Ver­tex shares surge as its cys­tic fi­bro­sis com­bo proves mar­gin­al­ly pos­i­tive, but pay­ers may not be so im­pressed

Ver­tex Chief Med­ical Of­fi­cer Jef­frey Chodake­witz

Ver­tex came up with the pos­i­tive da­ta that an­a­lysts were look­ing for in piv­otal stud­ies of a com­bi­na­tion drug for cys­tic fi­bro­sis, tee­ing up new drug ap­pli­ca­tions in the US and Eu­rope lat­er this year. The stock $VRTX re­spond­ed in kind, shoot­ing up a whop­ping 17% in af­ter-mar­ket trad­ing, even though there’s lit­tle sign that the da­ta on dis­play will thaw some frigid re­la­tion­ships with a large seg­ment of pay­ers who clear­ly are re­luc­tant to cov­er these drugs.

The good news: The com­bi­na­tion of teza­caftor (‘661) and Ka­ly­de­co (iva­caftor) de­liv­ered a mean in­crease of 4% im­prove­ment in FEV-1 in pa­tients with two copies of a ge­net­ic mu­ta­tion, the F508del group. Orkam­bi hit 3%. That’s a wee bit bet­ter, of course, which is par­tic­u­lar­ly good if you con­sid­er that sell-side an­a­lysts were on­ly look­ing for a match here to de­clare a vic­to­ry.

In a sec­ond study, the FEV-1 im­prove­ment in the new com­bo was 6.8% com­pared to 4.7% for Ka­ly­de­co alone. That should help open the mar­ket a bit, says Jef­feries’ Bri­an Abra­hams, who was clear­ly stoked at the prospect that fu­ture triples would do even bet­ter, win­ning a big fu­ture for it­self in the CF field. Es­ti­mat­ed peak sales of a triple: $3 bil­lion.

Sig­nif­i­cant­ly, on­ly 3% of pa­tients stopped tak­ing the com­bo due to side ef­fects, com­pared to 15% of Orkam­bi pa­tients in its piv­otal test. And the com­bo should there­fore give those pa­tients who had to stop a new op­tion with a bet­ter chance of suc­cess.

Not­ed Abra­hams Tues­day evening:

We had be­lieved ‘661/Ka­ly­de­co just need­ed to show 1) rea­son­able com­pa­ra­ble (2-3%) FEV-1 ben­e­fits in F508 pa­tients 2) with­out any ma­jor safe­ty is­sues, for the trans­lata­bil­i­ty of VRTX’s pre­clin­i­cal as­says to be reaf­firmed and for the com­bo to serve as a sol­id, low­er-DDI back­bone for the key triple-com­bos. With two com­po­nents now de-risked, and mul­ti­ple shots on goal for the third (‘440, ‘152, ‘659 POC da­ta 2H17, with hun­dreds more cor­rec­tors pre­clin­i­cal­ly), we be­lieve this serves to fur­ther dis­tance VRTX con­sid­er­ably from po­ten­tial com­peti­tors — which should en­able the mar­ket to bet­ter ap­pre­ci­ate the like­ly LT sus­tain­abil­i­ty of their CF fran­chise.

The bad news: Some pay­ers, par­tic­u­lar­ly in Eu­rope, have been woe­ful­ly un­der­whelmed by Orkam­bi, which they view as a mod­est im­prove­ment at best that can’t jus­ti­fy the price — $259,000 — Ver­tex has been seek­ing. That re­luc­tance on pay­ers’ part has kept rev­enue drag­ging sig­nif­i­cant­ly be­hind ini­tial ex­pec­ta­tions. And there’s no con­vinc­ing rea­son to be­lieve that the com­bo da­ta is so strong pay­ers will drop their ob­jec­tions and em­brace the new pair-up.

Galap­gos and Ab­b­Vie, mean­while, have a triple threat of their own in the clin­ic for cys­tic fi­bro­sis. Ver­tex is one step fur­ther ahead tonight on CF, but this race has a long way to go.

“The teza­caftor/iva­caftor com­bi­na­tion treat­ment demon­strat­ed clin­i­cal­ly mean­ing­ful ben­e­fits, with a fa­vor­able safe­ty pro­file, across mul­ti­ple pa­tient groups,” said Jef­frey Chodake­witz, EVP and Chief Med­ical Of­fi­cer at Ver­tex. “This com­bi­na­tion treat­ment may pro­vide a promis­ing new op­tion for treat­ing the un­der­ly­ing cause of CF in the fu­ture and brings us in­creas­ing­ly clos­er to our goal of de­vel­op­ing new med­i­cines for all peo­ple with the dis­ease.”

Brent Saunders [Getty Photos]

UP­DAT­ED: Ab­b­Vie seals $63B deal to buy a trou­bled Al­ler­gan — spelling out $1B in R&D cuts

Brent Saunders has found his way out of the current fix he’s in at Allergan $AGN. He’s selling the company to AbbVie for $63 billion in the latest example of the hot M&A market in biopharma.

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FDA re­jects Ac­er's rare dis­ease drug, asks for new tri­al — shares crater

Ac­er Ther­a­peu­tics’ bid to re­pur­pose celipro­lol — a be­ta-block­er on the mar­ket for hy­per­ten­sion — as a treat­ment for a rare, in­her­it­ed con­nec­tive tis­sue dis­or­der has hit a se­vere set­back. The New­ton, Mass­a­chu­setts-based com­pa­ny on Tues­day said the FDA re­ject­ed the drug and has asked for an­oth­er clin­i­cal tri­al.

The com­pa­ny’s shares $AC­ER cratered near­ly 77% to $4.47 in Tues­day morn­ing trad­ing.

Richard Gonzalez testifying in front of Senate Finance Committee, February 2019 [AP Images]

Ab­b­Vie's $63B buy­out spot­lights the re­turn of ma­jor M&A deals — de­spite the back­lash

Big time M&A is back. But for how long?

Over the past 18 months we’ve now seen three ma­jor buy­outs an­nounced: Take­da/Shire; Bris­tol-My­ers/Cel­gene and now Ab­b­Vie/Al­ler­gan. And with this lat­est deal it’s in­creas­ing­ly clear that the sharp fall from grace suf­fered by high-pro­file play­ers which have seen their share prices blast­ed has cre­at­ed an open­ing for the growth play­ers in big phar­ma to up their game — in sharp con­trast to the pop­u­lar bolt-on deals that have been dri­ving the growth strat­e­gy at No­var­tis, Mer­ck, Roche and oth­ers.

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UP­DAT­ED: In sur­prise switch, Bris­tol-My­ers is sell­ing off block­buster Ote­zla, promis­ing to com­plete Cel­gene ac­qui­si­tion — just lat­er

Apart from revealing its checkpoint inhibitor Opdivo blew a big liver cancer study on Monday, Bristol-Myers Squibb said its plans to swallow Celgene will require the sale of blockbuster psoriasis treatment Otezla to keep the Federal Trade Commission (FTC) at bay.

The announcement — which has potentially delayed the completion of the takeover to early 2020 — irked investors, triggering the New York-based drugmaker’s shares to tumble Monday morning in premarket trading.

Celgene’s Otezla, approved in 2014 for psoriasis and psoriatic arthritis, is a rising star. It generated global sales of $1.6 billion last year, up from the nearly $1.3 billion in 2017. Apart from the partial overlap of Bristol-Myers injectable Orencia, the company’s rival oral TYK2 psoriasis drug is in late-stage development, after the firm posted encouraging mid-stage data on the drug, BMS-986165, last fall. With Monday’s decision, it appears Bristol-Myers is favoring its experimental drug, and discounting Otezla’s future.

The move blindsided some analysts. Credit Suisse’s Vamil Divan noted just days ago:

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Novotech CEO Dr. John Moller

Novotech CRO Award­ed Frost & Sul­li­van Best Biotech CRO Asia-Pa­cif­ic 2019

Known in the in­dus­try as the Asia-Pa­cif­ic CRO, Novotech is now lead CRO ser­vices provider for the grow­ing num­ber of in­ter­na­tion­al biotechs se­lect­ing the re­gion for their stud­ies.

Re­flect­ing this Asia-Pa­cif­ic growth, Novotech staff num­bers are up 20% since De­cem­ber 2018 to 600 in-house clin­i­cal re­search peo­ple across a full range of ser­vices, across the re­gion.

Novotech’s ca­pa­bil­i­ties have been rec­og­nized by an­a­lysts like Frost & Sul­li­van, most re­cent­ly with the pres­ti­gious Asia-Pa­cif­ic CRO Biotech of the year award for best prac­tices in clin­i­cal re­search for biotechs for the fifth year. See oth­er awards here.

SQZ, Ery­tech kick off $57M cell ther­a­py part­ner­ship; Jean-Paul Kress lands new CEO gig at Mor­phoSys

→ In a mar­riage of two tech­nolo­gies meant to make cell ther­a­pies more pow­er­ful, SQZ Biotech is team­ing up with France’s Ery­tech Phar­ma for a col­lab­o­ra­tion, with $57 mil­lion re­served for the first project and $50 mil­lion for each sub­se­quent ap­proval (prod­uct or in­di­ca­tion). Hav­ing ac­cess to Ery­tech’s method of fash­ion­ing ther­a­peu­tics from red blood cells, the Cam­bridge, MA-based com­pa­ny said, will am­pli­fy SQZ’s cell en­gi­neer­ing ca­pa­bil­i­ties and al­low them to de­vleop a new class of im­munomod­u­la­to­ry ther­a­pies. Its own tech — so far ap­plied in can­cer but al­so has po­ten­tial in di­a­betes — tem­po­rary dis­rupts the cell mem­brane by squeez­ing the cell, thus cre­at­ing a brief win­dow for tar­get ma­te­ri­als such as anti­gens to en­ter.

Tasly Bio­phar­ma pitch­es long-await­ed IPO — will it trig­ger an­oth­er $1B gold rush on HKEX?

In the run up to the Hong Kong stock ex­change’s an­tic­i­pat­ed rule change — open­ing the door for Chi­nese pre-rev­enue biotechs to go pub­lic clos­er to home — more than a year ago, Tasly Bio­phar­ma was one of the big play­ers whose ru­mored in­ter­est helped stoke en­thu­si­asm for the new list­ing venue. The com­pa­ny has since kept the drum­roll rum­bling in the back­ground, rais­ing a pre-IPO round and con­vinc­ing part­ner Trans­gene to swap own­er­ship in a joint ven­ture for eq­ui­ty. Now the oth­er shoe has fi­nal­ly dropped as ex­ecs out­line plans for a pipeline dom­i­nat­ed by car­dio­vas­cu­lar drugs.

Suf­fer­ing No­var­tis part­ner Cona­tus grabs the ax and packs it in on NASH af­ter a se­ries of set­backs

The NASH par­ty is over at No­var­tis-backed Cona­tus. And this time they’re turn­ing off the lights.

More than 2 years af­ter No­var­tis sur­prised the biotech in­vest­ment com­mu­ni­ty with its $50 mil­lion up­front and promise of R&D sup­port to part­ner with the lit­tle biotech on NASH — ig­nit­ing a light­ning strike for the share price — Cona­tus $CNAT is back with the lat­est bit­ter tale to tell about em­ri­c­as­an, which once in­spired con­fi­dence at the phar­ma gi­ant.

With 4 more biotech IPOs due to wrap up Q2, how is the class of 2019 far­ing?

With 22 biotech IPOs on the books and four more set to price in the last week of June, in­vest­ment ad­vis­er Re­nais­sance Cap­i­tal has tak­en the pulse of the re­cent rush.

By the IPO ex­perts’ count, 25 out of 32 health­care of­fer­ings this year have been from biotechs — dif­fer­ing slight­ly from Brad Lon­car’s tal­ly — and the over­all pic­ture is one of un­der­per­for­mance. While they av­er­aged a first-day re­turn of 9.0%, col­lec­tive­ly they have trad­ed down to a 5.9% re­turn. Turn­ing Point $TP­TX and Cor­texyme $CRTX emerged on top at the half-year mark, ris­ing 135% and 109% re­spec­tive­ly.