The Sen­ate dis­sects Mar­tin Shkre­li's scheme to grab a $1B wind­fall

What­ev­er else you may have to say about Mar­tin Shkre­li and his team at Tur­ing, they did their home­work.

They want­ed to find a poor­ly per­form­ing or­phan drug serv­ing a small pa­tient pop­u­la­tion that had a sole-source man­u­fac­tur­er to sup­ply the mar­ket, so dis­tri­b­u­tion could be care­ful­ly con­trolled. And Dara­prim at Im­pax fit that bill per­fect­ly.

Be­cause a “clas­sic closed dis­tri­b­u­tion play” like Dara­prim served a small pa­tient pop­u­la­tion, they not­ed in emails and doc­u­ments cit­ed by the new Sen­ate re­port on drug pric­ing, there weren’t enough peo­ple in­volved to gen­er­ate an ef­fec­tive lob­by­ing cam­paign that might greet a sud­den price hike. Oth­er gener­ic man­u­fac­tur­ers could be barred from get­ting their hands on the prod­uct, keep­ing com­pe­ti­tion at bay. And the price could be set where they want­ed it, tak­ing a drug with lit­tle an­nu­al rev­enue and cre­at­ing an op­por­tu­ni­ty to make hun­dreds of mil­lions of dol­lars in a quick wind­fall.

Shkre­li had this to say to an in­vestor:

I think it will be huge. We raised the price from $1,700 per bot­tle to $75,000. Pre­vi­ous­ly im­pax sold 10,000 bot­tles per an­num (50% is giv­en away, how­ev­er). So 5,000 pay­ing bot­tles at the new price is $375,000,000—al­most all of it is prof­it and I think we will get 3 years of that or more. Should be a very hand­some in­vest­ment for all of us. Let’s all cross our fin­gers that the es­ti­mates are ac­cu­rate

As the deal was com­ing to fruition, he not­ed:

Very good. Nice work as usu­al. $1bn here we come.”

Once they got this drug, the com­pa­ny al­so bent over back­ward to make sure they were ship­ping Dara­prim on­ly to cus­tomers who would use it for pa­tients, and not for any­one — es­pe­cial­ly com­pound­ing phar­ma­cies — who might want to pro­duce a knock­off.

“Re­strict­ed dis­tri­b­u­tion in this case was a de­lib­er­ate part of Tur­ing’s plan to de­fend its shock­ing price in­crease and sub­se­quent in­creased rev­enue against po­ten­tial com­pe­ti­tion,” the Sen­ate re­port on price goug­ing states.

Shkre­li was fol­low­ing a play­book he set up at Retrophin, where he cre­at­ed the busi­ness mod­el with its ac­qui­si­tion of an­oth­er drug named Thi­o­la.

Here’s what he had to say to a Retrophin in­vestor:

The drug com­pa­nies are afraid. Small ones, big ones, etc. Big price in­creas­es are hor­ri­fy­ing be­cause most ex­ec­u­tives over­es­ti­mate changes in de­mand. It comes most­ly from phar­ma’s his­to­ry as qua­si-con­sumer prod­ucts. . . . The next gen­er­a­tion of phar­ma guys (or the smart ones) un­der­stand the in­elas­tic­i­ty of cer­tain prod­ucts. The in­sur­ers re­al­ly don’t care. They just pass it through and fo­cus on man­ag­ing care for physi­cian pay­ments and block­busters. They as­sume some­one will gener­i­cize it if it is mak­ing too much mon­ey, and they’re right.

So I don’t re­al­ly think of it the same way as oth­ers. I think this deal, if we pull it off, is worth $100m-$200m to our com­pa­ny. We’ll see!

I fig­ure this dy­nam­ic may not last for­ev­er, you need to max­i­mize op­por­tu­ni­ties while you can.

Shkre­li was right on some things, and wrong on a few crit­i­cal el­e­ments. The biggest blun­der was that he could hike the price of Dara­prim more than 5000% overnight with­out trig­ger­ing a pub­lic back­lash. Af­ter Andy Pol­lack at The New York Times wrote about it, the con­tro­ver­sy went vi­ral, trig­ger­ing an on­line mob of crit­ics to blast the deal and push law­mak­ers to take ac­tion.

On the oth­er hand, af­ter Shkre­li re­neged on a promise to low­er the price, he re­signed, the con­tro­ver­sy ebbed away and Dara­prim is still sold by Tur­ing with the same stick­er price.

Shkre­li him­self im­me­di­ate­ly re­spond­ed to the re­port with his usu­al blend of out­rage and fin­ger-point­ing.

https://twit­ter.com/Mar­tin­Shkre­li/sta­tus/811632835736039424

I queried Shkre­li on Twit­ter, par­tic­u­lar­ly in­ter­est­ed in whether he felt that de­spite all the con­tro­ver­sy, he and Tur­ing es­sen­tial­ly got away with it all, giv­en that the price for Dara­prim re­mains fixed at the in­flat­ed fig­ure. Here’s the ex­change.

https://twit­ter.com/Mar­tin­Shkre­li/sta­tus/811940094353539072

https://twit­ter.com/Mar­tin­Shkre­li/sta­tus/811940416299925504

https://twit­ter.com/Mar­tin­Shkre­li/sta­tus/811941471930687489

Guap, by the way, is slang for much mon­ey. Shkre­li is sched­uled to go on tri­al in June on fed­er­al charges that he was en­gaged in fraud re­gard­ing guap that had noth­ing to do with the prices he charged for drugs.

John Chiminski, Catalent CEO - File Photo

'It's a growth play': Catal­ent ac­quires Bris­tol-My­er­s' Eu­ro­pean launch pad, ex­pand­ing glob­al CD­MO ops

Catalent is staying on the growth track.

Just two months after committing $1.2 billion to pick up Paragon and take a deep dive into the sizzling hot gene therapy manufacturing sector, the CDMO is bouncing right back with a deal to buy out Bristol-Myers’ central launchpad for new therapies in Europe, acquiring a complex in Anagni, Italy, southwest of Rome, that will significantly expand its capacity on the continent.

There are no terms being offered, but this is no small deal. The Anagni campus employs some 700 staffers, and Catalent is planning to go right in — once the deal closes late this year — with a blueprint to build up the operations further as they expand on oral solid, biologics, and sterile product manufacturing and packaging.

This is an uncommon deal, Catalent CEO John Chiminski tells me. But it offers a shortcut for rapid growth that cuts years out of developing a green fields project. That’s time Catalent doesn’t have as the industry undergoes unprecedented expansion around the world.

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Dave Barrett, Brian Chee, Amir Nashat, Amy Schulman. Polaris

Bob Langer's first port of call — Po­laris Part­ners — maps $400M for ninth fund

Health and tech ven­ture group Po­laris Part­ners, which counts Alec­tor, Al­ny­lam and Ed­i­tas Med­i­cine as part of its port­fo­lio, is set­ting up its ninth fund, rough­ly two years af­ter it closed Po­laris VI­II with $435 mil­lion in the bank, sur­pass­ing its tar­get by $35 mil­lion.

The Boston-based firm, in an SEC fil­ing, said it in­tends to raise $400 mil­lion for the fund. Po­laris — which rou­tine­ly backs com­pa­nies mold­ed out of the work done in the lab of pro­lif­ic sci­en­tist Bob Langer of MIT  — typ­i­cal­ly in­vests ear­ly, and sticks around till com­pa­nies are in the green. Like its peers at Flag­ship and Third Rock, Po­laris is all about cham­pi­oning the lo­cal biotech scene with a steady flow of start­up cash.

The top 10 block­buster drugs in the late-stage pipeline — Eval­u­ate adds 6 new ther­a­pies to heavy-hit­ter list

Vertex comes in for a substantial amount of criticism for its no-holds-barred tactical approach toward wresting the price it wants for its commercial drugs in Europe. But the flip side of that coin is a highly admired R&D and commercial operation that regularly wins kudos from analysts for their ability to engineer greater cash flow from the breakthrough drugs they create.

Both aspects needed for success in this business are on display in the program backing Vertex’s triple for cystic fibrosis. VX-659/VX-445 + Tezacaftor + Ivacaftor — it’s been whittled down to 445 now — was singled out by Evaluate Pharma as the late-stage therapy most likely to win the crown for drug sales in 5 years, with a projected peak revenue forecast of $4.3 billion.

The latest annual list, which you can see here in their latest world preview, includes a roster of some of the most closely watched development programs in biopharma. And Evaluate has added 6 must-watch experimental drugs to the top 10 as drugs fail or go on to a first approval. With apologies to the list maker, I revamped this to rank the top 10 by projected 2024 sales, instead of Evaluate's net present value rankings.

It's how we roll at Endpoints News.

Here is a quick summary of the rest of the top 10:

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Partners Innovation Fund

David de Graaf now has his $28.5M launch round in place, build­ing a coen­zyme A plat­form in his lat­est start­up

Long­time biotech ex­ec David de Graaf has the cash he needs to set up the pre­clin­i­cal foun­da­tion for his coen­zyme A me­tab­o­lism com­pa­ny Comet. A few high-pro­file in­vestors joined the ven­ture syn­di­cate to sup­ply Comet with $28.5 mil­lion in launch mon­ey — enough to get it two years in­to the plat­form-build­ing game, with­in knock­ing dis­tance of the clin­ic.

Canaan jumped in along­side ex­ist­ing in­vestor Sofinno­va Part­ners to co-lead the round, with par­tic­i­pa­tion by ex­ist­ing in­vestor INKEF Cap­i­tal and new in­vestor BioIn­no­va­tion Cap­i­tal.

Step­ping on Roche's toes, Mer­ck cuts in­to SCLC niche with third-line Keytru­da OK

In the in­creas­ing­ly crowd­ed check­point race, small cell lung can­cer has been a rare area where Roche, a sec­ond run­ner-up, has a lead over the en­trenched lead­ers Mer­ck and Bris­tol-My­ers Squibb. But Mer­ck is fi­nal­ly mak­ing some head­way in that di­rec­tion with the lat­est ap­proval for its PD-1 star.

The lat­est green light en­dors­es Keytru­da in the third-line treat­ment of metasta­t­ic SCLC, where it would be giv­en to pa­tients whose dis­ease ei­ther don’t re­spond to or re­lapse af­ter chemother­a­py, which would have fol­lowed at least one pri­or line of ther­a­py.

Right back at you, Pfiz­er: BeiGene and a Pfiz­er spin­out launch a new­co to de­vel­op a MEK/BRAF in­hibitor that could ri­val $11.4B com­bo

A day af­ter Pfiz­er bought Ar­ray and its ap­proved can­cer com­bo, BeiGene and Pfiz­er spin­out Spring­Works have part­nered in launch­ing a new biotech that has an eye on the very same mar­ket the phar­ma gi­ant just paid bil­lions for. And they’re plan­ning on us­ing an ex-Pfiz­er drug to do it.

In a nut­shell, Chi­na’s BeiGene is toss­ing in a pre­clin­i­cal BRAF in­hibitor — BGB-3245, which cov­ers both V600 and non-V600 BRAF mu­ta­tions — for a big stake in a new, joint­ly con­trolled biotech called Map­Kure with Bain-backed Spring­Works.

Sanofi aligns it­self with Google to stream­line drug de­vel­op­ment

Tech­nol­o­gy is bleed­ing in­to health­care, and big phar­ma is rid­ing the wave. Sanofi $SNY ap­point­ed its first chief dig­i­tal of­fi­cer this Feb­ru­ary, fol­low­ing the foot­steps of its peers. By May, the French drug­mak­er and some of its big phar­ma com­pa­tri­ots joined forces with Google par­ent Al­pha­bet’s Ver­i­ly unit to aug­ment clin­i­cal tri­al re­search. On Tues­day, the Parisian com­pa­ny tied up with Google to ac­cess its cloud com­put­ing and ar­ti­fi­cial in­tel­li­gence tech to spur the de­vel­op­ment of new ther­a­pies.

Af­ter watch­ing its share price soar on a Bloomberg re­port and heat­ed ru­mors, Bio­haven stock takes a bil­lion-dol­lar bath

Back in April, Biohaven Pharmaceutical became one hot biotech stock $BHVN based on a report in Bloomberg that some “potential bidders” had been kicking the tires at the biotech, which has a lead drug for migraines. Then the rumor mill really started to smoke when execs canceled a presentation at an investor conference a little more than a week ago.

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UP­DAT­ED: Roche fields first ap­proval for Ro­z­lytrek in the run-up to a show­down with Bay­er, Pfiz­er

While it’s wait­ing to hear back from FDA reg­u­la­tors, Roche is be­gin­ning the vic­to­ry lap for en­trec­tinib in Japan.

Roche is giv­ing Bay­er a run for their mon­ey with this tu­mor-ag­nos­tic drug, which tar­gets NTRK gene fu­sions. Now dubbed Ro­z­lytrek, it’s sanc­tioned to treat adult and pe­di­atric pa­tients in Japan with neu­rotroph­ic ty­ro­sine re­cep­tor ki­nase fu­sion-pos­i­tive, ad­vanced re­cur­rent sol­id tu­mors.