EY: Post-boom biotech still has plen­ty of up­beat trends to boast about

If you just com­pare the top-line biotech num­bers for 2016 to 2015, you’d have good rea­son to de­spair. New drug ap­provals by the FDA plunged, net in­come for pub­lic biotechs cratered and to­tal cap­i­tal raised slid a stom­ach churn­ing 45%, ac­cord­ing to the fig­ures gath­ered by EY. Biotech fi­nanc­ing over­all dropped in 2016, for the first time since 2012.

Glen Gio­van­net­ti

So why are the an­a­lysts at EY — led by team leader Glen Gio­van­net­ti — so hap­py about last year’s per­for­mance?

Step back and look at the glob­al busi­ness over the past 15 years, as EY did for their an­nu­al Be­yond Bor­ders as­sess­ment, and you’ll see that even as the fig­ures year-over-year didn’t look great in every in­stance, they were gen­er­al­ly pos­i­tive — if not down­right bull­ish — com­pared to the pre-boom years.

Look­ing at es­tab­lished biotech cen­ters in the US and Eu­rope, EY con­clud­ed that net rev­enue surged 7% for the pub­lic crowd. The same com­pa­nies bid up their R&D gam­ble by 12% even as net in­come de­clined by slight­ly more than half and their col­lec­tive mar­ket cap sank 17%.

In­dus­try em­ploy­ment in the pub­lic sec­tor in­creased by 14%, ris­ing to 203,210. And while fi­nanc­ing was way down year over year, it was still the third best fig­ure EY has ever tracked as ven­ture in­vest­ing glob­al­ly con­tin­ues to im­press and new drug ap­provals this year surge back up.

EY an­a­lysts tracked 291 seed and Se­ries A biotech rounds in 2016 worth $3.6 bil­lion, just a half step be­hind 2015’s record spike of $3.8 bil­lion, with the VCs clear­ly com­mit­ted to fund­ing a new wave of up­starts in drug de­vel­op­ment.


Leav­ing out the biggest play­ers, New Eng­land biotechs raised a to­tal of $7.1 bil­lion in 2016, com­pared to $4.8 bil­lion in the Bay Area. Biotechs in main­land Chi­na, Japan, Sin­ga­pore, South Ko­rea and Tai­wan — rep­re­sent­ing an in­creas­ing­ly bois­ter­ous mar­ket in Asia —col­lec­tive­ly raised $2.5 bil­lion-plus in over­all fi­nanc­ing, even as more in­vestors in Asia got more deeply in­volved in back­ing US and Eu­ro­pean biotechs.

Like oth­ers in the big ac­count­ing world, EY says that the amount large phar­ma com­pa­nies are spend­ing on re­search is clear­ly un­sus­tain­able, if you look at what they’re get­ting out of it. And against that back­drop, pay­ers have ag­gres­sive­ly adopt­ed for­mu­la­ry con­trols aimed at ratch­et­ing back use of ex­pen­sive ther­a­pies.

But there’s noth­ing new about phar­ma’s poor ROI, un­der­scor­ing that the fun­da­men­tals are all in place to keep the in­dus­try grow­ing.

“This is nev­er go­ing away,” Gio­van­net­ti tells me. “There is go­ing to be pres­sure on pric­ing and val­ue.” But some­thing else isn’t go­ing away: “We’re get­ting old­er and we’re get­ting sick­er.” And no mat­ter how you slice it, Big Phar­ma still ur­gent­ly needs the in­no­va­tion that biotech pro­vides, which will in­evitably dri­ve more M&A in 2017.

EY’s ad­vice: Look to some new tech­nolo­gies to bend the curve on R&D pro­duc­tiv­i­ty and don’t stop be­liev­ing in biotech. All the noise out of Wash­ing­ton, DC on health­care re­form, big changes to the tax code and drug prices — as well as Brex­it in the UK — may best be ig­nored un­til some­thing con­crete emerges.

Per­haps John Mil­li­gan at Gilead said it best, notes Gio­van­net­ti: “I think that un­cer­tain­ty in Wash­ing­ton seems to be the norm in my 27 years here,” not­ed Mil­li­gan. Gilead has “learned to fil­ter that out and fo­cus on the things that are right for the com­pa­ny.”

Bot­tom line, says Gio­van­net­ti: “Stay the course and fil­ter out what you can’t con­trol.”

BiTE® Plat­form and the Evo­lu­tion To­ward Off-The-Shelf Im­muno-On­col­o­gy Ap­proach­es

Despite rapid advances in the field of immuno-oncology that have transformed the cancer treatment landscape, many cancer patients are still left behind.1,2 Not every person has access to innovative therapies designed specifically to treat his or her disease. Many currently available immuno-oncology-based approaches and chemotherapies have brought long-term benefits to some patients — but many patients still need other therapeutic options.3

GSK presents case to ex­pand use of its lu­pus drug in pa­tients with kid­ney dis­ease, but the field is evolv­ing. How long will the mo­nop­oly last?

In 2011, GlaxoSmithKline’s Benlysta became the first biologic to win approval for lupus patients. Nine years on, the British drugmaker has unveiled detailed positive results from a study testing the drug in lupus patients with associated kidney disease — a post-marketing requirement from the initial FDA approval.

Lupus is a drug developer’s nightmare. In the last six decades, there has been just one FDA approval (Benlysta), with the field resembling a graveyard in recent years with a string of failures including UCB and Biogen’s late-stage flop, as well as defeats in Xencor and Sanofi’s programs. One of the main reasons the success has eluded researchers is because lupus, akin to cancer, is not just one disease — it really is a disease of many diseases, noted Al Roy, executive director of Lupus Clinical Investigators Network, an initiative of New York-based Lupus Research Alliance that claims it is the world’s leading private funder of lupus research, in an interview.

Is a pow­er­house Mer­ck team prepar­ing to leap past Roche — and leave Gilead and Bris­tol My­ers be­hind — in the race to TIG­IT dom­i­na­tion?

Roche caused quite a stir at ASCO with its first look at some positive — but not so impressive — data for their combination of Tecentriq with their anti-TIGIT drug tiragolumab. But some analysts believe that Merck is positioned to make a bid — soon — for the lead in the race to a second-wave combo immuno-oncology approach with its own ambitious early-stage program tied to a dominant Keytruda.

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FDA de­lays de­ci­sion on No­var­tis’ po­ten­tial block­buster MS drug, wip­ing away pri­or­i­ty re­view

So much for a speedy review.

In February, Novartis announced that an application for their much-touted multiple sclerosis drug ofatumumab had been accepted and, with the drug company cashing in on one of their priority review vouchers, the agency was due for a decision by June.

But with June less than 48 hours old, Novartis announced the agency has extended their review, pushing back the timeline for approval or rejection to September. The Swiss pharma filed the application in December, meaning their new schedule will be nearly in line with the standard 10-month window period had they not used the priority voucher.

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Leen Kawas, Athira CEO (Athira)

Can a small biotech suc­cess­ful­ly tack­le an Ever­est climb like Alzheimer’s? Athi­ra has $85M and some in­flu­en­tial back­ers ready to give it a shot

There haven’t been a lot of big venture rounds for biotech companies looking to run a Phase II study in Alzheimer’s.

The field has been a disaster over the past decade. Amyloid didn’t pan out as a target — going down in a litany of Phase III failures — and is now making its last stand at Biogen. Tau is a comer, but when you look around and all you see is destruction, the idea of backing a startup trying to find complex cocktails to swing the course of this devilishly complicated memory-wasting disease would daunt the pluckiest investors.

Covid-19 roundup: Mod­er­na read­ies to en­ter PhI­II in Ju­ly, As­traZeneca not far be­hind; EU ready to ne­go­ti­ate vac­cine ac­cess with $2.7B fund

Moderna may soon add another first to the Covid-19 vaccine race.

In March, the mRNA biotech was the first company to put a Covid-19 vaccine into humans. Next month, they may become the first company to put their vaccine into the large, late-stage trials that are needed to prove whether the vaccine is effective.

In an interview with JAMA editor Howard Bauchner, NIAID chief Anthony Fauci said that a 30,000-person, Phase III trial for Moderna’s vaccine could start in July. The news comes a week after Moderna began a Phase II study that will enroll several hundred people.

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José Basel­ga finds promise in new class of RNA-mod­i­fy­ing can­cer tar­gets, lock­ing in 3 pre­clin­i­cal pro­grams with $55M

Having dived early into some of the RNA breakthroughs of the last decades — betting on Moderna’s mRNA tech and teaming up with Silence on the siRNA front — AstraZeneca is jumping into a new arena: going after proteins that modify RNA.

Their partner of choice is Accent Therapeutics, which is receiving $55 million in upfront payment to steer a selected preclinical program through to the end of Phase I. After AstraZeneca takes over, the Lexington, MA-based startup has the option to co-develop and co-commercialize in the US — and collect up to $1.1 billion in milestones in the long run. The deal also covers two other potential drug candidates.

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UP­DAT­ED: Es­ti­mat­ing a US price tag of $5K per course, remde­sivir is set to make bil­lions for Gilead, says key an­a­lyst

Data on remdesivir — the first drug shown to benefit Covid-19 patients in a randomized, controlled trial setting — may be murky, but its maker Gilead could reap billions from the sales of the failed Ebola therapy, according to an estimate by a prominent Wall Street analyst. However, the forecast, which is based on a $5,000-per-course US price tag, triggered the ire of one top drug price expert.

Pfiz­er’s Doug Gior­dano has $500M — and some ad­vice — to of­fer a cer­tain breed of 'break­through' biotech

So let’s say you’re running a cutting-edge, clinical-stage biotech, probably public, but not necessarily so, which could see some big advantages teaming up with some marquee researchers, picking up say $50 million to $75 million dollars in a non-threatening minority equity investment that could take you to the next level.

Doug Giordano might have some thoughts on how that could work out.

The SVP of business development at the pharma giant has helped forge a new fund called the Pfizer Breakthrough Growth Initiative. And he has $500 million of Pfizer’s money to put behind 7 to 10 — or so — biotech stocks that fit that general description.

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