The E100: Biotech execs are bullish about 2017, but fret about drug pricing and the FDA under Trump
About the Endpoints 100: This is our second biotech industry survey, which we sent out to our invite-only group of executives on February 6. 98 execs, primarily in the US and Europe, completed the survey, You can see a list of the entire group at the end of this article.
The biotech industry is feeling bullish about its own prospects at the beginning of 2017, largely satisfied with the financial support that’s been flowing in to the field with most execs ready to hire through the year as the tempo on deal-making remains upbeat.
But it’s not all coming up roses.
The industry is in a funk about the Trump administration after a few weeks of headlines over a travel ban controversy and a rolling series of outspoken tweets, with a large segment of these execs worried that a new head of the FDA could come in ready to reduce if not actually discard standards on drug development.
And virtually no matter what Trump says or does, a clear majority add, we’ve entered a new era on drug pricing that will demand a new math on what therapies cost. As for the high-profile instances where companies and CEOs have been fingered for price gouging, many believe we’re seeing an end game where the retaliation is likely to be severe enough to stop such practices forever.
That’s the bottom line from our latest Endpoints 100 survey, which captured the thoughts of a broad swathe of CEOs and top-level execs in the industry.
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Down on Trump
Fully two-thirds of these execs — out of 98 who responded to our survey — are deeply disenchanted with President Trump.
Thoughts ranged from “a smoldering dumpster fire with regards to health and human safety” to “his action on the immigrant ban was misguided. His inability to refrain from tweeting is arrogant. His admiration of Putin is foolish.”
A huge majority — 82% — disapproved of the president’s actions. Only 4% found something to approve.
One of the president’s signature efforts early on has been to blast what he calls outrageous pricing for drugs. A big group — 63% — feel that the biopharma industry has entered a new era on drug pricing. But a strong majority of 56% believe that allowing Medicare to negotiate drug pricing, as Trump has said now repeatedly, is the wrong move.
“I believe that Pharma really doesn’t get it,” said one exec. “Ever since the financial crisis there has been a constant drumbeat by patients, physicians, etc on the price of drugs. We need to be more focused on bringing ‘value for the money.’ There isn’t enough money in the world to address the world’s healthcare. We need to raise the bar much higher for ourselves and price responsibly. We are killing the golden goose.”
“Trump told Pharma CEOs to get prices down, innovation up and bring businesses back to the US. He means it and I believe Pharma will self regulate on blatant price increases (of which many are guilty).”
Only 24% felt that the status quo on pricing could be maintained.
“Payers are already increasing pressure and there is extreme pressure in the EU. Excessive price increases on generic drugs must stop. Need to moderate price increases on drugs generally to be more in line with inflation.”
Medicare price negotiations
There’s no doubting the considerable opposition in the industry to pushing Medicare into price negotiations. But a large minority, 44%, felt that there was good reason for Medicare price negotiations.
“Wrong move or right move, it’s an obvious move. It’s the biggest payer and somehow, some way, this will happen.”
None of the solid majority who opposed seeing Medicare leverage lower prices directly expressed their opinion on it.
It’s early days in this administration, but several of the execs who took this survey expect to see some fast changes out of Congress, some of which will likely spur the M&A side of the business.
“Expect repatriation (of overseas profits) which will drive more collaboration/acquisition. Expect volatility in communication from administration relating to pricing, driving continued uncertainty until administration clarifies position one way or another on pricing.”
“The biggest impact they will have will be in the appointment of the HHS secretary and the head of the FDA (hopefully Scott Gottlieb).”
“Wildly unpredictable. Of the various unknowns now the notion that the FDA might convert approvals to “safety only” is the most alarming.”
There is a significant division of opinion about what the FDA should do under a new commissioner. 43% said no significant changes are needed in terms of regulations, satisfied that changes made over the last few years has substantially benefited biopharma and streamlined development without eroding standards.
37%, though, are looking for significant changes.The theme, though, suggests the industry is looking for a continued evolution of the regulatory landscape, favoring developers but not gutting the gold standard on efficacy and safety.
“Continue to build on accelerated approval framework.”
“Do not lower scientific standards; retain safety and efficacy hurdle; increase use of surrogate and real world endpoints, including data from wearable and digital sources to help streamline approval with more disease- and patient-relevant endpoints of efficacy.”
“FDA has been doing a good job. We need to keep the high efficacy standard.”
“I actually think overall the FDA is doing a great job, I don’t think radical reform is needed. But I do think that many of the initiatives and reforms of recent years have been embraced by Sr. management, but not by the rest of the bureaucracy yet.”
“Terrifying to think of lowering efficacy standards significantly. Not good for the public or the industry!”
“In many areas, regulatory science is decades behind advances in new technologies and medical science. In the rare diseases, for instance, we need a rigorous yet flexible regulatory framework that does not exist today. The fact that there is not even a review division at FDA dedicated to rare genetic diseases is a tragedy in itself. “
“Increased use of biomarkers, accelerated approval pathways and perhaps even the introduction of ‘conditional’ approval pathways will drive medicines that are proven safe and effective to patients as quickly as possible. In fact, the most significant change that could be made at the FDA is to include the patient perspective at every step of the drug development and regulatory review process. Doing so will save countless lives.”
John F. Crowley Chairman & CEO Amicus Therapeutics
Brent Saunders’ pledge
One change that got a broad thumbs up from the E100: Brent Saunders’ call for an industry pledge to keep annual price increases on drugs in the single digits, under 10%. A total of 67% endorsed the move, with quite a few calling it sensible and viable or “a breathe of fresh air.”
But there was also a detectable air of skepticism that this kind of approach could work as a longterm solution, with many seeing it as a logical temporary step.
“This seems closer to following the laws of gravity than a plan. But it should create some much-needed daylight btwn industry and (controversial Turing founder Martin) Shkreli”
“I found Brent’s proclamation a bit disingenuous… He proclaims he wilresponsible on pricing but then takes 9.9% across his entire portfolio. Really! What industry gets 9.9% price increases?”
“I would say that we should emphasize tying price increases to inflation in some way. If inflation goes to 15% you would not raise prices by 9% and if inflation is 1% you would raise less than 9%. I worry about dogmatic statements like “single” digit which do not take into account the macro economic issues.”
The pulse on biotech prospects in 2017: Running strong
This is the second survey that is keeping the thumbs on the pulse of industry confidence, which is emphatically strong. Only 2% of the crowd are less than somewhat confidence, with three out of four running the gamut of confident to extremely confidence.
We have 57% rating the flow of investments from VCs as ‘good.’
“The capital is there from specialists for the right companies.”
“If you have a great team and a good story, you can get funded.”
But not everyone is happy about their access to capital these days.
“I am continually perplexed by the desire to fund “the dream” versus validated, real drugs. I wish there was more interest in real biotech companies that have revenues and deliver strong cash flows.”
IPOs are off to a so-so start after a weak 2016, so it’s not too surprising to see expectations are limited for the rest of the year. Forty-two percent ranked the IPO sector as fair, with 27% fair, 17% good and 14% poor. No one thought it was excellent.
About half thought that the IPO market will stay this way for the rest of the year, with the “better” and “worse” group split 29% to 19%.
Close to 4 out of 5 of these execs work in or with companies that are hiring in the first quarter, also reflecting a strong upbeat tempo in terms of expanding employment, which we also saw last fall in our first survey. 86% are hiring this year. No one plans to reduce staff. The biggest problem cited: Finding the right people can be difficult.
“We’ll hire aggressively again this year.”
“Job market remains very hot. Lots of competition to access the best talent.”
“We’re hiring aggressively but good candidates are hard to find,” says Yuval Cohen, CEO of Corbus Pharmaceuticals.”
Biotech valuations: Fair to good
The pace on deals and buyouts has started off with some sizable numbers in biotech, but our E100 execs weren’t feeling giddy about any of it.
57% of these execs found licensing deals were being done for average amounts, 37% said they were high and only 5% thought of them as low. There was a split on M&A, though, with 47% ranking valuations at average and 43% calling them out as high. That cold be a sellers perspective, though, as Big Pharma buyers have been saying for several years now that valuations have been running extremely high, in their view.
So where do we go from here?
“Let’s keep our eye on the prize: making important new therapeutics that address human needs. Let us embrace value-based pricing. Let us shun various historical industry practice to unreasonably extend patent monopoly. Let us abandon unjustified year-over-year cost increases in the absence of proven additional patient benefit or convenience.”
“A good year for biotech in 2017. Too many excellent technologies and innovation . They all will find homes!”
We end with an anonymous compliment:
“Well done, John and colleagues. Endpoints is a refreshing new source for biotech- and pharma-related news and views.”
It was just 1 out of 98, but we see a trend developing.
Do you have an idea for our next survey? Drop me a line at firstname.lastname@example.org
- Here’s a list of all participating Endpoints 100 executives
Jeffrey Albers Blueprint Medicines Alan Auerbach Puma Stephane Bancel Moderna Chuck Baum Mirati Therapeutics John Beadle PsiOxus Kees Been Lysosomal Therapeutics Arie Belldegrun Kite Pharma Nessan Bermingham Intellia Therapuetics Jean-Jacques Bienaimé BioMarin Pharmaceutical Kate Bingham SV Life Sciences Detlev Biniszkiewicz Surface Oncology Kevin Bitterman Polaris Partners Robert Blum Cytokinetics, Inc. Bruce Booth Atlas Venture Eduardo Bravo Tigenix, SAU Werner Cautreels Selecta Chip Clark Genocea Biosciences Robert Coffin Replimune Ron Cohen Acorda Yuval Cohen Corbus Pharma Robert Connelly Axcella (Pronutria) Bernard Coulie Pliant Therapeutics John Crowley Amicus David de Graaf Syntimmune Kim Drapkin Jounce Therapeutics Cameron Durrant KaloBios Glyn Edwards Summit Therapeutics plc Eliot Forster Immunocore Tassos Gianakakos MyoKardia David Giljohann Exicure Robert Gould Fulcrum Therapeutics Maxine Gowen Trevena Mike Grey Amplyx Geraldine Hamilton Emulate John Haurum F-star Rachel Haurwitz Caribou Peter Hecht Ironwood Mary Lynne Hedley Tesaro Olav Hellebø ReNeuron Group plc Russell Herndon Hydra Biosciences Rich Heyman Heyman Biotech Natalie Holles Audentes Therapeutics, Inc. Steve Holtzman Decibel Therapeutics Hervé Hoppenot Incyte Annalisa Jenkins Dimension Therapeutics Jeff Jonker NGM Bio Kevin Judice DiCE Molecules Rachel King Glycomimetics Gene Kinney Prothena Art Krieg Checkmate Pharmaceuticals Jeremy Levin Ovid Therapeutics Howard Liang BeiGene Jay Lichter Avalon Ventures John Maraganore Alnylam Alexey Margolin Allena Pharmaceuticals Tim Mayleben Esperion Sean McCarthy CytomX Therapeutics David Mott NEA Lonnie Moulder Tesaro Glenn Nedwin Second Genome Don Nicholson Nimbus Therapeutics Hugh O’Dowd Neon Therapeutics Bernat Olle Vedanta Rick Orr Adynxx Julia Owens Millendo Antoine Papiernik Sofinnova Pierluigi Paracchi GENENTA Science Alexander Pasteur F-Prime Capital Partners Joe Payne Arcturus Therapeutics Michael Pellini Foundation Medicine Andrea Pfeifer AC Immune Andrew Phillips C4 Therapeutics Richard Pops Alkermes Anna Protopapas Mersana Therapeutics Laurence Reid Warp Drive Bio Norbert Riedel Aptinyx Adam Rosenberg Rodin Therapeutics Gregg Sando Cell Medica David Schenkein Agios Denise Scots-Knight Mereo Biopharma Paul Sekhri Lycera Corp. Tito Serafini Atreca Armon Sharei SQZ Therapeutics Laura Shawver Cleave Bio Clay Siegall Seattle Genetics Nancy Simonian Syros Pharmaceuticals Harpreet Singh Immatics US Sander Slootweg Forbion Capital Partners Jeff Stein Cidara Carmine Stengone Avelas Biosciences, Inc. Niclas Stiernholm Trillium Therapeutics Clifford Stocks OncoResponse Hamza Suria AnaptysBio Mary Szela Aegerion Pharmaceuticals Nancy Thornberry Kallyope Praveen Tipirneni Morphic Therapeutic Helen Torley Halozyme Douglas Treco Ra Pharmaceuticals Steve Tregay Forma Therapeutics Tim Van Hauwermeiren Argenx Mark Velleca G1 Therapeutics Greg Verdine Fog Pharma George Vlasuk Navitor Pharmaceuticals, Inc. Robert Ward Radius Ryan Watts Denali Malcolm Weir Heptares Martin Welschof Opsona Therapeutics Ltd Doug Williams Codiak Troy Wilson Kura Oncology Steve Yang WuXi AppTec