Dems fire off a sil­ly pric­ing bill; What's wrong with No­var­tis?

End­points as­sess­es the big bio­phar­ma sto­ries of the week, with a lit­tle added com­men­tary on what they mean for the in­dus­try.

The De­moc­rats field few good ideas in a drug pric­ing bill that is DOA

Any Sen­ate bill that re­lies on a long list of De­moc­rats for its sup­port doesn’t have much chance of be­com­ing law. But the Dems’ pro­posed law does help il­lus­trate what Par­ty lead­ers are think­ing these days, and where Pres­i­dent Trump may find com­mon ground if the ul­tra con­ser­v­a­tive wing of the Re­pub­li­can Par­ty can’t be brought back in­to the fold.

At the top of the list of things-phar­ma-com­pa­nies-hate is a re­quire­ment to break out de­vel­op­ment costs for each new drug. The un­end­ing de­bate over the cost of R&D gen­er­al­ly re­volves around glob­al R&D bud­gets com­pared to ap­provals. The De­moc­rats want to see some hard num­bers for each new pro­gram, prob­a­bly so they can start sham­ing man­u­fac­tur­ers for ex­ces­sive pric­ing.

Medicare ne­go­ti­a­tions are back, of course. Al­ready sup­port­ed by Trump, gov­ern­ment an­a­lysts have con­clud­ed that Medicare price ne­go­ti­a­tions as such wouldn’t like­ly cre­ate much in the way of sav­ings. That would take a for­mu­la­ry, and the threat of kick­ing off drugs priced too high, an idea which caus­es angst in phar­ma cir­cles.

In this new bill Medicare would be al­lowed to use VA prices or a price list from some oth­er agency if of­fi­cials can’t ne­go­ti­ate a “fair” price. We al­ready know from the Cal­i­for­nia bill that drug­mak­ers would fight this to the last lob­by­ist. There’s al­so a spe­cial ex­cise tax in the event a phar­ma com­pa­ny push­es up the price of drug more than med­ical in­fla­tion.

In­ter­est­ing­ly, there’s $2 bil­lion “prize” mon­ey for new an­tibi­otics. Giv­en the need here, and the low cost, it’s un­like­ly to spur much op­po­si­tion. And there’s $10 bil­lion to pay for drug tri­als at the NIH. Al­so, not so con­tro­ver­sial, but right now the fo­cus in the new ad­min­is­tra­tion is on cut­ting the NIH bud­get, not adding to it.

Bot­tom line: Aside from Medicare ne­go­ti­a­tions, there isn’t much here for a bi­par­ti­san ap­proach. It’s DOA, like most every­thing else in the Capi­tol these days.

Num­bers be­fore peo­ple. It’s the in­dus­try stan­dard.

Over the past week we’ve cov­ered sev­er­al new re­or­ga­ni­za­tion sto­ries. Am­gen led the way, with its planned move push­ing about 10% of its Thou­sand Oaks staff out of HQ. The cuts or re­lo­ca­tions in­volve mov­ing po­si­tions and re­searchers to the two big hubs of the Bay Area and Cam­bridge/Boston. Ver­tex, we learned from an SEC fil­ing, is shut­ter­ing its Cana­di­an R&D fa­cil­i­ty in a con­sol­i­da­tion. R&D sources tell us they’ve al­so been root­ing out pock­ets of the “Old Guard” in what are re­ferred to as “stealth lay­offs.” And Take­da gave us an ex­am­ple of the M&A va­ri­ety of job cuts, with their de­ci­sion to ax 180 of about 300 jobs at the new­ly ac­quired Ari­ad (with some axed staffers go­ing to a CRO).

With biotech val­u­a­tions be­ing what they are, it shouldn’t sur­prise any­one to see buy­ers cut as deep as they pos­si­bly can af­ter an ac­qui­si­tion. It’s one way to make num­bers work. That’s a sim­ple, though painful, re­al­i­ty.

Am­gen, for all its biotech his­to­ry, is now a Big Phar­ma and it will look for ef­fi­cien­cies wher­ev­er it can find them. Like all the Big Phar­mas, the on­ly con­stant in R&D is change.

Ver­tex gets a black star next to its name. Not for the Cana­di­an re­treat — every­body is con­sol­i­dat­ing in des­ig­nat­ed hubs — but for its re­fusal to be hon­est about the stealth lay­offs. You don’t have to be down­siz­ing to note when you are lay­ing peo­ple off from their jobs.

I was asked by a Roche em­ploy­ee at Nut­ley a few years ago what I thought about job se­cu­ri­ty in R&D. I told her I didn’t see much of it. The fact is com­pa­nies will do what’s in the best in­ter­est of their share­hold­ers every time. For rank-and-file em­ploy­ees, that takes a will­ing­ness to stay flex­i­ble and move as need­ed and de­sired.

The con­stant churn helps with new com­pa­ny cre­ation, but the me­chan­ics of this new re­al­i­ty are un­for­giv­ing at a per­son­al lev­el.

You can’t fight a trend like this. But you can de­ter­mine the best way to man­age a ca­reer in which job se­cu­ri­ty is a thing of the past — if it ever ex­ist­ed.

What’s wrong with No­var­tis?

I have no in­side knowl­edge why Karen Walk­er is leav­ing her se­nior po­si­tion in charge of cell ther­a­py man­u­fac­tur­ing for No­var­tis. Seat­tle is a nice place to live, or so I hear, and for all I know Seat­tle Ge­net­ics made her an of­fer she couldn’t refuse. That’s her busi­ness.

But her tim­ing, leav­ing two days af­ter the FDA ac­cept­ed No­var­tis’ ap­pli­ca­tion for its pi­o­neer­ing CAR-T, couldn’t have been worse for the com­pa­ny. Man­u­fac­tur­ing is a crit­i­cal el­e­ment in this field, more than most oth­ers, and she would have played a key role in its re­view.

It’s an­oth­er ex­am­ple of the ex­o­dus of tal­ent from No­var­tis over the past year. Some of that is self-in­flect­ed, like No­var­tis’ ques­tion­able de­ci­sion to dis­solve an in­de­pen­dent cell and gene ther­a­py unit, which led Oz Azam to leave the com­pa­ny. But bleed­ing tal­ent the way No­var­tis has is in­dica­tive of deep prob­lems.

The up­side here is that lots of these ex­pe­ri­enced ex­ecs — like Azam and Walk­er — are tak­ing new jobs in a boom­ing biotech sec­tor. But what’s wrong with No­var­tis?

Third Rock’s lat­est start­up launch­es in style, with an am­bi­tious set of goals

While turnover re­mains high, the in­dus­try re­mains vi­brant be­cause new com­pa­ny cre­ation in biotech is strong. One of our top sto­ries this week fo­cused on a clas­sic Third Rock start­up, Tan­go Ther­a­peu­tics. I en­joyed cov­er­ing the sci­ence they will be ex­plor­ing, as the team grows in­to the mid-20s.

This com­pa­ny has every­thing a start­up wants: Brains, mon­ey and am­bi­tion. And it’s carv­ing out new ter­ri­to­ry in drug de­vel­op­ment, go­ing big.

It’s com­pa­nies like these that make my job fun. Whether it works or not, it cer­tain­ly looks like they de­serve a shot. And it keeps the big hubs like Boston/Cam­bridge teem­ing with new ideas for old, im­pos­si­ble tar­gets. Thumbs up, in­deed.

Albert Bourla appears before the Senate Committee on Finance for a hearing on prescription drug pricing on Capitol Hill in Washington, DC, February 26, 2019. Chris Kleponis for CNP via AP Images

UP­DAT­ED: Pfiz­er CEO Al­bert Bourla is back in the M&A game, but why is he pay­ing $11.4B for Ar­ray?

Pfiz­er $PFE has cut short its time on the side­lines of bio­phar­ma M&A.

Mon­day morn­ing the phar­ma gi­ant un­veiled an $11.4 bil­lion deal to ac­quire Ar­ray Bio­Phar­ma, beef­ing up its on­col­o­gy work and adding a new re­search hub in Boul­der, Col­orado to its glob­al op­er­a­tions.

At $48 a share, Ar­ray $AR­RY in­vestors will be get­ting a 62% pre­mi­um off the Fri­day close of $29.59.

Pfiz­er, which has strug­gled to gain all the up­side promised in past buy­outs like Medi­va­tion, high­light­ed the ac­qui­si­tion of 2 ap­proved drugs in the deal — Braftovi (en­co­rafenib) and Mek­tovi (binime­tinib).

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Gene ther­a­py R&D deals turn red hot as Big Phar­ma steps up to play

This September will mark the 20th anniversary of the death of Jesse Gelsinger, a young man suffering from X-linked genetic disease of the liver. He was killed in a gene therapy study conducted by Penn’s James Wilson, and the entire field endured a lengthy deep freeze as the field grappled with the safety issues inherent in the work.

Some thought gene therapy R&D would never survive. But it did. And this year marked a landmark approval for Zolgensma, a new gene therapy for spinal muscular atrophy Novartis priced at $2.1 million.

“Gene therapy is the hottest item on the block now. But there was a time when we first got into this trial, where there wasn’t a person in the world who believed that gene therapy would work. We have to remember that,” noted gene therapy investigator Jerry Mendell told SMA News Today.

We’re still right on the pioneering frontier when it comes to getting approvals for gene therapies and launching marketing campaigns with the European green light for bluebird's leading program last Friday underscoring the nascent nature of the field. But gene therapy R&D is booming, and has been for several years now.

The rapid growth of gene therapy clinical development is well known, but we decided to put some numbers on it, to quantify what’s going on. DealForma chief Chris Dokomajilar took a lot over the past 10 years, as the number of deals, R&D partnerships and buyouts steadily gained steam, spiking last year and on track to maintain the surge in 2019.

The upfronts and totals for the dollars on deals so far in 2019 is already close to the 2018 mark, underscoring a new phase of negotiations as the major players step up to gain a piece of the late-stage and commercial action.

Once again, we’re looking at an “overnight” biotech success story, decades in the making.

At some point, that may start to brake the numbers we’re seeing. But for now, as rivals line up to compete for frontline prominence across a range of diseases, the arrows are all pointed north.

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A uni­corn stalks Wall Street in search of IPO cash; CASI Phar­ma in-li­cens­es CD19 ther­a­py from Chi­na’s Ju­ven­tas

→ A herd of up­start biotechs will look to Wall Street for some ma­jor wind­falls this week as a burst of new of­fer­ings con­tin­ues to feed cash in­to the R&D sys­tem. To­day we learned that Bridge­Bio will look to raise in the neigh­bor­hood of $225 mil­lion by of­fer­ing 15 mil­lion shares for $14 to $16 each. And they have a string of joint bookrun­ners: J.P. Mor­gan, Gold­man Sachs, Jef­feries, SVB Leerink, KKR, Piper Jaf­fray, Mizuho Se­cu­ri­ties, BMO Cap­i­tal Mar­kets and Ray­mond James. If suc­cess­ful, Bridge­Bio will emerge with a mar­ket cap of around $1.7 bil­lion. There are 5 biotechs look­ing to IPO this week, in­clud­ing Akero and Pre­vail.

UP­DAT­ED: Sanofi Gen­zyme deserts gene ther­a­py de­vel­op­er Voy­ager Ther­a­peu­tics

While gene ther­a­py com­pa­nies re­joice as the sec­tor gains trac­tion with ap­provals and a flur­ry of M&A ac­tiv­i­ty, one play­er is feel­ing the heat.

Back in 2015, Voy­ager Ther­a­peu­tics joined forces with Sanofi Gen­zyme in a deal worth up to $845 mil­lion ($100 mil­lion up­front + a po­ten­tial $745 mil­lion in mile­stones) to co-de­vel­op gene ther­a­pies for se­vere cen­tral ner­vous sys­tem dis­or­ders. But two years lat­er, the French drug­mak­er re­treat­ed, elect­ing to not pick up the op­tion to work on Voy­ager’s Parkin­son’s dis­ease pro­gram. (Last year, the FDA dis­ap­point­ed Voy­ager, telling the com­pa­ny that it was not open to an ac­cel­er­at­ed fil­ing on the Parkin­son’s drug on the ba­sis of Phase II da­ta — in­stead of re­quir­ing an ad­di­tion­al piv­otal study.)

In­vestors fret as VBI's hep B vac­cine fails key sec­ondary PhI­II study goal

Sobered by mount­ing costs, Dy­navax $DVAX last month made the de­ci­sion to fo­cus all its re­sources on its 2017-ap­proved he­pati­tis B vac­cine Hep­lisav-B, which ri­vals and su­per­sedes the ef­fi­ca­cy and con­ve­nience pro­file of GSK’s $GSK es­tab­lished En­ger­ix-B. The Cal­i­for­nia-based com­pa­ny will be on the look­out for an­oth­er com­peti­tor — VBI Vac­cines, which on Mon­day un­veiled late-stage da­ta on its hep B vac­cine: Sci-B-Vac.

John Oyler, Founder & CEO of BeiGene, at the US-China Biopharma Innovation and Investment Summit in Shanghai on October 23, 2018; Credit: Endpoints News, PharmCube

UP­DAT­ED: As Bris­tol-My­ers/Cel­gene tie up loose ends, BeiGene pock­ets $150M from PD-1 breakup

As soon as Bristol-Myers Squibb announced its $74 billion buyout for Celgene, BeiGene emerged as a prominent example of a player whose pact with the big biotech could sour, as its PD-1 candidate seems to overlap with Opdivo. After six months of suspense, the partners say they are finally bringing the 2-year-old deal to an amicable end.

BeiGene $BGNE gets $150 million for the termination in addition to full global rights to tislelizumab. In 2017 Celgene had paid $263 million in upfront license fees to develop the PD-1 inhibitor for solid cancers in the US, Europe, Japan and the rest of the world outside Asia. It also threw in a $150 million equity investment in exchange for BeiGene handling its commercial operations — think Abraxane, Revlimid and Vidaza — in China.

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Exterior of the 1 million square foot Discovery Labs in Upper Merion, PA (PR Newswire)

Philadel­phia cham­pi­ons life sci­ences 'co-work­ing,' re­viv­ing for­mer GSK cam­pus in $500M makeover

In a boost to Philadel­phia’s thriv­ing life sci­ences scene, a for­mer Glax­o­SmithK­line cam­pus and a near­by site has been turned in­to what its de­vel­op­er calls “the largest cowork­ing ecosys­tem” for health­care com­pa­nies in the coun­try.

The Dis­cov­ery Labs, a com­pa­ny spawned by MLP Ven­tures, has se­lect­ed two lo­ca­tions in the King of Prus­sia area as the $500 mil­lion test case for its strat­e­gy of ac­quir­ing and con­vert­ing old phar­ma­ceu­ti­cal R&D fa­cil­i­ties world­wide. The sites add up to 1.64 mil­lion square feet.

Ted Love. HAVERFORD COLLEGE

Glob­al Blood Ther­a­peu­tics poised to sub­mit ap­pli­ca­tion for ac­cel­er­at­ed ap­proval, with new piv­otal da­ta on its sick­le cell dis­ease drug

Global Blood Therapeutics is set to submit an application for accelerated approval in the second-half of this year, after unveiling fresh data from a late-stage trial that showed just over half the patients given the highest dose of its experimental sickle cell disease drug experienced a statistically significant improvement in oxygen-wielding hemoglobin, meeting the study's main goal.

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Nick Leschly via Getty

UP­DAT­ED: 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.