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THREE SCIENTISTS WIN NOBEL PRIZE IN MEDICINE FOR PARASITE THERAPIES – Three scientists from Japan, China and Ireland whose discoveries led to the development of potent new drugs against parasitic diseases including malaria and elephantiasis won the Nobel Prize for Medicine last week. Irish-born William Campbell and Japan’s Satoshi Omura won half of the prize for discovering avermectin, a derivative of which has been used to treat hundreds of millions of people with river blindness and lymphatic filariasis, or elephantiasis. China’s Tu Youyou was awarded the other half of the prize for discovering artemisinin, a drug that has slashed malaria deaths and has become the mainstay of fighting the disease. She is China’s first Nobel laureate in medicine. Some 3.4 billion people, most of them in poor countries, are at risk of contracting the three parasitic diseases. “These two discoveries have provided humankind with powerful new means to combat these debilitating diseases that affect hundreds of millions of people annually,” the Nobel Assembly at Sweden’s Karolinska Institute said. “The consequences in terms of improved human health and reduced suffering are immeasurable.” Today, the medicine ivermectin, a derivative of avermectin made by Merck & Co. (Kenilworth NJ), is used worldwide to fight roundworm parasites, while artemisinin-based drugs from firms including Novartis AG (Basel CHE) and Sanofi SA (Paris) are the main weapons against malaria.
Omura and Campbell made their breakthrough in fighting parasitic worms, or helminths, after studying compounds from soil bacteria. That led to the discovery of avermectin, which was then further modified into ivermectin. The treatment is so successful that river blindness and lymphatic filariasis are now on the verge of being eradicated. Omura, 80, said the real credit for the achievement should go to the ingenuity of the Streptomyces bacteria, whose naturally occurring chemicals were so effective at killing off parasites. Omura is professor emeritus at Kitasato University in Japan, while Campbell, 85, is research fellow emeritus at Drew University in Madison, NJ. Tu, meanwhile, turned to a traditional Chinese herbal medicine in her hunt for a better malaria treatment, following the declining success of the older drugs chloroquine and quinine. She found that an extract from the plant Artemisia annua was sometimes effective but the results were inconsistent, so she went back to ancient literature, including a recipe from AD 350, in the search for clues. Tu, 84, has worked at the China Academy of Traditional Chinese Medicine since 1965.
EXPRESS SCRIPTS TO COVER COSTLY, NEW CHOLESTEROL TREATMENTS -- Express Scripts Holding Co. (St. Louis MO), the largest manager of prescription-drug plans for U.S. employers and health plans, said it has reached deals to cover two expensive new cholesterol drugs and expects to spend no more than $750 million on them next year. The injected drugs--Repatha from Amgen Inc. (Thousand Oaks CA) and Praluent from partners Regeneron Pharmaceuticals Inc. (Tarrytown NY) and Sanofi SA (Paris) each have list prices of more than $14,000 a year. They were approved by U.S. regulators during the summer and belong to a new class of medicines called PCSK9 inhibitors that can slash “bad” LDL cholesterol by more than 60%. Express Scripts says total U.S. spending on the new drugs could reach $10 billion next year, far beyond Wall Street forecasts. The company said its agreements with PCSK9 drugmakers include rebates, restrictions on who can receive the therapy, protections against price increases and a spending cap. It noted that drugmakers in the past would not provide a discount to insurers that limited a drug’s use. “But this time, we have been able to put in place strong utilization management to make sure only patients that meet (U.S.) label criteria get on the drug and we get a discount on top of that,” said Express Scripts’ Chief Medical Officer Steve Miller.
The agreements are part of Express Scripts’ National Preferred Formulary list of drugs, which covers 25 million Americans. Wall Street analysts forecast 2016 sales of between $157 million and $609 million for Repatha and between $211 million and $911 million for Praluent, with sales of each seen rising to $2.3 billion by 2020, according to Thomson Reuters Cortellis. Express Scripts said that statins, many now available as low cost generics, remain the most appropriate therapy for the large majority of the more than 70 million Americans with high cholesterol. U.S. health regulators have said that PCSK9 treatments should be used by a much smaller group of people with an inherited form of very high cholesterol, or people at high risk of heart attack or stroke who cannot control cholesterol with statins alone. But the drugs may be used more widely over time. Amgen and Regeneron/Sanofi are conducting clinical trials to show that their PCSK9 medicines can lower the risk of heart attack, stroke and other serious heart problems.
TRACKING WASHINGTON -- Hillary Rodham Clinton, as she offered up a sheaf of new healthcare proposals, said she was “building on the Affordable Care Act,” according to the New York Times. But concealed in those proposals was an implicit criticism of President Obama’s signature domestic achievement: For many families, the Affordable Care Act has not made health care affordable. Mr. Obama has spent five years minimizing cost issues still confronting many healthcare consumers. Mrs. Clinton is taking those on without apologies. She would go beyond the president’s 2010 law, capping a patient’s share of the bill for doctor visits and prescription drugs. She would repeal the law’s planned tax on high-cost employer-sponsored insurance--a tax the White House says is needed to constrain the growth of health spending. And Mrs. Clinton, like Bill Clinton when he was president, appears to be more willing to confront insurers and drugmakers over high prices. She said she would seek “authority to block or modify unreasonable health insurance rate increases” and stop “excessive profiteering” by drug companies. Those comments echoed her criticism of the industry 22 years ago. As chief architect of her husband’s plan to remake the nation’s healthcare system in 1993, she accused insurance and pharmaceutical companies of “price gouging” and “unconscionable profiteering.”
“Health care is one of highest-ranking issues she hears about over and over,” said Chris Jennings, an informal adviser to Mrs. Clinton who worked on health issues in the Clinton White House. Mrs. Clinton’s recent comments surprised and irked Obama administration officials, according to the Times. A White House spokeswoman said that, to her knowledge, the Clinton campaign had not consulted the administration. The White House press office issued a statement describing the tax on high-cost health plans--the so-called Cadillac tax--as “a key part” of Mr. Obama’s healthcare law. Repealing it “would hurt our economy by increasing the deficit, raising healthcare cost growth and cutting workers’ paychecks,” the White House said. It would also blow an $87 billion hole in the government’s revenue stream over eight years, according to the Congressional Budget Office.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration on Friday expanded its approval of Bristol-Myers Squibb Co.’s (New York) immunotherapy drug Opdivo for patients with an additional form of advanced lung cancer. The agency said Opdivo may now be used in patients with non-squamous, non-small cell lung cancer (NSCLC) whose disease has progressed during or after platinum-based chemotherapy. Opdivo, known chemically as nivolumab, was first approved to treat advanced melanoma, the deadliest form of skin cancer, and later for squamous non-small cell lung cancer. While the expanded approval was widely expected based on clinical trial data, the FDA announcement came about three months ahead of the agency’s mid-January action data. Lung cancer has a far larger patient population than melanoma, with NSCLC accounting for up to 90% of all cases, and is seen as a more lucrative use for the new medicines like Opdivo that help the immune system fight the disease.
Elsewhere, Sandoz International GmbH (Holzkirchen DEU), a Novartis AG company, said the FDA has accepted its second biosimilar application, this one for a copy of Amgen Inc.’s autoimmune disease drug Enbrel, whose global sales of nearly $9 billion made it the world’s fifth-biggest selling medicine in 2014. Enbrel (etanercept) is a TNF-alpha inhibitor intended to treat autoimmune diseases, including rheumatoid arthritis and psoriasis. Sandoz’s submission is based on two pivotal clinical studies showing the proposed biosimilar is essentially its reference product, the drugmaker said. Last month, Sandoz launched the first biosimilar in the U.S., Zarxio (filgrastim-sndz), which references Amgen’s chemotherapy drug Neupogen (filgrastim). Sandoz immediately priced the biosimilar $15 cheaper than the brand-name product. Merck & Co. and Samsung Bioepis Co. Ltd. won approval for a biosimilar to etanercept in South Korea last month, and a copy is on the way in Europe where Samsung is working with Biogen Inc.
The FDA approved Alkermes Plc’s (Dublin IRL) schizophrenia treatment clearing the way for the biopharmaceutical company to start selling the drug. Aristada, or aripiprazole lauroxil, will be available as a once-monthly and six-week injection. It is a new chemical entity that, once injected into the body, undergoes steps to yield aripiprazole, whose trade name is Abilify. In April, the FDA approved four generics of Otsuka Pharmaceutical Co.’s best-selling drug Abilify by Alembic Pharmaceuticals Ltd., Hetero Labs Ltd., Teva Pharmaceuticals Industries Ltd. And Torrent Pharmaceuticals Ltd. In 2014, the last full year in which Bristol-Myers Squibb Co. had exclusive rights to sell Abilify in the U.S., it reported $2.02 billion in sales of the drug. Bristol-Myers’ exclusive rights ended in April along with Otsuka’s Abilify market exclusivity.
And Advaxis Inc. (Princeton NJ) said the FDA has put on hold the mid-stage trials of its experimental cancer drug after a patient died. The clinical hold on the drug, axalimogene filolisbac, was issued after Advaxis submitted a safety report to the FDA, the company said. The company added, however, that the patient died due to progression of cervical cancer and the drug played no role in her death. The patient was admitted with an advanced form of cancer and received axalimogene filolisbac in early 2013 in an “investigator-initiated” trial. The patient was discharged but she returned to the hospital in mid-August with respiratory distress caused by the disease. Advaxis said the FDA has asked for additional information to prove that the drug did not contribute to the patient’s death. Axalimogene filolisbac is being tested in patients with Human Papilloma Virus-associated cancers.
MEDICAL STOCK SPOTLIGHT -- AmpliPhi Biosciences Corp. (Nasdaq) led advancing issues, more than doubling over the week to $6.51. The big upward move came after Director Louis Drapeau purchased 10,000 shares of the firm’s stock. The shares were acquired at an average cost of $4.39 per share. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through the SEC website. Separately, Roth Capital recently restated a “Buy” rating on shares of AmpliPhi in a research note. Glen Allen, VA-based AmpliPhi is a biotechnology company focused on the discovery, development and commercialization of phage therapeutics. Its pipeline is based on the use of bacteriophages, a family of viruses that infect only bacteria. The company’s lead program is AmpliPhage-002, for the treatment of staphylococcus aureus infections, including methicillin-resistant staphylococcus aureus (MRSA).
Elsewhere, ContraVir Pharmaceuticals Inc. (Nasdaq) soared 36% to $2.87 after the company reported that its CMX157, a lipid prodrug of Gilead Pharmaceuticals Inc.’s approved hepatitis B virus (HBV) treatment Viread, was 60 times more potent against HBV when compared to Viread. Analysts said New York-based ContraVir was seeking to capitalize on the surge with a secondary offering last Tuesday of 5,000,000 shares of its common stock and warrants to purchase 3,000,000 shares of its common stock at an exercise price of $4.25 per share. The company priced the offering at $3 per unit. The proceeds from the offering will allow ContrVir to fund its Phase 2 trial, which the company plans to initiate next year. Some analysts noted that while the CMX157 data are positive, they’re only from the pre-clinical stage.
And Pacific Biosciences of California Inc. (Nasdaq), a next-generation gene sequencing company, had another good week, rallying $1.94, or 32%, to $8.07. While there didn’t appear to be any particular news driving the shares higher, Pacific Biosciences stock has been surging since the company announced its new nucleic acid sequencing platform called “The Sequel System” which is based on its single molecule, real-time technology. Since making that announcement on September 30th, shares have now more than doubled in price. Pacific Biosciences also got a boost earlier in the week after it showcased the new system at the American Society of Human Genetics annual meeting in Baltimore on October 6. The Menlo Park, CA-based company is claiming that its newer system offers a lower price and smaller footprint while still providing all the benefits its existing system had to offer.
But Exact Sciences Corp. (Nasdaq) plunged $9.61, or 53%, to $8.51 after the U.S. Preventive Services Task Force said it considers the company’s non-invasive colon cancer test as an “alternative test.” Analysts said Madison, WI-based Exact’s shares slumped because investors are worried that the task force’s recommendation will hurt Exact’s negotiations with private insurers over how much they will pay for the test. “It will still get adopted because at the end of the day it’s cheaper, it’s more effective and it’s more convenient for patients to use,” said James T. Evans, chief investment officer at Thompson Investment Management Inc. “But they’re losing the upper hand in pricing negotiations with private insurers. Exact was on the ‘alternate,’ rather than ‘recommended,’ test list.”
IPO SECTOR -- CytomX Therapeutics Inc., a preclinical biotech developing tumor-activated cancer immunotherapies, raised $80 million by offering 6.7 million shares at $12, below the range of $14 to $16. CytomX Therapeutics lists on the Nasdaq under the symbol “CTMX.” South San Francisco-based CytomX initially filed confidentially on July 24, 2015. BofA Merrill Lynch, Jefferies and Cowen & Company acted as lead managers on the deal. CytomX is an oncology-focused biopharmaceutical company pioneering a novel class of antibody therapeutics based on its Probody technology platform. CytomX is using its platform to create proprietary cancer immunotherapies against clinically validated targets, as well as to develop first-in-class cancer therapeutics against novel targets. Shares closed the week up 3% at $12.40. ** Aclaris Therapeutics Inc., which is developing a proprietary hydrogen peroxide treatment for common skin lesions, raised $55 million by offering 5 million shares at $11, below the range of $14 to $16. Malvern, PA-based Aclaris Therapeutics lists on the Nasdaq under the symbol “ACRS.” Jefferies and Citi acted as lead managers on the deal. Aclaris Therapeutics is a clinical-stage specialty pharmaceutical company focusing on identifying, developing, and commercializing topical drugs to address various unmet needs in dermatology. Its lead drug candidate is A-101, a hydrogen peroxide topical solution that has completed three Phase 2 clinical trials for the treatment of seborrheic keratosis (SK), a common non-malignant skin tumor. Shares closed the week up 14% at $12.50.
Previous Week's Issue ... October 5, 2015
FDA APPROVES BRISTOL-MYERS' TWO-DRUG THERAPY FOR MELANOMA – The first combination of breakthrough drugs that boost the immune system to fight cancer has been approved, giving maker Bristol-Myers Squibb Co. (New York) an early lead over competitors testing other combos in a pharmaceutical gold rush of sorts. The Food and Drug Administration gave accelerated approval to a regimen combining the drugmaker’s already-approved immuno-oncology drugs, Opdivo and Yervoy, to treat the half of patients with advanced melanoma who have a genetic variation called “BRAF wild-type.” Together, the drugs slowed or temporarily stopped tumor progression in 60% of patients, versus 11% who only received Yervoy, in a key study of 140 previously untreated patients with melanoma, the deadliest skin cancer type. The combo increased the time until melanoma resumed progressing, to an average of about nine months, versus nearly five months for Yervoy alone. The combination of Yervoy, which was approved in 2011, and Opdivo caused serious side effects in 62% of study participants, compared with 39% only getting Yervoy, and many of those patients had to stop or delay treatment. The worst side effects included colitis, kidney and liver damage, severe diarrhea, lung inflammation and fever.
With a wholesale price of $141,000 to $256,000 for the combination, depending on length of treatment, even many insured patients may not be able to afford their portion of the tab, though Bristol-Myers and some charities help many patients cover much of it. Immuno-oncology drugs, also called “immunotherapy,” have brought the first significant advances in patient survival--though generally not cures--in many years for some cancer types, particularly lung cancer and melanoma. Now advances are coming more quickly. Almost daily, Bristol-Myers or rivals including Merck & Co. (Kenilworth NJ), AstraZeneca Plc (London), Roche Holding AG (Basel CHE) and Pfizer Inc. (New York) have been announcing the start of new patient testing of combinations of their own drugs or their drug with one being developed by a partner, or announcing new collaborations with other drugmakers in the hottest segment of cancer research. These drugs, including Yervoy and Opdivo, work by blocking different pathways that tumor cells use to “cloak” themselves from the immune system so it can’t spot and attack tumors. Bristol-Myers shares closed the week up 3% at $62.23.
CLINTON CALLS FOR REPEAL OF CADILLAC TAX ON HEALTHCARE PLANS -- Hillary Rodham Clinton is calling for the repeal of part of President Barack Obama’s healthcare law, the so-called “Cadillac tax” on health insurance that’s unpopular with large corporations and unions alike. Critics say the tax will raise costs for consumers, while supporters see it as a brake on wasteful healthcare spending. Clinton’s effort is part of a series of changes she is proposing to “build on” the Affordable Care Act, Obama’s signature domestic achievement. On the campaign trail, she often praises the law but says she wants to expand the cost-savings and coverage benefits, particularly for middle-class Americans. “I have proposed new reforms to build on the progress we’ve made and lower out-of-pocket costs for families,” she said in a statement. “Too many Americans are struggling to meet the cost of rising deductibles and drug prices.” The tax, which takes effect in 2018, is strongly opposed by unions who caution it would raise healthcare costs on their members. But it’s also a major way of funding the costs associated with the healthcare law. Many unions refrained from endorsing Clinton, often because their members prefer her primary opponent Vermont Sen. Bernie Sanders and their leadership wants to see if Vice President Joe Biden decides to enter the 2016 race. Last week, Sanders and seven other Democratic Senators introduced a plan to repeal the tax.
The Cadillac tax was meant to discourage extravagant health insurance coverage, which experts say encourages over-treatment and adds to healthcare costs. But critics say it’s actually a tax on essentials, not luxuries. A recent analysis from the nonpartisan Kaiser Family Foundation (Menlo Park CA) estimated that 26% of all employers would face the tax in at least one of their plans during its first year. Nearly half of larger companies would face the tax that year, because they tend to offer better benefits. Consultants say employers would try to avoid the tax by requiring workers to pay a bigger share of their medical costs out-of-pocket--essentially raising costs on their employees. The tax is 40% of the value of employer-sponsored plans that exceeds certain thresholds: $10,200 for individual coverage and $27,500 for family coverage. It is levied on insurers and health plan administrators, who are expected to pass it back to employers. The 40% rate is well above the income tax rates that most workers face. The Obama administration says critics overstate the potential impact of the tax.
TRACKING WASHINGTON -- The Senate passed legislation last week intended to protect small and midsize businesses from increases in health insurance premiums, clearing the bill for President Obama’s expected signature. The action by Congress was a rare example of bipartisan agreement on how to revise the Affordable Care Act. The bill, approved in the House and the Senate by voice vote, eliminates a provision of the law that would have imposed tough, potentially costly new requirements on businesses with 51 to 100 employees. A White House spokeswoman confirmed that Mr. Obama would sign the bill, but she declined to discuss its substance. Recent comments by administration officials suggested that they did not particularly like the legislation but could not stop the growing wave of bipartisan support for it. At issue is a provision of the health care law that expands the definition of a “small employer” to include companies with 51 to 100 employees, subjecting them to stringent insurance regulation starting Jan. 1. States have historically defined small employers as those with 50 or fewer employees. The bill preserves the traditional definition of “small group,” but allows states to expand it to include organizations with 51 to 100 employees if they want to do so.
Senator Tim Scott, Republican of South Carolina, the chief sponsor of the Senate version of the bill, said it would ensure that “small-business owners all across America are not more negatively impacted by Obamacare.” Senator Jeanne Shaheen of New Hampshire, the senior Democrat on the Small Business and Entrepreneurship Committee, said that passage of the bill was “a win for businesses across this country, a win for bipartisanship. This bill will make a helpful adjustment to the Affordable Care Act for small and midsize businesses by limiting potential premium increases and letting states determine what’s best for their market,” Mrs. Shaheen said. The House passed the last Monday.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration on Friday approved Merck & Co.’s (Kenilworth NJ) immunotherapy, Keytruda, for patients with the most common form of lung cancer whose tumors produce a specific biological marker. The FDA approval for Keytruda in advanced non-small cell lung cancer is for patients whose tumors express PD-L1, a protein targeted by the drug, and includes a companion diagnostic, made by a unit of Agilent Technologies Inc., to measure those protein levels. A Merck spokeswoman said clinical trials found that 22% of patients with this type of cancer had PD-L1 scores of at least 50%.
Elsewhere, Amicus Therapeutics Inc. (Cranbury NJ) said it was unlikely to submit a U.S. marketing application for its lead drug, to treat Fabry disease, by the end of 2015 as expected, after the FDA asked for a more comprehensive analysis of trial data. Amicus’s stock slumped 55% for the week to $6.39, at which point about $956 million had been wiped off the biotechnology company’s market capitalization on Friday. The company is hoping to make the drug, migalastat, the first oral treatment for patients with a form of Fabry disease, a potentially fatal, inherited disorder that affects about 1 in 40,000 to 60,000 men and occurs less frequently in women.
An interim report shows that the FDA has conducted nearly 90 meetings with more than 50 drug companies interested in producing biosimilar products since 2013 at a cost of $65.9 million. The report, ordered by Congress, showed the agency met with and reviewed potential investigational new drug (IND) applications with 33 drugmakers in 2013, 48 in 2014 and added four more in 2015. The FDA has accepted five biologics license applications (BLAs) for biosimilars, two in fiscal year 2014 and three since December. Of the two BLAs accepted in 2014, only Sandoz’s Zarxio was at the mid-way point of the application process by the end of the year. A senate panel recently grilled Center for Drug Development and Research (CDER) Director Janet Woodcock over the FDA’s lack of biosimilar protocols when compared to Canada and Europe. The FDA must publish a final report by September 2016.
And SpineGuard SA (Vincennes FRA) received CE mark approval to market its DSG threaded drill in Europe. Based on the differential electrical conductivity in various tissue types, DSG technology is used during insertion of screw implants in the spine. It also provides real-time audio and visual feedback to surgeons, according to the company. “This novel application of our DSG technology is the fruit of a close collaboration between our R&D team and our expert consulting surgeons,” said SpineGuard CTO and Co-Founder Stéphane Bette.
MEDICAL STOCK SPOTLIGHT -- Pacific Biosciences of California Inc. (Nasdaq) led advancing issues, soaring $2.13, or 53% for the week, to $6.13. The Menlo Park, CA-based company announced it has launched a new single-molecule sequencing system that offers higher throughput and costs about half the price of its RS II system. PacBio developed the Sequel as part of its collaboration with Swiss-based Roche Holding AG to develop a clinical-grade sequencing system for diagnostic purposes. That collaboration is ongoing, and the launch of Sequel marks another step toward the final goal. Dan Zabrowski, head of Roche Sequencing Unit and Tissue Diagnostics, said that the Sequel would form the “basis for the Roche sequencing instrument,” which is expected to launch in the second half of 2016 for clinical research and later as an in vitro diagnostics instrument. The Sequel has a list price of $350,000--about half the cost of the $695,000 RS II--and a physical footprint about one-third that of the RS II.
Elsewhere, Revance Therapeutics Inc. (Nasdaq) shot up $5.16, or 19%, to $32.17 after announcing the initiation of patient dosing in a phase II dose-escalating clinical study of its RT002 investigational drug product candidate to treat cervical dystonia, a neurological muscle movement disorder. The phase II study will evaluate safety, preliminary efficacy, and duration of effect of RT002 for injection in patients with moderate-to-severe isolated cervical dystonia symptoms of the neck. The Newark, CA-based company plans to release interim results in 2016. “Cervical dystonia is a debilitating condition characterized by involuntary muscle contractions in the neck. This painful malady is the first therapeutic indication we’re pursuing for our unique injectable neurotoxin,” said Dan Browne, President and CEO at Revance.
But Verastem Inc. (Nasdaq) plummeted $3.87, or 68%, to $1.80 after the biotech reported that its lead drug candidate failed to help patients suffering from a rare form of lung cancer. Cambridge, MA-based Verastem, which helped propel the long-running boom in initial public offerings of biotech companies when it went public in early 2012, said it had stopped enrolling patients with malignant pleural mesothelioma--a type of cancer caused by exposure to asbestos--in its most advanced clinical study. That study, if successful, was widely expected to lead to a new-drug application. Verastem focuses on discovering and developing drugs to treat cancer by the targeted killing of cancer stem cells. It also develops proprietary companion diagnostics for stem cells.
And Zosano Pharma Corp. (Nasdaq) tumbled $2.89, or 44%, to $3.74. After feedback from Japanese regulatory authorities that would have required additional clinical trials to support its marketing application there (and delayed commercialization for one year), the company decided to terminate its development of once-daily ZP-PTH for severe osteoporosis. After discussing the situation with collaboration partner Eli Lilly & Co., the companies agreed to end their partnership. Zosano will focus its development efforts on a once-weekly formulation of ZP-PTH, which was a project prior to its deal with Lilly for a daily version. Fremont, CA-based Zosano plans to initiate a phase II trial of the weekly version in H1 2016. ZP-PTH is a rapid delivery patch that is an alternative to daily injections. It delivers PTH1-34, teriparatide (PTH), a compound that stimulates the formation of new bone.
IPO SECTOR -- NovoCure Ltd., which markets a wearable electric field device for treating glioblastoma brain cancer, raised $165 million Friday via an initial public offering of 7.5 million shares (all primary) at $22 per share, below the downwardly revised range of $23 to $24. The St. Helier, Jersey Isle-based company originally planned to offer 12.5 million shares, including 5 million secondary shares, at $26 to $29. NovoCure lists on the Nasdaq under the symbol “NVCR.” NovoCure was founded in 2000 and booked $20 million in sales for the 12 months ended June 30, 2015. J.P. Morgan, Deutsche Bank and Evercore Partners are the joint bookrunners on the deal. Shares closed the week down 17% at $18.28. ** Advanced Accelerator Applications SA, a radiopharmaceutical diagnostics company developing its first therapeutic product, re-filed on Thursday with the SEC to raise up to $75 million in an IPO. The company originally filed for a $100 million IPO in November 2014 and filed terms to raise $75 million in February 2015, but postponed and withdrew its IPO. The Saint Genis Pouilly, France-based company, which was founded in 2002 and booked $89 million in sales for the 12 months ended June 30, 2015, plans to list on the Nasdaq under the symbol “AAAP.” Advanced Accelerator Applications filed confidentially on August 21, 2015. Citi and Jefferies are the joint bookrunners on the deal. No pricing terms were disclosed.
September 28, 2015 ...
CLINTON PLAN TO CUT HEALTH COSTS INCLUDES TAX CREDITS, MORE SICK VISITS – Hillary Clinton released more proposals last week for limiting what people with insurance pay for their health care, amid an effort to show she is seeking to improve the 2010 federal health law with provisions aimed squarely at consumers’ cost concerns. The Democratic presidential contender wants to require insurers to relax their rules on provider networks that can sting people with unexpected bills, include coverage for three sick visits a year to a doctor before a plan’s deductible kicks in, and create a new tax credit to help people pay for out-of-pocket medical costs. “When Americans get sick, high costs shouldn’t prevent them from getting better,” Mrs. Clinton said in a statement. “With deductibles rising so much faster than incomes, we must act to reduce the out-of-pocket costs families face. My plan would take a number of steps to ease the burden of medical expenses and protect healthcare consumers.” Each idea is geared toward addressing complaints that have grown louder in recent years among people who have insurance. Among the biggest are so-called high-deductible plans, which offer relatively low monthly premiums but require people to pay several thousand dollars before coverage kicks in. Such plans have become increasingly common options for people who buy through the health law or get coverage as part of their job.
Clinton’s platform also builds on broader concerns reflected by voters across polls in the five years since the passage of the Affordable Care Act. Large shares of Americans feel ambivalent about the law, saying it has done little to help them personally. At the same time, voters generally say they don’t want the law repealed, but improved. For Mrs. Clinton, that requires some careful maneuvering. As a first lady and 2008 presidential contender, she focused heavily on health coverage. Now, she has to simultaneously defend a law that Democrats see as a major achievement of Barack Obama’s presidency and explain how she would change that law. Republicans criticize the law for disrupting the health system for too little benefit, and her chief rival for the Democratic nomination, Sen. Bernie Sanders (D-VT), criticizes it for not disrupting the health system enough, arguing instead that the U.S. should have a single-payer, government-run healthcare system.
UNINSURED GETTING HARDER TO SIGN UP FOR OBAMACARE -- Getting new people signed up for Obamacare will get harder this year as the program tries to access poorer, younger, harder-to-reach individuals, U.S. Health and Human Services Secretary Sylvia Mathews Burwell said last week. There are about 10.5 million uninsured Americans who are eligible for coverage under the Affordable Care Act and who haven’t enrolled yet, Burwell said during a speech at Howard University College of Medicine in Washington. Many are confused about how subsidies the law created to help people afford insurance can be accessed, Burwell said. “Those who are still uninsured are going to be a bigger challenge,” she said in her prepared remarks. “Our research tells us that they will be harder to reach.” The Congressional Budget Office estimated in March that an additional six million people will gain health insurance next year through Obamacare, most of them through government-operated and partially subsidized markets called health insurance exchanges.
An improving economy has let more people get coverage through work, which could reduce how many need the Affordable Care Act. Many of those that remain uninsured and eligible to participate are younger and come from underserved communities living below the poverty level. “We’ve found that costs are still a big concern--about half of the people who are uninsured have less than $100 in savings,” Burwell said. The federal government and states that run the sign-up markets will need to get more information to those people about financial assistance, and Burwell said the U.S. would also try and make the program’s website clearer and operate call centers to answer questions. In a report issued last Tuesday, the Health and Human Services Department’s Office of the Assistant Secretary for Planning and Evaluation estimated that about 17.6 million people have gained coverage through the law’s various programs. Gains have been strongest in states that used the Affordable Care Act to expand Medicaid.
TRACKING WASHINGTON -- The U.S. government stored sensitive personal information on millions of health insurance customers in a computer system with basic security flaws, according to an official audit that uncovered careless practices. The Obama administration said it acted quickly to fix all the problems identified by the Health and Human Services inspector general’s office. But the episode raises questions about the government’s ability to protect a vast new database at a time when cyberattacks are becoming bolder. Known as MIDAS, the $110-million system is the central electronic storehouse for information collected under President Barack Obama’s healthcare law. It doesn’t handle medical records. But according to a government privacy impact statement, it does include names, Social Security numbers, birthdates, addresses, phone numbers, passport numbers, employment status and financial account information of customers on HealthCare.gov and state insurance marketplaces. “It sounds like a gold mine for ID thieves,” said Jeremy Gillula, staff technologist for the Electronic Frontier Foundation, a civil liberties group focused on technology. “I’m kind of surprised that this information was never compromised.” The flaws uncovered by auditors included issues of security policy.
Elsewhere, the U.S. government paid the main HealthCare.gov contractor $4 million to correct defects of the botched site and withheld only $267,420 of what it owed the company, according to a new federal audit. The report on the Centers for Medicare and Medicaid Services (CMS) and its contract with CGI Federal (Fairfax VA) was published by the Health and Human Services Office of Inspector General. It is the latest in a series of audits critical of federal oversight of the private companies that built the insurance marketplace at the heart of Obamacare. Although CMS replaced the contractor a few months after HealthCare.gov’s meltdown in 2013, the agency had little power to recover the money it spent trying to fix the site. Like many deals between the federal government and private companies, CGI Federal’s contract allowed the company to pass along its costs to taxpayers and to take a fee on top of that--essentially, its profit. If the health insurance site didn’t work, the government could withhold part of that fee, but taxpayers were still responsible for paying the underlying costs. “Cost reimbursement contracts place the risk of performance on the government,” according to the inspector general’s report.
FDA/EMA ROUNDUP -- European health regulators on Friday conditionally approved Amgen Inc.’s (Thousand Oaks CA) rare blood-cancer drug, Blincyto, which is one of the world’s most expensive cancer treatments. The U.S. Food and Drug Administration in December approved Blincyto for acute lymphoblastic leukemia (ALL), which has few treatment options once a patient has relapsed. Blincyto is a so-called bispecific antibody, an emerging class of drugs that could prove more potent than conventional antibodies--the mainstay treatment for many forms of cancers. The European Medicines Agency conditionally approves a drug when it is meant for a severely debilitating disease with few or no treatment options, and when the benefits of its immediate availability outweigh the risks. The conditional approval is granted despite the lack of complete trial data and is renewed annually until the EMA is satisfied with the complete data to fully approve the drug.
Elsewhere, Novartis AG’s (Basel CHE) new heart failure drug Entresto is on track to be approved for use in Europe by the end of the year after it received the backing of EU regulators, the company said on Friday. Entresto, also known as LCZ696, is the first new drug in decades for helping patients whose lives are in danger because their hearts cannot pump blood efficiently. Analysts estimate it could have annual sales of some $4.4 billion by 2020. Entresto won approval in Switzerland last week and got a green light from the U.S. Food and Drug Administration in July.
Roche Holding AG (Basel CHE) is expecting the European Commission this year to issue a final decision on a drug combination to treat advanced skin cancer, based on a drug panel’s positive opinion made public on Friday. The European Union’s Committee for Medicinal Products for Human Use, or CHMP, has adopted a positive opinion for Cotellic, when used in combination with Zelboraf for treatment of patients with a type of metastatic melanoma, Roche said in a statement. Roche in August won approval for the drug combination in Switzerland and expects a final decision on approval in the U.S. this year.
And the FDA has issued a “fast track” designation to Israeli biotech company Can-Fite BioPharma Ltd. (Petach Tikva ISR) for its liver cancer therapy for second-line treatment. CF-102 was classified as an “orphan drug” by the agency. It binds to an adenosine chemical receptor that shows up most frequently in tumor cells. Bayer AG’s Nexavar is currently the only approved treatment for the disease. Can-Fite’s anti-tumor oral medication is in phase II clinical trials in the U.S., Europe and Israel, and the trial’s 78-patient enrollment goal is expected to be met by summer 2016.
MEDICAL STOCK SPOTLIGHT -- Bellerophon Therapeutics Inc. (Nasdaq) led a small group of advancing issues, soaring $2.34, or 59% for the week, to $6.30. Shares skyrocketed after the tiny biotech reported a mid-stage clinical study showing its drug Inopulse benefitted patients with high blood pressure in arteries that connect the lungs to the heart. The Hampton, NJ-based company said early study data showed Inopulse provided a sustained benefit in patients with Pulmonary Arterial Hypertension. Also, Bellerophon said the Food and Drug Administration reported that the company’s design and clinical endpoints for a planned late-stage clinical trial for the drug were acceptable.
Elsewhere, Israeli biomedical company Vascular Biogenics Ltd. (Nasdaq) surged $3.00, or 44%, to $9.85 even as the biotech sector came under selling pressure over drug pricing issues raised by Democratic Presidential Candidate Hillary Clinton. Analysts said the reason for VBLT’s gains is an expectation that the Or Yehuda-based company will report positive data from a mid-stage study of VB-111 in brain cancer. VBLT is scheduled to present phase II data on VB-111 in combination with bevacizumab (Avastin) at the European Society for Medical Oncology’s (ESMO) European Cancer Congress 2015, which takes place in Vienna from September 25th to September 29th. The drug is considered promising, because interim results at earlier stages of the trial shows that VB-111 was effective in treating ovarian cancer, thyroid cancer, and brain cancer.
But after updating investors on its future plans last week and in the wake of an industry-wide sell-off, ImmunoGen Inc. (Nasdaq) plunged $4.21, or 29%, to $10.44. The week prior, ImmunoGen’s shares first rallied leading up to its investor conference only to trade-off after the Waltham, MA-based company told investors it would be launching a series of expensive trials in the coming months. Specifically, ImmunoGen plans to advance two phase II trials for its promising ovarian cancer drug, IMGN853, the first of which will evaluate IMGN853 as a monotherapy in pre-treated ovarian cancer patients. ImmunoGen is also planning combination trials in B-cell cancers that will determine the safety and efficacy of IMGN529 and coltumixab ravtansine, two other promising therapies in its pipeline. The clinical trial activity may draw down ImmunoGen’s cash stockpile more quickly than some investors previously anticipated, which in turn could lead to additional and dilutive stock offerings down the line.
And Horizon Pharma Plc (Nasdaq) tumbled $9.14, or 29%, to $22.78 after Brean Capital’s Difei Yang downgraded the rating on the company from “Buy” to “Hold,” while removing the price target. Recent negative developments for the sector as well as at Dublin, Ireland-based Horizon Pharma could exert pressure on the company’s shares, Yang mentioned. The analyst said that although Horizon Pharma has been “a good growth story” in the specialty pharma segment for the past couple of years, there have recently been several “unsettling” developments. These headwinds include: public discussion on drug prices is expected to heat up and its deal to acquire Depomed is not likely to close since Depomed has turned down Horizon Pharma’s offers several times. In the absence of the deal closing, investors may get concerned about revenue growth in the future.
IPO SECTOR -- Aclaris Therapeutics Inc., which is developing a proprietary hydrogen peroxide solution for common skin lesions, announced terms for its initial public offering on Friday. The Malvern, PA-based company plans to raise $75 million by offering 5.0 million shares of common stock at a price range of $14 to $16. At the midpoint of the proposed range, Aclaris would command a fully diluted market value of $301 million. Aclaris Therapeutics, which was founded in 2012, plans to list on the Nasdaq under the symbol “ACRS.” Jefferies and Citi are the joint bookrunners on the deal. It is expected to price during the week of October 5, 2015. ** Strongbridge Biopharma Plc, which is developing therapies for rare endocrine disorders, announced terms for its U.S. IPO. The Dublin, Ireland- and Trevose, PA-based company plans to offer 4.25 million shares of common, which would raise $76 million at its current converted price of $17.93 per share on the Norwegian OTC market. At that price, Strongbridge would command a fully diluted market value of $423 million. The company, which was founded in 1996, plans to list on the Nasdaq under the symbol “SBBP.” BofA Merrill Lynch and Stifel are the joint bookrunners on the deal. It is expected to price this week.
September 21, 2015 ...
OBAMA NOMINATES ROBERT CALIFF AS FDA COMMISSIONER – President Barack Obama nominated Robert Califf as the next commissioner of the U.S. Food and Drug Administration, selecting a well-respected Duke University (Durham NC) researcher who joined the agency earlier this year. Since January, Califf has been deputy FDA commissioner for medical products and tobacco. Before that, he was founding director of Duke’s Clinical Research Institute, the world’s largest academic research organization, the FDA said. He also led the university’s efforts on translational research, or turning basic scientific discoveries into new treatments for patients. Califf’s nomination is subject to Senate confirmation. Califf inherits an agency that is in the middle of overhauling how it handles food safety to help companies and consumers avoid food-borne illnesses and is expected soon to extend its oversight of tobacco to electronic cigarettes. The agency also is figuring out the details of regulating a new type of drug called biosimilars, which are less expensive copies of biologic drugs. “His transformative leadership at Duke, and real-world experience with patients make him a remarkable choice that will bring important new perspectives to an already strong agency,” Ellen Sigal, chairwoman of Friends of Cancer Research, said in a statement. The advocacy organization works closely with the FDA to help shape policy.
When Califf was appointed deputy commissioner, it was widely assumed he would be the nominee to permanently replace former Commissioner Margaret Hamburg. Califf’s job as a researcher and professor at Duke has been on hold since he joined the FDA. Califf is held in high esteem in the medical world--he has more than 1,200 publications in peer-reviewed literature, according to the FDA--and also has worked closely with the drug industry. He led the key clinical trial evaluating Johnson & Johnson’s (New Brunswick NJ) blood-thinner Xarelto, which the FDA approved in 2011 to prevent strokes in people with an irregular heartbeat. Xarelto generated $1.52 billion in sales last year, according to data compiled by Bloomberg. Margaret Hamburg stepped down at the end of March and Stephen Ostroff, the agency’s former chief scientist, has served as acting commissioner since.
GOOGLE BETS ON INSURANCE STARTUP OSCAR HEALTH -- Google Inc.’s (Mountain View CA) investment division has bought a stake in New York-based Oscar Health Insurance Corp., for $32.5 million. Oscar Health revealed the news in an interview with The Wall Street Journal’s “Digits” blog. The investment from Google Capital, which has worked aggressively to expand its presence in health care, takes Oscar’s value to $1.75 billion. Since it was founded in 2012, Oscar has collected over $350 million in its goal to apply data and technology to make the insurance business work more as an Internet service. Oscar currently offers its services only in New Jersey and New York; it has more than 40,000 users in the two locations. The startup is an online health insurer known for its search function that guides patients toward doctors according to the symptoms they type using natural language. Patients can then screen doctors to ensure they’re in the system prior to booking an appointment. Though headquartered in California, Google--or, now, Alphabet--has a sizable and growing presence in New York City. The investment comes as the company redefines itself as a holding company with other entities under its investment wings, including a health-focused company called Life Sciences, a company focused on longevity called Calico and X lab, which incubates new efforts like the Wing drone delivery effort.
Google Capital head David Lawee noted that Oscar stands out among the company’s other healthcare investments because it has the potential to help lower hospital bills and other costs for consumers. With Google’s backing, Oscar is expected to expand its services into Texas and California by next year. Oscar customers are mostly individuals, as opposed to employers, who sign up through online exchanges that were built after the 2010 Affordable Care Act. An average customer pays $5,000 per year. Also, it is considered the first insurance company to offer fitness-tracking devices to its customers, free of charge. The initiative rewards customers if they walk a certain number of steps each day.
TRACKING WASHINGTON -- The National Institutes of Health on Thursday approved a blueprint for U.S. President Barack Obama’s Precision Medicine Initiative and named an NIH insider as interim director of the project, which aims to enroll one million volunteers in the next three to four years. The sweeping study, announced in January by Obama, will gather data on people in the United States of all ages, racial and socioeconomic groups. NIH Director Francis Collins said he would “act immediately” on recommendations delivered to him on Thursday by a working group created to develop a framework for the study. “We now have a design plan and it’s time to move forward,” Collins said. He added he will begin a nationwide search for a distinguished scientist to direct the study, and has tapped Dr. Josephine Briggs, currently director of the National Center for Complementary and Integrative Health, as acting director. Collins said he hopes to begin recruiting study volunteers as early as next year. Among the goals of the study are to develop better estimates on individuals’ risk for developing disease. These would be drawn from a range of metrics, looking not only at genetic factors but also the role of environmental exposures and their impact on genetic predispositions.
Elsewhere, the percentage of people without health insurance in the U.S. fell to 10.4% last year as Obamacare’s expansion of public and private coverage programs took effect, the Census Bureau said. In 2014, 33 million people in the U.S. were uninsured, down from 41.8 million in 2013, according to the Census report. While other reports have shown a similar decline in the number of uninsured Americans and include more recent enrollment for 2015, the Census data is considered the gold standard. Last year was the first that people began enrolling in health coverage on Obamacare’s newly created marketplaces. The law subsidized the purchase of health insurance for some people, and expanded Medicaid to help cover the poor. It also established a tax penalty for those who refused to buy coverage. The uninsured rate has continued to fall since the first year of the new markets and Medicaid expansion, according to reports using more recent data. The Obama administration said in May of this year that about 16.4 million people have gained coverage under the Affordable Care Act, a figure that includes sign-ups for coverage this year. The majority of Americans don’t rely on public programs, and instead buy private coverage either through work or, increasingly, on Obamacare’s exchanges.
FDA/EMA ROUNDUP -- Allergan Plc (Dublin IRL) said on Thursday the U.S. Food and Drug Administration approved its new antipsychotic drug to treat bipolar disorder and schizophrenia. The drug, Vraylar, carries a boxed warning on increased risk of death associated with its use in older people with dementia-related psychosis, the FDA said on its website. Vraylar was approved after showing efficacy in more than 2,700 adults, the company said. The new drug will be the second antipsychotic to be sold by Allergan. The company already sells Viibryd to treat major depressive disorder in adults. Allergan partnered Gedeon Richter Plc (Budapest) to develop Vraylar.
Elsewhere, Hansa Medical AB (Scheelevagen SWE) received FDA “orphan drug” designation for its IdeS organ rejection drug candidate. Approximately 30% of the patients on the waiting lists for kidney, heart, lung and pancreas, equivalent to approximately 35,000 patients in the U.S., are sensitized to Human Leukocyte Antigen (HLA). HLA sensitization is a risk factor in transplantation and a significant part of the sensitized patients are rarely considered for transplantation due to the increased risk of antibody mediated organ rejection. Hansa Medical currently conducts phase II trials with candidate drug IdeS for the prevention of antibody mediated organ rejection in kidney transplant patients.
A joint FDA advisory panel voted unanimously last week to approve Collegium Pharmaceutical Inc.’s (Canton MA) new drug application (NDA) for Xtampza ER, deciding that the possible risks related to food effects on the opioid’s efficacy were forgiving and not likely to pose serious safety challenges. This was a marked turnaround from when the same Anesthetic and Analgesic Drug Products Advisory Committee and Drug Safety and Risk Management Advisory Committee rejected Purdue Pharma LP’s (Stamford CT) immediate-release Avridi by a 23-1 vote the previous day on grounds that its abuse-deterrent properties didn’t outweigh the food risks. Studies of Xtampza (oxycodone) showed significant barriers against common forms of misuse that panelists said take the drug a step in the right direction, including a stinging sensation when the capsule is opened and snorted and a significantly reduced uptake of oxycodone when snorted, versus taken orally and intact. Collegium closed the week up 78% at $23.98.
And Otsuka Pharmaceutical Co. Ltd. (Tokyo) and Proteus Digital Health Inc. (Redwood City CA) announced last week FDA acceptance of their first-of-its-kind digital medicine NDA combining Abilify with a digital tracking mechanism. The drug/device combination embeds an ingestible Proteus sensor in Otsuka’s blockbuster antipsychotic Abilify (aripiprazole), allowing data to be sent to a wearable patch that records individualized treatment information. The information--including ingestion patterns, adherence, rest, step count, body posture and other biometric data--is then sent to the patient’s mobile phone and, with consent, to doctors or caregivers. Otsuka hopes to boost drug therapy compliance with the combination. “By increasing overall patient compliance rates even modestly, health outcomes can be improved for many and healthcare costs can be reduced significantly,” spokeswoman Kimberly Whitefield said. Abilify was approved by the FDA in 2007. The Proteus ingestible sensor and wearable patch were cleared for marketing in 2012.
MEDICAL STOCK SPOTLIGHT -- Can-Fite BioPharma Ltd. (NYSE) led advancing issues, soaring $3.20, or 288% over the week, to $4.90 after announcing the U.S. Food and Drug Administration has granted the company’s drug candidate CF102 “fast track” designation as a second line treatment for hepatocellular carcinoma (HCC), the most common form of liver cancer. Fast track is a process designed to facilitate the development, and expedite the review of drugs to treat serious conditions and fill an unmet medical need. The purpose is to get important new drugs to the patient earlier, according to the FDA. Determining whether a condition is serious is a matter of judgment, but generally is based on whether the drug will have an impact on such factors as survival, day-to-day functioning, or the likelihood that the condition, if left untreated, will progress from a less severe condition to a more serious one. Can-Fite’s CF102 had already received the FDA’s “Orphan Drug” designation. Petach Tikva, Israel-based Can-Fite Biopharma develops treatments for autoimmune-inflammatory diseases and cancer.
Elsewhere, Intra-Cellular Therapies Inc. (Nasdaq) rocketed $29.37, or 212%, to $55.60 with shares benefitting from positive phase III test results of the company’s schizophrenia treatment candidate. The trials of its once-daily treatment demonstrated antipsychotic efficacy with statistically significant superiority when compared to a placebo. “We are very encouraged by the positive results of our first phase III trial. These data confirm the findings from our previous placebo- and risperidone active-controlled, randomized phase II trial. The antipsychotic effect of 60 mg is confirmed and shows itself to be well-tolerated along with a safety profile similar to placebo,” said CEO Dr. Sharon Mates. New York-based Intra-Cellular Therapies engages in the research and development of small molecule drugs to treat neuropsychiatric and neurological diseases and other disorders of the central nervous system.
And Aerie Pharmaceuticals Inc. (Nasdaq) surged $9.48, or 52%, to $27.87 after saying its experimental eye drop met the main goal of a late-stage study. The drug, Rhopressa, showed that it was not inferior to a commonly prescribed treatment, timolol, in reducing pressure inside the eye in patients suffering from glaucoma, or ocular hypertension, the company said. Results from an earlier late-stage study had prompted the company to change the main goal of the second study to Rhopressa being as effective as timolol in patients whose eye pressure was between 20-25 millimeters of mercury (mmHg). In April, Bedminster, NJ-based Aerie said Rhopressa was as effective as timolol in patients whose eye pressure was between 20 and 26 mmHg. But the main goal was for the drug to be non-inferior to timolol in patients whose eye pressure was as much as 27 mmHg. About 80% of glaucoma patients have eye pressure of 26 mmHg or less at the time of diagnosis.
But Raptor Pharmaceutical Corp. (Nasdaq) plunged $5.02, or 42%, to $7.01 after announcing topline results from the phase IIb “CyNCh” study, which did not meet its primary endpoint of improving nonalcoholic steatohepatitis (NASH) in children. NASH is liver inflammation and damage caused by a buildup of fat in the liver. It is part of a group of conditions called nonalcoholic fatty liver disease. The trial evaluated the safety and efficacy of RP103, or cysteamine bitartrate delayed-release capsules, in children with biopsy-confirmed NASH. The study did not achieve its primary endpoint defined as a two-point decrease in NAFLD Activity Score (NAS) and no worsening of fibrosis (p-value = 0.34). There were no differences in adverse events observed in children on RP103 compared to placebo. Novato, CA-based Raptor develops, manufactures, and commercializes medicines and clinical treatment for neurodegenerative disorder and liver disease.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, included among recent SEC filings for initial public offerings, Dimension Therapeutics Inc., which is developing novel, liver-directed gene therapies for rare genetic disorders, registered up to $115 million worth of common stock. Dimension Therapeutics licenses its AAV vector gene delivery technology from REGENXBIO, which floated its own IPO last week. The Cambridge, MA-based company, which was founded in June 2013, plans to list on the Nasdaq under the symbol “DMTX.” Dimension Therapeutics initially filed confidentially on July 17, 2015. Goldman Sachs, Citi, Wells Fargo Securities, Canaccord Genuity and Cantor Fitzgerald are the joint bookrunners on the deal. No pricing terms were disclosed. ** Nabriva Therapeutics AG, which is developing a novel antibiotic for bacterial pneumonia, raised $92 million by offering 9 million ADSs at $10.25 each, below the downwardly revised price of $10.50. The company originally planned to offer 6 million ADSs at $15 to $17. Insiders plan to buy $60 million on the initial public offering, up from $50 million originally. The Vienna, Austria-based company lists on the Nasdaq under the symbol “NBRV.” Nabriva Therapeutics initially filed confidentially on May 14, 2015. Leerink Partners and RBC Capital Markets acted as lead managers on the deal. Shares closed the week up 29% at $13.24.
September 14, 2015 ...
AMA SEES INSURANCE MERGERS AS ANTI-COMPETITIVE -- The market for health insurance in the U.S. is already so highly concentrated that pending tie-ups among four of the country’s largest insurers risk hurting both consumers and doctors, the American Medical Association (Chicago) said. Anthem Inc.’s (Indianapolis IN) proposed takeover of Cigna Corp. (Bloomfield CT) and Aetna Inc.’s (Hartford CT) bid for Humana Inc. (Louisville KY) would reduce competition among insurers in 154 metropolitan areas, worsening already concentrated markets, the organization said in studies released last week. The mergers could cause premiums to go up and decrease payments to doctors, the AMA said. “The prospect of reducing five national health insurance carriers to just three should be viewed in the context of the unprecedented lack of competition that already exists in most health insurance markets,” the AMA said. The takeover would make Anthem the largest health insurer in the U.S. by members and give it more scale in commercial coverage. Anthem and Cigna have “limited overlap in a highly competitive industry,” said Kristin Binns, a spokeswoman for Anthem. By combining, they will be able to operate more efficiently and reduce costs, she said. Spokesmen for Aetna, Cigna and Humana didn’t respond to requests seeking comment.
Assistant Attorney General Bill Baer, who leads the Justice Department’s antitrust division, which is reviewing the surge of deals, has said he will assess the industry as a whole to make sure competition is preserved and the mergers don’t lead to higher costs. Antitrust reviews of health-insurer deals typically focus on competition in local markets. In the past, companies have been able to resolve government concerns by selling parts of their business to competing insurers. If the Justice Department changes its approach to insurer reviews and considers a national market for health insurance, that could pose a bigger risk for the transactions, according to Bloomberg Intelligence analyst Jennifer Rie. The AMA study relied on the Herfindahl-Hirschman Index (HHI), which is also used by antitrust authorities reviewing deals. The HHI gauges the number of competitors and their market dominance. Transactions that increase the HHI by more than 200 points in highly concentrated markets are presumed likely to enhance market power under merger guidelines issued by antitrust authorities. In addition to the AMA, the pair of deals has drawn scrutiny from the American Hospital Association and lawmakers in Washington, who are planning hearings to examine the tie-ups.
HEALTH INSURANCE SIGN-UPS NEAR 10 MILLION IN MIDYEAR REPORT -- About 9.9 million people got health insurance coverage through the marketplaces set up by the Patient Protection and Affordable Care Act as of June 30, a decline from earlier in the year though still higher than the Obama administration’s target. About 84% got government subsidies to buy the coverage, getting an average of $270 a month, according to data released by the Centers for Medicare & Medicaid Services. Enrollment had been 10.2 million at the end of March. The administration has set a year-end goal of insuring at least 9.1 million people via policies bought in the insurance marketplaces. People fall off the rolls when they stop paying for the insurance. Sometimes that means they’re getting coverage elsewhere, for instance because they’ve married or taken a job that offers health benefits. Approximately 423,000 consumers lost coverage when they couldn’t produce enough documentation of their citizenship or immigration status, the department said in last week’s report. “Millions of Americans are benefiting from the peace of mind that comes with having quality coverage at a price they can afford,” Sylvia Burwell, secretary of the Department of Health & Human Services, said in a news release.
Obama’s law offers subsidized private insurance through online markets also called exchanges, plus an expanded version of Medicaid in states that adopt it. Independent surveys and government reports have documented steady gains in coverage since the 2014 launch of the insurance exchanges and the health law’s Medicaid expansion. The nation’s overall uninsured rate now stands at about 9%, a historic low. “Consumers from coast to coast are continuing to show how important health coverage is to their families,” Burwell added. The figures released last week cover the period through June 30.
TRACKING WASHINGTON -- Democratic presidential candidate and Vermont Sen. Bernie Sanders on Thursday introduced a bill to lower prescription drug prices, citing growing public concern with medicine affordability. The bill would allow Medicare to negotiate drug prices, institute a minimum rebate on drugs for some beneficiaries and prohibit so-called “pay-for-delay” agreements between drug manufacturers. It would also require drug companies to report information used to determine prices and allow prescriptions to be imported from Canada. Sanders said Americans pay the highest prices for drugs and cited a 2014 Commonwealth Fund survey that found about 20% of U.S. adults said they had not filled a prescription because they couldn’t afford it. “Well, obviously, they will get sicker and in some cases, they will die,” he said. “This is an unacceptable situation we must fix.” Sanders said pharmaceutical companies sometimes spend more on sales and marketing than on research and development, so transparency is needed to determine prices that allow a reasonable profit for the companies without costing Americans too much. The practice of a company paying a rival to keep a generic alternative off the market stifles competition and should be banned, he said.
Sanders said that he hears from constituents and on the campaign trail about the difficulty of affording medications and said his office constantly gets letters and e-mails on the issue. Rep. Elijah Cummings (D-MD), who is introducing a House version of the bill, said recent polls show Americans have a great concern about drug prices. About 66% of Republicans said it was their top healthcare policy concern, he said. “We will continue to fight this fight,” he said. Sanders said the bill will undoubtedly face Republican opposition, but aspects such as importing drugs from Canada have had bipartisan support. It doesn’t make sense for a politician to advocate for free trade and market competition but not support that measure, he said. A conservative think tank, the Heritage Foundation, recently released a statement saying that any proposed legislation would be the “same tired old thing.”
FDA/EMA ROUNDUP -- Amgen Inc. (Thousand Oaks CA) said on Friday it had asked the U.S. Food and Drug Administration to approve a monthly single-dosing option for its recently approved cholesterol drug, Repatha. The FDA approved Repatha--one of two expensive treatments in a new class of injectable “bad cholesterol”-lowering drugs called PCSK9 inhibitors--in late August. A similar drug from Regeneron Pharmaceuticals Inc. and Sanofi SA, called Praluent, was approved in July. Repatha is approved for patients with hereditary forms of high cholesterol--heterozygous familial hypercholesterolemia (HeFH) and a rarer homozygous (HoFH) form of the condition, in addition to those with cardiovascular disease. It is given as a 140 mg injection every other week or as a monthly injection of 420 mg, which is recommended for HoFH patients, the company said. Praluent has a U.S. price of $14,600 for a year of treatment, while Repatha costs about $14,100. Amgen’s drug is being launched in Europe at around half the U.S. price.
Elsewhere, a panel of outside advisers to the FDA voted against approving Purdue Pharma LP’s (Stamford CT) experimental fast-acting oxycodone painkiller, saying the public health benefits of the abuse-deterrent opioid don’t outweigh the risks to patients posed by the effect of food intake. The panel voted 23 to 1 against the approval. The recommendation was in-line with comments from the FDA’s staff who expressed concerns over likely errors in administering the drug to be called Avridi.
Collegium Pharmaceutical Inc.’s (Canton MA) experimental opioid painkiller moved one step closer to approval after a panel of outside advisers to the FDA unanimously voted in favor of the drug. The FDA panel’s vote also was contrary to a recommendation by FDA staff, which on Wednesday expressed concerns that the oral painkiller could be wrongly used, leading to an overdose. The panel voted 23 to 0 in favor of approving the drug. The FDA is not obliged to follow the advice of its advisory panels, but usually does. Collegium’s long-acting experimental oxycodone pill, to be sold as Xtampza if approved, is meant to be taken after a meal to provide maximum pain relief. The FDA staff had said if the drug was taken without food, it could lead to insufficient pain control, which in turn could contribute to overdosing.
And the FDA accepted for review the New Drug Application (NDA) from Otsuka Pharmaceutical Co. Ltd (Tokyo) seeking approval for Abilify (aripiprazole) embedded with an ingestible sensor in each tablet that will allow the measurement of medication-taking patterns and physiologic response. The sensor, developed by privately-held Proteus Digital Health, communicates with a wearable sensor patch. There is also a software application for measuring medication adherence, a major problem with patients suffering from schizophrenia, bipolar disorder or major depressive disorder. If approved, it will be the first digital medication cleared for sale in the U.S. Abilify was originally cleared by the FDA in 2002.
MEDICAL STOCK SPOTLIGHT -- Vitae Pharmaceuticals Inc. (Nasdaq) led advancing issues, soaring $6.72, or 88% over the week, to $14.32 after announcing positive top-line results from its phase I single ascending dose clinical study of VTP-43742 in autoimmune disorders. VTP-43742 is Vitae’s first-in-class, wholly owned RORγt inhibitor being developed for the treatment of a range of autoimmune disorders, potentially counting psoriasis, psoriatic arthritis, rheumatoid arthritis, multiple sclerosis and irritable bowel disease (IBD), in addition to numerous orphan diseases. In this double-blind, randomized, placebo-controlled study that evaluated the safety, tolerability, pharmacokinetic (PK), and pharmacodynamic (PD) profile of single oral doses of VTP-43742 in 53 healthy human volunteers, VTP-43742 was safe and generally well tolerated at all dose levels across a 60-fold dose range. No serious adverse events were stated and there were no drug-related clinical laboratory or electrocardiogram (ECG) abnormalities. Fort Washington, PA-based Vitae develops small molecule compounds that address medical needs such as chronic kidney disease, diabetes, atherosclerosis, and Alzheimer’s diseases.
Elsewhere, after reporting positive phase II trial results for its anemia drug, Akebia Therapeutics Inc. (Nasdaq) jumped $4.07, or 57%, to $11.21. Akebia Therapeutics is developing vadadustat for the treatment of anemia in patients with chronic kidney disease receiving dialysis. Anemia is common in these patients, and it’s frequently treated with Epogen, an erythropoiesis-stimulating agent manufactured by Amgen Inc. In a 16-week phase II trial, Cambridge, MA-based Akebia patients that were converted from Epogen to vadadustat didn’t see any drop-off in hemoglobin levels. Importantly, there were no serious safety concerns associated with taking vadadustat. Akebia plans to design and launch a phase III study soon, and if that study confirms earlier stage findings, it could result in FDA approval say some observers. That’s because Epogen was a multibillion dollar blockbuster drug for Amgen prior to losing patent protection, and even though Epogen faces off against biosimilars overseas, it’s still selling at an annualized $2 billion level.
And Clovis Oncology Inc. (Nasdaq), a biopharmaceutical company focused on treating a variety of cancers, rocketed $20.27, or 24%, to $104.10. Investors were excited by the updated data that the company presented at the World Conference on Lung Cancer in Denver. The Boulder, CO-based company provided updates through four different mini-oral presentations and also presented two scientific posters related to rociletinib, the company’s investigational oral treatment option for non-small cell lung cancer. During the presentations, the company provided a variety of clinical data related to its TIGER-X trials, which measured the effectiveness of rociletinib in multiple subsets of patients with non-small cell lung cancer. Investors apparently were impressed with the potential for rociletinib, as are regulators, with the drug granted the much coveted “breakthrough therapy” designation by FDA last year. Earlier this year Goldman Sachs estimated that the drug could fetch around $1.5 billion to $2 billion in peak sales.
But Tetraphase Pharmaceuticals Inc. (Nasdaq) plunged $34.56, or 80%, to $8.69 after announcing that a big, late-stage trial of its potential antibiotic failed to prove it works as well as existing drugs to treat infections of the urinary tract. Watertown, MA-based Tetraphase said that a phase III trial of 908 patients showed eravacycline is not as effective as levofloxacin in the treatment of complicated urinary tract infections. The news was a surprise for many who had high hopes based on the drug’s success in an earlier trial in patients with infections of the abdomen. That trial, the results of which were announced last December, caused a steep increase in the company’s market value to over $1 billion. The market cap of the company--which has been mentioned in recent months as a possible takeover target for Actelion or Roche--fell to $340 million. Chief Medical Officer Patrick Horn in December said that urinary tract infections are the more widespread of the two types, but patients are not as sick as those with complicated intra-abdominal infections. The bacteria that spread urinary tract infections are spread mostly in hospitals and nursing homes, and mostly affect those over the age of 50, he said.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, AnaptysBio Inc., which is developing antibody products focused on inflammation and immuno-oncology, registered up to $86 million worth of common stock. The San Diego, CA-based company, which was founded in 2005 and booked $19 million in sales for the 12 months ended June 30, 2015, plans to list on the Nasdaq under the symbol “ANAB.” BMO Capital Markets and Stifel are the joint bookrunners on the deal. No pricing terms were disclosed. ** Cerecor Inc., which is developing a novel adjunct therapy for major depressive disorder, announced terms for its IPO. The Baltimore, MD-based company plans to raise $27 million by offering 4.2 million shares at a price range of $6 to $7. At the midpoint of the proposed range, Cerecor would command a fully diluted market value of $58 million. Cerecor, which was founded in 2011, plans to list on the Nasdaq under the symbol “CERC.” Cerecor initially filed confidentially on December 20, 2013. Maxim Group LLC is the sole bookrunner on the deal.
September 7, 2015 ...
GOOGLE, SANOFI PARTNER TO IMPROVE DIABETES CARE -- Google Inc. (Mountain View CA) said its healthcare research unit agreed to work with French pharmaceutical company Sanofi SA (Paris) on new ways to monitor and treat diabetes. The companies declined to say how much they are investing in the partnership. Sanofi is a leading maker of diabetes medication, as well as many other drugs. Google’s Life Sciences division is working on small, connected medical devices to continuously collect diabetes-related data, as well as software that learns from the information to find new treatments. Diabetes is expected to affect 592 million people world-wide by 2035, according to the International Diabetes Federation (Brussels). Pascale Witz, head of Sanofi’s Global Diabetes and Cardiovascular Care business, is leading the collaboration. Google Life Sciences, led by Andrew Conrad, started about two years ago as part of the company’s goal to expand beyond its Internet-search roots into industries such as transportation and health care. Some of these efforts have stumbled, but Google Life Sciences has made steady progress through in-house research and partnerships with companies such as Novartis AG (Basel CHE) and Biogen Inc. (Cambridge MA). The life-sciences division will become a stand-alone unit in Google’s planned reorganization into a holding company called Alphabet Inc.
Mr. Conrad said the Sanofi partnership is the latest of several collaborations that combine expertise in medication, medical devices, software and computing infrastructure. That multi-disciplined approach is needed to effectively treat diabetes, but has been rare to date, he explained. An existing partnership with Novartis’s Alcon eye-care division aims to take a Google-designed contact lens that measures glucose in tears of diabetics into high-volume production and large-scale human trials overseen by the U.S. Food and Drug Administration in 2016. Another Google partnership, with Dexcom Inc. (San Diego CA), a maker of continuous glucose-monitoring devices, is developing a cheap, disposable device the size of a Band-Aid that can be worn on the skin and send blood-sugar measurements to a smartphone, remote computer servers known as the cloud and ultimately to doctors. “With Sanofi, we can complete the picture of how diabetes unfolds and try to interrupt that development through a proactive and preventive approach,” Mr. Conrad said.
MEDICAL SPECIALISTS CALL FOR MORE DEBATE ON HUMAN GENOME EDITING -- Medical researchers last week called for detailed, thoughtful debate on future use of new genetic technology that has the potential to create “designer babies.” The technology, called CRISPR-Cas9, allows scientists to edit virtually any gene they target, including in human embryos, enabling them to find and change or replace genetic defects. Describing CRISPR as “game-changing,” the Wellcome Trust (London) global medical charity and four other leading British research organizations urged the scientific community to proceed considerately, allowing time and space for ethical debate. “This raises important ethical and regulatory questions which need to be anticipated and explored in a timely and inclusive manner,” they said in a joint statement. Wellcome’s senior policy adviser Katherine Littler added: “It’s essential we start these discussions early, involving scientists, ethicists, doctors, regulators, patients and their families and the wider public.” Chinese biologists triggered an international furor this year when they reported carrying out the first experiment to edit the DNA of human embryos, drawing condemnation from critics who warn against altering the human genome in a way that could last for generations.
The Wellcome-led joint statement noted that gene-editing science and technology was still at a relatively early stage and potential therapeutic applications are not yet here, but said crucial questions should be discussed now. “It is important to clearly delineate the different ways and contexts in which this technology might be used,” it said. This included distinguishing the use of CRISPR in research from its potential uses in patients, as well as distinguishing its use in non-reproductive human cells or in reproductive, or so-called germ, cells, it said. “As genome editing technologies evolve, it’s vital that the regulatory framework remains robust and adapts so that the full potential of genome editing can be realized in a scientifically, ethical and legally rigorous way,” said Rob Buckle of Britain’s Medical Research Council, one of the statement’s signatories. The U.S. National Academy of Sciences and its Institute of Medicine are due to convene an international summit this year for researchers and other experts to explore the scientific, ethical, and policy issues associated with human gene-editing research.
TRACKING WASHINGTON -- Democratic presidential candidate Hillary Clinton would launch a $10 billion initiative to tackle drug and alcohol addiction, a problem she speaks of often on the campaign trail and which affects 23 million Americans. Clinton’s plan would include a new $7.5 billion federal fund to support states that launch addiction-related prevention, treatment, medical response, prescription and criminal justice initiatives. Clinton, the Democratic front-runner, announced her plan in the Manchester Union Leader, a New Hampshire newspaper. She said at her first campaign stop in the state, a retired doctor told her the biggest problem facing the country was drug addiction. “To be candid, I didn’t expect what came next,” Clinton wrote in the piece posted last Tuesday. “In state after state, this issue came up again and again--from so many people, from all walks of life, in small downs and big cities.” Substance abuse has become an early, surprising theme in Clinton’s campaign, prompting personal stories at panels in New Hampshire and house parties in Iowa, the two states that hold the earliest party nominating contests. Clinton’s vision, as outlined by her campaign, would emphasize better training for healthcare workers to recognize substance abuse, and having all first responders carry naloxone, a drug that can reverse the effects of an opioid overdose.
Elsewhere, the Obama administration proposed a rule Thursday that would forbid most health insurers and medical providers to discriminate against transgender patients, including by prohibiting insurers from categorically denying coverage of care related to gender transition. The proposal clarifies a civil rights provision of the Affordable Care Act that bans “any health program or activity” that receives federal funds from discriminating based on race, national origin, sex, age or disability. The proposed regulation expands on that broad language, specifying that the administration considers discrimination on the basis of gender identity a form of sex discrimination. “This rule actually contains the most significant affirmation of the rights of transgender individuals of equal treatment in health care and health insurance that has existed anywhere in the law,” said Samuel Bagenstos, a law professor at the University of Michigan. The proposed rule would apply throughout the healthcare system-affecting most health insurers, hospitals, nursing homes and physicians. Health insurers or medical providers who are found to violate the provision could risk losing their federal funding. The scope of the proposed regulation--which must go through a public comment period before it takes effect--was larger than some experts expected.
FDA/EMA ROUNDUP -- AstraZeneca Plc (London) on Thursday said the U.S. Food and Drug Administration approved a new dose of its blood thinner Brilinta intended for longer-term use in patients with a history of heart attack or a condition known as acute coronary syndrome. The FDA approved Brilinta tablets at a new 60 milligram dose that would be taken along with aspirin beyond a year after a heart attack. The drug, which is used to prevent blood clots that can cause heart attacks, strokes and deaths, had previously been approved at a higher dose for use during the first year after a heart attack. The FDA move comes a week after European heart experts endorsed the longer use of Brilinta and similar blood clot preventers. The expanded approval would greatly increase the numbers of patients eligible for the medicine to include those who had a heart attack more than a year ago.
Elsewhere, Cosmo Pharmaceuticals SA said on Friday that the FDA has given marketing authorization for SIC 8000, a product used in gastrointestinal tract procedures. Luxembourg-based Cosmo said SIC 8000 lifts mucous membranes in the esophagus, stomach, small and large intestines and other organs during removal of polyps, for example.
The FDA has issued clearance to Eko Devices Inc.’s (Berkeley CA) Eko Core, a next generation digital stethoscope. The device wirelessly streams heart sounds to a HIPAA-compliant smartphone app and integrates heart sounds directly into the patient’s electronic health record. According to the company, the stethoscope will help address a cardiovascular disease crisis that affects 1 in 4 people worldwide. Clinicians can download the Bluetooth-connected mobile app from the Apple App Store. It allows them to view a heart sound waveform, save heart sounds directly to a patient’s electronic health record and securely collaborate with a cardiologist for a second opinion. The University of California, San Francisco’s Department of Cardiology is leading the device’s ongoing clinical trial.
And Roche Holding AG (Basel CHE) said on Friday it had won “breakthrough therapy” designation from the FDA for an experimental hemophilia medicine, aiming for a piece of the $11 billion hemophilia drug market. The Swiss drugmaker said its U.S.-based Genentech unit’s ACE910 secured the “fast-track” designation as the company prepares separate phase III trials in 2015 and 2016, the first in patients with hemophilia A with factor VIII inhibitors and the second for patients without inhibitors. It represents a threat to more traditional treatments from Novo Nordisk A/S and Baxalta Inc., the target of a $30 billion takeover attempt by Shire Plc. Hemophilia A is a rare genetic disorder that prevents blood clotting. Patients receive lifesaving infusions of clotting factors, but development of inhibitors in many of those being treated interferes with efforts to control their bleeding. With the market for hemophilia medications expected to grow to $11 billion next year, Roche’s ACE910 drug is closely watched because it could change the way the disease is treated.
MEDICAL STOCK SPOTLIGHT -- Thinly traded nano cap KaloBios Pharmaceuticals Inc. (Nasdaq) led advancing issues, more than doubling over the week to $4.01. on heavy volume. Analysts speculate the possible driver of the bullish action may be Geron Corp.’s interest in acquiring an early-stage oncology asset via licensing or outright purchase of a company. In Geron’s 4Q earnings call in March, CEO Chip Scarlett said the due diligence process to assess potential candidates was underway. KalaBios’s two lead product candidates are KB004, a monoclonal antibody currently in Stage 2 development for myelofibrosis or myelodysplastic syndrome and KB003, a monoclonal antibody in phase I development for chronic myelomonocytic leukemia. South San Francisco-based KaloBios develops monoclonal antibodies designed to improve the lives of seriously ill patients with difficult-to-treat diseases, focusing on respiratory diseases and cancer such as cystic fibrosis, asthma, pneumonia, and tumors.
Elsewhere, Trevena Inc. (Nasdaq) shot up $4.72, or 78%, to $10.65--a new 52-week high after Jefferies Group raised their price target on the stock from $9.00 to $13.00. The brokerage currently has a “Buy” rating on shares. Trevena has been the topic of several other research reports. Zacks downgraded shares of Trevena from a “Buy” rating to a “Hold” in a report August 18th. Wedbush raised their price objective on shares of Trevena from $15.00 to $20.00 and gave the stock an “Outperform” rating. Cowen and Company reiterated a “Buy” rating and set a $14.00 target price (up previously from $13.00) on shares. One research analyst has rated the stock a “Hold” and eight have issued a “Buy” rating to the company. Trevena has a consensus rating of “Buy” and an average target price of $15.03. The King of Prussia, PA-based company is focused on the discovery and development of agents targeting G-protein coupled receptors and therapies that treat acute heart failure, acute chronic pain, and depression.
And Synergetics USA Inc. (Nasdaq) surged $2.22, or 51%, to $6.57. Canadian drugmaker Valeant Pharmaceuticals last Wednesday said it will the buy eye surgery product maker for as much as $192 million. Valeant has already announced two acquisitions worth at least $1 billion this year, so the purchase is relatively small by its standards. But the company said Synergetics’ products will strengthen the business of Bausch & Lomb, which it bought for $8.7 billion in 2013. O’Fallon, MO-based Synergetics makes products used in surgeries on the back of the eye, as well as surgical equipment and other products. Quebec-based Valeant said it will pay $6.50 per share, or $166.2 million, for Synergetics. Valeant could make payments worth another $1 per share, or $25.6 million, if Synergetics reaches $65 million in annual sales of ophthalmology products over the next few years.
But Heat Biologics Inc. (Nasdaq) tumbled $1.37, or 27%, to $3.79 despite having a “Buy” rating on its stock reaffirmed by research analysts at H.C. Wainwright LLC in a report issued Thursday. They presently have a $13.00 target price on the company’s stock. Wainwright’s target price suggests a potential upside of 225.00% from the company’s previous close. Other research analysts have also recently issued reports about the company. Cantor Fitzgerald restated their “Buy” rating. The firm currently has an $18.00 price objective on the company’s stock. Zacks raised Heat Biologics from a “Sell” rating to a “Hold.” Chapel Hill, NC-based Heat Biologics last announced its quarterly earnings results on Thursday, August 13th. The biopharmaceutical company reported ($0.56) earnings per share for the quarter, missing the consensus estimate of ($0.47) by $0.09. Heat Biologics is a development-stage biopharmaceutical company engaged in the development of allogeneic, off-the-shelf cellular therapeutic vaccines to combat a range of cancers and infectious diseases.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, PointClickCare, which offers cloud-based software management products for long-term care facilities, registered up to $100 million worth of common stock. The Ontario, Canada-based company, which was founded in 1995 and booked $113 million in sales for the 12 months ended April 30, 2015, plans to list on the Nasdaq under the symbol “PCLK.” J.P. Morgan, Goldman Sachs, RBC Capital Markets, William Blair and Canaccord Genuity are the joint bookrunners on the deal. No pricing terms were disclosed. ** Sancilio Pharmaceuticals Co. Inc., which markets, licenses and develops products based on its lipid drug delivery technology, registered up to $86 million worth of common in an initial public offering. The Riviera Beach, FL-based company, which was founded in 2006 and booked $22 million in revenue for the 12 months ended June 30, 2015, plans to list on the Nasdaq under the symbol “SPCI.” Sancilio Pharmaceuticals initially filed confidentially on May 14, 2015. UBS Investment Bank, Piper Jaffray, JMP Securities and FBR Capital Markets are the joint bookrunners on the deal. No pricing terms were disclosed.
August 31, 2015 ...
FDA APPROVES SECOND DRUG FOR CHOLESTEROL IN POTENT NEW CLASS -- Amgen Inc. (Thousand Oaks CA) won U.S. approval for its powerful cholesterol-lowering drug Repatha for certain patients, making it the second in a new class of treatments to come to market. The Food and Drug Administration limited sales of Repatha to people with hard-to-treat levels of bad cholesterol, according to a statement from the agency. The injection will cost $14,100 a year, Amgen said, and will be available in the U.S. this week. Repatha belongs to a category of drugs known as PCSK9 inhibitors designed to help patients with ultra-high “bad,” or LDL, cholesterol who can’t get their condition under control with widely used statins such as Pfizer Inc.’s (New York) Lipitor. Sanofi SA (Paris) and Regeneron Pharmaceuticals Inc. (Tarrytown NY) won approval on July 24 for their PCSK9 drug, Praluent. Repatha was approved in the European Union on July 21 for patients with uncontrolled cholesterol who require additional intensive reduction of LDL cholesterol. Express Scripts Holding Co. (St. Louis MO), the U.S.’s largest manager of prescription drug benefits, said PCSK9s could be the most expensive therapies ever seen, costing as much as $100 billion a year “if not managed properly.” As many as 10 million Americans may have conditions that would make them eligible for the drugs.
Express Scripts said Thursday that it would make a decision on how to cover the new drugs in the next several weeks. It didn’t rule out excluding either Amgen’s or Sanofi and Regeneron’s treatment to force price concessions. In the meantime, it will cover both. “Our preference would be that both Amgen and Sanofi/Regeneron provide our clients favorable pricing so that it would make sense for our national formulary to cover both products,” David Whitrap, an Express Scripts spokesman, said. CVS Health Corp. (Woonsocket RI), the second-largest pharmacy benefit manager, said it would also review both new drugs and try to negotiate favorable pricing. “Amgen is sensitive to the concerns of payers around cost, budget predictability and paying for value,” said Anthony Hooper, Amgen’s vice president of global commercial operations. Amgen will work with health insurers and pharmacy managers on getting the drugs covered, and finding ways to charge based on how effective they are, he said. High cholesterol is linked to heart disease, the No. 1 killer of Americans. Amgen closed the week up 70 cents at $155.89.
HEALTH INSURERS WIN BIG RATE INCREASES -- While most states have been pushing health insurers to curb proposed price increases, Florida is telling some of them they can charge more. The state last week approved an average premium increase of 9.5% for Affordable Care Act plans sold to individuals for next year. Insurers had asked to boost rates 8.6% on average. Humana Inc. (Louisville KY) and Blue Cross & Blue Shield of Florida Inc. (Jacksonville) were among those whose final rates were higher than they’d first sought. Alex Kepnes, a Humana spokesman, said the approved increase incorporated updated information from the U.S. government on ACA programs designed to spread cost, known as reinsurance and risk adjustments. Kepnes said it’s routine for rates to be adjusted between initial submission and final approval. BCBS declined to comment. Regulators can push insurers to raise rates if they think companies aren’t charging enough to cover costs, which could raise the prospect of a company failing. They also have the power in some states to force insurers to lower rates. “In most cases, when a state changes a rate in the rate review process, it’s to lower it, not to increase it,” said Cynthia Cox, who studies private health plans at the Kaiser Family Foundation (Menlo Park CA).
Humana had asked to raise rates 7.4% in one set of plans it’s selling in Florida. Instead, the Florida Office of Insurance Regulation told it to boost rates 16.3%. For the Blue Cross & Blue Shield plan, the final rate increase was 8.9%, more than double the 4.3% request. The rate increases were determined by a review that included risk adjustment amounts and other factors, Amy Bogner, a spokeswoman for the Florida regulator, said. Florida also held down rate requests for some insurers. Aetna Inc.’s (Hartford CT) premium increase was limited to 13.9%, down from a requested 21%. Humana, which is being acquired by Aetna, has faced higher-than-expected costs in some policies it sold under Obamacare. In Georgia, for instance, the company said its customers were sicker than expected, and it had to cover more out-of-network doctor visits than it planned for. The insurer ran into that problem in Florida as well, and told regulators it expects more customers to stay in network next year.
TRACKING WASHINGTON -- Republican leaders in Congress are considering a pledge to hold a separate vote on defunding Planned Parenthood Federation of America (Washington DC) as a way to keep the issue from derailing legislation to keep the government running, said congressional aides with knowledge of the discussions. In private discussions, the leaders are looking at using reconciliation procedures to let a Planned Parenthood bill come up for a filibuster-proof Senate vote, the aides said. Handling the issue that way would postpone the fight over federal funding for the medical services that Planned Parenthood provides to the poor, and deprive Democrats of being able to accuse the majority party of threatening to shut down the government to make a stand against an abortion provider. Some Republican presidential candidates, including Senators Marco Rubio and Ted Cruz, have demanded that legislation to fund federal agencies after Sept. 30 include a provision barring abortion providers such as Planned Parenthood from receiving federal money. Lawmakers return Sept. 8 from their summer recess. They already face a time crunch and a broader battle over the annual appropriations bills. Democrats have blocked Senate action on those, arguing that spending shouldn’t be capped at the levels mandated in the Budget Control Act, Public Law 112-25.
Using reconciliation as the vehicle would force a Senate vote on the Planned Parenthood issue, which so far Democrats have blocked. The leaders could combine Planned Parenthood provisions with language repealing parts of the Affordable Care Act into a package that, under reconciliation procedures, would require only a simple majority of members. The clamor for defunding Planned Parenthood grew after the release of videos purporting to show the organization’s doctors discussing harvesting fetal tissue for research, with activists posing as representatives of a medical research company. The House and Senate aides, who spoke on condition of anonymity, stressed that using reconciliation to deal with Planned Parenthood was still an option being studied. No decision is likely until after members discuss it next month, they said.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration approved Amgen Inc.’s (Thousand Oaks CA) cholesterol-lowering drug on Thursday, setting up a rivalry with a similar treatment that was approved just weeks earlier. The Amgen therapy, Repatha, belongs to a powerful new drug class that promises help for patients who have struggled to control their cholesterol using older statin medicines. In July, the FDA approved the first drug of this new class, Praluent, from Sanofi SA and Regeneron Pharmaceuticals Inc. Doctors and patients have been looking forward to these new cholesterol-lowering agents, which are injections either monthly or every two weeks. Some 11 million people in the U.S. can’t lower their so-called bad cholesterol, LDLs, to healthy levels using statin pills like Lipitor and Crestor, according to Amgen. Health insurers and drug-benefit managers have expressed concerns about the new drugs’ cost. Amgen said it is pricing Repatha at $14,100 a year, while Praluent comes in at $14,600.
Elsewhere, Novartis AG (Basel CHE) announced that the FDA has approved an expanded use for Promacta (eltrombopag) to include children 1 year of age and older with chronic immune thrombocytopenia (ITP) who have had an insufficient response to corticosteroids, immunoglobulins or splenectomy. The updated label also includes a new oral suspension formulation of Promacta that is designed for younger children who may not be able to swallow tablets. Promacta was approved by the FDA as a tablet formulation in June 2015 for children 6 years of age and older and in 2008 for use in adult patients with the same condition. ITP affects as many as 5 in 100,000 children each year and is characterized by a low platelet count. Chronic ITP, defined as ongoing disease more than 12 months after diagnosis, occurs in 13%–36% of children with immune thrombocytopenia. A small number of pediatric patients with chronic ITP may be at risk of significant bleeding.
The FDA granted priority review status for Sarepta Therapeutics Inc.’s (Cambridge MA) treatment of a rare genetic disorder. Sarepta is developing eteplirsen to treat Duchenne muscular dystrophy, a condition that destroys muscles and frequently kills patients by their 30s. The disease affects roughly one in every 3,500 boys world-wide. The FDA’s targeted action date on Sarepta’s new drug application is Feb. 26, the company said. The agency had previously granted fast-track, orphan drug designation, and rare pediatric disease designation for eteplirsen. Priority review indicates the FDA intends to take action within six months.
And the FDA on Thursday proposed identifying cheaper versions of biologic drugs with a suffix to distinguish them from their more expensive, branded counterparts. The FDA said its draft guidance is designed to prevent the inadvertent substitution of non-interchangeable products and to make it easier to monitor and track usage once the products are on the market. Biologic drugs are made from living organisms and, unlike most traditional drugs, cannot be easily replicated. Copies of biologic products are known as biosimilars as they are similar, not identical, to the original. The FDA is proposing that original biologic products and their biosimilars share a core drug substance name. That name would be followed by a unique suffix composed of four lowercase letters with no meaning. As an example, the agency offered the hypothetical drug replicamab. The original biologic might be named replicamab-cznm while the biosimilar could be named replicamab-hixf.
MEDICAL STOCK SPOTLIGHT -- Eagle Pharmaceuticals Inc. (Nasdaq) led advancing issues, leaping $18.22, or 28% for the week, to $83.67 on no company specific news. Eagle is a favorite with some analysts, having earned a consensus broker rating score of 1.33 (Strong Buy) from the three brokers that provide coverage for the stock, Zacks Investment Research reports. One equities research analyst has rated the stock with a “Buy” rating and two have assigned a “Strong Buy” rating to the Woodcliff Lake, NJ-based company. Brokerages have set a one-year consensus price target of $104.67 and are predicting Eagle will post ($0.52) EPS for the current quarter, according to Zacks. Zacks has also assigned Eagle an industry rank of 88 out of 265 based on the ratings given to related companies. Eagle is a specialty pharmaceutical company. It focuses on developing and commercializing injectable products, primarily in the critical care and oncology areas.
Elsewhere, Epizyme Inc. (Nasdaq) surged $3.48, or 22%, to $19.41 after announcing that its investigational new drug (IND) application for tazemetostat for the treatment of adults and pediatric patients with INI1-negative tumors or synovial sarcoma has been accepted by the FDA. The Cambridge, MA-based company plans to initiate a multi-center phase II study on the candidate in adults suffering from relapsed or refractory INI1-negative tumors or synovial sarcoma in the second half of this year. A multi-center phase I study in children is also scheduled to begin by year end. Apart from the phase II study in adults and phase I study in children, the company is evaluating tazemetostat in patients with relapsed or refractory non-Hodgkin lymphoma (NHL) and solid tumors in a phase I/II study. Epizyme plans to provide an update on this portion at the European Society for Medical Oncology’s European Cancer Conference on Sept. 26, 2015.
And Oncothyreon Inc. (Nasdaq) gained 18% to $3.54. Three analysts have set the short term price target for Oncothyreon of $4.67. The company received an average rating of 1.5 from four analysts, according to Zachs Research. Three have rated it a “Strong Buy.” One analyst has rated the company a “Hold.” Shares of Oncothyreon lost 0.28% on a 4-week basis. The Seattle, WA-based company is up 3.22% the last 3-months. Year-to-Date the stock performance stands at 86%. Oncothyreon develops therapeutic approaches to cancer management. The company focuses on the development of synthetic vaccines and immunotherapy strategies for the treatment of cancer.
But Macrocure Ltd. (Nasdaq) skidded an additional 28% to $3.22 after plunging 65% the week prior when its plan to break into regenerative medicine imploded. The biotech reported that its phase III study for repairing venous leg ulcers looks like a near certain loser, putting the company under a cloud at a critical moment. Macrocure reported that the data safety monitoring board on the CureXcell study “determined that this study is not expected to meet its primary endpoint.” Israel-based Macrocure said it may have to mount a third phase III study. Macrocure has been developing a therapy that centers on injecting white blood cells into wounds in order to spur the cellular regeneration needed to speed up wound healing. The company has another program using the same technology in a phase III study for diabetic foot ulcers.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Acelity Holdings Inc., a global medical technology company developing advanced wound care and regenerative medicine, registered up to $100 million worth of common stock. The San Antonio, TX-based company, which was founded in 2015 and booked $1.9 billion in sales for the 12 months ended June 30, 2015, plans to list on the New York Stock Exchange. No ticker symbol was revealed. J.P. Morgan, Goldman Sachs, and BofA Merrill Lynch are among the joint bookrunners on the deal. No pricing terms were disclosed. Acelity Holdings will replace Acelity LP as the holding company for the wound-care and regenerative-medicine businesses. Last week’s announcement was made two months after the Wall Street Journal reported Acelity LP was planning a public stock offering that was expected to raise $1 billion. ** Advanced Inhalation Therapies Ltd., which is developing inhaled nitric oxide drug-device therapies for respiratory infections, registered up to $36 million worth of common in an initial public offering. The Rehovot, Israel-based company, which was founded in 2011, plans to list on the Nasdaq under the symbol “AITP.” Aegis Capital is the sole bookrunner on the deal. No pricing terms were disclosed.
August 24, 2015 ...
FEMALE VIAGRA DRUGMAKER BOUGHT BY VALEANT FOR $1 BILLION -- A mere two days after getting approval from the U.S. Food and Drug Administration, the maker of Addyi, the “Female Viagra,” decided Thursday to ring the cash register. Canadian-based Valeant Pharmaceuticals International Inc. (Laval, Quebec) said it’s agreed to buy Sprout Pharmaceuticals Inc. (Raleigh NC) for an initial $1 billion in cash, generating an immediate and hefty reward for the tiny firm. The total amount may grow if Addyi passes certain (unspecified) milestones in sales and profits. Addyi is the first officially sanctioned treatment for boosting female sexual desire in the U.S. Valeant is wagering that the drug will be the same kind of unprecedented success as Viagra, Pfizer Inc.’s (New York) pioneering treatment for male erectile dysfunction, 15 years ago. Valeant is due to pay $500 million upon closing the transaction (expected by the end of September) and another $500 million in the first quarter of 2016. It expects Addyi to go on sale in the U.S. in the fourth quarter, and to add moderately to Valeant’s earnings in 2016, according to the company’s statement. Sprout will remain headquartered in Raleigh as a division of Valeant, a group that continually prefers to buy drugs developed by other companies rather than develop them itself.
A person familiar with the situation said that Valeant and Sprout had been in talks for about three to four weeks and had structured the deal so that the terms could be finalized quickly after Addyi’s approval. “Delivering a first-ever treatment for a commonly reported form of female sexual dysfunction gives us the perfect opportunity to establish a new portfolio of important medications that uniquely impact women,” Valeant chairman and CEO Michael Pearson said in the statement. Sprout CEO Cindy Whitehead commented that Valeant’s international reach “offers us a global footprint that could eventually bring Addyi to women across the globe.” Valeant shares closed the week down 10% at $222.19 in New York.
LILLY, BOEHRINGER DIABETES DRUG CUTS HEART ATTACK, STROKE RISK IN TRIAL -- A diabetes drug sold by Eli Lilly & Co. (Indianapolis IN) and Boehringer Ingelheim GmbH (Ingelheim DEU) lowered the risk of heart attacks, stroke and death in a large trial of adults with type 2 diabetes, compared with the standard of care alone. Shares of Lilly closed the week up 1% at $84.53. In a trial of 7,000 people at high risk of cardiovascular events, patients taking Lilly and Boehringer’s drug Jardiance were less likely to have a heart attack, stroke or die than those taking a placebo, the companies said in a statement. Patients in the trial were getting other drugs to control their diabetes. The results could give Lilly and Boehringer an advantage in a market crowded with diabetes treatments, where Merck & Co., Sanofi SA, Johnson & Johnson and Novo Nordisk A/S have battled to win patients and doctors to their therapies. Lilly and Boehringer said that the results make their drug the only one to show a reduction in cardiovascular death in a trial specifically designed to look for it. Cardiovascular disease is the leading cause of death among type 2 diabetics, according to the American Heart Association. The two companies plan to present full results of the study at a medical meeting next month.
Jardiance belongs to a class of diabetes drugs called SGLT-2 inhibitors. The drugs block sugar from being absorbed into the kidneys, and instead excrete excess sugar through the urine, helping control diabetes. J&J and AstraZeneca Plc have competing SGLT-2 drugs.
TRACKING WASHINGTON -- Republican presidential candidate Scott Walker proposed replacing President Barack Obama’s signature healthcare law with a system that eliminates many federal mandates and provides tax credits for the uninsured based on age--not income or family status. The Wisconsin governor’s strategy for winning the presidential nomination depends on Iowa. But he’s fallen to third place in the polls there, behind Donald Trump and Ben Carson. The centerpiece of the governor’s plan is an annual tax credit that would help people pay for policies on the private market if they don’t have employer-provided health insurance and want to be covered. “It’s all about freedom,” Mr. Walker said last Tuesday while introducing his proposal at a campaign event in Minnesota. “Putting freedom back in the hands of patients and families to make decisions about your health care and about your money.” Mr. Walker said his plan is akin to a “tax cut of about a trillion dollars. That’s probably about one of the biggest tax-relief plans we’ve had, pro-growth, economic development-tax relief plans we’ve had in the past 40 years. That’s going to have a dynamic and important impact on the nation’s economy.” Mr. Walker called his plan “cost neutral,” but he didn’t explain how he would pay $802 billion in increased Medicare spending that would be triggered by a repeal of the Affordable Care Act.
The tax-credit system Mr. Walker proposed would provide a tax credit of $900 a year for those 17 years old or younger and escalate to a credit of $3,000 for people between the ages of 50 and 64. It also would increase annual limits on tax-sheltered health savings accounts, a popular program for people in high-deductible plans, and would provide a $1,000 refundable tax credit to anyone who signs up. Walker aides said it could reduce premiums by as much as 25%. Under the Affordable Care Act, tax credits vary depending on an individual or family’s income as well as where they live. The Kaiser Family Foundation (Menlo Park CA) estimates that about 3.5 million people qualified for a total of about $10 billion in annual premium subsidies in 2014, or an average of about $2,890 a person. This year, nearly 8 million consumers who selected a plan on federal exchange qualified for an average tax credit of $263 a month as of Feb. 22, according to the Department of Health and Human Services. The nonpartisan Congressional Budget Office has said repealing the healthcare law would increase federal budget deficits by $137 billion over the next decade. Mr. Walker’s 6½-page proposal doesn’t address how he would pay for his plan beyond a vow to cut spending on Medicaid.
FDA/EMA ROUNDUP -- Medical device maker Boston Scientific Inc. (Marlborough MA) said its stent to prevent the blocking of arteries in the legs was approved by the U.S. Food and Drug Administration, four years after the device was recalled outside the country due to partial or no deployments. The device consists of a self-expanding metal stent with an advanced delivery system which helps in accurate deployment, the company said. The Innova Vascular Self-Expanding Stent is implanted into the arteries in the legs to prevent peripheral artery disease, which can lead to painful ulcers and infections, or even amputation of the toes or feet. The company recalled over 500 devices in 2011 as partial deployments could result in vessel wall injury, increased procedure time or an emergency surgery to remove it. The stent was approved in Europe in 2011.
Elsewhere, a pill to treat low sexual desire in women won approval from the FDA, becoming the first such treatment cleared for sale in the U.S. Sprout Pharmaceuticals Inc. (Raleigh NC) will sell the drug, flibanserin, under the name Addyi for women who haven’t yet gone through menopause and suffer from low libido, according to a statement from the FDA. The agency had previously rejected the drug in 2013 for its modest effect, and then faced a backlash from some doctors and researchers who claimed the agency was being sexist. Drugs to treat male sexual dysfunction have become ubiquitous since Pfizer Inc.’s Viagra was approved in 1998. Viagra generated $1.69 billion in sales last year. Flibanserin is approved for women diagnosed with a condition called “hypoactive sexual desire disorder,” which is low libido that causes stress. The company will price it similarly to a month’s supply of Viagra, which is about $350 to $400.
Mylan NV (Amsterdam), had “significant violations” of manufacturing-quality rules at three plants in India, the FDA said in a warning letter. The violations include failure to establish and follow written procedures to prevent microbiological contamination, use of torn gloves, poor monitoring to ensure a contamination-free environment and a failure to investigate product complaints, according to the warning letter from the agency dated Aug. 6. Mylan has operations around the world and has pushed for tougher U.S. inspections in India and other foreign countries. The FDA warning won’t impact Mylan’s full-year earnings forecast, the company said in a statement. The FDA has banned drugs from more than 30 plants in India since 2013, after the agency boosted inspections using fees it charges drugmakers to review their products.
And the Food and Drug Administration sent warning letters to the three makers of a specialized medical device that has been linked to outbreaks of so-called superbug infections at U.S. hospitals. The FDA conducted inspections of the manufacturing plants in the spring and said the companies either didn’t adequately report infections or failed to provide sufficient evidence that its cleaning procedures work. The device, known as a duodenoscope, is snaked down the esophagus into the top of the small intestine and is used in diagnostic and treatment procedures related to cancer and other conditions. The FDA has said the devices, which are cleaned and reused, have led to outbreaks of antibiotic-resistant infections even when hospitals followed manufacturers’ cleaning instructions. The three manufacturers, all headquartered in Japan, are Olympus Medical Systems Corp., Fujifilm Corp. and the Pentax division of HoyaCorp.
MEDICAL STOCK SPOTLIGHT -- Considering the swoon that dragged the Standard & Poor’s 500 Index to its worst losses in 46 months on Thursday and Friday, the healthcare sector was bound to take its share of the beating from the broader meltdown, and did. But there still was some positive news: case in point, Omeros Corp. (Nasdaq), which rocketed 62% for the week to $20.96 after announcing positive phase II trial results. The results stemmed from OMS721, which is the company’s lead human monoclonal antibody in its mannan-binding lectin-associated serine protease-2 program for the treatment of thrombotic microangiopathies (TMAs). Thrombotic microangiopathies are a family of rare, debilitating and life-threatening disorders characterized by excessive blood clots (thrombi) in the microcirculation of the body’s organs, most commonly the kidney and brain. Although the patient subset was very small--as is typical for a rare condition--the results were exceedingly encouraging. Seattle, WA-based Omeros plans to advance this compound to phase III development as soon as feasible.
Elsewhere, Argos Therapeutics Inc. (Nasdaq) surged $1.11, or 33%, to $5.32 after having its “Buy” rating reiterated by analysts at Roth Capital in a research note issued on Thursday. A number of other analysts have also commented on the company. MLV & Co. reaffirmed a “Buy” rating and issued a $13.00 price target on Argos’s shares in a report on April 19th. The Durham, NC-based company currently has a consensus rating of “Buy” and a consensus target price of $15.60. Argos Therapeutics is a biopharmaceutical company focused on the development and commercialization of personalized immunotherapies for the treatment of cancer and infectious diseases. The company’s product candidates include AGS-003 for the treatment of metastatic renal cell carcinoma, or mRCC, and AGS-004 for the treatment of HIV.
And Bellerophon Therapeutics Inc. (Nasdaq) jumped $1.00, or 25%, to $5.01 after brokerage FBR & Co. maintained its “Outperform” rating on the company’s stock. Bellerophon is down 34% in the past 200 days. Out of four brokers covering the Hampton, NJ-based company, all four rate it a “Buy.” The highest target is $14 and the lowest is $10 according to Thomson/First Call. The 12-month mean target is $11.5, which means upside potential of 103.54% over the current price. Bellerophon Therapeutics is a biotherapeutics company focused on the development of medical devices and pharmaceuticals, primarily for cardiac-related diseases.
But Vital Therapies Inc. (Nasdaq) lost nearly three-quarters of its market value after the company on Friday said its liver therapy failed to meet its main goal in a late-stage study, raising doubts about the future of the treatment. San Diego, CA-based company said it would stop two ongoing studies of the cell-based therapy, which are aimed at treating alcohol-induced liver diseases such as alcoholic fatty liver disease, alcoholic hepatitis and cirrhosis. Vital’s liver assist system ELAD (extracorporeal liver assist device) uses a mechanism similar to that of kidney dialysis machines. Vital said that data from the late-stage study testing the therapy, VTI-208 ELAD, did not show statistical significance in improving overall survival in patients with alcohol-induced liver failure. The stock was trading at $4.59 after the bell on Friday.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, MedEquities Realty Trust Inc., a REIT formed to invest in healthcare and healthcare-related real estate debt, registered up to $150 million worth of common stock. The Nashville, TN-based company, which was founded in 2014 and booked $4 million in sales for the 12 months ended December 31, 2014, plans to list on the NYSE under the symbol “MRT.” FBR Capital Markets, J.P. Morgan, Citi, KeyBanc Capital Markets and RBC Capital Markets are the joint bookrunners on the deal. No pricing terms were disclosed. ** Benitec Biopharma Ltd., which is developing a gene therapy platform based on DNA-directed RNA interference (ddRNAi), raised $14 million by offering 1.5 million ADSs at $9.21. Each ADS was sold with one third of a warrant to purchase an ADS at a $5.50 exercise price. Benitec had originally planned to raise $65 million by offering 5 million ADSs but cut its deal and added warrants the previous week. Unlike other RNAi-based technologies, ddRNAi effects lasting change in target cells, leading to long term benefit and, potentially, a cure, the company says. Sydney-based Benitec, which was founded in 1995 and booked $1 million in sales for the 12 months ended December 31, 2014, lists on the Nasdaq under the symbol “BNTC.” Maxim Group LLC is the sole bookrunner on the IPO deal. Shares closed the week down $1.21, or 13%, at $8.00.
August 17, 2015 ...
CVS HEALTH URGES REWRITE FOR U.S. HEART GUIDELINES -- The fight is intensifying over which patients will get an almost $15,000-a-year cholesterol drug from Regeneron Pharmaceuticals Inc. (Tarrytown NY) and Sanofi SA (Paris), with CVS Health Corp. (Woonsocket RI) calling for new treatment guidelines to make it clearer who should qualify. In a commentary published online last week in the Journal of the American Medical Association, three top medical officials from CVS are urging cardiologists to reconsider cholesterol-lowering guidelines from the American College of Cardiology and American Heart Association. They say that setting clear cholesterol levels for patients to reach would help doctors determine who needs the injectable drug and others like it, known as PCSK9 inhibitors. Regeneron and Sanofi’s treatment, Praluent, is the first of the powerful new class of cholesterol-lowering drugs, which already are triggering a mammoth debate among insurers and employers worried about their potential costs. A competing drug from Amgen Inc. (Thousand Oaks CA) could be approved by U.S. regulators by the end of this month. Already, insurers such as Aetna Inc. (Hartford CT) and UnitedHealth Group Inc. (Minnetonka MN) are at odds over which patients can get coverage for Praluent. CVS is the second-biggest manager of prescription-drug benefits in the U.S., working with insurers and employers to negotiate prices for medications.
In approving Praluent, the U.S. Food and Drug Administration left it vague about who exactly should get the medicine, approving it for patients with atherosclerotic disease who need further reduction of cholesterol despite being on high doses of statin drugs such as Lipitor. The FDA didn’t define precisely what this means, creating potential for conflict between patients, doctors and insurers. The drug is also approved for patients with a genetic form of high cholesterol. Setting a minimum cholesterol level for PCSK9s would be a shift for the influential cardiology organizations. Their current guidelines, written in 2013, moved away from recommending preset targets for bad cholesterol in favor of a broader strategy of looking at overall heart disease risk to determine treatment. Without specific LDL cholesterol targets, insurers could find it difficult to limit PCSK9 use to patients who need the drugs most, making expenses difficult to control, said Troyen Brennan, CVS’s chief medical officer, in the medical journal commentary.
GE TO SELL HEALTHCARE FINANCE BUSINESS TO CAPITAL ONE FOR $9 BILLION -- Capital One Financial Corp. (Tysons Corner VA) agreed to buy General Electric Co.’s (Fairfield CT) healthcare finance unit for about $9 billion, as the bank best known for its credit cards builds a niche business into one of the industry’s largest. Capital One will acquire the operation and about $8.5 billion of healthcare-related loans, the companies said last week in statements. The Healthcare Financial Services unit, put on the market this year as GE unloads the bulk of its finance arm, provides mortgages and loans to companies including nursing homes. Capital One CEO Richard Fairbank has expanded the credit-card consulting firm he founded more than two decades ago into a diversified lender that ranks as the seventh-largest commercial bank in the U.S. The transformation has been fueled by a spree of acquisitions that have included smaller businesses, such as energy investment banking and healthcare lending. “This addition will catapult us to a leading market position in providing financial services to the healthcare sector,” Michael Slocum, president of Capital One’s commercial bank, said in its statement. “This is a strategic investment in a specialty industry segment that we have been building out for the past several years.” Capital One closed the week up 1% at $81.27, while GE also finished 1% higher at $26.08.
The deal ranks among Capital One’s largest since the 2008 financial crisis. The company bought ING Direct USA for about $9 billion in 2012, building its deposit-taking bank into one of the largest online lenders in the nation. Capital One will retain the healthcare lender’s employees and management team, including President Darren Alcus. Loans to that industry already made up about 5% of Capital One’s commercial loans, according to company filings. “This makes them a much more significant player going forward in the healthcare business,” said Jeff Davis, managing director for the financial-institutions group at Mercer Capital in Memphis, TN. “And what it does is further diversify their asset base, which is positive for both equity and debt investors.” GE CEO Jeffrey Immelt is accelerating his push to divest about $200 billion of GE Capital assets to focus on manufacturing. That’s breaking up banking operations that imperiled the parent company during the financial crisis. Last week’s deal builds on GE’s agreements in the prior quarter to unload $23 billion of financial businesses, including the U.S. private-equity lending business sold to Canada Pension Plan Investment Board.
TRACKING WASHINGTON -- The Obama administration has notified two states that took steps to halt Medicaid funds to Planned Parenthood Federation of America (Washington DC) that they may be in conflict with federal law. The law requires that Medicaid beneficiaries may obtain services, including family planning, from any qualified provider. States that terminate their Medicaid-provider agreements with Planned Parenthood restrict access by not permitting recipients to get services from providers of their choice, according to the Department of Health and Human Services. The action comes as a sixth video was released by the Center for Medical Progress (Irvine CA), an antiabortion group, this one showing a former employee of a tissue-procurement company saying fetal remains were taken from women and donated for research without the women’s consent. “The video released last week shows someone who has never worked for Planned Parenthood making false and outrageous claims, without any evidence to back them up,” said Eric Ferrero, a spokesman for Planned Parenthood, in a statement. Three states said last week they will block hundreds of thousands of dollars from Planned Parenthood: Alabama and Louisiana moved to block funds under Medicaid, the state-federal health program for the poor, while New Hampshire’s Executive Council is blocking state funding, so its move isn’t subject to federal oversight.
Elsewhere, nearly a million people signed up for health insurance under President Barack Obama’s Affordable Care Act even after the official enrollment season ended, helping push the share of uninsured Americans below 10% and underscoring how hard it could be for Republicans to dismantle the program. The Health and Human Services Department said Thursday that 943,934 new customers have signed up since open enrollment ended on Feb. 22, benefiting from “special enrollment periods” keyed to life changes and other circumstances. It’s a flexible feature also common to the coverage people get through work. Sign-up opportunities for those experiencing changes such as having a baby or losing a job that came with health insurance are available year-round through HealthCare.gov and its state-run counterparts. The steadily growing number of Americans with coverage under the five-year-old law could make it more difficult for Republicans to repeal “Obamacare” even if they win the White House and keep control of Congress in next year’s elections. Several of the GOP presidential candidates have insisted they would scrap the law, but they would face the prospect of stripping millions of their insurance. Republican lawmakers also talk of replacing the Affordable Care Act, but the GOP has yet to rally behind an alternative.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration has approved Purdue Pharma LP’s (Stamford CT) powerful painkiller OxyContin for a new use in children 11 to 16 suffering from severe, chronic pain. OxyContin is an extended-release opioid that has long been used to treat around-the-clock pain in adults. But most pain medications are not approved for use in children. The FDA says it wants Purdue to study how to safely use OxyContin in children. Under the approval announced Thursday, prescribers are directed to only prescribe OxyContin to children who can already tolerate another opioid. Taking a sudden dose of an opioid can lead to overdose and death if patients haven’t previously been exposed to the drugs. The FDA notes that the Duragesic patch, made and marketed by numerous pharma companies, is the only other opioid approved for children.
Elsewhere, the FDA pushed back the decision date on an expanded use of Bristol-Myers Squibb Co.’s (New York) cancer drug Opdivo to Nov. 27, the company said last Wednesday. Bristol-Myers, which initially said a decision was expected by Aug. 27, said it had submitted additional clinical-trial data, which amounts to a “major amendment” that requires additional time to review. Opdivo, also known as nivolumab, was first approved for sale in December to treat patients with advanced melanoma, a skin cancer. In March, the FDA extended the use to treat advanced lung cancer. The current indication under review would be for patients with previously untreated advanced melanoma. Opdivo and its rivals work by interfering with a molecular brake known as PD-1 that prevents the body’s immune system from attacking tumors. Opdivo added about $122 million to sales inthe second-quarter, Bristol-Myers said.
The FDA says reality TV star Kim Kardashian’s social media posts violate federal drug-promotion rules. Kardashian recently began promoting a prescription pill to treat morning sickness through her social media accounts. In posts to Instagram and Facebook earlier this month Kardashian talks about her struggles with nausea due to pregnancy. “I tried changing things about my lifestyle, like my diet, but nothing helped, so I talked to my doctor,” the post states. “He prescribed me Diclegis, and I felt a lot better and most importantly, it’s been studied and there was no increased risk to the baby.” Kardashian’s posts link to a company website that includes the FDA-approved labeling information. But FDA regulators say the posts violate rules for promoting drugs because they don’t mention side effects of Diclegis, which include sleepiness that can make it dangerous to drive or perform other activities that require mental alertness. The FDA posted its warning letter online last Tuesday, addressed to the CEO of Canadian drugmaker Duchesnay Inc. (Blainville, Quebec), which markets the drug. Duchesnay said in a statement it “will take quick action in responding to the FDA’s letter and immediately and effectively address any issues.”
And manufacturers of new drugs and biologics, generics and biosimilars, as well as outsourcing facilities, will pay higher user fees for their applications starting Oct. 1, according to figures released by the FDA. In all, the agency expects to collect $1.2 billion in user fees in fiscal 2016: $851.5 million from PDUFA (Prescription Drug User Fee Act) drugs, $318.7 million from generic drugs and $815,479 from outsourcing facilities. Target revenue estimates for biosimilars were not included in the FDA’s notice. User fees for NDAs (new drug applications) and BLAs (biologics licenses applications) that require clinical data will be $2.37 million in fiscal year 2016, up slightly from $2.34 million this year. Applications that don’t require clinical data will be $1.19 million, again, up slightly from $1.17 million.
MEDICAL STOCK SPOTLIGHT -- Blood disorder drug developer Global Blood Therapeutics Inc. (Nasdaq) led advancing issues, more than doubling over the week to $45.67 as the company became the latest biotechnology company to get a powerful response from investors in its stock market debut. Global Blood says its treatment for sickle cell disease might stop red blood cells from becoming misshapen, treating the disease rather than its symptoms. The drug, GBT440, is in early clinical testing: as of July 31, it had been given to 30 healthy volunteers and six people with sickle cell disease. The South San Francisco-based company wants to begin at least one mid-stage trial of the drug in early 2016. The company’s offering of 6 million shares priced at $20.00 each, raising a greater-than-expected $120 million. FactSet says the company’s market capitalization is now around $3.5 billion, and it’s the third biotech to have its shares more than double in value on their first day of trading this year.
Elsewhere, Aquinox Pharmaceuticals Inc. (Nasdaq) extended its mind-boggling run for the second straight week. The stock closed at $1.79 on August 6, and since that time has risen to $22.13 at close Friday. That is a numbing 1,236% increase in just over a week. What initially sparked the explosion was the company’s announcement of encouraging results from its phase II “Leadership” trial with AQX-1125 in patients with bladder pain syndrome/interstitial cystitis. Vancouver, BC-based Aquinox also reported financial results for the second quarter, ending June 30, 2015. The net loss was $4.8 million, compared to a net loss of $5.4 million for the second quarter of 2014. Finally, in a recent SEC filing, Baker Brothers Advisors announced ownership of about 4.27 million Aquinox shares, which totals an impressive 39.8% stake. Aquinox had a total of roughly 10.73 million shares of common stock outstanding as of August 5, 2015. At current prices this stake would be valued at $178 million.
And Eleven Biotherapeutics Inc. (Nasdaq) surged $2.15, or 84%, to $4.71. The Cambridge, MA-based company announced a dose administration for the first patients in a phase III study of EBI-005, a treatment for moderate to severe conjunctivitis. The patient dosing in the trial is a significant step in the clinical development of the drug. This phase III study was designed and initiated following the completion in October 2014 of a phase II study in which EBI-005 exhibited biological activity in improving the symptoms of late-phase allergic responses in patients with moderate to severe allergic conjunctivitis. This included statistically significant improvements in mean change from baseline in patient-reported ocular itching, tearing and associated nasal symptoms. Eleven Biotherapeutics designs and develops protein-based medicines to treat inflammatory conditions and coagulation disorders.
But BioScrip Inc. (Nasdaq) plunged $1.33, or 50%, to $1.35 after being downgraded by investment analysts at SunTrust from a “Buy” rating to a “Neutral” rating in a report issued on Tuesday. They currently have a $2.00 price target on the stock, down from their previous price target of $5.00. SunTrust’s target price would indicate a potential upside 50% from the stock’s Friday close. BioScrip posted its latest earnings results last Monday, August 10th. The Elmsford, NY-based company reported ($3.60) EPS for the quarter, missing analysts’ consensus estimate of ($0.11) by $3.49. The firm earned $262.40 million during the quarter, compared to analysts’ expectations of $269.38 million. Analysts expect that BioScrip will post ($0.26) EPS for the current fiscal year. BioScrip is engaged in providing infusion and home-care management services.
IPO SECTOR -- Benitec Biopharma Ltd., which is developing a gene therapy platform based on DNA-directed RNA interference (ddRNAi), reduced the number of American Depositary Shares (ADSs) it plans to offer for the second time and reduced the number of warrants offered. The Balmain, Australia-based company now plans to raise $15 million by offering 2 million shares at a price of $10. The company had previously filed to offer 2 million shares at a price of $13.55. At the revised price, Benitec Biopharma will raise 41% fewer proceeds than previously anticipated. Unlike other RNAi-based technologies, ddRNAi effects lasting change in target cells, leading to long term benefit and, potentially, cure, the company says. Benitec, which was founded in 1995 and booked $1 million in sales for the 12 months ended December 31, 2014, plans to list on the Nasdaq under the symbol “BNTC.” Maxim Group LLC is the sole bookrunner on the deal. It is expected to price during the week of August 31, 2015. ** Global Blood Therapeutics Inc., an early-stage biotech developing a small molecule therapy for sickle cell disease, raised $120 million by offering 6.0 million shares at $20, above the range of $16 to $18. The South San Francisco-based company says its treatment for sickle cell disease might stop red blood cells from becoming misshapen, treating the disease rather than its symptoms. The drug, GBT440, is in early clinical testing: as of July 31, it had been given to 30 healthy volunteers and six people with sickle cell disease. The company wants to begin at least one mid-stage trial of the drug in early 2016. Global Blood Therapeutics lists on the Nasdaq under the symbol “GBT.” Morgan Stanley and Goldman Sachs acted as lead managers on the deal. Shares closed the week up $25.67, or 228%, at $45.67.
August 10, 2015 ...
SHIRE MAKES HOSTILE $30.6 BILLION BID FOR BAXALTA -- Shire Plc (Dublin IRL) CEO Flemming Ornskov will need to raise the ante if he wants to win U.S. biotech company Baxalta Inc. (Deerfield IL), according to some industry analysts. The Danish doctor is not taking the easy option with his $30.6 billion run at Baxalta. Rather than selling out at a premium to a bigger drugmaker, as many investors thought Shire might do, Ornskov is embarking on a risky battle to create the world’s leading rare diseases specialist. The transaction could vault Shire into the top 20 global drugmakers by sales, but hazards include Baxalta’s formidable anti-takeover defenses, as well as the risk that new science could upend the hemophilia market, which accounts for over half its revenue. With a “poison pill” defense against unwanted suitors, a hard-to-replace board featuring staggered directors’ terms and a block on shareholders calling special meetings, investors see a negotiated deal as the only realistic way forward. And that will likely mean sweetening the current unsolicited all-share offer, worth $45.23 a share at Aug. 3 market prices, which Baxalta argued “significantly undervalues” its newly listed business. “You know that they (Shire) will have to increase and you know that any increase has to be substantial,” said one fund manager with a stake in Baxalta. He believes Shire’s next move would have to involve an offer above $50 a share.
Analysts at Berenberg Bank agree Shire is very likely to increase its offer as it continues to try to engage with Baxalta. Ornskov has declined to comment about tactics. One person familiar with Shire’s thinking noted the current offer was based on public information and having access to Baxalta’s books might change the Ireland headquartered group’s view on valuation. Ornskov and Shire’s chairwoman Susan Kilsby, a former Credit Suisse banker, were clearly aware of the anti-takeover defenses before approaching Baxalta, which was only spun off from Baxter International Inc. (Deerfield IL) five weeks ago. Their rationale for the deal includes the industrial logic of creating a global leader in rare diseases and, importantly, some big tax benefits that come from Shire’s Irish domicile. But there are risks. While Baxalta’s treatments for hemophilia, such as Feiba and Advate, sell for hundreds of thousands of dollars and are immensely profitable, they face challenges on two fronts. Roche Holding AG (Basel CHE) is developing a novel monoclonal antibody (mAB) treatment for hemophilia and various companies are also working on gene therapies that promise long-lasting or even one-time cures. Baxalta closed the week up 15% at $37.60. Shire slipped 6% to $249.84.
COMMUNITY HEALTH RAISES GUIDANCE, SAYS TO SPIN OFF 38 HOSPITALS -- Community Health Systems Inc. (Franklin TN) raised its earnings guidance for the year as its second-quarter profit more than doubled thanks to its acquisition of Health Management Associates Inc. Separately, the hospital operator also announced plans to spin off a group of 38 hospitals and Quorum Health Resources LLC, its hospital management and consulting business. The hospitals included in the planned spinoff are primarily located in cities or counties that have populations of 50,000 or less. The new company will be named Quorum Health Corp., and the spinoff is expected to be completed in the first quarter of 2016. The businesses that would comprise Quorum Health Corp. in 2014 generated revenue of $2.1 billion and $255 million in earnings before interest, taxes, depreciation and amortization, Community Health said. For 2015, the company said it now expects a profit from continuing operations of $3.65 to $4.10 a share for the year, up from its previous projection of $3.40 to $4.05. Shares of Community Health, up 23.5% over the past 12 months, closed the week 3% lower at $56.56. Over all, for the second quarter, Community Health reported a profit of $111 million, or 96 cents a share, compared with a year-earlier profit of $42 million, or 37 cents a share. Profit excluding certain items and discontinued operations rose to $1.14 a share from 74 cents a year earlier.
“These results include operating synergies from the integration of the HMA hospitals, the benefit of numerous strategic initiatives, and the incremental opportunities created by the Affordable Care Act,” CEO Wayne T. Smith said. In January 2014, Community Health completed its acquisition of Health Management Associates. The $3.9 billion deal had merged 206 hospitals. Community Health said total admissions decreased 1.9% in the second quarter from a year ago. On a same-hospital basis, total admissions fell 2.2% and net operating revenue rose 2.5%. Operating revenue increased to $4.88 billion from $4.77 billion. Analysts had expected a profit of 89 cents a share on $5.02 billion in revenue.
TRACKING WASHINGTON -- Republican legislation to cut off federal funding for Planned Parenthood Federation of America failed to gather enough support in the U.S. Senate last week, halting at least for now moves to punish the group for its role in gathering fetal tissue from abortions for medical research. Senate Democrats succeeded in stopping the bill on a procedural vote. Sixty votes were needed to advance it in the 100-person chamber, but it received only 53 votes. Planned Parenthood, which provides healthcare services to women at hundreds of centers nationwide, has come under attack with the online posting of hidden-camera videos produced by an anti-abortion group, Center for Medical Progress (Irvine CA). The group says the videos show Planned Parenthood officials negotiating prices for fetal tissue from abortions it performs. Planned Parenthood denies any wrongdoing and says it does not profit from fetal tissue donation in any way. Under U.S. law, donated human fetal tissue may be used for research, but profiting from its sale is prohibited. Despite last Monday’s vote, Republicans are likely to try again in September to stop federal funds going to Planned Parenthood, which currently amount to over $500 million a year. After a congressional recess in August, conservative Republicans could try to attach the defunding measure to a bill funding the government.
Elsewhere, hoping to avoid another political uproar over the Affordable Care Act, the Obama administration is trying to persuade states to cut back big rate increases requested by many health insurance companies for 2016. In calling for aggressive regulation of rates, federal officials are setting up a potential clash with insurers, according to The New York Times. Some carriers said they paid out more in claims than they collected in premiums last year, so they lost money on policies sold in the new public marketplaces. After finding that new customers were sicker than expected, some health plans have sought increases of 10% to 40% or more. Big rate increases could undermine public support for the healthcare law, provide ammunition to Republican critics of the measure and increase costs for some consumers and the federal government. Kevin J. Counihan, the chief executive of the federal insurance marketplace, is urging states to consider a range of factors before making their decisions. “Recent claims data show healthier consumers,” Mr. Counihan said in a letter to state insurance commissioners. The federal tax penalty for going without insurance will increase in 2016, he said, and this “should motivate a new segment of uninsured who may not have a high need for health care to enroll for coverage.”
FDA/EMA ROUNDUP -- Apollo Endosurgery Inc. (Austin TX), a manufacturer of minimally invasive endoscopic surgical products for bariatric and gastrointestinal procedures, received approval from the U.S. Food and Drug Administration for its Orbera intragastric balloon to assist patients with weight loss. The balloon is aimed at helping obese patients lose and maintain weight. Thin and deflated, the balloon is placed into the stomach and filled with saline to about the size of a grapefruit to reinforce proper portion control. It is deflated and removed six months later. The procedure is non-surgical, and is a piece of the two-parts of the Orbera managed weight-loss system. Apollo reports that data on the system from a clinical trial show that the average person lost 3.1 times the weight as compared with diet and exercise alone within six months.
Elsewhere, the FDA approved the first prescription drug made through 3-D printing: a dissolvable tablet that treats seizures. Aprecia Pharmaceuticals Co. (Langhorne PA) said the FDA approved its drug Spritam for adults and children who suffer from certain types of seizures caused by epilepsy. The tablet is manufactured in a layered process via 3-D printing and dissolves when taken with liquid. The FDA has previously approved medical devices--including prosthetics--made with 3-D printing. An agency spokeswoman confirmed the new drug is the first prescription tablet approved that uses the process. Doctors are increasingly turning to 3-D printing to create customized implants for patients with rare conditions and injuries. The FDA held a workshop last year for medical manufacturers interested in the technology.
A federal judge blocked the FDA from preventing a drug company from promoting an unapproved use for its pills derived from fish oil, saying the firm’s claims are protected by the First Amendment. The district court judge, Paul Engelmayer, granted Amarin Corp. Plc (Dublin IRL) preliminary relief, allowing the company to “engage in truthful and non-misleading speech promoting the off-label use” of the drug, called Vascepa. The company’s suit against the agency will continue, but the firm will be allowed to begin the marketing of the off-label use immediately, under the judge’s order. “This is huge,” said Jacob Sherkow, an associate professor at New York Law School. “There have been other instances a court has held that off-label marketing is protected by the First Amendment, but this is the first time, I think, that any federal court--that any court--has held in such a clear, full-throated way that off-label marketing is protected by the First Amendment, period, full stop.”
And manufacturers of new drugs and biologics, generics and biosimilars, as well as outsourcing facilities, will pay higher user fees for their applications starting Oct. 1, according to figures released by the FDA. In all, the agency expects to collect $1.2 billion in user fees in fiscal 2016: $851.5 million from PDUFA (Prescription Drug User Fee Act) drugs, $318.7 million from generic drugs and $815,479 from outsourcing facilities. Target revenue estimates for biosimilars were not included in the FDA’s notice. User fees for NDAs (new drug applications) and BLAs (biologics licenses applications) that require clinical data will be $2.37 million in fiscal year 2016, up slightly from $2.34 million this year. Applications that don’t require clinical data will be $1.19 million, again, up slightly from $1.17 million.
MEDICAL STOCK SPOTLIGHT -- Aquinox Pharmaceuticals Inc. (Nasdaq) led advancing issues, skyrocketing $8.58, or 566% over the week, to $10.42 following the release of positive trial and financial results. The Vancouver, BC-based company announced positive results for its phase II trial testing AQX-1125 in patients suffering from bladder pain syndrome, or interstitial cystitis (BPS/IC). Aquinox said the trial succeeded in meeting the secondary endpoints, along with success in primary endpoints, as announced earlier. Aquinox CEO David Main said: “Consistently positive results from multiple secondary endpoints have strengthened our confidence in further development of AQX-1125 for BPS/IC.” Separately, the company also reported better-than-expected financial results for the second-quarter of fiscal 2015. It incurred a loss of $4.8 million for the quarter, and beat analysts’ consensus loss estimates of $5.87 million.
Elsewhere, Lexicon Pharmaceuticals Inc. (Nasdaq) soared $2.94, or 35%, to $11.38 after the tiny biopharma announced that the experimental drug, oral telotristat etiprate, met its primary endpoint in a pivotal late-stage trial of lowering the average number of daily bowel movements in cancer patients with carcinoid syndrome not adequately controlled by the current standard of care. Carcinoid syndrome is a rare disorder affecting patients with neuroendocrine tumors, causing patients to experience severe bouts of diarrhea. Following these positive top-line results, The Woodlands, TX-based Lexicon plans on filing oral telotristat etiprate’s regulatory application for this indication with the U.S. Food and Drug Administration in the near future. Given that the drug was previously granted Fast Track designation by the FDA, it could be on the market as soon as the first-half of 2016, assuming approval.
And USANA Health Sciences Inc. (Nasdaq) surged $3.32, or 28%, to $159.97 after reporting second-quarter EPS of $1.92, up from $1.36 in the prior year period. Analysts expected EPS of $1.60. The company also increased its full year EPS forecast to between $6.90 and $7.20, from prior expectations of $6.45 to $6.75. The consensus estimate is for EPS of $6.70. Salt Lake City, UT-based USANA Health develops, manufactures, and sells science-based nutritional and personal care products primarily to reduce the risk of chronic degenerative disease worldwide. USANA has a PE ratio of 25. Currently there is one analyst that rates USANA Health a “Buy,” no analysts rate it a “Sell,” and one rates it a “Hold.”
But AAC Holdings Inc. (Nasdaq) plunged $20.24, or 53%, to $17.77 after disclosing that its president and four employees at the chain of drug and alcohol treatment clinics were charged with murder for the death of a patient. It was the biggest decline since the company first disclosed the murder charges six days earlier. Trading in shares of AAC was halted following the announcement in a regulatory filing that Jerrod Menz, who founded AAC unit ABTTC Inc., was charged July 21 with murder and dependent adult abuse by a California grand jury in Riverside County, CA. Brentwood, TN-based AAC said in a statement that the allegations are “legally and factually unfounded,” and that it will “contest them vigorously.” The company said in its regulatory filing that it could suffer material losses if defendants in the case are convicted. AAC Holdings provides inpatient substance abuse treatment services for individuals with drug and alcohol addiction.
IPO SECTOR -- Aimmune Therapeutics Inc., which is developing an oral immunotherapy to desensitize peanut allergies and other food allergies, raised $160 million by offering 10 million shares at $16.00, the high end of the range of $14 to $16. Brisbane, CA-based Aimmune lists on the Nasdaq under the symbol “AIMT.” BofA Merrill Lynch, Credit Suisse and Piper Jaffray acted as lead managers on the deal. Shares closed the week up $7.00, or 44%, at %23.00. ** Zynerba Pharmaceuticals Inc., a preclinical biotech developing transdermal cannabinoid-based therapies, raised $42 million by offering 3 million shares at $14, the midpoint of the $13-$15 range. Perceptive Advisors, a biotech-focused hedge fund, has indicated an interest in purchasing up to $12 million on the offering (29% of the deal). At its offer price, Zynerba commands a fully-diluted market cap of $128 million and will have nearly $44 million in cash on its balance sheet. Devon, PA-based Zynerba lists on the Nasdaq under the symbol “ZYNE.” Jefferies and Piper Jaffray acted as lead managers on the deal. Shares closed the week up $10.54, or 75%, at $25.54.
Previous Week's Issue ... August 3, 2015
HEALTHCARE SPENDING TO ACCELERATE, U.S. REPORT SAYS -- Growth in national health spending, which had dropped to historic lows in recent years, has snapped back and is set to continue at a faster pace over the next decade, federal actuaries said. The return to bigger growth is a result of expanded insurance coverage under the 2010 Affordable Care Act, a revived economy and a pivotal point as Medicare’s baby-boom beneficiaries enter their 70s. American spending on all healthcare grew 5.5% in 2014 from the previous year and will grow 5.3% this year, according to a report from actuaries at the Centers for Medicare and Medicaid Services published in the journal Health Affairs. In the years through 2024, spending growth is expected to average 5.8%, peaking at 6.3% in 2020. The jump comes after five consecutive years of average spending growth of less than 4% annually--a rate touted by the Obama administration as the lowest since the government began tracking health spending in the 1960s and a sign that the health law’s Medicare provisions were helping rein in health costs. But the sharper increase had been foreseen last year by the CMS actuaries who warned of a 5.6% increase in 2014, 4.9% growth in 2015, and average 5.7% growth through 2024. The actuaries again pointed to the stronger economy and aging population as the main factors in shaping Medicare’s future spending.
Prescription-drug spending, long a target of warnings from the insurance industry, drew particular attention from the actuaries, who pointed to a big rise in spending growth there as costly new specialty drugs such as Sovaldi, for hepatitis C, came on the market in 2014. Spending growth on pharmaceutical products jumped by 12.6% in 2014, up from 2.5% in 2013. The report noted that growth is still slower than in the three decades before the economic downturn. Spending might have accelerated further but for the fact that consumers are paying a greater share of their medical bills and reining in their use of services, the actuaries said. One in three Americans said they or a family member delayed medical care because of costs in 2014, according to a report late last year by survey company Gallup Inc. (Washington DC). The consequences are also significant for Washington and state governments, which by 2024 will be responsible for paying around 47% of the nation’s health bills, up from 43% in 2013. In all, health care will comprise about a fifth of the U.S. economy by 2024, and the growth rate will exceed the expected average growth in gross domestic product by 1.1 percentage points.
WORLD HEALTH ORGANIZATION SAYS EBOLA VACCINE EFFECTIVE IN AFRICAN TRIAL -- Scientists and drug companies will continue to research the potential of alternative Ebola vaccines, despite an inoculation from Merck & Co. (Kenilworth NJ) and NewLink Genetics Corp. (Ames IA) proving 100% effective in a trial in Guinea. European researchers said on Friday different kinds of vaccines were needed that might be better suited for different population groups. Because Merck’s VSV-ZEBOV is a live, or replicating, vaccine, there were initial worries about its safety. However, it proved about as safe as a flu vaccine, said University of Reading (Berkshire GBR) virologist Ben Neuman, but it was still not given to children or pregnant women. Replicating vaccines have the advantage of requiring only one dose, making them suitable for emergency use. But non-replicating vaccines, which may need two injections, could be longer-lasting and better suited to protecting people outside an epidemic. “There is a place for all of these different modes and it’s important that development work on other vaccines continues,” said Rebecca Grais, director of research at Geneva-based Medecins Sans Frontieres (MSF) Epicentre, according to Reuters. “It’s also important to have multiple manufacturers in order to ensure competition.”
MSF was one of the organizations behind the successful clinical trial with Merck’s vaccine, which the World Health Organization (Geneva) said had brought the world to the verge of being able to protect humans against Ebola. GlaxoSmithKline Plc (London) applauded its rival’s success but said it would persevere with development of its alternative non-live vaccine. “We believe that it is important that the international community continues to support the development of more than one vaccine for the control of Ebola including those that might be more suitable for vaccination of pregnant women, infant children and the immunocompromised,” it said in a statement. GSK also hopes to test its vaccine in Guinea, although WHO vaccine expert Marie Paule Kieny said this might not be possible, given the dwindling number of Ebola cases. Johnson & Johnson (New Brunswick NJ), which is developing a two-injection vaccine in partnership with Bavarian Nordic A/S (Kvitsgaard DNK), said it remained committed to the program and hoped to start a trial in Sierra Leone in the coming weeks.
TRACKING WASHINGTON -- Rural healthcare providers last week told members of the House Ways and Means Health Subcommittee that current Medicare regulations threaten to shut the doors of more rural hospitals across the United States. In the testimony, the rural providers asked for support of the Medical Relief Act, legislation that would end the 96-hour rule for critical access hospitals. They also want to stop the physician on-site rule banning physician assistants from supervising services; and they want an increase in federal dollars to strengthen graduate medical education to get more physicians into rural hospitals. The committee made no decisions during last Tuesday’s hearing, but Chairman Kevin Brady (R-TX) said the committee would take additional comment for 14 days. The hearing was the latest held by the Health Subcommittee in the wake of passage of legislation to fix the way Medicare pays physicians, Brady said. Brady said Medicare regulations are creating rural healthcare disparities and agreed the 96-hour rule must go. Under the 96 hour rule, doctors at critical access hospitals have to certify that it is reasonable that an individual would be discharged or transferred within 96 hours of being admitted. Dr. Daniel Dirksen from the University of Arizona said, “We’ve seen 55 rural hospitals close over last five years,” he said. “Another 283 are at risk for closure.”
Elsewhere, the U.S. Defense Department awarded a team led by Leidos Holdings Inc. (Reston VA) a contract valued at up to $4.34 billion to build a new electronic health record system for 9.6 million current and retired military service members. The Defense Healthcare Management System Modernization contract, included in the Pentagon’s daily digest of major contract awards, runs for 10 years, including several options to extend the contract. The Pentagon’s chief arms buyer, Frank Kendall, said the contract was worth under $9 billion over the next 18 years, about $2 billion less than initially expected. He said the decision followed two years of work aimed at ensuring that the new records system could be used by the U.S. military, the U.S. Veterans Administration and private health providers, while ensuring the security of the data. The new system will replace 50 older records systems now in use at over 1,000 sites, Kendall said. He said the department hoped to fully implement the system by 2022, if not sooner.
FDA/EMA ROUNDUP -- Corvida Medical Inc. (Coralville IA) obtained the U.S. Food and Drug Administration’s 510(k) clearance for the Halo Closed System Transfer Device, a product designed to prevent clinicians from being exposed to hazardous medications such as those used in chemotherapy. The system provides guaranteed air-tight and leak-proof connections to vials and was designed to have fewer pieces and fewer steps to connect them. The system features swabbable raised seals and also helps prevent needle-stick injuries. The preparation and delivery of chemotherapy puts more than 5.5 million U.S. healthcare workers at risk of exposure, Corvida estimates. The potential health problems resulting from this exposure include cancer, reproductive and developmental problems, as well as other irreversible events that can occur after even low-level exposures, according to Occupational Safety & Health Administration and the National Institute of Occupational Safety & Health.
Elsewhere, the FDA approved a new balloon device manufactured by ReShape Medical Inc. (San Clemente CA) to treat obesity without the need for invasive surgery. The ReShape Integrated Dual Balloon System (ReShape Dual Balloon) is intended to facilitate weight loss in obese adult patients. The device likely works by occupying space in the stomach, which may trigger feelings of fullness, or by other mechanisms that are not yet understood. The ReShape Dual Balloon device is delivered into the stomach via the mouth through a minimally invasive endoscopic procedure. Once in place, the balloon device is inflated with a sterile solution, which takes up room in the stomach. The device does not change or alter the stomach’s natural anatomy. Patients are advised to follow a medically supervised diet and exercise plan to augment their weight loss efforts while using the ReShape Dual Balloon and to maintain their weight loss following its removal. It is meant to be temporary and should be removed six months after it is inserted.
The FDA is warning doctors and pharmacists to beware of mixing up two drugs with similar names. The agency said Thursday that some doctors and pharmacies are getting confused by the similar names of an antidepressant and a blood-thinning medicine. The FDA says it’s not aware of any patients who took the wrong drug, but the agency says it has received 50 reports of medication errors, including at least 12 cases where doctors prescribed the wrong drug or pharmacies dispensed the wrong one. The two medications are Brintellix, an antidepressant, and Brilinta, a blood-thinning medication used to prevent death after a heart attack or severe chest pain or to prevent a second heart attack. The agency says it has been receiving reports of errors since Brintellix was approved in September 2013. Both drugs are tablets with the letter T stamped on them, and in some cases, both are yellow. The agency is suggesting doctors write out the generic name of the drug and the ailment for which it’s being prescribed. Brintellix is sold in the U.S. by Japanese drugmaker Takeda Pharmaceuticals. Brilinta was approved in 2011, and is sold by AstraZeneca Plc (London).
And a pump used to infuse drugs at a patient’s bedside can be hacked through hospital networks, causing an over- or under-dose, U.S. regulators said. Healthcare providers should stop use of the pumps, which were manufactured by Hospira Inc. (San Diego CA) and called Symbiq, the FDA said in a statement Friday. While Hospira has quit making the devices, they are still in use by hospitals, nursing homes and other healthcare facilities to administer drugs intravenously, according to the agency. The FDA “strongly encourages healthcare facilities to begin transitioning to alternative infusion systems as soon as possible,” the agency said. The FDA warned about similar vulnerabilities to other Hospira pumps in May. The FDA said an independent researcher alerted the agency that Hospira’s pumps could be accessed through a hospital’s wireless networks. “This could allow an unauthorized user to control the device and change the dosage the pump delivers, which could lead to over- or under-infusion of critical patient therapies,” the FDA said. The agency isn’t aware of any patients who have been injured or any pumps that have been accessed without authorization.
MEDICAL STOCK SPOTLIGHT -- Nymox Pharmaceutical Corp. (Nasdaq) led advancing issues, soaring $1.28, or 94% on the week, to $2.64. The biopharmaceutical company announced that the long-term, double-blind phase III studies of fexapotide triflutate, also known as NX-1207, for BPH (enlarged prostate) successfully met the primary endpoint of long-term symptomatic, significant benefit superior to placebo. The drug has shown an excellent safety profile with no evidence of short- or long-term toxicity or any significant related molecular side effect, according to the company. St.-Laurent, Quebec-based Nymox Pharmaceutical is engaged in therapeutics in development for enlarged prostate, E. coli, Alzheimer’s disease and other indications and diagnostics for tobacco exposure, Alzheimer’s disease and other conditions.
Elsewhere, Oragenics Inc. (Nasdaq) surged 54% to $2.62. The company announced positive data on multiple compounds from its Mutacin 1140 (“MU1140”) lantibiotic platform in a critical animal model study, as well as the selection of a lead clinical candidate. The compounds were subjected to a standardized “proof of concept” animal model evaluating efficacy for reducing clinically relevant C. difficile infection(s) and increased survival relative to vancomycin-positive control. Lantibiotics are a class of antibiotics with a novel mechanism of action against several multi-drug resistant infectious agents. Through its collaboration with Intrexon Corp., Alachua, FL-based Oragenics has utilized proprietary bio-engineering capabilities to develop its MU1140 analog pipeline which it hopes will provide an important new tool in the fight against global bacterial antibiotic resistance.
And eHealth Inc. (Nasdaq) shot up $2.10, or 15%, to $16.26 after reporting second-quarter EPS of $0.44, $0.39 better than the analysts’ estimates of $0.05. Revenue for the quarter came in at $39.9 million versus the consensus estimate of $37.46 million. In addition, eHealth was upgraded by Stifel Nicolaus from a “Hold” rating to a “Buy” rating. The firm currently has an $18.00 target price on the stock. Stifel Nicolaus’s target price suggests a potential upside of 27% from the company’s previous close. eHealth sells health insurance over the Internet. The Mountain View, CA-based company serves individuals, families and small businesses.
But Bellerophon Therapeutics Inc. (Nasdaq) plunged $4.28, or 55%, to $3.47 after the Hampton, NJ-based company said an injectable heart drug it is developing under license failed in a study. The drug, bioabsorbable cardiac matrix (BCM), was licensed from BioLineRx Ltd. in 2009 after animal studies showed that it acted as a “scaffold” to support the heart wall and was likely to prevent further structural damage. BCM is a liquid that becomes a hydrogel when there are high levels of calcium in injured tissues. When BCM is administered after a heart attack, it flows into the damaged heart muscle where it forms a protective layer. The drug had been widely expected to succeed, paving the way for its approval in Europe.
IPO SECTOR -- Global Blood Therapeutics Inc., an early-stage biotech developing a small molecule therapy for sickle cell disease, announced terms for its initial public offering on Friday. The South San Francisco-based company plans to raise $102 million by offering 6.0 million shares at a price range of $16 to $18. At the midpoint of the proposed range, it would command a fully diluted market value of $528 million. Global Blood Therapeutics, which was founded in 2011, plans to list on the Nasdaq under the symbol “GBT.” Morgan Stanley and Goldman Sachs are the joint bookrunners on the deal. It is expected to price during the week of August 10, 2015. ** EyeGate Pharmaceuticals Inc., a late-stage biotech developing a treatment for eye inflammation, raised $10 million by offering 1.2 million shares and warrants at $8.50. EyeGate postponed a $25 million Nasdaq IPO in late 2014 before listing on the OTCQB in February. In mid-July, the Waltham, MA-based company set terms to raise $13 million when its stock traded at $15 on the “OTCQB,” and on July 30 it filed an amendment adding warrants, exercisable at 125% of the offer price ($10.63). At $8.50, the company’s fully diluted market value is $81 million. EyeGate Pharmaceuticals lists on the Nasdaq under the symbol “EYEG.” Aegis Capital and Chardan Capital Markets acted as lead managers on the deal. Shares closed the week down 16% at $7.15.
July 27, 2015 ...
ANTHEM TO BUY CIGNA AMID WAVE OF INSURANCE MERGERS -- Anthem Inc. (Indianapolis IN) struck a deal to buy rival Cigna Corp. (Bloomfield CT) for $48.4 billion, wrapping up almost a year of contentious negotiations and potentially creating the largest health insurer in the U.S. Anthem will pay $188 a share in cash and stock for Cigna, based on Anthem’s May 28 closing share price, the insurer said Friday in a statement. That’s 22% more than Cigna’s closing price on Thursday. The deal combines the second- and fourth-biggest insurers in the U.S., measured by members. The acquisition extends a wave of consolidation sweeping over the healthcare industry, potentially reducing the ranks of the biggest insurers from five to three. Aetna Inc. (Hartford CT) agreed to buy Humana Inc. (Louisville KY) for $35 billion earlier this month, a day after Centene Corp. (St. Louis MO) struck a $6.3 billion deal for Health Net Inc. (Woodland Hills CA). President Barack Obama’s 2010 healthcare overhaul is helping drive the mergers, in part by imposing tougher rules and limits on the industry’s profits. Under the deal announced Friday, Cigna shareholders will receive $103.40 in cash and 0.5152 Anthem shares for each Cigna share. Cigna closed the week down 5% at $145.72, while Anthem skidded 5% to $150.86.
“It was a reasonably good price to begin with,” Ana Gupte, an analyst at Leerink Partners LLC in New York, said before the announcement. “Shareholders were happy with $184 even. And they were telling Anthem and Cigna to resolve their differences and get the deal done.” The combination will increase adjusted earnings per share by almost 10% in the first year, with the accretion more than doubling in the second year, Anthem said. The companies said they plan to cut costs by about $2 billion in the first two years after the deal closes. The transaction, valued at $54.2 billion including debt, is expected to close in the second half of next year, pending regulatory approval. “We view this deal favorably as the acquisition price appears reasonable considering the significant potential accretion benefits.” Michael Wiederhorn, an analyst at Oppenheimer Holdings Inc., said in a research note. Cigna had previously rejected bids for as much as $184 from Anthem, with disagreements over who would hold key positions after the merger. Joseph Swedish, Anthem’s CEO, will run the combined company, according to the statement. David Cordani, Cigna’s 49-year-old CEO, will be president and COO.
DRUG PRICES SOAR, PROMPTING CALLS FOR JUSTIFICATION -- More than 100 oncologists from top cancer hospitals around the U.S. have issued a harsh rebuke over soaring cancer-drug prices and called for new regulations to control them. The physicians are the latest in a growing roster of objectors to drug prices. Critics from doctors to insurers to state Medicaid officials have voiced alarm about prescription drug prices, which rose more than 12% last year in the U.S., the biggest annual increase in a decade, according to Express Scripts Holding Co. (St. Louis MO), the nation’s largest pharmacy-benefit manager. More than 100 oncologists have issued stern warnings about the soaring cost of cancer drugs and impact on patients’ ability to afford their prescriptions. In an editorial published in the Mayo Clinic’s medical journal, the doctors focus attention on the financial burden to patients, saying the out-of-pocket costs are bankrupting many just as they’re fighting a deadly illness. Patients “have to make difficult choices between spending their incomes (and liquidating assets) on potentially lifesaving therapies or forgoing treatment to provide for family necessities,” the doctors write in Mayo Clinic Proceedings, a monthly peer-reviewed journal. As a result, about 10% to 20% of cancer patients don’t take their treatment as prescribed, the doctors say.
The 118 doctors come from institutions including Mayo Clinic of Rochester, MN, University of Texas MD Anderson Cancer Center in Houston, Dana-Farber Cancer Institute in Boston and University of Chicago. They are the latest to target high prices. Members of Congress have demanded that pharmaceutical companies justify the pricing of hepatitis C medication, which costs tens of thousands of dollars per patient. Sen. Bernie Sanders (D-VT) has advised the Department of Veterans Affairs to break the patents on hepatitis C drugs so that generics companies can manufacture them more cheaply for ailing veterans. Last Tuesday, Medicare’s board of trustees said expensive new medications will help drive a sharp increase in the program’s prescription-drug spending over the next decade, raising annual growth to 9.7% between 2015 and 2024, from 6.5% in the prior eight years. Amid the growing clamor, cancer medication has drawn particular wrath. The average price of new cancer drugs in the U.S. increased five- to tenfold over 15 years, to more than $100,000 a year in 2012, according to the Mayo Clinic journal editorial. Some of the newest therapies, including those that harness a patient’s immune system to fight tumors, cost about $150,000 per patient a year.
TRACKING WASHINGTON -- A slowdown in healthcare spending has shored up the funding outlook for Medicare, trustees of the program said last week. The Medicare program’s trust fund for hospital care will run out of money in 2030 the trustees said in a report. That was the same year as in their previous estimate, although the trustees said the program now appears on better footing over the longer term. When the fund runs out of money, Washington would only be able to partially cover its obligations. The trustees urged U.S. politicians to enact new laws to keep that from happening, though they said the funding gap over the longer run appears narrowed thanks to signs that healthcare costs would be lower in the future. “Notwithstanding the assumption of a substantial slowdown of per capita health expenditure growth...Medicare still faces a substantial financial shortfall,” the trustees said in the report. Trustees for the country’s Social Security program repeated their warning that Washington would run out of the money needed to fully pay disability benefits by 2016. Depletion of the Medicare and Social Security trust funds does not mean that all benefits would stop. At the current rate of payroll tax collections, Medicare would be able to pay about 86% of costs in 2030, declining to 80% by 2050.
Elsewhere, thousands of medical providers signed up to bill Medicare using questionable addresses, and dozens of doctors enrolled despite disciplinary actions by state medical boards, according to a congressional probe of the $600 billion-a-year taxpayer-funded program. Medicare records listed doctors and other providers as practicing at invalid addresses, such as commercial mailbox stores, construction sites and, in one case, a fast-food restaurant, according to a report by the Government Accountability Office that examined data through March 2013. Over the past five years, the federal Centers for Medicare and Medicaid Services, which runs Medicare, has been revamping its enrollment system and verifying provider information, such as addresses and licensure. The overhaul is partly due to requirements of the 2010 Affordable Care Act. The CMS last week said that as a result of its enhanced screening efforts, it has kicked more than 34,000 providers out of the program since February 2011. The GAO says that some screening problems persist, however, among the 1.8 million providers enrolled to bill Medicare from nearly a million addresses. The report estimated that about 23,400 addresses might be invalid.
FDA/EMA ROUNDUP -- Sunesis Pharmaceuticals Inc. (S. San Francisco) said the U.S. Food and Drug Administration called for more clinical evidence before considering approval for its cancer drug, sending the company’s shares down 73% over the week to $0.96. The drug, vosaroxin, failed a late-stage trial in October as it did not significantly improve the overall survival of patients compared with a placebo. The FDA wanted the additional evidence before Sunesis files its marketing application for the drug, the company said in a statement on Thursday. The European Medicines Agency (EMA) however, gave the company the nod to submit a marketing application for vosaroxin, Sunesis said. “The EMA has a history of taking in the whole picture while the FDA historically sticks to statistics,” RBC Capital Markets analyst Adnan Butt said. Butt expects the decision on the European approval to come through by 2016. Approval in the United States, however, can be delayed by a few years as the company would need to run additional trials, he added.
Elsewhere, Novartis AG (Basel CHE) announced that the U.S. Food and Drug Administration approved Odomzo (sonidegib, formerly LDE225) 200 mg capsules for the treatment of adult patients with locally advanced basal cell carcinoma that has recurred following surgery or radiation therapy, or those who are not candidates for surgery or radiation therapy. “The FDA approval of Odomzo offers a new and non-invasive treatment option for a potentially devastating disease that is hard to treat and can be disfiguring,” said Bruno Strigini, President, Novartis Oncology. The Odomzo approval was based on the demonstration of a durable objective response rate in an international, multi-center, double-blind, randomized, two-arm, non-comparative trial in patients not amenable to local therapy or metastatic basal cell carcinoma.
In Europe, regulators on Friday recommended the use of a combination of Novartis AG’s drugs Tafinlar and Mekinist for treating certain patients with melanoma, boosting prospects for medicines acquired from GlaxoSmithKline Plc. Recommendations for marketing approval by the European Medicines Agency’s Committee for Medicinal Products for Human Use are normally endorsed by the European Commission within a couple of months. The Swiss drugmaker said the FDA had also granted priority review for the combination.
Amgen Inc. (Thousand Oaks CA) won approval in the European Union for its drug Repatha, the first regulatory clearance for a new class of powerful cholesterol-lowering drugs. The European Commission granted Amgen authority to sell Repatha for patients with uncontrolled cholesterol who require additional intensive reduction of LDL, or bad, cholesterol, the company said in a statement. Repatha is part of a category of drugs known as PCSK9 inhibitors, designed to help patients who can’t get their LDL cholesterol under control with widely used statins such as Pfizer Inc.’s Lipitor, or who can’t tolerate the drugs. The U.S. Food and Drug Administration is expected to decide whether to approve Repatha by Aug. 27. More than 60% of high-risk patients in Europe are unable to lower their bad cholesterol with statins or other lipid-lowering therapies, according to the company statement.
MEDICAL STOCK SPOTLIGHT -- Inotek Pharmaceuticals Corp. (Nasdaq) led advancing issues, more than tripling over the week to $17.65. The Lexington, MA-based drugmaker announced the phase III development strategy of its lead glaucoma drug, trabodenoson, a first-in-class selective adenosine mimetic designed to restore the eye’s natural pressure control mechanism. Based on feedback from a recent “end of phase II meeting” with the U.S. Food and Drug Administration, Inotek is in final preparation stages to commence its first phase III trial to support a New Drug Application (NDA) for trabodenoson. The company also had its “Outperform” rating affirmed by analysts at Cowen and Company in a research report issued on Friday. They currently have a $40.00 price target on the stock, up from their previous price target of $15.00. Cowen and Company’s target price indicates a potential upside of 126.63% from the company’s current price.
Elsewhere, Exelixis Inc. (Nasdaq) soared $1.68, or 43%, to $5.59 after the company reported positive top-line results from the primary analysis of a phase III pivotal study (METEOR) on its oncology drug Cometriq (cabozantinib). The open-label, event-driven study is comparing Cometriq to Novartis’s Afinitor (everolimus) in metastatic renal cell carcinoma (RCC) patients who have experienced disease progression following treatment with a VEGF receptor tyrosine kinase inhibitor. Results revealed a statistically significant improvement in progression-free survival in the first 375 randomized patients as determined by an independent radiology committee out of the 658 patients enrolled in the study. Patients when treated with Cometriq witnessed a reduction in the risk of disease progression or death by 42% as compared to the patients in the Afinitor arm, thereby successfully meeting the primary endpoint of the study. Based on the encouraging study results, South San Francisco-based Exelixis intends to complete regulatory filings in the U.S. and EU in early 2016.
And Cara Therapeutics Inc. (Nasdaq) surged $4.77, or 30%, to $20.43 after the company reported that its lead product candidate CR845 met its primary endpoint in a mid-stage trial. Shelton, CT-based Cara is developing CR845 as a treatment for acute pain and uremic pruritis, a chronic itch affecting roughly half of all kidney failure patients. In a 65-person mid stage trial, uremic pruritus patients experienced a 54% bigger drop-off in “worst itch intensity” scores when taking CR845 than patients experienced while taking a placebo. Secondary endpoints for quality of life and a reduction in sleeplessness were also met. Cara Therapeutics’ positive mid-stage study clears the way for the company to kick-off a larger phase III study next year. While there is no guarantee that CR845 will prove to be effective in this upcoming trial, results confirming its mid-stage data could lead to an eventual FDA approval in this condition. If approved, the drug could potentially benefit up to 50% of the 400,000 Americans receiving hemodialysis, many of whom fail to control their itch with corticosteroids and antihistamines.
But XOMA Corp. (Nasdaq) plunged $3.58, or 79%, to $0.94 after the company announced the phase III EYEGUARD-B study of gevokizumab in patients with Behcet’s disease uveitis did not meet the primary endpoint of time to first acute ocular exacerbation. The study was conducted by Berkeley, CA-based XOMA’s partner Servier SA, an independent French pharmaceutical research company driven by the pursuit of innovative drugs. Gevokizumab appeared to be well tolerated in the trial. Adverse events were comparable between gevokizumab and placebo-treated groups. Others involved in the study noted that the initial observations seen in the secondary endpoints were clinically important and meaningful to both clinicians and Behcet’s disease uveitis patients. Immediately after the announcement, in only the first hour of trading alone, over 22 million XOMA shares had moved as investors ran for cover.
IPO SECTOR -- Zynerba Pharmaceuticals Inc., a preclinical biotech developing cannabinoid-based therapies for osteoarthritis and epilepsy, announced terms for its initial public offering on Thursday. The Devon, PA-based company plans to raise $42 million by offering 3.0 million shares at a price range of $13 to $15. At the midpoint of the proposed range, it would command a fully diluted market value of $128 million. Zynerba, which was founded in 2007, plans to list on the Nasdaq under the symbol “ZYNE.” Jefferies and Piper Jaffray are the joint bookrunners on the deal. It is expected to price during the week of August 3, 2015. ** Neos Therapeutics Inc., which is developing easily swallowed formulations of ADHD treatments, raised $72 million by offering 4.8 million shares (upsized from 4.0 million) at $15, the midpoint of the range of $14 to $16. Neos Therapeutics lists on the Nasdaq under the symbol “NEOS.” Neos initially filed confidentially on April 27, 2015. UBS Investment Bank, BMO Capital Markets and RBC Capital Markets acted as lead managers on the deal. Shares closed the week up $5.51, or 37%, at $20.51.
July 20, 2015 ...
J&J TOPS ESTIMATES AS DRUG SALES EXPAND BEFORE DOLLAR EFFECT -- Johnson & Johnson’s (New Brunswick NJ) recovering U.S. consumer health business, following years of recalls that kept Tylenol, Motrin and other marquee brands off store shelves, propped up an otherwise rough second quarter. Sales dropped across every other business segment, unusual for the world’s top maker of healthcare products, which also sells prescription medicines and medical devices. Even within consumer health, global revenue declined for normally steady categories, including wound, skin and baby care products as the effects of a stronger dollar cut into international revenue. But U.S. consumer health sales rose nearly 3%, versus a 9% decline in total revenue. J&J is beset by the failure of Olysio, a new hepatitis C medicine expected to garner billions, plus revenue lost to multiple divestitures and unfavorable currency exchange rates that sliced worldwide sales nearly 8%. “Operational results were solid” after stripping out all those problems, said Edward Jones analyst Ashtyn Evans, “but we have to see some stronger growth in prescription drugs.” J&J beat Wall Street’s low expectations, helped by a one-time gain of $931 million from the recent divestiture of painkiller Nucynta and other special items. It pinched its 2015 profit forecast to $6.10 to $6.20 per share excluding one-time items. In January, it forecast $6.12 to $6.27 per share.
J&J is seeing strong growth from key newer prescription drugs--anticlotting medicine Xarelto, long-acting schizophrenia injection Invega Sustena and immune disorder drugs Stelara and Simponi. The company just applied to the Food and Drug Administration for approval of biologic drug daratumumab, a likely multibillion seller for blood cancer multiple myeloma. It’s also pushing potential future breakthroughs in areas such as robotic surgery from recent partnerships with technology giants IBM, Google and Apple. And CEO Alex Gorsky said U.S. surgeries and hospital admissions are up a few percent for the fourth straight quarter, which boosts sales of many company products. J&J posted a 4.4% increase in second-quarter profit, to $4.52 billion. Earnings per share, adjusted for one-time costs, came to $1.71, 2 cents over analysts’ estimates. J&J posted total revenue of $17.79 billion in the quarter, edging forecasts for $17.7 billion. Shares closed the week up 1% at $100.08.
FORMER MEDICARE CHIEF TO LEAD LOBBYING WING OF HEALTH INSURERS -- Marilyn Tavenner, the former head of the Centers for Medicare and Medicaid Services who stepped down just six months ago, will now lead the country’s dominant health insurance lobbying group. The board of America’s Health Insurance Plans (Washington DC) last week named Tavenner as the group’s next president and CEO. She replaces Karen Ignagni, who served as AHIP’s top lobbyist for 22 years before deciding to leave for New York-based insurer EmblemHealth Inc. this year. “There is no better individual than Marilyn to lead our industry through the increasingly complex healthcare transformation that is underway,” Mark Ganz, AHIP board chair and CEO of Cambia Health Solutions Inc. (Portland OR), said in a statement. “She has the respect and trust of policymakers and stakeholders from all sides, and a personal commitment to advance meaningful solutions for improving access to quality, affordable care for all Americans.” Tavenner, 64, was a nurse and a former executive of HCA Holdings Inc. (Nashville TN) before entering the federal government. She will now be representing and lobbying on behalf of some of the country’s largest health insurers--the same companies who are regulated by the CMS and are devoting more of their business to Medicare and Medicaid in the form of privatized managed care.
Medicare Advantage, in particular, has been one of the fastest-growing components of the insurance industry. Private payers have publicly stated their desires to grow that side of the business. A pending merger between Aetna Inc. (Hartford CT) and Humana Inc. (Louisville KY) would create the largest Advantage plan in the country with about 4.4 million Medicare beneficiaries. Tavenner will not be able to lobby the Obama administration health agencies for a short period of time, said Kip Piper, a former CMS official who now serves as a health insurance consultant in Washington. “AHIP already has a large, Beltway-savvy lobbying team, and this will allow her to get acquainted with AHIP internally and with member needs,” Piper said. Many Washington observers say Tavenner’s move makes sense. “With exchanges and Medicare Advantage being a growth driver for plans, the managed-care industry needs someone to navigate Washington, and that includes Tavenner’s alma mater, CMS,” said Ipsita Smolinski, managing director of Washington-based healthcare consulting firm Capitol Street. John Gorman, a former CMS official during the Clinton administration who now consults with insurers, said Tavenner will have her work cut out for her, especially considering AHIP recently lost the membership of UnitedHealth Group Inc. (Minnetonka MN).
TRACKING WASHINGTON -- Senior Democrats pushed back Thursday against an undercover government probe of President Barack Obama’s healthcare law, saying it didn’t uncover any real fraud. Investigators for the nonpartisan Government Accountability Office signed up 11 bogus beneficiaries for 2014 coverage then got HealthCare.gov to continue benefits this year for all but one. Sen. Ron Wyden (D-OR) said these were “fictitious cases” and the GAO investigators themselves admit the findings can’t be translated to the 10 million people getting subsidized coverage through the law’s health insurance markets. Wyden spoke at a Finance Committee hearing on the investigation. But GAO’s audits chief Seto Bagdoyan said the investigation exposed real concerns. He said it was relatively easy for GAO’s fictitious characters to get and keep coverage, even to get reinstated after HealthCare.gov terminated them. HealthCare.gov seems to put a higher priority on getting people covered than on verifying they are legally entitled to benefits, Bagdoyan said. Democrats have no tolerance for fraud, but “the report up for discussion today is not about any real-world fraud,” Wyden said. “Not one of them was a real person who filed taxes or got medical services. No fast-buck fraudster got a government check sent to their bank account.”
Elsewhere, about 6.6 million U.S. taxpayers paid a penalty imposed for the first time this year for not having health insurance, about 10% more than the Obama administration had estimated--though a portion didn’t need to. The penalty of as much as 1% of income was implemented under the Patient Protection and Affordable Care Act, or Obamacare, and was meant to encourage people to sign up for health insurance. The Treasury Department had said in January that as many as 6 million taxpayers would pay the fine. The average penalty was $190, the National Taxpayer Advocate, the in-house ombudsman of the Internal Revenue Service, said Wednesday in a report. About 300,000 taxpayers overpaid the penalty by a total of $35 million. Most should have been exempt for their low income, according to the agency. The average overpayment was a little more than $110. The IRS hasn’t decided yet whether to issue a refund for the overpayments. “Since the majority of taxpayers use paid tax-return preparers, most would probably spend more than the roughly $110 average overpayment amount in preparer fees if amended returns are required,” the National Taxpayer Advocate said. About 10.7 million taxpayers filed for an exemption from the penalty.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration approved AstraZeneca Plc’s (London) drug, Iressa, as a first-line treatment for a common form of lung cancer. The FDA said the approval was based on results from a trial of 106 patients with previously untreated non-small cell lung cancer. The drug was previously approved for use only in patients who did not respond to chemotherapy. Lung cancer is the leading cause of cancer-related death in the United States. The National Cancer Institute estimates more than 158,000 will die from the disease this year. The approval could revitalize the drug, whose sales fell 5% to $144 million in the first quarter. Drugs like Iressa and Roche Holding AG’s Tarceva have been on the market for several years and provide a valuable treatment option for some lung cancer patients with a certain genetic mutation.
Elsewhere, Novo Nordisk A/S (Bagsvaerd DNK) announced that the FDA approved its PenMate injection device for use with Novo’s Norditropin Flexpro treatment for growth hormone-related disorders. The device is designed to hide the needle injecting Norditropin into patients. Norditropin is used for children and adolescents and is designed for users of Norditropin who dislike needles and prefer them to be hidden during the injection process. “Children and adolescents with growth hormone-related disorders are the primary users of Norditropin, and some feel uneasy at the thought of having to inject their medicine,” said Eddie Williams, senior vice president, Biopharmaceuticals, Novo Nordisk. “FlexPro PenMate was developed to hide the needle, demonstrating our commitment to keeping the patient at the center of everything we do.” Norditropin FlexPro is the only prefilled growth hormone injection pen that can be stored outside of the refrigerator for up to 21 days after first use, the company said.
The FDA is bolstering warning labels for popular pain relievers, adding information about the risk of heart attack and stroke in the short term. The changes announced Thursday apply to prescription non-steroidal anti-inflammatory drugs, or NSAIDs, including arthritis treatments like Celebrex. The agency said it plans similar changes to over-the-counter drugs in the same class, such as Advil and Motrin. Language on the pills’ label currently warns that they can increase the risk of heart-related problems if used long term. However, the agency’s new warning states that heart attacks and strokes can occur in the first few weeks of taking the drugs. The agency also warns that the risks increase with higher doses of the drugs. The updates are based on an FDA review of recent studies and recommendations by outside advisers. “In general, patients with heart disease or risk factors for it have a greater likelihood of heart attack or stroke,” the agency notes in the announcement posted to its website.
In Europe, Bristol-Myers Squibb Co. (New York) announced Thursday that its HIV-1 combo regimen Evotaz, for the treatment of adult patients suffering from HIV-1, has won approval from the European Commission. Evotaz is Bristol Myers’ combination drug containing 300 mg of Bristol’s protease inhibitor Revataz (atazanayir), and 150 mg of Gilead Sciences, Inc.’s CYP3A inhibitor Tybost (cobicistat). The said combination treatment is meant as a once-daily tablet to be taken with other antiretroviral for treating HIV-1. Evotaz’s approval in Europe is good news for a large portion of the European population currently suffering from the deadly infection. The approval allows Bristol Myers to market the drug in all 28 Member States of the EU.
MEDICAL STOCK SPOTLIGHT -- Ohr Pharmaceutical Inc. (Nasdaq) led advancing issues, soaring $1.41, or 62% for the week, to $3.68. The New York-based company announced positive final results from a phase II clinical trial of OHR-102 (0.2% Squalamine lactate ophthalmic solution) in patients with macular edema secondary to branch (BRVO) and central retinal vein occlusion (CRVO). The results demonstrated that, following an initial 10 week combination therapy treatment period, patients who continued to receive a combination of topical OHR-102 BID plus Lucentis achieved greater visual acuity gains than the control group who received Lucentis alone. At week 38, the mean gain in visual acuity from baseline for patients randomized (at week 10) to treatment with OHR-102 + Lucentis PRN was +27.8 letters compared with +23.3 for patients randomized to treatment with Lucentis plus PRN alone (control group), a clinically meaningful difference of +4.5 letters.
Elsewhere, following an increase in price target from Brean Capital’s Difei Yang, shares of Zogenix Inc. (Nasdaq) surged $5.96, or 39%, to $21.13. Yang raised the price target to $28 from $20 after the company’s successful Key Opinion Leader meeting focused on Dravet syndrome and Zogenix’s treatment for it, an orphan drug, ZX008. Yang said the assumptions previously used to value the company were too conservative. For example, the 35% operating income margin for an orphan disease company like San Diego, CA-based Zogenix might have been in line with other specialty pharma companies, but not the orphan-drug universe, for which it stands in the 50% range. Moreover, strong long-term clinical data on ZX008 and a lower efficacy bar for the drug owing to the absence of alternative therapies has led Yang to revise the success rate of pending trials up to 80% from 70%.
And EPIRUS Biopharmaceuticals Inc. (Nasdaq) gained $1.76, or 29%, to $7.76 after saying it will partner with Polpharma Group to commercialize a pipeline of biosimilar drug candidates in the European Union, Middle East, Turkey, Russia and Commonwealth of Independent States. The pipeline includes biosimilar versions of three blockbuster drugs--BOW015 (infliximab, whose reference biologic is the Johnson & Johnson drug Remicade), BOW050 (adalimumab, AbbVie’s Humira), and BOW070 (tocilizumab, Roche’s Actemra). All three focus on treating inflammatory and immune mediated disorders. EPIRUS plans to expand that pipeline mid- to long-term through biosimilar versions of at least some of the more than 20 Immunoglobulin G (IgG), Chinese Hamster Ovary monoclonal antibody drugs with soon-to-expire patents, clustered in five therapeutic areas. Both companies will split clinical development costs and eventual operating profit, with 51% going to Polpharma and the remaining 49% to Cambridge, MA-based EPIRUS.
But NephroGenex Inc. (Nasdaq) slid 16% to $4.72 after pricing an offering of 1.5 million shares of common stock, and warrants to purchase 1.5 million shares of common stock, at $5 per share and warrant. The warrants will have an exercise price of $6.25 per share and are exercisable immediately. Underwriters have a 45-day option to buy up to 225 thousand more shares and/or warrants for overallotment. The pharma firm expects gross proceeds of $7.5 million, to be used for general purposes. The offering should close this Wednesday. Research Triangle Park, NC-based NephroGenex develops novel drugs for the treatment of kidney disease. The Company is developing a small molecule drug that acts as an inhibitor of the pathogenic oxidative chemistries which are elevated in diabetic patients.
IPO SECTOR -- Intec Pharma Ltd., which is developing an improved delivery method of carbidopa/levodopa for Parkinson’s disease, announced terms for its U.S. initial public offering on Thursday. The company is currently listed on the Tel Aviv Stock Exchange under the symbol “INTP” with a market cap of about $45 million. The Jerusalem, Israel-based company plans to raise $38 million by offering 4.5 million shares at its current price of $8.36. At that price, Intec Pharma would command a fully diluted market value of $85 million. The last Parkinson’s disease biotech IPO, Cynapsus Therapeutics, is developing an easier-to-use formulation of apomorphine. It trades about 20% above its offer price. Intec Pharma, which was founded in 2000, plans to list on the Nasdaq under the symbol “NTEC.” Maxim Group LLC and Roth Capital are the joint bookrunners on the deal. No pricing date was disclosed. ** EyeGate Pharmaceuticals Inc., a late-stage biotech developing a treatment for eye inflammation, announced terms for its IPO on the Nasdaq last Wednesday. The Waltham, MA-based company plans to raise as much as $13 million by offering 0.87 million shares based on its July 14 share price of $15. At that price, EyeGate Pharmaceuticals would command a fully diluted market value of $131 million. EyeGate set terms to list on the Nasdaq in September 2014 at a $101 million market cap, but postponed the offering. It ultimately listed on the OTCQB under the symbol “EYEG” at $6 per share in February 2015, commanding a $43 million market cap and raising $4.1 million. On July 14, EyeGate announced the dosing of the first patient in its phase Ib/IIa trial of lead product candidate EGP-437 for macular edema, and it expects top-line data in the fourth quarter of this year. On the day of the announcement, its stock soared 107% to $15.00, then finished the week at $12.35. EyeGate Pharmaceuticals, which was founded in 2004, plans to list on the Nasdaq under the symbol “EYEG.” Aegis Capital and Chardan Capital Markets are the joint bookrunners on the deal.
Previous Week's Issue ... July 13, 2015
HEALTH INSURANCE COMPANIES SEEK BIG RATE INCREASES FOR 2016 -- Citing sicker-than-expected customers who purchased policies under the Affordable Care Act, the nation’s health insurers are seeking rate increases of 20% to 40% or more for the 2016 open enrollment season. Federal officials, meanwhile, have vowed to scale back such requests. According to a New York Times report, market leading Blue Cross and Blue Shield plans are especially insistent on raising prices. Various insurers are looking for rate increases of an average 23% in Illinois, 25% in North Carolina, 31% in Oklahoma, 36% in Tennessee and 54% in Minnesota. Elsewhere, insurers participating in the federal exchange have filed requests for pricing hikes that reach as high as 85% in Georgia and as low as 30% in Maryland. The root cause of the problem is the failure of several marketplaces to attract enough young, healthy applicants. “As a result, millions of people will face Obamacare sticker shock,” said Wyoming Senator John Barrasso. Insurance companies who want to raise rates more than 10% are required to submit their pricing plans for approval through the states’ insurance department with an explanation as to the high increases. Federal officials, however, have already pushed back at the proposed increases.
During a stop in Tennessee late last week, President Barack Obama told consumers to contact state insurance regulators and urge them to carefully review such high pricing proposals. If commissioners “do their job” and actively review rates, he said, “my expectations is that they’ll come in significantly lower than what’s being requested.” The comments are part of a more general increase in government review of health insurers. Earlier this month, a senior Justice Department official told reporters that antitrust enforcers want more power to review pending transactions between large health insurance companies. The fear is that the potential deals between the nation’s five largest carriers will disrupt the market, limit competition and increase pricing. Officials say if all mergers come through, it would look at the deals collectively in an attempt to determine what effect the deals might have on the marketplace--specifically whether rate increases would be likely and whether any antitrust concerns would be raised. Industry officials, however, say merger and acquisition activity is not likely to affect premium pricing. Instead, insurers’ “focus is on making sure consumers have affordable coverage,” a spokesperson for America’s Health Insurance Plans (Washington DC) said.
HUMANA, AETNA MERGER DEAL INCLUDES TERMINATION FEES -- Health insurer Humana Inc. (Louisville KY) and its buyer Aetna Inc. (Hartford CT) set fees to be paid in the event of a failure of the largest deal in the health insurance industry, Humana said in a regulatory filing. Aetna, which the week prior said it would buy Humana for about $37 billion in cash and stock, has to pay a termination fee of $1.69 billion. Humana would pay the larger rival $1.31 billion if the deal is terminated. The deal faces antitrust issues as the authorities scrutinize how the combination will affect competition for each line of insurance: Medicare, Medicaid, individual insurance, commercial insurance for small and large businesses and the large employer business. Wall Street analysts and some antitrust experts have said that they expect the combination to be approved, although regulators may insist on some divestitures. “Aetna shareholders have to approve the deal, and with such a large premium, there is some outside chance that shareholders will not approve it,” said Standard & Poor's equity analyst Jeffrey Loo. Aetna’s CEO said he was confident about an antitrust approval for the deal to close by June 30, 2016. The company had already prepared for possible divestitures to address overlaps with Humana’s business, he added. Aetna is required to pay Humana $1 billion if the deal is not closed by June 30, 2016, according to the filing.
Meanwhile, Humana prompted new investor concerns about the $37 billion deal by lowering its 2015 financial forecasts last week. Humana, which has posted disappointing results for several quarters in a row, said that members of its Medicare Advantage plans for the elderly were using hospital services at a higher rate than the company expected. That increase could cut into already tight profit margins, if Humana ends up paying more for medical claims than they anticipated when setting monthly insurance rates. Humana CEO Bruce Broussard said that inpatient hospital admissions have not performed in line with what the company had forecast. That contributed to its decision to slash expected 2015 operating profits by more than 8%. The company said it had taken the higher Medicare Advantage hospital use into account when it priced premiums for 2016. The degree to which Humana will boost Aetna’s earnings in 2017 and 2018 is less than what some investors had hoped for, he said. Aetna’s offer of $125 in cash and 0.8375 Aetna shares for each Humana share valued Humana at $230 per share. Aetna closed the week down 9% at $114.48, bringing down the offer price to $221 per share. Humana closed the week off 13 cents at $187.37.
TRACKING WASHINGTON -- President Barack Obama asked the U.S. Senate to confirm Andy Slavitt as the administrator of the Centers for Medicare & Medicaid Services. Slavitt is already the acting administrator of CMS. He joined the government in 2014, after working as an executive vice president at UnitedHealth Group Inc.’s (Minnetonka MN) Optum unit, which helped fix the main Obamacare website, healthcare.gov. CMS oversees health programs for the elderly, disabled and poor, in addition to handling many of the efforts tied to Obama’s healthcare overhaul. Medicare covers more than 50 million elderly and disabled Americans. Orrin Hatch, the Utah Republican who is chairman of the Senate Finance Committee, said Slavitt will have to answer questions about his work at UnitedHealth. “Mr. Slavitt’s conflicted history in the medical services industry has produced mixed results and raised a number of serious concerns,” Hatch said in a statement. “Slavitt will need to answer a number of tough questions regarding his former employer and their relationship with the agency.” Groups representing hospitals and doctors said they were pleased by Slavitt’s nomination.
Elsewhere, the Centers for Medicare and Medicaid Services has proposed restructuring payments for hip and knee replacement surgeries, some of the most common surgeries received by patients covered by the plans. CMS invited providers on Thursday to comment on a proposal that would hold hospitals in 75 geographic areas accountable for the quality of care they deliver to Medicare fee-for-service beneficiaries for hip and knee replacements from surgery through recovery. The targeted areas include over 800 hospitals, ranging from major cities like New York and Los Angeles, to smaller areas such as Lubbock, TX, and Flint, MI, said CMS Chief Medical Officer Patrick Conway. CMS said the plan is part of the Obama administration’s ongoing commitment to transform the U.S. health system to deliver better quality care and spend healthcare dollars in a smarter way. The agency said that in 2013, there were more than 400,000 inpatient knee and hip procedures, costing Medicare more than $7 billion for hospitalization alone. If approved, the program would go into effect in January. Savings over the five-year program were estimated at $150 million. The agency is accepting comments on the plan through Sept. 8.
FDA/EMA ROUNDUP -- Novartis AG (Basel CHE) won approval from the Food and Drug Administration to sell a first-of-its-kind drug to treat heart failure, a leading cause of death among adults. The FDA cleared the medicine, called Entresto, which has been shown to reduce deaths and hospitalization due to heart failure, the agency said last week in a statement. The treatment combines the Novartis drug Diovan, which treats high blood pressure, with another drug called sacubitril. It’s the first in its class that reduces the strain on the heart, according to the company. The drug should be a major blockbuster for Novartis, which said it expects Entresto to reach peak sales of at least $5 billion a year. About 5.1 million Americans suffer from heart failure, which usually worsens over time as the heart grows weaker, according to the FDA. Heart failure is often caused by cardiovascular damage from heart attacks and high blood pressure, the agency said in a statement. Novartis plans to begin shipping Entresto to the U.S. this week, according to the statement. Regulators in Canada, Switzerland and the European Union are reviewing Entresto for approval.
Elsewhere, an advisory panel to the Food and Drug Administration effectively supported approval of Eli Lilly & Co.’s (Indianapolis IN) experimental lung-cancer drug necitumumab on Thursday but recommended measures be taken to mitigate the drug’s risks. The panel did not officially vote but an informal poll taken by the FDA indicated most members believe the benefits of the drug outweigh the risks. The FDA is not obliged to follow the advice of its advisers but generally does so. In a clinical trial, the drug improved overall survival by an average of 1.6 months but also increased the risk of sometimes-fatal blood clots and potentially deadly electrolyte imbalances. “We are encouraged by the Committee’s constructive discussion,” said Dr. Richard Gaynor, senior vice president of product development and medical affairs for Lilly’s oncology division. “We look forward to working closely with the FDA as they continue their review.” Necitumumab is a second-generation monoclonal antibody for patients with stage IV squamous non-small cell lung cancer. In a 1,093-patient clinical trial, patients who received necitumumab together with the chemotherapy drugs gemcitabine and cisplatin survived an average of 11.5 months compared with 9.9 months for patients who received gemcitabine and cisplatin alone.
The FDA is bolstering warning labels for popular pain relievers, adding information about the risk of heart attack and stroke in the short term. The changes announced Thursday apply to prescription non-steroidal anti-inflammatory drugs, or NSAIDs, including arthritis treatments like Celebrex. The agency said it plans similar changes to over-the-counter drugs in the same class, such as Advil and Motrin. Language on the pills’ label currently warns that they can increase the risk of heart-related problems if used long term. However, the agency’s new warning states that heart attacks and strokes can occur in the first few weeks of taking the drugs. The agency also warns that the risks increase with higher doses of the drugs. The updates are based on an FDA review of recent studies and recommendations by outside advisers. “In general, patients with heart disease or risk factors for it have a greater likelihood of heart attack or stroke,” the agency notes in the announcement posted to its website.
And Insulet Corp. (Billerica MA) said on Wednesday it received a warning letter from the FDA over some of the company’s insulin pumps. The company said the letter, which it received last Monday, followed an inspection by the FDA of its facility in Massachusetts in March. At that time, the FDA had issued a Form 483 and the company filed its response letter in April. A Form 483 is usually issued at the end of an inspection when the investigator finds violations of prescribed standards. The letter relates to the release of certain lots of the company’s EROS OmniPods that did not conform to the FDA’s final acceptance criteria, Insulet said in a regulatory filing. The lots were manufactured in mid-2013 and the first half of 2014. Insulet said it expects the letter will not have not any adverse impact on its operations.
MEDICAL STOCK SPOTLIGHT -- Versartis Inc. (Nasdaq) led advancing issues, surging $4.16, or 28% over the week, to $18.78. The U.S. Food and Drug Administration gave the Menlo Park, CA-based biotech a reen light to ontinue its phase III testing for a drug that would help children with human growth hormone deficiency. Pricing of biotech shares depend heavily on pushing new products through their pipelines, but the process can be unpredictable, including FDA oversight. “Our team has continued to work diligently with the FDA and we are excited to be moving forward with the phase III clinical trial of VRS-317 in pediatric GHD patients,” said Jay Shepard, the CEO. In May, the FDA asked Versartis to halt enrollment in the late-stage trial and provide additional “bioanalytical data” for VRS-317. That delayed Versartis’s schedule by six months and pushed the stock price down by more than 10%. Versartis says it’s now on track to show top-line, 12-month results by the middle of 2017 and to present VRS-317 for approval by 2018.
Elsewhere, XOMA Corp. (Nasdaq) finished the week up 27% at $4.72. The upside was due in part to the company’s announcement that XOMA 358, a fully human allosteric monoclonal antibody, has been granted Orphan Drug Designation by the Food and Drug Administration for the treatment of congenital hyperinsulinism (HI). The upside was buttressed by the release of an upbeat analyst note out of Piper Jaffray. Data from XOMA’s gevokizumab’s EYEGUARD-B trial is expected over the next couple of weeks. The drug is designed to prevent disease flares in patients with Behçet’s disease uveitis. Piper analysts said they are confident in a positive read-out, and added that the risk/reward ratio is favorable. The firm reiterated its “overweight” rating and $8 price target. In addition, RBC Capital Markets said the risk-reward is favorable ahead of the release of the gevokizumab data. The brokerage said that if the trial is a success, the stock will likely get a boost ahead of additional phase III readouts.
And Vital Therapies Inc. (Nasdaq) jumped $4.73, or 22%, to $25.82. The biotherapeutic company developing ELAD, a cell-based therapy targeting the treatment of liver failure, announced the presentation of a poster at the International Liver Transplantation Society's 21st Annual International Congress in Chicago. The poster, entitled “Expression of Acute-Phase Proteins by ELAD C3A Cells,” describes recent research by the company showing that ELAD C3A cells produce several key anti-inflammatory proteins that are thought to decrease inflammation of the liver in patients with alcohol-induced liver decompensation (AILD). Levels of these anti-inflammatory proteins increase when C3A cells are stimulated by common inflammatory factors that are known to be elevated in patients with AILD. This dynamic response may represent one of the mechanisms by which the ELAD System could exert a therapeutic benefit in AILD, according to the San Diego, CA-based company.
But Aquinox Pharmaceuticals Inc. (Nasdaq) plunged $5.07, or 72%, to $1.94. Two weeks after reporting that its lead drug failed a phase II pain study, Aquinox came back with more bad news last week, noting its failure in a separate mid-stage study for chronic obstructive pulmonary disease patients with a history of frequent exacerbations. After giving a 200 mg dose of AQX-1125 daily for two weeks, the drug failed to demonstrate any improvement over a placebo for either the primary or the secondary endpoint. Back in late June, Vancouver, BC-based Aquinox reported that its lead therapy failed to post statistically significant results for bladder pain, noting a 2.4 point reduction on an 11-point scale compared to a 1.3-point drop for a placebo. Placebo responses routinely scuttle pain drugs.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Global Blood Therapeutics Inc., an early-stage biotech developing a small molecule therapy for sickle cell disease, registered up to $115 million worth of common stock. The South San Francisco, CA-based company, which was founded in 2011, plans to list on the Nasdaq under the symbol “GBT.” Global Blood Therapeutics initially filed confidentially on March 19, 2015. Morgan Stanley and Goldman Sachs are the joint bookrunners on the deal. No pricing terms were disclosed. ** GenSight Biologics SA, which is developing gene therapies for rare retinal diseases, registered up to $100 million in an initial public offering. The year’s other retinal gene therapy biotech, Spark Therapeutics (ONCE), is currently the best-performing IPO of 2015, up 170% from its offer price. The Paris, France-based company, which was founded in 2012, plans to list on the Nasdaq under the symbol “GNST.” Leerink Partners, Evercore Partners and Canaccord Genuity are the joint bookrunners on the deal. No pricing terms were disclosed.
July 6, 2015 ...
AETNA TO ACQUIRE HUMANA FOR $37 BILLION IN CASH, STOCK -- Aetna Inc. (Hartford CT) said Friday that it had agreed to buy Humana Inc. (Louisville KY) for $34.1 billion in cash and stock, following weeks of frenzied merger talks among the largest health insurers. Under the deal, Aetna would pay about $230 a share for Humana, a premium of 23% from Thursday’s close and 29% from the company’s share price before The Wall Street Journal in late May first reported Humana was exploring a sale. Including debt, the companies said, the deal is valued at $37 billion. A takeover approach for Humana earlier this year thrust the biggest health-insurance companies into a five-way merger frenzy. Cigna Corp. (Bloomfield CT) and Aetna were vying to buy Humana, while fielding takeover approaches of their own. Cigna and Anthem Inc. (Indianapolis IN) have rekindled talks after Cigna earlier rejected a public takeover bid of $184 a share from Anthem, its larger rival, and UnitedHealth Group Inc. (Minnetonka MN) earlier approached Aetna. The consolidation momentum in the health-insurance industry is being fed by a desire to diversify and cut costs, amid a landscape changed by the Affordable Care Act. Insurers are eager to reduce expenses and build scale that will help them face off against providers that are bulking up. The providers themselves are growing partly with an eye toward new forms of payment encouraged by the health law.
Analysts expect that the Aetna deal to buy Humana will, if completed, vault Aetna toward the top of the burgeoning Medicare business and give it scale to thrive as the industry consolidates. But expected scrutiny from antitrust regulators, along with signs of some emerging operational challenges at Humana, will put pressure on Aetna and its chief executive, Mark Bertolini, to demonstrate that the huge bet will pay off. Following the deal’s closing, Mr. Bertolini will serve as the chairman and CEO of the combined company. Under the deal, Humana shareholders will swap each share for $125 in cash and 0.8375 Aetna shares. Aetna expects to finance the cash portion, in part, by issuing about $16 billion in new debt. Upon closing, which the companies expect to occur in the second half of next year, Aetna’s shareholders would own about 74% of the combined company. Aetna sees the deal adding to its operating earnings in 2017. The combined company would have projected 2015 operating revenue of about $115 billion, with about 56% coming from government-sponsored programs like Medicare and Medicaid. Humana closed the week down 4% at $187.50 while Aetna slid 3% to $125.51.
U.S. DOCTORS, HOSPITALS GARNER $6.5 BILLION FROM DRUG AND DEVICE MAKERS -- U.S. doctors and teaching hospitals received $6.49 billion from drug and medical-device makers in 2014, according to new government data on the financial links between the companies and the people who prescribe their products. The data released last week range from the royalties paid to hospitals to help develop products to fees provided to medical experts to speak at a dinner with colleagues. The payments are listed in two broad categories: money to fund research, and payments to entertain doctors or compensate them for consulting or other non-research purposes. By disclosing information on the payments, the U.S. is seeking to bring transparency to the financial relationships between drugmakers and healthcare providers. Those ties can influence how physicians practice, even if they aren’t aware of it, said Jason Dana, a professor at Yale School of Management (New Haven CT) who studies decision-making. “If we have a financial incentive to believe something or conclude something, we kind of trick ourselves into thinking it’s true,” he said. “And we’re not always aware we’re doing it.” The Centers for Medicare & Medicaid Services created a website, called Open Payments, to let people search for data on their medical providers. The disclosures cover payments to about 607,000 doctors and 1,121 teaching hospitals.
Overall, companies made $3.23 billion in payments for research and $2.56 billion for other purposes, according to a summary posted on the website. The data also include ownership interests of $703 million. Pfizer Inc. (New York), the biggest U.S. drugmaker, reported at least $234 million in research payments and $53.3 million in general outlays. Merck & Co. (Kenilworth NJ) said it paid at least $97.7 million for research and made at least $27.5 million in general payments. AstraZeneca Plc (London) spent at least $85.7 million on research and $72.5 million on general payments. Quirks in the data make it difficult to get accurate totals for manufacturer payments. “We appropriately compensate doctors and institutions for their work to enroll patients and collect clinical trial data,” Pfizer spokesman Dean Mastrojohn said. “Merck is committed to the discovery and development of important new drugs and vaccines through collaboration with scientific leaders,” Merck spokeswoman Lainie Keller said. AstraZeneca had no immediate comment.
TRACKING WASHINGTON -- Now that it appears Obamacare isn’t going away anytime soon, the Obama administration plans to better explain to Americans why the law is good for them. After the Supreme Court declined to gut the law in a recent decision, there’s an opportunity to build on gains in health coverage and also rectify some missteps in the Affordable Care Act’s marketing, Sylvia Mathews Burwell, the U.S. health secretary, told Bloomberg News. “We as an administration haven’t done as much as we could to make sure people understand the breadth of the benefits,” she said. “The ACA became...narrower than the uninsured, it became about the marketplace. It is about so much more.” The court ruled 6-3 on June 25 that subsidies to help people pay their insurance premiums are available nationwide, not just in the 16 states that have built their own insurance marketplaces, called exchanges. The decision, however, didn’t touch on the law’s improvements in health care for many more people, Burwell said. The Obama administration must ensure “people understand the benefits they get every day that they’re using that are part of the Affordable Care Act,” she said. For example, the law requires insurers to cover children on their parents’ plans until age 26, and forbids out-of-pocket charges for a long list of preventive health services including mammograms.
Many Republicans said after the ruling that they would continue to try to repeal the Affordable Care Act. Former Florida Governor Jeb Bush, who’s running for the Republican nomination to succeed Obama, said he would replace the law with “conservative reforms that empower consumers with more choices and control over their healthcare decisions.” The government hopes to enroll more people next year into private health plans sold under the Affordable Care Act, Burwell said. About 10 million are in the plans now. Obama is also pushing states to take advantage of an expansion of Medicaid provided by the law. Obama traveled to Tennessee last Wednesday to promote Medicaid expansion. It’s one of 22 states with Republican governors or legislatures that have so far refused to do so.
FDA/EMA ROUNDUP -- Silicon Valley health startup Theranos Inc. received its first clearance from the U.S. Food and Drug Administration, getting the go-ahead for a herpes virus test that uses a fingerprick’s worth of blood. The agency cleared the herpes test, as well as Theranos’s analysis system, the closely held company said Thursday in a statement. Theranos says its product is as accurate as tests done with a vial of blood drawn from a vein. “This is a really special day for our team, and it’s a milestone for everything we’ve been working toward,” CEO Elizabeth Holmes said. “We will continue to go test by test through the clearance system.” The Palo Alto, CA-based startup, which Holmes says has a $10 billion valuation, provided the FDA with data on 818 people who took herpes tests using a traditional vein-drawn blood sample and blood from a finger stick. The data showed equivalence in the tests’ accuracy, Holmes said.
Elsewhere, Vertex Pharmaceuticals Inc. won FDA clearance for its combination treatment for the most common form of cystic fibrosis, giving the drugmaker what analysts have projected will be a new blockbuster. The FDA cleared the medicine, called Orkambi, for sale for patients 12 and older who suffer from the deadly lung disease, according to a letter posted in an FDA database. Orkambi is a combination of a drug called Kalydeco that Vertex already sells for a smaller group of cystic fibrosis patients and another medicine called lumacaftor. Boston, MA-based Vertex will charge $259,000 a year for Orkambi, the company said. Kalydeco cost $294,000 a year when it came to market in 2012 and last year had sales of $464 million. Revenue from Orkambi could reach $3.42 billion in 2018, analysts estimate. “Today’s approval significantly broadens the availability of targeted treatments for the specific defects that cause cystic fibrosis,” John Jenkins, director of the FDA’s office of new drugs, said in a statement.
Bayer Healthcare said the FDA approved using transvaginal ultrasound as an alternate test to confirm if the company’s Essure permanent birth control device has been placed properly. Essure is a small metal coil inserted into woman’s fallopian tubes. But since its approval in 2002, women using the device have sent the FDA more than 5,000 complaints, ranging from pain and menstrual problems to pregnancies and even deaths. Some of the complaints related to the placement of the device. In a transvaginal ultrasound (TVU), sound waves emitted from a probe placed in vagina help a physician check if Essure has been placed properly. This test is an alternative to the generally-prescribed modified hysterosalpingogram (HSG) test in which an x-ray of the uterus and fallopian tubes is used to check for proper device placement. A woman using Essure must undergo a test to confirm that the device is properly placed within three months of the procedure and until she receives a confirmation from her doctor, she must use alternate birth control methods, Leverkusen, Germany-based Bayer said.
And Insulet Corp. (Billerica MA) said on Wednesday it received a warning letter from the FDA over some of the company’s insulin pumps. The company said the letter, which it received last Monday, followed an inspection by the FDA of its facility in Massachusetts in March. At that time, the FDA had issued a Form 483 and the company filed its response letter in April. A Form 483 is usually issued at the end of an inspection when the investigator finds violations of prescribed standards. The letter relates to the release of certain lots of the company’s EROS OmniPods that did not conform to the FDA’s final acceptance criteria, Insulet said in a regulatory filing. The lots were manufactured in mid-2013 and the first half of 2014. Insulet said it expects the letter will not have not any adverse impact on its operations.
MEDICAL STOCK SPOTLIGHT -- Signal Genetics Inc. (Nasdaq) led advancing issues, soaring 46% over the holiday-shortened week to $2.27. The upward thrust came after the molecular diagnostics company announced a new master service agreement with “a leading pharmaceutical company.” Under the new master service agreement, the as yet unnamed pharmaceutical company will use Signal Genetics’ MyPSR genetic test in multiple clinical trials related to the development of “novel treatments for patients with multiple myeloma.” The Carlsbad, CA-based company said MyPSR will inform patterns of response to therapy regimens to help physicians better manage multiple myeloma patients based on their genetic profile. “This services agreement with a leading pharmaceutical company is a significant achievement for Signal, and validates the potential of our technology to impact therapy decisions in multiple myeloma,” Michael Cerio, SVP of Commercial Strategy and Business Development, said in a statement.
Elsewhere, Juno Therapeutics Inc. (Nasdaq) surged $7.41, or 16%, to $54.02 following the announcement that it has entered a 10-year partnership with Celgene Corp. to study and develop cures for cancer and other auto-immune diseases. Juno CEO Hans Bishop stated: “Celgene is the ideal partner for Juno to help us realize the full potential of our science and clinical research while maintaining the independence we, our employees, partners and investors believe is so critical for true innovation.” Under terms of the agreement, Celgene will pay $1 billion to Seattle, WA-based Juno, the heftiest upfront payment paid for a biotech licensing deal to date. Celgene has agreed to pay $150 million in cash, and to buy as many as 9.1 million newly issued shares of Juno for $93 per share--more than double Juno’s share price prior to news of the deal. Upon buying the shares, Celgene would have a 10% stake in Juno. Celgene will also have the option to select two drug candidates to share costs and profits of with Juno.
And SciClone Pharmaceuticals Inc. (Nasdaq) jumped $1.70, or 18%, to $11.06. The Foster City, CA-based company and Theravance Biopharma announced they have entered into a development and commercialization agreement granting SciClone exclusive rights for the antibiotic VIBATIV (telavancin) in China and certain adjacent territories. The companies plan to pursue development and commercialization of VIBATIV in hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia. Additional indications may include complicated skin and skin structure infections, and potentially bacteremia. VIBATIV is a bactericidal, once-daily, injectable lipoglycopeptide antibiotic with in vitro potency and a dual mechanism of action whereby telavancin both inhibits bacterial cell wall synthesis and disrupts bacterial cell membrane function.
But EnteroMedics Inc. (Nasdaq) plunged 50% to $0.53. The collapse came after the St. Paul, MN-based developer and manufacturer of devices that use neuroblocking technology to treat obesity, metabolic diseases, and other gastrointestinal disorders announced the pricing of its previously announced public offering of 40,229,886 units. Each unit consists of one share of common stock, 0.50 of a Series A warrant to purchase one share of common stock, and 0.50 of a Series B warrant to purchase one share of common stock, at a purchase price of $0.87 per unit.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Zynerba Pharmaceuticals Inc., a preclinical biotech developing cannabinoid-based therapies for osteoarthritis and epilepsy, registered up to $58 million worth of common stock. The last cannabinoid-based healthcare IPO was GW Pharmaceuticals, which became listed in the U.S. in April 2013. Since then, it has traded up over 1,200%. However, Zynerba is at a much earlier stage in development. The Devon, PA-based company, which was founded in 2007, plans to list on the Nasdaq under the symbol “ZYNE.” Zynerba Pharmaceuticals initially filed confidentially on January 12, 2015. Jefferies and Piper Jaffray are the joint bookrunners on the deal. No pricing terms were disclosed. ** Teladoc Inc., which provides on-demand medical consultation via mobile, internet video or telephone, raised $157 million last Tuesday by offering 8.3 million shares (100% primary) at $19, well above the $15-$17 range. The company had initially filed to offer 7.0 million shares. At its offer price, Teladoc now commands a fully diluted market cap of $758 million and an enterprise value of $620 million. The Lewisville, TX-based company will list on the NYSE under the symbol “TDOC.” J.P. Morgan and Deutsche Bank acted as the lead bookrunners on the deal. Shares closed the week up 47% at $28.00.
June 15, 2015 ...
OBAMA MAKES CASE FOR HEALTH LAW WHILE NATION AWAITS SUPREME COURT DECISION -- President Barack Obama last week declared his healthcare law a firmly established “reality” of American life even as the legality of one of its key elements awaits a decision by the Supreme Court. “This is now part of the fabric of how we care for one another,” Obama said of the law, his most prized domestic policy accomplishment. For a second time, Obama mounted a robust defense of a law that remains unpopular with some, and under legal challenge, but that has contributed to 14.75 million adults gaining coverage since its healthcare exchanges began signing up people in 2013. Obama’s remarks, made at the annual Catholic Health Association Conference in Washington, DC, amounted to a political argument for the law just weeks before the high court is expected to render its decision in a case that could wipe out insurance for millions of Americans. Obama poked fun at opponents for issuing “unending Chicken Little warnings” about what would go wrong under his healthcare plan. “The critics stubbornly ignore reality,” he said. Anticipating the president’s speech, Senate Majority Leader Mitch McConnell (R-KY) said it was Obama who was “jousting with reality again.” McConnell added, “I imagine the families threatened with double-digit premium increases would beg to differ, as would the millions of families who received cancellation notices for the plans they had and wanted to keep.”
At issue in the Supreme Court case is whether Congress authorized federal subsidy payments for healthcare coverage regardless of where people live, or only for residents of states that created their own insurance marketplaces. In the other states, residents can buy insurance through a federally run marketplace. Nearly 6.4 million low- and moderate-income Americans could lose coverage if the court rules people who enrolled through the federal site weren’t eligible for the subsidies. The decision rests on the court’s interpretation of a short phrase in the voluminous law. But Obama, wielding statistics and personal anecdotes, made a case that the law is so established that it has woven itself into the healthcare system.
HUGE HOSPITAL MARKUPS IN U.S. LED BY FOR-PROFIT CHAINS -- Although the enormous price markups that consumers regularly pay for most consumer items is around 100%, there are some products that are much higher. Common items like printer ink have a markup of 300% and airline tickets are marked up 400%, but both are meager beside those in some U.S. hospitals where the price for procedures is often 10 times the cost, according to a study published last week in the journal Health Affairs. Of the 50 hospitals with the highest markups, 49 are for-profit, including 25 owned by Community Health Systems Inc. (Franklin TN). Community Health and other for-profits did not respond to requests for an explanation of their markups, but in the past hospitals have said list prices, shown on a “chargemaster,” are irrelevant because “no one” pays those. In fact, out-of-network patients and the uninsured are often charged list prices, said Dr. Renee Hsia of the University of California, San Francisco, who has studied hospital charges but was not involved in this research. “People do get bills based on the chargemaster, and for out-of-network care insured patients pay a percentage” of chargemaster prices, she said.
Auto insurers, covering care after accidents, and workers’ compensation also pay full freight. “That results in higher premiums for auto insurance and for employers who pay into workers’ comp,” said study co-author Ge Bai of Washington & Lee University (Lexington VA). “That means we are all victims of these markups.” She and Gerard Anderson of Johns Hopkins Bloomberg School of Public Health in Baltimore blamed lack of regulation and transparency for 1,000% markups. Hsia, for instance, found that charges for a lipid panel blood test varied from $10 in one California hospital to $10,169 in another; opening blocked arteries cost $22,047 in one, $165,386 in another. For their study, Anderson and Bai analyzed 2012 data, the latest available, from the Centers for Medicare and Medicaid Services to identify the 50 hospitals with the highest markup over Medicare’s allowed charges, which Medicare considers a hospital’s cost. The 50 had an average markup of 1,010% vs. 340% for the other 4,433.
TRACKING WASHINGTON -- The U.S. Supreme Court rejected a bid by Maine to escape one requirement of Obamacare, as the justices prepare to rule on a more far-reaching challenge that might unravel the healthcare law. The justices last Monday left intact a federal appeals court decision that said Maine must continue offering Medicaid coverage to young adults until 2019. The dispute turned on an Obamacare provision that requires states to maintain their existing eligibility standards for children as a condition of receiving federal dollars under the Medicaid healthcare program for the poor. Maine’s top health official, Mary Mayhew, sought to drop the state’s longstanding Medicaid coverage for 19- and 20-year-olds. The Obama administration refused to allow the change, pointing to the Affordable Care Act provision. Mayhew sued, arguing that the state was being unconstitutionally coerced into keeping that coverage. A Boston-based federal appeals court rejected that argument. The Supreme Court will rule by the end of the month in its current Obamacare case, a dispute over the reach of the tax subsidies the law created to make insurance affordable. A group of challengers contends the law allows subsidies in only about a third of the states—just those that have set up their own online exchanges for people to buy policies. The case is Mayhew v. Burwell, 14-992.
In other news, facing resistance from its Pacific trading partners, the Obama administration is no longer demanding protection for pharmaceutical prices under the 12-nation Trans-Pacific Partnership (TPP), according to a newly leaked “transparency” annex of the proposed trade accord obtained by The New York Times. But American negotiators are still pressing participating governments to open the process that sets reimbursement rates for drugs and medical devices. Public health professionals, generic drugmakers and activists opposed to the trade deal, which is still being negotiated, contend that it will empower big pharmaceutical firms to command higher reimbursement rates in the U.S. and abroad, at the expense of consumers. They also say it could expose international markets to the direct consumer appeals that Americans have experienced. “It was very clear to everyone except the U.S. that the initial proposal wasn’t about transparency; it was about getting market access for the pharmaceutical industry by giving them greater access to and influence over decision-making processes around pricing and reimbursement,” said Deborah Gleeson at the School of Psychology and Public Health at La Trobe University in Australia, who saw the document. And even though it has been toned down, she said, “I think it’s a shame that the annex is still being considered at all for the TPP.”
FDA/EMA ROUNDUP -- A U.S. Food and Drug Administration advisory panel recommended that the agency approve the cholesterol-lowering drug Praluent, the first of a wave of such cardiovascular drugs expected to raise billions of dollars in revenue and perhaps alter the treatment of cardiovascular disease. But many panelists said the use of the drug should be limited to certain high-risk groups, such as people with very high cholesterol for genetic reasons because of a condition called familial hypercholesterolemia. The committee voted 13-3 in favor of Praluent, from Sanofi SA (Paris) and Regeneron Pharmaceuticals Inc. (Tarrytown NY). But enough panelists expressed caution about the evidence in the companies’ studies, and so it may take longer than the industry would like to get these medicines widely used. The new injectable medicine is generically called alirocumab and could help some patients who can’t tolerate or aren’t effectively treated with statin drugs such as Lipitor. This new class of medicines is often called PCSK9-inhibitors, because they block a protein called PCSK9, which interferes with the liver’s ability to clear so-called bad (LDL) cholesterol from the bloodstream.
Elsewhere, Amgen Inc.’s (Thousand Oaks CA) Repatha won the backing of an FDA panel for some patients, making it the second in a new class of powerful cholesterol-lowering drugs to move closer to U.S. approval last week (see above article). Repatha’s benefits outweigh its risks for some patients with difficult-to-treat high cholesterol, advisers voted 11-4 on Wednesday. They also voted 15-0 that the medicine’s benefits outweigh its risks for patients with a rare genetic disorder that causes ultra-high cholesterol levels. Panel members said Repatha’s use should be limited to patients with both forms of the genetic disorder and those who are at high risk of experiencing a heart attack until more study is done on the drug’s effect on heart health. Repatha is part of a category of drugs known as PCSK9 inhibitors, designed to help patients who can’t get their LDL, or bad, cholesterol under control with widely used statins such as Pfizer Inc.’s Lipitor, or can’t tolerate the drugs. The FDA is scheduled to decide by Aug. 27 whether to approve Repatha and designate which patients should use it.
An FDA advisory committee recommended approval on Thursday of GlaxoSmithKline Plc’s (London) drug mepolizumab for severe asthma in patients aged 18 and older. The panel voted 10 to 4 against approving it in children aged 12 to 17. The FDA is not obliged to follow the advice of its advisory panels but typically does so. If approved, the drug would be marketed under the trade name Nucala and be the first new biologic treatment for severe asthma in more than a decade. Asthma affects more than 22 million people in the U.S. Severe asthma accounts for 5% to 10% of that population, according to GSK. Mepolizumab is a monoclonal antibody that binds to a receptor known as interleukin-5 which promotes the growth of eosinophils. These are a certain type of white blood cell that can accumulate in the lungs of patients with asthma. The extent of these accumulations correlate with the frequency and severity of asthma exacerbations.
And Insulet Corp. (Billerica MA) said on Wednesday it received a warning letter from the FDA over some of the company’s insulin pumps. The company said the letter, which it received last Monday, followed an inspection by the FDA of its facility in Massachusetts in March. At that time, the FDA had issued a Form 483 and the company filed its response letter in April. A Form 483 is usually issued at the end of an inspection when the investigator finds violations of prescribed standards. The letter relates to the release of certain lots of the company’s EROS OmniPods that did not conform to the FDA’s final acceptance criteria, Insulet said in a regulatory filing. The lots were manufactured in mid-2013 and the first half of 2014. Insulet said it expects the letter will not have not any adverse impact on its operations.
MEDICAL STOCK SPOTLIGHT -- Marinus Pharmaceuticals Inc. (Nasdaq) led advancing issues, soaring $4.13, or 48% for the week, to $12.75. Last week’s rally continues the recent uptrend for the company, as the stock is now up over 62% in the past one-month time frame. Marinus Pharmaceuticals, a clinical stage biopharmaceutical company, focuses on developing and commercializing neuropsychiatric therapeutics. It is developing ganaxolone, a small molecule, which is in phase III clinical trials to treat patients with refractory focal onset seizures; and is in phase II crossover clinical study to treat behaviors in Fragile X Syndrome, a genetic condition that causes intellectual disability, behavioral and learning challenges and various physical characteristics. The New Haven, CT-based company is also developing an IV formulation for use in the hospital setting to control acute seizures.
Elsewhere, Adaptimmune Therapeutics Plc (Nasdaq) shot up $3.95, or 26%, to $19.29. Several analysts have recently commented on the stock. Analysts at Guggenheim initiated coverage on shares, setting a “Buy” rating and a $25.00 price target on the stock. Analysts at Bank of America initiated coverage, setting a “Neutral” rating and a $17.00 price target on the stock. Analysts at Leerink Swann initiated coverage, setting an “Outperform” rating and a $24.00 price target on the stock. Finally, analysts at Cowen & Co. initiated coverage, setting an “Outperform” rating and a $15.43 price target on the stock. Adaptimmune Therapeutics is a clinical-stage biopharmaceutical company. The Abingdon, U.K.-based company develops novel cancer immunotherapy products based on a T-cell receptor platform that helps to identify cancer targets.
And Tobira Therapeutics Inc. (Nasdaq) raced $4.65, or 26%, to $22.49 after announcing it has completed recruitment for its phase IIb CENTAUR study. CENTAUR is a global, double blind, placebo controlled, phase IIb clinical trial evaluating the treatment effects of cenicriviroc (CVC) versus placebo in patients with non-alcoholic steatohepatitis (NASH) and liver fibrosis at high risk of progressive disease. NASH is a severe form of non-alcoholic fatty liver disease. Patients with NASH and risk factors such as liver fibrosis and type 2 diabetes or metabolic syndrome are often at higher risk for progression to more advanced liver complications such as cirrhosis and liver cancer. South San Francisco-based Tobira expects results of the one-year primary endpoint to be announced in mid-2016.
But cholesterol drugmaker Esperion Therapeutics Inc. (Nasdaq) fell $28.60, or 28%, to $74.24. The catalyst behind the downward move was the Food and Drug Administration’s advisory committee meeting for Sanofi SA and Regeneron Pharmaceutical Inc.’s injected cholesterol lowering PCSK9 inhibitor known as Praluent (alirocumab). The committee voted thirteen to three to recommend approval of Praluent, but the consideration of a handful of different sub-populations resulted in several caveats on the committee’s recommendation. Specifically, nine of the sixteen experts on the panel were decidedly against approving the drug for so-called “statin intolerant” patients--the exact patient population Plymouth, MI-based Esperion is targeting with its experimental cholesterol pill ETC-1002.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Pieris Pharmaceuticals AG, which is developing a therapy for functional iron deficiency in anemic patients, registered up to $35 million worth of common stock. Pieris currently trades on the OTCQB under the symbol “PIRS” with a market cap of $90 million. The Freising-Weihenstephan, Germany-based company, which was founded in 2000, plans to list on the Nasdaq under the symbol “PIRS.” Oppenheimer & Co. and JMP Securities are the joint bookrunners on the deal. No pricing terms were disclosed.**Intec Pharma Ltd., which is developing an improved delivery method of carbidopa/levodopa for Parkinson’s disease, registered up to $46 million in an IPO. Intec Pharma trades on the Tel Aviv Stock Exchange under the symbol “INTP” with a market cap of about $44 million. The Jerusalem, Israel-based company, which was founded in 2000, plans to list on the Nasdaq under the symbol “INTP.RC.” Intec Pharma initially filed confidentially on April 7, 2014. Maxim Group LLC and Roth Capital are the joint bookrunners on the deal. No pricing terms were disclosed.
June 8, 2015 ...
NEW MEDICARE PROVIDER UTILIZATION AND PAYMENT DATA RELEASED -- The prices that hospitals ask customers to pay for a series of common procedures have increased by more than 10% between 2011 and 2013--more than double the rate of inflation. But the amount paid by Medicare has stayed flat, according to data released last week by the federal government. The hospitals’ rising list prices mainly affect the uninsured and people who use hospitals outside their insurance network. The newly disclosed Medicare data show $12.4 billion in 2012 payments to physicians and other medical providers that were obscured or removed from an earlier version of the data release. The 16% increase in payments accounted for in the new data--which now total $90 billion--reflects bills Medicare paid for services doctors and other providers performed on very small numbers of patients, though some of those services include very high-cost treatments. The federal agency had previously excluded the data, citing privacy concerns, because the number of Medicare beneficiaries for these providers was fewer than 11. The methodology change affects the total payments listed in the agency’s data for 95% of 880,000 providers. For most, the new data showed a modest uptick in payments from the previous version of the billing records, first disclosed in April 2014, with a median increase of about $3,600.
In some cases, however, the changes are large: For each of about 13,000 medical providers, the latest figures include at least $100,000 in payments that weren’t previously disclosed. Behind the change is the method Medicare officials used to add up payments to those doctors. In its first disclosure, Medicare released one file with line items for each specific procedure providers performed and one file with information about total payments to each provider. In the new data, Medicare still redacted procedures with low beneficiary counts from the detailed file, but it included the payments for those procedures in the file that summarized total payments for each provider. The shift has changed how some doctors ranked for total billings compared with their peers. The earlier version of the data showed Florida ophthalmologist Salomon Melgen received about $21 million in 2012 Medicare payments, the most of any individual medical provider. Under the new methodology, Dr. Melgen’s payments also totaled about $21 million, but he was the No. 2 biller in the data for 2012. Dr. Melgen was indicted on health-fraud charges in April, according to The Wall Street Journal.
THIRTEEN PERCENT LEFT HEALTHCARE ROLLS, U.S. FINDS -- About 1.5 million people dropped off health insurance coverage rolls this year after failing to pay for policies they picked on the Obamacare marketplaces. That left 10.2 million covered by Affordable Care Act policies as of March 31, up from 6.3 million at the end of 2014, the Centers for Medicare and Medicaid Services said. Eighty-five percent got subsidies to help them afford coverage. President Barack Obama’s administration had expected that some people would pick plans and then not follow through, and set a goal to have at least 9.1 million people paying for coverage bought through government-run marketplaces this year. “We’ve seen a historic reduction in the uninsured and consumers are finding the coverage they need at a price they can afford,” Sylvia Burwell, secretary of Health and Human Services, said in a statement. Almost 6.4 million people in 34 states are getting government subsidies to help afford insurance on the federal exchange, Burwell’s department said.
People receiving government subsidies, however, are at risk of losing them in a case the Supreme Court is set to decide this month. That case, known as King vs. Burwell, centers on four words. The law says people qualify for tax credits to help pay insurance premiums when they buy a plan on an exchange “established by the state.” Challengers say that phrase limits the tax credits to the 16 states that have set up their own markets, rather than relying on the U.S.-run one. Democrats who wrote the law say it was never their intent to deny subsidies to people in the federally run exchanges.
TRACKING WASHINGTON -- The government relies too heavily on advice from the American Medical Association (Chicago) in deciding how much to pay doctors under Medicare, and the decisions may be biased because the doctors have potential conflicts of interest, federal investigators say in a new report. This reliance on the association, combined with flaws in data collected by the influential doctors’ group, “could result in inaccurate Medicare payment rates,” the investigators said. The report, by the Government Accountability Office, a nonpartisan arm of Congress, reveals new details of an obscure process that distributes more than $70 billion a year to doctors treating Medicare patients. Medicare uses a fee schedule and sets rates based on its estimate of the “relative value” of each service. For example, by the government’s reckoning, a hip replacement operation involves more than twice as much work as cataract surgery and about 20 times as much as a routine office visit with an established patient. In measuring work, the government takes account of a doctor’s time and the amount of mental and physical effort and technical skill required to perform a particular service, compared with other services. Dr. Barbara S. Levy, who has been chairwoman of the medical association’s update committee for the last six years, defended its work and said she did not see any conflicts of interest.
In other news, a Republican-run House committee voted to repeal a 2.3% tax on many medical devices that helps pay for President Barack Obama’s healthcare overhaul. The Ways and Means Committee’s mostly party-line 25-14 vote came with Republicans complaining that the levy costs jobs and stifles innovation. “It’s like putting sandbags on the wings of the Wright Brothers as they try to figure out how to fly an airplane,” said Rep. Patrick Meehan (R-PA). Democrats say those claims are exaggerations and complained that Republicans have offered no savings to cover the $24.4 billion in lost revenue the repeal would cost over the coming decade. The bill was “the obvious effort of Republicans to essentially piece by piece, if they can’t do it entirely, to repeal” Obama’s health law, said Rep. Sander Levin (D-MI). The GOP-led House has voted three times to repeal the medical device tax since it was enacted in 2010 and the Senate approved a repeal in 2013, though on a non-binding vote. Senate Finance Committee Chairman Orrin Hatch (R-UT) has introduced a repeal bill in his chamber that has garnered some Democratic support, but no vote has been scheduled. The tax, which took effect in 2013, does not apply to consumer items like eyeglasses and pregnancy test kits.
FDA/EMA ROUNDUP -- Advisers to the U.S. Food and Drug Administration on Thursday recommended approval of what would be the first drug to treat lack of sexual desire in women. The advisory committee voted 18 to 6 that the drug, flibanserin, be approved. All of those who voted yes said approval should come only if certain measures are taken to reduce the risks of side effects. Flibanserin, a pink pill that would be taken every day at bedtime, would be approved to treat lack of sexual desire in premenopausal women that cannot be attributed to disease or other known causes. Sprout Pharmaceuticals Inc. (Raleigh NC), which owns flibanserin, said that 7% of premenopausal women had this condition, known as hypoactive sexual desire disorder. Flibanserin has been rejected twice already by the FDA, which said the drug’s minimal benefits did not outweigh its risks. The first rejection in 2010 came after an advisory committee similar to the one that met Thursday voted unanimously that the drug should not be approved.
Elsewhere, an experimental drug made by Sanofi SA (Paris) and Regeneron Pharmaceuticals Inc. (Tarrytown NY) effectively lowers bad LDL cholesterol and is generally well tolerated, according to a preliminary review by the FDA. The review was published on the agency’s website on Friday ahead of a meeting this Tuesday of a panel of outside advisers who will discuss the drug and recommend whether it should be approved. The FDA is not obliged to follow the advice of its advisory panels but typically does so. The drug, Praluent, also known as alirocumab, is one of a new class of LDL-lowering drugs known as PCSK9 inhibitors. The committee on Wednesday will discuss another drug in the class, Amgen Inc.’s (Thousand Oaks CA) Repatha. If approved, the drugs are expected to generate annual sales of more than $2.5 billion each by 2020, according to Thomson Reuters data. Some analysts predict sales for the class rising to $20 billion by 2026.
Merck & Co. (Kenilworth NJ) is on track to further extend its dominance in the fast expanding market of immunotherapy drugs. Its Keytruda drug won a Priority Review status from the FDA to treat patients suffering from non-small cell lung cancer (NSCLC). Keytruda received its first FDA approval in September last year for the treatment of patients suffering from worsening melanoma--the deadliest form of skin cancer--after treatment with Bristol-Myers Squibb Co.’s (New York) Yervoy, the old standard skin-cancer treatment. The targeted action date, according to Merck, is expected to be October 2, 2015.
And Sanofi SA (Paris) and its subsidiary Genzyme said on Thursday that the U.S. Food and Drug Administration has granted “breakthrough therapy” designation to olipudase alfa. This enzyme replacement therapy is under investigation for the treatment of patients with non-neurological manifestations of acid sphingomyelinase deficiency (ASMD), also known as Niemann-Pick disease Type B, as opposed to type A, which is characterized by neurological involvement, the statement said. ASMD is a serious and life-threatening disorder caused by insufficient activity of the enzyme acid sphingomyelinase (ASM), which results in toxic accumulation of sphingomyelin. There are currently no approved treatment options for patients with Niemann-Pick Type B.
MEDICAL STOCK SPOTLIGHT -- Ignyta Inc. (Nasdaq) led advancing issues, more than doubling over the week to $18.49. The clinical-stage biopharmaceutical company with a focus on developing therapies that target specific gene pathways to treat cancer skyrocketed higher following the release of results from its phase I study involving entrectinib. Entrectinib is Ignyta’s most advanced clinical product and is an oral tyrosine kinase inhibitor that targets tumors that harbor specific mutations to the NTRK1/2/3 gene expression pathway. San Diego, CA-based Ignyta announced that in its two phase I studies (ALKA-372-001 and STARTRK-1) involving 11 patients, it witnessed 10 responses for a clinical response rate of a stunning 91%. Notable is that entrectinib was targeted at non-small cell lung cancer, colorectal cancer, and acinic cell cancer--three difficult to treat forms of cancer--and it still delivered a 91% objective response rate.
Elsewhere, ImmunoGen Inc. (Nasdaq) surged $5.72, or 64%, to $14.70. The company, which focuses on the development of anticancer therapeutics using its antibody-drug conjugate (ADC) technology, reported encouraging, early stage data on its unique, FRα-targeting ADC, mirvetuximab soravtansine. The Waltham, MA-based company is looking to move the candidate into a phase II study later this year as a single-agent treatment for patients with FRα-positive platinum-resistant ovarian cancer. The impressive findings were presented at the 2015 American Society of Clinical Oncology (ASCO) meeting.
And Ardelyx Inc. (Nasdaq) shot up $3.59, or 33%, to $14.54 after announcing that it has entered into a termination agreement with AstraZeneca Plc such that all the rights to Ardelyx’s portfolio of NHE3 inhibitors, including Ardelyx’s lead product candidate, tenapanor, are returned to Ardelyx. Fremont, CA-based Ardelyx has agreed to pay AstraZeneca $15 million upfront along with other future contingent payments. Concurrently, Ardelyx will pay an additional $10 million in R&D costs and for the acceleration of the transfer of the program back to Ardelyx. Ardelyx formed a partnership with AstraZeneca in October 2012 to develop and commercialize Ardelyx’s internally discovered portfolio of NHE3 inhibitors including tenapanor.
But Puma Biotechnology Inc. (NYSE) skidded $56.66, or 29%, to $138.79. The selloff of Los Angeles-based Puma is an overreaction, said RBC Capital Markets’ Michael Yee. Investors were reacting to the release of phase III clinical trial data for the company’s breast-cancer drug, he said. Yee, who was attending the American Society of Clinical Oncology conference, said that RBC Capital Markets was still defending the stock because it represents a long-term opportunity. “The data looked as we expected,” said Yee. “We believe it’s an overreaction and we think investors are probably going to come away from that feeling …after they present more data.” Yee added that: “We think the stock moves higher over time.” Large companies are competing in the immuno-oncology market, explained Yee. “There is a huge race to go after a $20 billion market,” said Yee. “You are going to see this volatility.”
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Natera Inc., which sells non-invasive prenatal DNA tests, registered up to $100 million worth of common stock. The San Carlos, CA-based company, which was founded in 2003 and booked $179 million in sales for the 12 months ended March 31, 2015, plans to list on the Nasdaq under the symbol “NTRA.” Natera initially filed confidentially on May 14, 2014. Morgan Stanley, Cowen & Company and Piper Jaffray are the joint bookrunners on the deal. No pricing terms were disclosed.**Teladoc Inc., which provides on-demand medical care through video/telephone consultations, registered up to $100 million worth of common in an IPO. The Purchase, NY-based company, which was founded in 2002 and booked $51 million in sales for the 12 months ended March 31, 2015, plans to list under the symbol “TDOC.” It has not selected an exchange. Teladoc initially filed confidentially on March 24, 2015. J.P. Morgan and Deutsche Bank are the joint bookrunners on the deal. No pricing terms were disclosed.
June 1, 2015 ...
OBAMA ADMINISTRATION ASKS JUDGE TO THROW OUT GOP HEALTHCARE SUIT -- U.S. House Republicans suing the Obama administration over the federal healthcare law should change it if they don’t like it, a Justice Department lawyer told a skeptical judge on Thursday in a bid to have the lawsuit thrown out. The House “has any number of tools” to settle its differences with the executive branch, without running to the courts, attorney Joel McElvain said. Republicans can negotiate with the administration and “they can pass a new statute,” he said. U.S. District Judge Rosemary Collyer didn’t seem impressed with the argument, asking why lawmakers should forego a day in court just because they had other options. “This is the type of claim that belongs in the political process,” McElvain said. The Republicans claim the administration’s reimbursements to insurance companies, which total about $175 billion over a decade, weren’t approved by Congress and that the president unlawfully delayed a requirement that most employers provide insurance to workers. The case is being heard as both sides wait for a decision from the Supreme Court in a separate lawsuit over premium subsidies. Opponents of the Affordable Care Act, or Obamacare, claim the subsidies are legal only in the 16 states that have created their own marketplaces to sell coverage. The Obama administration has interpreted the law to make subsidies available in all states.
In the Washington federal court Thursday, Jonathan Turley, a lawyer for the House, told the judge that the funding legislation was passed and deliberately omitted money for certain insurance payments under Obamacare. Allowing the administration to work around that lack of spending authority by using money from other sources would render Congress’s power of the purse “decorative,” Turley argued. Why not pass a law explicitly forbidding the spending, Collyer asked, picking up on McElvain’s argument that Congress has alternatives to suing. That would create a “one free bite rule” under which the executive branch could stray from Congress’s spending instructions until lawmakers reined it in with a second more explicit directive, Turley said. “What about impeachment? Is that an option?” asked Collyer, an appointee of President George W. Bush. Lawmakers shouldn’t have to use Draconian measures to assert constitutional prerogatives, Turley told the judge. Thursday’s hearing covered only whether the House has the legal authority to sue and didn’t examine the merits of the case. Collyer didn’t indicate when she would rule.
CVS AGREES TO BUY OMNICARE IN $12.7-BILLION DEAL -- CVS Health Corp. (Woonsocket RI) CEO Larry Merlo is betting billions that nursing-home pharmacy operator Omnicare Inc. (Cincinnati OH) can further his efforts to transform the drugstore chain into a dominant healthcare player. Under Merlo, who took the helm in 2011, CVS stopped the sale of cigarettes, saying it was contrary to the mission of improving customers’ health, and changed its name to CVS Health from CVS Caremark. He has aggressively expanded CVS’s in-store health clinics, with plans to add about 600 locations by 2017, and in 2013 purchased an operator of drug-infusion centers. The agreement to buy Omnicare, valued by CVS at $12.7 billion including debt, may be Merlo’s most significant move yet for profits. CVS said it will add adjusted earnings of 20 cents a share next year. The all-cash deal is the drug-retailing leader’s biggest since 2007 when it paid $21.7 billion for pharmacy benefit manager Caremark Rx Inc., an acquisition made under Merlo’s predecessor that began the company’s diversification. CVS is “moving away from being solely a pharmacy and PBM to becoming more of a vertical integrator of health care,” said Jonathan Palmer, an analyst with Bloomberg Intelligence. It’s a strategy tuned to an aging population with greater care needs, and broader consolidation in the industry, Palmer said.
Merlo, 59, has been lauded for banishing cigarettes, getting invited by First Lady Michelle Obama to her husband’s State of the Union address this year and being named one of Fortune Magazine’s business people of the year. “We see ourselves at the forefront of the changing healthcare landscape,” said Merlo at the UBS Global Health Care Conference. Omnicare delivers drugs and helps senior-living facilities manage residents’ medications. Under the deal, CVS will pay $98 per share in cash. CVS’s $12.7 billion valuation for Omnicare includes $2.3 billion in debt. CVS’s pharmacy services unit, whose revenues expanded by 18.2% in the first quarter, is driving the company’s growth. Retailing grew by only 2.9% in the period. Demand for pharmacy services has been on the rise as patients, insurers and employers look to manage their costs amid soaring drug prices. With more control over different aspects of the drug-supply chain, companies can get more leverage on price. CVS closed the week off 2% at $102.38. Omnicare slipped 1% to $95.29.
TRACKING WASHINGTON -- A U.S. House of Representatives committee unanimously approved a bill to speed new drugs to the market, overcoming last-minute wrangling over how to pay for the legislation. The bill, known as the 21st Century Cures Act, requires the Food and Drug Administration to incorporate patient experience into its decision-making, streamline its review of drugs for additional uses, and consider more flexible forms of clinical trials. The bill, developed by the House Energy and Commerce Committee was spearheaded by Republican Congressman Fred Upton and Democrat Diana DeGette. Upton’s goal is for the bill to be voted on by the full House in June. A parallel measure is being developed in the Senate. Patient advocacy groups cheered the bill. Ellen Sigal, chair of the Friends of Cancer Research, said it “creates a more cohesive, efficient, effective and patient-centered research and regulatory system.” Some critics fear aspects of the bill will weaken the FDA’s ability to restrict marketing of drugs for unapproved uses and potentially lower safety and efficacy standards by relying on less rigorous clinical data. The bill would increase funding to the National Institutes of Health by $10 billion over five years. It would also boost FDA funding by $550 million over the same period. An official cost of the legislation is expected to be released within the next few weeks.
In other news, Steris Corp.’s (Mentor OH) takeover of Synergy Health Plc (Swindon UK) is being challenged by U.S. antitrust officials, who say the merger would hurt competition in the market for hospital sterilization products. The Federal Trade Commission said in a statement Friday it would seek a federal court order blocking the 1.2 billion-pound ($1.83 billion) deal pending an administrative proceeding in the agency’s in-house court. The deal would violate antitrust laws by significantly reducing future competition for sterilization of products, such as implanted medical devices, using radiation, particularly gamma or x-ray radiation, the agency said. Steris said it would contest the lawsuit. “It is unfortunate that we have come to this point with a transaction as strategic and geographically complementary as ours,” Steris CEO Walt Rosebrough said in a statement. “We have worked diligently to address the FTC’s concerns and to avoid litigation, but we will now focus our efforts on prevailing in court.”
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration approved new irritable bowel syndrome drugs from Actavis Plc (Dublin IRL) and Valeant Pharmaceuticals International Inc. (Laval, Quebec), validating big investments both companies made to acquire the products. The agency approved eluxadoline, to be sold under the brand name Viberzi, which Actavis obtained with its $1.1 billion acquisition last year of Furiex Pharmaceuticals. The agency also approved Valeant’s Xifaxan, also known as rifaximin, which the company acquired with its $11 billion purchase earlier this year of Salix Pharmaceuticals Ltd. Both drugs are designed to treat diarrhea-predominant irritable bowel syndrome (IBS-D), a condition that affects about 28 million people in the U.S. and Europe and can cause abdominal pain, bloating and diarrhea. Analysts expect Viberzi to generate U.S. sales of about $450 million by 2020 according to Thomson Reuters data. They expect Xifaxan sales for IBS-D to top $1 billion.
Elsewhere, the FDA on Thursday approved the first drug to treat a rare, progressive lung disease that mainly affects women of childbearing age. The drug, Rapamune, known chemically as sirolimus, is made by Pfizer Inc. (New York) and is designed to treat lymphangioleiomyomatosis (LAM), a disease that causes lung damage and affects only two to five women per million worldwide. Symptoms of the disease are similar to those of other lung conditions such as asthma, emphysema and bronchitis, according to the LAM Foundation (Cincinnati OH). The drug was originally approved in 1999 to help prevent organ rejection in patients receiving kidney transplants. It was reviewed under the FDA’s “breakthrough therapy” program, which helps speed products for unmet needs through the development and regulatory process. In patients with LAM, abnormal growth of smooth muscle cells invade lung tissues, making it hard to breathe and limiting the supply of oxygen to the body. A clinical trial of 89 patients over 12 months showed patients taking Rapamune had a slower decline in lung function than those taking a placebo. After the drug was stopped, the decline in lung function resumed at the same rate as the placebo group, the FDA said.
The FDA has asked manufacturers of dermal fillers to update their labeling to reflect the possible risk of serious injuries caused by unintentional injection of the fillers into the blood vessels in the face. The agency said on Thursday it had reviewed information suggesting that the fillers could block blood vessels and restrict blood supply to tissues, potentially leading to vision impairment, blindness, stroke and damage and/or death of the skin and underlying facial structures. The FDA said it wanted the updated labeling to include additional warnings, precautions and information about the risks associated with the filler’s usage. Dermal fillers are facial implants injected directly into the treatment area to reduce the appearance of wrinkles and create smoother or fuller appearance of the face. Makers of dermal fillers include Valeant Pharmaceuticals International Inc. (Laval, Quebec) and Allergan Inc. (Irvine CA), which was bought by Actavis Plc (Dublin IRL) in March.
And long lists of frightening prescription drug side effects at the end of television advertisements are a waste of time for patients, one of the U.S.’s top drug regulators recently said. “When they give the adverse events, or adverse reactions, it’s this litany of complaints”--death, or “‘Don’t use if you have MAE1,’” said Richard Pazdur, director of the office of hematology and oncology products at the Food and Drug Administration. “What patient knows what MAE1 is?” Pazdur said. “It’s just a waste of time.” Pazdur’s remarks come after the FDA last year began studying whether long lists of side effects in TV ads may cause viewers to overlook the most dangerous aspects of the medicine. An agency document about the study said it might be best to list only the most serious side effects and cover any lesser risks with a statement saying there are other potential harms. The pharma ads are required to include disclosures about potential side effects and other technical information. The FDA declined to say when the study will be complete.
MEDICAL STOCK SPOTLIGHT -- Transgenomic Inc. (Nasdaq) led advancing issues, soaring $1.08, or 70% over the week, to $2.63. The Omaha, NE-based company announced the launch of its new Multiplexed ICE COLD-PCR (MX-ICP) CLIA service for mutation detection in cancer patients to enable more informed diagnoses, better treatment decisions and ongoing patient monitoring. The service leverages the ultra-high sensitivity of Transgenomic’s proprietary MX-ICP technology to deliver highly accurate results from almost any type of patient sample, according to Transgenomic. The first tests are for the detection of EGFR exon 20 T790M mutations that affect the utility of tyrosine kinase inhibitor (TKI) drugs used for non-small cell lung cancer and EGFR exon 12 S492R mutations that render colorectal cancer patients resistant to the widely-used drug cetuximab. Transgenomic intends to add additional single mutation and mutation panel detection tests to its suite of testing services in the coming months.
Elsewhere, Heron Therapeutics Inc. (Nasdaq) rocketed $7.29, or 58%, to $19.76. The upward move came after the company announced that its lead product candidate, Sustol, met the primary endpoint of delaying chemotherapy-induced nausea and vomiting following administration of highly emetogenic chemotherapy (HEC) agents in a late-stage study dubbed “MAGIC.” Per the press release, the company said Sustol was also generally well-tolerated in the study. Heron has already tried to gain approval for Sustol with the Food and Drug Administration twice before. While analysts have noted that the FDA’s reluctance to approve the drug previously stemmed primarily from manufacturing issues that have since been resolved, it’s important to keep in mind that Sustol has been in clinical development at this point for over a decade. In short, there is no guarantee that this latest clinical success will translate into a regulatory approval, especially in light of Sustol’s lengthy developmental history. Redwood City, CA-based Heron plans on resubmitting Sustol’s New Drug Application to the FDA by mid-year.
And Vascular Biogenics Ltd. (Nasdaq) leaped $2.80, or 53%, to $8.05 after Zachs upgraded its rating on shares from a “Hold” rating to a “Buy” rating in a research note issued on Thursday. The firm currently has a $5.75 target price on the stock. Zacks wrote, “Vascular Biogenics Ltd. is a clinical stage biotechnology company focused on the discovery, development and commercialization of treatments for cancer and immune-inflammatory diseases. Its lead oncology candidate VB-111, is a gene-based biologic which is in phase II clinical trials for the treatment of recurrent glioblastoma, an aggressive form of brain cancer. It is also developing VB-201, an oral small molecule that is in phase II clinical trials for the treatment of psoriasis and ulcerative colitis.” Vascular Biogenics is based in Or Yehuda, Israel.
But drug developer GlobeImmune Inc. (Nasdaq) plunged $3.39, or 46%, to $3.99 after saying its experimental hepatitis B drug did not reduce infection in patients after 24 weeks of treatment in a mid-stage study. GlobeImmune, which is developing the drug with Gilead Sciences Inc., is among several drugmakers looking to tap the demand for hepatitis B treatments as hepatitis C drugs flood the market. Hepatitis B is being seen as the next big opportunity in the liver disease market as it is the most common liver infection, affecting about 400 million people worldwide. However, hepatitis B infection is much more difficult to treat than hepatitis C. Louisville, CO-based GlobeImmune is developing three other drugs for infectious diseases and five for different types of cancers.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Seres Therapeutics Inc., which is developing therapies that replace beneficial bacteria to treat infections, registered up to $100 million worth of common stock. Formerly known as Seres Health, the biotech is first targeting Clostridium difficile infection (CDI). The Cambridge, MA-based company, which was founded in 2010, plans to list on the Nasdaq under the symbol “MCRB.” Seres Therapeutics initially filed confidentially on Dec. 11, 2014. Goldman Sachs and BofA Merrill Lynch are the joint bookrunners on the deal. No pricing terms were disclosed.**ConforMIS Inc., which sells customized joint replacement implants, registered up to $173 million in an initial public offering. The Bedford, MA-based company, which was founded in 2004 and booked $52 million in sales for the 12 months ended March 31, 2015, plans to list on the Nasdaq under the symbol “CFMS.” ConforMIS initially filed confidentially on March 20, 20115. J.P. Morgan and Deutsche Bank are the joint bookrunners on the deal. No pricing terms were disclosed.
May 18, 2015 ...
CLEVELAND CLINIC PARTNERS WITH VENTER'S HUMAN LONGEVITY FOR SEQUENCING STUDIES -- Human Longevity Inc. (San Diego CA) signed a broad collaboration agreement with Cleveland Clinic, tapping into its GeneBank with the aim of discovering new disease-causing genes and disease pathways associated with heart disease. Founded in 2013 by genome pioneer J. Craig Venter, HLI and Cleveland Clinic say they’re applying whole genome, cancer and microbiome sequencing to better understand the biological basis for heart disease, so as to allow for earlier intervention and improved therapy. “This very broad agreement with Cleveland Clinic could cover an unlimited number of things, but we’re starting with a well-characterized cardiovascular cohort,” Venter said. “Their data are exactly the kind of thing we’re looking for.” So while this collaboration begins with heart disease, it could extend to cancer or even a wide range of rare disease, Venter said. The Cleveland Clinic’s GeneBank contains tens of thousands of samples, collected over the course of 20 years. And while this Human Longevity pilot will only involve the data from 1,000 patients, there’s a great deal of potential moving forward to collect and sequence thousands more samples, said Charis Eng, chair of the Cleveland Clinic’s Genomic Medicine Institute.
The collaboration ties into Human Longevity’s operating model, which involves sequencing and analyzing thousands of whole genomes each month so as to better understand the molecular basis of aging and disease progression. It already has a number of similar partnerships underway, with organizations like Genentech Inc. (S. San Francisco), Celgene Inc. (Summit NJ) and King’s College London. “Cleveland Clinic has these precious samples of DNA, and Human Longevity has the firepower with lots of the newest, most cutting-edge sequencers,” Eng said. Most notably, Human Longevity is utilizing Illumina Inc.’s (San Diego) HiSeq X10--the sequencer that can turn out multiple samples at once, in about one day, at a price of $1,000 each. The origin of this collaboration goes back a long time, Venter said. He and Dr. Toby Cosgrove, president and CEO of Cleveland Clinic, have known each other for decades, having served together in Vietnam.
ASTRAZENECA MOVES DEEPER INTO PRECISION MEDICINE WITH ABBOTT -- Pharmaceutical and biotech heavyweight AstraZeneca Plc (London) is teaming up with Abbott Laboratories Inc. (Abbott Park IL) to develop companion diagnostic tests for the company’s investigational asthma therapy, a potentially fruitful alliance as Abbott rides the wave of promising diagnostic sales. Under the terms of the deal, Abbott will develop and market blood tests with AstraZeneca’s MedImmune unit that measure serum levels of periostin and DPP4 (dipeptidyl peptidase-4), proteins that could act as biomarkers of severe asthma. The company will develop the diagnostics in tandem with MedImmune’s phase III trial of tralokinumab, an experimental therapy for adults and teens with an uncontrollable form of the disease, Abbott said. No companion diagnostic blood tests have been approved yet for use in asthma, but the partnership could yield lucrative results as the companies chase an untapped niche. “This partnership with Abbott to develop companion diagnostics for tralokinumab is an important step in delivering on our ambition to bring innovative options for patients who continue to suffer with severe asthma,” Bing Yao, head of MedImmune’s respiratory unit, said in a statement. “We anticipate that physicians will ultimately use these tests to better identify patients likely to benefit most from tralokinumab to bring their condition under control.
The deal comes on the heels of more good news for Abbott, as it chalks up promising numbers for its diagnostics unit and signs deals to expand its industry reach. The company’s diagnostics sales shot up more than 3% to $4.7 billion in 2014, bolstering Abbott’s revenues even as it faced declines in medical device sales. And the company is continuing on an upward climb this year, scoring in January a bladder cancer biomarker deal with the Institut Curie (Paris) and getting an FDA approval for its early pregnancy blood test last month. This is not Abbott’s first foray into companion diagnostics. The company last May joined forces with Idera Pharmaceuticals Inc. (Cambridge MA) to develop a companion diagnostic test for a lymphoma/autoimmune drug in clinical testing. Abbott closed the week up 2% at $48.71. AstraZeneca slipped 1% to $69.29.
TRACKING WASHINGTON -- From contraception to colonoscopies, the Obama administration last week closed a series of insurance loopholes on coverage of preventive care. The department of Health and Human Services said insurers must cover at least one birth control option under each of 18 methods approved by the FDA--without copays. Also, insurers can’t charge patients for anesthesia services in connection with colonoscopies to screen for cancer risk. President Obama’s healthcare law requires most insurance plans to cover preventive care at no additional charge to patients. That includes employer plans serving about 3 in 4 workers. The types of services covered generally dovetail with the recommendations of a government advisory panel. Also on the list are birth control pills and other contraceptives. But independent experts and women’s groups had recently found coverage gaps for some birth control methods. Insurers said they were trying to comply with the law, but that federal rules did not provide enough detail. “This has been a problem for women,” said Cindy Pearson, executive director of the National Women’s Health Network. “It seems like some insurers were trying to control costs under cover of medical management.” Her organization advocates on reproductive health and other issues.
In other news, the federal government opened the door to a new era of genetic medicine on Thursday by introducing a standard way to ensure the accuracy of DNA tests used to tailor treatments for individual patients. Scientists have identified hundreds of genetic mutations that appear to increase the risk of diseases, including cancer, Alzheimer’s and cystic fibrosis. But laboratories often report different results when they analyze genes obtained from samples of the same blood or tissue, because of variations in their testing equipment and methods. The National Institute of Standards and Technology said Thursday that it had developed “reference materials” that could be used by laboratories to determine whether their machines and software were properly analyzing a person’s genetic blueprint, or genome. The institute disseminates such reference materials for thousands of products including steel, concrete and peanut butter. Laboratories can use the new DNA standard to make sure their genetic testing is accurate. If labs get the right answers for the reference material--by finding the same mutations in the same places, for example--they can be confident that their testing of patient samples is similarly accurate.
FDA/EMA ROUNDUP -- Germany’s Bayer AG (Leverkusen) announced that its antibiotic drug Avelox has won the U.S. Food and Drug Administration’s approval for the treatment as well as prevention of plague--a rare but potentially fatal bacterial infection. Bayer’s Avelox, also known by its chemical name moxifloxacin, obtained its very first approval from the FDA for use in the U.S. in December 1999, and is currently used for the treatment of patients suffering from various indications including “acute bacterial sinusitis, acute bacterial exacerbation of chronic bronchitis, community acquired pneumonia, complicated and uncomplicated skin and skin structure infections, and complicated intra-abdominal infections.” The latest approval of the drug’s use is for the treatment of two forms of plague: pneumonic plague, which is marked by infection of the lungs, and septicemic plague, which involves infection of the blood.
Elsewhere, a federal advisory committee recommended approval of a drug from Vertex Pharmaceuticals Inc. (Boston MA) that might eventually help nearly half of patients with cystic fibrosis. The advisory committee to the FDA voted 12 to 1 that the drug, which Vertex plans to call Orkambi, was safe and effective enough to be approved. The agency usually follows the advice of its expert panels. The drug would be the second cystic fibrosis drug for Vertex and the second in the world that works directly to counteract the genetic defect that causes the disease, rather than just treat the symptoms. Vertex hopes the drug will propel the company to consistent profitability after 26 years in business. Vertex already sells Kalydeco, the first drug that works on the underlying genetic defect of cystic fibrosis, but it is applicable only to about 2,000 of the 30,000 cystic fibrosis patients in the United States. Kalydeco costs more than $300,000 a year.
Nevro Corp. (Menlo Park CA), a device maker that went public last year, surged the most in two months after the Food and Drug Administration approved its spine stimulator to treat chronic back pain. The FDA approval came two months earlier than expected, according to Sterne Agee CRT, opening up a $1.2 billion U.S. market for the company. The firm rates Nevro a Buy. “The FDA has approved several other totally implanted spinal cord stimulators for pain reduction, but this system is unique,” William Maisel, acting director of the Office of Device Evaluation at the FDA’s Center for Devices and Radiological Health, said in a release. Nevro’s pain reliever, Senza, is different because it offers spinal cord stimulation without a tingling sensation. The stock closed the week up 18% at $53.41. JMP Securities raised its price target on the shares to $65 from $55 citing Senza’s potential to capture a “meaningful share” of the U.S. market with its FDA-approved superiority claim.
And the FDA on Friday warned that a widely used newer class of type 2 diabetes drugs sold by AstraZeneca Plc (London), Johnson & Johnson (New Brunswick NJ) and Eli Lilly & Co. (Indianapolis IN) in partnership with Boehringer Ingelheim GmbH (Ingelheim DEU) may cause dangerously high levels of blood acids that could require hospitalization. The drugs belong to a class known as SGLT2 inhibitors that work by causing blood sugar to be secreted in the urine. They include AstraZeneca’s Farxiga (dapagliflozin), J&J’s Invokana (canagliflozin) and Jardiance (embagliflozin) from Lilly and Boehringer. The FDA, in a warning on its website, said the medicines may lead to ketoacidosis, a serious condition where the body produces high levels of blood acids called ketones. The FDA said its Adverse Event Reporting System database identified 20 cases of acidosis reported as diabetic ketoacidosis, ketoacidosis, or ketosis in patients treated with SGLT2 inhibitors from March 2013 to June 6, 2014.
MEDICAL STOCK SPOTLIGHT -- Israel-based Vascular Biogenics Ltd. (Nasdaq) led advancing issues, soaring $2.03, or 54% on the week, to $5.76 after the prime investigator, Richard Penson, will present interim data for the company’s ongoing treatment of platinum resistant Mullerian cancer. Mr. Penson will provide the data on the ongoing clinical trial in a presentation on May 30 at the annual meeting of American Society for Clinical Oncology (ASCO). The data are expected to be highly positive. VB-111, as the first anti-angiogenic agent for the treatment of tumor vascular growth for cancer therapy, has strong potential to treat a range of solid tumor indications by carefully targeting the blood vessels that are required for tumor growth.
Elsewhere, micro cap Oncothyreon Inc. (Nasdaq) surged 39% to $2.43 in another example of investors stampeding to establish positions in companies that have submitted abstracts for presentation at the upcoming American Society of Clinical Oncology (ASCO) meeting in Chicago, May 29-June 2. Buyers are responding to news of positive study results, even from early stage trials. In Seattle WA-based Oncothyreon’s case, the enthusiasm is in response to Abstract #602, which summarizes a phase IIb study of ONT-380, a small molecule inhibitor of HER2, a growth factor receptor that is over-expressed in cancers such as breast and ovarian.
And Revance Therapeutics Inc. (Nasdaq) leaped %6.03, or 30%, to $26.39 on no company specific news. Revance Therapeutics has a P/B (price-to-book) ratio of 3.58. The stock has traded between $34.20 and $14.02 over the last 52-weeks, its 50-day SMA (simple moving average) is now $20.35, and its 200-day SMA $19.31. Newark, CA-based Revance Therapeutics is a clinical stage specialty biopharmaceutical company, engaged in the development, manufacturing and commercialization of novel botulinum toxin products for multiple aesthetic and therapeutic applications.
But Health Insurance Innovations Inc. (Nasdaq) plummeted $2.12, or 27%, to $5.84 after reporting first-quarter net income of $53,000. On a per-share basis, the Tampa, Fl-based company said it had net income of 1 cent. The company posted revenue of $22.5 million in the period. Health Insurance Innovations operates as a developer and administrator of web-based individual health insurance plans and ancillary products. Its product portfolio consists of short-term medical plans, accident, sickness and hospital medical plans, ancillary insurance, life insurance, lifestyle and discount services. Zachs lowered shares of the company from a “Hold” to a “Sell.”
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Biotie Therapies Corp., a biotech developing an adjunct therapy to levodopa for Parkinson’s disease, registered up to $60 million worth of common stock. The Turku, Finland-based company, which was founded in 1998, plans to list on the Nasdaq under the symbol “BITI.” Biotie Therapies initially filed confidentially on March 17, 2015. RBC Capital Markets and Stifel are the joint bookrunners on the deal. No pricing terms were disclosed.**Nivalis Therapeutics Inc., which is developing a complementary small molecule therapy for cystic fibrosis, registered up to $60 million in an initial public offering. The Boulder, CO-based company was founded in 2007 and plans to list on the Nasdaq under the symbol “NVLS.” It initially filed confidentially on Feb. 13, 2015. Cowen & Company and Stifel are the joint bookrunners on the deal. No pricing terms were disclosed.
May 11, 2015 ...
U.S. SENATE REPUBLICANS PASS BUDGET PLAN THAT SEEKS OBAMACARE REPEAL -- The U.S. Congress adopted a budget last week that will allow Republicans to bypass Democrats and send a repeal or revision of President Barack Obama’s landmark 2010 healthcare law to his desk. The Senate vote Tuesday was 51-48 on the plan negotiated by majority Republicans in both chambers. The House adopted the measure 226-197 on April 30. The president has said repeatedly he would veto any proposal to gut or repeal Obamacare. Yet with the U.S. Supreme Court expected to rule next month on a challenge to the Affordable Care Act, Republicans could try to force him to compromise if the court strikes down most of the insurance subsidies that underpin the law. The budget “gives us the tools to leave Obamacare’s broken promises and higher costs where they belong--in the past,” said Senate Majority Leader Mitch McConnell, a Kentucky Republican. “It’s a budget that aims to make the government more efficient, more effective and more accountable to the middle class.” Minority Leader Harry Reid, a Nevada Democrat, said the budget is “balanced in name only” and cuts items such as financial aid to attend college. “The Republican budget is unfair, it’s unbalanced, unwise and some said it’s immoral,” Reid said.
White House press secretary Josh Earnest said in a statement that the budget would hurt middle-class families and relies on a temporary “gimmick” for defense funding. “Congressional Republicans propose drastic cuts to programs that support the middle class and provide ladders of opportunity for those seeking to reach the middle class,” Earnest said. The budget measure is a non-binding framework for spending bills to be passed later. It doesn’t go to the president for his signature. Reid said last week that his party would block spending bills based on the budget. The budget resolution, S.Con.Res. 11, spells out the Republican Party’s priorities by calling for $5.3 trillion in spending cuts to reach balance in nine years. Most of the reductions, $4.1 trillion, would come from programs including entitlements like Medicare. The plan would use a reserve fund to evade a limit on defense spending while keeping in place caps on domestic programs.
ALEXION TO BOLSTER RARE-DISEASE OFFERING WITH $8.4 BILLION DEAL -- A biotech company is paying $8.4 billion--or more than double the market value--to buy a smaller maker of medicines for rare diseases, the latest sign of how heated the market for promising new drugs has become. Alexion Pharmaceuticals Inc. (Cheshire CT), which has one drug and a market cap of $31 billion, is offering to pay a 124% premium over Synageva BioPharma Corp.’s (Lexington MA) average share price during the week leading to announcement of the deal--one of the biggest premiums paid for any company since 1995, according to U.K.-based Dealogic Plc. Synageva doesn’t have a product on the market, but it is in late-stage development of a treatment for a genetic disease that afflicts about 3,000 people. It continues a deal-making surge among pharmaceutical companies, which have been particularly keen on makers of drugs for rare diseases. The treatments are attractive because regulators often give their marketers financial incentives, such as multiyear periods of market exclusivity. Companies can make up for small patient populations by charging high prices for the treatments--often hundreds of thousands of dollars a year--without the need to deploy the large sales forces used for primary-care drugs. And it is difficult for insurers to argue against the high prices because many of the treatments are the only option available for serious illnesses.
Global sales of drugs for rare diseases, also known as “orphan” drugs, are expected to rise 10.5% annually to about $176 billion in 2020, according to research firm EvaluatePharma (Boston MA). Along with Alexion, other leading sellers of rare-disease drugs include Sanofi SA’s (Paris) Genzyme unit, Shire Plc (Dublin IRL) and BioMarin Pharmaceutical Inc. (San Rafael CA). Some analysts, however, questioned the price Alexion is paying for Synageva, concerned there won’t be enough patients for Synageva’s lead drug candidate to justify the price. Shares in Alexion closed the week down 5% at $163.02, a contrast to the boost that several pharmaceutical acquirers have received when they announced deals in the past year. Synageva estimates there are at least 3,000 patients with the condition that its lead drug targets in major markets globally. Its shares more than doubled over the week to $213.90.
TRACKING WASHINGTON -- A key pilot program in the federal health law saved Medicare nearly $400 million over two years and is the first alternative-payment model certified to cut costs while improving health-care quality, the Centers for Medicare and Medicaid Services said. That finding by independent actuaries makes the Pioneer Accountable Care Organization model eligible to be expanded to larger group of Medicare beneficiaries, CMS officials said. “This is a crucial milestone in our efforts to build a healthcare system that delivers better care, spends our healthcare dollars more wisely, and results in healthier people,” Health and Human Services Secretary Sylvia M. Burwell said in a statement. Earlier this year, she announced a goal of moving 50% of Medicare payments to such value-based models by 2018. The Pioneer ACOs have met with mixed success by other measures. Thirteen of the original 32 participating hospital systems have dropped out or switched to other models after failing to meet performance targets. In an ACO, hospitals or groups of doctors who keep costs down for a group of Medicare patients, while meeting quality measures, stand to split the savings with Medicare. Nationwide, more than 3.5 million Medicare beneficiaries are part of ACOs run by some 400 health systems.
In other news, nearly 17 million Americans gained health insurance in the first 18 months of Obamacare, according to new estimates from RAND Corp. (Santa Monica CA) that show far more people got insurance coverage than lost it since the most important provisions of the Affordable Care Act took effect. The research group’s number is consistent with earlier estimates and adds to the evidence that the law helped dramatically cut the number of Americans without health insurance. The RAND report comes a day after Republican senators adopted a budget plan that paves the way for an attempt to repeal Obamacare and as the Supreme Court considers whether to strike down a crucial piece of the law. According to the study, people got insurance not just from the new Obamacare marketplaces but from expanded state Medicaid programs and employer coverage as well. Employer health plans added about 8 million people to their rolls in a period when they added about 4.4 million jobs, according to seasonally adjusted data from the Bureau of Labor Statistics. The RAND study, published in the journal Health Affairs, measures changes in insurance coverage for adults under 65 between September 2013, right before healthcare.gov opened, and February 2015, when the window to enroll in Obamacare for this year closed.
FDA/EMA ROUNDUP -- Swiss drugmaker Roche Holding AG (Basel) said on Thursday the U.S. Food and Drug Administration has granted “breakthrough therapy” designation for venetoclax for the treatment of people who have relapsed or refractory chronic lymphocytic leukemia with a genetic abnormality. Breakthrough therapy designation is given when early data shows a product may confer substantial improvement over existing therapies.
Elsewhere, Vertex Pharmaceuticals Inc.’s (South Boston MA) combination of an experimental compound and an approved drug significantly improved lung function in cystic fibrosis patients with the most common genetic mutation underlying the disease, FDA staff said. The reviewers, however, were not sure whether Vertex’s already approved therapy, Kalydeco, had a positive effect alone. They also questioned if the experimental compound, lumacafotor, added any benefit. The FDA is trying to ask the panel if the evidence is enough to show that the combination’s benefit is significantly better than that of a single component, RBC Capital analyst Michael Yee said. “We think this is unlikely to block approval.” The FDA staff were satisfied with the safety profile of the combination, to be called Orkambi, according to documents released on Friday. Orkambi is being evaluated for CF patients with a type of the F508del mutation, which accounts for half of all CF patients.
AcelRx Pharmaceuticals Inc. (Redwood City CA) said a division of the FDA had rejected the company’s request for a meeting to discuss the need for an additional trial of its pain drug device, Zalviso. The company’s shares closed the week down 20% at $3.24 after the FDA also restated its view that the additional study was needed. The agency, in March, asked AcelRx to conduct the study to evaluate risks associated with the device, specifically issues relating to inadvertent dispensing. The additional trial is likely to push Zalviso’s approval to the end of 2016, against the previous estimate of early 2016, according to analysts.
Outside the U.S., Swiss drugmaker Novartis AG (Basel) said European health regulators have approved a drug for advanced lung cancer that is intended to treat patients with a specific genetic mutation. Zykadia, or ceritinib, is from a new class of medicines known as ALK inhibitors. It was approved in April 2014 in the U.S. It is designed for use in non-small cell lung cancer patients who have previously been treated with Pfizer Inc.’s Xalkori, another ALK inhibitor. Between 2% and 7% of non-small cell lung cancer patients have the specific mutation of the ALK (anaplastic lymphoma kinase) protein for which such treatment is targeted. They are often non smokers.
MEDICAL STOCK SPOTLIGHT -- PlasmaTech Biopharmaceuticals Inc. (Nasdaq) led advancing issues, soaring $4.51, or 59% over the week, to $7.34. The Dallas, TX-based company announced it has signed a deal to acquire Cleveland, OH-based Abeona Therapeutics Inc. The company, backed by billionaire George Soros, announced the plans on Wednesday, which when completed will give Abeona shareholders almost 4 million common shares and up to an additional $9 million in performance milestones. The news came two days after Soros filed with the Securities and Exchange Commission saying he owned 5.17% of the company. PlasmaTech, founded in 1988, is a biopharmaceutical company focused on treatments and supportive care for cancer patients. Abeona, founded in 2013, is seeking a cure for Sanfilippo syndrome, a metabolism disorder that can cause neurological issues.
Elsewhere, Fate Therapeutics Inc. (Nasdaq) rocketed $2.43, or 51%, to $7.22. The upside was largely driven by the company’s collaboration with Juno Therapeutics Inc. to identify and utilize small molecules and modulate Juno’s genetically-engineered T cell product candidates in order to improve their therapeutic potential for cancer patients. Zacks upgraded shares of San Diego-based Fate Therapeutics from a “Hold” rating to a “Strong-Buy” rating in a research note. The firm currently has a $6.25 price target on the stock. Earlier in the week, BMO Capital Markets set a $15.00 target price on Fate. The firm currently has a “Buy” rating on the stock.
And Calithera Biosciences Inc. (Nasdaq) leaped $4.05, or 41%, to $13.87 after reporting first-quarter financial results. The South San Francisco-based biotech reported a net loss from operations of $7.9 million, up from a loss of $4.15 million in the same period last year. Research and development expenses were $5.6 million for the three months ended March 31, 2015, compared with $3.3 million for the same period in the prior year. The increase of $2.3 million was primarily attributed to higher expenses associated with the continued advancement of CB-839, currently being evaluated in three phase I clinical trials in solid and hematological cancers.
But TetraLogic Pharmaceuticals Corp. (Nasdaq) plunged $1.38, or 35%, to $2.52. A serious safety snag forced the Malvern, PA-based company to halt enrollment in a phase I hepatitis B trial for its lead drug and thus pull the plug on a planned public offering. The biotech hit the brakes on an ascending-dose phase Ib/IIa hepatitis B trial for birinapant after observing cranial nerve palsies in the first dosing cohort. In a terse statement, TetraLogic divulged little else about the issue beyond saying that the pause is temporary. The news blew up the biotech’s plans to raise $25 million in a public offering.
IPO SECTOR -- EndoChoice Holdings Inc., which sells gastrointestinal endoscopy systems with wide field-of-view cameras, registered up to $115 million in an initial public offering. The Alpharetta, GA-based company, which was founded in 2008 and booked $64 million in sales for the 12 months ended March 31, 2015, plans to list under the symbol “GI.” It has not selected an exchange. EndoChoice initially filed confidentially on Jan. 9. J.P. Morgan, BofA Merrill Lynch, William Blair and Stifel are the joint bookrunners on the deal. No pricing terms were disclosed.**Evolent Health LLC, which offers healthcare providers a software platform that manages a value-based care model, registered up to $100 million in an initial public offering. The Arlington, VA-based company, which was founded in 2011 and booked $101 million in sales for the fiscal year ended December 31, 2014, plans to list on the NYSE under the symbol “EVH.” Evolent Health initially filed confidentially on Dec. 24. J.P. Morgan and Goldman Sachs are the joint bookrunners on the deal. No pricing terms were disclosed.
May 4, 2015 ...
PFIZER CUTS FULL-YEAR FORECAST ON STRONGER DOLLAR -- Cost-cutting and sales of new drugs helped Pfizer Inc. (New York) overcome a strong dollar and patent expirations to beat Wall Street projections for the first quarter, though it cut its outlook for the year, citing the unfavorable currency exchange rates. The world’s second-biggest drugmaker said its 2015 profit forecast includes a negative impact of $3.3 billion from currency exchange, and another $3.5 billion from generic competition. Most major drugmakers have overcome multibillion-dollar revenue hits from the unprecedented wave of patent expirations that began in 2011, but Pfizer isn’t free from peril quite yet. One of its top sellers, pain and arthritis treatment Celebrex, just got much cheaper generic competition in the U.S. Still, the drugmaker reported a 2% jump in net income to just under $2.38 billion, or 38 cents per share. Excluding one-time costs and gains, adjusted profit was $3.2 billion, or 51 cents per share, a penny better than analysts expected. Revenue fell 4% to $10.86 billion, as the strong dollar cut the value of sales paid for in local currencies by 7%, or 4 cents per share. That also edged out Wall Street expectations. Pfizer shares, which are near a 10-year high, closed the week off 3% at $34.08.
Sales of some recently launched drugs helped lessen the revenue pinch. Those include toward arthritis drug Xeljanz, liver cancer drug Xalkori and Ibrance, for women with a common subtype of breast cancer. Stroke and heart attack prevention drug Eliquis, whose profits Pfizer splits with partner Bristol-Myers Squibb Co., had sales more than triple to $355 million over the year-ago quarter. Pfizer’s top seller, pneumococcal vaccine Prevnar for preventing pneumonia and ear and other infections, jumped 41% to $1.31 billion after recent approval of Prevnar 13, which prevents infection by more strains of the bacteria. Recent coverage of the vaccine by Medicare and expert recommendations that people 65 and older get the shot boosted U.S. sales by 80% in the quarter. However, Celebrex sales plunged 67% to $205 million, and sales of antibiotic Zyvox fell 15% to $271 million. The company also terminated its co-promotion of the bronchodilator Spiriva in most countries. “We are in one of the most productive times for our pipeline,” with medicines for 30 conditions in late-stage testing, the last stage before seeking approval, CEO Ian Read said.
MYLAN RAISES OFFER FOR PERRIGO; IS REJECTED AGAIN -- Generic drugmaker Mylan NV (Canonsburg PA) raised its offer for over-the-counter medicines maker Perrigo Co Plc (Dublin), but the Irish company again rejected Mylan’s overture. Mylan said Wednesday it will pay $232.23 for each share of Perrigo in a mix of cash and stock, valuing Perrigo at about $34.1 billion. Perrigo said the offer isn’t in its best interest and that it isn’t worth as much as Mylan says. Perrigo, with U.S. headquarters in Allegan, MI, rejected an offer from Mylan the prior week. Mylan itself is trying to fend off an acquisition from larger competitor Teva Pharmaceutical Industries Ltd. (Petach Tikva ISR). Mylan wants to combine its prescription generic drug business with Perrigo’s business in over-the-counter products like vitamins, nutritional products and infant formula. Teva, already the largest generic drug seller in the world, wants to get even bigger and consolidate its manufacturing and sales by teaming up with Mylan. Earlier in April, Mylan, which is legally based in Amsterdam, Netherlands, offered to buy Perrigo for $205 per share, or $30.1 billion. Perrigo said that was too low. Mylan is now offering Perrigo shareholders $75 per share in cash instead of $60, as well as slightly more stock.
Teva wants to buy Mylan for $82 per share in cash and stock, or $40.1 billion. Mylan said that offer undervalued the company and said it wouldn’t start negotiations unless Teva offered at least $100 per share. It also criticized Teva’s leadership and corporate culture. Teva wants Mylan to drop its attempt to buy Perrigo. In the last few months Teva’s leadership has said it believes some of the biggest generic drug companies should combine in order to save money and become more efficient. Teva says it could eliminate $2 billion in annual costs after a tie-up with Mylan. An expanded Teva would also have more bargaining power and might be able to boost the price of some of its drugs. Generic drugs are less expensive than name-brand drugs, but the prices of some generics are increasing because of a lack of competition or shortages brought on by manufacturing problems. Since Mylan wants to buy Perrigo instead of accepting a sale to Teva, Perrigo argues that the gains in Mylan’s share price shouldn’t be counted as part of the offer. It says last week’s offer is worth about $202 per share. Perrigo shares closed the week down 3% at $192.89 in New York, while Mylan fell 3% to $73.89.
TRACKING WASHINGTON -- Nearly 40% of healthcare providers treating Medicare patients will have their payments cut 1.5% this year because they didn’t submit data on patients’ health to the government, the Centers for Medicare and Medicaid Services said. More than 460,000 providers failed to comply with the Physician Quality Reporting System in 2013, out of about 1.25 million eligible providers, according to the CMS report released last week. Some 70% of those that didn’t participate treat fewer than 100 Medicare patients a year, the agency said. Meanwhile, nearly 642,000 providers did comply in 2013 and will earn a 0.5% boost in payments this year. Launched in 2007, the federal quality-reporting program is one of several meant to measure and spur improvements in quality. Providers—including doctors, nurse practitioners, physical therapists and others who bill Medicare, initially earned bonuses for complying. The Affordable Care Act introduced penalties for not participating, starting this year. Some 257,000 providers are also seeing their Medicare pay cut 1% this year for not meeting federal targets for using electronic medical records in 2013. Hundreds more in large group practices are being docked a further 0.5% to 1% this year under a complicated cost-and-quality adjustment, the so-called Value-Based Payment Modifier.
In other news, the U.S. Supreme Court revived religious objections by Catholic groups in Michigan and Tennessee to the Obamacare requirement for contraception coverage, throwing out a lower court decision favoring President Barack Obama’s administration. The justices asked the Cincinnati-based 6th U.S. Circuit Court of Appeals to reconsider its decision that backed the Obama administration in light of the Supreme Court’s June 2014 ruling that allowed certain privately owned corporations to seek exemptions from the provision. The Affordable Care Act, known as Obamacare, requires employers to provide health insurance policies that cover preventive services for women including access to contraception and sterilization. Various challengers, including family-owned companies and religious affiliated nonprofits that oppose abortion and sometimes the use of contraceptives, say the requirement infringes on their religious beliefs. The high court threw out a June 2014 appeals court ruling that went in favor of the government. In March, the court took a similar approach in a case concerning the University of Notre Dame. The most recent case is Michigan Catholic Conference v. Burwell, U.S. Supreme Court, No. 14-701.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration said Wednesday it approved an injection designed to melt away double-chin fat. The agency approved a drug called Kybella for adults with moderate or severe fat below the chin, or submental fat. It’s the first approved drug for Kythera Biopharmaceuticals Inc. (Westlake CA). The drug is a synthetic form of deoxycholic acid, a chemical the FDA said is naturally produced by the body and helps it absorb fats. It destroys fat cells by breaking down the cell membrane. Kythera plans to start selling Kybella in the second half of 2015, and said in regulatory filings that it thinks the injection could top $500 million in annual sales.
Elsewhere, the FDA on Thursday approved the sale of Breo Ellipta as a once-daily treatment for asthma in patients aged 18 and older, GlaxoSmithKline Plc (London) and Theravance Inc. (S. San Francisco) said. The FDA declined to approve Breo for younger asthma sufferers. The agency, in a so-called complete response letter, told the companies that additional data would be required to further demonstrate Breo’s safety and efficacy in that population. The FDA’s decision came after an FDA advisory panel of experts had voted 16-4 that Breo Ellipta should be approved for use by adults.
The FDA approved the first generic versions of Otsuka Pharmaceutical Co Ltd.’s (Tokyo) antipsychotic drug, Abilify. The agency said on Tuesday that it had granted approval for generic versions of Abilify from four companies, including Teva Pharmaceutical Industries Ltd. (Petach Tikva ISR), to treat mental illnesses such as bipolar disorder and schizophrenia. Abilify has an orphan drug designation for the treatment of Tourette’s syndrome, a nervous system disorder, in children. Abilify, which is sold by Bristol-Myers Squibb Co. in the U.S., brought in sales of $554 million in the first quarter.
And the FDA approved The Medicines Co.’s (Parsippany NJ) drug device Ionsys for postoperative pain for hospital use, the company said on Thursday. Ionsys, a needleless, patient-controlled, opioid-based treatment, offers patients recovering from surgery in the hospital control over their analgesic dosing. Ionsys was originally developed by Johnson & Johnson (New Brunswick NJ) and won approval in the U.S. and Europe in 2006. But after its launch in Europe in 2008, it was recalled due to device stability issues. The therapy never made it to the market in the U.S. The Medicines Co. gained access to the product through its 2012 acquisition of Incline Therapeutics Inc., which had acquired the treatment from J&J in 2010.
MEDICAL STOCK SPOTLIGHT -- Healthcare bore the brunt of a major pullback on Wall Street last week with Celladon Corp. (Nasdaq) taking the biggest hit, plunging $11.06, or 81% to $2.62. The San Diego-based company announced that its randomized, double-blind, placebo-controlled, multinational phase IIb study (CUPID2) on advanced heart failure patients was unsuccessful in meeting both primary and secondary endpoints. The CUPID2 study evaluated a single, one-time, intra-coronary infusion of Mydicar (a cardiovascular gene therapy agent) in comparison to placebo in patients who had stable class II to class IV ischemic or non-ischemic heart failure (under the New York Heart Association classification system) despite optimal therapy along with reduced left ventricular ejection fraction and high propensity to recurrent heart-failure hospitalizations.
Elsewhere, Aerie Pharmaceuticals Inc. (Nasdaq) continued its free-fall, plummeting $3.50, or 27%, hitting a new 52-week low of $9.37 after the company announced that its lead pipeline candidate, Rhopressa, missed its primary efficacy endpoint in a phase III study. The company was evaluating Rhopressa for its ability to lower intraocular pressure (IOP) in patients with glaucoma or ocular hypertension. The once-daily eye drop failed to show “non-inferiority” in lowering of IOP compared to twice-daily timolol. Bedminster, NJ-based Aerie noted, however, that Rhopressa demonstrated numerical superiority compared to timolol at most of the measured time points.
And Calithera Biosciences Inc. (Nasdaq) sank $3.59, or 27%, to $9.82 on no particular company specific news. South San Francisco-based Calithera announced that clinical data for its lead drug candidate CB-839, the company’s novel, orally bioavailable glutaminase inhibitor for non-small cell lung cancer and renal carcinoma, will be presented at the 51st Annual Meeting of the American Society of Clinical Oncology (ASCO), which is being held from May 29 to June 2, 2015 in Chicago.
But in a small group of winners, Eleven Biotherapeutics Inc. (Nasdaq) rose $2.12, or 19%, to $13.31 after being upgraded by Zacks from a “Sell” rating to a “Hold” in a report released on Friday. Eleven Biotherapeutics is engaged in the discovery and development of protein therapeutics to treat eye diseases primarily in the United States. The company develops its therapeutics through AMP-Rx, a proprietary protein engineering platform. Cambridge, MA-based Eleven Biotherapeutics last issued its quarterly earnings data on Thursday, April 30th. The company reported ($0.36) earnings per share (EPS) for the quarter, beating the Thomson Reuters consensus estimate of -$0.57 by $0.21. On average, analysts predict that Eleven Biotherapeutics will post $-1.94 EPS for the current fiscal year.
IPO SECTOR -- Fast-growing Teladoc Inc., a Dallas, TX-based telehealth company, has taken a step toward filing for an initial public offering despite a recent Texas Medical Board ruling that went against the company’s business model. Teladoc filed a confidential Form S-1 with the Securities and Exchange Commission and expressed an intention to file an IPO after the SEC’s review process, according to a statement from the company. The number of shares of common stock to be sold and the price range for the proposed offering have not yet been determined, the statement said. The initial filing comes less than three weeks after the Texas Medical Board voted April 10 to adopt new rules limiting physicians who treat patients over the phone, video or online. The ruling could have severe implications for Teladoc, which conducts a substantial amount of its business in its home state.
April 27, 2015 ...
MYLAN MAKES HOSTILE $31.2 BILLION PERRIGO BID TO FOIL TEVA -- Generic drugmaker Mylan NV (Canonsburg PA) said Friday it would take its $31 billion offer for Perrigo Co Plc (Dublin IRL) directly to shareholders, in what is set to be one of the most high-profile hostile takeover attempts of the year. Mylan, which itself is the target of an unsolicited $40 billion bid from larger rival Teva Pharmaceutical Industries Ltd. (Petach Tikva ISR), said it would offer $60 in cash and 2.2 of its shares for each Perrigo share. The company’s pursuit of Perrigo, a major producer of over-the-counter drugs, is widely seen as an attempt to fend off Teva, the world’s biggest maker of generic drugs. The three-way chase is further evidence that the appetite for healthcare acquisitions continues unabated. M&A in the industry has hit $193.9 billion so far this year, double the amount in the same period last year. Mylan, which is legally based in Amsterdam, Netherlands, said on April 8 that it would make a cash-and-share bid that valued Perrigo at $205 per share but did not detail the breakdown between shares and cash to be offered. The offer announced on Friday works out to about $222 per share, based on Mylan’s Thursday close, valuing Perrigo at about $31 billion, according to Thomson Reuters data. However, Perrigo said the offer valued it at $181.67 per share based on Mylan’s unaffected price of $55.31 per share on March 10.
Mylan’s shares have risen by about a third since March 10. “Today’s announcement from Mylan proposes a price that is lower than the previously rejected proposal,” Perrigo said. Mylan said its offer was fully financed and not conditional on due diligence. The cash portion will be financed by a new bridge credit facility arranged by Goldman Sachs, the company said. Teva said in a statement that it remained fully committed to its Mylan offer. Perrigo’s shares closed the week off 3% at $192.89, while Mylan’s gained 9% to $76.06. Teva’s New York-traded shares slipped 50 cents to $64.41.
AMGEN PROFIT BEATS ESTIMATES AS DRUGMAKER RAISES FORECAST -- Amgen Inc. (Thousand Oaks CA) reported higher first-quarter earnings last week, helped by price increases for its best-selling drugs, as well as lower spending on research and development. Excluding one-time items, the drugmaker earned $2.48 per share in the quarter, beating analysts’ estimates of $2.10, according to Thomson Reuters. “The key is that expense reductions were really significantly greater than the street was modeling,” said RBC Capital Markets analyst Michael Yee. “The company has clearly proven that they are serious on cost management.” Amgen, which is entering the cardiovascular sector with new heart failure drug Corlanor and awaits U.S. regulatory approval for cholesterol drug Repatha, expects costs to trend higher for the remainder of the year, said Chief Financial Officer David Meline. He added, however, that overall cost trims are on track, and Amgen raised its full-year outlook for adjusted earnings per share to between $9.35 and $9.65 from a previous range of $9.05 to $9.40. The company also bumped up the lower end of its full-year revenue estimate to $20.9 billion from $20.8 billion, but left the upper end unchanged at $21.3 billion. Analysts had been forecasting 2014 earnings of $9.30 per share on revenue of $20.98 billion.
“We have strong momentum as we defend our base business against competition and our transformation efforts are delivering efficiencies and cost savings,” CEO Robert Bradway said, referring to cost containment goals outlined last year. Amgen’s first-quarter revenue rose 11% to $5.03 billion, while spending on research and development fell 14% to $856 million. The company’s sales of rheumatoid arthritis drug Enbrel rose 13% to $1.17 billion, while sales of white blood cell booster Neulasta rose 4% to $1.13 billion--both because of price increases. Year-over-year, Amgen raised its price for Enbrel by 19%. Stronger demand pushed sales of multiple myeloma drug Kyprolis up 59% to $108 million, and sales of bone drugs Prolia and Xgeva up 29% to $612 million. The drugmaker posted a quarterly net profit of $1.62 billion, or $2.11 per share, up from $1.07 billion, or $1.40 per share, a year earlier. Company shares closed the week up 3% at $167.91.
TRACKING WASHINGTON -- Mammograms are more beneficial for women 50 to 74 years old than for younger women, while the benefits for women 75 and older are unclear, a federal panel that evaluates medical practices said last week. The U.S. Preventive Services Task Force examined clinical studies on breast-cancer screening, concluding that “some women in their 40s will benefit from mammography” but that “most will not, while others will be harmed.” The panel said those hurt include women who undergo surgery, radiation or chemotherapy for cancers that never would have threatened their health. In November 2009, the task force told women in their 40s that it didn’t recommend mammograms for their age group. This time, the panel said the decision for those women “should be an individual one,” recognizing the potential benefits as well as the potential harms. “There is value to mammography screening in the 40s,” said Dr. Kirsten Bibbins-Domingo, a professor of medicine at UC, San Francisco, and vice chairman of the task force that issued the draft recommendations. “There are benefits, and they exceed the harms, but only by a small amount.” The task force--which analyzed eight major studies of mammography screening in the U.S., Canada, the U.K. and Sweden--said women in their 40s could benefit more from screening if they have a mother, sister or daughter with breast cancer.
In other news, a new bipartisan bill, co-sponsored by Senators Dianne Feinstein, Democrat of California, and Susan Collins, Republican of Maine, proposes to give the FDA broader oversight to regulate the millions of lipsticks, moisturizers and other cosmetics sold each year including the authority to force recalls of dangerous products. The proposal has backing from the cosmetics industry and proponents of strengthening the agency’s oversight, including the Environmental Working Group (Washington DC), a left-leaning advocacy group. “This bill is the best hope for meaningful cosmetics regulation in many years,” said Scott Faber, vice president of government affairs for the organization. The bill reflects a new reality for manufacturers of personal care products, which face more pressure than ever to respond to consumer concerns. Regulating cosmetics has not changed much since passage of the Food, Drug and Cosmetic Act in 1938. The FDA can only ask companies to voluntarily recall products, and manufacturers are not legally required to disclose adverse health effects reported by consumers. John Hurson of the Personal Care Products Council, an industry trade group, said of the new bill, “There were things that we liked more than others, but it is a compromise, and that’s a first.”
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration last week said increased safety problems with homeopathic remedies contributed to the government’s decision to revisit its oversight of the products. The agency wrapped up a two-day meeting to hear from supporters and critics of products like Zicam Allergy Relief and Cold-Eeze, alternative remedies that are protected by federal law, but not accepted by mainstream medicine. Similar to dietary supplements, the FDA does not review the safety or effectiveness of homeopathic remedies before they are sold. But unlike supplements, homeopathic medicines can state that they are intended for specific medical symptoms and conditions. The FDA’s Cynthia Schnedar, a director of drug compliance, said the agency has issued 40 warning letters to homeopathic product makers since 2009 amid increasing U.S. sales. In perhaps the most serious case, in 2009 the FDA ordered the maker of Zicam to stop marketing three products that contained zinc gluconate. The agency linked those products to 130 reports from consumers who said they lost their sense of smell. In 2010, the FDA warned about reports of toxicity in children taking Hyland Homeopathic’s teething tablets, which contained a berry-derived toxin called belladonna that can be poisonous in larger doses.
Elsewhere, the FDA on Thursday warned eight companies to stop selling weight loss, energy enhancement, and workout supplements containing BMPEA, citing that the substance does not meet the definition of a dietary ingredient. The drug, beta-methylphenethylamine, first made in the 1930s, is a chemical relative of amphetamine but is surprisingly poorly-studied. While it is unclear if BMPEA is a stimulant or possesses addictive qualities like amphetamine, doctors are concerned that it can cause an unsafe increase in heart rate and blood pressure, an action that has been demonstrated in laboratory animals and one human study. BMPEA, forbidden in competitive athletics by the World Anti-Doping Agency, emerged on the international radar earlier this month with the publication of an analysis by Pieter Cohen, MD, and colleagues, who demonstrated the presence of the substance in 11 of 21 supplements they tested. Cohen, a Cambridge Health Alliance internist and Harvard Medical School assistant professor, noted that the FDA’s own chemists had found a similar incidence of BMPEA in unnamed supplements two years earlier. Supplement makers claim that BMPEA is legally allowable in weight loss and workout aids because it occurs naturally in a southwestern shrub, blackbrush, known scientifically as Acacia rigidula. However, FDA chemists could not detect the substance in several plant samples.
The Medicines Co.’s (Parsippany NJ) intravenous blood clot preventer can be used in angioplasty procedures, an independent advisory panel to the FDA said last Wednesday. The panel voted 9-2 to support the approval of the once-rejected injection, cangrelor, for use in some patients undergoing angioplasty, a procedure to widen narrowed or clogged coronary arteries that often includes the use of stents. The recommendation follows a review published by FDA staff, which supported the approval of the drug. Cangrelor, which won European approval in March, was rejected by the FDA in April 2014. In its complete response letter, the agency had asked the drugmaker to reanalyze data from a pivotal trial called Champion-Phoenix.
And outside the U.S., European regulators have recommended approval of Bristol-Myers Squibb Co.’s (New York) Opdivo, paving the way for it to become the first of a closely watched group of immune system-boosting cancer medicines to go on sale in Europe. The drug, also known as nivolumab, was given a green light on Friday by the European Medicines Agency (EMA) for the treatment of melanoma. It is already approved in the United States for melanoma and lung cancer. The EMA said Opdivo was recommended for use on its own for the treatment of advanced melanoma, the most aggressive type of skin cancer, in both first-line and previously treated patients. The agency also recommended approval of Daiichi Sankyo Co.’s (Tokyo) Lixiana, or edoxaban, for stroke prevention and Vanda Pharmaceutical Inc.’s (Washington DC) Hetlioz, or tasimelteon, to treat a sleep-wake disorder in blind people. Bristol’s Opdivo belongs to a highly promising new class of medicines called PD-1 inhibitors that block a mechanism tumors use to hide from the immune system. It is expected to be one of the most commercially successful new drugs to reach major markets this year. It competes with Merck & Co.’s (Kenilworth NJ) Keytruda, which is also on the market in the U.S. but not in Europe.
MEDICAL STOCK SPOTLIGHT -- Affimed AG (Nasdaq), a clinical-stage biopharmaceutical company focused on discovering and developing highly targeted cancer immunotherapies, led advancing issues, soaring $4.24, or 57% for the week, to $11.72. The Heidelberg, Germany-based firm announced the achievement of the second milestone in its development partnership with Amphivena Therapeutics Inc. (San Francisco). The milestone represents the development candidate selection against an undisclosed target for the treatment of a certain hematologic malignancy. Affimed, which has a two-fold relationship with Amphivena as both investor and licensor, is due to receive a milestone payment of €7.5 million from Amphivena which will be paid in three installments.
Elsewhere, Innate Pharma SA (Nasdaq) surged $4.46, or 46%, to $14.20, a record high, as investors cheered a deal with AstraZeneca Plc to accelerate and broaden development of its immune-boosting anti-cancer medicines that could earn the French firm $1.275 billion. Innate Pharma will receive an initial $250 million payment from AstraZeneca, which is collaborating with Medimmune LLC to develop the French firm’s anti-NKG2A antibody, IPH2201, aimed at stimulating the body’s immune system to destroy cancer cells. It is the most significant transaction ever by the Marseille-based biopharmaceutical company, worth about 700 million euros on the stock market after Friday’s share price jump. AstraZeneca is set to pay Innate Pharma up to $1.275 billion plus double-digit royalties on sales.
And La Jolla Pharmaceutical Co. (Nasdaq) jumped $5.08, or 28%, to $22.95. Oppenheimer’s Ling Wang weighed in on La Jolla and initiated coverage with an “Outperform” rating and a price target of $43, implying an upside of around 98% from the current price. San Diego-based La Jolla has an attractive pipeline addressing multiple, large unmet medical needs. Oppenheimer sees the lead compound of LJPC-501 as having a strong probability of success (65%) in a pivotal phase III trial in catecholamine-resistant hypotension (CRH). The firm also expects the second compound, GCS-100, to establish definitive proof-of-concept in a phase IIb trial in diabetic chronic kidney disease (CKD) by the second half of 2016.
But Ampio Pharmaceuticals Inc. (Nasdaq) plunged $5.14, or 65%, to $2.73 after the biopharmaceutical company announced that the multiple injection STRIDE study for pain reliever Ampion did not reach its primary endpoint. The Greenwood Village, CO-based company said that based on its current projections, it has enough funds to continue operating through 2016 to complete additional trials of the drug and complete the necessary steps to bring the drug to market approval. “There is ample evidence from our multiple clinical trials that Ampion provides significant clinical benefit to a large number of patients with osteoarthritis of the knee,” said CEO Michael Macaluso.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Invuity Inc., which markets enhanced surgical illumination devices, registered up to $69 million worth of common stock. The San Francisco-based company, which was founded in 2004 and booked $13 million in sales for the 12 months ended December 31, 2014, plans to list on the Nasdaq under the symbol “IVTY.” Invuity initially filed confidentially on March 13, 2015. Piper Jaffray, Leerink Partners and Stifel are the joint bookrunners on the deal. No pricing terms were disclosed.
April 20, 2015 ...
OBAMA SIGNS $200 BILLION “DOC FIX” BILL -- Ending years of last-minute fixes, President Barack Obama on Thursday signed legislation permanently changing how Medicare pays doctors, a rare bipartisan achievement by Democrats and Republicans. The so-called “Doc Fix” overhauls a 1997 law that aimed to slow Medicare’s growth by limiting reimbursements to doctors. Instead, doctors threatened to leave the Medicare program, and that forced Congress repeatedly to block those reductions. Obama signed the $200 billion Medicare reform package Thursday in front of reporters and photographers, sitting alone and coatless in mild spring weather on the patio of the White House Rose Garden. The Senate passed the bill Tuesday; the House approved it in March. Obama praised Republican House Speaker John Boehner (R-OH) and House Democratic Leader Nancy Pelosi (D-CA) for negotiating the legislation. He said the new law helps Medicare by giving assurance to doctors about their payments. “It also improves it because it starts encouraging payments based on quality, not the number of tests that are provided or the number of procedures that are applied but whether or not people actually start feeling better,” Obama said. “It encourages us to continue to make the system better without denying service.”
The bill blocked a 21% cut in Medicare payments that was due to take effect this month. It also revamps how physicians will be paid in the future, by providing financial incentives for physicians to bill Medicare patients for their overall care, not individual office visits. Noting the unusual bipartisan nature of the bill, Obama said, “I hope this becomes a habit.” In Congress, Boehner praised Pelosi for “her indispensable leadership in helping tackle these challenging issues.” Paul B. Ginsburg, a health economist at the University of Southern California, and others expressed more skepticism about the component of the legislation that, beginning in 2019, would pay doctors based on how they perform on quality and other measures. Ultimately, the Department of Health and Human Services will decide those standards. Mr. Ginsburg said that doctors did not typically see enough patients to yield reliable data about how well they perform, or to adjust their scores for whether their patients are sicker than average.
JOHNSON & JOHNSON PROFIT BEATS FORECASTS -- Johnson & Johnson (New Brunswick NJ), the world’s biggest maker of healthcare products, reported quarterly earnings that topped analysts’ estimates as new cancer and diabetes treatments helped push drug sales higher. First-quarter earnings, excluding one-time items, were $1.56 a share, compared with the $1.53 average estimate of analysts compiled by Bloomberg. Pharmaceutical sales climbed 3% to $7.7 billion. The results underscore the company’s push to replenish its product lineup as drugs such as hepatitis C treatment Olysio and blood thinner Xarelto face new competition. An additional challenge comes from the strong dollar, since J&J gets about half its sales outside the U.S. The company cut its forecast for full-year earnings to a range of $6.04 to $6.19 a share, down from a prior prediction of $6.12 to $6.27, due to the currency fluctuations. Analysts had predicted $6.17. “If you look operationally--let’s take out foreign exchange--the numbers are actually fairly strong,” said Tony Butler, an analyst at Guggenheim Securities LLC. “They’re still growing the pharma business, mostly in immunology and oncology.” J&J won’t be alone in warning that the stronger dollar will continue to hurt earnings this year. Last quarter, the healthcare giant was the first of many drugmakers to report lower-than-expected guidance or sales declines due to the U.S. currency’s gain.
The currency changes hurt J&J’s earnings by 7.2% in the first quarter. Revenue fell 4.1% to $17.4 billion, the drugmaker said. Analysts had forecast $17.3 billion. Two newer drugs helped propel the growth of the pharmaceutical unit. Sales of diabetes medication Invokana almost tripled to $278 million. Cancer treatment Imbruvica, developed with Pharmacyclics Inc. (Sunnyvale CA) and approved by the Food and Drug Administration in 2013, had revenue of $116 million. Sales of the company’s top drug Remicade fell 0.6% to $1.6 billion, compared with the $1.77 billion forecast by RBC Capital Markets for the arthritis treatment. Olysio, which has been facing increased competition, sold $234 million, compared with the $160 million projected by RBC. J&J’s consumer unit, which makes over-the-counter products like Tylenol and Motrin, fell 4.7% to $3.4 billion. Revenue for the medical-device business, which has been under pressure from cost-cutting by insurers and hospitals, dropped 11.4% to $6.3 billion. J&J shares closed the week off 2% at $99.58.
TRACKING WASHINGTON -- The ability to transfer electronic medical records from one doctor or hospital to another is essential to the smooth functioning of the healthcare system and to providing the best possible care to patients. Yet these transfers often are being blocked by developers of heath information technology or medical centers that refuse to send records to rival providers. This will not be an easy problem to fix, but some possible approaches were detailed in a report to Congress from the Office of the National Coordinator for Health Information Technology, a unit of the Department of Health and Human Services. The full extent of the problem is difficult to assess, according to the report, mainly because of contractual restrictions imposed by software developers on their customers. It did not name any parties because it could not determine whether some of the information was blocked for legitimate reasons, like patient privacy. The report suggests new transparency requirements for developers to disclose the restrictions and costs associated with buying their systems. And the federal government could name the suspected wrongdoers and let them explain the reasons behind their actions. Congress could go still further and pass a new law providing criminal penalties and stiff fines for vendors and providers who deliberately block information sharing with no valid excuse.
In other news, people newly covered by Medicaid drove a significant increase in prescription drug use in 2014, even as those with private commercial coverage filled fewer prescriptions and, over all, patients did not visit the doctor as often, according to a new report by the IMS Institute for Healthcare Informatics (Danbury CT), which tracks the health industry. The report, released last Tuesday, offers a window into how consumers used their insurance in 2014, the first full year after millions of Americans gained coverage through the healthcare law, which expanded eligibility for Medicaid in many states and set up marketplaces where consumers could shop for insurance. Patients with Medicaid in states that expanded access to the program filled 25.4% more prescriptions than in the previous year, before the expansion. In states that opted not to expand the program, the increase was much smaller at 2.8%. Sabrina Corlette, a senior research fellow at the Center on Health Insurance Reforms at Georgetown University, described the difference as “stark,” adding, “it suggests that in the Medicaid expansion states, people are accessing the healthcare system. They are seeing physicians and other prescribers and getting needed drugs.”
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration approved Amgen Inc.’s (Thousand Oaks CA) Corlanor to treat patients with chronic heart failure, giving the world’s largest biotechnology company its first cardiovascular product. The agency approved the use of Corlanor (ivabradine) on top of current standard of care beta blockers for patients whose symptoms of heart failure are stable and who have a normal heartbeat and a resting heart rate of at least 70 beats per minute. Chronic heart failure is a common and debilitating condition in which the heart is unable to pump enough blood throughout the body. RBC Capital Markets analyst Michael Yee said that, long term, Corlanor could become a $500 million a year drug for Amgen.
Elsewhere, Momenta Pharmaceuticals Inc. (Cambridge MA) said the FDA approved the first generic version of Teva Pharmaceuticals Industries Ltd.’s top-selling multiple sclerosis drug, Copaxone. The agency cleared the application for the 20mg version of the blockbuster drug, submitted by Momenta’s partner Sandoz, a unit of Swiss drugmaker Novartis AG. The generic version, called Glatopa, was developed under a collaboration agreement between Momenta and Sandoz.
The Medicines Co.’s (Parsippany NJ) intravenous blood clot preventer can be used in angioplasty procedures, an independent advisory panel to the FDA said last Wednesday. The panel voted 9-2 to support the approval of the once-rejected injection, cangrelor, for use in some patients undergoing angioplasty, a procedure to widen narrowed or clogged coronary arteries that often includes the use of stents. The recommendation follows a review published by FDA staff, which supported the approval of the drug. Cangrelor, which won European approval in March, was rejected by the FDA in April 2014. In its complete response letter, the agency had asked the drugmaker to reanalyze data from a pivotal trial called Champion-Phoenix.
And FDA advisers said AstraZeneca Plc’s (London) Onglyza and a related diabetes drug should carry new information about a possible association with heart failure and death. The panel of diabetes experts voiced concern about data suggesting Onglyza and Kombiglyze can increase hospitalization due to heart failure and overall mortality. The panel voted 14-1 that such information should appear on the drugs’ prescribing labeling. Yet the panelists also said complicating factors make it difficult to tell whether the risk is real or a statistical fluke. Considering the drug’s overall benefits for treating diabetes, the panel voted 13-1, with one abstention, that the drugs’ heart safety profile was acceptable. Onglyza and Kombiglyze are part of a recently-developed class of diabetes drugs called DPP-4 inhibitors, which also includes Merck & Co.’s Januvia and Tradjenta, made by Eli Lilly & Co. and Boehringer Ingelheim GmbH.
MEDICAL STOCK SPOTLIGHT -- Novogen Ltd. (Nasdaq) once again led advancing issues, soaring $2.00, or 36% for the week, to $7.36. The drug discovery firm announced that it had signed a Memorandum of Understanding with the Feinstein Institute for Medical Research of New York to collaborate with the objective of developing effective treatments for brain cancers. The collaboration brings together the drug discovery expertise of Hornsby, Australia-based Novogen and the preclinical and clinical expertise of the Feinstein Institute in neurosciences and oncology. At the heart of the collaboration is the company’s super-benzopyran (SBP) drug technology platform, distinguished by its ability to kill the full spectrum of cells within a tumor including both rapidly- and slowly-dividing cancer cells (tumor-initiating cells).
Elsewhere, Oramed Pharmaceuticals Ltd. (Nasdaq) surged $1.94, or 31%, to $8.17. Equities researchers at brokerage MLV & Co. assumed coverage on shares, setting a “Buy” rating and a $30.00 price target. MLV & Co.’s price target suggests a potential upside of 266% from the stock’s previous close. Jerusalem-based Oramed is engaged in the field of oral delivery approaches for drugs and vaccines presently delivered via injection. Oramed’s flagship product, an orally ingestible insulin capsule in phase II clinical trials, is focused on the treatment of diabetes.
MediciNova Inc. (Nasdaq) rocketed 28% to $4.45, an all-time high, after announcing that it has received “fast track” designation from the FDA for MN-001 (tipelukast) for the treatment of patients with nonalcoholic steatohepatitis with fibrosis. Fast track designation is designed to expedite the review process for drugs being developed to treat potentially fatal or serious diseases that do not have a viable alternative treatment. La Jolla, CA-based MediciNova focuses on acquiring and developing novel and small molecule therapeutics for the treatment of serious diseases with unmet medical needs.
But Athersys Inc. (Nasdaq) plummeted $1.63, or 54%, to $1.40 after a stem-cell therapy--its only product to reach human trials--failed a mid-stage study testing it as a treatment for a type of stroke. Data on Friday showed that patients given the therapy, MultiStem, did not show a significant difference from those given a placebo as measured by the Global Stroke Recovery Assessment scale. The study, which was to test the safety and efficacy of the treatment given between 24 and 48 hours after an ischemic stroke, showed that MultiStem was no better than a placebo when given after 36 hours, the Cleveland, OH-based company said. However, data also showed that the therapy had better efficacy when given before 36 hours.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Galapagos NV, a biotech developing new treatments for inflammatory diseases, registered up to $150 million worth of common stock. Galapagos currently trades on the Euronext under the symbol “GLPG.” The Mechelen, Belgium-based company, which was founded in 1999 and booked €90 million in sales for the 12 months ended December 31, 2014, plans to list on the Nasdaq under the symbol “GLPG.” Galapagos initially filed confidentially on Feb. 6. Morgan Stanley, Credit Suisse and Cowen & Company are the joint bookrunners on the deal.
April 13, 2015 ...
MYLAN OFFERS TO BUY PERRIGO FOR $28.9 BILLION -- Mylan NV (Canonsburg PA) said it has proposed an unsolicited cash-and-stock deal worth $28.9 billion, or $205 a share, for rival Perrigo Co. Plc (Dublin IRL), which represents more than a 25% premium to Perrigo’s closing stock price prior to news of the offer. Perrigo reacted coolly, saying its board would meet to discuss the proposal and cautioning that “there can be no certainty that any offer will be made.” The proposal appeared to come out of nowhere. But Mylan said that the companies had held “many conversations over the years,” and said it sent a letter to Perrigo CEO and Chairman Joseph Papa last Monday proposing a transaction. Mylan said it still needed to conduct due diligence and expressed hope Perrigo would embrace the approach. “We have great respect for Perrigo’s board and management team and what they have built,” Mylan Executive Chairman Robert Coury said. “We look forward in the weeks ahead to working with them to capitalize on this tremendous opportunity and working together to create a unique leader with a one-of-a-kind profile in our industry.” Neither company is a household name, but a combination of Mylan and Perrigo would create one of the world’s top sellers of low-price medicines with $15.3 billion in yearly sales. A deal would also further the rapid consolidation among midsize drug firms.
Companies have been doing merger deals recently to adapt to a changing healthcare marketplace and remain competitive with rivals. In the process, companies have amassed billions of dollars in debt, cut thousands of jobs and grappled with the difficult task of digesting one organization after another. Yet the pace has continued unabated. Mylan and Perrigo recently closed on their own multibillion-dollar deals. Mylan is best known for selling generic prescription drugs, though its top-selling product is the EpiPen emergency treatment for allergic reactions. Perrigo makes over-the-counter cough-and-cold remedies and infant formula for chains like Wal-Mart Stores Inc. Each of the businesses is under pressure. Mylan has been coping with upstarts in India and other emerging markets that have been undercutting prices on its products, as well as bigger competitors like Israel’s Teva Pharmaceutical Industries Ltd. Perrigo, meanwhile, has been struggling to keep growing despite the low margins on the private-label medicines it sells. Perrigo closed the week up 21% at $198.55. Mylan surged 21% to $70.24.
MEDICARE ADVANTAGE PAYMENTS TO RISE IN 2016 -- Payments to health insurers operating Medicare Advantage plans for the elderly and disabled will increase by 1.25% in 2016, the U.S. government said last week, in response to expected growth in health spending. The announcement, by a division of the U.S. Department of Health and Human Services, comes after the U.S. government proposed a 0.95% cut in payments to insurers in February. More than 16 million people are enrolled in these plans, in which healthcare benefits are managed by private insurers, including UnitedHealth Group Inc. (Minnetonka MN), Humana Inc. (Louisville KY) and Aetna Inc. (Hartford CT). Each April the government announces reimbursement rates for insurers. The information helps insurers determine how profitable it will be to sell these plans, which optional benefits to provide and in which regions and markets to compete. The increase comes after many years of cuts to Medicare Advantage payments, because of an overall decline in healthcare spending and changes under the Affordable Care Act that seek to align payments more closely with the government-run Medicare fee-for-service program. The increase is larger than expected, Leerink Partners analyst Ana Gupte said, and bodes well for insurers that sell these plans next year. “2016 enrollment growth should be accelerated compared to previous years,” Gupte said.
Some insurers as well as the nation’s largest insurer lobbyist group, America’s Health Insurance Plans, had warned the government that any cuts would hurt the elderly. “The final rate notice took a notable step to provide stable funding for the Medicare Advantage program,” AHIP President Karen Ignagni said, adding, however, that the policy did not do enough to protect chronically ill and vulnerable populations. The increase for 2016 versus the decline announced in February results from expectations of Medicare Advantage spending growth of 4.2%, compared with the 1.7% the government forecast in February. The 4.2% growth reflects additional spending in 2014 and 2015, as well as higher expected outlays in 2016. The Centers for Medicare & Medicaid Services said higher spending was due to hospitalizations, rural health clinics and federally qualified health centers. It also includes a 0.1% increase based on the assumption that Congress will enact legislation raising Medicare payments to doctors. Shares of Humana, which receives about two-thirds of its revenue from Medicare Advantage plans, closed the week up 50 cents at $178.48. UnitedHealth added 1% to $119.00 and Aetna gained 1% to $107.91.
TRACKING WASHINGTON -- The Obama administration took vendors of electronic health records to task for making it costly and cumbersome to share patient information and frustrating a $30 billion push to use digital records to improve quality and cut costs. The report, by the Office of the National Coordinator for Health Information Technology, listed a litany of complaints it has received about vendors allegedly charging hefty fees to set up connections and share patient records; requiring customers to use proprietary platforms; and making it prohibitively expensive to switch systems. The report also cited complaints that some hospital systems make it difficult to transfer patient records to rival systems or physicians as a way to control referrals and enhance their market dominance. Congress requested the report last December amid rising concerns that the government’s massive investment in digitizing health records has created a windfall for the information-technology industry, but left patient records largely stuck in silos. Spurred by $28 billion in incentives to date, nearly 80% of doctors and 60% of hospitals have converted from paper files to electronic health records, known as EHRs, since 2009. But only 20% to 30% of providers are able to share records with outside providers, according to government and industry surveys.
In other news, Medicaid recipients who get services through managed care organizations or alternative benefit plans would get the same access to mental health and substance-abuse benefits as provided by private health plans, under a rule proposed last week by the Obama administration. Under a 2008 law, health insurance and group health plans must provide the same level of benefits for mental or substance-abuse treatment as they provide for medical and surgical care. Certain provisions of that law would now apply to Medicaid and the Children’s Health Insurance Program, a federal-state partnership, under the proposal. A number of states put limits on mental health coverage. The proposed rule wouldn’t change those limits on Medicaid fee-for-service plans, but it would stop such limits for Medicaid recipients who are in managed care plans. Medicaid is the state-federal health care program for people with low incomes. “It’s significant,” said Timothy Jost, a professor at the Washington and Lee University School of Law. “The mental health parity law preceded the ACA and it’s an issue people have been battling for some time. A significant number of people with mental health problems are on Medicaid.” States would be required to include provisions requiring parity in contracts for Medicaid managed care.
FDA/EMA ROUNDUP -- Clovis Oncology Inc. (Boulder CO) announced its experimental drug rucaparib has received “breakthrough therapy” status from the U.S. Food and Drug Administration for the treatment of patients with advanced ovarian cancer, who have already undergone at least two rounds of platinum-containing therapy. The company was granted another breakthrough therapy status for its lung cancer drug rociletinib in May last year, for which Clovis intends to seek marketing approval in a few months. Rucaparib is an inhibitor of the enzymes PARP1 and PARP2 and is designed for use as a mono-therapy in the treatment of patients with platinum-sensitive ovarian cancer with BRCA-mutated tumors.
Elsewhere, Horizon Pharma Plc (Dublin IRL) said Friday that its experimental Friedreich’s ataxia treatment has received “fast-track” designation from the FDA, a move that could speed approval. The specialty pharmaceutical company said the drug, Actimmune, is a treatment for Friedreich’s ataxia, an inherited disease causing nervous-system damage that often results in motor incapacitation and the use of a wheelchair. Horizon said there are currently no FDA-approved treatments for the disorder. Actimmune is already approved by the FDA for use in two genetic diseases.
Swiss specialty pharmaceutical company Santhera Pharmaceuticals Holding AG (Liestal) won a “fast track” designation from the FDA for treating patients suffering from Duchenne Muscular Dystrophy (DMD). With fast track status, Santhera might also win “accelerated approval and priority review,” which will further speed up the regulatory process. Raxone/Catena (idebenone), is a “synthetic short-chain benzoquinone,” which works by enhancing mitochondrial electron transport, thereby increasing the energy levels of cells found in muscles, according to Santhera.
And Denmark’s Novo Nordisk A/S (Bagsvaerd) said the FDA accepted a resubmitted application for its key insulin drug, Tresiba, based on interim analysis data from a clinical trial. Tresiba, already available outside the U.S., was rebuffed by the agency two years ago on concerns that the drug could be linked to higher rates of heart attacks or strokes. The FDA had asked Novo to conduct a dedicated trial to test for such risks, and the company last week said it expects to complete the study in the second half of 2016. When Novo said in late March that it was looking to resubmit the marketing application for Tresiba and a related drug, industry analysts had estimated Tresiba could get approved as early as October this year, based on the interim data.
MEDICAL STOCK SPOTLIGHT -- Novagen Ltd. (Nasdaq) led advancing issues, surging $1.46, or 35% over the week, to $5.63 after the Australia-based biotechnology company announced that studies of its experimental drug, Anisina, showed signs of what could be a breakthrough in melanoma treatment. Anisina was successful in destroying melanoma cells irrespective of their mutational status. This is significant because melanoma is associated with a variety of mutations, including those with the BRAF gene which occurs in about half of melanoma patients who do not have targeted therapy options. The BRAF gene has multiple treatment options while other mutations do not, but the study conducted by the University of Queensland Diamantina Institute suggests that Anisina treats the disease regardless of the type of mutation.
Elsewhere, Daxor Corp. (Nasdaq) leaped $1.97, or 34%, to $7.76 after receiving approval from the U.S. Patent Office for its Total Body Albumin Analyzer. The patent for the total body albumin analyzer is the first one issued for an instrument to measure the total albumin within the human body. Many diseases such as congestive heart failure, diabetes, kidney disease, involve loss of albumin concentration within the circulation. New York-based Daxor has also been issued a patent covering new technology used in its automated Blood Volume Analyzer. The test for measuring blood volume currently uses five sample points to provide an accurate measurement of a subject’s blood volume by measuring the dilution of a tracer in the subject’s bloodstream over a thirty-five minute period.
And hot biotech Sucampo Pharmaceuticals Inc. (Nasdaq) rocketed $4.25, or 27%, to $19.92 after brokerage Guggenheim launched coverage with a “Buy” rating, seeing multiple growth drivers ahead. Analyst Louise Chen wrote that Bethesda, MD-based Sucampo’s constipation drug Amitiza still has growth potential, despite growing competition from Actavis Plc’s and Ironwood Inc.’s Linzess. She added that further indications and formulations of Amitiza that are in development, along with Sucampo’s other drug candidate cobiprostone, could add up to $1.1 billion in annual sales and contribute $4.91 to EPS.
But Nymox Pharmaceutical Corp. (Nasdaq) plummeted 31% to $1.20 as investors took profits following four straight days of gains the prior week during which shares rose more than 175%. The stock soared after the company announced that it would begin further analyses of its phase III studies of NX-1207 for prostate enlargement (BPH). These analyses will include new long-term data from studies of NX02-0017 and NX02-0018. St. Laurent, QC-based Nymox plans to provide these new late-stage trial results in the second quarter or early third quarter.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Adaptimmune Therapeutics Ltd., which is developing cancer immunotherapies based on genetically engineered T-cell receptors, registered up to $150 million worth of common. The Abingdon, United Kingdom-based company, which was founded in 2008, plans to list on the Nasdaq under the symbol “ADAP.” Adaptimmune Therapeutics initially filed confidentially on February 5, 2015. BofA Merrill Lynch, Cowen & Company and Leerink Partners are the joint bookrunners on the deal. No pricing terms were disclosed.
April 6, 2015 ...
UNITEDHEALTH BUYS PHARMACY BENEFITS MANAGER CATAMARAN -- UnitedHealth Group Inc. (Minnetonka MN) agreed to buy Catamaran Corp. (Schaumburg IL) for about $12.8 billion, bulking up its drug-benefits business to get better negotiating power in talks with pharmaceutical companies over prices. UnitedHealth will pay $61.50 a share, financing the acquisition with cash and debt, the companies said in a statement. The offer, which would be UnitedHealth’s largest purchase ever, is 27% more than Catamaran’s closing share price prior to news of the deal. Benefits managers like Catamaran help administer the drug coverage in health plans, working with employers and insurers to negotiate with drug companies and pharmacies. They also often oversee patients’ drug use, maintaining lists of covered drugs and handling mail orders or complex treatments. The deal will put more pressure on drugmakers and the prices they charge. The pharmacy benefits industry has become the focal point of tensions between drug companies and customers over the cost of new treatments. Express Scripts Holding Co. (St. Louis MO), the biggest in the industry, successfully led a campaign last year to push for discounts on $1,000-a-day treatments for hepatitis C from drugmakers Gilead Sciences Inc. (Foster City CA) and AbbVie Inc. (North Chicago).
The Catamaran deal lets UnitedHealth bet more on growth in drug benefits as the initial surge of new health-insurance customers from Obamacare begins to slow. The biggest U.S. health insurer will combine Catamaran with its drug-benefit unit, called OptumRX, giving it a broader base of customers. Optum “has largely been servicing United’s captive business,” said Ana Gupte, an analyst at Leerink Partners. “They have aspirations to broaden that.” Adding scale will help UnitedHealth drive a harder bargain in negotiations with drugmakers and pharmacies said Steve Halper, an analyst at FBR & Co. “They have a lot more clout,” Halper said. “You’re negotiating with the manufacturers for rebates and pricing with a much larger base.” UnitedHealth closed the week off 1% at $117.36 in New York. Catamaran gained 23% to $59.26.
SUPREME COURT RULES MEDICAID PROVIDERS CAN'T SUE STATES FOR HIGHER PAY -- Hospitals and other healthcare providers can’t sue to challenge reimbursement rates set by states under the Medicaid insurance program for the poor, the U.S. Supreme Court ruled. The 5-4 decision last Tuesday is a blow to hospitals, which claim that Medicaid rates aren’t covering their costs. Providers now will have to take any objections to rates to the U.S. agency that oversees the joint federal-state program. Writing for the court, Justice Antonin Scalia rejected contentions that the U.S. Constitution authorized reimbursement lawsuits. Providers pointed to the Constitution’s supremacy clause, which says federal law trumps contrary state requirements. That provision “instructs courts what to do when state and federal law clash, but is silent regarding who may enforce federal laws in court, and in what circumstances they may do so,” Scalia wrote. Chief Justice John Roberts and Justices Samuel Alito, Clarence Thomas and Stephen Breyer joined Scalia in the majority. Justices Sonia Sotomayor, Ruth Bader Ginsburg, Elena Kagan and Anthony Kennedy dissented.
The dispute stems from reimbursement rates set by Idaho for services provided to people with developmental disabilities. Healthcare providers sued the state, claiming the reimbursement rates were too low to comply with the federal Medicaid law. A federal court agreed and said the rates were unlawful because the state didn’t consider provider costs. The American Hospital Association and the Federation of American Hospitals, in a court brief supporting the Idaho healthcare providers, said the cost of providing care to Medicaid beneficiaries in 2012 exceeded reimbursements by $13.7 billion. California said in court papers that since 2008, litigation over reimbursements has required the state to give Medicaid providers more than $1.5 billion in “excess payments” that are unnecessary to ensure beneficiaries receive quality care. The federal appeals circuit covering California allowed challenges by providers. The case is Armstrong v. Exceptional Child Center, 14-15.
TRACKING WASHINGTON -- Medicare is reported to have spent over $4.5 billion on the new, advanced, and highly expensive drugs for the treatment of hepatitis C during 2014, a 15 times increase in spending compared to the previous year’s spending on older, conventional treatments for the disease, as per previously undisclosed federal data. According to Sean Cavanaugh, director of Medicare and deputy administrator at the Centers for Medicare and Medicaid Services (CMS), “Part D,” a Medicare prescription drug benefit program, spent $286 million in 2013 on the earlier-generation hepatitis C drugs. The expenditure figures from last year dwarf these figures from 2013. The exorbitant costs of these new-generation hepatitis C treatments will be paid mostly by the federal taxpayers, who contribute the most toward the Medicare’s prescription drug program. The total expenditure for 2014 on hepatitis C drugs amounts to over $4.7 billion, out of which only $157 million have been spent on the drugs which belong to the earlier classes of hepatitis C treatments. The major part of the expenditure was taken up by the new class of treatments including the $84,000 Sovaldi by Gilead Sciences Inc. (Foster City CA), which accounted for over $3 billion of the total Medicare expenditure.
In other news, a little-noticed provision of a bill passed by the House of Representatives with overwhelming bipartisan support would provide doctors new protections against medical malpractice lawsuits. The bill, which requires the government to measure the quality of care that doctors provide and rate their performance on a scale of zero to 100, protects doctors by stipulating that the quality-of-care standards used in federal health programs--Medicare, Medicaid and the Affordable Care Act--cannot be used in malpractice cases. The provision is nearly identical to legislative language recommended by doctors and their insurance companies. They contend that federal standards and guidelines do not accurately reflect the standard of care and should not be used to show negligence by a doctor or a hospital. Medicare, Medicaid and private insurers increasingly require doctors to report data that can be used to assess the quality of care. They then evaluate and pay them based on their performance.
FDA/EMA ROUNDUP -- Novartis AG (Basel CHE) was granted approval by the U.S. Food and Drug Administration for its new once-daily, oral formulation of Exjade (deferasirox) called Jadenu. The drug is designed for treating chronic iron overload resulting from blood transfusions in patients aged 2 years or older and chronic iron overload in patients aged 10 years or older who are suffering from non-transfusion-dependent thalassemia syndrome. Chronic iron overload may also develop into a disease called hemochromatosis, characterized by weakness, fatigue, pain in the joints or abdomen and even organ failure. The condition if left untreated can lead to lethal liver and heart damage.
Elsewhere, pharmaceutical giant Amgen Inc. (Thousand Oaks CA) announced that its supplemental New Drug Application for Kyprolis has won a priority review designation from the FDA. The drugmaker has been seeking a label expansion for treating patients suffering from relapsed multiple myeloma, and those who have undergone at least one treatment previously. Priority review status is normally granted by the FDA for drugs that are meant to target a largely unmet need in the healthcare market or for debilitating diseases for which no other viable and/or approved treatment options exist. The designation speeds up regulatory approval by shortening the FDA’s final decision time from the standard 10 months to six.
But for the second time last month, Amgen Inc. (Thousand Oaks CA) lost a battle over its effort to block a biosimilar version of its Neupogen drug, a $5.7 billion seller used to fend off infections during chemotherapy. On this latest occasion, the FDA denied a citizen’s petition that the biotech filed arguing that Sandoz, which plans to sell a biosimilar, violated federal law by failing to provide it with needed information by a specified deadline. In its filing, Amgen maintained that Sandoz, which is the Novartis AG generic drug unit, was required to provide a complete copy of its biosimilar marketing application 20 days after it was submitted to the FDA. The biotech also sought Sandoz’s manufacturing plans. The agency wrote that the law “generally, does not describe any FDA involvement in monitoring or enforcing” the exchange of marketing and manufacturing information. The FDA rejection follows a ruling by a federal court over the same issue. The litigation is not over yet as Amgen last week filed an appeal of the FDA ruling with another federal court.
Outside the U.S., AbbVie Inc. (North Chicago) has been given the go ahead by the European Commission (EC) to market its blockbuster drug Humira (adalimumab). Humira is used to treat severe chronic plaque psoriasis in adolescents and children of ages four and above. The drug is used with children who have responded inadequately to phototherapies and tropical therapy, or those who are unsuitable for those treatments. Market authorization from the EC means Humira can be used to treat severe chronic plaque psoriasis in each member state of the European Union. Plaque psoriasis is a chronic autoimmune skin condition, characterized by the excess piling of skin cells. These then form thick lesions and scales on the skin causing inflammation.
MEDICAL STOCK SPOTLIGHT -- Nymox Pharmaceutical Corp. (Nasdaq) led advancing issues, nearly tripling over the week to $1.73. St. Laurent, QC-based Nymox announced last Wednesday that it is undertaking further analysis of its pivotal phase III studies of NX-1207 for prostate enlargement (BPH). This will include new long-term data from Studies NX02-0017 and NX02-0018. Ultimately, the company expects to provide these new pivotal phase III study results in the second or early third quarter of this year. The NX02-0017 and NX02-0018 studies were initiated in 2009. NX02-0017, which consisted of 499 patients randomized, was completed in 2012. NX02-0018 had 498 randomized patients and was completed in 2013. At 12 months post-treatment, there was no overall top-line statistical significance for the efficacy of treatment in terms of BPH Symptom Score improvement versus controls. The safety profile of NX-1207 was excellent.
Elsewhere, Cellular Dynamics International Inc., a company in the forefront of making human cells that might someday be used to cure disease, more than doubled to $16.46 after saying it has agreed to be sold to Fujifilm Holdings Corp., Tokyo, for about $307 million. The company was co-founded in 2004 by University of Wisconsin-Madison scientist James Thomson, who is viewed as one of the most influential stem-cell scientists in the world. It became a publicly traded company in 2013 and is at the forefront of an area known as regenerative medicine, which uses our own cells, tissues and organs to promote healing. CDI has about 150 employees and will continue to operate in Madison and Novato, CA, as a subsidiary of Fujifilm, the companies said.
Burlington, MA-based Dyax Corp. (Nasdaq) soared $10.51, or 64%, to $27.05 after news surfaced regarding early testing for a new drug for hereditary angioedema (HAE). The early testing showed that the drug may prove to be a “best in class” option. RBC Capital Markets’ Michael Yee said: “Well above consensus expectations, and we reiterate that this drug looks like best-in-class HAE (treatment). Dyax impresses and clearly shows proof of concept that it can essentially reduce/prevent nearly all HEA attacks.” Hereditary angioedema, or HAE, is a rare disease of the immune system, affecting an estimated 1 in 10,000 to 1 in 50,000 people around the world. HAE causes attacks of spontaneous swelling that are often painful and severe. The most common locations of HAE attacks are the hands, feet, face, genitals, abdomen and larynx.
But Can-Fite BioPharma Ltd. (NYSE) plummeted $3.22, or 58%, to $2.32 after the company announced that its phase II/III trial for its psoriasis drug candidate CF101 did not achieve its primary endpoint. According to the company’s announcement, patients given CF101 in the trial did not show significant improvement in their condition compared with patients given a placebo. “We are disappointed that our trial did not meet its primary endpoint. Regretfully, in the PASI 75 (psoriasis area and severity index) and PGA (physician’s global assessment) we did not see any real effect in patients over placebo. We have not yet completed our analysis of secondary endpoint and sub-group analysis and intend to do that in the near future,” chief executive Dr. Pnina Fishman said. Petach, Tikva, Israel-based Can-Fite is continuing its R&D efforts related to other drugs and indications in its pipeline, he added.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Community Healthcare Trust Inc., a newly-formed REIT focused on acquiring healthcare properties, registered up to $143.7 million worth of common stock. The Franklin, TN-based company, which was formed in 2014, plans to list on the NYSE under the symbol “CHCT.” Community Healthcare Trust is a fully-integrated healthcare real estate company that was recently organized as a Maryland corporation to acquire and own properties that are leased to hospitals, doctors, healthcare systems or other healthcare service providers in non-urban markets. CHT initially filed confidentially on February 17, 2015. Sandler O’Neill and Suntrust Robinson Humphrey are the joint bookrunners on the deal. No pricing terms were disclosed.
March 30, 2015 ...
SENATE DELAYS VOTE ON MEDICARE PAYMENT “FIX” FOR TWO WEEKS -- The U.S. Senate will take up legislation to replace a formula for reimbursing doctors who treat Medicare patients when the chamber returns from a two-week recess, Senate Majority Leader Mitch McConnell (R-KY) said on Friday. The House had one day earlier passed the bill in an overwhelming 392-37 vote. Supporters had hoped the Senate would take up the measure before a two-week spring break that began once the chamber adjourned Friday. “We’ll turn to this legislation very quickly when we get back,” Mr. McConnell said. “There’s every reason to believe it’s going to pass the Senate by a very large majority.” Congress has long wanted to replace the formula for calculating doctor payments, which was set by a 1997 budget law. The formula was designed to rein-in increasing Medicare costs by tying increases in physician pay to economic growth. When healthcare costs rose faster than the economy, the formula resulted in cuts to doctor pay and Congress stepped in to avert the reductions. Congress has passed 17 such patches and without congressional action would face either another patch or else would allow doctors to receive a 21% cut in pay for Medicare patients treated starting April 1.
Dr. Robert Wah, the president of the American Medical Association, said his group was “extremely disappointed” that the Senate vote was delayed and said that physicians would face a “devastating” cut when the current patch expires just days from now. The Centers for Medicare and Medicaid Services has said that it takes a minimum of 14 days to pay claims from doctors. Lawmakers expect that if Congress acts soon enough the government would be able to make payments without imposing the pay cuts. One possible wrinkle is that Senate Minority Leader Harry Reid (D-NV) appeared to request votes on a limited number of amendments related the legislation. Mr. McConnell said that he would “be discussing the way forward” with Mr. Reid.
HUMANA TO NARROW FOCUS OUTSIDE INSURANCE WITH CONCERTA SALE -- Health insurer Humana Inc. (Louisville KY) will sell its Concentra clinics unit for $1.06 billion in cash, less than five years after buying the business to expand into occupational health and physical therapy services. Concentra is being acquired in a joint venture by Select Medical Holdings Corp. (Mechanicsburg PA), which runs hospitals, and the private equity firm Welsh, Carson, Anderson & Stowe (New York), Humana said in a statement. Welsh Carson sold the business to Humana in 2010 for about $800 million. Concentra had about $1 billion in revenue last year. The unit runs about 300 clinics offering primary care, physical therapy and wellness services in 38 states, as well as about 250 workplace health clinics. Concentra was a way for Humana to “expand convenient, affordable high-quality health care for its membership base,” the health insurer said in the statement. Since then, Humana has decided to focus on primary care services, instead of workplace injury care, which was Concentra’s focus. “Concentra’s operations did not ultimately align with Humana’s strategy as well as we had originally anticipated,” Humana CEO Bruce Broussard said in the statement. “We expect Humana will continue to invest in other primary care assets.”
Concentra was founded in 1979, and pitches itself to employers as a way to lower their healthcare costs by delivering basic services on site. It has about 6,000 workers, according to its website. The deal is expected to close in the second quarter of this year. Select Medical, which operates more than 100 hospitals and 1,000 outpatient rehabilitation clinics, closed the week up 12 cents at $14.75. Humana fell $5.27, or 3%, to $177.52.
TRACKING WASHINGTON -- The Republican-controlled Senate voted 52-46 along party lines early Friday morning to advance the first Republican budget in nearly a decade. The ten-year fiscal blueprint achieves balance in ten years with deep spending cuts and no new taxes. It also calls for full repeal of President Obama’s healthcare law and increased Medicare savings. The contours of the 2016 campaign season took shape throughout the lengthy Thursday debate, where senators powered through a marathon session of votes on politically charged amendments to the GOP’s 10-year budget proposal. The voted concluded at 3 a.m. Friday. Republicans offered amendments to increase defense spending, subject lawmakers’ salaries to spending caps, and undermine President Obama’s healthcare law. Meanwhile, Democrats countered with amendments to raise the minimum wage, mandate paid sick leave and increase protections for pregnant workers. Unlike in the House, where GOP leaders allow a limited number of votes on competing budgets, the Senate process allows for a “vote-a-rama” where any senator can offer an amendment to the budget resolution until debate is exhausted and a final passage vote is called.
In other news, the White House is due to issue an ambitious plan to slow the growing and deadly problem of antibiotic resistance over the next five years, one that requires massive investments and policy changes from a broad array of U.S. government health agencies, according to a copy of the report reviewed by Reuters. The 60-page report is the first ever to tackle antibiotic resistance so broadly. It was compiled by a government task force led by the administration’s top officials for health, agriculture and defense. Doctors and health experts have warned for decades that rising rates of resistant bacteria are leading to tens of thousands of deaths, threatening to nullify modern medical advancements. The goals include drastically reducing the rates of the most deadly “superbug” infections within five years, investing in new diagnostic tools and antibiotic drugs, and improving antibiotic use. Other tactics include surveillance and prescribing practices in livestock and hospitals and increasing international collaboration through foreign ministries of health and the World Health Organization.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration said it approved Abiomed Inc.’s (Danvers MA) miniature blood pump system that maintains heart function and circulation during high-risk procedures. The device, Impella 2.5 System, can be used during angioplasty and stenting, the agency said. Angioplasty and stenting are procedures used to re-open arteries in the heart that are blocked due to coronary artery disease. The news helped send shares up $10.31, or 17% for the week, to $70.31.
Elsewhere, Emergent BioSolutions Inc. (Rockville MD) said the FDA approved its treatment for inhaled anthrax, triggering a $7 million milestone payment from the Department of Health and Human Services (HHS). The company developed the treatment, Anthrasil, as part of a $160 million contract it signed in 2005 with the Biomedical Advanced Research and Development Authority (BARDA), a part of the HHS. Anthrasil, which is approved in combination with other antibacterials, is already being stored in the U.S. Strategic National Stockpile, the company said. The drug is made by Emergent Bio’s Cangene Corp. unit using plasma from healthy, screened donors who have been immunized with Emergent Bio’s Anthrax vaccine, BioThrax, the only FDA-licensed vaccine for the disease.
The FDA approved Regeneron Pharmaceuticals Inc.’s (Tarrytown NY) big-selling, eye-drug Eylea to treat diabetic retinopathy, the most common diabetic eye disease and a leading cause of blindness in adults. The agency’s decision marked the fourth approval for Eylea, an injectable medicine that had sales of $2.78 billion in 2014. The agency had previously approved Roche Holding AG’s rival drug Lucentis for diabetic retinopathy, a condition in which blood vessels in the eye swell and leak fluid, or in which abnormal new blood vessels grow, hampering vision. Eylea was initially approved for wet age-related macular degeneration, the leading cause of blindness in the elderly. It is also approved for diabetic macular edema and macular edema following retinal vein occlusion, all eyesight robbing conditions.
And outside the U.S, European regulators have postponed a decision on whether to recommend approval of a closely watched Bristol-Myers Squibb Co. (New York) drug that helps the immune system fight cancer, officials said on Friday. Nivolumab, which is already approved in the U.S. under the brand name Opdivo for melanoma and lung cancer, was on the agenda at a monthly meeting of European Medicines Agency (EMA) experts, but no verdict was reached. The committee is considering whether to recommend the antibody medicine for treating advanced melanoma in adults.
MEDICAL STOCK SPOTLIGHT -- Oramed Pharmaceuticals Inc. (Nasdaq) led a small group of advancing issues, soaring $2.61, or 66% for the week, to $6.54 on no company specific news. Volume was 12 times normal but analysts weren’t seeing any news or rumors to account for the move. Oramed Pharmaceuticals is a Jerusalem, Israel-based pharmaceutical company. The company engages in the research and development of pharmaceutical solutions for the use of orally ingestible capsules or pills for delivery of polypeptides. Its product portfolio includes ORMD-0801, an oral insulin capsule that completed phase IIa clinical trials for the treatment of diabetes; and ORMD-0901, an analog for GLP-1 gastrointestinal hormone, which is in pre-clinical trials for the treatment of type 2 diabetes.
Elsewhere, biotech Conatus Pharmaceuticals Inc. (Nasdaq) surged $1.51, or 24%, to $7.75. The San Diego, CA-based company announced top-line results from its phase II double-blind, placebo-controlled clinical trial of emricasan, a first-in-class, orally active pan-caspase protease inhibitor, in 38 patients with nonalcoholic fatty liver disease (NAFLD), including the subset of NAFLD patients with nonalcoholic steatohepatitis. The trial met its primary endpoint, showing a statistically significant reduction in alanine amino transferase in patients treated for 28 days with emricasan at 25 mg twice per day dosing compared to patients in the placebo control group. Conatus focuses on the development and commercialization of novel medicines to treat liver diseases in the U.S.
But MEI Pharma Inc. (Nasdaq) plunged $4.56, or 72%, to $1.74 after the company’s cancer drug failed to meet the main goal in a mid-stage study. The drug, pracinostat, was being tested in combination with chemotherapy drug azacitidine to treat patients with myelodysplastic syndrome (MDS)--a blood cancer where immature blood cells in the bone marrow fail to become healthy cells. The trial failure raised questions about the future of the drug, which is also being tested for another rare blood cancer. “The risk profile for pracinostat has significantly increased and one potential scenario is the discontinuation of the drug’s development,” Roth Capital’s Joseph Pantginis said, slashing his price target on the stock to $2.50 from $14 and downgrading it to “Neutral” from “Buy.” Pantginis said Pracinostat’s failure called into question a late-stage study of the drug in Acute Myeloid Leukemia (AML) patients, scheduled to begin in mid-2015.
And Ohr Pharmaceutical Inc. (Nasdaq) plummeted $6.52, or 70%, to $2.74 after saying its experimental eye drug failed the main goal in a mid-stage study as a combination therapy. The study tested the eye-drop solution, OHR-102, in combination with Roche Holding AG’s injectable eye drug Lucentis, in patients with wet age-related macular degeneration (AMD), the leading cause of blindness in the elderly. Ohr’s drug failed the study’s main goal of reducing the average number of Lucentis injections per patient when used in combination with the Roche drug. Wet AMD is characterized by the growth of new blood vessels under the retina and macula, a process known as choroidal neovascularization (CNV) that leads to a rapid deterioration in vision. Although a combination of OHR-102 and Lucentis improved visual clarity in about 42% of classic CNV patients, compared with 28% in the Lucentis monotherapy group, less of a benefit was seen in the overall population, the New York-based company said.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Blueprint Medicines Corp., a preclinical biotech developing kinase inhibitors for cancer and genetic diseases, registered up to $100 million worth of common stock. Blueprint bills itself as a patient-driven oncology company developing highly selective kinase inhibitors for genomically defined cancer subsets. Blueprint claims it has developed a platform that combines genomics with a novel library of kinase inhibitors, enabling Blueprint to rapidly develop potent highly selective compounds against clear genomic driver targets. The Cambridge, MA-based company, which was founded in 2008, plans to list on the Nasdaq under the symbol “BPMC.” Goldman Sachs and Cowen & Company are the joint bookrunners on the deal. No pricing terms were disclosed.
March 23, 2015 ...
POLL ON HEALTHCARE LAW SHOWS INCREASED SUPPORT -- The fight over Obamacare in Washington is as ferocious as ever, with a new Republican budget plan that would repeal the healthcare law Democrats passed five years ago. In the rest of the country, however, opposition to the law appears to be easing. The gap between favorable and unfavorable views of the Affordable Care Act is the narrowest in more than two years, according to a poll released last Thursday by the Kaiser Family Foundation (Menlo Park CA). The poll of 1,503 U.S. Adults found 43% opposed to Obamacare and 41% in favor. With a margin of sampling error of plus or minus 3 percentage points, the result was essentially an even split. Those in favor most often cited expanded access to insurance, while opponents cited cost. Negative views of the law increased in the months after October 2013, when the sign-up website healthcare.gov and some state insurance marketplaces were crippled by technology failures. Now the government reports that some 16.4 million Americans have gained insurance coverage under the law.
The future of the law is in the hands of the Supreme Court. The justices are considering whether to strike down the federal subsidies that make private healthcare plans affordable to millions of new enrollees, with a decision expected by late June. A majority of those polled by Kaiser thought a ruling against the subsidies would be harmful, a view shared by majorities of Democrats, Republicans, and independents. About two-thirds of the poll’s respondents said they wanted Congress to come up with a way to preserve subsidies if the court rules against the Obama administration. But their expectations for that are dim. Less than 20% said they were even “somewhat confident” that lawmakers in Washington could work together to find such a solution, and a majority said they were “not at all confident” Congress would fix the problem.
VALEANT TRUMPS ENDO WITH $11 BILLION BID FOR SALIX -- Salix Pharmaceuticals Ltd. (Raleigh NC) accepted a sweetened, $11.1 billion takeover offer from Valeant Pharmaceuticals International Inc. (Bridgewater NJ), leading rival bidder Endo International Plc (Dublin IRL) to withdraw. Valeant’s revised $173-a-share offer, which adds about $1 billion in cash for Salix stockholders, will be available through April 7, according to a statement from the companies. Endo dropped its offer of $175 a share in cash and stock, a price that had surpassed Valeant’s initial bid of $158 a share. Salix is the latest company swept up in a dealmaking stampede as pharmaceutical companies chase new drugs. Salix’s biggest products are for gastrointestinal disorders, including Xifaxan for travelers’ diarrhea and Uceris for ulcerative colitis. The company had previously agreed last month to be acquired by Valeant for about $10 billion in cash. ValueAct Capital Management LLC (San Francisco) and Pershing Square Holdings Ltd. (New York), which each have a big stake in Valeant, were involved in the talks to sweeten the bid for Salix, a person familiar with the matter said. ValueAct, which first invested in a much smaller Valeant in mid-2006, now holds more than 5.8% of the big company, according to data compiled by Bloomberg. Pershing Square reported a passive 4.9% stake.
The termination fee Salix would have to pay to walk away from the deal was boosted to $456 million from $356 million as part of the sweetened agreement, the companies said. “While we are disappointed with this outcome, we have been and will continue to be disciplined in our approach to potential acquisitions,” Endo said in a statement. “We would like to wish Salix and Valeant continued success as they move forward with their transaction.” Thwarted last year in a long-running quest to buy Botox-maker Allergan Inc. (Irvine CA), Valeant is counting on Salix’s Xifaxan getting an additional use approved by the U.S. Food and Drug Administration, for irritable bowel syndrome with diarrhea. Salix closed the week up 2% at $172.80 while Valeant rose 3% to $204.26. Endo jumped 6% to $92.37.
TRACKING WASHINGTON -- U.S. Senate Republicans proposed less aggressive federal budget cuts last week than their House counterparts, forgoing a massive revamp of the Medicare health system for seniors and setting up a conflict over defense spending. Senate Budget Committee Chairman Mike Enzi’s plan, like the House of Representatives plan, has little to no chance of becoming law as is. Instead, both mark the onset of the annual congressional budget battle and a test of Republicans’ ability to get things done since winning control of both houses of Congress for the first time since 2006. Enzi’s spending blueprint proposes $5.1 trillion in spending cuts and interest savings over 10 years, compared with $5.5 trillion in the House Republican budget released the prior day. The Senate version would achieve a budget surplus a year later, in 2025, and assumes nearly $1 trillion in revenue from some expiring tax breaks that have routinely been renewed. Like the House budget, Enzi’s plan gets the bulk of its savings from repealing the Affordable Care Act, also called Obamacare, and by cutting welfare programs and other federal benefits. The Senate version maintains statutory caps on the core defense budget and seeks thwart adding money to an off-budget war funding account. That puts it in direct conflict with the House’s plan to boost defense spending by adding $36 billion to the fiscal 2016 war operations budget.
In other news, the U.S. government recovered $3.3 billion in fiscal 2014 from individuals and companies that tried to defraud federal health programs, part of an effort by the Obama administration to improve enforcement and prevent abusive billing practices. The administration recovered $7.70 for every dollar spent investigating healthcare-related fraud and abuse in the past three years, according to a report released Thursday by the Health and Human Services Department and Justice Department according to the Wall Street Journal. That marks the third-highest return on investment since the antifraud program was launched nearly two decades ago, the report said. “These impressive recoveries for the American taxpayer demonstrate our continued commitment to this goal and highlight our efforts to prosecute the most egregious instances of health-care fraud and prevent future fraud and abuse,” HHS Secretary Sylvia Mathews Burwell said in a statement. The Obama administration has been intensifying its focus on fraud and waste by preventing abuse and cutting the time from when fraud is identified and an arrest is made. The recoveries, while substantial, are small compared to the estimated fraud in the system. More than $27.8 billion has been returned to the Medicare Trust Funds since the fraud and abuse program began in 1997, the U.S. report said.
FDA/EMA ROUNDUP -- GlaxoSmithKline Plc’s (London) drug to treat chronic breathing problems is safe and effective enough for adults with asthma to use but not adolescents, an advisory panel to the U.S. Food and Drug Administration concluded on Thursday. The panel voted 16-4 that Breo Ellipta should be approved for once-daily treatment of asthma in adults 18 years and older. It voted 19-1 that the data did not support approval for use in children aged 12 to 17. The FDA is not obliged to follow the advice of its advisory panels but typically does so. Glaxo licensed the product from Theravance Inc. in 2002. The drug consists of a corticosteroid, which reduces inflammation, and a long-acting beta-agonist, or LABA, called vilanterol, which is designed to open the airways.
Elsewhere, an independent FDA panel recommended unblinding a late-stage study testing Pharmacyclics Inc. (Sunnyvale CA) and Johnson & Johnson’s (New Brunswick NJ) Imbruvica, after the treatment was successful against two similar forms of cancer in combination with other drugs. Pharmacyclics, which recently agreed to be acquired by AbbVie Inc. for about $21 billion, said Imbruvica showed a statistically significant improvement in survival without disease progression, the study’s main goal. Imbruvica, which is co-marketed by Pharmacyclics and J&J, is already approved for four cancer indications in the U.S. The study is testing Imbruvica in combination with bendamustine and rituximab (BR), against a placebo in combination with BR, in 578 previously treated patients with chronic lymphocytic leukemia (CLL) or small lymphocytic lymphoma. Imbruvica is already approved for CLL patients who have had at least one prior therapy.
The FDA said an advisory panel will discuss the development of Ebola vaccines, days after an American health worker was flown back after being tested positive for Ebola in Sierra Leone. The agency would discuss the development of vaccines on May 12, it announced on its website last Wednesday. Ebola has so far claimed about 10,000 lives in Sierra Leone, Liberia and Guinea. Only a handful of cases have been reported in the U.S., Spain and Britain. The resurgence of the virus last year prompted drugmakers from across the world to develop new treatments that are in different stages of studies. Mapp Biopharmaceutical Inc.’s (San Diego CA) ZMapp and a compound from Tekmira Pharmaceuticals Corp. (Burnaby BC) have so far shown they could cure non-human primates given injections of Ebola virus.
And outside the U.S., Novartis AG (Basel CHE) has been given the green light in Europe for Jakavi to treat a rare blood cancer. Specifically, the drug, a JAK 1 and 2 tyrosine kinase inhibitor, has been approved by the European Commission for the treatment of adults with polycythemia vera (PV) who are resistant to or intolerant of hydroxyurea. PV is a rare and incurable blood cancer associated with an overproduction of blood cells that can cause serious cardiovascular complications, such as blood clots, stroke and heart attack. It affects roughly one to three people per 100,000 globally. Approximately 25% of patients with PV develop resistance to or intolerance of hydroxyurea and are considered to have uncontrolled disease.
MEDICAL STOCK SPOTLIGHT -- Esperion Therapeutics Inc. (Nasdaq) led advancing issues, soaring $37.94, or 51% for the week, to $112.33. The Plymouth, MI-based company announced positive results for its phase IIb study, ETC-1002-009, that evaluated the safety and efficacy of its new drug, ETC-1002, in reducing “bad” cholesterol levels in patients on stable statin treatment. ETC-1002 is designed to prevent the onset of cardiovascular diseases by reducing the low-density lipoprotein (LDL) levels in patients. The once-daily, oral drug is not designed to replace statins--the standard prevention therapy for heart ailments since the 1990s. It will only work as a supplementary therapy to statins or will be recommended for patients who do not respond to statin treatment. The Phase IIb study on ETC-1002 succeeded in meeting the primary endpoint of lower LDL levels in patients treated with the drug, compared to those treated with a placebo.
Elsewhere, Retrophin Inc. (Nasdaq) rocketed $7.58, or 51%, to $22.34. The New York-based orphan-drug biotech is the new owner of an FDA-approved, rare disease treatment and a potentially lucrative voucher for a future speedy review thanks to a $75 million buyout agreement. Baltimore’s Asklepion Pharmaceuticals Inc. won approval for Cholbam, a treatment for a rare group of bile acid synthesis and peroxisomal disorders. And, under a January agreement, Retrophin has exercised its rights to acquire the company, paying $27 million in cash and 661,278 shares with the promise of $37 million additional tied to sales milestones. Alongside Cholbam, Retrophin also gets a Rare Pediatric Disease Priority Review Voucher, which the FDA granted Askelpion in tandem with the approval. The voucher guarantees its user a 6-month agency review, cutting short the standard 10-month process, and can be sold to the highest bidder.
And Prothena Corp Plc (Nasdaq) surged $9.51, or 33%, to $38.66 after saying its Parkinson’s disease treatment showed the ability to safely reduce a key protein potentially linked to the disease in an early stage study. The treatment, known as PRX002, is one of a new class of drugs known as immunotherapies, which use the body’s immune system to fight diseases. Dublin, Ireland-based Prothena is joining with Swiss-based Roche Holding AG to develop the drug. PRX002 is a monoclonal antibody that reduces free serum alpha-synuclein, a protein potentially involved with the onset and progression of Parkinson’s in 96% of patients. Forty patients were involved in the phase I study and received either a single dose of the treatment or a placebo. As part of its development pact with Roche, the biotech company received $45 million in milestone payments. It could receive up to $600 million.
But Anthera Pharmaceuticals Inc. (Nasdaq) skidded $1.14, or 21%, to $4.34 after reporting a loss of $7.4 million, or 32 cents per share, in its fourth quarter. For the year, the Hayward, CA-based company reported that its loss narrowed to $29.6 million, or $1.36 per share. Anthera shares have more than tripled since the beginning of the year. Separately, analysts at Zacks downgraded shares of Anthera from an “Outperform” rating to a “Neutral” rating and set a $3.90 price target on the stock. Anthera is a biopharmaceutical company focused on developing and commercializing products to treat serious diseases associated with inflammation and autoimmune diseases. The company’s primary phase III product candidate, blisibimod, targets elevated levels of B-cell activating factor (BAFF), which has been associated with a variety of B-cell mediated autoimmune diseases, including lupus.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Cidara Therapeutics Inc., which is developing novel therapies for fungal infections, registered up to $69 million worth of common stock. Cidara plans to use $25 million from the IPO to develop its lead drug, the IV CD101 along with a parallel topical formulation program for CD101 through phase II and into the start of phase III. Another $25 million will be devoted to advancing pre-clinical programs and its development platform, called “Cloudbreak.” The company is not yet generating product revenue. In February, Cidara completed a $42 million Series B financing to fund its drug-development programs. Cidara reported a net loss of $11.9 million for 2014, up from a net loss of $1.3 million in 2013 according to its preliminary prospectus. The San Diego, CA-based company, which was founded in 2012, plans to list on the Nasdaq under the symbol “CDTX.” Jefferies and Leerink Partners are the joint bookrunners on the deal. No pricing terms were disclosed.
March 16, 2015 ...
OBAMACARE SIGNUPS APPROACH 12 MILLION -- Nearly 11.7 million people have either signed up or re-enrolled for insurance coverage under the U.S. healthcare reform law, more than the 9.1 million predicted by the Obama administration, health officials said last week. As of Feb. 22, about 8.8 million signed up in one of the 37 states that use online exchanges operated by the federal government and 2.85 million were in the 14 states, and Washington, D.C., that operate their own exchanges, the Department of Health and Human Services said in a statement. The Democratic-backed Affordable Care Act, narrowly passed by Congress in 2010 over unified Republican opposition, aimed to help millions of Americans without health insurance obtain coverage. Conservatives criticize the law, commonly called Obamacare, as government overreach. The online exchanges, or marketplaces, are geared toward those who do not receive insurance through their employer and provide tax subsidies on a sliding scale to make health coverage affordable for low-income people. In the states that use the federal exchange, called healthcare.gov, 87% qualified for a tax credit averaging $263 per month, according to HHS. It said more than half of consumers in states using healthcare.gov bought a plan that cost $100 or less after tax credits.
Enrollment across the board has largely exceeded expectations, health officials said. The enrollment period for 2015 coverage opened on Nov. 15 and closed on Feb. 15. President Barack Obama’s healthcare policy has been challenged in the courts since the outset. In the latest case, the U.S. Supreme Court heard arguments on March 4 and is expected to decide this year whether or not to throw out tax subsidies in states that do not operate their own marketplaces. If the court rules against the Obama administration, up to 7.5 million people in at least 34 states would lose the tax subsidies, according to consulting firm Avalere Health LLC (Washington DC). More than 4.1 million people under 35 years old have purchased health insurance through state and federal exchanges, the HHS said last week, about a third of enrollees.
VALEANT SAID TO BE PLANNING TO RAISE ITS BID FOR SALIX -- Valeant Pharmaceuticals International Inc. (Laval Quebec) is planning to team up with Pershing Square Capital Management LP (New York) and other top shareholders, including ValueAct Capital LLC (San Francisco), to raise its bid for Salix Pharmaceuticals Inc. (Raleigh NC) this past weekend, according to people briefed on the matter. The raised offer will be above $160 a share and consist entirely of cash, these people said. The exact price of Valeant’s new offer was not yet known. Valeant hopes that the increased offer will be enough to end a bidding war that has erupted over Salix, a maker of gastrointestinal drugs. Valeant agreed to buy Salix for $158 a share in cash, or about $10 billion, last month. But last week, the drug giant Endo International Plc (Dublin IRL) offered $11.2 billion, or $175 a share, mostly in stock, for Salix. Although the Endo bid is higher, it also introduces several uncertainties to the sale process for Salix. Among the top concerns for analysts are the need for shareholder votes, a large stock component and the results of a pending treatment approval by the Food and Drug Administration. Valeant Pharmaceuticals is planning to team up with William Ackman in hopes that an increased offer will be enough to end a bidding war for Salix.
Analysts said the Endo offer sent Salix shares trading substantially higher, making it difficult for Valeant to stand by its lower bid. Details of Valeant’s new bid were still coming together on Friday afternoon. The Salix board reportedly met on Saturday to consider the rival offers, these people said. The chief concern for the board members’ is whether a deal would provide certainty for the company’s shareholders. That would suggest they may be leaning toward accepting an all-cash offer that does not require a vote. To finance the increased offer, Valeant is turning to top shareholders, including Pershing Square, the hedge fund run by Ackman. Earlier this month, it emerged that Pershing Square had taken a nearly 5% stake in Valeant but pledged to remain a passive investor. “In order for them to take the Endo transaction, they have to walk away from an all-cash deal,” Mr. Ackman said. “If you think Valeant is getting it on the cheap, then you should buy Valeant stock, which is what we did. We think Valeant stock is very cheap.” Salix shares closed the week up 7% at $169.40. Valeant slipped 1% to $197.43. Endo fell 30 cents to $87.33. (Source: New York Times)
TRACKING WASHINGTON -- More than 85% of Americans who signed up for health coverage this year through the Affordable Care Act qualified for government subsidies, according to a new report that underscores the scope of the aid at a time when the Supreme Court is considering sharply restricting it. Altogether, close to 10 million of the 11.7 million people who enrolled in coverage this year could get subsidies, the report from the U.S. Department of Health and Human Services shows. Reliance on government aid is higher in states where the federal government operates insurance marketplaces than in states like California that run their own systems. The legal challenge being considered by the Supreme Court would strip away subsidies in states that rely on the federal government, affecting as many as 7.7 million people, according to the report. In many of those states, consumers are getting subsidies that top $300 a month on average, according to the data. In Mississippi, for example, that has meant the difference between an average monthly premium of $405 without subsidies and $52 with them. In Texas, the average premium drops from $328 a month to $89 a month with aid. “We now know in very tangible terms how much assistance the Affordable Care Act is providing to people,” said Larry Levitt, senior vice president at the nonprofit Kaiser Family Foundation (Menlo Park CA).
In other news, the physicians who treat Medicare patients would avoid a cut in their government reimbursements under a proposal to be presented to U.S. House members this week, according to Republican and Democratic aides. The bipartisan $200 billion framework to replace Medicare’s cost-containment formula for doctor reimbursement was negotiated by House leaders of both parties and members of the committees with jurisdiction over Medicare. Some of the cost would be offset with $35 billion worth of Medicare savings from beneficiaries over 10 years. Another $35 billion over a decade would come from reducing or delaying higher payments to hospitals and other Medicare service providers over time, the aides said. The rest would be offset with $130 billion worth of adjustments in the budget resolution that would include government health programs, said a Republican aide who spoke on condition of anonymity because the proposal hasn’t been presented to members. There’s pressure on Congress to act by March 31 to prevent a more than 20% cut in payments to doctors for treating Medicare patients. Congress has avoided such payment cuts 17 times by passing what has become known as “doc-fix” legislation.
FDA/EMA ROUNDUP -- Boston Scientific Corp. (Marlborough MA) said on Friday that the U.S. Food and Drug Administration approved its device to prevent stroke in patients with a dangerous irregular heart rhythm known as atrial fibrillation (AF). The tiny umbrella-shaped product, called the Watchman Left Atrial Appendage Closure Device, is designed to spare heart patients a lifetime of taking anticoagulant drugs, such as warfarin, that carry a high risk of bleeding. The device will be made available to U.S. centers involved in Boston Scientific's clinical studies and additional specialized centers, the company said. People with AF, the most common type of arrhythmia, are five times more likely to suffer a stroke than those without the condition.
Elsewhere, an injection for double chin reduction developed by Kythera Biopharmaceutical Inc. (Calabasas CA) was unanimously backed by an independent panel of experts, bringing the drug a step closer to approval by the FDA. The FDA typically accepts the panel’s recommendations. The drug, ATX-101, is a formulation of synthetically derived deoxycholic acid, which destroys fat under the chin, leaving surrounding tissue largely unaffected.
AcelRx Pharmaceuticals Inc. (Redwood City CA) said the FDA is calling for an additional clinical trial to assess risk tied to its experimental pain-management treatment, further delaying its potential approval and marketing. The device, Zalviso, is designed for moderate-to-severe pain management in hospital settings. The FDA has said the company must perform an additional clinical study to assess the risk of inadvertent dispensing, as well as overall risk of dispensing failures. AcelRx said it won’t be resubmitting Zalviso as a new-drug applicant candidate this quarter and plans to meet with the agency to discuss the new requirement.
Outside the U.S., Merck & Co.’s (Kenilworth NJ) cancer drug Keytruda, which works by boosting the immune system but has yet to be licensed in Europe, is the first medicine to be made available to patients in Britain under a new early access scheme. The Medicines and Healthcare Products Regulatory Agency said that the treatment had been cleared to treat adults and children from 12 years of age with advanced melanoma, the deadliest form of skin cancer, after other drugs had failed. Keytruda, or pembrolizumab, was accepted under the scheme based on the significance of early study findings and unmet medical need. The new early access program is funded by drug companies. While Keytruda is already approved in the U.S., Merck’s application for marketing authorization in Europe is still under review.
MEDICAL STOCK SPOTLIGHT -- Amarin Corp Plc (Nasdaq) led advancing issues, soaring $1.12, or 63% for the week, to $2.90 following a major upgrade by brokerage H.C. Wainwright. Specifically, the firm placed a “Buy” rating on the stock (up from “Neutral”) and said they believe the stock has an incredible 515% potential upside. Amarin has been a disaster stock since the Food and Drug Administration revoked the Special Protocol Assessment, or SPA, agreement for the Dublin, Ireland-based company’s ANCHOR clinical trial of its prescription fish-oil pill Vascepa. The FDA repealed the SPA due to issues over the clinical trial’s design and doubts about the ability of fish oil pills to improve cardiovascular outcomes.
Elsewhere, MELA Sciences Inc. (Nasdaq) leaped $1.21, or 62%, to $3.04. The company had the “Buy” rating on its stock reaffirmed by analysts at H.C. Wainright in a report released on Thursday. Irvington, NY-based MELA, a medical device company, designs, develops, and commercializes a non-invasive point-of-care instrument to aid in the detection of melanoma. The company’s principal product, MelaFind, comprises a hand-held component that emits light of multiple wavelengths to capture digital data from clinically atypical pigmented skin lesions.
And small-cap Lion Biotechnologies Inc. (OTCMKTS) surged $4.12, or 46%, to $13.12. Piper Jaffray assumed coverage on the Woodland Hills, CA-based company’s shares in a report issued last week. The firm issued an “Overweight” rating and a $21.00 target price on the stock, saying, “The company has a license from the NIH to develop TILs (tumor infiltrating lymphocytes) to treat melanoma as well as other solid tumors likely to be responsive to this approach. Unlike some emerging cellular therapy platforms, TILs have a unique advantage in being able to target a repertoire of individualized tumor antigens. With highly promising results already reported in melanoma, we believe LBIO’s platform will play a very important role in the evolving cancer immunotherapy space.”
But AcelRx Pharmaceuticals Inc. (Nasdaq), a specialty pharmaceutical company focused on the development and commercialization of innovative therapies for the treatment of pain, suffered a 54% smackdown to $4.68 due to an unanticipated FDA request relating to ongoing clinical trials. AcelRx’s key product is Zalviso, a patient-activated, handheld device which allows a hospital patient to self-administer pain medication, bypassing the invasive procedure of using an IV. The product--which had already successfully undergone three phases of clinical trials--was rejected by the FDA in July. After fulfilling additional FDA requests for more data, the Redwood City, CA-based company hoped to resubmit Zalviso for approval later this March. But just prior to the company’s fourth-quarter earnings conference, the FDA made an additional request for yet another clinical trial to assess the device’s dispensing risks, pushing back the resubmission date.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Par Pharmaceuticals Inc., which manufactures and distributes generic and branded drugs in the U.S., registered up to $100 million worth of common stock. However, the deal size is likely a placeholder for an IPO that some analysts estimate could raise as much as $700 million or more. Par is controlled by equity investment firm TPG, which bought the publicly-traded generic drugmaker in September 2012 for $1.9 billion. The Woodcliff Lake, NJ-based company, which was founded in 1978 and booked $1.3 billion in sales for the 12 months ended December 31, 2014, has not yet chosen which market to list on but plans to list under the symbol “PRX.” J.P. Morgan, Goldman Sachs, and Citi, are among the joint bookrunners on the deal.
March 9, 2015 ...
U.S. SUPREME COURT SPLIT OVER OBAMACARE CHALLENGE -- The Supreme Court appeared clearly divided last week during heated arguments over the fate of President Obama’s healthcare law with the court’s four liberal members voicing strong support for the administration’s position. But the administration must almost certainly capture the vote of either Chief Justice John G. Roberts Jr. or Justice Anthony M. Kennedy to prevail. The chief justice said almost nothing. Justice Kennedy asked questions suggesting that he was uncomfortable with the administration’s reading of the statute. But he added that the challengers’ reading posed problems, too. “Your argument raises a serious constitutional question,” he told their lawyer. Solicitor General Donald B. Verrilli Jr. argued for the Obama administration, facing Michael A. Carvin, who represented the plaintiffs in another challenge to the law that reached the Supreme Court in 2012. The argument, which lasted 80 minutes rather than the usual hour, started with a presentation from Mr. Carvin that was tied closely to the text of the law. “This is a straightforward question of statutory interpretation,” he said, referring to a provision in the law that seems to say that subsidies are available only to people living where the insurance marketplaces, known as exchanges, had been “established by the state.”
Mr. Carvin faced a barrage of questions from the court’s liberal wing focusing on the healthcare law as a whole. “We don’t look at four words,” Justice Elena Kagan said. “We look at the whole text.” Justice Stephen G. Breyer echoed the point. “If you want to go into the context” of the law, he told Mr. Carvin, “at that point your argument really is weaker.” Justice Sonia Sotomayor said Mr. Carvin’s reading of the law would have devastating consequences. “We’re going to have the death spiral that this system was enacted to avoid,” she said. Justice Kennedy repeatedly asked whether Congress had the constitutional authority to make states choose between setting up their own insurance exchanges and letting their citizens lose tax subsidies to help them buy insurance. “There is a serious constitutional problem here if we adopt your position,” he told Mr. Carvin. Justice Kagan made a similar point, saying that a properly drafted law would have made the choice starker. “That’s not the clarity with which we expect the government to speak when it’s upsetting federal-state relations,” she said. The court’s decision is expected in late June.
ABBVIE TO BUY PHARMACYCLICS IN $21 BILLION DEAL -- AbbVie Inc. (North Chicago) is buying Pharmacyclics Inc. (Sunnyvale CA) for about $21 billion, giving it access to what is expected to be one of the world’s top-selling cancer drugs and expanding its reach in the profitable oncology field. The deal--the latest example of a big drugmaker swooping on a biotech firm to refill its medicine pipeline--bewildered industry observers’ expectations that Pharmacyclics would sell out to Johnson & Johnson (New Brunswick NJ). AbbVie will pay $261.25 per share in cash and stock, a 13% premium to Pharmacyclics’ closing price prior to news of the deal. Back in 2008 and 2009, the shares dipped below $1. The acquisition lessens AbbVie’s dependence on its blockbuster rheumatoid arthritis drug Humira that accounts for most of its revenue but is expected to start to see sales decline from 2017 or 2018. AbbVie failed last October to buy Dublin-based Shire Plc for $55 billion after the U.S. took steps to deter such tax-lowering deals. Deutsche Bank analyst Robyn Karnauskas said the deal was positive for AbbVie as Pharmacyclics’ blood cancer treatment Imbruvica would diversify the business beyond Humira. “Imbruvica is not only complementary to AbbVie’s oncology pipeline, it has demonstrated strong clinical efficacy across a broad range of hematologic malignancies,” AbbVie CEO Richard Gonzalez said in a statement.
Pharmacyclics expects U.S. sales of Imbruvica to hit $1 billion this year and by 2020 worldwide sales are forecast to reach $5.8 billion, according to consensus analyst estimates compiled by Thomson Reuters Cortellis. AbbVie, which was spun out of Abbott Laboratories Inc. (Abbott Park IL) in 2013, said the deal would be “highly accretive” to its revenue and earnings by 2017. Pharmacyclics co-markets Imbruvica with Johnson & Johnson. Besides Imbruvica, it has three product candidates in development. In a statement, J&J said: “We’re looking forward to continuing our collaboration with the team at AbbVie to further develop and commercialize this important therapy for patients and their healthcare teams.” Media reports had said J&J was close to buying Pharmacyclics. Novartis AG (Basel CHE) was also interested in the company, a report said. The deal, expected to close in the middle of the year, comprises about 58% cash and 42% AbbVie common stock. Pharmacyclics shareholders can opt for cash, AbbVie stock or a combination, AbbVie said. Pharmacyclics closed the week up 18% at $254.56. AbbVie fell 8% to $55.64.
TRACKING WASHINGTON -- The Supreme Court argument over subsidies that help millions of people afford their health insurance suggests that the Obama administration has two chances to attract one critical vote, according to some court observers. The justices gathered in private Friday to cast their votes in the case. The outcome after Wednesday’s argument appears to be in the hands of two conservative justices--one who voted with the court’s four liberals to uphold the law in 2012 and the other who joins the liberals more often, but who would have demolished the entire law three years ago. If Justice Anthony Kennedy had his way in 2012, there would be no healthcare case because there would be no Affordable Care Act. Last Wednesday, Kennedy at least left open the possibility that he would not vote the same way again because of a legal concept known as constitutional avoidance. The idea is that judges should avoid interpreting a law in a way that raises constitutional problems if there’s any other reasonable way to view it. The dispute focuses on four words in the massive health law, “established by the state,” which the challengers say is clear evidence that Congress intended subsidies to go only to people in states that created their own health insurance marketplaces, or exchanges.
The idea was to have a carrot-and-stick approach, the challengers’ lawyer, Michael Carvin, said. Congress wanted states to establish their own exchanges and held out generous subsidies to the residents of those that did. But Kennedy said such a scheme would raise a serious constitutional question about whether the federal government was trying to coerce the states to act. Kennedy told Carvin that “if your argument is accepted, the states are being told either create your own exchange or we’ll send your insurance market into a death spiral.” He repeated his concern when Solicitor General Donald Verrilli Jr. defended the administration’s view that subsidies are available everywhere because Congress did not want a law designed to reduce the number of uninsured Americans to leave people unable to afford insurance based on where they live. If Carvin is right, “this is just not a rational choice for the states to make and they’re being coerced,” Kennedy said. “And that you then have to invoke the standard of constitutional avoidance.”
FDA/EMA ROUNDUP -- On Friday, the U.S. Food and Drug Administration cleared the first-ever imitation of a bioengineered drug, which Novartis AG (Basel CHE) will call Zarxio, according to a statement from the agency. Novartis agreed to delay selling the biosimilar in the U.S. until a lawsuit with Amgen Inc. is resolved or until April 10, whichever is earlier, said Julie Masow, a spokeswoman. Amgen’s Neupogen generated $1.2 billion in sales last year as a therapy to help increase cancer patients’ white blood cell counts and fight infections. The drug is part of a class of medicines called biologics that have never faced generic competition. The 2010 Patient Protection and Affordable Care Act authorized the FDA to approve imitations of biologics. They are called biosimilars rather than generics because biologics are manufactured from living organisms and can’t be precisely copied.
Elsewhere, Bristol-Myers Squibb Co. (New York) received an expanded U.S. approval for the use of its checkpoint inhibitor Opdivo to treat a form of advanced lung cancer. The new Opdivo approval covers patients with squamous non-small cell lung cancer no longer responsive to chemotherapy, according to an announcement made by the FDA. In December, Bristol’s drug was approved initially to treat skin cancer. The FDA moved exceptionally fast expanding Opdivo’s approval. Bristol said the lung cancer application was accepted last week with an approval decision expected in June. The worldwide commercial market for squamous cell lung cancer patients tops $3 billion, according to an analysis by Barclays.
The FDA rejected Pacira Pharmaceuticals Inc.’s (La Jolla CA) application to expand the use of its post-surgery pain drug, Exparel, sending the company’s stock down 16% for the week to $96.63. Exparel is currently injected directly into tissue at the site of an operation, a technique known as infiltration. Pacira applied to expand its use as a nerve-numbing injection, or nerve block, in March last year. Nerve blocks work by introducing a local anesthetic close to a nerve, allowing the drug to control pain in a specific region of the body, such as the upper arm, thigh or lower leg. The FDA’s rejection could delay approval for the nerve block indication by at least a year, Canaccord Genuity analyst Corey Davis said. The drug’s main indication for post-surgical pain is still the company’s primary revenue driver, Pacira said.
And outside the U.S., Pfizer Inc.’s (New York) blockbuster vaccine against pneumonia and other bacterial infections won another approval, for use in European Union residents aged 18 and older. Prevnar 13, called Prevenar 13 in some countries, is the best-selling vaccine ever. It protects against 13 strains of pneumococcal disease, the most common bacterial cause of pneumonia and a top cause of death and hospitalization worldwide. It also causes children’s ear infections, bloodstream infections and other illnesses. Pfizer says more than 750 million doses have been distributed worldwide. Last year, Prevnar’s global sales reached $4.5 billion, making it the No. 2 product for the company, which also makes Lipitor and Viagra. In the U.S., it’s approved for children from six weeks through 17 years old and adults over 49.
MEDICAL STOCK SPOTLIGHT -- CorMedix Inc. (Nasdaq) led advancing issues, surging $3.09, or 60% for the week, to $8.25. The Bridgewater, NJ-based pharmaceutical company focused on developing and commercializing therapeutic products for the prevention and treatment of cardiac, renal and infectious diseases, announced several strategic business updates. Chief among the moves is that the company has engaged investment bank Evercore as financial advisor to explore strategic alternatives in order to accelerate the global development of its Neutrolin catheter lock solution and maximize shareholder value. According to CorMedix, Neutrolin is a novel formulation of citrate and heparin 1000 u/ml that decreases the triple threat of infection, thrombosis and biofilm.
Elsewhere, Atara Biotherapeutics Inc. (Nasdaq) soared $8.75, or 45%, to $28.31 following an announcement that its collaborative partner, Memorial Sloan Kettering Cancer Center, New York, has received breakthrough therapy designation from the Food and Drug Administration for Atara’s optioned cytotoxic T lymphocytes, which is activated against Epstein-Barr Virus in the treatment of patients with rituximab-refractory, EBV-associated lymphoproliferative disease. Brisbane, CA-based Atara is a clinical-stage biopharmaceutical company developing therapeutics with an initial focus on muscle wasting conditions and oncology. Its product candidates are biologics targeting myostatin and activin, members of the Beta protein super family which play roles in the growth and maintenance of muscle and other body tissues. Its lead product candidate is PINTA 745 which is in a phase II clinical trial for protein energy wasting, a condition affecting many end-stage renal disease patients.
And Celladon Inc. (Nasdaq) leaped $5.85, or 32%, to $24.00. Roth Capital Partners initiated coverage of San Diego, CA-based Celladon with a “Buy” rating and 12-month price target of $70. According to Roth, Celladon is about to announce potentially pivotal trial results from a 250-patient, heart-failure, gene-therapy trial (CUPID 2) in April. There are over 11 million patients suffering from heart failure in the U.S. and key European countries. The number of people impacted by heart failure increases by one million every year--leading to a doubling of the prevalent population in 10 years, according to Roth. The total annual cost of treating heart failure today is $39 billion in the U.S. alone. Mydicar gene therapy, developed by Celladon, reduced the risk of hospitalizations, the need for a heart transplant and death by 88% in a previous study.
But Sunshine Heart Inc. (Nasdaq) plummeted $1.72, or 30%, to $4.03 after the early-stage medical device company temporarily suspended enrollment for a study of its signature C-Pulse system. The Eden Prairie, MN-based company said it will be taking a “temporary pause” from enrollment in accordance with the study protocol which stipulates: if “more than three of the first twenty subjects pass away for any reason, including non-device related deaths, the company will work with the FDA to discuss a plan to resume enrollment.” To date, of the four reported patient deaths, two have been adjudicated by an independent Clinical Events Committee (CEC) as being non-device related, the company noted. The FDA has advised the company to file an Investigational Device Exemption (IDE) supplement that discusses the reasons for the temporary study suspension and a plan for study resumption.
IPO SECTOR -- Summit Therapeutics Plc, which is developing novel therapies for muscular dystrophy and bacterial infections, raised $34 million by offering 3.45 million shares at $9.90, below its expected offer price of $11.54. Oxford, U.K.-based Summit, which already trades on the AIM market of the London stock exchange under the ticker “SUMM,” will list on the Nasdaq under the symbol “SMMT.” Summit is conducting clinical programs focused on the genetic disease Duchenne muscular dystrophy and the infectious disease Clostridium difficile infection. JMP Securities and Oppenheimer & Co. acted as joint bookrunners on the deal. Shares closed the week up 4% at $10.29 on the Nasdaq. They fell 22% to 141.50 pence in London.
March 2, 2015 ...
MORE THAN ONE MILLION AMERICANS SWITCHED HEALTH PLANS DURING ENROLLMENT SEASON -- About 1.2 million people who bought coverage on HealthCare.gov in 2014 dropped their health plan and picked a new one through the site for 2015, the Obama administration said last week. The extent of people’s willingness to consider shifting to a different insurance carrier came as a surprise to federal officials, said Andy Slavitt, a former top executive at UnitedHealth Group Inc. (Minnetonka MN) who is now principal deputy administrator at Centers for Medicare and Medicaid Services and will become acting administrator today. “This is a much more active consumer than anybody expected,” Mr. Slavitt said, noting that in other programs such as the federal employees’ health plan, or Medicare prescription drug benefits, as few as 10% of customers changed plans from year to year. “We wanted to create maximum choice while we had maximum consumer protection,” he said. Nearly two million people were automatically re-enrolled in their 2014 plans after taking no action for 2015. And just over one million came back to the site to review their options but made no changes, according to new figures from CMS, the federal agency overseeing implementation of the federal health law. In all, 4.17 million of this year’s sign-ups under the health law are people who had coverage through HealthCare.gov in 2014.
The Obama administration decided last summer to automatically renew coverage for people who didn’t come back to the site. They made that decision to minimize the risk that people would drop out, even though supporters of the health law worried it could financially harm people who didn’t review their insurance choices. The decision benefited insurers who offered low prices in the first year of the law’s exchanges and scooped up large numbers of customers, since many of those people did remain loyal. Many people using HealthCare.gov to buy insurance had good reason to shop around for 2015. Carriers that scooped up the largest number of customers in the first year typically increased their rates for the second year by around 10%, the Wall Street Journal found. At the same time, many insurers that were new to the exchanges for 2015, or had fared poorly the first year, offered aggressively low rates in an effort to undercut the market leaders. That influx of lower-priced plans had an additional, unexpected result: It pulled down the value of tax credits that many customers received to offset the cost of premiums. The credits are pegged to the price of the second-lowest-cost midrange plan in a given geographic area, as well as an enrollee’s income.
FBI CLOSING IN ON CULPRITS BEHIND MASSIVE ANTHEM HACK -- The Federal Bureau of Investigation said it’s close to finding the hackers responsible for the attack on health-insurance company Anthem Inc. (Indianapolis IN) that exposed personal data on about 80 million customers. FBI officials are still deciding whether to publicly reveal information about the attackers in one of the biggest thefts of medical-related customer data in U.S. history, Robert Anderson, the bureau’s executive assistant director for cyber security, said. Agency officials don’t want to compromise investigations or operations by any disclosures, he said. “If you’re going to be calling out nations or actor sets you’ve got to be willing to provide some of the technical findings,” Joseph Demarest, assistant director for the FBI’s cybercrime division, said in Washington. “Sometimes it’s almost impossible without giving up or compromising current ongoing efforts to understand those actors.” Investigators have found some evidence in the breach of Social Security numbers and other personal information that points to Chinese state-sponsored hackers, three people familiar with the probe told Bloomberg News early in February. Anderson said he didn’t know yet whether the Chinese government carried out the attack. The FBI is tracking 60 hacking groups backed by foreign governments, the majority of which come from China, Demarest told reporters.
Demarest also said that the Islamic State terrorist group in Syria and Iraq lacks the capability to carry out hacking attacks, although the FBI is concerned the group will acquire more sophisticated skills and tools. “In some of these cases you’re going to be able to identify actors much early on,” Anderson said. It will take longer to identify” the ones that are very sophisticated that can obfuscate their attack” by using different Internet protocol addresses around the world. In another case, the FBI and other U.S. agencies were able to determine within weeks that the North Korean government attacked Sony Pictures Entertainment. Anderson said there will be more cases like Sony in which the attackers are publicly named. “The Sony case is not going to be a one off,” Anderson said. “You’re going to see us start to do this because, honestly, the community and the guys and gals that are working cyber--both on the law enforcement and national security side--are getting better at it. You’re going to see this more often.”
TRACKING WASHINGTON -- Americans who obtained health insurance through an online federal marketplace and then filed tax returns using flawed forms provided by the government do not need to amend their returns, the U.S. Treasury said last week. “We have concluded that these individuals do not need to file amended returns,” a Treasury official said in a statement. The Obama administration said on Feb. 20 that 800,000 people who signed up for health insurance under the Affordable Care Act received incorrect tax forms and should wait to receive new ones before filing their taxes. The Treasury estimated that about 50,000 people have already submitted their returns, using the incorrect forms. However, these people do not have to worry about the Internal Revenue Service coming after them if it turns out they would have owed more money using the corrected forms. “The IRS will not pursue the collection of any additional taxes from these individuals based on updated information in the corrected forms,” said the official, who was not identified by name.
In other news, Senate Finance Committee Chairman Orrin Hatch (R-UT) is backing a Supreme Court challenge to one of the keystones of President Barack Obama’s healthcare law. Now, he says he’s preparing a plan to help people who might be hurt if his side wins the case. The Supreme Court is scheduled to hear arguments this week in a case by conservatives and Republicans that says many subsidies the law provides for millions of people are unconstitutional. They argue that the law only allows such subsidies for the 13 states that set up their own marketplaces to sell health insurance, not the 37 states that use the federal HealthCare.gov website. Democrats say the subsidies were supposed to go to people buying policies on either the federal or state marketplaces. Should the court uphold the suit--a decision is expected in June--millions of people could be forced to drop their health coverage because those subsidies make their insurance affordable. So Hatch told an audience at the conservative Heritage Foundation that he will release “a short-term solution for those Americans that may be affected by the decision” in that case. Hatch provided no details on what he might propose or when it would be ready.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration approved a new antibiotic combination to treat several hard-to-treat infections. The drug from Actavis Plc (Dublin IRL) contains two ingredients, cephalosporin and avibactam, designed to help fight antibiotic-resistant bacteria. The FDA approved Avycaz to treat certain abdominal infections, in combination with another drug, and for complicated urinary-tract infections, including kidney infections, for which there are few other options. Avycaz is the fifth drug given an expedited review by the FDA in an effort to make newer antibiotics available to fight drug-resistant superbugs. The most common side effects reported in company trials included vomiting, nausea, constipation and anxiety. The new drug will be distributed by Forest Laboratories, which was acquired by Dublin-based Actavis last summer.
The FDA also approved a hormonal contraceptive device from Actavis Plc on Friday that gives American women another reversible contraceptive choice as effective as sterilization. The intrauterine device (IUD) device, Liletta, releases the hormone levonorgestrel to inhibit thickening of the womb lining, preventing pregnancy for up to three years. Typically smaller than an iPod Shuffle, the IUD is a t-shaped piece of plastic that must be inserted into the uterus to prevent fertilization. Actavis holds the commercial license for the product, but the marketing application was submitted by non-profit pharmaceutical company Medicines360, which holds the U.S. public sector clinical rights. The companies expect the device, which also helps to check heavy menstrual bleeding, to be available in the United States by the second quarter of 2015. It is already in use in Europe.
Elsewhere, the FDA approved Novartis AG’s (Basel CHE) drug to treat patients who have relapsed after earlier therapies for multiple myeloma, an aggressive blood cancer, even though an advisory panel in November recommended against approval. The drug, Farydak, in clinical trials almost doubled to 10.6 months the amount of time it took for the disease to progress, compared with standard treatment. But it was associated with a wide array of serious side effects, including severe diarrhea and heart problems, which are prominently listed in a boxed warning. Farydak was approved for use in combination with Takeda Pharmaceutical Co Ltd.’s Velcade and the anti-inflammatory drug dexamethasone once a patient has received at least two prior treatment regimens. The FDA granted Farydak conditional approval, meaning that continued approval may hinge on demonstrating benefits in confirmatory trials.
And outside the U.S., Roche Holding AG (Basel CHE) said on Friday that European regulators had recommended approval of its drug Avastin in combination with chemotherapy as a treatment for women with an advanced form of cancer of the cervix. Avastin, which is already approved in Europe to treat advanced stages of breast cancer, colorectal cancer, non-small cell lung cancer, kidney cancer and ovarian cancer, was the drugmaker’s biggest seller last year with sales of 6.42 billion Swiss francs ($6.76 billion).
MEDICAL STOCK SPOTLIGHT -- Biocept Inc. (Nasdaq) led advancing issues, soaring $1.71, or 118% over the week, to $3.16. The massive upward move came after the San Diego, CA-based biotech announced that its blood-based diagnostic, OncoCEE-BR, was used to determine hormonal status of metastatic breast cancer patients in a prospective study at Columbia University in New York. Up to 75% of breast tumors rely on estrogen receptor (ER) signaling to grow. Understanding the hormone receptor (HR) is important as well, because it is comprised of the ER and the progesterone receptor (PR). Targeting this pathway with anti-estrogen therapy has been shown in trials to have a clear clinical benefit in the treatment of this subset of breast cancer patients. The study at Columbia used Biocept’s proprietary CTC isolation platform to prospectively define both ER and PR status using a simple blood sample in women with metastatic breast cancer. Results from the study indicate Biocept’s blood-based diagnostic may be as effective in determining a patient’s HR status as traditional tissue biopsy.
Elsewhere, Cytori Therapeutics Inc. (Nasdaq) leaped 104% to $1.12 after receiving authorization from the Food and Drug Administration to increase the number of scleroderma clinical trial locations from 12 to 20 centers in the U.S. The San Diego-based company’s STAR research is an 80 patient pivotal clinical trial sanctioned by the FDA in January 2015 to study the effects of the firm’s lead drug ECCS-50 for treatment of patients with hand manifestations of scleroderma. Dr. Steven Kesten, Chief Medical Officer of Cytori, said that increasing the number of trial locations to 20 institutions should open the STAR trial to more physicians and patients with scleroderma. There are only around 35 specialized scleroderma centers in the U.S. and the FDA’s decision to increase the trial sites permits Cytori to substantially expand the geographic coverage of the trial and facilitate additional trial registration.
And Second Sight Medical Products Inc. (Nasdaq), jumped $7.42, or 85%, to $16.17. The medical device maker, which develops, manufactures, and markets implantable prosthetic devices, announced that all three of the centers approved to implant its Argus II Retinal Prosthesis System under the French Government national healthcare reimbursement program entitled ‘Forfait Innovation’ have successfully accomplished their first implants in patients with retinitis pigmentosa (RP). In 2014, the Argus II became the first-ever medical device to be named as the recipient of Forfait Innovation, allowing select hospitals in France to offer this “early access” treatment to patients with advanced RP. The condition, an inherited disease that often results in nearly complete blindness, affects roughly 24,000 French persons and 167,000 persons across all Europe.
But biotechnology company Vitae Pharmaceuticals Inc. (Nasdaq) skidded $2.58, or 18%, to $11.62. The firm said partner Boehringer Ingelheim GmbH has voluntarily placed a temporary clinical hold on its experimental Alzheimer’s drug and has notified regulatory agencies of the decision. Fort Washington, PA-based Vitae says the action was taken to investigate skin reactions observed in some study participants during an early-stage trial of the drug. Wall Street sell-side analysts have placed a $22 one-year price target on Vitae shares of Vitae. This is the consensus average based on three firms who have recently issued reports on the company. According to analysts, Vitae is expected to report earnings per share for the current fiscal quarter of $-0.45, the consensus mean estimate.
IPO SECTOR – Bayer AG (Leverkusen DEU) will wait until the second half of the year to decide whether to sell its plastics business in an initial public offering or spin it off after the slow-growing unit dragged down 2014 earnings. The planned listing of the material science unit by mid-2016 at the latest is on track and the economic and legal separation of the business will be completed by August, Bayer said in a statement Thursday. Sales and profit growth at the unit were the slowest of Bayer’s three businesses last year because of falling prices for the plastics used in smartphones and cars. Bayer said last year it planned to list the unit separately on the stock market as it focuses on the faster growing crop-science and healthcare divisions, where sales are being spurred by new products such as the blood thinner Xarelto and cancer drugs Stivarga and Xofigo. The company’s 2015 profit forecast, for growth by a low to mid-teens percentage rate, is “robust,” Alistair Campbell, an analyst at Berenberg in London, said. “The 2015 outlook is broadly where we would have hoped, albeit with a disappointing mix,” Campbell wrote, referring to weaker growth in consumer healthcare products. “We will need to revisit our assumptions on profitability” of the consumer health business that Bayer bought from Merck & Co. for $14 billion last year, he said.
February 23, 2015 ...
WHITE HOUSE SAYS HEALTH LAW SIGN-UPS TOP 11 MILLION -- Some 11.4 million Americans picked health plans through HealthCare.gov and state-run insurance exchanges during the official sign-up window for insurance under the federal health law, the White House said. The announcement followed a relatively smooth enrollment period that saw few of the technological problems that hobbled the online exchanges that were launched in the fall of 2013 as part of the Affordable Care Act. The White House posted a video of Sylvia Mathews Burwell, secretary of the Department of Health and Human Services, giving the news to President Barack Obama in the Oval Office. “That’s great,” Mr. Obama replied. “It gives you some sense of how hungry people were out there for affordable, accessible health insurance. The Affordable Care Act is working. It’s working a little better than we anticipated. It’s certainly, I think, working a lot better than many of the critics talked about early on.” The Obama administration has said around 6.7 million people were enrolled in health plans ahead of the new sign-up window. The administration closed out the last sign-up period, which lasted six months, with around 8 million people who had picked plans through the exchanges. The tally puts the Obama administration on track to meet its goal of having between nine million and 10 million people enrolled in coverage through the exchanges by the end of 2015.
The enrollment numbers likely don’t include all of the people who were trying to get coverage on HealthCare.gov, which serves 37 states, or on one of the 13 state-run sites when the sign-up deadline passed the previous Sunday. The federal government said last Monday that it would give those people through Feb. 22 to finish applying for coverage and picking their plans, and most states have followed suit. Ms. Burwell said in her filmed conversation with the president that the numbers were “preliminary.” And Americans who find out they’ll be paying a tax penalty for not having health insurance last year will get a chance to avoid the fee in 2016, after the U.S. on Friday announced an extra enrollment period starting next month. While sign-ups for 2015 coverage ended on Feb. 15, in a special grace period consumers will have a second chance to get coverage this year from March 15 through April and avoid next year’s bigger fines, Andy Slavitt, principal deputy administrator at the Centers for Medicare and Medicaid Services, said on Friday.
VALEANT SAID TO BUY SALIX FOR $10.1 BILLION -- Valeant Pharmaceuticals International Inc. (Laval Quebec) agreed to buy Salix Pharmaceuticals Ltd. (Raleigh NC) for about $10.1 billion, a person with knowledge of the matter said on Saturday, to add gastrointestinal drugs to its stable of offerings. Valeant will pay $158 a share in cash for Salix, the person said, asking not to be identified because the company hasn’t announced the deal. Salix shares closed the week up $5.50, or 4%, at $157.85, almost completely eliminating any premium in the purchase price. Valeant gained $6.26, or 4%, to $173.26. The deal with Salix marks a comeback for Valeant, which was thwarted last year in a long-running quest to buy Allergan Inc. (Irvine CA), the maker of Botox. Valeant is a serial acquirer, using an advantageous tax structure to make purchases and then slashing research and development costs to boost profits. Before Salix, Valeant had completed $19.2 billion of deals in the past five years, including the purchase of eye-care company Bausch & Lomb Inc. in 2013. Valeant emerged this month with the lead offer for the assets of Dendreon Corp. (Seattle WA), a bankrupt developer of a drug for advanced prostate cancer.
Valeant has a sizable presence in Bridgewater, NJ, though it’s headquartered in Canada in part because of lower corporate tax rates, CEO Mike Pearson has said. A Valeant spokeswoman and a Salix spokesman declined to comment. Salix makes drugs to treat ulcerative colitis and travelers’ diarrhea and is nearing approval for a potential treatment of irritable bowel syndrome. The company said last month that it will restate its results for 2013 and most of 2014 after the board conducted an accounting review of how inventory of top drugs built up with wholesalers. With that move, Salix put behind it the accounting issues that kept potential acquirers at bay last year, when it was on a handful of drugmakers’ shopping lists including Actavis Plc (Dublin IRL) and Allergan. Shire Plc (Dublin IRL) also was interested in Salix, according to two people with knowledge of the situation. After conducting its review, Salix will lower its reported revenue for 2013 and the first three quarters of 2014 by $20.7 million, and reduce net income over the same period by $11.9 million, the company said. (Source: Bloomberg News)
TRACKING WASHINGTON -- About 800,000 HealthCare.gov customers got the wrong tax information from the government, the Obama administration said Friday, and officials are asking those affected to delay filing their 2014 returns. The tax mistake is a self-inflicted injury that comes on the heels of what President Barack Obama had touted as a successful enrollment season, with about 11.4 million people signed up. California, which is running its own insurance market, on Thursday announced a similar problem affecting about 100,000 people. The errors mean that nearly 1 million people may have to wait longer to get their income tax refunds this year. And they could also affect the size of those refunds. Another 50,000 or so who already filed may have to resubmit their returns. Federal officials also announced Friday a special sign-up extension for uninsured people facing the healthcare law’s tax penalties for the first time this year. Uninsured people who go to file their taxes and learn they’re facing a penalty will have between March 15 and April 30 to sign up for subsidized coverage through HealthCare.gov. The fines for being uninsured are going up in 2015. The tax error highlights the complicated links between Obama’s healthcare law and taxes, connections consumers will experience for the first time this year.
In other news, health insurers paid by the U.S. government to provide Medicare coverage will see their rates cut by about 0.9% next year, the government said Friday. The proposed cut will be the subject of heavy lobbying by the health insurance industry, and isn’t expected to become final until April 6. Insurers estimate payments to the program, which allows private companies such as Humana Inc. (Louisville KY) and UnitedHealth Group Inc. (Minnetonka MN) to offer Medicare plans, have been reduced by nearly 10% in the last two years. About 15.7 million people, or 30% of Medicare beneficiaries, get coverage through the Medicare Advantage program, according to the Kaiser Family Foundation (Menlo Park CA). The private program allows for lower out-of-pockets costs compared with the traditional government-run version. Government payments to the insurers have been under pressure since 2010, when the Patient Protection and Affordable Care Act was partly financed with $206 billion in cuts to Medicare Advantage plans over a decade. At the time, U.S. spending for Advantage beneficiaries was estimated to be as much as 13% higher than for people enrolled in traditional Medicare, leading to criticism that the insurers were overpaid. The government reduced Medicare Advantage payment rates 4% in April 2014, slightly more than the 3.55% cut proposed in February last year.
FDA/EMA ROUNDUP -- The Food and Drug Administration warned healthcare providers across the country on Thursday that difficult-to-clean medical scopes inserted down the throat might be infecting patients with dangerous drug-resistant bacteria. The alert came a day after California hospital officials reported that two patients had died and five more had fallen ill because of what they said were improperly sterilized scopes at Ronald Reagan UCLA Medical Center. A deadly superbug that may have been transmitted during procedures using the devices was the likely cause, the hospital said. The germ, known as CRE, is estimated to kill about half its victims because it is resistant to almost all antibiotics. The CRE germs attack broadly, and the infections they cause are not limited to people with severely compromised immune systems, such as those with cancer, said Dr. Thomas R. Frieden, director of the federal Centers for Disease Control and Prevention. The UCLA Health System, of which the Ronald Reagan hospital is a part, has identified at least 179 patients who may have been infected during procedures performed between October and January and is in the process of informing them, said its spokeswoman, Elaine Schmidt.
Elsewhere, Celgene Corp. (Summit NJ) announced that its major blockbuster drug Revlimid has won expanded approval from the FDA to include newly diagnosed multiple myeloma (NDMM) patients. The product Revlimid (lenalidomide), in combination with dexamethasone, was approved in June 2006 for treating patients with multiple myeloma who had received at least one prior treatment. The latest expansion of Revlimid’s existing indication to NDMM patients will allow Celgene to make its drug available to the entire multiplemyeloma market.
23andMe Inc. (Mountain View CA), the genetic-testing company backed by Google Inc., gained FDA permission to sell consumers its first screening kit to detect whether they carry the risk of a rare genetic disorder. The approval of 23andMe’s test for Bloom syndrome, which is associated with short stature, sun sensitivity and higher cancer risk, ends a conflict with the FDA. The agency, in its approval notice on Thursday, also announced it intends to exempt other such “carrier screening tests” from premarket review. 23andMe, which scans people’s saliva to provide information on their ancestry and inherited features, hasn’t been able to include health analysis in its reports since a standoff began with the FDA in late 2013. Sales took a “big hit” and the company has only recently recovered, partly by selling the health analyses outside the U.S., CEO Anne Wojcicki said in a January interview.
And the FDA said it approved Medtronic Inc. Plc’s (Dublin IRL) device to permanently treat varicose veins of the legs. The VenaSeal closure system works by sealing the affected superficial veins using an adhesive agent. The device is manufactured by Covidien LLC, whose acquisition Medtronic completed last month.
MEDICAL STOCK SPOTLIGHT -- Aoxing Pharmaceutical Co Inc. (AMEX) led advancing issues, nearly quadrupling over the week to $1.95 to mark a new high. The sharp upward move came after the Jersey City, NJ-based company announced financial and operational results for the quarter ended Dec. 31, 2014. Revenues were $6.43 million, an 85% increase over the previous year’s fourth period. Net profit was $0.6 million versus a net loss of $1.9 million the previous year. The company said, “The increase in revenue was primarily attributable to the changes in our marketing program and an increase in the sales price of our main product, Zhongtongan, whose sales represented 90% of our overall sales revenue for the first half of the 2015 fiscal year.” Aoxing is a specialty pharmaceutical company focusing on the research, development, manufacturing, and distribution of a variety of narcotics and pain-management products.
Elsewhere, Eagle Pharmaceuticals Inc. (Nasdaq) soared $12.70, or 61%, to $33.68. Teva Pharmaceutical Industries Ltd. and Eagle Pharma announced that the companies have entered into an exclusive license agreement for EP-3102, Eagle’s bendamustine hydrochloride (HCl) rapid infusion product for the treatment of chronic lymphocytic leukemia (CLL) and indolent B-cell non-Hodgkin lymphoma (NHL). Teva will be responsible for all U.S. commercial activities for the product including promotion and distribution. Woodcliff Lake, NJ-based Eagle has responsibility for obtaining all regulatory approvals, conducting post-approval clinical studies, if required, and initially supplying drug product to Teva.
And BioLineRx Ltd. (Nasdaq) leaped 29% to $2.42. The Israel-based company entered into a strategic collaboration with Novartis AG back in December that is designed to facilitate the development and commercialization of drug candidates identified by BioLineRx. The companies will co-develop up to three pre-clinical and early clinical therapeutic product candidates through clinical proof-of-concept. Projects reaching the clinical stage will be eligible for selection by Novartis. If selected, the Swiss drug giant will pay BioLineRx an option fee of $5 million as well as fund 50% of the remaining development costs associated with establishing clinical proof-of-concept. As part of the agreement, Novartis has made an initial equity investment in BioLineRx of $10 million--a 12.8% stake.
But Vascular Biogenics Ltd. (Nasdaq) plunged $9.86, or 70%, to $4.25. The Israel-based, clinical-stage biotechnology company announced that it would be discontinuing the development of its lead drug candidate VB-201 for psoriasis and ulcerative colitis. The failure of VBL’s new drug came as separate phase II studies showed that the primary endpoints of the studies could not be met. In fact, the placebo in the studies showed a better performance.
IPO SECTOR – ViewRay Inc., which markets the only MRI radiation therapy system that images and treats patients simultaneously, filed with the Securities and Exchange Commission to raise up to $69 million worth of common in an IPO. The Oakwood Village, OH-based company, which was founded in 2004 and booked $8 million in sales for the 12 months ended September 30, 2014, plans to list on the Nasdaq under the symbol “VRAY.” ViewRay initially filed confidentially on November 14, 2014. Cowen & Company and Stifel are the joint bookrunners on the deal. No pricing terms were disclosed.
February 16, 2015 ...
SHAKY STANDING ISSUES SURFACE FOR ANTI-OBAMACARE PLAINTIFFS -- New reports are raising questions about whether four people pursuing a Supreme Court case challenging Obamacare subsidies in much of the country actually have the legal right to bring that case. The questions about two of those people relate to whether they were eligible or received health coverage from the Department of Veterans Affairs. The third person reportedly gave a short-term motel as her address in Virginia when she joined the suit, and the fourth person reportedly projected income for 2014 that exceeds what her employer has said they would have paid her. The Wall Street Journal reported that the issues could undermine the legal standing that the plaintiffs claim in their joint lawsuit. And the final person in that foursome of would-be destroyers of a large piece of the Affordable Care Act reportedly doesn’t actually understand that if their case is successful, millions of Obamacare customers likely would be unable to afford their current health insurance plans and would stop having coverage. “I don’t want things to be more difficult for people,” that woman, Virginia resident Brenda Levy, told Mother Jones magazine. “I don’t like the idea of throwing people off their health insurance.” Levy, 64, also told Mother Jones, “I don’t know how I got on this case. I haven’t done a single thing legally. I’m going to ask them how they found me.”
Levy, who is a substitute teacher, reportedly was unaware that there is no backup plan that would replace the insurance plans lost by people who could no longer afford them if her suit prevailed at the Supreme Court. The Journal reported last week that Levy, in court papers had projected her 2014 income would be $43,000. But a spokesman for the school system listed as her employer told the newspaper that Levy’s annual pay rate would not be more than $10,000. If that was Levy’s only income, she would not be subject to the Obamacare penalty for failing to have insurance, would not earn enough to be eligible for subsidies to help buy insurance, and thus possibly wouldn’t have legal standing to challenge the subsidies in court. She did not answer questions about her actual income from the paper, but the general counsel for the group backing the case told the Journal “there is no reason to assume that substitute teaching is her only or principle source of income.” The case, due to be argued March 4 before the Supreme Court, claims that billions of dollars of those subsidies, or federal tax credits, that helped most HealthCare.gov customers pay for their health plans are illegal. The suit is expected to be decided in late June.
J&J CREATES NEW RESEARCH EFFORTS TARGETING DISEASE PREVENTION -- The quest to identify who is likely to develop a particular disease--and then stop the disorder before it starts--has tantalized the medical world for decades. But that’s the goal of three research projects launched last week by Johnson & Johnson’s (New Brunswick NJ) pharmaceutical research arm, Janssen Research & Development. The projects, announced Thursday, aim to prevent illnesses--particularly ones related to aging and lifestyle--including Alzheimer’s disease, cancer, heart disease and Type 1 diabetes. “A hundred years from now, someone’s going to look back on us and say, ‘Can you believe they waited until you got a disease and then did something?’” Dr. William Hait, head of Janssen research and development, said, according to the Associated Press. The scope of the effort is a first for a major drug company. There are a few small-scale projects by groups of scientists or small technology companies collecting genetic data or blood samples from patients to learn more about diseases and develop new therapies, in one case for possible preventive treatments. But since the 1800s, big drugmakers have focused on making medicines to treat or cure illnesses.
The move by Johnson & Johnson, the world’s biggest maker of healthcare products, is possible because of recent, mammoth advances in genetics and other science. Meanwhile, some preventive treatments for widespread illnesses have become routine in developed countries including blood testing and use of cholesterol-lowering statin pills to prevent heart attacks and strokes in at-risk patients, or colonoscopies and removal of any polyps to prevent colon cancer. Billions of research dollars will be needed to accomplish Johnson & Johnson’s goals, and it could easily take a generation, cautions analyst Steve Brozak, president of WBB Securities. But Brozak said J&J is one of a few organizations that have the resources--money and scientific talent--to succeed at what he called a shift to “true modern medicine” that’s as revolutionary as Henry Ford creating the manufacturing assembly line. Johnson & Johnson has nearly 10,000 scientists and other employees at Janssen alone, plus four “innovation centers” collaborating with university researchers. And it’s got plenty of money, with a $16 billion profit last year.
TRACKING WASHINGTON -- The Obama administration is cutting off health-insurance coverage under the Affordable Care Act for 200,000 people who haven’t proven they are legally residing in the U.S. Department of Health and Human Services officials last week said health plans would terminate Feb. 28 for people who had signed up for coverage in 2014 and whose plans had been automatically renewed for 2015, after officials concluded those people hadn’t supplied enough information to verify their immigration or citizenship status. The cutoffs were announced at the same time federal officials said some 7.75 million people have picked plans or been automatically re-enrolled in coverage through HealthCare.gov for 2015, as of Feb. 6. The main sign-up window for 2015 coverage closed yesterday. But on Friday, the Obama administration said it is considering an extra enrollment period for tax filers who learn they owe a fine for not carrying insurance last year, to give them a chance to avoid even heavier penalties in 2015. “You’re going to hear from us, one way or another, within the next two weeks on whether that’s something that we would do,” HHS Secretary Sylvia Mathews Burwell said Friday. “It’s an issue that’s been raised.” A new period would let people sign up as soon as they get a taste of the financial penalty that comes with not enrolling.
In other news, the U.S. government on Thursday announced a cancer care initiative for Medicare beneficiaries that will link payments to oncology practices to quality of care and patient outcomes as a means of improving treatments and cutting costs. The initiative by the Centers for Medicare & Medicaid Services (CMS) as part of the Affordable Care Act comes as expensive new cancer treatments put an increasing strain on state and federal healthcare budgets. “We aim to provide Medicare beneficiaries struggling with cancer with high-quality care around the clock and to reward doctors for the value, not volume, of care they provide,” Dr. Patrick Conway, the chief medical officer for CMS, said in a statement. Cancer cost the United States an estimated $263.8 billion in medical costs and lost productivity in 2010, according to the National Institutes of Health. The majority of those diagnosed are over 65 and Medicare beneficiaries, CMS said. The initiative aims to link payment to quality of care, find new ways to improve and coordinate care delivery, and to share cancer care information more broadly among providers, consumers, and others to support better decisions, CMS said. It said the model would reward practices that focus on providing services that specifically improve the patient experience and health outcomes.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration said it approved Eisai Co Ltd.’s (Tokyo) drug to treat the most common form of thyroid cancer more than two months ahead of the expected decisiion date. The drug, Lenvima, was cleared for use in patients with progressive, differentiated thyroid cancer (DTC) who have not adequately responded to radioactive iodine therapy, the agency said on Thursday. Lenvima, known chemically as lenvatinib, is a kinase inhibitor that blocks certain proteins from helping cancer cells grow and divide. The drug is also being tested for use in other cancers. The drug, which was granted “orphan drug status” by the FDA, was evaluated by the agency under its priority review program.
Elsewhere, Swiss pharmaceutical giant Roche Holding AG (Basel) announced that the FDA has approved its eye medicine, Lucentis (ranibizumab injection), for the treatment of diabetic retinopathy (DR) in patients suffering from diabetic macular edema (DME), making it the fourth Lucentis indication for treating serious eye diseases since 2006. Lucentis has now become the first approved treatment for DR in the U.S. for patients with DME. The FDA approval was not unexpected as the agency had already granted Breakthrough Therapy Designation and Priority Review to the drug for this indication, based on the positive results from two phase III clinical trials, RISE and RIDE.
Amgen Inc. (Thousand Oaks CA) announced that two of the FDA’s advisory committees--the Cellular, Tissue and Gene Therapies Advisory Committee (CTGTAC) and the Oncologic Drugs Advisory Committee (ODAC)--will together be reviewing its Biologics License Application (BLA) for the drug talimogene laherparepvec, used for treating patients with metastatic melanoma. Melanoma is responsible for the highest number of skin-cancer deaths in the U.S. The committees will review the drug in a meeting scheduled for April 29. In late-stage clinical studies, the results showed that the drug shrank cancer tumors and also improved the median survival rate.
And Novartis AG’s (Basel CHE) new heart failure drug was granted a speedier review by the FDA, shortening it by four months, the drugmaker said on Friday. Novartis in August reported data for LCZ696, which found the drug cut the risk of both cardiovascular death and hospital admissions by a fifth. The shortened review means that the FDA could approve the drug, expected to be a “multi-blockbuster” with sales between $2 billion and $5 billion, in August, Novartis said.
MEDICAL STOCK SPOTLIGHT -- Genetic Technologies Ltd. (Nasdaq) led advancing issues, more than doubling over the week to $8.04 on no apparent, company specific news. The Australian genetic testing company closed at a low of $1.27 on Jan. 28, a day before it announced that up to six new breast cancer diagnosis and treatment centers were expected to begin offering its BREVAGenplus product to at-risk patients between January and March. It describes BREVAGenplus as an enhanced version of its breast-cancer assessment test. “It hit a tipping point because of their news announcement and people noticed so they got the volume and it increased in price and after that it just snowballed,” said John Kirkland, managing director at Ironridge Global Partners in San Francisco. Genetic Technologies performs advanced DNA genetic research and testing. The company has several gene-based patents which include intron sequence analysis, genomic mapping and fetal cell recovery.
Elsewhere, Signal Genetics Inc. (Nasdaq) nearly doubled to $3.91 on no company specific news. On February 2, the Food and Drug Administration gave conditional approval to its proprietary prognostic genetic test, MyPRS (Myeloma Prognostic Risk Signature), for use as entry criteria for a forthcoming clinical trial to treat high-risk multiple myeloma patients sponsored by the University of Arkansas for Medical Sciences (Little Rock). Carlsbad, CA-based Signal Genetics is a commercial stage, molecular diagnostic company focused on providing innovative diagnostic services that assist physicians to make better-informed decisions concerning their cancer patients.
And Pfenex Inc. (NYSE) soared $5.92, or 91%, to $12.45. The San Diego, CA-based company and Hospira Inc. announced that they have entered into an exclusive agreement to develop and commercialize PF582, Pfenex’s biosimilar candidate to Genentech’s Lucentis (ranibizumab injection). The latter medicine treats wet age-related macular degeneration, macular edema caused by a blocked blood vessel in the eye, and diabetic macular edema. Lucentis had estimated global sales of approximately $4 billion in 2014. Under terms of the collaboration, Pfenex will receive an upfront payment of $51 million and up to an additional $291 million over the next five years.
But molecular oncology diagnostics firm Biocept Inc. (Nasdaq) plummeted 33% to $1.41. The tank job followed the company’s announcement of the pricing of 8 million shares of its common stock and warrants to purchase up to an aggregate of 8 million shares at a combined offering price of $1.25--a 69% discount to the shares’ $2.11 trading price at the beginning of the week. The gross proceeds to Biocept from this offering are expected to be approximately $10 million. Biocept is a San Diego-based commercial-stage cancer diagnostics company developing and commercializing proprietary circulating tumor cell (CTC) and circulating tumor DNA (ctDNA) tests utilizing a standard blood sample.
IPO SECTOR – Bellerophon Therapeutics Inc., which is developing drug-device therapies for pulmonary and cardiac diseases, raised $60 million in an initial public offering by offering 5 million shares at $12, below the range of $14 to $16. The Hampton, NJ-based company had originally planned to sell 4 million shares. Bellerophon Therapeutics lists on the Nasdaq under the symbol “BLPH.” Leerink Partners and Cowen & Company acted as lead managers on the deal. Investor enthusiasm quickly sank though, and shares closed the week down 25% at $8.97.
February 9, 2015 ...
HEALTH INSURER ANTHEM HIT BY HACKERS -- Health insurer Anthem Inc. (Indianapolis IN) said hackers broke into a database containing personal information on about 80 million of its customers and employees, likely making it the largest computer breach disclosed by a healthcare company. Investigators are still determining the extent of the incursion that was discovered the previous week, and Anthem said it is likely that tens of millions of records were stolen, the Wall Street Journal reported. Anthem stored the Social Security numbers of its millions of customers without encrypting them, the result of what a person familiar with the matter described as a difficult balancing act between protecting the information and making it useful. Scrambling the data, which included addresses and phone numbers, could have made it less valuable to hackers or harder to access in bulk. It also would have made it harder for Anthem employees to track healthcare trends or share data with states and health providers, that person said. Because the data wasn’t encrypted, it would be easily readable by hackers. The company believes a hacker group used a stolen employee password to access the database. Companies can employ random pass codes, limit access from outside the office or use complex math to scramble data. But those things slow companies down. Anthem closed the week up 73 cents at $135.69.
There is no evidence yet that identity thieves are using the data stolen from Anthem, it said. On Thursday, investigators began to focus on links to a group in China. Although the investigation remains in its early stages, the Anthem hack relied on malware and tools that have been used almost exclusively by Chinese cyberspies, investigators said. “Chinese laws prohibit cyber crimes of all forms,” Chinese Embassy spokesman Zhu Haiquan said. “Unfounded hypothesis and jumping to conclusions is irresponsible and will be counterproductive to address these issues.” Employers and government agencies “require us to maintain a member’s Social Security number in our systems so that their systems can uniquely identify their members,” Anthem spokeswoman Kristin Binns said. Ms. Binns said Anthem encrypts personal data when it moves in or out of its database but not when it is stored, which is common in the industry. Anthem officials became aware of the breach when one of their senior administrators noticed someone was using his identity to request information from the database. The request--or query--by the hackers appears so far to have been for financial information only.
PFIZER BETS $16 BILLION ON NEW TYPE OF GENERICS WITH HOSPIRA DEAL -- Pfizer Inc. (New York) said Thursday it would buy smaller rival Hospira Inc. (Lake Forest IL) in a nearly $16-billion deal that would transform the pharmaceutical colossus into a leading player in the emerging market for lower-priced knockoffs of costly biotech drugs. Biotech drugs, made from living cells, are more complicated to make--and to copy--than traditional pills and therefore have proven highly resistant to low-cost competition, even after patents ran out. But after years of turning to these costly drugs to boost sales, big drug companies like Pfizer are now borrowing from the playbooks of generic makers and developing imitator versions of each other’s biotech drugs. The lure is a global market that could soar to $20 billion in sales in five years, up from just a few billion dollars now, as health plans and governments seek to rein in spiraling healthcare costs. These biotech-drug knockoffs, called biosimilars, can cost 20% to 30% less than the higher-priced originals. The Hospira deal underscores that the time has finally come for biosimilars, which have already gone on sale in some countries and could come to the U.S. as early as this year. Hospira is selling the drugs in Europe and Australia, and has asked health regulators for permission to sell two in the U.S.
Acquiring Hospira would turn Pfizer, which has been trying to build up its biosimilars business, into a top player along with Novartis AG (Basel CHE). “The puzzle pieces come together in a very nice way,” Pfizer CEO Ian Read said. Pfizer is also interested in plugging Hospira’s portfolio of generic intravenous drugs and drug-infusion pumps, sold mostly in the U.S., into its world-wide commercial infrastructure, according to Pfizer executive John Young, who will run the combined businesses. Hospira has had manufacturing issues in recent years, but Mr. Young said that due diligence left Pfizer feeling “comfortable that the issues have been or are being properly addressed.” Under the terms of the deal, Hospira shareholders will receive $90 a share in cash, a 39% premium to the closing price prior to news of the deal. Pfizer said it expects the deal to close during the second half of this year and immediately add to earnings. Pfizer said it also expects to realize $800 million in cost savings within three years. Pfizer stock closed the week up 6% at $33.17, while Hospira surged 38% to $87.43.
TRACKING WASHINGTON -- The House of Representatives passed a bill last week to repeal the Affordable Care Act for the first time in the new Congress, but Democrats appeared to show more zeal in defending the law than Republicans did in trying to extinguish it. The measure goes now to the Senate, where the majority leader, Mitch McConnell, Republican of Kentucky, has said that the chamber will vote on legislation repealing the health law but has not announced a schedule. Republicans in both chambers are divided over how to replace the law and how to respond if the Supreme Court upholds a challenge to insurance subsidies now being provided to millions of people under the law. The House vote, 239 to 186, generally followed party lines. No Democrats voted for repeal. Three Republicans--Representatives Robert Dold of Illinois, John Katko of upstate New York and Bruce Poliquin of Maine--voted against the bill. Despite an explicit veto threat from President Obama, Republicans said the vote on Tuesday was necessary to give new House members a chance to take a stand on the health law, which most Republicans had campaigned against. Democrats said it was the 56th time since 2011 that the House had voted to repeal or undermine some or all of the law, which was adopted in 2010 without any Republican votes.
In other news, the Obama administration says sign-ups continue to build under the president’s healthcare law ahead of a Feb. 15 enrollment deadline. Nearly 7.5 million people enrolled as of Jan. 30 in 37 states where the federal government is running insurance markets, which offer subsidized private coverage for people who don’t have a job-based plan. South Florida led other major metro areas, with more than 637,000 people enrolled from Miami to West Palm Beach. Additionally, states acting in tandem with the federal HealthCare.gov site have signed up at least 2.4 million people through their own insurance exchanges. Officials are preparing for a surge toward the end of this week, as supporters make a final push. The goal is at least 9.1 million people enrolled and paying premiums for 2015.
FDA/EMA ROUNDUP -- Eli Lilly & Co. (Indianapolis IN) and Boehringer Ingelheim Pharmaceuticals GmbH (Ingelheim DEU) received approval from the U.S. Food and Drug Administration for their diabetes drug Glyxambi, a combination of two compounds, empagliflozin and linagliptin. The medicine has been approved for adults with type II diabetes and functions as an adjunct to diet and exercise to enhance glycemic control in patients for whom both the compounds are appropriate. The once-daily tablets combine empagliflozin, a sodium glucose co-transporter-2 (SGLT2) inhibitor which reduces the re-absorption of blood sugar in the kidneys to remove glucose from the urine, with linagliptin, a dipeptidyl peptidase-4 (DPP-4) inhibitor, which hinders the liver from producing excess glucose and increases the hormones in the body which stimulate production of insulin by the pancreas.
Elsewhere, MedShape Inc. (Atlanta GA), which develops orthopedic devices using advanced material technologies, announced it has received 510(k) clearance from the FDA for its FastForward Bone Tether Plate. The Bone Tether Plate features MedShape’s latest technology platform--the 3D printing of medical grade titanium alloy (Ti-6AL-4V) that allows for the fabrication of devices with complex and/or customizable geometries. The plate serves as the primary component in the FastForward Bunion Correction System, a new approach to surgically correct “hallux valgus” deformities that preserves and protects the native bone anatomy. A 510(k) is a premarketing submissions made to the FDA to demonstrate that the device in question is as safe and effective as a legally marketed device that is not subject to premarketing approval.
Alcon, a global eye care division of Novartis AG (Basel CHE) announced that the FDA has approved Pazeo, a solution to treat ocular itching in allergic conjunctivitis patients. The condition is characterized by inflammation and affects the transparent layer covering the eyes. It does not harm the patient’s eyes or damage vision. Though not harmful, these allergies cause discomfort. The press statement released by Alcon states that 30% of the entire U.S. population suffers from seasonal allergy symptoms of which 70% to 80% have been reported to have ocular symptoms, like itchy eyes.
And the FDA approved a highly anticipated medicine from Pfizer Inc. (New York) to treat postmenopausal women with a certain type of advanced breast cancer who have not already taken other drugs. The agency approved Ibrance for women who have tumors that do not contain a protein known as HER-2 and have receptors for the hormone estrogen. Ibrance, known generically as palbociclib, works by blocking molecules linked to cancer cell growth. Pharmaceutical industry analysts expect Ibrance to grow into a mega-blockbuster, with annual sales as high as $4 billion by 2020. The drug is intended to be used in combination with another older cancer medication known generically as letrozole.
MEDICAL STOCK SPOTLIGHT -- Auris Medical Holding AG (Nasdaq) led advancing issues, soaring $2.42, or 61% over the week, to $6.38. The clinical-stage biopharmaceutical company dedicated to developing therapeutics that address unmet medical needs in otolaryngology announced that Thomas Meyer, PhD, Chairman and CEO, will present at the Leerink Global Healthcare Conference this Wednesday at the Waldorf Astoria Hotel in New York. Auris Medical is a Zug, Swiss-based company currently focusing on the development of treatments for acute inner ear tinnitus (AM-101) and for acute inner ear hearing loss (AM-111) by way of intratympanic injection with biocompatible gel formulations. Intratympanic means injected into the tympanum, or middle ear, through the ear drum.
Elsewhere, Esperion Therapeutics Inc. (Nasdaq) surged $13.49, or 29%, to $59.39 after the FDA announced it was removing a partial clinical hold that had been placed on Esperion’s cholesterol lowering drug ETC-1002 in 2009. A partial clinical hold allows clinical studies to continue, but with specific restrictions issued by the FDA. For example, Esperion has been able to continue studying ETC-1002 in midstage clinical trials. Those midstage trial results have (so far) been solid. Patients taking ETC-1002 as a monotherapy saw their bad cholesterol levels fall by 27% and 30% at doses of 120 mg and 180 mg, respectively. Combining ETC-1002 with Merck & Co.’s Zetia lowered bad cholesterol levels by 43%. Since the FDA has lifted its partial clinical hold, investor attention can now turn to Plymouth, MN-based Esperion’s planned discussion with the FDA of its phase IIb results and the launch of its phase III trials by year-end.
And Coherus Biosciences Inc. (Nasdaq) leaped $6.22, or 28%, to $28.66, a new 52-week high. The upward move was driven by the company’s announcement that it will participate in the 2015 Leerink Global Healthcare Conference to be held this Wednesday in New York City. The announcement led to more shares changing hands than in a normal week. Over the last 30 days, this biopharmaceutical company, focused on the development of biosimilar therapeutics to aid patients, did not witness any estimate revision and the Zacks Consensus Estimate also remained unchanged. Last week’s price action is encouraging though, so investors should keep a close watch on the Redwood City, CA-based company in the near future.
But Ardelyx Inc. (Nasdaq), a clinical stage biopharmaceutical company, plunged $11.09, or 41%, to $15.92 after saying that its key kidney drug led to higher-than-expected diarrhea rates in patients. The Fremont, CA-based company’s phase Iib clinical trial of Tenapanor in 161 patients evaluated the drug’s safety and efficacy in treating hyperphosphatemic patients who were suffering from chronic kidney disease (CKD) and were on hemodialysis. The results showed that the drug led to increased diarrhea. However, the drug successfully met the primary endpoint with significant reduction in the levels of phosphate for patients on dialysis. Tenapanor works as an inhibitor for sodium transport by flushing out sodium via feces instead of urine, thus saving the kidneys from extra work and helping treat CKD as well as end-stage renal disease and irritable bowel syndrome.
IPO SECTOR – IASIS Healthcare Corp. filed with the Securities and Exchange Commission to raise up to $100 million in an initial public offering. However, the deal size is likely a placeholder for an IPO that could raise $300 million or more according to some analysts. IASIS owns and operates medium-sized, acute-care hospitals in high-growth urban and suburban markets. The company owns or leases 18 acute care hospital facilities and one behavioral health hospital facility with a total of 4,362 licensed beds and has total annual net revenue of approximately $2.8 billion. IASIS originally filed for an IPO in 2001, but later withdrew its $200 million offering. In 2004, the company was acquired by investment bank TPG Capital. Franklin, TN-based IASIS, which was founded in 1998 and booked $2.5 billion in sales for the 12 months ended September 30, 2014, plans to list on the NYSE under the symbol “IAS.” J.P. Morgan, BofA Merrill Lynch, Barclays, Evercore, Goldman Sachs and Citi are the joint bookrunners on the deal. No pricing terms were disclosed.
February 2, 2015 ...
PFIZER BEATS STREET'S 4Q FORECASTS -- Pfizer Inc. (New York), the biggest U.S. drugmaker, forecast a decline in sales this year as patent expirations and a stronger dollar weigh on revenue. Sales will reach $44.5 billion to $46.5 billion this year, down from $49.6 billion in 2014, Pfizer said in a statement. Analysts had estimated $47.6 billion on average. The company’s projection includes a $3.5 billion impact from the loss of exclusivity on some products and $2.8 billion related to foreign-exchange rates. Pfizer is at a pivotal moment, having indicated it may pursue a large deal, break itself into pieces, or some combination of the two. The company is trying to replace revenue after losing exclusive sales rights to blockbuster medicines including Celebrex and Lipitor. While Pfizer’s 2015 projections were hurt by foreign-exchange fluctuations, the forecast also probably reflects some weakness in the business as well, said Ashtyn Evans, a healthcare analyst at Edward Jones. “It could be anything from new launches to just pressure in some of their products that have gone generic, losing share faster than expected, so I’m just waiting to see at this point,” she said. Alex Arfaei, an analyst at BMO Capital Markets Corp., said in a note to clients that he doesn’t foresee revenue growth through 2017 due to patent expirations and foreign-exchange pressure.
The disappointing forecast overshadowed a fourth quarter that beat analysts’ profit and sales estimates, with revenue from products including the vaccine Prevnar surpassing expectations. Fourth-quarter profit, excluding one-time items, beat by 1 cent analysts’ estimates compiled by Bloomberg. Revenue fell 3% to $13.1 billion. Pfizer has $33 billion of cash on its balance sheet, and after walking away from an almost $120 billion deal to acquire AstraZeneca Plc (London) last year, eyed Actavis Plc (Dublin) and reached out to Teva Pharmaceutical Industries Ltd. (Petach Tikva ISR), people familiar with the matter have said. AstraZeneca was attractive partly because of the U.K. company’s oncology pipeline. The proposed deal would also have let Pfizer relocate its legal address overseas, lowering its U.S. tax burden. Months after Pfizer dropped its pursuit, the U.S. Treasury Department imposed rules to limit the benefits of so-called tax inversion deals. Pfizer closed the week off 4% at $31.25. The stock has gained 6% in the past year.
DOCTORS' PAY TO BE LINKED TO QUALITY IN HISTORIC OVERHAUL OF MEDICARE BILLING -- The Obama administration last week unveiled an ambitious plan to control health costs by moving the $2.9 trillion U.S. health systems away from costly fee-for-service medicine, beginning with the Medicare program. By the end of 2018, Health and Human Services Secretary Sylvia Burwell told reporters that 50% of traditional Medicare’s $362 billion in annual payments would go to doctors, hospitals and other providers that participate in alternative payment models which emphasize cost containment and quality of care. Officials, who hope to see the initiative matched by private insurers, employers and state Medicaid programs for the poor, said the move was intended to head off a resurgence in healthcare cost growth from an historically low 3.6% in 2013 to a projected 6.6% in 2020. The administration announced its goals after Burwell met with private and public sector stakeholders including insurers, consumer and provider groups and employers including Boeing Co. (Chicago). Wall Street analysts said for-profit hospitals and private insurers would be well positioned to benefit from a new shift toward lower-cost care delivery. Groups representing doctors and hospitals said the move could mean greater flexibility for their members in determining care delivery, while consumer representatives said the unprecedented goals could boost the quality of care.
About 20% of traditional Medicare payments, a sum worth $72 billion, currently go to providers with cost-saving business models. The remainder are based on fee-for-service payments that reward providers for the volume of care they provide. Fee-for-service has been blamed by policymakers for promoting higher costs, mediocre care and unnecessary procedures. The administration’s goals would be phased in by first increasing the participation of alternative care models to 30% of Medicare payments by the end of 2016. Officials described the 50% goal for 2018 as a “tipping point” that could help make payment reform mainstream across the U.S. health system. Within four years, the administration expects all but 10% of traditional Medicare to be linked to new quality and efficiency standards, including most of the remaining fee-for-service providers. The government has also been experimenting with payment models that officials say have generated $417 million in savings to Medicare. New care models, however, have shown limited progress in controlling costs and little evidence of being able to sustain cost savings.
TRACKING WASHINGTON -- President Barack Obama said he will ask Congress for $215 million to fund his vision for a million-strong cohort of volunteers whose genetic and health data will be used to develop personalized medicine. “Precision medicine--in some cases, people call it personalized medicine--gives us one of the greatest opportunities for new medical breakthroughs that we have ever seen,” Obama said Friday at the White House, where he announced the initiative. The White House proposal will be part of the fiscal 2016 budget that Obama plans to submit to lawmakers later today. The National Institutes of Health, with $130 million, will spearhead the development of the national cohort, while the National Cancer Institute will get $70 million to focus on genomic drivers in cancer. “Precision medicine is a game-changer,” said Jo Handelsman, associate director for science at the White House office of science and technology policy. “It holds the potential to revolutionize the way we approach health in this country.” Precision medicine holds promise because the cost of genomic sequencing has fallen dramatically, from hundreds of millions of dollars to about $1,000 per patient. The lower costs, in conjunction with advances in scientific understanding of the disease, has led drugmakers to pursue more personalized therapies for cancers and numerous genetic disorders.
In other news, the Obama administration on Friday proposed a plan to move most doctors, hospitals and their patients to national standards for handling electronic clinical data by the end of 2017. The U.S. Department of Health and Human Services, as part of an effort to propel the $2.9 trillion U.S. healthcare system away from a costly fee-for-service system, released a report draft aimed at establishing an inter-operable, health information technology system that can be accessed by patients and their healthcare providers. Policy experts say that national health IT standards would lead to transparency in medical data, prices and provider performance, while helping support hospitals and medical practices in pursuing care-delivery models that emphasize care quality and savings over quantity. Earlier last week, Health and Human Services Secretary Sylvia Burwell announced the goal of moving 50% of fee-for-service Medicare payments to quality-care focused providers by the end of 2018. Public comment on the standards advisory closes May 1.
FDA/EMA ROUNDUP -- Medical device maker Abiomed Inc. (Danvers MA) raised its full-year revenue forecast and said the U.S. Food and Drug Administration had approved its heart pump, sending its stock up 31% to $51.74 for the week. Abiomed’s heart pump, Impella RP, helps blood circulation for up to 14 days in patients who develop acute right heart failure following implantation, myocardial infarction, heart transplant or open-heart surgery. The device is the first percutaneous, single access pump approved for right heart support, the company said. In surgery, “percutaneous” pertains to any procedure that allows access to internal organs via a needle-puncture of the skin, rather than by using an “open” approach where organs must be exposed, typically using a scalpel.
Elsewhere, the FDA on Thursday approved two fixed-dose HIV pills that combine protease inhibitors--one made by Bristol-Myers Squibb Co. (New York) and the other by Johnson & Johnson (New Brunswick NJ)--both with a boosting agent produced by Gilead Sciences Inc. (Foster City CA). Bristol-Myers said its drug, Evotaz, is a once-daily pill containing Reyataz, also known as atazanavir, a protease inhibitor, with the booster cobicistat. J&J’s once-daily Prezcobix, combines protease inhibitor darunavir, or Prezista, with cobicistat. The FDA approved both drugs for use in combination with other antiretroviral agents for the treatment of HIV-1 infection in adults.
Shire Plc’s (Dublin IRL) attention deficit hyperactivity drug, Vyvanse, can be used to treat binge-eating disorder in adults, the FDA said Friday. Vyvanse is Shire’s top drug, generating $1.23 billion in 2013. It’s the first medicine approved in the U.S. to treat binge-eating disorder, in which patients eat when they aren’t hungry, to the point of being uncomfortably full, the FDA said in a statement.
And the FDA said it approved Teva Pharmaceutical Industries Ltd.’s (Petach Tikva ISR) generic version of AstraZeneca Plc’s (London) blockbuster heartburn drug Nexium, the agency’s first such approval for the drug. The approval comes as generic drugmakers scramble to get their versions to the market and AstraZeneca is taken to court over so-called “pay-for-delay” settlements to delay the launch of generics to protect its drug’s exclusivity. Nexium garnered about $1.9 billion in global sales in the first half of 2014, according to AstraZeneca’s latest earnings statement.
MEDICAL STOCK SPOTLIGHT -- Genetic Technologies Ltd. (Nasdaq) led advancing issues, surging $1.54, or 123% for the week, to $2.79. The Melbourne, Australia-based company announced that up to 6 new breast diagnosis/treatment centers are expected to begin offering BREVAGenplus to their at-risk patients in the January to March timeframe, with a growing number of additional new breast and imaging center customers expected to follow later in calendar year 2015. As a result, the company expects sales growth to accelerate in the second half of 2015 and beyond. BREVAGenplus is an easy-to-use predictive risk test for the millions of women at risk of developing sporadic, or non-hereditary breast cancer, according to Genetic Technologies.
Elsewhere, Spark Therapeutics Inc. (Nasdaq) soared $27.00, or 117%, to $50.00. The company, which is developing gene therapy treatments for orphan retinal dystrophies, raised $161 million in an upsized initial public offering by offering 7 million shares at $23--above the upwardly revised range of $19 to $21. Philadelphia, PA-based Spark, which was founded in 2013, lists on the Nasdaq under the symbol “ONCE.”
And Biogen Idec Inc. (Nasdaq) shot up $31.63, or 9%, to $389.16 after the company announced upbeat financial and operational results for the fourth quarter of fiscal year 2014. The Cambridge, MA-based biotech firm said that its fourth-quarter profits increased 75% year-over-year to $883.5 million as its multiple sclerosis treatment drugs—particularly Tecfidera, which closed its second year on the market in the U.S.--contributed toward a 34% growth in revenue for the quarter. The company reported that Tecfidera sales rose to $916 million for the year, higher than the Street’s estimate of $880 million; Biogen expects Tecfidera revenue to increase further in the coming years.
But Venaxis Inc. (Nasdaq) crashed 74% to $0.50 after receiving “not substantially equivalent” remarks on its blood-based diagnostic test, APPY1, from the Food and Drug Administration. Castle Rock, CO-based Venaxis’s APPY1 Test is a rapid blood test that aids in the identification of appendicitis in the emergency room. It is developed for children, adolescents, and young adults with a low risk of appendicitis. The FDA allows healthcare devices rapid market access, provided they are “substantially equivalent” to other competing products. APPY1 has already been cleared by European authorities.
IPO SECTOR – TRACON Pharmaceuticals Inc., a biotech developing combination therapies with VEGF inhibitors to treat cancers, raised $36 million by offering 3.6 million shares at $10 each, well below the $12 to $14 range. The San Diego, CA-based company also sold 500,000 shares at the offer price to shareholder National Education Association in a concurrent private placement. At $10, TRACON commands a fully diluted market cap of $127 million. TRACON lists on the Nasdaq under the symbol “TCON.” Wells Fargo Securities and Stifel acted as lead managers on the deal. Shares closed the week off 1% at $9.40.
January 26, 2015 ...
JOHNSON & JOHNSON TOPS 4Q EARNINGS EXPECTATIONS, LOWERS OUTLOOK -- Johnson & Johnson (New Brunswick NJ), the world’s biggest maker of healthcare products, forecast lower earnings in 2015 as competition cuts into revenue for some of its best-selling drugs. Adjusted profit this year will reach $6.12 to $6.27 a share, the company said. That figure excludes an estimated charge of 32 cents a share for intangible amortization costs--an expense Johnson & Johnson previously included in its pro forma results. Incorporating that figure, 2015 earnings would be $5.80 to $5.95 a share, compared with 2014 adjusted profit of $5.97 a share. “It’s not uncommon for J&J to be a little more conservative as they start the year,” Tony Butler, an analyst at Guggenheim Securities LLC, said of the 2015 forecast. He said it’s not clear whether there is some “underlying weakness” that the company is worried about. Last January, J&J forecast 2014 adjusted earnings of $5.75 to $5.85 a share, then increased the outlook throughout the year. The company is seeking to replenish its product lineup as drugs such as hepatitis C treatment Olysio and blood thinner Xarelto face new competition. Jami Rubin, an analyst at Goldman Sachs Group Inc., lowered her recommendation to “Sell” from “Neutral” on Jan. 15 because she sees the company bringing fewer new drugs to market this year than in previous years, she said in a note.
J&J’s accounting decision on intangible amortization means the company is no longer deducting the changing cost of hard-to-value assets like trademarks and patents in the company’s adjusted earnings. The drugmaker is facing increased competition in its pharmaceutical business. Sales of Olysio plummeted to $321 million in the quarter, down from $796 million in the previous three months, as the hepatitis C drug faced new competition from Gilead Sciences Inc.’s (Foster City CA) Harvoni that combined two drugs in one pill. “The most important change has been demand in hepatitis C for Olysio,” Butler said. “Once Gilead launched Harvoni as a single pill, effectively that becomes the product du jour.” The strengthening dollar also hit J&J harder than expected, leading the company to miss sales estimates in all three of its major businesses, said Glenn Novarro, an analyst at RBC Capital Markets. The company’s forecast probably reflects the worse-than-expected foreign-exchange pressure, he said. Shares of J&J closed the week off $1.84, or 2%, at $102.20. The shares have risen 13% in the past 12 months.
GOVERNMENT CLOSER TO GOAL OF 9.1 MILLION ENROLLED UNDER HEALTH LAW -- Enrollment on the federal Obamacare exchange has reached 7.1 million, the Obama administration said last week in a report that warned last-minute shoppers to log onto HealthCare.gov before it’s too late. The “snapshot” report reflected enrollment among new and returning customers through Friday, Jan. 16, on HealthCare.gov, the federal website that serves 37 states without their own portals. Customers have until Feb. 15 to sign up, so officials are beefing up efforts to drive uninsured Americans to HealthCare.gov or exchanges run by 13 states and the District of Columbia. “Time is running out. If you don’t have health coverage, visit HealthCare.gov or contact the Marketplace call center to learn about your options and the financial help that is available,” Health and Human Services Secretary Sylvia Mathews Burwell said. The administration is well on its way toward exceeding its modest goal of 9.1 million enrollees for the 2015 plan year, although its target is far short of congressional estimates that put anticipated enrollment at 13 million.
Monthly HHS reports wrap in data from the state-run exchanges, and customers tend to flock to the exchanges before key deadlines. The tax industry is lending a hand, since this is the first year that Americans will have to attest whether they hold health insurance or owe a fine to the IRS. TurboTax Intuit (Mountain View CA) said it is working with Enroll America, a Washington, DC-based nonprofit that champions Obamacare enrollment, to make sure customers understand their coverage options and can find in-person help before the Feb. 15 deadline.
TRACKING WASHINGTON -- President Barack Obama will urge Congress to spend U.S. taxpayers’ money for research in “precision medicine,” a burgeoning field of care in which treatments are tailored to an individual patient. “I want the country that eliminated polio and mapped the human genome to lead a new era of medicine--one that delivers the right treatment at the right time,” Obama said in his State of the Union address. “I’m launching a new Precision Medicine Initiative to bring us closer to curing diseases like cancer and diabetes--and to give all of us access to the personalized information we need to keep ourselves and our families healthier.” Obama did not provide details on what the initiative would entail and how much it would cost. He’s expected to detail the program in his fiscal 2016 budget, to be released Feb. 2. The Obama administration views medical research as an area of healthcare policy the Republican-led Congress may be willing to help advance, even as it fights the president over the continued implementation of Obamacare, his signature legislative accomplishment. Precision medicine relies on tests such as genetic sequencing to identify patients who will respond to drugs such as Vertex Pharmaceuticals Inc. (San Diego CA) Kalydeco for cystic fibrosis. Advances in such therapies have been helped by the dramatic drop off in costs for sequencing.
In other news, President Obama on Thursday unveiled plans to greatly increase federal assistance to working Americans struggling to afford child care, choosing a Democratic pocket in a solidly Republican state to sharpen the contrast between the two parties’ economic visions. In an appearance at the University of Kansas--his second stop in a Republican state in two days of promoting his domestic initiatives--Mr. Obama called for an $80 billion expansion of a federal program that provides child care subsidies to low- and middle-income families with children ages 3 and under, nearly doubling the aid and offering it to more than one million additional children over the next decade. He promoted his plan to nearly triple, to $3,000 per child, the maximum child care tax credit. And the president said he would push to put more federal money into early childhood programs, expanding the availability of free pre-school and extending Head Start--focused on low-income families--to last an entire day, and for the full school year. “These aren’t just nice-to-have’s, this is a must-have,” Mr. Obama told several thousand people in a gymnasium on the campus. “It is time that we stop treating child care as a side issue or a, quote-unquote ‘women’s issue.’ This is a family issue, this is a national economic priority for all of us.”
FDA/EMA ROUNDUP -- NPS Pharmaceuticals Inc. (Bedminster NJ) won U.S. approval for the first drug to treat a rare hormonal abnormality, vindicating Shire Plc’s (Dublin IRL) gamble to buy the company for $5.2 billion before the outcome was publicly known. The Food and Drug Administration cleared NPS’s Natpara to control low blood calcium levels related to hypoparathyroidism, according to a statement from the agency. The drug may garner $665 million in sales by 2021, according to Chiara Russo, an analyst at Janney Montgomery Scott in Boston. Shire agreed to buy NPS this month to expand its portfolio of rare-disease treatments. It’s Shire’s biggest acquisition, and the second deal since its proposed $52 billion buyout by AbbVie Inc. fell apart. The NPS deal is CEO Flemming Ornskov’s seventh takeover since his appointment was announced in October 2012, as he pursues a goal of doubling sales to $10 billion by 2020.
Elsewhere, DexCom Inc. (San Diego CA) won U.S. clearance for the first system of glucose-monitoring apps that can be used with mobile devices such as the iPhone to remotely track the health of a diabetic. The FDA gave the green light to the Dexcom Share system, which transmits data from a small, wire-like sensor inserted just under the skin, according to a statement Friday from the agency. Other similar systems exist, but none has been cleared for sale by the agency since the FDA began regulating mobile medical applications as devices in 2013. The subcutaneous sensor sends glucose levels continuously to a monitor that is worn externally, and the Dexcom Share system allows the information to be shared by the user. The app downloads the data for followers from a Web-based storage location, the FDA said.
A panel of experts on Thursday voted to recommend that the FDA approve Astellas Pharma Inc.’s (Tokyo) drug for the treatment of rare, often fatal invasive fungal infections that can target patients with blood cancers. The Anti-Infective Drugs advisory committee panel voted 11-0 that the Japanese drugmaker had demonstrated sufficient safety and efficacy to support approval of the drug, isavuconazonium, to treat invasive aspergillosis. The panel voted 8-2 with one abstention to recommend the medicine to treat invasive mucormycosis. The Food and Drug Administration, which typically follows the recommendations of its advisory panels but is not obligated to do so, is expected to make its approval decision by March 8.
And outside the U.S., AbbVie Inc. (North Chicago) said that its new, all-pill hepatitis C combo treatment has been approved for patients in the 28 European Union member countries. The company said the European Commission granted marketing authorization for the combination of Viekirax and Exviera. Viekirax itself is a combination pill containing antiviral drugs ombitasvir, paritaprevir and ritonavir; Exviera is a single pill containing dasabuvir. It’s already approved in EU nonmembers Switzerland, Norway, Iceland and Liechtenstein, plus Canada and the U.S.
MEDICAL STOCK SPOTLIGHT -- Egalet Corp. (Nasdaq) led advancing issues, soaring $3.61, or 73% over the week, to $8.54 after the company announced positive results from a Category 3 human abuse liability (HAL) study of Egalet-001, an abuse-deterrent, extended-release, oral morphine formulation in late-stage clinical development for the management of pain severe enough to require daily, around-the-clock opioid treatment and for which alternative treatments are inadequate. The clinical HAL study demonstrated that in non-dependent, recreational opioid users, the abuse potential of manipulated Egalet-001 taken orally was significantly lower than that for manipulated MS Contin (morphine sulfate controlled-release). Wayne, PA-based Egalet Corp. is a specialty pharmaceutical company engaged in developing and planning to commercialize proprietary, abuse-deterrent oral products for the treatment of pain and in other indications.
Elsewhere, Array BioPharma Inc. (Nasdaq) surged $2.62, or 58%, to $7.11 after the drug developer said it will buy worldwide rights to a potential cancer treatment in late-stage clinical testing from Swiss pharmaceutical giant Novartis AG. The Boulder-CO-based company said the deal is conditional on Novartis closing some acquisitions with British drugmaker GlaxoSmithKline Plc that it announced last spring. The companies said in April that Novartis would buy Glaxo’s cancer-drug business for more than $14 billion. Array didn’t detail the financial terms of its purchase of encorafenib from Novartis, other than to say it involved a “de minimis payment” and no future milestone or royalty payments by either company. Researchers are studying encorafenib in combination with another treatment, binimetinib, in a late-stage trial of some patients with melanoma.
And Agile Therapeutics Inc. (Nasdaq) shot up $1.59, or 27%, to $7.54 after the company announced a definitive stock purchase agreement with a group of institutional accredited investors. The repurchase pertains to the placement of 3.4 million shares of common stock at $5.85 per share yielding nearly $20.0 million. Shares of Princeton, NJ-based Agile have received an average broker rating score of 1.25 (Strong Buy) from the four analysts that provide coverage for the company, Zacks Investment Research reports. Brokers have set a 12-month consensus price target of $16.00 for the company and are expecting that the company will post ($0.40) EPS for the current quarter, according to Zacks. Agile is a women’s health specialty pharmaceutical company. The company is focused on the development and commercialization of new prescription contraceptive products.
But Advaxis Inc. (Nasdaq) plunged $5.78, or 43%, to $7.73 after news that the law firm of Federman & Sherwood has initiated an investigation into Advaxis with respect to possible violations of federal securities laws. Princeton, NJ-based Advaxis is a clinical stage biotechnology company focused on the development of cancer therapies. Federman & Sherwood is investigating whether Advaxis and certain of its officers and/or directors have violated the Securities Exchange Act of 1934. Advaxis is the developer of cancer immunologies. Its claim to fame is ADXS-HPV, currently in phase II/III trials as a therapy for cervical cancer, though it has a total of three drugs being observed across six different clinical trials at this time.
IPO SECTOR – Avinger Inc., which sells an image-guided, catheter-based system to treat peripheral arterial disease, announced terms for its IPO. The Redwood City, CA-based company plans to raise $60 million by offering 4.6 million shares at a price range of $12 to $14. At the midpoint of the proposed range, Avinger would command a fully diluted market value of $169 million. Avinger, which was founded in 2007 and booked $12 million in sales for the 12 months ended September 30, 2014, plans to list on the Nasdaq Global Market under the symbol “AVGR.” Canaccord Genuity and Cowen & Company are the joint bookrunners on the deal. It is expected to price this week.
January 19, 2015 ...
SHIRE TO BUY NPS FOR $5.2 BILLION TO BOOST RARE DISEASE DRUGS -- Irish drugmaker Shire Plc (Dublin) said it will pay $5.2 billion to acquire NPS Pharmaceuticals Inc. (Bedminster NJ), which specializes in drugs for rare conditions. The acquisition will expand Shire’s portfolio of specialty drugs, medications for niche diseases and conditions that typically command much higher price tags than conventional medications. Shire’s best-selling drugs currently include the attention deficit disorder drugs Vyvanse and Adderall XR. Under the agreement, approved by the boards of directors from both companies, Shire will acquire all outstanding shares of NPS for $46 per share in cash. The agreement is Shire’s first major deal after AbbVie Inc.’s (North Chicago) attempts to acquire Shire fell apart last October. Shire received a breakup fee of $1.6 billion after AbbVie walked away from the so-called tax-inversion deal. AbbVie scrapped the acquisition after the Obama administration took steps to deter such tax-lowering deals. Shire CEO Flemmimg Ornskov indicated his company would keep hunting for more deals. Shire has been aiming to use the breakup fee to restart its shift from drugs for common conditions like attention-deficit disorder toward drugs for rarer diseases. Dr. Ornskov said combining NPS’s two drugs with Shire’s existing sales force could eventually yield blockbuster sales for each of the NPS therapies.
NPS specializes in rare-disease drugs. Its Gattex injections treat a potentially deadly bowel disorder that diminishes the body’s ability to absorb nutrients and fluids. Gattex, which costs $376,200 a year, had $67.9 million in sales during the first nine months of 2014. NPS earned $157.4 million in total revenue during the period. The market for rare-disease treatments is considered attractive, despite a small number of patients, because companies can command prices in the hundreds of thousands of dollars--as is the case with Gattex. Sales of so-called specialty drugs are forecast to reach $162 billion in 2018, up from $108 billion in 2013 and $81 billion in 2008, according to Credit Suisse. NPS also has another rare-disease drug that could generate hundreds of millions of dollars in revenue. The drug, which treats a hormone condition called hypoparathyroidism, is already approved in Europe; the U.S. Food and Drug Administration is due to decide soon whether to approve the drug, under the name Natpara. NPS closed the week up $3.54, or 8%, at $45.45. Shire slipped $2.28, or 1%, to $215.21.
OBAMACARE'S LEAD AGENCY CHIEF ANNOUNCES HER RESIGNATION -- Marilyn B. Tavenner, the administrator of the federal Centers for Medicare and Medicaid Services, who helped preside over the rollout of sweeping changes in the nation’s healthcare system, said Friday that she was resigning. “February will be my last month serving as the administrator for CMS,” Ms. Tavenner said. Ms. Tavenner, who was at the center of the disastrous debut of the federal insurance marketplace in October 2013, had given no public indications that she would be stepping down. She joined the administration in February 2010, a few weeks before President Obama signed the Affordable Care Act. Ms. Tavenner was a senior official at the Medicare agency before she was confirmed by the Senate in May 2013 as administrator. The agency insures one in three Americans and has an annual budget of more than $800 billion. Sylvia Mathews Burwell, the secretary of health and human services, praised Ms. Tavenner, saying, “Marilyn will be remembered for her leadership in opening the health insurance marketplace. In so doing, she worked day and night so that millions of Americans could finally obtain the security and peace of mind of quality health insurance at a price they could afford. It’s a measure of her tenacity and dedication that after the tough initial rollout of HealthCare.gov, she helped right the ship.”
The online exchange, a centerpiece of the health law that lets people shop for health insurance policies, was nearly unusable for several weeks after it opened in the fall of 2013. Ms. Burwell said that Andrew M. Slavitt, the No. 2 official at the Centers for Medicare and Medicaid Services, would become the acting administrator after Ms. Tavenner leaves. Mr. Slavitt started work at the agency in July 2014. He had been a top executive at Optum, a unit of UnitedHealth Inc. (Minnetonka MN), one of the nation’s largest insurance companies. Optum helped build and operate the federal insurance exchange, and another unit of UnitedHealth sells health plans to consumers through the exchange in several states. Ms. Tavenner, a nurse by training, worked for more than two decades at the Hospital Corporation of America, a commercial hospital chain. From 2006 to 2010, she was the secretary of health and human resources in Virginia, managing Medicaid and other programs.
TRACKING WASHINGTON -- A tax on medical devices, imposed by the Affordable Care Act, has become a prime target for Republicans, some Democrats and a small army of lobbyists for the industry. But a new report from the Congressional Research Service challenges economic arguments that are being made to justify repealing the tax. Critics of the tax say it is destroying jobs and encouraging manufacturers to move operations overseas. Repealing it is a priority for Republicans on Capitol Hill. But in its report, the Congressional Research Service, a nonpartisan arm of Congress, said that many of the concerns were unfounded. The effects on jobs, research and company profits are “relatively modest,” the report said. As a result of the tax, it estimates, 47 to 1,200 workers could lose their jobs. They account for one one-hundredth to two-tenths of 1% of jobs in the industry. “These relatively modest effects occur partly because the tax is relatively small,” the report said. In addition, it said, “innovation and research would be minimally affected.” The tax, which took effect in 2013, is equal to 2.3% of the sale price of a medical device and is expected to raise $29 billion over 10 years. It applies to products like X-ray machines, magnetic resonance imaging scanners, pacemakers, artificial hearts and artificial hip and knee joints.
Elsewhere, with a month to go in the 2015 open enrollment season, the Obama administration says sign-ups under the president’s healthcare law are edging higher. The Health and Human Services Department says at least 163,000 people signed up last week for subsidized private health insurance. That brings the total to nearly 6.8 million people in 37 states where the federal government is running the new health insurance markets. National figures should be significantly higher, since the federal count doesn’t include major states like California and New York, among those running their own exchanges. An updated national total will be available later. The administration is expecting a surge near the Feb. 15 enrollment deadline. The goal is 9.1 million people nationwide signed up and paying premiums for 2015.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration approved AbbVie Inc.’s (North Chicago) treatment for Parkinson’s disease. The treatment, Duopa--a combination of carbidopa and levodopa--is the first to be effective for 16 hours, compared with existing oral formulations that last for up to four hours following a single dose. Duopa, already available in Canada, is administered using a small portable infusion pump that delivers the drug directly to the small intestine. AbbVie shares closed the week off 2% at $64.54. The prior week, the FDA approved Impax Laboratories Inc.’s Parkinson’s drug, Rytary, after rejecting it twice.
Elsewhere, the FDA approved a novel dieting device that acts like a pacemaker for the stomach by manipulating the nerve pathway that makes people feel hungry or full. The device, made by EnteroMedics Inc. (St. Paul MN), is the first of its kind to treat obesity by targeting nerves that link the stomach and the brain. The Maestro Rechargeable System would block electrical signals in the abdominal vagus nerve by dispatching high-frequency electrical pulses. Federally approved weight-loss drugs and devices have huge sales potential but a mixed track record. An FDA advisory panel concluded the Maestro system showed a sustained weight loss in patients even though it fell short of its goal. The device is one of a series of products called neuro-modulators that target nerves for a variety of conditions ranging from pain to Parkinson’s disease. It is intended for people with significant obesity and at least one other related condition. These other maladies could include Type 2 diabetes or high blood pressure. The device is implanted surgically into the abdomen, and is designed to be used in people age 18 and over who haven’t been able to shed pounds with a weight-loss program. It is to be used in people with a body-mass index of 35 to 45, or roughly 75 pounds or more over a person’s ideal body weight.
Arrowhead Research Corp. (Pasadena CA) saw its shares plummet 24% last week to $6.86 after the FDA restricted further clinical testing on the company’s hepatitis-B drug ARC-520, and announced a partial hold. The FDA said in a preliminary notification that Arrowhead was allowed to begin phase IIb testing on the drug; however, the company would need to make a few amendments to its clinical trials in order to have the partial hold removed. Arrowhead Research is a biopharmaceutical firm involved in the development of targeted RNA interference (RNAi) drugs. RNAi is a biological process that targets those genes in the human body which cause Hepatitis B. ARC-520 is expected to be Arrowhead’s first product on the market for the treatment of this contagious disease.
And health authorities were scrambling to determine how hundreds of bags of intravenous saline solution meant for training healthcare workers in demonstrations or on dummies have been given to real patients. The mystery ensued after Wallcur LLC (San Diego CA) recalled different-size bags of its saline solution and distilled water on Jan. 7. As of Thursday, 17 patients had fallen ill and one person--a hospice patient--had died after being given the solution, health officials said, though they could not say conclusively whether the saline solution was the cause. Patients in seven states reported symptoms, including chills, fever, tremors and headaches. The company said it began shipping the saline, in bags labeled “for clinical simulation,” on May 22, 2014. It said the products were not intended for people or animals because they were not sterile. The FDA, which is investigating the case, said the bags had been shipped to medical clinics, surgical centers and urgent care facilities, some of which administered them to patients.
MEDICAL STOCK SPOTLIGHT -- Canada’s Tekmira Pharmaceuticals Corp. (Nasdaq) led advancing issues, leaping $8.50, or 54% for the week, to $24.20 after agreeing to buy OnCore Biopharma, based in Pennsylvania, to focus on developing a hepatitis B virus treatment. The implied market value of the merged company is about $750 million, the companies said in a statement. OnCore will become a wholly owned subsidiary of Tekmira; upon closing of the deal, OnCore shareholders will hold about 50% of the total outstanding shares of Tekmira. Burnaby, BC-based Tekmira’s chief executive, Mark J. Murray, will be the chief of the merged company, and its chairman, Daniel Kisner, will become vice chairman. OnCore’s chairman, Vivek Ramaswamy, will be the chairman. Tekmira said it would continue its oncology and antiviral programs, including treatments for Ebola.
Elsewhere, ZIOPHARM Oncology Inc. (Nasdaq) soared $2.73, or 51%, to $8.11 after it and partner synthetic biology company Intrexon Corp. announced they had entered into a $100 million licensing deal with The University of Texas MD Anderson Cancer Center to acquire the rights to its investigational cancer treatment known as chimeric antigen receptor (CAR) T cell therapy. Under the agreement, Intrexon and Boston, MA-based ZIOPHARM will be granted rights for the development and marketing of the cancer treatment developed by MD Anderson which works by modifying the immune system of patients to treat the cancer tumor. The deal also includes an exclusive sublicensing agreement through MD Anderson for research conducted at the University of Minnesota. The agreement is expected to help the companies develop and expand their respective synthetic immunology pipelines.
And Aldeyra Therapeutics Inc. (Nasdaq), a biotechnology company focused on the development of products to treat diseases related to free aldehydes, announced the closing of its previously announced $7.79 million private placement of common stock and warrants. Lexington, MA-based Aldeyra is a biotechnology company focused primarily on the development of products to treat diseases thought to be related to endogenous free aldehydes, a naturally occurring class of toxic molecules. The company has developed NS2, a product candidate designed to trap free aldehydes. Aldeyra plans to initiate phase II clinical studies of NS2 in Sjögren-Larsson Syndrome and noninfectious anterior uveitis in early 2015. NS2 has not been approved for sale in the U.S. or elsewhere.
But eHealth Inc. (Nasdaq) tanked $12.40, or 56%, to $9.68 after warning fourth-quarter and fiscal 2014 earnings and revenue would be below expectations. The Mountain View, CA-based company said applications for individual and family health insurance plans fell 41% in the fourth quarter. eHealth expects full-year revenue of $178-$180 million, down from earlier guidance of $185-$194 million, and earnings of $1.5 to $4 million, far below earlier guidance of $13.5 to $18.5 million. The 18-year old company, the nation’s first and largest private health insurance exchange, generates most of its revenue from insurance carrier commissions on individual, family, small business and Medicare plans. But the market is increasingly competitive, with health insurance providers marketing directly to consumers.
IPO SECTOR – Included among recent SEC filings for initial public offerings, Bellerophon Therapeutics LLC, which is developing nitric oxide-based therapies for cardiopulmonary diseases, registered up to $69 million worth of common stock. Bellerophon was spun out of Ikaria in February 2014 as a special dividend to existing stockholders, shortly before Ikaria’s non-biotech business was acquired by Madison Dearborn for $1.6 billion. Ikaria had originally intended to go public in November 2010 but withdrew its offering. The Hampton, NJ-based company plans to list on the Nasdaq under the symbol “BLPH.” Bellerophon initially filed confidentially on May 14, 2014. Leerink Partners and Cowen & Company are the joint bookrunners on the deal. No pricing terms were disclosed.
January 12, 2015 ...
HOUSE PASSES BILL TO UNDERMINE OBAMACARE -- The House of Representatives brushed aside President Barack Obama’s veto threat and passed a bill Thursday that would revise his 2010 healthcare law to ease the requirement that employers provide insurance to their workers. The measure, passed 252-172, would require employers to provide coverage to workers who put in at least 40 hours a week. That’s up from the current 30-hour threshold, which Republicans say would cause employers to reduce hours and wages for many workers. The bill now goes to the newly Republican-led Senate, where the Democratic minority could block the measure. Last week’s House vote, with 12 Democrats supporting the bill, shows that it lacks the two-thirds backing needed to override a presidential veto. “We will sustain the president’s veto on that,” House Minority Leader Nancy Pelosi said earlier on Thursday. “The president’s threat to veto this common-sense legislation, rather than work toward bipartisan solutions to help middle-class families, is a sad commentary on where his priorities lie,” said House Speaker John Boehner of Ohio in a statement after the vote. Boehner spokesman Michael Steel said it was too soon to discuss the bill’s prospects without a veto-proof majority. “First, let’s wait until it goes to the Senate,” he said.
The bill represents the Republican Congress’s opening swipe against the Affordable Care Act. Although it is short of an all-out attempt at repeal, promised by House and Senate Republican leaders, previous House votes showed that last week’s measure would draw at least a few Democratic crossover votes. “It is simply unfair to try to finance health care for some hard-working American people on the backs of other hardworking Americans through a reduction in hours and wages,” said Representative Todd Young, an Indiana Republican and the bill’s main sponsor. By raising the threshold requiring insurance coverage to 40 hours a week, Young said, “we remove this perverse incentive to reduce hours and wages when they are most needed by our hourly workers.” He cited analysts who say 2.6 million workers in the U.S. earn less than $30,000 a year and are most at risk. Obamacare, passed with no Republican votes, is the president’s signature domestic accomplishment. “While the administration welcomes ideas to improve the law, H.R. 30 would shift costs to taxpayers, put workers’ hours at risk and disrupt health insurance coverage,” the administration said.
FDA PANEL BACKS NOVARTIS COPY OF AMGEN'S NEUPOGEN -- Novartis AG’s (Basel CHE) imitation of Amgen Inc.’s (Thousand Oaks CA) cancer drug Neupogen won the unanimous backing of U.S. advisers, taking a step closer to becoming the first biosimilar drug for sale in the U.S. Novartis’s biosimilar, which it plans to call Zarxio, should be approved for the same five conditions that Neupogen treats, advisers to the Food and Drug Administration voted last week. The treatment seeks to increase cancer patients’ white blood cell counts. The FDA itself, expected to decide whether to approve the biosimilar in March, doesn’t have to follow the advisory panel’s recommendation. Neupogen, which generated an estimated $1.2 billion in sales for Amgen in 2014, is part of the growing class of biologic medicines that are more complex than chemical drugs. They also are typically more expensive and, unlike chemical drugs, have never faced generic competition before. The U.S. may save $44 billion in drug spending in the next 10 years by introducing biosimilars, according to Rand Corp. (Santa Monica CA). “This has been utilized extensively in other parts of the world,” Deborah Armstrong, chairwoman of the FDA panel and oncology professor at Johns Hopkins University School of Medicine, said during the meeting. “There’s fairly robust safety and efficacy data that makes some of this a little bit easier.”
FDA staff supported approving Zarxio for all five conditions in a report released Jan. 5. Novartis’s biosimilar version of Neupogen “meets the requirement for a demonstration of ‘no clinically meaningful differences’ between the proposed product and the reference product in terms of safety, purity, and potency,” FDA reviewers said. The FDA only gained the power to approve a biosimilar in the 2010 Patient Protection and Affordable Care Act, also known as Obamacare. Chemical drugs have faced generic competition for more than three decades. Imitations of biologic drugs are called biosimilars instead of generics because they’re made from living organisms, which can’t be precisely copied. Novartis, based in Switzerland, has sold biosimilar Neupogen in Europe, where it uses the brand name Zarzio, since 2009. Biosimilars aren’t expected to slash drug prices by 80% like chemical generics. Economic and actuarial studies included in the Rand report estimated the $44 billion in savings from biosimilars over a decade assumed the imitations would cut prices anywhere from 10% to 50%. Novartis closed the week up 5.15 Swiss francs, or 6%, at 97.50 francs in Zurich. Amgen fell $4.16, or 3%, to $155.73 in New York.
TRACKING WASHINGTON -- On the new Congress’s first day, the House unanimously approved Republican legislation making it easier for smaller companies to avoid providing healthcare coverage to their workers by hiring veterans. The measure was approved 412-0 and is the first of many expected GOP bills aimed at President Barack Obama’s healthcare overhaul, which was enacted over unanimous Republican opposition. That 2010 law is phasing in a requirement that companies with more than 50 full-time workers provide medical coverage for their workers. The House bill, sponsored by Rep. Rodney Davis (R-IL), would exempt from that threshold veterans who already get health care from the Veterans Affairs Department or the military. Supporters say the measure would encourage employers to hire veterans. That’s a goal backed by members of both parties, even as federal figures show unemployment among Iraq and Afghanistan veterans dropped from 9.9% in November 2013 to 5.7% last November. Critics say the measure’s effect on companies and veterans is overstated. They say only modest numbers of firms are close to the 50-worker level and would be motivated to hire veterans to avoid providing medical insurance for their employees. In a written statement, the White House said it backed the measure, saying it supports “commonsense improvements” in the law.
Elsewhere, nearly 6.6 million people have selected a 2015 health insurance plan on HealthCare.gov--the U.S. government website that sells subsidized individual insurance plans in 37 states as of Jan. 2--the U.S. health agency said last Wednesday. The U.S. Department of Health and Human Services said that 102,896 individuals signed up for 2015 Healthcare.gov plans in the week of Dec. 27 through Jan. 2. Enrollment for these plans opened on Nov. 15 and remains open until Feb. 15. The government has said that it expects over 9 million people in total to enroll in the health insurance, created under the national healthcare reform law. Another 14 states and Washington, D.C. run their own websites to sell insurance and those figures are not included in the government’s tally.
FDA/EMA ROUNDUP -- As the United States grapples with a flu season that has killed 21 people so far, the Food and Drug Administration last week cleared the way for greater use of a molecular test designed to quickly detect the presence of the virus in a nasal swab. The test, made by Alere Inc. (Waltham MA), can now be used in a wide variety of clinical settings, including doctors’ offices, emergency rooms, clinics and other healthcare facilities. Previously, it could only be used in a limited number of laboratories. The FDA first cleared the Alere influenza A & B test in June as a prescription-only device, categorizing the test as moderately complex and therefore not to be used widely. The agency said it agreed to allow wider use of the test after the company submitted data showing its ease of use and low risk of false results when used by untrained operators.
Elsewhere, Bayer AG (Leverkusen DEU) announced that the FDA has granted a label expansion approval for the additional use of its drug, Gadobutrol (marketed in the U.S. as Gadavist injections), for pediatric patients younger than 2 years of age (including term neonates), at the standard injection dose given to adults. The injection was granted approval to be used with an MRI to find and sketch out the regions in a patient’s body with a disrupted blood-brain barrier and/or abnormal central nervous system blood vessels. The injection helps produce enhanced images, allowing the abnormalities to be analyzed more accurately.
The FDA approved the use of a drug made by Daiichi Sankyo Co. Ltd. (Tokyo) to reduce the risk of stroke and blood clots in patients with an irregular heartbeat not caused by a heart valve problem. The new drug, Savaysa, will compete with older blood thinners, including Xarelto, sold by Bayer AG and Johnson & Johnson, Boehringer Ingelheim’s Pradaxa, and Bristol-Myers Squibb Co.’s Eliquis. The FDA said the Daiichi drug is also approved to treat deep vein thrombosis and pulmonary embolism in patients who have already been treated with an anti-clotting drug administered by injection or infusion, for five to ten days. The agency said that, as with other approved anti-clotting drugs, bleeding, including life-threatening bleeding, is the most serious risk with Savaysa.
And an expert panel unanimously recommended that the FDA approve a cheaper copy of a special drug used in cancer therapy, paving the way for alternatives to an entire class of complex and costly drugs to enter the U.S. market. Most brand-name drugs eventually lose their patent protection, opening the market to lower-priced generic products. But one class of drugs, known as biologics, which includes some of the most expensive medications in the world, has been insulated from the competition of cheaper copies for years. That changed when the 14 members of the panel, convened by the FDA, agreed to approve a drug known as EP2006, which helps the body make white blood cells and is a close copy of an existing medication called Neupogen, also called filgrastim. EP2006 was approved in Europe in 2009 as Zarzio but has not been used in the U.S., in part because no regulatory pathway existed to bring copies of biologic drugs to market. The drug recommended is made by Sandoz, a unit of the Swiss company Novartis AG (Basel). Neupogen, the original, is made by Amgen Inc. (Thousand Oaks CA).
MEDICAL STOCK SPOTLIGHT -- Arena Pharmaceuticals Inc. (Nasdaq) led advancing issues, soaring $1.84, or 51% for the week, to $5.43. The big upward move came after the San Diego-based biopharmaceutical company released positive data for its oral drug candidate, APD334, which is in a phase Ib trial. The oral drug targets the sphingosine 1-phosphate subtype 1 (S1P1) receptor to treat auto-immune diseases. BMO Capital analyst Jim Birchenough weighed in on the development and termed the results promising. However, he expects differentiation among S1P1 modulators, based on effects on the liver, pulmonary function, and heart rate. Auto-immune disorders (that APD334 sets out to cure) are so prevalent that AbbVie Inc.’s biotech drug Humira accounts for almost 65% of the company’s revenue.
Elsewhere, Anthera Pharmaceuticals Inc. (Nasdaq) rocketed 50% to $2.63 on anticipation of its symposium on systemic lupus erythematosus scheduled for this week in San Francisco. The Hayward, CA-based company’s candidate for the treatment of lupus is A-623 (blisibimod), a selective peptibody antagonist of the BAFF cytokine. On December 15, the company signed a license agreement with Tokyo-based Zenyaku Kogyo Ltd. for the development and commercialization of subcutaneous blisibimod in Japan and potentially other Asian countries.
And Tonix Pharmaceuticals Holding Corp. (Nasdaq) leaped $2.36, or 40%, to $8.28 after announcing it has completed a phase I safety, tolerability, and pharmacokinetic study of TNX-201, which is being developed for episodic, tension-type headache. In this single ascending dose, placebo-controlled trial, TNX-201 was well-tolerated at all doses studied, and showed a dose-related increase in pharmacokinetic parameters, according to the New York-based company. A phase II, double-blind, randomized, multicenter, placebo-controlled study to evaluate the efficacy and safety of TNX-201 for the treatment of a single episodic tension-type headache will begin in the second quarter of 2015.
But KaloBios Pharmaceuticals Inc. (Nasdaq) plunged 73% to $0.50. The company said it would discontinue the development of its drug for lung infections in cystic fibrosis patients after it failed in a mid-stage study. The South San Francisco-based company said its drug, KB001-A, did not extend the time before cystic fibrosis patients had to take antibiotics for their worsening respiratory tract symptoms. KB001-A was being developed to treat a powerful superbug, Pseudomonas aeruginosa, that causes lung infections. The drug also failed the trial’s secondary endpoints of improving lung function, the company said.
IPO SECTOR – Included among recent SEC filings for initial public offerings, Inovalon Inc., which provides healthcare data and analytics to pharmas, payors and providers, registered up to $500 million worth of common stock. The Bowie, MD-based company, which was founded in 1998 and booked $336 million in sales for the 12 months ended September 30, 2014, plans to list on the Nasdaq under the symbol “INOV.” Inovalon initially filed confidentially on October 10, 2014. Goldman Sachs, Morgan Stanley, Citi, BofA Merrill Lynch and UBS Investment Bank are the joint bookrunners on the deal. No pricing terms were disclosed.
January 5, 2015 ...
FDA DRUG APPROVALS REACHED 18-YEAR HIGH IN 2014 -- U.S. drug approvals in 2014 hit their highest level in 18 years and recommendations in Europe also came at a rapid rate, driven by expensive new treatments for cancer and rare diseases. After suffering a wave of patent losses on blockbuster products, which peaked two years ago, drugmakers are recovering their ability to bring new medicines to market and productivity is improving. The U.S. Food and Drug Administration’s Center for Drug Evaluation approved 41 novel medicines in 2014, 14 more than a year earlier, according to its website. That tally is second only to the all-time high of 53 approvals reached in 1996. The European Medicines Agency, which includes generic drugs in its list, recommended 82 new medicines last year, up from 79 in 2013 and 57 in 2012. Innovative new drugs have continued to command premium prices, to the relief of investors but the frustration of insurers and governments, which are starting to push back against the sky-high cost of some modern therapies. Nearly 40% of new drugs approved in the United States last year were for rare diseases, underscoring the industry’s focus on specialized products where competition is limited and annual costs often exceed $100,000 per patient.
Among 2014’s highlights were two cancer drugs that help the body’s own immune cells fight tumors and promise better, longer-lasting treatment with fewer adverse side effects. Merck & Co.’s (Whitehouse Station NJ) Keytruda and Bristol-Myers Squibb Co.’s (New York) Opdivo, which work by blocking a protein called Programmed Death receptor (PD-1), are the first in a coming wave of immunotherapies that analysts believe could generate annual sales of more than $30 billion a year. Fueled by new drug enthusiasm, biotech initial public offerings hit a record high in 2014 and the wider drug industry saw a flood of deals. That helped lift the Nasdaq Biotechnology Index and S&P 500 Health Care Index 34% and 23% respectively, though some fund managers are starting to question valuations as insurers take a tougher stance on prices. Pricing pressures have already taken a toll on older products like diabetes and respiratory medicines, where there are multiple options available, and the confrontation is now spreading to newer ones.
OBAMACARE ENROLLMENT SOARS -- About 6.5 million people signed up for health insurance using the federally run healthcare.gov system by Dec. 26, the U.S. government said. Including 633,000 people who signed up for Obamacare plans by Dec. 15 using enrollment systems run by 13 states, the total now in coverage under the Patient Protection and Affordable Care Act is at least 7.1 million. The state figures, reported separately by the Health and Human Services Department, don’t include people automatically renewed in their 2014 coverage in California, New York and six other states. Federal officials aim to have at least 9.1 million people paying for coverage sold under the law in 2015, up from 6.7 million in October. The 7.1 million signed up so far haven’t necessarily paid their first premium to their insurer, the final step in enrollment, and the figure doesn’t “fully capture the total number of plan selections for coverage beginning January 1st,” the government said. “With the latest enrollment figures, they are clearly within striking distance of their target,” Larry Levitt, a senior vice president at the Menlo Park, CA-based Kaiser Family Foundation, said. Coverage under the Affordable Care Act last year has eroded since May, when 8 million people had signed up. Some customers found alternative sources of insurance or became disenchanted with the program.
The Congressional Budget Office has estimated that 13 million people should be paying for plans sold under the law in 2015, a figure that would require “an enormous surge” of enrollment in the next six weeks, Levitt said. The Obama administration has said the CBO’s estimate is too high, and that the law’s coverage expansions will take more time than the budget agency expects to mature. Enrollment has been much smoother for 2015 than last year, when the government had only 2.2 million people signed up after three months as it struggled to salvage the Healthcare.gov system, which was crippled by software flaws. The Centers for Medicare and Medicaid Services, which oversees the enrollment website, awarded Dublin, Ireland-based Accenture Plc a five-year contract extension late last month, worth about $564 million, to continue running Healthcare.gov, according to federal records. Accenture was brought on in February to replace the company that built Healthcare.gov, CGI Federal Inc. (Fairfax VA).
TRACKING WASHINGTON -- The Obama administration reported a big increase in new customers signing up for health insurance in Florida, Texas and other states using the federal insurance marketplace. But in states running their own insurance exchanges, the numbers were more modest. Altogether, the administration said, in the first month of open enrollment for 2015 coverage, more than four million people signed up for the first time or re-enrolled through the federal and state insurance marketplaces. About 3.4 million of them were in the 37 states using HealthCare.gov, the website of the federal marketplace. More than two million consumers signed up for the first time, the administration reported, and 1.8 million of them did so through the federal marketplace. States with large numbers of new customers in the federal exchange included Florida (330,000), Texas (205,000), North Carolina (110,000), Georgia (103,000) and Pennsylvania (95,000). The report showed the importance of subsidies to people seeking coverage under the Affordable Care Act. Officials said that 87% of those selecting health plans for this year in the federal exchange had qualified for subsidies that would reduce their premiums.
Elsewhere, a startup insurance company loaned $145 million by the U.S. government under Obamacare is running out of money and being taken over by state officials in Iowa. The company, CoOportunity Health (W. Des Moines), which also serves Nebraska, was placed under Iowa Insurance Commissioner Nick Gerhart’s supervision last week and is no longer accepting new enrollees, according to a statement from his office. While Gerhart’s agency will operate the company for the time being, it’s urging policyholders to seek a new insurer. CoOportunity Health is a co-op, or Consumer Operated and Oriented Plan, one of 23 nonprofit health insurers providing coverage in 26 states. They were created under the Patient Protection and Affordable Care Act to increase competition. The fate of CoOportunity provides new fodder for Obamacare opponents who argue that the law wastes government money. The co-op’s troubles are a blow to an Obamacare program that had outperformed the direst predictions of Republicans. While Obamacare opponents had argued the companies would fail and squander government loans, some co-ops including CoOpportunity had outpaced forecasts for enrollment, growing five times faster than expected through March.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration announced that it would abandon a decades-old lifetime prohibition on blood donation by gay and bisexual men, a major stride toward ending what many had seen as a national policy of discrimination. However, the agency will continue to ban men who have had sex with a man in the last year, saying the barrier is necessary to keep the blood supply safe. The FDA enacted the ban in 1983, early in the AIDS epidemic. At the time, little was known about the human immunodeficiency virus, which causes the disease, and there was no quick test to determine whether somebody had it. But science--and the understanding of HIV in particular--has advanced in the intervening decades. The FDA acknowledged as much, lifting the lifetime ban.
Elsewhere, the FDA approved AbbVie Inc.’s (North Chicago) all-oral treatment for hepatitis C, and the company said the drug would cost $83,319 for a typical 12-week plan, slightly below its huge selling competitor Sovaldi from Gilead Sciences Inc. (Foster City CA). Gilead’s Sovaldi treatment made headlines last year with its $84,000 price tag and set off a national debate about whether drug prices have climbed too high. AbbVie’s newly approved regimen is also less costly than Gilead’s newest one-pill regimen that combines Sovaldi with another drug and costs $94,500 for 12 weeks. With Gilead’s newly improved Harvoni, some patients can take the treatment for just eight weeks, which sells for about $63,000.
The FDA approved a drug to treat dementia in Alzheimer’s patients that was developed by Actavis Plc (Dublin IRL) and Adamas Pharmaceuticals Inc. (Emeryville CA). The drug, Namzaric is designed to treat moderate-to-severe dementia in Alzheimer’s patients by combining in a single capsule memantine and donepezil--ingredients in two drugs that are often prescribed together. Memantine is the active ingredient in Actavis’s Namenda, while donepezil is the active ingredient in Pfizer Inc.’s (New York) Aricept. Both are in use for Alzheimer’s-related dementia. Actavis said it expects to launch Namzaric in two dosage strengths in the U.S. in the second quarter of 2015. Adamas will retain commercialization rights outside the U.S.
And the FDA approved BioCryst Pharmaceuticals Inc.’s (Durham NC) single-dose flu drug, in what the company says is the agency’s first ever approval for an intravenous drug to fight influenza. The drug is intended for adults with acute uncomplicated influenza who are unable to swallow pills such as Gilead Sciences Inc.’s (Foster City CA) Tamiflu or inhale GlaxoSmithKline Plc’s (London) Relenza because of upper respiratory problems. BioCryst’s peramivir injection, to be sold as Rapivab, is the first antiviral influenza treatment approved by the FDA in fifteen years, the company said. Rapivab inhibits the enzyme neuraminidase, which is critical to the spread of influenza.
MEDICAL STOCK SPOTLIGHT -- NephroGenex Inc. (Nasdaq) led advancing issues, exploding 119% over the week to $10.68 after the company announced that its lead drug, pyridorin, was shown to be safe in a late-stage cardiac safety study involving patients with diabetic nephropathy. The Raleigh, NC-based company, which focuses on innovative treatments for kidney disease, said an extensive QT/QTc (TQT) cardiac safety study had been conducted to check whether the drug affects the QT/QTc interval. The results showed that pyridorin was completely safe and did not affect the QT/QTc interval which, if affected for a prolonged period of time, could cause an irregular heartbeat or sudden cardiac death. The drug had also showed cardiac safety in phase I and II clinical trials. Pyridorin is being developed to treat diabetic nephropathy--a chronic, degenerative kidney disease resulting from diabetes, and often followed by heart disease.
Elsewhere, NeuroDerm Ltd. (Nasdaq) nearly doubled in value, rising $6.00, or 99%, to $12.06 after the company reported positive results in a small trial of a treatment for Parkinson’s disease. The Israeli company said continuous, subcutaneous delivery of two liquid product candidates had a positive effect on plasma levels, suggesting the high dose version that is aimed at severe sufferers of the disease may be an effective alternative to current treatments that require surgery. The higher dose candidate, known as ND0612H, “is designed to be delivered continuously, thus we believe it should offer a simple and effective treatment option that will minimize the need for surgical intervention in advanced Parkinson’s patients,” said Sheila Oren, vice president of clinical and regulatory affairs at the company.
And Brainstorm Cell Therapeutics Inc. (Nasdaq) surged $3.65, or 95%, to $7.50 ahead of the biotech company’s data release later today. Brainstorm intends to release the final results from its phase IIa trial of its stem-cell therapy NurOwn. The New York-based company describes NurOwn as an “autologous, adult stem cell therapy technology” designed to treat ALS, also known as Lou Gehrig’s Disease. “We are very excited to share the final results of this study,” said Brainstorm’s CEO Tony Fiorino, MD, PhD. “Professor Karussis presented a very positive and well-received interim analysis of this study at the Joint Congress of European Neurology in June 2014, and the final results include data from several additional subjects and analyses conducted by our independent statisticians.”
But MiMedx Group Inc. (Nasdaq) skidded 14% to $9.74 after the company announced it had received a subpoena from U.S. regulators. The Marietta, GA-based company, which specializes in regenerative medicine, said it received a subpoena from the Office of the Inspector General of the Department of Health and Human Services in connection with a civil investigation mostly tied to the company’s sales and marketing activities.
IPO SECTOR – Included among recent SEC filings for initial public offerings, Entellus Medical Inc., which sells a minimally invasive balloon sinus dilation treatment to open obstructed sinus pathways, registered up to $69 million worth of common stock. The Plymouth, MN-based company, which was founded in 2006 and booked $45 million in sales for the 12 months ended September 30, 2014, plans to list on the Nasdaq Global Market under the symbol “ENTL.” BofA Merrill Lynch and Piper Jaffray are the joint bookrunners on the deal. No pricing terms were disclosed.
December 22, 2014 ...
OBAMACARE'S BEST WEEK BRINGS ONE MILLION NEW SIGNUPS -- The Obama administration said that nearly 2.5 million people had selected health insurance plans through the federal marketplace in the first four weeks of open enrollment this fall. More than one million of those selections came in just one week, from Dec. 6 through Friday, Dec. 12. “Millions of Americans want access to affordable quality health insurance, and they came to the marketplace to find it,” Sylvia Mathews Burwell, the secretary of health and human services, said in reporting enrollment activity under the Affordable Care Act. Last Monday was the deadline for people to sign up for insurance taking effect on Jan. 1. Andrew M. Slavitt, the No. 2 official at the federal Centers for Medicare and Medicaid Services, said the new data did not include activity from Saturday through last Monday, when the website for the federal exchange was exceptionally busy. In those three days, Mr. Slavitt said, more than three million people used the site, HealthCare.gov, and the exchange received 1.6 million telephone calls. “Our call center and our technology have done their jobs so far,” Mr. Slavitt said. For about 90 minutes last Monday, officials said, they deployed an online waiting room for visitors to HealthCare.gov, but most users were not affected.
The number of people selecting plans in the first month of open enrollment this fall already exceeds the number who chose plans in the federal exchange in the first three months of enrollment last year, when Kathleen Sebelius was health secretary and the website often crashed or froze. The improved performance of the website may help the Obama administration fend off attacks on the healthcare law by Republicans in Congress, who won control of the Senate and expanded their House majority in elections last month. About half of those selecting health plans this fall, from Nov. 15 to Dec. 12, were new customers, and half were renewing coverage or switching to a different health plan. Millions of people who took no action to extend their coverage will automatically have it renewed. The Obama administration had urged people to return to HealthCare.gov, shop around and compare the options, saying they could often find a better deal. But it appears that many people did not take that advice.
S&P JOINS OTHER AGENCIES WITH PESSIMISTIC OUTLOOK FOR HOSPITALS -- The outlook for non-profit healthcare remains dreary for 2015, as hospital operating margins continue to face pressure from rising costs and weaker reimbursement, according to the three major credit ratings agencies. They were unanimous giving the healthcare and hospital sector a negative outlook next year, citing anticipated downgrades, declining operating cash flows, and on-going uncertainties surrounding the implementation of the Affordable Care Act. “The negative pressures facing most providers are widespread,” said Martin Arrick, services analyst with Standard & Poor’s Ratings. “Many providers will not be able to adapt.” S&P forecasted more downgrades than upgrades among not-for-profit healthcare providers for a third consecutive year, as operating margins are squeezed by rising costs. “There would likely have been more downgrades in 2014 if not for the high level of merger and acquisition activity which often precluded downgrades and in many cases led directly to upgrades,” S&P said in its 2015 outlook. Moody’s Investors Service anticipated another 12 to 18 months of weak performance, with large hospital systems faring better from economies of scale and the ability to drive revenue growth through expanded services. “The largest hospitals are getting stronger, while the smaller hospitals get weaker,” Moody’s senior analyst Daniel Steingart said.
Many hospitals have exhausted the low-hanging fruit for cost-cutting. At the same time, hospitals are expected to shift away from the traditional fee-for-service models, in which more patient services led to more revenue. The Affordable Care Act and purchasers of healthcare are now emphasizing preventative care and reduced hospital stays. That trend might be good news for the 43 million Americans grappling with overdue medical debt, according to the U.S. Consumer Financial Protection Bureau, but not so for hospitals that historically counted on healthcare spending to balance operating budgets. Fitch Ratings said more uncertainty is on the way, as Republicans with Congressional control vow to repeal or defund parts of the Affordable Care Act. That would “hamper the sector’s ability to adapt and plan,” Fitch said. The rating agency was closely following an upcoming U.S. Supreme Court decision in the King vs. Burwell case, in which the court could effectively invalidate insurance coverage purchased through federally operated state exchanges. “The hospital sector has navigated many challenging environments in the recent past, but the upcoming years represent a true transition as the core model of healthcare delivery and reimbursement is undergoing redesign,” said James LeBuhn, Fitch senior director.
TRACKING WASHINGTON -- The U.S. Supreme Court last week declined to approve tighter restrictions on abortion, turning away an appeal by Arizona officials defending a law that would restrict the use of drugs to end a pregnancy. The justices, without comment, left intact a ruling that blocks the 2012 Arizona law while a legal challenge plays out. The measure, described by opponents as the country’s most extreme, has the effect of barring medicinal abortions after the seventh week of pregnancy and perhaps earlier as well. Arizona says the law is a legitimate step to protect women’s health. The statute requires doctors to follow U.S. Food and Drug Administration instructions in dispensing abortion-inducing drugs. Abortion-rights advocates say the FDA-approved protocols no longer represent the safest approach and that doctors must be able to prescribe drugs “off label.” In blocking the law, a San Francisco-based federal appeals court said Arizona “has presented no evidence whatsoever that the law furthers any interest in women’s health.” Arizona argued that the state was being held to too high a standard. The appeal contended that the state needed to show only that it had a rational basis for believing the law would protect women’s health.
Elsewhere, the U.S. government canceled one of its most ambitious health research projects, an effort to follow 100,000 children from before birth through adolescence, after spending about $1.3 billion since 2007 without it ever really getting off the ground. Run by the National Institutes of Health, the study was to collect data on child health and development in the hope of discovering insights into autism and other maladies. Administrative difficulties and the project’s spiraling costs alarmed NIH Director Francis Collins, who ordered an evaluation of the study after the National Academy of Sciences raised concerns in a June 16 report. The project was authorized by Congress in 2000 yet never got past a small pilot study to test research methods. The study “as currently designed is not feasible,” Collins said in a statement on the NIH’s website. About $1.3 billion was poured into the project since 2007, though “the impact of this funding is unclear,” according to the internal NIH evaluation. Collins put the study on hold in June before announcing its cancellation last week.
FDA/EMA ROUNDUP -- Abbvie Inc. (North Chicago) and Enanta Pharmaceuticals Inc. (Watertown MA) won U.S. approval to sell a combination of pills to treat hepatitis C, bringing to market the first new competitor to Gilead Sciences Inc.’s (Foster City CA) drug to treat the liver virus. The Food and Drug Administration cleared the drug cocktail, which will be sold under the name Viekira Pak for patients with the U.S.’s most common strain of the virus, genotype 1. Like Gilead’s treatment, Viekira Pak is an all-oral medication that doesn’t require immune system-boosting shots that can have flu-like side effects and are used with older treatments. Unlike Gilead, AbbVie’s combination will require patients to take four to six pills a day. Viekira Pak could generate $2.9 billion in sales next year, according to the average of three analysts’ estimates compiled by Bloomberg.
Elsewhere, the FDA approved a device developed by Cerus Corp. (Concord CA) to reduce the risk of infections in blood plasma transmitted during transfusions, such as HIV, hepatitis and West Nile virus, sending company shares 32% higher on the week to $6.41. The Intercept Blood System for plasma uses ultraviolet light and a chemical called amotosalen that inactivates viral pathogens in the blood. The plasma is then purified to remove the chemical and its byproducts. While the Intercept Blood System for plasma has been shown to be effective in reducing a broad range of viral and bacterial pathogens that may be transmitted through transfusions, there is no inactivation process that has been shown to eliminate all pathogens, the FDA said.
Novartis AG (Basel CHE) announced that its drug Signifor LAR has been approved by the FDA to treat acromegaly in patients on whom prior treatments have not worked or for whom surgery is not an option. The FDA’s decision is based on the promising results demonstrated by the drug in two of its phase III trials, C2305 and C2402. In both of these trials, Signifor LAR, a next-generation somatostatin analog (SSA), proved superior to a first-generation SSA in achieving greater biochemical control in patients with acromegaly, a rare and life-threatening hormonal disease. Acromegaly is caused by a “non-cancerous tumor in the pituitary gland” as a result of an excess discharge of the growth hormone (GH) and “insulin-like growth factor-1 (IGF-1).” The disease can result in the swelling of various body parts such as feet, hands, and facial features.
And a new diet pill from Orexigen Therapeutics Inc. (La Jolla CA) has been recommended for approval in Europe, the European Medicines Agency (EMA) said on Friday. The drug, known as Contrave in the United States, will be marketed as Mysimba in Europe. The medicine won U.S. approval in September and is a combination of the antidepressant bupropion and Orexigen’s formulation of naltrexone, designed to prevent drug dependence. The EMA also gave a green light to a Parkinson’s drug called Xadago, or safinamide, from Newron Pharmaceuticals SpA (Bresso ITA) and its partner Zambon SpA (Milan), as well as a drug for controlling hyperphosphataemia from Sanofi SA’s (Paris) biotech unit Genzyme and a drug for skin infections from Durata. Recommendations for marketing approval by the EMA’s Committee for Medicinal Products for Human Use (CHMP) are normally endorsed by the European Commission within a couple of months.
MEDICAL STOCK SPOTLIGHT -- Auspex Pharmaceuticals Inc. (Nasdaq) led advancing issues, soaring $28.47, or 114% over the week, to $53.37 after the drug developer said its product for treating chorea, or involuntary movement associated with Huntington’s disease, met the main goal in a late-stage study. Patients administered SD-809, Auspex’s lead drug, showed an improvement in a standardized score measuring involuntary movement, compared with those given a placebo. The drug also significantly improved the patients’ quality of life, lowering rates of depression and anxiety. About 90% of those suffering from Huntington’s disease develop chorea, characterized by involuntary, excessive movements that can impact all parts of the body and interfere with motor functions. The La Jolla, CA-based company said it was also running an additional trial to see if chorea management remained under control when patients were switched overnight to SD-809 from H. Lundbeck A/S’s tetrabenazine, the current standard of care.
Elsewhere, a medical breakthrough in the treatment of melanoma sent biotechnology firm Novogen Ltd. (Nasdaq) up 57% to $2.58, just two years after the company abandoned a push to dismantle Australian operations in favor of its New York-based subsidiary. The Hornsby-based company announced its brain cancer treatment Trilexium had been shown in pre-clinical studies to be highly effective against melanoma. Novogen will now attempt to secure funding for clinical trials and to take the therapy to market, the company’s executive director Graham Kelly said. “People have speculated for some time that there’s a link between melanoma and brain cancer, so a drug that could knock out both is an important scientific discovery,” Dr. Kelly said. “From a shareholder point of view, there are very few drugs that work against melanoma.”
And Thinly-traded nano cap TransEnterix Inc. (Nasdaq) surged $1.35, or 71%, to $3.24. The Durham, NC-based company announced the successful completion of four general surgery and urology procedures using its SurgiBot patient-side robotic surgery system. Its value proposition is ease of use and lower cost compared to currently available systems. “The SurgiBot system has the ability to offer multiple instruments and a camera through a single small incision. It is designed to limit surgical trauma while enabling the surgeon with advanced vision, dexterity and control,” said Dr. Juan Carlos Verdeja, a general surgeon and chief of general surgery at Baptist Health Medical Group in Miami, FL. Management also stated that the preparation of its FDA 510(k) filing is proceeding as planned, and affirmed prior guidance of its intention to submit the filing in mid-2015.
But Sophiris Bio Inc. (Nasdaq) plummeted 84% to $0.45 after the La Jolla, CA-based company announced disappointing data from an interim efficacy analysis of its ongoing phase III PLUS-1 study on PRX302 as a treatment for lower urinary tract symptoms of benign prostatic hyperplasia (BPH). The ongoing international, multicenter, randomized, double-blind, and vehicle-controlled PLUS-1 study is evaluating the safety and efficacy of a single intraprostatic administration of PRX302 in patients with BPH. The company stated that enrollment and dosing in the study were completed in September. The Independent Data Monitoring Committee reported that a predefined efficacy threshold in patients receiving PRX302 was not achieved.
IPO SECTOR – Juno Therapeutics Inc., which is developing T-cell therapies for lymphomas, leukemias and other cancers, raised $265 million by offering 11 million shares (all primary) at $24, above the range of $21 to $23. The Seattle, WA-based company had initially planned to offer 9.3 million shares at $15 to $18, before increasing its range on Tuesday. At $24, Juno Therapeutics will raise 73% greater proceeds than initially anticipated, and command a fully diluted market cap of $2.2 billion. Juno Therapeutics, which was founded in 2013, lists on the Nasdaq Global Market under the symbol “JUNO.” Morgan Stanley, J.P. Morgan and Goldman Sachs are the joint bookrunners on the deal. Shares closed the week up $11.00, or 46%, at $35.00.
December 15, 2014 ...
HEALTHCARE.GOV SIGNUPS GROW IN WEEK THREE OF 2015 ENROLLMENT -- A working website and more new customers than expected have Obamacare headed toward enrollment that will surpass the lowered projections of its managers. With the program’s first deadline looming today--when people who want coverage beginning Jan. 1 must sign up--little has gone wrong so far in the second enrollment season for the Patient Protection and Affordable Care Act. Technical problems have been scattered and largely resolved. Consumer interest is strong, with 1.4 million people signed up through Dec. 5 in 37 states using the federal healthcare.gov system. It’s a dramatic turnabout from a year ago, when the federal website was brought to a standstill by errors, requiring a two-month repair effort. The government will probably surpass a goal of 9.1 million signed up for private coverage by the time enrollment closes in February, said Larry Levitt, a senior vice president at the Kaiser Family Foundation (Washington DC). “They should meet their target quite comfortably,” he said. Caroline Pearson, a vice president at Avalere Health LLC (Washington DC), a consulting firm, predicted that as many as 5 million new customers will join about 6 million expected to renew their 2014 coverage. The final number may depend on President Barack Obama, who helped create a surge of business last March by personally promoting enrollment, Pearson said.
Obama appeared Dec. 8 on Comedy Central’s “The Colbert Report,” where he took the place of host Stephen Colbert for a regular segment called “The Word”--retitled “The Decree” for his appearance--to pitch enrollment to young viewers. “Most young people can get covered for less than $100,” Obama said, using lines purportedly meant for Colbert. “How is the president going to get that message out to the kids? He could try to appeal to them directly through a speech or a press conference, but young people don’t watch real news shows like this one. They watch comedy shows, and I just don’t see the president going on one of those.” The Congressional Budget Office, which has estimated the law’s impact on U.S. health insurance coverage, expects about 13 million people to be enrolled in private plans sold through government-run insurance exchanges next year. The Obama administration distanced itself from that projection in November, saying the law’s programs would take longer than the budget office expected to ramp up and that employers haven’t eliminated workers’ health benefits in the numbers once anticipated, which would have moved more people to the government’s marketplace.
AMERICAN NURSE EXPOSED TO EBOLA ARRIVES AT U.S. TREAMENT CENTER -- An American nurse who was exposed to Ebola while caring for patients in Sierra Leone arrived Thursday in the U.S. for treatment and monitoring after being evacuated, according to the U.S. National Institutes of Health. The nurse, who wasn’t named, was admitted to the NIH Clinical Center in Bethesda, MD, after being flown in by a chartered medical plane. “NIH is taking every precaution to ensure the safety of our patients, NIH staff and the public,” the institute said in a statement Thursday. NIH did not release any further information on the nurse, including when he or she might have been exposed to the virus, current medical condition or affiliation. The patient will be admitted “for observation and to enroll in a clinical protocol,” NIH said. The NIH clinical center is one of 35 institutions designated as Ebola treatment centers earlier this month by the U.S. government, and previously treated a nurse who contracted Ebola in Texas. The clinical studies unit is designed to provide high-level isolation capabilities and is staffed by infectious disease and critical care specialists.
The outbreak is currently at its worst in Sierra Leone, which along with Liberia and Guinea has been ravaged by the virus. In those countries, Ebola has infected more than 18,000 and killed at least 6,500. Its impact outside the region has been limited, however. Eight people treated in U.S. hospitals have been cured, and two have died. Last month Martin Salia, a physician infected with Ebola who had been evacuated to the U.S. from Sierra Leone, died despite treatment in the U.S. Nina Pham, the nurse who contracted the virus while treating a patient with Ebola in Dallas, was cured after being taken to the NIH center in October. The week prior, an American health worker who may have been infected was taken to Emory University Hospital (Atlanta) for testing and possible treatment. New treatment centers are being opened by the government and organizations like Doctors Without Borders to cope with the surge in infections in Sierra Leone.
TRACKING WASHINGTON -- President Barack Obama said the $1.01 trillion spending legislation that passed the House of Representatives Friday and appeared headed toward approval by the Senate contains funds necessary for the fight against Ebola. “We’ve got to stay on this,” he said of the Ebola outbreak in West Africa. “This is not a fight that is going to go away any time soon.” Congress plans to give the White House $5.48 billion to combat Ebola abroad and at home, meeting most of President Barack Obama’s request as the outbreak burns hot in Sierra Leone. Included in the funding is $2.72 billion for the U.S. Health and Human Services Department, primarily the Centers for Disease Control and Prevention, which is trying to contain the virus in West Africa and also prepare U.S. hospitals for new domestic cases. The State Department and the U.S. Agency for International Development would receive $2.53 billion and the Defense Department $112 million. The money comes close to Obama’s request for $6.2 billion to combat the outbreak, though without a $1.5 billion “contingency fund” he asked Congress to create. Instead, lawmakers will provide additional money for a public health fund at the health department.
Elsewhere, Republicans in the U.S. House of Representatives subpoenaed an MIT economist to demand records of his work on Obamacare for federal and state governments that they say will shed light on how the law was passed. The Massachusetts Institute of Technology economist, Jonathan Gruber, appeared before the Oversight and Government Reform Committee on Dec. 9 and in several contentious exchanges with Republicans refused to disclose how much he was paid for work on behalf of the Obama administration. Republicans have accused the executive branch of hiding details of the law’s creation and implementation, and see Gruber as holding answers. “He is in a unique position to shed light on the ‘lack of transparency’ surrounding the passage of the president’s healthcare law,” the oversight panel’s chairman, Republican Darrell Issa of California, said. At the Dec. 9 hearing, the panel asked Gruber to testify about public appearances in which he belittled voters and suggested that Democrats passed the Patient Protection and Affordable Care Act in 2010 by deceiving the public. Gruber downplayed his role and apologized for his past remarks, calling them “uninformed and glib.” Gruber said he had no comment on the subpoena.
FDA/EMA ROUNDUP -- Amgen Inc. (Thousand Oaks CA) announced that its drug XGEVA, used to treat bone-related diseases, has been approved by the U.S. Food and Drug Administration for the treatment of hypercalcemia of malignancy (HCM) in patients on whom bisphosphonate therapy did not work. HCM is a rare but serious condition that develops in advanced cancer patients because of increased bone resorption, a situation where bones get broken down by bone cell, resulting in calcium entering into the patient’s blood stream. HCM occurs mostly in patients suffering from squamous cell cancer--such as lung, head, and neck cancer—and kidney, breast cancer, myeloma, and lymphoma. HCM can cause coma, renal failure, progressive mental impairment, and eventually death. The FDA has also granted XGEVA Orphan Drug Designation, which is a status given to drugs that are designed to treat rare diseases which affect less than 200,000 individuals in the U.S. As per this designation, XGEVA will have seven years of marketing exclusivity for the said indication.
Merck & Co. (Whitehouse Station NJ) received FDA approval for an updated version of its Gardasil vaccine, which protects against the virus that causes most cases of cervical cancer. The agency approved Gardasil 9, which protects against nine strains of the virus called HPV, or human papillomavirus, up from four strains covered by the original vaccine approved in 2006. The FDA said the updated Gardasil had the potential to prevent roughly 90% of cervical, vulvar, vaginal and anal cancers. It is approved for use in males and females--ages 9 to 26 for females, and 9 to 15 in males. Vaccination requires three injections over six months. Regulators approved Gardasil 9 based on Merck studies of 13,000 patients. The most common side effects linked to the vaccine were related to the injection, including pain, swelling and redness.