The Endpoints 100 CEO Survey: Execs offer a big thumbs up for Gottlieb and some suggestions for making the FDA a better agency
Scott Gottlieb, Commissioner of Food and Drugs, appears before a US Senate subcommittee to review the FDA’s 2018 budget request on Tuesday, June 20, 2017
AP Images / Endpoints News
About the worst thing that anybody in our biotech executive survey group has to say about FDA Commissioner Scott Gottlieb right now is that it’s still early in the game for him and they’re waiting to see how things develop before they offer a firm opinion.
After that, it’s all good.
“Looking across the range of administration nominees, I’d say FDA did exceptionally well,” writes Jeff Jonker, president of NGM Biopharmaceuticals, in a note that resonated throughout the responses we collected. “To his credit, Dr. Gottlieb seems actively committed to the mission of the agency.”
Altogether 74 of 88 execs in our Endpoints survey group — 84% — gave Gottlieb their thumbs up. The rest are sticking to the sidelines with a neutral position — for now.
There were 0 votes criticizing the pick.
The responses for our most recent checkup on the biotech pulse range from an appreciation of Gottlieb’s professional experience to his willingness to try new things to improve regulatory oversight of the drug development process. And for a group of execs who are, by and large, upset and disapproving of his boss — President Donald Trump — Gottlieb is quick to win kudos for his appreciation of science and an insider’s understanding of how the agency works.
Says one: “Gottlieb is one of the few members of this administration that appears to understand and appreciate science.”
There’s also a clear echo from an earlier debate over who should run the FDA, as biotech execs generally heaped abuse on Jim O’Neill and his notion that the efficacy bar should lie on the ground. You could see that in one assessment — “experienced adult” — of Gottlieb’s strengths.
The Democrats’ major objection to Gottlieb that his previous work as an investor and consultant in the field left him hopelessly conflicted is clearly not shared by biotech execs — of both political persuasions.
Gottlieb’s early popularity is just one of several issues we covered in our latest industry survey. By and large this group of execs is upbeat about the future of the business and their companies, looking to make more hires in an era of fairly ready access to capital. The lack of M&A so far this year, though, has some growing concerns about valuations, pricing remains a big issue with no easy solutions, and while Gottlieb is drawing positive reviews, there are also a number of suggestions on how the FDA could do better.
Want a better FDA? Hire excellent staffers. Lots of them
Gottlieb clearly has a mandate from the president to improve the FDA and find a better way to hurry along the regulatory process, in all areas outside of oncology, which is widely viewed by the industry — and Gottlieb — as the model for all other divisions in the agency. So we asked the members of the E100 what they would do differently at the FDA, and what they would be sure to leave unmolested.
Staffing is clearly an issue for a number of the execs who completed the survey. The FDA is understaffed in key areas, and most want to see generics pushed through faster. Biotech execs want more regulators, and they want better staff with more expertise in their field.
That topic came up repeatedly, in different ways.
Arie Belldegrun, the CEO of Kite, now in the last leg of its regulatory review for a groundbreaking CAR-T treatment, says it would be best to leave the review process alone. Positive change, he adds, will come from experienced, highly motivated staffers at the FDA. And he suggests taking a leaf from the new Chinese playbook.
Fight for more experienced and high quality manpower to do the work and complete it in a timely manner. Keep your examiners satisfied and feeling accomplished. Learn from the Chinese FDA and CDE!! What a change there!! I have just returned from a very impressive visit and meetings with the legislators and examiners in Beijing. They are excited, engaged, full of energy, and have significantly expanded their professional workforce. No complaints on being short of staff or lack of great candidates ( many of them trained in the US!). Highly recommend a visit with them ASAP.
There were several biting remarks about the eteplirsen controversy, with lingering anger evident that the agency chose to make an exception for Sarepta and its Duchenne drug. However, it was also clear that there’s plenty of support for responsible use of biomarkers and surrogate endpoints in coming up with faster approvals for many kinds of drugs, including those headed to the rare disease field.
Nancy Simonian, the CEO at Syros Pharmaceuticals, had this to say:
Keep the focus on moving innovative products swiftly forward for diseases with high unmet need. Provide more consistent guidance on biomarker driven strategies. Promote earlier exploration of combinations and adaptive trial designs to allow more efficient development. Enhance the perspective of the patient in decisions on what constitutes clinical benefit and risk/reward.
From reviewing the survey and moderating a recent conversation on FDA reform in Cambridge, MA, I’ll emphasize that there’s considerable support for making certain that patient perspectives are responsibly included in the review process, including a bigger focus on patient reported outcomes in clinical trials.
Also, biotech R&D is increasingly less and less likely to be neatly divided along the divisional boundaries inside the agency. That is causing some added frustration. Here’s one CEO, anonymously:
Change the divisional framework. It is an old fashioned way to divide a world that is increasingly molecular.
And don’t forget about doctors and patients, urges scientist and biotech investor/entrepreneur Greg Verdine.
Emphasize the educational mission of the FDA to help patients and prescribers navigate the risk/benefit equation for drugs.
We also asked CEOs about publishing CRLs and found some solid backing for that.
Self restraint on drug prices? It’s not enough
To be sure, there are some people in the industry who like the idea that companies can rein in drug prices to help lance the boil on this issue. Up until a few days ago, the general consensus was that the Trump administration would try something definitive to slash drug prices. That is less and less likely, if the reporting from Washington DC is accurate. But self discipline on pricing won’t be enough, according to 63% of the survey group.
“Insincere,” remarked one. You mean a cap of 10%? asks another. That’s still way above inflation, say some. And the general public won’t buy it now in any case, especially as long as a few price gougers ruin public opinion about biopharma.
“The public’s perception is now so negative that more will be needed to turn it around. A few remaining rotten apples are enough to sour it for the rest.”
“I think it is a piece of the puzzle, but on its own a commitment without demonstrable change and action will not fundamentally change the perception. Need to keep the innovation up and making drugs that have a big impact on patients’ lives.”
Several noted that the issue isn’t about drug pricing per se, but more about the stiff out-of-pocket charges that are being levied. As long as that remains in issue, manufacturers can cut prices all they want without resolving the issue.
Sustainable pricing? Hmmmm…
A solid majority of 60% believe that the pricing on new drugs this year is sustainable for all concerned. But a significant minority — 22% — said no.
Access to capital
Close to 80% of our group in the E100 are bullish about access to capital, with many ranking it good or excellent.
“As an IO company with positive human data, I feel I can get all the capital I want.”
Others expressed enthusiasm about non-traditional capital making it into the market, and several remarked that in this day and age in biotech, good companies with good ideas have good access to cash.
But several sounded a note of caution. VCs appear to be increasingly interested only in incubating their own companies, said a few, not looking outside the ranks to invest in biotechs with lots of potential.
And God help you if the data sour — investors appear to be increasingly harsh in the face of a setback, say some.
IPOs: Not bad, but not 2014
The biotech IPO market, which began to show some fresh signs of liveliness after the survey went out, drew definite skepticism. 70% said the IPO market was average or only fair. Only one in four thought it was good.
And there isn’t much belief that things will get much better in the short term, according to 65%. The big boom of 2014 is definitely dead, said several execs. And it’s not coming back soon.
After all, say some, generalist investors are out of biotech and there are lots of factors beyond the control of biotech that dictate investment trends.
“The IPO market seems to be supporting high-quality companies, but I don’t see a return to the 2014/2015 market.”
It will go up, Arcturus CEO Joseph Payne writes: “The volatility index (VIX) has been consistently stable for the last 6 months (post election). This has been the my preferred data source as a predictor of bubbles popping. In other words, IPOs will be “the same” or “go up” as long as the VIX stays under 15.”
As I write this, the biotech sector is experiencing a spike, and we’ll see how sustainable it is by the time we ask this question again.
Hiring: Heck yes. But good talent is hard to find
A big yes here. From the beginning of this survey, which is now getting close to a year ago, these execs were in a hiring mode. In the latest round, 83% said they were adding staff in the second quarter; 86% will be adding staff later in the year. No one is reducing staff. And that fits in with overall industry patterns, where adding staff is now the name of the game.
“Both of the companies I am building are hiring aggressively,” says one.
Brexit, Schmexit: “Good global hiring in UK with no impact from Brexit uncertainties to date.”
“Market for talent is getting very tight in San Francisco.”
“We’re hiring aggressively but finding the right people is a challenge with the supply not keeping anywhere near the demand,” notes Yuval Cohen.
Deal Watch: Show me the money
Talk to the average Big Pharma exec, and you’ll get an earful about how expensive biotech valuations are these days. Ask a biotech exec, though, and things are just so-so.
More than half of the execs say that valuations are only average.
Why is that? Despite big deals for Actelion and an early Ariad buyout, M&A in biotech is in the slow lane. Tax reform is still hangingin limbo and despite all the promises, we’re not seeing anything like the activity anticipated in 2017.
Right now it’s a case of “show me the money.” Once the deals and dollars (or euros) flow, they’ll be ready to believe again. In the meantime, they’re on the sidelines with all the dealmakers.
This is the third Endpoints 100 executive survey. Previous survey results are available here, and here. The Endpoints 100 is an invite-only group of biopharma chief executives, polled once-a-quarter.