Your Best Source of Healthcare Business & Economic
Breaking News for Tuesday … May 3, 2016
PFIZER EARNINGS EXCEED ESTIMATES; COMPANY RAISES 2016 FORECAST – Pfizer Inc. (New York), which last month abandoned its $160 billion quest for Allergan PLC (Dublin IRL), reported quarterly results that blew past analysts’ estimates on sales of its new cancer and arthritis treatments and the acquisition last year of hospital products company Hospira. The largest U.S. drugmaker also raised its revenue and earnings forecast for the year, helped in part by the weakening dollar. Shares of the company rose 2.4% in morning trading on Tuesday. Global company sales jumped 20% to $13 billion in the first quarter, which was $1 billion more than Wall Street had expected. But the quarter included five more days of sales in the United States than the year-ago quarter, adding revenue of $900 million in the most recent period. Pfizer said sales would be hurt in the fourth quarter of 2016, however, when those added days will be offset by fewer days. Credit Suisse analyst Vamil Divan said the results were impressive, with most drug categories beating sales expectations. But he said investors are eager to hear how Pfizer’s overall strategy might change, given its dashed hopes for Allergan. Pfizer walked away from the deal after the U.S. Treasury issued new rules curbing tax inversion deals, under which American companies move overseas to cut taxes. Many analysts believe Pfizer needs to buy new medicines or entire biotech companies to ensure competitive earnings growth.
Net income rose to $3.02 billion, or 49 cents per share, from $2.38 billion, or 38 cents per share, a year earlier, according to Thomson Reuters. Excluding special items, Pfizer earned 67 cents per share, well above the average analyst estimate of 55 cents per share. Pfizer now expects 2016 revenue of $51 billion to $53 billion, from its earlier view of $49 billion to $51 billion, and earnings of $2.38 to $2.48 per share, from $2.20 to $2.30 per share. With the Allergan deal scrubbed, Pfizer has said it will decide this year whether to sell or split off its hundreds of generic medicines, called established products, into a separate business. When it announced its planned Allergan deal last November, Pfizer put off making the decision until 2019. Conover said Pfizer is likely for the remainder of 2016 to seek far smaller “bolt on” deals, possibly in the $5 billion to $20 billion range. “They really need to figure out whether to break into two pieces before doing a lot of big mergers,” Conover said.
Highlights From This Week's Issue … May 2, 2016
ABBOTT LABS TO ACQUIRE ST. JUDE MEDICAL FOR $25 BILLION – A rash of deals on Thursday showed that healthcare companies are convinced, regardless of tax benefits, that bigger is not only better, it is essential. The more than $40 billion of deals announced on Thursday can be explained by the need to get bigger and the desire to acquire growing biotech firms and product lines to make up for older products whose sales are in decline. Case in point, Abbott Laboratories Inc. (Abbott Park IL) agreed to buy heart-device maker St. Jude Medical Inc. (St. Paul MN) for $25 billion, its biggest ever acquisition as the industry consolidates to gain bargaining power with hospitals. St. Jude shareholders will receive $46.75 in cash and 0.8708 shares of Abbott common stock, representing approximately $85 per share, according to a statement Thursday. That’s 37% above St. Jude’s closing price on Wednesday. Abbott will also assume or refinance St. Jude’s $5.7 billion in debt. Medical-device makers are merging to get access to new technology as hospitals push for lower prices. After receding back from mega deals since spinning off its brand name drug business as AbbVie Inc. in 2013, Abbott is now joining Medtronic PLC (Dublin IRL) and Johnson & Johnson (New Brunswick NJ), which both made their largest purchases in recent years.
Abbott CEO Miles White frequently spoke about his desire for bigger deals while pursuing smaller companies, although the recent rounds of M&A boosted the prices of potential targets, leaving fewer options. Abbott, an industry leader in heart stents, has been bulking up its generic-drugs business in emerging markets and nutrition products sold directly to consumers in recent years. With St. Jude, it’s gaining complementary products like pacemakers, heart valves and devices to treat atrial fibrillation. There is an obvious hole in the medical device business, specifically around cardiovascular products, and St. Jude is the perfect fit to fill that gap, according to Jonathan Palmer, a Bloomberg Intelligence analyst. “In an industry where a larger portfolio is increasingly important, Abbott just built a real medtech franchise,” said Joanne Wuensch, an analyst at BMO Capital Markets Corp. who rates the stock outperform. “From our perspective, there is very little, if any, product overlap, but a real opportunity for cross-selling.” St. Jude soared 26% over the week to $76.20, while Abbott sagged 12% to $38.92.
BRAIN DAMAGE IN ZIKA BABIES FAR WORSE THAN EXPECTED – While health officials in Brazil say the epidemic is peaking there, the scale and severity of prenatal damage by the Zika virus are far worse than expected. Experts have begun calling the assemblage of maladies linked to the virus “Congenital Zika Syndrome”--to describe babies born with disabilities more severe than in textbook microcephaly cases. Researchers say the virus attacks lobes of the fetal brain that control thought, vision and movement, and prevents parts of the brain not yet formed from developing. It may also trigger other birth defects that won’t be detected until after these babies grow. Without a vaccine, public-health authorities are trying to control mosquitoes spreading Zika. Scientists are trying to understand how a virus that had appeared benign since first identified nearly 70 years ago could now pose such a grave risk. The number of confirmed and suspected cases of microcephaly in Brazil associated with the Zika virus remained stable at 4,908 in the week through April 23, just one case more than a week earlier, the Health Ministry said last Tuesday. Of these, the number of confirmed cases climbed to 1,198 from 1,168 a week earlier, but suspected ones under investigation continued to decline to 3,710 from 3,741 a week ago. Cases that have been ruled out rose to 2,320 in the week through April 23, from 2,241 a week earlier, the ministry said.
Meanwhile, in the U.S., Senate negotiators moved closer to an agreement to provide at least $1.1 billion in emergency financing to combat the rapidly spreading Zika virus, which public health officials warn poses an imminent threat, but House Republicans said they were still not ready to approve additional funds. The White House bluntly warned that Republicans were not acting quickly enough and that the needed money might not arrive before mosquitoes carrying the disease, which causes birth defects, reach the United States. “This is an emergency,” said Josh Earnest, the White House press secretary. “The American people are counting on Congress to act. And instead, we’ve gotten bureaucratic excuses.” The administration first requested $1.9 billion in emergency financing to combat the Zika virus in February, but was rebuffed by congressional Republican leaders who urged the administration to redirect $510 million previously allocated to fight Ebola--a move that was made this month. Senator Roy Blunt of Missouri, a Republican who has led negotiations for his party, said that his talks with Senator Patty Murray of Washington, a Democrat, had produced the outlines of an agreement that would provide about $1.1 billion in additional financing.
TRACKING WASHINGTON – The Obama administration has set new standards for Medicaid private insurance plans, which in recent years have become the main source of coverage for low-income people. The rules apply to insurers operating as Medicaid middlemen in 39 states and Washington, DC. Each state runs its own program, although the federal government pays most of the cost. Private insurers now provide coverage to about two-thirds of the more than 70 million Medicaid recipients, and the rules had not been updated for more than 10 years. Among other requirements, the rules specify that insurance companies must guarantee access to certain types of service providers, and that at least 85% of what insurers get paid must be spent on medical care. They also envision a quality rating system to help Medicaid recipients pick a plan. The regulation issued last week is over 1,400 pages long, and it will take time for states, consumer advocates, and insurers to assess all its implications. The changes start to take effect next Jan. 1, and will take years to fully implement. Medicaid costs about $500 billion a year, making it a major component of state budgets. The program has grown dramatically under President Barack Obama’s healthcare law, which expanded eligibility to low-income adults with no children living at home. Thirty-one states and Washington, DC, have accepted the healthcare law’s Medicaid expansion.
Medicaid pays doctors considerably less than job-based health insurance or Medicare, creating longstanding concerns about access. But hospitals accept Medicaid, as do community health centers. Private insurers set up networks of primary care doctors and specialists who agree to see Medicaid beneficiaries for a fixed rate. Insurers offer states predictability on costs, while guaranteeing a basic level of access for patients. Medicaid coverage is usually free, although some states charge beneficiaries a token amount. Studies have shown that having Medicaid improves financial stability for low-income people, and that appears to have a positive impact on mental health.
FDA/EMA ROUNDUP -- Quest Diagnostics Inc. (Madison NJ) said it has received emergency authorization from the U.S. Food and Drug Administration to sell the first commercially developed diagnostic test for Zika in the United States, a step that may help expand testing capacity and speed diagnosis of the virus. Previously, the only Zika blood tests that had Emergency Use Authorization, or EUA, were available from the U.S. Centers for Disease Control and Prevention and were only to be used in qualified laboratories designated by the CDC. Quest, in its announcement on Thursday, said it plans to make the new test broadly available to doctors for patient testing, including in Puerto Rico, by early this week. Currently, the only laboratory that will use the new Zika test is at Quest’s reference laboratory in San Juan Capistrano, CA, where the test was developed and validated.
Elsewhere, Collegium Pharmaceutical Inc. (Canton MA) said its abuse-deterrent painkiller won full marketing approval from the FDA. The drug, Xtampza ER, won a tentative approval in November, but full approval was contingent on the outcome of a lawsuit filed by Purdue Pharma LP against Collegium. Purdue Pharma, which has also developed abuse-deterrent versions of the commonly prescribed and often-abused painkiller Oxycontin, claimed that Xtampza infringed some of its patents. However, the District Court of Massachusetts in February ruled in favor of Collegium. Xtampza ER is a long-acting oral opioid painkiller meant to be taken after a meal for maximum effect.
Two years after a failed trial and an uncertain future, Exelixis Inc. (S. San Francisco) has finally turned around its misfortunes after being granted FDA approval for cabozantinib. The FDA has now given the drug--named Cabometyx--a license in the second-line setting for patients with advanced renal cell carcinoma (RCC) who have already been given an anti-angiogenic therapy. The tablet’s approval is based on the Phase 3 Meteor trial--which met its primary endpoint of improving progression-free survival by nearly double (median PFS of 7.4 months vs. 3.8 months) when compared to Novartis AG’s Afinitor in second-line RCC patients. The drug also significantly improved the objective response rate compared with its rival.
In Europe, a once-monthly injection for multiple sclerosis from Biogen Inc. (Cambridge MA) and AbbVie Inc. (North Chicago) has been recommended for approval by European regulators, paving the way for its launch in the coming months. The European Medicines Agency said on Friday its experts had endorsed Zinbryta, or daclizumab, for the treatment of relapsing forms of multiple sclerosis (MS), adding a new option to a range of modern MS therapies. The positive opinion will now be referred to the European Commission, which normally grants marketing authorizations for medicines recommended by the agency within a couple of months. The self-administered, under-the-skin injection is also currently being reviewed by regulators in the United States, Switzerland, Canada and Australia.
MEDICAL STOCK SPOTLIGHT -- Summit Therapeutics PLC (Nasdaq) led advancing issues, soaring $2.98, or 43% over the week, to $9.98 after the drug developer revealed it had received some good news from U.S. regulators. The Food and Drug Administration cleared the company’s investigational new drug (IND) application to expand the Phase 2 proof-of-concept clinical trial, known as “PhaseOut DMD,” in the U.S. PhaseOut DMD will evaluate the company’s lead utrophin modulator, ezutromid (formerly known as SMT C1100), in patients with Duchenne’s muscular dystrophy (DMD), at sites in the U.K. and the U.S. In contrast to many current therapeutic approaches to DMD, utrophin modulation has the potential to treat all boys and young men with DMD, regardless of their underlying dystrophin gene mutation, Summit’s statement said. “The IND clearance for PhaseOut DMD paves the way to expand (it) into the U.S. and will provide access to a wider network of leading physicians in DMD,” said Ralf Rosskamp, MD, chief medical officer of Oxfordshire, U.K.-based Summit.
Elsewhere, thinly traded micro cap BioTelemetry Inc. (Nasdaq) jumped $3.89, or 33%, to $15.73 as it continued its string of earnings beats. Last Tuesday, the company reported EPS of $0.20 on revenues of $48.6 million, both above consensus. It also upped its 2016 EBITDA guidance to $42-$44 million. Consensus view for 2Q is EPS of $0.17 on revenues of $49.2 million. For 2016, it’s $0.71 on revenues of $198 million. The Conshohocken, PA-based company, formerly known as CardioNet, develops mobile cardiac telemetry devices, including event monitors and Holter monitors. Other 1Q highlights include the achievement of a fifteenth consecutive quarter of year-over-year revenue growth; realization of the highest quarterly EBITDA in the company’s history of $10.8 million, a 22% return; and servicing the highest quarterly patient volume in company history, a 10% increase over the prior year’s quarter.
And eHealth Inc. (Nasdaq), an online health insurance provider in the U.S. and China, surged $2.23, or 25%, to $11.19. The sizeable spike followed eHealth’s announcement of overwhelmingly positive 1Q results. The Mountain View, CA-based company’s results revealed a number of highlights, including: 1Q revenues totaling $73.8 million, a 20% increase compared to 2015; 1Q adjusted EBITDA totaled $26.8 million, compared to an adjusted EBITDA of $5.8 million in 1Q 2015; and Medicare memberships totaled 220,300, a 42% increase when compared to 2015. Also, eHealth included forward-looking statements within the 1Q report, including expected total 2016 revenues in the range of $195 million to $203 million. eHealth is the nation’s first and largest private health insurance exchange.
But ImmunoGen Inc. (Nasdaq) plummeted $22.43, or 26%, to $6.85 after reporting a loss of $31.9 million in its fiscal third quarter. On a per-share basis, the Waltham, MA-based company said it had a loss of 37 cents. The results missed Wall Street’s expectations. The average estimate of five analysts surveyed by Zacks Investment Research was for a loss of 30 cents per share. The drug developer posted revenue of $19.7 million in the period, also missing Street forecasts. Five analysts surveyed by Zacks expected $25 million. ImmunoGen has updated its guidance for its fiscal 2016. Revenues are now expected in the range of $60-$70 million, compared to the previous guidance of $70-$80 million. Immunogen is a clinical-stage biotechnology company, which focuses on developing targeted anticancer therapeutics using its antibody-drug conjugate (ADC) technology.
IPO SECTOR -- Intellia Therapeutics Inc., a preclinical biotech developing gene editing therapies using CRISPR/Cas9 technology, announced terms for its IPO on Wednesday. The Cambridge , MA-based company plans to raise $85 million by offering 5 million shares at a price range of $16 to $18. At the midpoint of the proposed range, Intellia Therapeutics would command a fully diluted market value of $610 million. Concurrent with the IPO, Intellia will raise an additional $55 million in a separate private placement from collaboration partners Regeneron Pharmaceuticals Inc. ($50mm) and Novartis AG ($5mm). Intellia Therapeutics was founded in 2014. It plans to list on the Nasdaq under the symbol ”NTLA.” Credit Suisse, Jefferies and Leerink Partners are the joint bookrunners on the deal. It is expected to price this week.
Elsewhere, Spring Bank Pharmaceuticals Inc., which is developing small molecule therapies for hepatitis B and viral diseases, lowered the proposed deal size for its previously postponed IPO on Wednesday. The Milford, MA-based company now plans to raise $15 million by offering 1.2 million shares at a price range of $12 to $14. Insiders intend to purchase $8 million worth of shares in the offering. The company had previously filed to offer 2.9 million shares at a range of $13 to $15. At the midpoint of the revised range, Spring Bank will raise 63% less in proceeds than previously anticipated. Spring Bank Pharmaceuticals was founded in 2002. It plans to list on the Nasdaq under the symbol ”SBPH.” Dawson James is the sole bookrunner on the deal. The deal is expected to price this week.
Previous Week's Issue ... April 25, 2016
LOCAL ZIKA OUTBREAKS IN UNITED STATES LIKELY; U.S. OFFICIAL – As Zika continues to spread throughout Central and South America, the Caribbean and Pacific Islands, the question on many people’s minds is if--and when--the U.S. might also experience an outbreak. Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Disease, earlier in the week said Americans should prepare for local transmission of the mosquito-borne virus. Fauci and other public health officials from the National Institutes of Health (NIH) suspect at least dozens of people will be infected. So far, local and state health authorities have only reported travel-related cases of Zika. While the virus spreading on American soil is a frightening idea to many, Fauci doesn’t believe the outbreak will become widespread. Fauci’s warning comes just a few days after the U.S. Centers for Disease Control and Prevention (CDC) confirmed Zika can cause microcephaly and other birth defects in infants born to women affected by the virus in her first trimester of pregnancy. In Brazil, where the outbreak first began, more than 4,000 infants have been born with serious birth defects. It’s also suspected that Zika may cause stillbirths and miscarriages, and some adults have developed Guillain-Barré syndrome and acute disseminated encephalomyelitis, both autoimmune conditions that target the central nervous system.
Fauci’s comments also come less than a week after he and Dr. Anne Schuchat, principal deputy director for the CDC, held a press conference urging Congress to pass legislation that would set aside approximately $1.9 billion in emergency funding to combat Zika. “Everything we look at with this virus seems to be a bit scarier than we initially thought,” Schuchat said. The CDC and other public health experts have forecasted the virus would migrate to the U.S. at some point as the weather heats up in parts of the country and mosquito season begins. A report, published in PLOS Currents: Outbreaks on March 16 by the University Corporation of Atmospheric Research (UCAR), suggested factors such as heat, humidity and heavy rains in the summertime will provide an ideal climate for the Aedes aegypti mosquitoes to thrive in the States. They concluded that cities in southern Florida and Texas are at especially high risk for local transmission of the virus. Additionally, the virus is likely to be seen on the East Coast--as far up as New York--and cities in the southern region. Cities along the eastern seaboard, such as New York City, Philadelphia and Washington, D.C., will likely be affected, though the threat is much smaller there, the report said.
UNITEDHEALTH GROUP TO PULL BACK FROM INSURANCE EXCHANGES, CITING LOSSES – UnitedHealth Group Inc. (Minnetonka MN), the nation’s largest health insurer, told investors it continued to lose hundreds of millions of dollars selling individual policies under the federal healthcare law. The company said it planned to pull out of a majority of states where it offered coverage and would offer policies on the public exchanges in “only a handful of states” for 2017. UnitedHealth, which was a late and apparently reluctant participant in the public exchanges, surprised investors last year when it announced its sizable losses, now estimated at more than a combined $1 billion for 2015 and 2016, because of its poor performance in the public exchanges. Policy analysts have been watching UnitedHealth closely as an indicator of whether the new individual market developed under Obamacare is sustainable. Addressing investors, CEO Stephen J. Hemsley continued to offer a pessimistic view. “The smaller overall market size and shorter-term, higher-risk profile within this market segment continue to suggest we cannot broadly serve it on an effective and sustainable basis,” he said. UnitedHealth estimated its losses from the exchanges would be $650 million this year. UnitedHealth reported overall earnings from operations of $3 billion on revenue of $44.5 billion for the first quarter of 2016, versus earnings of $2.6 billion on revenue of $35.8 billion last year.
The company would not specify which states it planned to exit. It appears to be staying in Virginia and Nevada next year, but it is not known what other states remain attractive. A small unit of UnitedHealth, which offers exchange plans that feature a primary care clinic, is being tested in some states, including Georgia, where United says it is pulling out. Despite the concerns over United’s decision, just how much of its struggles are because of a lackluster embrace of the market and small presence is unclear. The company has 795,000 people in its Obamacare plans, a small fraction of the roughly 13 million people who have signed up for 2016. Without large numbers of customers, insurers are unable to demand low prices from hospitals and doctors. They also cannot balance the high cost of very sick patients with the low expense of more healthy customers. The number of insurance carriers for every state has increased every year, Ben Wakana, a spokesman for the Health and Human Services Department, which oversees the exchanges, said. “With millions of Americans insured through the marketplaces, it’s clear that this is a growing business for insurers,” he said. UnitedHealth closed the week up 5% at $134.13.
TRACKING WASHINGTON – The Obama administration said Wednesday it would hold off publishing new hospital-quality ratings amid questions from health providers and members of Congress over the ratings’ methodology. The Centers for Medicare and Medicaid Services was to have started rolling out data last week that could help people compare hospitals based on a star system. Instead, federal officials told members of Congress they are pushing the release date back to July and would continue to talk with hospitals about the way the ratings are compiled. “CMS is committed to quality improvement and transparency for people with Medicare,” the agency said in a notice to lawmakers Wednesday. Medicare is one of the biggest payers for health care in the U.S. and has long been seen by different presidential administrations as a way to influence the entire health system. CMS said it was releasing the new timeline “in response to hospital and other stakeholder feedback.” The ratings relate to patients’ experience of care at almost 3,500 Medicare-certified acute care hospitals, and include measures ranging from patient experience and cleanliness that will be displayed in the form of ratings on the administration’s “Hospital Compare” website. Consumer advocacy groups had praised the move but said they wanted more information on hospital performance.
Elsewhere, a bipartisan group of senators will soon offer a proposal for more funding to fight a Zika outbreak spreading rapidly through the Americas, Senate Appropriations Committee Chairman Thad Cochran said on Thursday. Democrats and Obama administration officials have urged the Republican-controlled Congress to grant nearly $1.9 billion in emergency funds to combat Zika, a virus borne by mosquitoes that can cause microcephaly, a rare birth defect, among other illnesses. But many Republicans have said they need more information from the administration before approving the measure. In a temporary fix, the White House said earlier this month it would reprogram $589 million of allocated funds, but said this would be insufficient to deal with the threat. Cochran, speaking at an appropriations committee meeting, did not say how much funding would be in the proposal. The Republican said it would supplement the White House reallocation.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration on Friday proposed a ban on electrical stimulation devices (ESDs) that are used to curb individuals from engaging in self-injurious or aggressive behavior, saying they pose an “unreasonable and substantial” risk to public health. ESDs administer electrical shocks through electrodes attached to the skin to attempt to condition individuals to stop harming themselves or being aggressive. Evidence indicates a number of significant psychological and physical risks are associated with the use of these devices, including depression, anxiety, pain, burns, tissue damage and errant shocks from a device malfunction, the agency noted. “As these risks cannot be eliminated through new or updated labeling, banning the product is necessary to protect public health,” the agency said on Friday. The Judge Rotenberg Educational Center in Canton, Massachusetts is the only facility currently manufacturing and using these devices in the United States, the FDA said. If passed, the ban would not apply to ESDs used to create aversions to other conditions or habits, such as smoking, the FDA said.
Elsewhere, the FDA granted GW Pharmaceuticals PLC’s (Salisbury GBR) experimental cannabis-derived epilepsy drug “orphan” status for a third group of patients affected by a rare form of the disease. GW said on Thursday that its drug, Epidiolex, had been granted the status for the treatment of tuberous sclerosis complex (TSC), a rare genetic disorder that causes epilepsy in about 80% to 90% of the patients afflicted with it. TSC is the third orphan indication that GW is targeting within its Epidiolex clinical development program. Orphan status is granted to drugs aimed at treating rare diseases, giving the developer incentives such as a seven-year marketing exclusivity in the United States. There are about 50,000 people in the United States and nearly 1 million worldwide estimated to have TSC, according to the Tuberous Sclerosis Alliance. GW Pharma’s drug is being tested in four final-stage Phase 3 epilepsy trials, with results expected this year that the drugmaker hopes will confirm the therapeutic benefits of cannabinoids, the active ingredients found in marijuana.
The FDA cleared Venclexta (venetoclax) as a treatment for CLL patients who carry a mutation known as a 17p deletion and have been treated with at least one prior therapy after a review of just three months. AbbVie Inc. (North Chicago) and Roche Holding AG (Basel CHE) say they plan to start shipping the new product within the next week. CLL is a slow-progressing cancer of the bone marrow and blood and is the most common leukemia diagnosed in adults in western countries, with around 15,000 new cases a year in the U.S. The 17p deletion--which results in the loss of a tumor suppressor gene--is found in around 10% of early CLL cases but upwards of 20% among patients with more advanced disease. A companion diagnostic developed by Abbott Laboratories Inc. is already available to identify patients with the mutation. Analysts have suggested that Venclexta could become a blockbuster product for Roche and AbbVie with sales in excess of $1.5 billion a year. Other potential uses for it are in non-Hodgkin’s lymphoma (NHL), acute myeloid leukemia and multiple myeloma.
And the FDA’s Office of Generic Drugs had a banner year in 2015, seeing more than 700 full and tentative approvals, the agency announced last week in its first-ever report on generics. According to OGD, December marked a high point in the history of the program, with 99 approvals and tentative approvals alone. The agency also is close to hitting its target for first actions on Abbreviated New Drug Applications (ANDAs) and clearing 90% of the application backlog by 2017.
MEDICAL STOCK SPOTLIGHT -- Hansen Medical Inc. (Nasdaq) led advancing issues, soaring $1.08, or 35% over the week, to $4.15. The company and Auris Surgical Robotics, Inc. announced that they have signed a definite merger agreement under which Auris will acquire Hansen for $4.00 per share in cash, or a total equity value of approximately $80 million. The purchase price per share represents a premium of approximately 39.9% over the closing sale price of common stock of Mountain View, CA-based Hansen as reported on Nasdaq on April 19. “Hansen Medical has developed a technology leadership position in the field of intravascular robotics,” commented Dr. Fred Moll, CEO of Auris. “There remains a significant opportunity in flexible robotics and I am excited to combine with Hansen Medical to advance this market.” Cary Vance, President and CEO of Hansen Medical added: “We are pleased with this outcome, which we believe maximizes value for our shareholders. The combined capabilities of Auris and Hansen Medical will accelerate the proliferation of medical robotics to advance patient care.”
Elsewhere, Concordia Healthcare Corp. (Nasdaq) leaped $8.50, or 35%, to $32.47 on rumors Blackstone Group LP is considering a takeover of the listed Canadian pharmaceutical company. The buyout firm is in talks with Concordia about a potential transaction, according to people familiar with the matter, asking not to be identified as the discussions are private. Talks are at an early stage and a deal may not happen, they said. Other bidders may also be interested in acquiring Concordia, they said. Toronto-based Concordia said in a statement that it has formed a special committee of the board to consider strategic alternatives. “The company has had discussions, however, there can be no assurance that any transaction will occur,” it said in the statement. Shares of other specialty pharmaceuticals companies also rose. Endo International PLC surged 29% for the week, Mallinckrodt PLC jumped 12% and Horizon Pharma PLC climbed 11%. A spokeswoman for Blackstone declined to comment.
And DNA sequencing company Pacific Biosciences of California Inc. (Nasdaq) spiked up $1.99, or 23%, to $10.72 after the company reported first-quarter earnings. Revenue rose 8% from a year ago to $19.1 million and the net loss fell from $20.2 million a year ago to $19.4 million, or $0.23 per share. The earnings figure beat expectations by a penny, but most investors were looking further ahead. Management said on its conference call that revenue will be at least $93 million this year and gross margin will be in the high 40% range. Both numbers were slightly better than expected, and with momentum just beginning for the Sequel System, there could be a bright future ahead. Menlo Park, CA-based Pacific Biosciences launched the Sequel System late last year, and it needs the product to be a success to get to breakeven financially. So far, 79 systems have been ordered in just two quarters--half the number of previous generation systems sold in the past five years.
But Chiasma Inc. (Nasdaq) plunged $6.34, or 62%, to $3.83 following the rejection by the U.S. Food and Drug Administration of the company’s drug to treat acromegaly, a rare disease of the pituitary gland. The FDA’s reasons for rejecting the Chiasma drug Mycapssa closely mirrored the bearish outlook detailed the prior week, ahead of the agency’s decision. Mycapssa is a capsule containing octreotide, a somatostatin analog, combined with a “penetration enhancer” to allow for oral delivery. Essentially, Chiasma tried to turn a currently approved, injectable drug for acromegaly into one that patients can swallow. Turning shots into pills has long been a technological challenge, and Chiasma hasn’t figured out the solution with Mycapssa, according to the FDA’s complete response letter which turned down the company’s request for approval. If Chiasma wants to resubmit Mycapssa to the FDA, the company will have to conduct another Phase 3 clinical trial, FDA said.
IPO SECTOR -- American Renal Associates Holdings Inc. priced its initial public offering of 7.5 million shares at $22.00, within the anticipated range ($20-$23), raising $165 million in proceeds. Shares list on the NYSE under the symbol “ARA.” The company will have a market capitalization of approximately $678 million (assuming the option to purchase additional shares is exercised). Active bookrunners for the offering are BofA Merrill Lynch, Barclays, and Goldman, Sachs & Co. Beverly, MA-based ARA, founded 16 years ago, is one of the largest dialysis services provider in the U.S., and has an exclusive focus on a physician partnership model. It operates its clinics exclusively through a JV model, in which it partners with local nephrologists to develop, own and operate dialysis clinics. As of the end of 2015, it had 192 clinics, serving over 13,000 patients, and JV partnerships with 347 local nephrologists. Shares closed the week up 21% at $26.60.
Elsewhere, Viveve Medical Inc., which is commercializing a non-invasive medical system that reverses vaginal laxity, filed with the SEC to raise up to $11.5 million in an IPO ($10 million before the underwriter overallotment). The Sunnyvale, CA-based company was founded in 2005 and booked $1.5 million in sales for the 12 months ended December 31, 2015. It plans to list on the Nasdaq under the symbol “VIVE.” Ladenburg Thalmann & Co. is the sole bookrunner on the deal. No pricing terms were disclosed.
April 18, 2016 ...
CDC CONFIRMS ZIKA VIRUS CAUSES BIRTH DEFECTS – The U.S. Centers for Disease Control and Prevention last week said that enough evidence has accumulated for it to conclude that the Zika virus can cause birth defects in the infants of women who are infected during pregnancy. In a paper published in the New England Journal of Medicine, the public health agency said several established criteria to determine a causal relationship have been met, including Zika infection in mothers whose babies developed microcephaly--in which the head is small for gestational age and sex--and other severe brain abnormalities. “There is no longer any doubt that Zika causes microcephaly,” CDC Director Tom Frieden said. Most public health officials and scientists have been operating on the assumption that Zika is the cause of a sharp rise in the number of babies born in Brazil over the past six months with these birth defects, as well as an increase in abnormalities in fetuses of pregnant women who have been exposed in other countries where Zika is circulating. Many also assume the virus is behind at least two types of neurological complications in adults, including Guillain-Barre syndrome. The CDC said it is still studying whether Zika causes Guillain-Barre. Zika has been found circulating in 40 countries and territories, according to the CDC. The World Health Organization recently said “there is scientific consensus that Zika virus is a cause of microcephaly and Guillain-Barre syndrome.”
The CDC said its declaration won’t change its current warnings for pregnant women regarding travel to countries where Zika is circulating, or its guidance for preventing the spread of Zika through sexual transmission. But the agency said it hopes that declaring Zika a cause of birth defects in children will help to intensify efforts to raise public awareness of the risks of Zika infection, control the mosquitoes that spread the virus and develop a vaccine against it. A number of vaccine candidates are in development, as are new methods to control or eliminate the Aedes aegypti and Aedes albopictus mosquitoes that spread Zika and other dangerous viruses such as dengue and chikungunya. Many critical questions remain and could take years to answer, Dr. Frieden said. They include what types of and how many birth defects are caused by Zika and how common are the defects. One recent study estimated that a woman infected with Zika during her first trimester of pregnancy faces a 1% risk that her baby will develop microcephaly.
U.S. PRESCRIPTION SPENDING TO PASS $610 BILLION A YEAR BY 2020 – Spending on prescription drugs in the U.S. rose 12% to a record $425 billion before discounts last year, boosted in part by the introduction of breakthrough medicines for cancer and the growing number of patients seeking treatment for hepatitis C. While net growth slowed as pharmaceutical companies offered more rebates and patient assistance programs to help cover the costs, spending will continue to rise at a steady mid-single-digit rate through 2020, when it’s expected to hit $610 million to $640 million, according to a report from the IMS Institute for Healthcare Informatics (Danbury CT). Concerns about exploiting the healthcare system have sparked congressional hearings and an outcry on the campaign trails. While high-profile examples such as Martin Shkreli, a former industry executive who bought older medicines then boosted their prices, and Valeant Pharmaceuticals International Inc. (Laval Quebec) have dominated the debate, the reasons underlying last year’s overall gains were more nuanced, said Murray Aitken, executive director of the IMS Institute, the research unit of information and technology firm IMS Health Inc. “Drug spending growth remains at historically high levels, even as it’s moderated from 2014,” Aitken said. “A surge of new drugs being approved and becoming available for patients is a driver of increased costs.”
More than half of the spending growth stemmed from medicines approved within the past two years. Specialty pharmaceuticals, including drugs to treat hepatitis C, cancer and multiple sclerosis, generated invoices worth $151 billion, an increase of 20% from a year earlier. Drugmakers, facing competition and under pressure from health plans and pharmacy benefit managers to reduce costs, gave back an increasing amount of money in the form of price concession and rebates, according to the report. Those concessions reached $115.3 billion in 2015, more than double the $52.4 billion offered in 2009. The introduction of generic drugs, the low-cost rivals of medicines that have lost patent protection, didn’t put as much pressure on pricing as they did during the patent cliff in 2012. Spending on brands facing new generic medicines fell $14.2 billion in 2015, versus a drop of $32.6 billion in 2012. There also may be signs of slowing growth for novel hepatitis C therapies from Gilead Sciences Inc. (Foster City CA), AbbVie Inc. (North Chicago) and Merck & Co. (Kenilworth NJ). While 250,000 patients were treated in 2015, up from 170,000 a year earlier, the number of people beginning the therapy slowed as the year progressed, suggesting many of those most in need of the medicines may have received them, according to the IMS Institute. The report was generated entirely independently.
TRACKING WASHINGTON – U.S. lawmakers last week approved a bill to provide financial incentives to companies developing treatments for the Zika virus, sending the measure on to the White House for President Barack Obama’s signature. The measure allows the Food and Drug Administration to include Zika drug developers in the agency’s priority review voucher program. The program encourages manufacturers to study treatments for diseases that might not be profitable by expediting the regulatory review of a more lucrative drug in their research pipeline. The House of Representatives passed the bill on a voice vote, without a roll call, weeks after the same measure was approved by the Senate. Democrats and administration officials are also urging the Republican-controlled Congress to grant $1.8 billion in emergency funds to combat the spread of Zika. In a temporary fix, the White House said last week that it would redirect $589 million in allocated funds to prepare for the mosquito that carries the disease to emerge in the continental United States. According to the World Health Organization, there is a strong scientific consensus that the Zika virus can cause the rare birth defect microcephaly in newborns. But the link between the virus and the birth defects has not been scientifically established.
Last Tuesday, Brazil confirmed 1,113 cases of microcephaly and considers most to be related to Zika infections in the mother. Drugmakers who are working on Zika-related drugs, or considering such research, include Sanofi SA (Paris), GlaxoSmithKline PLC (London), Inovio Pharmaceuticals Inc. (San Diego CA) and Takeda Pharmaceutical Co Ltd. (Osaka JPN). Zika was first detected in Brazil last year and is spreading through the Americas. The World Health Organization had declared a global health emergency due to the virus’s possible link to microcephaly in babies and Guillain-Barre syndrome, a rare neurological disorder, in adults. Last Monday, top health officials said the mosquito that spreads the virus is now present in about 30 U.S. states, making local outbreaks a possibility. They have also predicted hundreds of thousands of people would be infected in Puerto Rico when the mosquito season kicks in this summer. It could also emerge on the U.S. mainland. A pharmaceutical company may be given a priority review voucher to develop a drug for an infectious disease, in this case Zika, which may not generate much profit for the manufacturer. The voucher gives the company the right to an accelerated review by the FDA of any other, more lucrative, drug in its pipeline.
FDA/EMA ROUNDUP -- An independent panel of experts advising the U.S. Food and Drug Administration recommended that Clovis Oncology Inc.’s (Boulder CO) lung-cancer drug not be approved based on existing trial data. The panel voted 12-1 against giving the drug an accelerated approval, and recommended the FDA wait for the results from an ongoing late-stage trial that compares the drug’s effect to that of chemotherapy. Clovis’s shares tumbled 12% for the week to $13.84. An accelerated approval would allow Clovis to conditionally market the drug, rociletinib, based on early evidence of its clinical benefit. Rociletinib is designed to treat a subset of patients with advanced non-small cell lung cancer (NSCLC) whose condition has worsened despite treatment. It targets patients with a genetic mutation known as T790M that helps tumors evade current lung cancer pills. A similar drug from AstraZeneca PLC, Tagrisso, won accelerated U.S. approval in November. The panel said existing data on rociletinib did not adequately characterize its benefit-risk profile over current treatments, especially Tagrisso, and also expressed uncertainty about the proposed dose.
Elsewhere, the FDA approved a biosimilar version of infliximab (Remicade) from Janssen Biotech (Horsham PA) called infliximab-dyyb (Inflectra)that treats gastrointestinal disorders, rheumatoid arthritis, and most other conditions indicated for its predecessor, the agency announced. Infliximab-dyy is the second biosimilar product that the FDA has approved. The first is filgrastim-sndz (Zarxio, Sandoz/Novartis), approved in March 2015. The agency defines biosimilars as very much akin to biological drugs such as infliximab that are generally derived from a living organism. Biosimilars also must demonstrate that they are just as safe and effective as their reference product.
The FDA has approved the first-ever generic version of Viagra. Teva Pharmaceutical Industries Ltd. (Petech Tikva ISR) will be adding the drug, sildenafil citrate, for male erectile dysfunction to its roster of hundreds of other generic medications. Teva said the drug will go on sale December 11, 2017. The tablets will come in three strengths: 25 milligram, 50 milligram, and 100 milligram tablets, the same strengths Viagra sells. Erectile dysfunction medications are big business, with a market estimated at $4.3 billion worldwide as of 2012. Teva said it has exclusive rights to generic sildenafil citrate for 180 days. More than 18 million men in the United States over age 20 are affected by erectile dysfunction, according to a study by Johns Hopkins Bloomberg School of Public Health researchers.
And more than 10 years since the FDA offered accelerated approval to EMD Serono Inc.’s (Rockland MA) fertility drug Luveris (lutropin alpha for injection), the agency last week announced it is withdrawing the drug’s approval as the company failed to run a postmarketing study required as a condition of approval. First approved on 8 October 2004, Luveris was indicated for concomitant administration with one of EMD Serono’s other fertility treatments, Gonal-F (follitropin alfa for injection), for helping infertile hypogonadotropic hypogonadal women with profound luteinizing hormone deficiency. Prior to that approval, experts at an FDA advisory committee meeting raised questions about the efficacy of Luveris.
MEDICAL STOCK SPOTLIGHT -- Repros Therapeutics Inc. (Nasdaq) led advancing issues, rocketing $1.37, or 252% for the week, to $2.27 after announcing that positive data came back from its Phase 2 trial of Proellex, which is used in the treatment of uterine fibroids. Data from the study demonstrated that vaginal administration of Proellex, at both 6mg and 12mg dosages led to a significant reduction in excessive menstrual bleeding in women with uterine fibroids. The Woodlands, TX-based company will be working with the FDA to detail plans for the Phase 3 trial. Currently analysts have an average price target of $2.17 but that could change soon, especially if the Phase 3 trial goes well. Looking at the daily chart, shares have basically flat-lined after getting crushed in late October when they plummeted from the $7.50 range all the way down to the $1.50 range. Last week, however, shares gapped up from a Tuesday close of $0.82--a strong indication that bulls are firmly in control.
Elsewhere, Argos Therapeutics Inc. (Nasdaq) soared $3.40, or 45%, to $10.97, a 52-week high, as investors apparently woke up to the fact that it has been given a consensus recommendation of “Buy” by the nine research firms that are currently covering the stock. The average 12-month price target among analysts that have issued a report on the stock in the last year is $10.93. Durham, NC-based Argos is a biopharmaceutical firm focused on the development and commercialization of personalized immunotherapies for the treatment of cancer and infectious diseases based on its technology platform called Arcelis. The company’s advanced product candidate is AGS-003, which is being developed for the treatment of metastatic renal cell carcinoma (mRCC) and other cancers. It is also developing AGS-004, its second Arcelis product candidate, for the treatment of human immunodeficiency virus (HIV).
And PTC Therapeutics Inc. (Nasdaq) climbed $2.55, or 40%, to $8.92 on positive news about its nonsense mutation Duchenne muscular dystrophy (nmDMD) treatment. The South Plainfield, NJ-based company announced that the National Institute for Health and Care Excellence (NICE) has recommended Translarna (ataluren) for ambulatory patients aged five years and older with nmDMD in connection with a Managed Access Agreement with NHS England. Provision of patient access is subject to the finalization of the NICE draft guidance, which the agency expects in May of 2016. This could be the first step in PTC’s recovery, as the stock has been crushed over the past year. In February, shares cratered after PTC announced that it received a Refuse to File letter from the U.S. Food and Drug Administration regarding its New Drug Application (NDA) for Translarna. The FDA said in the letter that the application was not sufficiently complete to permit a substantive review.
But Cellectar Biosciences Inc. (Nasdaq) plunged $1.50, or 42%, to $2.10. The hit came after the company said it priced an underwritten public offering of common stock, or pre-funded warrants in lieu thereof, at $2.13 per share and associated traditional warrants, for gross proceeds of approximately $7.0 million, prior to deducting underwriting discounts, commissions and offering expenses payable by the company. For each share or pre-funded warrant purchased, an investor will receive a five-year traditional warrant exercisable for one share of our common stock, at an exercise price of $3.04 per share. The shares and pre-funded warrants will be immediately separable from the traditional warrants. Madison, WI-based Cellectar Biosciences develops compounds for the treatment, diagnosis, and imaging of cancer. The company’s proprietary product candidates include I-124-CLR1404, a small-molecule, broad-spectrum, and cancer-targeting positron emission tomography (PET) imaging agent that is in Phase 2 clinical trials for glioblastoma.
IPO SECTOR -- GenSight Biologics SA, which is developing gene therapies for rare retinal diseases, withdrew its plans for an initial public offering on Thursday. It had filed to raise $65 million by offering 4.7 million shares at a price range of $13 to $15. It was the second biotech to withdraw IPO in two days, following Bavarian Nordic A/S’s withdrawal on Wednesday. Another biotech developing gene therapies for rare retinal diseases, Spark Therapeutics Inc., came public in early 2015 and trades 53% above its offer price, but well below its first-day close. Paris, France-based GenSight was founded in 2012 and planned to list on the Nasdaq under the symbol “GNST.” Leerink Partners, Evercore ISI and Canaccord Genuity were set to be the joint bookrunners on the deal.
Elsewhere, Intellia Therapeutics Inc., which is developing gene editing therapies using CRISPR/Cas9 technology, registered up to $120 million in an IPO. Fellow CRISPR gene editing biotech Editas Medicine Inc. came public in February with significant insider buying, and currently trades 137% above its offer price. Cambridge , MA-based Intellia was founded in 2014 and plans to list on the Nasdaq under the symbol “NTLA.” Intellia filed confidentially on September 4, 2015. Credit Suisse, Jefferies and Leerink Partners are the joint bookrunners on the deal. No pricing terms were disclosed.
April 11, 2016 ...
PFIZER NEEDS A NEW PLAN FOR GROWTH AFTER ALLERGAN DEAL TANKS – Pfizer Inc. (New York) has been frustrated for the second time in less than two years in its pursuit of a transformative, tax-powered deal to position the biggest U.S. drugmaker for long-term growth. The Obama administration has pretty much guaranteed another attempt is DOA. Pfizer and Allergan PLC (Dublin IRL) officially walked away from their $160 billion merger last week, an abrupt end to what would have been the largest-ever deal in the pharmaceutical industry. It also marks a turning point in the heated, election-cycle debate in the U.S. over corporate tax avoidance. Pfizer’s planned mega-merger with Allergan was historic in scale and ambition. The deal would have augmented Pfizer’s drug portfolio and created a pharma giant, with a strong lineup ranging from advanced cancer treatments to generics. Yet it was also a tie-up designed to reap tax savings, a mountain of them. And if the new company were to establish itself abroad with a lower tax rate, a process often called an “inversion,” it would have been the largest ever such move. Pfizer previously said it had strategic reasons for pursuing the acquisition, though it would also have helped the company escape the U.S.’s 35% tax rate, which applies to profits made anywhere in the world. In the proposed combination, the new company would have been located in Ireland, enjoying a much lower local tax rate.
Pfizer CEO Ian Read has long complained about what he believes is the competitive edge foreign rivals enjoy when it comes to taxes. That’s one reason Pfizer attempted, and failed, to conclude a tax-lowering inversion deal with British drugmaker AstraZeneca PLC in 2014. Last week AstraZeneca, Shire PLC (Dublin) and GlaxoSmithKline PLC (London) rose on speculation that Pfizer sees these drugmakers as possible inversion targets. Since the Pfizer-Allergan deal was unveiled last November, the transaction has drawn contemptuous criticism from Democratic and Republican presidential candidates, while Obama has called inversions the “most insidious of tax loopholes.” Then on Monday, the financial logic underpinning the merger collapsed when the Obama administration proposed tougher-than-expected new rules aimed at making deals like the Pfizer-Allergan transaction much harder to achieve. “There’s a couple lessons here: No. 1, don’t mess with the White House--they were very clear they didn’t want these transactions and broke new ground” with the new regulations, said John Schroer, sector head of health care at Allianz Global Investors, which holds Pfizer shares. “No. 2, inversions are dead.” Pfizer closed the week up 8% at $32.52, while Allergan plummeted 12% to $236.00.
ZIKA MYSTERY SWELLS WITH EVIDENCE OF NERVE-CELL INFECTIONS – Top Zika investigators now believe that the birth defect microcephaly and the paralyzing Guillain-Barre syndrome may be just the most obvious maladies caused by the mosquito-borne virus. Fueling that suspicion are recent discoveries of serious brain and spinal cord infections--including encephalitis, meningitis and myelitis--in people exposed to Zika. Evidence that Zika’s damage may be more varied and widespread than initially believed adds pressure on affected countries to control mosquitoes and prepare to provide intensive--and, in some cases, lifelong--care to more patients. The newly suspected disorders can cause paralysis and permanent disability--a clinical outlook that adds urgency to vaccine development efforts. Scientists are of two minds about why these new maladies have come into view. The first is that, as the virus is spreading through such large populations, it is revealing aspects of Zika that went unnoticed in earlier outbreaks in remote and sparsely populated areas. The second is that the newly detected disorders are more evidence that the virus has evolved. “What we’re seeing are the consequences of this virus turning from the African strain to a pandemic strain,” said Dr. Peter Hotez, dean of the National School of Tropical Medicine at Baylor College of Medicine (Houston TX).
Doctors also are worried that Zika exposure in utero may have hidden effects, such as behavioral problems or learning disabilities, which are not apparent at birth. “If you have a virus that is toxic enough to produce microcephaly in someone, you could be sure that it will produce a whole series of conditions that we haven’t even begun to understand,” said Dr. Alberto de la Vega, an obstetrician at San Juan’s University Hospital in Puerto Rico. First discovered in the Zika forest of Uganda in 1947, the virus circulated quietly in Africa and Asia, causing rare infections and producing mild symptoms. A 2013 outbreak in French Polynesia, the largest at that time, led researchers to make the Guillain-Barre link. Other neurological effects were noted but scientists made little of them at the time. According to the World Health Organization, there is a strong scientific consensus that Zika can cause microcephaly, although conclusive proof may take months or years.
Zika has not been proven to cause microcephaly, but there is mounting evidence suggesting it does. Brazil, hardest hit by the virus, has confirmed more than 900 cases of microcephaly, and it considers most cases to be related to Zika infections in the mothers. Brazil is investigating nearly 4,300 additional suspected cases of microcephaly.
TRACKING WASHINGTON – In an effort to break the two-month deadlock over funding to fight the encroaching Zika virus, Obama administration officials announced last Wednesday that, as congressional Republicans had demanded, they would transfer $510 million originally intended to protect against Ebola to the Zika battle. Officials from the Office of Management and Budget, the Department of Health and Human Services, and the State Department said they would move a total of $589 million to efforts to contain Zika. In addition to funds moved from the Ebola budget, an additional $79 million would come from several other accounts, including money previously allotted to the national strategic stockpile of vaccines and other emergency supplies for epidemics, said Sylvia Mathews Burwell, the Secretary of the DHHS. Despite the transfers, “these repurposed funds are not enough to support a comprehensive Zika response and can only temporarily address what is needed,” said Shaun Donovan, OMB director. In February, the Obama administration asked Congress for a more than $1.8 billion emergency appropriation for the effort to defeat the Zika virus. Congressional Republicans said that the administration should first spend the money previously allocated to the fight against Ebola. The administration’s emergency request still stands, officials said.
Elsewhere, Medicare says private insurance plans serving as an alternative for 17 million beneficiaries will get a modest payment increase next year. Factoring in adjustments for the health of patients covered by a plan, the final number works out to about a 3% increase for Medicare Advantage and Part D prescription plans. That’s slightly less than an originally proposed increase of around 3.5%. Medicare made the announcement last Monday. Medicare also announced a transition period for some employer-sponsored plans that were facing a cut. It will be spread over two years. Medicare Advantage plans cover nearly one out of three beneficiaries, a steadily growing share of the program. They offer lower overall costs for many patients, in exchange for some limitations on choice.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration approved a cheaper version of Johnson & Johnson’s (New Brunswick NJ) blockbuster drug, Remicade, an expensive biotech medicine for inflammatory diseases. The approval of Inflectra is only the second time that the FDA has approved a quasi-generic biotech drug for the U.S. market. These so-called biosimilar drugs, already available in Europe, have the potential to generate billions of dollars in savings for insurers, doctors and patients in coming years. Inflectra, from drugmakers Celltrion Inc. (Incheon KOR) and Pfizer Inc. (New York City), is approved for a half-dozen uses, including psoriasis and five other conditions in which the immune system attacks the body’s tissue. The drug helps reduce inflammation and control the immune system, which helps slow those diseases. Remicade, first approved in 1998, is J&J’s top-selling medicine with sales of $6.56 billion last year.
Elsewhere, the FDA approved Abiomed Inc.’s (Danvers MA) heart pump to treat patients who suffer cardiac shock after heart attack or heart surgery. Cardiac shock is a life-threatening emergency condition where the heart is suddenly unable to pump enough blood and oxygen to support the body’s vital organs. The condition is rare, but is often fatal if not treated immediately. The most common cause of the shock is damage to the heart muscles from a severe heart attack. On an average, only about 7% of people who have heart attacks develop the condition, according to the National Institutes of Health. Abiomed’s Impella heart pumps were first approved earlier in 2008 to maintain blood flow through the body during heart surgeries. Impella had worldwide sales of about $81 million for the quarter ended Dec. 31. That accounted for about 94% of the company’s total revenue in the period.
Medtronic Inc. (Dublin IRL) received FDA approval to sell a tiny pacemaker that’s implanted inside a patient’s heart. The company’s Micra device is the first so-called “leadless” pacemaker to receive U.S. regulatory approval, the FDA said Wednesday. The product is about an inch long but unlike traditional pacemakers, it doesn’t connect to the heart using wires. The wires, called leads, can be a source of problems for implantable devices because they may break or suffer damage, putting patients at risk of infection and other injuries. Regulators approved the product for patients suffering from abnormal heart rhythms. Medtronic rival St. Jude Medical Inc. (St. Paul MN) has also developed a leadless pacemaker, called Nanostim and is seeking regulatory approval to sell that product in the U.S.
And the FDA approved a tissue container bag for use in certain laparoscopic procedures along with power morcellators, that have been linked to the spread of cancer in women. Power morcellators are devices used in gynecological procedures like hysterectomy where the uterus or the uterine fibroids are cut into smaller pieces and extracted through small incisions. The tissue container bag, PneumoLiner, developed by privately held Advanced Surgical Concepts Ltd. (Wicklow IRL), is then inserted into the abdomen and the tissues removed during the procedure are placed into it. The FDA estimates that about 1 in 350 women who undergo surgical procedures for fibroids is found to have an unsuspected uterine cancer. If morcellation is performed on these women, there is a risk that it will spread the cancerous tissue within the abdomen and worsen the patient’s likelihood of long-term survival, the FDA said in a statement.
MEDICAL STOCK SPOTLIGHT -- SteadyMed Ltd. (Nasdaq) led advancing issues, soaring $2.08, or 81% for the week, to $4.65. The huge upward move comes after 9 months’ positive chart setup for the $66.44 million company. Currently, two analysts are covering SteadyMed, and both rate it a “Buy,” so they’re 100% positive. San Ramon, CA-based SteadyMed was the topic in 4 analyst reports since August 14, 2015. Among the most recent, RBC Capital Markets maintained the stock in November with an “Outperform” rating. According to Zacks Investment Research, “SteadyMed Ltd. is a specialty pharmaceutical company which focuses on the development of drug products to treat orphan and other diseases. The company’s lead candidate is Trevyent, a development-stage drug product which utilizes SteadyMed’s PatchPump technology to treat pulmonary arterial hypertension.” SteadyMed says it intends to file an NDA (New Drug Application) for Trevyent in Q3 2016 and will commercialize Trevyent in the U.S.
Elsewhere, swirling rumors that an acquirer might step up to buy the company caused Relypsa Inc. (Nasdaq) to rocket 69% higher on the week. The company has been the subject of M&A chatter ever since AstraZeneca PLC shelled out $2.7 billion to buy competitor ZS Pharma Inc. last year. Redwood City, CA-based Relypsa markets Veltassa, a drug for the treatment of high potassium levels in the blood, or hyperkalemia. The FDA approved Veltassa last October and thereupon came high expectations stemming from the fact that up to 3 million Americans with chronic kidney disease or heart failure could benefit from this therapy. Hyperkalemia can cause abnormal heart rhythms, and in some instances, result in death. The FDA is set to issue its decision on ZS Pharma’s hyperkalemia drug on May 26.
And OncoCyte Corp. (NYSE), a developer of novel, non-invasive blood based tests for the early detection of cancer, surged $1.56, or 37%, to $5.78. The Alameda, CA-based company and the Wistar Institute, an international biomedical research leader in cancer, immunology and infectious diseases, announced positive research results for a lung cancer diagnostic test being developed at Wistar. This study of 620 subjects replicates a previous study that was carried out at Wistar, which was presented at the American Thoracic Society conference in May 2015. The results of this study mark a successful transition of the assay platform from Illumina Inc.’s microarrays to a Nanostring nCounterTM machine, which is the platform that OncoCyte intends to use for commercialization. OncoCyte must now independently validate these results in its own follow-up study based on the results of Wistar’s latest study. OncoCyte will attempt to finalize and lock down both the assay and the classifier or algorithm that interprets test results.
But BIND Therapeutics Inc. (Nasdaq) plunged 30% to $1.57 after halting a trial of its only, wholly owned drug as it seeks a partner for new clinical trials, and laid off a third of its workforce to cut expenses. Last week’s trading price gives the Cambridge, MA-based company a market value of just $36 million. That’s about the value of the cash the company had on hand as of Dec. 31. Predictably, CEO Andrew Hirsch was asked the question on the minds of a lot of observers of the now 61-employee company, namely: Why should investors continue to support the company? His answer: “If you look at the data, the technology works. I’m convinced that it does.” The technology in question is one developed by MIT Professor Bob Langer, the inventor behind more than two dozen biotech firms, including Momenta Pharmaceuticals Inc. and InVivo Therapeutics Inc. In BIND’s case, it’s a nanoparticle that encapsulates a cancer-killing drug, or payload, intended to better target tumors with fewer side effects.
IPO SECTOR -- American Renal Associates Holdings Inc., which operates 192 kidney dialysis clinics through joint ventures with physicians, announced terms for its IPO on Friday. The Beverly, MA-based company plans to raise $161 million by offering 7.5 million shares at a price range of $20 to $23. At the midpoint of the proposed range, American Renal would command a fully diluted market value of $706 million. The company was founded in 1999 and booked $658 million in sales for the 12 months ended December 31, 2015. It plans to list on the NYSE under the symbol “ARA.” BofA Merrill Lynch, Barclays, Goldman Sachs, Wells Fargo Securities and Suntrust Robinson Humphrey are the joint bookrunners on the deal. It is expected to price during the week of April 18, 2016.
Elsewhere, Aeglea BioTherapeutics Inc., which is developing enzymes for rare genetic metabolic diseases and tumors, raised $50 million by offering 5 million shares at $10. It had originally planned to raise $60 million by offering 3.5 million shares at a range of $16 to $18. The Austin, TX-based company lists on the Nasdaq under the symbol “AGLE.” UBS Investment Bank, BMO Capital Markets and Wells Fargo Securities acted as lead managers on the deal. Shares closed the week up 20% at $11.99.
PApril 4, 2016 ...
VALEANT SHARES PLUNGE ANEW AFTER CEO SUBPOENAED BY CONGRESS – The Senate Aging Committee last week said that J. Michael Pearson, CEO of Valeant Pharmaceuticals International Inc. (Laval Quebec) since September 2010, is among the witnesses expected to testify on April 27. The committee is holding its third hearing since December on soaring prices for prescription medicines, which are becoming unaffordable for many patients. The high prices for many drugs--some costing $100,000 or more for a course of treatment--also are straining the budgets of insurers and government health programs. The most expensive drugs are generally ones for cancer and rare diseases, but the trend includes many brand-name drugs that have had robust price hikes year after year. Executives at Valeant and several other drugmakers have been buying up rights to old drugs and then boosting prices. Executives of the companies have been invited or subpoenaed to testify at hearings on the issue held by multiple Congressional committees. Valeant is in deep trouble, with three ongoing federal probes into its accounting and business practices, insurers demanding bigger discounts and executives leaving. Activist investor Bill Ackman’s Pershing Square Capital Management LP (New York City), one of Valeant’s largest shareholders, just took over two positions on its board of directors to try to salvage the fund’s investment in Valeant.
Later in the week, Valeant’s officers, including Mr. Ackman, received cease-trade orders from a Canadian securities regulator tied to the company’s failure to meet deadlines for filing its annual report and other documents. Valeant’s primary securities regulator is the Autorité des marchés financiers because the company has been based in Laval, Quebec, since it merged with Biovail Corp. in 2010 to take advantage of Canada’s more favorable tax regime. A spokesman for the AMF said the order restricts Mr. Ackman, Valeant’s other 12 directors, including Mr. Pearson, and CFO Robert Rosiello from trading in the company’s stock on the Toronto Stock Exchange. A spokeswoman for Valeant said the cease-trade order was expected after it notified the AMF that it would miss the deadline for filing its annual financial statements. The spokeswoman said it applies to all trading by its officers in the company’s stock on Canadian and U.S. stock exchanges. Shares of Valeant closed the week down 10% at $28.10. Shares have fallen steadily from a high of $263.81 last August, as its prices and accounting practices came under scrutiny.
SCIENTISTS FIND MOLECULAR LINK BETWEEN ZIKA AND MICROCEPHALY – A molecular map of Zika has revealed important structural differences on a key protein of the virus that may explain why the pathogen attacks nerve cells while other viruses in the same family do not, U.S. researchers said on Thursday. Variations in proteins on the outer shell, or “envelope,” of the virus may explain how Zika enters human cells and suggests new ways to fight the virus with drugs or vaccines, said Dr. Anthony Fauci, director of the U.S. National Institute of Allergy and Infectious Diseases, which funded the study published in the journal Science. Zika is very similar to other members of the flavivirus family such as dengue, Yellow fever and West Nile, Fauci said, with one key difference. “There was one very discreet stretch of the protein on the envelope that is really different than the other flaviviruses,” Fauci said. “That is like a big red flag.” Fauci said the important structural difference from similar viruses may explain the link between the mosquito-borne Zika virus and two disorders, the birth defect microcephaly and the paralyzing autoimmune ailment Guillain-Barre Syndrome.
To better understand why Zika behaves so differently from related viruses, Richard Kuhn, Michael Rossmann and colleagues at Purdue University (West Lafayette IN) created the picture of a mature Zika virus particle with a technique that provides a very high resolution image of the pathogen. The difference in Zika’s structure compared to similar viruses was seen in a region of the envelope protein that flaviviruses may use to attach to some human cells. This protein is also a key target of the immune system’s response to the virus, making it potentially useful in vaccine development. “They haven’t proven it yet, but it is a very important first clue,” Fauci said. Zika is spreading rapidly in South and Central America and the Caribbean, and has been linked in Brazil to thousands of cases of microcephaly, a disorder marked by small head size and underdeveloped brains in babies. Scientists believe Zika is neurotropic, meaning it specifically attacks nerve cells. It is the only mosquito-borne virus ever linked to a birth defect.
Zika has not been proven to cause microcephaly, but there is mounting evidence suggesting it does. Brazil, hardest hit by the virus, has confirmed more than 900 cases of microcephaly, and it considers most cases to be related to Zika infections in the mothers. Brazil is investigating nearly 4,300 additional suspected cases of microcephaly.
TRACKING WASHINGTON – Medicare on Friday launched an ambitious experiment changing how it pays for hip and knee replacements in an effort to raise quality and lower costs. The idea is to follow patients more closely to smooth their recovery and head off unwanted complications that increase costs. Hip and knee replacements are the most common inpatient surgery for beneficiaries, and Medicare will be using financial rewards and penalties to foster coordination among hospitals, doctors, and rehab centers. Improved care should also reduce costs, the government says. Hospitals are on board, but orthopedic surgeons have some misgivings. The new system goes into place in 67 metro areas across the country that are home to millions of beneficiaries and around 800 hospitals. Similar experiments may be in store for other procedures, like heart bypass surgery. It’s part of a broader effort under President Barack Obama’s healthcare law to align traditional Medicare with changes pushing the U.S. healthcare system toward greater accountability. Initially patients and families may not notice much beyond additional forms to sign from participating providers. Patients can still choose their doctors and hospitals. If the concept works, patients will see smoother coordination as they leave the hospital and take on the challenges of recovery and rehab, with measurably better results overall.
“There’s likely to be greater emphasis on communication and support to ensure that patients, once discharged, aren’t left to fend for themselves,” said Joshua Seidman of the consulting firm Avalere Health LLC (Washington DC), which has been working with hospitals. Hospitals are supportive, but surgeons have raised concerns. Over time surgeons fear there will be indirect pressure to discourage joint replacement for patients seen as having less chance of a smooth recovery. “The overall goal is a good one--they want to see where you can cut the waste out,” said Dr. Alexandra Page, a San Diego clinician representing the American Association of Orthopaedic Surgeons. But “one of the unintended consequences is going to be cherry-picking; hospitals are only going to want to have the patients who are going to do well.” Medicare says that’s unlikely because the experiment was designed so hospitals can keep treating a wide range of patients. Nonetheless, consumer groups say they’ll be watching.
FDA/EMA ROUNDUP -- An experimental test made by Roche Molecular Systems Inc. (Branchburg NJ) to check blood donations for the Zika virus has been approved by the U.S. Food and Drug Administration. The decision to allow use of the test in areas with active mosquito-borne transmission of the virus means that collections of whole blood and blood component donations can resume in Puerto Rico, agency officials said. “The availability of an investigational test to screen donated blood for Zika virus is an important step forward in maintaining the safety of the nation’s blood supply, especially for those U.S. territories already experiencing active transmission,” Dr. Peter Marks, director of the FDA’s Center for Biologics Evaluation and Research, said Wednesday. Zika is a mosquito-borne virus that’s been tied to thousands of cases--mainly in Brazil--of a severe birth defect called microcephaly. In microcephaly, a newborn’s head is smaller than normal, with the potential for long-term neurological damage.
Elsewhere, an advisory panel to the FDA backed an approval for Acadia Pharmaceuticals Inc.’s (San Diego CA) drug for psychosis related to Parkinson’s disease. Nuplazid’s benefits outweighed the risks, the panel said, after 12 members voted in favor of the treatment and two against. Acadia’s shares closed the week up 41% at $28.66. Several panel members said that while the drug’s efficacy was not as robust as they would have liked, it was “certainly better than nothing.” They said Nuplazid addressed the lack of treatment options for patients suffering from the condition. Psychosis, characterized by hallucinations and delusions, occurs in about 40% of Parkinson’s patients, the company said. Currently, there is no drug approved in the U.S. specifically for psychosis linked to Parkinson’s disease and common antipsychotic treatments including Quetiapine, Clozapine, Risperidone and Zyprexa are used for these patients.
The FDA cleared Jazz Pharmaceuticals PLC’s (Dublin IRL) drug to treat a rare kind of liver disease, making it the first treatment to win U.S. approval for the condition. The drug, defibrotide, targets patients with hepatic veno-occlusive disease (VOD), a potentially fatal complication of stem-cell transplantation in which some of the veins in the liver become blocked, causing swelling and a decrease in blood flow inside the liver. The disease can lead to liver damage, and in its most severe form patients develop failure of the kidneys and lungs, the FDA said on Wednesday. Out of the nearly 20,000 stem cell transplantation procedures done in the U.S. annually, about 8.8% to 13.8% of the patients suffer from severe VOD, Stifel Nicolaus analyst Annabel Samimy said, citing published research.
And the European Medicines Agency recommended approving American biotech drug developer Amicus Therapeutics Inc.’s (San Diego CA) experimental Fabry disease treatment. The EMA said on Friday the drug to treat the inherited disease is being recommended for adults and adolescents aged 16 years and older. Amicus’s shares closed the week up 12% at $8.69. The company is hoping to make the drug, migalastat, the first oral treatment for patients with a form of Fabry disease, a potentially fatal disorder that affects about 1 in 40,000 to 60,000 men and occurs less frequently in women. Fabry disease is caused by the build up of a type of fat, most notably in the kidneys, due to the deficiency of the alpha-Gal A enzyme. The accumulation damages cells and could lead to kidney failure, heart attacks and strokes.
MEDICAL STOCK SPOTLIGHT -- Genocea Biosciences Inc. (Nasdaq), a clinical-stage biopharmaceutical company focused on vaccines and immunotherapies, led advancing issues, soaring $2.60, or 67% over the week, to $6.57. The stock nearly doubled in value on Thursday after the Cambridge, MA-based company released data from a Phase 2 clinical trial evaluating its GEN-003 for the treatment of genital herpes. The results were highly encouraging as GEN-003 showed a statistically significant reduction in the rate of viral shedding over the entire 12-month period following dosing. Importantly, GEN-003 was shown to be safe and well tolerated by patients. That’s a great clinical result as GEN-003 showed similar efficacy when compared to currently antiviral treatment options. However, since GEN-003 only needs to be dosed once per year--versus oral antivirals that have to be taken daily--it has the potential to be a far more convenient treatment option. The American Sexual Health Association estimates that there are 776,000 new cases of genital herpes diagnosed each year in the U.S. alone. Genocea has already begun dosing of GEN-003 in another Phase 2b trial aimed at confirming the efficacy of the drug.
Elsewhere, Aclaris Therapeutics Inc. (Nasdaq) shot up $5.93, or 40%, to $20.70. Its stock was assigned a consensus broker rating score of 1.00 (Strong Buy) from the two analysts that cover it, Zacks Investment Research reports. Brokerages have set a twelve-month consensus target price of $25.00 for the Malvern, PA-based company and are anticipating that it will post ($0.50) EPS for the current quarter, according to Zacks. Zacks has also assigned Aclaris an industry rank of 77 out of 265 based on the ratings given to its competitors. Aclaris last announced its earnings results on Wednesday, March 23rd. The company reported ($0.28) EPS for the quarter, beating analysts’ consensus estimates of ($0.40) by $0.12. On average, analysts expect that Aclaris will post ($2.09) earnings per share for the current year. The company is focused on identifying, developing and commercializing topical drugs to address unmet needs in dermatology. Its current focus is topically applied therapies directed toward the removal of seborrheic keratosis and other lesions of the skin.
And Cardiovascular Systems Inc. (Nasdaq) surged $3.49, or 37%, to $13.00 after the company’s shares were upgraded at Needham from Hold to Buy following an increase in the preliminary revenue for the third quarter of fiscal year 2016. The St. Paul, MN-based company announced better-than-expected preliminary revenues for the period, projecting a range of $43.5 to $44 million, a 5% increase over the previous guidance of $40.5 to $42 million and beating analysts’ $41.05 million forecast. In addition, CSII announced broad-based restructuring initiatives in order to cut costs and balance revenue growth, while allowing for positive cash flow and profitability. Cardiovascular Systems is a medical technology company. It is engaged in developing, manufacturing, and marketing devices for the treatment of vascular diseases.
But MannKind Corp. (Nasdaq) tumbled 25% to $1.59 on huge weekly trade volume of some 36.6 million shares. The setback came after shares recently doubled in price. Based on the company’s history and its risk factors, even the current price is completely unwarranted according to some observers. The story of MannKind’s attempts to develop and sell its inhalable insulin drug, brand named Afrezza, has been an epic yarn. Bulls and bears have had strong opinions both on whether Afrezza would be approved and whether or not an approved drug would be commercially viable. The stock has been shorted many times by investors, and what is left of the company is trading at such a high valuation that it’s difficult to imagine a big run up from here, while an eventual drop is almost assured according to those with a bearish view. Simply put, there are no new positives to explain the recent doubling in price. The Valencia, CA-based biopharmaceutical company is focused on the discovery, development and commercialization of therapeutic products for diseases such as diabetes and cancer.
IPO SECTOR -- Aeglea BioTherapeutics Inc., which is developing enzymes for rare genetic metabolic diseases and tumors, announced terms for its initial public offering. The Austin, TX-based company plans to raise $60 million by offering 3.5 million shares at a price range of $16 to $18. At the midpoint of the proposed range, Aeglea BioTherapeutics would command a fully diluted market value of $203 million. The company was founded in 2013 and booked $6 million in grant revenue for the 12 months ended December 31, 2015. It plans to list on the Nasdaq under the symbol “AGLE.” UBS Investment Bank, BMO Capital Markets and Wells Fargo Securities are the joint bookrunners on the deal. It is expected to price this week.
Elsewhere, Sensus Healthcare Inc., which sells low-energy x-ray systems for treating non-melanoma skin cancer and keloids, postponed its IPO on Wednesday. It had filed to raise $20 million by offering 1.8 million shares at a price range of $10 to $12. The Boca Raton, FL-based company was founded in 2010 and booked $10 million in sales for the 12 months ended December 31, 2015. It had planned to list on the Nasdaq under the symbol “SRTS.” Joseph Gunnar & Co. and Feltl and Company were set to be the joint bookrunners on the deal. Only eight IPOs have priced in 2016, all in the healthcare sector, thanks to significant support from insiders, according to Renaissance Capital.
March 28, 2016 ...
FDA ENCOURAGES HARD-TO-ABUSE GENERIC PAIN PILLS – Federal officials are encouraging generic drugmakers to develop painkillers that are harder to abuse, the latest in a string of steps designed to combat abuse of highly-addictive pain drugs like codeine and oxycodone. The Food and Drug Administration published draft guidelines outlining testing standards for harder-to-abuse generic painkillers. The agency has already approved five brand-name opioid pain drugs which are designed to discourage abuse. The current version of OxyContin, for example, is difficult to crush, discouraging abusers from snorting or dissolving the tablets to get high. But these abuse-deterrent painkillers represent a small fraction of the market for opioid pain drugs, which is dominated by low-cost generics. Generic drugs receive a streamlined review process at the FDA, which helps speed their path to market and reduce the prices passed onto consumers. Generally, manufacturers only need show that their products are chemically equivalent to the original version. In addition, the FDA draft guidelines released Thursday make clear that companies will need to perform additional studies showing that generic opioids have the same anti-abuse properties as their brand-name counterparts. FDA officials said there is no timeline for updating currently-available generic opioids to abuse-deterrent versions.
Thursday’s proposal comes just days after the FDA said it would add a new boxed warning--the most serious type--to some 175 immediate-release painkillers, including both branded and generics. That action is one in a series of measures promised by new FDA Commissioner Dr. Robert Califf, who was confirmed by the Senate last month. Califf’s confirmation was held up by Senate lawmakers who said the agency needed to do more to combat opioid abuse. For years, the agency only made modest changes to the drugs, emphasizing the need to keep medications accessible to patients with chronic pain. In its announcement, the FDA acknowledged that evidence on the benefits of abuse-deterrent opioids is still emerging. “We recognize that abuse-deterrent technology is still evolving and is only one piece of a much broader strategy to combat the problem of opioid abuse,” Califf said in a statement. “But strongly encouraging innovation to increase access to generic forms of abuse-deterrent opioid medications is an important element in that strategy.”
BIRTH DEFECTS NOW LINKED TO ZIKA IN PANAMA; CDC ISSUES GUIDANCE ON CONCEPTION – Panama has reported its first case of birth defects associated with the Zika virus, the World Health Organization (WHO) said on Tuesday--new evidence of the epidemic’s potentially dangerous effects spreading throughout the region. Dr. Margaret Chan, the director general of WHO, said a baby with an unusually small head and brain damage--a condition called microcephaly--was born at 30 weeks’ gestation in Panama and died a few hours later. Local investigators found evidence of the Zika virus in the umbilical cord. Dr. Chan was providing an update on the Zika virus and its spread in the Americas. Scientists around the world are waiting to see whether more pregnant women who become infected eventually give birth to babies with microcephaly. “The knowledge base is building very rapidly,” Dr. Chan said. “The more we know, the worse things look.” So far, a surge of cases has been documented only in Brazil. In most other countries where Zika infections have spread, pregnant women who might have been exposed have yet to give birth. The virus is circulating in 38 countries and territories, Dr. Chan said. “No one can predict whether the virus will spread to other parts of the world,” she added. Brazil and Panama are the only countries that have documented microcephaly cases linked to Zika infection from mosquito bites, Dr. Chan said.
On Friday, the U.S. Centers for Disease Control and Prevention recommended women diagnosed with the Zika virus should wait at last eight weeks before trying to conceive while men who had the disease should hold off for at least six months. Both men and women who were possibly exposed to the virus should wait for at least eight weeks before attempting conception, the CDC’s new guidelines said. Zika has been linked to a sharp increase in microcephaly, a rare birth defect, in Brazil. The CDC’s recommendations are intended to help couples before they become pregnant. Its previous guidelines on the Zika virus had focused upon those who already were pregnant. CDC officials noted that conversations about the risks of pregnancy are difficult and encouraged health providers to engage their patients. Health officials noted the recommendations were based on limited data about Zika’s persistence in blood and semen. Zika has not been proven to cause microcephaly in babies. Brazil last week said it has confirmed more than 900 cases of microcephaly and considers most of them to be related to Zika infections in the mothers. Brazil is investigating nearly 4,300 additional suspected cases of microcephaly.
TRACKING WASHINGTON – Expanded health insurance coverage under the Affordable Care Act, President Barack Obama’s signature legislative legacy, will cost the government more, according to an official study released Thursday. Still, on balance, the measure more than pays for itself. The nonpartisan Congressional Budget Office said the healthcare law will cost $1.34 trillion over the coming decade, $136 billion more than the CBO predicted a year ago. That 11% hike is mostly caused by higher-than-expected enrollment in the expanded Medicaid program established under the law. In all, 22 million more people will have healthcare coverage this year than if the law had never been enacted, CBO said. The measure’s coverage provisions are expected to cost $110 billion this year. The number of uninsured people this year is anticipated at 27 million. About 90% of the U.S. population will have coverage, a percentage that is expected to remain stable into the future. The study also projected a slight decline in employment-based coverage, although it will remain by far the most common kind among working-age people and their families. Employers now cover some 155 million people, about 57% of those under 65. That’s expected to decline to 152 million people in 2019. Ten years from now, employers will be covering about 54% of those under 65.
Separately, the Supreme Court rejected an effort by Nebraska and Oklahoma to have Colorado’s pot legalization declared unconstitutional. The justices did not comment in dismissing the lawsuit the states filed directly with the Supreme Court against their neighbor. They argued that Colorado’s law allowing recreational marijuana use by adults runs afoul of federal anti-drug laws. The states also said that legalized pot in Colorado is spilling across the borders into Nebraska and Oklahoma, complicating their anti-drug efforts and draining state resources. The Obama administration had sided with Colorado, despite the administration’s opposition to making marijuana use legal. Justices Clarence Thomas and Samuel Alito would have heard the states’ lawsuit.
FDA/EMA ROUNDUP -- Federal health regulators will add their strongest warning labels to the most widely used prescription painkillers, part of a multi-pronged government campaign to reverse an epidemic of abuse and death tied to drugs like Vicodin and Percocet. The Food and Drug Administration last week announced plans to add a boxed warning the most serious type to all immediate-release opioid painkillers, which include roughly 175 branded and generic drugs. Those medications, which often combine oxycodone with lower-grade pain relievers, are among the most commonly prescribed drugs in the U.S. and account for 90% of all opioid painkillers prescribed. The long-awaited change comes roughly three years after the FDA added similar warnings to long-acting opioid drugs like OxyContin, which slowly release their doses over 12 hours or more. The labeling switch means both immediate and extended-release formulations will highlight information about the risks of addiction, abuse, overdose and death. “We’re at a time when the unfathomable tragedies resulting from addiction, overdose and death have become one of the most urgent and devastating public health crises facing our country,” FDA Commissioner Dr. Robert Califf said. “I can’t stress enough how critical it is for prescribers to have the most current information.”
Elsewhere, the FDA approved a drug from Eli Lilly and Co. (Indianapolis IN) to treat adults with moderate to severe cases of the skin condition plaque psoriasis. The injectable biotech medicine known chemically as ixekizumab will be sold under the brand name Taltz, the agency said. Taltz works by blocking a protein that causes inflammation, which is believed to play a role in development of the autoimmune disorder characterized by red skin and thick, unsightly, scaly white patches. In large, late-stage clinical trials, ixekizumab led to significant skin clearing compared with a placebo and also helped patients who did not respond to Amgen Inc.’s blockbuster treatment Enbrel.
The FDA approved a new injectable drug to treat patients who have been exposed to the deadly toxin anthrax. The agency said it approved Anthim to treat inhalation anthrax, which can cause serious injury and death. The condition occurs when anthrax bacterial spores are inhaled. Because anthrax is a potential bioterrorism weapon the U.S. government has been funding the development and production of therapies. Five people died in 2001 after being exposed to anthrax sent in letters. Anthim was developed by Elusys Therapeutics Inc. (Pine Brook NJ) with support from the Biomedical Advanced Research and Development Authority. The government agency stockpiles vaccines, drugs and equipment for use during pandemics and other health emergencies.
And A new cystic fibrosis treatment from Vertex Pharmaceuticals Inc. (San Diego CA) has been rejected as too expensive by Britain’s healthcare cost agency NICE. The National Institute for Health and Care Excellence said that Orkambi, priced at an annual 104,000 pounds ($149,000) per patient, was not a cost-effective use of state healthcare resources, even though it offers clinical benefits. Vertex said it believed the evaluation process used by NICE in reaching its draft decision was not appropriate for rare diseases like cystic fibrosis, as it did not take into account the full benefits that medicines like Orkambi could offer. Cystic fibrosis is caused by a genetic defect that causes the lungs and digestive system to become clogged with sticky mucus. There is currently no cure.
MEDICAL STOCK SPOTLIGHT -- Akorn Inc. (Nasdaq) led advancing issues, racing $$5.52, or 29% for the holiday-shortened week, to $24.37. The company’s stock had its Market Perform rating reiterated by Leerink Swann in a research report issued to clients and investors, MarketBeat.com reported. The brokerage presently has a $28.00 price objective on the stock, up from their previous price objective of $24.00. Leerink Swann’s price objective suggests a potential upside of 15% from the company’s current price. Lake Forest, IL-based Akorn has a 52 week low of $17.57 and a high of $57.10. Ten investment analysts have rated the stock with a Buy rating and six have given a Hold rating. The stock currently has an average rating of Buy and a consensus target price of $37.46. Akorn develops, manufactures, and markets ophthalmic and injectable pharmaceutical products. The company sells various diagnostic and therapeutic pharmaceutical products focused primarily on ophthalmology, anesthesia, antidotes, and rheumatology.
Elsewhere, building on the prior week’s huge upward move, Celator Pharmaceuticals Inc. (Nasdaq) leapt $1.93, or 22%, to $10.63. The company announced that its Vyxeos treatment helped older, high-risk patients with a deadly form of leukemia live longer than those who received the standard of care regimen in a late stage clinical trial. In the Phase 3 study of 309 patients with secondary, or high risk, acute myeloid leukemia (AML), those who received Vyxeos, also known as CPX-351, on average lived for 9.6 months after the start of the trial. That compared with 6 months for those who got the standard combination treatment of cytarabine and daunorubicin. Two years after the start of the trial, 31% in the Vyxeos group were still alive versus 12% for the standard treatment group. Given the survival advantage, higher response rate and lack of increase in serious toxicity seen with CPX-351 in this trial, “we’ll likely have a new standard of care for treating older patients with secondary AML,” Dr. Jeffrey Lancet, the study’s lead investigator, said. Based on the results, the Ewing, NJ-based company said it would submit its applications seeking U.S. approval later this year and for Europe in 2017.
And Medivation Inc. (Nasdaq) surged $6.75, or 19%, to $42.57. The San Francisco-based company announced the first patient has been dosed in a Phase 3 clinical trial, ARCHES, evaluating the safety and efficacy of enzalutamide with androgen deprivation therapy (ADT) compared to placebo with ADT in metastatic hormone-sensitive prostate cancer (mHSPC) patients. The global, double-blind, placebo-controlled study will randomize patients to receive a once-daily 160 mg oral dose of enzalutamide or placebo, administered with ADT. The primary efficacy endpoint is radiographic progression-free survival up to four years. The estimated study completion date is December 2023. Enzalutamide, branded as Xtandi, is an androgen receptor inhibitor developed at UCLA. It was licensed to Medivation in 2005, which sublicensed it to Astellas Pharma in 2009. The FDA approved it in 2012. Xtandi generated $1.15 billion in sales last year for Astellas.
But Tandem Diabetes Care Inc. (Nasdaq) sank $2.11, or 21%, to $7.90 after BofA/Merrill Lynch downgraded the rating on the stock to Underperform from Neutral. San Diego, CA-based Tandem Diabetes has declined 34% since August, 2015 and is downtrending. It has underperformed the S&P 500 by 32%. Tandem designs, develops, and commercializes various products for people with insulin-dependent diabetes in the United States. The company’s flagship product is the t:slim insulin delivery system that comprises the t:slim pump, its disposable insulin cartridge, and an infusion set. It also provides the t:flex insulin delivery system that includes a t:flex pump, its 480-unit disposable insulin cartridge, and an infusion set; and the t:slim G4 insulin delivery system, a touch-screen pump with an integrated CGM system. These and other Tandem products are intended to aid a person with insulin-dependent diabetes by automatically testing and controlling their blood glucose.
IPO SECTOR -- Corvus Pharmaceuticals Inc., which is developing checkpoint inhibitors to treat solid tumors, raised $71 million by pricing its IPO of 4.7 million shares at $15, the low end of the range of $15 to $17. The Burlingame, CA-based company was founded two years ago by former Pharmacyclics Inc. execs Richard Miller and Joseph Buggy and OrbiMed Inc. partner Peter Thompson. It closed a $33.3 million Series A round in 2015 and raised an additional $74.8 million in September from a syndicate that includes OrbiMed, Novo A/S, Roche Venture Fund and Fidelity. With the IPO proceeds, Corvus plans to push forward with four cancer therapies in early development. The most advanced, CPI-444, targets one of the body's G protein-coupled receptors to help the immune system home in on cancers, and Corvus began a Phase 1 trial in patients with solid tumors in January. Corvus lists on the Nasdaq under the symbol “CRVS.” Credit Suisse and Cowen & Company acted as lead managers on the deal. Shares closed the week off 5% at $14.25.
Elsewhere, Klox Technologies Inc., which is commercializing a light-reactive topical gel for acne and skin care, withdrew its plans for an IPO on Thursday. In May 2015, it had set terms to raise $67 million by offering 4.8 million shares at a price range of $13 to $15, but postponed that offering. In February, the company announced a partnership with Colgate-Palmolive. The Quebec, Canada-based company was founded in 2007 and booked $3 million in sales for the 12 months ended December 31, 2014. It had planned to list on the Nasdaq under the symbol “KLOX.” UBS Investment Bank was set to be the sole bookrunner on the deal.
March 21, 2016 ...
EXPRESS SCRIPTS SAYS U.S. DRUG SPENDING ROSE 5.2% IN 2015 – Spending on prescription drugs for insured Americans rose about 5% last year, driven by both greater medication use and higher prices, mainly for very expensive drugs termed specialty medicines. Still, the increase was half the rate in 2014, which saw the biggest price jump since 2003. A report by the largest U.S. prescription benefit manager, Express Scripts Holding Co. (St. Louis MO), also found the average price of brand-name drugs already on the market increased by 16.2% in 2015 and has jumped 98.2% since 2011. One-third of brand-name prescription drugs had price increases exceeding 20% last year. Those price hikes came despite intense criticism from patients and politicians, as well as congressional probes into the pharmaceutical industry’s pricing policies. Express Scripts forecasts drug spending will rise 6% to 8% annually from 2016 through 2018. The trends don’t augur well for insurers and government health programs trying to hold down medication costs. The data are based on prescription claims processed by Express Scripts. The company handles pharmacy benefits for about 85 million Americans with insurance, provided by employers, local and state governments, unions and Affordable Care Act insurance exchanges. Last year, the Food and Drug Administration approved 33 high-cost specialty drugs, many of them for cancer.
The 20th annual drug-trend report from Express Scripts found that for the first time, the drug category with the most spending was for a class of specialty medicines, specifically drugs for inflammatory conditions such as rheumatoid arthritis and psoriasis. Specialty drugs are injected, treat complex chronic conditions and usually are very expensive. As a result, insurers and prescription benefit managers have special programs to manage their use through measures such as preauthorization requirements and high copayments. The jump in specialty drug spending was 17.8%. That includes an average price hike of 11% and a 6.8% rise in the number of prescriptions filled for those drugs, which are only taken by 1% to 2% of Americans. Altogether, specialty drugs accounted for 37.7% of medicine costs for Express Scripts clients, and the company expects that to rise to 50% of spending in 2018. By comparison, the drug class with the most spending from 2011 through 2014 was for prescription drugs for diabetes, which are taken by millions of Americans. Before that, the top-selling class was cholesterol drugs such as Lipitor, most of which have seen cheaper generic pills seize most of their sales for at least several years.
STUDY STRENGTHENS ZIKA-MICROCEPHALY LINK – Thousands of pregnant women caught in an ongoing outbreak of the mosquito-borne virus spreading from Brazil risk having a baby with the birth defect microcephaly, according to the results of a new study. In the study in the Lancet medical journal which analyzed a 2013-14 Zika outbreak in French Polynesia, researchers said the risk of microcephaly is about 1 for every 100 women infected with the virus during the first trimester of pregnancy. While more research is needed to understand the biological mechanisms by which Zika might cause microcephaly, the researchers said, these findings suggest the World Health Organization’s (WHO) advice that pregnant women should protect themselves from mosquitoes is a sound precaution. “Our analysis strongly supports the hypothesis that Zika virus infection during the first trimester of pregnancy is associated with an increased risk of microcephaly,” said Simon Cauchemez, an infectious disease mathematical modeling expert at France’s Institute Pasteur who co-led the study. The WHO declared on Feb. 1 that the suspected link between microcephaly and an outbreak of Zika virus spreading from Brazil was a public health emergency. The WHO says the outbreak, which began in Brazil in 2014, is spreading rapidly through the Americas, with transmission reported in 31 countries and territories of the region.
Cauchemez’s team looked at a Zika outbreak in French Polynesia which began in October 2013, peaked in December 2013 and ended in April 2014. Over the course of the outbreak, eight cases of microcephaly were identified. Of these, five pregnancies were terminated and three cases were born. Using data on the number of cases of microcephaly, the weekly number of consultations for suspected Zika, blood tests confirming Zika antibodies, and the number of births during the outbreak, the researchers used modeling to estimate expected numbers of microcephaly cases under different risk scenarios. By comparing the models to the number and timing of actual microcephaly cases in the Polynesia outbreak, they found the scenario in which the first trimester of pregnancy was linked with an increased risk was most consistent with the data. The researchers were then able to estimate the risk of microcephaly as 95 in 10,000, or around 1%, of pregnant women infected with Zika in the first trimester. The number of confirmed and suspected cases of microcephaly in Brazil associated with the Zika virus has risen to 5,131 from 4,976 a week earlier, the Ministry of Health said on Friday. Of these, the number of confirmed cases climbed to 863 from 745 a week earlier, while suspected ones increased to 4,268 from 4,231 in the same period.
TRACKING WASHINGTON – The U.S. Supreme Court on March 23 will hear arguments in a major Obamacare case over insurance and contraception, with a range of potential outcomes that became more complicated with the death of Justice Antonin Scalia. The court will consider the case of Zubik v. Burwell, a consolidated group of seven cases brought by religious nonprofit organizations challenging the so-called contraceptive mandate under the Affordable Care Act. The mandate is a regulation issued by the U.S. Health and Human Services Department that requires health insurance plans to provide coverage of all FDA-approved contraceptive drugs and devices for women at no cost to the women. The question facing the court is whether the federal government can compel religious nonprofits that are opposed to contraception to facilitate access to contraception via the contraceptive mandate. If the government prevails, the religious nonprofits will be forced to ensure access to contraception coverage for their female employees. If the religious nonprofits prevail, then they will not be forced to cooperate in providing contraceptive coverage for their employees. The female employees would still likely be able to get coverage through an alternative means instituted by the government, but they may have to take a more active role in obtaining it than they would under the contraceptive mandate.
If there is a tie vote among the remaining eight justices on the court, the outcome gets more complicated, and could include a patchwork of regional variations across the United States. Under the contraceptive mandate some religious employers, such as churches, are exempt. There is also an “accommodation” available to religious non-profit groups such as religious social service agencies and “closely-held” businesses that have religious objections to contraception. The “accommodation” requires the religious nonprofit or closely-held business to file a notice with their health insurance issuer or with the HHS Secretary that, among other information, must include the “plan name and type...and the name and contact information for any of the plan’s third party administrators.” Once the notice is filed, the responsibility for providing the contraceptive coverage falls on the health insurance issuer which must provide the coverage separately without seeking reimbursement from the employer and without passing the cost onto the covered women. If the religious nonprofit or closely-held business fails to send the notification, it is still responsible for providing contraceptive coverage, and if it refuses to do so, it may face a daily federal penalty of $100 for each uncovered employee.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration approved Bayer AG’s (Leverkusen DEU) therapy for the most common form of hemophilia, the company said on Thursday, about three weeks after the treatment was cleared for use in Europe. The therapy, Kovaltry, is designed to reduce bleeding in patients with hemophilia A when infused prophylactically two or three times per week, and was approved by the European Commission on Feb. 22. Due to a fault in a gene that regulates the body’s clotting mechanism, people with hemophilia are susceptible to spontaneous bleeding as well as severe bleeding following injuries or surgery. Hemophilia has no cure. Patients typically require frequent injections of blood clotting proteins that can cost up to $300,000 a year for a single patient. A Bayer spokeswoman said the company could not specify a price for Kovaltry but added that it had already captured the second-largest share of the hemophilia A market in the United States. The German drugmaker’s established hemophilia A therapy, Kogenate, brought in global sales of about 1.15 billion euros ($1.30 billion) last year.
Elsewhere, a medical advisory panel to the FDA recommended approval of a first-of-its-kind heart stent from Abbott Laboratories Inc. (Abbott Park IL) that dissolves after it is implanted. The panel, by a vote of 9-0, supported use of the stent, called Absorb, which is designed to dissolve within three years of implantation, after restoring blood flow to a blocked artery. The FDA usually, but not always, follows the advice of its advisory panels.
The FDA rejected Eagle Pharmaceuticals Inc.’s (Woodcliff Lake NJ) drug to prevent blood clots in certain patients undergoing heart surgery. The drug, Kangio, is a ready-to-use version of The Medicines Co.’s blood clot preventer Angiomax, which is also to be taken with aspirin. Kangio contains the same active ingredient as Angiomax, but eliminates the need for dilution. Angiomax must be reconstituted with water and then further diluted before it can be administered. The agency did not approve the marketing application for Kangio in its present form and requested additional information, the drugmaker said on Friday. Angiomax was approved in 2000 to prevent blood clots in patients undergoing percutaneous coronary intervention (PCI) or angioplasty, a procedure to widen narrowed or obstructed arteries in the heart. Eagle Pharma said it would work directly with the FDA to determine a path forward to address the health regulator’s comments. Eagle’s shares closed the week down 30% at $43.50.
And the FDA issued an alert about Gilead Sciences Inc.’s (Foster City CA) cancer drug Zydelig last week, and in the warning it cautioned healthcare professionals that the drug is not approved for previously untreated chronic lymphocytic leukemia. Gilead had put a hold on six trails for its Zydelig because of concerns with adverse effects and even potential deaths. This cancellation raised questions about the viability of this treatment moving forward. Zydelig received regulatory approval in the U.S. in 2014 for three blood cancers. The drug has been used in combination with Roche Holding AG’s Rituxan to treat non-Hodgkin lymphoma. So far, Zydelig has generated $132 million in revenue in its is first year on the market. Separately, the European Medicines Agency has launched an investigation into Zydelig following the aforementioned increase in serious adverse events. The review of Zydelig--which is approved in the EU for the treatment of chronic lymphocytic leukemia and follicular lymphoma--was requested by the European Commission.
MEDICAL STOCK SPOTLIGHT -- Celator Pharmaceuticals Inc. (Nasdaq) led advancing issues, rocketing $7.17, or 570% for the week, to $8.70 after saying its Vyxeos treatment helped older high-risk patients with a deadly form of leukemia live longer than those who received the standard of care regimen in a late stage clinical trial. In the Phase 3 study of 309 patients with secondary, or high risk, acute myeloid leukemia (AML), those who received Vyxeos, also known as CPX-351, on average lived for 9.6 months after the start of the trial. That compared with 6 months for those who got the standard combination treatment of cytarabine and daunorubicin. Two years after the start of the trial, 31% in the Vyxeos group were still alive versus 12% for the standard treatment group. Given the survival advantage, higher response rate and lack of increase in serious toxicity seen with CPX-351 in this trial, “we’ll likely have a new standard of care for treating older patients with secondary AML,” Dr. Jeffrey Lancet, the study’s lead investigator, said in a statement. Based on the results, the Ewing, NJ-based company said it would submit its applications seeking U.S. approval later this year and European approval in the first quarter of 2017.
Elsewhere, Vitae Pharmaceuticals Inc. (Nasdaq) soared $2.42, or 51%, to $7.19 after the company reported positive results from tests of its experimental medication for psoriasis. Fort Washington, PA-based Vitae disclosed that a Phase 2a “proof-of-concept clinical trial” had shown “positive top-line results” on tests of an oral medication with potential to treat multiple autoimmune disorders, including psoriasis--a common condition in which skin cells build up and form scales as well as dry, itchy patches. The test, a randomized, double-blind, placebo-controlled trial, assessed whether the medication known as VTP-43742 was effective, safe and able to be tolerated by psoriasis patients who received multiple doses over a four-week period, Vitae said. The test showed psoriasis patients who received 350-milligram dosages had a 24% reduction of their psoriasis relative to a placebo, while those who got 700 milligram dosages had a 30% reduction, the company said. Vitae plans to advance the tests to a broader 16-week trial in the second half of 2016 “to continue to assess the efficacy, safety and tolerability” of the medication, Richard Gregg, the company’s chief scientific officer, said in a statement issued with the announcement.
And Flex Pharma Inc. (Nasdaq) leaped $3.39, or 44%, to $11.01 after Piper Jaffray reaffirmed their Overweight rating on shares in a research note, MarketBeat reported. Piper Jaffray currently has a $25.00 price target on the biotechnology company’s stock. Boston, MA-based Flex has been the topic of a number of other research reports. Zacks Investment Research lowered Flex Pharma from a Buy rating to a Hold rating in a research report last Monday. Jefferies Group restated a Buy rating and set a $25.00 price objective on shares in a research report on Thursday, March 10th. Cantor Fitzgerald restated a Buy rating and set a $22.00 price objective on Flex shares in a research report on Wednesday, March 9th. Flex Pharma presently has a consensus rating of “Buy” and an average price target of $24.38. Flex Pharma is a biotechnology company that is developing treatments for exercise-associated muscle cramps, nocturnal leg cramps and spasms for neuromuscular conditions.
But Aralez Pharma Inc. (Nasdaq) plummeted $2.23, or 37%, to $3.72 after reporting fourth-quarter EPS of ($0.40), $0.12 worse than analysts’ estimates of ($0.28). Revenue for the quarter came in at $5.97 million versus the consensus estimate of $10.41 million. Milton, Ontario-based Aralez Pharma sees FY2016 revenue of $48-58 million, versus the consensus of $54.8 million. Aralez also announced that it has resubmitted to the U.S. Food and Drug Administration the New Drug Application (NDA) for its investigational candidate, YOSPRALA (PA32540/PA8140) for the secondary prevention of cardiovascular disease in patients at risk for aspirin-induced gastric ulcers. Secondary prevention with aspirin may be recommended in patients who have had a myocardial infarction or unstable angina pectoris, chronic stable angina pectoris and those who have undergone revascularization procedures when there is a pre-existing condition for which aspirin is already indicated and ischemic stroke or transient ischemia of the brain due to fibrin platelet emboli.
IPO SECTOR -- Senseonics Holdings Inc., which is developing a long-lasting implantable glucose monitor for diabetics, raised $45 million by offering 15.8 million shares at $2.85. The Germantown, MD-based company is working to bring to market an implantable glucose sensor and transmitter called Eversense. The device is inserted under the skin and delivers continuous data for up to 90 days directly to a diabetic patient’s smartphone or smartwatch. With U.S. trials of Eversense announced in January, the company is trying to offer an alternative to constant finger-pricking--something that could represent a $2.7 billion market, the company said in a Securities and Exchange Commission filing. Formerly known as Sensors for Medicine and Science Inc., Senseonics was founded in 1996 by biotech veteran James Barrett. The company is now headed by Timothy Goodnow. Senseonics filed for regulatory approval for Eversense in Europe last year and expects to begin commercializing the product for the first time in select markets in the first half of 2016. Senseonics was founded in 1996. It lists on the NYSE under the symbol “SENS.” Leerink Partners and Canaccord Genuity are the joint bookrunners on the deal. Shares closed the week up 21% at $3.45.
Elsewhere, Hutchison China MediTech Ltd., a pharmaceutical company with a pipeline of oncology candidates, raised $101 million by offering 7.5 million ADSs at $13.50. In its most recent filing, the company expected to raise $100 million by offering 6.1 million ADSs at $16.33, its last traded price on the AIM market in London. Hutchison China MediTech lists on the Nasdaq under the symbol “HCM.” BofA Merrill Lynch and Deutsche Bank acted as lead managers on the deal. Hong-Kong-based HCM focuses on the discovery, development and commercialization of therapies for immunological and oncology diseases. The company boasts a broad pipeline and strategic collaborations with Eli Lilly & Co. and AstraZeneca PLC, among others. HCM engages in the research, development, manufacture, and commercialization of pharmaceuticals and other health-related consumer products mainly in the People’s Republic of China. HCM also manufactures, distributes, and sells over-the-counter, prescription, and health supplements products. HCM was founded in 2000 and operates as a subsidiary of Hutchison Healthcare Holdings Limited. Shares closed the week unchanged at $13.50.
March 14, 2016 ...
DRUGMAKERS RACING TO FIND ZIKA VACCINE – About 15 drug manufacturers are working on Zika virus vaccines, most in the initial stages, according to the World Health Organization (WHO). Among the more advanced are some in development by the U.S. National Institute of Allergy and Infectious Diseases (NIAID) and Bharat Biotech International Pvt. Ltd. in Hyderabad, India, said Marie-Paule Kieny, WHO’s assistant director-general for health systems and innovation last week. She predicts it will take at least 18 months for large-scale trials to get under way. Drugmakers Sanofi SA (Paris), Inovio Pharmaceuticals Inc. (San Diego CA), and NewLink Genetics Corp. (Ames IA) report they are now developing Zika vaccines. The NIAID and the Scripps Research Institute (La Jolla CA) are searching for potential drugs, while companies including Chembio Diagnostics Systems Inc. (Medford NY) are working on new diagnostic tests. Under the best-case scenario, it will take until roughly the end of 2017 to gather enough data from trials for regulators to make a decision on one of NIAID’s two candidate Zika vaccines, said institute director Anthony Fauci, MD. NIAID also is taking advantage of earlier research, modifying products that already were in development, Fauci added. It is inserting a gene for Zika virus into a vaccine originally developed for West Nile virus, for which the institute could not find a commercial partner.
Separately, the nation’s top health officials said Thursday that “urgent action” was needed to contain the Zika virus and appealed to Congress to allocate money to fighting the outbreak. President Obama has asked for $1.8 billion, but the request is stalled in Congress, with Republicans suggesting that money previously allotted to the Ebola virus be used instead. Describing a recent trip to Puerto Rico to survey efforts there to contain the Zika virus, Dr. Thomas R. Frieden, the director of the Centers for Disease Control and Prevention, said the island “is on the front lines and facing an uphill battle.” The virus has been linked to microcephaly--which often results in misshapen heads and brain damage--and other birth defects in babies born to infected women. About 34,000 babies are born each year in Puerto Rico, and Dr. Frieden said he anticipated “thousands” of expectant mothers to become infected during the hot, rainy season, which is just beginning.
MEDICARE TO TEST ALTERNATIVE PAYMENT PLANS FOR COSTLY DRUGS – The Obama administration sparked a firestorm last Wednesday with its plan to test new ways of paying for prescription drugs under Medicare, widely seen as the administration’s first serious attempt to rein-in drug spending. Groups representing Medicare beneficiaries welcomed some of the proposals but expressed concern about others. Drug manufacturers and some cancer doctors criticized the initiative, saying it placed too much emphasis on saving money and too little on ensuring patients’ access to treatment. “I deal every day with people fighting for their lives, and I am more sympathetic to them, their desire to live and to get the right treatment,” said Ellen V. Sigal, the founder and chairwoman of Friends of Cancer Research, a public education and advocacy group, even as she noted her concern about rising drug costs. Under the proposal, announced last Tuesday, Medicare would try a half-dozen new ways of paying for prescription drugs in Part B of Medicare, under which $20 billion was spent last year on medications administered in doctors’ offices and hospital outpatient departments. The announcement is only a proposal for a test, but it has huge implications for the pharmaceutical industry, especially for the big, fast-growing category of specialty drugs known as biologics.
The proposal could, for the first time, link Medicare payments to the effectiveness of a drug and the cost of comparable medications--factors not normally considered in the current reimbursement formula, which is based on the average sales price of drugs, with an additional 6% allowance for storage and handling costs. For decades, Congress has legislated Medicare payment rates in minute detail. But the Affordable Care Act authorized the secretary of health and human services to test new “payment and service delivery models” and adopt them nationwide if they save money without harming the quality of care. Sylvia Mathews Burwell, the health secretary, has shown she is willing to make aggressive use of this power. The Republican chairmen of three powerful congressional committees denounced the administration’s plan on Wednesday, describing it as “another troubling example of unelected bureaucrats making decisions behind closed doors.” The proposal could limit access to care for some of the sickest Medicare beneficiaries, said the statement, issued by Senator Orrin G. Hatch of Utah, the chairman of the Senate Finance Committee, and Representatives Fred Upton of Michigan, the chairman of the House Energy and Commerce Committee, and Kevin Brady of Texas, the chairman of the Ways and Means Committee.
TRACKING WASHINGTON – The Obama administration, responding to consumer complaints, says it will begin rating health insurance plans based on how many doctors and hospitals they include in their networks. At the same time, the maximum out-of-pocket costs for consumers under the Affordable Care Act will increase next year to $7,150 for an individual and $14,300 for a family, the administration said. Consumer advocates said those costs could be a significant burden for middle-income people who need a substantial amount of care. Under new rules published last week in the Federal Register, insurers will still be allowed to sell health plans with narrow networks of providers. But consumers will know in advance what they are getting because the government will attach a label indicating the breadth of the network for each plan sold on HealthCare.gov. About 12.7 million people signed up or had their coverage automatically renewed in the third annual open enrollment season, which ended on Jan. 31. Many health plans offered in the public marketplaces provide a limited choice of doctors and hospitals, and some insurers narrowed their networks this year by excluding some doctors and dropping popular teaching hospitals. The new ratings will indicate how the breadth of a health plan’s network compares with that of other plans in the same geographic area.
Separately, spending on prescription drugs is projected to have risen to $457 billion in 2015 and will likely continue to grow as a percentage of overall healthcare spending, a U.S. government health agency said. The agency also proposed a test program that would change the way that Medicare compensates doctors who administer drugs in their offices as a way to try to cut drug spending. The 2015 increase is an increase of about 8% from 2014’s prescription drug spending, which is also an estimated figure, the government agency said. Prescription drug spending is estimated to have accounted for 16.7% of $2.729 trillion spent on healthcare last year, the U.S. Department of Health and Human Services’ Office of the Assistant Secretary for Planning and Evaluation said in a report. An estimated $328 billion was spent on retail drugs, the report said. It also estimated that another $128 billion was spent on non-retail drugs, such as cancer treatments that are administered in a physician’s office or hospital. The agency forecast that total drug spending will grow to $535 billion in 2018 and represent about 16.8% of all healthcare spending. The figures are based in part on National Health Expenditure Accounts estimates from the Centers for Medicaid and Medicare Services.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration on Friday approved the expanded use of Pfizer Inc.’s (New York) drug to treat a type of lung cancer. The agency approved the drug, Xalkori, as a treatment for non-small cell lung cancer (NSCLC) patients who have a specific mutation of a gene named ROS1. This type of gene mutation has been identified in various cancers including NSCLC and accounts for about 1% of the total non-small cell lung cancer patients. Xalkori is an oral treatment that blocks the activity of the ROS1 protein in tumors that have the mutation. This prevents the tumor from growing and spreading. The drug was approved by the FDA in 2011 to treat non-small cell lung cancer patients who had a mutation of the anaplastic lymphoma kinase (ALK) gene. That mutation accounts for about 4% of all NSCLC patients.
Elsewhere, European regulators have started a review into the safety of Gilead Sciences Inc.’ (Foster City CA) leukemia drug Zydelig due to concerns over serious adverse events, including deaths. The review was prompted by an increased rate of harmful events, mostly due to infections, seen in three clinical trials that tested the drug in combination with other cancer medicines, the European Medicines Agency (EMA) said on Friday. The EMA said it would review data from the studies to see if the findings had any consequences for Zydelig’s approved use. In the meantime, patients taking the drug should be carefully monitored for signs of infections, it said. Zydelig is authorized in Europe for treating chronic lymphocytic leukemia (CLL) in combination with Roche Holding AG’s Rituxan and on its own for treating follicular lymphoma.
The FDA has approved the expanded use of Edwards LifeSciences Corp.’s (Irvine CA) SAPIEN CT transcatheter heart valve, designed for patients with narrowed pulmonary valves or moderate or greater pulmonary regurgitations initiated by congenital heart disease. The valve is a minimally invasive device for patients who undergo multiple open-heart surgeries, according to Larry Wood, vice president at Edwards. The approval was based on data pulled from Edwards’ COMPASSION trial, and extra data from Europe.
And Teva Pharmaceutical Industries Ltd. (Petach Tikva ISR) will be adding the first-ever, FDA-approved generic version of Viagra, for male erectile dysfunction, to its roster of hundreds of other generic medications. Teva said the drug will go on sale December 11, 2017. Sold under the brand name Viagra by Pfizer Inc. until now, sildenafil citrate tablets will come in three strengths: 25 milligram, 50 milligram, and 100 milligram tablets, the same strengths as Viagra. Erectile dysfunction medications have an estimated market of $4.3 billion worldwide as of 2012. Teva said it has exclusive rights to generic sildenafil citrate for 180 days.
MEDICAL STOCK SPOTLIGHT -- Proteostasis Therapeutics Inc. (Nasdaq) led advancing issues, surging $3.40, or 61% on the week, to $8.96. The company staged a disappointing IPO at the beginning of February, and has traded mostly flat since missing its expected price range of $12-$14. The missed pricing didn’t turn out a complete bust, however, as the company sold more shares than it had expected, so gross and net proceeds came in at $50 million--on track with what it had forecast in its scheduled price range. The only justifiable logic behind last week’s gains is a batch of newly initiated analyst reports. Three Outperforms and a Buy rating from four research firms sparked some upside interest, and the gains came as a result. Cambridge, MA-based Proteostasis is an early stage development biotech with a current focus on cystic fibrosis. It’s lead candidate, PTI-428, picked up Investigational New Drug (IND) approval from the Food and Drug Administration last year, and the company expects to report topline results from a Phase 1 trial sometime during the middle of this year. Even with the recent gains, it’s still well below its target IPO price.
Elsewhere, Omeros Corp. (Nasdaq) rocketed $4.09, or 33%, to $16.37 after having its Buy rating reaffirmed by analysts at Maxim Group in a report issued on Wednesday. The research firm presently has a $30.00 target price on the biopharmaceutical company’s stock. Maxim Group’s price objective would suggest a potential upside of 96.08% from the stock’s current price. Omeros last issued its quarterly earnings results on Tuesday, March 8th. The biopharmaceutical company reported ($0.52) earnings per share for the quarter, topping the Zacks’ consensus estimate of ($0.53) by $0.01. Omeros had revenue of $6.66 million for the quarter, compared to analysts’ estimates of $5.35 million. Analysts predict that Omeros will post ($1.12) EPS for the current year. The Seattle, WA-based company is engaged in discovering, developing and commercializing small-molecule and protein therapeutics for large-market as well as orphan indications targeting inflammation, coagulopathies and disorders of the central nervous system.
And GlobeImmune Inc. (Nasdaq) soared $1.41, or 145% for the week, to $2.38. However, there didn’t appear to be any recent news from or even about the company on the street to explain the stock’s big rally. GlobeImmune has 5.75 million shares outstanding, a market cap of $13.69 million and a 52-week price range of $0.72 to $10.95 per share. The Louisville, CO-based company, which focuses on developing therapeutic products for cancer and infectious diseases based on its proprietary Tarmogen platform, is developing therapeutic products, such as resected pancreas, non-small cell lung, colorectal, and medullary thyroid cancer, as well as multiple solid tumors.
But Celldex Therapeutics Inc. (Nasdaq) plunged $4.71, or 58%, to $3.48 and touched a 52-week low on the company’s announcement that it will be discontinuing a late-stage study on its lead pipeline candidate, Rintega. The company’s decision was based on the recommendation of an independent Data Safety and Monitoring Board (DSMB)--a pre-planned interim analysis of the study, which was being conducted in patients with newly diagnosed EGFRvIII-positive glioblastoma--that showed Rintega would not achieve statistical significance for overall survival, the primary endpoint. Needham, MA-based Celldex conducted multiple Phase 2 studies of Rintega in front-line glioblastoma patients which generally showed overall median survival in the range of 21 to 24 months. None of these studies included a control arm, so Celldex relied on data from a previously conducted study which showed similar, or “matched,” patients showing overall survival in the range of 14 to 16 months, depending on how the historical comparisons were made.
IPO SECTOR -- Corvus Pharmaceuticals Inc., a preclinical biotech developing checkpoint immunotherapies for solid tumors, announced terms for its initial public offering on Thursday. The Washington, DC-based company plans to raise $75 million by offering 4.7 million shares at a price range of $15 to $17. At the midpoint of the proposed range, Corvus Pharmaceuticals would command a fully diluted market value of $336 million. Corvus was founded in 2014. It plans to list on the Nasdaq under the symbol “CRVS.” Credit Suisse, Cowen & Company and Guggenheim Securities are the joint bookrunners on the deal. It is expected to price during the week of March 21, 2016.
Elsewhere, Sensus Healthcare Inc., which sells low-energy x-ray systems for treating non-melanoma skin cancer and keloids, announced terms for its IPO on Thursday. The Boca Raton, FL-based company plans to raise $20 million by offering 1.8 million shares at a price range of $10 to $12. At the midpoint of the proposed range, Sensus Healthcare would command a fully diluted market value of $95 million. Sensus was founded in 2010 and booked $10 million in sales for the 12 months ended December 31, 2015. It plans to list on the Nasdaq under the symbol “SRTS.” Joseph Gunnar & Co. and Feltl and Co. are the joint bookrunners on the deal. It is expected to price during the week of March 28, 2016.
March 7, 2016 ...
SUPREME COURT HEARS ARGUMENTS ON TEXAS ABORTION CLINICS CASE – A closely divided Supreme Court last week struggled with its biggest abortion case in years, with pivotal Justice Anthony Kennedy voicing concerns about a restrictive Texas law yet stopping short of signaling he would strike it down. The court’s four liberal justices indicated they believed the law, which imposes strict regulations on abortion doctors and clinic buildings, intrudes on a woman’s constitutional right to end a pregnancy established in a 1973 ruling. Conservative justices including Kennedy expressed doubt during the 85-minute oral argument about claims by abortion providers who asserted that the Republican-backed 2013 law forced numerous clinics to shut down. Kennedy at one point suggested sending the case back to a lower court to get further evidence on the law’s impact, including an assessment of the ability of existing Texas clinics to meet the demand for abortions. If there is evidence new clinics that meet the state’s regulations have increased capacity to perform abortions, it would show the law has provided a “beneficial effect,” Kennedy said. The outcome appeared to be in the hands of Kennedy, who often casts the deciding vote in close rulings. In past abortion cases, he has backed a fundamental right to abortion while supporting some restrictions.
The court was shorthanded with only eight justices following the Feb. 13 death of conservative Antonin Scalia, leaving the liberals and conservatives evenly divided. The best that supporters of the law could hope for would be a 4-4 split that would let stand a lower-court ruling that affirmed the Texas regulations but set no nationwide legal precedent on whether other states could enact similar measures. However, such a ruling--leaving the Texas law intact--could encourage other states with anti-abortion legislatures to pass similar laws. Kennedy gave little indication he would be willing to uphold the law in full, as his three conservative colleagues would be expected to do. If Kennedy sides with the court’s four liberals, the court could either send the case back to the lower court or strike it down. A ruling is due by the end of June. A decision sending the case to a lower court could mean the dispute might not be resolved for years. Some justices questioned the lack of evidence on why specific clinics closed after the law was passed, which could be addressed if new legal proceedings take place. Abortion providers assert that the law caused 22 of 41 clinics to close, but the state contests those numbers.
STUDIES SAY ZIKA KILLS CELLS KEY TO FETAL BRAIN DEVELOPMENT – There is “accumulating evidence” of a link between the Zika virus and two neurological disorders, microcephaly and Guillain-Barre syndrome, the World Health Organization said on Friday. The WHO’s Emergency Committee will meet this week to review “evolving information” and its recommendations on travel and trade in what is thought to be high season for transmission of the mosquito-borne virus in the southern hemisphere, it said. Dr. Bruce Aylward, WHO Executive Director for Outbreaks and Health Emergencies, said that recently published studies in the Lancet on the birth defect microcephaly and by the U.S. Centers for Disease Control (CDC) on Guillain-Barre had strengthened the case that the Zika virus is responsible. “Since the public health emergency of international concern was declared (by WHO) back in February, the evidence that there may be a causal relationship has continued to accumulate,” Aylward said. Also on Friday, scientists said the Zika virus is capable of quickly infecting and harming developing fetal brain cells in a study that provides insight into how the virus might cause microcephaly in fetuses exposed in the womb. The researchers said their study, published in the journal Cell Stem Cell, does not provide proof of a direct causal link between Zika and microcephaly, but it does identify where the virus may be inflicting the most damage in developing fetuses.
In another study, published in The New England Journal of Medicine, researchers found that 29% of women who had ultrasound examinations after testing positive for infection with the Zika virus had fetuses that suffered “grave outcomes.” They included fetal death, tiny heads, shrunken placentas and nerve damage that suggested blindness. “This is going to have a chilling effect,” said Dr. Anthony S. Fauci, the director of the National Institute of Allergy and Infectious Diseases. “Now there’s almost no doubt that Zika is the cause.” The small size of the study, which looked at 88 women at one clinic in Rio de Janeiro, was a limitation, Dr. Fauci added. From such a small sample, it is impossible to be certain how often fetal damage may occur in a much larger population. The new study does not answer an important question: whether Zika infections so mild that they produce no symptoms in the mother can damage a fetus. Doctors say four out of five Zika victims have no symptoms. When they do, the most common are rash, joint pain, red eyes and headaches. Still, although it was small, “this kind of study is the gold standard,” Dr. Fauci said.
TRACKING WASHINGTON – President Barack Obama said on Thursday that some 20 million Americans had become insured as a result of the Affordable Care Act, also known as Obamacare. The 20 million figure was an update to a September 2015 government estimate that 17.6 million Americans had been insured as a result of the Affordable Care Act. During a trip to Wisconsin to tout the program, Obama said he hoped Republicans would work with him during his final months in office to improve the law, which they have tried unsuccessfully to repeal. “Today I can announce that thanks to the law, 20 million more Americans now know the security of health insurance,” Obama told a crowd in Milwaukee after being introduced by a local man who said the law saved his life. The man, Brent Brown, said he was a Republican who had not voted for the Democratic president. The law was passed in 2010 and Republicans have sought to repeal it ever since. The U.S. Department of Health and Human Services said the estimates Obama referenced included coverage from the expansion of the Medicaid program, health insurance marketplaces, and provisions that allowed young people to stay on their parents’ private insurance plans longer.
Separately, the Centers for Medicare and Medicaid Services (CMS) announced Thursday it reached its goal of tying 30% of Medicare payments to value, instead of volume, with 10 months left in 2016. The 30% commitment, which was laid out last year, marks the most dramatic shift in Medicare payments in the program’s 50-year history. It’s also the first time the Obama administration--or any administration--has set a target on value-based payments. Instead of simply paying doctors for services, CMS now encourages public and private sector healthcare providers to base their payments on quality measures, such as patient outcome and access to care.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration has approved Medtronic PLC’s (Dublin IRL) Specify SureScan MRI surgical leads, as a part of the company’s full suite of implantable spinal cord stimulation systems for the treatment of chronic back and/or limb pain. Medtronic currently is the only company that provides a complete portfolio of SCS systems that are FDA-cleared for full-body MRI, the device titan says. The new leads will be available later this month.
Elsewhere, the FDA has placed a clinical hold on Cara Therapeutics Inc.’s (Shelton CT) Phase 3 trial of I.V. CR845 for postoperative pain because elevated serum sodium levels were seen in some patients. According to Cara, the decision was based on a protocol-specified stopping rule based on levels greater than 150 mmol/L. Four patients in the highest dose group showed transient serum sodium levels equal to or greater than 150 mmol/L. The drugmaker noted that the patients were asymptomatic and their sodium levels returned to normal. Company CEO Derek Chalmers says Cara is working with the FDA to review patient safety data and resolve the issue. Cara added that the independent data monitoring committee also is reviewing the data.
Six new drugs scored wins at the European Medicines Agency, scooping up recommendations for marketing authorization from the Committee for Medicinal Products for Human Use. Two hemophilia B drugs to treat bleeding were among the victors: Biogen Inc.’s (Weston MA) Alprolix and CSL Behring’s (King of Prussia PA) Idelvion. Both drugs have orphan designations. Additionally, Taiho Oncology’s (Princeton NJ) Lonsurf for the treatment of metastatic colorectal cancer, Gilead Inc.’s (Foster City CA) Descovy for the treatment of HIV infection and Eli Lilly’s (Indianapolis IN) Taltz for the treatment of plaque psoriasis nabbed positive opinions from the committee. Lonsurf is the only product with FDA approval.
And the FDA has approved Gilead Sciences Inc.’s (Foster City CA) fixed-dose HIV combination pill Odefsey containing emtricitabine 200 mg, rilpivirine 25 mg, and tenofovir alafenamide (TAF; 25 mg), the company announced. Odefsey is Gilead’s second TAF-based regimen to receive FDA approval “and represents the smallest pill of any single tablet regimen for the treatment of HIV,” the company said.
MEDICAL STOCK SPOTLIGHT -- InVivo Therapeutics Holdings Corp. (Nasdaq) led advancing issues, leaping $2.90, or 63% for the week, to $7.54. The biotech company working to develop treatments for spinal cord injuries reported a net loss of $33.3 million, or $1.26 per share, during the 12 months ended Dec. 31, expanding on an $18.3 million and $0.83 per share net loss during the prior-year period. Excluding restructuring costs and other one-time items, the company lost $22.5 million, or $0.85 per share, which compares with an adjusted net loss of $17.7 million and $0.80 per share, during 2014. The company did not report any revenues during 2015, as expected. The stock of InVivo Therapeutics registered an increase of 6.53% in short interest. Its total short interest was 3.40 million shares in March as published by FINRA (Financial Industry Regulatory Authority). The Cambridge, MA-based company is developing a Neuro-Spinal Scaffold--an investigational bioresorbable polymer scaffold for implantation at the site of injury within a spinal cord contusion.
Elsewhere, Advaxis Inc. (Nasdaq) shot up $2.84, or 49%, to $8.64 after saying that data from a Phase 2 study of its lead Lm immunotherapy candidate in HPV-associated head and neck cancer, axalimogene filolisbac (AXAL), has been selected as a late-breaker poster presentation at the American Association for Cancer Research (AACR) Annual Meeting. According to AACR’s selection criteria, late-breaking abstracts demonstrate highly significant and timely findings in any area of cancer research that were not available at the time of the regular abstract deadline. Additionally, only abstracts deemed to be of high scientific priority are accepted for presentation. Princeton, NJ-based Advaxis develops therapeutic cancer vaccines targeting cervical, head & neck, breast, prostate, and other cancers.
And CorMedix Inc. (NYSE) vaulted 45% to $2.61 after brokerage FBR Capital initiated coverage with an Outperform rating and a price target of $7.00. Analyst Ed White commented, “The company’s lead product, Neutrolin, is approved for marketing in several European and Middle Eastern countries and is in Phase 3 development in the U.S. for the prevention of catheter-related bloodstream infections (CRBSIs). Neutrolin is a catheter lock solution that aims to prevent the triple threat of infection, thrombosis, and biofilm formation. There are currently no FDA-approved products for the prevention of CRBSIs in the patient populations that CorMedix is targeting...We think that there is a large addressable market with an unmet medical need for Neutrolin...The FDA has designated Neutrolin a Qualified Infectious Disease Product, which allows for priority review and frequent contact with the FDA.” Bridgewater, NJ-based CorMedix is a biopharmaceutical company that seeks to in-license, develop, and commercialize therapeutic products for the treatment of cardiac and renal dysfunction.
But Vitae Pharmaceuticals Inc. (NYSE) plunged $4.47, or 49%, to $4.69 after the pharmaceutical company reported disappointing fourth-quarter fiscal 2015 earnings and was also downgraded at Stifel Nicolaus. The research firm downgraded the stock from Buy to Hold on the company’s enrollment for the VTP-43742 trial for its psoriasis drug, which came in below expectations. Stifel believes that the company “may have encountered some type of tox issues.” Fort Washington, PA-based Vitae reported a loss of $0.52 per share, which managed to beat the consensus estimate of $0.62 by $0.10. Net revenue in the quarter was $92,091, which missed the Street’s estimate of $120,000. In its earnings call, the company reported that it has advanced to the second stage of a multiple ascending dose, clinical proof-of-concept trial of VTP-43742 in psoriatic patients. Currently, it is analyzing the data and expects to announce top-line clinical efficacy and preliminary biomarker results by the end of first quarter of calendar year 2016.
IPO SECTOR -- Syndax Pharmaceuticals Inc. (Waltham MA), which is developing a therapy that enhances “checkpoint” immuno-oncology drugs, raised $53 million by offering 4.4 million shares at $12, below the hoped-for range of $14 to $16. The checkpoint approach works to release the “brakes” that tumor cells can place on immune cells, thereby allowing the immune system to once again mount a response to the tumor. Several weeks ago Syndax struck a deal to partner its lead drug entinostat--designed to boost an immune system assault on cancer cells--with avelumab, the PD-L1 drug from Pfizer Inc. and Merck KGaA. Syndax had already partnered with Roche Holding AG’s checkpoint inhibitor atezolizumab as well as Merck & Co.’s Keytruda. Entinostat is currently in Phase 3 trials for HR-positive breast cancer and won the FDA’s breakthrough therapy designation in 2013, which could provide an inside track with regulators.
Syndax Pharmaceuticals was founded in 2005 and booked $1 million in sales for the 12 months ended December 31, 2015. It lists on the Nasdaq under the symbol “SNDX.” Morgan Stanley and Citi are the joint bookrunners on the deal. Shares closed the week off 15 cents at $11.85.
February 29, 2016 ...
SENATE CONFIRMS OBAMA'S PICK FOR FDA COMMISSIONER – The Senate approved President Obama’s pick to lead the Food and Drug Administration last week, easily overcoming loud protests from lawmakers who used the nomination to criticize the agency’s response to the prescription opioid and heroin epidemic that is ravaging the U.S. Robert. M. Califf was confirmed, 89-4, with support from powerful Republicans, even as the Senate descends into a bitter feud over how and when to replace late Supreme Court Justice Antonin Scalia. Mr. Obama had selected Dr. Califf, a cardiologist and current No. 2 at the FDA, in September, and he breezed through a committee vote in January. “He has made clear he will continue to prioritize independence at the FDA as the commissioner and always put science over politics,” said Sen. Patty Murray of Washington, the top Democrat on the Senate Health Committee. Yet several lawmakers raised questions about his long tenure at Duke University (Durham NC), where he led a clinical research center that received a large share of its funding from the pharmaceutical industry. Democratic presidential contender Sen. Bernard Sanders of Vermont, also questioned his work as a consultant to drug companies, saying he wouldn’t rein in skyrocketing costs, while others said he was ill-equipped to rein in and regulate the approval of painkiller drugs that are fueling the opioid scourge across America.
Though Sen. Sanders missed Wednesday’s vote, he expressed his “disappointment” with Dr. Califf’s confirmation from the campaign trail in South Carolina. “At a time when one in five Americans cannot afford to pay for the medications that have been prescribed to them, we have got to do everything we can to lower the skyrocketing price of prescription drugs,” he said. Sens. Edward J. Markey, Massachusetts Democrat, and Joe Manchin III, West Virginia Democrat, were the most vocal protesters, using up floor time with heart-rending stories about families who were torn apart by the opioid crisis. They said Dr. Califf’s industry ties made him a poor choice to “shake up” the agency, which they accused of rubber-stamping new painkillers without the input of outside experts and erring in its decision to approve use of OxyContin by children as young as 11. President Obama set aside $1 billion in his fiscal 2017 budget request to fight the opioid painkiller and heroin epidemic--a key priority for Senate Republicans locked in reelection battles in New Hampshire, Ohio and other states.
CDC REPORTS CONFIRMED CASES OF ZIKA IN PREGNANT AMERICAN TRAVELERS – Nine American women who traveled to Zika-affected countries while pregnant have tested positive for the virus, the Centers for Disease Control reported. Of the nine, one gave birth to an infant with severe microcephaly, an affliction marked by an abnormally small head that scientists think may be linked to the disease. At least one of two women who terminated their pregnancy did so after brain abnormalities were detected, CDC officials said Friday, while two other pregnancies ended spontaneously in the first trimester. The CDC cautioned it's too soon to say whether Zika caused the birth defects or miscarriages. The first official report on Zika among pregnant U.S. travelers adds urgency to warnings last month that pregnant women should delay travel to areas of Latin America and the Caribbean where the mosquito-borne virus is rapidly spreading. Zika is circulating in at least 31 countries and territories in the Americas since it was detected in Brazil in May 2015, according to the World Health Organization. Brazil and French Polynesia are the only countries so far to report increases in microcephaly. Zika could cost the region $3.5 billion in 2016 through lost travel and tourism, as well as economic and medical costs of the illness, according to an initial estimate the World Bank published Feb. 18. That’s 0.06% of the GDP of Latin America and the Caribbean.
The links between Zika and microcephaly or other negative pregnancy outcomes haven’t been definitively established, but “the evidence for this is getting stronger by the day,” CDC Director Tom Frieden said. The CDC also reported six cases of women who acquired Zika after having sex with men who were sick with the virus or shortly after their symptoms resolved. “We did not anticipate that we would see this many sexually transmitted cases of Zika,” Frieden said. The CDC has advised couples in which men have been exposed to Zika to use condoms or abstain from sex during pregnancy. It’s also published advice for pregnant women. Scientists are conducting studies attempting to confirm the link between contracting Zika while pregnant and giving birth to an infant with microcephaly. If the virus does cause the birth defects, officials would expect to see a cluster of microcephaly in Colombia in June, based on the pattern of how Zika spread from Brazil. Any link between Zika and pregnancy loss would be harder to prove, because it’s a relatively common event. The CDC is currently investigating 10 other suspected cases of Zika in pregnant women that have not yet been confirmed by lab tests.
TRACKING WASHINGTON – Two leading U.S. House Democrats introduced legislation last week intended to curb corporate tax inversion deals by preventing companies from lowering the effective tax rates of U.S. business operations after moving their headquarters overseas. A bill, authored by the top Democrats on the House Ways and Means and Budget Committees, would limit the ability of newly inverted companies to engage in a tax strategy called “earnings stripping,” which the lawmakers said often follows an inversion deal. Corporate inversions, an issue for anti-establishment voters in this year’s presidential and congressional election campaigns, typically occur when a U.S. company buys a foreign firm and then relocates its headquarters to the foreign company’s home country, if only on paper, in a bid to reduce overall taxes. Leading the list of tax inversions in the healthcare sector thought by some to be abusive is Pfizer Inc.’s (New York City) $160-billion merger with the Irish drug company Allergan PLC (Dublin), currently pending. Others include Mylan NV (Amsterdam) acquisition of Abbott Laboratories Inc.’s (Abbott Park IL) generics unit in the Netherlands, and Medtronic PLC (Dublin) merging with Ireland’s Covidien.
The Obama administration has taken policy steps to discourage such deals. But only Congress can eliminate the option through tax reform, a prospect unlikely until after the Nov. 8 election. “We cannot continue to allow companies to shift their tax obligations onto American workers and families simply by changing their mailing address,” said Representative Chris Van Hollen of Maryland, senior Democrat on the House Budget Committee. Van Hollen introduced the “Stop Corporate Earnings Stripping Act of 2016” with Representative Sander Levin of Michigan, the senior Democrat on the House Ways and Means Committee. The lawmakers said newly inverted companies have stripped their U.S. operations of taxable earnings by loading them with debt that produces tax-deductible interest payments. The payments are made to the new foreign parent or another foreign affiliate as interest income that often pays a reduced or zero tax rate. The new legislation would reduce or eliminate financial thresholds that allow companies to pursue the earnings-stripping strategy after inversion.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration has extended the PDUFA (Prescription Drug User Fee Act) date on Titan Pharmaceuticals Inc.’ (S. San Francisco) Probuphine NDA (New Drug Application) for maintenance treatment of opioid addiction. The new action date for the subdermal buprenorphine implant was moved from Feb. 27 to May 27. Following a Psychopharmacologic Advisory Committee meeting in January, the FDA requested additional changes to the Risk Evaluation and Mitigation Strategy portion of the NDA, which the agency said qualified as a major amendment to the NDA. The advisory committee recommended approval of the opioid dependence implant.
Elsewhere, the U.K.’s National Institute for Health and Care Excellence (NICE) has provisionally recommended Merck & Co.’s (Kenilworth NJ) ezetimibe (Ezetrol) for use on its own for adults with primary hypercholesterolemia, when a statin is considered inappropriate or is not tolerated. Ezetimibe is a cholesterol-absorption inhibitor that blocks the intestinal absorption of dietary and biliary cholesterol and related plant sterols, without affecting the uptake of triglycerides or fat-soluble vitamins. Because of this mechanism of action, ezetimibe can be combined with a statin to provide either a complementary or an alternative mode of cholesterol reduction.
The FDA issued a “refusal to file letter” to PTC Therapeutics Inc. (S. Plainfield NJ) for Translarna (ataluren), its candidate for the treatment of nonsense mutation Duchenne muscular dystrophy. The agency determined that “the application was not sufficiently complete to permit a substantive review.” PTC’s stock thereafter plunged 72% for the week to $7.99. Ataluren failed its Phase 3 study last fall when the drug fell short of proving that it could help the average patient walk significantly further than a placebo. But PTC believes it can still make a case with regulators that the drug could work for subpopulations, hoping to build on a Phase 2b trial that also failed.
And the European Commission approved Bayer AG’s (Leverkusen DEU) hemophilia A drug Kovaltry for the treatment of patients from all age groups, the company said. Kovaltry will complement Bayer’s existing hemophilia business, with Kogenate being the most important product. Hemophilia affects about 400,000 people around the world and is a mainly inherited disorder in which one of the proteins needed to form blood clots is missing or reduced.
MEDICAL STOCK SPOTLIGHT -- Editas Medicine Inc. (Nasdaq) led advancing issues, soaring $9.01, or 49%, to $27.49, and still has a $35 target, or 27% above Friday’s closing price. The 6 months technical chart setup indicates low risk for the $1+ billion company. The gap was reported on Feb. 27 by Barchart.com. If the $35 price target is reached, the company will be worth an additional $282.80 million. Cambridge, MA-based Editas Medicine has risen 6.00% since January 28, 2016 and is uptrending. It has outperformed the S&P 500 by 13.7% this year. Editas Medicine provides genetic engineering services. The company offers genome editing technology to create a platform for the development of potential human therapeutics.
Elsewhere, Presbia PLC (Nasdaq) surged $1.44, or 40%, to $5.00. The Irvine, CA-based company has earned a consensus broker rating score of 1.00 (Strong Buy) from Jefferies & Co. Analysts have set a 1-year consensus price target of $12.00 for the company and are predicting it will post ($0.43) earnings per share for the current quarter, according to Zacks Investment Research. Presbia has a 12-month low of $2.94 and a 12-month high of $9.38. Zacks also upgraded the company from a “Hold” rating to a “Buy” rating. Presbia is an ophthalmic device company that has developed and is marketing an optical lens implant for treating presbyopia, the age-related loss of the ability to focus on near objects. Its lens, which it refers to as its “microlens,” is a miniature lens designed to be surgically implanted in a patient’s eye.
And Tandem Diabetes Care Inc. (Nasdaq) shot up $2.36, or 35%, to $9.18 after Zacks Investment Research upgraded shares from a “Sell” rating to a “Hold” rating in a research note released on Thursday. According to Zacks, Tandem Diabetes Care is a medical device company that designs, develops, and commercializes products for people with insulin-dependent diabetes. Its products include the t:slim and t:flex Insulin Delivery System, designed for convenience and ease of use, according to the San Diego-based company. Tandem Diabetes is a medical device company engaged in the designing, development and commercialization of products for people with insulin-dependent diabetes.
But Peregrine Pharmaceuticals Inc. (Nasdaq) plunged 59% to $0.41 after announcing it is discontinuing its Phase 3 “SUNRISE” trial of bavituximab in patients with previously treated locally advanced or metastatic lung cancer. The Tustin, CA-based company’s decision to stop the trial was based on the recommendation of the study's Independent Data Monitoring Committee following a pre-specified interim analysis. Results of the analysis demonstrated that the bavituximab plus docetaxel group did not show a sufficient improvement in overall survival as compared to the docetaxel group to warrant continuation of the trial. The interim analysis showed that the bavituximab combination group is performing as expected according to the original trial assumptions in terms of overall survival, while the docetaxel group is dramatically outperforming overall survival expectations.
IPO SECTOR -- Syndax Pharmaceuticals Inc. (Waltham MA), which is developing a therapy that enhances checkpoint immuno-oncology drugs, announced terms for its IPO. The company plans to raise $66 million by offering 4.4 million shares at a price range of $14 to $16. At the midpoint of the proposed range, Syndax Pharmaceuticals would command a fully diluted market value of $285 million. The company previously attempted to raise $60 million in a June 2014 IPO. Several weeks ago Syndax struck a deal to partner its lead drug entinostat--designed to boost an immune system assault on cancer cells--with avelumab, the PD-L1 drug from Pfizer Inc. and Merck KGaA. Syndax had already partnered with Roche Holding AG’s checkpoint inhibitor atezolizumab as well as Merck & Co.’s Keytruda. Entinostat is currently in Phase 3 trials for HR-positive breast cancer and won the FDA’s breakthrough therapy designation in 2013, which could provide an inside track with regulators. Syndax Pharmaceuticals was founded in 2005 and booked $1 million in sales for the 12 months ended December 31, 2015. It plans to list on the Nasdaq under the symbol “SNDX.” Morgan Stanley and Citi are the joint bookrunners on the deal. It is expected to price this week.
February 22, 2016 ...
WHO SAYS EVIDENCE OF ZIKA LINK WITH MICROCEPHALY INCREASING – Evidence is growing of a link between the Zika virus and potential birth defects in babies, the World Health Organization (Geneva) said on Friday, though this could take four to six months to prove. In autopsies, doctors in Brazil have found evidence of the virus in the brains of babies born with the neurological disorder microcephaly, said the director of the WHO’s outbreaks and health emergencies department, Dr. Bruce Aylward. “This does not still prove causation, but it is an increasing accumulation of evidence in terms of the temporal–geographic association of the virus and the consequences that we are worried about,” he told a news briefing. “We are seeing a lack of other explanatory causes.” Top U.S. and Brazilian medical experts met on Thursday to launch a research partnership to find a vaccine against the Zika virus that has spread rapidly since it first appeared in the Americas last year. Brazilian Health Minister Marcelo Castro said the experts would also pool resources and knowledge during the two-day meeting to develop better methods to test people for Zika. Brazil, where the virus first appeared in the Americas, is scrambling to contain the Zika outbreak that threatens attendance at the Olympic Games in Rio de Janeiro in August. Officials there have advised pregnant women to stay at home.
Researchers from the U.S. National Institutes of Health and the Centers for Disease Control and Prevention, along with experts from the Food and Drug Administration and the Department of Health and Human Services met with counterparts from Brazil’s leading biomedical research institutions. “We want to leave here with more direction and coordination of the various research efforts underway in different areas,” said Paulo Gadelha, head of the Fiocruz public health research center. While the ultimate goal is a vaccine, there is a lot of work to be done and shared on how the virus operates, he said. Among the issues they face is the need to agree on the evidence that Zika is causing the hundreds of confirmed cases in Brazil of microcephaly and other neurological diseases. Brazil’s Health Ministry announced last Wednesday that it was considering most of the 508 confirmed cases of microcephaly in the country to be linked to the Zika outbreak.
PFIZER UNIT TO PAY $785 MILLION IN MEDICAID REBATE SETTLEMENT – Pfizer Inc. (New York) swung to a fourth-quarter financial loss, instead of a modest profit, as a result of a just-announced charge to settle a long-running federal case over reimbursements for its former blockbuster heartburn pill, Protonix. Pfizer, which is planning a mega-acquisition of Irish drugmaker Allergan PLC (Dublin IRL) meant to reduce Pfizer’s corporate tax bill, said that it has a tentative agreement to pay the federal government $784.6 million. That would resolve litigation over the calculation of rebates Wyeth paid the government for Medicaid purchases of its heartburn treatment. The agreement must be approved by U.S. District Judge Douglas P. Woodlock in Massachusetts, Pfizer said. Pfizer said it is charging the payment to its fourth-quarter results, which it restated last Tuesday. That left it with a loss of $172 million, or 3 cents per share, in the last quarter, compared with a net profit of $613 million, or 10 cents per share, reported on Feb. 2. For all of 2015, Pfizer is now reporting net income of $6.96 billion, or $1.11 per share, down from $7.75 billion, or $1.24 per share, reported three weeks ago. Pfizer said its adjusted results for the quarter will not change. Protonix heals acid reflux damage to the esophagus. Cheaper generic versions of the drug, known as pantoprazole, came on the market about five years ago and around a dozen are available.
The settlement would resolve cases pending in federal court that centered on Wyeth’s practices related to rebates on Protonix sales between 2001 and 2006, when its patent, and market exclusivity, were still in force. Pfizer bought Wyeth in the fall of 2009. Wyeth is not admitting any liability, which is typical in the many settlements drugmakers reach with federal prosecutors for allegedly overcharging government health programs and other misconduct. A few years ago, Pfizer paid $55 million to resolve allegations that Wyeth promoted Protonix for uses not approved by the Food and Drug Administration. Pfizer expects to wrap up its $160 billion purchase of Allergan in the second half of this year, then move Pfizer’s official headquarters for tax purposes from New York to Allergan’s base in Dublin. The strategy, called a tax inversion, would sharply decrease Pfizer’s tax bill from its current U.S. tax rates, though the drugmaker’s operational headquarters would remain in New York. Pfizer closed the week up 13 cents at $29.48.
TRACKING WASHINGTON – The Food and Drug Administration is recommending U.S. blood banks refuse donations from people who have traveled in the previous four weeks to countries where the Zika virus is active, part of guidelines meant to protect the blood supply from the mosquito-borne virus. The agency is also recommending establishments turn away donors who may have had sexual contact with someone who has traveled to a Zika-affected area in the last three months. The recommendations follow similar measures taken earlier this month by the Red Cross and the American Association of Blood Banks, which have asked travelers to Zika outbreak countries to wait at least 28 days before donating blood. While FDA officials stressed that there have been no reports of Zika entering the U.S. blood supply, they said transmission through blood is a real possibility. “Based on the best available evidence, we believe the new recommendations will help reduce the risk of collecting blood and blood components from donors who may be infected with the Zika virus,” said FDA biologics director Dr. Peter Marks, in a statement. Canadian blood officials have already taken similar steps, deferring donations from people who have travelled outside of Canada, the continental United States and Europe.
Separately, Medicare pays hospice agencies to care for patients who are close to death. For some beneficiaries of the taxpayer-funded program, hospice has become a way of life, according to the Wall Street Journal. Between 2005 and 2013, about 107,000 patients received hospice care for an average of nearly 1,000 days spread out over four or more calendar years, according to Journal analysis of Medicare billing records. They cost Medicare 14% of its overall hospice spending, even though they accounted for just 1.3% of its hospice patients. Medicare’s hospice program, which has been around for 33 years, is supposed to be only for patients whom doctors certify are likely to die within six months, or about 180 days. Today, care is routinely being extended not only to those with terminal cancer--the program’s original focus--but to patients with an array of ailments, including dementia, whose declines can take years. The shift has fueled a steady increase in Medicare hospice spending, which roughly doubled over the nine years examined by the Journal, to about $15 billion in 2013. To explain the growth of hospice spending, the Journal searched about 35 million billing records for patients who used the service in four different years--a group that includes many who spent multiple long periods in hospice care.
FDA/EMA ROUNDUP -- Novartis AG (Basel CHE) received breakthrough therapy designation from the U.S. Food and Drug Administration for an investigational treatment of newly-diagnosed FLT3-mutated acute myeloid leukemia, the Swiss drugmaker said on Friday. Patients who received PKC412, also called midostaurin, combined with standard induction and consolidation chemotherapy experienced what Novartis called “a significant improvement in overall survival.” With the announcement, Novartis’s drug discovery program keeps pace with cross-town rival Roche Holding AG, which the week prior won FDA breakthrough therapy designation for its ocrelizumab investigational therapy for primary progressive multiple sclerosis.
Elsewhere, the FDA approved Belgian drugmaker UCB SA’s (Brussels) drug as an add-on therapy to treat partial seizures caused by epilepsy. The FDA approval comes nearly two months after European health regulators recommended approval of the drug, Briviact. Briviact has been approved for use in epileptic patients who are 16 years and older. The drugmaker has been active in epilepsy drug research and development for over 20 years. Approximately 50 million people worldwide have epilepsy, making it one of the most common neurological diseases globally, according to the World Health Organization.
The FDA granted breakthrough therapy designation to AstraZeneca PLC’s biggest new drug hope durvalumab as a treatment in bladder cancer, the drugmaker said. The experimental medicine is a so-called PD-L1 therapy that fights cancer by boosting the immune system. Breakthrough therapy designation expedites the development and review of medicines intended to treat serious or life-threatening diseases. Durvalumab is also being developed as a treatment for lung, head and neck, gastric, pancreatic, liver and blood cancers. It faces competition from rival products made by Bristol-Myers Squibb Co., Merck & Co. and Roche Holding AG.
And the FDA granted an approval to Medtronic PLC (Dublin) for its deep brain stimulation therapy for people with Parkinson’s with recent onset of motor complications. “This decision by the FDA is significant in that Medtronic Deep Brain Stimulation (DBS) Therapy may be considered before the symptoms and complications of disease becomes severe,” according to Mahlon DeLong, the W.P. Timmie professor of neurology at Emory University School of Medicine in Atlanta. As a result of the FDA’s action, Medtronic DBS therapy may be used on patients who have had Parkinson’s for at least four years, along with recent onset of motor complications, or complications of longer duration that are not adequately controlled with medication.
MEDICAL STOCK SPOTLIGHT -- Ocular Therapeutix Inc. (Nasdaq) led advancing issues, soaring $3.35, or 60% over the week, to $8.94. Morgan Stanley upgraded Ocular from equal-weight to overweight ahead of news for its drug OTX-TP and a viable path forward. The brokerage maintained its $15 price target with an “in-line” industry view. Morgan Stanley analysts wrote, “We are upgrading Ocular after management announced a viable pathway forward that appears to have a much lower bar than expected by investors. We expect shares to react favorably to the news.” Morgan noted that the FDA gave Ocular permission to conduct a Phase 3 program for OTX-TP in glaucoma patients. With the drug in Phase 3 clinical trials, Ocular has a chance to prove the drug’s safety and efficacy on humans, one of the last regulatory hurdles before the drug can be marketed. If the drug proves to be successful, Ocular can achieve significant revenue growth and profitability, according to Morgan.
Elsewhere, Spark Therapeutics Inc. (Nasdaq) leaped $9.58, or 39%, to $34.02 after Zacks Investment Research upgraded shares from a hold rating to a buy rating in a research note published on Thursday. The firm currently has a $37.00 target price on the stock. Spark Therapeutics focuses on the development of gene-therapy products. The Philadelphia-based company’s product candidates consist of SPK-RPE65, SPK-CHM, and SPK-FIX, which are in different clinical phases for the treatment of a range of debilitating genetic diseases including inherited retinal dystrophies, hematologic disorders and neurodegenerative diseases.
And Regulus Therapeutics LLC (Nasdaq) surged $2.04, or 35%, to $7.88 after the company released positive interim results for its experimental hepatitis C treatment in an ongoing mid-stage study. Per the press release, this injected drug (known as RG-101) reportedly showed the ability to reduce the average treatment duration in patients taking all-oral medications such as Gilead Sciences Inc.’s Harvoni, Johnson & Johnson’s Olysio or Bristol-Myers Squibb Co.’s Daklinza by a noteworthy eight weeks. The objective in the evolution of so-called next-generation hepatitis C medications is to shorten the average treatment duration from 12 weeks to just four weeks across the varied patient populations. San Diego, CA-based Regulus is now planning on accelerating the development of RG-101 following these highly positive interim data.
But Tonix Pharmaceuticals Holding Corp. (Nasdaq) led bears, plummeting $1.43, or 35%, to $2.61 following the release of top-line results from a Phase 2 clinical study. The New York City-based company announced top-line results for its proof-of-concept clinical study of TNX-201 (dexisometheptene mucate) in episodic, tension-type headache. Tonix determined that the study did not achieve its primary efficacy endpoint of participants achieving headache pain-free status at two hours after dosing. At the same time, the study also did not achieve two other primary endpoints, which were the proportion of participants with at least a 70% reduction in pain from baseline on the Visual Analog Scale (VAS) at two hours after dosing, and an increase of the mean change from baseline to two hours post-dose in the VAS score. Investors were not happy with these results.
IPO SECTOR -- February has been one of the most restrained months for U.S. initial public offerings with the pricing of only largely pre-sold deals. Six operating companies have postponed IPOs. And as of last week, 75% of 2015 IPOs were trading below issue. Meanwhile, the private market continues to be active. Notable recent private funding rounds include drug developer Apellis Pharmaceuticals Inc. (Crestwood KY), which secured $47 million in Series D funding from Cormorant, Hillhouse and venBio. The company withdrew its $86 million IPO two weeks ago. Apellis, which is developing a novel protein inhibitor for autoimmune and inflammatory diseases, originally filed in October 2015 with a proposed deal size of $86 million. As of September 30, 2015, the company had $10 million cash and an accumulated deficit of $63 million. The company was founded in 2009 and had planned to list on the Nasdaq under the symbol “APLS.” Citi, Barclays and Leerink Partners were set to be the joint bookrunners on the deal. ** ARMO BioSciences Inc. (Redwood City CA) closed $50 million in Series C funding. The investors included Kleiner Perkins Caufield & Byers, OrbiMed, DAG Ventures, NanoDimension, HBM Healthcare Investments, GV (formerly Google Ventures), Celgene Corp., Industrial Investors Group and certain private investment funds advised by Clough Capital Partners LP. ARMO intends to use the proceeds from the financing to support the clinical development of its lead product candidate, AM0010 for the treatment of advanced solid tumors, and its pipeline of immunotherapies, including cytokines and an anti-Programmed Cell Death Protein (anti-PD-1) monoclonal antibody checkpoint inhibitor. ARMO BioSciences develops immunotherapies that treat cancer, fibrosis, hypercholesterolemia/atherosclerosis and inflammatory diseases.
February 15, 2016 ...
COMMERCIAL TEST FOR ZIKA VIRUS COULD BE AVAILABLE WITHIN WEEKS – Suspected links between the Zika virus and two neurological disorders, microcephaly in babies and Guillain-Barre syndrome, should be confirmed within weeks, the World Health Organization (WHO) said on Friday. A sharp increase in birth defects in Brazil has triggered a global health emergency over the mosquito-borne virus, which had previously been viewed as a relatively mild illness, and has spurred a race to develop a vaccine and better diagnostic tests. The WHO said U.S. government scientists and an Indian biotechnology firm were currently front-runners in the race to develop a vaccine. The U.N. agency for the first time advised pregnant women to consider delaying travel to Zika-infected areas. Brazil, center of the Zika outbreak that has spread to more than 30 countries, is hosting the Rio 2016 Olympics, an event expected to draw hundreds of thousands of athletes, officials and spectators. “It seems indeed that the link with Zika (and microcephaly) is becoming more and more probable, so I think that we need a few more weeks and a few more studies to have this straight,” Marie-Paule Kieny, WHO Assistant Director-General for Health Systems and Innovation, told a news briefing. Studies of pregnant Latin American women who are confirmed as having had the Zika virus and due to deliver their babies soon should yield evidence, Kieny said.
Kieny said areas hit by the Zika virus had also seen increased cases of the neurological disease Guillain-Barre, adding: “The direct causality has still to be demonstrated but the association in time and in location seems to be clear.” Guillain-Barre syndrome, in which the body’s immune system attacks part of the nervous system, causes gradual weakness in the legs, arms and upper body and sometimes total paralysis. Although Zika is predominantly spread by mosquito, scientists are looking into possible transmission by blood and sexual contact, which would complicate efforts to contain the outbreak. On vaccines, Kieny said it would take at least 18 months to start large-scale clinical trials of potential preventative shots. “Two vaccine candidates seem to be more advanced: a DNA vaccine from the U.S. National Institutes of Health (NIH) and an inactivated product from Bharat Biotech Ltd. in India, she said. The NIH is working on a DNA-based vaccine that uses the same approach as one being developed for West Nile virus.
MYLAN TO BUY SWEDISH DRUGMAKER MEDA IN $7.2-BILLION DEAL – Investors reeled Thursday after pharmaceutical giant Mylan NV (Amsterdam) announced a deal to acquire Swedish drug company Meda AB for cash and stock worth $7.2 billion. The combined company would have more than 2,000 products, including brand-name drugs, generics and over-the-counter medicines, in more than 165 countries. One of Mylan’s best-known products is the EpiPen, an epinephrine injection to treat anaphylaxis, a potentially life-threatening allergic reaction. After the deal was revealed, shares of Mylan traded in the U.S. plunged 10% for the week to $41.83. Analysts and experts said shareholders balked at the price. “It’s a pretty sizable premium they’re paying,” since Meda’s sales and earnings before interest, taxes, depreciation and amortization are expected to grow only 3% and 5% annually over the next several years, says Jeffrey Loo, a healthcare equity research analyst at S&P Global Market Intelligence. “The growth rate for Meda is not that exciting.” Mylan is targeting Meda--which had $2.3 billion in revenue and about 4,500 employees in 2015--after its recent $26 billion attempt to take over generic drug manufacturer Perrigo Co. Plc (Dublin IRL) collapsed. “Investors are saying they don’t want $7 billion taken out of (Mylan’s) coffers,” adds David Dawley, director of the Robbins Center for Global Business and Strategy at West Virginia University.
Dawley added that investors may also be worried because 70% of cross-border acquisitions don’t succeed. Meanwhile, Meda stockholders cheered the agreement, driving up shares traded in Stockholm 59% for the week to 143.50 Swedish kroner. Meda’s largest shareholders, Stena Sessan Rederi AB and Fidim Srl, which collectively own 30% of the company, have already agreed to accept the deal. General shareholders will be given the chance to vote. Mylan and Meda hope to complete the deal by August, and the combined company would have $11.8 billion in revenue based on 2015 results and $3.8 billion in earnings before taxes, interest, depreciation and amortization. Mylan said the deal would provide a critical route into the over-the-counter drug market and certain foreign markets where the company does not currently sell its products. ”We believe Mylan is uniquely positioned in the global pharmaceutical space today, with very strong fundamentals and a long and successful track record of executing on all previous acquisitions and organic opportunities,” Mylan Executive Chairman Robert Coury said in a statement.
TRACKING WASHINGTON – The Obama administration is asking Congress for $1.8 billion to respond to the Zika virus abroad and prepare for it at home, officials said. “We must work aggressively to investigate these outbreaks, and mitigate, to the best extent possible, the spread of the virus,” the administration said in a statement. It said it has not yet seen a case of Zika transmitted directly within the continental United States, but with the approach of spring and summer mosquito seasons, it wants to be prepared to fight the disease. Following the report, the Centers for Disease Control and Prevention announced that its emergency operations center in Atlanta was on its highest level of alert. More than 300 CDC staff are working in the command center to monitor and coordinate the Zika response. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said he did not expect a major outbreak in the United States, noting that similar viruses such as dengue fever have been controlled in certain regions of the country such as Texas and Florida. But he said: “We never assume the least. We always assume the worst.” The CDC money would be used to reduce transmission in the most vulnerable parts of the United States, including Puerto Rico, Hawaii and southern states such as Florida and Texas. Officials are also focusing on pregnant women and their babies, the groups at highest risk.
Separately, U.S. Health and Human Services Secretary Sylvia Burwell said on Wednesday that no cases of the Zika virus had been passed by mosquitoes to people in the continental United States. In testimony to the House Ways and Means Committee about her department’s budget request, Burwell said cases of the virus had occurred in travelers returning to the United States, and that there had been one case of sexual transmission in Dallas. The virus has been passed from mosquitoes to people in the U.S. territory of Puerto Rico, she said. Burwell said the government needed the money the Obama administration is seeking from Congress to prepare for mosquito control, especially in the southern states, as the country heads into the summer months. She said that of two kinds of mosquitoes thought to transmit the virus, “one is a very efficient transmitter; meaning it will bite four individuals in a meal.” That mosquito is limited to the deep southern U.S. states, she said. The other mosquito can be found in about 20 states, and may be a transmitter, she said. Zika has spread quickly in South and Central America and the Caribbean, raising fears of the possibility of a birth defect known as microcephaly, a condition marked by abnormally small head size that can result in developmental problems.
FDA/EMA ROUNDUP -- A special advisory panel to the U.S. Food and Drug Administration recommended approval of a cheaper biosimilar form of Johnson & Johnson’s (New Brunswick NJ) Remicade arthritis drug that could eventually topple sales of the branded product. The panel, by a vote of 21-3, supported use of the biosimilar from Celltrion Pharma Inc. (Incheon, South Korea) and Pfizer Inc. (New York), called Remsima. The FDA usually, but not always, follows the advice of its advisory panels. The independent panel determined that clinical trials of Remsima showed no clinically significant differences with Remicade in treatment of rheumatoid arthritis and a related condition called ankylosing spondylitis. Remsima would become the second approved biosimilar in the United States, following Novartis AG’s September introduction of Zarzio. It is a version of Amgen Inc.’s Neupogen, which boosts white blood cells in patients who have undergone chemotherapy. Novartis priced Zarzio at a 15% discount to Neupogen.
Elsewhere, Amgen Inc.’s (Thousand Oaks CA) Repatha is in a market scuffle with Sanofi SA (Paris) and Regeneron Pharmaceuticals Inc.’s (Tarrytown NY) Praluent as the competitors rush to lock up as many approvals around the world as possible for the new generation of cholesterol fighters following their FDA approval last year within weeks of one another. Now Amgen has pulled ahead in England after the country’s drug pricing watchdog has both changed course to cover Repatha for some patients, while dealing its competitors a blow with a rejection for Praluent. The so-called PCSK9 meds are expected to be big sellers worldwide as a new approach to lowering persistently high bad cholesterol but England’s National Institute for Health and Care Excellence (NICE) is not making it easy for them to break into the market there. Last week, NICE approved Amgen’s Repatha for use against a number of specific conditions in which patients have persistently high LDL cholesterol, PharmaTimes reports. While the decision was a reversal of last year’s complete rejection of Repatha for use in the U.K, it was not as broad as Amgen had hoped.
The European Medicines Agency (EMA) has accepted an application to review Sandoz International GmbH’s (Holzkirchen DEU) biosimilar to Amgen Inc.’s (Thousand Oaks CA) EU-licensed Neulasta (pegfilgrastim), a recombinant human granulocyte colony-stimulating factor, Sandoz parent Novartis AG said on Thursday. Sandoz is seeking approval for the same indication as the reference product, it added in a statement. The U.S. Food and Drug Administration in November accepted Sandoz’s submission for approval of a biosimilar version of Amgen’s Neulasta drug that fights infections in cancer patients.
Telesta Therapeutics Inc. (Pointe Claire, Quebec) has received a complete response letter from the FDA, informing the company that its biologics license application (BLA) for Mycobacterium phlei cell wall-nucleic acid complex would need an additional Phase 3 clinical trial to adequately establish the candidate’s efficacy and safety. The candidate--designed for the treatment of non-muscle-invasive bladder cancer--achieved an overall disease-free survival rate of 25% at one year and 19% at two years, according to the drugmaker.
MEDICAL STOCK SPOTLIGHT -- Electromed Inc. (Nasdaq) led advancing issues, soaring $1.41, or 85% over the week, to $3.06 after the company said net revenues for the second quarter of fiscal 2016 came in at $6.26 million, breaking its previous records for earnings and representing a 28.3% increase year-over-year. New Prague, MN-based Electromed also registered net income of $1.07 million, or $0.13 per share for the quarter. The same quarter last year saw $420,000 in net income, or $0.05 per share. Electromed manufactures, markets and sells products that provide airway clearance therapy for patients with compromised pulmonary function. The company’s proprietary system generates high frequency chest wall oscillation (“HFCWO”), a technique for airway clearance therapy.
Elsewhere, Argos Therapeutics Inc. (Nasdaq) leaped 32% to $4.13 after several stock market analysts updated their consensus ratings on it shares. The latest broker reports as of Thursday state that 2 analysts have a rating of “strong buy,” 4 analysts “buy,” 0 analysts “neutral,” 0 analysts “sell” and 0 analysts “strong sell.” Durham, NC-based Argos is a biopharmaceutical firm focused on the development and commercialization of personalized immunotherapies for the treatment of cancer and infectious diseases based on its technology platform called Arcelis. The company’s advanced product candidate is AGS-003, being developed for the treatment of metastatic renal cell carcinoma (mRCC) and other cancers. Argos is also developing AGS-004, its second Arcelis product candidate, for the treatment of Human Immunodeficiency Virus (HIV).
And Intercept Pharmaceuticals Inc. (Nasdaq), a clinical stage biopharmaceutical company focused on treating diseases of the liver and intestines, jumped $21.71, or 22%, to $120.22 after Reuters reported that the company might be looking to sell itself. According to “sources familiar with the matter” New York-based Intercept has been working with a group of investment bankers recently to “explore the prospect of a sale.” It should be emphasized that this is still a rumor as Intercept declined to comment. This isn’t the first time that rumors have floated that Intercept might be a buyout target. Approximately a year ago another report surfaced saying that the company could auction itself off having received interest from a handful of large companies including Gilead Sciences Inc.
But BioCryst Pharmaceuticals Inc. (Nasdaq) plunged $4.43, or 72%, to $1.71 after disclosing results of a clinical trial of avoralstat. The drug was being administered in a liquid-filling soft gel form and monitored for prophylactic treatment of hereditary angioedema attacks (HAE). HAE patients experience episodes of swelling in various body parts including the hands, feet, face, abdomen and throat--a rare and potentially life-threatening genetic condition. Patients were randomized and treated either with avoralstat, at 500mg or 300mg dosage, or placebo for 12 weeks. Of the total, 38 patients received the 500mg dose, 36 had 300mg, and 36 were on placebo. The non-placebo patients failed to demonstrate any significant reduction in the attacks compared to placebo. Durham, NC-based BioCryst designs and develops small-molecule novel pharmaceuticals that block key enzymes involved in infectious diseases, inflammatory diseases & cancer.
IPO SECTOR -- Proteostasis Therapeutics Inc. announced the pricing of its initial public offering of 6.25 million shares of common stock at $8.00 per share. The company had planned to offer 3.85 million shares at $12-$14. Shares began trading on the Nasdaq under the ticker symbol “PTI.” Leerink Partners and RBC Capital Markets are acting as joint book-running managers. Cambridge, MA-based Proteostasis is developing disease-modifying therapeutics for diseases of protein processing. Using the DRT platform, a phenotypic screening approach based on the use of functionally pertinent cellular assays and disease relevant models, the company identifies highly selective drug candidates that modulate the proteostasis imbalance in the cell. In addition to its multiple wholly-owned programs in cystic fibrosis, the company has formed collaborations with Biogen New Ventures Inc. to research and identify therapeutic candidates for neurodegenerative disease. Shares closed the week down 23% at $6.18. ** AveXis Inc., an early-stage biotech developing a gene therapy for spinal muscular atrophy, raised $95 million in an upsized IPO by offering 4.75 million shares at $20, the midpoint of the range of $19 to $21. The Bannockburn, IL-based company originally planned to offer 4.25 million shares. Existing investors had indicated an interest in buying $30 million on the IPO, which would represent 32% of the deal. AveXis lists on the Nasdaq under the symbol “AVXS.” Goldman Sachs and Jefferies acted as lead managers on the deal. The company’s initial proprietary gene therapy candidate, AVXS-101, is in an ongoing Phase 1 clinical trial for the treatment of SMA Type 1. Shares closed the week off 11% at $17.80.
February 8, 2016 ...
ZIKA VIRUS PREGNANCY CONFIRMED IN SPAIN; FIRST IN EUROPE – Spain on Friday confirmed that a pregnant woman has been diagnosed with the Zika virus--the first such case in Europe. The health ministry said the woman had recently returned from Colombia, where it is believed she was infected. Zika, which is spreading through the Americas, has been linked to babies being born with underdeveloped brains. The World Health Organization (WHO) has declared the microcephaly condition, linked to the mosquito-borne virus, a global public health emergency. The WHO on Thursday also advised countries not to accept blood donations from people who had travelled to Zika-affected regions, the Paris-based AFP news agency reported. The link between Zika infection and microcephaly has not been confirmed and the risks at different stages of pregnancy are unknown.” In a statement, the Spanish health ministry said the pregnant woman was diagnosed as having Zika in the north-eastern Catalonia region. It did not release the woman’s name, saying she was one of seven confirmed cases in Spain. It said two more patients were in Catalonia, two in Castile and Leon, one in Murcia and one in the capital Madrid. “All are in good health,” the ministry added. It also stressed that “the diagnosed cases of Zika virus in Spain don’t risk spreading the virus in our country as they are imported cases.”
The U.S. Centers for Disease Control and Prevention on Wednesday updated its Zika virus guidance for pregnant women, advising them to protect themselves if their male sexual partner has traveled to or lives in an area where Zika virus is circulating. “Until we know more, if your male sexual partner has traveled to or lives in an area with active Zika virus transmission, you should abstain from sex or use condoms the right way every time you have vaginal, anal, and oral sex for the duration of the pregnancy,” the updated guidance says. The update in recommendations comes one day after Dallas County, TX, health officials, announced a case of the virus involving a patient who had sex with someone who had recently returned from Venezuela infected with the mosquito-borne virus. The CDC confirmed this as first known case of the virus being locally acquired in the continental United States in the current outbreak. The agency stressed that there was no risk to a developing fetus in this instance. The CDC on Friday revised its guidelines for pregnant women to include a recommendation that even those without symptoms of the Zika infection be tested after returning from affected areas.
MARTIN SHKRELI INVOKES THE FIFTH AMENDMENT IN HOUSE APPEARANCE; CALLS LAWMAKERS “IMBECILES.” – Former drug executive Martin Shkreli smirked and brushed off questions about drug prices then tweeted that lawmakers were imbeciles on Thursday, when he appeared at a U.S. congressional hearing against his will. Shkreli, 32, sparked outrage last year among patients, medical societies and Democratic presidential front-runner Hillary Clinton after his company, Turing Pharmaceuticals AG (Zug CHE), raised the price of the drug Daraprim by more than 5,000% to $750 a pill. The lifesaving medicine, used to treat a parasitic infection, once sold for $1 a pill and has been on the market for more than 60 years. At a hearing of the U.S. House Committee on Oversight and Government Reform, Shkreli repeatedly invoked the Fifth Amendment of the U.S. Constitution, which says no person shall be compelled in any criminal case “to be a witness against himself.” He responded to questions by laughing, twirling a pencil and yawning. Committee Chairman Jason Chaffetz, a Utah Republican, asked Shkreli what he would tell a single, pregnant woman with AIDS who needed Daraprim to survive, and whether he thought he had done anything wrong. Shkreli declined to answer. “I intend to follow the advice of my counsel, not yours,” said Shkreli after South Carolina Republican Representative Trey Gowdy suggested he could answer questions that were unrelated to pending fraud charges against him.
After the hearing, Shkreli’s lawyer, Benjamin Brafman, attributed his client’s behavior to “nervous energy.” Later, though, Shkreli wrote on Twitter: “Hard to accept that these imbeciles represent the people in our government.” U.S. Representative Elijah Cummings, who learned about the tweet while Turing Chief Commercial Officer Nancy Retzlaff was testifying, pounded his fist on the dais. The Maryland Democrat then shouted about an internal Turing document in which a staffer joked about the price increase. “You all spent all of your time strategizing about how to hide your price increase and coming up with stupid jokes while other people were sitting there trying to figure out how they were going to survive,” Cummings said. Shkreli was arrested in December and charged with running his investment funds and companies almost like a Ponzi scheme. He has pleaded not guilty to the fraud charges, which are not related to the pricing of Daraprim. He also stepped down from Turing and was fired from KaloBios Pharmaceuticals Inc. (South San Francisco). Cummings pleaded with Shkreli to reconsider his views about drug pricing: “You can go down as the poster boy for greedy drug company executives, or you can change the system.”
TRACKING WASHINGTON – About 12.7 million Americans signed up for 2016 health insurance coverage through the government insurance exchanges, surpassing its expectations, U.S. Health and Human Services Secretary Sylvia Burwell said on Thursday. The government began offering subsidies for individual insurance in 2014 under the Affordable Care Act and charges a penalty to Americans who do not have health insurance. In 37 states, customers can buy these plans on HealthCare.gov, the federally run website, while the other states and Washington D.C. run their own online exchanges. Enrollment closed on Jan. 31 for 2016. Avalere Health LLC, a Washington, DC-based health consulting firm, said that based on these numbers, it expects 2016 year-end enrollment will be about 10.2 million, above the Obama administration’s forecast of 10 million people being covered through the exchanges. Insurers have been struggling to make money on the exchanges, where low enrollment has contributed to high per-customer overhead and has made it a riskier business for them. Medical costs have also been an issue for insurers in 2015, with many reporting that they have booked unsustainable losses on these products. UnitedHealth Group Inc. (Minnetonka MN) in November said that it may exit the exchanges after 2016.
On HealthCare.gov, about 4 million new customers signed up for plans and another 5.6 million consumers returned to buy insurance again, Burwell told reporters. In all, about 2.7 million people aged 18 to 34 signed up for the insurance, she said. Customers who are younger tend to have fewer medical costs and are considered an important factor in creating financial stability for the private health insurers like UnitedHealth, Aetna Inc. (Hartford CT) and Anthem Inc. (Indianapolis IN) that sell these plans. Andy Slavitt, who runs the Centers for Medicaid and Medicare Services division of the health department, said that the enrollment numbers had surpassed the mid-point of its projection to have between 11 million and 14.1 million people signed up for 2016 health coverage at this point in the year.
FDA/EMA ROUNDUP -- U.S. Food and Drug Administration staff members on Friday said Celltrion Inc.’s (Incheon, South Korea) biosimilar form of Johnson & Johnson’s Remicade arthritis drug appeared “highly similar” to the widely used branded product. The news sent shares of J&J, whose annual Remicade (infliximab) sales of $6.5 billion are mostly in the United States, down 4% for the week to $100.50. It also hit AbbVie Inc. and Amgen Inc., which make arthritis treatments that work in the same way. Pfizer Inc. has teamed up with Celltrion in marketing the Remsima biosimilar. FDA scientists released their favorable report ahead of a scheduled meeting tomorrow of an independent medical advisory panel to the agency. The panel will decide whether to recommend approval of Remsima to treat rheumatoid arthritis and inflammatory bowel conditions such as Crohn’s disease. Celltrion and Pfizer, the largest U.S. drugmaker, want to sell Remsima in the U.S. as a cut-price copy of Remicade.
Elsewhere, Denmark’s Lundbeck A/S (Valby) said on Thursday an FDA committee had recommended that its anti-depression drug Brintellix can add improved cognitive functions to its information leaflet, a first of its kind. Though not bound to follow the committee’s recommendation, the FDA is likely to follow it, analysts said. “Lundbeck will be the only product on the market with a leaflet on cognitive effects. FDA is increasing its focus on this area, which means doctors also will,” Danish brokerage Alm. Brand wrote in a note to clients. Brintellix, developed with Japan’s Takeda Pharmaceutical Co. Ltd., was approved to treat adult depression by U.S. regulators in 2013, and has since been approved in 64 countries. Chief Executive Kaare Schultz said last year he expected Brintellix to become a blockbuster drug that would help the company swing to a profit in 2016.
The FDA has denied the expanded use of Vertex Pharmaceutical Inc.’s (San Diego CA) bestseller, Kalydeco, in certain cystic fibrosis patients, the company said on Friday. The regulator rejected the company’s application for using the drug in cystic fibrosis patients aged 2 or older, who have one of 23 residual function mutations. Vertex’s shares closed the week down 5% at $86.61. Analysts, however, said the news reflected a minor setback for Vertex, considering the company is recruiting the same patient population into one of its late-stage trials. These trials should have results by mid-2017, which would suggest that the population could be included in the labeled indication 18-24 months from now if not immediately, Leerink Partners analysts said. Kalydeco, which brought in revenue of $632 million in 2015, is already approved to treat CF patients aged 2 and older with 10 different mutations in the CFTR gene.
And Bristol-Myers Squibb Co. (New York City) has scored a win in Europe with Daklinza, with regulators approving expanded use of the hepatitis C drug in three new patient populations. As a result of the decision, Daklinza can be used in combination with Gilead Sciences Inc.’s Sovaldi in patients with chronic HCV who also have decompensated cirrhosis, HIV-1 co-infection or post-liver transplant recurrence of HCV. Separately, the company reported that it had stopped a Phase 3 study of Opdivo in head and neck cancer early because it met the primary endpoint, demonstrating superior overall survival in patients on the study drug. Opdivo was the first PD-1 immune checkpoint inhibitor to be approved globally. The CheckMate -141 trial evaluated Opdivo in patients with recurrent or metastatic platinum-refractory squamous cell carcinoma of the head and neck against standard of care therapy.
MEDICAL STOCK SPOTLIGHT -- Eyegate Pharmaceuticals Inc. (Nasdaq) led advancing issues, soaring $1.55, or 91% for the week, to $3.25 after equities researchers at Rodman & Renshaw initiated coverage on shares with a “buy” rating and issued a $10 price target. The brokerage’s price target would suggest a potential upside of over 300% from the stock’s current price. However, some investors are questioning whether a jump that huge is warranted and perhaps now is the perfect time to short shares. Waltham, MA-based Eyegate Pharmaceuticals is a clinical-stage specialty pharmaceutical firm focused on developing and commercializing therapeutics and drug delivery systems for treating diseases of the eye. The company has a market cap of $20.13 million. EGP-437 is the first and only product in clinical trials and incorporates a reformulated topically active corticosteroid, dexamethasone phosphate, which is delivered into the ocular tissues though the company’s proprietary drug delivery system--the EyeGate II Delivery System.
Elsewhere, Sinovac Biotech Ltd. (Nasdaq) rocketed $2.03, or 40%, to $7.05 after the company announced it received a non-binding proposal letter from a consortium of investors to acquire the company for $7.00 per share. A spokesman for one of the investors, Heng Ren Investments, said that Sinovac is a “coveted stock” because its EV-71 vaccine has a “massive” target market in China. He pointed out that the 1- to 5-year-old population in China is approximately 80 million and there are 17 million newborns per year. In addition, the company can expand its market to Southeast Asia where hand, foot and mouth disease (HFMD) is endemic and can be fatal for children. The spokesman continued, “The initial production is eventually 20 million doses. There are estimates by vaccine experts EV-71 pricing could be $10.00-$25.00 per dose, and in high-risk situations $50.00-$75.00.” Sinovac was founded in 1999 and is headquartered in Beijing.
And Hansen Medical Inc. (Nasdaq) surged 36% to $2.93 after the company announced it received the Food and Drug Administration’s (FDA) approval for the Magellan Robotic Catheter eKit (MRC eKit). The eKit is its latest addition to a family of approved MRCs and this will help improve robotic capabilities and control in peripheral vasculature procedures according to some observers. This new kit will help physicians take robotic control of third party microcatheters via the current MRC 6Fr architecture, the company claims. The main goal of the kit is to help reduce radiation exposure time and overall procedure time. Mountain View, CA-based Hansen Medical describes itself as “a global leader in intravascular robotics, born from the vision of creating a new generation of advanced medical robotics that would empower and protect physicians while providing enhanced care for patients.”
But Carbylan Therapeutics Inc. (Nasdaq) plunged 75% to $1.83 after being downgraded by equities research analysts at Leerink Swann from an “outperform” rating to a “market perform” rating in a research report issued to clients last week. They presently have a $1.80 price objective on the specialty pharmaceutical company’s stock--down from their previous price objective of $15.00. In related news, CEO David Renzi sold 10,000 shares of Carbylan stock in a transaction dated Wednesday, December 30th. The stock was sold at an average price of $3.70, for a total transaction of $37,000.00. Palo Alto, CA-based Carbylan Therapeutics is a clinical-stage specialty pharmaceutical company focused on the development of Hydros-TA, an intra-articular (IA), injectable product candidate to treat pain associated with osteoarthritis (OA) of the knee.
IPO SECTOR -- Editas Medicine Inc. (Cambridge MA), which is producing a technology that corrects disease-causing genes, gained in its market debut. Its shares closed the week up 10% at $17.60. The company raised $94.4 million, pricing shares at the low end of the range it had marketed to investors. Editas makes a gene-editing technology that is aimed at treating diseases for which the genetic causes are well understood. The company’s most advanced product would be used to treat a progressive form of blindness. Editas is also conducting research on preventing cancer, and it is teaming up with an immunotherapy company, Juno Therapeutics Inc., to do so. Editas Medicine plans lists on the Nasdaq under the symbol “EDIT.” Morgan Stanley and J.P. Morgan acted as lead managers on the deal. ** Chinese immunotherapy biotech BeiGene Co. Ltd. (Beijing) priced an upsized IPO of 6.6 million shares at $24--the high end of the range ($158 million)--and closed the week up 41% at $33.91. It was the first biotech IPO to price above the midpoint since September’s REGENXBIO. However, the deal was supported by its largest shareholders, who committed to buying up 50% of the offering. BeiGene lists on the Nasdaq under the symbol “BGNE.” Goldman Sachs, Morgan Stanley and Cowen & Company acted as lead managers on the deal.
February 1, 2016 ...
U.S. BUDGET OFFICE SHARPLY CUTS HEALTH EXCHANGE ESTIMATE – Far fewer people will get coverage in 2016 through public health insurance exchanges this year compared to earlier government estimates, the Congressional Budget Office reported last week. In its annual budget and economic outlook, the CBO estimated that 13 million people will get coverage through the exchanges this year, with 11 million receiving federal subsidies to partially or completely pay for enrollees’ premiums. The subsidies are available to the uninsured earning between 100% and 400% of the federal poverty level; for example, subsidies are available in 2016 for a family of four with an income of up to $97,000. Those coverage estimates are sharply lower than those published a year ago, when CBO projected that exchange enrollment would hit 21 million in 2016, with 15 million people using Patient Protection and Affordable Care Act subsidies to purchase coverage and 6 million individuals obtaining unsubsidized exchange coverage. The CBO, in its latest report, did not fully explain its sharp downward revision in its estimates of enrollment in the public insurance exchanges. In a brief footnote, though, the researchers said most of the unsubsidized individuals not purchasing coverage through the exchanges were expected, instead, to obtain coverage directly from insurers.
It also is possible that fewer employers than once thought will drop coverage, keeping their employees out of the exchanges. Indeed, in the wake of the passage of the Affordable Care Act in 2010, there was widespread speculation that many employers would eliminate coverage once the public exchanges began operating. That speculation was based on the assumption that employers would find it less expensive--even after paying a $2,000 per employee penalty and boosting employees’ salaries to help offset premiums employees would pay for coverage in exchanges--than continuing their plans. Few employers though have taken such an approach. For example, just 0.2% of benefit professionals surveyed last year by the International Foundation of Employee Benefit Plans (Brookfield WI) said their employers would drop coverage in 2016. The top two reasons, according to the IFEBP survey, employers said they would continue coverage are the need to attract top talent, cited by 78.7% of respondents, and to retain current employees, cited by 74.8% of benefit professionals surveyed.
ZIKA VIRUS SPREADING EXPLOSIVELY IN AMERICAS, WHO SAYS – The Zika virus, linked to severe birth defects in thousands of babies in Brazil, is “spreading explosively” and could infect as many as 4 million people in the Americas, the World Health Organization (WHO) said on Thursday. Director-General Margaret Chan told members of the U.N. health agency’s executive board the spread of the mosquito-borne disease had gone from a mild threat to one of alarming proportions. The WHO would convene an emergency meeting on Monday (today) to help determine its response, she said. “The level of alarm is extremely high,” Chan told the Geneva gathering. “Last year, the virus was detected in the Americas, where it is now spreading explosively. As of today, cases have been reported in 23 countries and territories in the region,” Chan said, promising quick action from the WHO. The agency was criticized last year for reacting too slowly to West Africa’s Ebola epidemic, which killed more than 10,000 people. “We are not going to wait for the science to tell us there is a link (with birth defects). We need to take actions now,” Chan said, referring to the condition called microcephaly in which babies are born with abnormally small heads and brains that have not developed properly. There is no vaccine or treatment for Zika, which is like dengue and causes mild fever, rash and red eyes. An estimated 80% of people infected have no symptoms.
Much of the effort against Zika focuses on protecting people from mosquitoes and reducing mosquito populations. Developing a safe and effective vaccine could take a year, WHO Assistant Director Bruce Aylward said, and it would take six to nine months just to confirm whether Zika is the actual cause of the birth defects, or if the two are just associated. “In the area of vaccines, I do know that there has been some work done by some groups looking at the feasibility of a Zika virus vaccine. Now something like that, as people know, is going to be a 12-month-plus time frame,” he said. U.S. health officials said the nation has two potential candidates for a Zika vaccine and may begin human clinical trials by the end of this year, but there will not be a widely available vaccine for several years. Marcos Espinal, head of communicable diseases at the Pan American Health Organization, the WHO’s Americas arm, forecast 3 to 4 million Zika cases in the Americas. As the virus spreads from Brazil, other countries in the Americas are likely to see cases of babies with Zika-linked birth defects, according to Carissa Etienne, regional director for the Pan American Health Organization. Brazil has reported around 4,000 suspected cases of microcephaly, vastly more than in an average year and equivalent to 1% to 2% of all newborns in the state of Pernambuco, one of the worst-hit areas.
TRACKING WASHINGTON – A Democratic senator is holding up President Barack Obama’s nominee for head of the U.S. Food and Drug Administration, calling for changes in how the agency approves prescription painkillers that have been at the center of a deadly epidemic of drug abuse. Senator Edward Markey of Massachusetts put a hold on Obama’s nomination of Robert Califf, a renowned cardiologist from Duke University (Durham NC), to serve as commissioner of the FDA, according to a statement from the senator’s office. Overdoses on prescription painkillers such as OxyContin or Opana killed about 16,000 Americans in 2013, which was about twice the number of deaths from heroin overdose in the same year, according to government data. Markey is particularly upset that the FDA last year approved OxyContin for use in kids from 11 to 16 years old. “Expert after expert has warned about the real world dangers of abuse of and dependence on these new supercharged opioid painkillers, but the FDA has willfully blinded itself to the warning signs,” Markey wrote. “The FDA needs to commit to shift the way it approaches and evaluates addiction before I can support Dr. Califf’s nomination.” Senate Majority Leader Mitch McConnell, a Republican from Kentucky, hasn’t scheduled the full Senate vote yet.
Elsewhere, President Obama signed a presidential memorandum on Thursday creating a White House task force on cancer, the first step in what Vice President Joseph R. Biden Jr. has called a “moonshot” to cure the disease, administration officials said. The president appointed Mr. Biden to lead the panel, which will include representatives from at least 13 government agencies. The group’s first meeting will be on Monday (today), officials said. The emotional power behind the push will come from Mr. Biden, whose son Beau died last year after a battle with brain cancer. This month in his final State of the Union address, Mr. Obama cited Mr. Biden’s “moonshot” comment, saying that “I’m putting Joe in charge of mission control.” Mr. Obama pledged in the speech to initiate a government-wide push to cure the disease along the lines of the effort in the 1960s to send a man to the moon. The president made no specific promises but urged Americans to believe that a cure could be found. Officials familiar with the president’s actions said the task force would set a goal of doubling the rate of scientific progress toward prevention, treatment and a cure.
FDA/EMA ROUNDUP -- Patients with hepatitis C have yet another advanced treatment option, as the Food and Drug Administration has approved a new once-a-day pill developed by drugmaker Merck & Co. (Kenilworth NJ). The FDA said Thursday Merck can begin marketing Zepatier, its new drug for patients with the liver-destroying virus. The combination pill includes the medications elbasvir and grazoprevir, which attack the virus in two different ways. The medication has a list price of $54,600 for a 12-week regimen, according to a Merck statement on Thursday. That’s 42% lower than Gilead Sciences Inc.’s Harvoni, which retails at $94,500. The field for hepatitis C patients has been divided between Gilead and AbbVie Inc., which have locked up arrangements with the leading managers of drug coverage in U.S. health insurance plans, offering discounts to ensure their medications are the first choice. Still, Merck doesn’t foresee trouble attracting patients.
Elsewhere, Zogenix Inc. (Emeryville CA), a pharmaceutical company developing therapies for the treatment of central nervous system (CNS) disorders, announced receipt of “fast track” designation from the FDA for the development program for the company’s investigational product, ZX008, as a treatment of seizures associated with Dravet syndrome, a rare and catastrophic form of childhood epilepsy. “The FDA granting fast track designation provides important support as we advance the development program for ZX008 in Dravet syndrome towards a potential approval as quickly as possible,” said Stephen Farr, PhD, CEO of Zogenix. The FDA’s fast track program was established to facilitate the development and expedite the review of drugs with the potential to treat serious conditions and address unmet medical needs. Zogenix is a pharmaceutical company committed to developing and commercializing CNS therapies that address specific clinical needs for people living with orphan and other CNS disorders.
Loxo Oncology Inc. (Stamford CT), a biopharmaceutical company innovating the development of highly selective medicines for patients with genetically defined cancers, announced that the European Medicines Agency (EMA) has granted the company orphan drug designation for LOXO-101 for treatment of patients with soft tissue sarcoma. Soft tissue sarcomas are cancers of the body’s connective or supportive tissues, such as cartilage, fat, muscle, fibrous tissue, and blood vessels. The EMA grants orphan drug designation to support the development of medicines for underserved patient populations, or rare disorders which affect no more than five in 10,000 individuals in the European Union (EU). Orphan drug designation provides to Loxo certain benefits, including protocol assistance, reduced fees for regulatory activities and up to ten years of market exclusivity in the EU upon marketing approval for the designated indication.
And Advanced Cooling Therapy LLC (Chicago) received the FDA’s 510(k) clearance for its second product, the Esophageal Cooling Device, or ECD-02. The device is used to cool or warm a patient through a system that is inserted into the esophagus. It is ready to use in a range of environments, from the operating room to the recovery room. According to the company, it is designed to be used with Cincinnati-based Sub-Zero’s Blanketrol II and III hyper-hypothermia systems. Last June, the company received clearance for its first product, the ECD-01, also used to modulate patients’ temperatures through the esophagus. ECD-01 may be used with Stryker Corp.’s Medi-Therm III hyper/hypothermia system.
MEDICAL STOCK SPOTLIGHT -- Amedica Corp. (Nasdaq) led advancing issues, soaring $1.21, or 77% over the week, to $2.79. On Thursday, Salt Lake City, UT-based Amedica, a company that develops and commercializes silicon nitride ceramics as a biomaterial platform, announced that all four submissions to the Orthopaedic Research Society Annual Meeting were accepted for presentation occurring March 5-8, 2016 in Orlando, FL. “Our presentations will demonstrate the rationale for using our proprietary silicon nitride composition in a variety of medical applications within the $15 billion surgical spine, dental, hip and knee replacement markets,” said Dr. Sonny Bal, Chairman and CEO of Amedica. “This scientific data will convincingly demonstrate the serious limitations of other existing biomaterials, while highlighting the advantages of silicon nitride, even as we continue further testing on an improved second generation silicon nitride composition.”
Elsewhere, Neos Therapeutics Inc. (Nasdaq) surged $3.68, or 37%, to $13.58 after reporting it received approval from the U.S. Food and Drug Administration for a new drug to treat attention deficit hyperactivity disorder. Neos’s new drug, called Adzenys XR-ODT, is for patients ages 6 and older. The drug is the first approved by the FDA that has both extended release capabilities and comes as an “orally disintegrating tablet.” That dissolving feature means patients don’t need water to swallow a pill. Extended release means patients only have to take a dosage once a day. Grand Prairie, TX-based Neos has patents for both the method of manufacturing and the composition of the matter. That suggests others won’t be able to easily replicate having both features in one drug, said Neos CEO Vipin Garg. “There are drugs on the market that have one feature or the other, but not both.” Neos plans to begin talking with doctors about its new drug now, but the product won’t be available until the second quarter.
And Inovio Pharmaceuticals Inc. (Nasdaq) rocketed $1.61, or 32%, to $6.68 as the Zika virus vaccine it’s helping to develop could be ready by the end of the year. The Plymouth Meeting, PA-based company also initiated patient recruitment for its MERS (Middle East Respiratory Syndrome) vaccine along with GeneOne Life Sciences Inc. The virus, which is spread through mosquito bites, can cause fever, rash and joint pain, and has been linked to serious birth defects. The first stage of testing on humans could start as early as August and if successful could allow the vaccine to be used in the event of a public health emergency in October or November, according to Gary Kobinger. Kobinger is the lead scientist from Laval University who is working with Inovio, GeneOne Life Sciences and the University of Pennsylvania on the Zika vaccine. Inovio CEO Joseph Kim said the timeline for making the vaccine available by the end of the year is aggressive, but could happen.
But OncoMed Pharmaceuticals Inc. (Nasdaq), a clinical-stage biotech, plunged $8.32, or 47%, to $9.25 after an independent data safety monitoring board reported that the company’s mid-stage pancreatic cancer drug, tarextumab, doesn’t appear to be effective, based on a preliminary interim analysis of the data. Specifically, the company said that patients receiving the drug weren’t showing any benefit in terms of either progression-free survival or overall survival. Tarextumab is being co-developed with GlaxoSmithKline Plc. At last count, OncoMed still had over $300 million in potential milestone payments that it could have landed for this indication, per its deal with Glaxo. After last week’s disappointing news, however, it appears that these back-end developmental payments are now off the table, along with a licensing deal. Redwood City, CA-based OncoMed is presently unblinding the trial to determine its game plan for tarextumab going forward.
IPO SECTOR -- Included in recent SEC filings for initial public offerings, Tactile Systems Technology Inc., a Minneapolis, MN-based company that develops therapeutic medical technologies to treat chronic medical conditions, registered up to $86.3 million worth of common stock. Tactile Systems, which does business as Tactile Medical, makes pneumatic compression devices for treatment of lymphedema (which generally results in swollen tissue associated with a compromised lymphatic system) and venous leg ulcers. The company’s products aim to deliver cost-effective long-term treatment of chronic diseases in a home health setting. Through the first nine months of 2015, revenue was $41.7 million, a 40% increase from the first nine months of 2014. Net income for the first nine months of 2015 was $134,000. The company, founded in 1995, plans to use proceeds from an IPO to expand its sales and marketing, product development and reimbursement and clinical activities. Piper Jaffray, William Blair and Canaccord Genuity are the joint bookrunners on the deal. No pricing terms were disclosed. ** Editas Medicine Inc., which is developing gene-editing therapies based on CRISPR technology, announced terms for its IPO. The Cambridge, MA-based company plans to raise $100 million by offering 5.9 million shares at a price range of $16 to $18. At the midpoint of the proposed range, Editas Medicine would command a fully diluted market value of $625 million. The company focuses its work on CRISPR-Cas9, a potentially revolutionary new approach to gene editing with far-ranging therapeutic implications. If the technology works as the pioneers claim it does, the startups in the field are in the opening stages of some profound genetic breakthroughs. Editas Medicine was founded in 2013 and booked $1 million in sales for the 12 months ended September 30, 2015. It plans to list on the Nasdaq under the symbol “EDIT.” Morgan Stanley, J.P. Morgan and Cowen & Company are the joint bookrunners on the deal. It is expected to price this week.
January 25, 2016 ...
UNITEDHEALTH TOPS ESTIMATES, OVERCOMING OBAMACARE LOSSES – UnitedHealth Group Inc. (Minnetonka MN) said its projected losses on the Affordable Care Act exchanges for 2016 deepened as enrollment grew despite the company’s efforts to reduce sign-ups. The biggest U.S. health insurer said it is now expecting losses of more than $500 million on its 2016 ACA plans, compared with previous projections that amounted to $400 million to $425 million in losses. UnitedHealth had taken steps to pull back on its exchange business in anticipation of losses, including reducing marketing and slashing commissions to health-insurance agents. But enrollment nevertheless grew, widening the company’s exposure. UnitedHealth CEO Stephen J. Hemsley said the new projection reflected “prudence,” as the company sought to ensure it had covered all possible losses. The exchange plans represent a tiny share of UnitedHealth’s total business. Last Tuesday, the company reiterated its overall financial outlook for 2016, saying it expected $7.60 to $7.80 in adjusted earnings per share and at least $180 billion in revenue. But UnitedHealth’s move comes amid continued worries about the exchange business--concerns that the company aired in November when it disclosed expected 2016 losses and said it would consider withdrawing from the health-law marketplaces, a decision expected to be made later this year.
UnitedHealth said its enrollment through the ACA exchanges was approximately 700,000. At the end of 2015, the figure was about 500,000. UnitedHealth said it had losses of about $475 million on its 2015 ACA-plan business. Of its anticipated 2016 ACA-plan losses, UnitedHealth said it had booked $245 million in 2015, as part of a “premium deficiency reserve.” The company in November said it expected $200 million in 2016 ACA-plan losses that it would book in 2015, as well as between $200 million and $225 million that would affect its results in 2016. Overall, UnitedHealth reported a profit of $1.22 billion, or $1.26 a share, for the fourth quarter of 2015, down from $1.51 billion, or $1.55, a year earlier. Excluding certain items, per-share profit declined to $1.40 from $1.64. Revenue increased 30% to $43.60 billion. Analysts expected earnings of $1.38 a share on revenue of $43.23 billion. During the quarter, UnitedHealth added 315,000 health-insurance customers, bringing its tally to about 46.4 million. Its shares closed the week up 5% at $114.33, as investors shrugged off the exchange comments amid strong results elsewhere in the company’s portfolio.
U.S. LIMITS OBAMACARE SIGN-UP PERIODS IN MOVE TO APPEASE INSURERS – The Obama administration, responding to complaints from insurance companies, announced several steps last week that will make it harder for consumers to obtain health insurance after the annual open enrollment period. Insurers say many consumers have belatedly signed up for coverage under the Affordable Care Act when they become sick and need care. Those latecomers drive up costs for people who sign up during the regular open enrollment period, insurers say. Open enrollment ends this year on Jan. 31. The administration, which had created more than 30 “special enrollment” periods, sent emails to millions of Americans last year urging them to see if they might be eligible to sign up after the annual open enrollment deadline. But, insurers and state officials said, the federal government did little to verify whether late arrivals were eligible. Kevin J. Counihan, the chief executive of the federal insurance marketplace, said last Tuesday that special enrollment periods “are not allowed for people who choose to remain uninsured and then decide they need health insurance when they get sick.” Mr. Counihan said the administration would eliminate six of the special enrollment periods, including two for certain lawfully present non-citizens who experienced “system errors” and “processing delays” when they used HealthCare.gov.
Counihan said the government would clarify eligibility standards and step up enforcement to prevent abuse of special enrollment periods. The actions appeared to have several purposes: to motivate consumers to sign up by the Jan. 31 deadline; to prevent an influx of large numbers of sick people into the market in the middle of the year; to persuade insurers to enter or stay in the public insurance marketplace; and to minimize rate increases in 2017 and later years. Federal officials said nearly 950,000 people used special enrollment periods to get coverage through HealthCare.gov from late February to the end of June 2015. In some cases, insurers said, consumers dropped coverage soon after receiving costly medical services. The marketplace must be attractive not only to consumers, but also to insurers, Mr. Counihan said. “Building an attractive marketplace starts with establishing a predictable, stable set of rules that help to keep the risk pool balanced,” he said, referring to the mix of healthy and unhealthy customers. Most of the special enrollment periods will still be available, for example, when people marry, have a baby, lose job-based coverage or become ineligible for coverage under a parent’s health plan at the age of 26.
TRACKING WASHINGTON – An Obama administration official last week said the government is taking steps to help health cooperatives set up under the Affordable Care Act remain solvent, while seeking to recoup federal funds from those that failed. The nonprofit co-ops were established to offer health insurance to consumers on the health law’s marketplaces and were intended to lower costs by giving established insurers more competition. But more than half of the 23 operating state co-ops failed after receiving more than $1.1 billion in federal loans. Andy Slavitt, acting administrator at the Centers for Medicare and Medicaid Services, told a Senate committee that the agency is working with the Justice Department and taking legal actions to collect the federal moneys in some cases. Co-op officials have said they suffered financially, in part because the law restricted their ability to acquire capital or solicit private-capital investment. The administration will soon release guidance aimed at helping co-ops to attract capital or merger partners, Mr. Slavitt told the Senate Finance Committee. “Our goal at CMS is to make sure the programs we are charged with are working the way they should,” he said. The committee’s chairman, Sen. Orrin Hatch (R-UT), said the co-op program was poorly designed and there were inadequate safeguards to protect taxpayer money.
The U.S. Supreme Court, which delivered major rulings in 2012 and 2015 preserving President Barack Obama’s signature healthcare law, last week declined to take up a new, long-shot challenge to Obamacare brought by an Iowa artist. The court turned away an appeal by Matt Sissel, who had asserted that the 2010 Affordable Care Act violated the U.S. Constitution’s requirement that revenue-raising legislation must originate in the House of Representatives, not in the Senate, as the healthcare law did. The high court left in place a 2014 ruling by the U.S. Court of Appeals for the District of Columbia Circuit upholding a lower court’s dismissal of the lawsuit, which was backed by the Pacific Legal Foundation, a conservative legal group. The suit targeted the law’s “individual mandate” that Americans obtain health insurance or pay a tax penalty. In a 6-3 ruling last June, the Supreme Court rejected a conservative legal challenge and upheld nationwide tax subsidies crucial to the healthcare law. In 2012, the justices ruled 5-4 that the law’s requirement that Americans obtain insurance or pay a penalty was authorized by the power of Congress to levy taxes. A three-judge appeals court panel was unanimous in finding that Sissel’s interpretation of the law was at odds with U.S. Supreme Court precedents, including the high court’s ruling in 2012.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration said on Thursday it has approved Amgen Inc.’s (Thousand Oaks CA) cancer drug Kyprolis in combination with certain other therapies to treat patients with multiple myeloma. The agency also approved the drug as a single agent for patients with relapsed or refractory multiple myeloma who have received one or more previous treatments. The decision converts to full approval an initial accelerated approval given to the drug in 2012 as a single agent, Amgen said. Accelerated approval is given to drugs based on a surrogate endpoint, such as a radiographic image or laboratory measure that is thought to predict a clinical benefit. Companies are required to conduct studies to confirm the anticipated benefit. If a confirmatory trial shows the drug does confer such a benefit, the FDA grants full approval for the drug.
Elsewhere, Bristol-Myers Squibb Co. (New York City) won the endorsement of the U.K.’s health-cost regulator for the use of its drug Opdivo in skin-cancer patients after failing to win its recommendation for treating lung tumors. The final draft guidance from the National Institute for Health and Care Excellence (NICE) is being reviewed by patient groups and doctors, who have a chance to appeal. Once NICE makes its final recommendation, the National Health Service must make the medicine available within three months. More than 13,000 people in the U.K. were diagnosed with melanoma in 2011, and it accounts for more deaths than all other skin cancers combined, according to NICE. Opdivo could become a key weapon in the arsenal against melanoma, said Paul Workman, CEO of the Institute of Cancer Research.
Samsung Group (Seoul KOR) said it has won approval from U.S. regulators to sell a near-replica of the blockbuster rheumatoid arthritis drug Enbrel in Europe, marking an early milestone for South Korea’s biggest conglomerate in the budding market for so-called biosimilar drugs. The approval comes as Samsung Bioepis Co., the conglomerate’s drug-development arm, is preparing a public listing on the Nasdaq Stock Market. Samsung Bioepis, which was founded four years ago, is developing its own biosimilars of existing drugs whose patents have expired or will expire soon, including Pfizer Inc.’s Enbrel and Johnson & Johnson’s Remicade. Samsung Bioepis also is planning to seek regulatory approval for the biosimilar from the U.S. Food and Drug Administration.
And Advanced Cooling Therapy LLC (Chicago) received the FDA’s 510(k) clearance for its second product, the Esophageal Cooling Device, or ECD-02. The device is used to cool or warm a patient through a system that is inserted into the esophagus. It is ready to use in a range of environments, from the operating room to the recovery room. According to the company, it is designed to be used with Cincinnati-based Sub-Zero’s Blanketrol II and III hyper-hypothermia systems. Last June, the company received clearance for its first product, the ECD-01, also used to modulate patients’ temperatures through the esophagus. ECD-01 may be used with Stryker Corp.’s Medi-Therm III hyper/hypothermia system.
MEDICAL STOCK SPOTLIGHT -- Biotie Therapies Corp. (Nasdaq) led advancing issues, soaring $11.38, or 83% for the week, to $24.58. Acorda Therapeutics Inc. (Nasdaq) announced that it has entered into an agreement to acquire Biotie, a biopharmaceutical company mainly focused on the development of therapeutics for central nervous system disorders. Acorda will acquire Turku, Finland-based Biotie for 23.5680 euros per American Depositary Share (ADS) in cash or the equivalent of $25.60 per ADS, representing a total value of about $363 million. With this acquisition, Ardsley, NY-based Acorda will gain global rights to an oral adenosine A2a receptor antagonist, tozadenant. Currently, tozadenant is in Phase 3 development for the reduction of “off” time, i.e., periods of decreased mobility, in patients with Parkinson’s disease. In a Phase 2b study, tozadenant has demonstrated statistically significant and clinically meaningful results with the ability to reduce average daily off time as an adjunct to treatment regimens including levodopa/carbidopa.
Elsewhere, Boston-based Zafgen Inc. (Nasdaq) shot up $3.03, or 52%, to $8.84 after the company announced positive efficacy results from the pivotal Phase 3 study on its lead pipeline candidate, beloranib. The study is evaluating beloranib in patients with Prader-Willi syndrome (PWS), the most commonly known genetic cause of life-threatening obesity. The double-blind, placebo-controlled study evaluated the safety and efficacy of beloranib in PWS patients during a six-month randomized treatment period. In the study, 107 patients were randomized to receive twice-weekly subcutaneous injections of either 2.4 mg or 1.8 mg doses of beloranib or placebo. Results showed that beloranib demonstrated a statistically significant reduction in both body weight and hyperphagia (excessive overeating) behaviors, thereby meeting the co-primary efficacy endpoints of the study.
And Chimerix Inc. (Nasdaq) leaped $1.80, or 25%, to $8.97 after Piper Jaffray reaffirmed their “overweight” rating on shares of the company, AnalystRatingsNetwork.com reports. The brokerage currently has an $18.00 target price on the biopharmaceutical company’s stock, up from their previous target price of $11.00. Durham, NC-based Chimerix is a biopharmaceutical company dedicated to discovering, developing and commercializing oral antivirals. The company’s lipid conjugate technology has developed its lead compound, brincidofovir which is in Phase 3 clinical development. It is a clinical-stage nucleotide analog lipid-conjugate which has demonstrated potent antiviral activity and safety in convenient, orally administered dosing regimens, according to the company.
But Eleven Biotherapeutics Inc. (Nasdaq) plunged $1.95, or 83%, to $0.39 after announcing top-line results from the Phase 3 clinical trial of its lead drug candidate, isunakinra (EBI-005), for the treatment of severe allergic conjunctivitis. In this trial, there were no statistically significant differences between the isunakinra treated group and the control group on the primary endpoint of ocular itching or on any secondary endpoints. Isunakinra was generally well tolerated, with 94% of the patients completing the trial and there were no serious adverse events reported. Cambridge, MA-based Eleven Biotherapeutics is a clinical-stage biopharmaceutical company with a proprietary protein engineering platform, called AMP-Rx, that it applies to the discovery and development of protein therapeutics to treat diseases of the eye.
IPO SECTOR -- BeiGene Co. Ltd., a Chinese biotech developing immunotherapies based on kinase inhibitors, announced terms for its initial public offering. The Beijing, China-based company plans to raise $126.5 million by offering 5.5 million ADSs at a price range of $22 to $24. Insiders intend to purchase 50% of the offering. At the midpoint of the proposed range, BeiGene would command a fully diluted market value of $756 million. BeiGene was founded in 2010 and booked $6 million in sales for the 12 months ended September 30, 2015. It plans to list on the Nasdaq under the symbol “BGNE.” Goldman Sachs, Morgan Stanley and Cowen & Company are the joint bookrunners on the deal. It is expected to price during the week of February 1, 2016. ** AveXis Inc., which is developing gene therapies for rare neurological diseases, filed on Friday with the SEC to raise up to $115 million in an initial public offering. The Bannockburn, IL-based company was founded in 2010 and plans to list on the Nasdaq under the symbol “AVXS.” AveXis filed confidentially on October 16, 2015. Goldman Sachs, Jefferies, BMO Capital Markets and Chardan Capital Markets are the joint bookrunners on the deal. No pricing terms were disclosed.
January 18, 2016
DRUGMAKER SHIRE TO BUY BAXALTA FOR $32 BILLION AFTER SIX-MONTH QUEST – Shire Plc’s (Dublin IRL) six-month pursuit of Baxalta Inc. (Bannockburn IL) ended last week when the two companies unveiled a $32 billion deal that they said would create the world’s biggest rare-disease drugmaker. News of Shire’s deal for the Illinois company comes amid unease in Washington over U.S. tax policy and corporate growth. For months, the focus has been on U.S. efforts to prevent inversion transactions that allow companies to move their addresses overseas for tax benefits. But some lawmakers contend that not enough is being done to discourage the purchase of U.S. companies by foreign entities. The two companies signed off on the deal after overcoming fears the tie-up could run afoul of U.S. laws that prohibit tax-free spinoffs from being used as a device to funnel cash to shareholders. Baxalta was separated from parent Baxter International Inc. (Deerfield IL) in July. Shire CEO Flemming Ornskov said that although the U.S. Internal Revenue Service would “of course” examine the deal, he was confident that the proposed transaction wouldn’t violate U.S. rules, citing an unqualified opinion provided by lawyers and tax accountants. The IRS said it is prohibited by federal law from discussing specific taxpayers. A combined Shire and Baxalta would have an effective tax rate of 16% to 17% by 2017, lower than Baxalta’s current rate of 23.5%.
One U.S. lawmaker, pointing to the tie-up, said it underscores the need for tax overhaul. “The deal proves that a new year can’t hide the flaws of our outdated tax code,” said Sen. Rob Portman (R-OH). “If we want to keep U.S. businesses, jobs and investment in the U.S., tax reform must be a 2016 priority.” Shire agreed to pay $18 in cash plus 0.1482 of its American depository shares for each Baxalta share, making this one of the few cash-and-stock deals involving a recent tax-free spinoff. The deal terms imply a valuation of $47.50 per share based on Shire’s average share price over the past 30 trading days, the drug companies said, and a valuation of $45.57 based on Shire’s closing price the previous Friday. Shares of Baxalta closed the week up 12 cents at $40.13 in New York, while Shire’s ADRs fell 5% to $177.58. Shire was a focus of U.S. regulators in 2014, when it proposed a merger transaction with AbbVie Inc. (North Chicago) that would have allowed AbbVie to invert and lower its tax rate. That deal, among others, prompted the Obama administration to propose tougher anti-inversion rules in September 2014. The AbbVie-Shire merger never closed.
DOZENS FEARED EXPOSED AS SIERRA LEONE CONFIRMS NEW EBOLA DEATH – A woman who died of Ebola last week in Sierra Leone potentially exposed dozens of other people to the disease, according to an aid agency report on Friday, raising the risk of more cases just as the deadliest outbreak on record appeared to be ending. Just a day earlier, the Geneva-based World Health Organization (WHO) had declared that “all known chains of transmission have been stopped in West Africa” after Liberia joined Sierra Leone and Guinea in going six weeks with no reported new cases. The three countries had borne the brunt of a two-year epidemic that killed more than 11,300 people. The WHO warned of the potential for more flare-ups, as survivors can carry the virus for months. But the new case in Sierra Leone is especially unsettling because authorities failed to follow basic health protocols, according to the report which Reuters saw. Compiled by a humanitarian agency that asked not to be named, the document said the victim, Mariatu Jalloh, had come into contact with at least 27 people, including 22 in the house where she died and five who were involved in washing her corpse. But its account suggested others could also be at risk. Jalloh, 22, began showing symptoms at the beginning of the year. A student in Port Loko, the largest town in Sierra Leone’s Northern Province, she traveled to Bamoi Luma near the border with Guinea in late December.
Sierra Leone’s northern border area, a maze of waterways, was one of the country’s last Ebola hot spots before it was declared Ebola-free on Nov. 7, and contact tracing was sometimes undermined by access problems. By the time she traveled back to her parents’ home in Tonkolili district, east of the capital Freetown, using three different taxis, Jalloh had diarrhea and was vomiting, the report said. She sought treatment at the local Magburaka Government Hospital on Jan. 8 where a health worker, who did not wear protective clothing, took a blood sample. It was not immediately clear whether the sample was tested for Ebola. She was treated as an outpatient and returned home, where she died on Jan. 12. Health workers took a swab test of Jalloh’s body following her death, which tested positive for Ebola. The missed diagnosis has led to anger in some quarters. Dozens of young people gathered outside the hospital on Friday, some holding placards accusing the health department of negligence. While the WHO has said that another major outbreak is unlikely, it says the risk of flare-ups remains because of the way the virus can persist in survivors. Reuters reports that research on survivors has located it in semen, breast milk, vaginal secretions, spinal fluid and fluids around the eyes.
TRACKING WASHINGTON – Federal investigators said Thursday that there were flaws in the way the Food and Drug Administration tracked drugs after they came to market, raising questions about the agency’s effectiveness as the country’s main drug overseer. Once the agency approves a drug, it is required to monitor the drug’s safety as well as efforts by the manufacturer to study how the drug is doing in the marketplace, for example, whether many patients are reporting problems while taking it. The investigators, from the Government Accountability Office, a nonpartisan investigative arm of Congress, looked at how the FDA was doing with those tasks. The answer was not very well. “FDA’s data on post-market safety issues and studies were found to be incomplete, outdated, to contain inaccuracies, and to be stored in a manner that made routine, systematic analysis difficult,” the GAO concluded in its report. The office described its findings in a report commissioned by Rep. Rosa DeLauro, (D-CT). Ms. DeLauro said she wanted to evaluate the FDA’s record on detecting problems with drugs at a time when increasing numbers of them are being approved under an expedited process. The investigators said that about a quarter of the drugs the agency approved from October 2006 to December 2014 used at least one of the agency’s expedited programs.
Critics of the fast-track system say it gives companies too much latitude to delay releasing longer-term evidence that a drug is safe and effective until after it is already on the market, a pattern they say increases patient risk. They say the new report is proof that such evidence is not making it into the public realm, a pattern that they argue discredits the integrity of the drug-approval system. “We are shortcutting an important part of the approval process in the hope that we get the information later, but now we’re finding out that’s not happening,” said Diana Zuckerman, president of the National Center for Health Research, a nonprofit consumer research group. Supporters of the faster approval process say it does not increase risk and is needed in an age of rapidly advancing science when drugs are increasingly used on smaller patient populations. The FDA said it had investigated some of the same issues over the past few years and had already taken steps to correct the problems. The agency’s response was included in the report.
FDA/EMA ROUNDUP -- U.S. Food and Drug Administration staff said they were unconvinced about the effectiveness of Sarepta Therapeutics Inc.’s (Cambridge MA) drug for a rare muscle wasting disorder, dealing another blow to the quest for a drug to treat the fatal disease. The report came a day after the FDA rejected BioMarin Pharmaceutical Inc.’s (Novato CA) rival drug Kyndrisa. Sarepta’s drug, eteplirsen, is designed to treat a subset of patients with Duchenne muscular dystrophy (DMD), which hampers muscle movement and affects one in 3,600 newborn boys, with most patients dying by the age of 30. There are no FDA-approved drugs for DMD, and pressure has been mounting on the agency to swiftly approve treatments. It’s not the end of the road for the treatment yet--the situation will become clearer after a panel to the FDA makes its recommendation on the drug on Jan. 22. Sarepta’s eteplirsen, like Kyndrisa, skips a faulty section of the gene to produce dystrophin, the lack of which is believed to cause DMD.
Elsewhere, a panel of medical experts recommended that the FDA approve a new way of treating opioid addicts, using a slender rod implanted into the arm that delivers medicine for months at a time. Some doctors say it could help ease the national epidemic of drug overdoses. The implant is called Probuphine and is made by Braeburn Pharmaceuticals Inc. (Princeton NJ). It is about the size of a small matchstick and delivers daily doses of buprenorphine--one of the most common medical treatments for opioid addicts--for six-month periods. In controlled doses, buprenorphine can help the body withdraw from opioid addiction, but can also itself be addictive. That risk is increased by the fact that the medicine can be taken only by mouth, requiring patients, often ill from addiction, to manage their daily dosages. The advisory panel voted 12 to 5 to recommend approval. The panel concluded that flaws in the evidence the company presented, including missing data in a clinical study, were not fatal, and that the product was roughly as effective as the oral form of the drug.
Roche Holding AG (Basel CHE) said the FDA has granted “priority review” status for its venetoclax drug for the treatment of a blood cancer, which it is developing with partner AbbVie Inc. (North Chicago). Analysts have said the drug has “blockbuster” sales potential, meaning sales of more than $1 billion a year, and the FDA had already fast-tracked it for approval last May by designating it a “breakthrough therapy.” The companies have said the drug has met its primary treatment goal in patients with chronic lymphocytic leukemia who had a so-called 17p gene deletion. The mutation has been associated with aggressive cancer and survival of less than two to three years after diagnosis. Roche expects to win FDA approval in the first half of 2016, a spokeswoman said. Brokerage Cowen and Co. has predicted that venetoclax, if approved, could capture annual sales of $2 billion by 2020.
And BioMarin Pharmaceutical Inc. on Thursday said the FDA rejected its new drug application for a treatment of a fatal form of muscular dystrophy because of questions about the drug’s effectiveness. The biopharmaceutical company said it would work with the FDA to determine next steps for the treatment, called drisapersen, and that studies will continue. The drug, which has the marketing name Kyndrisa, remains under review in Europe. Duchenne muscular dystrophy occurs in about 1 in 3,500 boys and is often fatal by the time the boy reaches his 20s or early 30s. Children with Duchenne begin to lose their ability to walk in their teens, and can lose respiratory function and begin to have severe cardiac problems. It has no FDA-approved therapy. In November, an advisory panel for the FDA said the drug’s trials fell short of proving it helped children with the illness.
MEDICAL STOCK SPOTLIGHT -- Affymetrix Inc. (Nasdaq) led advancing issues, soaring $4.70, or 51% for the week, to $13.91. Thermo Fisher Scientific Inc. agreed to acquire Affymetrix in a deal valued at about $1.3 billion, adding technology used by scientists and biologists to analyze specimens at the cellular and genetic level. Thermo Fisher will pay $14 a share in cash, according to a statement. The transaction, expected to be completed by the end of June, will add 10 cents a share to earnings in the first full year, Thermo said. Adding Santa Clara, CA-based Affymetrix’s products will help Thermo Fisher expand its array of laboratory equipment, which also includes diagnostic tools for hospitals and mass spectrometers for chemists. Thermo Fisher also expects to cut annual overlapping costs by about $70 million by the third year after the transaction closes. Thermo Fisher has been beefing up its diagnostic equipment offerings. In February 2014, it paid $15.4 billion for Life Technologies Corp., a maker of DNA analysis technologies--its largest deal ever.
Elsewhere, NanoString Technologies Inc. (Nasdaq) leaped $2.36, or 20%, to $14.33 after its stock had a “buy” rating reaffirmed by analysts at BTIG Research. They presently have a $20.00 target price on the stock--a potential upside of 39.57% from the stock’s previous close. Other research analysts have also recently issued reports about the stock. Zacks Investment Research raised shares of NanoString from a “hold” rating to a “buy” rating and set a $16.00 target price for the company in a report on October 22. Cowen and Company began coverage on NanoString Technologies on September 30. They set an “outperform” rating and a $20.00 price target on the stock. Seattle, WA-based NanoString has a consensus rating of “buy” and an average target price of $18.00. NanoString Technologies develops, manufactures and sells products that unlock scientifically valuable and clinically actionable genomic information from minute amounts of tissue, according to the company.
And Sagent Pharmaceuticals Inc. (Nasdaq) surged $2.02, or 15%, to $15.38 after Reuters reported that the company has hired an investment bank to solicit bids to buy the generic-drug maker. Reuters appears to have multiple sources that confirmed the rumor--and even named the investment bank, Perella Weinberg Partners--so it seems likely that Sagent is indeed looking for a buyer. The rumor emanated from the JP Morgan Healthcare Conference last week in San Francisco--a good place and time to shop a company since all the potential buyers were there last week. Schaumburg, IL-based Sagent specializes in injectable pharmaceuticals and offers its customers a broad range of products across anti-infective, oncolytic and critical-care indications in a variety of formats, including single- and multi-dose vials, pre-filled, ready-to-use syringes, medical devices and premixed bags.
But Sarepta Therapeutics Inc. (Nasdaq) plummeted $21.65, or 60%, to $14.28, on a highly negative clinical review of the company’s Duchenne muscular dystrophy drug, eteplirsen, released by the U.S. Food and Drug Administration. The FDA is convening an outside advisory panel this Thursday to review the eteplirsen data. Cambridge, MA-based Sarepta will get an opportunity to defend the eteplirsen data and convince the Jan. 22 panel members to vote in favor of approval. “Although FDA is prepared to be flexible with respect to a devastating illness with no treatment options, we cannot approve drugs for which substantial evidence of effectiveness has not been established,” the FDA said in a summary of the eteplirsen medical review. The FDA on Thursday formally rejected drisapersen, a competing DMD drug from Biomarin Pharmaceuticals Inc. Its shares closed the week down 13% at $83.14.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Senseonics Holdings Inc., a medical device maker producing implantable continuous glucose monitoring system, registered up to $52 million worth of common stock. The company is currently traded on the OTCQB under symbol “SENH.” As estimated by the International Diabetes Federation, there are 387 million people worldwide living with diabetes. This population is estimated to grow to 592 million people by 2035. The Germantown, MD-based company, which was founded in 2011, plans to list on the NYSE under the symbol “SENS.” Leerink Partners and Canaccord Genuity are the joint bookrunners on the deal. No pricing terms were disclosed. ** Advanced Inhalation Therapies Ltd., which is developing inhaled nitric oxide drug-device therapies for respiratory infections, announced terms for its IPO. The Rehovot, Israel-based company plans to raise $10 million by offering 675,000 units at a price of $15; each unit represents two shares of common stock and three warrants exercisable at 125% of the offering price. At the proposed price, Advanced Inhalation Therapies would command a fully diluted market value of $34 million. Advanced Inhalation Therapies, which was founded in 2011, plans to list on the Nasdaq under the symbol “AITPU.” The warrants will list under the symbol “AITPW.” Joseph Gunnar & Co. is the sole bookrunner on the deal, replacing Aegis Capital.
January 11, 2016 ...
U.S. SAYS 11.3 MILLION AMERICANS HAVE SIGNED UP FOR 2016 OBAMACARE PLANS – About 11.3 million people have signed up for 2016 health insurance policies under the Affordable Care Act, the U.S. said Thursday, exceeding the low end of government estimates. The Obamacare figures, which include federal data through Jan. 2 and state data through Dec. 26, are the most complete yet from the Health and Human Services Department. Most people have until the end of the month to sign up for 2016 health plans, and the government has estimated that 11 million to 14.1 million people will pick plans by then. But despite the decent enrollment number, the Obama administration so far is making little progress in getting more young adults to sign up for health policies on the federal insurance exchange. Twenty-six percent of people who signed up for coverage as of Dec. 26 in the 38 states that use the federal exchange were ages 18 to 34, according to a report from the Centers for Medicare and Medicaid Services, which administers the law. That figure is largely unchanged from a roughly comparable two-month period through Jan. 16, 2015. The numbers are below goals set by actuaries when the exchanges were launched in 2013. They estimated then that adults 18 to 34 would ideally make up 40% of the exchanges’ enrollment because the age group is generally healthier--which means they hold down premium rates by balancing out the greater medical spending of older enrollees.
Still, the percentage of new signs-ups among young adults is trending upward, federal officials said, though they said there isn’t comparative data to back up the contention. The officials said they typically see a surge of younger people in the final weeks of the enrollment period, which continues through Jan. 31. The number for 2016 also will rise once the state exchanges’ sign-ups are added. “We’re encouraged that marketplace consumers are increasingly young, engaged and shopping for the best plan,” Health and Human Services Secretary Sylvia Mathews Burwell said in a statement Thursday. In 2014, about 28% of people picking plans on the federal exchanges were 18 to 34 years old. The number of young people overall who are signing up--both young adults and children--was unchanged. Thirty-five percent of people who signed up or renewed coverage on the federal exchange as of Dec. 26 were under age 35, similar to the roughly comparable time period through Jan. 16, 2015.
BREAKTHROUGH IN GENE EDITING OFFERS HOPE TO THOSE WITH DUCHENNE MUSCULAR DYSTROPHY – After decades of disappointingly slow progress, researchers have taken a substantial step toward a possible treatment for Duchenne muscular dystrophy with the help of a powerful new gene-editing technique. Duchenne muscular dystrophy is a progressive muscle-wasting disease that affects boys, putting them in wheelchairs by age 10, followed by an early death from heart failure or breathing difficulties. The disease is caused by defects in a gene that encodes a protein called dystrophin, which is essential for proper muscle function. Because the disease is devastating and incurable, and common for a hereditary illness, it has long been a target for gene therapy, though without success. An alternative treatment--drugs based on chemicals known as antisense oligonucleotides--is in clinical trials. But gene therapy--the idea of curing a genetic disease by inserting the correct gene into damaged cells--is making a comeback. A new technique, known as Crispr-Cas9, lets researchers cut the DNA of chromosomes at selected sites to remove or insert segments. Three research groups, working independently, reported in the journal Science that they had used the Crispr-Cas9 technique to treat mice with a defective dystrophin gene.
Each of the three groups loaded the DNA-cutting system onto a virus that infected the mice’s muscle cells, and excised from the gene a defective stretch of DNA known as an exon. Without the defective exon, the muscle cells made a shortened dystrophin protein that was nonetheless functional, giving all of the mice more strength. The teams were led by Charles A. Gersbach of Duke University, Eric N. Olson of the University of Texas Southwestern Medical Center and Amy J. Wagers of Harvard University. “The papers are pretty significant,” said Louis M. Kunkel, a muscular dystrophy expert at Boston Children’s Hospital who discovered the dystrophin gene in 1986. The dystrophin protein plays a structural role, anchoring each muscle fiber to the membrane that encloses the muscle-fiber bundle. The dystrophin gene, which guides the protein’s production in the cell, sprawls across about 1% of the X chromosome and is the largest in the human genome. That gene has 79 sections, or exons, but can evidently maintain reasonable function even if a few exons in the middle are lost. The protein works as long as its two ends are intact. This is what happens in a milder disease known as Becker muscular dystrophy, in which mutations cause instructions from a few exons to be skipped during the protein-making process. (Source: Science)
TRACKING WASHINGTON – Protecting his signature domestic achievement, President Barack Obama on Friday vetoed Republican-inspired legislation to repeal his healthcare law, saying to do so “would reverse the significant progress we have made in improving health care in America.” Republican lawmakers have pushed many repeal measures since 2010, when Obama signed the healthcare program into law. This bill was the first one to make it through Congress and reach his desk. Republicans have argued that the law is costly and doesn’t work. In his veto message to Congress, first reported by the Associated Press, Obama disagreed. Obama said the Affordable Care Act includes fairer rules and stronger consumer protections “that have made healthcare coverage more affordable, more attainable and more patient-centered. And it is working.” The veto was expected. But Republicans claimed victory nonetheless, arguing that they met two goals by finally passing a repeal bill: keeping a promise to voters in an election year, and showing that they are capable of repealing the law if a Republican wins November’s presidential election. All the GOP presidential candidates support repealing the law widely referred to as “Obamacare.” House Speaker Paul Ryan (R-WI) predicted it will be “a matter of time” before the law is finally overturned.
The Senate passed the measure last year under special rules that protected it from a Democratic filibuster, which can be cut off with at least 60 votes. The House passed it last week. For maximum visibility, Republican leaders made the legislation their first major vote of 2016. Although they don’t have the votes to actually override Obama’s veto, they hope to schedule an override vote to coincide with the Jan. 22 March for Life in Washington, an annual commemoration of the anniversary of the Supreme Court decision that legalized abortion. “We will hold a vote to override this veto, taking this process all the way to the end under the Constitution,” Ryan said. The bill would dismantle the health law’s key pillars, including requirements that most people obtain coverage and that larger employers offer it to workers. It would eliminate the expansion of Medicaid to cover more lower-income people and the government’s subsidies for many who buy policies on newly created insurance marketplaces. It would also end taxes the law imposed to cover its costs and cut federal funding for Planned Parenthood. More than 16 million people have gained health coverage since the law was enacted, according to government figures. They could risk losing it under the GOP approach.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration approved AztraZeneca Plc’s (London) drug Zurampic to treat a condition associated with gout to be used in combination with another type of drug that reduces production of uric acid in the body. Zurampic, known chemically as lesinurad, works by helping the kidneys to excrete uric acid. Gout is a painful form of arthritis caused by the buildup of too much uric acid in the body. As a condition of the approval, the FDA said it will require AstraZeneca to conduct a study to further assess the kidney and heart safety of the medicine. The drug’s label will include a warning alerting healthcare professionals to the risk of kidney failure with certain unapproved uses, such as with higher-than-approved doses of Zurampic, the agency said.
Elsewhere, Eli Lilly & Co. (Indianapolis IN) secured a win at the FDA with the agency approving the company’s insulin Basaglar, to improve glycemic control in patients with Type 1 and 2 diabetes. Basaglar is the first insulin product approved through an abbreviated approval that relied in part on the FDA’s finding of safety and effectiveness for Sanofi SA’s Lantus (insulin glargine). The FDA granted tentative approval for Basaglar in August 2014. Lilly provided Basaglar-specific data that included two clinical trials enrolling 534 and 744 patients with Type 1 and 2 diabetes mellitus, respectively. Basaglar is indicated to improve glycemic control in adults with Type 2 diabetes and in combination with mealtime insulin in adults and pediatric patients with Type 1 diabetes.
Gilead Sciences Inc. (Foster City CA) said the FDA granted a priority review of its experimental hepatitis C combination drug. The drugmaker filed a new drug application (NDA) for the treatment--a combination of the biopharmaceutical company’s Sovaldi with velpatasvir--in late October. The FDA is expected to decide whether to approve the combination therapy by June 28. The FDA also has given the Sovaldi-velpatasir combination treatment “breakthrough therapy” designation, which is granted to experimental medicines that may offer major advances over existing options. The company, which had been known for its HIV/AIDS treatments, recently has seen its sales driven by its hepatitis C drugs.
And Regenxbio Inc. (Rockville MD) has won an FDA “rare pediatric disease” designation for its investigational gene-therapy candidate for the treatment of mucopolysaccharidosis type I (MPS I). RGX-111 uses an adeno-associated virus vector to deliver the human IDUA gene to the central nervous system, which MPS I lacks. The disease strikes about 1 in 100,000 newborns. Regenxbio has said it plans to file an IND application with the FDA in the first half of the year. Under the FDA’s Rare Pediatric Disease Priority Review Voucher program, a sponsor who receives an NDA or BLA approval may be eligible for a voucher, which can be redeemed to obtain priority review for any subsequent marketing application.
MEDICAL STOCK SPOTLIGHT -- Axsome Therapeutics Inc. (Nasdaq) led a tiny group of advancing issues in the sector, leaping $2.59, or 28% for the week, to $11.86. The quiet period for Axsome’s initial public offering expired on Tuesday, December 29th. New York City-based Axsome Therapeutics had issued 5.67 million shares on November 19 at a price of $9 per share. Following the expiration of the company’s quiet period, a number of analysts commented on the stock. Ladenburg Thalmann assumed coverage on shares of Axsome issuing a “Buy” rating and a $25.00 price target for the company. Brean Capital assumed coverage on shares issuing a “Buy” rating and a $29.00 price target. Finally, Cantor Fitzgerald assumed coverage on shares of Axsome and issued a “Buy” rating and a $13.00 price target. Axsome is a clinical stage biopharmaceutical company developing novel therapies for the management of pain and other central nervous system, or CNS, disorders.
Elsewhere, Athersys Inc. (Nasdaq) jumped $21% to $1.25 after announcing a license agreement Friday with Tokyo-based Healios K.K. on a treatment for strokes. The companies will collaborate on a stem-cell therapy, known as MultiStem, that treats ischemic stroke and is being developed by Athersys. Ischemic strokes, which cause blood not to reach the brain, accounts for about 87% of all strokes, according to the National Stroke Association. Under the agreement, Healios, a regenerative medicine company, will have exclusive development rights to MultiStem in Japan, the companies announced. Cleveland, OH-based Athersys, which specializes in regenerative medicine, will receive an initial license fee of $15 million and is eligible for sales milestones that could reach $185 million.
And Auris Medical Holding AG (Nasdaq) surged 16% to $5.69 after its stock had an “Outperform” rating restated by equities research analysts at Leerink Swann. Leerink analyst, Joseph Schwartz believes Auris's leading pipeline asset AM-101 could generate $350 million in risk-adjusted peak sales. Auris is pursuing groundbreaking neurotology research with two late-stage, Phase 3 pipeline candidates for the treatment of acute inner ear tinnitus (AM-101) and AM-111 for idiopathic sudden sensorineural hearing loss (sudden deafness). Top-line data for AM-101 are expected in 2Q16, and clinically meaningful efficacy would translate into solid upside, according to Leerink.
But ChemoCentryx Inc. (Nasdaq) plunged $3.33, or 41%, to $4.77 after its experimental drug was found to be as effective as standard-of-care in treating a rare autoimmune disease, but shares fell after the latest data raised doubts about the success of a late-stage study. “The small trial size and its design limits the confidence of the late-stage study being successful,” Cowen and Co. analyst Eric Schmidt, who has “market perform” rating on the stock, wrote. Schmidt said effects were driven by previously released data and the drug arm performed “directionally worse” in the newly treated patients. Interim data in November 2014 showed that the drug was as effective as the standard of care. Mountain View, CA-based ChemoCentryx is developing CCX168 to assess whether the drug can help reduce or replace the use of steroids in the treatment of Anti-neutrophil cytoplasmic antibody (ANCA)-associated vasculitis, or AAV. The condition, which affects about 40,000 people in the United States, is a type of rare autoimmune inflammation of the blood vessels. It leads to organ damage and failure and can be fatal if left untreated.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Visterra Inc., a drug developer focused on creating vaccines for infectious diseases prone to mutation and resistance, registered up to $69 million worth of common stock. The Cambridge, MA-based company, which was founded in 2007, plans to list on the Nasdaq under the symbol “VIST.” Leerink Partners and Stifel are the joint bookrunners on the deal. No pricing terms were disclosed. ** Spring Bank Pharmaceuticals Inc., which is developing a protein-modulating small-molecule platform to treat viral diseases, registered up to $58 million in an initial public offering. The Milford, MA-based company, which was founded in 2002 and booked $1 million in sales for the 12 months ended September 30, 2015, plans to list on the Nasdaq under the symbol “SBPH.” Spring Bank filed confidentially on August 3, 2015. William Blair, Wedbush PacGrow and BTIG are the joint bookrunners on the deal. No pricing terms were disclosed.
December 21, 2015 ...
PRESIDENT SIGNS MASSIVE TAX CUT, SPENDING PACKAGE; OBAMACARE WEAKENED – Congress gave final approval Friday to one of the most ambitious legislative packages in years--a $1.1-trillion funding bill, up to $680 billion in tax breaks and dozens of other substantial policy initiatives. The measure, which averts another shutdown and keeps the federal government running through September, was sent to President Obama, who signed it into law. “I do want to thank Congress for ending the year on a high note,” Obama said at a news conference after lawmakers voted on the deal. “I’m not wowed about everything in it--I’m sure that’s true for everybody--but it is a budget that, as I insisted, invests in our military and our middle class without ideological divisions.” Obama added that “because it eliminates the possibility of a shutdown for the first nine months of next year, Congress and I have a long runway to get some important things done on behalf of the American people.” The 65-33 Senate vote on Friday followed overwhelming passage in the House, delivering a rare bipartisan compromise as lawmakers bailed out of Washington for the holiday recess. The legislation contains yet another GOP blow to the Affordable Care Act. This one blocks administration efforts to augment a special fund created under the law to compensate insurance companies for excessive losses due to a disproportionate share of very sick or elderly enrollees.
The spending bill also suspends the implementation of two key Obamacare-related taxes for two years. Lawmakers targeted the so-called Cadillac tax on expensive healthcare plans and a levy on medical devices. Both levies help fund the healthcare law and suspending them could be the first step to a permanent elimination of the taxes. Even so, the White House seemed to ignore the suspension, releasing a supportive statement last Wednesday that instead focused more on provisions that make some middle-class tax cuts permanent and extend incentives for wind and solar energy. The spending legislation also renews the World Trade Center Health Program, which provides services to 9/11 responders, through 2090. The September 11 Victim Compensation Fund will be fully funded through 2021.
VALEANT MAKES DISTRIBUTION DEAL WITH WALGREENS – Valeant Pharmaceuticals International Inc. (Laval, Quebec) said it has found a new partner to replace the controversial mail-order pharmacy that had helped patients fill prescriptions for the company’s pricey skin and other drugs. Walgreens Boots Alliance Inc. (Deerfield IL), which runs the largest chain of pharmacies in the U.S., will sell Valeant’s signature skin and eye drugs at a discount under a 20-year agreement between the two companies. In addition, Walgreens agreed to sell at low generic prices more than 30 other Valeant branded drugs that have been struggling with low-price competition. The chain will also implement Valeant’s copay-assistance program to help patients with out-of-pocket costs, according to a person familiar with the matter. Valeant had been administering its financial-assistance program through mail-order pharmacy Philidor Rx Services LLC (Hatboro PA). Valeant had been looking for a new pharmacy partner since saying in October it would cut ties with Philidor, which The Wall Street Journal reported had close ties to Valeant and employed aggressive tactics to get insurers to pay for its drugs. Analysts and investors questioned how Valeant would replace Philidor, which was involved in nearly 7% of Valeant sales and contributed to its revenue growth.
In turning to Walgreens, Valeant has found a recognizable name that could help it quell the controversy over its drug-selling practices. Also, Walgreens has 8,000 pharmacies across the U.S. that promise the kind of volume-driven sales increases the drug company has been seeking. “This is going to drive growth,” Valeant CEO Michael Pearson said. The financial impact on Valeant remains unclear. Philidor helped Valeant gain insurance payments for high-price drugs such as Solodyn acne medicine. Valeant has agreed to sell its signature skin and eye drugs through Walgreens at a 10% discount, while cutting the cost of the 30 other branded drugs that face generic competition by an average of 50%. Also, Valeant will distribute the drugs directly to Walgreens instead of through a middleman, and pay Walgreens fees for filling prescriptions. Meantime, Walgreens benefits from Valeant’s many skin-drug patients going to the chain’s pharmacies, which can then try to cross-sell high-end shampoos and cosmetics to the often young, affluent patients as they wait for prescriptions. Valeant closed the week down 6% at $87.09. Walgreens rose 1% to $82.51.
TRACKING WASHINGTON – The number of new drugs approved in the United States this year has already topped last year’s 18-year high, yet large pharmaceutical companies are still struggling to get a decent return on their research dollars. In fact, returns on research and development (R&D) spending by the world’s top drugmakers have fallen to just 4.2%, or less than half the 10.1% recorded in 2010, according to a report from consultancy Deloitte Touche Tohmatsu Ltd. (New York City). The mismatch between the rising number of drug approvals and falling returns reflects the fact that each new medicine is expected to yield significantly lower average sales, while costs are continuing to rise. Since 2010, forecast peak sales per new drug have fallen by almost 50%, even as the average cost of developing a product has climbed by a third. Friday’s FDA approval for Roche Holding AG’s (Basel CHE) new lung-cancer drug alectinib lifted the 2015 total above 2014’s full-year tally of 41. Many of these new treatments, however, are targeted at niche patient populations and are designed for treating rare diseases or very specific sub-types of cancer. Still, the rapid pace of new drug launches is forecast to continue, with 225 new drugs expected to be approved between 2016 and 2020, according to a report from industry data firm IMS Health Inc. (Danbury CT). IMS expects cancer treatments to be largest category.
Elsewhere, about 6 million people signed up for health coverage that will take effect on Jan. 1 under the Affordable Care Act in states using the federal marketplace, the U.S. said Friday. That’s up from about 3.4 million people who had decided to sign up for ACA coverage through the federal system at about the same time last year, the Centers for Medicare and Medicaid Services said. It’s difficult to compare the enrollment periods directly because sign-ups for the ACA, also known as Obamacare, began on different dates. In a closely watched sign-up period, CMS departed from its usual Wednesday data releases to provide an update on ACA enrollment. Sign-ups this year will provide an important indicator of how President Barack Obama’s health law is faring as the 2016 election approaches. “These numbers tell an important story about a vibrant, healthy, growing marketplace,” Andy Slavitt, acting administrator of CMS, said. “It’s clear now that many people have been waiting to purchase coverage until this enrollment cycle.” The figures released Friday include the 38 states using the federal marketplace for enrollment. They don’t include states such as California and New York that have their own systems.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration approved Eli Lilly & Co.’s (Indianapolis IN) diabetes drug Basaglar, a cheaper version of Sanofi SA’s top-selling pen-like injector drug Lantus. The drug, an injection known also as insulin glargine, is a long-acting, man-made version of human insulin. It is the first insulin product approved through a shortened review process based on its similarity to an existing drug. The FDA determined that Basaglar was sufficiently similar to Lantus to justify approval based on the safety and effectiveness of Lantus as well as certain Basaglar-specific data. British research firm GlobalData says Lantus had sales of $12.4 billion in 2014.
Elsewhere, the FDA granted approval to Genentech Inc.’s (South San Francisco) Alecensa for metastatic anaplastic lymphoma kinase-positive non-small cell lung cancer in patients whose disease has worsened after taking Pfizer Inc.’s Xalkori, or who could not tolerate the treatment. An oral medication, Alecensa (alectinib) blocks the activity of the ALK protein, which may prevent NSCLC cells from growing and spreading. Patients with the ALK gene mutation in lung cancer cells often experience metastasis of the brain. Genentech spokesman Andrew Villani says the monthly cost of Alecensa is approximately $12,500, and the company is offering a co-pay card to help eligible patients with private insurance pay $25 per co-pay.
The FDA approved a new drug that helps patients recover from the numbing effects of certain surgical drugs. The approval of Bridion marks a victory for Merck & Co. (Kenilworth NJ), which had been seeking marketing clearance for the injectable medication for years. Bridion is the first drug that reverses the effects of certain muscle-relaxing drugs given along with anesthesia during surgery. Patients treated with Bridion recovered faster from surgery than those who did not receive the drug, according to the FDA’s review of studies involving 456 patients. But the FDA first rejected the drug in 2008 due to allergic reactions and bleeding problems seen in some patients. The agency then repeatedly cancelled and rescheduled meetings to review the drug, most recently in March of this year. The drug was approved in European Union countries in 2009.
And the FDA approved Otonomy Inc.’s (San Diego CA) Otiprio for the treatment of pediatric patients with bilateral otitis media with effusion undergoing tympanostomy tube placement. A single-dose antibacterial, Otiprio (ciprofloxacin otic suspension) is the first product approved for this indication, according to the company. Otonomy spokeswoman Heidi Chokeir says the company has a preliminary net sales price target of $200 to $250. The company plans to launch the product in the first quarter of 2016.
MEDICAL STOCK SPOTLIGHT -- ReWalk Robotics Ltd. (Nasdaq) led advancing issues, soaring 232% over the week to $13.50 after the U.S. Department of Veterans Affairs agreed to pay for the company’s robotic exoskeleton to help paralyzed soldiers walk again. The stock had fallen from a peak of $37.15 just days after the initial public offering in 2014 as the Yokneam, Israel-based company struggled to build a market for the device that is strapped onto paraplegics to power their knees and hips and provide support as they walk again. The VA issued a national policy to cover the evaluation of users, their training and the potential purchase of the ReWalk Personal exoskeleton system for veterans across the U.S. who have suffered from spinal cord injuries, the company said in a statement. There are 42,000 U.S. veterans who have lost the use of their legs, and ReWalk has estimated about half would be eligible for the system, creating a $1.9 billion market, said Raj Denhoy, an analyst at Jefferies LLC in New York.
Elsewhere, Acasti Pharma Inc. (Nasdaq) rocketed $1.28, or 78%, to $2.91 after the biopharmaceutical firm said it received encouraging comments from the Food and Drug Administration on its CaPre drug candidate. The drug is being developed to help prevent and treat hypertriglyceridemia, a condition in which abnormally high levels of triglycerides are present in the bloodstream. Acasti said the FDA believes “the 505(b)(2) pathway represents a course for regulatory review and approval, and that Acasti’s plans for the bioavailability bridging study are viewed as sound.” Laval, Quebec-based Acasti Pharma focuses on the research, development, and commercialization of therapies for the treatment and prevention of various cardiometabolic disorders, primarily abnormalities in blood lipids.
And Akebia Therapeutics Inc. (Nasdaq) leaped $2.60, or 27%, to $12.35 following news of what looks like a big commercialization partnership in Asia. The company announced a development and commercialization agreement with Mitsubishi Tanabe Pharma for vadadustat (formerly AKB-6548) in Japan and certain other countries in Asia. Vadadustat is an oral therapy for the treatment of anemia related to chronic kidney disease (CKD). In terms of the agreement, Mitsubishi will make payments totaling $100 million for costs associated with the global Phase 3 program for vadadustat, including $40 million at the signing. Additionally, Cambridge, MA-based Akebia is eligible to receive up to roughly $250 million in additional milestone payments, subject to the achievement of certain development and sales milestones.
But Neothetics Inc. (Nasdaq) sank $6.11, or 83%, to $1.29 after saying its experimental drug to reduce abdominal bulging failed in two late-stage studies. The safety and tolerability of the drug, LIPO-202, was measured using two independent assessment scales, with patients expected to achieve a two point or greater change on both scales. The trials tested the drug on 1,584 patients for eight weeks against a placebo, with the aim of reducing subcutaneous fat in the abdominal area. LIPO-202 is an injectable formulation of salmeterol xinafoate, which activates certain receptors on fat cells, triggering the breakdown of fat. Neothetics said it would analyze the data from both trials to evaluate future plans for the drug. The San Diego, CA-based company specifically develops treatments for the aesthetic market and the second drug in its pipleline is to treat thyroid-related eye-disease, which causes the eye to bulge.
IPO SECTOR -- The tech pipeline for 2016 technology initial public offerings shows no signs of revving up, as tech companies posted their weakest IPO showing this past year since 2009. Coming off of two banner years, the 2015 IPO market was a disappointment with 169 IPOs raising only $30 billion, a six-year low, according to Renaissance Capital, a global IPO investment advisor. There is no single explanation for the decline in 2015 activity said Renaissance; rather, it was driven by a number of factors, including uncertainties about Federal Reserve and European monetary policies, concerns over the Chinese economy, poor IPO performance, declining energy prices and increases in M&A and private market transactions. For the first eight months of the year, the IPO market was on target to reach over 200 IPOs with solid returns, but went into a tailspin in August and September that wiped out positive performance, drove abnormally high IPO discounts and brought issuance to a near halt by year-end. Looking ahead, the IPO pipeline is full, but the pace of IPO activity in 2016 depends on adjusting the expectations of investors and issuers.
Healthcare was the single sector that held up in 2015, comprising a record 46% of IPOs as biotech deal flow remained strong. Small-cap biotech stocks Spark Therapeutics Inc., headquartered in Philadelphia (Nasdaq:ONCE), and Aclaris Therapeutics Inc. of Malvern, PA (Nasdaq:ACRS), were among debuting stocks that have booked large gains in 2015. Among the largest biotech offerings were NantKwest Inc., Cardiff, CA (Nasdaq:NK), which raised $207 million, and Alzheimer’s-focused Axovant Sciences Ltd. (NYSE:AXON), based in Hamilton, Bermuda, which raised a record $315 million. Technology IPOs were notable in their absence, which was a function of plentiful pre-IPO funding and a large unresolved disparity between public and private market valuations. While there were some bright spots, such as Shake Shack, GoDaddy and Fitbit, there were far more disappointments, with 58% of all IPOs trading below issue and the average IPO down -4% at year-end.
December 14, 2015
WHITE HOUSE UPBEAT ON HEALTH-LAW SIGNUPS – Enrollment in 2016 individual insurance through the HealthCare.gov website is higher than it was a year ago at this time, with 1 million new customers signed up, U.S. government health officials said last week. The officials cited the latest enrollment data as a reason for confidence in the long-term stability of HealthCare.gov, which was created under President Barack Obama’s national healthcare law and sells individual insurance plans in 37 states. Private insurers including Anthem Inc. (Indianapolis IN), Aetna Inc. (Hartford CT) and UnitedHealth Group Inc. (Minnetonka MN) are among private insurers selling plans on HealthCare.gov, and who have said they are losing money on the business. A top health official said during a conference call with reporters that the market is robust, with more than 100 insurers selling plans there. “I would caution you not to be overly swayed by any one or a handful of companies and whether they are making money or not,” said Andy Slavitt, acting administrator of the Centers for Medicare and Medicaid Services division of the U.S. Department of Health and Human Services. Although premiums are increasing in most states, HealthCare.gov CEO Kevin Counihan says he’s optimistic about a strong open enrollment season.
More than 9 million people have insurance purchased through the government exchanges, with many of them receiving subsidies aimed at making monthly premiums more affordable. By the end of 2016, the government estimates about 10 million people will have this type of insurance, which was first sold in 2014. That number is far short of the 20 million that had been forecast by the Congressional Budget Office for 2016. Enrollment closes on Dec. 15 for coverage effective Jan. 1 and on Jan. 31 for 2016 coverage. The government said earlier last week that the special enrollment period that had been open around the income tax deadline would not be available this year. UnitedHealth said last month that it would reconsider the extent of its role on the exchanges, through which it now sells plans in about two dozen states. Tuesday Dec. 15 will be the first big test: It’s the deadline for consumers to sign up for subsidized private coverage that takes effect Jan. 1. Current customers who take no action will be automatically renewed.
SENATE PANEL FOCUSES ON BURDEN OF VALEANT, TURING DRUG-PRICE HIKES – Drug price increases hurt patients and disrupt the supply of medicine in the U.S., experts told a Senate panel investigating the industry. While companies should be rewarded for developing new drugs, the system “never anticipated companies acquiring off-patent drugs and then jacking up their prices to enormous heights,” Senator Susan Collins, a Maine Republican, said in a prepared statement at the start of the Senate Special Committee on Aging’s hearing last week. During the session, doctors and pricing experts testified on the impact of price increases for older generic drugs. The committee is led by Collins and Senator Claire McCaskill, a Democrat from Missouri who has called for government intervention. Executives from pharmaceutical companies aren’t scheduled to speak, though the committee has asked them to provide documents as part of its probe. In one case, a patient whose brain infection was being controlled with an anti-parasitic drug called pyrimethamine, or Daraprim, was unable to get the pills when the price shot up and distribution of the treatment changed, said Gerard Anderson, director of the Center for Hospital Finance and Management at the Johns Hopkins Bloomberg School of Public Health in Baltimore. Without the medicine, the patient’s infection flared.
Daraprim treats an infection called toxoplasmosis and is sold by Turing Pharmaceuticals AG (Zug CHE). Led by Martin Shkreli, Turing acquired the rights to the decades-old medicine in August and immediately raised the price to $750 a pill, from $13.50, and implemented a closed distribution system. “I noticed in the morning paper, this is the same guy who thought it was a great idea to pay millions of dollars for the only existing album of the Wu-Tang Clan,” McCaskill said at the hearing. Shkreli earlier this year paid $2 million to buy the sole copy of an album by the legendary rap group. While Shkreli has been a frequent target for criticism, “the Turing example of a several thousand percent price increase is only the tip of the iceberg,” Anderson said. “Many other generic companies are doing the same thing.” Erin Fox, director of the Drug Information Service at University of Utah Health Care, said that price increases for two drugs from Valeant Pharmaceuticals International Inc. (Laval Quebec) has forced the university’s health system to change how it treats heart attacks. The price hikes raise “troubling questions about whether companies like Turing and Valeant are taking advantage of the patients who depend on their products for survival,” McCaskill said.
TRACKING WASHINGTON – About 3.5 million Americans who are uninsured today could get health coverage in 2016 for less than what they’ll pay in penalties under Obamacare, according to a new analysis. That’s because the Affordable Care Act’s fines for skipping health insurance will rise next year. On average, people currently uninsured would have to pay $969 in 2016, up from $661 this year, according to the report by the Kaiser Family Foundation (Menlo Park CA). The penalties are rising to 2.5% of income or a flat dollar amount of $695 per adult, whichever is higher. That’s compared with 2% of income or $325 per adult this year. About 11 million people are eligible for coverage but haven’t bought it. The big question is whether the steeper fines will prod more of them into the market. ”That’s where the mandate matters the most, because it aims to bring healthy people into the risk pool, which will help keep premiums down,” says Larry Levitt, senior vice president at the Kaiser Family Foundation and one of the report’s authors. The new insurance markets created by Obamacare in 2014 need healthy people to enroll in order to be sustainable. Last month the largest U.S. health insurer, UnitedHealth Group Inc. (Minnetonka MN), said it might withdraw from the Obamacare market entirely after next year because of mounting losses.
More than 2 million people selected Obamacare plans in the first month after open enrollment began on Nov. 1, according to federal statistics, including 700,000 new to the marketplace. (The count encompasses 38 states that use the federal marketplace, and omits states like New York and California with their own enrollment systems.) Obama administration officials have said they expect about 10 million people to sign up in the enrollment period that closes at the end of January, only a small increase over the current year. Obamacare relies on carrots and sticks to get people to enroll in health plans. Subsidies bring down the price of insurance, while the penalties discourage people from forgoing coverage. For many people, paying the penalty might be a rational choice, because it’s often still less money than what the cheapest health plan costs. Kaiser estimates that there are about 7 million uninsured people in this circumstance.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration approved Alexion Pharmaceutical Inc.’s (Cheshire CT) treatment for an ultra-rare and potentially fatal genetic disorder. Alexion’s enzyme-replacement therapy, Kanuma, which received European approval in September, was approved to treat patients, including infants, with lysosomal acid lipase deficiency (LAL-D), that can lead to liver failure, heart disease and early death. Alexion shares closed the week up 7% at $188.06. There are only a few thousand patients with LAL-D in the United States, Alexion said. It estimates four to eight babies per year will be born with the infantile form of LAL-D. But life-saving treatments for ultra-rare diseases can command extremely high prices. The company believes Kanuma will eventually generate annual sales in excess of $1 billion.
Elsewhere, the FDA approved the first genetically engineered treatment for the most common inherited bleeding disorder, von Willebrand disease. The agency said that it’s approved Vonvendi, made by Baxalta Inc. (Bannockburn IL), for treating patients aged 18 and older. According to the FDA, von Willebrand disease affects about 1% of the U.S. population, or more than 3 million Americans. The disease is caused by a defect or deficiency in a protein critical for normal blood clotting, von Willebrand factor. Symptoms can include severe bleeding from the nose, gums, intestines, muscles and joints. In women, it can cause very heavy and prolonged menstrual periods and excessive bleeding after childbirth. Bleeding episodes after an internal injury or cut can damage joints and organs. Von Willebrand disease is generally less severe than hemophilia.
Otonomy Inc. (San Diego CA) said its treatment for an inflammatory ear disease in children became the first approved drug for the condition in the United States. The company said its antibacterial drug, Otiprio, was tested in pediatric patients who have middle-ear infection, and were undergoing surgery to drain out the accumulated fluid from the ear. The FDA approved the single-dose of Otiprio to treat children with the infection known as bilateral otitis media with effusion. OME occurs when non-infected fluid gets accumulated in the middle ear, resulting in hearing loss. Children with OME undergo a common surgery called the tympanostomy tube placement (TTP) where a T-shaped tube is inserted to drain out accumulated fluid, enable ventilation in the middle ear and simplify the administration of antibiotics. “ENT specialists who have experience with Otiprio view it favorably over other ear drops mainly due to ease of use and low treatment failure rate,” Piper Jaffray analysts added.
And an FDA advisory committee recommended that the agency approve Teva Pharmaceutical Industries Ltd.’s (Petach Tikva ISR) experimental drug reslizumab for severe asthma in patients aged 18 and older. The panel voted unanimously that the drug should not be approved for children aged 12 to 17. The FDA is not required to follow the advice of its expert advisory panels, but typically does so. Reslizumab is an antibody drug designed to be given intravenously once every four weeks. The FDA, according to a Teva spokeswoman, is slated to decide by March whether to approve the drug, which would be sold under the brand name Cinqair.
MEDICAL STOCK SPOTLIGHT -- BioPharmX Corp. (NYSE) led a small group of advancing issues, soaring 49% over the week to $1.76. The specialty pharmaceutical company announced Friday that research being presented at the annual ASCB meeting in San Diego shows its unique formulation of minocycline known as BPX-01 may offer a breakthrough in acne treatment because it can safely deliver the antibiotic to the layer of skin where the condition develops. Study findings will be presented today at the annual gathering of the American Society of Cell Biology. BPX-01 is the first and only stable hydrophilic (non-oil-based) topical gel with fully solubilized minocycline, the antibacterial and anti-inflammatory medicine most commonly prescribed to treat acne because it has a lower resistance rate than other antibiotics, according to the company. Menlo Park, CA-based BioPharmX provides drug-delivery products and offers products developed for dermatology, women’s health and ear, nose and throat therapy.
Elsewhere, TherapeuticsMD Inc. (NYSE) leaped $2.00, or 29%, to $8.87 on positive top-line results from one of its late-stage trials. The company announced positive results from its pivotal Phase 3 Rejoice Trial of TX-004HR, an investigational, applicator-free vaginal estradiol softgel, for the treatment of moderate to severe dyspareunia. The condition is characterized by vaginal pain during sexual intercourse, a symptom of vulvar and vaginal atrophy (VVA) due to menopause. VVA is a chronic condition affecting nearly half of postmenopausal women in the U.S that can significantly impair their quality of life. Safety and efficacy analyses of the Rejoice Trial data are ongoing. Boca Raton, FL-based TherapeuticsMD plans to submit Rejoice Trial results for presentation at future scientific meetings and publication in peer-reviewed journals.
And XBiotech Inc. (Nasdaq) surged $2.19, or 25%, to $10.80 after announcing that it met the primary endpoint in its European Phase III clinical study of Xilonix, a novel therapy for patients with symptomatic, advanced colorectal cancer. Patients enrolled in the double-blinded, placebo-controlled study had refractory, metastatic colorectal cancer and suffered from cancer-associated symptoms such as fatigue, pain, elevated inflammatory markers, weight loss and reduced physical ability at baseline. Patients were randomized 2:1 to receive either Xilonix therapeutic antibody or placebo, respectively. XBiotech Inc. is a clinical-stage biopharmaceutical company. The Austin, TX-based company discovers and develops monoclonal antibodies for treating a variety of diseases, such as cancer, vascular disease, inflammatory skin disease, and diabetes.
But South San Francisco-based Threshold Pharmaceuticals Inc. (Nasdaq) plunged 85% to $0.51 after announcing the outcomes of two Phase 3 cancer studies of evofosfamide (previously known as TH-302), an investigational hypoxia-activated prodrug, which is being evaluated for first-line treatment of advanced pancreatic adenocarcinoma and advanced soft tissue sarcoma, in combination with chemotherapy. In the Phase 3 MAESTRO study, patients with previously untreated, locally advanced unresectable or metastatic pancreatic adenocarcinoma treated with evofosfamide in combination with gemcitabine did not demonstrate a statistically significant improvement in overall survival (OS) compared with gemcitabine plus placebo. In the Phase 3 TH-CR-406/SARC021 study, patients with locally advanced unresectable or metastatic soft tissue sarcoma treated with evofosfamide in combination with doxorubicin did not demonstrate a statistically significant improvement in OS compared with doxorubicin alone.
IPO SECTOR -- In a week that saw a dearth of pricings and/or filings of initial public offerings, Basilea Pharmaceutica Ltd., a biopharmaceutical developing treatments for fungal and bacterial infections, withdrew its plans for an IPO on Wednesday citing poor market conditions. The Basel, Switzerland-based company was founded in 2000 and booked $51 million in sales for the 12 months ended June 30, 2015. It had planned to list on the Nasdaq under the symbol “BSLN.” Cowen & Company and Guggenheim Securities were set to be the joint bookrunners on the deal. ** EndoStim Inc., which sells a neurostimulation device used to treat gastroesophageal reflux disease, withdrew its plans for an IPO on Wednesday citing poor market conditions. The St. Louis, MO-based company was founded in 2009 and booked $1 million in sales for the 12 months ended June 30, 2014. It had planned to list on the Nasdaq under the symbol “STIM.” Wedbush PacGrow was set to be the sole bookrunner on the deal.
December 7, 2015 ...
U.S. HEALTH SPENDING SURPASSED $3 TRILLION LAST YEAR – Spending on all health care increased 5.3% in 2014, according to a report last Wednesday from actuaries at the Centers for Medicare and Medicaid Services. That compares with the 2.9% growth in 2013, which marked the lowest rate since the government began tracking the gains 55 years ago. The return to more robust growth after a slowdown in spending had been anticipated by economists. Still, it is likely to add to criticism that the 2010 health law isn’t doing enough to rein-in costs. The report, based on 2014 government numbers and published in the journal Health Affairs, follows five consecutive years where average spending growth was less than 4% annually. The rate of growth is closely watched because the Obama administration has initiated changes in healthcare delivery to help restrain spending. The administration said the faster pace of growth is still below levels before the law, a sign the Affordable Care Act is working. Healthcare spending is also driven in major ways by the federal government, which spends more on programs such as Medicaid when costs rise. Medicaid enrollment grew by 7.7 million last year. Federal healthcare expenditures also grew 11.7%, or 8.2 percentage points faster than in 2013.
The Obama administration called the escalating growth in U.S. healthcare spending temporary and said it hasn’t translated into higher costs for people who already had health coverage. “Under the Affordable Care Act, millions more Americans have quality, affordable health coverage, and cost growth has remained low,” said Richard Frank, assistant secretary for planning and evaluation at the Department of Health and Human Services, in a statement. The administration pointed out that the per capita healthcare spending growth of 4.5% and overall health spending growth in 2014 were still below the rates seen in many of the years before the ACA’s passage.
U.S. SENATE PASSES LATEST OBAMACARE REPEAL; VETO PROMISED – After five years of failed attempts, U.S. Senate Republicans on Thursday passed a symbolic partisan bill to wreck President Barack Obama’s signature healthcare reform law, but the effort has already been scheduled for a quick demise by Obama’s plans to veto it. The Republican-controlled Senate voted 52-47 to repeal several core Obamacare provisions under special budget procedural rules that allow for passage with a simple majority. Two moderate Republican senators, Mark Kirk of Illinois and Susan Collins of Maine, joined 44 Democrats and one independent in opposing the measure. Independent Senator Bernie Sanders, of Vermont, who is seeking the Democratic presidential nomination, did not vote. Democrats in the Senate have blocked some 61 previous Republican attempts aimed at rolling back the landmark 2010 legislation designed to provide health care for millions of uninsured Americans. The bill seeks to phase out a major expansion of Medicaid healthcare benefits for the poor under the law and eliminate health insurance subsidies and taxes on medical devices and high-cost plans offered by employers. It also seeks to deny funding to women’s healthcare provider Planned Parenthood, which Republicans have been trying to punish for months over accusations that it illegally sold tissue from aborted fetuses. The group denies the allegations.
The vote gives Republicans their first real chance of putting an Obamacare repeal bill onto the president’s desk, which would allow them to make campaign claims that they finally passed legislation to kill the program. Senate Budget Committee Chairman John Enzi said in debate that Obamacare was “unworkable, unaffordable and more unpopular than ever. For millions of Americans the law today represents nothing more than broken promises, higher costs and fewer choices.” Republicans lack the two-thirds majority needed to override the promised veto by Obama. The legislation still needs a vote in the House of Representatives, as it differs from a House version passed in October that concentrated on repealing the law’s mandates for individuals to buy health insurance and for larger companies to offer health plans to employees.
TRACKING WASHINGTON – House Speaker Paul Ryan said on Thursday that Republicans next year will unveil a plan to replace Obamacare in its entirety, as part of a “pro-growth” agenda that he believes should also include cutting welfare programs and taxes. Ryan said even if President Barack Obama will not sign them into law in his last year in office, the Republican majority in Congress must produce proposals to demonstrate “what our ideal policy would be looking forward to 2017 and beyond. Put together a positive agenda and take it to the American people,” he urged members of his party. The most urgently needed action, Ryan said, was to replace the Patient Protection and Affordable Care Act, as Obamacare is officially called. “Next year, we are going to unveil a plan to replace every word of Obamacare,” Ryan said in a speech at the Library of Congress, which his office billed as his first major address as speaker, a job he has held for a little over a month. Republicans have been vowing for years to repeal and replace Obamacare, the president’s signature healthcare initiative that Democrats passed in 2010 over united Republican opposition. Democrats say the act is insuring more Americans and helping to slow the growth in healthcare spending.
Republicans have never been able to agree on a plan to replace Obamacare. Ryan said one idea was to offer an individual tax credit to help people pay for health insurance premiums. Ryan, a 2012 vice presidential candidate, said Republicans had watched Obama transform the country “with great dismay.” But he said his party should focus on ideas in the 2016 election year instead of demonizing their opponents, a message that contrasted with the polarizing language of other Republicans, including some on the presidential campaign trail. The speaker also said he favored simplifying the U.S. tax code by taking the seven income tax rates that exist now and collapsing them to two or three. While saying Medicare and Social Security will be there “when you need them,” Ryan also suggested a revamp of safety net programs. He said Medicaid, food stamps and housing assistance were trapping people in poverty.
FDA/EMA ROUNDUP -- The Food and Drug Administration approved a generic version of one of the first very effective--and expensive--cancer drugs, Gleevec. The agency granted a subsidiary of Indian drugmaker Sun Pharmaceutical Industries Ltd. (Mumbai) approval to sell generic Gleevec pills, known chemically as imatinib mesylate, in 100-milligram and 400-milligram doses for chronic myeloid leukemia. Sun Pharmaceutical, one of the world’s biggest makers of generic medicines, says it will begin selling the pills in the U.S. on Feb. 1, 2016. Gleevec, which was developed and is sold by Swiss drugmaker Novartis AG, was approved in 2003. According to Sun, Gleevec has about $2.5 billion in annual sales in the U.S. It currently has a U.S. list price of about $10,000 per month for the more-common 400-milligram daily dosage.
Elsewhere, the FDA has awarded “orphan-drug” designation to Eiger BioPharmaceuticals Inc.’s (Palo Alto CA) ubenimex for the treatment of pulmonary arterial hypertension. An oral, small molecule, ubenimex is a dual-inhibitor of aminopeptidase and leukotriene A4 hydrolase. It is approved in Japan as an adjunct to chemotherapy for acute non-lymphocytic leukemia and is branded as Bestatin.
The European Commission has approved an additional indication for Pfizer Inc.’s (New York) Xalkori for first-line treatment of adults with anaplastic lymphoma kinase-positive advanced non-small cell lung cancer (NSCLC). The summary of product characteristics also was updated to include additional efficacy data from the PROFILE 1014 global Phase 3 study, which demonstrated that Xalkori (crizotinib) prolonged progression-free survival in previously untreated patients with ALK-positive advanced nonsquamous NSCLC versus standard chemotherapy regimens. The oral ALK inhibitor received accelerated approval by the FDA in 2011 for ALK-positive locally advanced or metastatic NSCLC.
And the FDA has rejected Repros Therapeutics Inc.’s (The Woodlands TX) New Drug Application (NDA) for its secondary hypogonadism treatment enclomiphene. The agency is asking the drugmaker to conduct an additional Phase 3 study or studies, as the original trials are no longer adequate to demonstrate clinical benefit.
MEDICAL STOCK SPOTLIGHT -- Dehaier Medical Systems Ltd. (Nasdaq) led advancing issues, soaring 49% over the week to $2.51 after Hangzhou Liaison Interactive Technology Co. said it plans to buy a $20-million stake in the company. The buyer proposed to purchase 10 million newly-issued shares at a price of $2 per share. Dehaier said its directors are evaluating the terms of the proposed investment. On October 19, the company’s shares rocketed 39% when it announced it had won a medical device contract for a healthcare construction project in rural China. According to Zachs, Beijing-based Dehaier is a developer and manufacturer of respiratory and oxygen homecare equipments. The company offers ventilators, sleep breathing therapy and screening systems (to ease or monitor snoring and other sleep disorders), oxygen concentrators, etc. Its non-core medical devices offerings include vitals monitors, anesthesia machines, and X-ray machines.
Elsewhere, CoLucid Pharmaceuticals Inc. (Nasdaq) surged $1.84, or 36%, to $7.00. The company last announced its quarterly earnings results on November 10th. The biopharmaceutical company reported ($0.59) EPS for the quarter, beating the Thomson Reuters’ consensus estimate of ($0.63) by $0.04. During the same quarter in the previous year, the Cambridge, MA-based company posted ($4.97) EPS. Equities research analysts forecast that CoLucid will post ($3.19) EPS for the current year. Separately, William Blair reiterated a “Buy” rating and issued a $22.00 price target on CoLucid shares. One investment analyst has rated the stock with a “Hold” rating and four have given a “Buy” rating to the stock. The company currently has a consensus rating of “Buy” and an average price target of $19.50. CoLucid Pharmaceuticals is a clinical-stage biopharmaceutical company developing a product candidate, Lasmiditan, for the treatment of central nervous system disorders.
And Relypsa Inc. (Nasdaq) jumped $5.17, or 23%, to $29.14 on rumors that the small biotech might soon court an acquirer. Street Insider reported from a source “claiming to have direct knowledge of the situation,” that Merck & Co. was planning to extend a non-binding takeover offer to the company. Soon after, the Financial Times said Redwood City, CA-based Relypsa was preparing for a sale, and drugmakers like GlaxoSmithKline Plc, Sanofi SA and Switzerland’s Galenica AG might be possible bidders. Neither account was confirmed by Relypsa or any other named drugmaker. The chatter might be a product of the rumor mill which has been signaling takeover potential in Relypsa since AstraZeneca Plc agreed to buy the biotech’s direct competitor, ZS Pharma, in a $2.7 billion deal last month. Relypsa is focused on the development and marketing of non-absorbed polymeric drugs for treating conditions in areas of cardiovascular, renal and metabolic diseases.
But OncoGenex Pharmaceuticals Inc. (Nasdaq) plunged $1.52, or 56%, to $1.21 after Stifel Nicolaus downgraded its stock from “Buy” to “Hold.” The move followed OncoGenex’s announcement that its Phase 3 Affinity trial results did not meet expectations. Some patients, who were treated with the Affinity drug, did not meet the rigorous criteria that demonstrated survival improvement. Stiefel said the Bothell, WA-based company’s drug “failed to reach a certain statistical threshold for overall survival. It was being tested on a subpopulation of metastatic castrate-resistant prostate cancer patients, with poor-prognostic risk factors.” Coupled with Stifel’s downgrade, the stock swooned.
explosion of IPO dog-and-pony shows typically cranks up after
Thanksgiving, as investment banks try to bring deals to market
before the U.S. IPO scene closes shop in mid-December.
good years, December can see as many as 15-20 or more IPO deals,
according to Renaissance
but for 2015 investors can expect a very quiet month. Large
valuation cuts and dampened first-day returns have led to
positive aftermarket performance for recent IPOs (+6% since Labor
Day vs. -19% for pre-Labor Day issuers), indicating that it may
be an opportune time for fundamentally driven, long-term IPO
Separately, included among the initial public offerings most likely to come this month is bladder-cancer biotech Viventia Bio Inc. The company, which is developing antibody drug conjugates for bladder and other cancers, filed in October with the SEC to raise up to $86 million in an IPO. The Winnipeg, Canada-based company, which was founded in 1995, plans to list on the Nasdaq under the symbol “VITA.” Viventia Bio filed confidentially on September 17, 2015. Leerink Partners, Cowen & Company and Guggenheim Securities are the joint bookrunners on the deal. No pricing terms have been disclosed.
November 30, 2015 ...
PFIZER, ALLERGAN INK $155-BILLION MERGER DEAL; SPLIT-UP CONTEMPLATED – The $155 billion agreement to combine PfizerInc. (New York) with Allergan Plc (Dublin IRL) would create a drug colossus so big that Pfizer is already thinking of breaking it up. The deal, announced last week, brings together a diverse stable of drugs, from Pfizer’s cancer medicines and vaccines, to Allergan’s skin-care treatments and eye drugs. The companies expect to achieve $2 billion in cost savings as well as significant tax benefits from the deal, under which Pfizer’s tax base would shift to Allergan’s home base in Ireland in a so-called inversion. As a result of the move, Pfizer expects to cut its tax rate to 17% or 18%, from its roughly 25% rate currently, because corporate taxes in Ireland are lower than in the U.S. The new drug company would be the world’s biggest with $63.5 billion in yearly sales, 110,000 employees and $9 billion in annual research spending. Pfizer executives have for years considered splitting the company, but they have been deterred by concerns that its businesses may not be large enough to stand alone. Now, with Allergan, the company would have strength in both high-cost, high-growth drugs as well as older, lower-cost drugs to make such a split.
Last Monday, executives said they would consider splitting the combined company into two by 2018. One business would focus on newer products, such as Pfizer’s breast-cancer drug Ibrance and Allergan’s blockbuster Botox, and have sales the companies project will grow in the double digits. The other, with a potentially mid-single-digit growth rate, would consist of drugs that have lost patent protection or are about to, such as Pfizer’s Celebrex arthritis drug and Allergan’s Teflaro antibiotic. The two businesses “may or may not fit” together, Pfizer CEO Ian Read said. Shareholders would have preferred more certainty on a split, according to analysts, because a breakup could increase the value of their holdings. They were also disappointed, analysts said, because Pfizer pushed back the timeline for making a decision by two years.
AMA CALLS FOR BAN ON DRUG ADVERTISING TO CONSUMERS – Drug companies should stop advertising directly to consumers, the American Medical Association (Chicago) said, declaring that the ads often push patients to more expensive treatments and inflate demand for therapies. In a vote at the group’s annual meeting in Atlanta, the AMA called for an end to television commercials and magazine spreads that are used to pitch prescription drugs. It’s a change from the AMA’s previous position, which said the ads were fine as long as they were educational and accurate. The U.S. is one of the few countries that allows direct-to-consumer drug ads. The vote “reflects concerns among physicians about the negative impact of commercially driven promotions, and the role that marketing costs play in fueling escalating drug prices,” AMA Board Chair-elect Patrice A. Harris said in a statement announcing the vote result. “Direct-to-consumer advertising also inflates demand for new and more expensive drugs, even when these drugs may not be appropriate.” The AMA has a membership of about 235,000 U.S. doctors and medical students. Last year, the group spent $19.7 million on lobbying the U.S. government, making it the No. 5 spender in the country, according to the Center for Responsive Politics. Pharmaceutical Research and Manufacturers of America, or PhRMA, which works on behalf of the drug industry, spent $16.6 million last year.
Drug ad spending has been rising. The pharmaceutical industry spent $4.54 billion on consumer ads in 2014, 21% more than a year earlier, according to Nielsen NV. Among the most-promoted drugs were Eli Lilly & Co.’s (Indianapolis IN) Cialis and Pfizer Inc.’s (New York) Lyrica and Viagra, Nielsen found. Drugmakers say their ads can help patients learn more about diseases and their treatment options. “Providing scientifically accurate information to patients so that they are better informed about their health care and treatment options is the goal of direct-to-consumer pharmaceutical advertising,” Tina Stow, a spokeswoman for PhRMA, said. “Research shows that accurate information about disease and treatment options makes patients and doctors better partners.”
TRACKING WASHINGTON – To reduce turmoil in Obamacare’s fledgling insurance markets, the Obama administration’s top health official is pushing to get more information to consumers about what they will actually pay for health care, which can include out-of-pocket costs as well as premiums. The changes are meant to help people choose coverage that fits their needs when up-front premiums and out-of-pocket costs are added together, Health and Human Services Secretary Sylvia Mathews Burwell said according to Bloomberg News. Cases of patients signing up, paying for a time, and then dropping out of Obamacare have plagued insurers like UnitedHealth Group Inc. (Minnetonka MN), which is debating whether to exit the government-run market to avoid more financial losses. “Many people came into the system very focused on premium only, and then learned about total cost,” Burwell said. “We think total cost is important, and we’ve been driving the consumer to understand that.” For the first time, the U.S.’s healthcare.gov website will show customers the cost of insurance premiums and also estimate what their actual health expenses will be. That will help people pick appropriate coverage, Burwell said, and could keep them from dropping policies midyear, a problem known as churn that’s plagued insurers like UnitedHealth and Aetna Inc. (Hartford CT).
Elsewhere, President Barack Obama’s nominee to head the U.S. Food and Drug Administration defended his ties to the pharmaceutical industry during a recent Senate committee hearing that included questions on soaring drug prices. Presidential candidate Sen. Bernie Sanders (D-VT) was among the Democrats who grilled Dr. Robert Califf, 64, who joined the FDA in January as a deputy commissioner. Califf previously held senior positions at Duke University, where he founded a large academic clinical research center that received more than half of its funding from the drug industry. Over the years, Califf has led multiple large-scale company-funded clinical trials and published more than 1,200 papers. Responding to questions from Sen. Elizabeth Warren (D-MA), Califf told the committee that the clinical trials he conducted at Duke, if funded by a drug company, had “ironclad” contracts giving the investigators the final rights to publication. Sanders said that the FDA needs a candidate who can stand up to an industry that has been “ripping off” the American people by charging “outrageous” prices for medicines. Sanders and other critics say Califf’s financial ties to the industry will prevent him from impartially regulating it.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration approved the first-ever nasal spray emergency treatment for opioid overdose. The spray, developed by privately held Adapt Pharma Ltd. (Dublin IRL), uses naloxone, a drug used to treat opioid overdose for nearly 45 years but approved only in injectable forms. Data from the Centers for Disease Control and Prevention indicates opioid overdose led to about 23,500 deaths in the United States in 2013, a four-fold jump from 1999. A majority of these deaths occur in non-medical settings, stressing the need for user-friendly treatments that can be administered without the help of a medical practitioner, Adapt CEO Seamus Mulligan said. The treatment, Narcan, which Adapt plans to launch by January, is expected to have wide coverage under health insurance with affordable co-pays, Mulligan added.
Elsewhere, the FDA approved a first-of-a-kind flu vaccine that contains a booster to help protect seniors vulnerable to the virus. The agency said Fluad is the first seasonal vaccine that contains an adjuvant, a substance that boosts the body’s immune response. The agency approved the vaccine to prevent seasonal flu in people 65 and older. Several vaccines already include boosters, including aluminum, which has been shown to help build immunity. Fluad contains an oil-in-water mixture that includes squalene, a substance found in humans, animals and plants. It should be available next year, Seqirus (Cambridge MA), a newly formed company that makes the vaccine, said. In July, drug giant Novartis AG sold its flu vaccine business to another flu vaccine maker, CSL Group, and CSL renamed the business Seqirus. Between 80% and 90% of flu-related deaths occur in seniors, according to federal authorities.
The FDA said it had approved Portrazza from Eli Lilly & Co. (Indianapolis IN), in combination with two forms of chemotherapy, to treat patients with advanced squamous nonsmall cell lungcancer, the most common type of lung cancer. The treatment will need to carry a “boxed warning” that flags potential fatal risks, including cardiac arrest and sudden death. A 1,093-patient clinical trial showed that patients who received Portrazza, along with the chemotherapy drugs gemcitabine and cisplatin, survived an average of 11.5 months compared with 9.9 months for those who received only chemotherapy treatments.
And Bristol-Myers Squibb Co. (New York) said the FDA had approved the expanded use of its cancer drug, Opdivo, to treat an additional form of advanced skin cancer. Opdivo, first approved in December 2014, garnered worldwide revenue of $467 million in the nine months ended Sept. 30. The drug has been approved for five other indications in the past 12 months. The company said the approval allows for the drug’s use in patients with a previously untreated, advanced form of melanoma and is based on data from a late-stage study comparing the drug with chemotherapy. Opdivo, already in use in patients with forms of lung cancer and with advanced melanoma who have received treatment, belongs to a promising new class of drugs designed to help the body’s immune system fight cancer by blocking a protein called programmed death receptor (PD-1). Wall Street expects such drugs to capture combined annual sales of over $20 billion by 2020.
MEDICAL STOCK SPOTLIGHT -- AEterna Zentaris Inc. (Nasdaq) led advancing issues, soaring $6.83, or 261% over the week, to $11.06. The specialty biopharmaceutical company engaged in developing novel treatments in oncology, endocrinology and women’s health had its “Buy” rating restated by equity research analysts at Canaccord Genuity in a research note issued to investors on Wednesday. According to AnalystRatingsNetwork.com., Canaccord currently has a $13.00 target price on the biopharmaceutical company’s stock, up from their previous target price of $0.10. Canaccord Genuity’s target price would indicate a potential upside of 14% from the stock’s current price. Quebec-based AEterna Zentaris engages in developing and commercializing novel treatments in oncology, endocrinology, and women’s health. Currently there are three analysts that rate AEterna Zentaris a “Buy,” no analysts rate it a “Sell,” and none rate it a “Hold.”
Elsewhere, KaloBios Pharmaceuticals Inc. (Nasdaq) shot up $16.58, or 91%, to $34.83 after CEO Martin Shkreli tweeted on Thursday that he would stop lending stock to people hoping to short it. “I spoke with my counsel and advisers and decided to stop lending my KBIO shares out until I better understand the advantages of doing so,” Shkreli tweeted. About 49% of KaloBios stock is short, meaning investors have been heavily betting the shares will go down, MarketWatch reports. KaloBios has been surging since Shkreli bought a 70% stake in the company earlier in November, rescuing it from insolvency. 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.
And Repros Therapeutics Inc. (Nasdaq) rocketed $1.07, or 73%, to $2.54 after announcing that the FDA had accepted its application for approval of its Androxal. Amid rising scrutiny of testosterone products, the FDA had previously offered up guidance to Repros regarding information necessary for an Androxal filing. In December, The Woodlands, TX-based Repros reported that it had addressed the agency’s questions and that it would file its Androxal application for approval with the FDA in the first quarter. That filing for approval was submitted to the FDA on February 2nd, so it doesn’t come as a surprise that the FDA has officially accepted the application for Androxal, a treatment for hypogonadism in overweight men that can help restore normal testicular function.
But XBiotech Inc. (Nasdaq) plunged $5.64, or 42%, to $7.90 after reporting that “data cleaning” has revealed a fewer number of per protocol patients available for primary endpoint evaluation in its trial of a treatment for colorectal cancer. The Austin, TX-based company found 25 patients dropped off the study prior to receiving any dosing with the drug or placebo. Analysis of patient blood samples also revealed that 14 patients erroneously received either placebo or study drug. In addition, 33 patients accomplished the study but failed to receive planned DEXA scans or a complete evaluation by the European Organization for Research and Treatment of Cancer (EORTC), or both. The company reports that these combined irregularities compromises data from 72 patients in the study. John Simard, President and CEO of XBiotech, stated, “These findings regarding the execution of the study are disappointing. We anticipate about another 10 days to complete ongoing analysis of patient samples and data.”
IPO SECTOR -- Axsome Therapeutics Inc. (Nasdaq) announced the closing of its initial public offering of 5.67 million shares of its common stock at a public offering price of $9.00 per share. The net proceeds to New York City-based Axsome from the IPO was approximately $45.4 million, after deducting underwriting discounts and commissions and estimated offering expenses. If the underwriters’ over-allotment option is exercised in full, Axsome estimates that it will receive aggregate net proceeds of approximately $52.5 million after deducting the underwriting discounts and commissions and estimated offering expenses. The sole book-running manager for the offering was Ladenburg Thalmann & Co. Inc.
Axsome Therapeutics is a clinical-stage biopharmaceutical company developing novel therapies for the management of pain and other central nervous system (CNS) disorders. By focusing on this therapeutic area, Axsome is addressing significant and growing markets where current treatment options are limited or inadequate, according to the company. Axsome’s product candidate portfolio includes two late-stage candidates, AXS-02 and AXS-05, which are being developed for multiple indications. Axsome Therapeutics aims to become a fully integrated biopharmaceutical company that develops and commercializes differentiated therapies that expand the treatment options available to caregivers.
November 16, 2015 ...
AMA ASKS JUSTICE DEPARTMENT TO BLOCK AETNA-HUMANA, ANTHEM-CIGNA MERGERS – The American Medical Association (Chicago) asked U.S. antitrust regulators to block two proposed mergers that could reshape the health insurance industry. Anthem Inc. (Indianapolis IN) shouldn’t be permitted to buy Cigna Corp. (Bloomfield CT) and Aetna Inc. (Hartford CT) should be blocked from acquiring Humana Inc. (Louisville KY), the lobbying and professional organization for physicians said in a letter last week to the head of the Justice Department’s antitrust division. The AMA as well as the American Hospital Association (Chicago) have been critical of the proposed deals, saying they will reduce competition and could harm patient care. If approved, the deals would shrink the ranks of the biggest health insurers to three from five, potentially reducing options for private Medicare policies and coverage purchased by employers for their workers. “Fostering competition, not consolidation, benefits American consumers through lower prices, better quality, and greater choice,” James Madara, the AMA’s CEO, said in the letter, which was sent to Assistant Attorney General William Baer. “Our analyses of the proposed health-insurance mergers reveal significant concerns with respect to the impact on consumers in terms of health-care access, quality, and affordability,” Madara said.
Anthem said its deal with Cigna will improve consumer choice and quality and help keep down costs for patients. “Some AMA members may fear that a combined Anthem-Cigna will be able to negotiate lower rates for their services--even though that could translate to lower prices for consumers,” Anthem said. “Providers play a critical role in our healthcare system, and they share responsibility for keeping health care affordable.” Aetna said that combining with Humana would “offer consumers more choices and greater access to higher quality, more affordable care. Our proposed transaction is primarily about the Medicare marketplace, where there is robust competition and choice.” The other health insurers declined to comment or didn’t respond. The companies have said in the past that the deals will benefit consumers and help them provide better insurance products. The DOJ has yet to sign off on the deals, which were announced in July. Anthem closed the week down 1% at $132.55, while Cigna also shed 1% to $131.57. Aetna fell 5% to $102.21. Humana slid 6% to $167.36.
MYLAN'S HOSTILE BID FOR PERRIGO FAILS – Shareholders of the drugmaker Perrigo Co. Plc (Dublin IRL) shut the door Friday on a $26-billion hostile takeover bid from Mylan NV (Amsterdam). Mylan acknowledged that its cash-and-stock offer failed to garner enough interest from Perrigo shareholders by a Friday deadline. About 40% of Perrigo shares had been tendered, well short of the more than 50% required to advance its takeover, the generic drugmaker said. Conceding defeat, Mylan Executive Chairman Robert J. Coury said in a statement that the Perrigo deal was a “unique and exciting opportunity, but not one that was required for the future success of our company.” Mylan NV makes more than 1,000 generic drugs and the EpiPen, used for the emergency treatment of allergic reactions. It approached Perrigo a number of times before going hostile with its bid, seeking the direct approval of Perrigo shareholders in September. Mylan saw advantages in a combination of its generic portfolio with Perrigo’s suite of over-the-counter vitamins, nutritional products and infant formula. Perrigo executives, however, called Mylan’s offer grossly inadequate and urged shareholders to stand firm.
Bolstering its case to spurn Mylan late last month, Perrigo said it would be trimming costs by cutting 800 employees, or 6% of its global workforce, and that it would begin buying back stock. It will be a lot cheaper for Perrigo to do that in the short term, according to some analysts. Shares hit a low for the year, a hit company investors were apparently more than ready to tolerate. Perrigo Chairman and CEO Joseph C. Papa said Friday that the buying of company shares would commence immediately. Mylan shareholders voted in favor of the acquisition last month, and European Union regulators had cleared it. It also got a nod from the U.S. Federal Trade Commission after saying that it would sell seven of its generic drugs. Perrigo shares closed the week down 8% at $146.90. Mylan gained 9% to $48.78.
TRACKING WASHINGTON – Medicare spending on “breakthrough” medications for hepatitis C will nearly double this year, passing $9 billion, according to new government figures. That’s raising insurance costs for all beneficiaries, whether or not they have the liver-wasting viral disease. The price of drugs is the public’s top healthcare concern in opinion polls, and the 2016 presidential candidates are increasingly paying attention. The federal Department of Health and Human Services will hold a public forum this week to examine the high cost of new drugs for difficult diseases. The challenge: how to reward drug-company research while keeping innovative medications affordable for patients, insurers, employers and government programs. New cost estimates indicate that Medicare’s popular prescription drug program will spend $9.2 billion on hepatitis C drugs this year, a 96% increase from $4.7 billion in 2014. That works out to nearly 7% of drug costs for all of Part D, as the program is known. The Associated Press requested the numbers from Medicare’s Office of the Chief Actuary, a unit that handles economic analysis.
Elsewhere, U.S. Democratic lawmakers are discussing proposing changes to the “Cadillac tax,” a levy on high-cost employer-based healthcare plans passed as part of President Barack Obama’s 2010 Affordable Care Act, the Senate’s No. 2 Democrat said last week. “I’m not proposing eliminating it at this point, I’m open to suggestions for changing it,” Illinois Senator Dick Durbin told reporters. “I don’t know if it’ll be done this year or next year,” Durbin added. “But we’re trying to figure out a way to change it or remove it and the impact it would have.” The tax got its nickname because it will apply to premium or “Cadillac” healthcare plans starting in 2018. It would be levied on employer-based coverage that exceeds the thresholds of $10,200 a year for individuals and $27,500 for families. It was designed to rein-in healthcare costs under Obama’s healthcare law. Employers could avoid it by replacing expensive plans with cheaper ones. Congressional Republicans have long sought to repeal the entire Affordable Care Act, also known as Obamacare. Democrats have generally defended the act. But the looming Cadillac tax has grown increasingly unpopular, in part because labor unions say it could encourage employers to cut back on their health insurance plans for workers.
FDA/EMA ROUNDUP -- A new lung-cancer pill from AstraZeneca Plc (London), designed for patients whose disease has worsened after treatment with other therapies, won early approval from the U.S. Food and Drug Administration on Friday. Tagrisso, also known as AZD9291, is one of several cancer medicines AstraZeneca hopes will rebuild its sales following patent losses on older drugs. During its defense against a takeover attempt by Pfizer Inc. last year, the firm forecast the drug could eventually sell as much as $3 billion a year. Industry analysts are more cautious about sales in the next few years, with consensus expectations pointing to revenue of $1.1 billion in 2020, according to Thomson Reuters.
Elsewhere, Merck & Co. (Kenilworth NJ) on Friday said an independent data monitoring committee recommended that the drugmaker continue a study of its experimental cholesterol drug, anacetrapib. The recommendation comes a month after Eli Lilly & Co. stopped testing a similar cholesterol drug, belonging to a class of drugs called CETP inhibitors. Merck said on Friday that the committee reviewed safety and efficacy data from the large study, including a futility analysis. A futility analysis is done to gauge if a study is likely to succeed or fail. Merck is now the only major drugmaker still aggressively developing a CETP inhibitor--drugs aimed at raising HDL, or “good cholesterol” levels in the blood and cutting levels of LDL, or “bad cholesterol”. Lilly stopped testing the drug for cholesterol due to low likelihood of it meeting the main goal of the study.
Gilead Sciences Inc. (Foster City CA) said on Thursday the FDA had approved the expanded use of its blockbuster hepatitis C drug, Harvoni. The drug can now be used to treat patients with subtypes of chronic hepatitis C virus (HCV) and patients who are co-infected with Human Immunodeficiency Virus (HIV), Gilead said in a statement. The once-daily pill, used in combination with antiviral ribavirin, was also approved to be used for 12 weeks as an alternate therapy to Harvoni alone, which is used for 24 weeks to treat patients with cirrhosis. Results from the study showed that about 93% of the patients with subtypes of the virus and 96% of patients co-infected with HIV showed a sustained response to the virus within 12 weeks of treatment.
And the FDA said it has approved Cotellic, a drug produced by Swiss drugmaker Roche Holding AG (Basel), for use in combination with the vemurafenib medication as a treatment for advanced melanoma. The drugs are intended to target the illness after it has spread to other parts of the body or can’t be resolved by surgery. According to the FDA, Cotellic and vemurafenib, which is marketed under the Zelboraf brand name, prevent or slow cancer cell growth. The drugs affect different parts of the same signaling pathway. The FDA said the safety and efficacy of Cotellic in combination with vemurafenib were shown in a clinical study of 495 patients with previously untreated, advanced melanoma that demonstrate the BRAF V600 mutation. A European Union advisory panel has also recommended Cotellic in combination with Zelboraf. A decision by the European Commission is expected by the end of the year.
MEDICAL STOCK SPOTLIGHT -- Sophiris Bio Inc. (Nasdaq) led advancing issues, nearly tripling over the week to $2.51 after announcing its sole drug in development met the main goal of a late stage study, reviving hopes for approval 11 months after the company’s interim analysis suggested the treatment would fail the study. The company said the drug, PRX302, had significantly improved symptoms in men suffering from benign prostatic hyperplasia, or enlarged prostate. The drug was well-tolerated and did not cause any serious health concerns, Sophiris said. The company, which has been developing PRX302 since 2009, said in December that an interim analysis had showed the treatment would not be effective, based on data available at that time. La Jolla, CA-based Sophiris has said the treatment has “blockbuster” potential--meaning annual sales of more than $1 billion. Sophiris said replicating the latest results for PRX302 in another late-stage study may be enough to apply to the U.S. Food and Drug Administration for marketing approval.
Elsewhere, Ocata Therapeutics Inc. (Nasdaq) rocketed $3.71, or 78%, to $8.46 after the sometimes controversial pioneer in developing human embryonic stem cells said it will be acquired by Astellas Pharma Inc. for about $379 million. Astellas, one of the major drug companies in Japan, will make a tender offer worth $8.50 a share in cash, a 79% premium to Ocata’s closing price prior to news of the deal. Shareholders must still approve the deal by tendering their shares. Despite its small size, Marlborough, MA-based Ocata, known for most of its existence as Advanced Cell Technology, has often been in the headlines for pushing the frontiers of cloning and embryonic stem-cell technology. It is arguably the most advanced company in testing medical treatments derived from human embryonic stem cells. Such cells are controversial because their creation usually involves the destruction of human embryos (though Ocata says it can avoid embryo destruction).
And Skyline Medical Inc. (Nasdaq) leaped $1.65, or 58%, to $4.50. The Eagan, MN-based company announced that as part of its international expansion strategy, Skyline is in the process of filing national stage patent applications for the technologies and processes applied in its flagship automated surgical fluid disposal system. The initial applications are being applied for in Canada and select European countries. Skyline Medical produces the fluid disposal STREAMWAY system. The company’s technology allows for the collection, measurement and disposal of surgical fluids, such as blood, irrigation fluid and other potentially infectious fluids found in the surgical environment at medical facilities.
But Anavex Life Sciences Corp. (Nasdaq) plunged $6.37, or 58%, to $4.55 despite confirming the information in its November 9, 2015 press release that announced positive safety and cognitive efficacy data from the Phase 2a Alzheimer’s trial for ANAVEX 2-73. New York City-based Anavex confirmed that “there has been no change with regards to our science, data or the fundamentals of our company. We remain dedicated to advancing ANAVEX 2-73 through the ongoing Phase 2a trial and to reporting new data to investors as it becomes available.” Some analysts pointed to an increase in short interest for the pullback with one firm issuing a forward price target for Anavex of $0.00. The biopharmaceutical company is dedicated to the development of novel drug candidates to treat central nervous system (CNS) diseases and various types of cancer.
IPO SECTOR -- Mesoblast Ltd. opened for trading at $7.50 after pricing 7.48 million American Depositary Shares (ADSs) at a public offering price of US$8.00 per ADS. Mesoblast says it has established a diverse portfolio of product candidates based on its proprietary allogeneic, off-the-shelf mesenchymal lineage cell-based technology, with multiple active Phase 3 clinical programs. These include chronic heart failure, chronic low back pain due to degenerative disc disease, and immune-mediated conditions such as acute graft versus host disease and biologic refractory rheumatoid arthritis. Melbourne, Australia-based Mesoblast lists on the Nasdaq under the symbol “MESO.” Shares closed the week down 1% at $18.10. J.P. Morgan and Credit Suisse were the joint bookrunners on the deal. ** Inpellis Inc., which is developing transdermal pain treatments for musculoskeletal disorders, registered with the SEC an IPO of up to $20 million worth of common stock. The Haddonfield, NJ-based company, which was founded in 2012, plans to list on the Nasdaq under the symbol “INPL.” Inpellis filed confidentially on April 9, 2015. Alexander Capital is the sole bookrunner on the deal. No pricing terms were disclosed.
November 9, 2015 ...
DEATH RATE RISING FOR MIDDLE AGED WHITE AMERICANS, STUDY FINDS – For decades, nearly all Americans--in every age and racial group--have seen decreases in death rates. But in the last nearly 15 years, middle-aged white Americans have been left out, according to a study. Death rates for white Americans ages 45 to 54 climbed half a percentage point each year between 1999 and 2013, researchers at Princeton University found using mortality data from the Centers for Disease Control and Prevention. In the previous two decades, the death rate for this group had dropped by 2% each year. Middle-aged blacks and Hispanics continued to see a 2% annual decline between 1999 and 2013. “We have come to expect mortality rates in middle age to continue to decline, which they did throughout most of the 20th century; it was really a surprise to see a sustained period when mortality rates actually increased (among middle-aged white Americans),” said Anne Case, professor of economics and public affairs at Princeton. Deaths related to drugs, alcohol, suicide and liver disease are the cause of the increase, researchers said. Case and her husband, Angus Deaton, a professor at Princeton and winner of the 2015 Nobel Prize in economic science, are co-authors of the study, which was published last week in the Proceedings of the National Academy of Sciences.
The only other time that death rates increased among middle-aged whites in the last century was in the 1960s because of smoking-related diseases, Case said. There was also a spike in mortality among younger adults in the 1980s during the AIDS epidemic, she said. The recent uptick in mortality among middle-aged whites is largely attributed to deaths from drug and alcohol poisoning, suicide and liver disease. In contrast, the rates of drug overdose and liver disease among black Americans dropped between 1999 and 2013. Although the CDC has reported on trends in recent years, such as white people being at higher risk of suicide and of death from opioid and prescription painkiller overdose, no study had yet put these trends together to see the impact they had on death rate, Case said. These causes of death--drug and alcohol overdose, suicide, liver disease--also are increasing among whites ages 35 to 44 and ages 55 to 64. Although these increases have not been large enough to drive up mortality in these groups, they have been linked to a leveling off of their death rates, Case said.
DUBLIN-BASED SHIRE TO ACQUIRE DYAX FOR INITIAL $5.9 BILLION – Shire Plc (Dublin IRL) has struck an all-cash deal valued at as much as $6.5 billion for U.S. Biotech Dyax Corp. (Burlington MA), demonstrating the company’s unwavering focus on midsize acquisitions even as it chases a $30 billion deal for rare-disease rival Baxalta Inc. (Bannockburn IL). London-listed Shire said it will pay an initial $37.30 a share, or a total of $5.9 billion for Dyax, a premium of about 35% to the U.S. biotech’s price prior to news of the deal. It has also agreed to pay a potential $4 a share, or $646 million, dependent on approval for Dyax’s experimental drug for hereditary angioedema, a rare and potentially life-threatening disease that causes swelling. The drug in question, DX-2930, is a long-acting injectable treatment that aims to lower the rate of hereditary angioedema, or HAE, attacks. It recently completed early-stage clinical trials, which showed it reduced attacks by more than 90% in patients who had suffered from two or more flare-ups in the previous three months. U.S. regulators have given the drug various priority designations, meaning it can enter Phase 3 trials without the intermediate step of a phase-two program. It could be launched in 2018 and bring in as much as $2 billion in peak annual sales, according to Shire. The additional $646 million payment is contingent on DX-2930 winning approval by the end of 2019.
“DX-2930 is a strategic fit within our HAE domain expertise, and we are well-positioned to advance the development, registration, and commercialization of DX-2930 for the benefit of HAE patients,” said Shire CEO Flemming Ornskov. Although the Dyax deal is Shire’s biggest to date, topping the $5.2 billion acquisition of NPS Pharmaceuticals Inc. earlier this year, Dr. Ornskov said the company still has the “financial firepower to pursue other value-added strategic acquisitions, including Baxalta.” Hemophilia specialist Dyax in August rejected an unsolicited offer from Shire on the grounds it undervalued the company. Shire’s offer was worth $30.6 billion at the time, but its value has declined significantly amid a rout in biotech stocks, spurred by increasing political and media scrutiny of drug prices and concerns the sector has become overvalued. Dyax closed the week up 25% at $34.52 in New York. Shire fell 191 pence to 47.34 pounds in London.
TRACKING WASHINGTON -- Drugmakers including Gilead Sciences Inc. (Foster City CA) and AbbVie Inc. (North Chicago) were contacted by the U.S. government’s Medicaid agency to discuss options for how to pay for hepatitis C cures whose costs have eaten into state budgets. The companies, along with Johnson & Johnson (New Brunswick NJ) and Merck & Co. (Kenilworth NNJ), were asked in letters from the Centers for Medicare and Medicaid Services to provide information on arrangements they make with health insurers to link payments to the outcomes of their treatments. Such arrangements may affect the prices that drugmakers are required to offer under the Medicaid program, the agency said Thursday. The agency is also pushing states to make sure poor people with hepatitis C have access to cures for the disease. Some states have been restricting the treatments to individuals with severe liver damage or otherwise limiting their use, the agency said in a letter to state Medicaid programs, also dated Thursday. Gilead’s Harvoni and Sovaldi hepatitis C treatments have brought in billions of dollars in sales for the drugmaker. A course of treatment can cost more than $80,000, though discounts typically reduce the price. Drugmakers are required to offer Medicaid programs their “best price” for pharmaceuticals, according to CMS.
Elsewhere, the financial failure of more than half the nonprofit health insurance companies created under the Affordable Care Act has handed Republicans a new weapon in their campaign against the health law, thrown the Obama administration on the defensive once again and left more than a half-million consumers in the cold. “Any start-up faces the inherent risks of building a business from the ground up,” Dr. Mandy Cohen, the COO at the Centers for Medicare and Medicaid Services, told Congress last week at a contentious hearing of the House Ways and Means Subcommittee on Health. “As with any new set of business ventures, some co-ops have succeeded while others have encountered more challenges.” So far, 12 of the 23 nonprofit insurance plans created as a result of President Obama’s signature domestic achievement have announced--voluntarily or under pressure from federal and state regulators--that they will not offer coverage next year. The most recent announcement came last Tuesday, just hours before the House hearing, when Consumers Mutual Insurance of Michigan posted a notice on its website saying it will not sell health plans in 2016 on the insurance marketplace.
FDA/EMA ROUNDUP -- The Food and Drug Administration on Thursday approved a new one-pill HIVtreatment from Gilead Sciences Inc. (Foster City CA) with a new, apparently safer form of tenofovir, a powerful HIV inhibitor. The new pill, called Genvoya joins several other one-pill treatments, including Atripla, Complera, Triumeq and Stribild. It contains the same four drugs as Stribild, but with the tenofovir disoproxil fumarate replaced by tenofovir alafenamide. The new form of the inhibitor, Gilead said, enters cells where HIV replicates more efficiently, resulting in 91% less tenofovir in the bloodstream. That should make the pill less likely to cause kidney damage or loss of bone density, which have become major problems among people with HIV who survive into old age, according to Gilead.
Elsewhere, GlaxoSmithKline Plc’s (London) Nucala therapy was approved to treat patients with severe asthma attacks in combination with other drugs, the FDA said on Wednesday. Mepolizumab, commercialized as Nucala, is an injection administered once every four weeks that is approved as an add-on maintenance treatment for patients aged 12 and older. In controlled trials, patients who received Nucala had fewer asthma attacks that required hospitalization or emergency-room visits and reported longer breaks between asthma attacks. The most common reported side effects included redness, swelling and itching in the injection area, back pain and fatigue. Herpes zoster infections, the virus that causes shingles, were also reported in the clinical trials.
The FDA has granted priority review to Acadia Pharmaceuticals Inc.’s (San Diego CA) Nuplazid for the treatment of psychosis associated with Parkinson’s disease. A PDUFA (Prescription Drug User Fee Act) date--a deadline for the FDA approve a drug--has been set for May 1, 2016. The NDA submission includes data from a pivotal Phase 3 study that showed improvement in both primary and secondary endpoints with no worsening of motor function. Nuplazid (pimavanserin) acts as a selective serotonin inverse agonist that targets 5-HT2A receptors.
And the FDA has granted “breakthrough therapy” designation to Merck & Co.’s (Kenilworth NJ) Keytruda, an anti-PD-1 therapy for treating patients with microsatellite instability high metastatic colorectal cancer. The breakthrough designation is based on Phase 2 data of the drug’s activity in cancers with microsatellite instability, a feature present in cells with certain types of DNA repair defects. Merck is conducting a Phase 3 study of the drug in a treatment-naïve patient population. Keytruda (pembrolizumab) previously was granted breakthrough status for advanced melanoma and advanced non-small cell lung cancer.
MEDICAL STOCK SPOTLIGHT -- Cellectis SA (Nasdaq) led advancing issues, soaring $15.69, or 59% for the week, to $42.14. On Thursday, investors got the first peek at patient data from an off-the-shelf experimental blood-cancer therapy known as CAR-T from the Paris-based drug company. The results are impressive but very preliminary. An 11-month-old girl with a form of treatment-resistant leukemia was put into remission by doctors using Cellectis’s “universal” CAR-T, known as UCART19, under an emergency, compassionate-use protocol. These are data from a single patient, so it’s not much more than an anecdote. The follow-up at just three months is also so short that it’s impossible to say if the remission induced by Cellectis’s CAR-T will be enduring. Still, the new data, or anecdote, are intriguing because they provide a possible answer to one of the major concerns with cellular cancer therapies: How to turn transformative science into a viable business.
Elsewhere, Horizon Pharmaceuticals Plc (Nasdaq) surged $5.25, or 34%, to $21.00 after the company released its third-quarter earnings report. The specialty pharma company blew away consensus for its adjusted non-GAAP earnings by a huge 75% and for revenue by 22%, leading the drugmaker to raise significantly its annual guidance as well. Most of this upside surprise stemmed from particularly strong sales of Horizon’s arthritis treatment Duexis, which saw its sales jump 150% to $56.9 million, compared to the same period a year ago. Deerfield, IL-based Horizon has taken a fair amount of grief in the media lately for Duexis’s reported $1,500 a month price. The issue is that Duexis is a branded combination of ibuprofen and famotidine. As such, the drug’s components, if purchased separately, would normally cost around $40 a month. Horizon reported an adjusted gross profit of 92.1% for the third quarter of 2015, making it one of the most profitable companies in the entire pharmaceutical industry.
And Genocea Biosciences Inc. (Nasdaq) leaped $1.67, or 35%, to $6.46 after reporting a loss of $9.8 million in its third quarter. The Cambridge, MA-based company said the loss amounted to 37 cents per share. The results exceeded Wall Street expectations. The average estimate of four analysts surveyed by Zacks Investment Research was for a loss of 43 cents per share. The biotechnology company posted revenue of $213,000 in the period. Genocea Biosciences shares have declined 22% since the beginning of the year. The stock has decreased 39% in the last 12 months. Genocea discovers and develops vaccines that address infectious diseases such as pneumococcus, chlamydia trachomatis, malaria, and herpes simplex virus 2.
But KaloBios Pharmaceuticals Inc. (Nasdaq) plunged 52% to $0.92 after announcing it will reduce its workforce by approximately 61% as part of a plan to reduce operating costs. The company will focus its resources on the ongoing development of lenzilumab, also known as KB003, in chronic monomyelocytic leukemia (CMML), while it continues to pursue strategic alternatives. As a part of its restructuring, the South San Francisco-based company also announced that it will pause enrollment in the Phase 2 cohort expansion phase of its ongoing clinical study of KB004 in certain hematologic malignancies. The company is currently evaluating strategic alternatives, including a potential sale of the company or its assets. Since these efforts may not be successful, in light of its limited cash reserves, the company is considering all possible alternatives, including a wind-down of operations and bankruptcy proceedings. KaloBios develops monoclonal antibodies designed to improve the lives of seriously ill patients, focusing on respiratory diseases and cancer, cystic fibrosis, asthma, pneumonia, and tumors.
IPO SECTOR -- GenSight Biologics SA, which is developing gene therapies for rare retinal diseases, postponed its initial public offering. The Paris, France-based company was founded in 2012 and booked $2 million in sales for the 12 months ended June 30, 2015. It had planned to list on the Nasdaq under the symbol “GNST.” Leerink Partners, Evercore ISI and Canaccord Genuity were set to be the joint bookrunners on the deal. ** Kura Oncology Inc., which is developing in-licensed protein inhibitors for solid tumors and blood cancers, raised $50 million by offering 6.25 million shares at $8 per share. The La Jolla, CA-based biotech, which is uplisting from the OTCQB (symbol: KURO), had last filed to raise $60 million by offering 3.75 million shares at its then-traded price of $16. Kura Oncology lists on the Nasdaq under the symbol “KURA.” Citi and Leerink Partners acted as lead managers on the deal. Shares closed the week up 7 cents from their IPO price at $8.07, but were down 50% from their price on the OTCQB.
November 2, 2015 ...
PFIZER BID FOR ALLERGAN PARTLY MOTIVATED BY TAXES – Drugmakers Pfizer Inc. (New York) and Allergan Plc (Dublin IRL) are making progress on the year’s biggest merger and are working toward agreeing on a deal as early as this month, people with knowledge of the matter said on Friday. Pfizer is pursuing what could be the biggest overseas takeover to lower U.S. corporate tax liability, showing that efforts in Washington to stem such deals have failed. Company officials confirmed a Wall Street Journal report that it was in early talks to acquire Ireland’s Allergan, a $100 billion-plus pursuit that thrusts Pfizer, the maker of Advil and Viagra, into the implacable debate over corporate taxes. It isn’t yet clear what terms Pfizer has in mind, but the deal could be structured as a so-called “inversion,” in which a U.S. company buys a smaller foreign rival to move its legal home to a lower-tax jurisdiction abroad. American firms have seized on these transactions, drawing a regulatory crackdown last year and widespread political opposition. Pfizer CEO Ian Read was unapologetic about his desire to reduce Pfizer’s tax rate, saying Thursday that U.S. corporate tax rates have put the company at a disadvantage to its foreign rivals. “We’re fighting with one hand tied behind our back,” Mr. Read said. While declining to comment on the Allergan talks, he said Pfizer was “doing what we need to do to ensure that we can continue to innovate.”
Such a takeover would create a pharmaceutical colossus, with a market value likely exceeding $300 billion. It would rank as one of the largest corporate mergers on record and push this year’s deal-making further into record territory. The U.S. Treasury Department announced a plan a year ago to make these inversion deals less attractive, mostly by limiting access to overseas cash. Some inversions faltered--Abvie Inc. (North Chicago), for example, abandoned its takeover of Shire Plc (London). Lawmakers and candidates in both parties want to reduce the tax advantages of incorporating abroad, but disagree on how to accomplish that. Republicans support a revamp of the tax system that includes lowering the corporate rate. Democrats, meanwhile, favor tougher rules that would stop U.S. companies from pursuing these deals to lower their tax liability. Pfizer’s tax rate was 25.5% in 2014, versus the 4.8% paid by Actavis Plc (Dublin), which changed its name to Allergan after the two companies combined earlier this year. Trimming that rate to 15%, for example, would save nearly $2 billion in taxes, based on the profit Pfizer expects to post this year. Pfizer closed the week off 1% at $33.82. Allergan jumped 15% to $308.47.
WALGREENS, RITE AID UNITE TO CREATE DRUGSTORE BEHEMOTH – Walgreens Boots Alliance Inc. (Deerfield IL) agreed to buy Rite Aid Corp. (Camp Hill PA) for about $9.4 billion, in a move that would create a drugstore giant as companies across the U.S. healthcare industry look for ways to bulk up. Walgreens agreed to pay $9 a share in cash for Rite Aid, offering a 48% premium to Rite Aid’s closing price prior to news of the deal. Rite Aid’s stock rose 43% to $8.67 last Tuesday after The Wall Street Journal reported on the merger talks. The deal, which would unite two of the country’s three biggest drugstore owners, would be likely to draw scrutiny from antitrust regulators, who could demand divestitures in exchange for their approval. It also adds to a blockbuster year for healthcare mergers and acquisitions, helping to put 2015 on track to be the busiest year ever for M&A. Later in the week, Pfizer Inc. (New York) and Allergan Plc (Dublin IRL) announced they were in friendly talks about a potential $100-plus billion merger. Including assumed debt, the Walgreens-Rite Aid transaction is valued at $17.2 billion. Rite Aid’s debt totaled $7.4 billion in August.
Drugmakers, hospital chains, health insurers and others have already struck some $427 billion of merger deals in the U.S. this year, according to Dealogic, as the Affordable Care Act and other factors spur them to seek more leverage with their suppliers and cut costs. By combining their drugstore networks, which together include roughly 13,000 U.S. stores, Walgreens and Rite Aid, which have both been squeezed by drug-price inflation, could reap considerable savings. Rite Aid has about 4,600 drugstores in 31 states. Walgreens has roughly 8,200 U.S. stores, while CVS Health Corp. (Woonsocket RI) has more than 7,800. Both Rite Aid and Walgreens have a major presence in states like California, New York and Massachusetts, while in others, including Florida, Texas and Illinois, there isn’t any overlap. Rite Aid shares closed the week up 28% at $7.88. Walgreens fell 6% to $84.68.
TRACKING WASHINGTON -- People shopping for health coverage over the weekend on the websites created by Obamacare saw double-digit percentage increases in their premiums. But some insurers say that’s still insufficient revenue for them. Anthem Inc. (Indianapolis IN) says there remain competitors in the government-run marketplace offering premiums that aren’t sufficient to profitably provide the coverage patients will require. Prices in some areas probably will have to climb in 2017 and even 2018 to reach levels that make sense, according to CFO Wayne Deveydt. Meanwhile, Anthem will sacrifice market share to keep its plans profitable, he said. “When you have fewer national enrollees and you have price points that we don’t believe are sustainable, we’ve just made a conscious decision we’re not going to chase it,” Deveydt said. “We are going to need to be patient until this works itself out.” Deveydt’s remarks spotlight a problem for the Patient Protection and Affordable Care Act’s marketplaces as the third annual sign-up period began Sunday. If prices prices are set too low to lure customers, losses can eventually mount. Some smaller firms already have closed, and some bigger insurers have withdrawn from markets--such as Aetna Inc. (Hartford CT), which will offer coverage in two fewer states this year.
The conundrum has led to this year’s price hikes, which have been higher, on average, than last year’s increases. But the danger is that premiums are now too expensive for some families to afford coverage, especially the uninsured which the Obama administration is trying to persuade to shop on the exchanges for the first time. “Exchanges have had their challenges,” said Ana Gupte, an analyst at Leerink Partners who follows healthcare companies. “The growth has been reasonable, depending on where you priced, but the margins have been a little less compelling.” Insurers have benefited in many ways since the Affordable Care Act was signed into law in 2010. About 17.6 million people have gained insurance coverage, mainly through the health-insurance marketplaces and an expansion of Medicaid, the U.S.’s program with states to cover low-income people. The insurance companies administer coverage for much of that population, and their stocks have soared in the past few years on the growth in their rolls. But the remaining uninsured are poorer and younger than those who’ve already signed up, and they’re more difficult to reach, Health and Human Services Secretary Sylvia Mathews Burwell has said. That may mean slower growth for the insurers.
FDA/EMA ROUNDUP -- BioDelivery Sciences International Inc. (Raleigh NC) said the U.S. Food and Drug Administration approved its opioid treatment for chronic pain, sending the drugmaker’s shares up 2% for the week to $5.38. Endo International Plc licensed the worldwide manufacturing and marketing rights to the treatment, Belbuca, from BioDelivery in 2012. Belbuca is an opioid film patch and aims to treat patients with chronic pain who need around-the-clock treatment and for whom current alternatives do not suffice. The patch is expected to be commercially available in the U.S. by the first quarter ending March in seven dosages, BioDelivery said. Laidlaw & Co Ltd. analyst Jim Molloy expects the treatment to garner peak U.S. sales of about $450 million by 2018 for Endo, and about $80 million for BioDelivery.
Elsewhere, the FDA expanded the use of Bristol-Myers Squibb Co.’s (New York) skin-cancer drug, Yervoy, as an additional therapy for patients with late-stage melanoma. This approval extends Yervoy’s use to patients with stage III melanoma, who have a high risk of recurrence after surgery, the agency said. Due to the potential for fatal adverse reactions and unusual severe side effects with Yervoy, the drug’s label carries a boxed warning--reserved for the most serious of risks. Treatment for stage III patients has historically been challenging, with fewer options available. A diagnosis means that melanoma cells have been found in lymph nodes, and that the patient will require surgery. Yervoy, administered intravenously, was originally approved in 2011 to treat late-stage melanoma that cannot be removed by surgery.
The FDA said there was no evidence of increased cardiovascular risks related to Novartis AG’s (Basel CHE) treatment, Stalevo, for Parkinson’s disease. Recommendations for using the drug, which won U.S. approval in 2003, will remain the same on the labels, the agency said, after examining data from a required clinical trial and one additional study. The regulator had warned patients and healthcare professionals about such risks in August 2010, after it identified certain issues in a clinical trial comparing Stalevo with a combination of drugs, carbidopa and levodopa. The combination treatment has not shown any increased cardiovascular risks.
The pressure on the medical testing company Theranos Inc. (Palo Alto CA) intensified last week when the FDA released two reports saying the company had used an unapproved medical device, did not adequately follow up on customer complaints and had various deficiencies in quality control procedures. The reports, resulting from agency inspections of Theranos facilities, said that the company’s tiny blood collection tube, the “nanotainer,” was a medical device that had not been cleared by the agency but was being shipped in interstate commerce. Theranos said last month that it had temporarily stopped using the nanotainer for all but one test until it could obtain FDA approval. While the company at times has said this was a voluntary move, it does appear from the inspection report that there was explicit pressure from the FDA. Theranos has gained wide attention because of its assertion that it can perform numerous medical tests quickly and inexpensively using a tiny sample of blood from a finger prick, rather than tubes of blood drawn from the arm. Its founder and chief executive, Elizabeth Holmes, who dropped out of Stanford and is now a billionaire, has become a Silicon Valley celebrity. The company’s reported valuation was estimated at more than $9 billion.
MEDICAL STOCK SPOTLIGHT -- Revance Therapeutics Inc. (Nasdaq) led advancing issues, soaring $12.78, or 48% over the week, to $39.17 after reporting interim Phase 2 clinical trial results suggesting that its drug may outperform Allergan Plc’s Botox Cosmetic. The Newark, CA-based clinical stage company is evaluating RT002 against placebo and Allergan’s multibillion dollar blockbuster, and the mid-stage data could suggest that RT002 does better than Botox Cosmetic at eliminating frown lines. Specifically, the trial results show that 100% of patients who were treated with RT002 responded to the drug with at least a one point improvement on a key measurement scale at week four. That finding compares favorably to the 95% response rate for patients taking Botox Cosmetic. Additionally, RT002 was found to be statistically better than Botox Cosmetic for duration of effect. There weren’t any significant safety risks associated with RT002 at the interim look, so attention now shifts to final mid-stage data that is expected in the first half of next year. If the final data remain robust, then a larger late stage trial could begin by the end of 2016.
Elsewhere, Fluidigm Corp. (Nasdaq), a company focused on producing tools for the life-science industry, rocketed $2.85, or 36%, to $10.81 after the company reported results that trounced expectations. Fluidigm reported Q3 EPS of ($0.15), $0.40 better than the analysts’ estimates of ($0.55). Revenue for the quarter came in at $28.6 million versus the consensus estimates of $27.4 million. That revenue beat allowed the company to show a GAAP net loss of only $9.3 million, or $0.32 per share, which was much better than the $0.55 loss that analysts were expecting. Given the beat on revenue and earnings, Fluidigm was upgraded to a “Buy” by an analyst at Cantor Fitzgerald. For the full year the company now expects revenue to fall between $111 million and $114 million. South San Francisco-based Fluidigm develops, manufactures, and markets proprietary Integrated Fluidic Circuit (IFC) systems. The company has commercialized IFC systems for a wide range of life science applications, including a system for gene expression analysis, genotyping, and a system for protein crystallization.
And Acceleron Pharma Inc. (Nasdaq) shot up $5.04, or 19%, to $31.21 after Zachs upgraded shares from a “Hold” rating to a “Buy” rating in a report released last Monday. Zachs currently has a $29.00 price target on the biopharmaceutical company’s stock. Cambridge, MA-based Acceleron is a biopharmaceutical company which focuses on the discovery, development and commercialization of protein therapeutics for cancer and rare diseases. Acceleron Pharma has been given an average rating of “Buy” by the eight research firms that are currently covering the stock, MarketBeat Ratings reports. Three analysts have rated the stock a “Hold” and five have given a “Buy” rating to the company. The average twelve-month price objective among brokerages that have covered the stock in the last year is $54.20.
But MacroCure Ltd. (Nasdaq) cratered $2.25, or 61%, to $1.42 after announcing that results from a pivotal Phase 3 multicenter, randomized, double-blind, parallel-group, sham-controlled study (MC-102) of its CureXcell in the treatment of diabetic foot ulcers (DFUs) did not meet its primary endpoint. CureXcell, the Petach Tikva, Israel-based company’s lead product candidate, did not show a statistically significant proportion of subjects with complete closure at 16 weeks and sustained complete closure for four additional weeks. In addition, CureXcell did not meet the secondary endpoints of the study. MacroCure develops and commercializes advanced cell-therapy products for the treatment of wounds.
IPO SECTOR -- Voyager Therapeutics Inc., a gene-therapy biotech targeting Parkinson’s disease and other central nervous system (CNS) disorders, announced terms for its initial public offering on Friday. The Cambridge, MA-based company plans to raise $75 million by offering 4.7 million shares at a price range of $15 to $17. At the midpoint of the proposed range, Voyager Therapeutics would command a fully diluted market value of $415 million. Voyager licenses adeno-associated virus (AAV) vectors from REGENXBIO Inc., which raised $139 million in an upsized September IPO. Voyager Therapeutics, which was founded in 2013 and booked $7 million in collaboration revenue for the 12 months ended June 30, 2015, plans to list on the Nasdaq under the symbol “VYGR.” Cowen & Company and Piper Jaffray are the joint bookrunners on the deal. It is expected to price during the week of November 9, 2015. ** MyoKardia Inc. priced its IPO well below targets, raising $54 million in an offering last Wednesday. The company sold 5.4 million shares at $10.00, now trading on the Nasdaq under the symbol of “MYOK.” It had expected to sell its shares for between $15 and $17 and raise as much as $91.6 million. South San Francisco-based MyoKardia targets hypertrophic cardiomyopathy, or HCM, a condition that has been implicated in sudden cardiac arrest and death of young athletes. MyoKardia was founded in 2012 and booked $7.1 million in revenue for the six months ended June 30, when it had $73 million in cash and showed a loss of $12.3 million. It raised about $98 million from private investors before going public. Its biggest shareholders are Third Rock Ventures (52.3%), Fidelity (13.1%) and Sanofi subsidiary Aventis Inc. (11.2%). Shares closed the week up 2% at $10.21.
October 26, 2015 ...
COMMUNITY HEALTH WARNS ON EARNINGS; HOSPITAL STOCKS SINK – Community Health Systems Inc. (Franklin TN) shares fell 32% over the week after the hospital chain’s preliminary earnings report disappointed, leading analysts to cut their ratings on the stock because of diminishing benefits from Obamacare. At one point, the stock fell to $27.10, the lowest intraday price since November 2012. HCA Holdings Inc. (Nashville TN), the biggest U.S. hospital chain, and Tenet Healthcare Corp. (Dallas TX) also fell. HCA said the week prior that its quarterly earnings would be hurt by an increase in labor costs and uninsured patients. The sustained poor results from hospitals suggest that the benefits of health reform in the U.S. have run out, said Sheryl Skolnick, an analyst with Mizuho Securities USA. “The nightmare of health care continues and we’re now convinced it is time to get out of the way,” she said in a note to clients, cutting her rating to “Neutral” from “Buy.” Raymond James analyst John Ransom and Chris Rigg of Susquehanna Financial also cut their ratings to the equivalent of “Neutral” from “Buy.” Community Health announced preliminary results for the third quarter ended September 30, 2015, with net operating revenues for the quarter expected to be $4.846 billion, compared to $4.78 billion in the year-ago quarter. Analysts had a consensus revenue estimate of $5 billion for the quarter. The company noted that weakness in volume and deterioration in revenue payor mix resulted in lower than anticipated net operating revenues.
Community Health expects income from continuing operations before taxes as reported to be $121 million, versus $133 million in the year-ago quarter. Adjusted EBITDA is expected to be approximately $661 million, compared to $750 million for the same period in 2014. In addition, the company expects income from continuing operations, excluding expenses from the planned spin-off of Quorum Health Corp., to be $0.56 per share, versus $1.01 per share in the prior year period. Community Health said this result reflects a 1.9% decrease in total admissions and a 0.2% increase in adjusted admissions. Community health closed the week down $13.21 at $28.71. Tenet closed the week down $5.88, or 16%, at $29.99. HCA dropped $3.97, or 4%, to $68.98.
AMERICAN CANCER SOCIETY RECOMMENDS FEWER MAMMOGRAMS – The American Cancer Society (Atlanta) changed its guidelines for early breast cancer detection, recommending that women wait until age 45 instead of 40 to start annual mammograms, then slow the pace at 55 to screenings every other year. The recommendation is designed to reduce erroneous results that require additional imaging and biopsies that find no cancer, creating unnecessary alarm and adding the risks that come with surgery. The decision more closely aligns the influential U.S. health organization with other recent guidelines that are profoundly changing decades-old medical conventions and the care for millions of women. The guidelines, published last week in the Journal of the American Medical Association, apply to women with an average risk of breast cancer and are flexible. Women should begin talking with their doctors about mammography when they reach age 40, and should continue to have access to annual exams at that age if they and their doctors feel it’s needed, the cancer group said. The change stems from new information on the development and progression of cancer and how screening affects the process at different ages, said Kevin Oeffinger, leader of the American Cancer Society panel that updated the guidelines and director of the Cancer Survivorship Center at Memorial Sloan-Kettering Cancer Center (New York).
The recommendations are designed to balance the benefits of early detection with the risks of overdiagnosis and unnecessary care, while taking into account women’s individual values, Oeffinger said. “After looking at literally hundreds of studies, we were convinced that mammography remains an essential tool, and it is still the single best tool for preventing a premature death in a woman with breast cancer,” Oeffinger said. “But most women will not have breast cancer. You can think of mammography as an insurance plan--something you hope you won’t need but you’re glad to have if you do.” The 11-member panel that reworked the ACS guidelines for the past two years was swayed by research that found women 40 to 44 were less likely to have breast cancer and comparatively more likely to have a false-positive result requiring additional imaging or a needle biopsy, the researchers said. Even with aggressive screening and improved treatments, breast cancer is the second-most-deadly tumor for females after lung cancer, killing more than 40,000 women each year.
TRACKING WASHINGTON -- The House approved Republican legislation Friday that would erase key components of President Barack Obama’s healthcare law, block federal payments to Planned Parenthood--and earn a certain veto should it reach the White House. Lawmakers used a near party-line 240-189 vote to approve the bill, which aims squarely at two favorite targets of conservatives. And though they know a veto awaits the measure should it win final congressional approval from the Senate, they say Obama’s rejection would help them sharpen political differences with Democrats for next year’s elections. “If he vetoes it, I think it will crystallize to the country that the only component missing now is a Republican president, and it shows even more importantly why we need to get a Republican president in the White House,” House Majority Whip Steve Scalise (R-LA) said. Democrats called the debate a political charade and a waste of time, saying the House has voted 61 times to repeal all or part of Obama’s prized health overhaul since the GOP took control of the chamber in 2011. “This is a hyper-partisan document that is just talking points for extremists,” said Rep. Ted Lieu (D-CA).
Republicans wrapped the legislation in a streamlined procedure that would shield it from a Democratic Senate filibuster--meaning it will need only 51 votes to pass that chamber. Filibusters, or procedural delays aimed at killing legislation, take 60 votes to halt and there are just 54 GOP senators. But even attaining a simple Senate majority for the measure may be tough for Republicans. The bill faces potential opposition there from moderate Republicans concerned it goes too far and conservative GOP senators running for president saying it doesn’t go far enough. In fact, there were rumblings of discontent about the measure from hard-line conservative Republicans from both chambers who said they wanted the bill to eliminate the entire healthcare overhaul, not just key legs of it. A pair of presidential contenders--Sens. Ted Cruz (R-TX), and Marco Rubio (R-FL) along with Sen. Mike Lee (R-UT) sent a letter last week to House Republicans urging opposition to the bill, saying “This simply isn’t good enough.”
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration is warning doctors and patients that two hepatitis C drugs from AbbVie Inc. (North Chicago) can cause life-threatening liver injury in patients with advanced forms of the disease. The FDA said Thursday it will require AbbVie to add new warnings to Viekira Pak and Technivie after reported deaths and liver transplants in patients who already had liver damage caused by hepatitis C. Jefferies analyst Brian Abrahams wrote in an investment note that the warning is a “moderate positive” for Gilead Sciences Inc. which has competing hep-C drugs. But he added that AbbVie’s Viekira Pak was already expected to be “displaced” by a similar drug from Merck & Co. next year. Shares of AbbVie closed the week down 11% at $50.34.
Elsewhere, a U.S. district court judge handed the Pharmaceutical Research and Manufacturers of America (PhRMA) a major victory when he vacated an HHS rule requiring Medicaid discounts on orphan drugs in certain healthcare settings, calling it “arbitrary, capricious, (and) an abuse of discretion.” In granting PhRMA’s motion for summary judgment, Judge Rudolph Contreras of the U.S. District Court for the District of Columbia said the term “a drug designated for a rare disease or condition” in the 340B provisions clearly shows Congress meant to exclude all drugs with orphan designations from eligibility for the newly added facilities. Under the 340B Medicaid Drug Rebate Program, firms must offer drugs at a steep discount to be covered by Medicaid. HHS is reviewing the decision.
A first-in-class drug from Amgen Inc. (Thousand Oaks CA) based on a tumor-killing virus was given a green light by European regulators on Friday, paving the way for its approval within a couple of months. The decision is a further milestone for a technology that has long fascinated scientists but has previously proven difficult to harness. The European Medicines Agency (EMA) said its experts had recommended approval of Imlygic, also known as talimogene laherparepvec or “T-Vec”, for treating melanoma, making it another option among several new drugs for the most deadly form of skin cancer. The drug is recommended for treating melanoma that cannot be removed by surgery and has spread without affecting internal organs. Imlygic uses a herpes simplex virus, the type that causes cold sores, which has been modified to only infect cancer cells. It is injected directly into tumors where it replicates and causes cancer cells to rupture and die, also stimulating a system-wide immune response.
And the FDA said it approved Johnson & Johnson’s (New Brunswick NJ) chemotherapy for specific soft-tissue sarcomas (STS) that have spread to other parts of the body or cannot be removed by surgery. The drug, Yondelis, is designed to delay the progression of cancer that occurs in fat cells or smooth muscle cells in patients who have previously received treatment containing the chemotherapeutic agent anthracycline. STS is a disease in which cancer cells form in the soft tissues of the body including muscle, tendons, fat, lymph vessels, blood vessels, nerves, and tissue around joints. Data showed Yondelis delayed the growth of the tumor by about 4.2 months on average.
MEDICAL STOCK SPOTLIGHT -- Adaptimmune Therapeutics Plc (Nasdaq) led advancing issues, rocketing $2.43, or 33% over the week, to $9.71. The company’s CEO, James Noble and COO, Helen Tayton-Martin, presented at the 2015 BIO Investor Forum held in San Francisco. Adaptimmune is a clinical stage biopharmaceutical company focused on novel cancer immunotherapy products based on its T-cell receptor (TCR) platform. Established in 2008, the Abingdon, U.K.-based ompany aims to utilize the body’s own machinery--the T-cell--to target and destroy cancer cells by using engineered, increased affinity TCRs as a means of strengthening natural patient T-cell responses.
Elsewhere, Dehaier Medical Systems Ltd. (Nasdaq) surged 30% to $1.84 after announcing that it won a medical device distribution bid for a new rural healthcare construction project supported by China Development Bank Corp. According to the agreement, Dehaier will provide its proprietary C-arm X-Ray machine and defibrillator monitor to Dongsheng Hospital of Ordos, Inner Mongolia. The procurement project is funded by CDB, one of China’s three national policy banks. Beijing-based Dehaier develops, assembles, and markets home-respiratory and oxygen homecare products and other medical devices. The company says its products are used in the surgery room, patient room and at home. Dehaier also provides technical assistance to manufacturers and distributors.
And Digirad Corp. (Nasdaq) gained $1.17, or 25%, to $5.81 after being upgraded by Zacks from a “Hold” rating to a “Buy” rating in a note issued to investors last week, according to MarketBeat. The brokerage presently has a $5.75 price objective on the stock. Zacks’ price target points to a potential upside of 5.89% from the company’s current price. According to Zacks, Poway, CA-based Digirad provides diagnostic nuclear and ultrasound imaging systems and services to physicians’ offices, hospitals and other medical services providers for cardiac, vascular, and general imaging applications. Digirad’s Cardius XPO line of nuclear imaging cameras use patented solid-state technology and unique multi-head design for sharper digital images, faster processing, compact size, lighter weight for portability, and improved patient comfort compared to standard nuclear cameras.
But Synta Pharmaceuticals Corp. (Nasdaq) plunged 66% to $0.67 deciding to end a late-stage trial of its lung-cancer treatment after an independent review said it proved ineffective. The late-stage study aimed to see if a combination of its drug ganetespib with chemotherapy drug docetaxel would work better than docetaxel alone for advanced non-small cell lung adenocarcinoma. The Lexington, MA-based company said it stopped the trials on the recommendation of an independent data-monitoring committee, which said the combination of the two drugs was unlikely to show significant improvement in overall survival compared to docetaxel alone. About 85 to 90% of lung cancers are non-small cell lung cancer and about 40% of lung cancers are adenocarcinomas, according to the American Cancer Society.
IPO SECTOR -- Oasmia Pharmaceutical AB, which is developing new formulations of existing chemotherapy drugs for use in humans and dogs, raised $9 million by offering 2.3 million ADSs at $4.06, below the range of $4.70 to $6.70. The offering also included 1.1 million warrants with an exercise price of $4.06 per ADS. The company originally filed to offer ADSs at $5.25-8.25. Shares have begun trading on the Nasdaq under the symbol “OASM.” Rodman & Renshaw and Joseph Gunnar & Co. acted as lead managers on the deal. Oasmia lowered the proposed deal size for its upcoming IPO last Monday. Oasmia Pharmaceutical was founded in 1999. Shares closed the week off 4% at $3.90. ** Viventia Bio Inc., which is developing antibody drug conjugates for bladder and other cancers, filed with the SEC to raise up to $86 million in an initial public offering. The Winnipeg, Canada-based company, which was founded in 1995, plans to list on the Nasdaq under the symbol “VITA.” Viventia Bio filed confidentially on September 17, 2015. Leerink Partners, Cowen & Company and Guggenheim Securities are the joint bookrunners on the deal. No pricing terms were disclosed.
October 19, 2015 ...
J&J POSTS MIXED 3Q RESULTS, AUTHORIZES BUYBACK – Johnson & Johnson (New Brunswick NJ) beat analysts’ estimates for third-quarter profit as a lower tax rate helped the world’s biggest maker of healthcare products overcome slightly weaker-than-projected sales for key drugs such as Remicade. The company also announced a $10 billion share repurchase program, the biggest not related to an acquisition since 2007. Earnings of $1.49 a share, excluding one-time items, beat by 4 cents analysts’ estimates compiled by Bloomberg. An effective tax rate of about 20%, compared with 24.2% a year earlier, helped boost profit above estimates. The company also raised its forecast for the year to earnings of $6.15 to $6.20 a share. Third-quarter sales fell 7.4% from a year earlier to $17.1 billion, missing the $17.45 billion average projection. J&J has been investing heavily in building up its pharmaceutical business as other products, such as medical devices, face pressure to compete on price to retain customers. The company fell short in the third quarter on several of its top drugs. Arthritis treatment Remicade had revenue of $1.61 billion, compared with expectations for $1.68 billion of sales, while blood thinner Xarelto’s $461 million in sales missed the $468.5 million average projection. Psoriasis drug Stelara was an exception, bringing in $613 million, more than the $586.5 million average estimate.
The $10 billion buyback plan approved by J&J’s board is double the amount it budgeted last year. The company will finance the repurchases with debt. The repurchase program has no time limit, and J&J had $34 billion in cash, equivalents and short-term investments at the end of June, leaving plenty of room for acquisitions. Dividends are J&J’s top priority for cash, followed by acquisitions, CFO Dominic Caruso said. The repurchase program doesn’t change J&J’s outlook for deals, he said. J&J has about 2.77 billion shares outstanding. The program would let the company buy back about 3.8% of those shares at last week’s closing price. J&J is one of only three U.S. industrial issuers to command a triple-A rating from the two largest credit-rating firms. That’s a rating grade not even matched by debt sold by the U.S. government. In May, Standard & Poor’s said it could lower J&J’s rating if share repurchases or acquisitions significantly increased the company’s debt leverage. Shares closed the week up 3% at $98.24.
VALEANT TUMBLES AS U.S. PROSECUTORS ISSUE SUBPOENA ON PRICES -- Valeant Pharmaceuticals International Inc. (Laval, Quebec), already under fire over steep price hikes for two heart drugs, said it had been subpoenaed by U.S. prosecutors seeking details on its patient assistance programs, drug pricing and distribution practices. U.S.-listed shares of Valeant, which said it would cooperate with the investigations, initially skidded 5%, then went on to close the week up 1% at $177.56. The Canadian company, which was hammered by Democratic lawmakers in late September over those price increases, said late Wednesday it was reviewing subpoenas from the U.S. Attorneys’ Offices for the District of Massachusetts and the Southern District of New York. Valeant tripled the price of its drug Isuprel and raised the price six-fold for another heart drug, Nitropress, after buying them in February. While the magnitude of the price hikes has put Valeant in the political crosshairs, raising drug prices is not illegal in the United States. The company said it had hired a consultant to review the drugs’ pricing and reimbursement. The consultant found “considerable room to increase the price of both drugs,” CEO Michael Pearson said in a letter on Wednesday in response to concerns expressed by U.S. Senator Claire McCaskill. He added that Valeant has made substantial investments in manufacturing in the United States.
McCaskill, the top-ranking Democrat on the Senate’s Permanent Subcommittee on Investigations, said on Thursday that Pearson’s letter failed to answer her questions and that she would press on with her investigation of drug pricing. Pearson has built Valeant into one of the world’s largest drugmakers through numerous acquisitions. His business model has featured price hikes on medicines, while slashing research spending of acquired companies. “Many companies charge high prices for drugs, but not many duplicate the Valeant business model,” said Erik Gordon, a professor at University of Michigan’s Ross School of Business. Gordon noted that drugmakers’ patient assistant programs, a main aspect of the subpoenas, help patients cover co-pays for their medicines, but can sometimes be deemed improper inducement to drive up sales. Shares of many drugmakers have slumped since Democratic presidential hopeful Hillary Clinton last month proposed ways to prevent industry “profiteering.”
TRACKING WASHINGTON -- The Obama administration released a new Obamacare enrollment goal for 2016 that’s less than 1 million higher than this year’s projected total, acknowledging how hard it’s going to be to get more people to sign up for and maintain health insurance coverage. By the end of 2016, about 10 million people will get individual coverage through health-insurance marketplaces set up by the Patient Protection and Affordable Care Act, the Department of Health & Human Services projected Thursday. About 9.9 million people were enrolled in Obamacare policies as of June 30, and the administration has said that number will probably fall to about 9.1 million by the end of 2015. “The remaining uninsured have a lot of concerns about whether or not they can afford coverage,” HHS Secretary Sylvia Mathews Burwell said Thursday. She said most of those who remain uninsured are eligible for tax credits, though they’re often confused about them or unaware of them entirely. “We know our audiences are going to be harder to reach,” she said. Burwell said in September that many of the remaining uninsured are poorer and younger than those who’ve already signed up. Almost half are aged 18 to 34, and about 40% of them make incomes between 139% and 250% of the poverty level, according to data released Thursday by HHS.
The affordability of health insurance has been brought up by both Republican and Democratic presidential candidates ahead of the 2016 election, and the administration’s success or failure in signing up people for coverage next year could heighten that debate. Enrollment for 2016 coverage on the exchanges starts on Nov. 1, about three months before voters in each party begin choosing their candidates in Iowa, New Hampshire and South Carolina. The 2010 Affordable Care Act created online health-care marketplaces as a way for millions of people to buy health insurance. Most of those who sign up on the exchanges get government subsidies to buy coverage. The Congressional Budget Office had projected higher enrollment totals for next year. In March, the CBO said 21 million people would gain coverage through Obamacare’s exchanges in 2016, and 24 million by 2017. Burwell said Thursday that earlier projections for sign-ups had anticipated that more people would move to marketplace coverage from employer plans, which hasn’t happened. People who have individual coverage outside the marketplaces also have been slower to move to Obamacare policies.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration declined to approve Pfizer Inc.’s (New York) oral rheumatoid arthritis drug Xeljanz to treat moderate to severe cases of the scaly skin condition plaque psoriasis, the drugmaker said. Pfizer said it received a so-called complete response letter from the Food and Drug Administration. Such letters typically outline concerns and conditions that must be addressed in order to gain U.S. approval. The FDA does not disclose the contents of the letters. Pfizer said it has been asked to provide additional safety analyses of Xeljanz for psoriasis, and that it will work closely with the agency to gain the additional approval. “Pfizer remains committed to Xeljanz based on the strength of the clinical data for the treatment of psoriasis,” Kenneth Verburg, Pfizer’s head of global medicines development, said in a statement.
Elsewhere, the FDA has agreed to review Allergan Plc’s (Dublin IRL) supplemental New Drug Application (sNDA) for a new single-dose regimen of its intravenous antibiotic Dalvance. The once-weekly drug--which targets acute bacterial skin and skin structure infections (ABSSSI), including staph infections like MRSA--is currently administered via a 1000 mg dose followed a week later by a 500 mg dose. The sNDA draws on Phase 3 results of a study comparing the efficacy of a single 1500 mg dose with the approved dosing regimen. The study met its primary endpoint of 10% noninferiority within 48 to 72 hours. Patients in the once-dosed arm saw their lesions decrease by more than 20%, compared with baseline. Dalvance--a lipoglycopeptide indicated to combat infections caused by Gram-positive bacteria--was the first drug approved under the FDA’s Qualified Infections Disease Product designation. It is the only IV antibiotic approved for treating ABSSSI, according to Allergan.
The FDA approved a third indication for Bristol-Myers Squibb Co.’s (New York) Opdivo, this time to treat metastatic non-squamous non-small cell lung cancer that has progressed during or after platinum-based chemotherapy. The approval means the PD-1 inhibitor can be used to treat both main types of NSCLC--squamous and non-squamous. Opdivo won the squamous indication in March. The new indication comes a week after Merck & Co.’s Keytruda gained FDA approval to treat both kinds of NSCLC, becoming the first PD-1 inhibitor to do so. However, Keytruda is limited to patients whose tumors express the PD-L1 protein and Opdivo is not, potentially giving it a larger patient population. Forecasts for Opdivo and Keytruda are about $9 billion and $5 billion, respectively, in 2020, S&P Capital IQ analyst Jeffrey Loo said. In addition to the two NSCLC indications, Opdivo is approved for previously treated advanced melanoma.
And the FDA has extended exclusivity for Ruconest, barring the marketing of biosimilars of the drug until July 2026. Dutch drugmaker Pharming Group NV, which makes Ruconest (recombinant C1 esterase inhibitor), and its U.S. distributor, Salix Pharmaceuticals Inc., said that the FDA granted the biological 12 years’ reference product exclusivity. The FDA approved Ruconest in July 2014 to treat hereditary angioedema, and the drug was launched in November. Ruconest previously had received orphan-drug designation, giving it seven years of marketing exclusivity. That exclusivity runs out in 2021.
MEDICAL STOCK SPOTLIGHT -- Five Prime Therapeutics Inc. (Nasdaq) led advancing issues, more than doubling over the week to $31.65. The clinical-stage biotechnology company announced a new worldwide license and collaboration agreement with Bristol-Myers Squibb Co. for Five Prime’s colony stimulating factor 1 receptor (CSF1R) antibody program. According to the press release, this agreement replaces the two companies’ current collaboration agreement regarding the development of Bristol’s PD-1 immune checkpoint inhibitor Opdivo in combination with Five Prime’s FPA008 product across six tumor types. Although an extended research agreement with a Big Pharma like Bristol is noteworthy in and of itself for a tiny biotech, the real reason Five Prime’s shares soared is because the South San Francisco-based company will receive an upfront payment of $350 million, per the terms of this deal. To put this in perspective, the upfront payment isn’t far from where Five Prime’s market cap stood upon last week’s close.
Elsewhere, Vital Therapies Inc. (Nasdaq) surged $2.22, or 49%, to $6.79 in what was a banner week for the shares--although its catalyst wasn’t at all clear. From a longer-term perspective, the stock has struggled--losing nearly three-quarters of its value on a year-to-date basis. Analysts said traders have been scooping up bearish bets over bullish at a furious pace recently. Vital Therapies’ 10-day put/call volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is $5.41--up from $0.91 five sessions ago--with more than five puts bought to open for every call. And, despite the stock’s intraday gains over the week, traders were buying to open the December $4.50 put in hopes of a sharp reversal below the $4.50 level within the next two months. San Diego-based Vital Therapies develops and discovers cell-based products, and is currently focusing on the design and production of medical cartridges to stabilize liver function in patients.
And Xenoport Inc. (Nasdaq) rallied $1.39, or 33%, to $5.58 after two prominent healthcare-focused funds submitted filings with the SEC, disclosing new or beefed up positions in the company. Deerfield Management Co. LP’s filing revealed a 6.29 million-share position in Xenoport, representing 9.97% of its common shares. In addition, Armistice Capital LLC reported upping its holding to 2.6 million shares. Unlike Armistice however, which held 1.6 million shares on June 30, Deerfield’s position in the stock is a new one for the firm. Analysts say both investors believe they have caught Santa Clara, CA-based XenoPort at the right price given its sharp decline in the middle of September. Its precipitous drop of over 37% during a span of four trading sessions beginning on September 14 followed the revelation that its psoriasis treatment XP23829 was causing frequent gastrointestinal-related side effects in testing, which led to nearly one-third of the trial subjects prematurely dropping out of the study. On the other hand however, the study did meet its primary endpoint, exhibiting efficacy for reducing lesions in psoriatic patients.
But Zafgen Inc. (Nasdaq) plunged $24.04, or 70%, to $10.36 after saying Friday that U.S. regulators have temporarily halted its clinical trial studying a treatment for a rare genetic disorder after a patient receiving the drug died during the study. The biopharmaceutical company confirmed Friday that the patient had been receiving its drug beloranib to treat Prader-Willi Syndrome, a rare genetic disorder that carries a high rate of mortality linked to obesity and related conditions. When Zafgen first announced the death Wednesday, the company didn’t know at the time if the patient was taking the drug or a placebo because of the blinded study. The U.S. Food and Drug Administration notified Zafgen late Thursday that beloranib has been placed on partial clinical hold. The hold impacts current or planned clinical trials involving the drug. The stock already had lost more than half of its value since mid-September amid reports of a death. Boston, MA-based Zafgen said it expects to report results from the halted trial in the first quarter of 2016. The company said it anticipates another late-stage trial will begin after the current one is completed.
IPO SECTOR -- Strongbridge Biopharma Plc, a late-stage biotech developing therapies for rare endocrine disorders, raised $25 million on Thursday by offering 2.5 million shares (80% insider) at $10 each. The Trevose, PA-based company originally planned to offer 4.25 million shares at $17.93, before it slashed its terms, added insider buying and removed lead bookrunner BofA Merrill Lynch last Wednesday. Existing shareholders, including RA Capital and NEA (New Enterprise Associates), purchased up to $20 million, or 80%, of the deal, which essentially makes this a private placement. Strongbridge lists on the Nasdaq under the symbol “SBBP.” Stifel is the sole bookrunner on the deal. Shares closed the week up 5 cents at $10.05. ** Hong Kong-based drugmaker Hutchison China MediTech Ltd. registered an initial public offering in the United States, according to a regulatory filing. The London-listed biopharmaceutical company, majority owned by Chinese conglomerate CK Hutchison Holdings Ltd., is also known as Chi-Med. Hutchison China, founded in 2000 by Hutchison Whampoa Ltd., makes cancer and arthritis drugs and medical devices. The company, which listed on the London Stock Exchange in 2006, has seven drug candidates in clinical-stage trials. Four of these drug candidates are for tumors and one each for lung cancer and rheumatoid arthritis. Hutchison China’s revenue more than doubled to $87.3 million in 2014. The company plans to list on the Nasdaq under the symbol “HCM.” It has set a target of up to $100 million for the IPO, according to the filing. BofA Merrill Lynch and Deutsche Bank Securities are the underwriters for
October 12, 2015 ...
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.
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.