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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.
Previous Week's Issue ... 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.
In Europe, regulators on Friday recommended the use of a combination of Novartis AG’s drugs Tafinlar and Mekinist for treating certain patients with melanoma, boosting prospects for medicines acquired from GlaxoSmithKline Plc. Recommendations for marketing approval by the European Medicines Agency’s Committee for Medicinal Products for Human Use are normally endorsed by the European Commission within a couple of months. The Swiss drugmaker said the FDA had also granted priority review for the combination.
Amgen Inc. (Thousand Oaks CA) won approval in the European Union for its drug Repatha, the first regulatory clearance for a new class of powerful cholesterol-lowering drugs. The European Commission granted Amgen authority to sell Repatha for patients with uncontrolled cholesterol who require additional intensive reduction of LDL, or bad, cholesterol, the company said in a statement. Repatha is part of a category of drugs known as PCSK9 inhibitors, designed to help patients who can’t get their LDL cholesterol under control with widely used statins such as Pfizer Inc.’s Lipitor, or who can’t tolerate the drugs. The U.S. Food and Drug Administration is expected to decide whether to approve Repatha by Aug. 27. More than 60% of high-risk patients in Europe are unable to lower their bad cholesterol with statins or other lipid-lowering therapies, according to the company statement.
MEDICAL STOCK SPOTLIGHT -- Inotek Pharmaceuticals Corp. (Nasdaq) led advancing issues, more than tripling over the week to $17.65. The Lexington, MA-based drugmaker announced the phase III development strategy of its lead glaucoma drug, trabodenoson, a first-in-class selective adenosine mimetic designed to restore the eye’s natural pressure control mechanism. Based on feedback from a recent “end of phase II meeting” with the U.S. Food and Drug Administration, Inotek is in final preparation stages to commence its first phase III trial to support a New Drug Application (NDA) for trabodenoson. The company also had its “Outperform” rating affirmed by analysts at Cowen and Company in a research report issued on Friday. They currently have a $40.00 price target on the stock, up from their previous price target of $15.00. Cowen and Company’s target price indicates a potential upside of 126.63% from the company’s current price.
Elsewhere, Exelixis Inc. (Nasdaq) soared $1.68, or 43%, to $5.59 after the company reported positive top-line results from the primary analysis of a phase III pivotal study (METEOR) on its oncology drug Cometriq (cabozantinib). The open-label, event-driven study is comparing Cometriq to Novartis’s Afinitor (everolimus) in metastatic renal cell carcinoma (RCC) patients who have experienced disease progression following treatment with a VEGF receptor tyrosine kinase inhibitor. Results revealed a statistically significant improvement in progression-free survival in the first 375 randomized patients as determined by an independent radiology committee out of the 658 patients enrolled in the study. Patients when treated with Cometriq witnessed a reduction in the risk of disease progression or death by 42% as compared to the patients in the Afinitor arm, thereby successfully meeting the primary endpoint of the study. Based on the encouraging study results, South San Francisco-based Exelixis intends to complete regulatory filings in the U.S. and EU in early 2016.
And Cara Therapeutics Inc. (Nasdaq) surged $4.77, or 30%, to $20.43 after the company reported that its lead product candidate CR845 met its primary endpoint in a mid-stage trial. Shelton, CT-based Cara is developing CR845 as a treatment for acute pain and uremic pruritis, a chronic itch affecting roughly half of all kidney failure patients. In a 65-person mid stage trial, uremic pruritus patients experienced a 54% bigger drop-off in “worst itch intensity” scores when taking CR845 than patients experienced while taking a placebo. Secondary endpoints for quality of life and a reduction in sleeplessness were also met. Cara Therapeutics’ positive mid-stage study clears the way for the company to kick-off a larger phase III study next year. While there is no guarantee that CR845 will prove to be effective in this upcoming trial, results confirming its mid-stage data could lead to an eventual FDA approval in this condition. If approved, the drug could potentially benefit up to 50% of the 400,000 Americans receiving hemodialysis, many of whom fail to control their itch with corticosteroids and antihistamines.
But XOMA Corp. (Nasdaq) plunged $3.58, or 79%, to $0.94 after the company announced the phase III EYEGUARD-B study of gevokizumab in patients with Behcet’s disease uveitis did not meet the primary endpoint of time to first acute ocular exacerbation. The study was conducted by Berkeley, CA-based XOMA’s partner Servier SA, an independent French pharmaceutical research company driven by the pursuit of innovative drugs. Gevokizumab appeared to be well tolerated in the trial. Adverse events were comparable between gevokizumab and placebo-treated groups. Others involved in the study noted that the initial observations seen in the secondary endpoints were clinically important and meaningful to both clinicians and Behcet’s disease uveitis patients. Immediately after the announcement, in only the first hour of trading alone, over 22 million XOMA shares had moved as investors ran for cover.
IPO SECTOR -- Zynerba Pharmaceuticals Inc., a preclinical biotech developing cannabinoid-based therapies for osteoarthritis and epilepsy, announced terms for its initial public offering on Thursday. The Devon, PA-based company plans to raise $42 million by offering 3.0 million shares at a price range of $13 to $15. At the midpoint of the proposed range, it would command a fully diluted market value of $128 million. Zynerba, which was founded in 2007, plans to list on the Nasdaq under the symbol “ZYNE.” Jefferies and Piper Jaffray are the joint bookrunners on the deal. It is expected to price during the week of August 3, 2015. ** Neos Therapeutics Inc., which is developing easily swallowed formulations of ADHD treatments, raised $72 million by offering 4.8 million shares (upsized from 4.0 million) at $15, the midpoint of the range of $14 to $16. Neos Therapeutics lists on the Nasdaq under the symbol “NEOS.” Neos initially filed confidentially on April 27, 2015. UBS Investment Bank, BMO Capital Markets and RBC Capital Markets acted as lead managers on the deal. Shares closed the week up $5.51, or 37%, at $20.51.
July 20, 2015 ...
J&J TOPS ESTIMATES AS DRUG SALES EXPAND BEFORE DOLLAR EFFECT -- Johnson & Johnson’s (New Brunswick NJ) recovering U.S. consumer health business, following years of recalls that kept Tylenol, Motrin and other marquee brands off store shelves, propped up an otherwise rough second quarter. Sales dropped across every other business segment, unusual for the world’s top maker of healthcare products, which also sells prescription medicines and medical devices. Even within consumer health, global revenue declined for normally steady categories, including wound, skin and baby care products as the effects of a stronger dollar cut into international revenue. But U.S. consumer health sales rose nearly 3%, versus a 9% decline in total revenue. J&J is beset by the failure of Olysio, a new hepatitis C medicine expected to garner billions, plus revenue lost to multiple divestitures and unfavorable currency exchange rates that sliced worldwide sales nearly 8%. “Operational results were solid” after stripping out all those problems, said Edward Jones analyst Ashtyn Evans, “but we have to see some stronger growth in prescription drugs.” J&J beat Wall Street’s low expectations, helped by a one-time gain of $931 million from the recent divestiture of painkiller Nucynta and other special items. It pinched its 2015 profit forecast to $6.10 to $6.20 per share excluding one-time items. In January, it forecast $6.12 to $6.27 per share.
J&J is seeing strong growth from key newer prescription drugs--anticlotting medicine Xarelto, long-acting schizophrenia injection Invega Sustena and immune disorder drugs Stelara and Simponi. The company just applied to the Food and Drug Administration for approval of biologic drug daratumumab, a likely multibillion seller for blood cancer multiple myeloma. It’s also pushing potential future breakthroughs in areas such as robotic surgery from recent partnerships with technology giants IBM, Google and Apple. And CEO Alex Gorsky said U.S. surgeries and hospital admissions are up a few percent for the fourth straight quarter, which boosts sales of many company products. J&J posted a 4.4% increase in second-quarter profit, to $4.52 billion. Earnings per share, adjusted for one-time costs, came to $1.71, 2 cents over analysts’ estimates. J&J posted total revenue of $17.79 billion in the quarter, edging forecasts for $17.7 billion. Shares closed the week up 1% at $100.08.
FORMER MEDICARE CHIEF TO LEAD LOBBYING WING OF HEALTH INSURERS -- Marilyn Tavenner, the former head of the Centers for Medicare and Medicaid Services who stepped down just six months ago, will now lead the country’s dominant health insurance lobbying group. The board of America’s Health Insurance Plans (Washington DC) last week named Tavenner as the group’s next president and CEO. She replaces Karen Ignagni, who served as AHIP’s top lobbyist for 22 years before deciding to leave for New York-based insurer EmblemHealth Inc. this year. “There is no better individual than Marilyn to lead our industry through the increasingly complex healthcare transformation that is underway,” Mark Ganz, AHIP board chair and CEO of Cambia Health Solutions Inc. (Portland OR), said in a statement. “She has the respect and trust of policymakers and stakeholders from all sides, and a personal commitment to advance meaningful solutions for improving access to quality, affordable care for all Americans.” Tavenner, 64, was a nurse and a former executive of HCA Holdings Inc. (Nashville TN) before entering the federal government. She will now be representing and lobbying on behalf of some of the country’s largest health insurers--the same companies who are regulated by the CMS and are devoting more of their business to Medicare and Medicaid in the form of privatized managed care.
Medicare Advantage, in particular, has been one of the fastest-growing components of the insurance industry. Private payers have publicly stated their desires to grow that side of the business. A pending merger between Aetna Inc. (Hartford CT) and Humana Inc. (Louisville KY) would create the largest Advantage plan in the country with about 4.4 million Medicare beneficiaries. Tavenner will not be able to lobby the Obama administration health agencies for a short period of time, said Kip Piper, a former CMS official who now serves as a health insurance consultant in Washington. “AHIP already has a large, Beltway-savvy lobbying team, and this will allow her to get acquainted with AHIP internally and with member needs,” Piper said. Many Washington observers say Tavenner’s move makes sense. “With exchanges and Medicare Advantage being a growth driver for plans, the managed-care industry needs someone to navigate Washington, and that includes Tavenner’s alma mater, CMS,” said Ipsita Smolinski, managing director of Washington-based healthcare consulting firm Capitol Street. John Gorman, a former CMS official during the Clinton administration who now consults with insurers, said Tavenner will have her work cut out for her, especially considering AHIP recently lost the membership of UnitedHealth Group Inc. (Minnetonka MN).
TRACKING WASHINGTON -- Senior Democrats pushed back Thursday against an undercover government probe of President Barack Obama’s healthcare law, saying it didn’t uncover any real fraud. Investigators for the nonpartisan Government Accountability Office signed up 11 bogus beneficiaries for 2014 coverage then got HealthCare.gov to continue benefits this year for all but one. Sen. Ron Wyden (D-OR) said these were “fictitious cases” and the GAO investigators themselves admit the findings can’t be translated to the 10 million people getting subsidized coverage through the law’s health insurance markets. Wyden spoke at a Finance Committee hearing on the investigation. But GAO’s audits chief Seto Bagdoyan said the investigation exposed real concerns. He said it was relatively easy for GAO’s fictitious characters to get and keep coverage, even to get reinstated after HealthCare.gov terminated them. HealthCare.gov seems to put a higher priority on getting people covered than on verifying they are legally entitled to benefits, Bagdoyan said. Democrats have no tolerance for fraud, but “the report up for discussion today is not about any real-world fraud,” Wyden said. “Not one of them was a real person who filed taxes or got medical services. No fast-buck fraudster got a government check sent to their bank account.”
Elsewhere, about 6.6 million U.S. taxpayers paid a penalty imposed for the first time this year for not having health insurance, about 10% more than the Obama administration had estimated--though a portion didn’t need to. The penalty of as much as 1% of income was implemented under the Patient Protection and Affordable Care Act, or Obamacare, and was meant to encourage people to sign up for health insurance. The Treasury Department had said in January that as many as 6 million taxpayers would pay the fine. The average penalty was $190, the National Taxpayer Advocate, the in-house ombudsman of the Internal Revenue Service, said Wednesday in a report. About 300,000 taxpayers overpaid the penalty by a total of $35 million. Most should have been exempt for their low income, according to the agency. The average overpayment was a little more than $110. The IRS hasn’t decided yet whether to issue a refund for the overpayments. “Since the majority of taxpayers use paid tax-return preparers, most would probably spend more than the roughly $110 average overpayment amount in preparer fees if amended returns are required,” the National Taxpayer Advocate said. About 10.7 million taxpayers filed for an exemption from the penalty.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration approved AstraZeneca Plc’s (London) drug, Iressa, as a first-line treatment for a common form of lung cancer. The FDA said the approval was based on results from a trial of 106 patients with previously untreated non-small cell lung cancer. The drug was previously approved for use only in patients who did not respond to chemotherapy. Lung cancer is the leading cause of cancer-related death in the United States. The National Cancer Institute estimates more than 158,000 will die from the disease this year. The approval could revitalize the drug, whose sales fell 5% to $144 million in the first quarter. Drugs like Iressa and Roche Holding AG’s Tarceva have been on the market for several years and provide a valuable treatment option for some lung cancer patients with a certain genetic mutation.
Elsewhere, Novo Nordisk A/S (Bagsvaerd DNK) announced that the FDA approved its PenMate injection device for use with Novo’s Norditropin Flexpro treatment for growth hormone-related disorders. The device is designed to hide the needle injecting Norditropin into patients. Norditropin is used for children and adolescents and is designed for users of Norditropin who dislike needles and prefer them to be hidden during the injection process. “Children and adolescents with growth hormone-related disorders are the primary users of Norditropin, and some feel uneasy at the thought of having to inject their medicine,” said Eddie Williams, senior vice president, Biopharmaceuticals, Novo Nordisk. “FlexPro PenMate was developed to hide the needle, demonstrating our commitment to keeping the patient at the center of everything we do.” Norditropin FlexPro is the only prefilled growth hormone injection pen that can be stored outside of the refrigerator for up to 21 days after first use, the company said.
The FDA is bolstering warning labels for popular pain relievers, adding information about the risk of heart attack and stroke in the short term. The changes announced Thursday apply to prescription non-steroidal anti-inflammatory drugs, or NSAIDs, including arthritis treatments like Celebrex. The agency said it plans similar changes to over-the-counter drugs in the same class, such as Advil and Motrin. Language on the pills’ label currently warns that they can increase the risk of heart-related problems if used long term. However, the agency’s new warning states that heart attacks and strokes can occur in the first few weeks of taking the drugs. The agency also warns that the risks increase with higher doses of the drugs. The updates are based on an FDA review of recent studies and recommendations by outside advisers. “In general, patients with heart disease or risk factors for it have a greater likelihood of heart attack or stroke,” the agency notes in the announcement posted to its website.
In Europe, Bristol-Myers Squibb Co. (New York) announced Thursday that its HIV-1 combo regimen Evotaz, for the treatment of adult patients suffering from HIV-1, has won approval from the European Commission. Evotaz is Bristol Myers’ combination drug containing 300 mg of Bristol’s protease inhibitor Revataz (atazanayir), and 150 mg of Gilead Sciences, Inc.’s CYP3A inhibitor Tybost (cobicistat). The said combination treatment is meant as a once-daily tablet to be taken with other antiretroviral for treating HIV-1. Evotaz’s approval in Europe is good news for a large portion of the European population currently suffering from the deadly infection. The approval allows Bristol Myers to market the drug in all 28 Member States of the EU.
MEDICAL STOCK SPOTLIGHT -- Ohr Pharmaceutical Inc. (Nasdaq) led advancing issues, soaring $1.41, or 62% for the week, to $3.68. The New York-based company announced positive final results from a phase II clinical trial of OHR-102 (0.2% Squalamine lactate ophthalmic solution) in patients with macular edema secondary to branch (BRVO) and central retinal vein occlusion (CRVO). The results demonstrated that, following an initial 10 week combination therapy treatment period, patients who continued to receive a combination of topical OHR-102 BID plus Lucentis achieved greater visual acuity gains than the control group who received Lucentis alone. At week 38, the mean gain in visual acuity from baseline for patients randomized (at week 10) to treatment with OHR-102 + Lucentis PRN was +27.8 letters compared with +23.3 for patients randomized to treatment with Lucentis plus PRN alone (control group), a clinically meaningful difference of +4.5 letters.
Elsewhere, following an increase in price target from Brean Capital’s Difei Yang, shares of Zogenix Inc. (Nasdaq) surged $5.96, or 39%, to $21.13. Yang raised the price target to $28 from $20 after the company’s successful Key Opinion Leader meeting focused on Dravet syndrome and Zogenix’s treatment for it, an orphan drug, ZX008. Yang said the assumptions previously used to value the company were too conservative. For example, the 35% operating income margin for an orphan disease company like San Diego, CA-based Zogenix might have been in line with other specialty pharma companies, but not the orphan-drug universe, for which it stands in the 50% range. Moreover, strong long-term clinical data on ZX008 and a lower efficacy bar for the drug owing to the absence of alternative therapies has led Yang to revise the success rate of pending trials up to 80% from 70%.
And EPIRUS Biopharmaceuticals Inc. (Nasdaq) gained $1.76, or 29%, to $7.76 after saying it will partner with Polpharma Group to commercialize a pipeline of biosimilar drug candidates in the European Union, Middle East, Turkey, Russia and Commonwealth of Independent States. The pipeline includes biosimilar versions of three blockbuster drugs--BOW015 (infliximab, whose reference biologic is the Johnson & Johnson drug Remicade), BOW050 (adalimumab, AbbVie’s Humira), and BOW070 (tocilizumab, Roche’s Actemra). All three focus on treating inflammatory and immune mediated disorders. EPIRUS plans to expand that pipeline mid- to long-term through biosimilar versions of at least some of the more than 20 Immunoglobulin G (IgG), Chinese Hamster Ovary monoclonal antibody drugs with soon-to-expire patents, clustered in five therapeutic areas. Both companies will split clinical development costs and eventual operating profit, with 51% going to Polpharma and the remaining 49% to Cambridge, MA-based EPIRUS.
But NephroGenex Inc. (Nasdaq) slid 16% to $4.72 after pricing an offering of 1.5 million shares of common stock, and warrants to purchase 1.5 million shares of common stock, at $5 per share and warrant. The warrants will have an exercise price of $6.25 per share and are exercisable immediately. Underwriters have a 45-day option to buy up to 225 thousand more shares and/or warrants for overallotment. The pharma firm expects gross proceeds of $7.5 million, to be used for general purposes. The offering should close this Wednesday. Research Triangle Park, NC-based NephroGenex develops novel drugs for the treatment of kidney disease. The Company is developing a small molecule drug that acts as an inhibitor of the pathogenic oxidative chemistries which are elevated in diabetic patients.
IPO SECTOR -- Intec Pharma Ltd., which is developing an improved delivery method of carbidopa/levodopa for Parkinson’s disease, announced terms for its U.S. initial public offering on Thursday. The company is currently listed on the Tel Aviv Stock Exchange under the symbol “INTP” with a market cap of about $45 million. The Jerusalem, Israel-based company plans to raise $38 million by offering 4.5 million shares at its current price of $8.36. At that price, Intec Pharma would command a fully diluted market value of $85 million. The last Parkinson’s disease biotech IPO, Cynapsus Therapeutics, is developing an easier-to-use formulation of apomorphine. It trades about 20% above its offer price. Intec Pharma, which was founded in 2000, plans to list on the Nasdaq under the symbol “NTEC.” Maxim Group LLC and Roth Capital are the joint bookrunners on the deal. No pricing date was disclosed. ** EyeGate Pharmaceuticals Inc., a late-stage biotech developing a treatment for eye inflammation, announced terms for its IPO on the Nasdaq last Wednesday. The Waltham, MA-based company plans to raise as much as $13 million by offering 0.87 million shares based on its July 14 share price of $15. At that price, EyeGate Pharmaceuticals would command a fully diluted market value of $131 million. EyeGate set terms to list on the Nasdaq in September 2014 at a $101 million market cap, but postponed the offering. It ultimately listed on the OTCQB under the symbol “EYEG” at $6 per share in February 2015, commanding a $43 million market cap and raising $4.1 million. On July 14, EyeGate announced the dosing of the first patient in its phase Ib/IIa trial of lead product candidate EGP-437 for macular edema, and it expects top-line data in the fourth quarter of this year. On the day of the announcement, its stock soared 107% to $15.00, then finished the week at $12.35. EyeGate Pharmaceuticals, which was founded in 2004, plans to list on the Nasdaq under the symbol “EYEG.” Aegis Capital and Chardan Capital Markets are the joint bookrunners on the deal.
Previous Week's Issue ... July 13, 2015
HEALTH INSURANCE COMPANIES SEEK BIG RATE INCREASES FOR 2016 -- Citing sicker-than-expected customers who purchased policies under the Affordable Care Act, the nation’s health insurers are seeking rate increases of 20% to 40% or more for the 2016 open enrollment season. Federal officials, meanwhile, have vowed to scale back such requests. According to a New York Times report, market leading Blue Cross and Blue Shield plans are especially insistent on raising prices. Various insurers are looking for rate increases of an average 23% in Illinois, 25% in North Carolina, 31% in Oklahoma, 36% in Tennessee and 54% in Minnesota. Elsewhere, insurers participating in the federal exchange have filed requests for pricing hikes that reach as high as 85% in Georgia and as low as 30% in Maryland. The root cause of the problem is the failure of several marketplaces to attract enough young, healthy applicants. “As a result, millions of people will face Obamacare sticker shock,” said Wyoming Senator John Barrasso. Insurance companies who want to raise rates more than 10% are required to submit their pricing plans for approval through the states’ insurance department with an explanation as to the high increases. Federal officials, however, have already pushed back at the proposed increases.
During a stop in Tennessee late last week, President Barack Obama told consumers to contact state insurance regulators and urge them to carefully review such high pricing proposals. If commissioners “do their job” and actively review rates, he said, “my expectations is that they’ll come in significantly lower than what’s being requested.” The comments are part of a more general increase in government review of health insurers. Earlier this month, a senior Justice Department official told reporters that antitrust enforcers want more power to review pending transactions between large health insurance companies. The fear is that the potential deals between the nation’s five largest carriers will disrupt the market, limit competition and increase pricing. Officials say if all mergers come through, it would look at the deals collectively in an attempt to determine what effect the deals might have on the marketplace--specifically whether rate increases would be likely and whether any antitrust concerns would be raised. Industry officials, however, say merger and acquisition activity is not likely to affect premium pricing. Instead, insurers’ “focus is on making sure consumers have affordable coverage,” a spokesperson for America’s Health Insurance Plans (Washington DC) said.
HUMANA, AETNA MERGER DEAL INCLUDES TERMINATION FEES -- Health insurer Humana Inc. (Louisville KY) and its buyer Aetna Inc. (Hartford CT) set fees to be paid in the event of a failure of the largest deal in the health insurance industry, Humana said in a regulatory filing. Aetna, which the week prior said it would buy Humana for about $37 billion in cash and stock, has to pay a termination fee of $1.69 billion. Humana would pay the larger rival $1.31 billion if the deal is terminated. The deal faces antitrust issues as the authorities scrutinize how the combination will affect competition for each line of insurance: Medicare, Medicaid, individual insurance, commercial insurance for small and large businesses and the large employer business. Wall Street analysts and some antitrust experts have said that they expect the combination to be approved, although regulators may insist on some divestitures. “Aetna shareholders have to approve the deal, and with such a large premium, there is some outside chance that shareholders will not approve it,” said Standard & Poor's equity analyst Jeffrey Loo. Aetna’s CEO said he was confident about an antitrust approval for the deal to close by June 30, 2016. The company had already prepared for possible divestitures to address overlaps with Humana’s business, he added. Aetna is required to pay Humana $1 billion if the deal is not closed by June 30, 2016, according to the filing.
Meanwhile, Humana prompted new investor concerns about the $37 billion deal by lowering its 2015 financial forecasts last week. Humana, which has posted disappointing results for several quarters in a row, said that members of its Medicare Advantage plans for the elderly were using hospital services at a higher rate than the company expected. That increase could cut into already tight profit margins, if Humana ends up paying more for medical claims than they anticipated when setting monthly insurance rates. Humana CEO Bruce Broussard said that inpatient hospital admissions have not performed in line with what the company had forecast. That contributed to its decision to slash expected 2015 operating profits by more than 8%. The company said it had taken the higher Medicare Advantage hospital use into account when it priced premiums for 2016. The degree to which Humana will boost Aetna’s earnings in 2017 and 2018 is less than what some investors had hoped for, he said. Aetna’s offer of $125 in cash and 0.8375 Aetna shares for each Humana share valued Humana at $230 per share. Aetna closed the week down 9% at $114.48, bringing down the offer price to $221 per share. Humana closed the week off 13 cents at $187.37.
TRACKING WASHINGTON -- President Barack Obama asked the U.S. Senate to confirm Andy Slavitt as the administrator of the Centers for Medicare & Medicaid Services. Slavitt is already the acting administrator of CMS. He joined the government in 2014, after working as an executive vice president at UnitedHealth Group Inc.’s (Minnetonka MN) Optum unit, which helped fix the main Obamacare website, healthcare.gov. CMS oversees health programs for the elderly, disabled and poor, in addition to handling many of the efforts tied to Obama’s healthcare overhaul. Medicare covers more than 50 million elderly and disabled Americans. Orrin Hatch, the Utah Republican who is chairman of the Senate Finance Committee, said Slavitt will have to answer questions about his work at UnitedHealth. “Mr. Slavitt’s conflicted history in the medical services industry has produced mixed results and raised a number of serious concerns,” Hatch said in a statement. “Slavitt will need to answer a number of tough questions regarding his former employer and their relationship with the agency.” Groups representing hospitals and doctors said they were pleased by Slavitt’s nomination.
Elsewhere, the Centers for Medicare and Medicaid Services has proposed restructuring payments for hip and knee replacement surgeries, some of the most common surgeries received by patients covered by the plans. CMS invited providers on Thursday to comment on a proposal that would hold hospitals in 75 geographic areas accountable for the quality of care they deliver to Medicare fee-for-service beneficiaries for hip and knee replacements from surgery through recovery. The targeted areas include over 800 hospitals, ranging from major cities like New York and Los Angeles, to smaller areas such as Lubbock, TX, and Flint, MI, said CMS Chief Medical Officer Patrick Conway. CMS said the plan is part of the Obama administration’s ongoing commitment to transform the U.S. health system to deliver better quality care and spend healthcare dollars in a smarter way. The agency said that in 2013, there were more than 400,000 inpatient knee and hip procedures, costing Medicare more than $7 billion for hospitalization alone. If approved, the program would go into effect in January. Savings over the five-year program were estimated at $150 million. The agency is accepting comments on the plan through Sept. 8.
FDA/EMA ROUNDUP -- Novartis AG (Basel CHE) won approval from the Food and Drug Administration to sell a first-of-its-kind drug to treat heart failure, a leading cause of death among adults. The FDA cleared the medicine, called Entresto, which has been shown to reduce deaths and hospitalization due to heart failure, the agency said last week in a statement. The treatment combines the Novartis drug Diovan, which treats high blood pressure, with another drug called sacubitril. It’s the first in its class that reduces the strain on the heart, according to the company. The drug should be a major blockbuster for Novartis, which said it expects Entresto to reach peak sales of at least $5 billion a year. About 5.1 million Americans suffer from heart failure, which usually worsens over time as the heart grows weaker, according to the FDA. Heart failure is often caused by cardiovascular damage from heart attacks and high blood pressure, the agency said in a statement. Novartis plans to begin shipping Entresto to the U.S. this week, according to the statement. Regulators in Canada, Switzerland and the European Union are reviewing Entresto for approval.
Elsewhere, an advisory panel to the Food and Drug Administration effectively supported approval of Eli Lilly & Co.’s (Indianapolis IN) experimental lung-cancer drug necitumumab on Thursday but recommended measures be taken to mitigate the drug’s risks. The panel did not officially vote but an informal poll taken by the FDA indicated most members believe the benefits of the drug outweigh the risks. The FDA is not obliged to follow the advice of its advisers but generally does so. In a clinical trial, the drug improved overall survival by an average of 1.6 months but also increased the risk of sometimes-fatal blood clots and potentially deadly electrolyte imbalances. “We are encouraged by the Committee’s constructive discussion,” said Dr. Richard Gaynor, senior vice president of product development and medical affairs for Lilly’s oncology division. “We look forward to working closely with the FDA as they continue their review.” Necitumumab is a second-generation monoclonal antibody for patients with stage IV squamous non-small cell lung cancer. In a 1,093-patient clinical trial, patients who received necitumumab together with the chemotherapy drugs gemcitabine and cisplatin survived an average of 11.5 months compared with 9.9 months for patients who received gemcitabine and cisplatin alone.
The FDA is bolstering warning labels for popular pain relievers, adding information about the risk of heart attack and stroke in the short term. The changes announced Thursday apply to prescription non-steroidal anti-inflammatory drugs, or NSAIDs, including arthritis treatments like Celebrex. The agency said it plans similar changes to over-the-counter drugs in the same class, such as Advil and Motrin. Language on the pills’ label currently warns that they can increase the risk of heart-related problems if used long term. However, the agency’s new warning states that heart attacks and strokes can occur in the first few weeks of taking the drugs. The agency also warns that the risks increase with higher doses of the drugs. The updates are based on an FDA review of recent studies and recommendations by outside advisers. “In general, patients with heart disease or risk factors for it have a greater likelihood of heart attack or stroke,” the agency notes in the announcement posted to its website.
And Insulet Corp. (Billerica MA) said on Wednesday it received a warning letter from the FDA over some of the company’s insulin pumps. The company said the letter, which it received last Monday, followed an inspection by the FDA of its facility in Massachusetts in March. At that time, the FDA had issued a Form 483 and the company filed its response letter in April. A Form 483 is usually issued at the end of an inspection when the investigator finds violations of prescribed standards. The letter relates to the release of certain lots of the company’s EROS OmniPods that did not conform to the FDA’s final acceptance criteria, Insulet said in a regulatory filing. The lots were manufactured in mid-2013 and the first half of 2014. Insulet said it expects the letter will not have not any adverse impact on its operations.
MEDICAL STOCK SPOTLIGHT -- Versartis Inc. (Nasdaq) led advancing issues, surging $4.16, or 28% over the week, to $18.78. The U.S. Food and Drug Administration gave the Menlo Park, CA-based biotech a reen light to ontinue its phase III testing for a drug that would help children with human growth hormone deficiency. Pricing of biotech shares depend heavily on pushing new products through their pipelines, but the process can be unpredictable, including FDA oversight. “Our team has continued to work diligently with the FDA and we are excited to be moving forward with the phase III clinical trial of VRS-317 in pediatric GHD patients,” said Jay Shepard, the CEO. In May, the FDA asked Versartis to halt enrollment in the late-stage trial and provide additional “bioanalytical data” for VRS-317. That delayed Versartis’s schedule by six months and pushed the stock price down by more than 10%. Versartis says it’s now on track to show top-line, 12-month results by the middle of 2017 and to present VRS-317 for approval by 2018.
Elsewhere, XOMA Corp. (Nasdaq) finished the week up 27% at $4.72. The upside was due in part to the company’s announcement that XOMA 358, a fully human allosteric monoclonal antibody, has been granted Orphan Drug Designation by the Food and Drug Administration for the treatment of congenital hyperinsulinism (HI). The upside was buttressed by the release of an upbeat analyst note out of Piper Jaffray. Data from XOMA’s gevokizumab’s EYEGUARD-B trial is expected over the next couple of weeks. The drug is designed to prevent disease flares in patients with Behçet’s disease uveitis. Piper analysts said they are confident in a positive read-out, and added that the risk/reward ratio is favorable. The firm reiterated its “overweight” rating and $8 price target. In addition, RBC Capital Markets said the risk-reward is favorable ahead of the release of the gevokizumab data. The brokerage said that if the trial is a success, the stock will likely get a boost ahead of additional phase III readouts.
And Vital Therapies Inc. (Nasdaq) jumped $4.73, or 22%, to $25.82. The biotherapeutic company developing ELAD, a cell-based therapy targeting the treatment of liver failure, announced the presentation of a poster at the International Liver Transplantation Society's 21st Annual International Congress in Chicago. The poster, entitled “Expression of Acute-Phase Proteins by ELAD C3A Cells,” describes recent research by the company showing that ELAD C3A cells produce several key anti-inflammatory proteins that are thought to decrease inflammation of the liver in patients with alcohol-induced liver decompensation (AILD). Levels of these anti-inflammatory proteins increase when C3A cells are stimulated by common inflammatory factors that are known to be elevated in patients with AILD. This dynamic response may represent one of the mechanisms by which the ELAD System could exert a therapeutic benefit in AILD, according to the San Diego, CA-based company.
But Aquinox Pharmaceuticals Inc. (Nasdaq) plunged $5.07, or 72%, to $1.94. Two weeks after reporting that its lead drug failed a phase II pain study, Aquinox came back with more bad news last week, noting its failure in a separate mid-stage study for chronic obstructive pulmonary disease patients with a history of frequent exacerbations. After giving a 200 mg dose of AQX-1125 daily for two weeks, the drug failed to demonstrate any improvement over a placebo for either the primary or the secondary endpoint. Back in late June, Vancouver, BC-based Aquinox reported that its lead therapy failed to post statistically significant results for bladder pain, noting a 2.4 point reduction on an 11-point scale compared to a 1.3-point drop for a placebo. Placebo responses routinely scuttle pain drugs.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Global Blood Therapeutics Inc., an early-stage biotech developing a small molecule therapy for sickle cell disease, registered up to $115 million worth of common stock. The South San Francisco, CA-based company, which was founded in 2011, plans to list on the Nasdaq under the symbol “GBT.” Global Blood Therapeutics initially filed confidentially on March 19, 2015. Morgan Stanley and Goldman Sachs are the joint bookrunners on the deal. No pricing terms were disclosed. ** GenSight Biologics SA, which is developing gene therapies for rare retinal diseases, registered up to $100 million in an initial public offering. The year’s other retinal gene therapy biotech, Spark Therapeutics (ONCE), is currently the best-performing IPO of 2015, up 170% from its offer price. The Paris, France-based company, which was founded in 2012, plans to list on the Nasdaq under the symbol “GNST.” Leerink Partners, Evercore Partners and Canaccord Genuity are the joint bookrunners on the deal. No pricing terms were disclosed.
July 6, 2015 ...
AETNA TO ACQUIRE HUMANA FOR $37 BILLION IN CASH, STOCK -- Aetna Inc. (Hartford CT) said Friday that it had agreed to buy Humana Inc. (Louisville KY) for $34.1 billion in cash and stock, following weeks of frenzied merger talks among the largest health insurers. Under the deal, Aetna would pay about $230 a share for Humana, a premium of 23% from Thursday’s close and 29% from the company’s share price before The Wall Street Journal in late May first reported Humana was exploring a sale. Including debt, the companies said, the deal is valued at $37 billion. A takeover approach for Humana earlier this year thrust the biggest health-insurance companies into a five-way merger frenzy. Cigna Corp. (Bloomfield CT) and Aetna were vying to buy Humana, while fielding takeover approaches of their own. Cigna and Anthem Inc. (Indianapolis IN) have rekindled talks after Cigna earlier rejected a public takeover bid of $184 a share from Anthem, its larger rival, and UnitedHealth Group Inc. (Minnetonka MN) earlier approached Aetna. The consolidation momentum in the health-insurance industry is being fed by a desire to diversify and cut costs, amid a landscape changed by the Affordable Care Act. Insurers are eager to reduce expenses and build scale that will help them face off against providers that are bulking up. The providers themselves are growing partly with an eye toward new forms of payment encouraged by the health law.
Analysts expect that the Aetna deal to buy Humana will, if completed, vault Aetna toward the top of the burgeoning Medicare business and give it scale to thrive as the industry consolidates. But expected scrutiny from antitrust regulators, along with signs of some emerging operational challenges at Humana, will put pressure on Aetna and its chief executive, Mark Bertolini, to demonstrate that the huge bet will pay off. Following the deal’s closing, Mr. Bertolini will serve as the chairman and CEO of the combined company. Under the deal, Humana shareholders will swap each share for $125 in cash and 0.8375 Aetna shares. Aetna expects to finance the cash portion, in part, by issuing about $16 billion in new debt. Upon closing, which the companies expect to occur in the second half of next year, Aetna’s shareholders would own about 74% of the combined company. Aetna sees the deal adding to its operating earnings in 2017. The combined company would have projected 2015 operating revenue of about $115 billion, with about 56% coming from government-sponsored programs like Medicare and Medicaid. Humana closed the week down 4% at $187.50 while Aetna slid 3% to $125.51.
U.S. DOCTORS, HOSPITALS GARNER $6.5 BILLION FROM DRUG AND DEVICE MAKERS -- U.S. doctors and teaching hospitals received $6.49 billion from drug and medical-device makers in 2014, according to new government data on the financial links between the companies and the people who prescribe their products. The data released last week range from the royalties paid to hospitals to help develop products to fees provided to medical experts to speak at a dinner with colleagues. The payments are listed in two broad categories: money to fund research, and payments to entertain doctors or compensate them for consulting or other non-research purposes. By disclosing information on the payments, the U.S. is seeking to bring transparency to the financial relationships between drugmakers and healthcare providers. Those ties can influence how physicians practice, even if they aren’t aware of it, said Jason Dana, a professor at Yale School of Management (New Haven CT) who studies decision-making. “If we have a financial incentive to believe something or conclude something, we kind of trick ourselves into thinking it’s true,” he said. “And we’re not always aware we’re doing it.” The Centers for Medicare & Medicaid Services created a website, called Open Payments, to let people search for data on their medical providers. The disclosures cover payments to about 607,000 doctors and 1,121 teaching hospitals.
Overall, companies made $3.23 billion in payments for research and $2.56 billion for other purposes, according to a summary posted on the website. The data also include ownership interests of $703 million. Pfizer Inc. (New York), the biggest U.S. drugmaker, reported at least $234 million in research payments and $53.3 million in general outlays. Merck & Co. (Kenilworth NJ) said it paid at least $97.7 million for research and made at least $27.5 million in general payments. AstraZeneca Plc (London) spent at least $85.7 million on research and $72.5 million on general payments. Quirks in the data make it difficult to get accurate totals for manufacturer payments. “We appropriately compensate doctors and institutions for their work to enroll patients and collect clinical trial data,” Pfizer spokesman Dean Mastrojohn said. “Merck is committed to the discovery and development of important new drugs and vaccines through collaboration with scientific leaders,” Merck spokeswoman Lainie Keller said. AstraZeneca had no immediate comment.
TRACKING WASHINGTON -- Now that it appears Obamacare isn’t going away anytime soon, the Obama administration plans to better explain to Americans why the law is good for them. After the Supreme Court declined to gut the law in a recent decision, there’s an opportunity to build on gains in health coverage and also rectify some missteps in the Affordable Care Act’s marketing, Sylvia Mathews Burwell, the U.S. health secretary, told Bloomberg News. “We as an administration haven’t done as much as we could to make sure people understand the breadth of the benefits,” she said. “The ACA became...narrower than the uninsured, it became about the marketplace. It is about so much more.” The court ruled 6-3 on June 25 that subsidies to help people pay their insurance premiums are available nationwide, not just in the 16 states that have built their own insurance marketplaces, called exchanges. The decision, however, didn’t touch on the law’s improvements in health care for many more people, Burwell said. The Obama administration must ensure “people understand the benefits they get every day that they’re using that are part of the Affordable Care Act,” she said. For example, the law requires insurers to cover children on their parents’ plans until age 26, and forbids out-of-pocket charges for a long list of preventive health services including mammograms.
Many Republicans said after the ruling that they would continue to try to repeal the Affordable Care Act. Former Florida Governor Jeb Bush, who’s running for the Republican nomination to succeed Obama, said he would replace the law with “conservative reforms that empower consumers with more choices and control over their healthcare decisions.” The government hopes to enroll more people next year into private health plans sold under the Affordable Care Act, Burwell said. About 10 million are in the plans now. Obama is also pushing states to take advantage of an expansion of Medicaid provided by the law. Obama traveled to Tennessee last Wednesday to promote Medicaid expansion. It’s one of 22 states with Republican governors or legislatures that have so far refused to do so.
FDA/EMA ROUNDUP -- Silicon Valley health startup Theranos Inc. received its first clearance from the U.S. Food and Drug Administration, getting the go-ahead for a herpes virus test that uses a fingerprick’s worth of blood. The agency cleared the herpes test, as well as Theranos’s analysis system, the closely held company said Thursday in a statement. Theranos says its product is as accurate as tests done with a vial of blood drawn from a vein. “This is a really special day for our team, and it’s a milestone for everything we’ve been working toward,” CEO Elizabeth Holmes said. “We will continue to go test by test through the clearance system.” The Palo Alto, CA-based startup, which Holmes says has a $10 billion valuation, provided the FDA with data on 818 people who took herpes tests using a traditional vein-drawn blood sample and blood from a finger stick. The data showed equivalence in the tests’ accuracy, Holmes said.
Elsewhere, Vertex Pharmaceuticals Inc. won FDA clearance for its combination treatment for the most common form of cystic fibrosis, giving the drugmaker what analysts have projected will be a new blockbuster. The FDA cleared the medicine, called Orkambi, for sale for patients 12 and older who suffer from the deadly lung disease, according to a letter posted in an FDA database. Orkambi is a combination of a drug called Kalydeco that Vertex already sells for a smaller group of cystic fibrosis patients and another medicine called lumacaftor. Boston, MA-based Vertex will charge $259,000 a year for Orkambi, the company said. Kalydeco cost $294,000 a year when it came to market in 2012 and last year had sales of $464 million. Revenue from Orkambi could reach $3.42 billion in 2018, analysts estimate. “Today’s approval significantly broadens the availability of targeted treatments for the specific defects that cause cystic fibrosis,” John Jenkins, director of the FDA’s office of new drugs, said in a statement.
Bayer Healthcare said the FDA approved using transvaginal ultrasound as an alternate test to confirm if the company’s Essure permanent birth control device has been placed properly. Essure is a small metal coil inserted into woman’s fallopian tubes. But since its approval in 2002, women using the device have sent the FDA more than 5,000 complaints, ranging from pain and menstrual problems to pregnancies and even deaths. Some of the complaints related to the placement of the device. In a transvaginal ultrasound (TVU), sound waves emitted from a probe placed in vagina help a physician check if Essure has been placed properly. This test is an alternative to the generally-prescribed modified hysterosalpingogram (HSG) test in which an x-ray of the uterus and fallopian tubes is used to check for proper device placement. A woman using Essure must undergo a test to confirm that the device is properly placed within three months of the procedure and until she receives a confirmation from her doctor, she must use alternate birth control methods, Leverkusen, Germany-based Bayer said.
And Insulet Corp. (Billerica MA) said on Wednesday it received a warning letter from the FDA over some of the company’s insulin pumps. The company said the letter, which it received last Monday, followed an inspection by the FDA of its facility in Massachusetts in March. At that time, the FDA had issued a Form 483 and the company filed its response letter in April. A Form 483 is usually issued at the end of an inspection when the investigator finds violations of prescribed standards. The letter relates to the release of certain lots of the company’s EROS OmniPods that did not conform to the FDA’s final acceptance criteria, Insulet said in a regulatory filing. The lots were manufactured in mid-2013 and the first half of 2014. Insulet said it expects the letter will not have not any adverse impact on its operations.
MEDICAL STOCK SPOTLIGHT -- Signal Genetics Inc. (Nasdaq) led advancing issues, soaring 46% over the holiday-shortened week to $2.27. The upward thrust came after the molecular diagnostics company announced a new master service agreement with “a leading pharmaceutical company.” Under the new master service agreement, the as yet unnamed pharmaceutical company will use Signal Genetics’ MyPSR genetic test in multiple clinical trials related to the development of “novel treatments for patients with multiple myeloma.” The Carlsbad, CA-based company said MyPSR will inform patterns of response to therapy regimens to help physicians better manage multiple myeloma patients based on their genetic profile. “This services agreement with a leading pharmaceutical company is a significant achievement for Signal, and validates the potential of our technology to impact therapy decisions in multiple myeloma,” Michael Cerio, SVP of Commercial Strategy and Business Development, said in a statement.
Elsewhere, Juno Therapeutics Inc. (Nasdaq) surged $7.41, or 16%, to $54.02 following the announcement that it has entered a 10-year partnership with Celgene Corp. to study and develop cures for cancer and other auto-immune diseases. Juno CEO Hans Bishop stated: “Celgene is the ideal partner for Juno to help us realize the full potential of our science and clinical research while maintaining the independence we, our employees, partners and investors believe is so critical for true innovation.” Under terms of the agreement, Celgene will pay $1 billion to Seattle, WA-based Juno, the heftiest upfront payment paid for a biotech licensing deal to date. Celgene has agreed to pay $150 million in cash, and to buy as many as 9.1 million newly issued shares of Juno for $93 per share--more than double Juno’s share price prior to news of the deal. Upon buying the shares, Celgene would have a 10% stake in Juno. Celgene will also have the option to select two drug candidates to share costs and profits of with Juno.
And SciClone Pharmaceuticals Inc. (Nasdaq) jumped $1.70, or 18%, to $11.06. The Foster City, CA-based company and Theravance Biopharma announced they have entered into a development and commercialization agreement granting SciClone exclusive rights for the antibiotic VIBATIV (telavancin) in China and certain adjacent territories. The companies plan to pursue development and commercialization of VIBATIV in hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia. Additional indications may include complicated skin and skin structure infections, and potentially bacteremia. VIBATIV is a bactericidal, once-daily, injectable lipoglycopeptide antibiotic with in vitro potency and a dual mechanism of action whereby telavancin both inhibits bacterial cell wall synthesis and disrupts bacterial cell membrane function.
But EnteroMedics Inc. (Nasdaq) plunged 50% to $0.53. The collapse came after the St. Paul, MN-based developer and manufacturer of devices that use neuroblocking technology to treat obesity, metabolic diseases, and other gastrointestinal disorders announced the pricing of its previously announced public offering of 40,229,886 units. Each unit consists of one share of common stock, 0.50 of a Series A warrant to purchase one share of common stock, and 0.50 of a Series B warrant to purchase one share of common stock, at a purchase price of $0.87 per unit.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Zynerba Pharmaceuticals Inc., a preclinical biotech developing cannabinoid-based therapies for osteoarthritis and epilepsy, registered up to $58 million worth of common stock. The last cannabinoid-based healthcare IPO was GW Pharmaceuticals, which became listed in the U.S. in April 2013. Since then, it has traded up over 1,200%. However, Zynerba is at a much earlier stage in development. The Devon, PA-based company, which was founded in 2007, plans to list on the Nasdaq under the symbol “ZYNE.” Zynerba Pharmaceuticals initially filed confidentially on January 12, 2015. Jefferies and Piper Jaffray are the joint bookrunners on the deal. No pricing terms were disclosed. ** Teladoc Inc., which provides on-demand medical consultation via mobile, internet video or telephone, raised $157 million last Tuesday by offering 8.3 million shares (100% primary) at $19, well above the $15-$17 range. The company had initially filed to offer 7.0 million shares. At its offer price, Teladoc now commands a fully diluted market cap of $758 million and an enterprise value of $620 million. The Lewisville, TX-based company will list on the NYSE under the symbol “TDOC.” J.P. Morgan and Deutsche Bank acted as the lead bookrunners on the deal. Shares closed the week up 47% at $28.00.
June 15, 2015 ...
OBAMA MAKES CASE FOR HEALTH LAW WHILE NATION AWAITS SUPREME COURT DECISION -- President Barack Obama last week declared his healthcare law a firmly established “reality” of American life even as the legality of one of its key elements awaits a decision by the Supreme Court. “This is now part of the fabric of how we care for one another,” Obama said of the law, his most prized domestic policy accomplishment. For a second time, Obama mounted a robust defense of a law that remains unpopular with some, and under legal challenge, but that has contributed to 14.75 million adults gaining coverage since its healthcare exchanges began signing up people in 2013. Obama’s remarks, made at the annual Catholic Health Association Conference in Washington, DC, amounted to a political argument for the law just weeks before the high court is expected to render its decision in a case that could wipe out insurance for millions of Americans. Obama poked fun at opponents for issuing “unending Chicken Little warnings” about what would go wrong under his healthcare plan. “The critics stubbornly ignore reality,” he said. Anticipating the president’s speech, Senate Majority Leader Mitch McConnell (R-KY) said it was Obama who was “jousting with reality again.” McConnell added, “I imagine the families threatened with double-digit premium increases would beg to differ, as would the millions of families who received cancellation notices for the plans they had and wanted to keep.”
At issue in the Supreme Court case is whether Congress authorized federal subsidy payments for healthcare coverage regardless of where people live, or only for residents of states that created their own insurance marketplaces. In the other states, residents can buy insurance through a federally run marketplace. Nearly 6.4 million low- and moderate-income Americans could lose coverage if the court rules people who enrolled through the federal site weren’t eligible for the subsidies. The decision rests on the court’s interpretation of a short phrase in the voluminous law. But Obama, wielding statistics and personal anecdotes, made a case that the law is so established that it has woven itself into the healthcare system.
HUGE HOSPITAL MARKUPS IN U.S. LED BY FOR-PROFIT CHAINS -- Although the enormous price markups that consumers regularly pay for most consumer items is around 100%, there are some products that are much higher. Common items like printer ink have a markup of 300% and airline tickets are marked up 400%, but both are meager beside those in some U.S. hospitals where the price for procedures is often 10 times the cost, according to a study published last week in the journal Health Affairs. Of the 50 hospitals with the highest markups, 49 are for-profit, including 25 owned by Community Health Systems Inc. (Franklin TN). Community Health and other for-profits did not respond to requests for an explanation of their markups, but in the past hospitals have said list prices, shown on a “chargemaster,” are irrelevant because “no one” pays those. In fact, out-of-network patients and the uninsured are often charged list prices, said Dr. Renee Hsia of the University of California, San Francisco, who has studied hospital charges but was not involved in this research. “People do get bills based on the chargemaster, and for out-of-network care insured patients pay a percentage” of chargemaster prices, she said.
Auto insurers, covering care after accidents, and workers’ compensation also pay full freight. “That results in higher premiums for auto insurance and for employers who pay into workers’ comp,” said study co-author Ge Bai of Washington & Lee University (Lexington VA). “That means we are all victims of these markups.” She and Gerard Anderson of Johns Hopkins Bloomberg School of Public Health in Baltimore blamed lack of regulation and transparency for 1,000% markups. Hsia, for instance, found that charges for a lipid panel blood test varied from $10 in one California hospital to $10,169 in another; opening blocked arteries cost $22,047 in one, $165,386 in another. For their study, Anderson and Bai analyzed 2012 data, the latest available, from the Centers for Medicare and Medicaid Services to identify the 50 hospitals with the highest markup over Medicare’s allowed charges, which Medicare considers a hospital’s cost. The 50 had an average markup of 1,010% vs. 340% for the other 4,433.
TRACKING WASHINGTON -- The U.S. Supreme Court rejected a bid by Maine to escape one requirement of Obamacare, as the justices prepare to rule on a more far-reaching challenge that might unravel the healthcare law. The justices last Monday left intact a federal appeals court decision that said Maine must continue offering Medicaid coverage to young adults until 2019. The dispute turned on an Obamacare provision that requires states to maintain their existing eligibility standards for children as a condition of receiving federal dollars under the Medicaid healthcare program for the poor. Maine’s top health official, Mary Mayhew, sought to drop the state’s longstanding Medicaid coverage for 19- and 20-year-olds. The Obama administration refused to allow the change, pointing to the Affordable Care Act provision. Mayhew sued, arguing that the state was being unconstitutionally coerced into keeping that coverage. A Boston-based federal appeals court rejected that argument. The Supreme Court will rule by the end of the month in its current Obamacare case, a dispute over the reach of the tax subsidies the law created to make insurance affordable. A group of challengers contends the law allows subsidies in only about a third of the states—just those that have set up their own online exchanges for people to buy policies. The case is Mayhew v. Burwell, 14-992.
In other news, facing resistance from its Pacific trading partners, the Obama administration is no longer demanding protection for pharmaceutical prices under the 12-nation Trans-Pacific Partnership (TPP), according to a newly leaked “transparency” annex of the proposed trade accord obtained by The New York Times. But American negotiators are still pressing participating governments to open the process that sets reimbursement rates for drugs and medical devices. Public health professionals, generic drugmakers and activists opposed to the trade deal, which is still being negotiated, contend that it will empower big pharmaceutical firms to command higher reimbursement rates in the U.S. and abroad, at the expense of consumers. They also say it could expose international markets to the direct consumer appeals that Americans have experienced. “It was very clear to everyone except the U.S. that the initial proposal wasn’t about transparency; it was about getting market access for the pharmaceutical industry by giving them greater access to and influence over decision-making processes around pricing and reimbursement,” said Deborah Gleeson at the School of Psychology and Public Health at La Trobe University in Australia, who saw the document. And even though it has been toned down, she said, “I think it’s a shame that the annex is still being considered at all for the TPP.”
FDA/EMA ROUNDUP -- A U.S. Food and Drug Administration advisory panel recommended that the agency approve the cholesterol-lowering drug Praluent, the first of a wave of such cardiovascular drugs expected to raise billions of dollars in revenue and perhaps alter the treatment of cardiovascular disease. But many panelists said the use of the drug should be limited to certain high-risk groups, such as people with very high cholesterol for genetic reasons because of a condition called familial hypercholesterolemia. The committee voted 13-3 in favor of Praluent, from Sanofi SA (Paris) and Regeneron Pharmaceuticals Inc. (Tarrytown NY). But enough panelists expressed caution about the evidence in the companies’ studies, and so it may take longer than the industry would like to get these medicines widely used. The new injectable medicine is generically called alirocumab and could help some patients who can’t tolerate or aren’t effectively treated with statin drugs such as Lipitor. This new class of medicines is often called PCSK9-inhibitors, because they block a protein called PCSK9, which interferes with the liver’s ability to clear so-called bad (LDL) cholesterol from the bloodstream.
Elsewhere, Amgen Inc.’s (Thousand Oaks CA) Repatha won the backing of an FDA panel for some patients, making it the second in a new class of powerful cholesterol-lowering drugs to move closer to U.S. approval last week (see above article). Repatha’s benefits outweigh its risks for some patients with difficult-to-treat high cholesterol, advisers voted 11-4 on Wednesday. They also voted 15-0 that the medicine’s benefits outweigh its risks for patients with a rare genetic disorder that causes ultra-high cholesterol levels. Panel members said Repatha’s use should be limited to patients with both forms of the genetic disorder and those who are at high risk of experiencing a heart attack until more study is done on the drug’s effect on heart health. Repatha is part of a category of drugs known as PCSK9 inhibitors, designed to help patients who can’t get their LDL, or bad, cholesterol under control with widely used statins such as Pfizer Inc.’s Lipitor, or can’t tolerate the drugs. The FDA is scheduled to decide by Aug. 27 whether to approve Repatha and designate which patients should use it.
An FDA advisory committee recommended approval on Thursday of GlaxoSmithKline Plc’s (London) drug mepolizumab for severe asthma in patients aged 18 and older. The panel voted 10 to 4 against approving it in children aged 12 to 17. The FDA is not obliged to follow the advice of its advisory panels but typically does so. If approved, the drug would be marketed under the trade name Nucala and be the first new biologic treatment for severe asthma in more than a decade. Asthma affects more than 22 million people in the U.S. Severe asthma accounts for 5% to 10% of that population, according to GSK. Mepolizumab is a monoclonal antibody that binds to a receptor known as interleukin-5 which promotes the growth of eosinophils. These are a certain type of white blood cell that can accumulate in the lungs of patients with asthma. The extent of these accumulations correlate with the frequency and severity of asthma exacerbations.
And Insulet Corp. (Billerica MA) said on Wednesday it received a warning letter from the FDA over some of the company’s insulin pumps. The company said the letter, which it received last Monday, followed an inspection by the FDA of its facility in Massachusetts in March. At that time, the FDA had issued a Form 483 and the company filed its response letter in April. A Form 483 is usually issued at the end of an inspection when the investigator finds violations of prescribed standards. The letter relates to the release of certain lots of the company’s EROS OmniPods that did not conform to the FDA’s final acceptance criteria, Insulet said in a regulatory filing. The lots were manufactured in mid-2013 and the first half of 2014. Insulet said it expects the letter will not have not any adverse impact on its operations.
MEDICAL STOCK SPOTLIGHT -- Marinus Pharmaceuticals Inc. (Nasdaq) led advancing issues, soaring $4.13, or 48% for the week, to $12.75. Last week’s rally continues the recent uptrend for the company, as the stock is now up over 62% in the past one-month time frame. Marinus Pharmaceuticals, a clinical stage biopharmaceutical company, focuses on developing and commercializing neuropsychiatric therapeutics. It is developing ganaxolone, a small molecule, which is in phase III clinical trials to treat patients with refractory focal onset seizures; and is in phase II crossover clinical study to treat behaviors in Fragile X Syndrome, a genetic condition that causes intellectual disability, behavioral and learning challenges and various physical characteristics. The New Haven, CT-based company is also developing an IV formulation for use in the hospital setting to control acute seizures.
Elsewhere, Adaptimmune Therapeutics Plc (Nasdaq) shot up $3.95, or 26%, to $19.29. Several analysts have recently commented on the stock. Analysts at Guggenheim initiated coverage on shares, setting a “Buy” rating and a $25.00 price target on the stock. Analysts at Bank of America initiated coverage, setting a “Neutral” rating and a $17.00 price target on the stock. Analysts at Leerink Swann initiated coverage, setting an “Outperform” rating and a $24.00 price target on the stock. Finally, analysts at Cowen & Co. initiated coverage, setting an “Outperform” rating and a $15.43 price target on the stock. Adaptimmune Therapeutics is a clinical-stage biopharmaceutical company. The Abingdon, U.K.-based company develops novel cancer immunotherapy products based on a T-cell receptor platform that helps to identify cancer targets.
And Tobira Therapeutics Inc. (Nasdaq) raced $4.65, or 26%, to $22.49 after announcing it has completed recruitment for its phase IIb CENTAUR study. CENTAUR is a global, double blind, placebo controlled, phase IIb clinical trial evaluating the treatment effects of cenicriviroc (CVC) versus placebo in patients with non-alcoholic steatohepatitis (NASH) and liver fibrosis at high risk of progressive disease. NASH is a severe form of non-alcoholic fatty liver disease. Patients with NASH and risk factors such as liver fibrosis and type 2 diabetes or metabolic syndrome are often at higher risk for progression to more advanced liver complications such as cirrhosis and liver cancer. South San Francisco-based Tobira expects results of the one-year primary endpoint to be announced in mid-2016.
But cholesterol drugmaker Esperion Therapeutics Inc. (Nasdaq) fell $28.60, or 28%, to $74.24. The catalyst behind the downward move was the Food and Drug Administration’s advisory committee meeting for Sanofi SA and Regeneron Pharmaceutical Inc.’s injected cholesterol lowering PCSK9 inhibitor known as Praluent (alirocumab). The committee voted thirteen to three to recommend approval of Praluent, but the consideration of a handful of different sub-populations resulted in several caveats on the committee’s recommendation. Specifically, nine of the sixteen experts on the panel were decidedly against approving the drug for so-called “statin intolerant” patients--the exact patient population Plymouth, MI-based Esperion is targeting with its experimental cholesterol pill ETC-1002.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Pieris Pharmaceuticals AG, which is developing a therapy for functional iron deficiency in anemic patients, registered up to $35 million worth of common stock. Pieris currently trades on the OTCQB under the symbol “PIRS” with a market cap of $90 million. The Freising-Weihenstephan, Germany-based company, which was founded in 2000, plans to list on the Nasdaq under the symbol “PIRS.” Oppenheimer & Co. and JMP Securities are the joint bookrunners on the deal. No pricing terms were disclosed.**Intec Pharma Ltd., which is developing an improved delivery method of carbidopa/levodopa for Parkinson’s disease, registered up to $46 million in an IPO. Intec Pharma trades on the Tel Aviv Stock Exchange under the symbol “INTP” with a market cap of about $44 million. The Jerusalem, Israel-based company, which was founded in 2000, plans to list on the Nasdaq under the symbol “INTP.RC.” Intec Pharma initially filed confidentially on April 7, 2014. Maxim Group LLC and Roth Capital are the joint bookrunners on the deal. No pricing terms were disclosed.
June 8, 2015 ...
NEW MEDICARE PROVIDER UTILIZATION AND PAYMENT DATA RELEASED -- The prices that hospitals ask customers to pay for a series of common procedures have increased by more than 10% between 2011 and 2013--more than double the rate of inflation. But the amount paid by Medicare has stayed flat, according to data released last week by the federal government. The hospitals’ rising list prices mainly affect the uninsured and people who use hospitals outside their insurance network. The newly disclosed Medicare data show $12.4 billion in 2012 payments to physicians and other medical providers that were obscured or removed from an earlier version of the data release. The 16% increase in payments accounted for in the new data--which now total $90 billion--reflects bills Medicare paid for services doctors and other providers performed on very small numbers of patients, though some of those services include very high-cost treatments. The federal agency had previously excluded the data, citing privacy concerns, because the number of Medicare beneficiaries for these providers was fewer than 11. The methodology change affects the total payments listed in the agency’s data for 95% of 880,000 providers. For most, the new data showed a modest uptick in payments from the previous version of the billing records, first disclosed in April 2014, with a median increase of about $3,600.
In some cases, however, the changes are large: For each of about 13,000 medical providers, the latest figures include at least $100,000 in payments that weren’t previously disclosed. Behind the change is the method Medicare officials used to add up payments to those doctors. In its first disclosure, Medicare released one file with line items for each specific procedure providers performed and one file with information about total payments to each provider. In the new data, Medicare still redacted procedures with low beneficiary counts from the detailed file, but it included the payments for those procedures in the file that summarized total payments for each provider. The shift has changed how some doctors ranked for total billings compared with their peers. The earlier version of the data showed Florida ophthalmologist Salomon Melgen received about $21 million in 2012 Medicare payments, the most of any individual medical provider. Under the new methodology, Dr. Melgen’s payments also totaled about $21 million, but he was the No. 2 biller in the data for 2012. Dr. Melgen was indicted on health-fraud charges in April, according to The Wall Street Journal.
THIRTEEN PERCENT LEFT HEALTHCARE ROLLS, U.S. FINDS -- About 1.5 million people dropped off health insurance coverage rolls this year after failing to pay for policies they picked on the Obamacare marketplaces. That left 10.2 million covered by Affordable Care Act policies as of March 31, up from 6.3 million at the end of 2014, the Centers for Medicare and Medicaid Services said. Eighty-five percent got subsidies to help them afford coverage. President Barack Obama’s administration had expected that some people would pick plans and then not follow through, and set a goal to have at least 9.1 million people paying for coverage bought through government-run marketplaces this year. “We’ve seen a historic reduction in the uninsured and consumers are finding the coverage they need at a price they can afford,” Sylvia Burwell, secretary of Health and Human Services, said in a statement. Almost 6.4 million people in 34 states are getting government subsidies to help afford insurance on the federal exchange, Burwell’s department said.
People receiving government subsidies, however, are at risk of losing them in a case the Supreme Court is set to decide this month. That case, known as King vs. Burwell, centers on four words. The law says people qualify for tax credits to help pay insurance premiums when they buy a plan on an exchange “established by the state.” Challengers say that phrase limits the tax credits to the 16 states that have set up their own markets, rather than relying on the U.S.-run one. Democrats who wrote the law say it was never their intent to deny subsidies to people in the federally run exchanges.
TRACKING WASHINGTON -- The government relies too heavily on advice from the American Medical Association (Chicago) in deciding how much to pay doctors under Medicare, and the decisions may be biased because the doctors have potential conflicts of interest, federal investigators say in a new report. This reliance on the association, combined with flaws in data collected by the influential doctors’ group, “could result in inaccurate Medicare payment rates,” the investigators said. The report, by the Government Accountability Office, a nonpartisan arm of Congress, reveals new details of an obscure process that distributes more than $70 billion a year to doctors treating Medicare patients. Medicare uses a fee schedule and sets rates based on its estimate of the “relative value” of each service. For example, by the government’s reckoning, a hip replacement operation involves more than twice as much work as cataract surgery and about 20 times as much as a routine office visit with an established patient. In measuring work, the government takes account of a doctor’s time and the amount of mental and physical effort and technical skill required to perform a particular service, compared with other services. Dr. Barbara S. Levy, who has been chairwoman of the medical association’s update committee for the last six years, defended its work and said she did not see any conflicts of interest.
In other news, a Republican-run House committee voted to repeal a 2.3% tax on many medical devices that helps pay for President Barack Obama’s healthcare overhaul. The Ways and Means Committee’s mostly party-line 25-14 vote came with Republicans complaining that the levy costs jobs and stifles innovation. “It’s like putting sandbags on the wings of the Wright Brothers as they try to figure out how to fly an airplane,” said Rep. Patrick Meehan (R-PA). Democrats say those claims are exaggerations and complained that Republicans have offered no savings to cover the $24.4 billion in lost revenue the repeal would cost over the coming decade. The bill was “the obvious effort of Republicans to essentially piece by piece, if they can’t do it entirely, to repeal” Obama’s health law, said Rep. Sander Levin (D-MI). The GOP-led House has voted three times to repeal the medical device tax since it was enacted in 2010 and the Senate approved a repeal in 2013, though on a non-binding vote. Senate Finance Committee Chairman Orrin Hatch (R-UT) has introduced a repeal bill in his chamber that has garnered some Democratic support, but no vote has been scheduled. The tax, which took effect in 2013, does not apply to consumer items like eyeglasses and pregnancy test kits.
FDA/EMA ROUNDUP -- Advisers to the U.S. Food and Drug Administration on Thursday recommended approval of what would be the first drug to treat lack of sexual desire in women. The advisory committee voted 18 to 6 that the drug, flibanserin, be approved. All of those who voted yes said approval should come only if certain measures are taken to reduce the risks of side effects. Flibanserin, a pink pill that would be taken every day at bedtime, would be approved to treat lack of sexual desire in premenopausal women that cannot be attributed to disease or other known causes. Sprout Pharmaceuticals Inc. (Raleigh NC), which owns flibanserin, said that 7% of premenopausal women had this condition, known as hypoactive sexual desire disorder. Flibanserin has been rejected twice already by the FDA, which said the drug’s minimal benefits did not outweigh its risks. The first rejection in 2010 came after an advisory committee similar to the one that met Thursday voted unanimously that the drug should not be approved.
Elsewhere, an experimental drug made by Sanofi SA (Paris) and Regeneron Pharmaceuticals Inc. (Tarrytown NY) effectively lowers bad LDL cholesterol and is generally well tolerated, according to a preliminary review by the FDA. The review was published on the agency’s website on Friday ahead of a meeting this Tuesday of a panel of outside advisers who will discuss the drug and recommend whether it should be approved. The FDA is not obliged to follow the advice of its advisory panels but typically does so. The drug, Praluent, also known as alirocumab, is one of a new class of LDL-lowering drugs known as PCSK9 inhibitors. The committee on Wednesday will discuss another drug in the class, Amgen Inc.’s (Thousand Oaks CA) Repatha. If approved, the drugs are expected to generate annual sales of more than $2.5 billion each by 2020, according to Thomson Reuters data. Some analysts predict sales for the class rising to $20 billion by 2026.
Merck & Co. (Kenilworth NJ) is on track to further extend its dominance in the fast expanding market of immunotherapy drugs. Its Keytruda drug won a Priority Review status from the FDA to treat patients suffering from non-small cell lung cancer (NSCLC). Keytruda received its first FDA approval in September last year for the treatment of patients suffering from worsening melanoma--the deadliest form of skin cancer--after treatment with Bristol-Myers Squibb Co.’s (New York) Yervoy, the old standard skin-cancer treatment. The targeted action date, according to Merck, is expected to be October 2, 2015.
And Sanofi SA (Paris) and its subsidiary Genzyme said on Thursday that the U.S. Food and Drug Administration has granted “breakthrough therapy” designation to olipudase alfa. This enzyme replacement therapy is under investigation for the treatment of patients with non-neurological manifestations of acid sphingomyelinase deficiency (ASMD), also known as Niemann-Pick disease Type B, as opposed to type A, which is characterized by neurological involvement, the statement said. ASMD is a serious and life-threatening disorder caused by insufficient activity of the enzyme acid sphingomyelinase (ASM), which results in toxic accumulation of sphingomyelin. There are currently no approved treatment options for patients with Niemann-Pick Type B.
MEDICAL STOCK SPOTLIGHT -- Ignyta Inc. (Nasdaq) led advancing issues, more than doubling over the week to $18.49. The clinical-stage biopharmaceutical company with a focus on developing therapies that target specific gene pathways to treat cancer skyrocketed higher following the release of results from its phase I study involving entrectinib. Entrectinib is Ignyta’s most advanced clinical product and is an oral tyrosine kinase inhibitor that targets tumors that harbor specific mutations to the NTRK1/2/3 gene expression pathway. San Diego, CA-based Ignyta announced that in its two phase I studies (ALKA-372-001 and STARTRK-1) involving 11 patients, it witnessed 10 responses for a clinical response rate of a stunning 91%. Notable is that entrectinib was targeted at non-small cell lung cancer, colorectal cancer, and acinic cell cancer--three difficult to treat forms of cancer--and it still delivered a 91% objective response rate.
Elsewhere, ImmunoGen Inc. (Nasdaq) surged $5.72, or 64%, to $14.70. The company, which focuses on the development of anticancer therapeutics using its antibody-drug conjugate (ADC) technology, reported encouraging, early stage data on its unique, FRα-targeting ADC, mirvetuximab soravtansine. The Waltham, MA-based company is looking to move the candidate into a phase II study later this year as a single-agent treatment for patients with FRα-positive platinum-resistant ovarian cancer. The impressive findings were presented at the 2015 American Society of Clinical Oncology (ASCO) meeting.
And Ardelyx Inc. (Nasdaq) shot up $3.59, or 33%, to $14.54 after announcing that it has entered into a termination agreement with AstraZeneca Plc such that all the rights to Ardelyx’s portfolio of NHE3 inhibitors, including Ardelyx’s lead product candidate, tenapanor, are returned to Ardelyx. Fremont, CA-based Ardelyx has agreed to pay AstraZeneca $15 million upfront along with other future contingent payments. Concurrently, Ardelyx will pay an additional $10 million in R&D costs and for the acceleration of the transfer of the program back to Ardelyx. Ardelyx formed a partnership with AstraZeneca in October 2012 to develop and commercialize Ardelyx’s internally discovered portfolio of NHE3 inhibitors including tenapanor.
But Puma Biotechnology Inc. (NYSE) skidded $56.66, or 29%, to $138.79. The selloff of Los Angeles-based Puma is an overreaction, said RBC Capital Markets’ Michael Yee. Investors were reacting to the release of phase III clinical trial data for the company’s breast-cancer drug, he said. Yee, who was attending the American Society of Clinical Oncology conference, said that RBC Capital Markets was still defending the stock because it represents a long-term opportunity. “The data looked as we expected,” said Yee. “We believe it’s an overreaction and we think investors are probably going to come away from that feeling …after they present more data.” Yee added that: “We think the stock moves higher over time.” Large companies are competing in the immuno-oncology market, explained Yee. “There is a huge race to go after a $20 billion market,” said Yee. “You are going to see this volatility.”
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Natera Inc., which sells non-invasive prenatal DNA tests, registered up to $100 million worth of common stock. The San Carlos, CA-based company, which was founded in 2003 and booked $179 million in sales for the 12 months ended March 31, 2015, plans to list on the Nasdaq under the symbol “NTRA.” Natera initially filed confidentially on May 14, 2014. Morgan Stanley, Cowen & Company and Piper Jaffray are the joint bookrunners on the deal. No pricing terms were disclosed.**Teladoc Inc., which provides on-demand medical care through video/telephone consultations, registered up to $100 million worth of common in an IPO. The Purchase, NY-based company, which was founded in 2002 and booked $51 million in sales for the 12 months ended March 31, 2015, plans to list under the symbol “TDOC.” It has not selected an exchange. Teladoc initially filed confidentially on March 24, 2015. J.P. Morgan and Deutsche Bank are the joint bookrunners on the deal. No pricing terms were disclosed.
June 1, 2015 ...
OBAMA ADMINISTRATION ASKS JUDGE TO THROW OUT GOP HEALTHCARE SUIT -- U.S. House Republicans suing the Obama administration over the federal healthcare law should change it if they don’t like it, a Justice Department lawyer told a skeptical judge on Thursday in a bid to have the lawsuit thrown out. The House “has any number of tools” to settle its differences with the executive branch, without running to the courts, attorney Joel McElvain said. Republicans can negotiate with the administration and “they can pass a new statute,” he said. U.S. District Judge Rosemary Collyer didn’t seem impressed with the argument, asking why lawmakers should forego a day in court just because they had other options. “This is the type of claim that belongs in the political process,” McElvain said. The Republicans claim the administration’s reimbursements to insurance companies, which total about $175 billion over a decade, weren’t approved by Congress and that the president unlawfully delayed a requirement that most employers provide insurance to workers. The case is being heard as both sides wait for a decision from the Supreme Court in a separate lawsuit over premium subsidies. Opponents of the Affordable Care Act, or Obamacare, claim the subsidies are legal only in the 16 states that have created their own marketplaces to sell coverage. The Obama administration has interpreted the law to make subsidies available in all states.
In the Washington federal court Thursday, Jonathan Turley, a lawyer for the House, told the judge that the funding legislation was passed and deliberately omitted money for certain insurance payments under Obamacare. Allowing the administration to work around that lack of spending authority by using money from other sources would render Congress’s power of the purse “decorative,” Turley argued. Why not pass a law explicitly forbidding the spending, Collyer asked, picking up on McElvain’s argument that Congress has alternatives to suing. That would create a “one free bite rule” under which the executive branch could stray from Congress’s spending instructions until lawmakers reined it in with a second more explicit directive, Turley said. “What about impeachment? Is that an option?” asked Collyer, an appointee of President George W. Bush. Lawmakers shouldn’t have to use Draconian measures to assert constitutional prerogatives, Turley told the judge. Thursday’s hearing covered only whether the House has the legal authority to sue and didn’t examine the merits of the case. Collyer didn’t indicate when she would rule.
CVS AGREES TO BUY OMNICARE IN $12.7-BILLION DEAL -- CVS Health Corp. (Woonsocket RI) CEO Larry Merlo is betting billions that nursing-home pharmacy operator Omnicare Inc. (Cincinnati OH) can further his efforts to transform the drugstore chain into a dominant healthcare player. Under Merlo, who took the helm in 2011, CVS stopped the sale of cigarettes, saying it was contrary to the mission of improving customers’ health, and changed its name to CVS Health from CVS Caremark. He has aggressively expanded CVS’s in-store health clinics, with plans to add about 600 locations by 2017, and in 2013 purchased an operator of drug-infusion centers. The agreement to buy Omnicare, valued by CVS at $12.7 billion including debt, may be Merlo’s most significant move yet for profits. CVS said it will add adjusted earnings of 20 cents a share next year. The all-cash deal is the drug-retailing leader’s biggest since 2007 when it paid $21.7 billion for pharmacy benefit manager Caremark Rx Inc., an acquisition made under Merlo’s predecessor that began the company’s diversification. CVS is “moving away from being solely a pharmacy and PBM to becoming more of a vertical integrator of health care,” said Jonathan Palmer, an analyst with Bloomberg Intelligence. It’s a strategy tuned to an aging population with greater care needs, and broader consolidation in the industry, Palmer said.
Merlo, 59, has been lauded for banishing cigarettes, getting invited by First Lady Michelle Obama to her husband’s State of the Union address this year and being named one of Fortune Magazine’s business people of the year. “We see ourselves at the forefront of the changing healthcare landscape,” said Merlo at the UBS Global Health Care Conference. Omnicare delivers drugs and helps senior-living facilities manage residents’ medications. Under the deal, CVS will pay $98 per share in cash. CVS’s $12.7 billion valuation for Omnicare includes $2.3 billion in debt. CVS’s pharmacy services unit, whose revenues expanded by 18.2% in the first quarter, is driving the company’s growth. Retailing grew by only 2.9% in the period. Demand for pharmacy services has been on the rise as patients, insurers and employers look to manage their costs amid soaring drug prices. With more control over different aspects of the drug-supply chain, companies can get more leverage on price. CVS closed the week off 2% at $102.38. Omnicare slipped 1% to $95.29.
TRACKING WASHINGTON -- A U.S. House of Representatives committee unanimously approved a bill to speed new drugs to the market, overcoming last-minute wrangling over how to pay for the legislation. The bill, known as the 21st Century Cures Act, requires the Food and Drug Administration to incorporate patient experience into its decision-making, streamline its review of drugs for additional uses, and consider more flexible forms of clinical trials. The bill, developed by the House Energy and Commerce Committee was spearheaded by Republican Congressman Fred Upton and Democrat Diana DeGette. Upton’s goal is for the bill to be voted on by the full House in June. A parallel measure is being developed in the Senate. Patient advocacy groups cheered the bill. Ellen Sigal, chair of the Friends of Cancer Research, said it “creates a more cohesive, efficient, effective and patient-centered research and regulatory system.” Some critics fear aspects of the bill will weaken the FDA’s ability to restrict marketing of drugs for unapproved uses and potentially lower safety and efficacy standards by relying on less rigorous clinical data. The bill would increase funding to the National Institutes of Health by $10 billion over five years. It would also boost FDA funding by $550 million over the same period. An official cost of the legislation is expected to be released within the next few weeks.
In other news, Steris Corp.’s (Mentor OH) takeover of Synergy Health Plc (Swindon UK) is being challenged by U.S. antitrust officials, who say the merger would hurt competition in the market for hospital sterilization products. The Federal Trade Commission said in a statement Friday it would seek a federal court order blocking the 1.2 billion-pound ($1.83 billion) deal pending an administrative proceeding in the agency’s in-house court. The deal would violate antitrust laws by significantly reducing future competition for sterilization of products, such as implanted medical devices, using radiation, particularly gamma or x-ray radiation, the agency said. Steris said it would contest the lawsuit. “It is unfortunate that we have come to this point with a transaction as strategic and geographically complementary as ours,” Steris CEO Walt Rosebrough said in a statement. “We have worked diligently to address the FTC’s concerns and to avoid litigation, but we will now focus our efforts on prevailing in court.”
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration approved new irritable bowel syndrome drugs from Actavis Plc (Dublin IRL) and Valeant Pharmaceuticals International Inc. (Laval, Quebec), validating big investments both companies made to acquire the products. The agency approved eluxadoline, to be sold under the brand name Viberzi, which Actavis obtained with its $1.1 billion acquisition last year of Furiex Pharmaceuticals. The agency also approved Valeant’s Xifaxan, also known as rifaximin, which the company acquired with its $11 billion purchase earlier this year of Salix Pharmaceuticals Ltd. Both drugs are designed to treat diarrhea-predominant irritable bowel syndrome (IBS-D), a condition that affects about 28 million people in the U.S. and Europe and can cause abdominal pain, bloating and diarrhea. Analysts expect Viberzi to generate U.S. sales of about $450 million by 2020 according to Thomson Reuters data. They expect Xifaxan sales for IBS-D to top $1 billion.
Elsewhere, the FDA on Thursday approved the first drug to treat a rare, progressive lung disease that mainly affects women of childbearing age. The drug, Rapamune, known chemically as sirolimus, is made by Pfizer Inc. (New York) and is designed to treat lymphangioleiomyomatosis (LAM), a disease that causes lung damage and affects only two to five women per million worldwide. Symptoms of the disease are similar to those of other lung conditions such as asthma, emphysema and bronchitis, according to the LAM Foundation (Cincinnati OH). The drug was originally approved in 1999 to help prevent organ rejection in patients receiving kidney transplants. It was reviewed under the FDA’s “breakthrough therapy” program, which helps speed products for unmet needs through the development and regulatory process. In patients with LAM, abnormal growth of smooth muscle cells invade lung tissues, making it hard to breathe and limiting the supply of oxygen to the body. A clinical trial of 89 patients over 12 months showed patients taking Rapamune had a slower decline in lung function than those taking a placebo. After the drug was stopped, the decline in lung function resumed at the same rate as the placebo group, the FDA said.
The FDA has asked manufacturers of dermal fillers to update their labeling to reflect the possible risk of serious injuries caused by unintentional injection of the fillers into the blood vessels in the face. The agency said on Thursday it had reviewed information suggesting that the fillers could block blood vessels and restrict blood supply to tissues, potentially leading to vision impairment, blindness, stroke and damage and/or death of the skin and underlying facial structures. The FDA said it wanted the updated labeling to include additional warnings, precautions and information about the risks associated with the filler’s usage. Dermal fillers are facial implants injected directly into the treatment area to reduce the appearance of wrinkles and create smoother or fuller appearance of the face. Makers of dermal fillers include Valeant Pharmaceuticals International Inc. (Laval, Quebec) and Allergan Inc. (Irvine CA), which was bought by Actavis Plc (Dublin IRL) in March.
And long lists of frightening prescription drug side effects at the end of television advertisements are a waste of time for patients, one of the U.S.’s top drug regulators recently said. “When they give the adverse events, or adverse reactions, it’s this litany of complaints”--death, or “‘Don’t use if you have MAE1,’” said Richard Pazdur, director of the office of hematology and oncology products at the Food and Drug Administration. “What patient knows what MAE1 is?” Pazdur said. “It’s just a waste of time.” Pazdur’s remarks come after the FDA last year began studying whether long lists of side effects in TV ads may cause viewers to overlook the most dangerous aspects of the medicine. An agency document about the study said it might be best to list only the most serious side effects and cover any lesser risks with a statement saying there are other potential harms. The pharma ads are required to include disclosures about potential side effects and other technical information. The FDA declined to say when the study will be complete.
MEDICAL STOCK SPOTLIGHT -- Transgenomic Inc. (Nasdaq) led advancing issues, soaring $1.08, or 70% over the week, to $2.63. The Omaha, NE-based company announced the launch of its new Multiplexed ICE COLD-PCR (MX-ICP) CLIA service for mutation detection in cancer patients to enable more informed diagnoses, better treatment decisions and ongoing patient monitoring. The service leverages the ultra-high sensitivity of Transgenomic’s proprietary MX-ICP technology to deliver highly accurate results from almost any type of patient sample, according to Transgenomic. The first tests are for the detection of EGFR exon 20 T790M mutations that affect the utility of tyrosine kinase inhibitor (TKI) drugs used for non-small cell lung cancer and EGFR exon 12 S492R mutations that render colorectal cancer patients resistant to the widely-used drug cetuximab. Transgenomic intends to add additional single mutation and mutation panel detection tests to its suite of testing services in the coming months.
Elsewhere, Heron Therapeutics Inc. (Nasdaq) rocketed $7.29, or 58%, to $19.76. The upward move came after the company announced that its lead product candidate, Sustol, met the primary endpoint of delaying chemotherapy-induced nausea and vomiting following administration of highly emetogenic chemotherapy (HEC) agents in a late-stage study dubbed “MAGIC.” Per the press release, the company said Sustol was also generally well-tolerated in the study. Heron has already tried to gain approval for Sustol with the Food and Drug Administration twice before. While analysts have noted that the FDA’s reluctance to approve the drug previously stemmed primarily from manufacturing issues that have since been resolved, it’s important to keep in mind that Sustol has been in clinical development at this point for over a decade. In short, there is no guarantee that this latest clinical success will translate into a regulatory approval, especially in light of Sustol’s lengthy developmental history. Redwood City, CA-based Heron plans on resubmitting Sustol’s New Drug Application to the FDA by mid-year.
And Vascular Biogenics Ltd. (Nasdaq) leaped $2.80, or 53%, to $8.05 after Zachs upgraded its rating on shares from a “Hold” rating to a “Buy” rating in a research note issued on Thursday. The firm currently has a $5.75 target price on the stock. Zacks wrote, “Vascular Biogenics Ltd. is a clinical stage biotechnology company focused on the discovery, development and commercialization of treatments for cancer and immune-inflammatory diseases. Its lead oncology candidate VB-111, is a gene-based biologic which is in phase II clinical trials for the treatment of recurrent glioblastoma, an aggressive form of brain cancer. It is also developing VB-201, an oral small molecule that is in phase II clinical trials for the treatment of psoriasis and ulcerative colitis.” Vascular Biogenics is based in Or Yehuda, Israel.
But drug developer GlobeImmune Inc. (Nasdaq) plunged $3.39, or 46%, to $3.99 after saying its experimental hepatitis B drug did not reduce infection in patients after 24 weeks of treatment in a mid-stage study. GlobeImmune, which is developing the drug with Gilead Sciences Inc., is among several drugmakers looking to tap the demand for hepatitis B treatments as hepatitis C drugs flood the market. Hepatitis B is being seen as the next big opportunity in the liver disease market as it is the most common liver infection, affecting about 400 million people worldwide. However, hepatitis B infection is much more difficult to treat than hepatitis C. Louisville, CO-based GlobeImmune is developing three other drugs for infectious diseases and five for different types of cancers.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Seres Therapeutics Inc., which is developing therapies that replace beneficial bacteria to treat infections, registered up to $100 million worth of common stock. Formerly known as Seres Health, the biotech is first targeting Clostridium difficile infection (CDI). The Cambridge, MA-based company, which was founded in 2010, plans to list on the Nasdaq under the symbol “MCRB.” Seres Therapeutics initially filed confidentially on Dec. 11, 2014. Goldman Sachs and BofA Merrill Lynch are the joint bookrunners on the deal. No pricing terms were disclosed.**ConforMIS Inc., which sells customized joint replacement implants, registered up to $173 million in an initial public offering. The Bedford, MA-based company, which was founded in 2004 and booked $52 million in sales for the 12 months ended March 31, 2015, plans to list on the Nasdaq under the symbol “CFMS.” ConforMIS initially filed confidentially on March 20, 20115. J.P. Morgan and Deutsche Bank are the joint bookrunners on the deal. No pricing terms were disclosed.
May 18, 2015 ...
CLEVELAND CLINIC PARTNERS WITH VENTER'S HUMAN LONGEVITY FOR SEQUENCING STUDIES -- Human Longevity Inc. (San Diego CA) signed a broad collaboration agreement with Cleveland Clinic, tapping into its GeneBank with the aim of discovering new disease-causing genes and disease pathways associated with heart disease. Founded in 2013 by genome pioneer J. Craig Venter, HLI and Cleveland Clinic say they’re applying whole genome, cancer and microbiome sequencing to better understand the biological basis for heart disease, so as to allow for earlier intervention and improved therapy. “This very broad agreement with Cleveland Clinic could cover an unlimited number of things, but we’re starting with a well-characterized cardiovascular cohort,” Venter said. “Their data are exactly the kind of thing we’re looking for.” So while this collaboration begins with heart disease, it could extend to cancer or even a wide range of rare disease, Venter said. The Cleveland Clinic’s GeneBank contains tens of thousands of samples, collected over the course of 20 years. And while this Human Longevity pilot will only involve the data from 1,000 patients, there’s a great deal of potential moving forward to collect and sequence thousands more samples, said Charis Eng, chair of the Cleveland Clinic’s Genomic Medicine Institute.
The collaboration ties into Human Longevity’s operating model, which involves sequencing and analyzing thousands of whole genomes each month so as to better understand the molecular basis of aging and disease progression. It already has a number of similar partnerships underway, with organizations like Genentech Inc. (S. San Francisco), Celgene Inc. (Summit NJ) and King’s College London. “Cleveland Clinic has these precious samples of DNA, and Human Longevity has the firepower with lots of the newest, most cutting-edge sequencers,” Eng said. Most notably, Human Longevity is utilizing Illumina Inc.’s (San Diego) HiSeq X10--the sequencer that can turn out multiple samples at once, in about one day, at a price of $1,000 each. The origin of this collaboration goes back a long time, Venter said. He and Dr. Toby Cosgrove, president and CEO of Cleveland Clinic, have known each other for decades, having served together in Vietnam.
ASTRAZENECA MOVES DEEPER INTO PRECISION MEDICINE WITH ABBOTT -- Pharmaceutical and biotech heavyweight AstraZeneca Plc (London) is teaming up with Abbott Laboratories Inc. (Abbott Park IL) to develop companion diagnostic tests for the company’s investigational asthma therapy, a potentially fruitful alliance as Abbott rides the wave of promising diagnostic sales. Under the terms of the deal, Abbott will develop and market blood tests with AstraZeneca’s MedImmune unit that measure serum levels of periostin and DPP4 (dipeptidyl peptidase-4), proteins that could act as biomarkers of severe asthma. The company will develop the diagnostics in tandem with MedImmune’s phase III trial of tralokinumab, an experimental therapy for adults and teens with an uncontrollable form of the disease, Abbott said. No companion diagnostic blood tests have been approved yet for use in asthma, but the partnership could yield lucrative results as the companies chase an untapped niche. “This partnership with Abbott to develop companion diagnostics for tralokinumab is an important step in delivering on our ambition to bring innovative options for patients who continue to suffer with severe asthma,” Bing Yao, head of MedImmune’s respiratory unit, said in a statement. “We anticipate that physicians will ultimately use these tests to better identify patients likely to benefit most from tralokinumab to bring their condition under control.
The deal comes on the heels of more good news for Abbott, as it chalks up promising numbers for its diagnostics unit and signs deals to expand its industry reach. The company’s diagnostics sales shot up more than 3% to $4.7 billion in 2014, bolstering Abbott’s revenues even as it faced declines in medical device sales. And the company is continuing on an upward climb this year, scoring in January a bladder cancer biomarker deal with the Institut Curie (Paris) and getting an FDA approval for its early pregnancy blood test last month. This is not Abbott’s first foray into companion diagnostics. The company last May joined forces with Idera Pharmaceuticals Inc. (Cambridge MA) to develop a companion diagnostic test for a lymphoma/autoimmune drug in clinical testing. Abbott closed the week up 2% at $48.71. AstraZeneca slipped 1% to $69.29.
TRACKING WASHINGTON -- From contraception to colonoscopies, the Obama administration last week closed a series of insurance loopholes on coverage of preventive care. The department of Health and Human Services said insurers must cover at least one birth control option under each of 18 methods approved by the FDA--without copays. Also, insurers can’t charge patients for anesthesia services in connection with colonoscopies to screen for cancer risk. President Obama’s healthcare law requires most insurance plans to cover preventive care at no additional charge to patients. That includes employer plans serving about 3 in 4 workers. The types of services covered generally dovetail with the recommendations of a government advisory panel. Also on the list are birth control pills and other contraceptives. But independent experts and women’s groups had recently found coverage gaps for some birth control methods. Insurers said they were trying to comply with the law, but that federal rules did not provide enough detail. “This has been a problem for women,” said Cindy Pearson, executive director of the National Women’s Health Network. “It seems like some insurers were trying to control costs under cover of medical management.” Her organization advocates on reproductive health and other issues.
In other news, the federal government opened the door to a new era of genetic medicine on Thursday by introducing a standard way to ensure the accuracy of DNA tests used to tailor treatments for individual patients. Scientists have identified hundreds of genetic mutations that appear to increase the risk of diseases, including cancer, Alzheimer’s and cystic fibrosis. But laboratories often report different results when they analyze genes obtained from samples of the same blood or tissue, because of variations in their testing equipment and methods. The National Institute of Standards and Technology said Thursday that it had developed “reference materials” that could be used by laboratories to determine whether their machines and software were properly analyzing a person’s genetic blueprint, or genome. The institute disseminates such reference materials for thousands of products including steel, concrete and peanut butter. Laboratories can use the new DNA standard to make sure their genetic testing is accurate. If labs get the right answers for the reference material--by finding the same mutations in the same places, for example--they can be confident that their testing of patient samples is similarly accurate.
FDA/EMA ROUNDUP -- Germany’s Bayer AG (Leverkusen) announced that its antibiotic drug Avelox has won the U.S. Food and Drug Administration’s approval for the treatment as well as prevention of plague--a rare but potentially fatal bacterial infection. Bayer’s Avelox, also known by its chemical name moxifloxacin, obtained its very first approval from the FDA for use in the U.S. in December 1999, and is currently used for the treatment of patients suffering from various indications including “acute bacterial sinusitis, acute bacterial exacerbation of chronic bronchitis, community acquired pneumonia, complicated and uncomplicated skin and skin structure infections, and complicated intra-abdominal infections.” The latest approval of the drug’s use is for the treatment of two forms of plague: pneumonic plague, which is marked by infection of the lungs, and septicemic plague, which involves infection of the blood.
Elsewhere, a federal advisory committee recommended approval of a drug from Vertex Pharmaceuticals Inc. (Boston MA) that might eventually help nearly half of patients with cystic fibrosis. The advisory committee to the FDA voted 12 to 1 that the drug, which Vertex plans to call Orkambi, was safe and effective enough to be approved. The agency usually follows the advice of its expert panels. The drug would be the second cystic fibrosis drug for Vertex and the second in the world that works directly to counteract the genetic defect that causes the disease, rather than just treat the symptoms. Vertex hopes the drug will propel the company to consistent profitability after 26 years in business. Vertex already sells Kalydeco, the first drug that works on the underlying genetic defect of cystic fibrosis, but it is applicable only to about 2,000 of the 30,000 cystic fibrosis patients in the United States. Kalydeco costs more than $300,000 a year.
Nevro Corp. (Menlo Park CA), a device maker that went public last year, surged the most in two months after the Food and Drug Administration approved its spine stimulator to treat chronic back pain. The FDA approval came two months earlier than expected, according to Sterne Agee CRT, opening up a $1.2 billion U.S. market for the company. The firm rates Nevro a Buy. “The FDA has approved several other totally implanted spinal cord stimulators for pain reduction, but this system is unique,” William Maisel, acting director of the Office of Device Evaluation at the FDA’s Center for Devices and Radiological Health, said in a release. Nevro’s pain reliever, Senza, is different because it offers spinal cord stimulation without a tingling sensation. The stock closed the week up 18% at $53.41. JMP Securities raised its price target on the shares to $65 from $55 citing Senza’s potential to capture a “meaningful share” of the U.S. market with its FDA-approved superiority claim.
And the FDA on Friday warned that a widely used newer class of type 2 diabetes drugs sold by AstraZeneca Plc (London), Johnson & Johnson (New Brunswick NJ) and Eli Lilly & Co. (Indianapolis IN) in partnership with Boehringer Ingelheim GmbH (Ingelheim DEU) may cause dangerously high levels of blood acids that could require hospitalization. The drugs belong to a class known as SGLT2 inhibitors that work by causing blood sugar to be secreted in the urine. They include AstraZeneca’s Farxiga (dapagliflozin), J&J’s Invokana (canagliflozin) and Jardiance (embagliflozin) from Lilly and Boehringer. The FDA, in a warning on its website, said the medicines may lead to ketoacidosis, a serious condition where the body produces high levels of blood acids called ketones. The FDA said its Adverse Event Reporting System database identified 20 cases of acidosis reported as diabetic ketoacidosis, ketoacidosis, or ketosis in patients treated with SGLT2 inhibitors from March 2013 to June 6, 2014.
MEDICAL STOCK SPOTLIGHT -- Israel-based Vascular Biogenics Ltd. (Nasdaq) led advancing issues, soaring $2.03, or 54% on the week, to $5.76 after the prime investigator, Richard Penson, will present interim data for the company’s ongoing treatment of platinum resistant Mullerian cancer. Mr. Penson will provide the data on the ongoing clinical trial in a presentation on May 30 at the annual meeting of American Society for Clinical Oncology (ASCO). The data are expected to be highly positive. VB-111, as the first anti-angiogenic agent for the treatment of tumor vascular growth for cancer therapy, has strong potential to treat a range of solid tumor indications by carefully targeting the blood vessels that are required for tumor growth.
Elsewhere, micro cap Oncothyreon Inc. (Nasdaq) surged 39% to $2.43 in another example of investors stampeding to establish positions in companies that have submitted abstracts for presentation at the upcoming American Society of Clinical Oncology (ASCO) meeting in Chicago, May 29-June 2. Buyers are responding to news of positive study results, even from early stage trials. In Seattle WA-based Oncothyreon’s case, the enthusiasm is in response to Abstract #602, which summarizes a phase IIb study of ONT-380, a small molecule inhibitor of HER2, a growth factor receptor that is over-expressed in cancers such as breast and ovarian.
And Revance Therapeutics Inc. (Nasdaq) leaped %6.03, or 30%, to $26.39 on no company specific news. Revance Therapeutics has a P/B (price-to-book) ratio of 3.58. The stock has traded between $34.20 and $14.02 over the last 52-weeks, its 50-day SMA (simple moving average) is now $20.35, and its 200-day SMA $19.31. Newark, CA-based Revance Therapeutics is a clinical stage specialty biopharmaceutical company, engaged in the development, manufacturing and commercialization of novel botulinum toxin products for multiple aesthetic and therapeutic applications.
But Health Insurance Innovations Inc. (Nasdaq) plummeted $2.12, or 27%, to $5.84 after reporting first-quarter net income of $53,000. On a per-share basis, the Tampa, Fl-based company said it had net income of 1 cent. The company posted revenue of $22.5 million in the period. Health Insurance Innovations operates as a developer and administrator of web-based individual health insurance plans and ancillary products. Its product portfolio consists of short-term medical plans, accident, sickness and hospital medical plans, ancillary insurance, life insurance, lifestyle and discount services. Zachs lowered shares of the company from a “Hold” to a “Sell.”
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Biotie Therapies Corp., a biotech developing an adjunct therapy to levodopa for Parkinson’s disease, registered up to $60 million worth of common stock. The Turku, Finland-based company, which was founded in 1998, plans to list on the Nasdaq under the symbol “BITI.” Biotie Therapies initially filed confidentially on March 17, 2015. RBC Capital Markets and Stifel are the joint bookrunners on the deal. No pricing terms were disclosed.**Nivalis Therapeutics Inc., which is developing a complementary small molecule therapy for cystic fibrosis, registered up to $60 million in an initial public offering. The Boulder, CO-based company was founded in 2007 and plans to list on the Nasdaq under the symbol “NVLS.” It initially filed confidentially on Feb. 13, 2015. Cowen & Company and Stifel are the joint bookrunners on the deal. No pricing terms were disclosed.
May 11, 2015 ...
U.S. SENATE REPUBLICANS PASS BUDGET PLAN THAT SEEKS OBAMACARE REPEAL -- The U.S. Congress adopted a budget last week that will allow Republicans to bypass Democrats and send a repeal or revision of President Barack Obama’s landmark 2010 healthcare law to his desk. The Senate vote Tuesday was 51-48 on the plan negotiated by majority Republicans in both chambers. The House adopted the measure 226-197 on April 30. The president has said repeatedly he would veto any proposal to gut or repeal Obamacare. Yet with the U.S. Supreme Court expected to rule next month on a challenge to the Affordable Care Act, Republicans could try to force him to compromise if the court strikes down most of the insurance subsidies that underpin the law. The budget “gives us the tools to leave Obamacare’s broken promises and higher costs where they belong--in the past,” said Senate Majority Leader Mitch McConnell, a Kentucky Republican. “It’s a budget that aims to make the government more efficient, more effective and more accountable to the middle class.” Minority Leader Harry Reid, a Nevada Democrat, said the budget is “balanced in name only” and cuts items such as financial aid to attend college. “The Republican budget is unfair, it’s unbalanced, unwise and some said it’s immoral,” Reid said.
White House press secretary Josh Earnest said in a statement that the budget would hurt middle-class families and relies on a temporary “gimmick” for defense funding. “Congressional Republicans propose drastic cuts to programs that support the middle class and provide ladders of opportunity for those seeking to reach the middle class,” Earnest said. The budget measure is a non-binding framework for spending bills to be passed later. It doesn’t go to the president for his signature. Reid said last week that his party would block spending bills based on the budget. The budget resolution, S.Con.Res. 11, spells out the Republican Party’s priorities by calling for $5.3 trillion in spending cuts to reach balance in nine years. Most of the reductions, $4.1 trillion, would come from programs including entitlements like Medicare. The plan would use a reserve fund to evade a limit on defense spending while keeping in place caps on domestic programs.
ALEXION TO BOLSTER RARE-DISEASE OFFERING WITH $8.4 BILLION DEAL -- A biotech company is paying $8.4 billion--or more than double the market value--to buy a smaller maker of medicines for rare diseases, the latest sign of how heated the market for promising new drugs has become. Alexion Pharmaceuticals Inc. (Cheshire CT), which has one drug and a market cap of $31 billion, is offering to pay a 124% premium over Synageva BioPharma Corp.’s (Lexington MA) average share price during the week leading to announcement of the deal--one of the biggest premiums paid for any company since 1995, according to U.K.-based Dealogic Plc. Synageva doesn’t have a product on the market, but it is in late-stage development of a treatment for a genetic disease that afflicts about 3,000 people. It continues a deal-making surge among pharmaceutical companies, which have been particularly keen on makers of drugs for rare diseases. The treatments are attractive because regulators often give their marketers financial incentives, such as multiyear periods of market exclusivity. Companies can make up for small patient populations by charging high prices for the treatments--often hundreds of thousands of dollars a year--without the need to deploy the large sales forces used for primary-care drugs. And it is difficult for insurers to argue against the high prices because many of the treatments are the only option available for serious illnesses.
Global sales of drugs for rare diseases, also known as “orphan” drugs, are expected to rise 10.5% annually to about $176 billion in 2020, according to research firm EvaluatePharma (Boston MA). Along with Alexion, other leading sellers of rare-disease drugs include Sanofi SA’s (Paris) Genzyme unit, Shire Plc (Dublin IRL) and BioMarin Pharmaceutical Inc. (San Rafael CA). Some analysts, however, questioned the price Alexion is paying for Synageva, concerned there won’t be enough patients for Synageva’s lead drug candidate to justify the price. Shares in Alexion closed the week down 5% at $163.02, a contrast to the boost that several pharmaceutical acquirers have received when they announced deals in the past year. Synageva estimates there are at least 3,000 patients with the condition that its lead drug targets in major markets globally. Its shares more than doubled over the week to $213.90.
TRACKING WASHINGTON -- A key pilot program in the federal health law saved Medicare nearly $400 million over two years and is the first alternative-payment model certified to cut costs while improving health-care quality, the Centers for Medicare and Medicaid Services said. That finding by independent actuaries makes the Pioneer Accountable Care Organization model eligible to be expanded to larger group of Medicare beneficiaries, CMS officials said. “This is a crucial milestone in our efforts to build a healthcare system that delivers better care, spends our healthcare dollars more wisely, and results in healthier people,” Health and Human Services Secretary Sylvia M. Burwell said in a statement. Earlier this year, she announced a goal of moving 50% of Medicare payments to such value-based models by 2018. The Pioneer ACOs have met with mixed success by other measures. Thirteen of the original 32 participating hospital systems have dropped out or switched to other models after failing to meet performance targets. In an ACO, hospitals or groups of doctors who keep costs down for a group of Medicare patients, while meeting quality measures, stand to split the savings with Medicare. Nationwide, more than 3.5 million Medicare beneficiaries are part of ACOs run by some 400 health systems.
In other news, nearly 17 million Americans gained health insurance in the first 18 months of Obamacare, according to new estimates from RAND Corp. (Santa Monica CA) that show far more people got insurance coverage than lost it since the most important provisions of the Affordable Care Act took effect. The research group’s number is consistent with earlier estimates and adds to the evidence that the law helped dramatically cut the number of Americans without health insurance. The RAND report comes a day after Republican senators adopted a budget plan that paves the way for an attempt to repeal Obamacare and as the Supreme Court considers whether to strike down a crucial piece of the law. According to the study, people got insurance not just from the new Obamacare marketplaces but from expanded state Medicaid programs and employer coverage as well. Employer health plans added about 8 million people to their rolls in a period when they added about 4.4 million jobs, according to seasonally adjusted data from the Bureau of Labor Statistics. The RAND study, published in the journal Health Affairs, measures changes in insurance coverage for adults under 65 between September 2013, right before healthcare.gov opened, and February 2015, when the window to enroll in Obamacare for this year closed.
FDA/EMA ROUNDUP -- Swiss drugmaker Roche Holding AG (Basel) said on Thursday the U.S. Food and Drug Administration has granted “breakthrough therapy” designation for venetoclax for the treatment of people who have relapsed or refractory chronic lymphocytic leukemia with a genetic abnormality. Breakthrough therapy designation is given when early data shows a product may confer substantial improvement over existing therapies.
Elsewhere, Vertex Pharmaceuticals Inc.’s (South Boston MA) combination of an experimental compound and an approved drug significantly improved lung function in cystic fibrosis patients with the most common genetic mutation underlying the disease, FDA staff said. The reviewers, however, were not sure whether Vertex’s already approved therapy, Kalydeco, had a positive effect alone. They also questioned if the experimental compound, lumacafotor, added any benefit. The FDA is trying to ask the panel if the evidence is enough to show that the combination’s benefit is significantly better than that of a single component, RBC Capital analyst Michael Yee said. “We think this is unlikely to block approval.” The FDA staff were satisfied with the safety profile of the combination, to be called Orkambi, according to documents released on Friday. Orkambi is being evaluated for CF patients with a type of the F508del mutation, which accounts for half of all CF patients.
AcelRx Pharmaceuticals Inc. (Redwood City CA) said a division of the FDA had rejected the company’s request for a meeting to discuss the need for an additional trial of its pain drug device, Zalviso. The company’s shares closed the week down 20% at $3.24 after the FDA also restated its view that the additional study was needed. The agency, in March, asked AcelRx to conduct the study to evaluate risks associated with the device, specifically issues relating to inadvertent dispensing. The additional trial is likely to push Zalviso’s approval to the end of 2016, against the previous estimate of early 2016, according to analysts.
Outside the U.S., Swiss drugmaker Novartis AG (Basel) said European health regulators have approved a drug for advanced lung cancer that is intended to treat patients with a specific genetic mutation. Zykadia, or ceritinib, is from a new class of medicines known as ALK inhibitors. It was approved in April 2014 in the U.S. It is designed for use in non-small cell lung cancer patients who have previously been treated with Pfizer Inc.’s Xalkori, another ALK inhibitor. Between 2% and 7% of non-small cell lung cancer patients have the specific mutation of the ALK (anaplastic lymphoma kinase) protein for which such treatment is targeted. They are often non smokers.
MEDICAL STOCK SPOTLIGHT -- PlasmaTech Biopharmaceuticals Inc. (Nasdaq) led advancing issues, soaring $4.51, or 59% over the week, to $7.34. The Dallas, TX-based company announced it has signed a deal to acquire Cleveland, OH-based Abeona Therapeutics Inc. The company, backed by billionaire George Soros, announced the plans on Wednesday, which when completed will give Abeona shareholders almost 4 million common shares and up to an additional $9 million in performance milestones. The news came two days after Soros filed with the Securities and Exchange Commission saying he owned 5.17% of the company. PlasmaTech, founded in 1988, is a biopharmaceutical company focused on treatments and supportive care for cancer patients. Abeona, founded in 2013, is seeking a cure for Sanfilippo syndrome, a metabolism disorder that can cause neurological issues.
Elsewhere, Fate Therapeutics Inc. (Nasdaq) rocketed $2.43, or 51%, to $7.22. The upside was largely driven by the company’s collaboration with Juno Therapeutics Inc. to identify and utilize small molecules and modulate Juno’s genetically-engineered T cell product candidates in order to improve their therapeutic potential for cancer patients. Zacks upgraded shares of San Diego-based Fate Therapeutics from a “Hold” rating to a “Strong-Buy” rating in a research note. The firm currently has a $6.25 price target on the stock. Earlier in the week, BMO Capital Markets set a $15.00 target price on Fate. The firm currently has a “Buy” rating on the stock.
And Calithera Biosciences Inc. (Nasdaq) leaped $4.05, or 41%, to $13.87 after reporting first-quarter financial results. The South San Francisco-based biotech reported a net loss from operations of $7.9 million, up from a loss of $4.15 million in the same period last year. Research and development expenses were $5.6 million for the three months ended March 31, 2015, compared with $3.3 million for the same period in the prior year. The increase of $2.3 million was primarily attributed to higher expenses associated with the continued advancement of CB-839, currently being evaluated in three phase I clinical trials in solid and hematological cancers.
But TetraLogic Pharmaceuticals Corp. (Nasdaq) plunged $1.38, or 35%, to $2.52. A serious safety snag forced the Malvern, PA-based company to halt enrollment in a phase I hepatitis B trial for its lead drug and thus pull the plug on a planned public offering. The biotech hit the brakes on an ascending-dose phase Ib/IIa hepatitis B trial for birinapant after observing cranial nerve palsies in the first dosing cohort. In a terse statement, TetraLogic divulged little else about the issue beyond saying that the pause is temporary. The news blew up the biotech’s plans to raise $25 million in a public offering.
IPO SECTOR -- EndoChoice Holdings Inc., which sells gastrointestinal endoscopy systems with wide field-of-view cameras, registered up to $115 million in an initial public offering. The Alpharetta, GA-based company, which was founded in 2008 and booked $64 million in sales for the 12 months ended March 31, 2015, plans to list under the symbol “GI.” It has not selected an exchange. EndoChoice initially filed confidentially on Jan. 9. J.P. Morgan, BofA Merrill Lynch, William Blair and Stifel are the joint bookrunners on the deal. No pricing terms were disclosed.**Evolent Health LLC, which offers healthcare providers a software platform that manages a value-based care model, registered up to $100 million in an initial public offering. The Arlington, VA-based company, which was founded in 2011 and booked $101 million in sales for the fiscal year ended December 31, 2014, plans to list on the NYSE under the symbol “EVH.” Evolent Health initially filed confidentially on Dec. 24. J.P. Morgan and Goldman Sachs are the joint bookrunners on the deal. No pricing terms were disclosed.
May 4, 2015 ...
PFIZER CUTS FULL-YEAR FORECAST ON STRONGER DOLLAR -- Cost-cutting and sales of new drugs helped Pfizer Inc. (New York) overcome a strong dollar and patent expirations to beat Wall Street projections for the first quarter, though it cut its outlook for the year, citing the unfavorable currency exchange rates. The world’s second-biggest drugmaker said its 2015 profit forecast includes a negative impact of $3.3 billion from currency exchange, and another $3.5 billion from generic competition. Most major drugmakers have overcome multibillion-dollar revenue hits from the unprecedented wave of patent expirations that began in 2011, but Pfizer isn’t free from peril quite yet. One of its top sellers, pain and arthritis treatment Celebrex, just got much cheaper generic competition in the U.S. Still, the drugmaker reported a 2% jump in net income to just under $2.38 billion, or 38 cents per share. Excluding one-time costs and gains, adjusted profit was $3.2 billion, or 51 cents per share, a penny better than analysts expected. Revenue fell 4% to $10.86 billion, as the strong dollar cut the value of sales paid for in local currencies by 7%, or 4 cents per share. That also edged out Wall Street expectations. Pfizer shares, which are near a 10-year high, closed the week off 3% at $34.08.
Sales of some recently launched drugs helped lessen the revenue pinch. Those include toward arthritis drug Xeljanz, liver cancer drug Xalkori and Ibrance, for women with a common subtype of breast cancer. Stroke and heart attack prevention drug Eliquis, whose profits Pfizer splits with partner Bristol-Myers Squibb Co., had sales more than triple to $355 million over the year-ago quarter. Pfizer’s top seller, pneumococcal vaccine Prevnar for preventing pneumonia and ear and other infections, jumped 41% to $1.31 billion after recent approval of Prevnar 13, which prevents infection by more strains of the bacteria. Recent coverage of the vaccine by Medicare and expert recommendations that people 65 and older get the shot boosted U.S. sales by 80% in the quarter. However, Celebrex sales plunged 67% to $205 million, and sales of antibiotic Zyvox fell 15% to $271 million. The company also terminated its co-promotion of the bronchodilator Spiriva in most countries. “We are in one of the most productive times for our pipeline,” with medicines for 30 conditions in late-stage testing, the last stage before seeking approval, CEO Ian Read said.
MYLAN RAISES OFFER FOR PERRIGO; IS REJECTED AGAIN -- Generic drugmaker Mylan NV (Canonsburg PA) raised its offer for over-the-counter medicines maker Perrigo Co Plc (Dublin), but the Irish company again rejected Mylan’s overture. Mylan said Wednesday it will pay $232.23 for each share of Perrigo in a mix of cash and stock, valuing Perrigo at about $34.1 billion. Perrigo said the offer isn’t in its best interest and that it isn’t worth as much as Mylan says. Perrigo, with U.S. headquarters in Allegan, MI, rejected an offer from Mylan the prior week. Mylan itself is trying to fend off an acquisition from larger competitor Teva Pharmaceutical Industries Ltd. (Petach Tikva ISR). Mylan wants to combine its prescription generic drug business with Perrigo’s business in over-the-counter products like vitamins, nutritional products and infant formula. Teva, already the largest generic drug seller in the world, wants to get even bigger and consolidate its manufacturing and sales by teaming up with Mylan. Earlier in April, Mylan, which is legally based in Amsterdam, Netherlands, offered to buy Perrigo for $205 per share, or $30.1 billion. Perrigo said that was too low. Mylan is now offering Perrigo shareholders $75 per share in cash instead of $60, as well as slightly more stock.
Teva wants to buy Mylan for $82 per share in cash and stock, or $40.1 billion. Mylan said that offer undervalued the company and said it wouldn’t start negotiations unless Teva offered at least $100 per share. It also criticized Teva’s leadership and corporate culture. Teva wants Mylan to drop its attempt to buy Perrigo. In the last few months Teva’s leadership has said it believes some of the biggest generic drug companies should combine in order to save money and become more efficient. Teva says it could eliminate $2 billion in annual costs after a tie-up with Mylan. An expanded Teva would also have more bargaining power and might be able to boost the price of some of its drugs. Generic drugs are less expensive than name-brand drugs, but the prices of some generics are increasing because of a lack of competition or shortages brought on by manufacturing problems. Since Mylan wants to buy Perrigo instead of accepting a sale to Teva, Perrigo argues that the gains in Mylan’s share price shouldn’t be counted as part of the offer. It says last week’s offer is worth about $202 per share. Perrigo shares closed the week down 3% at $192.89 in New York, while Mylan fell 3% to $73.89.
TRACKING WASHINGTON -- Nearly 40% of healthcare providers treating Medicare patients will have their payments cut 1.5% this year because they didn’t submit data on patients’ health to the government, the Centers for Medicare and Medicaid Services said. More than 460,000 providers failed to comply with the Physician Quality Reporting System in 2013, out of about 1.25 million eligible providers, according to the CMS report released last week. Some 70% of those that didn’t participate treat fewer than 100 Medicare patients a year, the agency said. Meanwhile, nearly 642,000 providers did comply in 2013 and will earn a 0.5% boost in payments this year. Launched in 2007, the federal quality-reporting program is one of several meant to measure and spur improvements in quality. Providers—including doctors, nurse practitioners, physical therapists and others who bill Medicare, initially earned bonuses for complying. The Affordable Care Act introduced penalties for not participating, starting this year. Some 257,000 providers are also seeing their Medicare pay cut 1% this year for not meeting federal targets for using electronic medical records in 2013. Hundreds more in large group practices are being docked a further 0.5% to 1% this year under a complicated cost-and-quality adjustment, the so-called Value-Based Payment Modifier.
In other news, the U.S. Supreme Court revived religious objections by Catholic groups in Michigan and Tennessee to the Obamacare requirement for contraception coverage, throwing out a lower court decision favoring President Barack Obama’s administration. The justices asked the Cincinnati-based 6th U.S. Circuit Court of Appeals to reconsider its decision that backed the Obama administration in light of the Supreme Court’s June 2014 ruling that allowed certain privately owned corporations to seek exemptions from the provision. The Affordable Care Act, known as Obamacare, requires employers to provide health insurance policies that cover preventive services for women including access to contraception and sterilization. Various challengers, including family-owned companies and religious affiliated nonprofits that oppose abortion and sometimes the use of contraceptives, say the requirement infringes on their religious beliefs. The high court threw out a June 2014 appeals court ruling that went in favor of the government. In March, the court took a similar approach in a case concerning the University of Notre Dame. The most recent case is Michigan Catholic Conference v. Burwell, U.S. Supreme Court, No. 14-701.
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration said Wednesday it approved an injection designed to melt away double-chin fat. The agency approved a drug called Kybella for adults with moderate or severe fat below the chin, or submental fat. It’s the first approved drug for Kythera Biopharmaceuticals Inc. (Westlake CA). The drug is a synthetic form of deoxycholic acid, a chemical the FDA said is naturally produced by the body and helps it absorb fats. It destroys fat cells by breaking down the cell membrane. Kythera plans to start selling Kybella in the second half of 2015, and said in regulatory filings that it thinks the injection could top $500 million in annual sales.
Elsewhere, the FDA on Thursday approved the sale of Breo Ellipta as a once-daily treatment for asthma in patients aged 18 and older, GlaxoSmithKline Plc (London) and Theravance Inc. (S. San Francisco) said. The FDA declined to approve Breo for younger asthma sufferers. The agency, in a so-called complete response letter, told the companies that additional data would be required to further demonstrate Breo’s safety and efficacy in that population. The FDA’s decision came after an FDA advisory panel of experts had voted 16-4 that Breo Ellipta should be approved for use by adults.
The FDA approved the first generic versions of Otsuka Pharmaceutical Co Ltd.’s (Tokyo) antipsychotic drug, Abilify. The agency said on Tuesday that it had granted approval for generic versions of Abilify from four companies, including Teva Pharmaceutical Industries Ltd. (Petach Tikva ISR), to treat mental illnesses such as bipolar disorder and schizophrenia. Abilify has an orphan drug designation for the treatment of Tourette’s syndrome, a nervous system disorder, in children. Abilify, which is sold by Bristol-Myers Squibb Co. in the U.S., brought in sales of $554 million in the first quarter.
And the FDA approved The Medicines Co.’s (Parsippany NJ) drug device Ionsys for postoperative pain for hospital use, the company said on Thursday. Ionsys, a needleless, patient-controlled, opioid-based treatment, offers patients recovering from surgery in the hospital control over their analgesic dosing. Ionsys was originally developed by Johnson & Johnson (New Brunswick NJ) and won approval in the U.S. and Europe in 2006. But after its launch in Europe in 2008, it was recalled due to device stability issues. The therapy never made it to the market in the U.S. The Medicines Co. gained access to the product through its 2012 acquisition of Incline Therapeutics Inc., which had acquired the treatment from J&J in 2010.
MEDICAL STOCK SPOTLIGHT -- Healthcare bore the brunt of a major pullback on Wall Street last week with Celladon Corp. (Nasdaq) taking the biggest hit, plunging $11.06, or 81% to $2.62. The San Diego-based company announced that its randomized, double-blind, placebo-controlled, multinational phase IIb study (CUPID2) on advanced heart failure patients was unsuccessful in meeting both primary and secondary endpoints. The CUPID2 study evaluated a single, one-time, intra-coronary infusion of Mydicar (a cardiovascular gene therapy agent) in comparison to placebo in patients who had stable class II to class IV ischemic or non-ischemic heart failure (under the New York Heart Association classification system) despite optimal therapy along with reduced left ventricular ejection fraction and high propensity to recurrent heart-failure hospitalizations.
Elsewhere, Aerie Pharmaceuticals Inc. (Nasdaq) continued its free-fall, plummeting $3.50, or 27%, hitting a new 52-week low of $9.37 after the company announced that its lead pipeline candidate, Rhopressa, missed its primary efficacy endpoint in a phase III study. The company was evaluating Rhopressa for its ability to lower intraocular pressure (IOP) in patients with glaucoma or ocular hypertension. The once-daily eye drop failed to show “non-inferiority” in lowering of IOP compared to twice-daily timolol. Bedminster, NJ-based Aerie noted, however, that Rhopressa demonstrated numerical superiority compared to timolol at most of the measured time points.
And Calithera Biosciences Inc. (Nasdaq) sank $3.59, or 27%, to $9.82 on no particular company specific news. South San Francisco-based Calithera announced that clinical data for its lead drug candidate CB-839, the company’s novel, orally bioavailable glutaminase inhibitor for non-small cell lung cancer and renal carcinoma, will be presented at the 51st Annual Meeting of the American Society of Clinical Oncology (ASCO), which is being held from May 29 to June 2, 2015 in Chicago.
But in a small group of winners, Eleven Biotherapeutics Inc. (Nasdaq) rose $2.12, or 19%, to $13.31 after being upgraded by Zacks from a “Sell” rating to a “Hold” in a report released on Friday. Eleven Biotherapeutics is engaged in the discovery and development of protein therapeutics to treat eye diseases primarily in the United States. The company develops its therapeutics through AMP-Rx, a proprietary protein engineering platform. Cambridge, MA-based Eleven Biotherapeutics last issued its quarterly earnings data on Thursday, April 30th. The company reported ($0.36) earnings per share (EPS) for the quarter, beating the Thomson Reuters consensus estimate of -$0.57 by $0.21. On average, analysts predict that Eleven Biotherapeutics will post $-1.94 EPS for the current fiscal year.
IPO SECTOR -- Fast-growing Teladoc Inc., a Dallas, TX-based telehealth company, has taken a step toward filing for an initial public offering despite a recent Texas Medical Board ruling that went against the company’s business model. Teladoc filed a confidential Form S-1 with the Securities and Exchange Commission and expressed an intention to file an IPO after the SEC’s review process, according to a statement from the company. The number of shares of common stock to be sold and the price range for the proposed offering have not yet been determined, the statement said. The initial filing comes less than three weeks after the Texas Medical Board voted April 10 to adopt new rules limiting physicians who treat patients over the phone, video or online. The ruling could have severe implications for Teladoc, which conducts a substantial amount of its business in its home state.
April 27, 2015 ...
MYLAN MAKES HOSTILE $31.2 BILLION PERRIGO BID TO FOIL TEVA -- Generic drugmaker Mylan NV (Canonsburg PA) said Friday it would take its $31 billion offer for Perrigo Co Plc (Dublin IRL) directly to shareholders, in what is set to be one of the most high-profile hostile takeover attempts of the year. Mylan, which itself is the target of an unsolicited $40 billion bid from larger rival Teva Pharmaceutical Industries Ltd. (Petach Tikva ISR), said it would offer $60 in cash and 2.2 of its shares for each Perrigo share. The company’s pursuit of Perrigo, a major producer of over-the-counter drugs, is widely seen as an attempt to fend off Teva, the world’s biggest maker of generic drugs. The three-way chase is further evidence that the appetite for healthcare acquisitions continues unabated. M&A in the industry has hit $193.9 billion so far this year, double the amount in the same period last year. Mylan, which is legally based in Amsterdam, Netherlands, said on April 8 that it would make a cash-and-share bid that valued Perrigo at $205 per share but did not detail the breakdown between shares and cash to be offered. The offer announced on Friday works out to about $222 per share, based on Mylan’s Thursday close, valuing Perrigo at about $31 billion, according to Thomson Reuters data. However, Perrigo said the offer valued it at $181.67 per share based on Mylan’s unaffected price of $55.31 per share on March 10.
Mylan’s shares have risen by about a third since March 10. “Today’s announcement from Mylan proposes a price that is lower than the previously rejected proposal,” Perrigo said. Mylan said its offer was fully financed and not conditional on due diligence. The cash portion will be financed by a new bridge credit facility arranged by Goldman Sachs, the company said. Teva said in a statement that it remained fully committed to its Mylan offer. Perrigo’s shares closed the week off 3% at $192.89, while Mylan’s gained 9% to $76.06. Teva’s New York-traded shares slipped 50 cents to $64.41.
AMGEN PROFIT BEATS ESTIMATES AS DRUGMAKER RAISES FORECAST -- Amgen Inc. (Thousand Oaks CA) reported higher first-quarter earnings last week, helped by price increases for its best-selling drugs, as well as lower spending on research and development. Excluding one-time items, the drugmaker earned $2.48 per share in the quarter, beating analysts’ estimates of $2.10, according to Thomson Reuters. “The key is that expense reductions were really significantly greater than the street was modeling,” said RBC Capital Markets analyst Michael Yee. “The company has clearly proven that they are serious on cost management.” Amgen, which is entering the cardiovascular sector with new heart failure drug Corlanor and awaits U.S. regulatory approval for cholesterol drug Repatha, expects costs to trend higher for the remainder of the year, said Chief Financial Officer David Meline. He added, however, that overall cost trims are on track, and Amgen raised its full-year outlook for adjusted earnings per share to between $9.35 and $9.65 from a previous range of $9.05 to $9.40. The company also bumped up the lower end of its full-year revenue estimate to $20.9 billion from $20.8 billion, but left the upper end unchanged at $21.3 billion. Analysts had been forecasting 2014 earnings of $9.30 per share on revenue of $20.98 billion.
“We have strong momentum as we defend our base business against competition and our transformation efforts are delivering efficiencies and cost savings,” CEO Robert Bradway said, referring to cost containment goals outlined last year. Amgen’s first-quarter revenue rose 11% to $5.03 billion, while spending on research and development fell 14% to $856 million. The company’s sales of rheumatoid arthritis drug Enbrel rose 13% to $1.17 billion, while sales of white blood cell booster Neulasta rose 4% to $1.13 billion--both because of price increases. Year-over-year, Amgen raised its price for Enbrel by 19%. Stronger demand pushed sales of multiple myeloma drug Kyprolis up 59% to $108 million, and sales of bone drugs Prolia and Xgeva up 29% to $612 million. The drugmaker posted a quarterly net profit of $1.62 billion, or $2.11 per share, up from $1.07 billion, or $1.40 per share, a year earlier. Company shares closed the week up 3% at $167.91.
TRACKING WASHINGTON -- Mammograms are more beneficial for women 50 to 74 years old than for younger women, while the benefits for women 75 and older are unclear, a federal panel that evaluates medical practices said last week. The U.S. Preventive Services Task Force examined clinical studies on breast-cancer screening, concluding that “some women in their 40s will benefit from mammography” but that “most will not, while others will be harmed.” The panel said those hurt include women who undergo surgery, radiation or chemotherapy for cancers that never would have threatened their health. In November 2009, the task force told women in their 40s that it didn’t recommend mammograms for their age group. This time, the panel said the decision for those women “should be an individual one,” recognizing the potential benefits as well as the potential harms. “There is value to mammography screening in the 40s,” said Dr. Kirsten Bibbins-Domingo, a professor of medicine at UC, San Francisco, and vice chairman of the task force that issued the draft recommendations. “There are benefits, and they exceed the harms, but only by a small amount.” The task force--which analyzed eight major studies of mammography screening in the U.S., Canada, the U.K. and Sweden--said women in their 40s could benefit more from screening if they have a mother, sister or daughter with breast cancer.
In other news, a new bipartisan bill, co-sponsored by Senators Dianne Feinstein, Democrat of California, and Susan Collins, Republican of Maine, proposes to give the FDA broader oversight to regulate the millions of lipsticks, moisturizers and other cosmetics sold each year including the authority to force recalls of dangerous products. The proposal has backing from the cosmetics industry and proponents of strengthening the agency’s oversight, including the Environmental Working Group (Washington DC), a left-leaning advocacy group. “This bill is the best hope for meaningful cosmetics regulation in many years,” said Scott Faber, vice president of government affairs for the organization. The bill reflects a new reality for manufacturers of personal care products, which face more pressure than ever to respond to consumer concerns. Regulating cosmetics has not changed much since passage of the Food, Drug and Cosmetic Act in 1938. The FDA can only ask companies to voluntarily recall products, and manufacturers are not legally required to disclose adverse health effects reported by consumers. John Hurson of the Personal Care Products Council, an industry trade group, said of the new bill, “There were things that we liked more than others, but it is a compromise, and that’s a first.”
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration last week said increased safety problems with homeopathic remedies contributed to the government’s decision to revisit its oversight of the products. The agency wrapped up a two-day meeting to hear from supporters and critics of products like Zicam Allergy Relief and Cold-Eeze, alternative remedies that are protected by federal law, but not accepted by mainstream medicine. Similar to dietary supplements, the FDA does not review the safety or effectiveness of homeopathic remedies before they are sold. But unlike supplements, homeopathic medicines can state that they are intended for specific medical symptoms and conditions. The FDA’s Cynthia Schnedar, a director of drug compliance, said the agency has issued 40 warning letters to homeopathic product makers since 2009 amid increasing U.S. sales. In perhaps the most serious case, in 2009 the FDA ordered the maker of Zicam to stop marketing three products that contained zinc gluconate. The agency linked those products to 130 reports from consumers who said they lost their sense of smell. In 2010, the FDA warned about reports of toxicity in children taking Hyland Homeopathic’s teething tablets, which contained a berry-derived toxin called belladonna that can be poisonous in larger doses.
Elsewhere, the FDA on Thursday warned eight companies to stop selling weight loss, energy enhancement, and workout supplements containing BMPEA, citing that the substance does not meet the definition of a dietary ingredient. The drug, beta-methylphenethylamine, first made in the 1930s, is a chemical relative of amphetamine but is surprisingly poorly-studied. While it is unclear if BMPEA is a stimulant or possesses addictive qualities like amphetamine, doctors are concerned that it can cause an unsafe increase in heart rate and blood pressure, an action that has been demonstrated in laboratory animals and one human study. BMPEA, forbidden in competitive athletics by the World Anti-Doping Agency, emerged on the international radar earlier this month with the publication of an analysis by Pieter Cohen, MD, and colleagues, who demonstrated the presence of the substance in 11 of 21 supplements they tested. Cohen, a Cambridge Health Alliance internist and Harvard Medical School assistant professor, noted that the FDA’s own chemists had found a similar incidence of BMPEA in unnamed supplements two years earlier. Supplement makers claim that BMPEA is legally allowable in weight loss and workout aids because it occurs naturally in a southwestern shrub, blackbrush, known scientifically as Acacia rigidula. However, FDA chemists could not detect the substance in several plant samples.
The Medicines Co.’s (Parsippany NJ) intravenous blood clot preventer can be used in angioplasty procedures, an independent advisory panel to the FDA said last Wednesday. The panel voted 9-2 to support the approval of the once-rejected injection, cangrelor, for use in some patients undergoing angioplasty, a procedure to widen narrowed or clogged coronary arteries that often includes the use of stents. The recommendation follows a review published by FDA staff, which supported the approval of the drug. Cangrelor, which won European approval in March, was rejected by the FDA in April 2014. In its complete response letter, the agency had asked the drugmaker to reanalyze data from a pivotal trial called Champion-Phoenix.
And outside the U.S., European regulators have recommended approval of Bristol-Myers Squibb Co.’s (New York) Opdivo, paving the way for it to become the first of a closely watched group of immune system-boosting cancer medicines to go on sale in Europe. The drug, also known as nivolumab, was given a green light on Friday by the European Medicines Agency (EMA) for the treatment of melanoma. It is already approved in the United States for melanoma and lung cancer. The EMA said Opdivo was recommended for use on its own for the treatment of advanced melanoma, the most aggressive type of skin cancer, in both first-line and previously treated patients. The agency also recommended approval of Daiichi Sankyo Co.’s (Tokyo) Lixiana, or edoxaban, for stroke prevention and Vanda Pharmaceutical Inc.’s (Washington DC) Hetlioz, or tasimelteon, to treat a sleep-wake disorder in blind people. Bristol’s Opdivo belongs to a highly promising new class of medicines called PD-1 inhibitors that block a mechanism tumors use to hide from the immune system. It is expected to be one of the most commercially successful new drugs to reach major markets this year. It competes with Merck & Co.’s (Kenilworth NJ) Keytruda, which is also on the market in the U.S. but not in Europe.
MEDICAL STOCK SPOTLIGHT -- Affimed AG (Nasdaq), a clinical-stage biopharmaceutical company focused on discovering and developing highly targeted cancer immunotherapies, led advancing issues, soaring $4.24, or 57% for the week, to $11.72. The Heidelberg, Germany-based firm announced the achievement of the second milestone in its development partnership with Amphivena Therapeutics Inc. (San Francisco). The milestone represents the development candidate selection against an undisclosed target for the treatment of a certain hematologic malignancy. Affimed, which has a two-fold relationship with Amphivena as both investor and licensor, is due to receive a milestone payment of €7.5 million from Amphivena which will be paid in three installments.
Elsewhere, Innate Pharma SA (Nasdaq) surged $4.46, or 46%, to $14.20, a record high, as investors cheered a deal with AstraZeneca Plc to accelerate and broaden development of its immune-boosting anti-cancer medicines that could earn the French firm $1.275 billion. Innate Pharma will receive an initial $250 million payment from AstraZeneca, which is collaborating with Medimmune LLC to develop the French firm’s anti-NKG2A antibody, IPH2201, aimed at stimulating the body’s immune system to destroy cancer cells. It is the most significant transaction ever by the Marseille-based biopharmaceutical company, worth about 700 million euros on the stock market after Friday’s share price jump. AstraZeneca is set to pay Innate Pharma up to $1.275 billion plus double-digit royalties on sales.
And La Jolla Pharmaceutical Co. (Nasdaq) jumped $5.08, or 28%, to $22.95. Oppenheimer’s Ling Wang weighed in on La Jolla and initiated coverage with an “Outperform” rating and a price target of $43, implying an upside of around 98% from the current price. San Diego-based La Jolla has an attractive pipeline addressing multiple, large unmet medical needs. Oppenheimer sees the lead compound of LJPC-501 as having a strong probability of success (65%) in a pivotal phase III trial in catecholamine-resistant hypotension (CRH). The firm also expects the second compound, GCS-100, to establish definitive proof-of-concept in a phase IIb trial in diabetic chronic kidney disease (CKD) by the second half of 2016.
But Ampio Pharmaceuticals Inc. (Nasdaq) plunged $5.14, or 65%, to $2.73 after the biopharmaceutical company announced that the multiple injection STRIDE study for pain reliever Ampion did not reach its primary endpoint. The Greenwood Village, CO-based company said that based on its current projections, it has enough funds to continue operating through 2016 to complete additional trials of the drug and complete the necessary steps to bring the drug to market approval. “There is ample evidence from our multiple clinical trials that Ampion provides significant clinical benefit to a large number of patients with osteoarthritis of the knee,” said CEO Michael Macaluso.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Invuity Inc., which markets enhanced surgical illumination devices, registered up to $69 million worth of common stock. The San Francisco-based company, which was founded in 2004 and booked $13 million in sales for the 12 months ended December 31, 2014, plans to list on the Nasdaq under the symbol “IVTY.” Invuity initially filed confidentially on March 13, 2015. Piper Jaffray, Leerink Partners and Stifel are the joint bookrunners on the deal. No pricing terms were disclosed.
April 20, 2015 ...
OBAMA SIGNS $200 BILLION “DOC FIX” BILL -- Ending years of last-minute fixes, President Barack Obama on Thursday signed legislation permanently changing how Medicare pays doctors, a rare bipartisan achievement by Democrats and Republicans. The so-called “Doc Fix” overhauls a 1997 law that aimed to slow Medicare’s growth by limiting reimbursements to doctors. Instead, doctors threatened to leave the Medicare program, and that forced Congress repeatedly to block those reductions. Obama signed the $200 billion Medicare reform package Thursday in front of reporters and photographers, sitting alone and coatless in mild spring weather on the patio of the White House Rose Garden. The Senate passed the bill Tuesday; the House approved it in March. Obama praised Republican House Speaker John Boehner (R-OH) and House Democratic Leader Nancy Pelosi (D-CA) for negotiating the legislation. He said the new law helps Medicare by giving assurance to doctors about their payments. “It also improves it because it starts encouraging payments based on quality, not the number of tests that are provided or the number of procedures that are applied but whether or not people actually start feeling better,” Obama said. “It encourages us to continue to make the system better without denying service.”
The bill blocked a 21% cut in Medicare payments that was due to take effect this month. It also revamps how physicians will be paid in the future, by providing financial incentives for physicians to bill Medicare patients for their overall care, not individual office visits. Noting the unusual bipartisan nature of the bill, Obama said, “I hope this becomes a habit.” In Congress, Boehner praised Pelosi for “her indispensable leadership in helping tackle these challenging issues.” Paul B. Ginsburg, a health economist at the University of Southern California, and others expressed more skepticism about the component of the legislation that, beginning in 2019, would pay doctors based on how they perform on quality and other measures. Ultimately, the Department of Health and Human Services will decide those standards. Mr. Ginsburg said that doctors did not typically see enough patients to yield reliable data about how well they perform, or to adjust their scores for whether their patients are sicker than average.
JOHNSON & JOHNSON PROFIT BEATS FORECASTS -- Johnson & Johnson (New Brunswick NJ), the world’s biggest maker of healthcare products, reported quarterly earnings that topped analysts’ estimates as new cancer and diabetes treatments helped push drug sales higher. First-quarter earnings, excluding one-time items, were $1.56 a share, compared with the $1.53 average estimate of analysts compiled by Bloomberg. Pharmaceutical sales climbed 3% to $7.7 billion. The results underscore the company’s push to replenish its product lineup as drugs such as hepatitis C treatment Olysio and blood thinner Xarelto face new competition. An additional challenge comes from the strong dollar, since J&J gets about half its sales outside the U.S. The company cut its forecast for full-year earnings to a range of $6.04 to $6.19 a share, down from a prior prediction of $6.12 to $6.27, due to the currency fluctuations. Analysts had predicted $6.17. “If you look operationally--let’s take out foreign exchange--the numbers are actually fairly strong,” said Tony Butler, an analyst at Guggenheim Securities LLC. “They’re still growing the pharma business, mostly in immunology and oncology.” J&J won’t be alone in warning that the stronger dollar will continue to hurt earnings this year. Last quarter, the healthcare giant was the first of many drugmakers to report lower-than-expected guidance or sales declines due to the U.S. currency’s gain.
The currency changes hurt J&J’s earnings by 7.2% in the first quarter. Revenue fell 4.1% to $17.4 billion, the drugmaker said. Analysts had forecast $17.3 billion. Two newer drugs helped propel the growth of the pharmaceutical unit. Sales of diabetes medication Invokana almost tripled to $278 million. Cancer treatment Imbruvica, developed with Pharmacyclics Inc. (Sunnyvale CA) and approved by the Food and Drug Administration in 2013, had revenue of $116 million. Sales of the company’s top drug Remicade fell 0.6% to $1.6 billion, compared with the $1.77 billion forecast by RBC Capital Markets for the arthritis treatment. Olysio, which has been facing increased competition, sold $234 million, compared with the $160 million projected by RBC. J&J’s consumer unit, which makes over-the-counter products like Tylenol and Motrin, fell 4.7% to $3.4 billion. Revenue for the medical-device business, which has been under pressure from cost-cutting by insurers and hospitals, dropped 11.4% to $6.3 billion. J&J shares closed the week off 2% at $99.58.
TRACKING WASHINGTON -- The ability to transfer electronic medical records from one doctor or hospital to another is essential to the smooth functioning of the healthcare system and to providing the best possible care to patients. Yet these transfers often are being blocked by developers of heath information technology or medical centers that refuse to send records to rival providers. This will not be an easy problem to fix, but some possible approaches were detailed in a report to Congress from the Office of the National Coordinator for Health Information Technology, a unit of the Department of Health and Human Services. The full extent of the problem is difficult to assess, according to the report, mainly because of contractual restrictions imposed by software developers on their customers. It did not name any parties because it could not determine whether some of the information was blocked for legitimate reasons, like patient privacy. The report suggests new transparency requirements for developers to disclose the restrictions and costs associated with buying their systems. And the federal government could name the suspected wrongdoers and let them explain the reasons behind their actions. Congress could go still further and pass a new law providing criminal penalties and stiff fines for vendors and providers who deliberately block information sharing with no valid excuse.
In other news, people newly covered by Medicaid drove a significant increase in prescription drug use in 2014, even as those with private commercial coverage filled fewer prescriptions and, over all, patients did not visit the doctor as often, according to a new report by the IMS Institute for Healthcare Informatics (Danbury CT), which tracks the health industry. The report, released last Tuesday, offers a window into how consumers used their insurance in 2014, the first full year after millions of Americans gained coverage through the healthcare law, which expanded eligibility for Medicaid in many states and set up marketplaces where consumers could shop for insurance. Patients with Medicaid in states that expanded access to the program filled 25.4% more prescriptions than in the previous year, before the expansion. In states that opted not to expand the program, the increase was much smaller at 2.8%. Sabrina Corlette, a senior research fellow at the Center on Health Insurance Reforms at Georgetown University, described the difference as “stark,” adding, “it suggests that in the Medicaid expansion states, people are accessing the healthcare system. They are seeing physicians and other prescribers and getting needed drugs.”
FDA/EMA ROUNDUP -- The U.S. Food and Drug Administration approved Amgen Inc.’s (Thousand Oaks CA) Corlanor to treat patients with chronic heart failure, giving the world’s largest biotechnology company its first cardiovascular product. The agency approved the use of Corlanor (ivabradine) on top of current standard of care beta blockers for patients whose symptoms of heart failure are stable and who have a normal heartbeat and a resting heart rate of at least 70 beats per minute. Chronic heart failure is a common and debilitating condition in which the heart is unable to pump enough blood throughout the body. RBC Capital Markets analyst Michael Yee said that, long term, Corlanor could become a $500 million a year drug for Amgen.
Elsewhere, Momenta Pharmaceuticals Inc. (Cambridge MA) said the FDA approved the first generic version of Teva Pharmaceuticals Industries Ltd.’s top-selling multiple sclerosis drug, Copaxone. The agency cleared the application for the 20mg version of the blockbuster drug, submitted by Momenta’s partner Sandoz, a unit of Swiss drugmaker Novartis AG. The generic version, called Glatopa, was developed under a collaboration agreement between Momenta and Sandoz.
The Medicines Co.’s (Parsippany NJ) intravenous blood clot preventer can be used in angioplasty procedures, an independent advisory panel to the FDA said last Wednesday. The panel voted 9-2 to support the approval of the once-rejected injection, cangrelor, for use in some patients undergoing angioplasty, a procedure to widen narrowed or clogged coronary arteries that often includes the use of stents. The recommendation follows a review published by FDA staff, which supported the approval of the drug. Cangrelor, which won European approval in March, was rejected by the FDA in April 2014. In its complete response letter, the agency had asked the drugmaker to reanalyze data from a pivotal trial called Champion-Phoenix.
And FDA advisers said AstraZeneca Plc’s (London) Onglyza and a related diabetes drug should carry new information about a possible association with heart failure and death. The panel of diabetes experts voiced concern about data suggesting Onglyza and Kombiglyze can increase hospitalization due to heart failure and overall mortality. The panel voted 14-1 that such information should appear on the drugs’ prescribing labeling. Yet the panelists also said complicating factors make it difficult to tell whether the risk is real or a statistical fluke. Considering the drug’s overall benefits for treating diabetes, the panel voted 13-1, with one abstention, that the drugs’ heart safety profile was acceptable. Onglyza and Kombiglyze are part of a recently-developed class of diabetes drugs called DPP-4 inhibitors, which also includes Merck & Co.’s Januvia and Tradjenta, made by Eli Lilly & Co. and Boehringer Ingelheim GmbH.
MEDICAL STOCK SPOTLIGHT -- Novogen Ltd. (Nasdaq) once again led advancing issues, soaring $2.00, or 36% for the week, to $7.36. The drug discovery firm announced that it had signed a Memorandum of Understanding with the Feinstein Institute for Medical Research of New York to collaborate with the objective of developing effective treatments for brain cancers. The collaboration brings together the drug discovery expertise of Hornsby, Australia-based Novogen and the preclinical and clinical expertise of the Feinstein Institute in neurosciences and oncology. At the heart of the collaboration is the company’s super-benzopyran (SBP) drug technology platform, distinguished by its ability to kill the full spectrum of cells within a tumor including both rapidly- and slowly-dividing cancer cells (tumor-initiating cells).
Elsewhere, Oramed Pharmaceuticals Ltd. (Nasdaq) surged $1.94, or 31%, to $8.17. Equities researchers at brokerage MLV & Co. assumed coverage on shares, setting a “Buy” rating and a $30.00 price target. MLV & Co.’s price target suggests a potential upside of 266% from the stock’s previous close. Jerusalem-based Oramed is engaged in the field of oral delivery approaches for drugs and vaccines presently delivered via injection. Oramed’s flagship product, an orally ingestible insulin capsule in phase II clinical trials, is focused on the treatment of diabetes.
MediciNova Inc. (Nasdaq) rocketed 28% to $4.45, an all-time high, after announcing that it has received “fast track” designation from the FDA for MN-001 (tipelukast) for the treatment of patients with nonalcoholic steatohepatitis with fibrosis. Fast track designation is designed to expedite the review process for drugs being developed to treat potentially fatal or serious diseases that do not have a viable alternative treatment. La Jolla, CA-based MediciNova focuses on acquiring and developing novel and small molecule therapeutics for the treatment of serious diseases with unmet medical needs.
But Athersys Inc. (Nasdaq) plummeted $1.63, or 54%, to $1.40 after a stem-cell therapy--its only product to reach human trials--failed a mid-stage study testing it as a treatment for a type of stroke. Data on Friday showed that patients given the therapy, MultiStem, did not show a significant difference from those given a placebo as measured by the Global Stroke Recovery Assessment scale. The study, which was to test the safety and efficacy of the treatment given between 24 and 48 hours after an ischemic stroke, showed that MultiStem was no better than a placebo when given after 36 hours, the Cleveland, OH-based company said. However, data also showed that the therapy had better efficacy when given before 36 hours.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Galapagos NV, a biotech developing new treatments for inflammatory diseases, registered up to $150 million worth of common stock. Galapagos currently trades on the Euronext under the symbol “GLPG.” The Mechelen, Belgium-based company, which was founded in 1999 and booked €90 million in sales for the 12 months ended December 31, 2014, plans to list on the Nasdaq under the symbol “GLPG.” Galapagos initially filed confidentially on Feb. 6. Morgan Stanley, Credit Suisse and Cowen & Company are the joint bookrunners on the deal.
April 13, 2015 ...
MYLAN OFFERS TO BUY PERRIGO FOR $28.9 BILLION -- Mylan NV (Canonsburg PA) said it has proposed an unsolicited cash-and-stock deal worth $28.9 billion, or $205 a share, for rival Perrigo Co. Plc (Dublin IRL), which represents more than a 25% premium to Perrigo’s closing stock price prior to news of the offer. Perrigo reacted coolly, saying its board would meet to discuss the proposal and cautioning that “there can be no certainty that any offer will be made.” The proposal appeared to come out of nowhere. But Mylan said that the companies had held “many conversations over the years,” and said it sent a letter to Perrigo CEO and Chairman Joseph Papa last Monday proposing a transaction. Mylan said it still needed to conduct due diligence and expressed hope Perrigo would embrace the approach. “We have great respect for Perrigo’s board and management team and what they have built,” Mylan Executive Chairman Robert Coury said. “We look forward in the weeks ahead to working with them to capitalize on this tremendous opportunity and working together to create a unique leader with a one-of-a-kind profile in our industry.” Neither company is a household name, but a combination of Mylan and Perrigo would create one of the world’s top sellers of low-price medicines with $15.3 billion in yearly sales. A deal would also further the rapid consolidation among midsize drug firms.
Companies have been doing merger deals recently to adapt to a changing healthcare marketplace and remain competitive with rivals. In the process, companies have amassed billions of dollars in debt, cut thousands of jobs and grappled with the difficult task of digesting one organization after another. Yet the pace has continued unabated. Mylan and Perrigo recently closed on their own multibillion-dollar deals. Mylan is best known for selling generic prescription drugs, though its top-selling product is the EpiPen emergency treatment for allergic reactions. Perrigo makes over-the-counter cough-and-cold remedies and infant formula for chains like Wal-Mart Stores Inc. Each of the businesses is under pressure. Mylan has been coping with upstarts in India and other emerging markets that have been undercutting prices on its products, as well as bigger competitors like Israel’s Teva Pharmaceutical Industries Ltd. Perrigo, meanwhile, has been struggling to keep growing despite the low margins on the private-label medicines it sells. Perrigo closed the week up 21% at $198.55. Mylan surged 21% to $70.24.
MEDICARE ADVANTAGE PAYMENTS TO RISE IN 2016 -- Payments to health insurers operating Medicare Advantage plans for the elderly and disabled will increase by 1.25% in 2016, the U.S. government said last week, in response to expected growth in health spending. The announcement, by a division of the U.S. Department of Health and Human Services, comes after the U.S. government proposed a 0.95% cut in payments to insurers in February. More than 16 million people are enrolled in these plans, in which healthcare benefits are managed by private insurers, including UnitedHealth Group Inc. (Minnetonka MN), Humana Inc. (Louisville KY) and Aetna Inc. (Hartford CT). Each April the government announces reimbursement rates for insurers. The information helps insurers determine how profitable it will be to sell these plans, which optional benefits to provide and in which regions and markets to compete. The increase comes after many years of cuts to Medicare Advantage payments, because of an overall decline in healthcare spending and changes under the Affordable Care Act that seek to align payments more closely with the government-run Medicare fee-for-service program. The increase is larger than expected, Leerink Partners analyst Ana Gupte said, and bodes well for insurers that sell these plans next year. “2016 enrollment growth should be accelerated compared to previous years,” Gupte said.
Some insurers as well as the nation’s largest insurer lobbyist group, America’s Health Insurance Plans, had warned the government that any cuts would hurt the elderly. “The final rate notice took a notable step to provide stable funding for the Medicare Advantage program,” AHIP President Karen Ignagni said, adding, however, that the policy did not do enough to protect chronically ill and vulnerable populations. The increase for 2016 versus the decline announced in February results from expectations of Medicare Advantage spending growth of 4.2%, compared with the 1.7% the government forecast in February. The 4.2% growth reflects additional spending in 2014 and 2015, as well as higher expected outlays in 2016. The Centers for Medicare & Medicaid Services said higher spending was due to hospitalizations, rural health clinics and federally qualified health centers. It also includes a 0.1% increase based on the assumption that Congress will enact legislation raising Medicare payments to doctors. Shares of Humana, which receives about two-thirds of its revenue from Medicare Advantage plans, closed the week up 50 cents at $178.48. UnitedHealth added 1% to $119.00 and Aetna gained 1% to $107.91.
TRACKING WASHINGTON -- The Obama administration took vendors of electronic health records to task for making it costly and cumbersome to share patient information and frustrating a $30 billion push to use digital records to improve quality and cut costs. The report, by the Office of the National Coordinator for Health Information Technology, listed a litany of complaints it has received about vendors allegedly charging hefty fees to set up connections and share patient records; requiring customers to use proprietary platforms; and making it prohibitively expensive to switch systems. The report also cited complaints that some hospital systems make it difficult to transfer patient records to rival systems or physicians as a way to control referrals and enhance their market dominance. Congress requested the report last December amid rising concerns that the government’s massive investment in digitizing health records has created a windfall for the information-technology industry, but left patient records largely stuck in silos. Spurred by $28 billion in incentives to date, nearly 80% of doctors and 60% of hospitals have converted from paper files to electronic health records, known as EHRs, since 2009. But only 20% to 30% of providers are able to share records with outside providers, according to government and industry surveys.
In other news, Medicaid recipients who get services through managed care organizations or alternative benefit plans would get the same access to mental health and substance-abuse benefits as provided by private health plans, under a rule proposed last week by the Obama administration. Under a 2008 law, health insurance and group health plans must provide the same level of benefits for mental or substance-abuse treatment as they provide for medical and surgical care. Certain provisions of that law would now apply to Medicaid and the Children’s Health Insurance Program, a federal-state partnership, under the proposal. A number of states put limits on mental health coverage. The proposed rule wouldn’t change those limits on Medicaid fee-for-service plans, but it would stop such limits for Medicaid recipients who are in managed care plans. Medicaid is the state-federal health care program for people with low incomes. “It’s significant,” said Timothy Jost, a professor at the Washington and Lee University School of Law. “The mental health parity law preceded the ACA and it’s an issue people have been battling for some time. A significant number of people with mental health problems are on Medicaid.” States would be required to include provisions requiring parity in contracts for Medicaid managed care.
FDA/EMA ROUNDUP -- Clovis Oncology Inc. (Boulder CO) announced its experimental drug rucaparib has received “breakthrough therapy” status from the U.S. Food and Drug Administration for the treatment of patients with advanced ovarian cancer, who have already undergone at least two rounds of platinum-containing therapy. The company was granted another breakthrough therapy status for its lung cancer drug rociletinib in May last year, for which Clovis intends to seek marketing approval in a few months. Rucaparib is an inhibitor of the enzymes PARP1 and PARP2 and is designed for use as a mono-therapy in the treatment of patients with platinum-sensitive ovarian cancer with BRCA-mutated tumors.
Elsewhere, Horizon Pharma Plc (Dublin IRL) said Friday that its experimental Friedreich’s ataxia treatment has received “fast-track” designation from the FDA, a move that could speed approval. The specialty pharmaceutical company said the drug, Actimmune, is a treatment for Friedreich’s ataxia, an inherited disease causing nervous-system damage that often results in motor incapacitation and the use of a wheelchair. Horizon said there are currently no FDA-approved treatments for the disorder. Actimmune is already approved by the FDA for use in two genetic diseases.
Swiss specialty pharmaceutical company Santhera Pharmaceuticals Holding AG (Liestal) won a “fast track” designation from the FDA for treating patients suffering from Duchenne Muscular Dystrophy (DMD). With fast track status, Santhera might also win “accelerated approval and priority review,” which will further speed up the regulatory process. Raxone/Catena (idebenone), is a “synthetic short-chain benzoquinone,” which works by enhancing mitochondrial electron transport, thereby increasing the energy levels of cells found in muscles, according to Santhera.
And Denmark’s Novo Nordisk A/S (Bagsvaerd) said the FDA accepted a resubmitted application for its key insulin drug, Tresiba, based on interim analysis data from a clinical trial. Tresiba, already available outside the U.S., was rebuffed by the agency two years ago on concerns that the drug could be linked to higher rates of heart attacks or strokes. The FDA had asked Novo to conduct a dedicated trial to test for such risks, and the company last week said it expects to complete the study in the second half of 2016. When Novo said in late March that it was looking to resubmit the marketing application for Tresiba and a related drug, industry analysts had estimated Tresiba could get approved as early as October this year, based on the interim data.
MEDICAL STOCK SPOTLIGHT -- Novagen Ltd. (Nasdaq) led advancing issues, surging $1.46, or 35% over the week, to $5.63 after the Australia-based biotechnology company announced that studies of its experimental drug, Anisina, showed signs of what could be a breakthrough in melanoma treatment. Anisina was successful in destroying melanoma cells irrespective of their mutational status. This is significant because melanoma is associated with a variety of mutations, including those with the BRAF gene which occurs in about half of melanoma patients who do not have targeted therapy options. The BRAF gene has multiple treatment options while other mutations do not, but the study conducted by the University of Queensland Diamantina Institute suggests that Anisina treats the disease regardless of the type of mutation.
Elsewhere, Daxor Corp. (Nasdaq) leaped $1.97, or 34%, to $7.76 after receiving approval from the U.S. Patent Office for its Total Body Albumin Analyzer. The patent for the total body albumin analyzer is the first one issued for an instrument to measure the total albumin within the human body. Many diseases such as congestive heart failure, diabetes, kidney disease, involve loss of albumin concentration within the circulation. New York-based Daxor has also been issued a patent covering new technology used in its automated Blood Volume Analyzer. The test for measuring blood volume currently uses five sample points to provide an accurate measurement of a subject’s blood volume by measuring the dilution of a tracer in the subject’s bloodstream over a thirty-five minute period.
And hot biotech Sucampo Pharmaceuticals Inc. (Nasdaq) rocketed $4.25, or 27%, to $19.92 after brokerage Guggenheim launched coverage with a “Buy” rating, seeing multiple growth drivers ahead. Analyst Louise Chen wrote that Bethesda, MD-based Sucampo’s constipation drug Amitiza still has growth potential, despite growing competition from Actavis Plc’s and Ironwood Inc.’s Linzess. She added that further indications and formulations of Amitiza that are in development, along with Sucampo’s other drug candidate cobiprostone, could add up to $1.1 billion in annual sales and contribute $4.91 to EPS.
But Nymox Pharmaceutical Corp. (Nasdaq) plummeted 31% to $1.20 as investors took profits following four straight days of gains the prior week during which shares rose more than 175%. The stock soared after the company announced that it would begin further analyses of its phase III studies of NX-1207 for prostate enlargement (BPH). These analyses will include new long-term data from studies of NX02-0017 and NX02-0018. St. Laurent, QC-based Nymox plans to provide these new late-stage trial results in the second quarter or early third quarter.
IPO SECTOR -- Included among recent SEC filings for initial public offerings, Adaptimmune Therapeutics Ltd., which is developing cancer immunotherapies based on genetically engineered T-cell receptors, registered up to $150 million worth of common. The Abingdon, United Kingdom-based company, which was founded in 2008, plans to list on the Nasdaq under the symbol “ADAP.” Adaptimmune Therapeutics initially filed confidentially on February 5, 2015. BofA Merrill Lynch, Cowen & Company and Leerink Partners are the joint bookrunners on the deal. No pricing terms were disclosed.
April 6, 2015 ...
UNITEDHEALTH BUYS PHARMACY BENEFITS MANAGER CATAMARAN -- UnitedHealth Group Inc. (Minnetonka MN) agreed to buy Catamaran Corp. (Schaumburg IL) for about $12.8 billion, bulking up its drug-benefits business to get better negotiating power in talks with pharmaceutical companies over prices. UnitedHealth will pay $61.50 a share, financing the acquisition with cash and debt, the companies said in a statement. The offer, which would be UnitedHealth’s largest purchase ever, is 27% more than Catamaran’s closing share price prior to news of the deal. Benefits managers like Catamaran help administer the drug coverage in health plans, working with employers and insurers to negotiate with drug companies and pharmacies. They also often oversee patients’ drug use, maintaining lists of covered drugs and handling mail orders or complex treatments. The deal will put more pressure on drugmakers and the prices they charge. The pharmacy benefits industry has become the focal point of tensions between drug companies and customers over the cost of new treatments. Express Scripts Holding Co. (St. Louis MO), the biggest in the industry, successfully led a campaign last year to push for discounts on $1,000-a-day treatments for hepatitis C from drugmakers Gilead Sciences Inc. (Foster City CA) and AbbVie Inc. (North Chicago).
The Catamaran deal lets UnitedHealth bet more on growth in drug benefits as the initial surge of new health-insurance customers from Obamacare begins to slow. The biggest U.S. health insurer will combine Catamaran with its drug-benefit unit, called OptumRX, giving it a broader base of customers. Optum “has largely been servicing United’s captive business,” said Ana Gupte, an analyst at Leerink Partners. “They have aspirations to broaden that.” Adding scale will help UnitedHealth drive a harder bargain in negotiations with drugmakers and pharmacies said Steve Halper, an analyst at FBR & Co. “They have a lot more clout,” Halper said. “You’re negotiating with the manufacturers for rebates and pricing with a much larger base.” UnitedHealth closed the week off 1% at $117.36 in New York. Catamaran gained 23% to $59.26.
SUPREME COURT RULES MEDICAID PROVIDERS CAN'T SUE STATES FOR HIGHER PAY -- Hospitals and other healthcare providers can’t sue to challenge reimbursement rates set by states under the Medicaid insurance program for the poor, the U.S. Supreme Court ruled. The 5-4 decision last Tuesday is a blow to hospitals, which claim that Medicaid rates aren’t covering their costs. Providers now will have to take any objections to rates to the U.S. agency that oversees the joint federal-state program. Writing for the court, Justice Antonin Scalia rejected contentions that the U.S. Constitution authorized reimbursement lawsuits. Providers pointed to the Constitution’s supremacy clause, which says federal law trumps contrary state requirements. That provision “instructs courts what to do when state and federal law clash, but is silent regarding who may enforce federal laws in court, and in what circumstances they may do so,” Scalia wrote. Chief Justice John Roberts and Justices Samuel Alito, Clarence Thomas and Stephen Breyer joined Scalia in the majority. Justices Sonia Sotomayor, Ruth Bader Ginsburg, Elena Kagan and Anthony Kennedy dissented.
The dispute stems from reimbursement rates set by Idaho for services provided to people with developmental disabilities. Healthcare providers sued the state, claiming the reimbursement rates were too low to comply with the federal Medicaid law. A federal court agreed and said the rates were unlawful because the state didn’t consider provider costs. The American Hospital Association and the Federation of American Hospitals, in a court brief supporting the Idaho healthcare providers, said the cost of providing care to Medicaid beneficiaries in 2012 exceeded reimbursements by $13.7 billion. California said in court papers that since 2008, litigation over reimbursements has required the state to give Medicaid providers more than $1.5 billion in “excess payments” that are unnecessary to ensure beneficiaries receive quality care. The federal appeals circuit covering California allowed challenges by providers. The case is Armstrong v. Exceptional Child Center, 14-15.
TRACKING WASHINGTON -- Medicare is reported to have spent over $4.5 billion on the new, advanced, and highly expensive drugs for the treatment of hepatitis C during 2014, a 15 times increase in spending compared to the previous year’s spending on older, conventional treatments for the disease, as per previously undisclosed federal data. According to Sean Cavanaugh, director of Medicare and deputy administrator at the Centers for Medicare and Medicaid Services (CMS), “Part D,” a Medicare prescription drug benefit program, spent $286 million in 2013 on the earlier-generation hepatitis C drugs. The expenditure figures from last year dwarf these figures from 2013. The exorbitant costs of these new-generation hepatitis C treatments will be paid mostly by the federal taxpayers, who contribute the most toward the Medicare’s prescription drug program. The total expenditure for 2014 on hepatitis C drugs amounts to over $4.7 billion, out of which only $157 million have been spent on the drugs which belong to the earlier classes of hepatitis C treatments. The major part of the expenditure was taken up by the new class of treatments including the $84,000 Sovaldi by Gilead Sciences Inc. (Foster City CA), which accounted for over $3 billion of the total Medicare expenditure.
In other news, a little-noticed provision of a bill passed by the House of Representatives with overwhelming bipartisan support would provide doctors new protections against medical malpractice lawsuits. The bill, which requires the government to measure the quality of care that doctors provide and rate their performance on a scale of zero to 100, protects doctors by stipulating that the quality-of-care standards used in federal health programs--Medicare, Medicaid and the Affordable Care Act--cannot be used in malpractice cases. The provision is nearly identical to legislative language recommended by doctors and their insurance companies. They contend that federal standards and guidelines do not accurately reflect the standard of care and should not be used to show negligence by a doctor or a hospital. Medicare, Medicaid and private insurers increasingly require doctors to report data that can be used to assess the quality of care. They then evaluate and pay them based on their performance.
FDA/EMA ROUNDUP -- Novartis AG (Basel CHE) was granted approval by the U.S. Food and Drug Administration for its new once-daily, oral formulation of Exjade (deferasirox) called Jadenu. The drug is designed for treating chronic iron overload resulting from blood transfusions in patients aged 2 years or older and chronic iron overload in patients aged 10 years or older who are suffering from non-transfusion-dependent thalassemia syndrome. Chronic iron overload may also develop into a disease called hemochromatosis, characterized by weakness, fatigue, pain in the joints or abdomen and even organ failure. The condition if left untreated can lead to lethal liver and heart damage.
Elsewhere, pharmaceutical giant Amgen Inc. (Thousand Oaks CA) announced that its supplemental New Drug Application for Kyprolis has won a priority review designation from the FDA. The drugmaker has been seeking a label expansion for treating patients suffering from relapsed multiple myeloma, and those who have undergone at least one treatment previously. Priority review status is normally granted by the FDA for drugs that are meant to target a largely unmet need in the healthcare market or for debilitating diseases for which no other viable and/or approved treatment options exist. The designation speeds up regulatory approval by shortening the FDA’s final decision time from the standard 10 months to six.
But for the second time last month, Amgen Inc. (Thousand Oaks CA) lost a battle over its effort to block a biosimilar version of its Neupogen drug, a $5.7 billion seller used to fend off infections during chemotherapy. On this latest occasion, the FDA denied a citizen’s petition that the biotech filed arguing that Sandoz, which plans to sell a biosimilar, violated federal law by failing to provide it with needed information by a specified deadline. In its filing, Amgen maintained that Sandoz, which is the Novartis AG generic drug unit, was required to provide a complete copy of its biosimilar marketing application 20 days after it was submitted to the FDA. The biotech also sought Sandoz’s manufacturing plans. The agency wrote that the law “generally, does not describe any FDA involvement in monitoring or enforcing” the exchange of marketing and manufacturing information. The FDA rejection follows a ruling by a federal court over the same issue. The litigation is not over yet as Amgen last week filed an appeal of the FDA ruling with another federal court.
Outside the U.S., AbbVie Inc. (North Chicago) has been given the go ahead by the European Commission (EC) to market its blockbuster drug Humira (adalimumab). Humira is used to treat severe chronic plaque psoriasis in adolescents and children of ages four and above. The drug is used with children who have responded inadequately to phototherapies and tropical therapy, or those who are unsuitable for those treatments. Market authorization from the EC means Humira can be used to treat severe chronic plaque psoriasis in each member state of the European Union. Plaque psoriasis is a chronic autoimmune skin condition, characterized by the excess piling of skin cells. These then form thick lesions and scales on the skin causing inflammation.
MEDICAL STOCK SPOTLIGHT -- Nymox Pharmaceutical Corp. (Nasdaq) led advancing issues, nearly tripling over the week to $1.73. St. Laurent, QC-based Nymox announced last Wednesday that it is undertaking further analysis of its pivotal phase III studies of NX-1207 for prostate enlargement (BPH). This will include new long-term data from Studies NX02-0017 and NX02-0018. Ultimately, the company expects to provide these new pivotal phase III study results in the second or early third quarter of this year. The NX02-0017 and NX02-0018 studies were initiated in 2009. NX02-0017, which consisted of 499 patients randomized, was completed in 2012. NX02-0018 had 498 randomized patients and was completed in 2013. At 12 months post-treatment, there was no overall top-line statistical significance for the efficacy of treatment in terms of BPH Symptom Score improvement versus controls. The safety profile of NX-1207 was excellent.
Elsewhere, Cellular Dynamics International Inc., a company in the forefront of making human cells that might someday be used to cure disease, more than doubled to $16.46 after saying it has agreed to be sold to Fujifilm Holdings Corp., Tokyo, for about $307 million. The company was co-founded in 2004 by University of Wisconsin-Madison scientist James Thomson, who is viewed as one of the most influential stem-cell scientists in the world. It became a publicly traded company in 2013 and is at the forefront of an area known as regenerative medicine, which uses our own cells, tissues and organs to promote healing. CDI has about 150 employees and will continue to operate in Madison and Novato, CA, as a subsidiary of Fujifilm, the companies said.
Burlington, MA-based Dyax Corp. (Nasdaq) soared $10.51, or 64%, to $27.05 after news surfaced regarding early testing for a new drug for hereditary angioedema (HAE). The early testing showed that the drug may prove to be a “best in class” option. RBC Capital Markets’ Michael Yee said: “Well above consensus expectations, and we reiterate that this drug looks like best-in-class HAE (treatment). Dyax impresses and clearly shows proof of concept that it can essentially reduce/prevent nearly all HEA attacks.&rdqu