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.

M&A: a crit­i­cal dri­ver for sus­tain­able top-line growth in health­care

2021 saw a record $600B in healthcare M&A activity. In 2022, there is an anticipated slowdown in activity, however, M&A prospects remain strong in the medium to long-term. What are future growth drivers for the healthcare sector? Where might we see innovations that drive M&A? RBC’s Andrew Callaway, Global Head, Healthcare Investment Banking discusses with Vito Sperduto, Global Co-Head, M&A.

15 LGBTQ lead­ers in bio­phar­ma; Paul Stof­fels’ Gala­pa­gos re­vamp; As­traZeneca catch­es up in AT­TR; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

A return to in-person conferences also marks a return to on-the-ground reporting. My colleagues Beth Synder Bulik and Nicole DeFeudis were on-site at Cannes Lions, bringing live coverage of pharma’s presence at the ad festival — accompanied by photos from Clara Bui, our virtual producer, that bring you right to the scene. You can find a recap (and links to all the stories) below.

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David Loew (Ipsen)

Ipsen snags an ap­proved can­cer drug in $247M M&A deal as an­oth­er bat­tered biotech sells cheap

You can add Paris-based Ipsen to the list of discount buyers patrolling the penny stock pack for a cheap M&A deal.

The French biotech, which has had plenty of its own problems to grapple with, has swooped in to buy Epizyme $EPZM for $247 million in cash and a CVR with milestones attached to it. Epizyme shareholders, who had to suffer through a painfully soft launch of their EZH2a inhibitor cancer drug Tazverik, will get $1.45 per share along with a $1 CVR tied to achieving $250 million in sales from the drug over four consecutive quarters as well as an OK for second-line follicular lymphoma by 1 Jan. 2028.

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AstraZeneca's new Evusheld direct to consumer campaign aims to reach more immunocompromised patients.

As­traZeneca de­buts first con­sumer cam­paign for its Covid-19 pro­phy­lac­tic Evusheld — and a first for EUA drugs

AstraZeneca’s first consumer ad for Evusheld is also a first for drugs that have been granted emergency use authorizations during the pandemic.

The first DTC ad for a medicine under emergency approval, the Evusheld campaign launching this week aims to raise awareness among immunocompromised patients — and spur more use.

Evusheld nabbed emergency authorization in December, however, despite millions of immunocompromised people looking for a solution and now more widespread availability of the drug.

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De­spite a slow start to the year for deals, PwC pre­dicts a flur­ry of ac­tiv­i­ty com­ing up

Despite whispers of a busy year for M&A, deal activity in the pharma space is actually down 30% on a semi-annualized basis, according to PwC’s latest report on deal activity. But don’t rule out larger deals in the second half of the year, the consultants said.

PwC pharmaceutical and life sciences consulting solutions leader Glenn Hunzinger expects to see Big Pharma companies picking up earlier stage companies to try and fill pipeline gaps ahead of a slew of big patent cliffs. Though a bear market continues to maul the biotech sector, Hunzinger said recent deals indicate that pharma companies are still paying above current trading prices.

Joe Wiley, Amryt Pharma CEO

Am­ryt Phar­ma sub­mits a for­mal dis­pute res­o­lu­tion to the FDA over re­ject­ed skin dis­ease drug

The story of Amryt Pharma’s candidate for the genetic skin condition epidermolysis bullosa, or EB, will soon enter another chapter.

After the Irish drugmaker’s candidate, dubbed Oleogel-S10 and marketed as Filsuvez, was handed a CRL earlier this year, the company announced in a press release that it plans to submit a formal dispute resolution request for the company’s NDA for Oleogel-S10.

Sen. Thom Tillis (R-NC) (J. Scott Applewhite/AP Images)

Phar­ma-friend­ly sen­a­tor calls on FDA for a third time to show patent pro­tec­tions should­n't be blamed for high drug prices

North Carolina Republican Sen. Thom Tillis made a name for himself in the 2020 election cycle as the darling of the pharma industry, accepting hundreds of thousands in campaign contributions, even from the likes of Pfizer CEO Albert Bourla.

Those contributions have led Tillis to attempt to re-write patent laws in pharma’s favor, a move which failed to gain steam in 2019, and request for a third time since January that the FDA should help stop “the false narrative that patent protections are to blame for high drug prices.”

EMA signs off on 3 drugs re­cent­ly re­ject­ed by FDA, in­clud­ing Bio­Mar­in's new he­mo­phil­ia gene ther­a­py

The EMA’s human medicines committee on Friday recommended three new drugs for approval or conditional approval, even as their US counterparts have rejected these three for various reasons.

In a major move, CHMP offered a thumbs-up to a conditional marketing authorization for the first gene therapy to treat severe hemophilia A, although the agency cautioned that it’s so far unknown how long the effects of infusion will last.

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Joe Papa (Ryan Remiorz/The Canadian Press via AP, File)

Joe Pa­pa re­signs as chair of Bausch Health as bil­lion­aire John Paul­son takes over

Joe Papa, chair of Bausch Health, officially resigned on Thursday and the board appointed billionaire hedge fund manager John Paulson as the new chair, effective immediately.

The specialty pharma company sought to make clear that Papa’s abrupt departure “was not due to any dispute or disagreement with the Company, its management or the Board on any matter relating to the Company’s operations, policies or practices.”

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