent GI cancer in mice: gasdermin, they called it, after the particular proteins it expressed.

Over the next decade-and-a-half, researchers found five more genes in the same family – often identified as gasdermin A, B, C, D, E and F – and yet their purpose baffled scientists. Mutations in appeared to make mice bald (alopecia), but deleting it had no effect. Mutations in F and A were linked to deafness. Mutant E caused human cells to self-destruct.

“The exact biological function of these proteins remained unknown for more than 15 years,” three of the field’s top researchers wrote in a  Nature review in November.

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FDA’s golodirsen CRL: Sarep­ta’s Duchenne drugs are dan­ger­ous to pa­tients, of­fer­ing on­ly a small ben­e­fit. And where's that con­fir­ma­to­ry tri­al?

Back last summer, Sarepta CEO Doug Ingram told Duchenne MD families and investors that the FDA’s shock rejection of their second Duchenne MD drug golodirsen was due to some concerns regulators raised about the risk of infection and the possibility of kidney toxicity. But when pressed to release the letter for all to see, he declined, according to a report from BioPharmaDive, saying that kind of move “might not look like we’re being as respectful as we’d like to be.”

He went on to assure everyone that he hadn’t misrepresented the CRL.

But Ingram’s public remarks didn’t include everything in the letter, which — following the FDA’s surprise about-face and unexplained approval — has now been posted on the FDA’s website and broadly circulated on Twitter early Wednesday.

The CRL raises plenty of fresh questions about why the FDA abruptly decided to reverse itself and hand out an OK for a drug a senior regulator at the FDA believed — 5 months ago, when he wrote the letter — is dangerous to patients. It also puts the spotlight back on Sarepta $SRPT, which failed to launch a confirmatory study of eteplirsen, which was only approved after a heated internal controversy at the FDA. Ellis Unger, director of CDER’s Office of Drug Evaluation I, notes that study could have clarified quite a lot about the benefit and risks associated with their drugs — which can cost as much as a million dollars per patient per year, depending on weight.

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Aymeric Le Chatelier, Ipsen

A $1B-plus drug stum­bles in­to an­oth­er big PhI­II set­back — this time flunk­ing fu­til­i­ty test — as FDA hold re­mains in ef­fect for Ipsen

David Meek

At the time Ipsen stepped up last year with more than a billion dollars in cash to buy Clementia and a late-stage program for a rare bone disease that afflicts children, then CEO David Meek was confident that he had put the French biotech on a short path to a mid-2020 launch.

Instead of prepping a launch, though, the company was hit with a hold on the FDA’s concerns that a therapy designed to prevent overgrowth of bone for cases of fibrodysplasia ossificans progressiva might actually stunt children’s growth. So they ordered a halt to any treatments for kids 14 and under. Meek left soon after to run a startup in Boston. And today the Paris-based biotech is grappling with the independent monitoring committee’s decision that their Phase III had failed a futility test.

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Roche's check­point play­er Tecen­triq flops in an­oth­er blad­der can­cer sub­set

Just weeks after Merck’s star checkpoint inhibitor Keytruda secured FDA approval for a subset of bladder cancer patients, Swiss competitor Roche’s Tecentriq has failed in a pivotal bladder cancer study.

The 809-patient trial — IMvigor010 — tested the PD-L1 drug in patients with muscle-invasive urothelial cancer (MIUC) who had undergone surgery, and were at high risk for recurrence.

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