First Cel­gene, now Gilead can’t ac­cu­rate­ly fore­cast drug sales rev­enue. How bad is this?

On the same day Cel­gene was get­ting shel­lacked af­ter cut­ting longterm rev­enue fore­casts for the com­pa­ny, Gilead man­aged to keep the in­vestor herd in a state of alarm with fresh ev­i­dence of the fast-de­te­ri­o­rat­ing mar­ket for hep C drugs.

Bri­an Sko­r­ney

Giv­en its dom­i­nant po­si­tion in HIV, Gilead was able to boost rev­enue for that big chunk of its busi­ness. But its hep C busi­ness de­clined $1.1 bil­lion for Q3 com­pared to the same pe­ri­od a year ago. What re­al­ly sent the mar­ket over­board was a move to trim the pro­ject­ed top end of an­nu­al sales while in­di­cat­ing that Q4 could be very painful, re­flect­ing price com­pe­ti­tion in the field.

Both com­pa­nies are blind­sid­ing the in­vest­ment com­mu­ni­ty af­ter be­ing un­able to pre­dict the near-term im­pact of ri­val pric­ing. For Gilead it’s in hep C, for Cel­gene it’s Ote­zla. What has been a re­li­able and con­fi­dent march up­wards to an of­ten un­cer­tain date with gener­ic com­pe­ti­tion is be­gin­ning to look like a dis­rup­tive era of far more ag­gres­sive price com­pe­ti­tion, which will have a va­ri­ety of ef­fects on bio­phar­ma man­age­ment as they work in a more con­strained en­vi­ron­ment.

What hap­pens to bio­phar­ma if Cel­gene’s ex­ec­u­tive crew starts to feel that they have to use more mon­ey for div­i­dends and less for deals?

For stocks, the im­me­di­ate ef­fect of a sud­den loss of faith was se­vere. Cel­gene’s shares $CELG end­ed down 16.4% for the day. Gilead, look­ing to rev up its new CAR-T busi­ness, saw shares $GILD slide more than 4% in pre-mar­ket trad­ing. And it could get a lot worse be­fore it gets bet­ter. Much of the mar­ket is trans­lat­ing that star­tling, un­ex­pect­ed turn of af­fairs in­to an in­dus­try-wide prob­lem that could bring down the whole sec­tor.

Ge­of­frey Porges

For some of the an­a­lysts, that un­der­ly­ing weak­ness was clear cause for alarm.

Baird’s Bri­an Sko­r­ney:

Even at the high end (of pro­jec­tions for Gilead), this calls for on­ly $1.36B in world­wide HCV sales in Q4 (com­pared to $2.2 bil­lion in Q3), an al­most 40% se­quen­tial de­cline, and a run rate of on­ly $5.0B-$6.0B in­to 2018. Con­sen­sus is cur­rent­ly mod­el­ing $7.9B in 2018 HCV sales. What we think is more con­cern­ing than just mar­ket share ero­sion is com­men­tary on the call around net pric­ing, which man­age­ment in­di­cat­ed is now sta­bi­liz­ing for all ther­a­pies around gt. 1 eight-week pric­ing. Head­ing in­to con­tract­ing for 2018, we aren’t en­cour­aged by the rhetoric here.

Umer Raf­fat:

I see a whole­sale re­set of 2018 and 2019 ex­pec­ta­tions based on to­day’s (Gilead) re­sults. My new EPS es­ti­mates are 12-22% be­low pub­lished con­sen­sus for next cou­ple of years.  The stock may like­ly go through a pe­ri­od of cool­ing off while Street process­es the num­bers.

Keep in mind that while Gilead has been man­ag­ing a fast-shrink­ing mar­ket in hep C, it still gets high marks for over­all per­for­mance. Cel­gene has been a dar­ling of in­vestors for years. But rep­u­ta­tions can turn on a dime these days.

Leerink’s Ge­of­frey Porges says that in one week we’ve seen Gilead and Cel­gene — two ma­jor league op­er­a­tors — un­able to re­li­ably fore­cast rev­enue 12 months out, “let alone con­vey­ing any con­fi­dence about the out­look 4 or 5 years in­to the fu­ture.”

Wall Street hates un­cer­tain­ty of any kind, and bio­phar­ma just de­liv­ered a dou­ble dose of nasty sur­pris­es.

UP­DAT­ED: In sur­prise switch, Bris­tol-My­ers is sell­ing off block­buster Ote­zla, promis­ing to com­plete Cel­gene ac­qui­si­tion — just lat­er

Apart from revealing its checkpoint inhibitor Opdivo blew a big liver cancer study on Monday, Bristol-Myers Squibb said its plans to swallow Celgene will require the sale of blockbuster psoriasis treatment Otezla to keep the Federal Trade Commission (FTC) at bay.

The announcement — which has potentially delayed the completion of the takeover to early 2020 — irked investors, triggering the New York-based drugmaker’s shares to tumble Monday morning in premarket trading.

Celgene’s Otezla, approved in 2014 for psoriasis and psoriatic arthritis, is a rising star. It generated global sales of $1.6 billion last year, up from the nearly $1.3 billion in 2017. Apart from the partial overlap of Bristol-Myers injectable Orencia, the company’s rival oral TYK2 psoriasis drug is in late-stage development, after the firm posted encouraging mid-stage data on the drug, BMS-986165, last fall. With Monday’s decision, it appears Bristol-Myers is favoring its experimental drug, and discounting Otezla’s future.

The move blindsided some analysts. Credit Suisse’s Vamil Divan noted just days ago:

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Novotech CEO Dr. John Moller

Novotech CRO Award­ed Frost & Sul­li­van Best Biotech CRO Asia-Pa­cif­ic 2019

Known in the in­dus­try as the Asia-Pa­cif­ic CRO, Novotech is now lead CRO ser­vices provider for the grow­ing num­ber of in­ter­na­tion­al biotechs se­lect­ing the re­gion for their stud­ies.

Re­flect­ing this Asia-Pa­cif­ic growth, Novotech staff num­bers are up 20% since De­cem­ber 2018 to 600 in-house clin­i­cal re­search peo­ple across a full range of ser­vices, across the re­gion.

Novotech’s ca­pa­bil­i­ties have been rec­og­nized by an­a­lysts like Frost & Sul­li­van, most re­cent­ly with the pres­ti­gious Asia-Pa­cif­ic CRO Biotech of the year award for best prac­tices in clin­i­cal re­search for biotechs for the fifth year. See oth­er awards here.

Bris­tol-My­ers star Op­di­vo fails sur­vival test in a matchup with Nex­avar aimed at shak­ing up the big HCC mar­ket

Bris­tol-My­ers Squibb has suf­fered an­oth­er painful set­back in its years-long quest to ex­pand the reach of Op­di­vo. The phar­ma gi­ant this morn­ing not­ed that their Check­mate-459 study com­par­ing Op­di­vo with Bay­er’s Nex­avar in front­line cas­es of he­pa­to­cel­lu­lar car­ci­no­ma — the most com­mon form of liv­er can­cer — failed to hit the pri­ma­ry end­point on over­all sur­vival.

This was a sig­nif­i­cant mile­stone in Bris­tol-My­ers’ tal­ly of PD-1 cat­a­lysts this year. Nex­avar (so­rafenib) has been the stan­dard of care in front­line HCC for the past decade, though Op­di­vo has been mak­ing head­way in sec­ond-line HCC cas­es, where it’s go­ing toe-to-toe with Bay­er’s Sti­var­ga (re­go­rafenib) af­ter re­cent ap­provals shook up the mar­ket.

Suf­fer­ing No­var­tis part­ner Cona­tus is pack­ing it in on NASH af­ter a se­ries of un­for­tu­nate tri­al events

The NASH par­ty is over at No­var­tis-backed Cona­tus. And this time they’re turn­ing off the lights.

More than 2 years af­ter No­var­tis sur­prised the biotech in­vest­ment com­mu­ni­ty with its $50 mil­lion up­front and promise of R&D sup­port to part­ner with the lit­tle biotech on NASH — ig­nit­ing a light­ning strike for the share price — Cona­tus $CNAT is back with the lat­est bit­ter tale to tell about em­ri­c­as­an, which once in­spired con­fi­dence at the phar­ma gi­ant.

Fol­low­ing news of job cuts in Eu­ro­pean R&D ops, Sanofi con­firms it’s of­fer­ing US work­ers an 'ear­ly ex­it'

Ear­li­er in the week we learned that Sanofi was bring­ing out the bud­get ax to trim 466 R&D jobs in Eu­rope, re­tool­ing its ap­proach to car­dio as re­search chief John Reed beefed up their work in can­cer and gene ther­a­pies. And we’re end­ing the week with news that the phar­ma gi­ant has al­so been qui­et­ly re­duc­ing staff in the US, tar­get­ing hun­dreds of jobs as the com­pa­ny push­es vol­un­tary buy­outs with a fo­cus on R&D sup­port ser­vices.

Dean Hum. Nasdaq via YouTube

Gen­fit goes to Chi­na with a deal worth up to $228M for NASH drug

Fresh off the high of its Nas­daq IPO de­but, and the low of com­par­isons to Cymabay — whose NASH drug re­cent­ly stum­bled — Gen­fit on Mon­day un­veiled an up to $228 mil­lion deal with transpa­cif­ic biotech Terns Phar­ma­ceu­ti­cals to de­vel­op its flag­ship ex­per­i­men­tal liv­er drug — elafi­bra­nor — in Greater Chi­na.

The deal comes more than a week af­ter Gen­fit $GN­FT is­sued a fiery de­fense of its dual PPAR ag­o­nist elafi­bra­nor, when com­peti­tor Cymabay’s PPARδ ag­o­nist, se­ladel­par, fiz­zled in a snap­shot of da­ta from an on­go­ing mid-stage tri­al. The main goal at the end of 12 weeks was for se­ladel­par to in­duce a sta­tis­ti­cal­ly sig­nif­i­cant im­prove­ment in liv­er fat con­tent, but da­ta showed that pa­tients on the place­bo ac­tu­al­ly per­formed bet­ter.

Alex­ion wins pri­or­i­ty re­view for Ul­tomiris' aHUS in­di­ca­tion; FDA ex­pands ap­proval of Ver­tex's Symdeko

→ Alex­ion $ALXN has scored a speedy re­view for Ul­tomiris for pa­tients with atyp­i­cal he­molyt­ic ure­mic syn­drome (aHUS) af­ter post­ing pos­i­tive da­ta from a piv­otal study in Jan­u­ary. The drug is the rare dis­ease com­pa­ny’s shot at pro­tect­ing its block­buster blood dis­or­der fran­chise that is cur­rent­ly cen­tered around its flag­ship drug, Soliris, which is a com­ple­ment in­hibitor typ­i­cal­ly ad­min­is­tered every two weeks. Ul­tomiris has a sim­i­lar mech­a­nism of ac­tion but re­quires less-fre­quent dos­ing — every eight weeks. The de­ci­sion date has been set to Oc­to­ber 19. Late last year, Ul­tomiris se­cured ap­proval for noc­tur­nal he­mo­glo­bin­uria (PNH) pa­tients.

Bet­ter than Am­bi­en? Min­er­va soars on PhI­Ib up­date on sel­torex­ant for in­som­nia

A month af­ter roil­ing in­vestors with what skep­tics dis­missed as cher­ry pick­ing of its de­pres­sion da­ta, Min­er­va is back with a clean slate of da­ta from its Phase IIb in­som­nia tri­al.

In a de­tailed up­date, the Waltham, MA-based biotech said sel­torex­ant (MIN-202) hit both the pri­ma­ry and sev­er­al sec­ondary end­points, ef­fec­tive­ly im­prov­ing sleep in­duc­tion and pro­long­ing sleep du­ra­tion. In­ves­ti­ga­tors made a point to note that the ef­fects were con­sis­tent across the adult and el­der­ly pop­u­la­tions, with the lat­ter more prone to the sleep dis­or­der.

Gene ther­a­py biotech sees its stock rock­et high­er on promis­ing re­sults for rare cas­es of but­ter­fly dis­ease

Shares of Krys­tal Biotech took off this morn­ing $KRYS af­ter the lit­tle biotech re­port­ed promis­ing re­sults from its gene ther­a­py to treat a rare skin dis­ease called epi­der­mol­y­sis bul­losa.

Fo­cus­ing on an up­date with 4 new pa­tients, re­searchers spot­light­ed the suc­cess of KB103 in clos­ing some stub­born wounds. Krys­tal says that of 4 re­cur­ring and 2 chron­ic skin wounds treat­ed with the gene ther­a­py, the KB103 group saw the clo­sure of 5. The 6th — a chron­ic wound, de­fined as a wound that had re­mained open for more than 12 weeks — was par­tial­ly closed. That brings the to­tal so far to 8 treat­ed wounds, with 7 clo­sures.