In­sys founder, for­mer ex­ecs face decades in jail af­ter be­ing found guilty in land­mark opi­oid case

In­sys should’ve paid heed to this ill-fat­ed line from its own sales rap song. “If you want to be great, lis­ten to my voice. You can be great — but its your choice.” In­stead, its (for­mer) bil­lion­aire founder John Kapoor and four of his high rank­ing col­leagues were found guilty of en­gag­ing in a bribery scheme to get doc­tors to pre­scribe its po­tent, ad­dic­tive painkiller and dupe in­sur­ers in­to pay­ing for the drug, by a fed­er­al ju­ry on Thurs­day.

Each de­fen­dant — for­mer Chair­man Kapoor; for­mer vice-pres­i­dent of man­aged mar­kets Michael Gur­ry; for­mer na­tion­al di­rec­tor of sales Richard Si­mon; and for­mer re­gion­al sales di­rec­tors Sun­rise Lee and Joseph Rowan — faces up to twen­ty years in jail, al­though they have de­nied any wrong­do­ing and sig­naled plans to ap­peal. The crim­i­nal con­vic­tion is his­toric as it takes aim at the pow­er­ful mas­ter­minds be­hind a mar­ket­ing ploy de­signed to put prof­it ahead of pa­tients — in­stead of mere fines, or let­ting pow­er­ful ex­ec­u­tives make sac­ri­fi­cial lambs of their lieu­tenants.

Kapoor cre­at­ed In­sys $IN­SY in 1990. In 2012, the com­pa­ny’s fen­tanyl spray Sub­sys was ap­proved by the FDA for break­through can­cer pain. Fen­tanyl is a man-made opi­oid 50 times more po­tent than hero­in and 100 times more po­tent than mor­phine, ac­cord­ing to the CDC. Three years lat­er, Rod­dy Boyd of the South­ern In­ves­tiga­tive Re­port­ing Foun­da­tion first brought to light the dead­ly im­pact of in­dis­crim­i­nate Sub­sys pre­scrib­ing, trig­gered by In­sys’ ques­tion­able mar­ket­ing prac­tices in this damn­ing re­port. In 2017, the In­di­an-born Kapoor was charged with the crim­i­nal con­spir­a­cy — on the very day Pres­i­dent Trump de­clared the US opi­oid cri­sis a pub­lic health emer­gency.

Pros­e­cu­tors charged In­sys with in­flat­ing Sub­sys sales by brib­ing doc­tors to pre­scribe the drug to pa­tients with­out can­cer — in an elab­o­rate scheme that in­clud­ed win­ing and din­ing them, pay­ing them to speak at “ed­u­ca­tion­al events” and in one case even a lap dance — fu­el­ing the rag­ing opi­oid cri­sis that kills 130 Amer­i­cans every day.

Tri­al ju­rors were giv­en a front-row seat to the ob­scene video de­signed to train sales reps, in which two im­pec­ca­bly suit­ed men — os­ten­si­bly In­sys em­ploy­ees — ‘rap’ the Ari­zona-based drug­mak­er’s sin­is­ter strat­e­gy re­plete with rapid hand ges­tures: “I love titra­tions. Yeah, that’s not a prob­lem. I got new pa­tients, and I got a lot of ‘em…If you want to be great, lis­ten to my voice. You can be great — but it’s your choice.”

Al­though Kapoor’s lawyers as­sert­ed that the 75-year-old was kept in the dark about these ac­tiv­i­ties, the tes­ti­mo­ny of for­mer In­sys sales head Alec Burlakoff — who emerges as the man adorn­ing the Sub­sys cos­tume in the video that lit­er­al­ly blue­prints In­sys’ reck­less mar­ket­ing strat­e­gy — sul­lied that ar­gu­ment as the gov­ern­ment’s key wit­ness. Burlakoff, along with for­mer chief ex­ec­u­tive Michael Babich, tes­ti­fied against Kapoor af­ter plead­ing guilty to par­tic­i­pat­ing in the scheme.

Alec Burlakoff

The tri­al’s ver­dict is in­dica­tive of the “ac­tions of a se­lect few for­mer em­ploy­ees of the com­pa­ny,” In­sys spokesper­son Jack­ie Mar­cus told End­points News in an emailed state­ment, adding that “Kapoor’s (In­sys) shares have been and will re­main man­aged by an in­de­pen­dent trust, with which Kapoor is not in­volved.”

Last Au­gust, In­sys had agreed to fork over at least $150 mil­lion in a re­lat­ed set­tle­ment with the U.S. Jus­tice De­part­ment. Un­der fire for the role in played in the cri­sis of opi­oid abuse, mis­use and ad­dic­tion in the Unit­ed States, the com­pa­ny in No­vem­ber said it was look­ing to di­vest its ar­se­nal of opi­oid as­sets — in­clud­ing Sub­sys — to sharp­en its fo­cus on its pipeline of cannabis-de­rived ther­a­peu­tics.

Michael Babich

But as the com­pa­ny’s le­gal fees be­gan to add up, In­sys’ au­di­tor last month raised doubts on the drug­mak­er’s abil­i­ty to con­tin­ue as a go­ing con­cern. In­sys is hard­ly the on­ly opi­oid drug mak­er in fi­nan­cial trou­ble. Pur­due Phar­ma — the mak­er of one of most wide­ly abused pre­scrip­tion opi­oid painkiller Oxy­con­tin — is re­port­ed­ly con­sid­er­ing bank­rupt­cy.

Mean­while, oth­er drug man­u­fac­tur­ers, dis­trib­u­tors and phar­ma­cies are al­so fac­ing hun­dreds of civ­il law­suits for their role in the prop­a­gat­ing opi­oid cri­sis.


Im­age Source: John Kapoor. AP

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

Af­ter 4 years of furor, the FTC and New York state ac­cuse Mar­tin Shkre­li of run­ning a drug mo­nop­oly. And this time they plan to squash it

Pharma bro Martin Shkreli was jailed, publicly pilloried and forced to confront some lawmakers in Washington riled by his move to take an old generic and move the price from $17.50 per pill to $750. But through 4 years of controversy and public revulsion, his company never backed away from the price — left uncontrolled by a laissez faire federal policy on a drug’s cost.

Now the FTC and the state of New York plan to pry his fingers off the drug once and for all and open it up to some cheap competition.

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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Short at­tack­er Sahm Ad­ran­gi draws crosshairs over a fa­vorite of Sanofi’s new CEO — with PhII da­ta loom­ing

Sahm Adrang Kerrisdale

Kerrisdale chief Sahm Adrangi took a lengthy break from his series of biotech short attacks after his chief analyst in the field pulled up stakes and went solo. But he’s making a return to drug development this morning, drawing crosshairs over a company that’s one of new Sanofi CEO Paul Hudson’s favorite collaborators.

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UP­DAT­ED: Ac­celeron of­fers thumbs up on a PhII suc­cess for would-be block­buster drug — and shares rock­et up

There’s no public data yet, but Acceleron $XLRN says that its first major trial readout of 2020 is a success.

In a Phase II study of 106 patients with pulmonary arterial hypertension (PAH), Acceleron’s experimental drug sotatercept hit its primary endpoint: a significant reduction in pulmonary vascular resistance. The drug also met three different secondary endpoints, including the 6-minute walking test.

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Civi­ca and Blue Cross Blue Shield launch new ven­ture to low­er gener­ic prices

Five years after Martin Shkreli put a smug face to the volatile prices companies can charge even for generic drugs, payers and governments are coming up with outside-the-box solutions.

The latest fix is a new venture from the Blue Cross Blue Shield Association, 18 of its members and Civica, the generics company founded in 2018 by hospitals fed up with high prices for drugs that had long-since lost patent protection. While Civica focused on drugs that hospitals purchased, the new company will aim to lower prices on drugs that, like Shkreli’s Daraprim, are purchased by individuals.

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Merck Invests in State-Of-The-Art Biotech Development Facility in Switzerland

Mer­ck KGaA match­es lofty R&D goals with €250M in­vest­ment in­to a new clin­i­cal man­u­fac­tur­ing site in Switzer­land

As Merck KGaA strives to prove itself as a capable biopharma R&D player, it has begun construction on a €250 million facility dedicated to developing and manufacturing drugs for use in clinical trials.

The German drugmaker chose a location at Corsier-sur-Vevey, Switzerland, where it already has a commercial manufacturing site, in order to “bridge together research and manufacturing.”

“This investment in the Merck Biotech Development Center reflects our commitment to speed up the availability of new medicines for patients in need, and confirms the importance of Switzerland as our prime hub for the manufacturing of biotech medicines,” CEO Stefan Oschmann said at the groundbreaking ceremony, according to a statement.

Breast can­cer ap­proval in tow, As­traZeneca, Dai­ichi armed an­ti­body scores in key gas­tric can­cer study

AstraZeneca kicked off Monday with a flurry of good news. Apart from unveiling positive results on its stroke trial testing its clot-fighter Brilinta, and welcoming its experimental IL-23 inhibitor brazikumab back from Allergan — the British drugmaker also disclosed some upbeat gastric cancer data on its HER2-positive oncology therapy it is collaborating on with Daiichi Sankyo.

Buoyed by the performance of its oncology drugs, last March AstraZeneca chief Pascal Soriot bet big to partner with Daiichi on the cancer drug, with $1.35 billion upfront in a deal worth up to roughly $7 billion. Roughly 8 months later, as 2019 drew to a close, the FDA swiftly approved the drug — trastuzumab deruxtecan — for use in breast cancer, months ahead of the expected decision date.

Sor­ren­to shrugs off an anony­mous pri­vate eq­ui­ty group’s $1B of­fer to buy the com­pa­ny

San Diego-based Sorrento Therapeutics isn’t going the M&A route — at least not today.

The biotech caused quite a stir when it put out word a few weeks ago that an unidentified private equity group was bidding a billion dollars-plus for the company. The news drove a quick spike in the company’s share price as investors hooked up for the ride — that didn’t happen.

The update sparked a 5% drop in the share price $SRNE ahead of the bell. It’s now trading just above $4, without any evidence that the $7 price looked like it was firm.