Left to right: Arthur Pappas, Robert Nelsen, Peter Kolchinsky Doug Cole and David Beier

In rare po­lit­i­cal for­ay, top biotech in­vestors urge Con­gress to re­ject drug pric­ing bill

Thir­teen of the top biotech ven­ture cap­i­tal­ists in the coun­try wrote a let­ter last week warn­ing law­mak­ers that if Con­gress pass­es a drug pric­ing bill House Speak­er Nan­cy Pelosi has put be­fore law­mak­ers, they won’t be able to in­vest in bio­med­ical re­search at their cur­rent rate, and pa­tients will suf­fer.

“If poli­cies such as those in­clud­ed with­in H.R. 3, the Low­er Drug Costs Now Act, are passed, our abil­i­ty to con­tin­ue to in­vest in fu­ture bio­med­ical in­no­va­tion will be se­vere­ly con­strained, thus crush­ing the hopes of mil­lions of pa­tient wait­ing for the next break­throughs to treat or cure their can­cers, rare ge­net­ic dis­eases, Alzheimer’s, or oth­er se­ri­ous and life-threat­en­ing con­di­tions,” they wrote in a let­ter ad­dressed to the high­est-rank­ing De­moc­rats and Re­pub­li­cans in the House and Sen­ate and ac­quired by End­points News. 

The list of sig­na­to­ries in­cludes Arch Ven­ture Part­ners’ Robert Nelsen, Bay City Cap­i­tal’s David Beier, Flag­ship Pi­o­neer­ing’s Doug Cole, RA Cap­i­tal Man­age­ment’s Pe­ter Kolchin­sky and Pap­pas Cap­i­tal’s Arthur Pap­pas. They write they have over $20 bil­lion in­vest­ed in pri­vate and pub­lic bio­phar­ma­ceu­ti­cal com­pa­nies.

The in­vestors join the larg­er phar­ma com­pa­nies in ex­press­ing alarm about the price con­trols in Pelosi’s bill. Pfiz­er is urg­ing vot­ers to “Tell Con­gress: Re­ject the Dan­ger­ous Drug Pric­ing Bill.”

While the large phar­ma com­pa­nies have long ped­dled in Wash­ing­ton through the lob­by­ing group PhRMA and have amped spend­ing to record lev­els as drug pric­ing re­form has gained trac­tion, biotech ven­ture cap­i­tal­ists have large­ly been more re­luc­tant to en­ter the po­lit­i­cal fray. In­creas­ing­ly, though, the de­bate around drug pric­ing re­form and what it might mean for R&D has cen­tered around the small­er biotechs these VC funds keep afloat.

Bob­by Dubois NPC

Last week, STAT ran a piece quot­ing tiny biotechs as fear­ing a “nu­clear win­ter” if the Nan­cy Pelosi-backed bill passed. In Oc­to­ber, Bob­by Dubois, the CSO of the in­dus­try-backed Na­tion­al Phar­ma­ceu­ti­cal Coun­cil told End­points that he couldn’t be sure that a fall in rev­enue for big phar­ma would lead to cuts to R&D spend­ing but that it was very like­ly that such a bill would cut off dol­lars from small­er biotechs.

Biotechs’ high start­up costs and at­tri­tion rate, the the­o­ry goes, make them de­pen­dent on huge po­ten­tial pay­outs. With­out those, in­vest­ments would dry up.

The bill would al­so like­ly de­rail the biotech IPO mar­ket, which is how ven­ture cap­i­tal­ists have earned much of their mon­ey in bio­phar­ma in re­cent years.

Un­veiled in Sep­tem­ber, the De­mo­c­ra­t­ic bill — which con­tains el­e­ments Re­pub­li­cans have backed but has lit­tle chance of pass­ing the Sen­ate — would teth­er the price of the na­tion’s 250 most ex­pen­sive drugs to an in­ter­na­tion­al price in­dex and all-but-force com­pa­nies to ne­go­ti­ate the fi­nal fig­ure with the fed­er­al gov­ern­ment. An ear­ly Con­gres­sion­al Bud­get Of­fice analy­sis es­ti­mat­ed the bill would re­duce fed­er­al spend­ing on Medicare Part D by $345 bil­lion be­tween 2023 and 2029 but al­so lead to be­tween 8 and 15 few­er drugs be­ing brought to mar­ket over the next 10 years, al­though the CBO said the ef­fect on in­no­va­tion was dif­fi­cult to quan­ti­fy.

Dar­ren So­to

In the let­ter, the VCs ar­gued such a sys­tem would be “grant­i­ng the U.S. gov­ern­ment es­sen­tial­ly unchecked au­thor­i­ty” to set prices and pin those prices to coun­tries that “sys­tem­at­i­cal­ly un­der­val­ue” med­ical break­throughs.

“Biotech in­vest­ment al­ready is a high-risk en­ter­prise…” they wrote. “If, af­ter we in­vest hun­dreds of mil­lions of dol­lars over a decade or more to achieve such suc­cess, the gov­ern­ment can im­pose an ar­ti­fi­cial­ly low price on the few new drugs that make it to mar­ket, our ro­bust biotech in­vest­ment ecosys­tem will be­come un­sus­tain­able.”

The dis­agree­ment be­tween the VCs and De­mo­c­ra­t­ic and some Re­pub­li­can law­mak­ers is both around whether the cuts will af­fect in­no­va­tion and the val­ue of some of that in­no­va­tion. The VCs de­scribed the ther­a­pies they back as “mir­a­cle drugs, with the abil­i­ty not just to treat, but to ac­tu­al­ly cure, so many ge­net­i­cal­ly-based dis­eases and oth­er se­ri­ous con­di­tions.”

An­na Es­hoo

In past push­es for drug pric­ing re­form, ad­vo­cates have most­ly said that that rhetoric is over­stat­ed and pric­ing con­trols will leave R&D spend­ing most­ly un­touched. But a few De­moc­rats, in­clud­ing Flori­da Rep­re­sen­ta­tive Dar­ren So­to and Cal­i­for­nia Rep­re­sen­ta­tive An­na Es­hoo, now ar­gue an uptick in ac­cess is worth los­ing a few drugs.

“Three hun­dred forty-five bil­lion dol­lars in sav­ings ver­sus the cost of eight to 15 few­er drugs over 10 years,” So­to said at a re­cent hear­ing be­fore the House En­er­gy and Com­merce Com­mit­tee, ac­cord­ing to STAT. “I frankly think it’s worth it.”

The 20 un­der 40: In­side the next gen­er­a­tion of bio­phar­ma lead­ers

“Each generation needs a new music,” Francis Crick wrote in 1988, reflecting back on his landmark discovery. Crick was 35, then, in 1953, when he began working with a 23-year-old named James Watson, and 37 when the pair unveiled the double helix. Rosalind Franklin, whose diffraction work undergirded their metal model, was 32.

The model would become the score for a new era in biology, one devoted to cracking the basic structures turning inside life. Subsequent years would bring new conductors and new rhythms: Robert Swanson, 29 when he convinced a 39-year-old Herb Boyer to build a company off his work and call it Genentech; Phillip Sharp, 29 when he discovered RNA splicing and 34 when he co-founded Biogen; Frances Arnold, 36 when she pioneered directed evolution; Feng Zhang, 31 when he published his CRISPR paper.

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Chart-top­ping ven­ture cash? Strong deal flow? In the month Covid-19 ripped around the globe? Yup

It turns out that even sending everyone from the CEO to rank-and-file staffers home to work in the middle of a Category 5 pandemic wasn’t enough to put a crimp in the flow of venture cash into biopharma. And even dealmaking held its own against the howling winds of misfortune — largely because a group of savvy players was quick to adjust to the new reality.

Our deal expert Chris Dokomajilar ran the numbers for us on a month-to-month basis and found that not only was venture money flowing during the panicky month of March, but it was also hitting home in record sums compared to the last 26 months of deal flow.

Say what?

As you can see in the top chart below, Dokomajilar outlined how the industry racked up $2.41 billion in total for March, just barely ahead of one other topper during the heady days of August 2018.

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FDA Commissioner Stephen Hahn and President Donald Trump at a press briefing on March 19, 2020. (AP Images)

Biotech ex­ecs warn that the FDA is fum­bling their re­sponse to the Covid-19 open-door promise, de­lay­ing progress

A few days ago the FDA touted a procedure for Covid-19 meds that committed the agency to immediate action for developers, formalizing a high-speed response that’s been promised for weeks.

Bioregnum Opinion Column by John Carroll

Decisions that once required months would be measured in hours under the Coronavirus Treatment Acceleration Program. “In many cases” trial protocols could be hammered out in less than a single day. If you had a potential solution to the crisis, the appropriate staffer would be in touch “to get studies underway quickly.”

It would be the ultimate high-speed regulatory pathway from Phase I to approval. Red tape was banished.

But it’s clear that for some — and quite likely many — biopharma execs, the actual agency response has not measured up to the promise. Beyond the front ranks of advanced companies in the field, like Gilead, or for drugs endorsed by President Trump, it may not even come close.

“The first response is this form letter everyone gets,” says one biotech CEO who’s reached out to the FDA on Covid-19. And when you try to cut through that, the ball gets dropped as it is passed from top officials to the frontline staff actually charged with getting things done.

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GSK's Hal Bar­ron buys a $250M stake in George Scan­gos' Vir and makes a bee­line to the clin­ic with Covid-19 an­ti­bod­ies

GlaxoSmithKline is diving straight into the swirling waters of Covid-19 R&D work, and investing $250 million to grab a chunk of equity in one of the emerging stars in infectious disease research to make it official.

GSK put out word this morning that it is partnering with Vir Biotechnology $VIR, the infectious disease startup founded in the Bay Area by former Biogen CEO George Scangos. They’re planning a leap into Phase II studies for 2 preclinical antibody candidates — VIR-7831 and VIR-7832 — that have been engineered to target the SARS-CoV-2 spike protein.

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UP­DAT­ED: A small, ob­scure biotech just won big with their IPO. In this mar­ket. Are you kid­ding me?

How could a small, largely unknown biotech that emerged from stealth mode just months ago with early-stage cancer programs jump onto Wall Street in the middle of a Category 6 financial hurricane and sail through with a $165 million IPO?

And what does that mean for the rest of the industry waiting to see just how much damage global lockdowns will wreak on clinical development?

The biotech is a company called Zentalis. The crew there nabbed an $85 million crossover round late last year — notably waiting 5 years before waving the numbers around to attract attention, according to my read of a FierceBiotech story. Perceptive joined in, but the syndicate was not in general the kind of marquee affair that gets tongues wagging.

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Ready to de­clare a de­fin­i­tive come­back in two months, Im­munomedics stops PhI­II ear­ly, re­cruits new CEO

More than a year ago, hit by a surprise complete response letter from the FDA, Immunomedics bid its then-CEO, Michael Pehl, adieu and began a 15-month quest to resolve the manufacturing issues cited in the CRL and seek a new leader — all the while moving forward with a Phase III study on its lead drug for metastatic triple-negative breast cancer.

Today the biotech said their stars are finally aligning. Not only is Novartis Oncology vet Harout Semerjian coming on board as CEO to steer what they believe will be a smooth sail to a new PDUFA date in June, Immunomedics has also been informed that their late-stage trial can be stopped early due to “compelling evidence of efficacy.”

An­oth­er day, an­oth­er boat­load for biotech. Deer­field adds $840M to rush of ven­ture dol­lars

The biotech dollars just keep rolling in.

Even as the world economy faces an economic contraction unprecedented in nature, biotech venture capital firms are announcing huge new investment pots. The latest? Deerfield Management Co.

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Small mol­e­cules, bi­o­log­ics and now gene ther­a­pies: Ger­many's Evotec adds an­oth­er feath­er to its R&D cap

German drug discovery company Evotec — which has a thriving rolodex of biopharma partners such as Bayer, Boehringer Ingelheim, Novartis, Novo Nordisk, Pfizer, Sanofi, and Takeda — is now venturing into gene therapies.

The company swallowed Seattle-based Just Biotherapeutics, a company focused on reducing the cost of manufacturing protein therapies last year. It is now setting up a dedicated R&D site for gene therapies in Austria, in an effort to achieve a “modality-agnostic” repertoire — small molecules, biologics and now gene therapies.

A pair of PhI­II fail­ures spells last rites for Men­lo’s once-promis­ing Mer­ck drug

Four months after an intercontinental merger, Menlo Therapeutics is counting yet another pair of trial failures — ones with significant consequences for the companies, their shareholders and the drug.

In two pivotal Phase III trials, Menlo’s lead drug serlopitant failed to treat pruritus associated with prurigo nodularis — basically itchiness from a particular skin disease that causes red lesions on a person’s arms or legs. Serlopitant has long been the company’s only drug and as recently as 2018, it looked promising enough to support a stock price of $37. In April of that year, a Phase II failure demolished the stock price overnight: $35 to $9. Other subsequent stumbles trickled the ticker down to just above $2.