Sahm Ad­ran­gi’s Ker­ris­dale knifes Pro­teosta­sis’ 'break­through' cys­tic fi­bro­sis da­ta in a bru­tal biotech short at­tack

Sahm Ad­ran­gi and his SWAT team at Ker­ris­dale Cap­i­tal have put an­oth­er biotech in their cross hairs.

The high-pro­file biotech in­vestor — who’s tak­en on a group of biotechs that range from Bavar­i­an Nordic to Prothena with a se­ries of bru­tal short at­tacks — is now ready to call Pro­teosta­sis’ $PTI work on cys­tic fi­bro­sis a bomb in the mak­ing.

“We looked at it,” Ad­ran­gi tells me, “and de­cid­ed to take a clos­er look af­ter it spiked” in the wake of the FDA’s break­through drug des­ig­na­tion.

Reg­u­la­tors put the Cam­bridge, MA-based com­pa­ny on its in­side reg­u­la­to­ry track, promis­ing to pro­vide an open-door ap­proach to help­ing speed it along, af­ter the biotech post­ed da­ta for its CFTR am­pli­fi­er PTI-428, part of a cock­tail it’s been de­vel­op­ing in hopes of cap­i­tal­iz­ing on the mar­ket that Ver­tex has been build­ing for it­self.

The biotech re­port­ed Phase II da­ta demon­strat­ing that their drug was linked with a 5.2% jump in a mea­sure of lung per­for­mance.

Shane Wil­son

In Ker­ris­dale’s view, though, that is non­sense. What re­al­ly hap­pened, Ker­ris­dale an­a­lyst Shane Wil­son claims, is that the tiny place­bo arm in­volv­ing just 4 pa­tients in the study had a sharp, sud­den and un­ex­pect­ed drop in lung per­for­mance dur­ing the 28-day tri­al that cre­at­ed a gap fa­vor­ing the drug. And when you com­pare it with what you would ex­pect for these pa­tients, there should not nor­mal­ly have been any­thing like that gulf be­tween the two small arms of the study.

“If place­bo was flat and the drug was up 1%,” says Wil­son, “no one would think that was good.”

From the re­port:

On av­er­age, we cal­cu­late that the PTI-428 group im­proved by just 2.5%, while the (4-per­son) place­bo group wors­ened by 6.7% – ex­act­ly repli­cat­ing Pro­teosta­sis’s stat­ed place­bo-ad­just­ed rel­a­tive im­prove­ment of 9.2%. In terms of ab­solute changes, we es­ti­mate that the PTI-428 group im­proved on av­er­age by just 1 per­cent­age point, while the place­bo group wors­ened by 4 per­cent­age points.

And that’s not some­thing that can be repli­cat­ed in a larg­er tri­al.

The rest of the da­ta points — like sweat chlo­ride — are ei­ther messy or be­ing ig­nored by Pro­teosta­sis, adds the Ker­ris­dale team.

“They don’t give the ac­tu­al re­sults, which means al­most cer­tain­ly that the re­sults aren’t good; prob­a­bly be­cause they didn’t do any­thing.”

From their re­port:

Giv­en the scarci­ty of CFTR mR­NA and pro­tein even in the air­way ep­ithe­li­um, we doubt that Pro­teosta­sis can re­li­ably mea­sure its fa­vored bio­mark­ers, call­ing in­to ques­tion its fun­da­men­tal un­der­stand­ing of its own drug. In­deed, we find it dif­fi­cult to trust the com­pa­ny’s da­ta, giv­en its ten­den­cy to gloss over po­ten­tial­ly neg­a­tive facts. For in­stance, while a group of par­tial­ly in­de­pen­dent re­searchers have re­cent­ly found that, in one in vit­ro mod­el, PTI-428 failed to in­crease CFTR pro­tein lev­els or func­tion­al­i­ty to a sta­tis­ti­cal­ly sig­nif­i­cant de­gree, ei­ther on its own or when added to stan­dard-of- care drugs, Pro­teosta­sis man­age­ment has ig­nored the un­pleas­ant re­sults, even though three Pro­teosta­sis em­ploy­ees were co-au­thors on the pa­per.

With­out a lead drug or a pipeline, Ker­ris­dale says the com­pa­ny can on­ly be worth cash, a 70% to 90% drop in val­ue.

There is lit­tle val­ue in PTI’s mis­lead­ing­ly spun da­ta, bizarrely noisy bio­mark­ers, and se­lec­tive­ly dis­closed re­sults. Alas, it’s far eas­i­er to in­flate weak da­ta than it is to in­flate ail­ing lungs.

The short at­tack ar­rives just hours af­ter Pro­teosta­sis laid out plans to take ad­van­tage of its swelled share price by sell­ing 9 mil­lion shares, with Leerink and RBC Cap­i­tal act­ing as joint book run­ners. Its shares were down 13% in pre-mar­ket trad­ing and then kept slid­ing af­ter the Ker­ris­dale re­port hit. By mid-morn­ing shares were down 20%.

Neil Wood­ford

While quite a few short at­tacks tend to arise from anony­mous re­ports or by way of a Tro­jan horse, Ker­ris­dale likes to do their work pub­licly and up close. They re­cent­ly earned some con­sid­er­able crit­i­cism from in­vestor Neil Wood­ford, who said:

Their job is to scare the mar­ket when the mar­ket is pre­pared to be scared. It doesn’t mat­ter if what they said about Al­lied Minds and Prothena is to­tal­ly in­ac­cu­rate and un­sub­stan­ti­at­ed. What mat­ters is Bloomberg and oth­ers giv­ing them the oxy­gen of pub­lic­i­ty and hey presto there is a self-ful­filled prophe­cy and the share price falls.

Prothena’s da­ta are com­ing up in the sec­ond quar­ter.


Sahm Ad­ran­gi. KER­RIS­DALE CAP­I­TAL

De­vel­op­ment of the Next Gen­er­a­tion NKG2D CAR T-cell Man­u­fac­tur­ing Process

Celyad’s view on developing and delivering a CAR T-cell therapy with multi-tumor specificity combined with cell manufacturing success
Overview
Transitioning potential therapeutic assets from academia into the commercial environment is an exercise that is largely underappreciated by stakeholders, except for drug developers themselves. The promise of preclinical or early clinical results drives enthusiasm, but the pragmatic delivery of a therapy outside of small, local testing is most often a major challenge for drug developers especially, including among other things, the manufacturing challenges that surround the production of just-in-time and personalized autologous cell therapy products.

Paul Hudson, Getty Images

UP­DAT­ED: Sanofi CEO Hud­son lays out new R&D fo­cus — chop­ping di­a­betes, car­dio and slash­ing $2B-plus costs in sur­gi­cal dis­sec­tion

Earlier on Monday, new Sanofi CEO Paul Hudson baited the hook on his upcoming strategy presentation Tuesday with a tell-tale deal to buy Synthorx for $2.5 billion. That fits squarely with hints that he’s pointing the company to a bigger future in oncology, which also squares with a major industry tilt.

In a big reveal later in the day, though, Hudson offered a slate of stunners on his plans to surgically dissect and reassemble the portfoloio, saying that the company is dropping cardio and diabetes research — which covers two of its biggest franchise arenas. Sanofi missed the boat on developing new diabetes drugs, and now it’s pulling out entirely. As part of the pullback, it’s dropping efpeglenatide, their once-weekly GLP-1 injection for diabetes.

“To be out of cardiovascular and diabetes is not easy for a company like ours with an incredibly proud history,” Hudson said on a call with reporters, according to the Wall Street Journal. “As tough a choice as that is, we’re making that choice.”

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Roger Perlmutter, Merck

#ASH19: Here’s why Mer­ck is pay­ing $2.7B to­day to grab Ar­Qule and its next-gen BTK drug, lin­ing up Eli Lil­ly ri­val­ry

Just a few months after making a splash at the European Hematology Association scientific confab with an early snapshot of positive data for their BTK inhibitor ARQ 531, ArQule has won a $2.7 billion buyout deal from Merck.

Merck is scooping up a next-gen BTK drug — which is making a splash at ASH today — from ArQule in an M&A pact set at $20 a share $ARQL. That’s more than twice Friday’s $9.66 close. And Merck R&D chief Roger Perlmutter heralded a deal that nets “multiple clinical-stage oral kinase inhibitors.”

This is the second biotech buyout pact today, marking a brisk tempo of M&A deals in the lead-up to the big JP Morgan gathering in mid-January. It’s no surprise the acquisitions are both for cancer drugs, where Sanofi will try to make its mark while Merck beefs up a stellar oncology franchise. And bolt-ons are all the rage at the major pharma players, which you could also see in Novartis’ recent $9.7 billion MedCo buyout.

ArQule — which comes out on top after their original lead drug foundered in Phase III — highlighted early data on ‘531 at EHA from a group of 6 chronic lymphocytic leukemia patients who got the 65 mg dose. Four of them experienced a partial response — a big advance for a company that failed with earlier attempts.

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Paul Hudson, Sanofi

Paul Hud­son promis­es a bright new fu­ture at Sanofi, kick­ing loose me-too drugs and fo­cus­ing on land­mark ad­vances. But can he de­liv­er?

Paul Hudson was on a mission Tuesday morning as he stood up to address Sanofi’s new R&D and business strategy.

Still fresh into the job, the new CEO set out to convince his audience — including the legions of nervous staffers inevitably devoting much of their day to listening in — that the pharma giant is shedding the layers of bureaucracy that had held them back from making progress in the past, dropping the duds in the pipeline and reprioritizing a more narrow set of experimental drugs that were promised as first-in-class or best-in-class.  The company, he added, is now positioned to “go after other opportunities” that could offer a transformational approach to treating its core diseases.

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Am­gen puts its foot down in shiny new South San Fran­cis­co hub as it re­or­ga­nizes R&D ops

Amgen has signed up to be AbbVie’s neighbor in South San Francisco as it moves into a nine-story R&D facility in the booming biotech hub.

The arrangement gives Amgen 240,000 square feet of space on the Gateway of Pacific Campus, just a few minutes drive from its current digs at Oyster Point. The new hub will open in 2022 and house the big biotech’s Bay Area employees working on cardiometabolic, inflammation and oncology research.

Ab­b­Vie, Scripps ex­pand part­ner­ship, for­ti­fy fo­cus on can­cer drugs

Scripps and AbbVie go way back. Research conducted in the lab of Scripps scientist Richard Lerner led to the discovery of Humira. The antibody, approved by the FDA in 2002 and sold by AbbVie, went on to become the world’s bestselling treatment. In 2018, the drugmaker and the non-profit organization signed a pact focused on developing cancer treatments — and now, the scope of that partnership has broadened to encompass a range of diseases, including immunological and neurological conditions.

South Ko­rea jails 3 Sam­sung ex­ecs for de­stroy­ing ev­i­dence in Bi­o­Log­ics probe

Three Samsung executives in Korea are going to jail.

The convictions came in what prosecutors had billed as “biggest crime of evidence destruction in the history of South Korea”: a case of alleged corporate intrigue that was thrown open when investigators found what was hidden beneath the floor of a Samsung BioLogics plant. Eight employees in total were found guilty of evidence tampering and the three executives were each sentenced to up to two years in prison.

Nick Plugis, Avak Kahvejian, Cristina Rondinone, Milind Kamkolkar and Chad Nusbaum. (Cellarity)

Cel­lar­i­ty, Flag­ship's $50M bet on net­work bi­ol­o­gy, mar­ries ma­chine learn­ing and sin­gle-cell tech for drug dis­cov­ery

Cellarity started with a simple — but far from easy — idea that Avak Kahvejian and his team were floating around at Flagship Pioneering: to digitally encode a cell.

As he and his senior associate Nick Plugis dug deeper into the concept, they found that most of the models others have developed take a bottom-up approach, where they assemble the molecules inside cells and the connections between them from scratch. What if they opt for a top-down approach, aided by single-cell transcriptomics and machine learning, to gauge the behavior of the entire cellular network?

Left top to right: Mark Timney, Alex Denner, Vas Narasimhan. (The Medicines Company, Getty, AP/Endpoints News)

In a play-by-play of the $9.7B Med­Co buy­out, No­var­tis ad­mits it over­paid while of­fer­ing a huge wind­fall to ex­ecs

A month into his tenure at The Medicines Company, new CEO Mark Timney reached out to then-Novartis pharma chief Paul Hudson: Any interest in a partnership?

No, Hudson told him. Not now, at least.

Ten months later, Hudson had left to run Sanofi and Novartis CEO Vas Narasimhan was paying $9.7 billion for the one-drug biotech – the largest in the string of acquisitions Narasimhan has signed since his 2017 appointment.

The deal was the product of an activist investor and his controversial partner working through nearly a year of cat-and-mouse negotiations to secure a deal with Big Pharma’s most expansionist executive. It represented a huge bet in a cardiovascular field that already saw two major busts in recent years and brought massive returns for two of the industry’s most eye-raising names.

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